He Raised $2.2 Billion To Build A Tech-Driven Health Insurance Company, Making Good Health Accessible And Affordable For All

Mario Schlosser’s story resonates with entrepreneurs navigating the complexities of building companies across different cultures, facing financial hardships, navigating board dynamics, and even being fired from their own startups.

From a quaint town in Germany to the bustling streets of Silicon Valley and New York City, Mario’s journey is filled with pivotal lessons on resilience, creativity, and cultural adaptation. He ended up building Oscar Health, his latest startup.

Listen to the full podcast episode and review the transcript here.

The Early Days: From Hochheim to Harvard

Mario Schlosser was born and raised in Hochheim am Main, a small German town near Frankfurt with 18,000 residents. Since Rheingau is a Riesling area, he remembers picking grapes when he was a child. He speaks fondly of the town’s idyllic charm and the medieval city wall surrounding it.

This place was far removed from Silicon Valley’s tech-centric atmosphere. Mario’s initial exposure to technology came in an unexpected way—through a Sinclair ZX81 computer with a mere kilobyte of RAM and a few manuals that a family friend presented to him when he was 8.

Given to him by a family friend, the computer sparked a lifelong passion for coding that would later significantly influence his career. Mario’s father was a middle school teacher, teaching German and Geography, and his mother was a NICU nurse, so his interest in computers was self-driven.

Mario vividly recalls typing BASIC code from stained manuals into his ZX81, fostering a solitary approach to coding without getting any formal training. He believes this self-reliant mindset is one of the vital cultural differences between European and American founders.

While American entrepreneurs tend to think, “How can I get others to do this for me?” European founders often feel they have to handle everything themselves.

From Coding to Problem-Solving: Education in Germany and the U.S.

Despite his love for coding, Mario’s academic path wasn’t straightforward. He won several national science competitions, including “Jugend Forscht,” for innovative projects like building an eye-tracking device in the mid-90s. He put a camera on a computer to film the user’s face.

Yet, Mario resisted the idea of purely studying computer science, fearing it might box him into a technical role without room for creativity. Instead, he pursued computer linguistics and computer science at the University of Trier, in southwest Germany.

Here, Mario was exposed to interdisciplinary studies that fused technology with human interaction. But a transformative moment came when a professor at the University of Hanover, specializing in chip design and electronic design automation, invited Mario to study with him.

At Hanover, Mario was exposed to a combination of hardcore electrical engineering and computer science. This shift led him to work on algorithms for detecting signals from the heart to identify risks of atrial fibrillation post-surgery. He developed a chip called the FPGA.

This experience was Mario’s first foray into combining engineering with real-world medical applications. That same professor later arranged an internship for him in Silicon Valley with Infineon, a German semiconductor company.

Landing in San Jose, Mario was immediately struck by the innovation culture in Silicon Valley. Driving along highways marked with legendary names like “Mountain View” and “Stanford,” he realized that he had entered a world far more expansive than the medieval walls of his hometown.

Silicon Valley: Building Connections, Learning Cultures

Mario’s time in Silicon Valley was more than an internship—it was a horizon-expanding experience. After his stint at Infineon, he cold-called Stanford professors who were interested in fields like computer vision, network switching design, chip design, and more.

Eventually, Mario secured a position as a visiting scholar with a German professor from the computer science department database. There, he collaborated on a groundbreaking paper that, 15 years later, would win the prestigious “Test of Time” award at the World Wide Web Conference.

None of this would have happened for Mario had he not ventured into the heart of Silicon Valley’s innovation ecosystem. This experience was pivotal not just for the technical skills he gained but for the cultural understanding he developed.

Coming from a German academic background, Mario found that Stanford wasn’t necessarily more intellectually rigorous than his previous schools, but the mindset was drastically different.

Here, German engineers would perfect their craft within established companies, and Stanford students were founding companies and dreaming big. This cultural shift planted the seed for Mario’s eventual foray into startups.

The McKinsey Detour: Learning Business Strategy

Rather than dive headfirst into startups, Mario took a detour into consulting with McKinsey & Company in Germany, where he discovered a new approach to problem-solving.

He reveals how, at the time, Germany had a recruiting program to go to top American universities and convince German students to return to McKinsey. Mario opted to accept the two-month internship, bringing just a sleeping bag and a three-piece suit and tie.

At McKinsey, the focus was less on technical details and more on analyzing problems from a top-down, strategic perspective. They would decompose the problem into its constituent parts and then attempt to solve it.

Mario remembers being awestruck by how quickly consultants could build Excel spreadsheets, which he now finds amusing but seemed incredibly impressive at the time. McKinsey was Mario’s first exposure to the world of high finance and corporate strategy.

He attended a “mini-MBA” program where he met hedge fund managers and investment bankers and learned how they used Excel without touching a mouse—an entirely new skill set for someone coming from a tech background.

Despite the corporate allure of five-star hotels and business-class flights, Mario found this world intellectually stimulating but ultimately unfulfilling. The experience gave him some perspective and inspired him to switch gears and go to the business side.

Entering the Startup World: Harvard Business School and Founding Startups

Mario’s decision to attend Harvard Business School (HBS) in 2005 marked another pivotal chapter. Here, he met his future co-founder, Josh Kushner, who would later found Thrive Capital and lead the $150B funding at a $6B valuation round in OpenAI.

Though Mario initially viewed business school as a “safe” choice—one that signified he hadn’t taken the bold risk of founding a startup—he soon realized it was the perfect environment to launch ventures.

While at HBS, Mario began working on various startup ideas, marking the early days of platforms like Facebook and MySpace. In fact, Sean Parker once reached out to Mario in 2005, inviting him to join “The Facebook.”

Mario recalls wryly that he declined because he thought PHP, the language the platform was built in, was for “script kiddies.” A decision, in hindsight, that reflects the timing risks inherent in startups.

Lessons from the Valley: Timing, Failure, and Resilience

Mario’s early forays into startups weren’t all successful. He experimented with ventures like mobile photo-sharing six years before Instagram or apps for purchasing and selling digital assets before the market was ready.

These experiences taught Mario invaluable lessons about timing and the fickle nature of entrepreneurship. Sometimes, being too early can be just as detrimental as being too late.

One of the most profound lessons Mario shares is the importance of resilience in the face of failure. Many founders, including himself, face moments where they run out of money, get fired from their own companies or see their ventures crumble.

Yet, these setbacks often provide the foundation for future success. For Mario, every failure was a stepping stone that led him closer to understanding the right product-market fit, the importance of timing, and the nuances of scaling a company.

Working at Bridgewater Associates and Vostu

During the financial crisis, Mario took a job he had interviewed for at HBS. Bridgewater Associates was a smart hedge fund ahead of its time. He enjoyed the experience, understanding the crisis, and deleveraging the debt crisis.

Although Mario’s original plan was to stay on for three months, he ended up staying for three years. Side-by-side, he worked at Votsu, which came to be known as the Zynga of Brazil.

Mario remembers taking away crucial lessons and reminders of how viral growth can work and how founders should keep pace with the signals from the outside world. They faced the rise of programmatic channels on social networks.

Instead of leveraging Facebook’s immense potential, which opened its platform in 2007, Mario and his friends decided to build their own social network—an effort that, in retrospect, was futile. Apps could be put into Facebook, which led to Zynga gaining incredible traction within two years.

Mark Pincus, the founder of Zynga, didn’t make the same mistake. He launched simple games like poker on Facebook, and built what would become a gaming empire.

Mario and his co-founders focused on Brazil’s equivalent of Facebook, Orkut, starting with a gifting app. Eventually, it grew to become the largest game provider on Oracle in the country, with 30 million Brazilians playing its games monthly.

Mario and his team started calling themselves Zynga Brazil. Unfortunately, that success led to legal battles with Zynga over copyright infringements, which ended in a chaotic lawsuit between Brazil and the US.

As the company grew, internal strife among the five founders led to conflicts. Their disagreements and battles eventually drove the board to step in and fire all the founders. Mario reveals how Daniel Caffee was the CEO of the company and he himself was chief scientist and game designer.

The end of that chapter marked the beginning of something new—Oscar Health.

The Birth of Oscar Health

In March 2012, Mario returned to New York with his pregnant wife and a bruised entrepreneurial spirit. He connected with Josh, his co-founder, and the duo regrouped over coffee. Josh shared his interest in starting a venture fund while Mario wanted to start an insurance company.

Drawing from Mario’s experience in gaming, where virtual economies and incentives are meticulously designed, he realized that the insurance company controls much of the health system’s economy, dictating the costs for medical services and influencing consumer behavior.

Mario also pointed out that insurance companies can incentivize members to do things differently, like make certain drugs and physicians cheaper. Developing control over the incentives was the motivating factor for Oscar Health.

At its core, Oscar is a health insurance company with a familiar business model: take in premiums, spend 80% on healthcare costs, and use the remaining 20% for administrative and operational costs.

However, what sets Oscar apart is its focus on consumer engagement and its approach to healthcare as a complex, interactive economy—one that could be influenced by incentives and behavioral changes.

The Impact of Obamacare

What Mario and Josh didn’t realize in early 2012, but became clear later that year, was that the Affordable Care Act (Obamacare) was about to create a new individual health insurance market.

This presented an opportunity for Oscar to become a consumer brand and develop a direct relationship with its members. By 2018, Oscar had raised significant capital, including a notable $375M investment from Alphabet, Google’s parent company, which saw potential in its vision.

In total, Oscar raised about $2.2B, culminating in an IPO in March 2021. The IPO experience wasn’t easy. The public markets were becoming impatient with money-losing companies, and while Oscar avoided the SPAC route, the road to profitability was a challenge.

Storytelling is everything that Mario Schlosser was able to master. The key is being able to capture the essence of what you are doing in 15 to 20 slides. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here) where the most critical slides are highlighted.

Remember to unlock the pitch deck template founders worldwide are using to raise millions below.

However, after painstakingly steering the company toward profitability, Mario met Mark Bertolini, the former CEO of Aetna, during the IPO process. He became a mentor and, after years of discussions, joined Oscar as CEO, with Mario transitioning into the role of CTO.

For a company to succeed, there could only be one ultimate decision-maker, Mario agrees. Mark’s arrival brought stability and renewed confidence to the markets, with Oscar’s stock rising 940% within a year.

Future Vision for Oscar Health

Looking forward, the vision for Oscar is clear: a healthcare system where individuals receive personalized guidance on how to live healthier and happier lives, with the health insurance company playing a pivotal role.

By incentivizing healthy behaviors, reducing unnecessary medical costs, and utilizing machine learning and modeling, Oscar aims to be the health advocate in your pocket—one that not only covers medical expenses but helps prevent them by investing in members’ long-term well-being.

This transformation will require a deep integration of healthcare incentives, technology, and personalized care, but it’s a future that Mario and his co-founders are determined to build. Looking back at his journey, he talks about some of their best wins and losses.

Oscar successfully navigated the challenges of Obamacare almost shutting down. Mario also underscores the fact that of the 60 people who previously worked at Oscar, 40 went on to build their own startups.

There’s no better sign of a successful company culture than employees leave to start something new. For aspiring entrepreneurs, Mario’s journey offers a powerful reminder: success isn’t linear, and sometimes, the most valuable lessons come from the least expected places.

Conclusion: The Balancing Act of Building, Scaling, and Surviving

Mario Schlosser’s journey from a small town in Germany to Silicon Valley, Harvard Business School, and eventually founding his own startups is a testament to the complexity of entrepreneurship.

His experiences highlight the cultural nuances that shape how founders approach building companies, the importance of adapting to new environments, and the resilience required to bounce back from failure.

From coding on a Sinclair ZX81 as a child to winning prestigious academic awards and navigating the highs and lows of startup life, Mario’s story is one of relentless curiosity, adaptability, and a willingness to take risks.

Listen to the full podcast episode to know more, including:

• Mario’s transition from Germany to Silicon Valley revealed how cultural differences shape entrepreneurial approaches. His shift from a solitary, self-reliant coding mindset to a more collaborative, big-thinking American approach was pivotal in his success.
• Mario faced numerous challenges, including financial hardships, being fired from his own company, and failed ventures. His story emphasizes that resilience in the face of failure is critical for entrepreneurial success.
• Many of Mario’s early ventures were ahead of their time, such as his work on mobile photo-sharing apps before Instagram. This taught him the importance of launching products when the market is ready.
• Mario’s time at Vostu, where internal strife and a lawsuit with Zynga ended in him being fired, was a valuable learning experience. These setbacks prepared him for future ventures, including the launch of Oscar Health.
• Mario’s diverse background—from coding as a child to studying electrical engineering, linguistics, and business—allowed him to combine technical and business skills, contributing to his ability to innovate in sectors like health insurance.
• Mario’s time at Harvard Business School and McKinsey broadened his perspective, teaching him how to approach problems strategically and helping him transition from a technical expert to a business leader.
• The creation of Oscar Health leveraged Mario’s gaming background, using virtual economies and incentives to reshape how health insurance influences consumer behavior. This innovative approach, coupled with the rise of Obamacare, helped Oscar thrive in a challenging market.

 

SUBSCRIBE ON:

For a winning deck, see the commentary on a pitch deck from an Uber competitor that has raised over $400M (see it here). 

Remember to unlock for free the pitch deck template that founders worldwide are using to raise millions below.