Oron Afek has already built several companies from the ground up. His newest venture, Vim brings together all that he has learned so far, and has already attracted $100M in capital. Oron has successfully acquired funding from top-tier investors like Optum Ventures, Anthem, Frist Cressey Ventures, and Walgreens Boots Alliance.
In this episode you will learn:
- How Vim is innovating and scaling in healthcare
- Pivoting to create a successful business
- What investors want at each round of fundraising
- The best books for startup entrepreneurs
- Creating platforms that change the world
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.
The Ultimate Guide To Pitch Decks
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 Oron Afek:
Oron Afek is the co-founder and CEO of Vim (www.getvim.com) – improving the performance of healthcare networks in the US. Prior to starting Vim, Oron started a telecommunication startup and a gaming company, operating out of Tel Aviv, Israel. Oron received his law and business degrees from IDC Herzliya.
See How I Can Help You With Your Fundraising Or Acquisition Efforts
See How I Can Help You With Your Fundraising Or Acquisition Efforts
Connect with Oron Afek:
Read the Full Transcription of the Interview:
Alejandro: Alrighty. Hello everyone, and welcome to the DealMakers show. Today we have another founder coming from Startup Nation. It’s amazing; the incredible founders that come out of Israel are unbelievable. This founder today has done it multiple, multiple times, and now he’s looking to really make a difference in a market that is massive. We’re going to be talking about marketplaces, how to think about adjusting the technology, the business model so that you can reach that level of scale that makes sense for everyone. I think that you’re all going to have a blast listening and really getting inspired with our guest today. So without further ado, let’s welcome our guest today. Oron Afek, welcome to the show.
Oron Afek: Thanks, Alejandro. Thanks for having me, man.
Alejandro: Originally from Startup Nation. Tell us how life was growing up there.
Oron Afek: It was a really small place, super tight, and had some revealing experiences growing up. I’m sure I was the best soccer player, best student back in school, but growing up realizing that I’m not among the best people when I got to the military. Everyone in Israel goes to the military and has this fusion reactor happening where you meet people from other places that you may not have been exposed to before. I think my first few weeks in the flight academy, where I started surrounding myself with really good people and that we’re all smarter than me and more talented. I felt that that was the best experience I could have as a younger person coming to real life. I think that experience still resonates.
Alejandro: One thing that resonates that I find perhaps from all of the founders that I’m interviewing that go through the military process because it’s like a thing that you need to go through there. But in this case, I guess the level of discipline, as well, that it brings to the way that you’re viewing things, to the way that you do business, to the ethic that it gives you, too. In this case, what did you get out of going to the military and Special Forces there in Israel?
Oron Afek: Yeah. I think the ethic is a hugely important point. Most of the time, you’re risking your life because that’s the absolute best way to do it. In most cases, it’s the best way to do it because it can minimize hurting lives on the other side, meaning always use fighter jets to solve problems. The majority of the problems are being solved with an understanding of the other side in hand, and that’s where you’re willing to risk yourself. I think the ethical aspects are also what drive excellence in some of the units and how people farther down the line starting their own businesses and joining companies. I think that’s huge. The other thing is the sense of competitiveness that is not individualistic, so working as a team is really critical for success, and I’m sure that folks here in the U.S. are going through similar processes when they’re joining a football team or a swimming team, and it’s always a team effort and the experiences in similar stuff. Also, in the military, winning as a team is a huge pillar, a huge component. I think the whole notion of discipline, as you said, is critical, so how do you overcome other desires—overcome ADHD, overcome things that you just want to do and just sit down and get focused for a long period of time. I think that’s very helpful.
Alejandro: In your case, it’s amazing because you didn’t look at the corporate side of things too much. You went right at it after this, and you started your first. You went after one company after the other, so let’s get into that. Why did you decide that startup life was your thing, just building and scaling companies, and then walk us through how you brought your first one to life, which was Cellxpert?
Oron Afek: I think for me when I was 14, 15 until I was 18 going into the military, I was trying to work for some companies and trying to make a living in summers and trying to make some money. I felt that I wasn’t a good employee. My dad has always been independent in construction, his ability to praise on destiny, make decisions, and eventually, he works harder than anyone else, but he has this freedom of choosing, getting up, and doing what he does, and he likes it. So I think I sensed that I might not be successful if I went and worked for a company—the few experiences I had before the military working for other companies that felt very limiting to me. I guess during that time between the military and starting my first company, I felt like. “I’m better off starting my own thing.”
Alejandro: One of the things I notice, as well, and thought about is how you’ve jumped from one industry to another, which I think gives you the knowledge transfer and that level of advantage over others where you’re able to bring that knowledge from another segment that you learn into whatever segment that you’re looking to tackle. Talking about the first industry that you got involved in, why the communication space? Tell us what you were doing there.
Oron Afek: Completely opportunistic, Matt, a very, very smart person in university back in school. He had invented really good technology that is able to deliver applications into feature phones. I thought, “We’re solving a huge problem here.” We talk about the feature smartphone jobs and the iPhone kind of era. You had so many different feature phones, Nokia, Samsung. They had hundreds of different variations of operating systems. What if we could deliver a consistent applicative experience across all feature phones with a similar fee. Not too different from what Vim does today, which I’m sure we’re going to talk about later. I was intrigued by that. I was intrigued by how technology can solve a big engineering problem. I had no experience with technology at that point in my life. So I think it was pretty opportunistic. Then, I think that the fact of our working the company, trying to build it. I’d been there for four years. My partner still continues to this day, and he’s very successful. Back in the day, I think those early days, given it was very opportunistic. I think that was also, for me, what was pretty telling like, I should be moving on to something that is less opportunistic, something that is more intentional from my standpoint, something I can connect with in the personal level, not just cool technology to solve the problem. I truly want to connect with the problem.
Alejandro: So from this experience with Cellxpert, what was your lesson because right after you went at it again, and you went at it in the next segment that you went in, which was gaming. What was your lesson with Cellxpert?
Oron Afek: I think the main lesson is it’s not going to be enough to have really good technology. Amazon is calling it working backward. You need to start from the customer, the problem, the desire, the absolute number one or two priorities that that customer segment has, and then try to solve for it versus finding a hammer and look for a nail. I think that was the biggest lesson to learn at that time.
Alejandro: Let’s talk about continuing here in the path of lessons. What did you do with Smite, the gaming company, and what lesson did you get out of that experience?
Oron Afek: I worked with some incredible people, and that was my first exposure to something that is more direct to consumers giving you more instant gratification, working in more of a high-speed environment, using data to understand behavior. That was a really revealing experience. Up until that point, I was mainly dealing with large enterprises, mobile operators, and so on, and so forth that were really slow to move. I think that experience was really rewarding from that standpoint. I think there was definitely a need. You can see a need with using data, and you can see what people are asking and what that means; it’s so much easier. At this point, also, I still wasn’t happy. My happiness was still reflecting on the good old days back in the military alongside good people, and I was like, “I’m still not happy. I haven’t found my happiness. Should I just go and work for McKenzie? Should I just go and find a regular job?” That’s what led me to take a couple of years off. I went to Spain and started to do some Ironman. I met two German brothers in Barcelona, and we did some real estate business there, and that gave me some time to really think through what I’ve been through so far was a 30-year-old looking for my next kind of thing. I really tried to take on those learnings. I think on the gaming side, really cool mechanics, really cool and fun and satisfying to take this with some data, but on the other hand, it was still missing that mission part that wasn’t closed.
Alejandro: I’m a little bit biased, but definitely Spain. What a wonderful country to get inspired from.
Oron Afek: I’m still waiting for closure, man.
Alejandro: I hear you.
Oron Afek: With COVID, who knows.
Alejandro: Hopefully, we are able to see the end of the tunnel with this COVID thing, but in this case for you, it really helped to incubate what became your current baby, which is a rocket ship. I’d like to talk about it a little bit here. I’d like to really have you bring all of us, with the listeners, through what was the moment where you came across this idea? And what were the sequence of events for you to bring it to life?
Oron Afek: I appreciate it. For me, it was really [12:01]. I use a spreadsheet. It’s funny. I don’t think I’ve ever told this story. I just use a simple spreadsheet, and I said—it’s a simple exercise saying like—this was 15 years ago, and I could start any company anywhere. What would be that company? Famous company. What would I be proud today to have my name on? The names I saw on this list were Airbnb, Uber, Amazon, and a long list of other marketplaces. I was feeling like I’m really intrigued by this dynamic of supply and demand and how to create efficiencies, and how to drive value to the top. Then I said, “All right. That makes sense. Maybe I can find an opportunity to start a technology company in a market that strives to have a marketplace.” During that time around 2013/2014, Obama Care really started making headlines here in the United States, and I started to get more exposure in Israel and Spain about healthcare and U.S. healthcare in particular. I got really intrigued by how this supply and demand-driven marketplace has been the single most expensive industry, the highest-cost industry in the world. The more I dove into the mechanics to define self-health care, such as the cost of care, the quote of care, and overall the prices and the variation of price is not correlated with quality. I was more and more intrigued. I said, “That’s exactly the underlying dynamics that were in any other industry like the tax industry or stay at other people’s homes industry, the hospitality industry. Things have not been priced adequately where quality and cost are creating a value score. That was really intriguing, and that was the reason why we started back in the day, booking Vim in 2015. I got into this with two co-founders through Sequoia, Israel. They’ve been the founding investor in this company. They introduced us three, and we set up the company in 2015, and it was an awesome journey.
Alejandro: What ended up being the business model? How do you guys make money here?
Oron Afek: We quickly realized that while we would love to start a direct-to-consumer marketplace like the companies I just mentioned: Uber, Airbnb, and Amazon, which would give us the speed and data-driven approach like I had in Smite will give us that ability to make quick direction and involve. U.S. healthcare is not a direct-to-consumer market. U.S. healthcare is built via insurance. Folks that use healthcare services need to have insurance. We really started to work with large enterprises as our customers. Because we wanted to be more nimble, we started to work with employers. Our first customer was Disney, actually. Disney is a big employer. Some people don’t know, but they take risks for their population around 160,000 employees back in the day. They were using us to—we started to think we were going to be Amazon. Where are the books we’re going to be selling? They’ve been using us to get people to the right MRI, CT scan, PET scan, high-tech imaging service where they had a need. We are able to go and work with providers that have those services and by just getting somebody an earlier appointment where there’s underutilization—paying the provider out front with cash. We actually got really good discounts over what the insurance companies were able to negotiate. We were getting 40% to 50% off the insurance price of those services. It was pretty cool for a small company that worked with their employer. The challenge here—there was a dual challenge. 1) An employer, even if you operate in a place like LA, and you have Disney next to you, which is one of the biggest employers, is still a drop in the ocean. You’re dropping in the ocean of millions of people, so the geo-density that you are creating to really manipulate and influence the supply side design is very limited. Given if you can’t just go and buy Google ads or Facebook ads to generate demand, you need to work with those employers. Once again, it’s really hard to solve that chicken or the egg problem. That’s problem number one. 2) Even if we’ve been able to attract maybe employer lives and create some sort of a marketplace dynamic, those patients are not the true decision-makers being in the marketplace that is called healthcare. The real decision-makers are the doctors. They’re making most decisions [17:05]. I think about it as Pivot #1 for the company that we need to stop working with employers. We need to start working with large insurance companies that give us geo-density. We need to stop working with patients. We need to start working with doctors to influence decisions and really influence where things are going. That was the first and biggest pivot of the company.
Alejandro: Obviously, you guys have raised quite a bit of money, and you were alluding to Sequoia earlier. How much capital have you guys raised to date?
Oron Afek: A little bit over $100 million so far. Sequoia, GreatPoint Ventures still remain the largest shareholders in the company, and they need to back us up over the years. We really started to realize if we want to work with payers or insurance companies and then subsequently want to engage with providers, given that every provider sees multiple different insurance companies, we need to have what we think about today as a multi-payer approach to our product. We need to represent multiple insurance companies and not a single one in every given market to drive provider adoption. Once again, we talk about the smart dynamics and how you produce them. So early on, we recognized the fact that we need to have sounder insurance companies invest within our company. It’s all public, and a health group, BlueCross, Florida Blue, or something investors in our company work with is now an investor in the company. We wanted to bring them together around the table, the decision-makers, to drive that multi-pair adoption that has proven to be critical.
Alejandro: It’s interesting, so walk us through what has been the transition from one cycle to another because one thing that was very interesting to me, and I’m sure that the listeners are also going to find it interesting too, is that how early the relationship with Sequoia, which is one of the best venture capital firms in the world, how early that happened in the process for you guys.
Oron Afek: I think that in my case, it happened really early to the extent that the partner who invested in us from Sequoia Israel, he and I actually served in the same military units. The relationship started earlier, and we were talking about this concept when he first became a partner in Sequoia. He was helping to design the concept, which was really from inception very early on, because of the partnership, and we still see it as a partnership. He was the one introducing me to my two co-founders. This may be an extreme story to what other people may experience with venture capital firms, including things like Sequoia. I’ll always be grateful for that guy, Tom Morganton. He’s now with Litespeed, by the way.
Alejandro: Got it. How did it change the expectations on how you were thinking about raising money from one round to another one? How many rounds have you guys done so far?
Oron Afek: Two have changed.
Alejandro: Let’s talk about how the expectations change from one to another and how you also were approaching them.
Oron Afek: Absolutely. I would say two have changed because Sequoia did the Seed, and then we did an A Round. Now, we just completed our B Round. The Seed Round was mainly around: look for someone who can believe in the team and the industry but are not necessarily married to the idea. They appreciated that ideas could change, but placing a bet on the right team, in the right industry, at the right time, you know something is going to happen. That was the need of the early investor. The A Round that was GreatPoint Ventures based out of Silicon Valley and Andrew Perlman was mostly to focus on “Have you guys found some initial interest, some initial success, not massive revenue-driven success, some initial product/market fit within such a huge industry that can scale?” Now, they didn’t ask us. They didn’t want us to prove it can scale, but they wanted to check our thesis like, “Have you landed on an idea that can theoretically scale? And if it can scale, can it solve a huge pain point? That was still very classic for someone like Andrew Perlman and to beat such a round because he’s an entrepreneur. He understands where we are really early, and I think if we went to strategics at this point, it was too premature.
Oron Afek: The B Round was more of a: we’ve done this a couple of times. Now we try to get to more meaningful revenue. We want to get customer commitment, given that our industry has so many different players. They’re all very strong and entrenched. How do you break through those walls to bring them together? That was calling for a strategic round. So we started to work with large insurance carriers, especially in the round, and also those investments were all tied, and they’re all tied to commercial expansion with those companies in their perspective [22:29]. That, obviously, was a very, very useful thing to do. I think it was a good choice of the right investors at the right time.
Alejandro: It’s very interesting what you guys are doing, but one thing that is for sure very interesting is the fact that you’re dealing with three different things at the same time. Two at the same time is the fact that you’re building a marketplace like you’re building two companies at the same time because you’ve got the supply and the demand and all of that stuff happening. Then, at the same time, you have the other adversity or the other uncertainty that is created by being in a regulated type of space. So how did you find the medium in that triangle of uncertainties to not only survive but then also thrive as a company?
Oron Afek: This is a super-thoughtful question. At the beginning, we actually were sure that we could just go and pay physicians to make the right decisions and thus drive cost reduction and quality improvement. It’s funny, but you could save $1,500, $1,600 per click, with a simple decision a doctor would take. It’s unbelievable, and that’s just the average. You could save $20,000 off of decisions on average downstream. It’s such a huge industry. Every decision makes so much downstream impact a positive or negative. It depends on how you make it. Apparently, you can’t just pay doctors to do what you want in healthcare. Paying someone to refer to a specific place is actually a huge law violation. So the idea was, in the beginning, which ones do the right thing? The regulator in the United States, like CMS, is encouraging companies to do the right thing, understanding this regulation and how do you navigate within it, and how do you align yourself with frameworks that today are known to be called value-based care. How do you align yourself with value-based care, frameworks that create a lot of incentives to payers and providers versus trying to reinvent the wheel and do your own thing? That, obviously, requires a lot of things that we didn’t have back in the day, which is understanding the underlying healthcare ecosystem. So it goes beyond the technology and how integrated service data it gets into. One of the underlying economics seen in the healthcare industry and what can we really do in the U.S. for the business model? What can we really build for? What are the things we can incentivize for, and so on? So, it’s a pretty tough thing to navigate. But thankfully, [25:11] government and CMS have really been in favor of interpretability and creating a seamless integration between data, workflows, and incentives. That wave that started the thing when I got here seven years ago today is in its peak, and it’s only going to continue and [25:29].
Alejandro: Nice. Let me ask you this. How big is Vim today? Is there anything that you can share in terms of the number of employees or anything else that you could share?
Oron Afek: Yeah. Vim is around 140 employees across Israel, the U.S., and the Ukraine, where we have in Tel Aviv most of our product and engineering teams. We have engineers and some product resources. In the U.S., we have our go-to-market teams and starting to build now more product resources here as well. We are active in six different markets, the biggest markets being California, Florida, and now expanding into New York. What brought me to New York and California almost seven years, so I just moved here. That’s where the company is serving very large insurance carriers and many thousands of physicians.
Alejandro: Nice. Imagine you go to sleep tonight, and you wake up in a world five years later where the vision of Vim is completely realized. What does that world look like?
Oron Afek: I don’t know, and that’s the exciting thing. I’ll give an example. I think when Steve Jobs came up with the iPhone, he didn’t realize what he was going to do to certain industries. I think one industry, and I want to think about it as a comparable. Take fossil fuels, for example. When you came up with the smartphone, there are two [26:52] innovations that really affected and will affect the fossil fuel industry. One is leaky mined batteries and how so much competition and smart manufactures came into the industry and competing for smartphones. That reduced the cost of leaky mined batteries and improved the [27:09] length. That yielded innovations like Tesla and other electric car companies that haven’t thought they could actually use batteries to drive a car. I think that was the first wave of innovation that fueled the cell-driving cars that are electric. The second thing that was enabled is marketplaces like Uber and Lyft that made transportation as a service a real thing and started eating into private car ownership. The combination of those two things, Tesla as a service, reduction in car ownership alongside electric clean vehicles, is what basically caused a lot of money to be invested in tech from countries that originally were counting on oil. Five years from now, I would love to see things that I may not be expecting today. So if being successful, our operating system between stolen, every provider, ideally in the next five years in the United States would become the facto way of any innovator in healthcare to do business with physicians and insurance companies. We just want to be that canvas, that browser, that iPhone that people use to build their own innovation. That’s why, for us, success would mean that we are deployed in as many places as possible and giving those other entrepreneurs ways to innovate and build their own apps. We don’t think of ourselves as can solve all the problems and opportunities in healthcare, but we truly believe that we can be that browser, if you want, to give other people [28:43].
Alejandro: I love it. So imagine that I put you into a time machine, Oron, and I bring you back in time to that moment where you were coming out of the Special Forces, and you were looking at a world where you were probably going to start something to put a gap in the market where you saw a problem and bring a solution. If you had that opportunity of speaking with your younger self and giving that younger self one piece of advice before launching a company, what would that be and why, given what you know now. Oron, it’s been three companies now. Actually, this is the fourth one that you’re in. You have your fair amount of lessons, so imagine if you had that advantage of just having that younger self and granted that younger self was listening because typically, when we’re younger, we don’t listen to anything. But imagine you were listening. What would you tell that younger self?
Oron Afek: The first thing: surround yourself with people that are 10x smarter than you, and put your ego aside. Asaf, my co-founder, he’s 10x smarter than I am. Get to be really close with them. You don’t need to have 100 people. Three or four will be enough. Surround yourself with them. Good to Great is an amazing book. It says, “First, put the right people on the bus.”
Alejandro: Oh, yeah.
Oron Afek: Then decide where the bus is going, so get the right people on the bus is the first thing. The second thing, put your ego aside. If you understand you made a mistake, if you discover data or feedback that you need to course-correct, just put it aside. There’s no ego. Just course-correct and just go to the other side. That’s what’s really needed. I think those two things are what I would love. Back then, I was afraid to surround myself with smarter people. I think I was afraid to admit mistakes and change. If I was going 15 years back, those would be my biggest two things.
Alejandro: I love it. Amazing stuff. Oron, for the people that are listening and watching, what is the best way for them to reach out and say hi?
Oron Afek: Just email me at [email protected]. I would love to hear from you, and I’d love to hear your thoughts and suggestions.
Alejandro: Amazing. Well, Oron, thank you so much for being on the DealMakers show today.
Oron Afek: Thanks for having me, man.
* * *
If you like the show, make sure that you hit that subscribe button. If you can leave a review as well, that would be fantastic. And if you got any value either from this episode or from the show itself, share it with a friend. Perhaps they will also appreciate it. Also, remember, if you need any help, whether it is with your fundraising efforts or with selling your business, you can reach me at [email protected].