In 2009, a Midwest healthcare startup was formed by seasoned entrepreneurs who knew virtually nothing about health care, other than that it had a Big Data opportunity. With spending in the U.S. approaching 18 percent of GDP, the need to leverage the massive untapped reservoirs of health care data to reduce unnecessary waste, identify better treatment paths and improve overall outcomes had reached a critical mass.
By 2015, that startup had grown to be the leader in Big Data healthcare intelligence — it had amassed the largest clinical data sets in the world, representing more than 50 million lives, and was being used by many of the nation’s largest, most prominent health systems and life sciences organizations. In April 2015, it was acquired by IBM as the first in the portfolio of its newly formed Watson Health division. That startup was Explorys.
If you have started and grown a company to compete on a national stage, you know it is often an all-out battle for funding, customers and talent to fuel the growth against better-funded competitors from the coasts. While capital remains critical for any startup, the ability to stretch that cash has everything to do with product development and sales efficiency.
Although our early team had strong technical experience in big data technology in other industries such as financial services and telecommunications, we had little experience with the nuances of health care policy, delivery, terminology and data, making our strategic partners critical for us from the very beginning. Explorys was formed as a spinout of Cleveland Clinic, and having a name brand as an equity partner not only gave us national credibility, it also provided us insight and access to experts that resulted in less trial and error as we developed our products. It also meant we could get to market in a fraction of the time that our well-funded, but less advised, competitors could. Lastly, the relationship also benefited Explorys’ strategic investors by providing a creative outlet for their teams, as well as a share in the proceeds when the company was acquired.
There has been much discussion about what is needed to spur economic development in the Midwest. Many claim that we need to focus on attracting talent and innovative companies to the region. While I remain optimistic, these efforts have yet to produce the desired jobs, income, wealth and next generation startup entrepreneurs.
This region is at its best when we innovate locally. It’s a fact that most startups and spinouts can operate much faster and more efficiently than large organizations. If this region’s anchor institutions and large corporations are serious about economic development, for themselves and their communities, they must partner with qualified entrepreneurs that can enable them to create, export and profit from locally developed innovation. Our path to meaningful, inclusive economic development is going to require that we shift our focus from buying technology from established “safe” companies outside of the region, to taking calculated risks to partner with the next batch of future hometown billion-dollar startups.
Charlie Lougheed is a co-founder and board member at The Unify Project, a nonprofit that is mapping the “socioeconomic genome,” including the factors that drive economic dislocation. He has also led innovation in FinTech at institutions including KeyBank, the former National City Bank and PNC. You can reach him at (888) 410-6444 or Charlie.firstname.lastname@example.org