Welcome to the Ice Age

Welcome to the Ice Age

Momma Kliff used to say even when your right and everyone else was wrong there is no reason to gloat. Well this is one time when we will divert from Mom’s advice and gloat just a little as the digital diabetes space has gone from being hotter than Georgia asphalt to colder than Chicago during winter. Shares of Livongo continue to sell off with everyone looking for a reason why this company has lost half its value.

We hate to be captain obvious here but when a company has proven about the only thing, they can do consistently is lose money is it any wonder this once hot stock has fallen from grace.

Yet Livongo isn’t the only company felling the chill as Bigfoot Biomedical a company known more for its numerous social media posts then actually having an FDA approved product has gone largely radio silent. Let’s face some of those pesky facts here folks, Bigfoot is running out of money is having a difficult time raising new money and without an infusion of desperately needed capital it won’t be just the social media that cease to exist but the company itself.

Now we’d like to think that finally at long last investors have learned that this is not about the toys in the toy chest. That it helps when you have a sustainable business model. We’d like to think that, but we’d be wrong for as sure as the sun rises in the east and sets in the west this pump and dump cycle will continue. Investors will continue to fall for whiz bang way cool it’s in their DNA. We witnessed this with the millions dumped into the quest for a non-invasive glucose monitor and are seeing it again with digital diabetes.

Right now we’d love to be a fly on the wall at Onduo or OneDrop two of Livongo competitors. Two companies who were feeling pretty good when Livongo went public as this IPO seemed to validate their models as well. Digital health was all the rage and it looked as if they too could hit the capital markets. Well it hasn’t exactly turned out that way.

The real question we have is will anyone learn from the Livongo free fall. Or will they continue to play follow the leader which in this case will lead them nowhere.

The same can said about Bigfoot, with the exception of Companion Medical the only real connected pen company with an actual product that is actually on the market, will any of the dozen or so other connected pen companies learn from Bigfoot’s mistakes. Probably not as like the Livongo copycats these companies have forgotten that way cool whiz bang might make for a great PowerPoint presentation, but it doesn’t feed the bulldog when it comes to having a sustainable business model.

Heck let’s not stop with all the Livongo wannabes or all the connected pen companies not named Companion, what about all the Dexcom wannabes. These include the evil empire otherwise known as Medtronic who continues to believe that calibration is a good thing. Just once and we’d pay good money for this we’d like a potential investor to ask any of these Dexcom wannabes how they plan to make money when Dexcom and Abbott are gobbling up CGM patients by the boatload. And the answer isn’t were going to be just as good as Dexcom just cheaper.

The facts, yes, those pesky facts are this – when it comes to our wacky world the difference between success and failure comes down to talent and talent is in short supply today. We have lots of hubris and tons of arrogance but talent the ability to actually run a business is lacking. Medtronic is becoming the poster child for how hubris and arrogance can take down a company that once had a stranglehold on a market. Not to take anything away from Tandem or Insulet but their recent success has as much to do with Medtronic’s mistakes as it does their own performance.

As everyone knows our chardonnay guzzling friends in Paris have long held the mantle for the worst run diabetes company. Sanofi has that special knack for consistently doing the wrong thing the wrong way and paying millions for the privilege. Yet we are beginning to see room on the shelf for others to join Sanofi. Medtronic is a strong candidate as it takes extraordinary talent to go from having a monopoly to fighting to stay alive. No the company is no danger of going out of business, but the oven has been turned on and that goose that laid all the golden eggs is about to get cooked.

One last thing before we go – our WAG (wild ass guess) as to when the Livongo Limbo will end at what price – we say $14 per share. WAG #2 the over/under when Bigfoot goes under, we’d say that come next June they won’t be here in Chicago.