F093 How does a doctor become a VC? (Benedict Evans)
Despite enjoying clinical practice, Benedict Evans still came to a point where he felt he is not passionate enough about what he does, and as a surgeon, he realized he enjoys talking to patients more than treating them when they are under anesthesia.
He went to a consulting position at McKinsey, then back to an NHS Trust to drive digital innovation and now to a VC position.
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Key points:
Being a surgeon is hard, and so can be consultancy, but leading digital transformation of a hospital beats them both
Doctors have many opportunities outside of healthcare
Startups that show deep understanding and show they will stick to solving the problem have the best chance to attack investments
Leaving Trauma & Orthopedics surgery
Benedict Evans.
Sometimes medical students realize by the end of their studies that they prefer to do something outside of clinical practica. In Ben Evan’s case, the realization came later. He did not have a clear idea about his next job could be, but he knew that he was interested in the business side of healthcare. He also met some startups during his work as a doctor. When he decided to switch careers, he tried to get feedback from others that made that transition and reached out to his network. “Being a doctor makes it possible to transition gradually since one can continue to work temporarily and continue to get an income. This gives you more flexibility in terms of planning what you do next,” says Evans.
Having a medical background turned out to be a great asset in his future roles. As an Associate Director of Transformation for St. Georges Healthcare NHS Trust, he could relate more with clinical staff. “You can just understand, you can empathize, you can talk in a similar language, and you get a bit of insight into what’s going to work whatnot. This is the reason why many consulting firms hire a lot of doctors to do healthcare work,” says Ben Evans.
Reached out to his network and joined McKinsey & Company first in the UK later the US
When he joined McKinsey & Company, he got familiar with the scale of innovation on the East coast of the US. “That kind of got me hooked on digital health innovation. I actually started a company, a healthcare analytics business, but struggled to sell into hospitals. I learned a lot of hard questions but ultimately ran out of money.” This experience got him a valuable insight into startup operations. But before becoming an investor, he felt he could contribute to the UK’s healthcare system.
Took on the position of an Associate Director of Transformation for St. Georges Healthcare NHS Trust
When he applied for the hospital management position, he had imagined the job would be much easier than it was in the end. ”I was at a point in my life where I felt I’ve learned a lot in. As a doctor, I wanted to give something back, and I felt the position at St. Georges was a chance to do it. Someone told me this will be the hardest thing that I will ever do. And I thought, how is that possible? We’ve been pulling all-nighters at McKinsey’s, and I was operating on patients, worked long shifts. But working in hospital management was really really tough. First of all, managers work incredibly hard and don’t get a lot of respect from the NHS. Secondly, your ability to change things and encourage general improvement is all about trying to influence people. You learn how to sell things and how to convince people. It was fascinating to be on the other side, having managing consultants coming in and telling us how things should be done. I found that in turns interesting and also frustrating. It brought a realization about how little I knew and understood what it was like for people in hospital management positions.”
What makes hospitals difficult regarding re-invention is the fact of healthcare organizations by nature being incredibly busy, and everything needs to be done immediately. It is challenging, explains Ben Evans, to get people to think about the longer-term and how they change their behaviors. And digital solutions impact how things are done - they impact culture. “You can have the best software solution there well, but if it’s fundamentally people that need to be willing to change a particular routine. There aren’t many leavers you have to get people to change. In the US, it’s easier. More money is available and used for financial incentives either at a government level or local level. That can help push people in a particular direction.”
Despite all the pains, the work was also rewarding, because he felt he was contributing together with others in the team, to something pretty important in terms of improving a hospital within the NHS. How to make progress?
You have to focus on champions as early adopters. Those who are interested and excited by new technology, and use them to really role model behavior. Over time, others will be brought around to it and see the value in it. “It often comes down to just having clarity around why you’re doing this and why it’s important and who benefits from it and be consistent.”
Became a VC at InHealth Ventures
InHealth Ventures is a $50m early-stage fund investing solely in health tech startups.
Ben Evans mentions the following components startups should have when approaching investors:
Good team, meaning:
Excellent understanding of the problem. Either detected through experience or having gone through the process of really deeply analyzing it.
Very clear view and an idea - teach investors something new.
Balance of skills. Commercial, clinical, operational, technical, because they’re all important. Particularly on the commercial side, since it’s hard to sell in healthcare.
Potential unfair advantage. Having corner resources, particular network. If the idea is good and it will evolve, others will naturally come along, if you’re doing well. Founders also need to be confident oscillators to develop a great product that people will pay for.
Tune in for the full discussion below or in iTunes, Stitcher or Google Podcasts.
Some questions addressed:
I’ve talked to many doctors that became entrepreneurs, not that many that would become full-time investors. What was your journey towards this role from the initial Trauma & Orthopedics surgeon position?
Between 2010 and 2014 you worked for McKinsey & Company. You started off in healthcare practice in the London office before transferring to Boston and New York to help scale-up Objective Health a McKinsey-backed healthcare data analytics start-up. Having a close insight into the UK and the US healthcare system, what are your takeaways from that stark contrast? The UK system is tax based and public, whereas the US system is much more complex and fragmented and complicated for doctors and patients.
In 2014 you became the Associate Director of Transformation for St. Georges Healthcare NHS Trust to develop and head up trust-wide program responsible for delivering £45m of savings across clinical operations, workforce, infrastructure, portfolio optimization and IT. How did that go, and what were you able to implement? Digital transformation is very, very slow in hospitals.
You are now working as a Managing Partner at InHealth Ventures. Is your view on healthcare and MedTech innovation different today than it was when you were still practicing as a doctor?
What do you look for in startups that approach you? What convinced you in your portfolio companies?
When choosing a portfolio company, to which extent do you directly engage yourself in the startup’s development and advancement? Your medical background gives you a special kind of credibility when approaching potential users/customers? Meaning that: do in your opinion, the companies that you invest in have an easier time achieving success because when a customer hears you invested in that company, you as an investor/doctor might be seen as an additional layer of verification that adds to the credibility of a specific solution
What is, in your view, the biggest challenge in digital health adoption and digital transformation in healthcare? In my opinion, regulation has been pretty much outlined by today; we have organizations that offer insight into app validation. However, there are so many solutions out there that in my opinion, awareness is one of the biggest issues; the choice is just too big, so we restore to the good old personal recommendation approach when looking at new solutions?
What do you look for in startups that approach you? What convinced you in your portfolio companies?
When choosing a portfolio company, to which extent do you directly engage yourself in the startup’s development and advancement? Your medical background gives you a special kind of credibility when approaching potential users/customers? Meaning that: do in your opinion the companies that you invest in have an easier time achieving success because when a customer hears you invested in that company, you as an investor/doctor might be seen as an additional layer of verification that adds to the credibility of a specific solution?
What is in your view the biggest challenge in digital health adoption and digital transformation in healthcare? In my opinion, regulation has been pretty much outlined by today, we have organizations that offer insight into app validation, however, there are so many solutions out there that in my opinion awareness is one of the biggest issues; the choice is just too big so we restore to the good old personal recommendation approach when looking at new solutions?