Ironically, we started “Savvy” the wrong way. There’s a plethora of writing on how to identify and evaluate good startup ideas — we followed none of these [0].
In San Francisco as a twenty-some year old, I was in the echo chamber of Silicon Valley looking in. I had been an investor and board observer of unicorn founders and an early employee at a hypergrowth startup. This, I thought at the time, suggested my pattern recognition was strong and, not one to sit on the bench, I was ready to build a startup.
The inspiration for Savvy came after months of research and ideation with my friend (and future cofounder) Kev on how to fix US healthcare’s antiquated payments system. These early weeks were a slog. Fresh off of quitting our jobs, we toiled from an uncomfortable dining room table, hungry to find a problem to pursue. Market research was particularly painful. We didn’t have the money to buy industry reports or calls with experts, so we’d repeatedly get paywalled. One day while driving across SoMa, we noticed a billboard stating the biggest industry conference in health insurance would be arriving in SF the following week. We were giddy — we needed to find a way in. We immediately scoured LinkedIn for connections. After many dead-ends, we found our mule in a health insurance sales rep named Ari. He was energized by our hustle and invited us to shadow every meeting he had lined up at the conference. His ask in return? A couch to crash on — hotels were priced through the roof. We had ourselves a deal.
Ari shepherded us like Moses across the conference floor, stopping seemingly every 10 meters to greet an acquaintance. For us, seeing the underbelly of the industry was eye opening and largely monochromatic — the majority of folks were 55 year old white men in wool blazers. The “technologists” in booths were demoing what looked like my middle school online learning software on enormous, military-style laptops. That day, we talked to anyone who made the mistake of locking eyes with us. Just these handful of chats gave us more perspective about the industry than what we had gleaned from months of online research. What’s more, we left feeling inspired to grab the aging industry by its horns. While we didn’t leave with a specific problem, we got a much needed energy boost to keep on going.
After the conference, we spent countless more caffeine-fueled hours researching the payments companies we had met. One observation was consistent: the leading products in the space were largely “old-school” — there appeared an opportunity to build a modern software offering in the space. But what specifically could we build? We ultimately landed on modernizing the debit cards that often accompany employer health plans for out-of-pocket spending. When personally using these “FSA” and “HSA” debit cards in the past, we had experienced a high-friction process that required uploading receipts on 1990s interfaces. Paired with the fact that employers are the primary payers in US healthcare, we had conviction that we found the right “wedge” into modernizing healthcare payments.
Looking back, I’d give our ideation process a C-. Good startup ideas are not about pattern recognition, modernizing, or finding wedges — they are about specific problems. Without speaking to a single user, we developed a vision for an alternative future in healthcare payments. Visions without identifying a problem are dangerous. They are often made up solutions to made up problems or, even worse, alternative realities to things that are working just fine.
In the weeks that followed, we brought our vision to prospective customers in an effort to validate the need in the market pre-building. We hustled our way into meetings with 10 tech company HR and benefits decision-makers. At first, we received excitement and validation. However, we realized our first several “interviews” were actually sales pitches (”hey here’s this really cool new thing, what do you think?”), far too biased to get any real signal. After reading up on customer interview best practices ahead of another slew of meetings, we tried again, this time with an unbiased script [1]. Not one person brought up FSAs, HSAs, or health debit cards as a problem they desperately needed to solve. We concluded that our vision, which we had painstakingly spent many hours developing, was off the mark. Back to the drawing board — or in our case, the dining table!
[0] Paul Graham essay How to get startup ideas and Lenny Rachitsky ft. Todd Jackson on How to validate your startup idea