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Reflecting On Our First 5 Years: 5 Things I Wish I Knew At The Beginning

By: Tim Gordon

It doesn’t feel like five years. In fact it feels like just yesterday I was sitting down at my  kitchen table to figure out how to start a company. So much has happened since then, and without the support of my now-wife-then-girlfriend who apparently missed the memo that being an entrepreneur basically means you’re unemployed, none of this would be possible. I’ve watched in amazement as we’ve grown – bigger offices, new website iterations, the launch of this newsletter, new clients, new investments, and most importantly – more team members. The impact of adding
each and every one of the people on our team has reverberated through the entire business, taking it somewhere I never could have even flirted with on my own. Through all of that, I’ve learned countless lessons – many the hard way – but on the whole have found these challenges far more rewarding to power through than those that came before. In honor of our 5th Birthday, here’s five things I’ve learned that I wish I knew at the beginning.

  1. Always Be Selling Like You’re Going Out of Business

    This sounds obvious enough, but things are tricky in a services business when you’re an army of one. We don’t sell widgets, and we didn’t invent a better mousetrap. We don’t cold-call CEOs, suggest it’s time that they replace their CFO and offer to help them with that. Sales cycles are all over the place. The shortest has been 1 week, the longest – well I’ll know the answer when we start doing work for companies we started building relationships with the year I founded the firm. In the beginning, I was worried that I’d sell too much and not be able to deliver on the
    work without having a team to support me. In hindsight, this was bananas. This would have been a wonderful problem to have. Alas, it was not the problem I had. After some reps, I quickly learned that I always needed to have the same urgency around our business development efforts as I did around our delivery. This got easier once our team grew and I could split my focus more evenly, but the reality is, no revenue, no business. Even when things are going well, get your ass out there and sell more.

  2. Hiring The Right People is Transformational

    Duh, right? Shameless plug for a search firm? Maybe. But if you want to trace the first inflection point in our business, there’s an exact date that just happens to match up with our first hire. You have to white-knuckle your way through the productivity dip that follows, but when you come out the other side of it, the return on investment is huge. When you get it right, you see the early formation of your company’s culture, you get freed up to focus on other things (see Lesson #1), the next hire gets incrementally easier to on-board via shared institutional knowledge, and, it gets a little less lonely. Just a little. There’s a chicken and egg element to this when you’re bootstrapping the business and haven’t raised capital, but there hasn’t
    been a single thing that we’ve spent money on that has a better return on investment than our people.

  3. Understand Why People Say No To You, But Even More Importantly, Why They Say Yes.

    In the beginning, I heard “No” a lot. A lot. Turns out, starting a company is an exercise in getting your teeth kicked in every day, and coming back for more. Good thing my dad’s a dentist. When we wouldn’t win an engagement, I very infrequently knew why. I could take a good educated guess, but rarely would a prospective client tell me straight up. One-man shop, track record, etc. Over the last year, a number of our clients have told me why they said “yes” to us, and it was a strangely profound realization that that was probably more important for me to understand. I should have asked every damn client we had why they picked us, because some of the unsolicited feedback surprised me. It highlighted that they cared a lot about the
    things about us that I thought they should care about, but feared they didn’t. They chose us because of our size not in spite of it, our clear focus, and the belief that we would do anything to deliver for them. It showed me that the story about us that I wanted to tell, was in fact the one that people wanted to hear. Who would have thought? Which leads me to my next lesson…

  4. Trust Your Gut

    You know. You know you know. But you zig when you knew to zag. At what point do you start to listen to that feeling that clearly knows better than you? I should have listened more often. I’m happy I listened when I did. Instinct led me to make some bold (for me) calls over the last few years at times when all the evidence said not to. A number of those moments represent huge inflection points in our business, and frankly are why we’re still here. Other times I didn’t trust my gut, and I really should have. This one requires constant awareness on my part, because I still miss it sometimes, but I’m getting a lot better at paying attention. I think the brain subconsciously does a phenomenal job of cataloguing experiences in the form of data, and when it’s trying to tell you something based on all of that computing power, you should listen.

  5. Balance is A Key To Longevity

    I say “A” and not “The” because there are others, but this one has been hugely important for me. In the beginning, at that lonely table in my one bedroom apartment, 10 feet from my bed, it was hard to figure out when the work-day started and ended. Even sitting on the couch in the evening, being able to see my “office” led to pangs of guilt. I’m starting a company, shouldn’t I still be working? I think the answer was no. This is a marathon, not a sprint. Finding time to get above it, rest, reset and come back ready to go made a big difference. Taking the occasional vacation to realize that I could and the world wouldn’t come to an end was really important. We just aren’t meant to keep going without taking a break, and I’ve got to set a good example. Happy employees make for a happy company and happy clients, and they need to know that it’s not only OK to rest and reboot, but that it’s an expectation. As a founder, I had to be deliberate about placing boundaries (with some flexibility) for the benefit of everyone, not just me.

What I’m Working On

I, like our company, am a work in progress. I find that when I share what I’m working on out loud and with others, it helps keep me accountable to it. There are two things that I’m trying to improve on daily. The first is patience. And not the “I’m an impatient person and that’s a weakness masquerading as a strength” type of a BS answer to an interview question. I mean impatience in a form that I’m not proud of. It’s something that I’ve been working on for a long time, and probably always will be, but it’s important to me, my team, and my family that they get the best, most patient version of me so that we can continue to do amazing things.

The second thing, is stopping to celebrate the wins. I think we’re like most growing companies, in that we spend a lot of time unpacking the things that we mess up, or fail at, and very little time patting ourselves on the back for a job well done. I’ve been guilty of this my whole life, but I’m making a concerted effort to focus on our wins – big and small – because we should and it’s important. I worry that if we don’t we may forget how to have fun doing this, and if we’re not having fun, what’s the point?

An Interview With Carolyn Witte, Co-Founder & CEO of Tia

Carolyn Witte is the Co-Founder and CEO of Tia, a New York City based modern gynecology  and wellness practice designed to personalize and integrate a holistic approach to omen’s healthcare. Designed to be a one-stop-shop for female health, Tia opened their first clinic in Flatiron in the Spring of 2019, with plans to expand in the coming months.

Tim: Tell us a little bit about how Tia came to be, and what inspired you and Felicity to found the company in the first place
Carolyn: Tia really started out of my own and Felicity’s frustrations with the healthcare system as patients. We very much approached the space from a patient-first point of view, having gone through our own really frustrating diagnosis process in our early twenties that exposed to us everything that was fundamentally broken about women’s healthcare – specifically the fragmentation, lack of personalization, and, something that we talk a lot about: lack of soul in healthcare. It’s been quite a journey over the past two years taking our patient experience and marrying that with the provider reality, and really saying, ‘well, what would healthcare really look like in design, with the female experience at the center of it?’ That’s what Tia has been really about.

Tim: And for those that don’t know, what is Tia?
Carolyn: Tia is a lot of things. We are not a clinic with an app, or an app with a clinic, but at our core: the next-gen women’s platform fundamentally changing the way women interact with the healthcare system at large. What that means in practice is we build all sorts of products, tools, and services, from our personal private women’s health advisor app to our first brick and mortar Tia clinic here in New York City. Everything we do or build is designed to help women be their own patient advocate and get meaningfully better healthcare.

Tim: Women’s health is having a bit of a moment right now – and sensibly, as depending on where you get your stats, upwards of 78% of women are the primary healthcare decision-maker in their household; what do you attribute the explosion of companies focused on the space to?
Carolyn: Yeah, it’s interesting. I think there’s a tension between this realization that women spend 80% of the healthcare dollars and therefore are “a niche market,” as this market used to be described as. With the other side of the coin, which says that that women have – we believe whole heartedly at Tia – fundamentally different, distinct healthcare needs than men; and therefore, necessitate their own product experiences and healthcare offerings designed with them at the center of it. As we say at Tia, ‘women aren’t small men,’ and the healthcare system at large has all too often treated women as such.

Tim: What was the biggest challenge that you faced in getting Tia started?
Carolyn: Where to start. That continues to be a challenge we face: We’ve always had a really big, bold, grandiose vision for building a new model of women’s care from the ground up. The question of where to start, sequencing and prioritization has always been the challenge. We started as building an information-only platform, and quickly learned that we couldn’t really achieve our goals, or our vision, without getting into care delivery ourselves, which was the next chapter. I think now the challenge continues to be what are the next, and the next, and the next chapters, and the right sequencing to really enable us to achieve our long-term vision?

Tim: Along those lines, how do you differ from other women’s health providers?
Carolyn: First and foremost, we’re not just a women’s healthcare provider. We’re a technology platform at the core. In many ways we’re three businesses in one: a technology platform, a clinical services business, and a direct-to-consumer brand. And Tia’s magic is really at the intersection of brand experience, technology, and best-in-class clinical care.

Tim: When you talk about that technology, what role does it play in your view in revamping the patient experience that you’re providing?
Carolyn: We view technology as the tool that’s not only about revamping the patient experience,but changing the provider one. I think the biggest realization for me as the founder, who approached the space originally from a patient-first point of view, was realizing that, to fix women’s health for women, you need to fix it for providers too. So we view technology as a bridge that can serve as filling the gap or the void between patients and providers, and build a new relationship-based model of care for the modern healthcare system that is missing today at a time when healthcare is becoming more fragmented, more transactional, and less human. And we use innovative technology to fill that void.

Tim: So what are your plans for expansion?
Carolyn: Big plans. Expansion for us looks like an array of different, sort of, chess moves, opening up more Tia flagship clinics in other cities around the country. It’s been amazing to see how in demand this new care model is that we’re building since we opened our first Tia clinic 3 months ago – expanding our scope of practice beyond core gynecology and basic primary care. We found that women want literally everything from Tia – from fertility to mental health to OB – and the challenge of where and how to expand our scope is a big one. And the third thing is scaling our technology platform through other providers is something we are starting to think through as a way to reach more women at scale and really productize that part.

Tim: At this point, what keeps you up at night?
Carolyn: Sequencing. The same thing that has always kept me up at night, and doing the right things in the right order. I think we have worked really hard to get where we are, and validate it a lot and prove that women and providers really want this new care model, and that they trust Tia, which is the ultimate thing we’ve earned. Their trust is hard to earn and easy to lose; and thoughtful scale, thoughtful sequencing, and expansion is the key thing to fix up here and what keeps me up at night.

Tim: Remind me, how far into this are you? How long have you been at this?
Carolyn: Two and a half years.

Tim: Which is kind of a lifetime in a startup, right? What’s one thing you know now that you wish you knew at the beginning?
Carolyn: Aligning incentives among all the different players in the healthcare system is key to success. You can’t just build for patients. You can’t just build for providers. You can’t just build for payers. You have to build for everybody. And figuring what that thing is that fulfills everybody’s needs and wants is the secret.

Tim: Hmm, that’s a good one. I like that one. Great thought to end with. Thanks Carolyn!

Coffee Chats with Nina: Understanding the Entrepreneurial Mindset – Part III

By: Nina Mermelstein

Part III of an Ongoing Series- What They Don’t Teach You in Business School (or startup summer camp)

We often applaud successful entrepreneurs for creating innovative solutions that are aimed at changing the status quo. Our culture prioritizes entrepreneurship skills so much that we now offer summer camps such as Biznovator and school programs like We Grow to empower young entrepreneurs. Where were these amazing programs when I was stuck sweating in the summer heat at tennis camp? By the time I attended university, my school offered a brand new minor that I was excited to partake in called “Entrepreneurship & Management.” We analyzed corporate case studies, developed business plans, and built mock marketing agencies.

I generally agree with the idea that it is important to instill entrepreneurial skills such as creative thinking and teamwork in children and young adults. However, I have also come to understand through my continued Coffee Chats with Founders and CEOs in the digital health space that there is a lot about entrepreneurship that we can’t learn in summer camp, college, or even business school. Below I’ve pared down my findings into three categories: honing people skills, balancing competing priorities, and leveraging available resources.

The “People Stuff”

Over the course of a business school education, you might dive into classes focused on finance, organizational behavior, management, or accounting. However, one entrepreneur who earned her MBA from one of the most prestigious business schools in the country noted that while her education was incredibly valuable, it didn’t exactly prepare her for all of the “people stuff” that came along with building her business. For example, she found herself embarking on new and exciting quests to better engage her employees and establish a strong company culture. This was what she called “the fun part” of learning on the job. She was also confronted with much more difficult predicaments regarding underperforming hires. No book or course had prepared her to determine when is the right time to let someone go or even how to fire an underperforming employee. She said that as a founder, “it’s important to gain more comfort in living in the grey area, rather
than in a world that is just black or white,” especially when working with and making decisions about your team members.

Another founder spoke about her successes and challenges while bringing together a group of employees with a variety of skillsets and work experiences. She knew early on that there was a great benefit in assembling a team that would offer a diverse set of perspectives. While she was proud of her success in hiring an eclectic team, spanning clinical researchers to software engineers, she was quickly confronted with a significant communication barrier. Since her team members came to the table with different specialized skillsets, they became frustrated when trying to speak and understand one another’s views and ideas. Her background as an investor never fully prepared her for this type of challenge. She found herself acting as a translator between a physician with 5+ years of clinical care experience and a product expert who had never worked in healthcare before. Once she made a more concerted effort to level the playing field by creating a company culture that invites people to ask questions and never assume that any concept should be immediately understood, her team began working well together.

The Balancing Act

As a millennial living in NYC, I often find myself struggling to strike a balance between my career responsibilities, social activities, and self care needs. If I find balancing these
priorities difficult, I was curious to know how founders and CEOs, who have more at stake, attempt to balance their work and personal lives. When I asked these entrepreneurs how they maintain balance, I often received a laugh and the response: “I don’t.” My Coffee Chats have taught me that the idea of a true work-life balance is unattainable for someone who is building a business from scratch. While striking a perfect equilibrium of work, self, and family needs is unlikely, I’ve learned about a number of tactics that these founders have employed in an effort to distribute their time in a way that leaves them feeling fulfilled.

I spoke with a second-time entrepreneur who shared that work truly was his number one priority while immersed in his first entrepreneurial venture. During the time that he built this first business, he also became engaged and got married. He found it difficult to create a separation between work and home life, as he was constantly thinking about the needs of his company. Since then, he and his wife have had children and he has further recognized the need to strive for more work-life balance in his new role as CEO of a different startup. For him, the key was to hire an energetic Chief of Staff with the bandwidth to juggle multiple projects and the ability to take things off the CEO’s plate. With this incredible new hire offering a safety net for any immediate work-related tasks, the CEO is now able to go home at 5pm and spend more quality time with his wife and children.

I’ve also learned about the concept of career-life integration rather than attempting to compartmentalize different aspects of work and home life. I spoke with another Founder, who in addition to her work responsibilities has two young children and two parents in need of care. She said that she is not striving for perfection in any one area, but instead thinks of ways that she can integrate her work and home worlds. For example, working in a startup gives her the flexibility to take her children to school in the morning and to be home with her family at dinner, although she will often sign back online in the evening to answer emails once everyone is asleep. Since her company has grown, she reminisces about the times she was able to get more hands on and involved in the smaller tasks associated with building the business. However, she has investors who say to her, “you can’t do it all, you really need to hire others who can help you.” By making the decision to shift many of her previous responsibilities to her capable employees, she is able to find more time for other aspects of her life.

The Resources Available

Making time for continued industry learning and professional development is difficult, especially when you are a Founder who can barely find a minute to eat lunch. A number of entrepreneurs voiced their tendencies, for better or for worse, to hunker down, trying to get everything done. However, they often forget to pick their heads up throughout the day to leverage the resources available to them- whether in the form of consumable materials like journals and podcasts, or in the form of people such as mentors and advisors.

One CEO mentioned that he started using a time tracking device to compare how he would like to be spending his time with an accurate assessment of how he is realistically spending his time. He discovered that he wasn’t dedicating as much attention to networking, mentoring relationships, and industry reading as he would have liked. He now has an hour carved out on his calendar every day to read the news, blogs, journals, and other relevant publications.

A first-time founder described how he immediately immersed himself in all the resources he could find online about starting a company and raising funding. He said that First Round has ggregated an incredible variety of resources for founders. Additionally, he mentioned how he was inspired by Nike Co-Founder Phil Knight’s book Shoe Dog and he spoke about the lessons he learned from the book The Hard Thing About Hard Things by Ben Horowitz. Other great resources that entrepreneurs shared included a number of different podcasts, such as How I Built This with Guy Raz, Masters of Scale by Reid Hoffman, and Reboot with Jerry Colonna.

In regards to human resources, many Founders have found wonderful communities where they can share ideas and personal stories with others who can relate. Some leaders I spoke with took advantage of networks built by unique co-working spaces like The Wing, while other leaders have joined what are effectively “business leader support groups” offered by companies like Venwise. I’ve also heard from some entrepreneurs that they enjoy seeking guidance from people in their existing network that comes in the form of family, friends, and friends-of-friends who can relate to starting their own businesses.

These coffee chats have deepened my respect for entrepreneurs and what they are juggling on a daily (or minute-by-minute) basis. They are constantly pulling different levers, continuously learning how to better manage their teams while making time for their personal and home lives, as well as their own professional development. This has also brought to light the psychological impact that many entrepreneurs feel when attempting to portray 100% confidence all of the time without showing any signs of weakness. Michael Freeman, a psychiatrist and faculty member at the UCSF School of Medicine found that Founders are 50% more likely to report having a mental health condition. I wasn’t surprised to read that statistic given everything I’ve learned about
entrepreneurs’ competing priorities and need to depict an impenetrable vision of leadership.

Mike Tyson once said, “everybody has a plan until they get punched in the mouth.” Many of the CEOs and founders I’ve spoken with have incredible educational pedigrees and work experiences, but there is only so much they can do to plan and prepare before actually building their businesses. At the end of the day, these executives are just people who face a lot of the same challenges we are all familiar with, whether it’s about maintaining some balance in our lives or overcoming difficult team dynamics. I believe it is important to continue to have an open dialogue about how we can best support and empathize with these driven Founders so that they can achieve success in their businesses while also maintaining their personal health and happiness.

How Starting My Own Company Made Me Better At My Job

By: Tim Gordon, Founder & Managing Partner

It blows my mind that we’re going to be five. Five! I’ve now officially been running Aequitas Partners longer than anything else I’ve done in my professional career. Five has me a bit nostalgic. Reflective. Grateful. I’ve tried to be mindful and celebratory of milestones that we’ve reached over the years as the business has grown, but I’ll be honest – I’m bad at it. In quiet moments I celebrate these things, but it’s usually fleeting and then it’s back to work. It’s something I’m working on. As we close in on our fifth anniversary as a firm, I thought it fitting to revisit the first thing I wrote when I was “giving content a try.” As I read through what I wrote, it felt more relevant than ever, and reminded me of how incredibly uncomfortable I was writing it the first time around. Now felt like a great time to dust it off, polish it up, and drag it into 2019.

Part of why I wanted to revisit this topic is because my belief in its impact hasn’t changed, and if anything has only gotten stronger. Empathy may be the most important, accidental thing I’ve gained from starting my own company. Friends and family would tell you that I’ve always been empathetic; tough but fair. I’m the guy that people usually came to with their problems when they needed someone to listen and maybe give advice. I’m a good listener, and was always good at relating to people. I’m talking about empathy in a different way here. It’s been nearly 5 years since I took the leap and founded Aequitas Partners. It’s been a wild ride that’s gotten more exciting each month, and I’m not kidding when I say it feels like a blink. Days, weeks and months disappear, and I regularly lament to anyone that will listen that if I had a super power it would be the ability to slow time down and live in moments longer. I’ve made what I view as an offensive number of mistakes (no one beats me up quite like me). These mistakes are different though; these challenges, stresses, missteps, screw-ups, missed opportunities – have actually taught me things. I’ve learned to separate that from the trivial. Interestingly enough, the one thing that quite possibly has had the most profound and unexpected impact on me is a simple byproduct of starting the company in the first place – building my own team. It was true when I wrote this the first time, and it’s true now.

The irony of this is not lost on me. I’m in the business of hiring, so shouldn’t this be easy? As an executive recruiter, I’ve been fortunate to work with some incredible entrepreneurs and CEOs across Healthcare in recent years, helping them identify C-level and leadership team members across every functional role. What I had yet to do when I wrote this the first time, was find team members for myself. It’s now a little over two years since we hired our first person – Steven Berman – and the subsequent growth of our team has given me a small glimpse into what each of my clients must be experiencing when they ask us for help. Something that seems low risk, such as hiring a summer intern, at the time felt like it came with the weight of the world. There were nights tossing and turning as I did the math on whether I could afford to hire that person that could be an absolute game changer, and when the right time to pull the trigger was. There’s that gut feeling that someone just isn’t the right choice, even though they look great on paper. There’s the realization that with a team comes a tremendous amount of personal responsibility – they need engaging work to do, a steady paycheck, health benefits, professional development, training, career growth, and general investment from me in them. And they deserve it. Conversely, I need them to be ambassadors for the brand; every person they interact with needs to walk away impressed and intrigued by our story. It’s scary as hell.

But it has also made me better at my job. I now have a level of empathy that’s difficult to recreate, having not walked a mile in a client’s shoes. I’ve never been a hard-sell search guy – not with candidates and not with clients. I try my best to shepherd both parties through the process, adding insight when I can, and pushing back when it’s required. I try to do all of this while not losing sight of the significance of the decisions that both parties are making. Our clients are investing a significant amount of money in this process, both in us, and the executives they hire. Mistakes are costly, potentially meaning lost clients, lost revenue, and unhappy investors. Add to that, that this is just one of their priorities on a list that never ends, and you gain some perspective. Similarly, the executives we recruit are making what most would consider life-altering decisions. Leave a good job for what might be a better one? Relocate their whole family for what might be a career-defining opportunity? Take a cut in their cash compensation in favor of a bigger equity stake in something that could create generational wealth? Living here in the middle, it’s easy to lose sight of the gravity of these decisions.

Hiring our first few folks was a crash course in how much time and energy needs to go into making someone successful at what we do. My perspective shifted dramatically from being a one-man shop and worried about providing for myself (and subsequently my wife), to include these other incredible humans who were willing to get in the boat with me. The loyalty I feel to them for taking that leap, and the tremendous effort they’ve put in to building this company with me is something I’m not sure I’ll ever be able to articulate. It also raises the stakes. Payroll gets bigger, offices get bigger, infrastructure costs grow, and the investment of time back into our team grows. To say it never keeps me up at night would be a lie. The gift it gives me though, is the good fortune to currently be working with the best people I ever have. The pressure to deliver for them, in that light, feels appropriate.

Spending time thinking about building my team has given me an immense respect for my clients that do it every day, and arguably with more at stake. It’s helped me be more patient as clients reach their own conclusions. It’s made me acutely aware of all the things that are probably going through their minds, even though they might not say them out loud. It’s made it more personal. I now know where they’re coming from, not just in theory, but in practice. In a business that is so intensely driven by relationships, I’ve come to appreciate that my internal challenges have given me a window into the minds of those who we aim to help. As I reflect on the last 5 years, this perspective and empathy has to be one of the most important things I’ve gained, and has unquestionably made me better at what I do.

Coffee Chats with Nina: Understanding the Entrepreneurial Mindset – Part II

By: Nina Mermelstein

Part II of an Ongoing Series — 5 Things Entrepreneurs Wish They Knew Before Building Their Companies

As part of my mission to get into the headspace of entrepreneurs, I’ve continued to have in-depth discussions over coffee with a variety of digital health founders and CEOs to hear about their experiences firsthand. We’ve covered everything from early successes and challenges to lifestyle changes and resources utilized.

In my first article, I shared the insight I gained on the initial phase of an entrepreneur’s journey (see Part I: Taking the Leap). Since all of the entrepreneurs I’ve engaged with have experienced some form of growth, whether it was in terms of fundraising, team size, customers or users, I also wanted to get a sense of the different obstacles they encountered in getting to where they are now. Furthermore, I wanted to understand if, in hindsight, there was any knowledge they wish they had to best tackle those challenges.

I asked all of the leaders a very open-ended question— what do you wish you knew before building your business? Since we still lack a time machine (I’m working on it…), I received a variety of candid responses to my question that I pared down into five themes that I’ve shared below.

1. Manage Your Own Expectations

The importance of managing your expectations came up in the majority of my discussions. These leaders are incredibly mission-driven and often have personal health experiences that underpin their businesses. Their passion can also be coupled with the impatience of wanting to see the results of their work right away. In an incredibly high-stakes, complex industry, with longer than average sales cycles, the foresight to manage expectations becomes even more essential.

One first-time founder echoed the necessity for managing expectations as it relates to timing. Her initial vision for the business involved securing a certain number of customers and team members within two years. She soon realized that she needed to re-adjust her mindset regarding the speed for business growth. After three years since founding the company, she now has a much more robust product and business model and is finally seeing that anticipated growth.

Another entrepreneur shared how she has experienced the pressure for immediate growth from both the investor and founder side. During her time as a venture capitalist, she watched many companies succeed and fail in the digital health space based on their speed to market. She witnessed founders underestimate the uniquely long sales cycles and she also saw the external pressures that investors often place on founders to produce immediate results. She watched companies that raised huge amounts of capital and had great leadership teams run pilots before they were ready and eventually shut down. When building her own business, she almost fell into the same trap. She had an innovative idea that began gaining momentum and she wanted to hit the ground running. Instead, she took a step back, recognizing that there were many things that needed to be done first, beginning with administrative processes such as creating the proper governance and legal structure.

2. Not All Advice Is Free

For many entrepreneurs, the network they build early on can lead to long-term customers, investors, advisors, and partners for their businesses. That being said, it is also important to be wary of some new relationships that can be harmful for the company over time.

One founder experienced this scenario when he set out to build his company and was connecting with different people who offered to help him in a variety of ways. Some of those people were genuine and well intentioned. Many became long-term trusted advisors and partners for the business. Unfortunately, there were also many individuals who approached him offering introductions to potential investors or customers only in return for official advisory board seats or shares in his business. Since he is a younger first-time entrepreneur, there were a number of instances where people tried to take advantage of him. Initially, he caught himself thinking “I can’t believe I’m only three months into building this business and this person can take me to the next level.” He quickly learned that he needed to be wary of the people who promise the world, whether they are investors, dealmakers, or even corporate development executives at large companies. While he still believes that every conversation is worthwhile and creates an opportunity to learn something new, he is much more wary of people who make big promises.

3. Patience Is A Virtue

Taking on an executive operator role at a company you’ve founded doesn’t always come naturally, despite having years of work and management experience. Even for entrepreneurs who have founded multiple businesses, they often have to adjust their leadership styles to effectively manage teams at different companies. For first-time entrepreneurs, the path to becoming a successful CEO and team leader can be bumpy and some executives forget to be patient with themselves as they grow into these new roles.

I spoke with a first-time founder & CEO who had a strong network of healthcare executives and was able to quickly assemble a world-class team that was distributed across the country. She soon realized that despite having recruited an extraordinary team, she wasn’t prepared for what it took to manage their day-to-day activities. She found herself spending multiple hour-long sessions coaching different team members each day, which took time away from her other necessary executive responsibilities. She is learning that it is all about motivating people and making them feel like they are bringing their best selves to work everyday, empowering them to work more independently. This often requires getting to know her team members on a personal level. With the help of trusted mentors and advisors, she is continuing to hone her leadership skills over time.

4. Roll with the Fundraising Punches

It’s not a surprise that fundraising makes it to the top of the list of challenges that founders face during the early stages of building their businesses. Some founders have experienced fundraising difficulties throughout their entrepreneurial journeys. However, many first-time entrepreneurs are facing unfamiliar obstacles with potential investors.

There is no true playbook for handling these “fundraising blows,” but one particular founder shared an interesting example from when her business was in need of “life support” funding and how she handled her precarious situation. She was working with an angel investor who had completed their due diligence and was about to sign on the dotted line. The investor pulled out right before what was supposed to be a relaxing Thanksgiving holiday. This founder had thought the investment was pretty much a done deal, so this news was completely unexpected. Instead of taking it personally or dwelling on the lost capital, she immediately went back to the drawing board. Knowing that she needed to secure financing to sustain her business, succeed for her existing customers, and support her employees, she had to focus on what was next. This mentality and thick skin enabled her to move on and successfully secure funding from new investors.

5. A Sticky Situation: Mixing Business with Friends & Family

Consulting with close friends and family during the early stages of building a business is natural. They are the trusted people you go to for advice and support in all aspects of life, so of course you would come to them for something as personal as starting your own company. I spoke with a founder who chose to bring two of his children into his business early on. Their comfort with one another and honest communication was of great benefit to the company culture.

On the other hand, I’m sure we’ve all heard the horror stories of friends and families that have been torn apart by going into business together. Since my profession involves interviewing executives across the healthcare industry, I’ve heard my fair share of these stories involving leaders seeking capital or business partnerships from friends or family and then watching those relationships fall apart.

I spoke with an entrepreneur who faced this common predicament when deciding whether to co-found her digital health business with her best friend from childhood. Since they were concerned about whether their friendship would transfer well to becoming business partners, they each spent time separately thinking about their vision for the business and strategies around growth, company culture, and other fundamental concepts. After spending several days apart thinking about their personal visions, they came together and compared notes. Once they realized that they were aligned, they decided to start their business together. They continue to use this method for making any big business decision – thinking about it separately at first and then coming together to make sure they are on the same page. They never anticipated that their initial process as friends would develop into a very important business strategy.

Conclusion:

At the end of the day, entrepreneurs will never have all of the answers and nobody can truly prepare them for the constant challenges they face while building their businesses. Based on my discussions, I believe that the ability to “block and tackle” should most definitely be included in the founder job description. Entrepreneurs have to constantly be nimble as their companies evolve while maintaining dynamic energy around what they are building.

My coffee chats have provided me with incredible stories about the early successes the entrepreneurs experienced, whether it was making a key hire, raising significant capital, or gaining traction with the number of users or customers. Other founders mentioned positive feedback they received from early customers or users about their product or service that reinforced the importance of what they were creating. While all of these leaders have experienced some failures and had to overcome a variety of obstacles, they have also taken the opportunity to celebrate their early wins, both large and small. These short moments of recognition have helped propel their businesses forward.

An Interview with Matt McCambridge, Co-Founder & CEO of Eden Health

Matt McCambridge is the Co-Founder and CEO of Eden Health, a New York City based healthcare organization that provides high quality, technology enabled primary care services to employees on behalf of their employers. Backed by Greycroft, the company is in the process of expanding their footprint nationally.

Tim: Start off by telling us a little bit about how Eden came to be; what inspired you and Scott to found the company in the first place?

Matt: So many things in healthcare come back to a personal story that people working in it have felt in their own lives. A lot of the system is broken, and everybody’s been to the doctor, and confronted it in one way or another. So, for me when I was a kid, I had a really transformative experience with my sister who got very sick around the age of 14 and would end up in the ER over a dozen times. She had really complicated issues. She has all of these stories of waking up and doctors on staff saying “Oh she’s on drugs” or “Oh she’s pregnant” – and none of those things were actually happening for her. We then went on this nearly four-year process where she visited over 70 specialists. We would show up to a specialist, do all the same tests, all the same imaging procedures and then they wouldn’t even help you find the next person to go to. Over the course of 4 years and over 70 people, we saw the problems of the healthcare system day in and day out. We got lucky when a primary care provider coordinated her care and got the right prescription in the hands of my sister. She never went to the ER in the same way again. So we had this all too common healthcare experience where we confronted the realities of the healthcare system up close. That inspired us to build a primary care company, because primary care is the most fundamental building block of good and cost-effective healthcare. Along the way to building that primary care company, we found out that insurance was a huge impediment to people being able to get the kind of care that they need. So we combined those two and added mental health and that’s really the suite of offerings that we present to employers to create an entirely new environment for their employees when accessing care.

Tim: Sadly, a familiar story. So how exactly does Eden work?

Matt: We combine virtual care, insurance navigation, in-person primary care and mental healthcare. On the virtual care side, you get a dedicated, collaborative care team. Whenever you reach out as a member, you get exactly the same set of providers in person and virtually. This enables our members to build meaningful relationships with our providers, and streamline care for more effective delivery for complex cases like my sister’s. Even if you have a straight-forward dermatology issue, you still want to make sure your health concern is followed up on and resolved quickly. Our continuous, 24/7/365 virtual care is the way patients should be able to access their healthcare.

Insurance navigation is essential to providing excellent healthcare. For example, if you get a big bill in the mail, you can take a photo of it through the Eden Health app, and our team can act on your behalf to help resolve and often reduce your bill. On top of this, we have a network of primary care offices where our members can see Eden Health providers in person. Members can see our primary care providers same day and for extended appointments that cover their entire physical and emotional health. This type of comprehensive experience from one solution is unique for an employer to offer, compared to what they’re able to do exclusively through their insurance plan or by piecing together several different, unconnected solutions.

Tim: What made you guys decide to focus on mid market employers as your target customer base?

Matt: Employers are the transformative healthcare buyers in the U.S. right now. They are the buyers of healthcare for 160 million people. They are aligned on wanting to provide excellent quality healthcare at a fair price, and they are able to move quickly, and independently from much of the rest of the healthcare system. They have allowed us to do something like provide 70 percent of all our care virtually, coordinate all of your specialty care, and follow up over the course of days, weeks, months and years like Eden Health is able to do.

Most employers have not been able to get cutting edge solutions, which have been typically reserved for the fortune 1000. The mid market is just as interested in offering a fully integrated healthcare delivery system for their employees, which makes it a great opportunity for a company like ours. Of course, we work with much smaller and much larger companies as well, but there’s just a huge need in this market segment.

Tim: One of the more compelling components of your recent fundraising is the investment from and partnership with Convene. How do you see that partnership accelerating your scale nationally?

Matt: If you’re an employer today, you have a distributed workforce, and that’s what our virtual care system is built to support. We are building Eden to offer care in every single state. We are in multiple states across the country already and will be in all fifty by the end of the year.

Providing better care and offering companies the ability to work directly with primary care providers in any location and at any size was the idea for partnering with Convene. We currently have clinics in New York and by the end of 2019 we’ll be building locations with Convene in Chicago and DC. We will then be going to cities like Philadelphia, Boston, Los Angeles, San Francisco and others. Employers are now going to have access to a distributed network of physical primary care clinics that they can tap into anywhere they are.

Tim: This is a good segue into the next question. What have you seen to be the biggest challenge in marrying technology with a more traditional brick and mortar healthcare services organization?

Matt: This has not been a super difficult thing for us to do. Based on the history of how insurance payments developed, we’ve gotten to thinking that virtual care is somehow different healthcare than getting in-person care. We want to dismantle the idea that there is telemedicine and in-person medicine – it’s all medicine no matter where it is provided. In fact, virtual care is often better than in-person care. If you’re sick, you’re going to be sick for hours, days, weeks, months or years. You’re not sick for just the ten minutes that you’re sitting in a physical encounter with someone. I think the fact that we send people who have the flu through the subways of our cities or make them drive to their doctors office and then get other people sick along the way is a crazy notion.

From a virtual perspective, we’ve been able to take 70 percent of our clinical interactions, do them virtually, and then focus on making the physical care about longer appointments, spent with more complex chronic and sometimes comorbid patients. This has made our physical clinics more successful and easier to manage by providing so much virtual care. It has also helped to create the incredible healthcare experiences that our members love.

Tim: Along those lines, you have talked a lot about creating a “delightful” experience for your patients. How have you reengineered the patient experience to achieve some of those goals?

Matt: There are two ways that stand out. The first is the level of access. We have an average of seven-minute response times from our care teams, who are available 24/7. This enables them to be with somebody throughout their entire care episode. In some cases this translates to staying with our patients virtually during the trip to and out of the emergency room. Knowing when they are seriously sick, being able to follow up at any time, and having access to so much of the healthcare system through the same offering is a new experience for our members when they start using Eden Health.

The second is our integrated model of care and insurance navigation. You, as a patient, no longer have to think “Which person do I go to for an issue with my knee vs. an issue with my hip vs. the fact that I also have a fever?” which is often confusing to navigate yourself. Instead, you can start at one place always and use Eden Health to manage all of your health and financial aspects associated with your care. I think that integration and accessibility are the main ways in which patients are getting a totally different experience with us compared to elsewhere.

Tim: You guys now have successfully raised capital, you’ve won enterprise customers and you have hired great people. So at this point, what keeps you up at night?

Matt: Making sure we’re continuing to hire great people is the main thing that I stay up thinking about. From a patient relationship perspective, you build on top of interactions with great providers. You have to make sure that they are truly excellent every step along the way. From a company building standpoint, making sure that you have people who are mission-oriented, excited about what we’re doing and interested in navigating the difficulties of healthcare is the ultimate goal. Getting those people in place allows us to continue to scale the organization. That’s really the main thing that I think about.

Tim: What kind of culture are you building at Eden and how do you see that tying back into the mission that you’re on?

Matt: Our mission is to provide health and well being to people everywhere. In order to do that, we are building a company in a pretty fundamentally different way, with the combination of the virtual and personal care along with insurance navigation. We have to make sure that every idea that we advance in the company is interrogated, criticized and ultimately implemented in a team-based environment that makes sure that we’re sourcing the best ideas and bringing them to fruition. We of course have ‘patients first’ as our primary value. In order to achieve that, I really look at our value of “speak up, and act with conviction,” meaning you need to surface your thoughts around the idea that we are advancing and be capable of communicating it, and everyone on the team needs to be capable of receiving that feedback. When we make a decision as a team, we move forward and effectively execute that decision in order to either provide better care for patients or to provide care to more patients.

Tim: So, as you reflect a little bit, as you guys enter the next stage of your growth, what’s the one thing you know now, that you wish you knew at the beginning?

Matt: I just wish that I had found Aequitas Partners day one. (laughs)

Tim: (laughs) Be careful Matt, that’s on the record.

Matt: (laughs) I stand by it.

When we first started the company, we came with this idea of ‘let’s just provide primary care’, even just in person, very standard, traditional primary care that was going to be high quality and sold to the employer. But, what we realized along the way, as we really began to listen to employers as much as we could, was that just the provision of medical services does not get you far enough to really change the way the healthcare system delivers care. You have to fundamentally focus on the way people receive care, so adding technology seemed logical. You have to focus on the way people interact with their benefits, including insurance navigation. You have to think about those other huge impediments to appropriate care on the mental health side, which is why we’ve added mental health providers. So, I can’t boil it down to just one thing I wish I knew, but we’ve learned a ton from our employers along the way just by listening to them and building things that they wanted and that our patients wanted.

I have seen so many successful companies while I was investing at Insight Venture Partners and saw all of the issues that they had getting started. I came in eyes wide open, and more importantly ears wide open, in terms of what we needed to know. So we tried to approach it as humbly as we knew how because there is so much to learn in healthcare and the more you learn about it, the more there is to know.

Tim: No more questions, but is there anything else you would want to leave for anybody who might be reading?

Matt: Work with Aequitas. You guys have been great, I really appreciate it.

Tim: It’s our pleasure, and thanks for doing this.

 

Digital Therapeutics: Why Your Next Pill May Be an App…

By: Steven Berman

Although clinical therapy has long been the cornerstone of the Healthcare industry, the Digital Therapeutics subset of digital health is slowly-but-surely establishing its own foundation. The nascent industry offers patients and doctors alike the ability to treat chronic diseases without solely relying on prescription medication. This disruptive technology is empowering patients while redefining how healthcare is delivered – and doing so for a large assortment of chronic conditions with minimal downside risk.

What are Digital Therapeutics?

Digital Therapeutics are essentially software tools that can improve a patient’s health much in the same way a drug can, minus the side-effects. Although such software has been around for nearly a decade, it wasn’t until 2013 that the term ‘Digital Therapeutics’ first entered the public lexicon. That was when Sean Duffy, CEO of Omada Health, began floating the concept at conferences and marketing events which he used to promote his pre-diabetic coaching software aimed at preventing full onset of the disease by encouraging patients to exercise more and lose weight.

Digital Therapeutics have since become something of a Shangri-la of modern medicine; the long-awaited bridge between Silicon Valley and Big Pharma. Veejay Pande, partner at prominent venture capital firm Andreessen Horowitz, even predicts that the industry will evolve into “the third phase” of medicine (the first two being small-molecule drugs and protein biologics). One key difference between Digital Therapeutics and traditional prescription drugs: launching an online platform involves jumping through many less hoops then launching a physical drug, and can cost billions of dollars less.

Because Digital Therapeutics don’t have to run through a battery of clinical trials, nor do they require FDA approval, the cost of bringing them to market is a fraction of that of traditional medicine. This should mean that the industry can scale rather quickly, as more and more platforms are provided for consumers with illnesses ranging from diabetes to asthma, to ADHD and depression. Yet despite the rapid scalability, traditional medicine need not be alarmed. With few exceptions, Digital Therapeutics serve to complement and even enhance a patient’s pharmaceutical experience, rather than supplant it altogether.

Types of Digital Therapeutics

We can classify Digital Therapeutics into three categories, based on their interaction with traditional medicine:

Digital Services: These platforms help guide consumers through lifestyle changes that greatly improve their patient outcomes. The aforementioned Omada Heath, which offers a 16-week weight loss program that guides pre-diabetics through daily nutrition and exercise routines, is a prime example. As a stand-alone service, this classification of Digital Therapeutics can neatly coexist with traditional medicine, and need not infringe on the doctor-patient relationship.

Pharmaceutical Support Devices: These therapeutics indirectly enhance the benefits of traditional pharmaceuticals. For example, Proteus Digital Health’s Discover medication adherence platform offers products such as miniature ingestible sensors and small wearable sensor patches that patients either ingest or wear on their clothing. The platform monitors relevant health and lifestyle information via digital technology, and the findings can be incorporated into the patient’s future prescriptions (type of medication, dosage, frequency, etc.). These platforms are meant to work in-tandem with traditional pharmaceuticals, by utilizing patient-specific data to foster more educated decision-making on the part of physicians.

Pharmaceutical Replacements: Here we have the exception to the rule. These therapeutics are actually looking to supplant traditional medicine altogether by providing clinical benefits via digital technology, without the need for additional forms of treatment. One example is Pear Therapeutics’ reSET application, which treats substance use disorder. In a recent clinical trial, the reSET app has been proven to promote a higher rate of abstinence than the traditional standard of care, which for substance use disorder happens to be outpatient face-to-face counseling. Because the trial’s results were approved by the FDA, Pear’s reSET app can be properly termed a prescription Digital Therapeutic, meaning a physician must prescribe the app, and patients receive the same coverage options as they would with traditional pharmaceuticals. Of course, much like the first two categories of Digital Therapeutics, the reSET app can be prescribed in-tandem with other substance use disorder treatments, but the fact that physicians can prescribe the treatment in-lieu of traditional medicine relegates the app into a third classification.

Wellness 2.0? Not So Fast…

Given that most Digital Therapeutics companies focus on lifestyle adjustment, it’s easy to see how the sector could be hastily lumped into the more comprehensive ‘Wellness’ space. However, Digital Therapeutics differs markedly from Wellness in that the latter is an imprecise category that broadly applies to the general public – think yoga, meditation, sleep and exercise apps – while the former is engineered with specific ailments in mind. Think apps for asthma sufferers, or patients with Crohn’s Disease.

In order to further distinguish themselves from the Wellness industry, Digital Therapeutics startups have begun embarking on clinical trials in addition to seeking regulatory approval from the FDA. Welldoc, for example, offers a prescription-only version of its BlueStar phone app for managing diabetes, which it claims is the “first FDA-cleared mobile prescription therapy.” Other platforms, such as the aforementioned reSET app, provide the industry a veneer of legitimacy that the Wellness space is still struggling with.

One area in which Digital Therapeutics mimics its more popular Wellness cousin, however, is in data collection. By their very nature, Digital Therapeutics are data aggregators. The platforms track patient populations across a range of metrics, and deliver results which can be harvested by professionals across the entire spectrum of Healthcare, from Big Pharma to hospitals and physicians.

A prime example is Oshi Health. Oshi delivers a platform that helps IBD sufferers examine their symptoms and explore lifestyle factors which can help contribute to a better quality of life. Patients continually input variables such as diet, stressors, sleep pattern, and activity/exercise routine. The app then delivers a wellness score, which indicates how likely the patient is to experience IBD symptoms in the near future. Patients can leverage the wellness score to learn what their IBD triggers are, and can tailor their daily regimen to reduce the frequency and severity of outbreaks. Currently, Oshi has over 35,000 members. The beauty of the platform is that as that number grows larger, the data becomes more relevant, since a greater patient population implies more statistically significant results. Those results not only help patients, they assist pharmaceutical makers and physicians looking to optimize their treatment of the disease.

Thanks to platforms like Oshi, user feedback, in certain instances, is the new clinical trial.

The Road Ahead

Despite the low barriers to entry and added health benefits, the road to mainstream adoption of Digital Therapeutics remains a bumpy one. Look how long it took to get on board with telemedicine! The key challenge facing the industry is breaking the longstanding belief that in order to improve their health, patients need to take a pill prescribed by a physician. This is a reality that’s been coded onto our collective Healthcare DNA for generations, and will likely take some time and effort to reverse.

To confront this immense challenge, the industry has begun advertising much in the same way any startup would – through targeted ads, social media campaigns, and via thought leadership articles on various third party publishing platforms. Some Digital Therapeutics companies are going the extra mile and allying with Big Pharma. Propeller Health recently partnered with GlaxoSmithKline on a “digitally guided therapy” platform. The company produces sensors which attach to asthma inhalers and provide patients feedback on their condition as they inhale. Patients have been shown to use their inhalers less often as they leverage the new technology.

The good news for the Digital Therapeutics industry is that the low cost of adoption ties in nicely to the self-funded employer model. Employers looking to reduce Healthcare expenditure are adopting these low-cost technologies in the hopes that platform utilization will lead to reduced member expenses down the road. Many in the private sector understand the notion of spending now to save later, and the value-prop of Digital Therapeutics fits neatly into that paradigm.

The Future of Healthcare

Although Digital Therapeutics is a relatively new industry segment populated by a handful of niche players, the regulatory inroads already established, as well as partnerships formed with the likes of Big Pharma and insurance companies, are harbingers of future growth if there ever were any. Last year, for example, Cigna invested $50 million into Omada Health, and included the platform in their subscriber plan as a measure of chronic disease prevention and cost control.

By educating patient populations on their symptoms and triggers, as well as pharmaceutical companies and healthcare providers on the lifestyle choices of their patient populations, Digital Therapeutics offer a window into the opaque world of how patients interact with their specific medications. Given the lower barriers of entry to launch a Digital Therapeutic, and the widespread positive impact they can have on patient populations, it’s likely we will see more big name players in the Healthcare space making significant investments into this field over the coming years. That means it’s looking more and more likely that your next prescription may be for an app instead of a pill.

Coffee Chats with Nina: Understanding the Entrepreneurial Mindset

By: Nina Mermelstein

Taking the Leap: Part One of an Ongoing Series

Since joining the Aequitas Partners team last December, I’ve immersed myself in the healthcare technology space through interactions with clients and absorbing all the information I find about industry trends and the large financial investment going into this sector. The industry’s growth has captured my curiosity and I now find myself looking for additional answers to a different set of questions. Who are the entrepreneurs who are driving innovation in this space? What motivates founders of health-tech startups to make the precarious journey from a promising idea to a full-fledged business? Who are their role models, what are their influences, and what have they learned from past failures?

Given our team’s focus on talent, I figured that the best way to get into the entrepreneurial mindset is to do what I do best – interview executives. Over the course of a year, I am meeting with digital health company founders and CEOs to get the inside scoop on what it takes to build a company from the ground up in this industry. These leaders differ in age, gender, and professional backgrounds. Their companies are focused on different facets of the health tech industry, spanning from disease management to care coordination.

My candid coffee chats have already brought to light a number of trends that I’m excited to share with our newsletter readers through a series of articles. For this first installment, I focus on the initial phase in various entrepreneurs’ journeys—the point in time when they realized that it was time to build their companies, and how their professional backgrounds have prepared them to take that leap.

Learning on the Job

Since the majority of people I’ve spoken with are first-time startup founders, I was extremely curious about how they’ve applied their previous work experiences in various fields such as Finance, Marketing, or Social Impact in their current roles. To my surprise, my question, “How has your professional background as an Investment Analyst prepared you to build your business?” for example, was often first met with a very candid chuckle. I soon learned that while many founders agree that their professional backgrounds provided them with a unique set of skills and knowledge that they apply in their day-to-day startup operations, they felt that there was nothing that could have adequately prepared them to build a company from scratch.

One founder elaborated that while her experience in the venture capital space offered her key case studies of the successes and failures of other healthcare startups, she still felt that there were a lot of things that she could only learn on the job. As a first-time CEO and founder, she has gained a new set of instrumental skills by focusing on growing and coaching her own team of experts.

In my conversations with entrepreneurs who have previously built other startups, I learned that they were able to draw upon previous experiences for some of the early questions that other first-time founders often encounter such as which HR systems to use, the best process for onboarding consultants, and how to engage with investors. A second-time entrepreneur noted that while he had some of the answers from his previous experience as a founder, his new leadership role with a different growth-stage business came with its own unique set of obstacles that required him to continue learning and evolving his leadership style.

Bringing in the Clinical Experts

The depth of previous healthcare industry knowledge each founder had before launching his or her business varied, which surfaced a unique set of challenges. While some had a tremendous amount of healthcare industry knowledge, as trained clinicians or having worked at health systems, payers, and pharmaceutical companies; others lacked that previous insider industry experience.

One founder, whose startup sells into large payers, had previously spent a significant number of years as a high-powered executive in the payer space. She highlighted how her payer experience was instrumental in understanding the ins and outs of her current customer base. She can now accurately pinpoint the decision-makers within the complex payer structure, improving the sales cycle for her company.

Another healthcare industry veteran stressed how his healthcare MBA, and work on the provider and pharmaceutical sectors, was vital to understanding the nuances of the healthcare market. He felt that in order to be successful in healthcare, you really need 10+ years experience in the space.

On the other end of the spectrum, many of the founders who had less healthcare industry familiarity decided to bring in clinical executives early on, either by working with a physician co-founder, hiring skilled chief clinical executives, or stacking their advisory boards with knowledgeable clinical experts.

Finding a Better Way

As a result of these conversations, I find myself amazed by the number of entrepreneurs who have quit their high-paid positions to take limited salaries while dedicating all of their time towards building their businesses. During a recent coffee chat, one founder said, “it takes a personality defect to be an entrepreneur because you have to be willing to give up everything.” I needed to get to the bottom of what could possibly inspire these skilled professionals, often with families and secure careers, to take on that level of risk.

When I asked the founders about what motivated them to first launch their healthcare start-up, they all responded with a version of the same line: “There has to be a better way.” Each of the founders recognized flaws in their respective sectors of the market and decided to tackle these issues themselves since nobody else was effectively solving the problem.

Various entrepreneurs expressed that their personal frustration and experiences with broken aspects of the healthcare system have become the ignition and continued fuel propelling their businesses forward. A clinician, and now startup CEO, expressed how his 20+ years of first-hand experience interacting with patients helped him really understand the pain points in the system and inspired him to build a business that would empower both the patient and clinician. Another founder described how his father’s negative medical experience prompted his foray into the healthcare space and his determination to build a solution that would improve the lives of many patients.

One founder described his inherent entrepreneurial nature, beginning with his childhood lawn mowing business and his radio sales startup in college. He has always gone through life asking “why?” and constantly looking for better ways of doing things. A younger founder explained that his innate entrepreneurial nature involves a bit of “punk rock” since he often finds himself breaking rules and questioning the status quo. He further summed it up by quoting the founder of the outdoor clothing company, Patagonia: “If you want to understand the entrepreneur, study the juvenile delinquent. The delinquent is saying with his actions, ‘This sucks. I’m going to do my own thing.’”

Conclusion

Throughout my coffee chats with a diverse group of founders, I learned that while direct industry experience may offer perspective and help prepare solutions for pain-points, the perceived chasm of a lack of industry experience is not so wide as to hinder budding entrepreneurs from making the leap into startup-life. Several of the founders I spoke with did just that – albeit with slight adjustments to their approach and leadership style, as well as a steadfast determination to bring in the right people as early in the process as possible, in order to offset their lack of industry expertise.

When it comes to why one might launch a startup in the first place, the motivation amongst all of these founders comes from an ambition to fix a problem he or she has personally encountered in the industry. All of the founders offer a brand new solution or better alternative to the current resolution. Each of our founders expressed this simple yet elegant ideal: to solve a problem they were amazed to find was not being properly addressed.

My coffee chats have highlighted that, while past choices will inform one’s path, they don’t define it. Determination, commitment, and the steadfast desire to realize a better solution are the core ingredients necessary in launching a business. I’m looking forward to sharing more as the year progresses!

An Interview With Dr. David Berman, Founder & CEO of Slingshot Health

Dr. David Berman is a career Gastroenterologist, with over 30 years in practice, and is also the Founder and CEO of Slingshot Health. Slingshot Health is a marketplace that connects patients and providers directly, allowing individuals to bid on a physician’s time, leading to convenience, decreased cost and increased price transparency. Slingshot already serves the Greater New York City region, and is rapidly growing nationally.

Tim: David, you’ve been a practicing physician for over 30 years – entrepreneurial in your own right – but you’ve plunged headfirst into a health tech startup, as the Founder of Slingshot Health. Why now, and why Slingshot?

David: Those are questions I’m still trying to answer, believe it or not. I think a lot is just destiny. Having always dedicated my life to making the world a better place, through what naturally constitutes taking care of people – human beings – one person at a time. And I am just now transitioning to hopefully helping millions at a time. So why Slingshot Health? Well, it took 30-some-odd years to learn how to practice medicine – to get me to being a real doctor – and then, I think that the same reason I went to Medical School – that quest for knowledge – has always led me to exploring different parts of the world, not just medicine, but economics, politics, religion, history – and you acquire a certain knowledge base over time, and you may be presented with that ‘aha’ moment, where you combine all that knowledge over decades of life experience, and that’s what happened. In the space of a second, an idea was born. Actually, I think I was shaking – saying ‘wow, this is it, this is it!’ So it was a combination of life experiences and just an operating system of always having your eyes wide open and trying to be the best person you can be.

Tim: Tell us a little more about Slingshot. What are you after and what’s the mission?

David: It’s a relatively very simple concept. The mission is to put people back in control of their Healthcare destinies. Whether that’s patients or providers – that’s the goal. After having spent 30+ years in Healthcare, I saw people on both sides with less control, less affordability, less accessibility and less transparency, and living that nightmare day-to-day. If you think it’s bad as a patient – which it is – try living it as a provider. Try running your own practice, seeing patients, and then having all of these other things forced upon you that are unrelated to the patient’s visit or their problems, in order to justify somebody else’s existence – somebody else’s fix for Healthcare. And we get all these newsflashes that “Healthcare is broken, but we have a fix for it!” All we really get is another acronym, another few trillion dollars in debt for my kids’ generation, less transparency, less affordability and less accessibility, because nobody comes at the problem – or the solution to the problem – from the way that makes sense: the provider.

Tim: So what does Slingshot do? How does Slingshot solve that problem? Tell us about the platform itself.

David: The concept is really very simple: You should have complete control of your Healthcare destiny. The same way I want to have complete control over my professional destiny as a provider, the same way my plumber charges me a hundred and fifty bucks an hour, and sees me when he wants to see me – the marketplace is fully in effect there. The only place that the marketplace is not fully in effect is in Healthcare. Instead of the current system where patients beg for what they need, we provide them with not only what they need, but what they want. At the same time, we present providers with the freedom to practice the way they thought they would going into medical school.

We’re an unfettered, dual-sided marketplace. We don’t charge anybody anything. We’re free for patients, we’re free for providers.

A patient comes to our homepage, they tell us what they want, when they want it, and how much they want to pay. We tell them the average price for that service. That bid goes out to all the providers that can provide that service for that patient, and they have the freedom of either ignoring it, accepting it, or counter-bidding. And because when a patient joins, they use their HSA/FSA account, credit card or debit card – it’s a cash payment – so from the provider’s perspective, they are saving over 50%. There’s no co-pay collection, there’s no balance billing, there’s no administrative costs, there’s no MACRA, no MIPS, no claw-backs – nothing. So they know what they’re going to be getting paid, because we tell them within 24-48 hours that they’ll receive that from us. They get the freedom from the administrative burdens of having to try to collect that dollar, and having to satisfy different requirements imposed by insurance companies and government, and having to check off different boxes during that patient visit. If you haven’t gone to the doctor recently, they spend half their time with their face in the computer screen, making sure those boxes are checked off. What a waste.

Tim: Any big wins that you can share with us so far?

David: I think the biggest win from my perspective is being able to grow a team centered around our culture of humility and love and kindness. And those are just immutable values. The fact that we’ve controlled that and maintained that and have people who are part of the team who share that operating system and the vision, is everything to me. It’s easy as you grow quickly, to kind of let go of that culture – and that happens I think very frequently. It’s very common to gain more business success, at the price of ethical and moral imperatives. You can build a lot of things, but if you don’t build it with the right people and the right operating system, it’s not worth it in the end. At the end of the day, I look at life in lots of ways. One of the ways is that I have an existence and I have a life, I am going to die eventually, I want to make sure that my life lives on beyond my body, that I am a positive value proposition that lives on beyond my body; that I can do good for people, do good for the world. So if I can do that, that would be a huge win. Being able to wake up in the morning and participate with the people I do during the day – whether it be in my medical practice or with the people at Slingshot, that’s a huge win. A huge win is going to the Slingshot offices in the morning, and being able to give everybody a high-five or a hug, realizing that they voluntarily come and join me on the island every day. That they do that with a smile on their face, and a sense of urgency and vision and mission – that’s really spectacular and special. When people go to the office and you can see that, it’s energizing and invigorating. That’s a win. The fact that I’ve attracted people who have helped me – including you – from the beginning, makes me believe that God works in mysterious ways.

Tim: How about on the Investor, Customer and User Adoption Front?

David: The fact that we have two billionaires in our $8M Seed round is pretty exciting. The fact that we have former Tiger Management execs, and the head of M&A at Goldman Sachs and his associates on board is personally a huge win. So, on the investor side, we were able to raise a lot of money at a very nice valuation, and attract people from all walks of life.

The other wins that we’ve had in the marketplace are with the providers. We were able to sign up 1,000 providers two summers ago, with little difficulty. We now have contracts with major Healthcare systems, including Hackensack Meridian Health.

On the user side – we’ve now booked our 6th month of 50% growth month-over-month, in terms of bids. We now offer 90 different specialties, and 1,000 different services on our website. At the patient level, today I had a Slingshot patient that walked in, a gentleman that was being treated for Hypertension. He said to me, because he had just started a new job, and had no insurance, ‘This is the most amazing thing! I was able to see a doctor – someone to take care of me – at a price I could afford. How can I help you?’ And we get that all the time – “How can I help you?” The fact that we’re putting people back in control is really very heartwarming.

Tim: What surprised you most in the first two years?

David: The amount of acceptance that we get across the platform. We have never heard that “this is not scalable.” We have never heard that “this is not going to work.” It’s always about execution. So, the surprise was – and I don’t want to say it’s really a surprise, because providers are patients too; I’ve been a patient, I know how terrible the system is, because I’ve been on both sides of the marketplace… the surprise was, I didn’t think we would be at this point in our team’s trajectory that we are today. We have 30+ full time people, and growing. I knew it was going to work, there had never been a doubt in my mind, from the first second, that this is going to work – but I guess the surprise is that so many different people from so many different walks of life agree with me. We’re able to get our message across in under 60 seconds, and people get it, no matter what they do.

Tim: The benefit of having a relatively simple story.

David: Yeah. Well, I’m a simple guy (laughs).

Tim: The simpler the better, especially in Healthcare.

David: That’s not a usual term for Healthcare – simple.

Tim: No, it’s not. So you’ve talked about this a number of times – your quasi-day job is your medical practice. You’ve successfully built a time-tested practice. How has this venture been different than that, for you?

David: There really is not that much of a difference – the only difference is the subject matter. Building something is building something; people that are successful at building things are going to keep on doing it, and they can just change what they’re building, as long as it is in their wheelhouse, or leverages their skillset. Building a medical practice is not easy, in fact it’s pretty hard. I was employee number one, 25 years ago, and now we have several dozen people. And what you do is you learn… there’s always learning, every day. There are several advantages in being a physician that comes into play when starting a business. The interesting thing in Healthcare is that we approach things very differently than MBAs and business people. We’re trained in a collegial way – we like people around us, we don’t think in an adversarial way. If we did, people would die. We are quick to admit what we don’t know. If we try to do something to the patient that we shouldn’t be doing, they could die. There’s nothing really life or death about business. Businesses do live or die, but nobody’s actually dying. We are trained to retroactively analyze everything. You examine a series of decisions that led to that outcome, trying to learn why. You can apply that to business too. And I think that’s very critical – people hesitate to find out what’s wrong with what they’re doing. It may not be wrong when they’re looking at it, but the trick is to find something early before it becomes a big problem. So there are lots of things you can apply from medical training to building a business.

Tim: What’s your grand vision for Slingshot?

David: The grand vision is to be the world’s marketplace. Next quarter – and I want to show you the new homepage – we’ll launch Slingshot Pet. Same coding, 98% compatibility, we just switched the provider from a physician to a veterinarian. And with 1.1 million cats and dogs in Manhattan, we could be a very successful company just with that alone. And you can change it to anything – it can be an accountant, a lawyer – hopefully we do that at the end of next year. So we are creating a prime membership that will encompass different marketplaces. The first one is human health. And we’ll combine that with Slingshot Pet, and hopefully we combine that with different marketplaces along the way.

Tim: So with all that in mind, what keeps you up at night?

David: Lots of things (laughs). There’s things that I always worry about. One is that as CEO, I have several responsibilities. One is about making sure we’re executing and allocating. The most important thing is to make sure the people on board the team are happy, fulfilled, have a sense of vision and mission, understand the culture and the operating system, and understand that I want them to be the best they can be. It’s a matter of making sure everything is in place, that there’s enough money in the bank, and that we’re executing on all these different fronts.

There’s a healthy fear of failure. And I mean more the big fail. I like to fail – it means I am pushing myself. But if you look at the org chart in our office, I’m at the bottom. And that keeps me up at night, because I know I have to answer to everybody, not just the people on the team, but the investors, the people we do contracts with, and everybody. But what’s interesting – I don’t feel pressure at all. It’s actually an honor to be where I am, it’s a blessing. The first thing I say in the morning is ‘Thank you.’ And the last thing I say is ‘Thank you.’ And it’s been that way for a long time. I just want to make myself the best person possible, to lead the best life possible, and make the world a better place. That’s what keeps me up at night – to make sure that I don’t fail myself, and in doing so, others.

Tim: So if you had a do-over on anything since you started the company, what would it be?

David: I look at every experience I have – good or bad – as a learning moment. So I don’t ever want a redo. What I do want is to make sure that I am cognizant of everything in the past, and that I am integrating it into myself, into my being. There’s a reason that thing may have happened, and the outcome may not have been what I wanted it to be. I have to understand why that happened. I think there’s a reason for everything that happens, so I have never in my life wanted a redo of anything. And there have been some moments where probably… (laughs)… where probably somebody else has wanted a redo… but I think things happen for a reason, and I am charged with trying to figure out why.

Tim: Anything you want to leave the people reading this with?

David: I think that no matter what you’re doing, it’s important to set your goals properly. Is it about getting wealthy, or is it about making you a better person, or is it about making the world a better place? I think if you put money or capital accumulation ahead of everything, that will create jaundiced lenses through which you will see your project or your company. If you’re key on monetizing something, that should be a natural result of very hard efforts solving a problem, that makes people’s live better. A lot of startups are formed around people having personal pain. They live through something that they don’t want to live through again or they don’t want other people to live through. And if that’s the reason you’re creating your company, and if you can make that operational and execute that, monetizing becomes easy. I think that’s important – I think it’s really important to put life in perspective. You have a very short amount of time on the planet. It may seem long to you… my advantage is that what I do during my day, I see things happen to people for unexplainable reasons. Because of chaos and entropy. I understand how precious every day is. Few people do, the way that I do, because I see what happens. And if you create the proper value proposition to each and every day, knowing it could be your last, and knowing what you want to leave behind, it’s a start. If you take each day and make it a tile in a mosaic, that mosaic out of tens of thousands of days of life can be spectacular. If you don’t have that many tiles and your mosaic is kind of small, it can still be amazing. Every mosaic can be special. And it depends what you want to paint with that mosaic, is it a dollar sign, or is it something that you want to last thousands of years, that somebody unearths and says ‘wow!’ And that’s what it’s about. That’s the way that I drive myself.

Tim: That’s a good note to end on, thanks David.

 

A Brief History of Employer Sponsored Healthcare

By: Steven Berman

Perhaps no other facet of our society touches our lives as acutely as Healthcare. Given the industry’s impact on everything from our personal lives to our national economy, one might expect that the average American would be indelibly linked to its financial underpinnings. Yet nothing could be further from the truth. Most Americans have no clue what their Healthcare actually costs, given that someone else –Insurance – is paying the tab.

So how did we end up here? How did America find its way into a system where consumers are so far removed from the costs of their care that most don’t even know the actual price of the last prescription drug they took? In an effort to shed light on the subject, we thought we’d pluck a page out of The History Channel’s playbook and briefly examine the history of health insurance in the United States. Hopefully doing so will help illuminate exactly why we are where we are today (while also providing some nifty historical tidbits).

So without further ado…

The forerunner to what would eventually become modern-day group health insurance didn’t come to fruition in the United States until the turn of the 20th century. Given the state of the industry prior to then, Healthcare’s delayed entrance on the national stage should really come as no surprise. Throughout the 19th century, Healthcare as an industry rarely provided effective outcomes to patients seeking respite from illness and disease. Medical care was substandard at best, and hospitals were mostly sick houses for the poor and those afflicted with contagious disease. Indeed, the goal of medical care at the time was – to quote an infamous saying – “to cure seldom, to help sometimes, and to comfort always.”

By the turn of the century, however, advances in medical care began to considerably improve patient outcomes. Innovations in the fields of bacteriology and anesthesiology made surgery less painful and much safer, and modern medicine helped transform hospitals into effective treatment centers. At the time, consumers were well aware of the costs of care, as those costs were so low that they were not considered onerous (oh how times have changed!). Of greater concern was the loss of income sustained during time away from work due to illness or injury. To address this growing anxiety, the first employer-sponsored group policies were initiated. These pre-paid group plans were not aimed at covering medical expenses, since those were not of primary concern to patients; rather their purpose was to replace lost wages incurred due to an inability to work. Patients covered their own medical expenses in a standard fee-for-service model.

An interesting footnote here: Physician associations actually discouraged companies from offering group care policies, which were viewed by physicians as infringing on their control of care (and doing so at a lower cost). During the early part of the century, opposition to employee-sponsored coverage dissuaded numerous companies from escalating their participation in medical care. One prominent example involves the famous retailer Sears, Roebuck. The company doctor was forced to resign after the county medical society refused him membership due to his supervision of a group policy. Not coincidentally, his successor persuaded the company to limit their pre-paid care packages. And word of this type of public pressure got around. A 1916 Public Health Service study found that only only one of 425 companies surveyed fully funded pre-paid group plans.

By the 1920s, however, things were starting to change. Public demand for group health insurance was on the upswing, thanks to the notion that healthcare could actually… ahem… care for one’s health. Hospitals even began offering medical services to individuals on a pre-paid basis, and more and more consumers emerged into the Healthcare marketplace. Yet despite the industry’s rapid growth, there was still plenty of progress to be made. A report issued by the Committee on the Costs of Medical Care at the end of the ‘Roaring 20s’ provides an illustrative snapshot on the state of Healthcare at the time. A few highlights:

  • • Per capita spending on healthcare averaged $25-$30 per year (about 4% of national income). However, 3.5% of families bore roughly 1/3 of that total.
  • • 1/3 of those receiving hospital care needed government largesse or philanthropy to pay their medical bills.
  • • Around 150 multispecialty medical groups were in existence, and many were offering innovative delivery mechanisms that coordinated patient care across certain metrics.
  • • Several employment-based medical expense protection arrangements were being developed and launched; some that offered benefits for as little as $6-$12 per year.

One of those employment-based arrangements that came to fruition during the decade led to the formation of the largest health insurance provider in the nation. In 1929, then vice president of Dallas, Texas-based Baylor University’s health system, Justin Ford Kimball, began noticing a hefty amount of unpaid medical bills, mostly belonging to Dallas educators. Kimball developed a plan in which an enrollee would pre-pay just $0.50 a month to cover the cost of a 3-week stay at a hospital. The coverage would be initiated after a 1-week hospital stay, and the fees incurred during that first week would cost $5.00 per day above the pre-paid coverage amount. Interest in Kimball’s innovative plan quickly skyrocketed, and the plan became known as a Blue Cross plan. The next year, Blue Shield plans were introduced to provide reimbursement for physician services. In 10 years time, enrollment in both plans grew from 1,300 covered souls to 3 million.

The growth of the medical industry and the sprouting of innovative insurance plans cheerfully coincided, giving rise to a budding new sector of the economy – that of health insurance. Health insurance addressed a key pain point in the market: the mass-consumerization of the industry, and the resulting interaction between consumers and the costs of care, which was beginning to take place on a large scale for the very first time. But the health insurance industry in its current form didn’t sprout up overnight. It would take an accident of history to help pave the way for the complex and overarching system that we know today…

In the wake of the devastating hyperinflation that gripped post-WWI Germany, the FDR administration issued wage and price controls in order to stem a similar tide that some feared might occur as the administration attempted to lift the country out of The Great Depression. What the FDR government didn’t foresee was the vitriolic reaction from unions and labor groups, who threatened to strike en masse. To avert a cataclysmic strike, FDR struck a deal with labor, exempting employer-paid health benefits from wage controls and income tax. The exemption afforded a 100% tax deduction to employers, while employee benefits were exempt from federal, state, and city taxation. In a war economy with labor shortages, the tax exemption became a means of circumventing the wage controls that were instilled to counteract hyperinflation. FDR’s decision generated enormous demand for employer-provided health insurance, and ultimately led to the decline of individual fee-for-service plans. This was the turning point which saw consumers first become detached from the cost of their Healthcare.

The 1943 exemption helped balloon coverage from less than 10% of the population in 1940 to nearly 70% by 1955. By 1958, an estimated 3/4 of the 123 million Americans with private health coverage were participants in employment-based programs. By 1960, 79 Blue Cross and 65 Blue Shield plans had been established, 250 to 300 independent and pre-paid group plans existed, and over 700 commercial insurance companies were selling individual or group coverage.

Thanks to an accident of history, our modern health insurance system was born. As a result, employers and insurance companies bore most of the costs of insurance throughout the second half of the 20th Century, hence the general public was almost entirely removed from the cost-element of Healthcare. But with the advent of pioneering pharmaceuticals and groundbreaking procedures, costs rose sharply, and premiums climbed higher as a result. The 1990s saw double-digit growth in premiums, which led many small businesses to either redesign their plans with higher cost-sharing by employees or cease offering health benefits altogether. The combination of rising costs and benefit reductions led to what is known as ‘the small employer-based health insurance death spiral.’ Essentially, the individual market expanded as small businesses could no longer afford to adopt robust group plans. And as demand increased, flaws in the individual market were soon exposed. Medical underwriting procedures began to be questioned, application denials – some leading to fatalities – made headlines, and a general lack of discontent with our Healthcare system inhabited our public zeitgeist. In short, costs were ballooning, and the level of care wasn’t meeting consumer expectations. Something had to change.

That is where the country stood prior to the Affordable Care Act, which was passed in part to standardize insurance plans and provide consumer protections, as well as to offer universal, affordable care. It’s interesting to note that the consumer frustration around Healthcare centered on the fact that consumers typically hadn’t been exposed to the cost-element of our Healthcare system – at least not until the small employer-based health insurance death spiral forced them into the individual market. Once consumers hit the private market, they were aghast at what they found: pills and procedures that broke the bank.

Regardless on where you stand politically on the ACA, most healthcare professionals acknowledge we are continuing to move more towards a value-based system, which will only further the “consumerization” of healthcare. Whichever way we’re headed, it’s vital that we instill some level of transparency in order to enable us as a society to make more informed healthcare decisions. I want to be clear I’m not proselytizing here, I am simply advocating for a more healthcare literate citizenry in regards to costs. It is my belief that because we as consumers had such little skin in the game, we’ve allowed our system to become bloated and overly complex, and as we head down the path to get it under control, education is a strong first step.