When Collective Health was young: the early years

Steven Loeb · October 21, 2019 · Short URL: https://vator.tv/n/4ef7

The company grew from 150 members to 30,000 in one year

Our when they were young series is a look back at the modest days of startups, what traction they had in their first few years, and how they evolved. In the end, we hope to provide a glimpse into what great startups looked like in their first few years.

Stories like these are always well received because it reminds us that anyone, regardless of pedigree and environment, can rise above the noise and have great influence. They show us the value of being resilient, persistent, and committed. If we can follow their footsteps, maybe we too can have similar success.

This segment is on Collective Health.

(Note: Vator will be holding its latest healthcare salon, called The Future of Health Insurance, on Nov. 14. Get tickets here!)

— Collective Health's First Year —

Founders: Ali Diab, who becomes CEO; Rajaie Batniji, who becomes Chief Health Officer; Preston Tollinger, who becomes Chief Technology Officer; Kent Keirsey, who becomes Chief Legal Officer

"I felt like that represented the vectors that we needed. It represented somebody who had passion and an eye for design and product, which was me. Somebody who understood the subject matter, in terms of healthcare and policy, and the implications for the system in Rajaie. Somebody who understood the law, and the need to be very compliant and follow regulations to the letter of the law. And thensomebody who was technically very proficient, somebody who had written algorithms to send Mars Rovers out into space and to autonomously driveon the surface of Mars. So, we had a very sort of strong founding team, and I think that's one of things that gave our early investors comfort; that, 'Even though these guys don't yet have a product, if anyone can build it these guys can'," Diab says in an interview at Vator Splash Health in 2016.

Founded: October 2013

Initial company description: Collective Health is founded in 2013 after Diab falls ill with a life threatening intestinal illness. The illness is painful, he writes in a blog post, but dealing with his insurance company is even worse.

"In addition to dealing with a difficult recovery, I faced the agony of battling with a health insurer that did not want to pay my massive hospital and surgical bill. My insurer claimed some of my surgical and hospital charges were experimental or the result of physician error, leaving me holding the bag for a shockingly large portion of the bill," Diab writes.

He calls Batniji, a physician, to ask for advice. Together they decide to take on the existing insurance space and create a solution that actually worked.

"After several long bike rides and early morning coffees before his rounds at Stanford Hospital, Rajaie and I decided to dedicate ourselves to fixing how Americans pay for health care. As we began our journey, we discovered how much we needed to learn to deliver on our vision of a transparent health care system. At the same time, we intentionally chose to neglect the status quo and to ask questions that people from within the industry don’t seem to want to ask."

Personnel, at two months from founding: In December 2013, both Tollinger and Keirsey join Collective Health. 

First funding, at three months from founding: In January 2014, Collective Health raises a $6 million Series A from Signatures Capital, Redpoint, RRE Ventures, New Enterprise Associates, Maverick Ventures, Lee Linden, GV, Founders Fund, Formation 8 and Citizen.VC.

Diab is introduced to Founders Fund by one of his college fraternity brothers. In 2016 he calls the meeting "an immediate melding of the minds because those are kinds of bets they like to make."

"It's a very sort of traditional venture capital, in the classical sense. They were like, 'Yeah, we get this is going to take probably 10 years, we get that it's probably 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've backed, so we're happy with that kind of risk.' So, it's a bit of a lesson to entrepreneurs: I think you have to match the kind of investor that you're looking for with the kind of problem that you're trying to prosecute."

Traction, at three months from founding: In January 2014, Collective Health signs Datasafe as its first client

Launch, at 10 months from founding: In August 2014, Collective Health officially comes out of stealth.

"Well, it’s not practical today for a smaller company to self-insure. There is a lot of workflow, quite a lot of human-resources work and cost. You must contract with a health-benefit consulting company, and this can cost hundreds of thousands of dollars. It’s a significant speed bump for smaller businesses. What we are doing is using software on this consulting aspect, which will make it accessible to many more people. Consultants charge you an arm and a leg to build a model of your risk. Our software models risk and performs analysis. It helps people set up a plan and budget for it. It handles customer support and claims administration," Diab says in an interview with the Wall Street Journal.

Traction, at 10 months from founding: In August 2014, Collective Health is working with five employers. 

 

— Collective Health's Second Year —

Product, at one year and two months from founding, four month from launch: In December 2014, Collective Health launches its Member Portal.  

Second funding, at one year and five months from founding; seven months from launch: In March 2015, Collective Health raises a $38 million Series B from New Enterprise Associates and Founder’s Fund, Formation 8, Redpoint Ventures, RRE Ventures, Subtraction Capital and Rock Health. The round values the company at $107 million. 

"To our customers, the fact that we’ve raised as much money as we have at our stage almost matters less than who we’ve raised the money from. Our customers want to know that we are going to be around for a while. Equally, they want to know that we intend to remain an independent company. Who a company’s financial backers are can be insightful in that regard," Diab writes in a blog post.  

"With lead investors like Founders Fund and NEA — investors behind independent, industry-changing companies like Palantir, Salesforce, SpaceX and Workday — our customers can take comfort in knowing that our intent is to build a thriving company that will be both around and independent for a long time."

 

— Collective Health's Third Year —

Third funding, at two years from founding, one year and two months from launch: In October 2015, Collective Health raises an $81 million Series C from Google Ventures, NEA, Founders Fund, Maverick Capital, Redpoint Ventures and RRE Ventures.

"While we were drawn to the product and market, as always, our primary motivation is the people. Founders, Ali Diab and Rajaie Batniji, have built a remarkable team bringing to together data scientists, designers, software architects, healthcare experts, and actuaries uniquely suited to take on the task of building a better health plan. It is a bold idea and we love partnering with teams with huge ambitions ready to face whatever challenges may come. We are thrilled to partner with them on their journey and look forward to helping discover how good a health plan can be," Redpoint's Scott Raney writes in a blog post

Expansion, at two years from founding, one year and two months from launch: In October 2015, Collective Health announces that it will begin to offers its employer health insurance solution to companies nationwide starting in 2016, expanding beyond California for the first time.

Product, at two years and two months from founding, one year and four months from launch: In December 2015, Collective Health launches its iOS app.

Traction, at two years and two months from founding, one year and four months from launch: By the end of 2015, Collective Health has 30,000 members, growing from 150 at the start of the year. 

"It’s hard to believe that in the two years since we founded Collective Health, our mighty team has come so far in such a short time. This is especially impressive when you consider the scale of what we’re undertaking: applying technology and design to transform the healthcare experience from one that is daunting and frustrating, to one that is simple, straightforward and human," the company writes in a blog post. 

Expansion, at two years and 11 months from founding, two years and one month from launch: In September 2016, Collective Health opens its headquarters in San Francisco

Cutting the ribbon at 85 Bluxome

 

— Collective Health's Fourth Year —

Traction, at three years and four months from founding, two years and five months from launch: In January 2017, Collective Health has 15 clients and 77,000 members.

Personnel, at three years and five months from founding, two years and six months from launch: In February 2017, Tollinger leaves Collective Health

Traction, at three years and five months from founding; two years and seven months from launch: In March 2017, Collective Health reveals it has grown its membership 500x since securing its first client in January 2014. 

In just one year, Collective Health has doubled its membership to 70,000 employees and dependents across 15 employer clients, including Counsyl, Cloudera, CrossFit, Red Bull, Jazz Pharmaceuticals and Trace3.

Product, at three years and five months from founding; two years and seven months from launch: In March 2017, Collective Health launches CareX, which it describes as its "new patient identification and engagement product that uses artificial intelligence (AI) to help members navigate the many different treatment options they have available to them," into beta.

The product has been in development for two years and already shows a 2x increase in program engagement in the over 15,000 members who have used it so far. 

Personnel, at three years and 11 months from founding, three years and one month from launch: In September 2017, Keirsey leaves Collective Health

 

— Collective Health's Fifth Year —

Product, at four years and one month from founding; three years and three months from launch: In November 2017, Collective Health unveils new mobile application features: out-of-network claims submission, health funds management, and cost and quality guidance.

“While mobile access has simplified people’s lives in almost every way, it’s woefully behind in health benefits. At Collective Health, we’re committed to realizing mobile’s promise in healthcare—creating the industry’s best apps is a cornerstone of our product development and member support strategy,” Diab says in a statement. “Our apps take fullest advantage of the latest mobile device technologies—including camera, location, messaging, payment, and visual identification technologies—to make the experience of navigating an otherwise confusing and complex healthcare system as effortless as possible.”

Accolades, at four years and two months from founding; three years and four months from launch: In December 2017, Collective Health is chosen by Rock Health as the Best Digital Health Company to Work For. 

"Collective Health helps companies get more out of their healthcare investment while taking better care of their employees. The team is committed to creating a diverse, inclusive culture, allowing employees to grow their careers in an environment that promotes health and wellness and provides benefits such as flexible work schedules and generous family leave," Rock Health writes. 

Traction, at four years and three months from founding; three years and five months from launch: By January 2018, Collective Health has 30 enterprise clients, and is covering 120,000 members.

Collective Health members are seeing emergency room visits decrease by 5 percent, urgent care increase by 4 percent, specialists visits and advanced imaging decrease by 8 and 12 percent, respectively, and behavioral health services increase by 13 percent.

Fourth funding, at four years and four months from founding; three years and six months from launch: In February 2018, Collective Health raises a $110 million Series D round of funding from NEA, Founders Fund, GV, Maverick Ventures, Sun Life Financial and Mubadala Ventures.

Product, at four years and five months from founding; three years and seven months from launch: In March 2018, Collective Health launches its Partner Program, "helping employers harness the power of emerging digital health offerings to deliver the best care options to their employees. The program makes it easier and faster for employers to choose, implement, and manage the explosion of targeted care solutions increasingly used to complement traditional health plans."

The first delivery of the Program packages offerings from founding members, including Omada, Lyra, Doctor on Demand, and Ovia Health.

Expansion, at four years and six months from founding; three years and eight months from launch: In April 2018, Collective Health announces that it will opens its second office in Chicago

"When you think of Chicago, you might think of deep dish pizza, the Cubs (okay, the White Sox too), or Navy Pier, but Chicago also has rich pool of technical talent. In fact, Illinois is the second largest producer of computer science graduates in the United States. We evaluated multiple locations for our second office, but that concentration of talent, the existing, robust cadre of companies focused on healthcare and technology, and the City of Chicago’s support of their growing tech community is why we ultimately chose the city for our new office," the company writes in a blog post

Personnel, at four years and 10 months from founding, four years from launch: In August 2018, ex-GE CEO Jeff Immelt becomes a member of the board at Collective Health, joining Mohamad Makhzoumi of NEA and Scott Nolan of Founders Fund.

"I have decided to spend the next phase of my career working on important reform in healthcare, working closely with disruptors and entrepreneurs. This includes companies like Collective Health, a software driven Workforce Health Management System, that have given strategic employers a new weapon in managing the cost and outcome balance in employee healthcare. I was so taken with their approach and success I joined as a Board member, and am looking forward to seeing many of my peers in the Fortune 100 adopt the company and drive change in the system," Immelt writes in a blog post. 

  

— Collective Health Today —

Collective Health raised a $205 million round of funding in June 2019, from DFJ Growth, PSP Investments, Founders Fund, GV, Maverick Ventures, NEA, Sun Life, and others, bringing its total funding to date to $435 million.  

Today, Collective Health services over 200,000 members and over 45 enterprise clients.

 

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