Previously I wrote about the top 3 mistakes I made building my first company. This time, I spend time on our successes. I found this reflection hard, perhaps because my brain refuses to let myself appreciate wins when the overarching story isn’t a resounding success.
But just as time mellows out mistakes, it draws out the wonder in our successes. We set out to tackle one of the most regulated and challenging industries in healthcare, and we built a sizable business across three states. We served hundreds of families and recruited a team of 100+ teammates. We heard from many of them that Songbird created something special in ABA. We built a culture to be proud of. Feelings of wonder fill my head when I allow them to.
Below are the three successes I’m most proud of from Songbird. These are the decisions the propelled us forward and the techniques I’d apply again next time.
Win 1: Rigorous Idea Validation Led Us to Make Something People Want
The road to conviction in our idea was long and arduous. 8 months of weekend work. 9 months of uncertainty-filled exploration after quitting my job. Over >200 documented interviews with customers and healthcare stakeholders. 25 distinct ideas explored and MVP-ed.
A disciplined and effective idea validation process is what kept us sane. At the time, others told us we were non-committal and should start working on something. In retrospect, taking our time during idea validation ensured that built something people actually wanted. Here’s an outline of what it looked like for us.
Structured weekly process: We’d kick off each week by writing a weekly plan document. It included the current idea, a single qualitative goal, risks, and list of tasks to validate those risks (see example below). Anyone’s who has explored startup ideas knows the Idea Maze, the winding path from an initial insight into an eventual business idea. Weekly plans helped us feel forward progress and forced structure when evaluating ideas.
Maintaining mission while focusing on revenue: When talking to other early-stage entrepreneurs about validating ideas I often hear about 2 orientations. I call them mission and revenue.
Mission orientation starts with a very specific consumer problem or insight about how the world should work (bottoms up). A prototype is built early. For example we focused on how crappy the experience was for parents of children with mental health issues and had a belief that more care should be virtualized, software-enabled, and utilizing parent training.
Revenue orientation focuses on who will buy your thing and tries to make sales as quickly as possible (top down). TAM analyses are common and this approach starts off higher-level.
The approach that worked for us was balanced: testing zero-code MVPs with parents while also analyzing the ABA therapy market via market reports and industry expert conversations.
Lots and lots of customer conversations—Craigslist is the voice of America. Hear me out. Every kind of thing transacts on Craigslist, and similarly every type of person—with their own unique needs and perspectives—uses Craigslist. This makes it an invaluable user research tool. We were ruthless about talking our customers, and we documented interviews with over 200 customers and stakeholders. These were critical for us to discover the world of ABA therapy and invalidate many ideas as things people simply wouldn’t pay for. Since many of our ideas were consumer ideas we used Craigslist to source these conversations. We’d post to the gigs section, offer an Amazon gift card for a 15 minute interview, and use Google Forms to qualify potential interview candidates.
A few weeks ago I re-read our notes before we began contracting with insurance payors to serve patients. The risks of a tech-enabled autism provider we identified in early 2020—gross margin, operational intensiveness, and questioning 10x differentiation from tech—map 1:1 to what we eventually learned about the business. Our rigorous idea validation process wasn’t perfect, but was eerily accurate at predicting the business we’d eventually build.
Win 2: Prioritizing Distribution and Achieving Mass Payor Contracts
“First time founders are obsessed with product. Second time founders are obsessed with distribution.” We aptly prioritized distribution, and this focus enabled us to build a multi-million run rate business across three states. One of the best pieces of advice I got from fellow healthtech founder was to “follow the money,” and we did. For us, the key ingredients of distribution were the 100+ contracts we established with most of the national and state health insurance companies (~90% of our revenue eventually came through via these contracts).
Getting these payor contracts required that we identify a viable business model as outsiders to healthcare. We navigated this by taking a B2C2B1 approach that was weird at the time, but now is seen as a strong approach to build a enduring virtual care in digital health (One Medical, Bicycle Health, etc.). Once we had identified the right business model, the process of actually obtaining contracts can only be described as a mix of creativity and hustle (a story for another time).
Win 3: Staring at the Abyss and Making Hard Decisions
What gives me the most personal pride is how we handled challenging decisions. One of my favorite startup metaphors is “the abyss” from Ben Kuhn. It captures well the gutrenching feeling and painful uncertainty of startup decisions and gives them a name:
Staring into the abyss means thinking reasonably about things that are uncomfortable to contemplate, like arguments against your religious beliefs, or in favor of breaking up with your partner. It’s common to procrastinate on thinking hard about these things because it might require you to acknowledge that you were very wrong about something in the past, and perhaps wasted a bunch of time based on that (e.g. dating the wrong person or praying to the wrong god).
We had the courage to stare into the abyss, figure out the way, and navigate with humanity.
Sometimes staring into the abyss is quickly making and leaning into a hard decision. As the fundraising markets soured in early 2022, it became clear we weren’t going to be able to raise. We needed to figure out a plan as our runway dwindled. It was the night before I was scheduled to get in front of our company to announce layoffs. We had moved quickly to get to this point: re-forecasting our model and scripting HR-approved talking points. Then at the final hour, I examined our model and the question of whether we should cut an additional 5% deeper popped into my mind. It would deepen the upfront cultural damage, but it’d give us more time. Time was ticking. We ultimately made the decision to lean in. In the hype of the previous years, we had grown too much, and we needed to become leaner. This decision was painful in the moment, but proved to be prescient later.
Other times staring into the abyss involves knowing when to quit. As 2023 began, I was all-in on on a new strategy to open up physical ABA therapy centers. We had the cash to fund this, my board had approved the plan, and I had re-motivated my team around this 2 year plan. Then through a fateful set of advisor conversations, I found myself reconsidering whether physical centers were worth executing on. The numbers showed that physical centers could get us to profitability, but we’d be executing a strategy that was better suited for private equity; it was a standard services business.
My intuitions and emotions told me to persevere. So did all the entrepreneurial stories I heard over the years, like Tesla making it through despite multiple near-death encounters. Just a few weeks ago these doubts hadn’t crossed me mind because I hadn’t let them. As a founder you just need to default to believe that you can make it work.
Time for introspection opened up space for clarity. I eventually came to conclude that physical clinics meant we’d be building an undifferentiated services business, which wasn’t suited for having raised venture capital. I came to believe the better path was partnering with an acquirer to house everything we had built, take care of our team, and recoup our time for greener pastures. We quit, but in that context quitting was the right call. It was a decision made out of vision versus fear.
Thanks for reading along, and please comment or email back with any feedback. Let me know what resonates or what pops into your head as you read. Writing, I hope… can be a social and collaborative practice. I am currently wandering around southeast asia and have found writing to be a return to the beginner’s mind while I think about the past 4 years. It is a humbling feeling to spend hours writing a first draft, only to re-read a re-write nearly every sentence.
B2C2B for Songbird meant: 1) We marketed to consumers but reimbursed via fee-for-service payor contracts. 2) We believed that with increasing scale we’d be able to secure unique contracts with payors, improving margin and building a moat. Though we didn’t achieve our grand vision, we saw early signs of 2 in our payor conversations and know of other ABA platforms which have unique contracts via this path.
* I really like "staring into the abyss" from Ben too!
* I like how long you took to validate ideas. I'm doing that too and it's an uneasy feeling to not be executing. Thanks for sharing.
* "focus on distribution": This is never a redundant reminder. Thanks!