Entrepreneurship in Healthcare Annual Review 2024: Squid Game?

In 2024, many companies stumbled and failed in the digital health and healthcare services space.

And yet healthcare remains an area of ​​intense focus and investment.

As the year draws to a close, I share some thoughts on the highly competitive world of healthcare entrepreneurship that in 2024 seemed strangely similar to the critically acclaimed Netflix series Squid game.

1) The power of patience and perseverance

Almost anything worthwhile in healthcare is difficult and will take twice as long as you think when you start doing it. It’s easy for a startup or early-stage founder to underestimate the power of established companies; the enormous friction caused by government and para-government regulations; and the longer time it takes to scale a business, let alone reach profitability. There are a handful of companies that make it. But the denominator is much bigger than everyone is talking about, and true success – as measured by patient impact and sustained profitability – is rare. The analogy to Squid Game (for those of you who may have just played season 2) is real.

2) You may have no idea what really happened

If it seems too good to be true, it almost always is. If you are in the right information flows, you sometimes hear the real story. More often than not, you won’t. I recently received a phone call congratulating me on the “success” of a healthcare angel investment I made years ago. I kept my mouth shut because I didn’t know the person very well. What I wanted to say is that my “successful” healthcare investment was now worth pennies on the dollar. Much of what is sold to others as success isn’t really that. All that glitters is not gold.

3) Fraud is normalized and masked

Some health care darlings are actually getting rich quick schemes with flawed fundamental economics. The bigger the hype, the bigger the fall. The real word for it – fraud – is rarely spoken. There may be shoddy valuation practices at play or, worse, shoddy accounting practices. Companies raise capital with figures that are falsified. Or companies whose bookings were shown as turnover. No one is blowing the whistle on these executives or companies because no one close to the unsavory truth—not management, employees, or investors—will benefit from having it revealed. Not to mention those tight non-disclosure agreements (NDAs). And so everyone lives to see another day… and, yes, start their own day next company. I hear Elizabeth Holmes is raising money for her next healthcare company. I’m kidding. Or is that me?

4) Some “experts” are not experts

Beware of expert bias. Fancy names or fancy companies associated with something often don’t mean much. They are often easier and cheaper to obtain than you 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 good fundamentals. But if you don’t see it yourself, just don’t believe it. And if you’re even a little suspicious, check your suspicions with Olivia Benson, Law and Order: SVU-like perseverance. You

5) Fail and win

Some founders succeed financially despite the fact that their company ultimately goes bankrupt. Subsequent funding rounds allow founders to “take money off the table.” This now commonplace trend represents an insidious distortion of the business model and is enabled by investors looking to reward and motivate a founder for a great early start. However, what makes a business successful is the fact that someone literally stakes their career on taking an idea to the extreme. When the wrong founder is rewarded early, there is no ‘distance’ because even a medium-term financial outcome can be life-changing.

6) So what exactly is it that you do?

If, after hearing about a company for a long time, you still have no idea what they do, listen to your gut… and run. These ‘all for all’ companies are the type to be avoided. Depth – doing a limited number of things well – almost always wins over breadth. Wanting to do everything for all people often reflects a lack of management maturity (and good governance) rather than a broad and expansive vision. Sorry, my apologies, no, your app, device, AI tool or clinic cannot solve every healthcare industry problem for every healthcare sector in one go.

7) McDonalds or McDowells?

Many so-called innovative companies are companies that are replicas of previous companies that operated in different markets or at a different time. More simply put: copycats. Entrepreneurship in healthcare has a short memory and little appreciation for the history of the sector. Why bother with history when we can resell the same story not once, but twice? And the second time for much more money than the previous one? Fans of Coming to America will remember the proud and robust innovation of one Cleo McDowell (RIP John Amos).

8) Beware of the arrogant outsider

Healthcare is complex. And experience is important. If you’re new to healthcare, this just means you’ll likely spend a lot of time making mistakes that others have already made. Beware of the shiny arrogant outsider. Arrogant outsiders – with glossy CVs from other sectors – can be persuasive figures who promise to bring outside thinking in. But few of these people are successful because they lack the humility and patience to truly succeed in the multi-matrix environment of healthcare.

9) Not my problem anymore

Large established companies and leaders often make ill-considered major strategic acquisitions, leaving subsequent leaders who survive struggling to find work for years. Big media splash doesn’t often translate into big success, but there is rarely any accountability for these failures. Call it ‘too big to fail’ or muddying the waters. This daring ‘takeover case’ often fails to materialize and leads to a lot of finger-pointing afterwards. Until there is a new, far too expensive acquisition that diverts attention from the previous one. Pleasure.

10) I have no idea what you’re selling, but I like you

Any major new trend (AI, anyone?) will attract many new players, making it very difficult for the average buyer of new technology or services to make good choices. Industry relationships will almost always drive purchasing decisions more than fundamental differences between offerings. That overpriced steak dinner, bottle of wine and tickets to the Super Bowl weren’t such a bad investment, were they?

Ah, the dirty business of healthcare. Where it’s all about the patients.

Or say they say…

So will 2025 be different from 2024? More likely than not it will be an acceleration of a game that is already in flux.

Listen to the creepy soundtrack.