OKRs: Fad or a Foundation?

John Doerr, a renowned venture capitalist at Kleiner Perkins, gained insights to the concept of OKRs early in his career from Andy Gove at Intel in the 1970s. After John left Intel and later joined Kleiner Perkins, he utilized the 30 slides that Andy had built to introduce the OKR concept to his portfolio companies.  

The concept of OKRs is relatively simple in design and powerful in its impact.  The Objective is what we want to have accomplished. The Key Results are how we going to get it done. The objectives are typically longer lived. They’re bold and aspirational. The key results are aggressive, but always measurable, time-bound, and limited in number.

One of Doerr’s portfolio companies was Google and the founders quickly implemented the management tool with great success. Eric Schmidt in this book “How Google Works” claimed that the introduction of OKR’s in 1999 “changed the course of the company forever.”

There are only three to five objectives for the organization. For each objective, there are three to five key results. The discipline of the system is determining what are the most important things for the business.  Each employee should then create their own OKRs tied to the same “True North” objective for the company. The system also should be transparent to the entire organization. Even today, Google employees can look online at any of the OKRs for each employee in the organization.

We believe that OKRs can be implemented with great success from small startups to large organizations.  John Doerr has recently written a book “Measure What Matters” which should be a must read for startup CEOs.  In the book, John identifies the five key benefits of the OKR system.

  1. Focus –formalizes the most critical objectives for the organization.
  2. Alignment – the entire organization is aligned around common objectives
  3. Commitment – transparency creates accountability
  4. Tracking – measuring progress is critical
  5. Stretching – set 10x’s goals, if you shoot for Mars and fall short you make it to the moon!

The above spells out FACTS which makes it easy to remember.

During the December annual planning summit for AngelMD, we went through a process of determining the OKRs for our company. The objectives centered around membership growth, member online engagement, and growing assets under management. Each team created a series of key results that aligned to these true north objectives. In the next month, we will bring up an online platform for making the OKRs transparent across the organization.

We believe so strongly in the power of OKRs that we will begin encouraging our own startups to use the system. We believe that the best ingredient to a great idea is great execution. In our view, this is not a fad but rather the foundation to a successful startup.

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Building Your Brand: What’s in a Name?

At AngelMD, we see a bevy of new startups each month. As part of the AngelMD network, you see many of them, but some startup profiles never reach approval. Often times, that’s because someone wants to create a profile for an idea rather than a company. Part of building a company is choosing a name and then starting to build a brand. For many aspiring founders, these starting points become stumbling blocks.

Over the next few months, we will discuss what goes into building a brand. Our first stop? Choosing a name. While the brand isn’t the company name, the company name is certainly part of the brand. But the entirety of the brand goes far beyond just the name. Your brand is a purposeful mosaic of the name, your logo, imagery, color schemes, positioning, your voice, the language that you use, and ultimately the promise that you’re making.

Naming a company can be the most frustrating part of a forming your new venture. The trademark and URL search almost always uncover that your first choice of company name is not available.  Although time consuming, it is important to get this right. Changing you name downstream can get very expensive.

So how do you decide what to name your company? Here are some points to consider:

  • The name describes your business.  We selected AngelMD because we thought it best described our business.
  • The name should not be limiting as your company grows.  Including the name of your city in your company name will not travel well to a nationwide launch.
  • Don’t name the company after yourself.  Sure, it might have worked for Henry Ford, but that is certainly the exception and not the rule.  
  • Avoid names that are hard to pronounce or spell.  A good start is to test the name out on your mom, spouse, sibling or children.
  • Limit yourself to 3 syllables.  The longer the name, the less likely that it will be memorable or readily shared.
  • Secure the trademark and URL. It is cheaper to start your search with a domain registrar rather than your local trademark lawyer.

While all of these points are easy to put into words, they’re more challenging to set into action. Don’t let that be a sticking point that keeps you from moving forward with your company. To point out an example of good branding, look at AngelMD portfolio company VICIS. VICIS has done a masterful job of integrating their brand into all facets of their company. They are a great example of a startup simultaneously building their brand while they perfected their product and go to market.

If you are a startup and made poor branding choices, you are not alone and it’s not too late to correct your course. Here are some well-known companies and the early mistakes that they made choosing a name:

As you look at the above list, it is hard to believe that these companies would have achieved the same level of success without undergoing a name change. That said, changing the name of a company is a delicate process and should not be taken lightly.  

Another challenge that startups have is that their product “brand” supersedes the company brand.  A great example of this in healthcare IT is QSI whose portfolio product NextGen was better known than the corporate brand of QSI. Ultimately, QSI rebranded the company NextGen rather that absorbing the cost of building two brands. Ideally, you want to bundle the corporate name into your branding choices. Allscripts is a HCIT company that did not fall into the same trap as QSI/NextGen. Their leading portfolio product names were Allscripts Touchworks and Allscripts Professional.  

Naming your company, and building the associated brand, is not about your ego. It’s about building a foundation for your future success.

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What is Impact Investing?

There is a definite buzz around the term “impact investing”, and it’s only gotten louder over the past few years. The idea behind impact investing is that, as investors, we should put our money into projects that we believe have a net positive impact in the world around us. The idea itself isn’t new, but it has certainly gained traction.

One prominent example of impact investing emerged in 2016. The Rise Fund was started at an exclusive gathering held at Richard Branson’s Necker Island. The event was hosted by Jeff Skill, eBay’s first employee. The conference held a simple agenda — to define big ideas to save the world. The Rise Fund was one such idea. The premise behind The Rise Fund is that it would invest profitably, but would only do so while having positive social and environmental impact. Two years later, parent company TPG is looking to raise $3 billion for its second Rise Fund.

It is a generally-accepted idea that, in impact investing, the expectation of financial return is relaxed in order to allow for investments that have greater impact. That said, at AngelMD, we believe that you can still have a significant impact without having to sacrifice alpha. In fact, we branded our annual meeting for physicians and investors as The Alpha Conference for that very reason.

While we understand that newer investors may be focusing less on impact than returns, we’d like to challenge that way of thinking. For example, look at this list of problems:

  • Inoperable brain cancers
  • Scoliosis impacting young children
  • DNA-specific medical treatments
  • Global vaccine delivery
  • Concussions in sports and in combat
  • Drug delivery for the ears and eyes
  • Oxygenation monitoring in preterm neonates

It doesn’t take a stretch to say that these are impactful solutions to big problems. But what do they all have in common? They’ve all been sourced and funded by AngelMD.

One lingering problem with impact investing is that it will reach into investment classes for which there is very little data. AngelMD is matching the leading startups in the world with physicians and investors to help de-risk these ventures and accelerate their path to market.

The market for healthcare innovation is highly fragmented, and lacks the structure required to optimize for speed. Innovators often find themselves spending too much time and energy chasing capital instead of developing and commercializing their products. By getting the right physicians and advisors involved early in the process, AngelMD helps to accelerate progress, avoid roadblocks, and thus maximize investment returns.

Our goal at AngelMD is to provide better returns for investors. But ultimately this requires that we provide better economics, results, and a better quality of life for patients.

There are painfully few areas in life where you can have your cake and eat it too. We have taken great care to provide a way for investors to not only have an impact, but also realize returns that any investor would be happy to see.

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The Roadmap to an Exit

There are, generally speaking, two types of startups in the world — those that want to build the next hundred-year company and those that are building with the intent to find an exit. There are arguments for both cases, but more often than not the former ends up switching over to the latter. There could be any number of reasons why the change occurs. It’s not uncommon, however, for the weight of repaying Angel and VC funding to rank near the top of the list.

With that fact in mind, one of our strong recommendations at AngelMD is that startups form an early roadmap toward an exit. We aren’t alone in this strategy. Renowned investment banker, Angel investor, and author Basil Peters shares the sentiment:

“I would suggest that the exit strategy is simply the play for the business, the entire business, and like all good plans it should start at the end with the goal. Every company should have a clearly articulated, regularly reviewed exit strategy.”

There are several steps to plotting out your company’s roadmap to an exit. In each of these, bear in mind that your answers today may not look like your answers six months or even six weeks from now. As Basil recommends, the plan strategy should be regularly-reviewed and that will mean changes. We would go a step further to say that one of your reviewers should be someone outside of your organization, who might offer viewpoints that you would have missed yourself.

Find Your Targets – You should identify the category and names of potential acquirers for your company. This needs to be specific.

Use The Data – There is a wealth of publicly-available data that can help you understand the acquisition strategies of the companies that you have identified. Document how your company aligns with those strategies.

Show Momentum – Your product, your achievements, and even your roadmap should all show activity within your company. This momentum needs to be clear not only to the market, but also to investors and potential acquiring companies.

Build Fans – Whenever possible, try to target employees of your acquisition targets who can implement your product. This helps to make your company a “household” name, and in some cases can give you guidance on what real users will need your product to do for them.

Find the Leaders – This goes along with the previous point, but expands it a bit. Develop a relationship with the business unit leaders at the potential acquiring organizations. In many cases, you will build these relationships while getting your product into use at the company, but other times it will be important to build rapport above the front-line employee who uses your product.

Gather Advisors – Building an advisory board of physicians that have professional and personal relationships within the industry can offer incredible insight. For extra credit, find advisors that hold roles within the companies that might acquire yours.

Share Your Findings – Publish outcome studies that show the efficacy of your solution. Send these studies to contacts at the potential acquiring organizations, and ask for their feedback or insight.

Gather Investors – While this is more for later-stage rounds, it’s still something that should go into your roadmap. Have your investment banker solicit the potential acquiring organizations for participation in your rounds. Not only does this give the company a vested interest in your success, but it could lead to a greater interest in acquiring your company as well.

While there is no tried-and-true method for getting your company acquired, it’s safe to say that chance favors the prepared. By starting your exit plan early, and building the resources that will help gather interest in your company, you are paving a pathway toward success.

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AngelMD’s Q4 2018 Healthcare Funding Report

Each quarter, AngelMD produces a report that details what’s been happening in the world of private healthcare investment. This Q4 report, rounding out 2018, comes from our individual evaluation of over 500 SEC Form D filings. We have eliminated filings that were not directly involved with healthcare, filings from large, public companies, and those related to private equity buyouts.

The State of Healthcare Funding

As is typical, Q4 saw fewer overall deals than the rest of the year. That said, the total size of all deals grew by nearly $400 million. The median deal size more than doubled from Q1, to $3.77 million. AngelMD analysts believe that, given the market conditions, 2019 is sizing up to be a formidable year for healthcare investment.

A New Challenger

It’s not uncommon to see oncology, bio-pharma, or genomics take the lead for the amount of money raised each quarter. But Q4 brought about quite the surprise. Dermatology and plastics, with a combined total of $563 million, was the sub-specialty with the largest total raise.

Notably, oncology is still the second largest raise in the bio-pharma category, with a total of $547 million. As we delve deeper into CRISPR and other genome areas, we’re also seeing significant numbers from from genome editing, cell therapy, and medical genetics.

AngelMD’s 2018 Story

AngelMD members continued to show strong interest in a wide variety of investments through 2918. As you might expect, California and Texas had the largest number of raises, which coordinates to the number of AngelMD members in those states. Interestingly, neurology was the speciality with the largest amount of money raised in the year.

We look forward to even more investment activity in 2019, and helping to shape the future of healthcare. The full Q4 investment report is available to all members, who are following AngelMD, through their activity feed.

Not a member? Join AngelMD today.

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