Healthcare experienced its own version of the squid game in 2024.
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In 2024, many well-known brand digital health and healthcare services companies stumbled and failed.
Still, healthcare continues to be an area of intense focus and investment.
As the year draws to a close, I'm sharing some thoughts about the competitive world of healthcare entrepreneurship that, in 2024, bears an eerie resemblance to the critically acclaimed Netflix series “The Squid Game.”
1) The power of patience and persistence
Almost anything worth doing in healthcare is difficult and takes twice as long as you think it will take you to try to do it. Startups and first-time founders often underestimate the power of existing. Massive frictions caused by government and quasi-government regulations. And it takes a long time to scale a business, let alone achieve profitability. There are several companies that make it. However, the denominator is much larger than anyone actually talks about, and true success as measured by patient impact and sustained profitability is rare. The similarities to Squid Game (for those who binge-watched season 2) are real.
2) You may never know what actually happened.
If it seems too good to be true, it almost always is. If you put yourself in the right flow of information, you may be able to hear the real story. In many cases, this is not the case. I recently received a call congratulating me on a “successful” healthcare angel investment I made many years ago. I didn't know the person well, so I kept my mouth shut. What I meant was that my “successful” healthcare investments are now worth every penny on the dollar. Much of what is touted as success by others is actually not. Gold is not the only thing that shines.
3) Fraud is normalized and hidden.
Some darlings of health care ventures are actually planning get-rich-quick schemes based on unsound economic principles. The bigger the hype, the bigger the fall. The real word “fraud” is rarely uttered. There may be unsound valuation practices, or worse, unsound accounting practices. Companies raise money based on doctored numbers. Or a company whose reservations are represented as revenue. They benefit when unpleasant truths come to light because no one — management, employees, or investors — stays away. Not to mention strict non-disclosure agreements (NDAs). And then everyone goes on to live another day… and, yes, start another company. I heard that Elizabeth Holmes is raising money for her next healthcare company. Just kidding. Or is it me?
4) Some “experts” are not experts.
Beware of expert bias. A fancy name or a fancy company given to something often doesn't mean much. It's often easier and cheaper to obtain than you might think. It's easy to get lazy when you hear that a major company has invested in something and believe that the company has a working product and sound fundamentals. But if you haven't seen it with your own eyes, never believe it. And if you have any doubts, pursue your doubts with Law & Order: SVU-like Tenacity by Olivia Benson. you
5) Failure and Victory
Some founders succeed financially even if their company ultimately fails. Subsequent funding rounds allow founders to “take money off the table.” This now-common trend represents an insidious distortion of the venture model, enabled by investors who want to reward and incentivize founders to get off to a great early start. But part of the reason ventures work is the fact that someone is literally betting their career on making the idea a reality. There is no “distance” because even medium-term financial results can be life-changing if the wrong founder is rewarded early.
6) So what exactly do you do?
If you've heard about a company for a long time and you still don't know what it does, listen to your gut…and run. These “all things to all” companies are the type to avoid. Depth, or being good at a narrow range of things, is almost always better than breadth. The desire to be all things to all people often reflects a lack of management team maturity (and proper board governance) rather than breadth of vision. Sorry, but no, apps, devices, AI tools, and clinics cannot solve all healthcare industry problems in every area of healthcare at once.
7) McDonald's or McDowell's?
Many so-called innovative companies are replicas of previous companies operating in different markets or at different times. To put it more simply, it's a counterfeit product. Healthcare entrepreneurship has a short memory and little awareness of the industry's history. Why care about history when you can resell the same story not once, but twice? And the second time it costs a lot more money than the last? Fans of Coming to America will remember the proud and powerful innovations of one Cleo McDowell (Rest in Peace, John Amos).
8) Beware of arrogant outsiders
Medicine is complex. And experience matters. Being new to medicine means you're likely to spend a lot of time making mistakes that others have already made. Beware of shiny arrogant outsiders. An arrogant outsider with a stellar resume from another industry can be a persuasive person who promises to introduce an outside-in mindset. However, very few of these people are successful. Because they lack the humility and patience to truly succeed in the multi-matrix environment of healthcare.
9) It's not my problem anymore
Large incumbent companies and leaders make large strategic acquisitions without thinking twice, and subsequent leaders who survive then struggle for years to get the job done. Great media coverage doesn't often lead to great success, but that failure is rarely explained away. Nothing is too big to fail or muddy the waters. In many cases, these bold “takeovers” do not materialize and result in much criticism after the fact. Until a new high-priced acquisition is made to take the focus away from the previous acquisition. fun.
10) I have no idea what you're selling, but I like you
Big new trends (like AI?) always attract many new entrants, making it very difficult for the average buyer of a new technology or service to make the right choice. In most cases, industry relationships drive purchasing decisions rather than fundamental differences between products. An expensive steak dinner, bottle of wine, and Super Bowl tickets weren't such a bad investment after all, right?
Ah, the dirty business of medicine. Everything is for the patient.
Or so they say…
So will 2025 be any different than 2024? Perhaps it will be an acceleration of a game that is already well underway.
An eerie soundtrack gets stuck in your head.
