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Is WhatsApp the Acclarent (device) of the App World? In it to Win it and Not Sustain it?

Is WhatsApp the Acclarent (device) of the App World? In it to Win it and Not Sustain it?

Josh-Makower-PhotoUpdated:  Saturday, 2/22/2014  (7:11 PM)

Updated: Saturday 3/8/2014 (11:59PM)

Medical device startup and tech startup (WhatsApp)  follow the same business model.

Apples to Oranges 1

Pharmaceutical and now Facebook follow the same model.

Apples to Oranges 2Here’s a great case study that makes the point:

Johnson & Johnson bought Acclarent (Medical Device Startup out of Menlo Park) for $785 million  

(January 2010)

Acclarent was projected to make $1 billion by either 2015 or 2017, but by some estimates made only around $190 million last year.   (I do remember Gary Pruden, Johnson & Johnson  Worldwide Chairman, Global Surgery Group* boasting the same claim at a meeting in 2010, just after the purchase) *(that name changes all the time, read why: )

cf final

The projection is way off because the business models do not align.  It will be interesting to see if WhatsApp follows the same pattern. 

According to Zuckerberg the projections of WhatsApp’s are 1 billion*-(that sounds familiar) but are unrealistic and demonstrates lack of knowledge of the market and business model differences.  And you buy a startup for what it is and not what it’s going to be (one of the main reasons startsup fail). I get that ‘fail,’ and $19 billion is an oxymoron, but we have to take the blinders off regarding the billions and start looking at the actual business.

FB needs to look at the correlation between medical device and pharma to see a similar fate slated for WhatsApp to underproduce and FB to start incorrectly placing blame internally, when it fact it was a poor purchase.  Maybe Gorsky (CEO of Johnson & Johnson World Wide) &  (Sucker, I mean) Zuckerberg can get together and compare notes as to which is a bigger sucker.

Startups do not care about sustainability they care about initial growth at any cost and often follow The Sociopathic Business Model to achieve their goals. 

But don’t feel too badly for Johnson & Johnson in this scenario,if they were that concerned, I don’t think they would keep investing the founder of Acclarent, Josh Makower’s other New Enterprise Associates (NEA)  startups, do you?

Nevro Corp. Closes $48 Million in New Financing

MENLO PARK, Calif. – March 7th, 2013 – Nevro Corp., a medical device company focused on improving pain relief in patients suffering from debilitating chronic pain, today announced it has completed a $48 million Series C financing round. The round was led by new investor Novo Ventures, joined by New Enterprise Associates (NEA) and Covidien Ventures. Existing investors participating in this financing round included Accuitive Medical Ventures (AMV), Bay City Capital, Johnson & Johnson Development Corporation (JJDC), Mayo Clinic, MPM Capital, and Three Arch Partners.

Here’s another possible characteristic of The Sociopathic Business Model™ for us to apply to the case study to see if there are other parallels between Facebook (at the startup level (pre IPO) in comparison to Acclarent (startup level pre-selling to Johnson & Johnson):

Was the legal system used to intervene against either founder/Company regarding infringement of an idea?   Facebook’s story was made famous by the movie, The Social Network .

December 2003

Mark Zuckerberg, in 2003, begins working on Harvardconnection.com with twin brothers Cameron and Tyler Winkelvoss and Divya Narendra.

January 11, 2004

Mark Zuckerberg registers the domain thefacebook.com

Enlists help of friends Eduardo SaverinAndrew McCollumDustin Moskovitz and Chris Hughes

February 4, 2004

The site goes live

And here’s a charming IM that was leaked regarding what Mark Zuckerberg planned to do to the orginal team created in 2003

facebook 1 leaked

Again, we are just applying the characteristics to a business model and in no way suggesting any of the people in the company have these characteristics personally.   It’s compelling to look at the way the organization in operating and I leave that up to each individual reading to decide how to best apply this information.

SBM NORMAL

Manipulative, does not recognize the rights of others

Accomplices become eventual victims 

Pathological lies

Lack of accountability

As the movie depicts, Mr. Zuckerberg was sued by Cameron and Tyler Winkelvoss and Divya Narendra; and also his best friend, who fronted the original money, Eduardo Saverin. The plaintiffs dismissed the case and undisclosed amounts were written to the injured parties.  

In the case study comparison of Acclarent, there is no movie,  but there is evidence to support there was a Patent Infringement Case filed. Quest Medical Inc et al v. Acclarent Inc et al in June 2006 and terminated in November 2006 where Quest Medical dismissed the case.  Was it because Quest Medical didn’t have enough evidence or was an undisclosed amount written to the injured parties?  Most cases, 95%,  settle out of court before reaching trial.  We don’t have enough data on this case to run it through the model as we did Facebook, but it’s certainly food for thought, isn’t it?

While we are comparing billions to hundreds of millions it does begin to look like there is a cycle or pattern that’s emerging in startups.  One I’m not sure we want to keep encouraging, replicating and rewarding.  Mark Zuckerberg lied and stole but became the 19th richest person in the world after the Facebook IPO and worth an estimated $19.1 billion-I’d say that’s some reward and one that a lot of people will want to replicate.

Again, any information is good information, it’s what we choose to do with it that counts!

 

Read more from a 22 year startup veteran who was quoted as saying :

If you’re a startup employee, you’re probably getting screwed.

 

 

***http://www.killingmycareer.com/the-sociopathic-business-model/the-yellow-brick-road-of-risperdal/

*http://www.washingtonpost.com/business/whatsapp-has-outage-after-19b-facebook-deal/2014/02/22/4c303a88-9c12-11e3-8112-52fdf646027b_story.html

 

 

 

 

1 Comment
  • Anonymous
    Reply

    Feel so sorry for the author, i pitied him and read his article. Whatsapp was the best decision for facebook it presented serious threat to it. No body knew it inside the u.s.a but in the middle east asia and aftica. It is the most widely used application. It alone could have introduced a social network and destroyed facebook. Zuck was scared out of his mind and that is why he paid so much money for it. You will never make it if you have not by now.

    March 1, 2014 at 11:43 am

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