Don Ross


8.5 million Americans received rebates from their insurance companies this summer
Written by Don Ross // 18 July 2013 //

Under the Affordable Care Act requirements, rebates (average amount = $100) were paid by insurance companies to 8.5 million American this summer. Insurance companies are required to spend 80% of your premium dollars on healthcare. If administrative overhead costs exceed 20%, the difference is rebated to patients. See good illustrations here http://tinyurl.com/lhgx6c8. 

This is a laudable outcome and tangible evidence of healthcare reform impacting costs of insurance. However, the far more substantial impact will hit in 2014. With revised coverage requirements taking effect, I have seen estimates that insurance premiums will increase as much as 40%!!!!

Perversely, many small businesses may find it cheaper to pay penalties than buy insurance--the opposite of the government's intent for more people to have health insurance. 

Under a small group plan, I already pay $1,900/month ($22,800/year) for health insurance to cover me and my wife. A 40% increase would result in health insurance premiums of $31,920/year.  Somehow, I'm not seeing the "affordable" component in these premiums.

Although I see overall positives in the Affordable Care Act, insurance reform is a rocky path.  

The average price of an iPhone app is 19 cents — and shrinking
Written by Don Ross // 18 July 2013 //

As of April this year, 90 percent of all apps are free and ad-supported, according to new research from the mobile analytics firm Flurry. As a result, the average price of an app continues to drop.

iPad apps are the priciest, Android the cheapest.

The average iPad app ($0.50) costs more than twice the average iPhone app ($0.19) and eight times an Android app ($0.06), according to Flurry.

Eight-four percent of apps that were price tested ended up going free as of April. “This implies that many of the developers who ran pricing experiments concluded that charging even $.99 significantly reduced demand for their apps.”  Note: Most apps are not subjected to price testing.

In the Apple iStore today, developers are competing for users against 900,000 other apps for sale, and they have to find ways to stand out.  A year ago, there were more than 13,000 iPhone health apps for consumers.

Bottom line: business models based on revenue from app sales/subscriptions are a non-starter.

Full article here: http://tinyurl.com/m3cvopr 

Don Ross, Digital Health Summer Summit 2013, June 13, 2013
Written by Anne DeGheest // 13 June 2013 // Video, Interview
HealthTech Capital Announces HealthTech Conference 2012
Written by Don Ross // 03 August 2012 // Conferences, healthtech, HealthTech Capital

While our healthcare system is in a state of flux, new opportunities are exploding and a flood of new technologies are appearing from outside the healthcare domain. The onset of new mobile technologies, personalization, real time information, persistent monitoring and other innovations promise to remake the way healthcare is delivered.

 But these technologies often arrive without an understanding of unique challenges presented by our healthcare system. The HealthTech Conference 2012 is specifically designed to be an interactive practical experience with ample networking opportunities. We’ll explore the real pain points of providers with CEOs of major hospitals. Thought leaders will look at the enabling technologies remaking the healthcare landscape. Leaders of successful companies will share their lessons learned in the HealthTech domain.

Top venture capitalists will share how they evaluate HealthTech companies. Top emerging HealthTech companies will be in the Demo Hall. Audience voting combined with the investor input will select the “Most Promising 2012 HealthTech Company.

 Major networking opportunities are planned throughout the day, which wraps with a reception and conversations recapping the event.

October 26 at Mission Bay in San Francisco--hope to see you there! 

See Details Below

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Crowdfunding Debate at Stanford
Written by Don Ross // 22 June 2012 //

The crowd was buzzing at Stanford’s Li Ka Shing Center last Tuesday evening. The Stanford VLab panel on crowdfunding was sold out, and I was honored to be one of the panelists speaking to the packed house. The other panelists were:

  • Carl Esposito, founder of crowdsourcing.org, moderated the panel with skill and finesse. He kept the conversation moving briskly and maintained a balance among opposing opinions.
  • Slava Rubin, CEO of Indiegogo, argued passionately to open startup equity investment to all comers. Slava has just received $15 million in funding from Khosla Ventures.
  • Daniel Zimmerman, Partner at WilmerHale, provided a balanced explanation of the many legal implications.
  • Ryan Caldbeck, CEO of CircleUp, had an interesting perspective based on crowdfunding for companies with proven business models. Sixty days ago, Ryan launched an equity-based crowdfunding platform (for accredited investors) that focuses on consumer product businesses with at least $1 million in annual revenues. The consumer products market segment (including food) is underserved by the venture capital community.

From left to right: Slava Rubin, Ryan Caldbeck, Don Ross, Daniel Zimmerman

Definition of terms became critically important:

  • “Project-based,” also called “rewards-based,” crowdfunding is great. People provide funding in exchange for discounted products/services. This is what Indiegogo and Kickstarter are doing currently. See my prior post for the success of Pebble Technologies at Kickstarter.
  • “Equity-base” crowdfunding, as envisioned by the JOBS Act, is fraught with problems. When it takes effect, people would provide funding in exchange for company equity.

Because little information is available on “equity-based” crowdfunding in the marketplace, crowdfunding discussions tend to conflate “rewards-based” and “equity-based” crowdfunding. This is a mistake—they are very different animals. On the panel, I pushed for understanding the differences.

Another important distinction is company stage. My focus is the raw startup that needs seed or Series A funding. This is the domain of Angel investors and some venture firms. Information about a company is always incomplete—much is unknown and unknowable at this stage. For early stage investments, good diligence, research, experience, and judgment is needed. Research by the Kaufmann Foundation shows that positive Angel investment returns are related directly to:

  • Depth of due diligence
  • Domain knowledge
  • Mentoring, coaching and participation

Equity-based crowdfunding proponents suggest that the “wisdom of crowds” will outperform Angels and VCs. But in the financial markets, crowds have been anything but wise. “Herd mentality” and “group think” have emerged time and time again—from the Tulip Mania in the 1600s, to the dot.com bubble in 2000, to other recent financial crises. For the Harvard Business Review, Daniel Isenberg has written an excellent blog, The Road to Crowdfunding Hell, that describes how “crowds are frequently stupid” when it comes to the financial market.

It is hard, very hard, for seed stage companies to become successful. Mentoring and coaching from early investors can make the difference, but these are not part of the proposed equity-crowdfunding. Also, it can be years or decades before you know whether a startup investment is successful. Will equity-based crowd funding produce better investment returns than Angel/VC funding? In an “apples-to-apples” comparison of early stage companies receiving funding, the evidence says “no.”

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