One of the first questions a healthcare entrepreneur needs to answer is whether he is bringing a totally unique product or service to the marketplace (which often necessitates creating the market) or starting a well-understood business (which often necessitates competing against established competitors). It is an important trade-off.
Let’s start by defining four situations:
A unique product/service is a product that no other company is producing (or just a few of other companies do). Maybe no one else produces it because no one has identified the opportunity, because they don’t know how to do it, or (careful, here) simply because nobody really wants the product (i.e. a mobile phone able to monitor your heart rate)
A common product/service is something that the target customer is used to buying (i.e. a specific shunt system to treat hydrocephalus)
We say "established use" when we sell it to a market where it has an already identified use. People “know” the product will solve a particular problem.
We say “new use” when we sell it to a market or segment where it hasn't been traditionally used. The people who will buy it does not know really that the product has this intended use, and therefore needs to be educated.
The typical startup usually struggles between the choice of offering a really unique product to a market that has no idea how to use the product (yet) or offering some more common product facing a lot more competition. When I see an entrepreneur clearly positioned in one of the two “blue” quadrants, I feel comfortable with the project, and I know the start-up will need different resources to accomplish its goals depending on which one is in. One will need a focus on educating the market, while the other needs the company to be prepared for heavy competition.
Careful with the other two options, they may be disruptive and exciting, but certainly their path to success is much more complex. The other two quadrants are possible, but dangerous, at least in healthcare. It is indeed possible to sell a unique product to a market where those types of products have an established use. Some companies are able to sell something very common (let’s say “asthma inhalers”) and make it very unique selling it with a big surplus, as a luxury product, if the inhalers’ brand is for example Cartier. A common product becomes unique. It may sound funny, but you get what I mean here.
It is as well possible to have a common product with a new use, but again this is unlikely. Usually the users of any given product or service have figured out its best uses. Identifying a new use for an existing product generally doesn't yield venture returns to entrepreneurs. This is particularly true in healthcare because even if you discover a new use for an existing product, you can't protect that use and secure some form of IP on it--since you are using a common product to do it.
Let’s start by defining four situations:
A unique product/service is a product that no other company is producing (or just a few of other companies do). Maybe no one else produces it because no one has identified the opportunity, because they don’t know how to do it, or (careful, here) simply because nobody really wants the product (i.e. a mobile phone able to monitor your heart rate)
A common product/service is something that the target customer is used to buying (i.e. a specific shunt system to treat hydrocephalus)
We say "established use" when we sell it to a market where it has an already identified use. People “know” the product will solve a particular problem.
We say “new use” when we sell it to a market or segment where it hasn't been traditionally used. The people who will buy it does not know really that the product has this intended use, and therefore needs to be educated.
The typical startup usually struggles between the choice of offering a really unique product to a market that has no idea how to use the product (yet) or offering some more common product facing a lot more competition. When I see an entrepreneur clearly positioned in one of the two “blue” quadrants, I feel comfortable with the project, and I know the start-up will need different resources to accomplish its goals depending on which one is in. One will need a focus on educating the market, while the other needs the company to be prepared for heavy competition.
Careful with the other two options, they may be disruptive and exciting, but certainly their path to success is much more complex. The other two quadrants are possible, but dangerous, at least in healthcare. It is indeed possible to sell a unique product to a market where those types of products have an established use. Some companies are able to sell something very common (let’s say “asthma inhalers”) and make it very unique selling it with a big surplus, as a luxury product, if the inhalers’ brand is for example Cartier. A common product becomes unique. It may sound funny, but you get what I mean here.
It is as well possible to have a common product with a new use, but again this is unlikely. Usually the users of any given product or service have figured out its best uses. Identifying a new use for an existing product generally doesn't yield venture returns to entrepreneurs. This is particularly true in healthcare because even if you discover a new use for an existing product, you can't protect that use and secure some form of IP on it--since you are using a common product to do it.
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