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Beginning of the End for Health 2.0?

by John Moore | December 08, 2008

Late last week, one fo the Health 2.0 darlings, DailyStrength, bit the dust and was acquired by HSW Inc.  Was never a big fan of DailyStrength, thought their model was just another “me-too” social network with little idea as to how to actually generate revenue.  Their partnership with Revolution Health may have been a harbinger of the eventual collapse of DailyStrength.

So who the h*ll is HSW.  Looking at their website, they seem to be focused on the Chinese and Brazilian markets with broad, horizontal information plays – actually just re-purposing their enlish language website HowStuffWorks.  How DailyStrength plays into these existing properties or their overarching strategy is not readily apparent, unless of course they got DailyStrength for nothing, which is probably the case as there was a rumor at Health 2.0 in October that they were on their last legs.

This will be but one of many acquisitions or tent-foldings of the far too many Health 2.0 start-ups in the market today.  Those that make it through the next 12 months will clearly demonstrate that they are delivering value. In essence, something that someone, somewhere is willing to pay hard cash for.

Enough of the sending of virtual hugs.  Time to get down to business and start figuring out how you, Mr. or Mrs. Health 2.0 can start delivering that value proposition as this morning’s WSJ reported that several VC firms are seeing their investors are defaulting on capital calls so you will increasingly be left to your own devices to get that operating capital.

And getting back to the title of this post…

No, this is not the end of Health 2.0 as a broad movement in consumer health trends, but it will be the end of the line for many Health 2.0 companies.

4 responses to “Beginning of the End for Health 2.0?”

  1. Lois Drapin says:

    Hi I am a senior advisor to a bunch of CEOs in the health, technology, and pharma sectors. I thought I would send this along regarding HowStuffWorks…Jeff Arnold is the founder….former founder of WebMD before it was acquired/merged with Marty Wygod’s companies that became the WebMD you know today. FYI.

    “As CEO of HowStuffWorks, the award-winning, high-quality content Web site, Jeff Arnold is responsible for setting company vision and strategy. After acquiring the company in 2003, he raised more than $75 million in private equity for the company and orchestrated its sale to Discovery Communications, the No. 1 nonfiction media company. Jeff also founded and served as CEO of The Convex Group, a media and technology holding company whose portfolio included HowStuffWorks until its sale to Discovery in 2007. Additionally, Jeff serves as the chairman of HSW International, a separate and publicly traded entity that has the local language rights to the HowStuffWorks content and brand in Brazil and China and the option for the same rights in India and Russia.

    Prior to founding The Convex Group, Jeff founded and served as CEO of WebMD, the e-health care company leading the transformation of health care into a more accessible, efficient and innovative system using the Internet. Between August 1998 and September 2000 Jeff negotiated more than 10 acquisitions, growing WebMD from 60 people and $75,000 in annual revenue to more than 5,000 people and revenue of nearly $1 billion in 2001. During his WebMD tenure, Ernst & Young recognized Jeff as the Entrepreneur of the Year for 2000, Southeast Region.

    Prior to founding WebMD, Jeff used an initial family investment of $25,000 to start Quality Diagnostic Services (QDS), a cardiac arrhythmia monitoring company. As Chairman and CEO, Jeff positioned the company for its sale to Matria Healthcare for $25 million in 1998.”

    Jeff was inducted as a member into the American Academy of Achievement in 2000 and is a Global Leader of Tomorrow, World Economic Forum. He is

  2. While I am not as familiar with Jeff Arnold as Lois is, I heard about HowStuffWorks venture. From a few tidbits on their strategy (that I am aware of) it kind of makes sense.

    The idea is simple. Buy a bunch of content websites for pennies on a dollar, cut all costs to the bone and squeeze every pageview for maximum ad revenue. What those websites are does not really matter. Nothing glamorous, nothing revolutionary, but sound business, even if it is not going to shoot the moon. Kudos to Jeff!

    As for “Health 2.0” the term will be forever used to brand the age of hyperbole, buffoonery and false promises. Some formerly respected people will gain the reputation as BS artists, idiots or charlatans. Others will avoid this fate by getting in front of the problem, as is happening already.

    Once the dust settles, smoke clears and people expecting a quick buck go home, it will be the best time to deliver on the true promise of Internet health applications.

    By the way, I have a lot of respect for DailyStrength folks. As far as I know they were not even pushing “Health 2.0” hype. They simply tried their best with the product and took advantage of whatever PR opportunities that came along.

  3. Some Health 2.0 companies are better than the others. Patientslikeme (in my opinion) is better than the rest. Revolution Health is not bad but just not unique enough. DailyStrength is not bad but business model is not there.

  4. The revolution could make it easier for families to navigate their health conditions. However, the main aim of the company are profit.

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