Creating a Healthier Future spoke with Mark Friess, CEO and founder of WelVU , about the opportunities and challenges small companies — Davids — face when approached by large companies — Goliaths — that desire their promising healthcare innovations. WelVU is a patient engagement firm that uses video and mobile technologies to record and share patient-physician encounters to improve patient education and adherence with treatment plans.
Offering the start-up point of view is Friess, who was recognized as a local innovator at McKesson’s Better Health Portland event in March.
CAHF: Do you think collaborative partnerships are the right choice for Davids wanting closer relationships with Goliaths?
FRIESS: Absolutely. I think it’s preferable to acquisition in most cases, particularly early on in the small company’s development. It gives the small company an opportunity to learn whether its innovation is a good fit with the solutions being offered by the large company. Does it advance or enhance or complement those existing solutions? Or does it compete with them and consequently not have much of a future? It’s better to find those things out first through collaboration rather than after an acquisition, when it may be too late.
Top 3 Collaboration Advantages
Awareness: Understand how your product works with other products in the market.
Reach: Access a larger sales force to push your product into the market.
Exposure: Identify who does it right, who doesn’t and who might help you in the future.
CAHF: What about the people part of the equation?
FRIESS: Collaboration offers the same advantages. The smaller company can find out whether its culture and its team are a good fit with the culture and team at the larger company. Collaboration is the platform upon which to test whether the relationship can work, develop and grow.
CAHF: What qualities make a Goliath a good collaborative partner for a David?
FRIESS: A willingness to invest in the small company’s product or service, a willingness to sell and market the small company’s product or service and a willingness to share information to make both of those work. It’s also important for the small company to expect the large company to be transparent about its expectations. It may say to the small company, “We’re not going to touch you. Just keep doing what you’re doing. We will learn from you.” Or, it may say to the small company, “We understand your vision. We understand your passion. But if you stay with us, your company will not look the same in three years.”
CAHF: How long should a David stay with this courtship before deciding whether to dissolve the partnership or take the business relationship with a Goliath to the next level?
FRIESS: There’s no fixed time period. It’s unique to each product and to each relationship. But there will be a point at which both sides realize the relationship must change. More often than not, the large company will get to that point first. If it sees growth in the product and growth in sales, it will know that it will be cheaper to buy the smaller company sooner rather than later. The acquisition price will continue to rise along with the smaller company’s value in the marketplace. On the other hand, if the larger company doesn’t see growth potential, it likely will want out sooner rather than later to avoid sinking resources into a company that it no longer wants to partner with.
CAHF: What will surprise a David about a typical Goliath’s culture?
FRIESS: Time expectations. I think it will surprise a small company executive how long it takes to get something done in a large company, whether it’s reviewing a contract or even just distributing information to a sales team. Another is the level of rigor. At a larger company, the standards that must be met in order to go to market are much higher. The bigger company is more concerned about business value.
CAHF: What are some of the specific business advantages for a David collaborating with a Goliath?
FRIESS: You learn how your product works or fits in with other products in the market. Is it compatible? Is it complementary? How can you improve it to make it so? Another is access to the larger company’s sales team, which can push your product in the market as long as you can communicate the value or net benefit to the sales team in doing so. Another business advantage is not being locked in with one Goliath. You can partner with as many larger companies that you want as long as you don’t stretch yourself too thin. You’re building your own learning lab to study who does it right, who doesn’t and who you may want to get closer to in the future.
CAHF: How would you describe the market receptivity to collaborative partnerships between Davids and Goliaths in healthcare right now?
FRIESS: It’s tremendous. Big companies have realized that for an ecosystem to thrive, it needs small companies that can access capital to foster innovation. In that ecosystem, collaboration is the model that can prove — or disprove short of an acquisition — the hypothesis that the small company has a solution to a job to be done in the marketplace.
Editor’s note: Watch a video interview with Mark Friess on how WelVU uses videotaped visits with physicians to improve patient education.
To learn more about the Better Health Tour and transformative innovation in healthcare, visit the Creating a Healthier Future blog on McKesson.com.