I Like Mike (Part 2)

Regular readers know that I'm a big fan of Mike Bloomberg. I wrote about him in an earlier post back in 2008. Chris Dixon interviewed him for TechCrunch’s Founder Stories series last November.  It's an insightful and inspiring interview -- I recommend watching when you have some time.  Here's some of the highlights/insights for me. I’m paraphrasing Mike, of course.

• One of the goals of New York City is to have a park within a ten minute walk of every New Yorker.
• The business goals for New York isn’t to pay companies to come here through subsidies, it’s to create an environment where people want to live.  That means great culture, parks, schools and reduced crime.
• Big companies are like governments in that they setup very reasonable bureaucracies to minimize risk.  But that bureaucracy is what prevents them from innovating.  That’s why we need startups.
• The United States is committing suicide by not giving citizenship to foreign entrepreneurs.
• People talk about making New York more of a hub for college education, much like Boston.  It turns out that there are more undergraduate and graduate students in New York City then there are people in Boston.
• There are 13 public golf courses in New York City and Staten Island's land mass is almost 25% park.

Healthcare Tech Lessons: Capitation

Earlier I wrote about the differences between a managed care payment model and a fee-for-service payment model. Today I’m going to write about a specific managed care model called capitation. In a capitation model, healthcare providers (doctors and nurse practitioners) contract with a type of HMO called an independent practice association (an IPA). The IPA is a group of providers across a wide range of specialties that look to provide care for patients in their community. Patients enroll in the IPA and pay a fixed, monthly fee to have access to care from those providers. The IPA then pays each healthcare provider a set amount for each patient that’s enrolled. The provider receives this payment regardless of whether or not the patient seeks care.

So, in short, the bad news for the provider is that the payments are “capped”, regardless of how much care they provide. But the good news is they get paid even if they never see the patient. The amount of the payment the provider receives varies based on the expected healthcare utilization of the patient (factors such as medical history, age and gender are considered); though there are some capitation models where the payment is the same, regardless of the expected healthcare utilization.

The capitation model provides a few unique incentives for physicians and nurse practitioners:

1. Providers will consider cost when providing care. You don’t want to order treatments that cost more than the payment you receive.
2. There’s an incentive for providers to focus on preventative care. Healthy patients mean more profit.
3. There’s an incentive to avoid costly patients. So with a capitation model, the provider effectively becomes the insurer for the patient. They take on the risk of whether or not the patient is going to seek care. They can have good and bad years, depending on the amount of care patients need.

There are two major challenges when providers insure patents:

1. They’re providers, not actuaries or underwriters. As a result, they’re not as good as assessing risk as a traditional insurer and could take a loss as a result.
2. Risk fluctuation is a function of the size of the portfolio. Because a provider’s patient panel is limited by the capacity of the physicians in the IPA, portfolio size can be small and risky.

It'll be interesting to watch how the relationship between providers and insurers changes as changes in Medicare and Medicaid force more providers to adopt a capitation model.

Where I Get My News - 2012

Growing up my parents were news junkies. As a result, I sort of pride myself on knowing what’s going on in the world. The other day I was asked where I get my news and it took me a while to answer the question. So I thought I’d think about it and lay out the answer in a blog post. I’ll try to order these sources from most consumption to least consumption. Here goes. Blogs. Currently I follow 52 blogs and I read them daily. The topics include business, technology, sports, current events and healthcare. Most of the blogs are written by individuals, but I do follow the What’s News section of the Wall Street Journal, the New Yorker and Techmeme which aggregate posts from a wide variety of writers and sources. I use Google Reader to manage the blog feeds on my desktop and the Reeder App to view them on my iPhone and iPad.

Twitter. I follow about 200 people on Twitter. I get a ton of news from individual Tweets as well as links to other content that I’m interested in that gets Tweeted. I follow a variety of news outlets, bloggers, traditional writers, businesspeople, athletes and musicians.

Podcasts. I follow 14 podcasts. My most listened to podcasts in order are a variety of shows on WEEI (Boston’s sports radio station), the Adam Carolla Show, This American Life (NPR) and the B.S. Report (Bill Simmons).

Television. I watch far less TV than I used to. I watch Meet the Press and 60 Minutes every week without fail. And I sporadically and somewhat infrequently catch parts of the local broadcast news and national cable news.

Newspapers. Because I'm from Boston I read the online version of the Boston Globe virtually every single day. Living in New York, on a rare, rare occasion I will pick up a copy of the Times, the Post or the Daily News.

Magazines. I subscribe to hard copies of Men’s Health and Outside Magazine. With some regularity I’ll download the New Yorker, the Atlantic or the Economist onto my iPad.

Other Social Media. Occasionally I’ll find a link to an article posted by a friend or connection on Facebook or LinkedIn.

Kindle. I got my first Kindle back in March. I love it. But so far I haven’t used it for anything other than reading books, though I plan to use it to read newspapers and magazines when I get around to it. Currently I’m reading Great by Choice by Jim Collins and Breakfast at Tiffany’s by Truman Capote. Both are great.

So there’s my somewhat organized list of where I get my news. It’ll be interesting to see how this changes over the next few years.

Some Thoughts on the Celtics

My favorite Boston sports team is, by far, the Celtics. I grew up in the era of Bird, McHale, Parish, Johnson and Ainge. This was back when nobody went to Red Sox games and the Patriots were a joke.

The Celtics had a great year this year and came within a few minutes of advancing to the third championship of the "Big Three" era.

The consensus seems to be that the "better team" -- the Heat -- won.  I disagree completely. What happened on Saturday night was more about health.

The Heat got their third best player (Chris Bosh) back full time and healthy in game 7.  It's that simple.  That's why they won.  He hit three three pointers and took the Celtics' big men way out of position to open up the lanes for James and Wade.  He had 19 points, 8 rebounds and a very key block.

If the Celtics got their fourth best player (Avery Bradley) back full time for game 7 it would've been a different result.  The better team didn't win; the team that got healthy just in time for when it mattered won.

No doubt this is the end of the road of the five year run of the Big Three in Boston. It was an unforgettable group. Their heart, commitment and unmatched defense will be remembered in Boston for a long, long time to come.

Bill Simmons wrote a column about the team back in March the day after they beat a very tough Clippers team in Los Angeles. He ended the column with these words and I'll do the same with this post.

We’ll always have that final minute after the Clippers fans filed out, when it was just the sea of green and a nodding Pierce happily soaking in those "Let’s go Celtics!" chants again. Leave them alone and the 2012 Boston Celtics will go down swinging. That’s all we know, and frankly, that’s good enough for me.

Where the Magic Happens

Very true.  Via Bijan Sabet.

Entrepreneur = Salesperson

At the start of the first day of class my Entrepreneurship professor in business school said two things to the class.

The first was, “if you don’t want to do sales every day, all day, then don’t be an entrepreneur”.  Then he asked everyone that was in sales to raise their hand. After about a third of the class raised their hand he said, “90% of you are not truly salespeople, you’re order takers, because you don’t have a quota and you aren’t getting rejected every single day”. I’m paraphrasing, of course.

While harsh, there’s lot of truth to this. Entrepreneurs are salespeople and salespeople are entrepreneurs.  They put their success and failure out there for everyone to see. A lot of other roles in an organization can take cover behind things like shared goals and muddled metrics and a lack of a direct cause and effect on revenue. Salespeople can’t. They have an individual goal, with clear metrics and a direct impact on revenue.  Like the entrepreneur, salespeople put themselves on the line.

Jim Keenan had a great post on this a while back. To emphasize the point, I’ll post an excerpt from it here:

So why doesn’t everyone want to be a sales person?

Because  . . .

It takes guts to only have HALF your salary guaranteed

It is sucks to be rejected on a daily basis

It’s hard calling up people you don’t know and asking them to meet you

It’s scary asking strangers for things

It’s uncomfortable challenging people

It’s tough being held accountable to black and white metrics. You can’t hide from the numbers

It’s not easy having your results constantly compared, in the open, to your peers

It’s not easy losing

It’s tough being fully accountable for your own success or failure

It’s not fun doing something where you can fail so quickly after be successful

Not everyone likes being in the spotlight

Unpredictability SUCKS

Most people don’t want to be in sales, because it takes GUTS! It takes guts most don’t have.

SecondMarket & the Tech Bubble

There was a fantastic column the other day on Reuters written by Felix Simon titled, Facebook’s SecondMarket Puppets. The column points out how investors that put their money in Facebook using SecondMarket while Facebook was private have actually lost money since the company went public. This is interesting – and scary – for companies with upcoming IPOs that are allowing their illiquid shares to be traded on a secondary exchange. In theory, the value of SecondMarket was that you could get in on a hot company pre-IPO and make big bucks if/when they went public. But it seems that this isn’t a guarantee. Simon’s key insight is this: 

…it’s increasingly looking as though shares in private tech-companies are a bit like fine art prices: a place for the rich to spend money and feel great about owning something very few other people can have. The minute they become public and democratic, they lose a lot of their cachet.  And a lot of their value.

The level of hype propping up the valuations of some of the hot private and public internet companies is enough to keep me far away from these securities...and SecondMarket.

Segmenting the Unemployment Rate

Any data set is a lot more useful if you segment it.

As an example, let’s say you find out that your e-commerce website converts at a rate of 3%. That is, for every 100 visitors, 3 make a transaction. That’s somewhat useful data, but it isn’t actionable -- i.e. you can't do much with it -- until you segment it. 

You need to break the users into segments: by gender or age or income, etc. When you do, you’ll find actionable insights that will allow you to take actions that will increase your conversions. For example, you might find that men between the ages of 30 and 40 that make more than $100k per year actually convert at the rate of 20%, but that most of your site’s visitors are in lower converting segments, thus the aggregate 3% conversion. With information like this you can adjust your marketing to bring more higher converting users to your site -- you'll get more marketing bang for your buck.

We must do the same with our unemployment data. The unemployment rate -- last time I checked -- was 9%. This number is quoted over and over again in the media as if, by itself, it actually means something. 9% unemployment is not actionable.  It must be segmented.

For example, the U.S. unemployment rate for those with graduate degrees is 2%, college grads 4.5%, high school grads 9.7%, non-high-school grads 15%. 

It’s critical to recognize the difference between these segments. The data is telling us that for the educated segment of our population, unemployment is at or well below its natural rate. But for the uneducated population it’s super high. This is actionable data. This tells us that there isn’t necessarily a shortage of jobs. There may actually be a shortage of qualified labor. Politicians should keep this segmentation in mind when evaluating "job creation" vs. "job training" programs.

Mary Meeker's State of the Internet

Nobody is better than Mary Meeker -- now a partner at Kleiner Perkins -- at summarizing the state of the internet. Last week she presented her Internet Trends 2012 presentation at the All Things Digital Conference. This presentation is fantastic, I recommend flipping through it when you get a chance. The most compelling part to me is her summary of how technology has forced almost all industries -- from photography to healthcare -- to reimagine their products and they way the deliver value. That section begins on page 33 and ends on page 84.

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