I killed my startup hours before closing a seed round

http://www.tamccann.com/how-i-killed-my-idea-hours-before-closing-a-seed-round

by rmason • 11 years ago

89 37 11 years ago

jdp23• 11 years ago

It must have been a tough decision. But, far better to pull the plug than commit himself (and investors) to something that he really wasn't confident would work. To me this is the key line: "as the days marched forward ... the negatives mounted and my confidence decreased." The trend was in the wrong direction.

And, kudos to him for sharing it!

pavornyoh• 11 years ago

This shows great character thus being honest and knowing taking money isn't ideal at that stage.

itake• 11 years ago

yeah, that could be true. But starting a company is a huge risk for him as well. He felt like this idea wasn't something he was willing to put his time for yet and backed out of the arrangement.

Mz4• 11 years ago

I looked at the three competitors he listed in his letter and this describes his idea in a nutshell:

The goal was to make a mobile app that worked something like; install, find your doctor, take a photo of your drivers license, “sign” on the phone (to validate identity) and then magically (after a few days time) you have copies of all your past health records, accessible on your phone. Obviously, we had many ideas of what you could do next (visualize your health history, find correlations and causation, compare with norms, share with others, enhance with other data…) but we wanted to make it fast, easy and free to get your records. After a few months, we had this working (with lots of issues) and it was really cool!

I am having trouble understanding why medical records are apparently central to his vision. Why? I mean, if you are frustrated with how medicine currently works, why not do something "non medical" as a real alternative?

mfoy_2• 11 years ago

Nothing in his original vision seems off to me, of course I can see why people would be wary to share that with his service, though. (As he listed in the reasons for killing the project)

do something "non medical" as a real alternative

What do you mean? Are you talking about alternative medicine?

Mz4• 11 years ago

I worked in insurance for over 5 years. Medical records are regulated by HIPAA. Being HIPAA compliant is a pain and most people don't understand medicalese.

But there are metrics you can track that can be medically significant and it doesn't require you to deal with doctor's offices or official medical records.

Why not offer a means to track diet, blood glucose readings for diabetics, and other metrics of that sort? It addresses the domains he was targeting -- people with chronic illness or "optimizers" trying to improve their sports performance -- without getting into dealing directly with official medical records, HIPAA compliance, etc.

Animats• 11 years ago

It's a hard problem. Huge efforts are going into getting medical records into some machine-usable form without making medical care worse or overloading doctors. That alone is hard. Doing it across multiple providers is very hard. The business plan seemed to be "do cool app", and then magically the huge back-end problem somehow gets solved.

Jim Clark, the founder of SGI, tried to do this in 1995, with Healtheon.[1] After several failures but a successful IPO (dot-com boom) which raised $40 million, the business pivoted into medical billing, and is now Emdeon, which does about half the commercial medical/insurance billing in the US.

So bailing out at the seed round was a good idea.

[1] https://en.wikipedia.org/wiki/Healtheon

marktangotango• 11 years ago

Fantastic info, thanks for sharing. Great example of a pivot.

fencepost• 11 years ago

Without doing some research I'm not sure that this could ever have worked anyway. Unless things have changed a lot in the last couple of years, medical practices are allowed to and generally do charge a non-trivial copying fee for providing records to patients; these fees have legally set base cost and per-page caps that I believe are updated yearly.

I'm sure some of this has changed as offices shifted to EMR (Electronic Medical Records) systems, but many offices don't scan the entire existing chart into a new system - just the key parts relevant to current care (e.g. labs from the last 6-12 months, etc.). The full chart is still in a tagged manila folder on a shelf or in a box depending on the office.

I've not regularly seen practices charge for sending records to other medical practices or for providing limited information to the patient directly (e.g. copies of labs), but that's usually not for an entire chart it's for items that can reasonably be faxed. Where I have seen practices charge it's when they also have a regularly scheduled outside service that comes in to scan entire charts that have been requested and for some specialties (e.g. neurology) those charts can easily be 500-1000 pages. I suspect that if a patient wants an entire chart transferred to a new practice that the old one will require that they request and pay for the copy, then it's the patient's job to get it to the new folks.

Changing systems can also be a problem; I know of one specialty practice that has a firewalled-off 2003 server with their old EMR on it because when they migrated to a new system only demographics and some other basic information could be automatically imported. When previous patients schedule appointments, they go into the old system and export all the relevant records to PDFs, then import those into the patient's chart in the new system.

Given the still-widespread need to either scan a bunch of paper, retrieve records from multiple systems, and pay for printing or burning to a CD I see no reasonable way for a company to offer that service free or even inexpensively.

Update: here's a nice resource on per-state costs: http://www.lamblawoffice.com/medical-records-copying-charges...

In Illinois, for example, it can legally cost you a minimum of $25 even for a single page, though as I noted most offices don't seem to have a problem with not charging for small numbers of pages.

Mz4• 11 years ago

Yeah, requesting records was a thing I did at my old job. I was allowed to pay fees up to a certain limit without it going to approval. Above a certain amount, my boss needed to approve the expense. We were an entirely electronic records based system. I think I reviewed a paper claim once in the 5+ years I was there. I had to get instructions on how to do that because I still needed to handle it via our computer system in order to be able to cut a check.

So even with almost everything being faxed, digitized, etc. there were still fees to pay when requesting records. And I have reviewed claims that had hundreds of pages. It wasn't the norm, but if someone was in a serious accident that was followed by hospitalization and multiple surgeries, that did sometimes come across my desk.

So, I agree with you. Requesting records is actually something of a pain, even with standardized letters and procedures developed by a large company with years of experience. And, no, it is generally not free.

jrochkind1• 11 years ago

Personal Health Records are a nightmare, the whole system doesn't make a lot of sense and is solving the wrong problems in the wrong ways in the first place (and legally mandated to do so). I think he's totally right that he just dodged a bullet.

philsnow• 11 years ago

Personal Health Records are a nightmare, the whole system doesn't make a lot of sense and is solving the wrong problems in the wrong ways in the first place (and legally mandated to do so).

s/Personal Health Records are/Health Insurance in the US is/ and I still agree

rokhayakebe3• 11 years ago

solving the wrong problems in the wrong ways

Can you please elaborate?

pcurve• 11 years ago

On the surface, comprehensive, coordinated, and centralized PMR sounds like an appealing notion. It plays into the idea of Big Data to produce better healthcare outcome, and also empowering consumers to make informed decisions.

Much of the frustration stemming from lack of PMR is rooted in the the way our de-centralized and privatized healthcare function. This isn't something you fix through better technology; it's something you have to fix through legislation. Our healthcare problem is mainly a legislative one.

Some are tackling PMR because it appears to a contributing cause of poor healthcare, when in fact is a symptom.

7Figures2Commas2• 11 years ago

Kudos to the author for doing the right thing. But his post highlights just how frothy the market is and just how much weight founder resume and social proof are being given in seed rounds today.

justinkramp• 11 years ago

I got a 500 response and a HostGator error page. I thought you were making a point about making sure your website is up or at least not running campy error messages with a cartoon alligator.

_vn5r• 11 years ago

Seems to be going down, so: http://webcache.googleusercontent.com/search?q=cache:iV6Xc7-...

ubasu• 11 years ago

I made my first offer to a full-time employee, who could add necessary medical expertise to the team. She chose us over an existing offer and gave notice to her current employer.

What happened to this employee? Just curious...

MisterBastahrd• 11 years ago

I'd like to know this too. The blog reads like someone patting himself on the back for pulling back from taking money from wealthy investors, while hiring someone who had a job and another offer then pulling the rug out from underneath them.

elcct• 11 years ago

Probably it was saddest 30 minutes of her life o.O

jonas21• 11 years ago

Also, what happened to his team of "night-time hackers" who actually built the MVP. Did they have any say in the decision to shut down or were they just cast aside?

adamloving• 11 years ago

I was one of them. We had many spirited discussions. TA was completely transparent about what was going on and we tried hard to find an angle to make it work. I look forward to future hacking with the others.

drumdance• 11 years ago

Whoa, I had a similar experience about 15 years ago. It wasn't hours before closing but it was looking like a go. And it also was with Brad Feld.

ajhit406• 11 years ago

Entrepreneurship is more about conviction, determination, and will than ideas and market opportunities.

To me, this letter is basically saying you're just not up for the challenge. That's fine -- it's certainly better to admit it now, and it's likely a rational decision.

But the best companies usually aren't created by rational thinkers. The best entrepreneurs can take a horribly broken system and contort it in ways that nobody else even thought of, and then execute on a vision to make it the new reality.

You're not telling your investors "this market is too tough, let's not go here", you're basically just saying "This market really needs to be un-fucked, but I'm not the guy to do it".

Nothing wrong with that, let's tell it how it is.

alexdevkar• 11 years ago

I believe your generalizations go too far. The "crazy" founder who succeeds despite all odds is only one archetype. There are others. Many outliers are successful by creating new markets.

This guy (T.A. McCann) has successfully built and sold a startup, so he doesn't lack the will -- he just lacks the will for this business.

Markets can be so tough that the time/cash/energy to succeed in them means the opportunity is not as attractive as others.

rokhayakebe3• 11 years ago

Actually entrepreneurship is ALL about market opportunities and ideas. All you do is maximize all the odds and leverage everything you have for a win. Winning is all that matters, and winning as big as you can.

Now if you want to take on a big challenge, change the world, and build something magical, you can and you should. However none of these are required, and each of these is more likely to be a problem.

awakeasleep• 11 years ago

You have to put it into perspective. There are job creators, and there are takers.

rev_bird• 11 years ago

Doesn't sound like the author was too keen on creating those jobs, eh?

dang• 11 years ago

We detached this subthread from https://news.ycombinator.com/item?id=10441543 and marked it off-topic.

wbillingsley• 11 years ago

I might just be being contrarian, but it sounds a little as if it's the investors that dodged a bullet.

As I understand it, there's plenty of ups and downs in a new venture, especially e-Health where you're somewhat at the whim of government (most countries' health systems are highly government regulated) and there are already plenty of past-failures, even one by Google. But surely the investors would already have been aware of that, and had decided to take a risk, because e-Health is also inevitably going to be a very big market eventually (just who knows when the ducks will finally start to line up), and if they want to play in that space they have to try.

But it seems this entrepreneur had last-minute cold feet at even the thought of the hurdles they will encounter.

It's that question -- whether this team has enough perseverance to stand a chance in that stormy sea -- that seems to have been answered at the last minute. The investors already knew the chances would be low.

7Figures2Commas2• 11 years ago

The investors dodged a bullet not because this founder lacked the mental fortitude to face challenges but because he did their due diligence for them and was honest enough to pull out of the financing once he discovered his concept was likely not viable.

The market for seed-stage investments is very frothy today. Lots of investors are spraying and praying, and as a result often lack domain expertise in the areas in which they're investing. Founder pedigree and social proof weigh heavily in what seed stage investors consider "due diligence."

logicallee• 11 years ago

This blog post doesn't add up for me, but I can't put my finger on it.

rajacombinator• 11 years ago

The real gem hidden in this article is the way he approached structuring the round.

ajmurmann• 11 years ago

Totally agree. Is there any other good writing on this topic. Most of what I find is usually about how to pitch, but there is typically very little about how to select investors.

I killed my startup hours before closing a seed round

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