Based on your reading of the Solome Tibebu case, sketch out a preliminary but coherent business model canvas for each of the

Solome Tibebu 1

Solome Tibebu: Evaluating Possible Business Models

Laura C. Dunham, University of St. Thomas

PREPARING TO LAUNCH

With summer break nearly over and her senior year in college ahead, Solome Tibebu was feeling increasingly excited about a new venture idea she was developing with hopes of launching by graduation. Her venture was focused on helping teens cope with anxiety. As someone who experienced ongoing episodes of severe anxiety since middle school, Tibebu knew how debilitating this disorder could be. Having worked with multiple therapists throughout her teens, she believed there were significant limitations to traditional forms of therapy. In the last few years, Tibebu began designing a set of interactive video games featuring psychotherapeutic activities that she felt had the potential to educate, empower and calm young people in the throes of an anxiety attack. She recently shared her ideas with several therapists and they were encouraging. She was at a point where she needed to determine the best way to bring this venture to life.

Based on her research, Tibebu identified three viable options, each with merits. She was determined to pursue the idea further, but was not sure of her next steps. Her commitment was clear – as she put it:

I want to be the number one source for teens who are suffering from anxiety, which can mean pre-teens all the way to college students as well as parents who need help with a child with anxiety. I want this to be …where they go for help, wherever they are … Even if you are seeing a therapist, if you have that luxury, which I did, and which many don’t, it can still seem like an eternity for the weeks or half a week that you have to wait to see them. So, if in the middle of the night, you are in trouble, you can go to this … to get immediate relief.

As an Entrepreneurship major at the University of St. Thomas in St. Paul, Minnesota, she was unsure if she should:

1. Sell her games directly to teens and their parents via her own website. She had an operating web site – Anxiety in Teens (AiT) – developed five years previously to serve as a source of education and community for teens like her. Although she currently offered free access to it, she wondered if she might be able to offer a subscription service that provided access to her games and other premium content.

2. Sell her games to school systems and provide access to middle school and high school students via the internet in what was termed a “software-as-a-service (SaaS)”1 model.

—————————– Copyright © 2018 by the Case Research Journal and by Laura Dunham. This case was prepared as a basis for classroom discussion, not to illustrate either effective or ineffective handling of an administrative situation. The author wishes to thank Gina Grandy and anonymous reviewers for extensive comments and insightful recommendations, and Solome Tibebu for her assistance in preparing this case.

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2 Case Research Journal  Volume 38  Issue 4  Fall 2018

3. Sell to mental health professionals in a SaaS model, enabling therapists to offer the games to their patients and thus provide 24/7 support.

She knew it was going to be tough to find the time to make good progress. It was August 2012 and fall semester was starting in two weeks. In addition to classes and various other school activities, Tibebu was also becoming increasingly busy with outside internships and active networking within the local entrepreneurial community, as well as with speaking engagements to parent and youth groups dealing with teen anxiety.

She felt a small pang of anxiety as she considered what she should do. Should she continue researching each of these business models, and if so how? Should she select one and plunge ahead, and if so, how? How do you go from idea to action, she wondered.

SOLOME TIBEBU

Tibebu grew up in the affluent suburb of Eden Prairie, Minnesota. One of two children of recent émigrés – her father was Ethiopian, her mother Polish – Tibebu’s early childhood was a happy and busy one.

In middle school, things changed when Tibebu experienced her first of many panic attacks. Suddenly, and seemingly out of the blue, she became excessively fearful of losing her family. At school, she was constantly in the counselor’s office, weeping uncontrollably and begging the counselor to call and check on her parents, to make sure they were all right. At home, she clung to her parents, afraid to let them out of her sight.

Years of therapy seemed to be of little help until she began seeing a therapist whose approach was different. As Tibebu recalled:

He really showed me what was going on in my brain, what was the chemistry behind it all. He mapped out what was an obsessive and compulsive thought process and helped me understand what was going on. I felt like that really empowered me. When I was in a high- anxiety situation, I could say, ‘Oh, wow. This is what I learned. This is what’s going on with my body. I’m having these thoughts because I have an anxiety disorder.’ So instead of focusing on ‘Oh, somebody’s dying right now,’ I was able to move to, ‘Oh, what is going on with me and my serotonin levels?’

Having this knowledge made a profound difference for Tibebu, allowing her for the first time to become more proactive about managing her anxiety. She became eager to learn as much as possible about anxiety and effective techniques for working through panic attacks. However, she became increasingly frustrated by the lack of information available on the web. During one particularly debilitating attack while she was away at summer camp, Tibebu was searching the web for helpful information when she became angry:

I remember I Googled ‘teen anxiety’ or something. The only things that came up were just very medical stuff like WebMD and what was anxiety and not really a community or a refuge, especially for teens… I remember my frustration. I mean, I was angry. I thought, ‘How is there nothing out there?’ This is the most common mental health illness there is, but there was nothing.

Right then, Tibebu became determined to start her own web site, to provide “information, inspiration and community” for teens suffering from anxiety. Her goal was to provide immediate relief for teens in the midst of a panic attack as well as the kinds of resources that could help teens with ongoing management of their disorder.

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Solome Tibebu 3

Aged 16 at the time she started the web site, Tibebu spent the next few years improving and expanding it. Designing and redesigning the site, building content, creating a user forum, establishing a store – the work was hard and time consuming but very rewarding.

However, by the time she was finishing her second year in college, it became clear she was at an inflection point. She had pushed things as far as she could with the resources she had in hand. Even though she had attracted six interns through the University’s Learning Through Service course (a required course in which all undergraduate business students volunteered 40 hours to a local nonprofit), it still was not enough to accomplish her goals.

Tibebu was impatient to increase the impact of her efforts, and to help more teens manage their anxiety and put themselves on the path to recovery. However, she felt she had taken things as far as she could with the web site. If she were going to develop the content and applications that could really support teens with anxiety, and successfully reach the millions of teens suffering from anxiety, she needed a different approach. She felt the games she was developing might be the right vehicle for reaching and helping young people, and might also help her attract the investment she needed to scale and sustain her efforts. By the end of her second year in college, Tibebu began actively exploring new business models for her venture.

ANXIETY DISORDERS AMONG YOUNG PEOPLE

Anxiety disorders encompass a range of mental health disturbances that feature excessive worry and fear, experienced in a constant and overwhelming manner, that can interfere with daily activities such as work, school or social life. Anxiety disorders include panic disorder, social anxiety disorder, specific phobias, obsessive compulsive disorder and post-traumatic stress disorder. According to WebMD, all anxiety disorders share some symptoms, including:

 Panic, fear, and uneasiness

 Sleep problems

 Not being able to stay calm and still

 Cold, sweaty, numb or tingling hands or feet

 Shortness of breath

 Heart palpitations

 Dry mouth

 Nausea

 Tense muscles

 Dizziness In 2012, anxiety disorders were the most common mental health ailment in the

U.S., with an estimated 40 million Americans affected each year2. Treatments typically included medication, such as anti-depressants and anti-anxiety drugs, and psychotherapy, including family therapy, talk therapy, and cognitive behavioral therapy. The latter was increasingly widespread in the treatment of anxiety disorders and focused on helping patients learn to recognize and change thought patterns and behaviors that triggered anxiety. Despite available treatment, only 36.9% of anxiety sufferers received treatment.3

An estimated 31.9% of adolescents between the ages of 13 and 18 experienced an anxiety disorder, with symptoms typically arising around age 6.4 Over 8% of adolescents experienced severe impairment. Various studies indicated a sharp rise in

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4 Case Research Journal  Volume 38  Issue 4  Fall 2018

the number of teens coping with anxiety disorders.5 Research indicated that the majority of young people with moderate to severe anxiety disorders responded well to treatment with cognitive behavioral therapy, medication or a combination of both. Further, these patients continued to show improved outcomes over a 6-month follow- up period with the help of monthly booster sessions.6 However, only 18% of teens with anxiety disorders typically received mental health care.7 Without help, studies indicated that children with anxiety disorders were more likely to underperform in school, to miss out on social experiences, and to experience problems with substance abuse.8

EVALUATING POSSIBLE BUSINESS MODELS

Whole Teen By the end of her second year in college, as Tibebu considered how to create more impact, she wondered if she could use the Anxiety in Teens web site as the platform for selling her games to teens. Her first thoughts centered around developing a “freemium” model9. This would entail continuing to provide basic content and the community forums for all users, as she currently did, but also offering a subscription for teens and their parents that would provide access to premium content. Tibebu envisioned calling the subscription service “Whole Teen” and she hoped to offer her games as well as articles, products and webinars on a wide range of topics including nutrition, exercise and meditation.

This business model built on the learning and experience she had accrued through her work with AiT, including skills at social media marketing and search engine optimization techniques to drive more traffic to her site. However, despite her growing skills and knowledge, Tibebu knew it was difficult to build brand awareness and traffic on the web to the extent she hoped. Traffic remained low, with unique (new) visitors numbering fewer than 500 each month.

She also knew she was up against tough competition. As a website offering medical advice and support, AiT competed against much more established players such as WebMd, Mayo Clinic and Helpguide, each of which reached millions of consumers annually. These comprehensive sites offered advice on a variety of illnesses and health topics. Another competitor, Anxiety Disorders Association of America (ADAA), was an established nonprofit organization dedicated to helping individuals suffering from any type of anxiety disorder. The organization recently expanded and redesigned their website and the new website received over 5 million hits each month. A leader in advocacy, education, training, and research for anxiety and stress-related disorders, ADAA offered an array of services including electronic chat rooms, nationwide conferences, special events that allowed people to come together in person, informational materials and brochures, podcasts, newsletters and resources for finding a therapist.

Tibebu’s site was the only one focused on young people with anxiety, and she believed this was the reason why visitors returned regularly. She conducted an online survey with her users and discovered that over 50% regularly visited the site, either daily or weekly, and that they valued the focus on teen issues and the ability to connect with other teens experiencing anxiety. Given the high prevalence of young people experiencing anxiety, the fact that so few visited a therapist, and that teens valued the community and tailored information she provided, Tibebu felt that Whole Teen could be a viable vehicle for delivering impact. In spring 2011, as she began considering a business model centered on a subscription service, Tibebu’s mind raced with ideas for

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Solome Tibebu 5

products and services she could offer subscribers. However, the more ideas she generated, the more stuck she began to feel. It would cost a lot of money to develop these apps and other products and services and where would she get that? With fewer than 500 unique visitors a month, her numbers were still too low to sustain a subscription site and provide cash for product development. She felt stuck in the aggravating grip of a “chicken-egg” problem:

What comes first? Do I want to bring more people before I have a lot of bells and whistles, or should I develop the bells and whistles before I bring more people? But how to do I attract the people without the bells and whistles? If I go the other way, how do I get the offerings on my site without more money? Either way, I need more money.

Tools for Schools As she headed into her third year in college, and wrestled with these issues, Tibebu began brainstorming another possible business model. Thinking back to her days in middle and high school, when she was a constant presence in the counselor’s office, she remembered how challenging the situation was for the school counselor.

Here I was running to the counseling department five days a week, several times a day, hysterical. And I know my counselor was trying her best but she was just as anxious as I was because she wasn’t trained in mental health. She was just trained more in college planning and maybe middle school boyfriend/girlfriend drama. But not really mental health.

It occurred to Tibebu that she could target schools, providing counselors with a set of tools that they could offer to students experiencing anxiety attacks. From her own experience, she knew there was a need. It was also a much more focused target audience – rather than having to go after such a broad and diffuse audience as teens and their parents, Tibebu would be able to target school systems and their counselors directly. She could start locally and learn and grow the business from there.

Initial research confirmed that there was a sizeable market. In her home state of Minnesota, the numbers were substantial (see Exhibits 1 and 2 at end of case). Although state law in her state did not mandate that schools offer counseling services, there was indication of a growing need for services of this kind. For instance, Tibebu discovered that at the high school near her apartment, there were 4 counselors serving 2,236 students, a student/counselor ration of 559 to 1.

Through an acquaintance, Tibebu met several professors in the Masters in School Counseling Program at the Adler Graduate School. She shared her idea with them and was pleased by the highly positive reception they gave her. She learned from them that mental health issues were becoming an increasing area of focus among school counselors, who traditionally were more focused on academic issues and college planning. One of the professors shared studies that indicated that mental health interventions within the school setting dramatically improved student performance.

Heartened by these findings, Tibebu approached contacts at the state Association of School Counselors. With their feedback in mind, Tibebu aimed to develop a set of interactive web-based video games featuring psychotherapeutic activities that could be sold to the schools. The schools could then provide them to students experiencing an anxiety attack at school. The games would have several goals: 1. To calm the 504-Plan students (students with special needs, including emotional

disabilities, often students who have severe anxiety and depression) who are in immediate distress at school and cannot attend class.

2. To educate users by offering fun lessons on the cognitive process and teaching youth what is ‘really going on in their minds’ when they experience an anxiety

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6 Case Research Journal  Volume 38  Issue 4  Fall 2018

disorder, which allows users to disassociate themselves from their distressing situation.

3. To empower users to further build self-confidence through effective affirmation exercises and self-esteem-building activities. Tibebu anticipated offering these games through a subscription program to

schools, using sliding scale fees based on school size. She was aware that school systems already purchased various web-based services, such as for college counseling. Companies serving schools with those kind of services charged anywhere from $450 a year per school to close to $1,000 per school.

In the fall of her third year in college, as she was in the preliminary stages of thinking this business model through, she decided to test the idea by applying for her university’s business plan competition, the Annual Business Concept Challenge in October. She knew that if she advanced past the first round, she would have the opportunity to present the idea to a panel of local entrepreneurs and investors. She was eager to hear their feedback on the idea.

Tibebu placed fourth, receiving a small scholarship as her award. Although the judges all applauded the idea and saw the value of the service, they were less enthusiastic about her choice of schools as target customer. They noted that schools were notoriously hard to sell into, with tight budgets and long sales cycles, they told her.

Discouraged but not deterred, Tibebu continued to investigate the idea, but also began thinking about another possible business model centered around serving therapists. By the spring of her third year, she created a new iteration of the business model, Cognific, a combination of cognitive behavioral therapy and “terrific.” Cognific Having worked with five different therapists when she was younger, Tibebu knew that the games she was developing could fill a need. She described the need:

The way the therapists give mental health homework today is like a typewriter when it needs to be an iPad. The therapist writes down the homework on a little Post-It note – ‘go do this.’ Do exposure therapy. Touch a spider 20 times when you get home if that’s your phobia. But then once the kid gets home with this thing — if he hasn’t already lost it in the car — he’s supposed to go and do exposure therapy completely by himself with no guidance and not knowing really what to do and what’s going on. I remember myself how much I hated it and often avoided it. I mean there’s not a real motivation there, and it just prolongs treatment. And so what if my games could kind of like ‘Chef Boyardee’ the kids — they don’t know that the veggies are in the pasta but they think it’s so fun and tastes good. What if mental health homework was actually fun?

She believed that the games she was designing would work well in the clinical setting. She could also add a back end with all sorts of features for the therapist. While the patient was playing the games, the software could be capturing data about timing, frequency and intensity of his or her panic attacks. Tibebu explained:

This is so important especially with young people when they come into the therapist’s office only once a week or maybe every other week. Let’s say they had a panic attack on Monday and came to see the therapist on Friday — they can’t articulate the same feelings or the experience. Or even details around when, what happened, what triggered it. And so by the time they get there, it’s almost a waste of time. Cognific will help the therapist help the patient a lot better. What Cognific could do is really kind of like what online banking did for the

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Solome Tibebu 7

banking system. It could create a 24/7 connectedness between patient and therapist. And really making that bond a lot stronger.

According to the U.S. Department of Labor, there were over 552,000 mental health professionals practicing in the U.S. Psychologists made up the largest sub-segment of mental health professionals, and about 34% of them were self-employed, mainly as private practitioners and independent consultants. The number of psychologists was expected to grow 12% between 2008 and 2018. There also appeared to be little competition in the space. Based on extensive web research, Tibebu was not able to identify any other vendor who provided this kind of resource to mental health professionals. Tibebu ran the idea by a couple of therapists for input. Working through her growing network, she identified several marriage and family therapists who agreed to speak with her. They were not a perfect fit – she really needed to speak with clinical psychologists who worked with teens – but she felt they could address basic issues around the idea. For instance,

I was kind of afraid — the therapist isn’t going to like something that’s helping their clients get better faster, not because they’re a bad person and they don’t want to see their patient get better, but they have to pay the bills too. If it’s helping so much, maybe they don’t want to buy it? And so that was just a fear I had. And the therapists said, ‘Oh no, we want to do everything we can to make it better for our patients.’

Tibebu was pleased that the therapists welcomed the idea of better mental health homework to give their clients, but was disappointed to find that her small group of interviewees seemed lukewarm about the idea of a web-based program.

The therapists I spoke with had been doing it for 30 years, and I don’t think that older generation is quite my target. So I wasn’t getting quite the feedback that I needed. It’s tech- y. They’re comfortable with what they’ve been doing for so many years, and this kind of product would be a big departure for them.

Tibebu knew she needed to find therapists that better fit her target group in order to get more detailed feedback. However, in the spring of her third year, she became engrossed in writing a business plan for Cognific, to submit to a statewide venture competition that attracted over 1,000 entrants in six categories. Tibebu submitted to the student division, and to her delight, was selected as a semi-finalist. In addition to the validation the idea received from being selected, Tibebu also experienced the benefit of two mentors helping her flesh out and revise her business plan for the next round of the competition. Her mentors were bright and experienced, both having started significant businesses, including one in the healthcare area.

Over the course of the next few months, through the end of her third year and the summer before her 4th and final year in college, Tibebu’s mentors and others helped her refine and elaborate her plan and develop preliminary financials to submit to the next round of the statewide competition (Exhibit 3). Working through the financials was eye opening. Tibebu realized she needed more specifics about all aspects of her business model in order to detail her revenue sources, costs, and start-up capital required. For instance, she had to make a decision about her revenue model – while the end user was clear (clients and therapists), who should pay? For the purposes of her submission to the next round of the statewide competition, Tibebu decided to base her financial model on charging therapists $69 per patient per six-month period. This seemed like a reasonable fee to her given what she knew about therapists’ charges, although it was not yet validated with the market.

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8 Case Research Journal  Volume 38  Issue 4  Fall 2018

Her mentors also stressed the importance of an exit strategy. If she were going to raise investment capital, she was going to have to provide would-be investors with a future “liquidity event” that would generate an attractive return for them. One of her mentors suggested that she target health insurance companies and large pharmaceutical companies as potential purchasers of the business once established.

Tibebu explained:

If Cognific is helping the patient get better faster, which could reduce medication times and reduce therapy times and costs, that is a little more attractive to the health insurance company than it is to the actual therapist. So, for instance, if you go to liveandworkwell.com, which is United Healthcare’s portal for their health insurance policy holders, they have private content — there are a bunch of articles and whatnot for policy holders to read and help themselves. But I got to thinking, ‘What if they had Cognific? If I were to provide my product to them to offer to all of their policy holders or to distribute however they feel with therapists?’ Not only might this generate an important revenue stream for Cognific, but also, and more importantly, a potential acquirer down the road when Cognific was up and running and demonstrating its value.

Similarly, big Pharma might serve that role.

Right now, of the top 20 pharmaceutical drugs, 13 have their patents are expiring this December, this year. And so the companies are really looking to find something else besides medication, some more holistic approach. And not only that, but also because they are getting such a bad rap for just being medication motivated. So what if they had Cognific – so a doctor could prescribe six months of Prozac with six months of Cognific to a young person with anxiety disorders? I’m really thinking there is huge possibility there, really huge potential.

Although she did not end up advancing beyond the semi-finalist stage in the statewide competition, Tibebu was thrilled by how much she had learned about business plan developme

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