Friday, August 19, 2011

Chemo 101: a web success story

Kristin Gustafson started marketing Chemo101 even before she launched the website that keeps chemotherapy patients, nurses, doctors and caregivers abreast of the latest information available about life in the Chemo Room.

Gustafson says her Denver-based site has grown like a blogger's dream over the last year, landing a $25,000 ad schedule from Whole Foods because of the marketing buzz she created within its target audience by competing for startup funding in the Pepsi Refresh Project.

That's a fund-raising program run by Pepsi which gives away grant money to make innovative ideas -- anyone's idea, really -- into reality by winning the funds to make it happen through a contest.

KG, as Gustafson calls herself, entered Pepsi Refresh last September at the $250,000 level, but lost out to a much larger organization, the animal protector ASPCA, which was able to marshal many more voters to its cause than Chemo 101.

But soliciting votes for her project from all the people who might use it essentially put Chemo 101 in the minds of its audience even before it was available. The site launched in December, and besides her Whole Foods advertising program, KG is now averaging 30,000 unique visitors to the site per month. Like I said: a blogger or website developer's dream.

And that's as much a reason for writing about her here as the nature of her cancer-related website. Gustafson has started a small business on the Internet in the booming health-care industry which never seems to shrink even as the nation's economy falters.

So KG's business lesson is valuable to many of the readers of this blog whether they come from the blogging world, the cancer world, the small-business world, or even the politics and policy world. Chemo 101 is an example of a successful, small-business startup in a booming industry fueled by the Internet.

And Gustafson has gone about starting that business in an instinctively entrepreneurial way.

Her professional background is in human resources, having worked with health-care, and specifically oncology-related, companies in Minnesota, before moving to Colorado to work briefly with a medical-device manufacturer. She found herself drawn back to oncology and the fight against cancer, however, and so decided to start Chemo 101 as an outgrowth of what started as an HR consultant's practice.

She didn't win the Pepsi contest, so her funding came from her own savings and investments, and she was helped by a friend who volunteered his expertise not only in programming but also in sales and marketing because he had been touched by the fight against cancer in his own life and wanted to "give back" while waiting a few months to take a new professional position.

Chemo 101 was borne of KG's experience with her target audience: patients, nurses, doctors and caregivers from mostly community-based cancer clinics. "Our site is really augmenting what they do in the clinic every day," she said.  "A lot of times from the day that someone is told there's cancer, they're just rushed through the process. And the oncology nurse has fifteen people that she's trying to get set up." So a lot of patients go home from a first treatment with dozens of unanswered questions.

KG's website has the answers to many of those questions. "My idea," KG says, "was build a website for cancer patients to understand their drugs and dollars, ... a resource to understand your chemotherapy drugs, understand the different food and drug interactions, and how co-pays work, and what type of insurance you're on; what questions to ask."

But while cancer consumers were the target audience, Gustafson knew her target market for monetizing the site was big pharma, the huge pharmaceutical companies that test, make and sell drugs that help millions of people fight cancer across the globe.

"My business models started with the thought of I'm going after the big pharmaceutical companies; they are the ones that have drugs in the data base that I have built. They have branded, marketed products that we see ... advertised on TV."

Those companies' oncology products, the chemotherapy drugs pumped into patients all over the world, are the mystery meat of the cancer-treatment industry. Millions of patients, nurses  and caregivers are constantly seeking the ever-changing, latest information about drugs and their side effects in order to ease the patient's struggle to stay alive.
And Gustafson, through the website, keeps the information up to date. She uses what are called Food and Drug Administration-approved "package inserts" to describe the chemicals patients receive during chemotherapy. The inserts are the printed material included with any medicine sold to consumers.

But she also has a "resources" section of the site she says will be used to offer information about alternative treatments ranging from use of medical marijuana for nausea to nutrition and diet information geared to the cancer patient. That portion of the site is not yet very developed, but like any site on the Internet, Chemo 101 is a work in progress.

Nurses' desire for more nutrition information, however, is what drove Gustafson to seek out advertising from Whole Foods Market. Surveys she collected at a national meeting of oncology nurses in Boston earlier this year showed nurses ranked a desire for more information on nutrition as high as their desire for information about clinical trials.

"Wow, nutrition is really something I never thought of, and here we've got 40 percent of the nurses saying they would want nutritional information for themselves and their patients," she said. So she contacted a Whole Foods sponsorship program in Boulder and quickly signed up for the first $25,000 of revenue Chemo 101 has generated for itself.

At a later annual  meeting of the American Society of Clinical Oncology in Chicago -- "Kind of the Big Dance in oncology," Gufstason said -- "we met with just about any pharmaceutical company that sells an oncology product that you can think of" and were "walking on air a little bit" with the Whole Foods ads already up on the site.

When you are talking with pharma "Goliaths" like Pfizer or Merck, Gufstason said, "David at Chemo 101 didn't seem so small when you had a partner like Whole Foods."

KG is still working to land other advertising and sponsorship deals that carry Chemo 101 into the future of the fight against all kinds of cancers.

But her one-year fight to start the company: the pre-launch marketing campaign through the national Pepsi Refresh program; her visits to national meetings to build traffic and credibility among professionals "critical" to the care of cancer patients, her primary audience; her widening of her advertising market beyond big pharma to businesses on the periphery of the cancer-care industry; all make for text-book examples of how to build an online small business.

So, even if you don't have cancer, Chemo 101 is a website to watch.

Friday, August 12, 2011

How does government money create jobs?

A question that has lingered through the debt-ceiling debate fiasco, specifically related to the need for stimulating a weak economy, is how can government money actually create jobs?

Gov. John Hickenlooper's administration is working hard to find an answer. It has applied to the Treasury Department for $17.2 million it wants to spend with lenders in Colorado to break their reluctance to fund small-business growth.

Small businesses grow by hiring people to produce and sell more of their product or service, increasing a firm's revenue and profits. The longest running complaint small businesses have had with state and federal policy makers has been that banks refuse to lend businesses money to achieve that growth.

Alice Kotrlik, a long-time valuable asset of the Office of Economic Development and International Trade and director of its Business Finance Division, is in charge of Colorado's application to the State Small Business Credit Initiative, and expects to hear a "favorable" response from Treasury very soon, perhaps within days.

She said the 2010 Small Business Jobs Act, signed last September and so far apparently in no danger from projected deficit-reducing budget cuts, requires the programs using the federal money to be started by states within 90 days of receiving a grant. All of Colorado's $17.2 million, if it gets it, will have to be deployed within two years. So the money will be going to businesses fairly quickly once the state gets its check.

That's good because business finance is a top-of-mind issue in Colorado not only because of political pledges to get people back to work -- create jobs -- but also because past efforts to fund small-business startups with government money have been dismally unsuccessful.

Kotrlic's office crafted her application for the small-business federal funding through Hickenlooper's "bottom-up" economic-development process, resulting in the release last month of the Colorado Blueprint, a document that amounts to a master plan for state governance.

The application calls for distribution of the $17 million through three programs: an existing loan-loss/reserve program run through the Colorado Housing and Finance Authority (CHAFA); an expanded pilot program started last summer that offers angel investors a tax credit for investing in Colorado small businesses; and an altogether new program designed to distribute $14.2 million of the funds by depositing cash certificates of deposit in banks that want to loan money to a small business but are hesitating because of a borrower's shortfall in the value of collateral being used to support the loan.

Kotrlic described the program for me in detail, and it sounds like the only kind of government effort a Colorado bank would be willing to sign up for to loosen up its lending to small business: direct cash infusions of government money they can take if a loan goes sour.

The banks aren't crazy. The reason a Small Business Administration emergency loan program failed in Colorado and around the country in 2008 and 2009 was because the loans -- $35,000 max -- weren't large enough for the bankers to bother with, and because the people who needed them, small businesses already in trouble and at risk of survival because of the economic collapse, were too risky to lend to.

Kotrlic's new program will provide up to 25 percent of loans from $75,000 to $1 million in a cash CD that can be deposited in the lending bank and dedicated as collateral for the loan. The small business owner then can use the full amount of the loan to grow his or her business by hiring new workers and increasing sales and revenues, and pay back the bank over a three-year term.

The state will provide a collateral shortfall for loans up to $5 million, but the percentage of state-supported collateral will drop for bigger loans to the amount needed to cover the borrower's shortfall up to about 10 percent of the loan. Kotrlic points out that 10 percent of a $5 million loan would still amount to a $500,000 cash CD, and she seemed to think that was plenty for the state to give a bank to cover the risk of an otherwise credit-worthy borrower.

That's how government money can create jobs and stimulate the nation's lagging economy. It's government at its best, helping private small businesses break through big-business bankers' reluctance to help Main Street get back on its feet.