Wednesday, October 5, 2011
Interview with Adi Jaffe, All About Addiction
Story by Benjamin F. Kuo
One of Southern California's biggest assets are the number of world class, local universities researching and developing technology and knowledge across a large number of disciplines. Investors and universities are often very eager to figure out how to tap into those universities as a source of new companies, but often find its difficult to move research from the lab to an actual company. What effort and what kind of person does it take to make the leap from academia to the commercial world? To understand how one local company is making that transition, we talked with Los Angeles-based All About Addiction (www.allaboutaddiction.com), a company that grew out of Adi Jaffe's work at UCLA as a trained psychologist.
First, what is All About Addiction about?
Adi Jaffe: I'm a UCLA addiction trained psychologist, specializing in addiction. What our company is doing, is it is developing an online tool for people to find addiction treatment to meet their needs. The statistics are, about half of the 3 million or so people looking for addiction treatment every year, do not find treatment. There have been a couple of pieces of research on why, but one of the main reasons is lack of access to information. The other is stigma--going up to someone and saying, I have an addiction problem, or my son has an addiction problem, and can you help them. What we have tried to create, is an online solution which allows them to do that anonymously, and instead of just looking through a list of providers, allows them to fill out a form on what their issues are, what drugs are being used, how much, how long, and other information about other physical or mental issues they might have, demographics, location, and all of that kind of stuff, and we process it and match their needs and assessment with a list of providers and services they offer. The idea is really to make the process as simple as possible. We give you five results, not a laundry list to look at, to make this as simple of a process for them as possible. The goal is to get the algorithm tweaked as we look at the data to the point where they just have to make that first call.
How is this related to the work you were doing at UCLA?
Adi Jaffe: I was a graduate student at UCLA. I had been focused on addiction research for awhile, and as part of being a student there was part of student meetings and groups. At one of them, I talked to a professor and asked a question about why entrepreneurship was not pushed heavily within the academic culture, and how does someone like me even get my research our to the public, and talk about the things I want to get out there to the public. All of what we publish at academics just goes to other academics. That caused me to start a student group we called Psychology In Action (www.psychologyinaction.org), to help get the word out about psychology research to the public. An offshoot of running that group for a few years, was this website, All About Addiction. I was trying to figure out how to access the public, provide information, and educate them about addiction. So, in February of 2008, I started the website, and it caught on. I think I had five people use it the first month, mostly from friends and family, but our traffic kept growing, and I kept getting more traction, to the point that I would meet people in the field and say--I've seen your website. That's when I decided to make more of it, Even though we were getting 20,000 unique visitors a month, I said we could do more with this, and put out more good information.
The idea was to make it simpler for people to find rehab. The issue there, is there is a lot of research, but not enough information about that. It's just like looking for a doctor for a problem, where it's sort of difficult to figure out who is best suited to treat what you have. Addiction is even worse, because there are so many conflicting pieces of information, and mountains of information that people have to go through when looking for treatment. The options are anything from medical detox, going to a hospital, to residential inpatient services, to a couple of different outpatients things, to seeking a shrink or psychologist or things of that nature. That's a lot of decision making for someone who is essentially in crisis. You don't look for addiction help when things are going well in your life. Anyway, so I had this idea, and happened to meet Fred Jouyal, CEO of 1-800 DENTIST. I asked him if he wouldn't mind sitting down with me, and he helped me develop the business model, and suggested that I work with some offshore developers on automating the system. The current way people handle this is someone calls a call center, they walk through a process by phone call. However, computers are far better suited for processing these kinds of things than people are, so I worked with some offshore developers and put together our beta, which is what's available now.
Was it a big leap for you to go from academia to your own startup?
Adi Jaffe: It is tough. First of all, I'm still at UCLA, spending about half my time doing research at UCLA. My sister, who is a physician, laughed at me when I told her I had this tool. Being an academic, the notion is that you'll go into research. But, I felt that pull of starting a company. I had to learn a lot about entrepreneurship, and had to learn things completely independently. I started as a sole proprietorship, used templates for business plans, and spent the last two years just trying to figure out what monetization means. When I came to the table, I just had the idea for a solution. I've actually been wrestling with an issue all academics should know, which is as a student employee at UCLA, you give up the rights to inventions you create. So, I have been meeting with the intellectual property office even to figure out if I own the rights to the algorithm which I developed, even though I developed it outside of my capacity of work at UCLA. Lots of that comes into play within academia, which normal entrepreneurs don't have to deal with.
Beyond that, I remember submitting an application to the Tech Coast Angels two years ago, and we didn't have a paying client at the time. We have three or four now. Those paying clients are service providers for rehab, and while they pay to become recommended providers, they have to go through an arduous certification process. Then, when I came to the Tech Coast Angels, although they were interested enough to ask a second round of questions, the issue of scale came about. I had to learn about monetizing things, project levels for angels versus venture capitalists, how much money to ask for, and valuation. Those are all things that academics and researchers don't have to think about at all. The value of research is improving knowledge, and that was the initial way I was thinking about what our product was going to be. I thought about how to improve the way that people go about finding the right kind of treatment, but didn't think about how to find money, how to make it pay for itself--none of those things were on the table initially. It has been a long, two, two and a half year learning process, taking myself which I think of essentially a low level MBA.
Speaking of monetizing things, what's the revenue model behind this?
Adi Jaffe: Our first, and primary model is the idea of having service providers pay to become recommended providers. It gives them preferential placement, but this is not an advertising model, because we do not guarantee them placement. It's not you pay us this much, and you'll show up this many times. The model we use is different, which is sort of scary for the capital investors I've been talking to, because it's not traditional. The idea is they become recommended providers, and any time they are matched up with a company that has an equal number of services and types of services and matches the client, the verified company will show up on top every time. It's a bit different in that we can't guarantee placement. The second part of our model, which I learned through the UCLA network and contacts, is that a vast number of placements for treatment is done through public agencies. LA County apparently places around 40,000 to 50,000 people a year in treatment, and they also subsidize that treatment. Talking to them, the process is really cumbersome, and right now it takes an hour and a half to two hours to meet with people, have them fill out a questionnaire, and to make phone calls. Our system can handle that far more efficiently. So, one of our other revenue streams we are pursuing is municipal government contracts to essentially contract and automate that referral system.
Finally, what's the next step for your company?
Adi Jaffe: Our next step is really trying to get some angel level funding. We have some interest from people, and are in conversations. To take us out of beta to full market readiness will take a few thousand dollars of development money. Plus, one of the things we're missing, is so far we have no marketing budget at all. Even though our solution has so far been used by over 1100 people, and we have three paying provider agencies who are verified and generating revenues, we haven't done any marketing. We'd like to put money into marketing and web development, so we can create a more robust solution, and get it out in front of people.
Thanks, and good luck!