Omada Health ($1bn+ Valuation)

It was really hacky. My technical co-founder built the whole thing himself, but it did include all of the key elements. We went through a couple of versions. The very first was me being a health coach in a small group, mailing people some scales. The second — which was more robust, what I'd call our MVP — was my co-founder taking a turn being the coach on a truncated program. But it included curriculum, a social community, a connected scale, tracking elements. It had the light version of all the needed pieces.

And there was a big moment of, "Well, will it work for anybody?" We had, I think, half a dozen members in the Chicago area in this MVP, and we got good feedback. They were like, "Wow, this is interesting. I didn't expect this to provide a level of accountability and support that would actually help me progress. And it has." That was enough to take the next step and just keep building over time.

I think it included things that hadn't been tied together before. A whole health-coach human element that supported you — you got to see a video of your health coach, which in that version was my co-founder, Adrian. A social community. The connected scale that was automatically linked to the account. Content curriculum. There was a clear timeline, specific objectives, visibility to progress. You could find a version of each of those in a product that was only that one thing, but it was the first thing we saw in the market that really tied all of them together in a holistic experience.

It's funny. The revolution for Omada is piecing all of these tiny ingredients together in a way that's differentiating. There have been randomized control trials on great food trackers — they never work. So the way I sometimes describe it is: you're writing a symphony. You can't do it without all the instruments, but they also have to play on a timeline in the right way. And therein lies the art — to make something that's compelling and works.

The other thing we did differently is, right out of the gate, I asked, "Well, what would my medical school classmates need to believe this worked? Data." So we started publishing right out of the gate. I actually thought that was more common in digital health — it turns out it wasn't. We just started generating evidence, and once we revved that up and started producing clinical evidence in peer-reviewed journals, that enabled more meaningful enterprise conversations. That really earned the trust within the healthcare system.

We had our MVP, and through that we had these cellular-connected scales — we'd sent out 150 for the members we were supporting in that pilot. Then we realized we had to make a change to the firmware based on some super-esoteric thing relative to scale taring. So we had to work with all of our members to mail them back to my co-founder's living room — 200 scales in the living room. We had to open every single one and solder and flash the firmware. It was like, "Oh my gosh," days and days of just being our assembly line.

And we had a curriculum as part of this. We always tried to get ahead of it, but the next week's curriculum would unlock for users at midnight on Sunday, and we always had ambitions to have it ready to rock by that Wednesday. At this point it was basically us writing it, and it would invariably be at 11:58 where we're like, "Let's do a copy." There were a lot of those moments — because you're not blessed with enough resources or expertise to build it out yourself. I was in Photoshop building the early designs; I was our bookkeeper, modeling the business.

Yeah, and it's super fun. Even those harrowing moments at Omada have been some of the most fun. The way I describe it as the company grows: the frequency upon which you face an existential threat changes. In the early days, every month something could conceivably kill you that appears in front of you. Then as you grow, it shifts to every other month, then every quarter, then every six months, then every year. In the early days it's harrowing, but it's a lot of fun.

Healthcare generally is a very hard place to build a business — I didn't even appreciate the level of difficulty. I now have enough SaaS entrepreneur friends and consumer entrepreneur friends: it's hard to build any business, that's the truth. But I do think enterprise healthcare is the double black diamond. There are just more stakeholders, the sales cycles are different, the way you need to fit into the value chain is different, the regulatory environment is different. It's massively complex.

There are a lot of tiny little things we've done that either aren't known or wouldn't be appreciated. We worked with some of our partners to figure out how — even though we were digital and didn't have clinics — to get into their provider network and file claims on our value-based billing model, but through fee-for-service billing infrastructure. All this hacky, crazy stuff to fit into the existing infrastructure has really enabled our success. It was very difficult, but it's in the category of operational innovation that really makes the difference. And it's always the details — always that last T to cross and I to dot — that can be the difference between success or failure when you bring something to market that doesn't fit the usual mold of enterprise healthcare.

To bring you back into the world at that time: we had a very unique value-based billing model, which we still have. At that point it was actually on weight-loss outcomes specifically — it was really cool, and we still have contracts like that. We later switched to something simpler for customers but still value-based. And the question is: well, how do you bill for it? You can't just send your health plans or employers an invoice. I mean, you could, but then you're in the HR leader's budget — you need to be treated as proper medical spend.

So you have to figure out how to use the fee-for-service billing infrastructure to bill a value-based model. That's the operative question. We're like, "All right, we need a code." So we took our trials to the American Medical Association, and we actually got them to issue the first-ever digital-specific CPT code in US healthcare history.

It's a Category III code — which, for the geeks listening, means it's not priced, it doesn't go through the RUC, but it serves as piping. So now we have a code. Now we can work with our payer partners to file a claim on that code with this unique structure that uses modifiers to indicate what milestone we're billing on. It has a max allowable on their side to make sure the claim clears, sets us up as a group-specific provider so that if the employer's bought it, it works, and if the employer hasn't, it doesn't.

Some of our early plan partners helped us figure this out — Blue Cross Blue Shield of Minnesota was one early plan partner. I remember our claims teams were like, "Let's crack this nut together." We got in a room and figured out how to Apollo 13 it. And then they were so gracious — when we signed the next plan deals, they'd get on the phone with the other plans' technical teams and say, "Here's how we were able to set up a mod on our side." If you don't do that, you're not able to be treated as a proper healthcare provider — you can't bill in the normal way, so there's a commercial headwind. Those things really deeply matter.

It's evolved over time. In the early days we priced on weight-loss outcomes, which was pretty cool and cute, and buyers liked it — but it got really complex once we expanded to diabetes, hypertension, and MSK care. So today's pricing model is a monthly fee. Think of Medicare Advantage as a good mental model — a monthly fee that includes everything: all of Omada's scope of services, our care teams, devices, supplies. But it doesn't lock us into trying to bill for episodes of, say, when we message the person. It's only billed if people are still using Omada — we stop charging if people stop using it — and often we'll put performance guarantees on clinical measures on top of that. So it's fundamentally still value-based.

One unique thing about our business model is we don't make anything unless someone signs up and gets value from the service. In the health tech space, you'll often find PEPM or PMPM models where they charge a buck or two for the whole population regardless of who uses it. That provides access — but that's not Omada. We could in theory sign a hundred-thousand-person contract with a big employer and have no revenue from it if nobody signs up. I know that doesn't happen — we've gotten really good at driving activation — but that alignment with your customers has been refreshing to them.

It's very hard operationally. You have to get very precise in forecasting. Your marketing machine has to be absolutely working. You have to bottoms-up every single deal in pipeline, because a deal that's 10,000 people with a hundred percent email coverage — where we can email everybody — could be more valuable than a deal that's a hundred thousand people but, God forbid, they just don't have as many emails, or we're not allowed to do the contact outreach ourselves. So from a forecasting standpoint, it's more difficult.

But I think it's the right model. This is one of the many reasons the original DM industry failed: the challenge with the blanket PMPM pricing model, in my view, is that it doesn't create as strong an alignment as would be optimal with your customers. Because if you're in the company seat, you've got a steady stream of revenue coming in regardless of who uses it, and more usage compresses your margins — a little funky. So the incentive structures are: you want enough usage that the customer doesn't kick you out, but not too much because it hurts your financials. It's just not good. And by doing that, you're not aligning your price with the unit level of value you're delivering or your cost of revenue.

I think one should aspirationally always charge in a way that mirrors your cost of revenue and the value. That just hadn't been done. You'll find some Mercer consultants out there who'll say, "Omada killed the PMPM." I don't think that's necessarily true — it was an innovation in the early days, and now it's a more common model, which I think is great.

I do think so, yeah. The everyday employer is like, "I'm sick of paying these multimillion-dollar PEPMs with minimal usage. I want what I pay to be aligned with what my employees are getting." Which is good, fundamentally. And the comical thing is — if you actually peel back the way the financials hang together in our category, they're actually better businesses, in my view. If you look at the dollar retention and all the unit economics and the way things cascade, you create better businesses that are more aligned with customers, and the pressures to innovate are more aligned. So net-net, it's healthy. I'd say it's a more difficult business to operate, but it's a healthier one.

It's funny. I've always felt that we have an incredibly capable product, and building product has never felt like the hardest thing. It's hard, but it hasn't felt like the hardest thing — which is not true in the other world. Fitting into the system has been the thing we've been relentless about understanding in enough detail, because there are no shortcuts. The canonical joke is, "Oh, here's another Silicon Valley company trying to disrupt healthcare from the side — get ready for them to get beaten up." But if you really try to listen and figure out how to fit in with the system and the inertia that's there — love it or hate it — you just have to look at it.

Sometimes I call them the fundamental laws of physics within the US healthcare system that you just can't violate. You can view that as a constraint and then innovate within it. That tends to be more successful.

There are a couple of truths there. I describe Omada's strategy as "selective breadth" — really allowing the word "selective" to carry the weight of that sentence, because it's a heavy endeavor to expand to any new care area if you want to do a good job of it. Otherwise you're spreading yourself too thin and you're not going to be excellent in any of them, because it involves lots of clinical oversight, probably a whole publication plan, internal compliance, governance, product-team capability, new expertise areas. So it's not done lightly.

Then there are general entrepreneurship truths. Going from single- to multi-product is very hard. You see this in the SaaS world all the time. Investors love it if you go multi-product, because you have distribution — as you build more products, you don't need more salespeople per se to sell a couple of things versus one. Businesses and customers love it too, because there's a convenience aspect. So it's a common path in enterprise software, but it's canonically one of the most difficult, because all of a sudden you have to tune the way you talk about your company, the go-to-market motion, the way you train your reps, the way you pull in SMEs. All that second-order operational detail changes pretty significantly.

But once you've got it, you can expand to new care areas. So the short answer is: yes, we could. We know how to do it. Would it be overnight? No. It doesn't matter how big you are — your customers still put you through the ringer. Costco is an amazing, longstanding partner for Omada. They'd ask us, "Hey, please could you do diabetes? Please could you do hypertension? Please could you do MSK?" And when we said yes, they'd be like, "All right, now I'm going to vet you against all your competitors before agreeing to use your solutions," because they want quality. So it doesn't come for free or happen overnight, but it is an organizational capability that's developed at Omada, and it provides optionality for future chapters.

There are so many that are interesting right now. We're happy with the suite we have — because if you survey the benefits landscape, you'll find ones on our list, but there are unique things about them where they're just not quite a tailor fit for between-visit care, in our view. But that'll evolve. MSK wasn't anywhere on the radar when I founded the company, and then it came onto the radar. So there will be others that pop up. If you ask me, "Are you going to be doing other things in five years?" — probably. Right now we think we've got the right suite that allows a customer to get their key between-visit needs from us.

Fascinating question. It may be too late already, but there's some neat movement in GI, and some companies doing very, very well there. It literally depends on your go-to-market. If you're bringing something to employers, the only things that work in a direct-to-employer go-to-market are things with enough prevalence within the given employee population — which is commercially insured in large part — to pop up high enough on their strategy list as something to work on directly, versus just hoping their network or carrier does it. I don't know the rule of thumb, but I'd say if your prevalence is south of a third, you'll probably have a headwind. So it has to be the big-ticket items, and most of them are spoken for.

Good question. There's an enormous shortage of GI docs, and it's not an area where I have a huge amount of clinical expertise — but there's a huge shortage, and it tends to be pretty underdiagnosed. You've got a whole complex clinical landscape of things like Crohn's disease, IBD, and so on, and it can get very expensive. I think there are things you can do about it that involve support relative to lifestyle and getting the right care. So that's one employers are interested in, but I think it's still early — most of the companies there are doing great, it's still kind of two or three players.

The challenge there is there are some amazing companies that have scaled really well — the Lyras, the Springs, the Moderns of the world. So if you were to enter that space right now, in large part the reaction you'd get from employers is, "You know, wonderful, but I really like my current ecosystem."

We've gotten into the weeds on things like the CPT coding. But at the end of the day, your company is only as good as your people. I have gone to extremes to hire incredible executives. I've written poems, found out their favorite sports team and dressed in the athletic gear, flown across the country on a moment's notice. You name it, I've probably done it. And that's so incredibly important.

If you do a search, it's always a feeling of, "I don't have a backup," because you find the person who's the fit, and it's like — this person either joins, or there's not that, "Oh cool, I've got two candidates who are perfect and it's going to be a tough choice between two." That's a rarity. Relative to your question on boss moves, I've put the extra energy there, and I just watch what it yields — because there are incredible leaders at Omada that I learn from and the company benefits from. At some point, no matter what, you're going to be surprised by your organization as you scale, and having world-class leaders makes all the difference. I've gone to the ends of the earth in many instances to pull people in.

It depends on the role, but first you have to know what great looks like — and you may not know that. I didn't know that in many roles. Now I feel like I have a really good handle on what excellence looks like in every function, but I didn't back then. So if you find yourself not knowing that as an entrepreneur, you should self-assess: "I may not know how to hire a world-class CHRO, or a VP Finance, or a CFO, or a head of sales." The best tactic there, in my view, is to find — through your venture network or your friends — folks who are described as excellent and world-class, and beg them for 45 minutes. Ask them, "What's the difference between good and great in your function? If you were in my seat hiring your role, what are the questions I should ask?" That'll help you suss out the right level of detail.

Then at Omada we always do structured interview plans, where your interview team — yes, you can stray a bit, but there are always focus areas for each person and specific questions relative to that focus area. Because what can happen is you do six interviews and everyone's just doing a resume walkthrough, and you can't triangulate — it's a waste of everybody's time, and you've basically done one interview.

Speed of submitting feedback is really helpful, and doing it in a blinded way. We require that if you're on an interview panel, you don't talk to anyone else about what you thought until after you've submitted your feedback — otherwise you're influenced by the others' thinking. And then we always try to have some version of a work product as part of the process that resembles the sort of work they'll be doing. That could be a presentation on a specific topic, a case study, a brief for an executive, a hundred-day plan: "What are you going to come in and do against these objectives?" You get a general sense of the work product the person can create, and how they communicate it is equally important.

The blanket statement — and it sounds crass, but it's not — is the level to which they lean into the strategy of their function. The best execs, even now, are talking to me about 2026 and 2027, where their function needs to go and what's ahead. The best leaders get this year done, but they're always one or two years out.

Then there's fundamental leadership competency: how you align your team, set the goals, get the best out of people, take action on the ones that aren't going to work. There's a core basic leadership competency where, even if you have brilliant people — and there are plenty of C-level executives who are just not competent leaders — that can immediately disrupt your organization if they're inside it.

You have to have a market where you can articulate the value of what you do. But from there, I do think it's the micro. It's funny — even with some of Omada's early strategic advisors, the strategy insights were never that helpful; the tactical insights were always the most helpful, because those are what can trip you on the path to building a business. Your biggest risk tends to be your own operations when you grow a company. If you have a market that's there that you can go capture, then it's really easy to foot-fault when you build a path to best capitalize on that market. Just like you said, you can hire the wrong leader, and all of a sudden you're set back two years in that particular function — you're patchworking and band-aiding.

You can't be perfect. We've done that — I've brought in people who weren't made to fit, and you suffer. If you have too much of that, an organization can only bear so much. You can create a vicious cycle where one domino hits the next, hits the next, and it can be pretty hard to recover from.

Trust really matters — because it's a risk-averse buying market. You need to deliver on your promises, your implementations. Yes, they can have blips and bumps, but on balance they need to go really well. You have to study the details and earn the trust of your customers, partners, and channels, because that really, really matters. If you lose trust, it can be a death knell.

Imagine you're an account manager for a health plan, and Omada works with you to turn on one of your employers. Your fundamental job as that account manager is to keep that account happy and retain them as part of your health plan. If Omada fumbles the implementation or the experience is bad, you're not going to be interested in bringing me into that next client. So really indexing on trust-building would be a big lesson — even more so than other markets. It's a good rule of thumb anyway, but in healthcare it really matters.

It sounds small, but when I get asked that from other entrepreneurs, I say: make sure you really think about your pricing model. And not just the price — the actual structure, the revenue characteristics, the margin characteristics. Those early decisions in healthcare have more impact downstream than you'd imagine. And that's correlated to your sales cycles.

If you're an enterprise SaaS company, the usual play is you go small, then medium first, and work up to the jumbos — you're selling to your YC friends, then you work up to the average 400-person company. In that world, the sales cycles are shorter, or you can change pricing structures more readily as you figure it out. In enterprise healthcare, where you have to start with these big plans and big employers, sometimes your pricing structures can hold with you for a long time. So you need to be thinking about pricing and packaging more than I expected. I would have put a ton of energy into that in year one, versus year four or five, which is when we started to get a better handle on it.