Why America Needs Companies Like Twitter

Nearly every day news publications highlight recent graduates who are “choosing Silicon Valley over Wall Street”, embracing not only the startup culture and lifestyle but the dream of getting rich quicker.  It is therefore understandable that Twitter’s initial public offering was a major event not only on Wall Street but college campuses across the world.  Twitter follows a long line of consumer-facing tech giants to price their IPOs in the last five years, including Facebook, LinkedIn, Groupon, and Zynga. But according to Dan Primack, a prominent tech blogger for Fortune magazine, there doesn’t seem to be another similar company on the IPO horizon any time in the near future, at least not one on the scale of “even my mother would know about it”.  While Primack notes that it seems like this should only matter to venture capitalists and bankers, the lack of prominent consumer technology IPOs could have a larger effect that permeates not only the entrepreneurial ecosystem, but American society as a whole. 

The phrase “technological sublime” was first developed by Perry Miller in his study “The Life of the Mind in America”.  A scholar of early American history, Perry wrote that “technological majesty join[ed] with the starry heavens above and the moral law within to form a peculiarly American trinity of the Sublime.” The steamboat, for example, evoked a sense of wonder typically reserved for God. The steamboat became “a subject of ecstasy for its sheer majesty and might, especially for its stately progress at night, blazing with light through the swamps and forests of Nature,” inspiring Mark Twain in the same way the stars inspired Van Gough.

David Nye expanded on this idea in his book “American Technological Sublime”.  Using case studies ranging from the skyscraper to the atomic bomb, Nye demonstrated how the American response to certain technologies is best described through the lens of the sublime.  The phenomenon of the technological sublime is as old as America itself. In an earlier era, Americans thronged at the 1939 World’s Fair; today we wait in long lines at the Apple Store on release day.  The Brooklyn Bridge and the Hoover Dam have been replaced by the iPod and the iPhone, but the same veneration of technology remains, giving a common source of devotion to a nation devoid of cultural and religious homogeneity.

Perhaps the most telling example of the technological sublime can be found in The Social Network.  David Fincher’s movie recounts the early story of Facebook through the lens of its founder, a self-assured college dropout who changed the world from a Harvard dorm room.  The movie went on to receive eight Academy Award nominations, including best picture, and prominent film critic Peter Travers of Rolling Stone named The Social Network his movie of the year.  Mark Zuckerberg’s story evokes a sense of awe among my peers, and it’s not because of the effectiveness of his customer acquisition strategy or the way he structured his data centers. Facebook became my generation’s moon landing, arousing not only admiration but national pride.

Will this same fervor greet the tech successes of the future?  Veeva Systems provided a better return on capital for its investors than Twitter, but none of my friends shared that story because Veeva is an enterprise company that provides content management solutions for the life sciences industry (and that’s not even fun to read).  Zulily went public at a $2.6 billion valuation, but barely a single tech blogger wrote about it because it has a functional revenue model and its co-founders are in their 40s. Sexy companies are started by college dropouts and don’t make any money.  Those companies evoke the sublime.  Real businesses with uninteresting founders belong on an investor’s Excel sheet, not on the front page.

While companies like Uber or Spotify could rise to become the next big consumer success stories, chances are we will have to wait at least a year and probably even longer for our next big consumer tech IPO.  This leaves the question: what happens when the technological sublime runs dry? As Michael Sacasas notes, throughout history Americans have been divided on the basis of class, ethnicity, and religion.  Americans share no strong historical blood lines or ancient ties to the land.  What has bonded Americans together, however, is a belief in technological progress reinvigorated by one sublime technology after another, from the transcontinental railroad through The Social Network. I worry that the coming dry spell will impact not only Silicon Valley and Wall Street, but our sense of what makes us American.

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Direct to Consumer Genetic Testing: What Makes Disruption “Sustainable”?

Genetic testing began as a niche service limited to a small number of specialized doctors that could test for a few rare diseases, but today consumers can test for over 1200 disease combinations ranging from breast cancer to cystic fibrosis. The falling costs and the lowering of technical barriers have transformed genomics and spurred a new industry: Direct to Consumer Genetic Testing (DCGT).  While doing some research on this industry, I found that the current practices of DCGT companies raise some troubling ethical concerns.This case study also inspired me to think critically about how “sustainability” is discussed in the start-up lexicon, and to propose a new definition of start-up sustainability going forward.

Perhaps the foremost critique of DCGT is lack of medical validity.  Contradictory results commonly arise from different tests, and the lack of regulatory framework means there is no quality control held over the science. Despite this, survey of 38 DCGT companies conducted by Leonhard Hennen in 2010 found that “only thirty-seven percent of the companies’ websites give specific information on the analytical validity of the genetic tests offered (accuracy of the test identifying the biomarker).” The concern is not so much that DCGT companies will misdiagnose a disease—government regulations prohibit diagnosis from anyone who is not a medical professional—but that a negative result  could cause consumers to think they are no longer at risk for a disease and delay a visit to a doctor.

Medical concerns also include clinical validity, or the relationship between the genetic marker and the patient’s clinical status.  In Dementia Entanglements in a Postgenomic Era, Margaret Lock uses Altzheheimer’s disease as a particularly illustrative example of the faulty risk assessments given on the basis of individual genetic testing. Although there was early excitement that the Alzheimer’s puzzle could soon be “solved” after the discovery of the APOE gene in 1993, scientists now unanimously agree that the presence of the e4 allele on the APOE gene “is neither necessary nor sufficient to cause the disease,” and that “at least 50 percent of e4 carriers never succumb to Alzheimer’s disease”. Scientists recognize that other genetic and environmental factor effect the onset of disease, but only 24% of companies in Hennen’s study give information on the clinical validity of genetic testing.

DCGT companies have also been criticized for failing to offer counseling services to those who use their services. In her study of deep vein thrombosis, Paula Saukko found that while some “well informed” patients felt counseling was unnecessary, a subgroup of diagnosed patients showed distress and confusion about thrombophilia.  This subgroup included those with a strong family history of DVT, a personal history of recurrent clotting, and who came from lower classes. The “less informed” patients felt that genetic counseling would have been helpful in dealing with their diagnosis, yet only ten of the 38 DCGT companies in Hennen’s study mention on their websites that they offer counseling service, and counseling in these instances is mostly done through written information via mail or web-log.  Of course, it is impossible to determine whether or not the customer properly understands counseling provided in those ways.

The start-up community loves to talk about “sustainability” in terms of financial metrics.  I have heard many times that if your Customer Lifetime Value (CLTV) is greater than your Customer Acquisition Cost (CAC), you have a “sustainable business.”  I think that going forward, we need to expand our definition of start-up sustainability. Sustainable businesses require not only sustainable financial metrics, but a sustainable market.  Likewise, a “sustainable market” generally refers to the size of the market (are there enough people out there who want genetic testing?). This is also an incomplete definition: a “sustainable market” comprises more than just market size. It includes the existential threat of regulation.  The American College of Medical Genetics has advised the public to avoid “home DNA tests” due to the possible misinterpretation of results and the lack of follow up counseling, and the FTC and the FDA jointly released a consumer alert targeting the lack scientific validity in some genetic tests. I am sure that the entrepreneurs who run DCGT companies are aware of the “best practices” espoused by their more traditional peers, and that they are aware that not following them has helped DCGT companies to raise massive rounds of financing.  But this growth is not sustainable because these companies have contributed in creating an unsustainable market.

DCGT companies argue that they give more consumers more access to the latest achievements of human genome research, and that by growing genetic testing supply they are helping to create a world of individualized, preventive medical care.  But DCGT companies will never reach their goal of improving health for consumers if they cannot first create a healthy industry.