This Entrepreneur Raised $75 Million To Help You Save Money At Your Doctor’s Appointment
Michael Botta has chosen to dedicate his life to taking on the broken US healthcare system. That has recently taken the form of a very fast growing healthtech startup that has already raised 75 million dollars from some pretty high profile investors.
During his appearance on the Dealmakers Podcast Botta walked us through his story of getting involved in healthcare. Including how business and health services have changed in the wake of pandemic lockdowns, and the strategy involved in building marketplace startups.
Michael Botta’s grandparents moved from Puerto Rico to New York City, where he was born.
His grandfather was a subway conductor. His mother, a teacher in New York’s public school system. With her off work in the summers, they split their time between going back to Puerto Rico with their family, and living in Brooklyn during the school year.
Obviously, when your mom is a teacher, education is a big deal at home. He applied himself, and earned a scholarship to a very different, and prestigious school in Manhattan. That even took him onto studying at both Princeton and Harvard. Which certainly made his education focused parents proud.
Eventually Botta was struck by the ridiculousness and complexity of the US healthcare system. While he says there are lots of great doctors and healthcare workers, the system hinders them with a perverse set of incentives and economics. It’s all about billing volume, not delivering quality healthcare.
So, he continued to study at the intersection of medicine and economics. It was then that Obama became president. So, Michael chose to take a break from his Ph.D. program to go to the White House and work on health policy. He told the podcast audience that he is very proud to have worked on the Affordable Care Act.
One of the deans of Harvard Medical School introduced Michael to David Goldhill,. a business executive who had been inspired to throw himself into healthcare after a medical error took his father’s life.
David wanted help writing a book on the subject. As they dug into the research they realized how the industry had changed, and many of the new issues that had been caused by Obamacare.
Insurance changed. While many are encouraged to go onto Healthcare.gov to find coverage, those that can are finding that they are paying a whole lot more for insurance than they used to. They are getting a lot less in exchange for it. Not only are premiums higher, but so are the deductibles. Meaning those with healthcare insurance are spending a lot of money out of pocket. Well ahead of insurance kicking in any dollars.
At the same time they found medical centers dealing with more hard to collect on debt. Which brings a lot of additional administrative work and cost.
There appeared to be an opportunity to help more practices get more money upfront, and who would be glad to offer a discount to get it. It seemed there could be technology that could be applied here from other industries.
Still, it took a while before David and Michael to get to the point where they couldn’t shy away from that opportunity anymore.
Eventually, they ran out of excuses not to do it. Michael says that he knew he would deeply regret not seizing on the opportunity, and running with the idea.
Eventually on a family vacation in Spain, Michael got together virtually with David in NY, and John Fontein who was in Tokyo at the time. John had been a friend from back in college, and was respected as an operator who got things done. It completed their dream team of cofounders to get started.
Together they came together to launch Sesame. A direct to consumer healthcare marketplace.
On one side of the marketplace are the clinicians who list themselves on the platform. They get to set their own dynamic pricing and availability. On the other side are the consumers looking for care. Sesame primarily makes their money through transaction fees.
They started out focusing on Kansas City, Missouri as their initial market to launch in. They are grateful for those early believers who listed themselves on the platform, even though they understood it had a long way to grow.
To get a handle on the customer acquisitions side, they hired and built out a team with experience in that. They explored all types of channels. Though they made mistakes, they kept working on conversions, and iterating to find the customer patients who would become recurring users of their platform.
Primarily fueled by COVID restrictions, Sesame began expanding with virtual telehealth services. They are now in all 50 states in America, with hundreds of thousands of users, and have been growing around 25% per month, or 500% a year.
To date, Sesame has raised a total of $75 million; $27 million in their Series B round, which they just completed..
Even though the fundraising space has been tougher post-COVID, they’ve brought in great investors and board members. Including General Catalyst, GV, and Virgin Group.
Michael Botta’s top advice when launching a company · The vision for the future of healthcare in America · Choosing your board members
