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March 1, 2018

Healthcare IT Industry Spotlight Interview, Part 2: Casey West, Managing Director at SSM Partners

MHT Partners  | Healthcare Investment Bank

The healthcare industry is also notoriously entrenched and slow moving. What characteristics convince you that an investment has what it takes to disrupt incumbents and embedded practices, or carve out new markets, in its respective corner of the industry to achieve a “hard ROI?”

It’s a combination of a number of factors, but I like to use the “proof is in the pudding” mentality. Because we are a growth equity firm, our investments generally have enough of an operating history for us to let the customers do the talking. We try to spend more time listening to what customers are saying about the product than what our perception of the product is. That’s where the rubber meets the road. We spend a lot of time trying to understand customer preferences, their decision-making processes, and their likelihood to continue using this product in the future.
Aside from that, there are many factors that go into making a company successful over a multi-year time period. A lot comes back to the team, its leadership, its pliability, its ability to collect data from the market place, triage that feedback into product enhancements, and then deliver this ever-evolving product back to the marketplace in such a way that they are highly competitive and economically viable. It’s really tricky, and a lot of it is about leadership and culture. That’s the part of the business that I truly love. I’m very thankful to be in the healthcare industry, but the people side of this is what’s most interesting to me. It is a great privilege to work with entrepreneurs.

How do you identify that in a founder or management team? Is it the same sort of track-record methodology that you apply to financials and customer behavior?

We’ve invested in entrepreneurs with a great track record, sometimes multiple times, and that has been a privilege. If that’s all we did, it would be limiting. There are not many entrepreneurs who fit that description, and frankly, there are great new entrepreneurs emerging all the time. It is on us to identify entrepreneurs who have the ability to become successful chief executives.

Focusing on that subset for the moment, what I look for in new entrepreneurs is an intensity, a competitiveness, and a drive. Motivations vary: some want to leave a mark on the industry and see things change, some are pursuing financial incentives, and some just want either success or fear failure. Regardless of motivation, they must be driven. For me, there just needs to be some sort of motivation and “edge” there. Think about athletics. There are players who have “it” who make everyone around them better because of their intensity, because of their preparation, because of their drive, it elevates the playing of the entire team, and that’s what we are looking for in an entrepreneur.

In Boston, we might call that the Tom Brady factor.

Exactly, Tom Brady’s not perfect. There are guys that are more athletic, guys who have stronger arms, and certainly guys that can move around better. But man, does that guy want to win, and maybe nobody prepares more thoroughly than him. It pays off, and it makes his team better.

But as an entrepreneur, one needs a strong understanding of economic context, market incentives in the industry, and their own economics. Some founders may have that intensity but be less aware of the economics of the market or their own business. Unfortunately, that is a severe hindrance to success. When you find people with drive who marry intensity and market sensibility, you really have a chance at making something special.
Interview to be concluded in next week’s blog.

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