Amazon to startups: stay close to the consumer and let us own the platforms

  • Amazon’s healthcare play appears to be heavily focused on platforms rather than specific applications
  • They would prefer startups focus on elements that are truly differentiating for consumers and let Amazon take care of the infrastructure
  • Early-stage companies investing in their own back-end services may find their dollars wasted or their applications incompatible with Amazon

The following insights around Amazon’s healthcare strategy rely on comments made by Eliot Menschik, Global Head, Healthcare + Life Science Startups, at Amazon Web Services and other speakers at the recent TiECon East conference. Because of Eliot’s position, this post focuses on AWS.

No single business unit within Amazon houses all their healthcare initiatives—instead, healthcare initiatives are distributed across e-commerce (consumer and professional), PillPack, Haven (the joint company formed with Berkshire Hathaway and JPMorgan Chase), Alexa, and AWS. In fact, even Amazon’s efforts around PillPack seem to be independent of their e-commerce strategy, which includes delivery of over-the-counter medications. This decentralization implies that Amazon is bringing the same philosophy to healthcare that stood them well historically: don’t constrain teams, trade off duplication risk to gain agility, make bets, fail fast and learn from mistakes.

While the scattered nature of these efforts suggests Amazon has no master plan for healthcare, one goal is clear: the company aims to use its platform plays, which include service-oriented architectures such as AWS, e-commerce, and Alexa, to position itself at the center of an innovation ecosystem.

Amazon’s platform economics

Amazon’s platforms focus more on helping their business users innovate rather than innovating themselves. AWS’s stated goal of allowing its business users to focus on differentiation by removing friction, constraints and limitations that stand in their way is particularly telling. This strategy extends to groups such as Alexa that enable others to take advantage of their installed user base and underlying voice-driven infrastructure.

Areas of opportunity

Areas of innovation called out during the session as ones Amazon is prioritizing include:

  • The decentralization of care,
  • Improvements in the speed and accuracy of diagnosis,
  • Development of more precise and continuous interventions, and
  • Modifications to the clinical workflow.

Amazon aims to power these shifts by providing their business users with sets of “utility capabilities” in mobility, voice, vision, sensation, perception, analytics, prediction, automation, and trust which they can incorporate into their services.

This positioning sheds light on the way Amazon defines their business versus the business of their platform users. If there is something that innovators across healthcare are doing to enable their solutions, Amazon will likely strive to incorporate that function into its common infrastructure. In November 2018, for example, Amazon released Comprehend Medical, a machine learning-driven natural language processing (NLP) service for unstructured medical text that can be accessed through a simple API call. Medical-specific NLP has increasingly become a backbone of applications spanning a variety of use cases including clinical research, revenue cycle management, and clinical decision support. With organizations spending a tremendous amount of resources developing custom rules for their applications, Amazon saw an opportunity to eliminate this “undifferentiated heavy lifting” by bringing this service onto their platform.

Amazon is playing a long-term consumer-centered game

Amazon’s culture of innovation is centered around three core tenets:

  1. Understand the problems consumers are facing,
  2. Invent on their behalf, and
  3. Have patience.

The company strives to carry the same consumer-centric mindset for which they are famous (think: easy returns, accountable shipping, one-click ordering, etc.) over to the way they work with the business users innovating on their platforms. For example, AWS markets itself as a partner able to anticipate and quickly respond to the needs of a rich ecosystem of healthcare organizations. The unit wants to be the first point of contact when their users experience any roadblocks.

VCs as aggregators

While the goal of enabling innovation is furthered most effectively through close partnerships, Amazon can’t give all business users of their platform equal attention. Ultimately, Amazon must find ways to prioritize. AWS, for example, has chosen to work closely with VCs and dedicate time to their portfolio companies, rather than invest heavily in identifying and building direct connections with a large number of startups.

Implications for healthcare innovators

Understanding Amazon’s platform focus is crucial to assessing its place in the healthcare landscape. Amazon realized early on that no product will ever be right for everyone. Instead, by providing universal services, they enable third parties to develop the end solutions that work best for consumers.

This platform strategy doesn’t bode well for early-stage companies that dedicate significant resources to developing back-end services for healthcare applications. Startups in this space may have a hard time competing against Amazon’s resources. If all goes well for Amazon, successful companies will likely be those that create the interfaces and workflows that best meet end user needs for a specific use case. This strategy is based on the idea that, by building on infrastructures created by AWS and other service providers, health tech startups can build scalable solutions and focus their efforts on differentiation for end users.

We use cookies
This website collects cookies to deliver better user experience and to analyze our website traffic and performance; we never collect any personal data or target you with ads.