Three key characteristics of successful healthcare startups

by Felix Staeritz and Sven Jungmann with Daniel Nathrath and Claire Novorol

An entrepreneur, a paediatrician and a neuroscientist meet at a conference. Ten years later their medical AI streamlines the healthcare journey for over 10 million users and, at a time when self-assessment is more relevant than ever, this app has empowered patients with 20 million assessed symptoms. However, it wasn’t merely the technology that led to this success, but rather flexibility, perseverance and entrepreneurial optimism that allowed Daniel Nathrath, Claire Novorol and Martin Hirsch to usher in real change with Ada Health.

“There’s technological innovation and there’s business model innovation.”

As part of our mission at FoundersLanes to investigate outstanding innovation, we interviewed Ada founders Daniel Nathrath and Dr. Claire Novorol to get the scoop on how they disrupted not just the technology but the business model.

This interview was originally conducted for our new book “Das Entscheidende Jahrzehnt”. If you would like to read the full story follow the link and get your version of “Das Entscheidende Jahrzehnt” now.

Ada is a self-assessment app that helps users understand, manage and access care for symptoms in minutes with reliable global medical information. Considering the current shortage of healthcare workers as well as the COVID-19 pandemic, a symptom-assessment solution that increases access is a game-changer. According to the Broadband Commission for Sustainable Development 2020 Report, “Solutions like Ada have the potential to address existing health inequalities and provide medical expertise to clinicians, health workers, and patients alike.”

Using technology to leverage medical knowledge, however, is not exactly a linear path. The technology that underpins the Ada consumer app was originally intended for clinicians, but while the feedback from doctors was positive about the early iterations, physicians’ time and insurance constraints combined with the sector’s conservative approach to change meant that the product-market fit — an element crucial for success — just wasn’t right.

Flexibility: Product-Market Fit

The team needed to change its approach. Nathrath, Ada’s CEO, explains: “Our goal is to build a company that makes a positive impact on people’s health at mass scale but in a sustainable way. And it’s only sustainable if we also build a successful business.”

Thus, they pivoted to focus on those experiencing symptoms rather than on those treating symptoms. Novorol, a doctor in paediatrics and clinical genetics and Chief Medical Officer of Ada Health, describes how they “moved upstream” to follow demand, “translating into patient-friendly language and looking to put the tool in the hands of patients in the waiting room or at home.” Although the founders wished they arrived at this realization sooner, their willingness to disrupt the original business concept — combined with the medical rigour built into the technology from its earliest days — resulted in a winning product-market fit.

Perseverance: A Static Industry

Healthcare is a difficult industry for entrepreneurs, and only those who patiently persevere will navigate it. Nathrath reflects, “I was overly optimistic about how quickly you could move things in healthcare because, rightly, it is an industry where the ‘move fast and break things’ approach to innovation really doesn’t work.” Even with an insider’s view, Novorol admits she was surprised by how slowly many healthcare organizations were to embrace innovation.

Why is innovation so slow in the healthcare industry? This leads back to a topic we discuss frequently — who’s paying for it. “There’s a big challenge that in most Western healthcare systems the money that gets paid isn’t paid directly by the consumer.” Nathrath points out, “[This] puts you into a tricky position because if you want to get paid, you need to work with incumbent stakeholders…and then you are negotiating with very large organisations, which sometimes takes half a year or a year.”

Despite the ongoing pressure for digital health companies to quickly generate revenue, Nathrath remains very optimistic about Ada’s mission, stating that the potential “delta of improvement” for those with limited or no access to care is more important, and that “in the long run, hopefully, quality and responsible entrepreneurship will win.”

Entrepreneurial optimism: Facilitating Collaboration

“It’ll never work. Nothing ever changes in healthcare.”

In regard to the industry, perseverance alone wasn’t enough. When Ada first started, this sceptical “nothing ever changes” attitude towards healthcare innovation dominated. Nathrath asserts, “To some extent you need a willingness to be seen as ‘naive’ at times if you want things to change.”

Novorol also emphasizes the importance of this entrepreneurial optimism, or overconfidence, explaining that while corporates offer assets and valuable insight into regulatory environments, entrepreneurs bring “fresh perspective” that creates momentum. She notes that Ada’s business model pivot has generated much interest: “A lot of the conversations we have with existing partners, potential partners, they’re very interested in engaging more with the patient, moving from just a healthcare-payer to a partner for the patient.”

Looking toward the future and especially with the COVID-19 crisis, Nathrath observes that startups and corporations alike are realizing “the journey of the consumer into the healthcare system doesn’t start in the waiting room of the doctor’s office anymore, it starts on your computer or smartphone.” This mindset is critical to achieving healthcare innovation that ensures sustainability and inclusive access. To learn more, read our new book Das Entscheidende Jahrzehnt and start receiving our newsletter today.

About FoundersLane

FoundersLane, the leading Corporate Venture Builder for climate and health, was founded in 2016 by Felix Staeritz, Andreas von Oettingen, and Michael Stephanblome. The team develops digital business models in the health and climate sector by combining the agility and the mindset of technology entrepreneurs with the strength of corporations. FoundersLane draws on more than 20 years of experience by the founders in building up new companies.

FoundersLane creates new, fast-growing digital companies in categories that are highly topical and current. FoundersLane counts more than 100 founders, experts and entrepreneurs with great expertise in the fields of medicine, health, climate, disruptive technologies such as IoT connectivity, AI, and machine learning. Clients and partners include SMEs and corporations as well as more than 30 Forbes listed companies, such as Trumpf, Vattenfall, Henkel and Baloise. FoundersLane is active in Europe, MENA and Asia with offices in Berlin, Cologne, Vienna and London.