Thread by @parulia

Applying software to highly regulated / intermediated industries like education and healthcare is so tricky.

When well-meaning technologists dive into these industries they slam into quite a few things. Human systems prove harder to hack.

A thread:

⚠️ 1st problem: more than usual inertia around the status quo.

There are often multiple stakeholders who have fought to build distinct moats or for whom the status quo simply is profitable, and it distorts economic, productivity, and outcomes-based incentives.

⚠️ 2nd problem: disconnect between users, stakeholders and payers.

Where normally, design principles teach us to find a deep stakeholder problem and solve it, here you can do that and still not find a payer for it (ever).

⚠️ 3rd problem: systems need to be high availability with high privacy requirements.

This is expensive to build to, and means that unlike other areas of SaaS, you can't spin up a product in weeks and deploy / iterate.

⚠️ 4th problem: slow sales cycles also make it hard for innovators to build quickly + iterate

A second order problem: the fact that it's so hard to build a high-growth business makes these unattractive to venture funders (for whom velocity is a major value driver)

⚠️ 5th problem: the people with the greatest needs have the least ability to pay

A common high-growth startup hack is to hone in on the segments with the greatest need AND highest willingness to pay, but that doesn't work here.

⚠️ 6th problem: "legacy infrastructure debt"

Like technical debt, except here it's the effect of difficult-to-change systems around which other systems (including human systems) have calcified.

⚠️ 7th problem: sometimes no one wants to pay to solve the biggest problems.

As a society, we don't have the collective will to pay kindergarten teachers more, or pay for healthcare for the poorest people, so these problems linger and drag at the bottom line.

Things that work. This is a little tough to extrapolate across two such disparate sectors, so excuse me in advance. But I don't want to give the impression that I think these sectors are hopeless. Far from it 💪🏽

💪🏽Finding single use cases: starting with what works and expand outwards.

Very narrow use cases for fast adoption can provide a wedge into the larger stack.

💪🏽Starting with discrete market segments where there are innovation-friendly, fast adopters: ie. self-insured employers, charter schools; or simply going DTC.

💪🏽Another approach: rather than starting with the problem, start with the payer & work backwards.

With @classtag, advertisers will pay to be in front of parents more than teachers will pay for a CRM.
With @FlumeHealth, employers will pay for concierge healthcare w/o insurers.

💪🏽A LOT of ecosystem help: in my observation, great players are somehow able to mobilize the ecosystem in their support.

Nonprofits can play a disproportionate role, and be virtually kingmakers in accelerating adoption (HT @nickducoff for this last point)

Patient and sector-focused capital: there are NO worthwhile businesses to build that I can think of - which are easy.

Despite the challenges, scrappy entrepreneurs find their ways around them. But leaning into the problems help - if you don't acknowledge it, you can't fix it.

There are so many worthwhile and impactful businesses being built here - we have funded a few. But let it not be said, that it is easy. These founders are doing it anyway 👇

@classtag @uLesson @skillshare @EdmitEDU
@ElektraLabs @FlumeHealth @IanaCare @OmadaHealth @PillPack

To sum up: human systems are harder to hack than digital ones. We are not🤖