The lack of focus, coupled with the “champagne and cocaine” mentality brought on by “easy” VC money totaling almost $1 billion, is what killed yet another AI health startup, Olive AI.
It seems like it was raising off of buzz words! I read all these and I still don't understand what it means in practice. Curious to know what its revenue (if it even had) and expenses/net loss were. I am guessing it was struggling to monetize.
Thank you for your question. As I discussed this in my Digital Health 2024 overview (https://sergeiai.substack.com/p/digital-health-2024-7-predictions), unless you are in treatment, drug discovery, genomics, radiology, mammography, dermatology, or part of the healthcare monopolies like UnitedHealth, Cigna, Elevance, CVS, Humana, Epic, Cerner, it's likely you're facing significant challenges in monetizing your healthcare business model.
In my article, I explained the reasons for Olive's failure. The "champagne and cocaine" metaphor reflects a self-serving bias common among venture capitalists and many founders. It suggests that founders, especially those with intricate ties to VC circles, are accustomed to being lauded as "visionaries" and dismiss any criticism as "undeserved". They're often too caught up in lofty long-term visions to recognize that the best, and often the only, path for startup survival is to roll up your sleeves, get lean, and not shy away from cost-cutting. Instead, founders often see VC funding as a free pass to the “champagne and cocaine” spending.
It seems like it was raising off of buzz words! I read all these and I still don't understand what it means in practice. Curious to know what its revenue (if it even had) and expenses/net loss were. I am guessing it was struggling to monetize.
Hi Christian,
Thank you for your question. As I discussed this in my Digital Health 2024 overview (https://sergeiai.substack.com/p/digital-health-2024-7-predictions), unless you are in treatment, drug discovery, genomics, radiology, mammography, dermatology, or part of the healthcare monopolies like UnitedHealth, Cigna, Elevance, CVS, Humana, Epic, Cerner, it's likely you're facing significant challenges in monetizing your healthcare business model.
In my article, I explained the reasons for Olive's failure. The "champagne and cocaine" metaphor reflects a self-serving bias common among venture capitalists and many founders. It suggests that founders, especially those with intricate ties to VC circles, are accustomed to being lauded as "visionaries" and dismiss any criticism as "undeserved". They're often too caught up in lofty long-term visions to recognize that the best, and often the only, path for startup survival is to roll up your sleeves, get lean, and not shy away from cost-cutting. Instead, founders often see VC funding as a free pass to the “champagne and cocaine” spending.
I discuss this and other biases, particularly those associated with AI systems in healthcare, in my recent paper: https://www.sciencedirect.com/science/article/abs/pii/S0009898123003212.
As a private company, Olive AI wasn't required to disclose its financials. However, the fact that the company reported revenue but not profit indicates it was experiencing losses. In fact, we know there were significant losses, as the company collapsed quickly from its $4 billion valuation in 2021. (Source: https://www.axios.com/pro/health-tech-deals/2023/10/31/olive-ai-is-shutting-down.) Olive's revenue was in the range of $100 to $500 million. (Source: https://incfact.com/company/oliveai-columbus-oh/.)
I wrote this article to help our industry learn from the mistakes of digital health companies like Olive AI and Babylon Health.