Technology and Innovation. A complicated relationship?
1) The complex relationship between technology development and innovation. 2) 2024 Healthcare Trends. Insights by Anastasiya Markvarde. 3) A review of Creative Selection by Ken Kocienda.
Ciao,
This week marked the conclusion of my eight-year tenure as an adjunct professor at Roma Tre University. I chose not to extend my contract for another year, ending this chapter in my professional journey. This year, I recorded all my lectures and will post excerpts of the transcripts and the slides in the coming months.
The pre-Covid teaching years were particularly memorable. I had the pleasure of encountering numerous brilliant students, some of whom I developed friendships with. A few became my colleagues, and together with others, we ventured into startup initiatives. These experiences significantly enriched me on a personal level.
Although I'm stepping away from traditional teaching, I intend to continue mentoring in a different capacity. I like to help people move toward entrepreneurship, and I always try to persuade them to avoid becoming boring consultants. 😛
Table of Contents
Technology and Innovation. A complicated relationship?
2024 Healthcare Trends. Insights by Anastasiya Markvarde
Book. Ken Kocienda, Creative Selection
Technology and Innovation. A complicated relationship?
There are many definitions of innovation, although they are very similar, and most of them refer to Schumpeter’s work. Wikipedia, for instance, defines innovation as “the practical implementation of ideas that result in the introduction of new goods or services or improvement in offering goods or services.”
My definition of innovation is the following:
Innovation is the process of turning an idea or invention into a product or service that creates value and for which customers will exchange their money or data.
My definition emphasizes three aspects that are often underestimated and without which the word innovation ends up being synonymous with having ideas:
Innovation must be tangible. Innovation turns an idea or a technology into something tangible: a product or a service (I use the terms as synonyms).
There must be value. A crucial condition for successful innovation is creating value for a specific customer segment. Whether it's a group of 10 or 1 million people, the product or service should solve a problem or meet a need, making customers willing to pay for it.
There must be a payment. In today’s world, customers might pay for a product with money or their data (as seen in social media).
Innovation is closely linked to the development of technology, but it is a complicated relationship. For example, many companies often develop a fantastic technology but fail to develop a vision to turn it into an innovation. Many know the first computer with a GUI (graphical user interface) was not a Macintosh.
In 1972, Xerox developed the first computer with a graphical user interface (GUI) at their Palo Alto Research Center (PARC). This was a groundbreaking innovation in computing technology. However, Xerox underestimated its potential, predicting it could sell only about 10 to 12 units yearly due to its high cost.
Enter Steve Jobs, the co-founder of Apple. He visited Xerox PARC and immediately recognized the potential of the GUI technology. This visit inspired him to incorporate GUI into Apple’s products, leading to the creation of the Macintosh, launched in 1984. This was a significant leap from the existing computer interfaces of that time, such as those from IBM, which were text-based and not user-friendly for the general public.
The story of Xerox and Apple is one of the most famous examples of the fact that technology is only a starting point that opens up many opportunities.
In other situations, a technology is transformed into a product sufficient to meet the needs of a niche market but not yet mature enough to “cross the chasm.” For instance, Apple introduced Newton in 1993 as a personal digital assistant (PDA) with handwriting recognition.
The Newton was an amazing piece of technology for its time, but still too immature to produce real value beyond the niche of tech enthusiasts. It was necessary to create many other technologies to get to the iPhone. The most important were multi-touch screens, the virtual keyboard, and the App Store. These and other inventions combined enabled the smartphone era.
The smartphones we use today result from a vision that began to take shape in the 1990s and went through products such as the Palm Pilot and the Blackberry. It took twenty years to go from devices specializing in a few business tasks (managing email, contacts, and calendars) to a true personal platform for entertainment and productivity.
The history of innovation is full of extraordinary technologies that did not make it into successful products. For example, I like to mention Segway and Google Glass. (Can you think of any others? Write them down in the comments.)
At the same time, some innovations need decades to evolve and incorporate many different inventions and technologies. Just think of virtual reality viewers. I wore them for the first time in 1987. They offered a terrible experience: they were heavy, cumbersome, and had rudimentary graphics. They were objectively useless. It took decades and many other inventions to get to Apple Vision Pro. And it’s still unclear if all this technology will become another blockbuster for Apple.
I will buy it, but I belong to the early adopters who have already bought two generations of Oculus and countless other products that did not cross the chasm.
2024 Healthcare Trends. Insights by Anastasiya Markvarde
My friend Anastasiya Markvarde, Sr Innovation Manager at VITA Accelerator & Healthware Group, shares some exciting insights from the two recent healthcare reports, PitchBook 2024 Healthcare Outlook Report and HSBC Venture Healthcare Report, complemented by RockHealth 2023 digital health funding summary.
Both reports approach the healthcare market in 2023 from different perspectives: Pitchbook has more statistics on PE / global VC investments, IPOs, deals in biopharma, and some specific trends like AI or surgical robots, while HSBC Report (using Pitchbook data as one of the main sources) offers a more extensive investment and financial deep dive by category / therapeutic area. RockHealth has added its insider comments as the player tracking digital health as a category since 2011.
I was curious to look at all three as they offer an excellent picture of the year in health.
📖 Some insights from Pitchbook:
Healthcare will decrease as a share of PE and VC global deal count.
Healthcare’s reputation as an acyclical investment category has not held up in the current economic cycle, which is not a vote of no confidence but a reflection of the industry’s unique position in an economic cycle shaped by a global pandemic and its aftermath (the market stabilizing after the pandemic hype).
After reaching a peak of 18.4% in 2020—mainly driven by an unprecedented flow of capital into biopharma—healthcare has dropped to 16.5% of the global VC deal count in 2023, with even lower predictions for 2024.A higher number of digital health exits in 2024 is expected (13 listings in 2021, 5 in 2022, and 0 in 2023), even if IPOs fall short of projections. The aggregate valuation of digital health unicorns has been increasing to $95 billion.
However, the market environment will be challenging for the late-stage digital health market as the sector struggles with a small number of acquirers, limited investor demand for unprofitable IPOs, and headwinds from market conditions.Clinical validation outlook: Biopharma startups will require more robust clinical validation, such as successful completion of phase 2 trials, before pursuing IPOs, reflecting a shift from trends observed in 2021.
Generative AI will begin to disrupt care coordination & navigation as a labor-intensive industry opening to adding AI-based solutions to existing platforms.
💹 Some insights from HSBC:
A slightly more positive outlook on the healthcare market in general: it stabilized in 2023. The rate of new investments fell by 28%, but top 10% deals still secured rounds with step-up valuations.
However, since about 50% of financings in healthcare were add-on/insider rounds to help fund companies to new investor-revised milestone expectations, it may create a harsh fundraising environment for 2024.VC in healthcare saw a 28% decrease from 2022 and 53% from 2021, though the year’s pace is still consistent with 2H 2022.
Provider Operations (workflow and clinical support) led health-tech investment as a sector for the second consecutive year, shifting away from Alternative Care (Primary Care, Mental & Behavioral Health, Women’s Health, Specialty Care), which dominated in 2020 and 2021 - highlighting the ongoing significance of addressing the gaps in healthcare data, communication, and workflow.
Echoing the trends for later clinical-stage exits in the M&A landscape and a shift away from growth at all costs in health-tech investments means recalibration of the industry to focus on fundamentals.
RockHealth offers more data on somewhat less obvious trends to support the opinion that 2023 was not just a year of total collapse:
For example, though some startup shutdowns were likely unannounced, Rock Health data suggests that less than 5% of venture-backed US digital health companies (i.e., have raised >$2M) are no longer operating as of Dec 31st, 2023. This rate has held relatively steady over the past several years, remaining quite consistent with the proportion of all startups. However, in 2024, the startups are expected to be facing the choice between strong growth or shutting down, potentially resulting in a smaller cohort of stronger players, synergies through consolidated offerings, and a more successful IPO class.
Another notable trend is the rise of series extensions, unlabelled rounds, and silent rounds in 2023. Yes, 2023 digital health venture funding totaled $10.7B across 492 deals, the lowest annual total in four years, but these numbers likely don’t tell the whole story. It might suggest that a big portion of startups - together with becoming leaner - turned to creative financing measures to stay afloat, which aren’t fully reflected in the annual numbers: doing an extension or unlabelled raises as well as doing unannounced, inside-round financings from existing investors. This, however, is likely to turn back to more commonly labeled rounds in 2024 as they will require substantial new funding to grow.
In a nutshell, I would agree with the following 2024 health outlook: 2023 needs to be put in perspective of unprecedented post-pandemic growth. It must be considered a recalibration of the industry rather than a market collapse. In 2024, we will see a recalibration and consolidation of the digital health market with fewer stronger players (the same with the IPOs - a more stable publicly traded cohort).
Anastasiya Markvarde
Creative Selection: Inside Apple’s Design Process During the Golden Age of Steve Jobs
In Creative Selection (affiliate link), Ken Kocienda, a former Apple software engineer, offers an insider’s view of Apple’s culture and development process during what he refers to as the company’s “golden age.” This period, under Steve Jobs’ leadership in the late 90s and 2000s, saw Apple release a series of groundbreaking products like the iMac, iPod, iPhone, iPad, and major software advancements.
Kocienda highlights Apple’s demo culture, where product demos were crucial in development and decision-making. This approach is exemplified through a story about presenting the iPad keyboard to Steve Jobs and other Apple leaders, showcasing the company’s drive for perfection and attention to detail. The author shares his experience as the primary developer for the iPhone’s keyboard, tackling the skepticism around virtual keyboards prevalent at the time.
You can also watch this interview on YouTube.
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Nicola