On May 31st, when the local and national press was buzzing about the monumental dollar figures cited in the Outcome Health funding announcement, Rick Desai cut through the noise and captured the true meaning of what had just happened:
“Model Breaker”
We talk about this concept a lot at the individual start-up level. In building towards a Vision & Mission, you figure out a revenue-producing product or service that can be predictably built & sold, in order to sustain a baseline company “model”. From there, growth is a matter of the team’s ability to break it. Who can emerge to prove that the expected output of a sales rep can go from X —> X+Y? Etc etc. That’s breaking the model. Once proven, it opens the floodgates for repeat successes. This holds true across all ambitions. When Roger Bannister ran the world’s first 4 minute mile in 1954, previously deemed scientifically impossible for over a thousand years, he broke the model on middle distance running. After Roger broke it, over twenty more runners achieved the milestone by 1960. Today it’s a standard feat. Well, Rishi, Shradha, and the Outcome Health team have spent a decade breaking the model for Chicago's entrepreneurial ecosystem.
There are six particular “model broken” categories that come to mind when I think about what Outcome Health's latest milestone represents:
1.) Perseverance: They broke the model here in so many ways, but the denial of seed funding is what stands out to me. “Rishi & Shradha bootstrapped the company” is a famous story now, but it wasn’t by choice. They needed money, as we all do, however in a nascent ecosystem with a fledgling business (that required costly hardware!) they simply couldn’t get it. Such an invaluable lesson this provides us. When scores of the "smarter guys in the room” determine and articulately express why your idea will fail, it’s a natural tendency to chalk it up as a failed pipe dream and quit. We hear Howard talk about this all the time, that failure happens only when the entrepreneur/team gives up. Rishi & Shradha chose to persevere, against odds that were frankly even more challenging than what most of us face today. I don’t say that to discredit any of us, but to highlight the optimistic potential marked by their sustained will-power through adversity & doubt.
2.) Operational efficiency: The Outcome Health business model requires two sides of the coin in order to work: doctor's offices must be sold on installing the free hardware + educational content package (TVs at first), and then pharmaceutical companies must be sold on paying for display time within that educational content in order for Outcome Health to sustain as a “for-benefit” company. That’s a big time cash flow challenge to inherit at ground zero. Imagine attempting to launch a company that requires enough available cash to intensely negotiate your hardware purchase, so that you can efficiently install the hardware ASAP upon convincing the doctor’s offices to join, in order to sell fast enough that the volume justifies your do-or-die recruitment of advertisement revenue in order to live another day. Oh and you don’t have seed funding. Oh and you’re a baby-faced 20 year old without any formal Medical degree (or even a Bachelor’s!), selling an unproven vision into a paradigm of middle-aged doctors, impatient office admins, and BigCo pharmaceutical execs. That’s the reality to which Rishi & Shradha refer when they now casually mention that they had “no margin for error” back then.
3.) Mental strength: Shradha tossed a bag of dynamite at the model in this category when it came to her visa status. This is perhaps the most underrated story in Chicago, and not mine to tell nor one I fully comprehend, but I’d like to touch on it for a moment as the absurd H1B visa challenges for talented students & recent grads continue today. Shradha Agarwal, as immigrant student co-founder of then ContextMedia, wasn’t able to drop out of college because she’d be asked to leave the country if she did. Even post-graduation, they had back-up plans for Shradha to operate remotely out of Toronto given the high probability of her not winning the visa lottery. Could you imagine the hidden loss that Chicago & America would have experienced if Shradha had been shown the door, as she expected to be, upon graduating from Northwestern? Talk about having an "internal locus of control" mindset. Shradha maintained enough mental composure to execute through the aforementioned operational challenges, while under a cloud of life uncertainty that she truly could not control.
4.) Community fostering: Shradha & Rishi pledged to personally invest $5 million into the Chicago start-up ecosystem back in 2012. That’s a big dollar amount for anyone, but especially from entrepreneurs that remained heads down focused on building their company. While I’m certain that there was opportunity cost on those dollars that could have helped them sleep better at night, the headline that day still didn’t capture the most significant aspect of their investment pledge: time. While managing the execution workload of the last few years’ historic scaling efforts, Rishi & Shradha still held themselves to the highest standard of “paying it forward” by way of late night texts, early breakfasts, sporadic lunches, random hallway Q&As (don’t forget, their office at one point became a mini-incubator for start-ups they advise) and group dinners they’ve hosted. This was all in un-obliged effort of rallying & mentoring a wide range of local entrepreneurs across an array of sectors. They broke the model on giving back early & often.
5.) Talent recruitment: In the last few months they’ve managed to recruit executives from Facebook, the White House, Salesforce and other big name companies. These individuals moved to Chicago for Outcome Health. Trickle down effect from these types of notable executive hires generally follows, and at the very least the stories of those hires will play a material role in reversing the “brain drain” effect that has hindered our local University talent pool. This is a huge collective ‘W' for our ecosystem’s access to talent.
6.) Civic engagement: Entrepreneurs are energizers and purveyors of vision by nature. It’s in the job description. But with individual company mission & needs becoming all-consuming, I know that I personally can too often forget to lift my head up to play an active role in Democracy between election periods. Rishi & Shradha, dating all the way back to their time as students, have held an enlightened long term view on governance, feeling the call to enact positive change at a policy level scale. They’ve elevated business-level mentorship to another degree by gathering Round-Table discussions between entrepreneurs & political leaders, hosting public events, and always expressing, be it vocally or in writing, their viewpoints on current events. This is a big picture, heads-up mindset, that they’ve maintained amidst a decade of heavy start-up grind.
There are undoubtably more “model breaker” factors that I’m missing here, and I encourage the community to continue the dialogue of highlighting them. Building on Rick’s message regarding some of the recent announcement's coverage: this isn't about a dollar amount, it’s not about net worths or nuances of the (“seed”) financing details. For them, it’s about continuing, at a grander scale, that same mission of improving patient outcomes by educating at the point of care. For us, as a community, it’s an invigorating call to action on how much more we can all contribute and accomplish right here at home.
“After news like this it's time to put on a pot of coffee and not pop the champagne” - Rishi.
"Today, Rishi & I feel we're still at the beginning of our journey - the road ahead much longer and the opportunity much larger” - Shradha.
Day One continues. On behalf of the next class to march with a confident perspective through the barriers you’ve broken: thanks guys.
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