Ohio Venture - OVA Review Newsletter
News from the Ohio Venture Association meeting on January 13, 2012

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Keynote Address:

Stephen McHale
Chairman and CEO
Explorys, Inc.

As one of Northeast Ohio's most prominent serial entrepreneurs, Stephen McHale has a long track record of being ahead of the information technology curve. He founded two earlier companies, each of which became leaders in their niche, before selling both to larger entities. This time, he's focusing on opportunities at the intersection of healthcare and "big data," and his partner is the Cleveland Clinic.

His company, Explorys, was co-founded with the Clinic in 2009 to explore options in healthcare as they relate to data mining and business intelligence. He told OVA members at their monthly lunch in January that the best analogy for what Explorys is trying to create is an ERP system for the healthcare industry, though one that would be cloud-based. With healthcare reform and the push toward electronic medical records, "organizations that compete have to collaborate. That's perfect for us." The goal, he went on to say, is to "have a conversation with your data, and get answers in less than a second. Not days or weeks. If you can do those things, you can lead the market."

In describing his entrepreneurial journey over the past 25 years, he delved into an interesting paradox. Even though he's forming a company around data, he noted that his entire career has been built more on gut instincts for what feels like the right thing at any one time.

Of one company-building experience he said: "It was an experience that wasn't so planned out. It was listening to yourself, being engaged in the journey, picking up a lot of data points along the way, and recognizing that you're not going to be able to process them in real time, but that they're going to be in there," to be processed eventually.

This dynamic was especially true in the case of Everstream, a company he co-founded in 1999. "We're streaming music, we're considered the top dog (in the industry)—at least we thought we were—we organized all these publishers, and we're streaming the music out, and we're really rolling. We realize we're burning $600,000-700,000 a month and going up. But we had $6 million in the bank, with promises of revenue coming, so we were okay."

Then, while on vacation, sitting by a pool, he was suddenly struck with the realization that it was not sustainable. "I was talking to my wife and I said, 'We're shutting this down.' We had a team that went in on a Monday and took it down 75% in a week, because it occurred to me that the model just wasn't going to be sustainable, and if we didn't make our moves immediately, we weren't going to have enough to turn the engines and save our business. So we did that... It's not all roses, but we had to do a re-set button on the business, and that was just a pure gut call."

Later as he watched the casualties in that business pile up, he realized they had made precisely the right move. After adjusting the business model and repositioning its intellectual property, the company instead targeted the telecom business and media measurement. Again, it was a gut move. Ignoring the advice of a prominent consulting group, which advised against it, Everstream eventually rebounded nicely, and was later sold to a public company in Atlanta, Synergistic.

More recently, when he and his team approached the Cleveland Clinic about a possible joint venture, he was asked for a business plan. He didn't have one. "You're going to have to trust us," he told them. "Again, it was gut, but I also began surrounding myself with other people who can do what you can't do from gut, which is analyze, calibrate, validate things, always validate your gut, and we do that." He also approached the Clinic only after spending some time with his IT partner in Silicon Valley, listening closely to how the top engineers at industry leaders such as Google, Facebook and Yahoo leverage big data.

Today, Explorys aggregates and leverages "high-velocity" data from the healthcare industry. It now has 41 billion pieces of clinical data across 13 million patients and thousands of providers. It's arguably the largest clinical data set in the world, and its size is doubling every year, he says.

After two earlier business successes, he took four years off, intending to get back into business, but waiting for an opportunity that would excite him. His only goal this time, he said, was "I wanted to get into something socially redeemable, and (one that is) orders of magnitude larger in scale." Once more, his gut told him that leveraging big data in healthcare seemed to be just the right fit.

More information:

Webcast from the Meeting:

Click on the image below to view the entire presentation as video.

Video Webcast from Recent Meeting
Webcasts produced by Tom Kondilas.

OVA's New Video Archive is Online:

OVA is pleased to have recently added an archive of program videos to its website. You'll find the full video record of most OVA formal programs since 2008 at www.ohioventure.org/video-archive.html.

Upcoming Meeting Dates:

  • April 13, 2012
    Joseph Jankowski
    CWRU
    Stephen Behm
    University Hospital
  • May 11, 2012
    Panel Discussion
    Featuring a Company Showcase
  • June 12, 2012
    Venture of the Year Award
    Submit Nomination

See complete details and registration for these events.
 

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Newsletter Sponsors:

The Oho Capital Fund

Taft Stettinius & Hollister

Glengary LLC

Chrysalis Ventures

Early Stage Partners

Edison Ventures

Draper Triangle Ventures

Fir Hill, LLC

Ciuni & Panichi

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