Reference no: EM132175984

Many companies start with an idea and discover it’s not working or they find an even more attractive idea while running experiments. Then they pivot dramatically. A great example of that phenomenon is Athenahealth. After identifying an opportunity to create and manage women’s health and birthing centers, the founders started their first clinic in San Diego, CA in 1997. Once the clinic was up and running, they struggled to keep track of procedures and of reimbursement from insurance companies and other payers.

To solve this, they decided to develop their own practice management software system. Eventually, they offered that software for sale. At several points in its history, the company almost went out of business. But they persevered, improved the software, and focused their business on helping medical practices manage their business and patient information. In 2017, 20 years after its formation, the company has a market capitalization of almost $5 billion. Jonathan Bush still runs it. His co-founder, Todd Park, went on to become the Chief Technology Officer for the US government. Athenahealth originally saw an opportunity running birthing centers. They created software to solve a problem and then realized there was an even better opportunity staring them in the face, so they pivoted to selling the software.

Why didn’t Athenahealth’s founders just start with the plan to create software to manage medical practices? How frequently do you think entrepreneurs shift gears once in the market?