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Interview with Ryan Tarzy about Digital Health

Ryan Tarzy received his B.A. in Economics and Applied Mathematics from Northwestern University. Early in his career, he realized that his talents involved combining the role of an entrepreneur with that of an advisor. Since then, Ryan has been passionately working on moving healthcare forward and has founded or led several digital health startups. In 2003, he co-founded MediKeeper, one of the earliest digital health startups. He later served as CEO of Personal Health Labs, a lab focused on R&D in areas such as health gaming and interoperability.  He now serves as Director of the Incubation Studio at CoverMyMeds. Prior to CoverMyMeds, he served as Co-Founder of Playful Bee and SVP of Business Development for PokitDok. He has recently begun to angel invest in digital health startups.


1) Many have attributed the impressive evolution and expansion of digital health to a move towards human-centered design, suggesting that a lot of previous health technology was engineered in a such a way that user experience was an afterthought. In your opinion, to be a success in digital health is user experience more important than utility? And why?

I think it is absolutely accurate that in the past, user-centered design has arguably been an afterthought. However, as we evolve into this next wave of digital health beyond Health 2.0, I think it is unfortunately still true that neither utility nor user-centered design is the most important factor of success. I would say at this point, success relies primarily on a solid business model. You can have fantastic user-centered design, you can have some utility, but if you have not figured out the way you’re going to get reimbursed, the way you’re going to get paid, or have a compelling value proposition for the direct consumer, then you are still going to struggle to be successful in digital health.

That said, I do believe user-centered design is driving some really exciting things coming out of the new wave of companies in digital health. I’m really encouraged by that, and I hope that it continues. I think that it does become a differentiating factor when you compare multiple companies, all of which have the reimbursement model and/or revenue model figured out.

2) As an investor in digital health startups, what do you look for in early stage companies trying to make it in health tech? And, what is a common flaw of new entrants that you feel could be easily avoided?

First and foremost, I look at the founders. Founders, to me, are the No. 1 determinant for success. I look for founders that, if they haven’t done this before, have deep domain expertise. They have dealt with the business problem before, they understand it, and they’re now trying to solve it through their own company.

I also look for founders that have a combination of passion and hustle that makes me confident that they’re going to be able to get past the inevitable roadblocks and hiccups that are going to take place when you’re trying to tackle an industry like health care. Those are the top two things I look for.

Lastly, I look for companies that I feel like I can provide an unfair advantage (while advising them). I want to feel like I can bring a lot more to the table than just monetary value as an investor.

In terms of things that I think are common mistakes … ultimately the sales cycles in health care are just really long. What I see is most new entrants will come in vastly underestimating the sale cycle and struggle. When you have these long sales cycles, what kills you is waiting on those maybes. You really have to aggressively develop process to manage the pipeline and be able to move beyond that first LOI, or unpaid pilot, and get yourself more quickly to a proven revenue model — a robust pipeline that is bringing in recurring revenue.

Another common mistake is a great idea, with a lack of domain expertise. It sounds self-serving as a healthcare investor with deep domain expertise to say this, but it is always good to have someone with healthcare expertise as an investor and/or advisor in the group. You need an advisor with specific knowledge in the area that you’re trying to tackle.

For example, a lot of people lump life science investors in with health IT and digital health investors — these are completely different businesses. One is dealing with long development cycles and a completely different type of regulation. The other is more about reimbursement cycles and enterprise sales and understanding the intricate players in the space. They are just different animals. You need someone, depending on which area you’re tackling, with that specific type of healthcare domain expertise. Very few can do both.

3) In 2014, Robert Szczerba wrote an interesting article: If Google Health Failed, Why Will Your Health Portal Company Succeed? We still have not seen a true runaway success in this area. What will it take to finally get there?

This is very personal to me because the first company I co-founded was one of the early personal health record companies. My co-founders and I built the company on the premise that there is this need, this obvious need, for a more central place for individuals to manage their health information. Back then we called it personal health records (PHRs), now you might call it a health portal. It just still feels like something that should exist but, I agree, at this point there has not been a huge success in this space yet.

What’s really interesting about this is there’s information leaking out that both Google and Apple are now attacking this space with new technologies. The ubiquity of smartphones, or even now through smartwatches, might potentially be a new opportunity for this to take hold.

I’ve always believed that the ideal health information exchange is the “HIE of One,” where the individual is the conduit of their own health information. The panacea of interoperability to create a universal portal, whether it’s Google Health or Microsoft HealthVault, is the wrong way to think about it. We need the ability for an individual to easily be able to take control of their health information and have control of the back and forth. Then, consume their data in whatever portal they want. I hope this is where things are going and I’m excited to see Apple coming into the market and Google seemingly retrying to attack this market. I’m really intrigued to see what they come up with.

4) What is your take on the longevity of today’s wearables? There are numerous articles with click-bait titles indicating the smartphone is dead within five years. One could argue that might be the same fate for most wearables today. Where do you see the puck heading for wearables?

I feel like five years is too aggressive to say the smartphone will die, but I may be wrong. I think that I’m much more pessimistic about the future of wearables as they exist today. We are seeing the early stages of these devices; they have passionate followers; they literally have millions of users out there. If you believe that wearables are going to become a more ubiquitous thing — I will say today’s wearables will likely be starkly different five years from now. Looks at Apple’s AirPods, those will change the smartphone and are technically a wearable. Wearables will evolve in ways we cannot predict.

It comes down to, what do you define as a wearable? Staying with the AirPods example, this is a sign that we’ll be utilizing voice for data entry … speech will be integrated into our car, which is integrated into our watch and into our AirPods. And really, the cloud becomes more and more the world we live in versus having our nose in our smartphone.

So although I am pessimistic that devices like the Fitbit will have legs five years from now, I am optimist about the future of computing being more integrated into all parts of our life in a, hopefully, more user-centric way without having to have our nose buried in our smartphone all the time. As voice gets more and more compelling, we will not need to physical interact with devices, limiting the need to “wear” anything.

5) In your opinion, what are two underrated and/or little-known companies right now in digital health that you believe are positioned to make a huge impact (in the future) and why?

1) LeapCure: This is a company that has really cracked the code on recruiting patients for clinical trials. It is fascinating to me that over 60 percent of clinical trials fail due to patient recruitment issues. That’s just staggering to me and just seems like such a big problem that we haven’t been able to crack.

This company has been able to use techniques that have been utilized in other non-health care markets to micro-target individuals — even for very rare diseases. One of their customers specifically specializes in rare diseases for children. So, truly the needle in the haystack kind of problem: how do you find the less than 20 patients in the country that would qualify for this clinic trial?

They are able to do that, and will likely make a huge impact. They are reducing the cost of patient recruitment and increasing the success rate of clinical trials. That could have a far-reaching impact on the industry. So, I’m really bullish on that and what they’re doing and excited to work with their team as an investor and board observer.

2) Paubox:  Sometimes seemingly boring companies on the surface are in the best position to make an impact. Paubox operates in the area of email and disaster recovery. Sounds incredibly boring for healthcare but, what they’ve done is, they have cracked the code of how to deliver HIPAA-secure email — and they do that in a way that is user-friendly. You can finally simply use your Gmail account as a doctor, and they’re able to make that HIPAA secure for communication with patients. All the friction created by email alerts that push you to a portal, only to hassle with additional passwords and clunky communication channels. Paubox solves all that. Finally, you can simply email your doctor … like you email the rest of the world.