StartUp Health: ‘We want the best of the best’

8.21.2015

By John George, Senior Reporter, Philadelphia Business Journal

 

StartUp Health, a SeventySix Capital portfolio company, is on a mission to help 1,000 new businesses “re-imagine and transform” the delivery of health care by 2021.

 

In the four years since its inception, the entrepreneurship development company has assembled a portfolio of 105 companies from 10 countries and attracted $20 million in investments from a diverse group of investors that includes Internet mogul, Shark Tank star, and Dallas Mavericks owner Mark Cuban and AOL co-founder Steve Case.

 

Among the entrepreneurs participating in the program is Adam J. Simon of Yardley who founded a company developing technology to better diagnose concussions.

 

“The people here are similar,” Simon said, during a break at a recent StartUp Health event in New York. “We are all high energy. [StartUp Health CEO] Steve Krein describes us as people who come with batteries included. We learn from each other. You learn about planning and strategic thinking, you share information and benefit from the lessons other people have already learned.”

 

Although based in New York, StartUp Health – which is in the process of raising another $30 million in a round led by Milwaukee-based Aurora Health Care – would not have gotten off the ground without its strong Philadelphia region connections.

 

Consider:

  • The company’s management team features three siblings who grew up in Cherry Hill, two of whom still live in the area. Steven Krein co-founded StartUp Health with a friend named Unity Stoakes. Dr. Howard D. Krein, a Thomas Jefferson University Hospital physician, is the company’s chief medical officer. Bari Krein, a Philadelphia lawyer, is StartUp Health’s chief strategy officer. The family affectionately refers to Stoakes as their fourth sibling:”Ira Krein.”
  • Conshohocken-based SeventySix Capital in Conshohocken was StartUp Health’s first, and remains its only, venture capital firm investor. Wayne Kimmel, the firm’s managing partner, serves on StartUp Health’s board of directors.
  • Philadelphia native Jerry Levin, the former CEO of Time Warner, serves as StartUp Health’s chairman.
  • The company’s investors also include about a dozen doctors from Thomas Jefferson University Hospital.

StartUp Health differs from traditional business accelerators, which typically work with fledgling companies for a few months. StartUp Health operates a long-term coaching program that includes a variety of programming to educate entrepreneurs and connect them with potential investors and customers. The members of the StartUp Health Academy also interact with each other through an Internet portal where budding and veteran entrepreneurs can discuss and seek answers for common problems and issues.

 

The companies accepted into the three-year program range from the earliest of startups to more mature businesses with products in the marketplace. The idea is people at different stages of development can learn from each other.

 

The selection criteria doesn’t change.

 

“We look at the entrepreneurs,” said Steven Krein. “We’ve learned intuitively over the years whether people are coachable and whether they are the kind of entrepreneurs you’d want to spend the next couple of years working with. We look at: Do they have a strong team? Is their idea big enough and is it scalable? At the core it always comes back to the team. Ideas are a dime a dozen. There a lot of ideas out there. We look for people who you can bring together a team and start executing and getting traction. … We look around the world for these people. We want the best of the best.”

 

StartUp Health – which has three Philadelphia-area entrepreneurs in its academy – envisions enrolling another 50 to 75 companies in its academy coaching program during the next 12 months.

 

A Philadelphia story

 

The Krein clan grew up in a home on tree-lined Larkspur Road in Cherry Hill, where they were raised by parents who stressed the importance of education.

 

Bari, the oldest; Howard, the middle child; and Steven, the youngest, could pursue any career they wanted – as long as they became either a doctor or lawyer.

 

“What our parents really instilled in us, early on, was this notion that getting an education meant we controlled our own destiny,” said Steven Krein. “I can remember from the earliest of ages our parents saying education can’t be taken away. Get that and you can do anything you want.”

Bari Krein said their parents, who still live in that same Cherry Hill house, also emphasized the importance of family. “Both my parents were incredibly close with their siblings and we were brought up with the expectation we would always be close,” she said.

 

The expectation, Howard Krein said, was “we would be each other’s best friends and take care of each other and stick together.”

 

Bari opted to become a lawyer, becoming a senior attorney at the Securities and Exchange Commission and later a partner at Reed Smith in Philadelphia. Howard chose medicine and became a surgeon specializing in head and neck cancer, facial plastics and reconstruction. Steven went the legal route, a decision for which Wayne Kimmel takes some of the credit.

 

Krein and Kimmel met and became friends in college.

 

“We were fraternity brothers at the University of Maryland,” Kimmel said. “I convinced Steve to follow in his sister’s footsteps and go to law school with me instead of going up to this “little startup called Apple.” I remember we were sitting on the roof of our fraternity house and I said we had so much fun in college, we should go to law school together. I said he could always go work for that Apple company in the future.”

 

While Steven Krein and Wayne Kimmel both received law degrees, neither ended up spending much time in the courtroom.

 

Kimmel became a venture capitalist, founding SeventySix Capital in 1999.

 

Krein became an entrepreneur. His first company, a global online advertising, direct marketing and technology company called Promotions.com, was founded in 1996, and went public through a $50 million IPO in 1999. The company was acquired by iVillage Inc. in 2002. Promotions.com created an opportunity for Steven to work with Bari, who helped the company with the legalities of its initial public stock offering and then became its director of corporate and legal affairs.

 

“I was a little jealous; they were always together,” said Howard Krein, who worked at the company part time when he was in graduate school.

 

Steven Krein joked that next time they would launch a health care company so they could all work together. That kidding would become reality several years later.

 

In 2007 Kimmel’s business partner, Ian Berg was diagnosed with pancreatic cancer. Kimmel and Berg had invested in Promotions.com.

 

To help Ian and his family, the Kreins and Unity Stoakes, chief marketing officer at Promotions.com, got together and hand-curated the best online information and resources pertaining to the disease.

 

“Steven asked me what we tell patients after giving them a diagnosis – whether we send patients to the Internet for more information,” Howard Krein said. “I told him we didn’t because patients would just get more confused.”

 

Added Steven Krein, “We saw this huge gap between the doctor visit and the information that was available on the Internet.”

 

The episode stimulated a series of conversation among the Kreins that eventually led to the formation of a new company in 2007 called Organized Wisdom – where all the siblings had a role. Organized Wisdom was created to help health care practitioners create an online presence and build digital offices to provide information to patients before, during and after office visits.

SeventySix Capital was one of Organized Wisdom’s first investors. Levin joined the company’s board as chairman.

 

It was at an Organized Wisdom board meeting held at SeventySix Capital’s offices in the Four Falls Corporate Center at the end of 2010 where the seeds for StartUp Health were planted.

“We were talking about the challenges entrepreneurs are facing in this sector,” Steven Krein said. “Health care reform was kicking in. Mobile devices were making their way into doctors’ lab coats, into hospitals and into patients’ hands. Jerry asked us if we could wave a magic wand and look out a decade, what would be different.”

 

The boardroom conversation led to a discussion about creating a community of entrepreneurs who were all working together to figure out what works and what doesn’t work. They talked about how such a community would benefit from a long-term coaching program and a vehicle to help them interact with each other.

 

“While building Organized Wisdom we saw entrepreneurs had a hell of a time really innovating in this sector with all the regulations and minutia and the fact this industry hadn’t changed in decades,” Steven Krein said. Such a community, he said, could also use the support from a network of angels investors and venture capitalists investing in the health care sector, and a way to connect with the payers and providers and pharmaceutical companies that would be their potential customers. “If you could do all of that,” Steven Krein said, “then you could transform health care.”

 

Less than a year later, that lengthy conversation led to the evolution of Organized Wisdom into what is now StartUp Health. Kimmel and SeventySix Capital again stepped up to provide the initial funding.

 

“It fit perfectly into my investment thesis, which is investing in smart and nice entrepreneurs who are creating game changing companies,” Kimmel said. “That’s who these guys are.” Other Organized Wisdom investors, including Howard Krein’s physician colleagues at Jefferson, also became investors in StartUp Health.

 

Steven Krein and Stoakes got the opportunity to announce the launch of StartUp Health at the White House where they were guests of Todd Park, the Obama administration’s technology policy director, at a health care conference.

 

They also got a chance to talk about their new company with President Barack Obama and Vice President Joe Biden, who, it turns out, is Howard Krein’s father-in-law.

 

“I happened to be talking to my father-in-law that day and I mentioned Steve and Unity were down there,” Howard Krein said. “He knew about StartUp Health and was a big fan of it. He asked for Steve’s number and said, ‘I have to get them up here to talk with Barack.’ The Secret Service came and got Steve and Unity and brought them to the Oval Office.”

 

Steven Krein said he talked to Obama about how his reform efforts, which emphasized a greater use of electronic health records and the use of medical technology to deliver care more efficiently was creating a “treasure trove” of opportunities for digital health entrepreneurs.

 

“The President loved it and it became a talking point for him,” Steven Krein said.

 

StartUp Health’s heavy hitters on why they got involved with the company

 

“I believe we are on the cusp of a revolution in health, so I have made a number of health/wellness investments. Also, I have long believed we should do more to support startups, particularly in emerging regions like Philadelphia and sectors like health. Plus, I know Steve and others involved in StartUp Health, including Jerry Levin. So for all those reasons, I decided to invest in StartUp Health.”

 

StartUp Health investor Steve Case, Co-founder and former chairman and CEO of America Online (AOL) who started and now leads the Washington, D.C., investment firm Revolution LLC

The next ‘big thing” [in health care] is personalized medicine. Some of the best companies will be startups that will need capital.”

 

StartUp Health investor Mark Cuban, Owner of the Dallas Mavericks and star of Shark Tank. He is the co-founder of Broadcast.com, which was acquired by Yahoo! for $5.7 billion in 1999

I was always interested in the disruptive reach of digital technology throughout my career, but since retiring from Time Warner I have been professionally involved with mental health and personally engaged with Parkinson’s. StartUp Health combined my dual passions, plus providing the joy of mentoring a community of entrepreneurs in an innovative academy. My role as chairman is to bring to the board and our able management whatever relevant background business experience I may have had together with humanist life lessons I may have learned in the process. I also like the synergy of our Philadelphia backgrounds.”

 

StartUp Health Board Chairman Gerald “Jerry” Levin, Former CEO of Time Warner


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