Obama's Push to Digitize Health Care Boosts Startups

Posted by: Rachael King on January 11, 2012

By Ari Levy

President Barack Obama's effort to bring the health-care system into the digital age is boosting a couple of software startups -- ZocDoc and Practice Fusion -- that are trying to do just that.

ZocDoc, which lets patients book medical appointments via the web, said today that former Senate Majority Leaders Tom Daschle and Bill Frist have joined the advisory board to help the New York City-based company expand.

Practice Fusion, meanwhile, announced today it raised $2 million in debt from a group of angel investors, following a $23 million round of financing last year. Physicians use Practice Fusion's software to track their patients' medical history, schedule appointments, prescribe medication and provide referral letters.

While companies big and small have spent years trying to crack the electronic medical records market, it was President Obama's 2009 economic stimulus plan that sped up the process. As part of the plan, the government will invest up to $27.4 billion by 2021 to get health organizations on board.

ZocDoc is taking a bipartisan approach. Frist, a former heart and lung transplant surgeon, is a Republican and served as his party's leader in the Senate. Daschle led the Democrats in the Senate and now works at law firm DLA Piper, where he provides advice to clients on health care.

"They know a lot about the existing health-care establishment," said ZocDoc Chief Executive Officer Cyrus Massoumi. "Having people who have spent time at the highest level fixing the U.S. health-care system will help us leverage what we've done."

ZocDoc, founded in 2007, is used by about 800,000 people. The site lets users search for physicians in a particular practice and city and book the appointment online, rather than having to call around. Doctors pay $250 per month for the system, which is free for patients.

Practice Fusion, which opened its doors two years earlier, says its service for storing data is used by more than 130,000 medical professionals serving 29 million patients. The system is free for all users, and the San Francisco-based company currently generates all of its revenue from advertising on the site.

Venture capitalists and other investors have poured a combined $133 million into the companies, and there's plenty of overlap. Peter Thiel's Founders Fund and Ron Conway's SV Angel are investors in both. Salesforce.com CEO Marc Benioff backed ZocDoc, while his company is an investor in Practice Fusion.

Jive Is Flying High, But Is It Really in the Cloud?

Posted by: Rachael King on December 14, 2011

By Ari Levy

Jive Software's initial public offering this week sparked a debate over the meaning and merits of "cloud software."

As a decade-old company that got started when business software was delivered in packages, Jive didn't start selling Web-based subscriptions until 2007. About 60 percent of its business is now in the cloud. Clients use their software to collaborate with each other and customers.

The cloud model is cheaper to operate, allows for faster product updates and is better at collecting large amounts of data. Companies like Salesforce.com and SuccessFactors, which SAP agreed to acquire this month, are completely Web-based and valued more highly by the public markets on a price-to-sales basis than Oracle and Microsoft.

At the close of trading today, Jive had a stock market valuation of $859.5 million, or 12 times revenue over the past year. SAP paid 11.7 times sales for SuccessFactors, while Oracle has a ratio of 4.1 and Microsoft's is 3.

"There's just one problem with Jive trying to ride the coattails of SuccessFactors and other cloud company valuations: Jive is not cloud," says David Sacks, founder of Yammer, which also provides social-networking software to businesses.

If you believe Jive's pitch, it gets the best of both worlds. The company competes for customers that are pure cloud and comfortable having all their data hosted off-site. Yet, it can also sell to more highly-regulated companies in health care and financial services that need dedicated servers and aren't ready to make the move.

"We're not religious about it," Jive CEO Tony Zingale said in an interview yesterday, after ringing the opening bell on the Nasdaq Stock Market. "We let customers choose."

Taleo, like Yammer, prefers not to offer the choice. Its software, which competes with SuccessFactors in delivering talent management software, is for companies that are in the cloud or quickly migrating. Trying to deliver products the old way would just slow it down, says Jason Blessing, an executive vice president at Taleo.

What about security and privacy concerns? Those are overblown, he says. Taleo sells to the U.S. Department of Justice, and it doesn't get much more sensitive than that.

"Security issues have almost faded completely into oblivion," he says.

Apple's Holiday Shutdown Puts Rush on App Developers

Posted by: Rachael King on December 14, 2011

By Adam Satariano

Apple has given developers a holiday deadline if they want the most recent versions of their games, photography, productivity or other applications available in the App Store when people start cashing in their iTunes gift cards.

According to a note Apple sent to developers last month, the company is shutting down from Dec. 22-29 for the winter holidays. That means in addition to engineers setting aside the development of future iPhones and iPads, the company's developer relations and application review teams are also heading for the eggnog. (Apple's retail operation will remain open.)

Apple approves each application that's available in its App Store. While it's Cupertino, California, headquarters are closed, no apps can be approved. Apple, which also closed the week of Thanksgiving, warned developers that any apps scheduled to go live during the company shutdown would be delayed until after employees return from the holiday reprieve.

Those not paying attention to the warning may find their apps temporarily dropped from the App Store. Apple told developers not to schedule any app pricing changes during that period because the system will be closed and the price change will cause the app to be unavailable for purchase.

After rushing to get their apps turned in, perhaps the slew of startups making the more than 500,000 applications available in the App Store will use the shutdown to take their own holiday break.

AT&T, Other ISIS Partners Eye Mobile Payments Overseas

Posted by: Rachael King on December 14, 2011

By Olga Kharif

A joint venture of AT&T Mobility, T-Mobile USA and Verizon Wireless wants to bring its mobile-payment technology to markets outside the U.S., as companies try to grab a piece of the fast-growing digital wallet business.

The venture, ISIS, has held discussions to explore international opportunities, said Jaymee Johnson, a spokesman. He declined to name prospective partners, who could choose to use ISIS's brand or its technology.

ISIS is competing with Google Inc. and other consortiums and startups in the mobile payments arena. Their goal: To allow consumers to use their phones to make credit- or debit-card purchases in stores. The worldwide market is expected to reach $670 billion in total transactions by 2015, up from $240 billion this year, according to Juniper Research.

``The underlying equity partners in ISIS give us some degree of visibility and awareness beyond the U.S.,'' Johnson said in an interview. One of Verizon Wireless's two parent companies is Vodafone Group Plc, based in the U.K., while T-Mobile USA is owned by Germany's Deutsche Telekom AG.

ISIS is playing catch-up with Google in the U.S. The company's Google Wallet service launched in September, while ISIS's effort will start in two cities in mid-2012. Google's service has recently run into problems: Verizon Wireless blocked it from the new Galaxy Nexus smartphone, citing security concerns.

Industry support for ISIS is growing. This week, the venture announced that Gemalto NV will be one of its technology providers in the U.S. The company is the world's biggest maker of smart cards, which contain embedded memory chips used to carry out various functions such as access control and payment transactions.

ISIS has also announced agreements with payment networks including Visa Inc. and handset makers including Motorola Mobility Holdings Inc.

Rocket Fuel Aims for 2012 IPO to Boost Online Ad Sales

Posted by: Rachael King on December 14, 2011

By Brian Womack

Rocket Fuel Inc., an online advertising company, may join what's becoming a long parade of technology companies.

If market conditions allow, Rocket Fuel is aiming for an initial public offering in 2012 as the company expands its sales, said Chief Executive Officer George John. Rocket Fuel will have more than $40 million in revenue this year, up from about $16 million in 2010, he said. That's more than Zillow Inc., the online real estate company, had before its IPO earlier this year, John said.

The company, which helps companies place ads on websites and mobile devices in real time, is benefiting from international growth and strong demand from current customers. More than 90 percent of its clients renewed spending on Rocket Fuel in the third quarter from the second quarter, he said. Those customers increased their spending by an average of 50 percent.

The company's backers include Nokia Growth Partners and Northgate Capital. Before a potential public offering, the Redwood City, California-based company plans to raise capital in the first quarter to fund growth and acquisitions, he said.

``If there's a speed limit for us, we haven't found it yet,'' John said.

Other initial public offerings this past year include Groupon Inc., the daily deals site, and LinkedIn Corp., the professional services networking service.

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Bloomberg Businessweek writers Peter Burrows, Cliff Edwards, Olga Kharif, Aaron Ricadela, and Douglas MacMillan, dig behind the headlines to analyze what’s really happening throughout the world of technology. Tech Beat covers everything from tech bellwethers like Apple, Google, and Intel and emerging new leaders such as Facebook to new technologies, trends, and controversies.

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