Startup Insider: Lucro Marketplace

By December 15, 2015Interview, News, Press

(as originally posted by Becker’s Hospital Review on December 14, 2015)

There are few, if any, industries in which vendor and solutions marketplaces are as saturated as in healthcare. Health systems and hospitals are often inundated with pitches from those pushing product-based solutions to the point that they can’t see the differences between their options, let alone pick the right one for their specific needs. Lucro Marketplace is trying to bring order to that chaos.

“Lucro is really about fundamentally wanting to solve for healthcare the problem every other industry has figured out how to solve,” says Bruce Brandes, founder and CEO of Lucro Marketplace. “We have to be able to execute faster on innovation in healthcare and we think this platform can be the vehicle to do that.”

Lucro, which is currently available in a beta-release format, will have its complete platform rolled out in the coming weeks. Mr. Brandes said much of its design and functionality has been built on forming relationships with more than 1,000 providers, getting to know their desires and needs and then building a platform specifically aimed at meeting them head on.

“The core functionality of what we offer the healthcare organizations we work with is divided into four components: Discover, organize, collaborate and align,” Mr. Brandes says.

Mr. Brandes took time to speak with Becker’s Hospital Review about those four components, why Lucro aims to tackle innovation before monetization and how the startup hopes to help providers feel less overwhelmed by a noisy market.

Editor’s Note: Responses have been edited lightly for length and style.

Question: How did the idea for Lucro Marketplace begin to form?

Bruce Brandes: One of the people who I shared my thoughts about healthcare with was Charlie Martin, who most recently was founder and CEO of Vanguard Health Systems which he sold to [Dallas-based] Tenet Healthcare at the end of 2013. He asked me to join him and a number of other folks in a venture firm that he started after leaving the hospital business, basically to invest at the intersection of healthcare and technology. In joining Charlie, I made a few observations. The first, which I’d always believed over my 25 years in the business is healthcare is a market that’s been oversold and underdelivered and has the scars to prove it. The second observation was all of the entrepreneurs who were coming to us looking for capital weren’t so much looking for capital as they were looking for customers. They just thought they needed a whole bunch of capital to hire a big sales team. As I was making the rounds to tell the healthcare executives in our network about Martin Ventures, my third observation was almost all of them wanted help filtering the “universe of the shiny things.” They said all the vendors who called them sounded the same and one of two things would happen: Either they would waste a lot of time in meetings they should’ve never taken, or to prevent that from happening, they would put up a big wall to keep vendors out because they couldn’t field their pitches and still run their businesses. But that left them worried about solutions they were missing out on.

Within that was the inspiration for the start of Lucro, which was the realization that there had to be a better way. I spoke with a friend who heads innovation for [San Francisco-based] Dignity Health and asked him how we in healthcare could learn from other platforms outside of healthcare who have figured out how to leverage the power of community, enabled by technology, to shift the advantage to buyers to make better decisions faster and cheaper. They connected me with a digital design firm out of San Francisco that helped to build Airbnb, Nike+, eHarmonyand all of these multi-sided platforms on the consumer side — and they knew nothing of healthcare. So given our healthcare network we arranged for [the firm] to talk to a couple dozen healthcare executives on the provider side, the payer side and the vendor side. The goal was to listen objectively and determine how we could apply some of those lessons learned to healthcare by building a platform that reinvents how the buyers and sellers in healthcare connect.

Q: How did that process inform the platform Lucro has launched?

BB: Essentially what we’ve built is a network. We’re still very early the journey but we’ve made a lot of progress in a short period of time over the course of this year. The first thing we looked to do was align with a critical mass of healthcare executives to share our vision and ask if they would join us on the journey as early adopters. Through that they’ve given us a lot of really good insight to prioritize what needed to be developed. We’ve built an early adopter network of over 1,000 hospitals that represent the largest health systems in the country and aligned with them to prioritize what they specifically need to better internally organize and elaborate and collaborate within their own health systems and within their peers across the country.

Between now and the end of the first quarter, our plan is to work exclusively with our early adopters to build the platform and start the conversation.

Q: How do you bring vendors into the conversation?

BB: A big part of what we’ve worked on is listening to healthcare organizations about what they want. What we hear is they don’t want to talk to a sales representative right out of the gate; they don’t want to go to a vendor’s website and see the glass half full side of what they offer. What [healthcare organizations] really care about is collaborating in a private way with peers they know and trust to understand what they think of these different solutions. What they’ve said is: “We really want you to get the vendors to be able to offer us basic information, similar to how Trip Advisor works, where I can learn just the facts about their company.” What they really want is a solution card that says what [vendors] do, what the benefits are, how what they offer is different and how it works.

[Healthcare organizations] want to see the ratings, reviews and comments of people in their trusted network to help make an initial assessment about a particular solution. At Lucro, we’ve now invited basically all vendors selling into healthcare to claim and curate their solution cards..It doesn’t leave a lot of room for creative writing or marketing-speak. It’s a way for them to report just the facts. We’ve pre-populated it with basic information about all of these companies and their products, but it’s really not 100 percent accurate and it won’t be complete until the vendor actually curates that content.

Once that content is curated and our early adopters are collaborating around the most comprehensive information about their solutions, it will make vendors more visible by providing the filters through which people are looking for solutions today.

Q: What functionalities has your early-adopter network asked for?

BB: Those have really manifested themselves into four key use cases and functions. The first capability they asked for was to be able to discover, to find solutions. Today, instead of having to rely on Google or asking anecdotally on LinkedIn or going to state hospital associations and conferences to find out who has a solution for what, they want to be provided with a comprehensive catalogue of all the solutions out there. That’s a huge win. The vendor solution card is a basic building block upon which that happens.

The second thing they asked for was help sifting through solutions. They want to be able to apply filters to help narrow choices, which is why it’s so important for vendors to curate their solution cards to help them to be found more clearly and more appropriately. The algorithm we’ve built will become more intelligent over time and understand the buyer’s interests as they start to filter and search.

The third capability they asked for is to be able to organize those solutions, because generally individual products are not what they’re looking for. For example, if a hospital wants to improve its quality metrics for wound care, there’s no one product that does that. What they really need to be able to do is create a project board for wound care so as they come across specific solutions, they can pin those products and come back to them to create a more comprehensive solution. They’d also like to collaborate with their peers privately within their own health system community, or share their project board within a private group of peers from other health systems to compare notes. So we give them the capability to create those groups and privately share their project boards and solutions to get that peer feedback.

The fourth key capability that I think is really the most powerful for many health systems today is the need to be able to internally align. We heard very consistently from health systems with multiple hospitals and venues that have grown by acquisition that the biggest challenge they face is the right hand doesn’t know what the left hand is doing. Even though their whole purpose in coming together is achieving scale, they haven’t seen that benefit yet. If we can get them to better understand how to all perform at the same high level across the board it would be transformative not only for the health system, but for the communities it cares for. So [early adopters] asked for their own partitioned area within the Lucro community. We call it My Marketplace, it’s where providers can privately understand within their own organizations what solutions and products they have and whether they’re using them optimally. It enables an executive in one market across a multi-hospital system to look inwardly first and see how their peers have addressed a problem before they go out to shop for a new solution.

Q: Have vendors come to you with requests for functionality as well?

BB: That’s really one of the goals, to address the needs of the vendor community as well. Their biggest challenge, especially early-stage companies and growth-stage companies, is getting access to the decision-makers. We’re building the platform to give vendors that access. Most importantly we think it’s critical for these companies that they redirect a lot of the dollars that would otherwise go to sales and marketing in the traditional senses to helping them make sure those products are robust and that their customers are successful. What we aim to do is give their happy customers the vehicle to be able to share that experience across the marketplace. We intend to level the playing field, to ensure that the best solutions, whether they’re from a very established company or an emerging company, have a better than average chance to succeed in the market. The thing we’re worried most about is that really smart scientist or physician or entrepreneur who started something that really does have great promise will fail only because the skill set it takes to come up with that great idea is different from the skill set it takes to build a big traditional sales organization. What we’ve heard from the buyers is they don’t want those big traditional sales organizations anymore, so they actually want to retrain their incumbent vendors to use this as their platform for communication. Let’s let the best solutions win.

Q: How does Lucro plan to monetize the marketplace solution it has created?

BB: We do not charge vendors to claim and curate their content nor will we ever, and we do not charge the healthcare organizations to be part of this platform. Our belief is if we fundamentally solve the problem that the healthcare organizations ask us to solve, and do it in a really powerful and complete way, that there will be lots of ways [to monetize the solution]. We’ll figure out the monetization piece later in 2016, but our main focus in 2016 is still to build the community, to continue to build out all the capabilities requested of us and to start the conversation.

Q: What are Lucro’s plans following the release of the complete platform?

BB: Next year is really about building out the community. A big focus for us over the coming months is to reach out to all of the other trusted sources of independent insight, whether they come from industry associations or other third parties of people and organizations that already have respected points of view on different solutions. We want to invite them to align with us because our goal is to be the platform that synthesizes all of those insights into place in a very comprehensive way, so healthcare executives can accelerate execution on innovation by being able to make better decisions faster.

We’ve got a great basis with which to build, given who our early adopters, backers and advisors are, and the fact we’re not encumbered by any legacy interests. We think we’re uniquely positioned to build the platform, but if this is really going to make the impact on the industry, we need to align with other thought leaders that can come alongside us and build this together.