Bootstrapping A Healthcare IT Startup To 50 Million: Eliza Corporation President Alexandra Drane (Part 4)

Sramana: What were some of the major lessons learned between the time you left Axon Group and joined Eliza?

Alexandra Drane: I left CDI to start Axon which was a value capital company. One of the startups with Axon was NewMed which was a medical device company. At each company I have been involved with we have made a very big mistake. With NewMed we had a product that would help people who had asthma. We had stunning feedback from the entire delivery system about the benefits of the product. Meanwhile we had been lucky enough to get into a double blind placebo trial run by the Heart Lung Blood Institute. We got impatient and instead of waiting for the results of that study to come back we pushed into pharmacies directly assuming that even without a study behind it patients would buy it and doctors would pick it up. That did not turn out to be the case which was a devastating lesson. When the results of the study came back they showed that the product did have a definite impact on adherence to medication. We were too impatient and did not respect how the healthcare industry likes to do things, we ended up selling the company for basically nothing.

The NewMed story happened in parallel with our breaking off of Axon, at which point I started Tesseract which we have already discussed. One thing I should point out with Tesseract was the mistake that we made there, which was that we did not read the fine print on our contract. That sounds stupid, but entreprenuers should make sure that they do not let their enthusiasm keep them from paying close attention to all the fine details. The contract essentially said that if someone paid development dollars, they owned the code. As a result we built a really good tool that we were unable to get paid for as it rolled out because it was successful. Tesseract had a second life where we did the same thing with college athletic systems. After that we sold that company, which was 3 months before I was supposed to get married. My fiancé asked me to please not start another company before we got married.

I then went and looked for something to do for three months because I knew that if I sat around I would go crazy. This was in 1998 so I went back to the angel community I had been associated with and asked them to give me something to do for three months. They let me go do some consulting work for some portfolio companies. One of those companies was Eliza.

Sramana: The healthcare space is an interesting one in that it is, of itself, not an entrepreneurial problem. You can build a company around a specific problem, but you cannot build a company to fix the entire space. Can you give us some granular details about how you have accomplished that in the healthcare space with one of your companies?

Alexandra Drane: I will do that with Eliza. I agree with you 100%. When you look at the totality of an industry it is difficult to get started and you must pick something focused to begin. You have to do something that will solve somebody’s problem so that they will pay you money to deliver the solution, and you need to do it at a profit.

When I got started with Eliza the company had been around for 10 years as an R&D house. They had angel funding and some speech recognition software but had never marketed it. I felt as if I had met my soul mate when I listened to the original head engineer of Eliza describe what the technology could do. Every company I have been a part of has been focused on needs. All of the problems I kept seeing in healthcare were hinging on getting the right information to the right person at the right time. It was a difficult thing to do. It was a technology that would allow you to understand what someone said when they were speaking naturally over the phone. We needed a way to communicate with people on a daily basis and everybody had a phone, and they knew how to use a phone. That technology would let me go after the people who were not going to doctors offices and reach out to them.

This segment is part 4 in the series : Bootstrapping A Healthcare IT Startup To 50 Million: Eliza Corporation President Alexandra Drane
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