One of the main challenges digital health startups face today is finding a scalable business model. Typically, your success in scaling a tech startup in healthcare depends on your ability to leverage large network effects. How did it go for Noona? What was your experience?
Jani: Noona’s initial business model was selling licenses to cancer centers. At the time this model seemed appropriate, since so many companies liked it – as did investors. We also thought it would be good for our customers. Soon however, we came to realize that a typical hospital’s IT budget was very limited, as many hospital had recently invested heavily in new EHRs (electronic health records).
In the fall of 2017 Noona’s commercial strategy was renewed under the supervision of our new Chairman, Emmanuel Blin. We identified a growing mega-trend in cancer care — real-world evidence, where pharma companies increasingly invest. This means tracking patients’ well-being, symptoms and coping in a “real-life setting”, without having to sign up for heavy clinical trials. Cancer centers (and patients) are still the key users of Noona, but pharma companies that use Noona’s data to analyze the effect and tolerability of their treatments are the ones to pay. With hindsight, it is easy to say that a license based model would have made scaling the business very difficult in these early phases of our journey.
When we invest in digital health startups, we look for people with a solid understanding of the ecosystem – market dynamics, existing players, public and private reimbursement schemes, and hospital IT budgets. Being based out of the Nordics, how did you go around getting insights from other markets (Europe, US etc.)?
Jani: The best way is to travel a lot and meet with local experts. Market research and industry reports provide you with a good baseline understanding, but the only way to gain an in-depth understanding is to be out in the field – meeting the people, who have hands-on experience of digital health. For Noona, the most important sparring partners are pharma managers, government officials, and directors of local cancer clinics. An easy way to get acquainted is through leading seminars, such as Health 2.0 or HIMMS.
How much value would you assign to scientific research & clinical validation when looking at a startup?
Jani: Very much indeed, especially if customers are hospitals or pharma companies. A well planned and executed research coupled with well-known scientists is extremely valuable for a young company trying to make a name for itself. Noona conducted its first study together with Helsinki University Hospital. In 2016, we started a research cooperation with Stanford medicine, which has been a door opener for us.
The challenge with scientific research is the duration, which is not always compatible with the time horizon of a small start-up. A combination of scientific ambition and pragmatism is key – a small sample quickly-executed study might be more valuable than the “Sagrada Familia”.
I also believe that every company that is bound for success will find paying customers before the results are published. Noona’s first paying customers were persuaded based on our user engagement that showed how much patients valued the service.
Your product is one of the best in the market. What was your approach to designing it?
Jani: Superior user experience has been our competitive advantage from the start. Cancer patients and nurses have always been part of the product development at every phase of the process. They spend as much time at our offices as we do at the clinics. We measure user activity and satisfaction daily and keep track of development ideas in our design sprints.
Sometimes it can be difficult to know if the collected patient feedback concerns the product itself or the service provided by the healthcare personnel. A great user experience is naturally a result of both the activity of the cancer clinic and our technology. As cancer diagnosis is always a shock and treatments that follow can be exhaustive, we hope to help our clients deliver on the promise of great care. In addition to product development co-operation, we actively share the best practices in digital patient navigation.
How do you go around building the winning team?
Jani: First, by hiring entrepreneurial-minded people with a genuine passion towards what we do. Second, by trusting people’s judgement and by giving them freedom to act.
Looking back at your journey so far, what would you have done differently?
Jani: Holding a tight focus and saying “no” even to good ideas and calls for co-operation. A small company cannot succeed without discipline. This specifically applies to go-to-market strategy and customer segmentation. Early on, we were too opportunistic – running after every commercial opportunity. We should have been clearer in defining our market and once we had done that, we should have stayed put.
What have been the most difficult periods of your entrepreneurial journey so far?
Jani: By far the most challenging task was to get our first customers in the US without references, while the bank accounts of both our company and myself were emptying out at an alarming pace.
What kept you going through the worst times?
Jani: I have been fortunate to get a good network of personal advisors that have since became good friends. They have been patient at handing me advice in the toughest of times – when desperation was close. One of them is George Sledge, who is a professor at Stanford Medicine. We dine together every time I visit Palo Alto. Our conversations have always helped me find solutions to situations that have first seemed insurmountable.
What are the questions you would ask from a potential investor? (or should have asked in the past)
Jani: A start-up working with digital health needs an investor that understands the healthcare market and its dynamics. In addition, the investor needs to have a network that she is willing to reach out to, because money alone is not enough. My first questions are always: “Do you have the know-how, experience and networks that can help us succeed? How would you want to be involved?”
What’s the best advice you’ve ever received?
Jani: On a flight from LA to Helsinki, I met an American philosopher, and we found ourselves in a conversation about accepting failure. I vividly remember his advice: ”The key is to learn to accept failure the minute you face it. Learn from it, but don’t dwell in it. The faster you become at dealing with failure, the happier you become.”
If you’d like to reach out to Jani, do so at email@example.com or on Twitter @ahonala.