Julie Yoo 0:28
Hi, everyone. I’m Julie Yoo, one of the general partners at Andreessen Horowitz focused on digital health and health tech investing. And it is my pleasure today to be joined by Chris Severn, who is currently the CEO and co-founder of Turquoise Health. So ji, Chris. Welcome.

Chris Severn 0:42
Hi, Julie. Thanks for having me. Nice to see you again.

Julie Yoo 0:46
Same here. So I’m going to start with a super basic question, or maybe not so basic. But who is Chris Severn? Tell us about yourself and what led you to the path of starting Turquoise Health?

Chris Severn 0:56
Yeah, so that’s a great question. My whole background is in this niche, sleepy part of healthcare called hospital revenue cycle. And so after college, I was looking to work at a consulting company, as many business grads look to do. And I fell into this healthcare niche called hospital revenue cycle, did it for five or six years, had the inkling that there were some opportunities to work in revenue cycle on my own and start my own thing. And little did I know it’s hard to start something on your own. So I synced up with Adam Geitgey, current co-founder and software guru extraordinary of Turquoise, and we started Turquoise last year, and it’s been a busy year. And here we are.

Julie Yoo 1:38
You left that a minor detail, which is if you were to search for Chris Severn on the internet, you would find a video of you being the commencement speaker at your UC Berkeley graduation, that talks about the fact that you were also a stand up comedian. Tell us about that.

Chris Severn 1:52
I’ve had a lot of side careers in my 20s, like I tried a lot of different things starting with the commencement speech at Berkeley. Go Bears. And then it’s kind of funny because you go straight from graduating college feeling like you’re the top of the world to being lowest on the totem pole at a large org. And then after leaving the consulting firm I was at, which is Cloudmed, formerly Triage Consulting, I tried a bunch of things and a lot of fledgling entrepreneurial adventures that I don’t even know what turns up when you Google that on the internet. And then, you know, I feel like I failed forward. And here we are.

Julie Yoo 2:24
Apparently, you were also the top salesperson at the Sports Authority, one of your summer jobs. So highly impressive sales skills there. So now you’ve started Turquoise Health, tell us just a one liner on what Turquoise Health is and what you all do and provide to the market.

Chris Severn 2:38
Yeah, so Turquoise is in the price transparency business. So before January 1 of this year, it was impossible to know the price of healthcare, especially hospital care, until a federal law permitted the prices of healthcare to be posted online. And so Turquoise is building towards a future where we have savvy consumers of health care and they know the full value proposition in advance of choosing where to get healthcare services. And so we started with building out some data pipelines and sharing that data to the world this year. We’re building some solutions that help providers and payers negotiate the new cost of care.

Julie Yoo 3:18
So this whole concept of price transparency is one that’s been making the headlines for the last couple of years. It’s obviously been a mainstream topic, largely driven by regulatory change and policies that have been going into place. Is this an idea that you had many, many years ago that you thought was inevitable? Or, you know, how much were you influenced by all the changes that were happening in the macro environment within healthcare?

Chris Severn 3:41
Yeah, it’s really odd because working in hospital revenue cycle, really, it’s the most boring thing to talk about at parties, like people would ask me in my 20s, like, what do you do? I tried to say, you know, I find hospital underpayments, I mine hospital claims, and people’s eyes glaze over. But in the know, you see these contracts, and you see what BlueCross is paying XYZ health system, you see how much money this is. And as a 23 year old analyst, you’re like, this is huge. This is a lot of money flowing through these scanned PDF contracts that are secret that I only have access to because I work for this consulting firm. And fast forward, Adam and I were doing some machine learning for hospital revenue cycle under a different company, and this law hit that required hospitals to publish their standard charges, which in 2019, the term was “charge master” so the hospital just published their list price. And that is the price that hospitals charge but really nobody pays unless you’re a foreign dignitary or a very rich uninsured person and you know, they smell blood in the water. And Adam and I went through this side project of aggregating all these hospital charge masters. We made this thing called a national charge master database in 2019. I don’t really remember why. We know that nobody really pays list prices. But it was just fun. And we didn’t do much with it. And then in late 2019, they updated the rule to say, hey, our definition of standard charges was too limiting and we want hospitals to publish more. And so then they defined under the Trump administration that standard charges means the negotiated rate for all items and services at a hospital. And that’s when Adam and I just said, whoa, whoa, this is huge, because if this is true, all of these PDFs that we’re looking at, will, in effect become public. And we know how much of the cost of care flows through these negotiated rates. So that’s when the price transparency path just fell illuminated in front of us.

Julie Yoo 5:42
And you guys clearly leaned into that, and essentially pivoted from being sort of a small consulting shop doing probably revenue driven growth, and you know, not raising outside capital to all of a sudden being a fast growth VC-backed company. And in full disclosure, I should have said earlier that we are very happy investors in Turquoise Health here at Andreessen.

Chris Severn 6:00
You are?

Julie Yoo 6:03
Check your cap table. I always used to say to my employees when I was a founder, that, you know, we should all recognize that the percentage of companies that get started in any given year that are actually VC backed is a very, very, very small percentage, right, it’s single digit percentage of the overall business creation opportunity within the US on an annual basis. And yet, because we’re sort of in the zeitgeist, seeing all these, you know, hot companies being covered by media, you tend to think that that’s the end all be all way for companies to get started. And so you made that transition from one to the other. But you know, presumably, there probably was a path for you to remain, you know, non venture backed and, you know, continue to kind of do what you were doing. What was kind of your decision calculus in making that switch?

Chris Severn 6:42
Yeah, that’s a fantastic question. And it’s still really fresh. That’s why this podcast is kind of fun, because we were having these conversations a year ago. So yes, Adam and I had what you would call like a lifestyle business, sort of a consulting business, building machine learning workflows for hospital revenue cycle. We were always looking for that platform play of like, hey, let’s scale something rather than selling our hourly services. And Adam and I, first of all, really, really, backing up a bit, we enjoy working with one another. He and I met here in San Diego. We went to lunch like 200 days in 2017 before we ever talked about work. And so Adam and I had that comfort working together before we started working on our cost, or former company. And there was this moment where, you know, Adam’s so prolific at building software that we had some value in our initial price transparency play last year, helping hospitals comply with the rule, the public Turquoise Health website, where it crossed our mind, like, hey, there’s a small version of this where we build a bit of the infrastructure of price transparency, and maybe we hire a few employees, have some fun, and maybe we get acquired, is, you know, everybody’s like, end all be all at that stage. So the first pitch was always Adam. It was like, Adam, you know, he’s a little bit older than me. So I’m, like, young, ready to just really push here. And he’s had a career, a really successful career. And so my first pitch was, hey, can I convince you that there’s enough opportunity here, and enough good to be done here, that this is worth doubling down on. And so about a year ago, we were having those conversations. Life was pretty simple when it was just the two of us and a few other folks at the consulting company, I think, ultimately, you just started having so much fun. And then you start realizing that we really chose good timing for this price transparency business, and a lot of the legislation is going our way that, you know, either I eventually weathered him down, or he saw that, hey, this is really fun. We have some potential here. Let’s see where it goes. So eventually, I think he was the first person that convinced and then we really went for it.

Julie Yoo 8:59
Good that he was the first since he was your co-founder.

Chris Severn 9:01
Yes.

Julie Yoo 9:01
So, well done there. So it’s not like it was a combination of sort of intrinsic feeling on your part that, you know, this was something that was worth going big on. But you also have the benefit of the pull from the market to show that, you know, there was the opportunity to actually deploy capital in a much more aggressive way against the business opportunity, which is, you know, kind of more than you could ask for. Amidst all this, you also had this crazy backdrop of the pandemic. And you guys, I believe, actually started the company during the pandemic, officially with it, is that true?

Chris Severn 9:01
Yes.

Julie Yoo 9:03
What was that like? And how much did that factor into your conversations? And, you know, how did that either help or hinder your ability to explore this potential path?

Chris Severn 9:40
Yeah, I mean, looking back on the last year, the pandemic really played to our advantage. So first of all, you know, disclosure, you know, Adam is from San Diego. He lives in London. And so, Adam and I, for the last two years, we’re really used to collaborating across the ocean and that means we’re really good at having regular check ins communicating over Slack, documenting things. We felt very organized for a small company before Turquoise. And so we already had this like small remote culture that was just ready to start Turquoise during the pandemic. As we got into rolling out like the core of Turquoise, so early 2021, we were able to scale up pretty fast because we were able to use talent that was remote. And we were also able to have customer calls and investor calls just all over Zoom. So I think I asked you guys in the Spring, I was like, would this have typically, what I’ve like flown up and, you know, sat across from you at a table pre-2021? And I think the answer sometimes is yes. And so to us, it allowed us to get going much faster and maybe have customer conversations with legitimate customers way sooner than, you know, they would have let us in the door if we were just a couple people flying out to meet them at their health system.

Julie Yoo 11:06
Yeah. So to that point, you know, San Diego, there’s actually I think, a pretty robust biotech, you know, scene in terms of startup companies, but not necessarily in the top three list of companies you think about for, you know, again, VC-backed tech companies. How did you even make your way into the network? How did you find the first set of investors that you wanted to talk with? Was there a local network that you tapped into? And what were some of the tactics that you implemented to actually, you know, get plugged in?

Chris Severn 11:30
This is just so interesting to look back on, because I’ve never, we’ve talked about this, but like, I’ve never personally had this in my roadmap that I wanted to start a large VC backed company. I knew I wanted to start something. Adam and I just always feel a little creative and we do have that entrepreneurial vibe, but not the fundraising vibe. And so for me, this time a year ago, or maybe 14 months ago, I went to a new and so I knew some folks in the revenue cycle world that have had a career and do some angel investing. And I created a deck that felt totally, it was literally, you know, drawn at first. And then I hired a designer to like, turn my drawings into a deck. And I just pitched folks that maybe would do some angel investing. And then that traveled around a bit. And then we did a small pre-seed fundraise. And so that was my first foray into like, who do I know? There were a few folks in San Diego that I talked to, but at the time, COVID was just, you know, anyone across the US that would take my call. There were a few times where our angel pitch like, bled into the traditional investor world. And it was just those natural connections of like, hey, you know, you should talk to, you know, Jay at a16z, or, hey, I know, this friend that works at this VC, where we started actually being able to run this by traditional institutional investors. And so it was very natural and it was pretty much I started like with the node that I knew, and then I kept pulling on threads until I got more calls.

Julie Yoo 13:02
Amazing. When you started the process, if you can recall, what were some of your initial criteria that you think you would have articulated at the time of like what you were looking for in your investor? And how did that morph as you got more and more meetings?

Chris Severn 13:15
This was an interesting one, and this is where Adam would be, it’d be interesting to hear his perspective because I pitched everything with like a double bottom line. So I’d say, hey, we want to do this price transparency thing. We want to be loyal to the economics, the future economics of health care. That means that we care about the prices of healthcare going down. We care about simplification of how rates are quoted, and we’ll say no to things. So we’ll say no to a customer who wants us to do this. We’ll say no to folks that want us to support the status quo. And I went into those investor conversations with that as my, like, boundaries, I guess. And so there were a few investors that said, hey, sounds like you guys really know this underpayment space and the mining of hospital claims to find payment anomalies. Can you just do that? And it was tempting, because they would say, we’ll give you money if you just do that. But this price transparency thing, that law will never last or that’ll never go through. We were raising last year, when the law hadn’t officially gotten through. And so I think we said no to a few that were trying to pull us in this old direction where we already were at. That’s when it was really great to have Adam on my team there to be like, Okay, we’re committed to this price transparency thing, because I don’t think in a year, we’d be able to sleep at night if we just try to capitalize off of what we’ve already been doing.

Julie Yoo 14:37
Yep. Yeah, that’s super important,I think, and something that a lot of first time founders probably sort of underappreciate just to what degree you should and need to have conviction to go with investors who truly believe in your mission and also trust that even if your plans change, that, you know, they’ll stick by you versus sort of overlay their own point of view on what you should be doing. That’s great that you guys stuck to your guns and clearly it’s worked out. Let’s double click now on the business and what it’s been like to build Turquoise. One of the interesting aspects of how you guys are positioning yourselves in the market, and really hard aspects I would imagine, is you’re kind of like the Switzerland for payer, provider, government, patient. Historically, one of the reasons why price transparency has been such a sort of third rail issue is because of the power dynamics and the information asymmetry between all those players. And you know, here, Turquoise comes along and says, you know what, we’re just going to sit in the middle, shine a light on all of this, and essentially almost broker relationships in an independent way between all these different stakeholders. That’s got to be really, really hard to do. And I’m hard pressed to even think of any examples where a player has been able to successfully execute that without ultimately ending up looking like an evil middleman in some way, shape, or form. What does that been like? Is it that bad? You know, are there things that you think have fundamentally changed in the market in the last couple of years that actually make it possible to do that today,

Chris Severn 15:59
What we’ve seen with this pricing data is that it’s inevitable. It’s coming onto the market, it’s going to be publicly distributed. And what we can help with providers and payers is get ahead of it, and say, hey, we’ll at least be a mirror and show you your own reflection in the market. We can’t alter the data or tell a different narrative than what the data is saying, aside from maybe if you you messed up, and you actually have typos in the data, or you didn’t calculate it, right, we could help you fix those. And so as long as we’re coming to providers with that level of honesty and, you know, we’re selling to providers and payers, so if we’re going to providers and payers with that level of honesty, they generally get it now, because they’ve gone through the stages of denial with this price transparency rule that they’re like, alright, show us the data. And it feels a little bit like, this analogy I just thought of is when I would go on like backpacking trips for three days. And I haven’t seen myself in the mirror, and then you get in a car and pull the thing down, and you’re like, oh, my gosh, that’s what it looked like. There’s a little bit of that shock value to providers that have never seen their data against other providers in their region, or they’ve never even like seen their own rates really displayed cleanly in front of them. And so we’ve just been very honest with our customers that you can succeed in a price transparent market. But first, you’ve got to accept the narrative of how it is right now. And then we also meet them where they’re at. And because we offer compliance solutions and we help them post their data, we help them with patient estimate solutions, we can also acknowledge that this is hard. It’s not very easy to represent the negotiated rates, cash rates, and list prices of all items and services in your health system. It’s very difficult. And so as long as we don’t come to providers and pretend like we know better than them, or that this is easy and they’re dropping the ball, it’s generally been receptive. The other thing is that providers and payers adapt software quicker when there’s a compliance and regulatory need. And so, optics aside, or discomfort aside, most of our customers have come to us accepting that this just has to happen.

Julie Yoo 18:06
You’ve mentioned a couple times, Chris, along that vein that, you know, you guys are very principled about, you know, who you choose to work with, how you choose to position yourself, how you think about your value proposition. I presume that you’ve probably had to say no to some people on the basis of a misalignment of why they want to partner with you and what they would use the data for. Has that been the case? What’s your general philosophy on, you know, early customer traction and, you know, having the conviction to say no, because when you’re a startup, you know, the one thing you’re desperate for is commercial business and logos. And yet, you know, you have to make these hard decisions sometimes for the long run. So how have you approached that and what are some examples that you can share of hard decisions that you’ve had to make along those lines?

Chris Severn 18:46
There are some nefarious pricing schemes in healthcare and we’ve had, of course not naming names, we’ve had some organizations come to us that are very interested in how to uphold the status quo of all the complex algebra that supports current managed care negotiations. We’ve also had some folks come to us, some large orgs that are like, we will not contribute to the ecosystem. We are not publishing our data, but we want to learn about our competitive environment. So it’s basically like, you know, me being a lurker on Yelp, reading restaurant reviews, but never contributing a review. And so those are times that we have pause and we might not prioritize that prospect or customer, or we might just, you know, be blunt with them and say, hey, we actually really support price transparency. We think it’s a good thing for patients. And so, here’s what we would do if we were your vendor for this. But here’s what we would not do. I think we’ve lost some customers over that for sure. What we’re also trying to be cognizant of is who will succeed in a price transparent environment. And I have theories that it’s you know, payers that have clear benefit design, and clear cost share for patients. And it’s providers who have a clear value prop. So whether it’s access, quality, price, brand, or some combination of those four things, we do evaluate our customers and say, hey, you know, if you are a affordable hospital with high quality and you’re playing ball with price transparency, we really want to work with you. If you’re obfuscating your data or you’re actively fighting the price transparency law in courts, you’re probably not the right fit for us. It has been a bit of a customer segmentation journey this year to figure out who should be our flagship customers in year one.

Julie Yoo 20:37
Yeah, well good for you for having that point of view and actually articulating, you know, a prioritization framework because I think the thing that we often hear perhaps the most frequently amongst early stage company employees is that hunger and desire for transparency and clarity on how to balance the millions of opportunities that, typically, companies like you have in front of them. So having that top down, explicit point of view is probably super helpful. And to that point, you know, curious to pivot into the talent side of things and, you know, what it’s been like to build a company from two lenses. One is, you know, during the pandemic, how has hiring changed in terms of your approach, how you think about geography, how you think about general policies that you’ve implemented on your team, to embrace and lean into this new normal and the pandemic? And then also, you know, once you announced that you had raised this venture capital, how did that also change the nature of, you know, folks reaching out to you? Did it make it super easy for you guys to attract talent or perhaps even harder, because now, you know, you’re now competing with a different class of companies? From those two lenses, tell us more about how you’ve approached building your org.

Chris Severn 21:43
The geographic side of this, because Adam and I have always been distributed, from day one, we just knew, you know, this will probably be a distributed company. And now we’ve hired in eight or nine states. And if you’re listening to this and you’re looking for a job, and you’re in Sioux Falls, South Dakota, you know, you wouldn’t be our first employee from Sioux Falls, South Dakota. And so we’re really interested now to attract talent from all across the US and abroad. We have, as an org, really valued face to face in person time, COVID permitting. Because we’re still small enough, we’ve done quarterly on sites where we all get together in one place. And that’s been really helpful for team building. Post-fundraising, we were really excited to announce our fundraising because, in the beginning, before you’ve really announced any round, it’s hard to tell someone’s side project that they might work on part time, or they’re a solo founder and there’s no substance to it from something that will have staying power in healthcare. And so once we announced funding, I think to our customers, it announced that we will be here for, you know, years to come. And then to folks that were considering applying, they really want that early stage startup vibe, but they don’t want day one. They don’t want the no-funding company that could go bankrupt in six months. And so the moment that we announced funding, recruiting became a lot easier. I wouldn’t say that it’s easy by any means. There’s a high caliber of health tech startups right now that I respect, and we’re all sort of fighting for the same talent pool. But for us, we’ve been really true to this mission of empowering consumers of healthcare. And, you know, for engineers, and designers, and product people, it’s like, this is what we’re doing. This is really easy to talk about, with your parents and your friends that, in three or four years when someone can prepay for their elective surgery without thinking about it, that you had a hand in that. And so I think that’s been helpful for us. We hired a people person, I think, employee number eight, which was also super helpful. And now, you know, we’re just trying to grow the team just like everybody else.

Julie Yoo 23:55
Yeah, you must have learned a ton in a very short period of time just moving as quickly as you guys have been moving and growing as quickly as you’ve been growing. How do you as a leader, like, find time to reflect on those learnings because I always find you to be extremely thoughtful, Chris, when we have conversations about what’s going well, it’s not going well, etc. I don’t remember ever having time to think about myself when I was building my company in that thoughtful fashion, which I think was to a detriment, because it is always so valuable to kind of sit back and make sure that you’re sort of reviewing the right things and taking the right learnings. What’s that been like for you? What’s your overall kind of approach and philosophy to take care of yourself as a leader that you’ve learned or you know, perhaps brought along with you from your past life?

Chris Severn 24:35
Yeah. So first of all, I took a vacation three weeks ago, for you know, a week went to Hawaii. And it was wonderful. And I think a lot of early stage startup founders might not let themselves take the foot off the gas in that first year or two. I’ve noticed I truly perform better when I’m balanced and when I’m sleeping right. And so, there are things that I still do to maintain my internal homeostasis in the past year that I haven’t given up, starting a company. The other thing is, you know, I got engaged in January. I live with my fiancee and then Adam and I have really been very honest with one another ever since we started working together three or four years ago. And so I’ve got my daily, you know, combined with other folks at Turquoise and friends, I’ve got my daily sort of support team that keeps me in check and keeps me balanced. And also, they remind me that Turquoise is really important, but there’s a lot of other important things going on the pandemic also put that in perspective. And so, a healthy dose of perspective, has really gotten me through this year, which I wouldn’t say this year has been easy, but without those sort of support folks in my life, it would be much harder. So that answers your question a little bit. And then the other thing is I do make time to reflect on myself. I think COVID generally slowed my life down as well, like, I’m still not traveling that much. My commute is from the living room to here. And so I have time for walks. I have time for weekends, to some extent. And so there’s an alternate world where starting a startup, I had to travel a ton and just be commuting and all that, that maybe I wouldn’t have had time to stay sane.

Julie Yoo 26:24
What advice, Chris, would you give to other folks who are thinking about starting companies and I would say expressly considering whether or not they should raise venture capital?

Chris Severn 26:33
The first caveat is that I’ve been doing this for a little over a year. Like I mentioned to you, I don’t want to, you know, wax philosophical like I know exactly how to do all this, but I do have some pointers from the past year. The first is that, you know, for a long time, I tried to dip my toe in the water with starting a business without fully committing, and all the good stuff at Turquoise has happened once Adam and I really went all in on it. And so you know, if you find yourself in a situation where you’re thinking about starting a company, and you vetted the idea, again, several people, and it’s not just your own personal echo chamber that thinks it’s a good idea, and it’s time to start, maybe you leave your job, or you’ve saved up some money, or maybe you haven’t, I would just dive fully in, rather than trying to moonlight on the side, because then you vet your experiment much faster and you can move on from a failure much faster if you just dive in. So that’s the first piece of advice. The second, raising VC money, I truly only did it when we were really convinced to the market size in the opportunity. If you’re not totally convinced of your ability to execute, and the market size, it might not be a VC backed endeavor. And maybe the VC will notice as well. But I know it’s a very founder friendly market right now. So there are some times where the founder may be able to convince the VC that the market’s bigger than it is. And then you might, I would assume, get in over your skis, as you say, and wish that you would stay at a 4 to 5% lifestyle business. And so we only raised money once we were fully convinced of the size of the market, the opportunity, and our ability to execute.

Julie Yoo 28:17
That’s a great point and something that, you know, certainly as an ex founder myself, I always try to make sure that the people pitching us understand what it means to get on the hamster wheel, so to speak, with a firm of our scale and size and what expectations come with that because I think, again, as you just stated, it’s something that you know, perhaps is underappreciated what those expectations look like once you get on board. So…

Chris Severn 28:37
Yeah, and one other thing I’d add as well is that, if I had tried to start this five years ago, I don’t think I knew myself or I was strong enough with my subject matter expertise, like revenue cycle, to start a business like this, as much as I would have wanted to. And then Adam is just an amazing software engineer. So he’s probably always had the chops to do this. But I would also, you know, look within yourself and be like, hey, am I ready? Am I an expert in my field, where I can really command attention for my idea and get something going. And when I hire employees, they trust my decisions. And so maybe you’re just super convincing. You don’t need the subject matter expertise. But I found that that really helped.

Julie Yoo 29:17
Excellent advice. Well Chris, it’s a shame that you and I didn’t meet at a cocktail party earlier because I love talking about revenue cycle at cocktail parties. So, but thanks so much for spending the time with us here. One last very, very important question. Where does the name Turquoise Health come from?

Chris Severn 29:32
Yeah, so Turquoise is a street that my fiance lived on when we came up with Turquoise and it ends in San Diego at the water, and the water is very, it’s the clearest water in San Diego. You can see the bottom, so I always pictured the ocean, seeing the bottom, transparency, prices. It happens that it’s not the easiest word to spell and then someone let us know well after the founding of Turquoise that it’s an opaque mineral. And so, you know, transparency of the gem is not there. But we like to say we’re removing opacity from healthcare. So yeah, that’s where Turquoise came from.

Julie Yoo 30:08
Very poetic and profound. Excellent.

Chris Severn 30:12
Not a mineralogist.

Julie Yoo 30:13
Yeah, that’s awesome. Well, thanks again so much, Chris, for sharing your insights. I’m sure they’ll be super valuable to the founders out there who are listening.

Chris Severn 30:20
Of course, thanks for chatting. Until next time.