In 1999, I left consulting to try my hand as the COO of an electronic health records company out of Dallas called Patient Technologies, Inc (PTI). BTW - I know the name sucks, this was still the 90s and no one knew what to name business software other than TLAs (Three Letter Acronyms).
Anyhow, we had a pretty kick ass mission. We were going to be the first to market with a web based electronic health record specifically for nursing homes. Nursing homes in 1999 were like most businesses in 1970. They were swimming in paper, phone calls, faxes and UNIX based accounting systems. The poor nurses were the coordinator of all care for the patients and spent most of their day coordinating with doctors, labs, pharmacies, hospitals, and families.
EVERYTHING about nursing home processes was ugly. The homes smelled bad and were dark scary places. The residents were miserable and over-medicated. The doctors hated their work. We had this vision of changing all that that through information technology.
It is hard to remember what 1999 was like now. Back then, the World Wide Web was about 5-6 years old and everyone got online with 56kb/s modems. They made this noise that still haunts my dreams....
Web sites were SLOW and static. Business applications on the web were just starting to become a thing. Blackberry had just released their little email device to replace pagers. It looked like this:
Nursing homes talked to all their providers over fax machines. Faxes are based on technology developed in the mid 1800's and have not materially changed.
Nurses would literally line up at the fax waiting on prescriptions, lab reports, and discharge summaries. Nurses were amazingly astute in the arts of fax machine repair and I personally witnessed a nurse swap out a thermal role on the fly without the machine even pausing. This gave me hope that they were technically ready to log into a web application and join the 20th century.
NOPE!
We had this amazing vision to tie together all of the communications revolving around the care of a patient by leveraging the centralized power of the web. We planned to integrate blackberries, pagers, fax machines, scanners, printers, web servers, browsers, laptops and wireless networks to drag nursing homes into the electronic age.
We toiled like the good little dot commers we were. My buddy Pete joined me as our chief architect and we stayed up until midnight all the time sipping beer and coffee and hammering out volumes of code.
Of course our main investor had a private plane (a 1985 Fairchild Merlin) that he took Pete and I on for demos to potential customers. This is the plane we almost died in at least three times:
It was not uncommon for us to setup a server and network in the plane so we could code up what we thought the prospect would want to see at the demo. Remember that this was 1999 and 10 mb/s ethernet was a big deal. To have a whole network and rack server on a turboprop flying to Ft. Smith Arkansas was fucking amazing.
We would tell our tale of how we were going to fix the nursing home industry to the skeptical nursing home experts. We would remove all the phone calls, faxes, delays, errors, documentation, and bad care. We were going to make nursing homes leverage technology to give patients and nurses a better life.
Prospects would become enamored. We would have smart corporate nurses joining us in the dream and executives were already doing the mental math of the marketing value of their ancient homes becoming modernized.
We told them about this utopian future and they told us what we wanted to hear: "We are in." "This is amazing." "What took you so long." "When can I get it?"
So, after we had sufficiently convinced ourselves that we would become dot com multi-millionares, we got back to work, doubled our efforts and staffed up.
We even did an overnight trip to Southern California to buy a hard drive from a guy that was running from the law for nursing home fraud. The hard drive had a key piece of missing code that we needed to have a viable feature set. We were literally up all night in Culver City. One team hashed out the legal work as the fugitive transferred the asset to his girlfriend and then to us. The other team feverishly walked through the code to make sure it was complete and would meet our needs. By 4AM, we handed over a briefcase full of cash and they handed us a 250MB hard drive. Then we got back on the flying server room and integrated the new code into our system on the flight back to Dallas.
At this point, we were really drinking the Kool Aid.
It smelled like a dead cat rolled into a pee soaked rug and drug through a pit of bat guano. And the residents looked like this:
For months we had to live there. We had rooms in this place. We ate their food. We listened to their cries for help at 2AM. IT WAS MADNESS. Especially after what we had previously been through. We went from flying on executive planes and wining and dining corporate VPs to living in the worst conditions people live in the US.
WHY?
Just because a nurse can use a fax machine does not qualify her to run a centralized web based patient care hub. The cold hard facts were that they just could not use it. Even though we did tests with our parents and friends, these nurses we not ready. Most of them had never even used a computer much less gotten on the internet.
I felt like a turn of the century developer of internal combustion engine cars trying to convince a horse drawn coach builder that there is no longer a need for poop catchers. If you don't know what a poop catcher is, I'll save you the google search:
They just could not understand how this whole thing could possibly work, so we had to be there all the time to basically do it for them. We would type in what they needed. We would scan the documents. We would print the med sheets. We would do everything. They liked the system because three humans came with it. They just refused to learn how to use it themselves.
It was then that I learned how hard it can be to compete with PAPER. Paper is wireless, the batteries don't die, you can fold it, tear it, write anything on it, mail it, fax it, burn it and file it. It is so flexible. Software systems are structured and rigid. This was when I started my career long hatred of the pulp and paper industry!
Well... We kept at it. Eventually, we got used to the smell, got decent at playing hearts, and heard a lot of WWII stories. Also, we worked our way into some nicer and more advanced homes and after a while, we had four homes kind of using the system with limited success. In fact, one home was using it with their doctors, pharmacy and labs. They were drinking the Kool Aid with us. And it gave us just enough encouragement to keep going and keep spending our investor's money. We never stopped to ask ourselves why after a year of hard labor we had only four nursing homes and one paying customer. We had a vision and DAMMIT, we were going to change the world.
Then the dot com bubble burst. Then 9/11. Then we sold to a holding company and got tied up in a 2 year contract.
Then we got THE CALL. This is the point I have been building up to. The period that led to the biggest mistake of my career.
THE CALL was from the largest nursing home chain... The Holy Grail. They heard about us at a conference and wanted to learn more. Once again, Pete and I found ourselves in the Merlin flying to Toledo to make the pitch we had been making for three years now. And it seemed like they got it. They understood the vision and said that they wanted us to become the standard. We just needed to add a few additional features and we would get the business. So I got a rental in Toledo and camped out there for a few months working feverishly with their staff to nail down the functionality. And we delivered. We were down to contracts and implementation planning. It was finally all coming together.
One cold Monday morning, I flew out to Toledo for the signing event and when I arrived, I was met by my main customer contact. I had been through hell with this guy and we were pretty tight at this point. I could tell immediately something was wrong. It was like that moment when you are on what you think is a date and the girl breaks up with you before you even get appetizers... Very Awkward.
We were still in the lobby. My heart and my jaw were on the floor. I was devastated. How in the world could they have been dating someone else this whole time? Who were these other guys? Did they have the "VISION".
Well, it turns out that they did not have the "VISION". This little startup from Canada had just taken the warmed over functionality from the last generation of client server applications and moved them to the web. It was ugly, clunky and CHEAP. It was 1/5 our price.
1/5
Even though it was only 10AM, my customer buddy and I found a bar and started with irish coffees and quickly moved to shots and long island iced teas. I was in total denial all day. I knew there must have just been a stupid mistake. The lawyers must have messed things up. NOPE. It was us. It was our bull headed ideas about changing the world. About jumping ahead. About build it and they would come.
But instead, they bought the basic system from Canada that did just what they needed and nothing more. And it did it for 1/5 our price.
It was many years later before I fully came to terms with what had happened. My ego wanted to believe that we were right and everyone else was wrong. It turns out that we were right to a degree. We were right that the nursing home industry needed a connectivity solution like our software. We were just 15 years too early. Today, this is exactly what the industry wants. But today, everyone is used to using technology to connect over facebook, email, instagram, etc.. In fact everyone expects software to connect everything now. In 1999, no one got it. At All.
If I knew then, what I know now, we would have met the industry where it was. We would have done what those jerks from Canada did and built a low cost basic system on the web. Then we would have incrementally added capabilities toward a 2015 "VISION". That strategy would have won and I would be a rich executive at a nursing home software company today.
I think about how much discipline it must have taken Jeff Bezos to only sell books in the early days. He had the "BIG VISION" from the beginning to take on Walmart. But he was patient. He did not push beyond what the customer was ready for. He built the basics, he did it cheap and he won.
Netflix did the same thing. All along, they had the vision to stream, but broadband was not there in 2000. So they met the market where it was and shipped DVDs. Blockbuster did not see it as a real threat. In the mean time, Netflix got their streaming client in every device possible and as soon and broadband made the last mile, they won. Almost overnight.
Uber is doing this right now. Their real mission is to own the transportation space by buying up all the self driving cars. At that point, we will be in a sharing economy and car ownership will be 10X the cost per ride of a self driving Uber trip. No one will own cars anymore. Uber is just meeting the market where they are right now by having people offer rides with their own cars. That whole thing goes away once self driving is here. The auto industry gets clobbered overnight. Also, trucking, transportation construction, and even public transportation all will take major hits way before anyone has time to react.
We toiled like the good little dot commers we were. My buddy Pete joined me as our chief architect and we stayed up until midnight all the time sipping beer and coffee and hammering out volumes of code.
Of course our main investor had a private plane (a 1985 Fairchild Merlin) that he took Pete and I on for demos to potential customers. This is the plane we almost died in at least three times:
It was not uncommon for us to setup a server and network in the plane so we could code up what we thought the prospect would want to see at the demo. Remember that this was 1999 and 10 mb/s ethernet was a big deal. To have a whole network and rack server on a turboprop flying to Ft. Smith Arkansas was fucking amazing.
We would tell our tale of how we were going to fix the nursing home industry to the skeptical nursing home experts. We would remove all the phone calls, faxes, delays, errors, documentation, and bad care. We were going to make nursing homes leverage technology to give patients and nurses a better life.
Prospects would become enamored. We would have smart corporate nurses joining us in the dream and executives were already doing the mental math of the marketing value of their ancient homes becoming modernized.
We told them about this utopian future and they told us what we wanted to hear: "We are in." "This is amazing." "What took you so long." "When can I get it?"
So, after we had sufficiently convinced ourselves that we would become dot com multi-millionares, we got back to work, doubled our efforts and staffed up.
We even did an overnight trip to Southern California to buy a hard drive from a guy that was running from the law for nursing home fraud. The hard drive had a key piece of missing code that we needed to have a viable feature set. We were literally up all night in Culver City. One team hashed out the legal work as the fugitive transferred the asset to his girlfriend and then to us. The other team feverishly walked through the code to make sure it was complete and would meet our needs. By 4AM, we handed over a briefcase full of cash and they handed us a 250MB hard drive. Then we got back on the flying server room and integrated the new code into our system on the flight back to Dallas.
At this point, we were really drinking the Kool Aid.
Over the next few months, we got our hosting co-lo set up with some home built servers and went live in our first nursing home. IT WAS A DISASTER.
The nursing home was an old 40 bed cinder block shack. It looked kind of like this:
For months we had to live there. We had rooms in this place. We ate their food. We listened to their cries for help at 2AM. IT WAS MADNESS. Especially after what we had previously been through. We went from flying on executive planes and wining and dining corporate VPs to living in the worst conditions people live in the US.
WHY?
Just because a nurse can use a fax machine does not qualify her to run a centralized web based patient care hub. The cold hard facts were that they just could not use it. Even though we did tests with our parents and friends, these nurses we not ready. Most of them had never even used a computer much less gotten on the internet.
I felt like a turn of the century developer of internal combustion engine cars trying to convince a horse drawn coach builder that there is no longer a need for poop catchers. If you don't know what a poop catcher is, I'll save you the google search:
They just could not understand how this whole thing could possibly work, so we had to be there all the time to basically do it for them. We would type in what they needed. We would scan the documents. We would print the med sheets. We would do everything. They liked the system because three humans came with it. They just refused to learn how to use it themselves.
It was then that I learned how hard it can be to compete with PAPER. Paper is wireless, the batteries don't die, you can fold it, tear it, write anything on it, mail it, fax it, burn it and file it. It is so flexible. Software systems are structured and rigid. This was when I started my career long hatred of the pulp and paper industry!
Well... We kept at it. Eventually, we got used to the smell, got decent at playing hearts, and heard a lot of WWII stories. Also, we worked our way into some nicer and more advanced homes and after a while, we had four homes kind of using the system with limited success. In fact, one home was using it with their doctors, pharmacy and labs. They were drinking the Kool Aid with us. And it gave us just enough encouragement to keep going and keep spending our investor's money. We never stopped to ask ourselves why after a year of hard labor we had only four nursing homes and one paying customer. We had a vision and DAMMIT, we were going to change the world.
Then the dot com bubble burst. Then 9/11. Then we sold to a holding company and got tied up in a 2 year contract.
Then we got THE CALL. This is the point I have been building up to. The period that led to the biggest mistake of my career.
THE CALL was from the largest nursing home chain... The Holy Grail. They heard about us at a conference and wanted to learn more. Once again, Pete and I found ourselves in the Merlin flying to Toledo to make the pitch we had been making for three years now. And it seemed like they got it. They understood the vision and said that they wanted us to become the standard. We just needed to add a few additional features and we would get the business. So I got a rental in Toledo and camped out there for a few months working feverishly with their staff to nail down the functionality. And we delivered. We were down to contracts and implementation planning. It was finally all coming together.
One cold Monday morning, I flew out to Toledo for the signing event and when I arrived, I was met by my main customer contact. I had been through hell with this guy and we were pretty tight at this point. I could tell immediately something was wrong. It was like that moment when you are on what you think is a date and the girl breaks up with you before you even get appetizers... Very Awkward.
We were still in the lobby. My heart and my jaw were on the floor. I was devastated. How in the world could they have been dating someone else this whole time? Who were these other guys? Did they have the "VISION".
Well, it turns out that they did not have the "VISION". This little startup from Canada had just taken the warmed over functionality from the last generation of client server applications and moved them to the web. It was ugly, clunky and CHEAP. It was 1/5 our price.
1/5
Even though it was only 10AM, my customer buddy and I found a bar and started with irish coffees and quickly moved to shots and long island iced teas. I was in total denial all day. I knew there must have just been a stupid mistake. The lawyers must have messed things up. NOPE. It was us. It was our bull headed ideas about changing the world. About jumping ahead. About build it and they would come.
But instead, they bought the basic system from Canada that did just what they needed and nothing more. And it did it for 1/5 our price.
It was many years later before I fully came to terms with what had happened. My ego wanted to believe that we were right and everyone else was wrong. It turns out that we were right to a degree. We were right that the nursing home industry needed a connectivity solution like our software. We were just 15 years too early. Today, this is exactly what the industry wants. But today, everyone is used to using technology to connect over facebook, email, instagram, etc.. In fact everyone expects software to connect everything now. In 1999, no one got it. At All.
If I knew then, what I know now, we would have met the industry where it was. We would have done what those jerks from Canada did and built a low cost basic system on the web. Then we would have incrementally added capabilities toward a 2015 "VISION". That strategy would have won and I would be a rich executive at a nursing home software company today.
I think about how much discipline it must have taken Jeff Bezos to only sell books in the early days. He had the "BIG VISION" from the beginning to take on Walmart. But he was patient. He did not push beyond what the customer was ready for. He built the basics, he did it cheap and he won.
Netflix did the same thing. All along, they had the vision to stream, but broadband was not there in 2000. So they met the market where it was and shipped DVDs. Blockbuster did not see it as a real threat. In the mean time, Netflix got their streaming client in every device possible and as soon and broadband made the last mile, they won. Almost overnight.
Uber is doing this right now. Their real mission is to own the transportation space by buying up all the self driving cars. At that point, we will be in a sharing economy and car ownership will be 10X the cost per ride of a self driving Uber trip. No one will own cars anymore. Uber is just meeting the market where they are right now by having people offer rides with their own cars. That whole thing goes away once self driving is here. The auto industry gets clobbered overnight. Also, trucking, transportation construction, and even public transportation all will take major hits way before anyone has time to react.
TL;DR: Meet the market where it is today and be cheap.
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