StartUp Health Co-Founder on Innovation, Failure, and Persistence

Innovation is tough. "Failure is definitely part of the process. It becomes an opportunity if you can transform each failure point into a navigation beacon to solve the next problem," says Unity Stoakes, co-founder and president of StartUp Health.

This week, the conclusion of my conversation with Unity Stoakes, co-founder and president of StartUp Health, which runs a three-year "startup academy" for healthcare technology companies. Read Part I.

HLM: Do you believe the role that an organization like StartUp Health plays will be complemented by the innovation centers I see springing up at healthcare institutions themselves, whether that be Partners or Mayo or whoever? Some of the inventors are coming right out of healthcare – doctors who are tech savvy.

Stoakes: We have to work together. There's been a lot of wonderful innovation centers internally at some of the largest stakeholders in healthcare. Those can be good for intrapreneurship, where there's great talent within these companies that can keep building things. But a lot of the great invention throughout history comes from new startups that think about solutions in completely different ways.

There's a serendipity approach. There's a naiveté approach, where some of the best solutions get created almost by accident, from outsiders. But you'll see a bridging of the gap where those leaders in healthcare will start to acquire some of these companies, will start to invest in some of these companies. We're already seeing this.

HLM: Samsung's putting in money, as is Apple. How important will their movements in this market be?

Stoakes: Health consumerism is going to drive a lot of the innovation. The concept of price transparency, couple that with the fact that there's new services, new technologies, new tools being made available to empower consumers, and new platforms to build whole companies on, and then you get some of the greatest brands of our time.

Whether it's Google or Apple [that] focused on this… it creates a whole new environment for where things are going that will impact our health and wellness. But what about automotive companies as an example? What about airlines? What about manufacturing companies that build refrigerators?

You start to see how, for a variety of reasons, these companies will become healthcare companies. When you look at Apple, Samsung, Google and IBM's announcements altogether in context, there's definitely an 'aha' moment.

It's almost the next wave of infrastructure and innovation that's happening in the sector. One of the outcomes will be more of a focus on software and the applications, and less of a focus on the hardware itself.

HLM: Healthcare is regulated not just by Washington, but by 50 states. What could they do better?

Stoakes: The HITECH act created a lot of innovation funding for startups. The ACA created an opportunity for competition and for new business models to emerge. It's broken the stagnation that's happened for so many years. At a regional level, there are certain markets that are really seizing the opportunity.

New York, for example, has been very effective in terms of supporting innovation. They've opened up a lot of data. New York City has a whole big apps program for health. They've opened up a lot of city data, health data. It's called Big Apps. This started in the Bloomberg administration and it's continued on.

HLM: Do you ever hear people say, all this technology is great, but who's going to pay for it?

Stoakes: I hear that all the time. A lot of the business models are in flux right now. There's a lot of mystery around who the payers will be. What I do know is when there's a changing environment, or this moment of creative destruction, that creates a lot of opportunity for new entrants.

It was once assumed that people wouldn't pay for their own healthcare. I think that's a fallacy. We're starting to see that change. Whether it's pay for a device, or pay for a service, or pay for some new type of care, you will see consumers pay for healthcare.

And we're already starting to see new risk-based models emerge, where there's different types of incentive structures around healthcare services, so instead of the fee for service, it's more based on quality care or results. If you have a business that can prove you can save money or create efficiencies or improve care in some tangible way, there will be plenty of opportunities.

HLM: What's your attitude on failure? You've got so much invested in all these companies. Some of them are going to fail. That's part of innovation, part of the discovery process. How do you manage failure?

Stoakes: Failure is definitely part of the process. It becomes an opportunity if you can transform each failure point into a navigation beacon to solve the next problem. If it becomes a data point to help you improve and recalibrate for the future, then it becomes an opportunity.

So we see the best entrepreneurs pivot, learn from experiment, really navigate around the challenges over time. If you balance failure with persistence, it can become a great asset.

HLM: What has been an interesting pivot in your group of companies?

Stoakes: We have a really great company, now called Maxwell Health. It started as a company called Daily Feats. They started as a rewards and incentives platform to help [consumers] with behavior change. [Now] they're more of a service layer on top of health insurance. Really interesting behavior change solutions on top of health insurance.

So a completely different customer, a completely different experience, but still focusing on behavior change. The end result, the benefit for the person, is still the same. So they reworked their whole business and now have a really successful business.

HLM: You're not an accelerator or an incubator.

Stoakes: What we realized very early on is that a long-term approach to building a business and specifically focusing on customer development was needed in healthcare, because the business models are shifting, the sales cycles are very long, and often times the regulatory and compliance issues take a long time to navigate in healthcare.

So we created a three-year program, what we call an academy. It's also a network and a community, so we've organized 25,000 stakeholders who are members of the StartUp Health ecosystem. These are investors. These are customers like hospitals and insurance companies. And [these are] innovators themselves.