[00:00:20] Marcus Osborne: Hello, I’m Marcus Osborne with Walmart Health, and I’m also an advisor to Day Zero. And it’s my honor and pleasure to be able to interview today, Sean Mera HealthTap. So, Sean, I appreciate you joining us, particularly after the holiday. Thanks for coming.

[00:00:47] Sean Mehra: It’s a great way to kick off the week. Thanks for having me, Marcus.

[00:00:50] Marcus Osborne: What is it that is motivating you to do what you do?

[00:00:54] Sean Mehra: It’s a good question. There’s a guiding life philosophy I have, which is just to live each day doing good work for good people, with good people. And, through the pandemic, I was reminded about how life is random and none of us really know how much time we have here on this earth. And really it’s about each day, and as cliche as it sounds, about enjoying the journey and not just about the destiny. So even when I advise entrepreneurs, I really tell them it’s great to imagine what one day your venture can be, but make sure that what you’re really excited about is each day you’re going to be spending for solving those problems that eventually get you there because, ultimately, that’s all there is. At each level, there’s just the next problem to solve.

[00:01:39] Marcus Osborne: What is the thesis or theses that you have around health, or healthcare systems, and how did that thesis, or how did those theses, influence your choice to help found a company?

[00:01:54] Sean Mehra: One of my original epiphanes about healthcare is that it is a two-sided marketplace, like so many others in other industries. And that means that there is a supply and a demand like any other industry. In healthcare specifically though, the supply are the medical providers and they’ve been the supply for hundreds, if not thousands. Of years, all the way back to the days of the village shaman and the villagers. And the demand is those villagers, those people in the shamans’ villages that get sick and need their knowledge or care. And if you think about it that way, then you realize that everything else industrialization has constructed around this supply and demand is they’re just artifacts, they’re support systems for what’s become. And so if you distill healthcare down to the fact that it’s just these two parties, the providers and the patients, the consumers, and the doctors, however you want to label them, what you realize is that those are the only parties that ultimately matter. And as long as you serve them and serve them both equally and well, you’re going to do right by the system. So the other thesis or the thesis that comes together out of all of this is, if you’re really going to create true disruptive change in healthcare, create a solution and speak directly to those two parties because, if you’re going to create solutions for the middlemen or the ancillary institutions in the value chain, let’s call it. And I don’t mean to marginalize what payers and providers and pharma and all these other institutions are and what hole they fill in the system. All mean to say is that they have become the powerful institutional incumbents and it is in their interest to keep things that way so that they stay in power. And if you really want to see true change, what you want to do is fundamentally change the way consumers and providers interact and transact. And in healthcare, that transaction means an exchange of knowledge or an exchange of care. And so by not thinking about the solution for the middlemen, but for your end users, you’re more likely to change the way the system works from the grassroots level, because it is very unlikely that healthcare change is going to be top-down. And if it happens, it’s going to be marginal. It’s going to be incremental and it’s going to take a long time. But change can be pretty drastic and pretty quick.

[00:04:23] Marcus Osborne: You’ve made a decision to have your company focus on consumers, by going direct to consumer. That feels like it runs fundamentally counter to almost everybody else in the entire industry. You started touching on it a little bit, why do you think that can be successful? What is it that leads you to believe that can be a successful approach?

[00:04:47] Sean Mehra: I think that’s where you create sustainable disruptive change that focuses on actual value creation. So in entrepreneurship and investment, there’s value capture and there’s value creation. Value capture is just extracting more value from the existing system. Value creation is creating new solutions that didn’t exist before. When you build direct to consumer applications, when your customer, the person paying you out of their wallet, is ultimately your end-user, in this case, the consumer, there is no hiding behind vanity metrics and products that actually serve a middleman. So much of healthcare appeals to the insurance plan designer, the health system executive, the employer benefits leader. And when you create solutions for them, it’s not the consumer’s choice, what solution they use. It was chosen for them. And out of the whole selection in the free market of solutions that could exist, you’ve narrowed it down to something that you think is the lowest common denominator for your whole population. And you see time and time again in e-commerce and retail, that doesn’t work. Different solutions for different people. Different people prioritize different things at different price points, at different quality bars. And so you’re never going to get the most efficient system when you’re saying, wow, my one solution landed a deal where now I’m covering 1 million lives. Well, great for you, but let’s talk about how many people are using your solution. Let’s talk about how many people love your solution. And let’s talk about how great your solution is for each and every one of those 1 million individuals and why it’s the best solution for them. And I think when you’re direct to consumer, you don’t have to worry about those things. You just worry about who your solution is good for and finding those people. And over time, you will practically get better at serving different flavors of your solution to more and more types of people and eventually building quite a big user base. And once you kind of tip the scales, once you achieve a certain scale of consumer base, then you’re too big to ignore even for the institutions. And that’s when you, as the innovative disruptor, have kind of the negotiating leverage to say, here’s how I think the system should work because here’s what my consumers are telling me. Not, here’s what you think the system should be working as and how I’m going to cater to you.

[00:07:13] Marcus Osborne: What you’re saying is, if I engage with the individuals who are actually really doing the work and understanding what they need, then ultimately, everybody else will kind of follow. And I think that’s kind of an interesting message, I think, to a lot of people, and particularly to entrepreneurs, I think, to people who would think about founding companies to say, there is another way. You can focus on the needs of consumers and still win.

[00:07:39] Sean Mehra: And by the way, Marcus, I don’t fault the way entrepreneurs have approached the industry for the last 10 years. The system was designed to incentivize them to approach it that way. If you’re going to build a business, you’re going to be drawn to those distribution channels that get you the most users and the most revenue as quickly as possible. So doing a single deal with an institution with 1 million lives, well, that’s your fastest path to quote unquote success. So when the system is designed that way, of course, a majority of the early entrepreneurs are going to approach it that way. But it just takes a couple of fish swimming upstream in the opposite direction from the rest of the school of fish to show them that there’s a different way. I think we’re getting to that chapter of the industry now.

[00:08:21] Marcus Osborne: I agree with what you’re saying. How are you thinking about your own kind of business model? Or if you were to kind of go advise others, how do you think about the business model in an environment where the supply side is going to be impacted, but where it’s sort of critical to what you’re doing.

[00:08:38] Sean Mehra: It’s a great question. I’ve spent a lot of time thinking about this. There is a shortage of a supply of let’s just call them providers for now because you can throw nurses into the bucket too and other types of healthcare professionals, but there’s a shortage of supply. There’s a growing demand. That equation’s never going to work unless a few things change. Either you start making more supply, you start shrinking your demand, or you make the supply and demand somehow meet each other more efficiently, assuming not every person that needs a provider connects with a provider. Or you make each unit of supply more productive than before. So let’s just break those down for a moment, those four things. Just very logically, demand is not going to decrease. As the world’s population increases, as we age, the need for healthcare will grow. I think that is an inevitable force that will remain true until some eventuality where the world population shrinks. The second one. Grow more supply. Well, in this case, that’s building medical schools and educational institutions that create more providers each year. Those things are measured in decades. So, we should certainly be doing that. It’s just not going to be the solution for us in the next 30 to 50 years. So then that leaves us with the next two. The next two are, you either make supply and demand transact more efficiently, or you make each unit of supply more productive. Telehealth, classic example of bucket number one. Today, supply and demand doesn’t always transact efficiently because time and space separate us from the provider. They’re either sleeping or on vacation when we need to talk to them. There is a doctor, but he or she is a hundred miles away when the one next to me is busy. There’s all sorts of barriers that prevent us from finding that supply when we’re sick in that moment when we need it. Telehealth helps. I’m just giving it as an example of a technology that makes the transaction more efficient. The second bucket, how to make providers more productive. Well, you have all this buzz around technologies like AI. We’re very early in those days, but eventually, trust me, there will be not just algorithms that do some part of the doctor, because I think that’s still a bit more futuristic. There’s simple procedures you can start doing yourself. There’s so many connected devices that you could operate on your own person that doesn’t require a provider doing it to you like it used to 50 years ago. There’s so many testing kits you can order and just administer yourself at home that don’t require providers. So there will be technologies that enable us to do more and more things without a human physician or provider. And remote patient monitoring, classic example of a combination of devices, sensors, algorithms that supplement what physicians would do that enables them to proactively monitor a larger patient populations than they ever could if they invited people behind closed doors one-on-one. And I think the next five to 10 years are going to be characterized by those two innovations. There’s a macro economics idea I remember from back in high school called the production possibilities frontier. In a given society, there’s just a frontier that is the maximum possible output of any given unit of good or service that a country produces. The only thing that moves a production possibilities frontier out is the advancement of technology. It’s technology. So, if I had to, in this moment here for you define what is healthcare technology, healthcare technology is that which makes healthcare supply more productive, more efficient, and meet its demand more efficiently. And that’s the only thing that’s going to help us overcome the supply shortage.

[00:12:14] Marcus Osborne: There’s kind of two analogies. I had somebody tell me that, if you’re ever gonna use a sports analogy should use a non-sports analogy. So my sports analogy, the one that’s cliched is, is the primary care physician going to go from being the quarterback to the coach to maybe even the general manager, not even the field, the court. The other one, the non-sports one, was they’re going to go from being the actor to the director, to the producer. How do you kind of think about it? Do you see, as part of that, a changing role the function kind of shifts?

[00:12:43] Sean Mehra: I think those are good analogies. I’ll offer you a better one. In those analogies, you’re kind of abstracting out the role of the human being. They’re going to higher and higher levels of problem solving. And I think that is expected. As technology automates things, it usually automates the easiest stuff first. I think of the analogy of the bank teller. Originally the bank teller was your financial advisor. It was your check depositor, and your cash disperser, and all the other services that a bank required of. And you had to physically walk into the bank lobby, engage with the bank teller and then came ATM’s and, all of a sudden, they didn’t have to disperse cash. You had machines that could do that for you conveniently all over the place. So that job of the human went away. Then you had mobile apps that started helping you deposit your checks. So the role of the check depositing couldn’t happen. And then, eventually robo-advisors like these apps that help you invest your money started being done through apps as well. So what is left of the job of the bank teller? They’re not your director, your producer. They still fill a need. If you need 15, $20 bills, you can’t always specify that of an ATM machine exactly. So, when you need personalized care, when you need a level of stuff that hasn’t been automated, you go to the bank teller. And why am I giving this analogy? It’s because, look, in the future, it’s not that a provider is always going to be the director. Someone still needs to give you that vaccination in person. Someone needs to tend to that wound care. So it’s not always abstracted levels of direction. Sometimes it’s just the work that we have an automated yet that only a human can still do. But I think generally you’re correct. We will chip away at all of the things that is required of a human provider and automate more and more of it and make more and more of it self-serve, like repairing your car. But I don’t want to diminish the simple jobs that will still need to be done in person for quite some time. And so we will still need, not just our quarterbacks who are the all star primary care physicians that coordinate everything. You’ll still need your nurse assistants, your registered nurses, and all the different support functions that do jobs other than what a doctor does.

[00:14:52] Marcus Osborne: Yeah. And you may see, to your point, the rise of the community health worker and others who can sort plug in the roles. It’s actually interesting, and this ages me pretty significantly, but more than three decades ago, funny enough, my first job was as a customer service rep bank teller. And I can remember there was an individual who I worked near and he was convinced that people love their bank teller. In the bank I was in, people would come get in line just to transact with me. And he was convinced that they would never go away. And they haven’t gone away in some way. You’re right. But the role is very different, their function’s different. So I think what you’re describing does make a lot of sense there.

[00:15:34] Sean Mehra: Yeah, you see startups now like Rent a Nephew or Rent a Grandson. And it’s really just taking that role of a provider, which used to be your community friend and trusted social component of your life that is missing now. It’s gone missing and technology won’t be able to replace that for some time.

[00:15:54] Marcus Osborne: So I’m going to pivot a little bit, because I think there’s also an interesting story that, as I look at what you’ve done and I look at your founding of HealthTap, and I look at your history there. Maybe talk a little bit about that experience of, one, of the changing business model, and two, your role now, being CEO, but not starting that way. How did that all come about? What have you learned and how would that then sort of influence how you would advise others who might be thinking of trying to start their own thing?

[00:16:31] Sean Mehra: I appreciate you shining a light on this because I do believe that stories like mine and ours here at HealthTap are so different from what you see in the media. So often, prospective entrepreneurs are exposed to the straight line successes and, you know, the true outliers. But what you neglect are the 90% of instances where great companies were built, but they took a bit of a circuitous path and the team evolved quite a bit. The business model evolved quite a bit. And people don’t realize that happens way more often than people realize. So, in our case, it’s very interesting. There are some companies that are founded on the very cutting edge of what they do because of their time in history. And some that are usually iterating on existing competition. We were, in this case, in the former bucket, being founded as a virtual care company in 2010 was a very different time than if you were to found a virtual care company in 2021. And so at that time there was zero precedent. In fact, even the idea of connecting doctors and patients on the internet was met with resistance. Doctors were afraid of being sued for anything that resembled telemedicine. Okay. That just gives you a contrast of how far we’ve come versus where we began this company and therefore you can see that, things that you take for granted today. If you were starting a telehealth company, not a single person would doubt the merits of telehealth. Not a single person would doubt whether doctors would do it. Not a single person would be confused about how doctors are reimbursed. Like all of these most fundamental questions were questions we had to figure out answers for. They didn’t exist. No one starts a technology company like ours and says one of the first things I need to figure out in the first year is malpractice insurance on the internet for doctors and what they publish on a website. Absurd idea. My point is, when you’re early, there’s a lot of stuff to figure out. There’s a path you need to kind of blaze for others that will follow. And that’s just the trade-off of being early is you got to figure more stuff out. And for us, one of those things was business model. One of those things was path to market. We had this basic idea that going directly to consumers and making sure we have a direct relationship and we bring our doctors along with us was going to be the way that we were going to implement actually grassroots change in the industry. We began with that idea. It’s just that we didn’t know how the industry was going to shape up. We didn’t know what business models were going to prove to be successful. So we got lured by the same enticements that all the other entrepreneurs got lured by, which is B2B business. You do a deal with a couple of gigantic institutions with millions of lives and lo and behold, everything’s going to be better for you. We learned the hard way that’s not always the case either. You can sign a contract and have access to literally tens of millions of eligible lives like we did. But that doesn’t mean you built a great business or products that are changing healthcare. And it took us four or five years to learn that, that while this is interesting, we’re making a lot of money, we’re not fulfilling our original mission and vision of changing the way healthcare is done. We had at that time become a glorified dev shop with a platform that we were customizing for folks that had little incentive to change the way things worked. And so of course, our system that we had created to catalyze change was just being slowed down by her quote unquote customers. So, entrepreneurship is the art of problem solving and staying in the fight long enough, surviving long enough, till it all works. It’s never going to work the first time. It rarely works the first time. In our case, we had the humility and the agility to say, we tried a thing. It was different than the first thing. It didn’t work and we’re not going to dig our feet into it with pride and say, well, it is what it is. We’re going to make this work now because of the decision we made. We said, you know what, well, maybe it wasn’t the right decision. And we were not afraid to kind of blow up the strategy eight years into the company and say, let’s go back to our origins because we were onto something there. So in our case, we were a direct to consumer company, did a tremendous amount on the B2B side, learned that the grass wasn’t as green as we thought on the other side, and went back home to our roots as a direct to consumer company. And guess what, we’re seeing the success that I think we were always destined to see, because we were a group of people rallying around a vision of that grassroots change. And when your vision, your tactics and everything aligned with the group of people you have around the table, things really take off. In our case, we were also a little bit lucky. I will say that if we tried to do direct to consumer in 2015 and stayed the course, we’d have encountered a lot more resistance than trying at it again in 2021. So look, you never know, maybe it was a blessing in disguise that we took a bit of a detour for four or five years, hit the snooze button so that we could reenter the market when the market was primed for us. I think that’s what we did. So that’s our story with business model evolution, being one of the early companies, I can tell you about my role. But really, again, it boils down to just being fluid. It’s the journey, not the destination. I knew that there was a group of people here and an idea and a vision, as abstract as it was in 2010, that I wanted to be part of. The role I was feeling at the time as Chief Product Officer was the guy that was going to help build a lot of it. Did I want to found my own company? Did I want it to be my own idea? Absolutely. There’s an ego part of you that says, I want this to be my baby from day zero, from day negative one. But I realized that in my case at least, the idea of steering a ship, even if it’s seated by other folks, is more exciting to me than being the guy whose name is attached to the idea. Like there was the analogy of Eric Schmidt to Larry Page and Sergei. And I was okay if I was just going to be Eric Schmidt, I was going to take someone else’s invention that already had traction or approach to it, and I was going to be responsible for ushering it to scale and success. And with that approach, I had less ego what title I carried. And eventually it worked out in my favor that the last hole that the company needed most recently was in the CEO position. And now I have ultimate responsibility and control, but you know what? I also think I’m most ready for that position than I’ve ever been because I built it, I’ve done the strategy, I’ve done the operations, and now I can really focus on the next set of problems that are hard to solve. I’m not going up a hundred learning curves at once.

[00:23:11] Marcus Osborne: This was kind of a theme and you just kinda hit it again, which is, if you’re clear on what the problem is, continue every day to fight that problem. The solutions, that’s where you’ve got to be pragmatic, right? You’ve got to say, hey, we are not coming off this problem until we come up with a solution that addresses it. But you know, the solution that I have today may not address it the best. And so I think, what I’m hearing from you is that really has been your experience.

[00:23:40] Sean Mehra: I was going to say the only thing constant is change itself. That’s a truism, right? We hear that all the time. And so the problems you’re solving will change. And the solutions that work for those problems will change. So at any point, all you can say as a company is, I have some kind of problem solution fit at that point in time because any company and every company in the history of all of mankind has always had to reinvent itself eventually, because either the problem changes or the solution changes, because the market’s changing or at different scales, you unlock new problems. Regardless, all you can do at any moment in time is optimize for the now. Do I have the best problem solution fit that I could find? It’s called product market fit in business school, but it’s the same idea. At any given moment, am I optimizing the problem market fit knowing that whatever I have now is not going to last and next year is probably going to have to be different. And I think as long as you build an organization that is able to weather that change and catalyze that change in itself, you’re building a durable, sustainable company. It is those companies that get entrenched in the way things are that eventually fade away.

[00:24:45] Marcus Osborne: Well, we’re going to end on that one. So, Sean, thank you so much. Thanks so much for your time. Thanks for everything you’re doing at HealthTap, and thanks to the HealthTap team for letting us borrow you away. I want to also thank the Day Zero team for allowing us to do this. But again, it was such a pleasure connecting with you and good luck.

[00:25:05] Sean Mehra: I can’t wait to get the print edition of Marcus’s theses.

[00:25:09] Marcus Osborne: They’re coming soon.

[00:25:12] Sean Mehra: Thanks. Marcus. Have a great one. Thank you.