Julia Hu On On Raising $100 Million To Help Millions Of People Manage Their Chronic Diseases

Juli Hu is the cofounder and CEO of Lark Health which is a digital health startup that provides virtual care through AI coaching, smart devices, and tele-monitoring. The company has raised $100 million from top tier investors such as Lightspeed Venture Partners, Social Starts, Tuesday Capital, Pegasus Tech Ventures, Asset Management Ventures, and Golden Seeds to name a few.

In this episode you will learn:

• Securing massive distribution deals with a prototype
• Brave pivots
• The truth about fundraising, and why investors are so opaque when they turn you down
• Julia’s top advice for other entrepreneurs
• How long you really need to be prepared to commit for, before jumping into a startup

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For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash.

Moreover, I also provided a commentary on a pitch deck from an Uber competitor that has raised over $400 million (see it here).

Remember to unlock for free the pitch deck template that is being used by founders around the world to raise millions below.

About Julia Hu:

Connect with Julia Hu:

• Linkedin
• Crunchbase
• Twitter

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FULL TRANSCRIPTION OF THE INTERVIEW:

Alejandro: Alrighty. Hello everyone, and welcome to the DealMakers show. Today we have a very, very powerful founder. I think that she’s really going to be teaching a thing or two about entrepreneurship. I mean, her journey is really remarkable. But I don’t want to make anyone wait longer, so without further ado, let’s welcome our guest today. Julia Hu, welcome to the show.

Julia Hu: Hey, Alejandro. Great to be here.

Alejandro: Originally born in LA, so how was life growing up there?

Julia Hu: It was good. I came from the Valley, the original Valley where Valley Girls were named, and it was a fun time. My dad was a first-generation immigrant from China, and it was fun.

Alejandro: I know that very early on, you were experiencing this health type of challenge that it even prompted your dad to quit his day job. Tell us what happened here.

Julia Hu: Oh, yeah. When I was growing up, I use to wake up in the middle of the night, every few days for as long as I could remember, really, like when I was four years old or five years old. It would be like my stomach was eating itself, and it would just be about seven hours of horrible pain every night, and it would repeat every week or so. So my dad was taking care of me. He was a single dad and working. He had to quit his day job to take care of me. He took me to 30 or so specialists. No one could figure out what I had. He ended up finding this great pediatrician, Dr. Pang, who became like my uncle. He and my doctor and I every week, we would get together, and there would be all of this experimentation of trying out different things to see if orange juice impacted my stomach or french fries. It was almost 12 years of that where throughout the 12 years, consistence, experimentation, and care. He changed everything about my diet, how I managed pain, sleep, exercise, and stress, and got rid of 90% of my attacks, and that’s how I still manage my chronic condition today.

Alejandro: Wow! Well, your dad is a hero. That’s amazing.

Julia Hu: Thank you.

Alejandro: In your case, Julia, how did you start getting into engineering? We’re going to, by the way, for the listeners, too, we’re going to be talking about Lark in a little bit, which, obviously, is your condition prompted that business, and we’re going to get into that in just a little bit. But just so that we continue in this walk through memory lane, how did you get into engineering and design?

Julia Hu: I would probably call me the worst engineer. I was a civil and environmental engineer, but I was actually much more interested in design-thinking. I went to Stanford. There was this great program called the B School, which was all about how do you design experiences? How do you design companies? It was a fascinating field, a very interdisciplinary, so it fit my personality of liking a lot of different things and how to put it all together. I was really excited about science and math in high school, and then I went to Stanford. I started as an astrophysicist, and that wasn’t for me, so I went into B School and environmental engineering.

Alejandro: And this prompted your first company, EMOD. Tell us about your first business, your first baby.

Julia Hu: That was my first baby, so I loved Stanford for how big it made you think. It was always pushing you to change the world in some way. I really wanted to work on environmental issues. EMOD was a really fun first company, I realized. It totally exploded, and it didn’t even explode. It just never really got off the ground because I was so busy refining and perfecting my business plan. I never got the guts to really make mistakes and try things and grow the company as I should have.

Alejandro: So, as they say, typically one never learns so much from successes but from failures are where the biggest lessons come to light. I’m sure that for you, this first chapter was a little bit painful because it was your first baby, and it’s really awful when the first time around it doesn’t pan out the way that one would have hoped. But I’m sure there were a ton of lessons for you to learn in this journey. If you had to compress those in your three top lessons, what would you say those were?

Julia Hu: Exactly what you said, actually. I think ideas are not worth that much. Really, it’s about the courage to implement some of them and learn, so I think that was a big learning for me that I just had to go out there and try it. I think I was too scared of failure. I think the second is, I remember chatting with one of my mentors, and he said, “You’re trying to build something that’s very new. You just have to go to City Council and talk to the council member to give you this validation. I remember thinking, “How can I talk to such an important council member? I’m still pretty much in school.” It was really, I think, the second lesson is probably that you just have to believe that you can do and you’re worthy of talking to important people as you go out there and bet your ideas and try to persuade people to work with you. I think the third was the importance of team. I really learned a lot about creating large volunteer teams, but I didn’t shoot for getting a core, highly-engaged team. So I think that’s where I also failed. I learned a ton. It got me excited about the future.

Alejandro: Talking about the future, once an entrepreneur, always an entrepreneur. So the next one, Clean Tech Open. Here, you were part of the founding team. What were you guys doing there?

Julia Hu: I realized that I wasn’t quite ready in my mind to start another company from scratch. Clean Tech Open was this great business plan competition that I was a part of, and they asked me to join their founding team to scale this incubator that helps support and scale other Clean Tech companies. I loved it because it was a chance to work with a really smart and experienced founding team all in Silicon Valley. We were helping a ton of companies, so I got to see how other companies were building their own companies, and it was fantastic. We scaled the Clean Tech Open from one area, one region, to about 30 states. That was a blast.

Alejandro: And especially during the early stages, there are probably a lot of people listening right now that are thinking about how they should go about execution. We’ve talked about execution quite a bit already, especially with what you learned with EMOD. But now that you were with Clean Tech Open and you were about to get that pattern recognition from working with many of those companies, were there certain things that you saw from the ones where they would go out there and do something great from the ones that failed in their attempt?

Julia Hu: You know, that’s a really great question. I think that I saw entrepreneurs that I really respected, and they’re bold and stubborn, headstrong folks who also work extremely hard. I think that struck me that they were great listeners, but they loved to debate. I just saw all of these amazing people struggling every day for something that was totally unproven. I really respect that. I saw that a lot when I was at Stanford. I decided, “I’m just going to go and intern for every GSP Business School company that I can. So I interned for seven of them or so. It was a great experience to see the boldness of entrepreneurs.

Alejandro: Here, you’re seeing all the entrepreneurial activity happening left and right in front of your eyes. At this point, you already knew and were exposed to the ecosystem of Stanford, where some of the biggest entrepreneurs have come out from. So why go into MIT to continue the education? MIT is, obviously, an amazing school, and there are amazing engineers coming out of MIT, but why did you choose to go to MIT?

Julia Hu: It’s a great question. I think that I was really interested because I came from more of an engineering/design background that I wanted to see what are the building blocks of building a company? I chose MIT because it also has a very strong culture of inventor innovation and engineering and tech. It was a very different culture than Stanford, but I think it really helped balance me out and give me some foundational skills for building a company.

Alejandro: So the foundational skills and then going to MIT, you ended up realizing that it was not your time to be there or not your thing. So what was that point where, here you are, you’ve been in Stanford, one of the best universities in the U.S. and in the world, and now MIT, so you’re combining and getting another one in the bucket that is another amazing university? At what point do you tell yourself, “I think this is not the right time or place for me to be here.”?

Julia Hu: Yeah, Alejandro. The first year was wonderful. I used it to think of ideas, meet a lot of engineers; you know, geek out on ideas. I was looking to start another company, and since I’m not a technical founder, I wanted to partner with the right tech folks. I ended up starting the ideas of Lark at MIT, and then I realized that there’s no better place to learn than just going for it. I didn’t have much traction at all, but I decided to drop out of MIT and start Lark, which is the company that I’m still running and trying to grow. It was a hard decision, but I decided to drop out and make a go at it.

Alejandro: And as they say, people think that ideas are overnight and that successes are overnight, but in this case, the idea of Lark actually took decades to incubate. So why did it take so long, and why did you choose at that point that it was the right time to execute it?

Julia Hu: That’s right. So, I had a very rare chronic condition, and, obviously, as a business person, you would say, “Well, Julia, you had an extremely rare and undiagnosed chronic condition until recently. That’s not going to help anyone if you solve that problem.” What I realized was the pain of living with a chronic condition, and also the benefits of having a loving dad and a loving doctor be my 24/7 care team, that made me realize like, wow! There are hundreds of millions, if not billions, of people struggling with a chronic condition. I can do something about it because I have such empathy and understanding for that journey. What if we could create an AI nurse or a super-infinitely scalable version of care that is personal yet scalable. That was the crazy dream that came in reflecting on, this is the time to go do it.

Alejandro: So tell us about the next steps when you said, “We are going to go and do it.”

Julia Hu: Lark’s goal and mission is to provide infinitely scalable, compassionate personal care. In the beginning, of course, we had to focus somewhere. I was noticing a trend of more and more consumer health data, but there wasn’t quite enough. So we decided to combine this idea of an AI coach nurse. I was inspired by this woman who was actually a researcher at Stanford. She would work with MBA stars, NFL stars, Olympic stars, and she would use medical health monitors and collect information about their sleep and other things. Then, go read it, and then coach them on how to improve their sleep and their stress levels so that they could manage to be the best athlete in the world. She was very successful with this technique. I said, “Oh, this is so great. Why don’t we try and automate this? Can we automate an AI personal coaching experience while taking data from the patient of the person? So we took a $5,000 medical health monitor and a ticker-fee watch, and we turned it into a $99 product that ended up being sold in all Apple stores. It was a sleep monitor. Then there was an AI nurse/coach on top of that. At the time, it wasn’t speaking to you like we wanted. It was more of a personal report based on the data. That was how we started. Lark looks very different today, but those were the first years.

Alejandro: Obviously, there was that transition from hardware to software, but before we even talk about that transition, let’s talk about that trip that you had to do to China the last minute after you received that call from Apple.

Julia Hu: That’s right. We had a great chat with the folks at Apple. We showed up with our clunky prototype that we had just welded and soldered right before in the machine shop, and they said, “This is great. Let’s have this in all Apple stores in nine months nationally.” I said, “Okay.” Then I said, “Sure. Why not? Let’s do it.” Then I didn’t tell them that I didn’t have any of them built yet. So then I ran to China and worked with this great, also VC-backed hardware ODM to help build Lark. Our first product landed there according to schedule in all Apple stores. So that was a ridiculous rush.

Alejandro: That’s amazing. Here, you have this amazing demand, this ridiculous rush, but that didn’t stop you from doing a pivot. So why the pivot?

Julia Hu: I know. I called it an evolution, but everyone else says, “Oh, it’s a big pivot.” [Laughter] Our goal was, how do you create infinitely scalable care and make it automated? We were spending so much energy on the hardware side, and we saw the Apple watch coming out. We saw all of these great hardware products coming out. For us, as entrepreneurs, you have to focus, or you die. For me, I always wanted to focus on our strength, which was, how do we use our AI platform, our learnings, to create a service that could help folks like a 24/7 care team might. So that took total focus. We went to our board and said, “We’ve decided that we’re going to shut down the hardware side of our business. If we don’t do that, we’re going to be competing against other hardware, and we want to make sure that the other hardware medical devices know that we are collaborators and not competitors. Trust us. It will take us a few more years, but we’re going to build an AI nurse, and it’s going to help chronic patients all over the world.” It was really tough. I mean, I will tell you. It was like the dark years. Our investors, obviously, were disappointed. We had to let go a bunch of the team. I couldn’t raise money for a while, but there were some moments where we had some great support that allowed us, today, to become the world’s largest AI healthcare provider.

Alejandro: And, obviously, since a great turnaround. I’m sure there are a lot of people that are listening that haven’t gotten into that product/market fit that are maybe thinking about doing a pivot. I’ve gone through those pivots myself, too. It’s tough to even get out of bed sometimes. What do you think really helped you to keep pushing in the right direction?

Julia Hu: It was very tough. I was sometimes working 120 hours a week and burning myself out. My chronic condition shows itself during stress, and literally every year right before the launch, I would be sent to the ER because my body would give out. So, you’re absolutely right, Alejandro. It’s a tough job. No normal person, if they were happy with the way things are, would embark to be an entrepreneur.

Alejandro: Yeah.

Julia Hu: I think that I had this drive, but I remember a conversation with Vinod Khosla when I was pitching Lark to him. He said something that, at the time, I thought was so fantastical. He said, “Julia, stop right there. You’re talking about an incremental improvement to healthcare. But in five years, there will be no doctors. It will all be AI.” I know he was just being hyperbolic, but it really got me reexamining like, “Wow. I am trying to do something pretty crazy. I am trying to build an AI nurse that I hope one day will be able, not to replace a live nurse, but there are just not enough doctors and nurses in the world to take care of hundreds of millions and billions of folks who are struggling with a long-term chronic condition. It reminded me that you have to go big or go home.

Alejandro: Got it. That makes total sense, and we’re going to be talking about the amount that you guys have raised, which is a good follow-up to this and how it was for you. But before we get there, just so the people listening get it, what ended up being the business model of Lark? How do you guys make money?

Julia Hu: We spent around six years in R&D building our AI nurse, which is essentially a text-message-based counseling service where your AI nurse will look at all of your health data and then coach you to manage your chronic condition, whether that be pre-diabetes, diabetes, hypertension, behavioral health issues like stress and anxiety, smoking cessation, so managing your chronic conditions with 24/7 care in real-time. This product, though, took six years of R&D. We finally launched it in late 2016. We trained it on about a million patients, and it started to get clinical equivalence to live nurses. So we became a healthcare provider, and we started treating patients for the large national health plans and the insurance companies as well as large employers. We’ve been able to treat close to two million patients now with the Lark AI platform and have just gotten contracts to manage close to 27 million more members.

Alejandro: Wow! That’s impressive. In you guys’ case, Julia, it was a really big turnaround, the CDC recognition. So tell us about this.

Julia Hu: Oh, yes. It was a great moment for us because this AI nurse, in the first years, it sounded like a three-year-old, and then a five-year-old. The more we trained it with a patient’s input, the smarter it got, and one day it was so exciting. We shared our launch [27:30] data with the CDC, which does launch to analysis of how your service compares to other live-nurse call centers or in-person clinics. There are 2,400 healthcare provider groups in the country that serve pre-diabetics and use the CDC diabetes prevention program offering. We received a letter from the director of the CDC that showed that we were getting clinical equivalence, and we achieved full recognition, which is the top 8% of clinical outcomes of this 2,400-provider group. So about the top 8% have achieved full recognition. We were through the moon. Today, we’re the second-largest PPP provider in the country. We’ve scaled very quickly, and we just got contracts with the largest health plans to scale more.

Alejandro: Going back to the question, you were talking about Vinod Khosla. Now, let’s talk about fundraising because you’ve probably heard the word, no, many times. How many times would you guesstimate, and how much capital have you guys raised to date?

Julia Hu: Hundreds. [Laughter] I heard the word, no, hundreds of times. And probably worse is the “maybe” and the ghosting.

Alejandro: Yeah.

Julia Hu: That’s even worse for an entrepreneur. I’m very optimistic, so I think “Maybe means maybe yes,” But it usually almost always means no. I’ve struggled. I’ve always thought that I was a bad fundraiser, and I struggled with that part of my identity and career. We’re lucky; we recently raised about another 70 million dollars, so we’ve raised about 100 million to date from VCs and super angels from some strategics. But it’s always a struggle, I tell you. I’ve learned a lot through the years from those first days.

Alejandro: And what is the key lesson that you’ve learned on fundraising?

Julia Hu: Fundraising – honestly, I think that it’s resilience. I think that fundraising makes you feel so bad about yourself sometimes. You have this dream, and constantly people who are smarter, more experienced than you tell you that it’s not good enough. You second guess yourself; you think, “Is this the right path?” One of the difficulties in the relationship between entrepreneurs and VCs is that VCs cannot give you too much real feedback, like really hard feedback. Imagine if you’re Mark Zuckerberg and they don’t know how you take feedback. Let’s say they told you that Facebook was a stupid idea, and here are the reasons why. Then, in the next round, they would never be able to get into your round. So I understand why VCs often cannot give very unfiltered feedback. But as a result, you’re left in the dark of like, “What did I do wrong? What’s not good enough?” It’s tough. I think resilience is the one thing that I would tell entrepreneurs is to manage your emotions and keep on getting back up.

Alejandro: Yeah. Absolutely. So for the people that are listening to get an idea of the size of Lark today, is there anything that you can share in terms of the number of employees or anything else that is interesting?

Julia Hu: Sure. We always cheekily joke that if we had live nurses, we would have around 14,800 live nurses.

Alejandro: Wow!

Julia Hu: Because we have millions of text messages going back and forth some patients. But that’s just a jokey way of answering it. Our team is largely tech, data, AI product engineers. So we’ve got close to a bit more than 100 now, but we’re scaling pretty quickly.

Alejandro: That’s amazing. One of the things I wanted to ask you here, obviously, now with COVID, it’s interesting how before, all the healthcare-related stuff was in the background. But now, you see on the press, on the front pages of magazines and newspapers, nowadays it’s doctors and nurses on the front pages. So, obviously, now, you guys are going to be able to ride this trend, too. I’m wondering, where do you see Lark five years from now, let’s say if you were to go to sleep tonight and wake up in a world where the vision of the company is fully realized?

Julia Hu: That’s a great question. I think that COVID, obviously, has been tragic for so many reasons as we were just talking about. The one thing that I think COVID has done is more than any time in our lifetime; this is going to be the largest shift into the future of care. What I mean by that is telehealth, virtual care will become huge parts of the future of healthcare rather than this fringe thing on the side. As we see it, the world will be reshaped because of COVID, and we’re super excited about how we can contribute. Right now, chronic conditions are costing the entire healthcare system 3.5 trillion dollars a year. That’s 86% of all healthcare costs, and that’s because the healthcare system is built for infectious diseases. It’s built for acute conditions. I know we’re going to get through COVID, but the epidemic of chronic conditions is going to survive as long as there are not enough doctors and nurses, and there will never be enough doctors and nurses because this is a high-touch, life-long condition that so many people have. I’ll get off my pedestal now. How does Lark contribute to that? We believe that AI is necessary because there needs to be a scalable technology that gives the care of a nurse, but can do it at 1:00 am at night when you’re stressed; can do it the moment we see from your blood pressure cuff or your glucometer that you are trending in the wrong direction. So, for me, what would be idealistically my vision is in five years, anyone in the world globally that needs chronic care can get it for free, and they can get it any time they want. So that requires us to provide scalable chronic care and work with the health plans to provide this type of care to anyone. I see a world where we are the first line of defense, and then things that really matter, we escalate to the live nurse, the live doctor so that they can work at the top of their license with the data that they need to make the right decisions at the right time for these patients. But the day-to-day care is done with technology that can be scaled and can be much cheaper than humans.

Alejandro: That’s amazing. One of the questions, Julia that I typically ask the guests that come on the show is if you had the opportunity to go back in time and have a chat with that younger Julia that was coming out of Stanford and thinking about launching

something, what would be that one piece of business advice that you would give to your younger self and why given what you know now?

Julia Hu: Oh boy. That’s a hard one. I would tell my younger self that it’s a rollercoaster and that it’s a marathon. It’s not a sprint. And, in fact, actually, I did have an amazing mentor. She’s still on our board, [Vali Dye 38:00]. I think from a background perspective, she’s the richest, self-made female Asian entrepreneur in the U.S. She started her own company, [Marvelle 38:14], and grew it to 10,000 people. She told me, “Julia, you have to be ready to do something that makes you excited and willing to put everything aside from your life for the next 15 years because this is the path of an entrepreneur. And if you’re not ready to make those sacrifices, don’t do it.” I remember thinking, “That is so crazy. Fifteen years?” Everyone in Silicon Valley talks about four years like that’s how vesting works. I still remember that, and I’m so thankful that she reframed the importance of persistence, and resilience, and real commitment to your vision.

Alejandro: I love it. Julia, for the folks that are listening, what is the best way for them to reach out and say hi?

Julia Hu: I am julia@lark, and you can find me on Twitter @JuliaHuCEO. Lark.com is where we are growing the team, so if you want to join us there’s a job’s apply section. We love to work with entrepreneurs.

Alejandro: Julia, love it. There you go. Collaboration left and right – the way to go. Well, Julia, thank you so much for being on the DealMakers show today.

Julia Hu: Thank you, Alejandro. It was so fun.

 

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