Lessons HealthTech Startups Can Take From ZocDoc
Editor’s note: This guest post was written by Dave Chase, the CEO of Avado.com, a Patient Relationship Management company that was a TechCrunch Disrupt finalist. Previously he was a management consultant for Accenture’s healthcare practice consulting to 25 hospitals and was the founder of Microsoft’s Health business. You can follow him on Twitter @chasedave.
ZocDoc just announced a $50M round from DST. Where many have failed, ZocDoc has shown that a disruptive new model executed properly can actually work in healthcare. Healthtech startups can take several lessons away from the ZocDoc experience observing from the outside what they have accomplished.
Scrappiness matters. ZocDoc’s CEO & Co-founder, Cyrus Massoumi was tenacious in getting close to his first customers and doing whatever it took to close his first customers. He has shared that he waited in a doctor’s waiting room for 5 hours to speak with one doctor he wanted. In another case, he was escorted out of the building by security due to his persistence.
Focus pays off. ZocDoc appears to have ignored the siren song of any number of diversions from their core. This could have included getting into pricing elasticity or electronic health records. They do one thing exceptionally well — they fill open slots on doctors’ and dentists’ appointment calendars. Now that they’ve proven this, there’s logical places for them to extend. For example, think about what happens after scheduling an appointment (insurance eligibility, reminding patients about appointments, etc). With the credibility they’ve established, they can increase revenue per customer if they offer those services to a doctor.
Great investors help. While I’m sure their investors would give the ZocDoc team most of the credit, it can’t hurt to have Vinod Khosla, Marc Benioff and Jeff Bezos as early investors followed by the Founders Fund and SV Angel.
Honing their sales model. It appears they don’t use their website for sales to clinicians. Their website is almost entirely focused on consumer acquisition. Their strategy to acquire their paying customers may be viewed as “old school” (i.e., field and inside sales) but it has been effective. It sounds like they make a significant investment in sales development which is a great way to maximize the value of a salesforce.
Word of mouth still works. Doctors and dentists talk with each other and by providing them a great experience, they are getting plenty of inbound lead generation. Too often, startups rush growth and it bites them back with a bad customer experience and negative word of mouth. No doubt, this is helping drive inbound interest.
Start small to go big. As Salesforce.com and others have shown, starting with small customers is a great way to get initial traction. In ZocDoc’s case, they went to individual doctors rather than pursuing hospitals and large clinics. No doubt, that opportunity exists if/when they want it but they’ve shown you can build a business with small providers first. This can open up later opportunities with hospitals.
Stage rollout by geography. This is particularly critical in their model but I think it will matter for many healthtech startups. Having critical mass in a particular geography makes sense from a sales and marketing standpoint helping compress the sales cycle and learning curve. An alternative to this would be staging by specialty – i.e., focus on one specialty before moving to another.
Lead with the doctors. As Google Health’s failure demonstrated, leading with the consumer and expecting them to pull in physicians isn’t likely to be successful. ZocDoc focused first on getting doctors on board to have a critical mass of available appointments. While they have done consumer marketing, my impression is that doctors are now encouraging their patients to schedule appointments this way creating a virtuous cycle. If a doctor (or any business) tells you the preferred way to interact with them, most consumers will do it. In contrast, most doctors wouldn’t heed a patient or two telling them to use some new tool.
Technology-enabled services appeal to healthcare. Doctors, for the most part, don’t care about the technology. I doubt they think about the underlying architecture of ZocDoc’s solution. Rather, they care about the outcome ZocDoc provides – filling empty appointment slots. For many of their customers, they are the #1 source of new patients. WhiteGlove Health is another startup providing a technology-enabled service having success — their IPO is this week. Technology as an enabler, rather than as the centerpiece, matters more the smaller the target customer as a general rule.