Meetups to Startups:

Hashed Health’s Evolution to a Healthcare Venture Studio

At Hashed Health, our mission has always been to produce solutions that solve the most challenging problems in healthcare. We believe that the most impactful solutions over the next ten years are those that promote collaboration and shared value, which is why we have a specific focus on blockchain and distributed ledger technologies.

As the first pure-play healthcare blockchain company, we have had quite a journey – from supporting a nascent market and advising the industry, to building and deploying production-level technology across networks of enterprise organizations. Having discovered the low-hanging design patterns and technical models, we now see that healthcare enterprises are ready to adopt.

That journey now includes a pandemic that has influenced the topology of our markets, the behaviors of our customers, and the urgency of our solutions. At this moment, forces of change are felt everywhere in healthcare. All the big trends (the shift to value, the unbundling of hospitals, the untethering of insurance, consumer empowerment, automation, interoperability, transparency, the introduction of rational markets) have accelerated, creating a unique moment for new solutions.

Thus, our entire focus and all of our historic business assets are now aligned around company creation. We “radically collaborate” with the industry and with entrepreneurs to build new companies that solve the biggest challenges faced by our industry. This is the story of that evolution.

The Unfolding of Hashed Health

When we founded Hashed Health in 2016, the world looked much different from the perspective of a new company focused on introducing blockchain and distributed ledger technologies to healthcare. Bitcoin was the headline at that time, but the Ethereum community was demonstrating where the technology was headed. At blockchain meetups and conferences around the world, Hashed and other early adopters would meet to discuss a basic understanding of how blockchains could be applied to trust and transparency issues in healthcare. But there was no market in healthcare at the time. There were no networks coming together to solve shared problems. Business models were not understood. The idea of selling a product, much less spinning off a new company, was unrealistic. In those early days, it was really more about education, collaboration, and developing the early community, such as assisting in the founding of the Hyperledger Healthcare Working Group.

In those early days, revenue came through strategic consulting services. Early engagements with healthcare enterprise organizations were primarily aimed at education and ideation. In the summer of 2017, our services work was growing and we were learning more and more about use cases of interest across the enterprise landscape. The market was developing rapidly. As the market matured, some of the conversations began to get more technical and more product-focused. We began talking about the networks and business models that might be enabled by these experiments.

These early engagements were critical, as they allowed us to innovate collaboratively on a variety of protocols (in 2017 and 2018 we experimented with six protocols) and we started to get a sense of which tools could be optimized for healthcare use cases. These experiments also enabled us to develop relationships with many of the top brands in our industry. Many of our early experiments failed but others, after some iterating on the product and the business model, showed commercial promise.

Very early on, we identified issues associated with healthcare provider data to be important problems needing an industry-wide solution.  In early 2017, we created an early version of a provider directory solution on Hyperledger Fabric v.06. This experiment led to a project with the State of Illinois on interstate medical licensure reciprocity (different business model, different protocol, different network).  In late 2017, we began a collaboration with Anthony Begando, a seasoned entrepreneur and thought-leader in the provider data space. With Anthony, we focused on the creation of a market level solution for the sharing of verified credentials data. With input from the industry at every phase, we assessed the market, designed a minimum viable product and minimum viable network, built a prototype solution, and recruited the network.  Once we obtained sufficient validation, we formed a new company, Professional Credentials Exchange. 

In early 2020, we completed a successful financing which was led by the network that the organization was spun out as a separate, fully autonomous organization. Now Professional Credentials Exchange has a network of 25 brand name companies and strong momentum. More importantly, it has brought innovation to a hair-on-fire problem in healthcare (provider identity).

Through these experiences, we developed a strong conviction that by bringing top resources and market to the beginning of the product development lifecycle, we could build companies with better talent, more efficient use of resources, and very tight product-market fit. We are now replicating our model across a new series of startups that that will redefine the industry.

The Venture Studio Model

The original and most well-known Venture Studio was Idealab, which has 35 IPOs and acquisitions since 1996. Since then, there have been several waves of venture studios that have delivered an impressive list of exits including Yelp, Dollar Shave Club, Girlboss, Change.org, Medium, and a number of other strong IPOs and exits.

The demonstrated success of the model is driving a proliferation of studios around the world. According to research by Alper Celen, founder of Enhance Ventures, the venture studio movement is accelerating globally with over 430 venture studios launched. Major firms such as BCG, EY, Deloitte, Mars, and P&G have all built or acquired studios. Well known investors such as Peter Thiel, Marc Andreesen, David Sacks, Greycroft Partners, NEA, Sequoia, Softbank, and Greylock have all invested in this new asset class.[1]

The Global Startups Studio Network (GSSN), a thought-leading network of startup studios around the world, has been tracking the proliferation of studio models. Their research indicates that the number of studios will triple by 2023.[2]

Why?  Because venture studios increase the chances of startup success.

Startup success is a very real problem in healthcare, where 98% of digital health startups fail[i]. This is not a new trend. Across all industries, long-term startup failure rates have not improved over the last 20 years in spite of the availability of lean startup bootcamps, accelerators, and other tools for entrepreneurs.[1]

Venture Studios bring new solutions to the table that attempt to address product-market fit, business model challenges, customer requirements understanding, and other common problems of why startups fail. And the goal is to address these issues as early as possible in the process using external validation. Studios use a defined process for developing a hypothesis and then intentionally validating product-market fit. By the time a company launches it has a proven product, a proven business model, customers, and investors. The process helps protect against the common problem of falling in love with your own ideas.

By bringing market and resources to the front of the process, venture studios improve startup success and de-risk what is otherwise the extremely risky business of launching healthcare startups.

Hashed Health’s Venture Studio Process

Hashed Health’s process is one that we’ve been developing and fine-tuning since early in our history. We’ve always been in the business of collaborating with enterprises on shared ideas. Most of the experiments we were involved in for the first several years of the company failed technical, business or network validation. In the early days, it was often a technical failure, often having to do with privacy and confidentiality which are obviously important when we are dealing with sensitive data in healthcare. As the technology matured, we graduated to experimenting with new business models and convening networks of companies who are excited to create shared value together. The experience we gained as the market matured allowed us to advance the mental model we use to validate use cases, and allowed us to recognize design patterns that are indicative of where product-market fit might be found. The network of healthcare enterprises, life sciences companies, technology vendors, and entrepreneurs we have worked with over the years now serves as validators, investors, advisors and recruiters for our startup efforts.

Why Venture Studios Are Important Now

The venture studio model is hitting its stride at a critical moment. The next few years will be an unprecedented time for company creation in healthcare. The pandemic has highlighted longstanding challenges in our healthcare system while acting as a catalyst for disruption and adoption.

There is significant work to be done. While the acceleration is unlocking opportunities to advance important new solutions for identity, payments, supply chain, transparency, and consumer empowerment; it is important to recognize that much of this innovation is dependent on industry-wide collaboration, an approach for which today’s infrastructure is not optimized.

The legacy healthcare world rests atop infrastructure that was not designed to enable trust, transparency, and incentive alignment across networks of counterparties and market participants.  Needs and behaviors are certainly changing, but our existing design is a limiting factor for change. Examples of this are all around us. There is a growing thirst for telehealth but we are still married to the traditional, manual credentialing process that takes months to complete.  There’s a growing need for value-based payments, but our data and payment rails are still segregated which makes it hard to break our addiction to rebates and retrospective reconciliation. The “center of gravity” of data is shifting towards the consumer, but unless we protect privacy and create consumer value we will never fully recognize the promise of consumer-generated datasets.

We are seeing the end of the “every CFO for him/herself” era. The nature of these big foundational challenges indicates that they can’t be solved alone. The next generation of supply chain solutions, for example, requires industry collaboration. It’s not about one provider or one manufacturer… it’s about a network of corporates coming together to solve big issues that they’ve been unable to solve alone. It’s about shifting to a new type of collective purpose that you see in initiatives such as the US Business Roundtable’s Statement on the Purpose of Corporation, the World Economic Forum’s Davos Manifesto 2020, and the Shared Value Initiative’s Purpose Playbook.

Venture Studios collaborate with enterprises and seasoned executive co-founders who “share purpose” and work together to validate the technical, business, and network governance models that are critical to success. In doing so, the Venture Studio model of collaboration helps corporates and teams move quickly to produce outperforming companies in these critical areas during this unprecedented time.

We believe we have an incredible opportunity to empower the health of individuals and communities through innovation. Healthcare’s current design struggles with trust, transparency, and aligned incentives. The new technologies at our disposal are purpose-built for collaboration and shared value creation. Our Venture Studio model thrives on the principles of shared value in healthcare. We have entered a new innovation window that represents a unique moment for company creation. Our community was born for this moment.