Costing a leg

Day 54: Thursday

Morning, Tim!

Silly Josephine…

Tim as you well know I work in healthcare. Thinking about healthcare as a business feels kind of grimy at times — you are making money off of those who desperately need help, many times in order to live. That said, having worked with a lot of Catholic hospital systems, the usual saying goes “No margin no mission”. In order to operate, in order to help all of those people, they need to have the financial backing to do so. They certainly have a lot of write-offs each year, essentially donating care back to communities; but it’s no news that in the U.S., healthcare is expensive, and many people are paying all they can afford in medical bills.

I’m not sure how I’m supposed to think about making money off of others’ misfortune. In one hand, I’m helping them extend life; in the other, the cost of that extension is often a poor quality of life, constantly fretting about bills and work.

I recently came across some articles about financially backing legal cases. I asked a friend of mine with a law degree to explain in a bit more detail, but the gist is that there are many wrongs done to people – e.g. abuse, discrimination, etc. – done by a corporation that has quite a bit of money. If the individual were to sue, there are legal ways for the corporation to spend those dollars quickly prolonging and “drowning” the individual, making it effectively impossible to sue in many cases. There are some lawyers who will work on a contingency basis, not getting paid until the individual does — but they typically have caps far smaller than would be necessary to take on a corporation.

The linked article discusses financially backing some of these cases. Now I certainly don’t have enough money to bankroll anyone’s legal case, but the idea still intrigues me. If real harm was done, shouldn’t there be some recompense paid? The same problem we saw above begins to arise, though – in order to operate like this, the financial backer would need some form of compensation, thus taking a portion of what would go to the individual. There’s this feeling of doing good while simultaneously lessening the good done.

I’m not sure there’s any way around it within healthcare. Hopefully make it cheaper to deliver care, I suppose. It’s just unfortunate that there’s a cost to doing good.

Until tomorrow,

Zak

Defend your base (Drawing challenge; business models)

Day 33: Tuesday

Morning, Tim!

Thank  you for the beautiful imagery yesterday. I could be referencing either your poem, the star across Milan, or perhaps (and here’s the frontrunner…)

The choir members are hilarious.  They’re all adults, some of them quite elderly, but they act like little children […] This meant that yesterday, instead of just chatting during mass, they also told each other to be quiet in between conversations.

This is perfectly like children. It’s kind of a beautiful thing.

Tim have you ever ridden a Segway? I’m going to ride this one to now discuss business models…

So working with early stage companies I come across a variety of ways businesses provide value, ranging from “outsource the humans to other humans” to providing new datasets (e.g. by monitoring something previously not monitored [patients/staff/supplies/etc.]) to making existing datasets useful (e.g. predictive analytics; visual dashboards), among many, many others. It’s a great chance to think about where there are gaps in the market — where there are meaningful problems that there are no real solution for. It has also provided an interesting case study on business models.

Walking through some history, you had mom and pop stores selling things locally — groceries, shovels, bicycles, flowers. Enter Walmart, who truly displaced many of these locally owned stores and sold the same goods. So how did they succeed? They had more shelf space then anybody else, and became a one stop shop — the stores were much larger than what they were displacing and each sold “everything”, at least in that seemingly at that period in time. Having the convenience of going to one store for your cereal, orange juice, and kid’s Christmas present was only part of the story, though. Because Walmart had such scale, they were able to negotiate with suppliers to lower prices; not only could you get Cheerio’s and a rocking horse, but you could do so cheaper than you would be able to anywhere else. That’s part of why Amazon is so interesting current day – by putting your inventory online, you have effectively infinite shelf-space; and by having  (free) Prime 2-day (or 1-day/same-day/2-hour depending on location) delivery, you also begin to chip away at the immediacy constraints of traditional retail. Among many other reasons, it’s why Amazon has an interesting business model.

So that’s the kind of business model stuff that’s going through my head (except a lot more detailed and nerdy) when I’m at work talking with these companies. Take yesterday for example. Doctors are highly trained, and thus are “expensive” labor in total dollars. Wanting to keep tabs on patients and visits, when Doctors take notes about visits they are effectively acting as highly trained, very expensive scribes. To help alleviate this problem, there was dictation software — you could speak faster than you could write, and so notes could be gathered quickly. Alternatively, if you put an actual medical scribe in the room, you could have notes taken in real-time, saving the doctors time entirely but now paying another person. The business model continues to move forward — if you put the scribe remotely and simply have an audio and/or visual stream coming to them they could do some from a call center; you could put that call center in a labor market where it is cheaper and also gain the efficiencies in staffing to obviate the down-town it would take an in-person scribe to e.g. switch rooms. Finally, the direction that is exciting, is in the automation of the scribing all-together. To add color, this would be technology that takes the audio and/or visual stream, parses the audio, and then algorithmically places the necessary snippets of information into the relevant fields within the system. What is really exciting about this model is the lack of marginal cost (put too simply: the cost to serve the next customer). Because it is software (outside the very small tech investment to capture the audio stream), no human is being hired to do scribing, and so you no longer scale linearly with costs and revenues, but instead have a high fixed cost up front (to get the algorithm right and have servers to process the necessary information) and then distribute it over every new customer you have.

whew. That was a really large text wall. I doubt anyone has read this far, but I’m going to include a picture and a game as a reward if anyone has.

So Tim here’s how the game works:

  1.  I’m going to draw a base (See below).
  2. You then draw a base. Then draw something to attack my base.
  3. I then draw something to defend my base, and attack your base.
  4. You then draw something to defend your base, and attack my base.
  5. Repeat steps 3 & 4 (as reasonable)

Rules:

  1. There are no rules (I kid. I just like it how it sounds intense when people say this…)
  2. Be creative

Zak’s Base

sketches-copy-7

Until tomorrow,

Zak

p.s. the title of this post was supposed to somehow capture the fun nature of the game and also the very dry nature of my post about business models. I’m imagining someone shouting “Defend our base!” in each case…and in the case of someone shouting it in business in reference to protecting, for example, their customer base, that person would be…annoying.

Blessed, with Responsibility

Day 30: Friday

Morning, Tim!

Depending on how you count it, we’ve been at it for a month! I figured I’d count it this way so that I could note it before you did (though you could have made a claim regarding “But February only has…” A missed opportunity…).

[…] Close our eyes and imagine somewhere we would like to be if we could be anywhere in the world.  When we opened our eyes he asked if the place anyone had imagined was room 312 YC high school.  I was the only one who raised their hand.  Maybe I was over thinking things, but if I really wanted to be somewhere else, wouldn’t I just get up and leave?

Decisions are a challenging thing. To be fair to your 14 year old classmates, I wonder if they really did have the power to go where they’d like. Perhaps some thought “man, I’d love to be at tacobell!” (depending on the hour of your class, perhaps Starbucks…). But others probably imagined the word Italy (it’s probably hard to imaging if you haven’t gone) or somewhere foreign – and where was a 14 year old to get the means to travel to Italy? Even getting up and leaving wouldn’t get them there. And so of course they sat in class, for that’s what they were told to do, many with the hope that life would be a long conditional. “If I do this [e.g. sit in school like I’m told], I’ll get to do that [e.g. go on vacation where I’d like, or perhaps even live there depending on my willingness to dream…]”

Or you could be an odd boy, realizing this train of thought, and….suggested that this was the place you wanted to be. I was that boy too…

Leaving your work would be an administrative decision that you make about the infrastructure of your life.  We don’t make those kind of decisions on a daily basis.

You don’t state it explicitly, but your discussion of decisions, infrastructure life decisions in particular, seems to lean toward an inability in at least some cases to truly make these changes. There are people who can make them (e.g. Jim Koch founded Sam Adams brewery after being fed up with consulting – but it was precisely because he was a management consultant that he was in a position to quit). In cases such as these, he describes them as scary but not dangerous; not dangerous because the other option was dangerous – looking back at 65 and wondering why he spent his whole life doing management consulting when that’s not what he wanted to do. I can appreciate this line of thought – I have been blessed with opportunities; while I work hard, I also know I’m lucky to be in the position I am.

In other cases, though, it is dangerous to make those infrastructure changes. For a single mom with three kids, there isn’t much room for adventure in the job market, nor to simply “get up and leave” because the consequences mount so high – hungry kids, an unpaid mortgage, utility bills mounting. Or, much worse, someone in a war-torn country who can’t leave because they literally can’t. They have nowhere to take refuge, no country to take them in.

Obviously you know all of this; I’m merely reflecting on decisions, infrastructure choices in particular. Reflecting on the choices I deliberate over…

I feel blessed to be able to even have the options I have in my choices. I also wonder what responsibility comes along with those options…

Until Monday,

Zak

p.s. I hope you chose to join the choir. Also if you do, I’ll anticipate a good picture of you doing some handshaking…

First and best, for 100 years

Day 28: Wednesday

Morning, Tim!

I work with a lot of entrepreneurs. Most of the companies I interact with have been around for less than 5 years, many for only 1, and each are in ongoing development mode. They are passionate about the work they do and, being in healthcare, oftentimes have a personal story about why they do the work they do. It is wonderful work – entrepreneurs have said they want to make a difference, that the current way of doing things wasn’t good enough on it’s own, and that they want to contribute to making it better.

In thinking about what makes at least some of these companies successful as they scale, I’ve been primed to look at Amazon first, and recently received another example in Patagonia that is similar, yet with some key differences. I recognize the immediate thought may (should) be “But Zak…those aren’t startups”. Correct. But they are both led by entrepreneurs who have control and who have established what success looks like for their companies.

Taking Amazon first, Bezos saw Amazon wasn’t great at working internally when one team needed access to what another team was working on. Perhaps the means of getting there are a bit unsettling, but Bezos mandated that teams had to create interfaces to connect with one another, and that all communication must be through these interfaces. For context, Bezos was taking away any shortcuts – it was more work to create these interfaces (particularly backwards, in many cases). When your vision is to be around after 100 years, though, you build it right – no need for shortcuts, you build it to last and to scale. By forcing teams to create this infrastructure to support Amazon.com, they had also built it for the rest of the world – AWS allows for Amazon to build tech infrastructure that others would use, and they know others will use it because they use it. They are their first and best customer (and…it’s nice when your best customer is the largest online retail giant). Amazon has also done this with their distribution infrastructure, figuring out how to fulfill 2-day delivery all across the US. By building it to meet their own needs, they can just as easily meet others (because they intimately know the needs and challenges faced).

Turning to Patagonia, Yvon Chouinard founded the company because he didn’t like the equipment available to him for climbing. Wanting better gear, he made it – realizing others would want it, he made more and sold it. He did the same for clothing, finding that he couldn’t find elsewhere the clothes he himself would want to wear. The jackets not built to last, nor built for quickly changing weather. The shirts were too bland, the shorts not sturdy. As he created, he also brought on others who, like him, did the activities he wanted to create a company to support. Who better to know what the surfer needs than the guy who, rather than be in his job, mostly just wants to surf all day. While not a clean comparison (Patagonia employees aren’t themselves a best customer in the way that Amazon.com is for AWS, not supporting with nearly the same size/scale) and I’m over-simplifying, but the end-result is similar – Yvon created a company that values doing it “right”, as if they were going to be there in a 100 years, and made products that they themselves wanted in order that they might better do their passions/jobs.

I’m not sure what this looks like for healthcare. In advising health systems, it looks like first and foremost creating a system that the individuals themselves would want to go to. Perhaps that means there is more personalization – whether genomics or simply knowing I prefer Zak to Zakary when I come in. Perhaps it’s a focus on making things safer – perhaps by reducing unnecessary variation in supplies so people can become better experts, perhaps by enforcing hand-washing. Perhaps it’s building a workplace that supports its employees – a workplace that clinicians want to go to, even though the work they do every day is physically and emotionally taxing. I’m not exactly sure how to put this into practice for entrepreneurs within healthcare, but it’s something I think about. Perhaps making medical records more accessible, or innovating within chronic disease or mental health is relevant.

Anyway – I like the idea of creating things that will last, not because of “legacy” but because it’s inspiring to act in a way that is rewarding – to “do it right” and feel satisfied in the work done because it wasn’t for short-term gain or one that took shortcuts. It’s admirable to put in the work, having the discipline to do it right – even more so when empowering others to do that work in their daily lives with you.

Until tomorrow,

Zak

Thily Fin Information

Day 1: Monday

Good morning Zak,

As you know, today marks the beginning of our new blogging project.  We needed to start as soon as possible before we both came to our senses.  Beginning today, you and I will be posting our personal correspondences to Thily Fin on alternating week days: I post today, Wednesday, and Friday, you post Tuesday and Thursday this week, etc.

Under your advisement, I have taken it upon myself to write our first entry.  This is obviously a very easy task, since all I have to do is write the worst entry I can so that expectations will be as low as possible.  That’s why the opening of every great piece of literature is always the least memorable part:

“Midway through the journey of our lives, I found myself in a dark woods, for the right way had been lost…

“When Gregor Samsa woke up one morning from unsettling dreams, he found himself changed into a monstrous vermin…

“In the beginning God created the heavens and the earth…

You can only go uphill from there, Zak.

It’s easy to feel self-conscious about “creative” writing.  I think that’s because it’s something no one really expects of you.  Like, Zak, you wouldn’t feel self-conscious about turning in a financial report to your boss. (I assume that’s the kind of thing you do when you have a real job.)  That’s because every part of that report would be meeting very clear expectations, and whatever you included would either be right or wrong.  But if somehow that report form had an extra blank box in which you were supposed to enter the “thily fin information,” you might be a little bit anxious.

I’m guessing it would show up right before “total liabilities expected for the coming fiscal year.”  Maybe you would decide to draw a picture.  Maybe you’d write a story about an internally conflicted cashew.  Whatever you decided to do, you probably would wish that your boss had been a little more specific about what he was looking for.

The thily fin box, though, is probably one of the more memorable blank little boxes that could show up on a financial reporting form.

Until tomorrow,

Tim