‘There are too many soulless software startups’

Laurens van der Tang is a special personality in the startup scene. At age 28, representing his IT employer Baan, he helped to win a million dollar project from Boeing. Soon after Baan went IPO and in 2000 Van der Tang became its CEO. Recently the convinced Christian sold VitalHealth, a company he co-founded, to healthcare giant Philips. With startup community Silicon Veluwe he reflected on this story (podcast).

Van der Tang is an outspoken Christian and cited a lot by Protestant newspapers. He likes writing columns and blogs. For Silicon Veluwe, a startup community organising events in high-potential companies from the Dutch region ‘de Veluwe’, he gladly reserved time to tell his story. After all, VitalHealth is located in this area, with offices in Ede and Uddel.

We at Jexia, as founders of the Silicon Veluwe community and relative neighbours (our HQ is in Apeldoorn, 30 minutes from Ede), were pleased to introduce the entrepreneur in company of fellow tech enthusiasts. Van der Tang shared insights about VitalHealth’s assortment of apps for people with chronic diseases such as COPD, heart failure, diabetes and depression. The company founded in 2005 nowadays provides more than 5.5 million patients with its technology. Not bad for an organisation that is operating for only 12 years in the tough-to-crack healthcare market.

Highlights interview

Right below we have highlighted some questions and answers that provide a balanced picture of VitalHealth and the vision of Van der Tang. For those being interested in the whole Q&A session, listen to the podcast:

Silicon Veluwe: What does VitalHealth offer to its users?

Van der Tang: “We provide multiple applications, for example for various periodic health checks. Those apps help a patient to fulfil their personal goals and manage their life. Also think about functions that support people to eat and drink healthy and work out more than before. At the same time we ensure you control your own medical data and your data only will be shared with the right health providers. Additionally you can chat with doctors and nurses.”

Silicon Veluwe: How did VitalHealth actually start its journey?

Van der Tang: “Previously I was member of the board of Noaber Foundation and in that role I was asked to set-up innovation network VitaValley, connecting stakeholders and accelerating innovation in health care. One of the important issues crossing by during talks, were the rise of chronic diseases. It was a time in which big changes were introduced within the health care industry: 85 percent of the costs in health care at that time appeared to be spent on chronic diseases, such as diabetes.”
“Most people will suffer from chronic diseases, sooner or later. Even worse, it’s almost inevitable. At a certain age you have to deal with it. So we realised there will be demand for better support, to be able to make a transition to more proactive healthcare.”
“Then we got into conversations with Mayo Clinic, an absolute powerhouse in the global health care industry. If you whisper Mayo Clinic to a doctor in India in the middle of the night, he immediately gets awake. That’s the terrific reputation this institution has. We decided to start a joint venture, with Mayo Clinic as launching customer. That really helped us in many ways.”

Silicon Veluwe: Once you start the conversation with prospects, trustworthiness is very important, especially in healthcare. How do you gain this trust?

Van der Tang: “Simple: just say what you do and do what you say. Within healthcare there’s a lot of scepsis about software development companies. They have the reputation to overpromise and underdeliver. And especially CEO’s of hospitals consider IT as a risk, not an opportunity. It’s in that situation crucial to stay down-to-earth as much as possible and be honest. You must speak their language and you at least need people in-house that understand their processes.”
“In the beginning this situation was quite uncomfortable for me. I am not a doctor and I was going to tell that what they were doing, could be done better. So I always started with emphasizing that I’m not a doctor, but I do try to make a point here.”
“A lot of companies that approach healthcare professionals, just consider things from their own point of view. They say: you must start to operate more like a business, because yours isn’t and it’s running too slow. This is exactly you should avoid to say against health care pros. There is a good reason why things are going the way they go within that industry. After all, it’s all about the lives of people.”
“At Baan this inside-out view also existed, and this frustrated me. Concerning ERP systems you surprising hardly find happy customers, because customers have to submit themselves to the structure that the system is providing. In the past we told customers that this is a good thing, because our processes would reflect ‘best practices’. But in fact this is a very one-sided view. When I started VitalHealth, I knew we had to do it differently. I wanted to have a company with really happy customers.”

Silicon Veluwe: In former presentations you have stated a lack of soul is one of the biggest pitfalls of startups. Can you elaborate on this?

Van der Tang: “Companies tend to focus too much on growth. Especially software companies are often founded with the idea of an exit in mind. Basically everything is in pursuit of fast growth. “From day one they are thinking about selling their company, instead of asking themselves how you become an established power within the market by offering a better customer experience. In this way you get soulless startups.”

Silicon Veluwe: Still you don’t flinch from talking about growth hacking in your presentations. Why?

Van der Tang: “Most importantly you have to realise that company growth takes time, especially in a B2B market, which is often very complex. You can’t take every shortcut. But, in my opinion there are practices that can help building a healthy growing business. For instance, in partnership agreements we have often negotiated minimum revenue commitments — for a number of years. You can call it dull, risk-averse, whatever. But imagine a partner promises you the world, and nothing happens — then both parties get frustrated. By such a deal you always generate revenue, whatever happens. You also ensure your partner really invests in your relationship, otherwise they basically throw their money out of the window. So in my eyes securing these type of revenue commitmentes is also an example of growth hacking, although not many people would call it like that.”

Why is VitalHealth the right match for Philips?

“Because of several reasons: we have a platform that can be scaled globally. And down the road we have always taken security and privacy into account, very important in healthcare. Our market position is strong, it can even help Philips to reposition itself in the Dutch market.”

But the exit was never planned, right?

Van der Tang: “No, it never was. On the contrary, when Philips approached us, we didn’t directly offer our company for sale to get multiple bids to drive up the price — which happens a lot. We have taken our time to negotiate, because we considered Philips to be a great partner to realise our goal. And that is simply providing better healthcare for people with chronic diseases.”

Some entrepreneurial advice from Van der Tang:

Embrace the long-term and focus on profit

I have been very risk-averse, always kept the need to become solidly profitable in mind. If you need money from others, you do not control your destiny anymore. So build conservatively. Maybe the outside world thinks this is a too slow approach, but this is the way you are really able to convert your company into your life’s work. At the same time you build a healthy company that stands out within its own market.”

The customer comes first, create real value

“A recurring impression I get from most entrepreneurs, especially the young ones, is that what they build has to be fun, creative and attractive. But their startups forget to create real value to the people they want to sell it to. Is this product or service really interesting enough to spend money on? So just create real value and focus on this value proposition.”

This article is provided by Jexia. By empowering programmers to focus on the business logic, Jexia believes it enables software builders to really provide a great customer experience .

Originally published at Jexia.