I founded a Y Combinator-backed social venture, then shut it down. Here’s why.
Lessons for social entrepreneurs from my journey with Verano Health (formerly CoachMe Health) through the tech nonprofit and healthcare worlds.
A few years ago, I threw my heart and soul into my dream to found a social enterprise to improve health outcomes for low-income Americans. The premise was simple: we would bring first-in-class digital tools and health coaching to Medicaid beneficiaries managing chronic disease, a challenge exacerbated by COVID-19. I found believers in my vision, beginning with the Stanford Impact Founder (SIF) Fellowship, which provides critical support for budding social entrepreneurs. My venture was subsequently supported by the world-class accelerators Fast Forward and Y Combinator, and attracted and recruited a phenomenal team of coaches, public health innovators, advocates, experts, and donors along the way. We received national accreditation as a Diabetes Self-Management Education program, won multiple health plan contracts, and attracted great tech talent to the team. We even figured out Medicaid billing (mostly). Verano Health had the wind in its sails to bring technology-enabled solutions to people who were forgotten by the multi-trillion dollar health industry.
Fast forward to late in 2021: we were winding down operations, exiting our contracts, and I was searching for a job. What happened?
I’m writing to share honest lessons from my roller coaster journey, which ultimately made me a better leader and builder. I hope I can do the same for social entrepreneurs reading this piece.
What They Don’t Tell You About Leading a Social Venture
Social ventures can come in a lot of forms, but I like to think of them as united by a pursuit of solving problems the private sector has not. Against the advice (or at least bemusement) of many, I decided a nonprofit model made the most sense to preserve our mission of supporting low-income patients. Over 2+ years, I learned a lot, sometimes the hard way.
- You Must Prioritize Your Biggest Blockers. I met challenges as a founder in building a two-sided marketplace: hiring and filling the schedules of a team of coaches and recruiting and engaging patients in need. In our first year, I welcomed the complexity at every turn and tried to solve it all at once. This included: raising short-term philanthropic capital while building a long-term revenue model, enrolling a hard-to-reach population (low-income patients with chronic disease, during a pandemic), building a team as a solo founder, and figuring out all the start-up compliance duties. I learned to take it one at a time. I learned that it would be better to identify the biggest barrier to our scale goals (Engagement? Revenue? Partnerships?) and focus on that priority blocker first.
- Hire The Team You Need. The classic advice is to hire slow and fire fast, which is at odds with a common nonprofit model of taking on temporary and pro bono support. Verano Health benefited so much from dozens of volunteers, interns, and others who worked with us to build technology and tools for our patients. We would not have gotten off the ground without their efforts. However, in retrospect, I would try to raise more funding to hire the dedicated, talented, and expensive team I needed, and to spend the money I did raise more quickly. This would have allowed me to build long-term commitment to the organization and delegate functions I held onto for far too long.
- Take Care of Yourself and Your Team. Imagine everything you and your coworkers went through at a for-profit company when you felt like just one more thing would topple your fragile work-life balance. For the Verano Health team, that one extra thing case was “customers” who are struggling — quite literally — to survive, and knowing your mission is to help them. I underestimated the need to take care of my mental health in the midst of trying to be there for my team and my patients. I never took a week off or gave myself a weekend to stop thinking about how to grow and scale Verano Health. The result was that as we faced challenges like struggling to enroll and engage patients in the program, it decreased the morale of the whole team. As the leader, you’re the model for your team, and I could have been a stronger example of putting well-being first.
- Honesty is the Best Policy — Especially with Donors. For two years, we raised money from large and small private donors. I found unexpected joy in “selling” my dream to philanthropists, and grew from the crash course into a different kind of sales. Just as we started to see cracks in our model, our private funding pipeline was heating up. I forced myself to be honest with them, including a point when I began declining new donations and sharing why we didn’t think we could put them to best use. When we decided to wind down our work, I was terrified of telling past donors. Ultimately I leaned into a direct, honest approach again, sharing with them what their support had meant and why we made the decision. They were supportive, and I’ll carry forward many of those relationships.
- It’s Okay to Be Wrong. Toward the end of Verano Health, I became fixated on a quote from Franklin D. Roosevelt: “Take a method and try it. If it fails, admit it frankly, and try another. But by all means, try something.” The nonprofit sector is filled with risk-averse, static models. I tried something audacious, knowing the odds were slim but the potential for change was great. We ultimately experienced something very common in the venture, technology, and small business sectors: failure. That’s a normal part of the cycle of learning and innovation, even if it didn’t feel like it at the moment. I’m proud our team tried something.
- As a Nonprofit, You Might Simply Get Outgunned. Part of the personal and external vetting of my nonprofit model was an assumption that low-income, public insurance patients were not served by the private sector. I challenged myself to harness the ambition of a VC-backed company to solve the market failure. But after many months of effort, I realized that not only did we have fewer resources than better-funded private companies, but many more mature players were beginning to tackle the Medicaid space. In short, we were going to be outgunned, which would create a vicious cycle for attracting talent and competing for health plan sales. While I know our product was fantastic, competition in the space is good for patients in the long run.
What They Don’t Tell You About the Healthcare Space
- Selling into Medicaid is Complex. It is just as complex, idiosyncratic, and foreign as everyone told me it would be. For example, we analyzed billing codebooks for all 50 states to discover that the service we offered was reimbursed at rates ranging from $7 to $45 per visit with a dietician. Imagine if your company’s one customer paid you 50 different rates for the same product (and “paid” you months after the service, for only a fraction of the invoices you sent).
- Millions of People Are Waiting on “Last Mile” Legwork. There are many diabetes solutions, but getting them into the hands of patients on Medicaid is very hard. Connecting with patients through health plans, partnering with their physicians, connecting with health centers — all of this takes time that a “direct to consumer” business would skip over. But these are important avenues to reaching people and likewise critical actors in making billing work. There are many, many solutions succeeding despite having no tangible impact at the patient level.
- Invest in Cultural Competency. At nearly 25% of Americans, Medicaid beneficiaries are as diverse as our country. Solutions must meet people where they are, which includes recognizing the cultural competency necessary to meet every community. With a nod to organizations like SameSky Health that get this right, I’m proud we hired a diverse and representative coaching team and used our patient feedback to improve the platform. A highlight of our early success was when a local government picked up our culturally competent Spanish translations for use county-wide.
- Community Health is Power. Community Health Centers, Federally Qualified Health Centers, and free clinics are an incredible and powerful part of our healthcare system. These health centers change the lives of the safety net every single day. Our country has a powerful web of passionate safety net organizations and professionals doing their best on the frontlines in this byzantine system built over the decades. I am so grateful for them.
- Listen to Your Nos: The distribution strategy for our product depended on community health centers buying into our ability to improve their patients’ overall experience. But health centers consistently told us that they struggle with competing priorities, that they were skeptical of outside vendors, and that many of their patients were not comfortable with the technology that underpinned our solution. While I’m still hopeful for ways innovative organizations can embolden and support their work, I recognize their wisdom in spotting what would all prove to be substantial hurdles to our ability to scale.
What They Don’t Tell You About Living
- Your Mental Health is More Important Than Your Company: A few years in, I hit maximum burnout, and it’s what made me decide to step to my next adventure and find a new path for impact. A wise friend who counseled this time said it simply — “your mental health is more important than your company”. Sometimes you need to make radical changes, regardless of the success of your venture.
- Work is Not the Be All End All: I put my job before many things in my life: time with my partner, visits to my family, and time for myself. Deciding to wrap up our work at Verano Health helped me remember that I am more than my job. We all are more than our careers.
- You Must, Must Believe in Yourself. Life is too short not to.
- Being Human. When I decided to transition out of Verano Health, I felt like I was giving up on my dream to start an organization with purpose. What I realized in stepping away is that our purpose as human beings is to be human beings. It is to be alive and to love and live. To care for our friends and family and to live every day with love.
- Failure is a Stepping Stone. Every decision I made has been a step toward becoming a better leader, understanding my true self, and knowing what I can do. This journey taught me how to take care of myself, how to put my team first, and how to trust my gut in seeking impact.
- Every Life Matters. I’m proud of every family we served, every conversation I had with a patient, and each session our coaches offered to improve the lives of patients on Medicaid.
What I Didn’t Tell You About Silver Linings
When I decided to step away from Verano Health, I wanted to make sure we did the best we could with our resources.
First, I felt determined to find a partner that could make the best use of our technology. My ultimate lesson is that it’s not about me — it’s always been about the service and the impact I set out to have. At the end of 2021, Verano Health merged our patient-management and data collection technology with CareMessage, an innovative tech nonprofit that shares our goals of supporting community health centers with text messaging tools and resources. Our technology will go to a bigger, fantastic team that will stay true to our mission: to improve the health disparities facing underserved Americans. (Those in the venture, technology, and small business spaces would recognize this as “getting acquired” — a normal and even celebrated outcome of a startup!)
Second, we ended operations with a considerable amount of capital. We could have saved the “nest egg” for our next pivot or venture. But I went back to everything I learned in the last two years. I know that we all benefit from a strong health ecosystem, and I’m confident our capital is best spent delivering impact and innovation, just as our donors intended. With donor permission, we distributed our remaining funding to the following organizations:
- Shasta Community Health Center is a vital health center in Northern California with a fantastic team that is always pushing innovative approaches. We were honored to offer diabetes education to some of their patients in rural areas.
- Tuskegee University (www.tuskegee.edu) had our coach Shaune Hill in their very first public health program, and we’re excited to support future generations of graduates who are as fantastic as her.
- Ravenswood Family Health Network (https://ravenswoodfhn.org/) employs incredible clinicians and team members to deliver care during COVID-19 and beyond. We loved working with the digital health team.
- Shade Tree Clinic (https://lnkd.in/gwY3CctP) was where Bharat Kilaru was a co-director before business school, and they deliver high-quality care to those with the most need in the Nashville Area.
- Samaritan House (https://lnkd.in/gCEhMz2w) is where we ran our very first coaching pilot and where we saw the hard work of the many volunteer staff and team members.
Here is to every life we touched, to every partner we engaged, and to every powerful public health advocate we met along the way. You are our silver linings.