Healthcare in politics, week 11Read more...
The Collective Health CEO sat down with Ezra Roizen at Vator Splash Health
At Vator's second annual Splash Health event at the Kaiser Center in Oakland on Tuesday, Ali Diab, CEO of Collective Health, a health insurance solution was interviewed by Ezra Roizen, Managing Director of Vator Investment Club.
Collective Health does not replace health insurance but rather empowers employers to create health benefits that truly meet the needs of their people. It partners with employers to design and administer a set of health plans that allow employees to choose the best plan for their needs, to have a clear understanding of their benefits across medical, dental and vision, to access their health and claims information online and through a mobile app, and to have a premium, high-touch member service.
Employers work with Collective Health to design health plans that meet the needs of their populations by bringing together the best medical, dental, pharmacy and vision networks, in addition to other health benefit programs the employer has in place for their employees.
During the conversation, Roizen asked Diab how the company has changed since it raised its Series A round back in 2014 (the company has now raised $119 million).
"Perhaps not surprisingly, since we did so much research up front, it hasn't deviated all that much. The business that we're trying to build is, in some ways, not unlike a business like Tesla or SpaceX where there's a significant amount of fixed cost up front, but there's a pretty clear blueprint of what you want to accomplish, whether its building a car that's electric, or sending a payload to Mars, or to space, using a reuseable rocket," he said.
"One thing I'll say, that's a little tangential, but is related, is that one of the things that became clear to us in doing our research was that if we wanted to do something meaningful, it had to be something meaningful. It had to be something audacious and. In a Valley that tends to, at least lately among consumer startups, reward rapid iteration, and momentum, and things like that, it was a bit of a qualifier to find the right investors that we were going to look for. We were looking for investors who were willing to write a big check, and to have the conviction to stay the course for, potentially, a decade without the kind of momentum you get from a Facebook, or a Snapchat, or something you can easily see is trending."
Diab was introduced to Founder's Fund by one of his college fraternity brothers, and he called it "an immediate melding of the minds."
"Those are kinds of bets they like to make. It's a small, traditional venture capital, in the classical sense. They were like, 'Yeah, we get this going to take probably 10 years, we get that it's going to take hundreds of millions of dollars to do correctly, but we've been doing that with SpaceX and Stemcentrx and all these other companies that we backed, so we're happy with that kind of risk.' So a lesson to entrepreneurs is I think you have to match the kind of investor you're looking for with the kind of problem you're trying to prosecute."
Part of what made Collective Health special, though, was its founding team, which consisted of Diab; Rajaie Batniji, a physician with a PhD, who is now the company's Chief Health Officer; Preston Tollinger, the company's CTO, who was a serial entrepreneur; and Kent Keirsey, it's Chief Legal Officer, who was an Army Ranger, and platoon commander, in Iraq, "so someone who really knows how to manage risk, understands the law and is not daunted by scary environments."
"That was the core founding team, and I felt like that represented the vectors that we needed. It represented somebody around passion, with an eye for design and product, which was me. Somebody who understood the subject matter, in terms of healthcare and policy, and implications for the system, and that was Rajaie. Somebody who understood the law, and the need to be very compliant and follow regulations to the letter of the law. And somebody who was technically very proficient, somebody who had written algorithms to send Mars Rovers out into space and drive autonomously on the surface of Mars. So we had a strong founding team, and that's one of things that gave our early investors comfort, that 'These guys don't yet have a product, if anyone can build these guys can.'"
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