Checklist

Putting my nose to the grindstone for Humaginarium

During the past week of travel in Scotland, I was reminded every day of The Checklist Manifesto, the book by Dr. Atul Gawande that recommends the use of checklists in complex situations like an OR or airplane cockpit. For years I’ve used the Wunderlist app to make and manage lists of practically everything I set out to do. I don’t know if I could function these days without it! Even when traveling last week, starting each day with a neat list on my phone of goals to accomplish, whether large or small, and ending the day by making a fresh list; well, there is nothing more satisfying than that – except maybe a wee glass of Aberlour A’Bunadh before a hearty dinner of Scotch chicken and leek pie.

My checklist for the next four months is going to be broken down into daily milestones that I must meet before I turn in each evening. I am coming to the start of a nasty nose-to-the-grindstone quarter for Humaginarium, exciting and dreadful at the same time.

Wait, isn’t that what every quarter is like for a startup? Well no, not for this one. I love keeping lists, but I also love “slack time”: leaving plenty of play in every day for work that is not consciously goal-oriented; for example, writing this blog. My most satisfying accomplishments are often randomly inspired and unplanned. Alas, there won’t be much of that for the rest of this year.

My top priorities are to finish writing two grants – one to the NSF, the other to the NIDDK – for Phase 1 SBIR funding of R&D. The grants are more than seed funding; they are blueprints for an enterprise that will ascend in 2020 like a hot air balloon, with me and my colleagues in the basket holding on for dear life. I’ve been working on the grants for a while, but somehow not taking them seriously enough. They have not been properly committed to checklists! Now the time has come to get very serious. These grants are not quick wins or slam dunks. They require meticulous planning and writing, the kind I can do when I’m not enjoying myself very much. Oh well, nose-to-the-grindstone.

In the same period I will also facilitate a new cohort of experiential learners at the Northern Illinois University College of Business. These undergraduate business majors will be directed by Humaginarium and a team of financial consultants in Chicago and San Francisco who like what Humaginarium is doing with health promotion and video games. We’re going to study and make better sense of things like valuation and commercialization, if that’s not biting off too much between now and the end of the year.

A different cohort is likewise forming as I write this, one with enormous potential value if managed well. It’s a Circle of Industry Advisors including corporate stakeholders at provider, supplier and payer organizations who are strategically committed to my four pillars: health promotion, health education, health literacy and health equity. You know, the important stuff that I care so much about, but is hard for most folks to monetize even in their heads. The stakeholders will help ensure that Humaginarium moves the needle of population health in ways that industry endorses. I am not looking for funding from the Circle, just knowledge and brand equities.

That is an overview of my current checklist. Will I do just this and nothing more? Well, there’s one more little thing that may be added. Humaginarium was asked to create an innovative module of continuing medical education for practitioners of a medical specialty. I’ve been slow to take this up because it doesn’t feel particularly altruistic; in other words, it’s work for a fee and it isn’t likely to change the world for the better.

For reasons unknown to me at the present moment, altruism has become almost a filter that I use to evaluate opportunities. This is very strange, to put it mildly. It may be because I am painfully alienated by the economics of American health care. They are pretty disgusting and dispiriting, and I don’t like getting my hands soiled with them.

Yet the prospect of making boatloads of money from consumers with health problems is a key driver of Humaginarium. I’d better put that goal on a checklist so I can chunk it down to bites I can swallow, maybe with the help of Aberlour A’Bunadh.

Green Light Redux

Two federal agencies have invited us to request SBIR Phase 1 funding.

I’m taking a break from game design this week to talk about progress on another front.

Back on April 10, I announced that the National Science Foundation approved Humaginarium’s Project Pitch. Today I’m announcing that the National Institute of Diabetes and Digestive and Kidney Diseases has approved our Specific Aims. Two US federal agencies have thus invited Humaginarium to apply in 2019 for substantial, non-dilutive, SBIR Phase 1 funding. In my opinion, that’s cool!

Specific Aims is a single page argument that our groundbreaking idea for biomedical innovation is a good fit for NIH support; and that it’s a good candidate for commercialization. I dubbed the idea Metabolic Genii.

In popular culture, a genie is Robin Williams magically springing from a bottle to make jokes and grant wishes. I’m fine with that; it fits our brand well enough, but the word genie is actually more meaningful. It’s a variant of genius, and a genius (plural: genii) is an attendant spirit: a force that influences actors for better or worse.

Metabolic genii are digital affordances that empower folks who have or risk developing metabolic disorders. The genii enable them to inquire what’s up with their bodies and gain a bit more control over their medical outcomes.

Like any genius worthy of that moniker, metabolic genii are extremely creative. Ours are creative like scientists rather than sorcerers. They intelligently pan for the personal gold in every individual they meet, ultimately enabling users to feel a little like Aladdin, with wishes that now make a lot more sense and eventually may come true.

The terminal objective of our Specific Aims is a set of six precise, repeatable techniques that reliably convert basic health literacy (acquired in a separate project) into resolute behavior. These six techniques are drawn from a social science palette that includes situational awareness, choice architecture, scenario planning, nudge theory, decision science, and reinforcement theory of motivation. According to my reading of research literature, these powerful and accessible affordances have never been synced to produce sustainable medical outcomes. We’re about to sync them in order to discover what happens next.

What do we expect to happen next? Empowerment. Users will demonstrate their ability and desire to make evidence-based decisions about illness and wellness; and furthermore make those decisions as sticky as flypaper. Sound easy? Sorry, it’s never been done before. That may be why health education mostly doesn’t work. At all.

Who is going to benefit from this project? Of course Humaginarium and its investors will benefit, but more importantly 60% of the adult population stands to benefit. That is the proportion who already have a poorly controlled chronic illness (the numbers are increasing). That’s also the proportion who play video games, the medium we are using to generate basic health literacy (and yes, those numbers are increasing too).

What will our R&D be like? It begins with a re-review of secondary research that bears on our terminal objective. From there it takes the form of agile discovery. We are not going to think this problem to death. Instead we shall design activities that a large number of experts and ordinary consumers can experience and comment with feedback. Each of these activities generates data that indicate efficacy and flow into other parts of the Metabolic Genii system.

Our Phase 1 research and development yields proof-of-concept of this system; and verifies its theoretical efficacy. If results are encouraging, we will migrate our hardening techniques into a Phase 2 design-build-test-deploy project. At that point, our world begins to resemble an oyster.

Metabolic Genii and it’s counterpart Diabetes Agonistes are now as two horses pulling a chariot named Humaginarium. Our chariot isn’t racing against competitors; there is none working at our level. We’re racing against time. We want to stymie metabolic disorders and other chronic illnesses as quickly and as soon as possible.

Click here to read the Specific Aims.

Worth

Worth doesn’t show up in a value proposition; it’s under the radar.

My recent investigation of pre-money valuation yields a number: $3 million. That is the current hypothetical value of Humaginarium: pre-grant, pre-investment, pre-product and pre-revenue.

Like any good hypothesis, this one’s just a reasonable guess. It’s based on the parameters of four valuation methods: Berkus, Risk Factor Summation, Scorecard, and Economic. I also took into account the informed opinions of skeptical or auspicious advisors; and factored in the lasting value of cash and intangible assets given to, or generated by, Humaginarium as it bootstraps.

So what’s next after this valuation exercise? There are five steps related to valuation in the foreseeable future:

  1. Ask federal agencies for SBIR seed funding
  2. Ask select companies for dedicated industry knowhow
  3. Ask other companies for transactional corporate sponsorship
  4. Ask select foundations for program-related investments
  5. Ask investors for private equity

I estimate that these five asks may increase early-stage valuation (pre-revenue) to just under $10 million – an amount that seems sufficient to develop, test and launch awesome MVPs that generate serious revenue.

Yet not all of Humaginarium’s value can be measured in dollars and cents. The company exists not to make money, after all, but to promote health literacy and empower self-care. I believe it’ll make a lot of money because our business idea is meaningful and strikingly, uniquely commercial. But it doesn’t exist just to make money. For that reason, I want for a word that connotes value the way I think about it. That word may be “worth.”

The dictionary defines worth and value almost as synonyms, and often that’s how they’re used. But not by me. I associate value with benefit. Whether you’re a consumer or investor, the value of Humaginarium is the benefit you may get from it. Such benefits may be aesthetic, behavioral, educational, financial or some combination of these gimmes. A notable example: adults with a chronic illness have fun while learning stuff that improves their lifestyle and lowers their spend on medicine. That’s four concurrent, measurable benefits. Another example: investors own a monumentally creative solution while working with a brilliant team on the cutting edge of several advanced technologies as they head for an exit of 20x their original stake. That’s four concurrent, tangible benefits. According to my projections, Humaginarium is valuable.

Still, the way I think about it, value is not enough. Humaginarium also has to be worthy. This is nuanced, please bear with me. I associate worth with merit. Unlike value, merit isn’t what people take out of Humaginarium, but what they plow into it. Whether they’re a founder, employee, advisor, investor or business partner. merit is the quality and excellence they impart to the venture. This principle even applies to consumers who are often cutthroat when it comes to spending their hard-earned dough. They want more than their money’s worth! So I unlocked the front gates by welcoming consumers into Humaginarium for free; not just into the foyer but free to roam the whole house. The attention they give, the devotion they consequently pay to their own marvelous bodies, the merit they enact when they radiate the insights of Humaginarium, that’s what I mean by worth.

Worth doesn’t show up in a customer value proposition; it’s under the radar of value. Worth shows up in the pride that Humaginarium makes people feel, the honor it bestows on them, the belief that what they’re doing – researching, making, investing, selling, using – really matters in real life and in the brave fantasies of an unshackled imagination.

Specific Aims

When consumers are ready to transfer knowledge from the fantasy world of play to the real world of health.

I recently received a green light from the National Science Foundation to apply for Phase 1 SBIR. The invitation was prompted by my “Project Pitch,” a compact description of R&D that Phase 1 has the potential to support. My proposal calls for a series of experiments, conducted over a several months, that may confirm the technical feasibility of scientific, educational and commercial goals set for the video game component of Humaginarium.

The video game is one of four components of my model unit. Maybe the most exciting and creative, but not the most powerful and impactful. Why? Because the video game is for learning huge things while having intense fun, but that’s as far as it goes. A video game by itself cannot make learning stick. If all I do is make incredible video games for health, that may not move the needle; it may not produce tangible and valuable outcomes.

The job of moving the needle is performed by a different component of Humaginarium. I call this the Diagnostic (versus Game). The Diagnostic is where consumers go AFTER having fun and learning the science of chronic illness. They go there to figure out what to do with incipient health literacy that emerged in the game. They participate in the Diagnostic when they’re ready to transfer knowledge from the fantasy world of play to the real world of health; i.e the human body and the experience of life that the body makes possible.

The Diagnostic is the subject of my “Specific Aims” document: a single-page précis that describes what Humaginarium would do with a Phase 1 SBIR from the National Institutes of Health. NSF requests a Project Pitch whereas NIH requests Specific Aims in order to prequalify applications for funding. Since grant writing takes weeks or months, and grant reviewing takes additional weeks or months, both agencies want to discourage laborious submissions that are just not a good fit for their SBIR mandates. I sent my Specific Aims to program officers at NIDDK (National Institute of Diabetes and Digestive and Kidney Diseases) because my R&D concerns mitigation of metabolic syndrome and diabetes mellitus type 2: morbid conditions in the NIDDK wheelhouse.

Actually I sent my Specific Aims twice. The first submission, a couple of weeks ago, was like throwing a stone into a pond and not seeing ripples form. Eventually the eerie stillness made me wonder, so I opened my file and read my text. OMG it was bad! Bad meaning incoherent, meandering, dotted with idiotic rhetorical flourishes, doomed to failure (in my opinion). I couldn’t fathom why I wrote it that way; couldn’t imagine why I sent it after writing; and couldn’t guess why it wasn’t immediately spurned by the agency as DOA. I hated it.

The writing was bad, but the ideas lurking behind the words were pretty good (in my opinion). So I started over; rewrote my Specific Aims as quickly as possible (fearing that NIDDK would acknowledge my first draft before I replaced it), and submitted the second draft with a cover note of mea culpa and fuhgeddaboudit and I’m not the a-hole that I seem to be.

I may not grab the brass ring with my second draft, but at least I won’t be embarrassed by it. “The tangible yield of my Phase 1 experiments will include cloud-based, self-administered qualification and prioritization mechanics for setting health goals, conducting intimate risk-assessment, contextualizing a personal choice architecture for change, modeling behavior changes to predict impact, and reinforcing medical and lifestyle resolutions.” In a nutshell that is the Diagnostic. It doesn’t already exist anywhere; it’s a linchpin for making health education stick; and if NIH lets me propose it for Phase 1 R&D, it may practically guarantee that the individual outcomes I promise with Humaginarium will be delivered en masse.

Pre-Money

Pre-money valuations are often guesswork loosely based on creative analytics.

Humaginarium is pre-money in a cardinal sense of the term: no financing, no outside investment, no revenue. We’re clean as a whistle! Nonetheless we’re an economic entity with latent equities: stakeholder contributions of facilities, services, material, time, and cash. These significant contributions are measurable and have practical value. Surprisingly then, though we’re unfunded we’re not poor. We have operating and capital budgets, expenses, cash flow, an elegant brand, and a business model though we’ve yet to write a profit and loss statement. This may sound like a classic tech startup holed up in a garage, except we occupy several garages.

Our financial situation is going to change soon, so I’m working on our first pre-money valuation. Not all startups do this, but I feel it’s worthwhile. A pre-money valuation assigns a total net value to our present and near-future company so that I can rationally price shares in Humaginarium. Shares of ownership will be exchanged for services in some cases, for hard cash in others. However not all contributors will receive Humaginarium stock; only those who want it and can materially enhance the company’s total value.

Even after three years in my virtual garage, that word “rational” still sounds a little jarring. It gets my hackles up because I don’t associate rational with guesswork, intuition, smoke and mirrors, or the Midas touch. However many valuations of early stage companies are concoctions of just these sorts of things. Pre-money valuations are often guesswork loosely based on creative analytics. As much art as science, maybe more. How’s that for full disclosure?

My first approach to pre-money valuation was led by a sensible financial advisor and for that reason it went nowhere. Months were spent trying to build a kind of sand castle with blueprints, but every time we stood back to look, ocean waves from the real world would wash over and turn it into mush. I still have some artifacts of that effort, but I doubt they will ever be used. They don’t enhance the value of the company.

More recently I met with Steve Lindo, a fellow member of the MATTER Healthcare Incubator, whose early-stage company Simergent recently closed a nifty second round of funding. I told him afterwards that he managed to call me out of the dense woods and on to a marked path, one that he had recently walked and was still navigating though Simergent is farther along than Humaginarium. By the way I talk a lot about the value of peer-to-peer learning, positioning it as a capstone of my innovative health education. Steve and Bob dialoging in a small, windowless conference room is a stellar example of how peer-to-peer works. Two explorers on a mountain trail, talking about conditions and directions, shortcuts and pitfalls, techniques and models that may hopefully lead to a summit.

Steve explained several tested methods for pre-money valuation. Everything made basic sense and I was encouraged because he spoke from experience and deep reflection. Afterwards I spent a few hours researching his methods and a couple others that surfaced online. I also sent questions to experts about non sequiturs of pre-money valuation that I just couldn’t make sense of (because, it turned out, they are nonsensical).

My net result is a hybrid methodology that nicely organizes the economics of Humaginarium (rather than some sand castle), plus a list of very doable analytical tasks to come up with my number. I wound up feeling pretty sure that my first pre-money valuation will be drafted soon, this month, so that I can head over to current and emerging stakeholders with a cap table that is as much science as art, maybe even more. That will be awesome disclosure!

Sustainment

Games require non games to capture their full value.

I enjoyed writing my compact Evidence for humaginarium.com. So much has been published about the utility and efficacy of games for learning, games for impact, games for change, games for health. Some of it substantiated and reliable, and some merely personal opinions. I tried sticking to facts.

What could I state about the value propositions of Humaginarium that is evidence-based and beyond reasonable doubt? How could I say it for an audience that doesn’t read scholarly papers, doesn’t care about video games or health education, and maintains a laser focus on controlling financial risk? I’m referring to investors and sponsors seeking assurance that Humaginarium will produce meaningful outcomes if it works as planned.

After posting Evidence I shared it with a few of the subject-matter experts whose research it epitomizes. I asked for feedback, in particular about whether it includes things that are false or misleading or leaves out things that are important.

I received several thoughtful responses including a vital observation by a co-editor of Computer Games and Instruction. It has a kind of sum-up-to quality so I quoted him at the new end of the deck. Here’s what he wrote:

“The big thing that Sig and I noted was that learning is substantially enhanced by helping learners reflect on underlying concepts of game actions, not leaving that to the learners to discover by themselves.” John Dexter Fletcher, email on April 4, 2019

I think the crucial point here is that games require non games to capture their full value. Without the addition of non game experience that dovetails with play, the cognitive and behavioral gains of play may not be realized or sustained. That’s consistent with findings I didn’t originally include in Evidence, demonstrating that games are not self-teaching. As another scholar put it: Instructor guidance must be applied during crucial states in game play to ensure that learning closure occurs. Players must be guided, prompted, motivated and sometimes forced to learn from their experience.

That’s going a bit far, in my opinion, but my opinion isn’t the organizing principle of Evidence. I accept empirical research as factual. Yet it’s also problematic here because entertainment and education don’t always coexist peacefully. One may try to destroy the other as they compete for dominance. Is there a way to forge a peace that allows us to reap the benefits of both at the same time?

I think Humaginarium has found that way. We have integrated extremely important non game experience into our model unit before and after game play.

Non game experience first occurs in a virtual arcade that helps consumers form a robust mental model of biological homeostasis: in other words, the healthy human body. With that model in mind, they enter a fantasy world of video games that are sheer and shameless entertainment. I don’t condone serious games that “force” folks to learn from their experience. Consumers must always have – and feel they have – the unfettered choice to learn and also to play without learning.

After a game is played, consumers can choose to start a diagnostic activity that helps them understand structural differences between the healthy human body they want and unhealthy body they actually have; the body that they are beginning to understand and engage for the first time thanks to playing the game. The diagnostic activity is where “instructor guidance” takes place in Humaginarium: not in game, where it may interfere with flow and fun, but right after the game when consumers have decided that they’re ready to reflect on their experience and make resolutions to take better care of themselves.

Can we be sure we won’t lose them in the interstices between game and non game experience? I think so. We use tech known as stealth assessment. Game mechanics trigger behaviors in players that make palpable their conditions, and symptoms, and beliefs, and worries, and longings. Stealth assessment is seamlessly woven directly into the fabric of game play. It’s quiet yet powerful technology by which consumer performance data are continuously gathered during the course of playing and learning, with inferences made about the level of legacy and emerging competencies.

Stealth assessment design has to include a competency model (what knowledge and skills should be assessed), an evidence model (what behaviors or performance should reveal those competencies), and a task model (what tasks will elicit behaviors that comprise evidence). The data generated by such tasks in game, and captured by stealth assessment, build bridges from the homeostatic paradigm to the fantasy of play to the urgent reality of illness and wellness.

Curves

I will be there with media that is not designed for yesterday, is not backwards compatible, and is wholly invested in the future.

Innovation may be a simple thing, like a better mousetrap. It may also be a complex thing that disrupts every which way. Humaginarium has a toe in the water of complex innovation.

I talk a lot about about bending the curve of bioscience in order to make it more relevant and interesting to regular folks. That’s one way to innovate: for example, by creating enjoyable content derived from radiography and microscopy that can be understood and used by blokes playing video games. Not so they’ll play doctor in a make-believe clinic, but in order to help them find and choose believable paths to wellness. That’s what I mean by “empower self-care.”

Humaginarium is also bending the curve of commercial games in order to make them more meaningful and consequential. Technologies like interactive storytelling, CGI, unlocking levels, and existential conflict scenarios are used to run half the entertainment algorithms, the dazzling half known as escapism. I want to run the other half too: the ancient medical salve known as catharsis, flourishing in the interstices between art and science. People will think better about their physical selves in the real world after they play around with our outrageous fantasies. That’s innovative too.

We’re likewise bending curve of execution in order to make products faster, better, cheaper. As Amazon Web Services says: don’t pick two, take all three! That’s innovation even a venture capitalist may appreciate. I’ve watched infrastructure as a service (IAAS) emerging for about 10 years; now it’s approaching prime time. I’m embracing it like the answer to my prayers, which in fact it is. IAAS lets me achieve practical and strategic goals with the wisdom of the commons and without wasting millions of dollars on crap like square feet and executive bathrooms.

We’re also bending the curve of delivery by streaming high-quality game entertainment from the cloud to all devices. No downloading, no consoles, no costly gaming PCs. Just instant access to video games the same way movies are accessed on Netflix and Amazon Prime. As the issue of latency crumbles, constraints on the video game market will burst. I will be there, with my toe in the water, casting exciting media that is not designed for yesterday, is not backwards compatible, and is wholly invested in the future. Dangerously innovative!

There is one more thing to mention here. We are bending the curve of enactment. This is very much on my mind as I approach the NIH for seed funding. By enactment I mean bridging the gap between learning (thinking) and doing (behaving). This innovation is so rare and desirable that it could be called fool’s gold, but not this time. Influences like behavioral economics and positive psychology push me forward, full of optimism, that we will reliably produce valuable outcomes. Humaginarium will ride them to a new level of achievement with video games that are great works of art; art that not only fills people with wonder, but also leads them out of their fearful fantasies and into objective reality where, more than ever before, sublime differences in the quality of life can be made.