Is health-tech entering its ‘influencer’ era?

One of the biggest and most expensive challenges associated with building a health-tech company is patient acquisition, especially in today’s “attention economy,” when it’s more costly and challenging to win over people’s time. Let’s be real: most companies compete with Instagram and TikTok to engage patients in their solution, which can be a losing battle.

So if you can’t beat ‘em, why not join ‘em?

Of all the ways to get the word out these days, I’m seeing more interest in working with influencers. Companies in digital health are experiencing huge brand lifts because of these relationships. To name just a few: NOCD and Howie Mandel; Midi and Amy Schumer; Function Health and Dr. Mark Hyman, Equip Health and Kerry Washington… the list goes on.

What fascinates me is how variable these relationships can be — sometimes, it’s compensation to the influencer. In others, the influencer invests their money into the business because they deeply believe in it. And there’s plenty of shades of grey in between. These days, I’m seeing it all!

“The first thing is there’s a distinction between celebrity doctors and celebrities in entertainment and media—the traditional celebrities—and there’s a convergence in both kinds getting involved in health companies,” said Georgina McMillan from Headline in a recent podcast we recorded.

I’ve found that the arrangement is usually in the middle, with some give and take. The influencer or icon takes equity or some combination of cash and equity to promote a business, sometimes because they have a personal connection to the problem. Sometimes they invest via their family office or fund if they see an opportunity for a return on their money.

The hard part is making these connections happen, and then driving them forward. When it comes to successful outcomes, the match is everything. Let’s dive in.

We spoke with Georgina McMillan, a consumer investor with Headline on the topic this past week on the Second Opinion podcast. Tune in here.

Authenticity wins

One of the smartest people I know on influencer marketing is Carine Carmy, CEO of Origin, a women’s health MSK company that started with pelvic floor PT (editors’ note: I’m an advisor). Carmy lives in Los Angeles, so she has easy access to many of these influencers. Origin also has clinics in the area, so many icons and influencers have personally used them for their health needs.

Her advice to fellow founders? Find an influencer who is deeply connected to the issue and has a set of followers that hit the sweet spot for the brand. It doesn’t need to be millions of people; it could even be just a few thousand. Don’t think so deeply about sheer numbers. Carmy has had the most success with influencer-led campaigns that are deeply authentic, versus patently promotional or transactional.

“I would rather have thousands of patients and smaller influencers promoting us who care and are evangelists versus big $50,000 arrangements with a nebulous ROI,” she said. And $50,000, by the way, would be on the low end of what many influencers with hundreds of thousands, if not millions, of followers would charge for a post.

Jordan Bromley, a lawyer from Manatt’s entertainment group—and a colleague of mine—agrees: “You want to look at their audience, their passions, their interests,” he said. He also advises startups to be deeply strategic, and consider the audience a specific influencer might have. They’ll know how to appeal that audience better than the startup will, so don’t just hand them marketing copy. Ask them for their creative ideas and inspiration.

Define the relationship

Here’s another hot tip I heard from several founders I spoke to: DEFINE THE RELATIONSHIP. Is it a post? Is it several posts? Or something more formal, like an advisory relationship? If so, what is the cadence of meetings? Ensure that everything is negotiated upfront, while sharing goals and KPIs in both directions. Otherwise it can feel nebulous, and misunderstandings will happen along the way. I’ve seen massive rifts happen because a huge amount of money exchanged hands, and then the company didn’t get much out of the relationship. Part of the problem was the lack of sharing expectations upfront.

There are exceptions to that rule when you start with influencers with smaller followings. Origin had a successful partnership with the high-profile comedian Ilana Glazer, because she cared about the company's mission and took on a larger role in education. Again, authenticity matters. Likewise, NOCD, a company in the behavioral health space, took its brand to the next level by working with the comedian and television personality Howie Mandel. Mandel has been outspoken about his own experiences with OCD so that made him the ideal ambassador for NOCD, as the condition is still stigmatized.

“Having them (the influencer or celebrity) connected to the mission matters,” said Alyssa Jaffee from 7wireVentures, an investor in NOCD.

Influencers on Cap Tables

There are two ways that I see influencers entering into the health-tech space with skin in the game.

The first is that you’re seeing more celebrities becoming co-founders and being involved in the daily activities of the business. A good example is Dr. Mark Hyman, one of the most recognizable faces in medicine, starting a longevity business called Function Health. Hyman has written copious content about the importance of healthy behaviors, so it caught many people’s attention when he put his brand behind a business that provides a battery of blood tests to consumers (more information than most people would get via a primary care visit). Function, I’d argue, started as a front-end to Quest Diagnostics—so for a business like that, patient acquisition is crucial to unlocking growth. Hence, the brilliance of a strategy like this!

Another trend involves celebrities and influencers getting equity in companies as advisors or investors. It’s not uncommon for influencers these days, particularly Hollywood celebrities, to have their own venture funds and/or family offices. That includes Jay-Z, Ashton Kutcher, Jared Leto, Leonardo DiCaprio, Chelsea Clinton, Serena Williams, Jessica Alba and more. Don’t underestimate these individuals; they are shrewd operators and investors—no different than anyone else you’ll meet in venture.

So what do traditional VCs think about working with these funds with celebrities at the helm? Most of them like it, but I did hear from investor friends that there’s no guarantee of an endorsement for the company. Influencers might invest simply because they sense a good opportunity, not because they want to get involved or promote the business. So again, ensure this is all discussed upfront to avoid disappointment down the road.

Any downsides?

Well, it can be expensive for a startup that doesn’t have a lot of capital—particularly if many asks are involved. There’s sometimes equity trading hands, and usually some cash. And as we discussed in this piece, the price isn’t cheap.

Then, there are the implications for consumers. It’s difficult enough to parse the quality differences in the market, let alone when an influencer is involved. That’s even more true when it’s an influential doctor, given that people tend to trust MDs regardless of their training or expertise. There’s a big reason supplements are all the rage these days, but there’s limited evidence that most do much of anything. Consumers don’t fully recognize that these MD affiliations are paid ads.

These are the kinds of things that have kept me up at night for years, as I’ve seen first-hand the consequences when influencers market to vulnerable patients.

So, in my opinion, the opportunity lies in the matchmaking—connecting the startup (ideally a high-quality, evidence-based one) with an influencer with that genuine passion for what they’re doing. And then there’s the intricate work to parse out the deliverables—and I’d love for us to do a better job here in sharing lessons learned. I’ve heard from many consumer health businesses I’ve spoken to about this topic that there’s a big bump after an influencer posts about a product, but it quickly dies down. It takes careful consideration upfront to determine what kind of relationship makes the most sense, and then the right cadence for the promotion.

Tl;dr

I’m bullish on this trend when it results in healthy behaviors. Influencers are influential, and our industry needs more people who can drive outcomes and inspire change. This stuff is also nuanced. I might not like that an influencer is pushing supplements that don’t do much of anything. But then I’ll meet up with a friend and they’ll order a soda and lime, because that influencer encouraged their followers to experiment with dry January in a post. I never thought these individuals in my friend group would say no to a margarita, and because of it they’re sleeping better than they have in years.

There’s something powerful about that—and in my view, we’ve barely scratched the surface.

That’s it for now, folks. I’d love to hear from you if you have thoughts on this week’s newsletter. Have you tried out any of these influencer partnerships in the past? Any lessons learned or tips? Reach me at [email protected].