January 30, 2017

Report Finds That Developing Countries Are Facing a New Challenge From an Increase in Noncommunicable Diseases

Commissioned by the Geneva, Switzerland-based International Federation of Pharmaceutical Manufacturers and Associations (IFPMA) on behalf of Access Accelerated, the Economist Intelligence Unit (EIU) produced a report, The next pandemic? Non-communicable diseases in developing countries, that "examines the growing burden of noncommunicable diseases (NCDs) in low- and lower-middle-income countries, the drivers of this change, and possible solutions for how healthcare systems can bridge the resource gap to deliver appropriate NCD care for patients."

"Developing countries are facing a new challenge from an increase in noncommunicable diseases (NCDs) such as cardiovascular disease, cancer, mental illness, diabetes and chronic respiratory disorders," the report explains. "At the same time, while substantial gains have been made in the battle against infectious diseases and child and maternal mortality, these remain a major concern, resulting in a double burden of disease." The report is based on data analysis, desk research, and five in-depth interviews with experts on NCDs. The main findings of the research are listed below in its entirety as found in the report's Executive Summary:
  • The burden of disease attributable to NCDs in developing countries is increasing relentlessly. NCDs account for over half of the overall burden of disease in lower-middle-income countries, and close to one-third in low-income countries. The evidence shows that, in absolute terms, this burden increased by nearly 30% between 2000 and 2015 and impacts people at a younger age than in wealthier countries, exacerbating social and economic costs. Cardiovascular disease is the main contributor to the increase.
  • Existing healthcare systems are ill-equipped to manage these conditions. In general, healthcare systems in developing countries have evolved to cope with the burden of infectious diseases and to improve child and maternal health. There is now a pressing need to include the prevention and management of chronic diseases in these systems, requiring new thinking on how such medical services are financed. These services include the provision and use of appropriate treatments as well as screening and diagnostic services.
  • Much could be achieved through preventive policy intervention, but there is no "onesize-fits-all solution." Driven by urbanization, a shift to more sedentary occupations and less healthy diets, much of the increase could be mitigated through preventive healthcare policies. Such policies include targeting key risk factors, such as obesity, smoking tobacco products and alcohol abuse. Health awareness programs, urban planning that facilitates physical activity and taxation strategies that seek to reduce demand for tobacco are all good starting points, but there is no "one-size-fits-all" solution; countries need to develop policy frameworks that reflect the national burden of disease, funding constraints and the nature of the healthcare system while also taking cultural factors into account.
  • Delivering appropriate NCD care to patients requires addressing multiple challenges. They encompass insufficient access to medical care and to healthcare facilities and professionals (physicians, nurses etc), but also policy weaknesses. Policies may not exist or, if they do, may not be comprehensive because they lack clear and achievable targets, adequate resources for implementation and monitoring, and evaluation processes.
  • Developing countries face an acute financing constraint for healthcare in general, and for NCDs in particular. On a per-capita basis, total spending on healthcare in low-income countries amounts to less than 1% of the expenditure of high-income countries, and in lower-middle-income countries it amounts to less than 2%. Out-of-pocket expenditure still represents the largest proportion of spending in developing countries, exposing most households to catastrophic healthcare expenditure. At the same time, only a tiny percentage of development assistance on health is allocated to NCDs.
  • Technological and organizational innovations as well as sustained, coordinated efforts across multiple stakeholders are required. The healthcare infrastructure developed to address Millennium Development Goals can be leveraged to face the NCD challenge. For example, there is an opportunity to leverage primary-care clinics established to deliver reproductive, maternal and child health to extend the provision of screening and treatment for cervical cancer and hypertension, as well as patient education programs. Innovative business models offer the opportunity to create incentives for patients and healthcare providers to pursue prevention programs. In both cases initiatives are in their infancy and warrant scaling up, an effort that will require financing.
While I agree with each of the report's findings, I particularly support the final point given my personal and professional interests in technology including patient education and mobile health technologies. The mobile software solutions my colleagues and I are designing at ROI3 will provide mobile phone users in developing economies and newly industrialized countries with the ability to receive information for the prevention of NCDs such as diabetes, cancer, cardiovascular and chronic respiratory diseases. As the EIU report correctly notes: "There are also interesting opportunities to embrace new service-delivery models and to scale up business and technological innovations that offer the possibility of leapfrogging more traditional ways of increasing health awareness and driving consumer behavior."

Lastly, this website contains a data visualization tool that shows the disease burden of NCDs in 30 developing countries in 2000 and in 2015.

Do you agree with the findings of the report? What innovative services are you seeing that are increasing health awareness?

Aaron Rose is an advisor to talented entrepreneurs and co-founder of great companies. He also serves as the editor of Solutions for a Sustainable World.

January 19, 2017

Relationships Can Change a 'No' to a 'Yes'

As part of the Eureka Park Marketplace at CES® 2017, Techstars sponsored the Startup Stage, which provides an opportunity for tech leaders to share their knowledge and experience with conference attendees. This post focuses on a conversation between Brad Feld, co-founder and Managing Director of the Foundry Group, a Boulder, Colo.-based venture capital firm, and James Park, CEO of Fitbit. Mr. Feld also co-founded Techstars.

As the title of the talk suggests, "Fireside Chat with Fitbit: From Inspiration to IPO," Mr. Park discusses the timeline and various challenges he and his colleagues encountered as they launched the company and developed the product. As a hardware company, Mr. Park talks about the importance of managing engineers to overseeing production to logistics. "I remember spending a whole week evaluating third-party logistic providers, visiting them, trying to understand what made one company better than another." I commend Mr. Park's efforts to understanding the ecosystem of his business and its industry, which is essential if a new business is going to overcome the odds of startup failure.

Messrs. Feld and Park then talked about the first time they met, which took place via a telephone conversation at a time when Fitbit was attempting to raise a Series B financing. Todd Bishop of GeekWire summarizes Mr. Feld's reflections of the process that led him to invest in Fitbit:
It was in 2010, during a major snowstorm at his home in the Colorado mountains, and [Brad Feld] was too distracted by intermittent power outages to give serious attention to an investment pitch from a fitness tracking startup. 
'Pretty much my entire goal during that call was to get off the phone,' Feld recalls. 'I wasn't in any sort of headset or mindset about investing. I was interested in the idea of human-computer interaction, but I hadn't really processed this notion of what a Fitbit was, or why I would want to instrument myself yet. We were just at the very beginning of that thought process.' 
So he passed. But nine months later, Feld heard from his fellow investors Jeff Clavier of SoftTech and Jon Callaghan of True Ventures, urging him to take a serious look at Fitbit again. 
Clavier sent Feld an email that basically read, 'Brad, don't be f—ing stupid, you need to pay attention to this,' as Feld recalled. When Feld continued to express ambivalence about the investment, Clavier forwarded the same email again and told him to save it. 
Feld, who had been using a Fitbit in the meantime, relented. 
His firm, Foundry Group, ended up leading a $9 million Series B investment in Fitbit with SoftTech and True Ventures in 2010, and continued to invest more after that. When Fitbit went public in 2015, Foundry Group’s 28.9 percent stake was reportedly worth nearly $1.6 billion.
I cannot emphasize enough the importance of capitalizing on established relationships. In 2016, I was approached by a young man in Seattle, Wash. about making an investment in his company. The entrepreneur and I had a positive meeting at my office where we talked about the problem his company was trying to solve, his short-term goals and long-term vision, and his ability to lead the company to profitability.

Among the number of documents the entrepreneur provided to me as the meeting was nearing its conclusion was a spreadsheet that listed the current shareholders/investors. Upon an initial review, I recognized two individuals on the list and asked if it would be okay for me to contact them to learn why they had invested in the company. The entrepreneur said he was okay with me contacting the two investors.

I spent the next few days reviewing my notes from the meeting as I was seriously considering making an investment in the company. Like with every startup, there were a number of risks to consider. I was interested in the product the company developed and I felt certain key risks could be mitigated. However, I did not contact the two individuals whom invested in the company (primarily because I was focused on more pressing matters relating to my other business interests). Ultimately, I decided not to invest.

While the entrepreneur's initial response to my rejection was understandable disappointment, he expressed his appreciation for my time and respect for my decision. However, a key mistake he made was not taking the initiative to ask the two current investors to contact me. He should have asked these individuals to contact me and convey their reasons for what led to their decision to invest. Hearing their story about why they decided to invest could have positively influenced my decision to write a check to the company. In other words, a short conversation with an investor whom I know and respect could have been the deciding factor of going from "no" to "yes, I will invest."

Do you have a similar story, either as an entrepreneur or investor, to share? How do you utilize relationships in your business dealings? 

The entire conversation between Messrs. Feld and Park may be viewed below or through this link.

Aaron Rose is an advisor to talented entrepreneurs and co-founder of great companies. He also serves as the editor of Solutions for a Sustainable World.

January 16, 2017

Startups Demo Their Products at the 50th Anniversary of CES

Once again, I had the pleasure of attending CES®, the world's largest innovation event, from Jan. 5-8, 2017. In addition to more than 3,800 exhibiting companies,over 600 startups demonstrated their latest innovation at the Eureka Park Marketplace, which is a specialized exhibit area that provides startups a unique exhibiting opportunity to launch a new product, service or idea. According to the Consumer Technology Association, the Arlington, Va.-based organization that produces CES®, "More than 175,000 industry professionals, including 55,000 from outside the U.S., convened in Las Vegas to drive the ever-evolving global technology industry forward." This post, which is the first of three regarding CES® 2017, focuses on a few companies that I saw demonstrate some interesting (or amusing) products at the Eureka Park Marketplace.

Image: Wezzoo
Seattle has a reputation for its rainy weather (although despite exaggerated rumors, it does not "rain all the time" in the Pacific Northwest). Produced by the French company Wezzoo, the Oombrella is a smart connected umbrella that sends you severe weather alerts in your vicinity. In addition, "the unforgettable umbrella" sends you an alert to your smartphone if you forget it a restaurant or somewhere else. You can also share live date to the Wezzoo community.

Image: Sprimo
As with many of you, I spend too much time working inside an office. Therefore, I found interest in the Sprimo, which is a personal air purifier. Designed by Sprimo Labs and promoted as the "world's smallest air purifier," the Sprimo "learns, adapts and delivers clean air towards your breathing zone in less than 30 seconds, regardless of room size," according to the Santa Clara, Calif.-based company's press release. Scientifically proven to be 50 times more effective than conventional air purifiers, Sprimo uses advanced sensors to continually analyze air, adapt filtration, and deliver clean air--based on your personal preferences.

The company also lists two important value propositions of its product: (1) Energy efficient and (2) economic and sustainable. Regarding the former, the Sprimo uses only 12.5% of the energy that whole room purifiers use. As for the latter, the unit and filters cost half as much as whole room purifiers and filters, and filters are recyclable. While many people spend as much as 90 percent of their time indoors, I appreciate the claim that the "Sprimo helps to block airborne virus/bacteria, which reduces the exposure to contagious particles that can help your immune system in an open office environment, especially during flu season."

Image: Catspad
And for cat lovers, the Catspad is a smart and connected cat feeder and water fountain. The dry food dispenser and water fountain helps you manage your cat(s) as well as their food and water intake from your smartphone. The water dispenser provides fresh, filtered, running water to encourage them to drink more. The Catspad app allows you to check the amount of food and water available from your smartphone. The French-designed product will detect each individual cat, using either their microchip or collar tag--the latter of which is provided by the company.

The was the sixth year of the Eureka Park Marketplace at CES®. Having attended each year, I am continually impressed with how this event provides a great platform for new and growing companies to introduce and market their technologies to influential media, key investors and potential collaborators. This link provides a complete list of the exhibitors at this year's event.

Did you attend CES® 2017? If so, what products or services did you find interesting?

Aaron Rose is an advisor to talented entrepreneurs and co-founder of great companies. He also serves as the editor of Solutions for a Sustainable World.

January 6, 2017

Majority of Business Executives Are Encountering Global Resource Challenges

Sponsored by the Sealed Air Corporation, the Economist Intelligence Unit (EIU) conducted a survey of 800 business executives in the food & beverage, hospitality services, healthcare services and consumer goods industries. Respondents are drawn equally from North America, Latin America, Europe, Middle East and Africa, high-income Asia-Pacific countries and emerging-market Asia countries; 29 percent hold C-suite positions, with the rest being senior vice presidents, directors or senior leaders. Thirty percent of the respondents are from organizations with more than US$500 million in revenues.

To complement the survey findings, which may be found in a report titled Global resource challenges: Risks and opportunities for strategic management, "the EIU developed the Global Resource Management (GRM) Index, a set of four unique, interrelated industry-focused indices that examine how companies and governments monitor resource use, plan for future challenges and commit to sustainable, intelligent resource management across 25 countries. The industries and countries in the GRM Index are the same as those included in the EIU survey, with the exception of Denmark and Luxembourg."

Key findings of the report are listed below:

Labor is a constant challenge
  • "Access to labor was identified as the biggest challenge by respondents across industries. Fully 70% of respondents say they face labor challenges, alone or in combination with other resource issues, and half say access to skilled labor is a top challenge. Food & beverage and hospitality services are the industries hardest hit by labor challenges.
  • Improving overall working conditions is most often cited by survey respondents as an effective solution for both skilled and unskilled labor challenges, chosen by 27% of respondents. The other solutions in the top three are local training and education and relocating trained workers to locations with need for their skills.
Natural resource scarcity is particularly complicated to manage
  • 40% of survey respondents who say their company is facing natural resource challenges say these add time, cost or complexity to their operations.
  • Consumer goods and food & beverage companies are leaders in natural resource management. The index shows companies in these industries are more focused on sustainable management of environmental resources, such as committing to global standards, while the healthcare services and hospitality services industries have been slower to adopt such practices, in some cases because they are not as relevant to operations.
  • To address natural resource challenges, food & beverage companies focus on training employees and vendors to manage resources more effectively; consumer goods companies say working with suppliers to reduce resource use is the most effective strategy.
Physical infrastructure challenges affect the entire supply chain
  • Physical resource capacity, which includes the quality and reliability of the power network, is particularly low in emerging-market Asia, according to the index. In these countries, poor physical infrastructure exacerbates energy use and intensity due to waste and inefficiency. Europe, on the other hand, scores particularly well in this category.
  • The most effective ways to address physical resource challenges, survey respondents say, are mainly operational—such as adding flexibility to more easily operate in many locations (26%), training workers (25%) and reducing overall reliance on physical resources (24%).
Companies can be short-sighted regarding long-term risks
  • The index shows that water is a critical natural resource challenge for companies operating in many countries, but it is not cited as a top concern among survey respondents. This suggests that respondents are not necessarily aware of or focused on the long-term risk that water scarcity and climate change can have on their operations—even though 66% of respondents say climate change has had some effect, positive or negative, on the resource challenges they face. The lowest share saying so was respondents in North America (54%), while the highest was respondents in emerging-market and high-income Asia (81% and 71%).
  • One in five hospitality, consumer goods and food & beverage executives say climate change has made resource challenges more difficult to manage in the past two years; a separate 11% say climate change has increased the priority of managing these challenges, suggesting that organisations focused on resource challenges today may have an opportunity to get ahead of their peers as those challenges become more acute.
  • Collaboration with suppliers to reduce the use of natural resources is cited as an important way to mitigate natural resource challenges across industries (chosen by 24% of survey respondents as effective), while working with industry or consumer groups is cited as effective by only 11%. This suggests that most executives are not taking advantage of external collaboration partners to address critical resource challenges. This, too, seems short-sighted since best-practice companies very often gain significant benefits by doing so."
The report's conclusion begins by noting "most companies today face labor, physical or natural resource challenges, often in combination. The good news is that when they address these issues—individually and, more powerfully, together—most companies see hard and soft business benefits. The difficulty often comes in determining how to address all three challenges in a way that derives the most business benefit while mitigating a broad range of short- and long-term risks."

Moreover, "while many companies are focused on near-term talent issues ... they may be setting themselves up for long-term problems if they don't seek solutions that address labor in the context of the other issues facing them."

Do you agree with the findings of the report? Is your company facing labor, physical or natural resource challenges? And if so, what tactics are being utilized to mitigate these issues?

Aaron Rose is an advisor to talented entrepreneurs and co-founder of great companies. He also serves as the editor of Solutions for a Sustainable World.

January 3, 2017

EIU Report Highlights ASEAN as an Important Economic Bloc

Despite economic headwinds certain global markets are facing, I remain encouraged by the economic growth projections of the ten nations that comprise the Association of Southeast Asian Nations (ASEAN). This is a topic that I have been tracking for the past few years, Therefore, I found particular interest in a whitepaper, ASEAN Cities – Stirring the melting pot, produced by the Economist Intelligence Unit (EIU) that says: "In a world struggling with low growth, the ten member states of the Association of South-East Asian Nations (ASEAN) represent a genuinely exciting prospect among emerging markets." Moreover, the EIU "expects growth in the region, already the world's sixth largest economic bloc, to average 4.6% annually in the next five years. Much of this growth will come from ASEAN's urban hubs: the region currently has around 50 cities with populations of over 500,000, which will continue to drive an overwhelming share of its economic development in the next decades."

The whitepaper correctly asserts that ASEAN, with a population of 626 million according to the US-ASEAN Business Council, represents "a powerful economic bloc." Supporting this claim, the report says ASEAN is the sixth-largest economy in the world with a combined GDP of US$2.4trn. The report, however, importantly recognizes that ASEAN "includes economies with vastly different profiles: GDP per capita in its wealthiest member, Singapore, is over 50 times higher than that of its poorest member, Myanmar. At the same time, Singapore's population of 5.5m is only a small fraction of that of Indonesia, which, with a population of 250m, is the region's most populous nation and its single largest economy (see Figure 1)."

Encouragingly, "despite these differences, the EIU forecasts that the region's growing economic integration, aided by ASEAN-led initiatives, will pay off to see it expand by 5% a year on average over the next five years."

The EIU's analysis further explains that "the main 50 cities with populations of over 500,000 people in ASEAN are the ones that are driving an overwhelming share of the bloc's economic development. Urbanization is well known to result in productivity benefits, led by its ability to agglomerate knowledge, resources, ideas, innovation and different cultures. Cities profit from this cluster effect to form highly concentrated and efficient economic powerhouses. About two-thirds of a city's economic growth and competitiveness are determined by its population flow."

Having traveled to ASEAN's key economic hubs such as Bangkok, Ho Chi Minh City, Jakarta, Kuala Lumpur, Manila and Singapore, I can attest that "ASEAN cities are still young and evolving rapidly, and the importance of migration—internal, rural-to-urban and external—cannot be ignored."

The purchasing power of individuals residing in ASEAN's urban areas will continue to rise. "Over the coming years the EIU expects incomes to grow at marginally faster rates in rural areas than in cities, where labor markets are comparatively tighter, although this faster growth will be from a lower starting base."

I am bullish about the business opportunities that exist for companies looking to expand into ASEAN. In particular, I see significant opportunities for those companies creating products or services that target the interests of a growing middle-class. These products or services include education technology, mobile health, self-driving technology, smart energy, eCommerce and enterprise solutions, and home entertainment.

Do you agree with the findings of the EIU report? Are you currently or planning to do business in ASEAN?

Aaron Rose is an advisor to talented entrepreneurs and co-founder of great companies. He also serves as the editor of Solutions for a Sustainable World.

January 1, 2017

25 Things to Consider for Your Business as You Begin a New Year

Photo: http://ow.ly/9sEn307As1T
Happy 2017!! Many business owners use the start of a new year as a time to financially prepare for the next 12 months. In an article written for Entrepreneur magazine, John Rampton provides "25 ways in order to keep your business up-and-running for the long haul." While you can read Mr. Rampton's "25 Things to Begin Now so Your Business Thrives in 2017" below, this post focuses on a few items that I find particularly value as I prepare my business for the coming year.

Mr. Rampton correctly begins his list with revisit your business plan. I am a strong proponent that every entrepreneur should create a business plan, a topic that I have addressed in previous posts, and business owners should use the beginning of the year as a time to "make sure that your original plan still fits your current business situation."

A business should focus on profitability. As Mr. Rampton explains: "Either revisit or create a financial model by paying close attention to your expenses, assessing your marketing plan, building your projections from the bottom-up, checking results from the top down, and finding your breaking point. It may not be perfect, but those steps can guide you in boosting profits."

No matter how great your attorney or accountant is, a business owner should keep up on new tax rules and regulations. "There may not be major changes every year, but it's important to pay attention to any new federal, state, and local tax rules and regulations," writes Mr. Rampton.

"If you do not know your numbers, you do not know your business" is a theme that I often say to my colleagues. Therefore, I appreciate start monitoring your monthly expenses and create a budget and stick [to] it. Tracking "every single purchase," according to Mr. Rampton, "lets you know how much you’re spending on your expenses and where to start trimming the fat if you're overspending.

Importantly, tracking your expenses "lets you know if any of your accounts have been jeopardized to cyber-attacks if you spot any unauthorized purchases. This not only gives your total control of your money, it's one of the most important steps when creating a budget."

In my 20+ years of business experience, I have become to appreciate the value of having a realistic budget. As Osmond Vitez notes in an article entitled, "Why Is it Important for a Business to Budget?" "Budgets usually represent a detailed analysis of how a company expects to spend money in future time periods. . . . Using an annual budget process also limits the amount of time companies spend creating and managing capital resources."

Lastly, I strongly support that a business owner should stay organized. You must have "a system in place so that all of your records are organized," says Mr. Rampton. "Take your invoices, for example. When they're organized you can see which invoices have been paid and which are pending. You can also have them handy in case you get audited. Thanks to the cloud, most of this information is started in one convenient dashboard automatically."
"25 Things to Begin Now so Your Business Thrives in 2017"
  1. Revisit your business plan.
  2. Gather necessary information for a business loan.
  3. Focus on profitability.
  4. Set a savings goal.
  5. Evaluate your business processes.
  6. Review your all of you insurance policies.
  7. Keep up on new tax rules and regulations.
  8. Be aware of salaries in your industry.
  9. Take advantage of cash accounting.
  10. Declutter and get tax deductions.
  11. Research financial institutions.
  12. Draw on your bank credit line.
  13. Evaluate your product lines.
  14. Look for ways to generate recurring revenue.
  15. Make saving automatic.
  16. Challenge the status quo.
  17. Have collateral ready.
  18. Ask your customers to purchase higher priced items or services.
  19. Start monitoring your monthly expenses.
  20. Create a budget and stick [to] it.
  21. Cut costs, even if revenue is solid.
  22. Shop around.
  23. Evaluate the ROI of your sales and marketing efforts.
  24. Stay organized.
  25. Meet with an accountant or tax advisor.
How are you preparing your business for the new year? What would you add to this list?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of Solutions for a Sustainable World.