Michael Botta On Raising $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 health tech startup that has already raised tens of millions of dollars from some pretty high-profile investors. The venture, Sesame, has attracted funding from Virgin Group, General Catalyst, FMZ Ventures, and TeleSoft Partners.

In this episode, you will learn:

• Michael Botta’s top advice when launching a company
• The vision for the future of healthcare in America
• Choosing your board members

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About Michael Botta:

Michael oversees all sales, partnerships, and clinician relationships at Sesame. Prior to co-founding Sesame, Michael spent 5 years at McKinsey & Co., working to find solutions to healthcare’s biggest problems, including healthcare prices, quality measurement, and competition in the US and abroad. Michael received his Ph.D. in Health Economics and Policy from Harvard and has advised The White House Office of Management and Budget, Brookings Institution, and the State of Massachusetts on health reform legislation and implementation.

Connect with Michael Botta:

• Crunchbase
• LinkedIn
• Twitter

Read the Full Transcription of the Interview:

 

Alejandro: Alright, hello everyone and welcome to the deal maker show. So super excited with our founder today you know going from corporate to entrepreneurship and right now he’s he’s built this rocket ship and we’re gonna be. We’re gonna be learning a lot about building. Scaling financing all the stuff that we really love on this show so without further ado. Let’s welcome our guest today Michael Bora welcome to the show. So your family is originally from Puerto rico

Michael Botta: Um, Alejandro thank you for having me excited to be here.

Alejandro: But you guys you know, settled in in in New York you know quite early so give us a little of a walkthrough memory lane. How was life growing up.

Michael Botta: I sure I mean pretty typical. You know child of immigrants type of story I everybody here you know my mom was none generation after her parents moved here from West Coast of Puerto Rico. My grandfather was a conductor on the subway so that’s sort of what we grew up with as a kid. My mom was a teacher in the public school system in New York so you know when you’re teacher gets summers off every summer right? back to Puerto rico so grew up sort of splitting time between sunset park in Brooklyn which is where we grew up where I went to school. And Moca Awai and Puerto Rico which is where the family’s from I but we had a great time of a younger sister. We were doing all that stuff together. Um went to school in Brooklyn was fortunate that along the way I got I got into a you. Pretty darn good school in Manhattan that is scholarship only. So if you got in you got a scholarship and that was regis what and so that was high school so that was my none real experience leaving like the bubble of Brooklyn going into this prep school world world and having a totally different experience but that really set me up for on the course for the rest of my life. Okay.

Alejandro: And what was say I know that schools in in New York City they’re insane. So was it like really tough to get into regis.

Michael Botta: Yeah I mean it just sounds like bragging if I’m like oh yes, so tough I did it but you know like interviews tests all that stuff and that’s you know it’s on the circuit with things like Stuyvesant and Bronx science and all the the other fancy you know public schools or schools that that pay for you to go there. So.

Alejandro: Yeah, yeah.

Michael Botta: It was a lot of work I would I did all the you know like getting all the books and all the test prep as a kid and education was a big deal in our family I think everybody had the idea that our job was to be in school and so our parents were providing for us for my sister and I to make sure that we were studying paying attention getting good grades and taking it really seriously and. You know so far so good and so that worked out for both of us.

Alejandro: Um, I mean so far so great Princeton and and and Harvard. So I mean I’m sure that your parents are very very proud.

Michael Botta: Yeah, you know I remember um packing the uhaul to go to school and my dad’s a pretty reserved guy but I remember him like telling the neighbors like oh we’re packing it up. We’re going to Harvard. We’re taking them to Harvard now did I mention harvard. That’s where we’re going because that’s where we’re going. So. It was. It was a pretty nice moment at the time to be like oh this is pretty cool I get you know I’m the reason my dad gets to show off to the neighbors here so that that is a a treasured memory of that packing up and driving up.

Alejandro: And what about you know health policy I mean what got you into policy because I know that you did that also in Princeton but they harvard you know more specifically.

Michael Botta: Yeah, um I think one of the things I realized early on, especially you know when you come from a family. It doesn’t have a ton of experience with the american health care system and how kind of ridiculous it can be is that american health care is incredibly complicated and a lot of that. You’ve got people who have the best of intentions. A lot of amazing physicians. Amazing health care workers who want to do the best by patients. But the system gives them really strange perverse incentives to think about billing and volume over quality and outcomes and to me. You know when you’re talking about the incentives people face you’re talking about economics because economics is really the study of incentives. So after college I said to myself you know I I don’t think I want to be a physician necessarily but I want to work in healthcare care and I want to make the healthcare system better and the best way for me to do that is to study Health Economics so I again incredibly fortunate and got into a great program that they had at Harvard that was sort of spanned the medical school and the economics department where all we were doing was health policy I sort of full time focusing on the weird incentives that people face. In health care. Everyone from hospital administrators to doctors to patients to the people who run insurance companies and thinking through like where were there opportunities to make an impact on that it was also a pretty significant time because. You know the history of american attempts at health care reform are incredibly long like goes back to Fdr tried to include health care reform and social security. Um, basically every president you can think of had some idea about how to reform American Health Care Very few of them went anywhere but I was in grad school. You know when this guy Barack Obama got elected president and all of a sudden one of the pillars of his campaign and None of the first things he wanted to work on was health care reform. So I actually you know early on in my ph d took a break from the program went to the white house I was in the office of management and budget. You know. Working in a small, very small capacity. A a small role working on being a liaison between the house of representatives and the administration for the design of the affordable care act because this was the big time really for somebody who cares about incentives and health care and the way the whole American Healthcare system works so pretty big moment to make an impact. So. I got to do that sort of during the course of my academic career. It’s one of the things I’m really proud of so.

Alejandro: Now the stint at Harvard tool was very um, very productive I would say as well on the entrepreneurial side because there you met David ah your cofounder and and and obviously there. Is where you guys planted the seed for sesame. So so how did you plant that how what was that ideation ecuation like.

Michael Botta: Um, yeah I mean that’s exactly right? Um I remember the day really going back talking to None of the deans of the medical school who said you know she just had this interesting conversation with this business executive. A guy who wasn’t you know, really a. Originally a health care expert but had really thrown himself into health care for sort of the worst reason which was that his dad passed away because of a medical error in a hospital in New York and this is somebody who had had a really successful career largely media and telecom. But over the course of really trying to understand for himself what had gone wrong in his dad’s case really found himself drawn to health care and wanted to write a book about the experience and he wanted to do that with somebody who could you know, keep him honest about the data and the research and sort of what the economic literature said about. What we know what we don’t know in health care and I had been a management consultant before I you know sort of used to working with Ceos and executives so I was one of the people that they pinged about this and said hey why don’t you meet this guy David see if you hit it off and see if you want to work together on this and. You know that sort of was the beginning of what is now a long working relationship. We worked together I worked on research with him for the book that he wrote which became catastrophic care which is now probably you know in the bargain bin at Amazon if you want to check it out. It’s been a while um and along the way what we said to ourselves was ok. American health care has changed a lot since the affordable care act a lot more people have health insurance now. But what it means to be insured in America is fundamentally different insurance is much less generous and it has a lot less. You know what we call first dollar coverage so if you are an American With Health Insurance you’re likely spend more of your own money to pay for care. Your premiums are higher but not only that your deductibles are much higher. So the amount of money you have to spend out of pocket before your insurance does anything is a much bigger number and in parallel all of these provider practices. So physicians. Nurse practitioners specialists labs imaging centers. You name it increasingly they’re dealing with more bad debt. So more times where they send the bill to somebody and because of the structure of their health insurance. The bill doesn’t get paid. So we said there’s probably an opportunity here because most practices are pretty eager to take upfront payment. And are willing to offer a discount if that means they can mitigate. You know all of the administrative expenses that go along with insurance billing. So what? if we really aggregate that supply in None place. We can sort of take advantage of the technology that exists in almost every other marketplace but doesn’t exist in healthcare around yield management around dynamic pricing.

Michael Botta: And around providing the tools to these independent businesses to be able to sell to this type of customer The the price-s sensitivesitive Healthcare customer so we can build something to offer them better pricing pretty broad selection and again this is not going to replace everything in Healthcare. It’s not a replacement for going to the emergency room. It’s not a replacement for in most cases Finding. You know an inpatient surgery but you can do a lot just by you know, being mindful of what options are available to you and thinking about you know, comparing price quality and availability for practices local to you and.

Alejandro: And so then why it sounds like it sounds like you guys had something quite tangible I mean why did you guys go back to corporate America.

Michael Botta: I um, it’s an interesting question I think we wanted to watch the world evolve a little bit and you know both of us were pretty happy doing what we’re doing like I’m a I’m an academic at heart I’m a ph d I didn’t think of myself as an entrepreneur especially to start? um. You know I grew into the role and Mckinsey I was you know engaging with executives all all across the board. So I think ultimately also it came down to we just couldn’t not do it to use a double negative like the idea became so compelling to us that it we said like. I don’t want to leave this opportunity on the table this feels like the right time and it feels like the right idea like I would feel I’d regret it and I’d feel incredibly stupid if I didn’t jump on this opportunity and take this idea and try to make it into something real so it was really that like I ran out of excuses not to do it and I think that that’s what pushed me into it saying. You know if I don’t do this I’m going to kick myself enough.

Alejandro: So then obviously you know you had to give your notice at mckinsey. But but how was that phone call where you know you called David and you say hey screw it. Let’s do it.

Michael Botta: Um, you know you know what’s interesting about that. Um I remember we had taken a family vacation to Barcelona and I talked to David and you know the hours were different and the like the timing was all you know misaligned and I said to him like I’m in. I will do this with you but we need None more person you’ve got to call this guy John Funtane who I you know went to college with or both from New York he is the absolute best person I know at actually getting things done. He is like an incredible operational leader and John at the time was in Tokyo. So I was trying to organize these None -way calls between a guy in Barcelona a guy in Tokyo guy in New York and it was like impossible to get us on the phone at the same time but I was like David if we’re going to do this and we are now going to do it. We got to have John like he is going to be the missing piece to actually make this thing sing and I still think that that’s definitively true. Because those None guys met John came back from Tokyo and we were all able to get together in New York when everybody was back there but I will never forget you know two a m in a hotel room in in Barcelona trying to like do a whatsapp call with John or I don’t even know what year it was was like you know Skype at that point or who knows but getting everybody collected. On one call to talk this through and explain like hey you None don’t know each other but you’re about to be best friends like we need each other to do this. This is the right crew to build something.

Alejandro: I Love it So now for the people that are listening to really understand it. You know what ended up being the business model of says I mean how how do you guys make money.

Michael Botta: It? Yeah so sesame is a pretty in lots of ways its pretty standard marketplace in that we work with yeah, both sides we engage with Clinicians who are independent all over the country to build out listings on this platform. And they are listed on the basis of their licensure of their availability of the services that they offer and they can modify those and set their own pricing on the basis of you know time of day day of week time of year they can do that dynamically and reflect their value at any given time sesame separate From. What they charge sesame charges is transaction Fees. So It’s very much a take rate on Marketplace fees. Um, and consumers use us to shop like they would for any other shoppable service I think it’s incumbent on us to both you know, spend money on customer acquisition make sure that we are. Informing customers as well as we possibly can about the variety of options and how they compare how they should make their choices. Um, but especially as when we started we were doing predominantly just transaction fees on Services. We started doing only in-person Care. So The only things you could do on sesame were um. Seeing a doctor in their office. You know getting a lab in the laboratory imaging at the imaging Center. We’ve since expanded to virtual care as well. So We’ve got a pretty robust Telehealth business here. That’s now sits side by side and you can choose either option for most clinicians. Um, we’re also building out more membership Models. So where you can have a membership to sesame the platform and eventually have a membership to an individual medical practice or an individual clinician to really have them as your own doctor. So You know we we make money based on take rate and now the memberships. We Really think about it as. A markedly more affordable option for most people who care about how much their health care Costs. You know we say it’s you know it’s None price but whole quality medical care with actual prices upfront that you pay on the sesame platform you lock them in and you’re guaranteed a rate.

Alejandro: Now in this case, you know for you guys. You know when you got started back in September Two Thousand and eighteen officially with sesame the you know the world was different. Right? Because then you know you all of a sudden had covid. You know that kicked in and and we went to more of a world where you know you would see like nurses and doctors on the front cover of of magazines and newspapers which was unheard of how would you say that covid has shaped up. Um, says I me and the way that you guys think about the business.

Michael Botta: And it is incredibly different now than it was before ko I remember you know, very stupidly sitting in the office and people asking like oh should we be worried about this coronavirus like is it going to have an impact in everybody’s lives. It’s like oh you know these things pop up all the time you know sars. You know lots different diseases I kind of doubt it I don’t think that we’ll see a huge impact on this I was dead wrong. So obviously we went from everybody working together in offices we’re in New York and in Berlin to everybody working remotely and that’s just our office. What was much more important to the business was what it meant to get medical care in America changed. Immediately. So all of a sudden you had lots and lots of medical practices that were either saying hey we’ve got lots of availability. Lots of open appointments but nobody wants to come in because everybody staying at home or you had lots of practices saying we’re not taking anybody in person like no more in person care. We’ll do something on the phone or we’ll. Hack together a Zoom or a Facetime call to see our patients is to make sure we can keep providing care and so when sesame started everything we did was in person care like I said but we really you know sat down with the team remotely over you know Google meet and Zoom and said look this is a defining moment for this business. If we want to live through this pandemic. We need to create an incredibly easy to use virtual care option that can sit side by side in person care. So basically any clinician who wants to on this platform can offer both. They can say you can come to my office. But if my office is closed or if you’re not comfortable with coming to my office. We can do a video visit so we put in the work I mean our team was you know 24 hours for weeks building out a fully functional fully secure so hipa compliant for American Healthcare Law Telehealth platform that could plug in and exist side-by-side with our infrastructure that we could schedule. We could send people to the same way. It was really important to us that you could use it on any device so we made sure that our tech did not require an app you could use it on a phone to use it on a computer on a tablet and that we could have telephone backup sort of somebody’s connection was bad or they weren’t you know tech savvy yet. We could do a full intake and. Yeah, a clinician could follow up by phone if that was the right path to meet them and I got to say that was a huge unlock for us because pre pandemicdemic you know we had started off in a few different markets across the country just in person and during the pandemic. We scaled to the entire country in all fifty states in every market. We’re able to do things like. Incrementally offer malpractice insurance through us to the clinicians who are using the platforms that they could feel more confident that they could practice. You know, completely using this infrastructure and do telehealth all of those were really I mean these things sound kind of obvious now but they were the wild west at the time even the idea of like how does insurance work.

Michael Botta: How do we navigate? you know, making sure that these clinicians have what they need and can collect the right information from a patient to give good care. The pandemic forced a lot of that on everybody and I think yeah, there’s there’s a number from a study that I saw that something like None times more people tried virtual care. During the pandemic that had ever tried it beforehand and sesame was really one of the biggest places people were doing that we saw a lot of volume across the whole country and lots of clinicians who once we built that infrastructure and once that you know Manhattan project for building out a full-featured telehealth platform was complete said you know this is how I’m going to practice. I’m going to join this platform I’m all in so let me use sesame as my my home for finding patients.

Alejandro: Now The um for you guys I mean it’s been quite a remarkable journey to on the capitalizing side of of the business I mean you’ve done a few rounds So wokas you know first and foremost how much capital have you guys raised late.

Michael Botta: So in total as of the series b we’ve raised about $75000000

Alejandro: And obviously you had you know heavy hitters you know coming in and investing like general catalyst Google as well. So so give us a little bit of a walk through what has been that a progress and transition from one financing cycle to the next.

Michael Botta: Sure, um, you know when we raised our series a which is the round that’s led by general catalyst Joel Cutler who’s you know one of the founders of general catalyst joined the board and I’d say you know the series a you know we had some initial proof points but it was really based on. You know the idea and the vision and the people so we could show that yeah people are willing to use this platform. They are you know they’re they’re learning how to use the internet to shop for care in areas where that’s possible. But we have a lot still to prove at the series. A. It was incredibly beneficial to have somebody like Joel join the board Joel somebody who built you know. He built his own marketplace platform in Kayak and learned a lot. Obviously he’s built a none companies since then has been on the board of a none companies but he’s somebody who had done it and who had taken this concept in another industry and also tons of healthcare expertise so that was a tremendous value ad for us. It was something we were really excited about I remember. Um, as we were negotiating the round I was on the tube in London with my wife. It’s like our none vacation since starting the company and just you know sweating bullets making sure that we get the round done like every detail making sure every I was dotted every t was crossed that we were locked in because they were exactly the partner we wanted. For the series a and it was such a relief to like land on you know, get back in New York and be like we’re good. We get. We have what we needed so that that was huge for us. Um, as the company kept scaling. You know as we led you know through the pandemic um man where we excited to meet. You know Kathy Friedman who’s the newborn member who joined and the team at gv formerly Google ventures those folks I think also really got it. They’ve made none of excellent health care investments. They were incredibly excited. You know, just like we are about the breadth of. Clinical services that are available on this platform and you know look around. It is a pretty tight None fundraising environment right now like financing is not the same as it was last year you know at the beginning of the pandemic. Even so it was a real thrill to get. You know our None choice the exact people we want to be doing this with in gv. Onboard um, we’ve had amazing people join with them so gv led the round you know virgin group joined us Telesoft joined fmz joined. Um, we’ve got a bunch of other folks who are with us who have been incredibly helpful. Coefficient capital industry ventures giant ventures avg the folks at alumni ventures. Um, an incredible group of people to work with both those who are on the board. Those were observers those who not on the board feel very fortunate to have the backing that we have like a lot of sharp sharp people with incredible Health Care Expertise incredible marketplace expertise who have helped us take this from you know, an idea.

Michael Botta: Was based around local in-person care to something that can really do everything across the country and.

Alejandro: And in this case I mean as you’re talking about where you guys have taken things just for the people that are listening to get a better understanding on the scope and size of says ie today I mean anything that you can share in terms of number of employees or anything else that you feel comfortable sharing.

Michael Botta: Yeah I mean I can talk a little bit about the growth. So hundreds of thousands of customers. At this point that use sesame and the comeback to sesame for repeat care. Um, we’re growing quite a bit so growing 25% month over month revenues up you know, 500% year over year so

Alejandro: But friend.

Michael Botta: Utilization of this platform keeps growing which we are thrilled about none of clinicians who are listed so independent practitioners who use the platform and the team keeps growing. So. It’s interesting. You know, like most companies we weren’t exactly thinking about this being a remote organization pre pandemicdemic. Although. We had a team in New York and we had a team in Berlin and you know we slow folks in New York and still folks in Berlin but a lot of those folks have moved so they live in Miami and they live in Portugal and they live in Boston so it’s very much a distributed organization now across the team and we’re learning how to live with this new normal. You know work together without seeing each other face to face every day.

Alejandro: And when you’re building a marketplace like this. What would you say has been the most challenging aspect of a of the business.

Michael Botta: Guy so twofold. Um, one is you know any None sided marketplace you got to make sure you got your sides inmb balance and that you are mindful about which one is going to be harder which one can you take some you know initial shortcuts to you know jump start liquidity on which ones are going to take more work for us. We did and. A ton of legwork to get the initial roster of clinicians on board and when you’re starting something like you know the clinicians you’re working with are the true believers. The people who are like I believe in you I believe in this idea I understand that you’re not going to send me a lot of patients immediately. But I want to grow with you and god I’m so grateful to those initial clinicians who are largely in i. Kansas City Missouri which was the first city where we really started building wonderful dedicated clinicians incredible doctors, incredible partners who ran imaging facilities labs you name it who understood what we were going for and recognized. We could add value to their businesses. Um, when it came to customer acquisition. We had a lot to learn. Ah, we hired a team and we built a team that had experience acquiring customers indirect to consumer spaces and so we knew you know what channels are sort of the defaults to think about you know when you think about online acquisition are you to do social or you do Sem or you do organic do partnerships or new affiliates you name it. But selling health care online and building trust with people you know for something as important as healthcare that was new to everybody so we did lots of experimentation particularly in that none market in Kansas City where we started trying basically every channel you can think of to measure what conversion would look like what. You know how many eyeballs could we get on this product where those people convert or not and use that information to iterate and iterate and iterate lots of trial and error. Lots of mistakes lots of learning to say where do we find the individual customer who can be a patient and use the sesame platform and use it on a recurring basis. Feel really good about that team and the work that they’ve done. They have built a real engine and our acquisition engine is something. We’re really proud of but you know like any twosided marketplace we’ve put in a lot of face- to face time with building the supply side. Lot of relationships with clinicians who we value extremely highly because they are the engine of this place and then lots of work learning iterating testing and developing customer acquisition strategies that are scalable for this business.

Alejandro: And for this business for sis I mean imagine if you were to go to sleep tonight and you wake up in a world where the vision is fully realized what does that world look like.

Michael Botta: And so I think it’s a world where anybody who cares? How much their health care costs knows that they should look at sesame as the None place to go We like I said we think about ourselves as half price. Whole quality medical care and we recognize. Like some people have incredibly generous health insurance and they say like I’m interested in convenience like I’m not thinking about value or price I would still love for those people to look at sesame to understand who’s available near them like what’s their availability which Clinicians how can I make a decision. How roughly how much does that cost. But our sweet spot is anyone who cares? How much their healthcare costs because they’ve got a high deductible because they’re uninsured because they’re between insurance because you know they’re just trying to save money sesame is the None place they go if they say I need a doctor I need a test I need a lab I need a procedure you name it. We want to be top of mind. For anybody who cares about the cost of care.

Alejandro: So now imagine if I was to put you into a time machine and I was to bring you back in time maybe to that moment where you were in Barcelona speaking with your None cofounders and and trying to to envision you know a world where you were gonna bring up. Solution and and and and really in the form of a company and imagine you were able to let’s say join one of those conference calls that you guys were having at two a m in the morning and here is your you know, ah yourself now with the knowledge and everything that you have and being able to go back and just joining you know one of those conference calls and. And being able to give those 3 you know youngsters you know they’re from from a few years ago 1 piece of advice before launching a company. What would that be and why given what you know now. Okay.

Michael Botta: Um, yeah, we’ve we’ve learned. Yeah, so many things from 4 years in building a company the the number None thing I would say is be comfortable moving quickly with partial information and changing direction quickly. So. You know, strong opinions. Loosely held are I think the most important philosophy for building. A company is be bold choose a direction but know what will make you say when it’s change this. We need to stop this. We need to do the other thing because that’s what life is like as a startup you you might have a clear initial business plan and a clear initial idea of how the company is going to work. What you’re going to sell where you’re going to sell it who your customer is going to be and you will learn very quickly. How much of that was wrong and how much of that you misunderstood and how much of the market is really going to teach you who your customer is how to make your product fit your market being willing to move quickly on those changes and take what you learn and implement it That’s the biggest thing that’s that’s why we’re here. It’s because we you know we didn’t get too precious. We didn’t say that any None idea had to be right because a lot of times we were wrong and we learned by doing not by thinking.

Alejandro: I love it now Michael Botta: for the people that are listening. You know what is the best way for them to reach out and say hi.

Michael Botta: Sure I’d love to hear from anybody who listens to this please reach out I’m on Twitter at at Michaelbotta B Otta send me a note. Um and I’d be happy to chat. So if I can be useful to somebody who’s thinking about starting something or would love to chat. Otherwise I’m here. So. Twitter is probably the easiest way I’ve got the I’ve got the bird on my phone whether or not elon owns it I don’t know but we’ll see what happens I’m around.

Alejandro: Ah, amazing. Well hey Michael Botta: thank you so much for being on the deal maker show. It has been an honor to have you with us.

Michael Botta: A None thank you for having me I really appreciate it.

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