Leading a growth technology company in 2023 is a lot more difficult than it used to be. A recession is looming, interest rates are high, and the window for the IPO market appears to be closed for now, as a razor-sharp 90% drop in 2022 drop in IPO proceeds compared to 2021. Investor risk appetite seems lower than ever.
This economic downturn did not spare digital health, which experienced a post-Covid boom like no other innovative field, but saw a 38% drop in investment in 2022 and a series of post-IPO value destructions. The companies best positioned to make an impact in 2023 are those that deliver clinical value, can navigate this turbulence, adapt to the new economy and thrive with limited resources.
Transition from the strong economy we’ve been used to – with 2021 seeing the fastest growth rates in decades—to the current situation will be a challenge for many companies. The lush green pastures that fed the so-called tech unicorns have become barren deserts. To adapt to the new terrain, we need a new framework. Giving up technical fairy tales is a good start. Instead of striving to become unicorns, we should start thinking like camels.
So-called unicorn companies are top-line focused and built to weather the $1 billion valuation, burning cash quickly while scaling quickly. Unicorns do not have a detailed and verified roadmap to profitability in the early stages of their existence, as their innovation could – over time – be disruptive to their field and applicable to many products. They run fast and break things on the fast track to early adoption and an IPO to drive further growth and a path to profitability.
On the other hand, camels can move both fast and slow. They endure challenging and extremely long roads supporting themselves with the most minimal means. The idea of camel and unicorn mentalities emerged from my experiences during the first weeks of the pandemic. When clinical trials were repeatedly delayed by multiple quarantines, it was clear that companies chasing consumers and those taking the long road by introducing clinical-grade regulated products were two completely different creatures. The disruptive mindset is not suited to digital health. When it comes to patient safety, we don’t break things. When clinical trials and dialogue with the FDA are involved, we need patience and transparency.
Not only that, anyone with experience in digital health solutions knows that developing the technology, as brilliant as it may be, is only the first hurdle. Getting overburdened physicians and diverse groups of patients to adopt while adhering to HIPAA and other rules and regulations are the final — and often more challenging — hurdles.
Camels can get used to the challenges and bumpy roads they face: long legs keep their distance from hot desert sand, while long lashes provide protection from the sandstorms. As long as the expert agreement believes this year will be a recession year, an adaptive long-term view that shows how their company will fend off competition and liquidity challenges is what CEOs will need in 2023. In this dry season, the IPO market will most likely be closed to most companies – taking flexibility away from CEOs and making investors even more scrupulous in their due diligence. A clear and viable market adoption strategy is number one on their wish list.
This also means thinking about one’s competitive advantage. If the adoption of your innovation could be jeopardized by the arrival of a technology giant in your field, because they can do it better and stronger (and cheaper), identify the elements that only you can provide by running long but rewarding . away. Founders who adopt the camel mentality will be much better prepared for the regulatory approvals and clinical trials process, and much better positioned to solve persistent problems such as lack of access to prescription drugs and low compliance with key medical tests .
Thriving in a desert climate also requires letting go of the winner-takes-all mentality and purpose different pain points as a group, while complementing each other through channel partnerships. Given the complex and fragmented healthcare system in the United States and the hurdles along the way, the ability of any small or giant tech company to reshape the system according to its platform is almost non-existent. Therefore, health technology companies are inherently driven to collaborate and play on their innovation, which can lead to wider adoption and distinctive contributions to the health system. Real needs. More collaboration means more access to health innovation, which is better for industry and better for society.
The pandemic has left its mark on the world and the global economy, teaching us that while we can’t always anticipate the obstacles ahead, a long-term plan and delivering real value will help us adapt more easily. Many companies aspired to become unicorns, but to move forward now, they must become camels.
