Pulling the plug?
Not sure how many years it has been since all the big tech companies began their dive into the diabetes pool but whenever the official start day was we can say that this dive has been pretty much a belly flop. Years ago everyone was going gaga as Apple was developing a non-invasive continuous glucose monitor that would work with their way cool whiz bang Apple Watch. Yet Apple soon discovered what everyone already knew, that even with their vast resources and large talent pool this technology didn’t work and would not work no matter how much money they threw at it.
After buying PillPack everyone thought Amazon would become a major player in diabetes. Like Apple, Amazon had the resources and talent pool but also like Apple they suffered from the since were very good at one thing we for sure will be good at all thing’s syndrome. So after a feeble attempt to enter diabetes the company is back to square one.
However the most confounding misfire from big tech comes from our friends at Google and their life sciences unit Verily. Like Apple and Amazon Google had the resources and talent pool, like Apple and Amazon they had hubris in abundance and like Apple they bet on a glucose monitoring technology that was way cool whiz bang but had a small problem in that it didn’t work. So much for contact lenses that measure glucose.
But this was just the first of many missteps for Verily who made a huge mistake by partnering with our wine drinking friends in France. Now in all fairness we cannot blame Verily for selecting Sanofi, who was so desperate to work with Verily they ponied up $250 Million for the privilege. Lilly and Novo Nordisk were also interested but had the better sense not to overpay for this privilege.
Onduo, the Verily/Sanofi partnership got off to a rather auspicious beginning as their mission seemed to be let’s throw it at the wall and see what sticks. Like all the tech companies they did their best to shroud their strategy in secrecy, when in fact like the other big tech players they really didn’t have a coherent strategy to begin with.
One good thing they did was partner with Dexcom but even that didn’t work out in the long run with Dexcom separating from Onduo. The two companies still work together but these one-time partners have vastly different views on what the future looks like and quite frankly are better off separated.
Waking up to the fact that Sanofi wasn’t the right choice, these partners also agree to separate. Anyone seeing a trend here? Listen as bad as Sanofi is as a partner and as badly as they have managed their own diabetes franchise they at least would like to see a return on their $250 million investment.
Now before we go any further a few quick points;
1. With their vast resources why partner with just one diabetes player and not partner with Lilly and Novo too? Did Verily really need $250 million from Sanofi? Would it not have been better over the long run to develop a platform that ultimately benefit all three companies?
2. Why didn’t the company buy LifeScan which had millions of patients, a global presence in diabetes and was throwing off millions in free cash flow that would have helped pay for the deal? Please do not tell insult us and say that they could not afford LifeScan.
3. Once separated from Dexcom and Sanofi why is it taking so long to get into the diabetes coaching game, a game they could dominate but seem afraid to try. Why is Onduo/Verily letting UnitedHealthcare, who by the way has a much better coaching platform, win the game without putting up a fight?
We suspect the folk at Google are asking these questions and more. It’s no secret that Google shut off the money spigot for Verily basically telling the unit if you need more money go out and raise it. Which is exactly what Verily did raising a cool billion bucks. Still even with this fresh infusion of capital the unit has yet to produce much.
Could it be that Google is getting a little tired of all this talk? Could it be time with digital health hotter than Georgia asphalt time to spin off this unit? Frankly with Teladoc valuing Livongo at a whopping $18.5 Billion the timing could not better. As Momma Kliff used to say timing is everything and best to take advantage of a hot sector before investors come to their senses. A Verily IPO would likely be a major hit making Google, Verily and of course the investment bankers very happy.
The fact is this for all the hype, all the promise big tech’s entry into our wacky world has been one big fat bust. These big tech companies may have unlimited resources and tons of talent, but they also bring with them an equal amount of arrogance and hubris. Rather transform diabetes as we thought they could do; they have fallen into the same traps as everyone else. In the end it’s more of the same and not the new fresh innovative approach we expected.
Are we surprised by this? Somewhat as we initially believed that being new to diabetes and unencumbered and chained to the past they would have an advantage. Sadly what we learned is that these companies known for way cool whiz bang can be just as stupid as those in diabetes before them. They did not learn from past mistakes, they repeated them. They did not innovate; they did not bring a fresh perspective. They brought the same thing in a shiny new box and tried to pawn this off as innovation.
Momma Kliff used to say that just because someone has money does not mean they are smart. That just because they were very good at one thing they doesn’t mean they will be good at all things. That arrogance and hubris is like cancer as it does not discriminate, it does not care whether you are rich or poor, the color of skin or your gender. That left unchecked, untreated it does just one thing, it kills.