Unpacking the 3 Stages of the Founder Journey

We recently had an insightful and illuminating conversation as part of the Define Ventures ‘Building for Success’ forum for the digital health community. We spoke to Afton Vechery (CEO & Co-Founder of Modern Fertility), Seth Cohen (CEO & Co-Founder of OODA Health) and Chris Klomp (CEO & Chairman of Collective Medical) — three talented digital health entrepreneurs with successful exits.

We segmented our discussion by talking through three stages of the founder journey: the build, the scale, and the exit. Vechery shares her learnings in building a direct-to-consumer digital health company from the ground up, while Klomp and Cohen outline their lessons learned selling into the healthcare enterprise.

For those that did not have the chance to hear Vechery, Cohen, and Klomp live, here are some nuggets of their wisdom at each stage of the digital health company-building journey:

Digital Health — The Early Build (Seed / Series A):

1. Distinguish between your users and your buyers. Klomp reflects, “In digital health — it is critical to understand the differences between product-market fit and go-to-market fit. Specifically, within product-market fit, understanding there is often disaggregation in the value chain between users and buyers. Users — such as patients — can love your product, but if the buyers don’t know about it or aren’t incentivized to pay for it, that’s problematic. It’s important to nail value chain alignment in the early days to inform a strong go-to-market strategy that positions you well for scale.”

2. Build on momentum. Looking back, Vechery recalls “Many digital health companies trying to commercialize through all 3 channels, which was really, really hard. We ultimately decided to be a physician-mediated direct-to-consumer business. What we learned was that if we could have that relationship with the customer directly from the start and scale that, it would allow us to impact more people faster. In the earliest stages this enabled us to build better products — ultimately giving us a broader product portfolio that enabled us to displace other players.”

3. Stay focused. Cohen articulates the challenges of entrepreneurship in the digital health sector: “As an entrepreneur you get this great applause and excitement around the vision of what you’re building, but the most courageous thing you can do is choose to sunset something. It’s the hardest thing to do when you’ve invested in something, to say no, we’re going to shut it down. I want to offer encouragement to those out there thinking about those things: it’s so painful but they’re the most important moves. Distinguishing between something that has a really great vision versus something the market is excited by.”

Digital Health — Building to Scale (Series B & C):

1. Klomp shares, “I find that the business of health care often causes people to forget the reasons that brought them there in the first place. Essential to us in selling was to remind [everyone at the table] why they got there in the first place, which means go back to the patient and tell patients stories, and talk about patient impact and how we are on a journey to help our brothers and sisters lead a healthier and more productive life — and to do that in a cost sustainable manner. When people remember that then you shake and free them from the shackles of of mistrust that otherwise characterize the business of healthcare, and then amazing things start to happen.”

2. When going D2C, and building a market, map out your market development strategy. Vechery looks back at how she positioned the company for scale: “it was [identifying what are] the stepping stones that we have to take clinically, from that grassroots physician-mediated direct-to-consumer approach, to get to a point where we can make that broader change, but deliver value along the way.”

Digital Health — Building Towards The Exit:

1. Shareholders are not your only stakeholder: customers and employees are also stakeholders in your exit; ensure the nature of your exit does right by them. Cohen explains how he views acquisition as an art form: “think about what happens down the road: you’re still accountable. In many ways, customers didn’t buy a product, they bought you, and your credibility to say ‘I’m going to deliver this solution to your problem.’”

2. The importance of balancing insiders vs. outsiders in healthcare Vechery reflects, “I think the founder has to be incredibly intentional about how they want healthcare principles to show up in their business. You’re gonna get pushed in different directions by investors and by your team and having like a firm stake in the ground there will help you make the decisions on a day to day basis.”