Eynat Guez, CEO, Papaya Global 
April Koh, CEO, Spring Health
Kate Ryder, CEO, Maven 
Moderator: Alyson Shontell, Editor-in-Chief, FORTUNE; Co-chair, Fortune Brainstorm Tech



Brainstorm Tech 2022: The State Of Unicorns

Conferences

Eynat Guez, CEO, Papaya Global 
April Koh, CEO, Spring Health
Kate Ryder, CEO, Maven 
Moderator: Alyson Shontell, Editor-in-Chief, FORTUNE; 

Brainstorm Tech 2022: The State Of Unicorns



 Eynat Guez, CEO, Papaya Global 
April Koh, CEO, Spring Health
Kate Ryder, CEO, Maven 
Moderator: Alyson Shontell, Editor-in-Chief, FORTUNE; Co-chair, Fortune Brainstorm Tech

Good afternoon aspen. It is so nice to see all of you here in person with us and for those of you on the screen. Hello! Great to see you too. Um Hello to all my amazing panelists. I want to point out a really cool step. We've raised a billion dollars on this stage. That's an amazing feat. Really cool. And not too long a time frame either. And over $7 billion so I want to get all of your perspectives on how you got to that point also what point we're in now and how you're looking ahead? Um but the first question is is there's no doubt startup valuations have been through the roof recently. An unprecedented speed. I think people have been reaching these startup valuations of a billion or more. Um What do you think created these market conditions and how many of these unicorns are actually sustainable. I know you want to take that one first. Well I think the hard one first. So I think that in reality two things happen. Companies started growing on super speed. So I mean on on a really kind of growth phase that haven't been done before and haven't been seen before. So everyone was kind of preempting round and so on. But from the other hand, yeah, I agree that when you are looking on valuation currently of private company versus the public market, I mean there is some discrepancies that eventually I think over time in the probably the next 12 to 24 months. I mean we need to ensure that we are growing or we are taking those unicorns to the stage where they meet the current valuation. Yeah, I think we just saw or read about Lorna's attempting fundraise at the moment, it's not going well. Apparently could raise down 85% from its last valuation. Um How are you both looking at this environment, you are you thinking we're going to see more of that. What's your take on the market of where we are now in private companies? Sure. You go for it gun Sure. All right. Well, I I think um it's uh starting with right down the middle of of what everybody's thinking about um at the executive level, I think we were talking earlier how this is kind of on the minds of everyone. Um and you know, really for us, what we see is a lot of the last decade, a lot of companies rewarded for growth, so growth at all costs. Um And so I think you're seeing a lot of those public companies that maybe don't have the underlying economics to reach that profitability um getting hammered at the moment. And so I think, you know, for what we're really happy to be a private company at the moment. Um but uh but I think it, you know, for us at least we've always as as a company in the women's and family health space, you know, struggled to raise funding early on. We've always had to be scrappy, we've always had to kind of, you know, create a sustaining business model. And so, um, so you know, I think at least in our, as we talked about it on our team that may have been, um, you know, we're, we're kind of looking forward to the next few years because we have a strong business. We have tons of tailwind in our market and we have a, you know, a business that can reach profitability pretty soon. Yeah, I think you alluded to it. Um, I think that this panel used to be called the state of female lead unicorns. Um, and then we change the state of unicorns, which I think is awesome. And I think it's amazing that we're all women here. Um, but you mentioned, you know, in the early days, you struggled to raise capital and that led this led you to lead your company in a really disciplined way and I can't agree more. Um, so as a young woman, I struggled in the early days to raise venture capital. So I knew just how precious the millions of dollars uh, were that we were raising. And so we've always been extremely disciplined about how we raised how we raise capital, what evaluations are, how we run our business. And I would say as a tiger global portfolio company. I know this is strange to say, but I tell investors and I tell our team we are undervalued and I believe it. And I think that There's so many companies out there and I were founders that I need just out and about and I say, Oh my gosh, you're a $5 billion $10 billion dollar business. Like what is your revenue like what have you scaled at? It was scale too and they will say a revenue that's lower than ours and it's just um and we're $2 billion dollar business at this point, right? And so there are multiples I would say are insane, unsustainable. Um but for us, our multiples are very much in line with normal fast multiples or digital health multiples even before the hype cycle. So your undervalued based on your revenue, you're under value based on your revenue, your current, what should your valuation? That's the million dollar question. There may be another billion dollars. There you go. Um So you, you all, I think had issues raising fundraising in the beginning, as many startups do at a certain point that uplift and you've raised um april's raised 300 million cakes raised 200 and I'm not raised for 45 million. Um so there's been a frenzy. I know I'm not, you went out to raise 40 million um not too long ago and all of a sudden you had 140 million that you raised, can you talk a little bit about what it was like being a founder that was suddenly very sought after in this environment that we just saw. Yeah. So I think it took me a while to understand the kind of to flip the things because honestly in the early 33 years that we started the company I raised less than $5 million. I can speak on every dollar that we raised and how hard was that. And I mean for me the biggest challenge was actually to kind of get the market and and the investor kind of convictions that this is a huge market that we are disrupting. I mean it started as is it a real market is it's a real need and so on. And once this and I think then it flips to a place where they believe that this is a much bigger problem than what we think it is and this is when I and I remember I mean this conversation when I why do I need to raise so much fun and yeah, because you you can do things on a much quicker and you can dream bigger. And I think that when you are kind of understand that Yeah, you need to be, I mean very cautious, you need to understand what you're doing. You're not like throwing funds all over in. This is a really big enabler. I mean for companies to grow. So not a bad time to have a workshop. That's not a bad time to have a big work. Yeah. And April your valuation jumped about $2 billion right. Yeah. Yeah. So what? There you go? Less than one. So what flipped for you? What was it that um What was the frenzy like? Well I mean it's undeniable that spring health is a remarkably strong company and a very compelling story. So we started the company six years ago um in response to the global mental health crisis that we're all in. Which by the way began before the pandemic. And it was accelerated by the pandemic. Um But you know we we grew because um you know even before the pandemic, we were growing forex then the pandemic just accelerated everything and we grew six x. And that led us to have that jump in valuation. Um The reality is we are in the middle of a crisis. People need our help. People need our support. Unfortunately suicide rates are increasing at an alarming rate. I think half of 11 to 17 year olds in 2020 reported feelings of suicidality. Um or you know the urge to self harm. These are just alarming statistics. And I think the demand just created a really strong business and we were rewarded for that with a very good valuation. So a question I'm curious about as well is what kind of direction are you getting? And pushing are you getting from your investors? How are they pushing you to proceed at the moment? Things are looking a little bit shaky. People aren't sure how anything is going to pan out. The free money has stopped. Um, how are you planning for the future and what pressure are you getting from investors one way or another on how to lead? So first, I think that the one thing that we all need to do is start off currently is beat the metrics as long as you're building the metrics. I mean you're in a good shape second. You need to take care of your one way. So obviously, I mean, you need to ensure that you have the worst case scenario, best case scenario That you are past 24-36 months from now. And I think as long as you can be confident about that, you'll be okay in terms of investors. But in reality, I think that, you know, it's a dialogue. I mean, we should listen to investors obviously. I mean they want to create value. I mean, this is why they invested in the company's um, so it's really about, you can't ignore the market. You can't ignore signals. You can't ignore things that eventually are kind of flagging. So it's not, I mean, we are, we are part of it as well, but it's really about being very conservative and very cautious about the metrics and how do you grow? And, and obviously, I mean, I think that everyone is thinking about efficiency and about profitability and maybe, I don't know. I mean, it seems that we have similarity in the stories. I think that we all kind of were very, very cautious about that from the very early days. So maybe currently we kind of, we don't have this pressure of changing everything or transforming everything internally, but it's very important. And how are the rest of you adapting to endure? And what kind of signals are you getting from your investors? Like rays, more rays, more rays more or like conserve, conserve, conserve and how's the path to profitability going? Well. I think a lot of investors are just struggling the price in this market because things are so volatile. Things are all over the place. Are we, you know, have we massively overcorrected? Where's the bottom? And so I think our investors at least um, are, you know what? We're facing two simultaneous trends, which is the market downturn at the same time as growth accelerating our category. I think, you know, digital health is still pretty special in the sense that there's just so much growth over the next 10 years. And so how do you treat right now if you're looking at, you know, your investment over a 10 year time horizon. Um, and so, you know, I think it's the, make sure you have enough runway for three years if in the, in the worst case scenario. Um, but also, you know, don't don't pull back on growth because at a certain point the markets are gonna start rewarding on growth rates again and not just profitability and so, you know, we need to be right there because we are in a high growth category and so, um, I think, you know, one of our investors said, listen, the capital markets haven't frozen up for more than 3 to 6 months at a time, and so I think we're in like month three of a little bit of a freeze, but um, you know, certainly one of my, you know, one of my investors a few weeks ago, there was a big off site with this fund and um, he was like, I haven't made any investments all year, but like, I better start doing something in the fall, so it does feel like people are getting antsy. Um and so it'll be interesting though, if everybody comes into the market at once in the fall, is there gonna be competition again to kind of, you know, increase prices? So we'll see totally, I hear that VCS are kind of checked out until september, like literally on vacation. Um and so I think conferences there, I saw someone saying that they're just sitting it out there, just waiting, Things will get better in september, I'll throw my hat back in then. Yeah, so I don't think deals are happening right now. And so, you know, we get the classic advice like three years, it seems like the three year advice is like, um, basically the advice to give us Vcs, um, but I would say for us, you know, every company has a bull case, they have a base case in the bear case and um you know, for us the way that we find it, it's like bullets like growth at all cost mentality kind of in line with what you were saying before the bubble burst I guess and then the base case which is still very strong for us just given all the tail winds that we're seeing in our industry and the strong demand that still exists for mental health care for employees. And then there's the kind of the bear case, what we've done is we've kind of taken the growth at all costs bull case off the table, we've continued to stay focused on the base case. So in a lot of ways our company operations have not really changed and our strategy hasn't really changed. But I think also we've we've actually shifted the bear case to be a lot more pessimistic just in case, right, we don't know what's gonna happen, we don't know how long this recession is gonna last, We don't know how it's going to impact budgets for our enterprise customers. And so because of that, you know, we've made those adjustments and move forward as a company. Um and you know with the word test that you all have raised in capital, there is m and a possibility. How are you? You just did a big m and a deal not too long ago. How did you make that calculus of like, okay, now's a good time despite whatever the heck is going on out there. So first I think that we started the seminar we signed disseminate just when this kind of current crisis started. So you could, you could debate if this was a good timing or bad timing. I think that the, the way that we looked at is is it going to do good for the business? I mean, so it's not about how much it cost us that much, how much we can do more we said and I think that M and A is becoming a very interesting issue currently. I mean we are very big believer that eventually, if you have possibility to grow and to eventually merge teams better. I mean we, we are very, we like to buy technology because we believe that eventually the accelerator to what we want to build on the payroll space and when you're looking on public companies currently actually there are, I think that there are much more opportunities on acquiring public companies and private companies because in the private companies, I mean there is still a chaos. I mean what's my evaluation with should, I mean and where the market stands, but it's definitely a very good timing to kind of look around on the public market and local m and opportunities. Right? So I want to switch to um, leadership strategy, you all have had to scale tremendously. Each of you has hundreds if not thousands, of employees at your companies, um it's not easy to do and it's not easy to scale responsibly in a healthy way, in a sustainable way. Um april I know this has been something that you've worked on at your company, I believe. Um last october you sent an email to your team saying we've had a systemic issue of burnout at Spring health. Um and also that, you know, there's a natural tension between hyper growth and mental health. So how have you um what happened there and then how have you taken things moving forward? Yeah, I mean, just to reiterate, I do think that there is a natural tension between hyper growth and and mental health. Um and I think mental health means a lot of different things to people. And so for us as a company, we've really clarified what it means to be a mentally healthy company and what it means to be mentally healthy at Spring Health, I'll say to address the burnout issue, everyone is burned out. Every single company is struggling with this issue. For us, it is existential as an issue because we are a mental health company, right? Like it is uh in a way it's it's very it can be disingenuous if we as a business are not able to um have a mentally healthy workforce when we ourselves are delivering a service that promises a mentally healthy workforce for others. And so given the existence show gravity of of the the need for a mentally healthy workforce, we've put a lot of work and a lot of time and a lot of resources behind it. About two years ago, we were very explicit about our goal as a company to not just grow and serve others, but also to be the mentally healthiest and highest performing company in the world ourselves. And to do that, we've actually allocated protected cross disciplinary bandwidth to helping us get there. So we believe that in order to be mentally healthy and high performing um two concepts that really are not thought of together in other companies, but at spring healthy, really trying to marry the two for us to to be mentally healthy and high performing. We need not just, you know, people leaders um working on this. Uh we need therapists working on this, we need and mental health professionals, we need data scientists to understand where we are a baseline and working where we can go and what what impact the experiments that were running internally are having. And we've just invested a ton of time, a ton of energy and resources to it. And I think, you know, we have a long way to go still, but we've made a ton of progress, right? Um there's, you know, every company as you said is experiencing burnout. There's also pressure and ceos are experiencing burnout. There's expected to be a record number of ceo turnovers this year because people have been waiting through the pandemic to make sure their teams are okay um to then hand over the baton. Um So I think we're expected to see that as well. Another pressure that Ceos and founders have that they didn't have before is to wade into social issues and to be very transparent with their teams about their thoughts on things outside of the bottom line business. Um kate, you are in this in the thick and you are a women's health clinic provider for for many companies and for employees. Um Roe v. Wade like how did you address that with a team? What's your advice for for others who are addressing and what did it do to your business? Yeah. You know I think uh one of the we were talking earlier, one of the things that's just a shame is that women's health is so politicized because the way that we've always seen it which is consistent with all the major medical associations in the U. S. Is that you know, abortion access is just a healthcare issue. It's part of the core prenatal care model with one out of four women will have abortions in their lifetime. You know, from ectopic pregnancies to um you know feed that will not be viable at birth that this this happens all the time. And. And you know routine care. And so for us this has just always been part of women's health and I think now more than ever our team feels that urgency to um to step up. I mean Maven was founded because women and families are underserved. Women have, women's health has always been underserved and now it's just even more so and so we're, you know, we've been really encouraged. We have um you know, we work with nearly half of the fortune 15 and um most of the major national pairs and so, you know, in the lead up to roe v wade being overturned, um we're having conversations and and people, you know, there's a ton of uncertainty, there still is, but I think we've been really encouraged ever since that court decision came down on friday and the actual, you know, it was, it was set in stone, it wasn't just a leak. Um everybody, even our most conservative clients have stepped up to actually, you know, provide support because they see it as this is a healthcare issue and an access issue and and you know, no more than that. Excellent. Well, a lot away here on this stage. Um congratulations to all of you for building the businesses to this point um and for the efficiency that in which you've done it and hopefully we'll set you up for much success moving forward despite whatever is around the corner um seems like you all are well set up, thank you all for tuning in and um we are concluding, thank you, Okay.