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The path to scale begins by starting small. In an effort to find product market fit, we often find companies running too many experiments at once. One of our portfolio companies spent longer than necessary to find the optimal customer type — between health plans, providers, or employers. They tried to tackle all three segments simultaneously to see which “won.” However, running three parallel potential strategies—particularly those requiring different expertise and networks — resulted in false negatives. The non-adoption in a certain area was actually due to the lack of focused effort, as opposed to a true lack of viability. The board ultimately encouraged them to focus on one segment at a time and run short experiments to test product market fit. By doing so, they became much more credible and responsive, which enabled them to gain meaningful traction. Start small, learn fast, and then add on more.
Data is your number one tool to enable future sales, particularly in health care. Founders often find themselves in a chicken and egg conundrum. On one hand, payers want data demonstrating the efficacy of the intervention before putting it in front of their members. On the other hand, the company can’t assess the efficacy of the intervention without being able to try it with actual users. Companies have addressed this conundrum by starting with a small and easily attainable market, even if it’s not the market they ultimately plan to serve. Focusing on a specific demographic or market segment allows you to gather invaluable data and validate your impact and business model more efficiently. This proof of concept not only enables you to refine your offering, but also equips you with the evidence required to scale your solution effectively. One example in our portfolio is Manatee, which provides virtual child and family therapy. They began as a direct-to-consumer service, and as they demonstrated the efficacy of their model, they then parlayed that data to support conversations with health plans. Others have started with small pilots (sometimes free, sometimes paid) with the potential to expand if they meet certain milestones. The primary goals for these early customers are to demonstrate efficacy, not to optimize pricing. That will come when you have data to leverage to justify your value.
So now you’ve identified your target customer segment and generated data to support your claims. How do you go about getting a contract in place? You can spend a lot of time spinning your wheels by talking to the wrong person within the right customer. An efficient and repeatable sales strategy is critical as companies approach scale. Whenever possible, take the time to learn who makes purchasing decisions within your target organizations. This information is rarely on a company’s website, so you will need to lean heavily on people with prior experience – these may be advisors, investors, or other founders who have pursued a similar path. For example, our portfolio company Hazel Health, which partners with schools and families to provide high-quality virtual physical and mental health care, learned that while the guidance counselor or school psychologist may seem like the logical person to approach, the ultimate purchasing decisions might sit with anyone from the school principal to the district superintendent. Understanding who makes what decisions – and at what price points – will enable you to spend time cultivating the right relationships to facilitate speed and scale.
While securing payer contracts is a significant milestone worth celebrating, contracts do not translate into users. Many of the founders in our portfolio have been surprised to learn how difficult it can be to drive awareness and adoption, even when payment is reimbursed. Often, payers such as health plans, employers, and schools struggle to engage their members, so companies need to get creative about how to reach their end users. User adoption can be doubly challenging when building for youth mental health, where you often have to market to parents and teens, which will require different strategies and channels. We have seen portfolio companies overcome this challenge in a few ways:
For example, our portfolio company Caraway Health, which provides 24/7 physical and mental health care to Gen Z, set up Caraway Crew, a program for student ambassadors on college campuses.
We encourage companies to view marketing as a key function, not just a nice-to-have. We like to believe that a solution that works will sell itself, but only if people actually know it exists.
Ultimately, your goal is for people to use your product and for your product to help them get better. Even if another payer is footing the bill, teens and young adults are the ones using the product. We often find, particularly with services designed for teens and young adults, that products that should work do not have the desired impact because they are unable to maintain engagement. Hopelab knows from our 20+ years of creating supportive tools for young people that engaging young people in the creation of products and services leads to better outcomes. Strategically partnering with youth is a critical aspect of creating impactful products, services, and experiences that center on young people's specific needs and preferences. Companies that take the time to gather youth feedback make products that young people will want to use, making it possible for them to see real benefits. It may seem time-consuming up front, but it yields real impact down the line. We often refer our portfolio companies to In Tandem, which makes it easy for young people to work alongside organizations, researchers, and schools to shape the future—together.
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