Imagine what combining an Open Source hardware and software platform together might do in the medical device industry, particularly for less stringent telehealth applications. This is something that some in the industry are beginning to look at by leveraging the novel platform from a small New York city based start-up, Bug Labs.
On Tuesday, the Berkman Center at Harvard Law School sponsored a luncheon talk by Bug Labs founder and CEO, Peter Semmelhack. Though I was unable to attend that luncheon, I did get a chance to sit down with Peter that morning over coffee to learn more about Bug Labs, its technology and where he sees his company headed.
Company in a Nutshell:
- Based in NYC, it also has an office on the west coast.
- Founded in April ’06 by serial entrepreneur, for Peter this is his 3rd start-up.
- First product released/shipped in March ’08. They now have 7 products in their offering that can only be purchased at their online store.
- Backing from VCs that include: Union Square Ventures, Spark Capital & Court Square Ventures. This is a very nice line-up of VC firms, all of whom have been quite successful.
- Currently have 17 employees and claim an Open Source development community of over 2,000.
- Go to market strategy to date has been online but they are now looking at eTailers as secondary distribution channel. They are also in discussions with a number of very large companies that are looking at novel ways to leverage the open hardware/software device platform to create novel services for the markets they serve.
So What Exactly is Bug Labs Offering:
The best metaphor for what Bug Labs is offering the market is an electronic “LEGO” set that allows a tech geek (they post a big warning for those wishing to buy that Java programming experience is required) to build a wide range of potential devices. It begins with the base platform, BUGbase, that is really nothing more than a Linux computer with all the various interfaces (power, Ethernet, USB 2.0 etc.) one would expect in a neat and tidy package. The BUGbase is fully IP-addressable and has four slots to mount various BUGmodules to the BUGbase. Right now, modules include among others a camera, motion detector/accelerometer, GPS, & LCD display. Slapping together a BUGbase with motion detector and camera modules, one can put together a simply home security system that alerts you, via the Internet/email, if there is motion in the home and the camera to show you what is happening.
All of this is pretty slick, but that’s about it. These are not solutions they are selling, but a development platform, a LEGO kit, that others might leverage to create novel solutions. But it maybe that development platform, its openness and novelty that leads many a bright mind to begin creating unique solutions for specific market applications.
Leveraging the Community:
Leveraging all the Web 2.0 tools (blogs, wiki, ideas with voting, etc.) at their disposal, Bug Labs has created a very active and engaged community for their product offering. When I asked Peter about the development community, he commented that it is one that is VERY engaged (after all he did say over 2,000 in that community for a company of only 17 employees) and that development community is doing far more work for them then they could have ever done on their own in such a short period of time. Bug Labs’ community is viral, suggesting new modules to be built and creating new solutions/apps with existing modules. Combining development, modules and ultimately solutions that are then taken to market will lead to pull-through sales of Bug Labs’ products.
Nice model, that has an ability to scale in dramatic fashion, but there is one small problem: Can Bug Labs compete in a market, such as electronics where the cost of hardware relentlessly drops and subsequently margins are squeezed. Even rapid growth that leverages community input may not save them here.
Peter recognizes this and their business model is part product, part service. For services, they intend to replicate the model of Linux company, Red Hat. Yes, Bug Labs platform is full open source and yes, anyone can get the source code and develop an app. Where open source users often run into a problem, however, is how to insure that the platform is running is the most up-to-date, secure, bug-free software. Red Hat keeps the open source Linux-based servers of large corporate clients refreshed for an annual service fee, Bug Labs hopes to do the same for its BUGbase customers.
Looking at the Market:
The Bug Labs business model was predominantly focusing on the consumer market, especially all those tech geeks looking to build some sort of cool, one off device. What has surprised Peter is the inquiries they are receiving from specific business markets. Right now they are seeing about 40% of inquiries/interest coming from three distinct markets: Education, Manufacturing and, drum roll…
I seriously doubt there is much of an opportunity for Bug Labs in a hospital care setting, simply too many regulatory issues and entrenched vendors to make a dent there.
The telehealth market is a completely different story. Yes, plenty of players jumping in, e.g., Intel with Health Guide, and a lot of others circling e.g., Verizon and AT&T, (Peter did say they are in discussions with one of the mega-carriers in Europe on a healthcare app – hint, had to do with rounds and digitizing clinical notes) but this is a potentially huge market as there are simply not enough hospital beds to handle the demographic bulge that is working its way into retirement. And quite frankly, quality of life is far better in one’s own home than some hospital anyway so why don’t we try to keep people there for as long as possible and leverage technology to assist in care.
So getting back to Bug Labs
An open development platform, a large development community, an ability to create an almost limitless number of applications, fully IP-addressable with 3G and Bluetooth in the base station combining with Bluetooth sensor grids in the home connecting on out to the Internet via 3G, developed and installed for relatively low cost…
Yes, the Bug Labs model could lead to some very interesting healthcare/telehealth applications, in fact, they have a very simple one already called GeriatricAssistant. The challenge, however, is to go beyond the simple LEGO model of Bug Labs today to creating fully integrated solutions that also address critical workflow requirements of caregivers. This is not a particularly hard challenge, but certainly one that will require expertise that resides outside of Bug Labs. But with an openness that is rare in the device sector, they are likely to attract more than a few interested parties from the ranks of the healthcare sector to build those novel solutions and take them to market.