Failure Analysis
Yiyao died from a toxic combination of unsustainable unit economics and strategic misalignment in a winner-take-all market. The core problem was attempting to build...
Yiyao was a Chinese healthcare platform that attempted to bridge the gap between patients and medical services through an online-to-offline (O2O) model. Launched in 2015 during China's digital health gold rush, Yiyao raised $200M to build a comprehensive ecosystem connecting patients with doctors, pharmacies, and healthcare providers. The platform offered telemedicine consultations, prescription fulfillment, health information, and appointment booking. The timing seemed perfect: China's healthcare system was notoriously fragmented, with patients facing long wait times, limited access to quality doctors, and opaque pricing. Yiyao positioned itself as the 'super app' for healthcare, attempting to digitize the entire patient journey from symptom search to prescription pickup. However, the company faced brutal unit economics in a market where patients expected free consultations, doctors were reluctant to engage outside hospital systems, and regulatory uncertainty around online prescriptions created operational chaos. Despite massive funding, Yiyao burned through capital trying to subsidize both supply (doctors) and demand (patients) while competing against better-capitalized rivals like Ping An Good Doctor and Ali Health. The company's hybrid model—neither pure marketplace nor integrated provider—left it vulnerable to platform giants who could absorb losses indefinitely while building healthcare as a loss-leader for broader ecosystems.
Yiyao died from a toxic combination of unsustainable unit economics and strategic misalignment in a winner-take-all market. The core problem was attempting to build...
The Chinese digital health market in 2024 is a consolidated oligopoly dominated by three ecosystem players: Ping An Good Doctor (market cap ~$3B, 400M+...
Healthcare marketplaces require structural advantages beyond product: Yiyao proved that even $200M and decent execution can't overcome ecosystem disadvantages. Modern founders should only enter...
China's digital health market is massive and growing. The TAM in 2015 was estimated at $50B+ and has since exploded to over $200B as...
Building a healthcare marketplace in 2015 required massive infrastructure: doctor credentialing systems, HIPAA-equivalent compliance, payment processing, logistics for prescription delivery, and complex integrations with...
Healthcare marketplaces have notoriously poor scalability due to supply-side constraints and high variable costs. Yiyao's model required continuous subsidies to both doctors (to participate)...
Step 2 (Validation): Sign outcome-based pilot with one mid-size insurer (5,000 covered diabetics). Charge $15/patient/month with 50% bonus if cohort achieves >0.7% average HbA1c reduction. Expand AI capabilities: add exercise coaching, mental health check-ins (diabetes + depression comorbidity), and family caregiver portal. Integrate with China's national health insurance system for claims data. Target 80% patient retention at 6 months. Cost: $300K (6 months, scale to 8-person team).
Step 3 (Growth): Launch employer wellness channel targeting China's 200M+ white-collar workers (high diabetes prevalence, strong employer health benefits). Offer $200/employee/year for comprehensive diabetes prevention + management. Build viral loop: patients who hit HbA1c goals get $50 credit toward CGM supplies, incentivizing adherence. Expand to 50,000 active patients across 3 provinces. Add AI-powered complication prediction (retinopathy, neuropathy risk scoring) to increase clinical value. Cost: $800K (12 months, 20-person team).
Step 4 (Moat): Develop proprietary clinical dataset of 100K+ Chinese diabetic patients with longitudinal CGM + outcomes data—the largest in China. Use this to train specialized medical AI models that outperform generic LLMs on diabetes management. License these models to hospitals and other digital health platforms (B2B revenue stream). Expand to hypertension and cardiovascular disease using same AI infrastructure. Negotiate exclusive partnerships with top-3 CGM manufacturers for China distribution. Build regulatory moat by working with NMPA (China's FDA) to get ChronicCare classified as Class II medical device software, creating 18-24 month barrier to entry for competitors.
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