Until joining the Founder’s Institute, I hadn’t thought too much about the market characteristics like growth rate, total revenue estimates, and avg company size mainly because I haven’t had to do too many investor pitches. Sales presentations are a lot different than investor pitches, but they do share one thing in common which is Return-On-Investment. In the electronic health records space, solar installations, or enterprise software your customer is primarily interested in what the rate of payback is and how much your product will increase their productivity. When you approach investors they want to know a lot of the same things. VCs want to know at a macro level what the market looks like and whether your company can reach $100M in revenues in 2-3 yrs, but they also want to know about the value of your product to the customer.

This market research exercise brought up a lot of macroeconomic questions that I’d never really thought about before. I look back now at all the industries that I’ve jumped into, and it wasn’t because I did some formal market analysis, it was because of buzz and trends. I entered the medical staffing industry because I saw a niche opportunity in the senior health market. I didn’t know exactly what the market capitalization was, nor did I care. I entered medical informatics because I felt like there was an opportunity to provide a reliable low cost alternative to proprietary software, know in some sense that it was a big industry.

I think the hype curve that was brought up today was a good concept. You definitely want to know where you are in the curve. If you’re in the web, you probably wouldn’t want to be doing a social network. In CleanTech, you wouldn’t want to be in thin films. I can say with certainty that Electronic Health Records is on the upswing. Come the beginning of 2010, there will be a torrent of medical practices adopting EHR systems because they will need to be positioned to qualify for the meaningful use criteria in 2011.

Although there are a ton of vendors out there, mass adoption is not occurring because most medical practices are taking a wait-and-see approach. They are waiting for “meaningful use” to be clearly defined as well as waiting for other doctors around them to adopt the technology. Technology has evolved to a point where physicians can “cross the chasm”. Early adopters ran into a lot of problems that have scared the majority of physicians from adopting the technology.

In an Oreilly article that was forwarded to me yesterday, they related the problems the medical industry is now experiencing in adapting workflow to computerization to problems with waterflow development in the 70s and 80s.

Some things I learned from market research:

Market Segments: Peds 29,170 OB/GYN 19,750 = 78,000 immediately addressable market

Growth Rate: 11% combined annual growth rate continuing through 2013

Total Revenue: $8-10B/ year

Adoption rate: 250,000-300,000 physicians over 3 years

Untapped market: 80% primary care

It was very useful to look at competitor website and review their investor page. I haven’t read the 10Ks yet. I’ll most likely look into GE Centricity, Allscripts, McKesson, and AthenaHealth.