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Making health insurance frictionless | Mayank Kale @ Loop
338 Plays2 years ago
Mayank wanted to make healthcare as easy as pie by offering health insurance solutions to companies for their employees. But finding product-market fit became tough. Not one to give up easily, Mayank’s hard work paid off and Loop became the most well-funded startup in the space. He shares his journey of building Loop.
Additional links:-
1. Mayank Kale and Amrit Singh's Loop is filling the gaps in health insurance
2.How Loop Health’s group insurance plans go beyond securing lives to improve healthcare delivery
3.How Loop Health is transforming care delivery in India with a focus on preventive care
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Transcript
Motivation and Vision Behind Loop
00:00:00
Speaker
Hey folks, I'm Mayank. I'm the co-founder and CEO of Loop.
00:00:16
Speaker
It's only during periods of medical emergencies in the family that you get to experience the broken healthcare system of India. And this is also what happened to Mayang Kale when his father experienced a medical emergency. This experience moved Mayang Kale so much that he decided to build solutions to fix healthcare in India and this was the beginning of Loop Health. In this candid conversation with your host Akshay Dutt, Mayang shares the journey of finding product market fit for Loop
00:00:42
Speaker
and making it the most well-funded startup in its space.
High-Impact Startups in India
00:00:45
Speaker
Loop is on a mission to make healthcare frictionless for its users by selling comprehensive healthcare and health insurance solutions to corporate clients for their employees. Stay tuned and subscribe to the Founder Thesis Podcast and any audio streaming platform to listen to more such journeys of discovering product-market fit to build high-impact startups.
Inspiration from Silicon Valley
00:01:13
Speaker
There is this narrative of second generation of Indian companies taking over and just sitting on the business and not building much. And so I always had that
00:01:31
Speaker
maybe that chip on my shoulder to say, I'm going to go do my own thing that is completely unrelated.
Educational Influences and Entrepreneurial Path
00:01:37
Speaker
That is going to be higher technology, higher impact. But also, I'm grateful to him for providing all the things he has. But I did feel from a very early age, I wanted to build my own identity. So those four years in the US must have shaped your thinking on entrepreneurship, on what you want to build, what you want to do. Tell me about that.
00:02:01
Speaker
Yeah, so from a very early age, I've been really fascinated with Silicon Valley. I used to write emails to all of these founders in the Valley back when I was in the sixth, seventh grade. Some of them ended up becoming now investors and board members.
00:02:19
Speaker
I honestly always wanted to go to Stanford. That was the mecca for founder types like me, but I didn't get it.
Personal Experience with Healthcare
00:02:28
Speaker
I was just like depressed for months after I went to Stanford. But my second choice was Illinois because the University of Illinois is like a top three CS program in the world and it has a history of
00:02:41
Speaker
amazing founders like Mark and Lisa and Max Levchin, Jeremy Stopperman, Luke Nozak, all of these folks have come from worldwide. Deep roots of Mosaic and PayPal. That was my second choice and so I ended up there. It has dramatically changed my perception of what startups were.
00:03:05
Speaker
I always did feel like I was still away from Silicon Valley. I never felt like it belonged until I ended up at YC in 2020. But there was still a lot of CS hacker culture at UIUC combined with just the deep roots in the Valley. And I think that shaped a lot of
00:03:28
Speaker
ambition, I think for me, it's very, it's one of those things, it's very hard to know how to be really ambitious unless you see it.
Challenges and Pivot to Integrated Care
00:03:36
Speaker
And that was kind of the first realm when I really saw people take on world changing projects. And so yeah, I think that was the, that was the Did you also try world changing projects while there's like, like, you know, what led up to loop, you must have tried a bunch of ideas before reaching to loop.
00:03:58
Speaker
Yeah, so, you know, I was pretty clear. I always wanted to start a company. I've never had a job. This is like my first job out of college. But I never thought about healthcare. I was deep into the crypto space in 2014. So that's when Bitcoin was probably at like $50 or $60 and just, you know,
00:04:22
Speaker
kind of hacking at it in CS lab. I worked a lot on the crypto side of things, on Bluetooth low energy, that was emerging technology at that point. Just trying out a bunch of projects, obviously didn't know anything about product development or product management.
00:04:39
Speaker
So as an engineer, just building random things that actually are not that useful. And then in 2015, second year of college, my dad had a heart attack. So my parents both live in Bune, he's luckily fine now, but he had a heart attack and that completely changed how I thought about
00:05:04
Speaker
the basic necessities in the Maslow's hierarchy almost. I went through that whole experience with him. He got diagnosed over the heart attack. He got prescribed really invasive heart surgery. I was 19, so we just ended up getting the heart surgery. It cost them like rupees. I had to get that all back from the insurance company, which was the worst experience I've ever had.
Innovative Healthcare Models
00:05:34
Speaker
Later, when we talked to a few friends and family, we found out that he didn't need the invasive heart surgery and took him like six months to recover. And so that experience got me really obsessed with trying to figure out, you know, we have all of this, how's progress in BITS life, right? Your Twitter, your social networks, Google, all of these BITS patients, but the atoms haven't shifted yet.
00:06:02
Speaker
right? The atoms like transportation and traffic and healthcare and all like some of these core infrastructural things haven't moved. And that got me really obsessed with saying, look, if healthcare sucks for me in India, where I can pay basically as much money as I need to get right the good healthcare. I don't even know what's happening to kind of, you know, someone who maybe cannot afford it or is doesn't have the family and so on and so forth.
00:06:31
Speaker
So yeah, that started my obsession with healthcare. I took a semester off and I spent those four months just talking to 200 doctors and a bunch of hospital owners. And I was just uncovering
00:06:51
Speaker
horrendous kind of incentive problems in healthcare. You know, learning that care providers, doctors and hospitals are given targets for how many surgeries they should do, what is the surgery mix, MRI, X-ray targets. Hospital owners are thinking about a number of bed occupancy multiplied by revenue per bed. That's the metric they are maximizing.
00:07:15
Speaker
And just thinking about all of that and learning made it so obvious why my dad had the experience he had. Even though his primary care doctor knew 12 of his cousins had an heart attack in the last 20 years, they still couldn't prevent this guy from having a heart attack.
Aligning Healthcare Incentives
00:07:34
Speaker
And so it just became obvious why the experience is so broken. The incentives are broken. No one is using technology and product to help someone live longer, live healthier. And not all the incentives are aligned that way. And so, yeah, that's what got me in healthcare. And I did a bunch of things while I was still completing my undergrad.
00:08:00
Speaker
Like, one way to solve this problem could be to build like an asset like hospital model, like say what maybe Bristine Care is doing, you know, something on those lines. What did you want to do?
00:08:15
Speaker
So at that point it wasn't clear, like the journey to figuring out your core mission and product market fit is a long, arduous, exploratory one. At that point it wasn't clear, but I was clear in the fact that we needed to solve the core problem, which is that of incentives.
00:08:35
Speaker
If doctors continue to get more money, the sicker a patient is, regardless of what you improve, it's never going to work because it fails at the atomic unit, at the logical unit. And so always I think the core principle of design was, can you build a health system where care providers are paid to keep people healthy and to keep people out of hospitals? And can you align health care with what a patient wants?
00:09:03
Speaker
Right. And so that's why the asset light hospital models where we are maximizing surgeries is wasn't ever that interesting to us because it doesn't take a genius to figure out the profit pools are in the city care or cities. Right. But I think we never wanted to go to that. I think all the persistent
00:09:25
Speaker
attempt was to try to figure out can we rewire the whole stack so that the incentives are aligned and and we solve the core problem of healthcare.
B2B Model and Rapid Growth
00:09:35
Speaker
Well tell me that journey like you must have started with a certain thesis that this is the way to do it and which must have gone through multiple iterations. Yeah
00:09:47
Speaker
Yeah, I mean hindsight is always 20-20. I feel it's so easy to piece it together looking back. But honestly, it was a pretty uncertain process. So after my dad's heart attack, I basically said, you know, what a
00:10:08
Speaker
what a software engineer would say is software solves this, right? That was the first hypothesis. I'm going to write code to solve healthcare. And so I spent about a year when I was still studying, not going to class basically, but writing code for EMR for the electronic medical record that was
00:10:28
Speaker
built for rural India. So there are thousands of villages in India where there are no doctors. That void is filled by health workers who are trained. And today these health workers, ASHA workers are using
00:10:43
Speaker
Paper, notebook, forms to diagnose diseases, right? Disease diagnosis is nothing but a flowchart, right? Yes or no question, values, diagnosis. So they've been using these thick books. And so I ended up, me and my dad ended up getting involved in a nonprofit in rural Maharashtra and in tribal villages in Maharashtra, which is run by two ex Johns Hopkins doctors for the last 30 years.
00:11:13
Speaker
And they had trained a couple of hundred village health workers to do deliveries, to take care of pregnancy complications and to treat 15 diseases in those villages. And they were using these horrible pen and paper notebooks to run this. I said, okay, look, if I can write code to fully fix this problem,
00:11:36
Speaker
you know, why I'm still in college, let me do that and then we'll go take it to the real world.
Journey Through Y Combinator
00:11:41
Speaker
We'll help doctors make better decisions and all of those things. And all will be well. And so that's what I ended up spending two years of my college doing while I was finishing up the degree. I wrote a couple of lines of code for the electronic medical record in Meraki. So these, I hadn't focused on that. And ended up deploying it to about
00:12:06
Speaker
500,000 patients. So half of their lives ended up being touched with this EMR that has the workers used. And that was the first project. And that was as a 20-year-old, that project will say that I can build something, and I can push it in the real world, and it can have real impact.
00:12:32
Speaker
So that was when the idea became clear that you can build technology, you can write code to save lives, which is a really powerful thing to realize, I think, as a 20-year-old software engineer.
00:12:44
Speaker
And so that was the first thing I built. And then in 2018, I moved back to India with my friend and co-founder, Ryan, who I met in college. And we said, look, we've built this piece of technology. It works in public. So Ryan is like an American citizen.
00:13:04
Speaker
Yeah, so I have three co-founders, Ryan Amrit and Shami. Ryan and Amrit are my friends from UIUC. They are both natives. They were born in the US, American but are Indian origin and ended up doing the reverse brain dream thing. Yeah, amazing.
00:13:30
Speaker
So yeah, so we moved in 2018 and we were like, okay, let's use, I mean, this is great technology. Let's deploy it in clinics and all will be well. And so we tried to go and sell it to doctors and pretty soon we realized that doctors, GPs, hospitals are not really interested in improving quality of care. Obviously they want to do it broadly, but in the moment they don't want to pay for things that improve quality of care.
00:14:00
Speaker
They are trying to get as many patients through the door as possible. And they are trying to give them a service that they can pay the insurance companies for.
Product Development and Market Fit
00:14:09
Speaker
Which is the right thing to do. I don't want to categorize the service in that way. But we realize that no one is interested in paying for a tool that helps you make better decisions as a doctor. Because no one is incentivized to do that.
00:14:26
Speaker
And so we miserably failed. This tool was like a clinic management software where you could manage your patients and keep documenting every visit in it so that next time a patient visits, you can see all past visits and what was prescribed to him and maybe send reminders for next visit, et cetera. Something like that, like a clinic management app.
00:14:48
Speaker
That was half of it. So the half of this clinic management and the other half was what's called a CDS or a clinical decision support. And so that was basically using the information inputted by the doctor to help them make a better decision. So pulling up algorithms, pulling up best practices, potentially flagging up what the symptoms could mean and so on and so forth. Give me an example of how it would work.
00:15:16
Speaker
Like for example, like let's say you're treating a patient with hypertension, right? And some of the, you end up prescribing statins to this patient. You see some statin, you've been prescribing a statin for let's say the last six months, but the blood pressure is not going down or the blood pressure is going down, but the patient has high
00:15:42
Speaker
kind of pylorubin or some other liver enzymes, secretion
Expanding Disease Management and Coverage
00:15:46
Speaker
is suddenly increased, right? So there's side effects.
00:15:52
Speaker
It's not, I mean, you could take pharmacological studies and show the physician that, hey, this kind of statin produces this effect in X percentage of patients, try these six other statins, and if your patient fits this bill, then these two might be the best for them, right? That's the kind of intelligence you can provide, and we have built some of these algorithms across maternity, across some primary care conditions as well. And that is,
00:16:21
Speaker
This sounds like a fairly multiple things to solve to make this successful. First is how do you get clean data in? I mean, if, for example, you're saying that there were markers, how do you get that clean data in? Typically, those test results will be like a printout from a lab, and doctors may not have the time and patience to do manual data entry or so on. What was your approach to get the data in?
00:16:50
Speaker
Yeah, I mean, we didn't understand that. We were just experiment. I deployed it in public health where you are mandated to do certain things because you're a public health worker. By a doctor or a GP in a clinic, you're right. That was why I failed. It's because they had no incentive to use a digital system. It was too painful. That was kind of the first lesson with product management, which is before you.
00:17:17
Speaker
Okay, that extra hassle of data entry was kind of a barrier to adoption. And how did you quote the intelligence in it? Like, that must have been a manual process, like you would have had to like collate studies and then like, was that how you did it? Like with the help of like a doctor or a subject matter expert?
00:17:40
Speaker
Yeah, so in college, I had interned at a health analytics company in Chicago. That was the fastest growing health analytics company in the US. And what they had done in the US, because the US is already on medical records, electronic medical records for 25 years, they had built a marketplace of algorithms on top of it.
Monetization and Sustainable Business
00:18:02
Speaker
So you could take an algorithm from a science research paper, and you could deploy it in a hospital.
00:18:09
Speaker
And I was like engineer number six on it. And I worked there for about 12 months while I was still studying and doing this startup, so to speak. And so I had learned a lot about how to do those things from that experience, which translated really well to this. So yeah, some background on how to build it. And then we used some of my connections that built up during that internship to help us launch at least the top 25
00:18:37
Speaker
kind of primary care cases. Okay, got it. Okay, so then what like you went to market and you saw that it is not getting adoption. So yeah, we went to market, we saw it's not getting adoption. And then we're like, okay, like any kind of founder would do ask the doctors, what do you want?
00:19:01
Speaker
And the doctors, I think a lot of what came from the doctors was this problem of, oh, we don't get specialist advice. Or as a team piece, we don't have access to specialist advice.
00:19:17
Speaker
And so, okay, cool. Let us fix that problem for you. Will you pay for it? Yes, we'll pay for it. All right. We'll send it. We'll build it, right? So we ended up building a two-sided marketplace of specialist doctors from major hospitals and connecting them with the GPs. So if they had a case that they wanted advice on,
00:19:40
Speaker
they could pay this doctor or their assistant or their team and they would solve it for them and then they would pay them, right? So they would take additional money from the patient and then they would pay the specialist, right? And that was a really attractive service for doctors. And so we grew very quickly. So in a span of six months, we had 350 doctors, GPs at Bune using this service.
Future Goals and Challenges
00:20:07
Speaker
And we were doing it
00:20:09
Speaker
probably close to 600 concerts a day with these specialist doctors. And the onboarding would have been manual, right? Like you would have had to call up, these people tell them, hey, another source of earning for you and just sit at your home and earn and like something like that.
00:20:30
Speaker
On the specialist side, yes, the supply side, the onboarding was manual. On the demand genie side, they told their friends. So they are like, hey, check this out. What a mouth. And so we ran that for a couple of months in 2019, early 2019. But what that ended up devolving into is something funny. That ended up devolving into a surgery funnel for specialists.
00:21:00
Speaker
So we started getting calls from GPs saying that, hey, this specialist did not prescribe surgery to this patient, but they have insurance. So why didn't they prescribe a surgery? And we started learning about this idea of kickbacks.
00:21:25
Speaker
that if you send a patient for surgery, you can get 5-10-20% of the surgery back from the hospital or the specialist.
00:21:35
Speaker
And so we kept getting like a call a day from some of these GPs saying, hey, why did this person operate? Hey, where's my money? And we were really confused when aren't you, aren't we helping you make better decisions? Oh, wait, that's not what's happening. And they were transacting on top of that.
00:22:03
Speaker
And then we read too some of these chats because they could use that app to chat with these specialists. And it was about how much money. And they were like, holy fuck, like this is not a direct opportunity. I don't want to be the business of maximizing surgeries. That doesn't feel like the right thing to do for our users.
00:22:25
Speaker
And so we decided to shut it down. We said, look, this is not the right thing you want to build. We're going to shut it down. We learned so much about patients, about their experience at hospitals, about insurance, and about incentives that we said,
00:22:45
Speaker
Look, if we really want to solve this problem, we are going to have to be really ambitious. We are going to have to commit to this problem of building a new kind of healthcare system. That's where this idea emerged that, look, no one except the insurance company is incentivized to keep you out of hospitals.
00:23:08
Speaker
The insurance company doesn't want you to claim. Now, there are two ways to do it. One way is just to deny claims, in which case, no insurance company will succeed because they just will have a reputation of not paying back their consumers. The other way is to keep your patients healthy, navigate them to the right doctors, navigate them to a trusted circle of specialists, and broadly help them manage their conditions so that they don't end up at hospitals.
00:23:37
Speaker
we ended up, and again, the team was like three people right at that point in 2019. We ended up talking to a lot of folks in the US, in the UK, in Singapore, learning about health systems around the world and understanding what worked for them. And we ended up discovering what is
00:23:59
Speaker
used to be called an integrated care provider that is now called a paywider in the VC language. A paywider is basically a payer and a healthcare provider combined. Someone like a Kaiser Permanente in the US is a great example of a paywider.
00:24:18
Speaker
of an old paywider and someone like Oscar Health or Global Health is an example of a new kind of paywider where you are the insurance company, you take risk on a patient population, but you are also the handicap provider.
00:24:34
Speaker
So it allows you to keep them healthy, it allows you to influence them, and it allows you to be on the right side of the patient. And I think we got really excited with this model. And obviously, it doesn't eat. But yeah, I have a question first.
00:24:54
Speaker
How is this any different from any health insurance company? It sounds like exactly the same thing. The health insurance company is doing that. They're taking a risk on a cohort and they pay, and especially like today everything is cashless, so they would directly pay the hospital for the procedure, etc. So insurance companies today are like banks.
00:25:17
Speaker
You never think about ICICI being your healthcare provider. You think about a doctor who wants a healthcare brand. ICICI is the bank that allows you to pay for hospitalization. So they are just purely payers today in India. What a paywider is, is they are not only your payer, but you also go to them to sync healthcare.
00:25:41
Speaker
They would set up your appointment. Yeah, they might be your family doctor. They might be the specialist. You fully trust them to deliver health care for you. And that's the difference. Got it. So you learned about this model which excited you quite a bit in 2019.
00:26:05
Speaker
Then we said, look, we are like 23, 24-year-old founders. We have no business. We need health care or insurance. This is like an old person's game. But fuck it. We were really passionate about this. Let's go build a new kind of health system in India. And let's do it right. And let's commit a couple of decades of our lives to doing that.
00:26:30
Speaker
And so, yeah, that's when we said, look, you want to be eventually a pay wider in India. How do we do that? We do that by getting a bunch of families covered under our health plans, and we pick out their health care provider of choice. And that's when we started building our health insurance product with our primary care product. And you are basically the first ones in 2020 to offer that
00:27:00
Speaker
combined to companies because we know that most people get their insurance from their company, right? And so even the first ones to be essentially a health care broker to go in and say, take your insurance and here's some primary care with it. And we're going to help your employees and their family members stay healthy, engage with benefits more. And if they need to go to the hospital, we'll be there of the whole care for them.
00:27:29
Speaker
So that was the... Company was a decision you took after trying B2C, B2B both or you straight away wanted to do B2B? Yeah, we didn't do B2C because it just seemed like not the right strategy for a company that had no money. Yeah, okay. So B2B seemed like, okay, I can sell. My co-founder can sell. Let's just go and build a base of consumers.
00:27:57
Speaker
And so you were taking the risk on your books or you had collaborations with insurance companies and like you were creating a bundle.
00:28:08
Speaker
Yeah, we were a broker, right? So brokers in India can't take risks today. So we had a few insurance partners that we worked with and still work with. And they were the ones backing this group health plan. But we were delivering health care ourselves in-house. So we did have our own doctors and so on and so forth that was part of the health care plan.
00:28:34
Speaker
Okay, so one part of it is an insurance policy from one of the traditional health insurance companies and the other part is like first level consult can be done through your app because you have doctors on on panel available on call and
00:28:54
Speaker
Subsequently, if somebody needs to get admitted or needs to get a test, then that could be set up through the app, like an appointment with a specialist or a test pickup and stuff like that. That's exactly right. Okay. Did your plan cover, there must be like, say, ex-consults a year by employee and stuff like that. Tell me, what exactly were you selling? What was the product to an HR head of a company?
00:29:23
Speaker
Yeah, the product was simple. It was unlimited primary care. You could actually be concerned and text us 24-7 as many times as you want. That was that risk we underwrote on the primary care side.
00:29:36
Speaker
No one wants to just chat with a doctor by phone. You don't have that problem of induced utilization. That's what they call an insurance. You're not just going to use it to use it. So we said unlimited primary care for your employees, along with
00:29:54
Speaker
a fully digital modern insurance journey that includes your insurance cards in the app, digital claims, an HR dashboard for you and so on and so forth. So both these pieces are fairly revolutionary when we introduced our 2020, where we were then displacing their existing providers at a pretty rapid rate.
00:30:19
Speaker
So the first company we sold was two years ago. Which company was that? It was actually a small subsidiary of General Electric, GE. Wow, okay, amazing. And we sold it to them and since in the last two years, you know, we've grown to about 550 companies. We cover more than 300,000 lives and so I think
00:30:47
Speaker
It's been, I think, phenomenal to see consumers like HRs and employees daily adopt it very quickly. So, are you also providing patient health record on the app? Like, say someone goes for a test, like diagnostics, they can just click a pick and it gets read by like, you know, machine vision reads it and puts those records and stuff like that.
00:31:13
Speaker
Not yet. That is in a long-term roadmap. I think as we stack rank our priorities, there are so many other things to build before that. But if you do a test through us, it shows up as a PDF in your app. And so we have people that have consulted with us like 10 times a year. And all of them consults their prescriptions and their lab tests show up in the app, which is already better than
00:31:39
Speaker
what people have today. And so that's kind of where the experience is today. I think in the future, I'm sure we'll go and build more. So what is the list? So like your stack rank, the features, and these are features you want to build first, and these are down the line. Just talk to me through that. What were the top features you wanted to get out first? Yeah.
00:32:05
Speaker
So again, let's talk about the bust more freely. We wanted to launch a few things quickly. The first was HR as a customer. How do we make your life easy? We make your life easy by completely extracting you out of the insurance administration part of your job. So we replaced that with
00:32:32
Speaker
technology and so you as an HR don't need to email us the list of your new employees or email us the employees you want to remove from your insurance plan. We just plug into your HR software and we are just able to essentially pick up from that.
00:32:55
Speaker
That was the first thing we shipped. We were like, don't be involved in the insurance administration. Here's this technology to do it. Don't be involved in claims that are kind of people-centric, customer support desk and are
00:33:10
Speaker
It's a little claims journey, help you and your employees solve that problem. So you as an HR are not going to get calls at 3 a.m. asking for claims support, right? So that was the first set of features we shipped for the HR. And for the employee, there's only two sets of features that were important.
00:33:30
Speaker
It's just unlimited primary care. So consult doctors with the app, text them. And B, see your insurance info. See what's covered. See what's not covered. File a claim. So that sounds easy. There's a lot of magic that happens underneath it because the insurance partners we work with are not digital. And so there's a lot of duct taping and a lot of internal people plus tech happens.
00:33:57
Speaker
to make an experience that feels fully tech based and integrated. So it took us a while, a few waters to build that, but like each insurance company would have their own formats and templates for claims. So you would need to give the customer one unified format, but then convert it to master insurance companies format and have some automated following up and stuff like that. That's exactly right.
00:34:24
Speaker
So we had to do all that on claims, but I think just being scrappy, like one of the core values at Loop is obviously the first one is to be customer obsessed, but velocity is also a really important value that we have. And so we were being scrappy. We sold, we printed, we sold, we built in lockstep. And so it wasn't like there was an eight month development process and then we launched. We just launched and then we kept building.
00:34:51
Speaker
and we still do that. We will launch things and we will build simultaneously. This launch happened after YC. You got into YC, right? In 2020? Yeah, so 2020 we got into YC and we spent three months there. I think that was some of the most fun three months I've had in the last three pandemic.
00:35:15
Speaker
So interestingly enough, ours was the first kind of virtual demo day. So ours was the first batch that the pandemic hit. And so our blue group partner was Michael Seibert, who was the CEO of YC. And basically when COVID happened in 2020 in March, demo day got shifted from in-person to virtual. And now it seems so obvious, but back then,
00:35:42
Speaker
It just created havoc in the whole founder community and YC because everyone was really freaked out. How do you raise money on Zoom? That sounds crazy. Why would anyone give you money over a video call?
00:35:57
Speaker
And so, yeah. And so Michael Seibel basically told us, look, guys, we don't know how things are going to be. Take the first term sheet and run. I recommend you days quickly. So we actually ended up raising our seed round in two days before demo day happened. And this was pre-revenue. You had not made your first deal yet.
00:36:18
Speaker
This was pre-revenue, that's right. As founders, we had grown a bit during YC from a slightly different subset of this business. Because we took time to get the insurance license, we just sold healthcare to companies. So we did make some revenue dollars there. Just the primary care piece, unlimited concerns. Exactly.
00:36:42
Speaker
A bunch of companies wanted it, especially with COVID around. And so some forward-thinking HRs bought this from us. So at YC, we did YC. We were a team of, I think, six or seven at that point, raised our seed, and then was stuck in the US for six months. And then got back and then launched in September 2020.
00:37:06
Speaker
Okay, so you need a license for being an insurance broker also like and that takes time, is it? Yeah, it takes on time. Okay. And once you get that license, then do what and every insurance company must work with you or you still need to go and build relationships with each company.
00:37:25
Speaker
Every insurance company can work with you. The must is based on your relationship and building supply. It's essentially a marketplace. You are matching HRM company risk to the risk capacity of insurance companies. You won't build relationships with insurers.
00:37:51
Speaker
Would they do customized policies for you or is there like a standard policy which like how does it happen? What is your relationship with insurance companies?
00:38:04
Speaker
It's a bit of both. We do the standard policy that customers ask us for, and we do your customized ones where we think that the scope of innovation, we will go work with one or two partners, get those things, and then expand that.
00:38:23
Speaker
Okay. What is the onboarding journey for an employer? Is it like they can see policies and then they can add to cart to what kind of policy they want? Or is it like a consultative selling where somebody is talking to them understanding and then sending a proposal? Yeah, it's all consultative. Insurance is fairly complex. HRs don't want to mess it up. And so it's a consultative sale.
00:38:51
Speaker
to be, it's likely to be SaaS in some ways. And yeah, sales team is involved in selling to HR. But once they sign up, then the onboarding team ensures that every employee gets their benefits, hears from us, be integrated to the company's HR system, all of that gets pulled. And we do a bunch of
00:39:16
Speaker
activities around healthcare to get people to the primary care aspect of this one. Okay, okay, okay. Got it. Okay. So, why is there so much VC interest in this space? You know, you would be aware that there are a lot of companies which have raised a fair amount of funding, although I think you raised the maximum amount of everyone else in the field.
00:39:40
Speaker
So what are the features of this business which excite VCs? Yeah, that's a great question. So I think the number one thing is that... So I think there's two things, right? I think what do VCs want? The first one is they want...
00:40:09
Speaker
They want a massive market. They want to have a big opportunity to go after because only large bet can return that fund. And so that's the first thing. And insurance and health care fit that bucket. So one of the biggest reasons why VCs are interested in this space is it's because both of these markets combined are massive.
00:40:34
Speaker
The second thing that is very interesting about this space is that it's largely dominated by incumbents. So you have these old 20-year-old brokers, 20-year-old insurers, low moving, customer dissatisfaction is high, no use of technology, and so on and so forth. So it just feels like, okay, this is prime for disruption.
00:40:56
Speaker
And any good business has modes. And this is a business that has modes because you don't move your insurance often. You don't move your primary care or your health care provider often. And so yeah, some of these reasons make it very exciting for venture capitalists to look at this.
00:41:20
Speaker
Okay, so customers tend to be very sticky. Unless somebody is majorly screwing up, there's a lot of inertia to change the provider and you'll have to get a lot of approvals and explain why you want to change and so on and so forth. Exactly. Got it. Okay, interesting.
00:41:38
Speaker
So yeah, tell me that journey. So you told me you built up these two features as primary like for the HR to get outboarded and for employees. What else on the features did you build next and what's on the roadmap? Yeah, so we ended up building that and when we
00:41:59
Speaker
We are a very design-first company. One of our co-founders is a designer. We are one of those red companies in India where we have a design co-founder. A core ethos is just to talk to our users.
00:42:14
Speaker
I think we kept doing that and kept building more features in these segments. And then I think very quickly we reached a point where we were 10x better than what was out there. And so that helped us just kind of rapidly scale as we were doing that. And we have been basically listening to our customers and building what they want.
00:42:39
Speaker
If you think about what we're building today, we're making progress on two vectors, right? The first one is we are going deeper in the healthcare stack. So we're going deeper in terms of helping our employee base or our member base deal with
00:42:56
Speaker
chronic diseases deal with some acute primary care problems, so building diabetes, hypertension, and some of these core diseases that people go through, we're building plans for that and helping them take care of themselves in the journey.
00:43:15
Speaker
And the other vector we're building rapidly towards is more coverage or more benefits. So insurance is about covering your risk for a lot of problems and nitty-gritties in terms of what's covered, what's not, how is it covered, what is the mechanism for paying back. And so there's all of the nitty-gritties in terms of
00:43:38
Speaker
how much insurance covers and our attempt is every customer we sell to for the same price we should show up with more coverage and the way to do that is technology, partnerships and a more digital journey.
00:43:56
Speaker
Okay. So, you know, there's stuff on diagnostics, on OPD visits and procedures and all. Is that stuff that you monetize? Like, what are those integrations? Like, you must have got partnerships with various diagnostics companies and how does that work? Yeah. So,
00:44:21
Speaker
Today, we don't monetize them. Today, the goal is to provide a complete experience. So you can book lab tests through our app. You pay through us, but we pay the provider ultimately. And it's basically to complete your care journey because most people have become so used to using our app. We have, you know, we do tens of thousands of these interactions every month.
00:44:46
Speaker
and available 20-30% of them require diagnostics and people want to be in the same app and complete the same journey. And this would be through like digital first diagnostics like say like a 1MG or like those kind of change that you would be working with.
00:45:06
Speaker
It's a bit of both. Coverage is important. So we work with traditional players. We work with the new guys. Yeah, pretty open about that bit. And so yeah, so not really monetizing those aspects today. I think it's easier to scale a business the simpler it is. And so today we are in the phase where we have kept the business simple. We know where we make money.
00:45:33
Speaker
how we spend it, the goal is to scale and go quickly. And then I think once we're comfortable that an engine is running, I think people would want to go and dig a little deeper in some of these, let's say ancillary revenue streams. Okay. So how do you currently monetize? What is the model?
00:45:55
Speaker
Well, we make a percentage of the premium that we sell, right? So you sell to an employer, they pay the insurance company a premium amount for coverage, and we get a certain percentage of that from the insurance company. And that's the pretty simple monetization model today. What percentage do you earn or what do you earn per employee covered?
00:46:22
Speaker
So, you can earn anywhere, depending on the kind of cover you sell, you can earn anywhere between 5% to 15% of the premiums that a company pays. So, it depends on a lot of factors. Risk, losses, relationships, size, you know. Okay. Tell me about the fundraise journey and, you know, like we spoke, that you have raised more money than anyone else in this field. How did you do that? Yeah.
00:46:52
Speaker
So when we started raising, right? So we started raising in May of last year. That was our first institutional round. That was the Series A. And we were super cool, 12-minute round led by General Catalyst, Elevation, and Coaster Adventures. I think when we started raising, we were really clear on what we wanted in a partner.
00:47:21
Speaker
What we wanted in a partner was someone who understood that we are on a long journey to build a new kind of healthcare system in India. We are not on a two-year journey or a three-year journey to go and scale something quickly. We are not on a five-year journey to maximize top line, but we want to change the fundamental nature of healthcare delivery in India.
00:47:44
Speaker
And there were a few people that understood that. So Hemant Taneja who runs General Catalyst, he has written a book called Unhealthcare. And we came across that book and we read it. We said, we looked at our internal memo of the company and this book and we're like, this is the same thing.
00:48:08
Speaker
Hemant is a prolific investor. He likes to see that Stripe, Snapchat and a couple of these massive successes. This is the guy for us because he really understands what it means to build in healthcare.
00:48:25
Speaker
And so that was the big thesis. That was like, OK, the spiritual alignment almost with this investor. So we found a way to get connected to him, and we erased from him. With Vinod, there was a similar story. Vinod's been a personal hero of mine since I was a kid, I think, building Sun Microsystems. And it just was such an amazing story for me as him as an engineer building.
00:48:55
Speaker
these massive companies. And incidentally, he had also written like a 50 page memo on the future of healthcare called 20 Sam Doctor. And I had read that a couple of years ago, and I'm like, this guy gets it. We want to erase from him as well. And so we found a way to get connected over North as well. And in India, you know, we ended up chatting with obviously
00:49:22
Speaker
most of the large venture funds. I think Mayankanduja was our partner at Elevation, same name, Mayank, same initials, MK. But we just felt like they understood what we were building. They were going to be partners with us for the long run. And I thought that this was the fund we'd want to partner with because they deeply understand India and they understand the founder journey really well.
00:49:52
Speaker
out of multiple machines that we had at that point, we ended up with an update with these folks. And by that stage, you already had enough traction to demonstrate that this business has legs and the team has executed well. What kind of numbers were you at that time?
00:50:18
Speaker
From a company perspective, I think we had just sold to about 40 companies, 30 or 40 companies. We were covering some 25,000 employees, give or take, I think. 20,000 employees or something like that. Yeah, yeah.
00:50:37
Speaker
So that's how we raised the A. It was all remote. It was during the pandemic. We were the only ones in the office every day, and we are trying to raise through Zoom. Obviously, as first-time founders, it's a nerve-wracking experience, but we ended up pulling through and raised the A, and then the B we raised earlier this year, which was same set of addresses, $25 million.
00:51:05
Speaker
It was the same set of investors, but we also added Optum Ventures as part of the round. Optum was another company we've admired in the US. Optum is a subsidiary of UnitedHealth. UnitedHealth is the largest health system in the US. They are 2% of the US GDP. They are massive.
00:51:26
Speaker
And yeah, it just felt like they would be the right partners as we go and build a new health system in India. And so we connected to them, spoke to the ex-CEO of Optum, who had grown the business to about $100 billion. And I think we wanted to pull them in as partners in this round as well. And so we raised our leads. I think we all knew that
00:51:54
Speaker
The macro world has got to go to shit at some point. It's better to race early and get the money in.
00:52:06
Speaker
So this was essentially like just to have a watcher's because you're in a business where the money comes in right at the beginning, right? The moment you sell, you get the cash. So it's like a very healthy cash flow kind of a business, right? I mean, you don't necessarily need money for working capital and so on.
00:52:27
Speaker
Exactly. It's a negative gas conversion cycle, which is helpful. So we're able to get the money up front. But mostly, for us, it's like day 0.1. It's not even day one. There is so much to build. There is so much innovation we wanted to win insurance and health care, mostly, that we just have this massive roadmap to build. And we said,
00:52:53
Speaker
Let's raise the capital. Let's invest up for art. And so we ended up closing that round. And then a month later, the world went to shit. So we felt pretty good about that for our business. OK. Do you think that there's going to be consolidation in this space? And one way to grow could be through acquisitions?
00:53:24
Speaker
There could be, I think, consolidation. I think one would have to think about why you are acquiring a certain company. And is the capital more efficient in deploying it in your own sales team to displace these companies or to acquire one? And so I think the jury is still out. We're still doing the math.
00:53:50
Speaker
No, I would say patient health record as a feature could be solved through an acquisition. Correct. Yeah. I think product acquisitions make a lot of sense. That's right. When we have been, we have been looking. So if someone is hearing this, it is a small team, part of something larger, just a call out here.
00:54:13
Speaker
So can you share some revenue metrics and what do you estimate them to be? Like say, do you have like a new target for 2025? What is your current era and stuff like that? Yeah. Yeah. So I think the revenue and premium wise, we tend not to share these out, but I think what we do end up sharing out is just how large of a patient base we have. I think it's fairly easy to estimate.
00:54:40
Speaker
You know, the exercise is left for the reader type of thing. But I would say that, you know, today we cover more than 3 lakh lives. I think for us in the by 2025, we want to get to 2 to 3 million lives covered in India. And so the goal is to basically 10x in the next two years for us. And what would be your error at that stage when you're at 2 billion lives?
00:55:11
Speaker
So, we hope to, I think the way to think about it is premiums. And so, the average person pays $100 for insurance. And so, 2 million, that's $200, $250 million of
00:55:32
Speaker
of a book that we have. Okay. Okay. And five to 15% somewhere in that range is your take rate in that. That's right. That's right. Yeah. Okay. Okay. So do you want to eventually go deeper in terms of getting into the insurance business itself or do you want to continue to be a broker?
00:55:54
Speaker
I think it remains to be seen, to be honest. The insurance base is also evolving very quickly. The regulator is more liberal now than they have been before.
00:56:07
Speaker
I think today in the group health space, we have not seen prices normalized yet because there's a presence of some large public sector and short hours and so on and so forth. What does that mean? Prices are not normalized. Are you saying it is like, subsidence?
00:56:26
Speaker
Yeah, I think not subsidized, but I think the market is definitely a little skewed towards lower prices because of the presence of these massive government insurers. And we are seeing every year prices normalized more and more to a more sustainable market clearing price. But I think it remains to be seen the attractiveness of the segment and so on and so forth.
00:56:55
Speaker
But what I will say is the goal is to align incentives and so eventually we want to be able to
00:57:05
Speaker
take risk on the population. Now, whether it's by becoming an insurance company or by any other means as a partnership, I think that the way it should be seen. But eventually we want to be punished if our employees or if our members go to the hospitals more and we want to be rewarded if our members go to the hospitals less. That's what we want to get to. All right. Amazing. You work with the government insurance companies also, like you work mostly with private companies.
00:57:35
Speaker
We work with both the government and the private folks. But I'm guessing with the government folks, it might be more painful for claim settlement and stuff like that. The integrations and all of that.
00:57:48
Speaker
The technology integrations are definitely much harder with the government folks. But surprisingly, it's a fairly well oiled machine, I think. It's crazy to say that out loud, but sometimes they've been better, honestly, than the private ones. So that's come as a nice surprise to us. Amazing. Cool. What's your headcount, Mike, currently?
00:58:17
Speaker
We are almost 340 folks. And this would largely be sales and product, like these would be the two majors.
00:58:26
Speaker
That's right. Sales product, some in operations, but mostly sales and product. And that brings us to the end of this conversation. I want to ask you for a favor now. Did you like listening to the show? I'd love to hear your feedback about it. Do you have your own startup ideas? I'd love to hear them. Do you have questions for any of the guests that you heard about in the show? I'd love to get your questions and pass them on to the guests. Write to me at adatthepodium.in. That's adatthetodium.in.