Chapter's Cobi Blumenfeld-Gantz: From Palantir To $3B Medicare Disruptor

18:44So we've been very fortunate in that regard. But still, as I was alluding to, I think anyone who says fundraising is easy is just insane. Like, it's not. Even if you're very fortunate and you're a very hot company, it's still hard. You still have a lot of negotiations. There's still a lot of terms to deal with. It's still very hard, even when you're in a fortunate position. And you're usually not in a fortunate position is the reality. Even if it looks sexy online or on LinkedIn or Twitter, it's still very hard. I do think figuring out how to grow was the hardest part in a cost-effective way. We initially got a lot of traction in 2021 doing things that weren't the most economical.

19:21And so we were able to grow pretty well. And this was still before the like 22-ish mini crash that happened in the tech world. And so a lot of VCs in 21 were like, oh, this is great. You're growing. We don't really care if your payback is two, three, four years on your acquisition cost.

19:38Cobi Blumenfeld-Gantz:And this is like paid marketing or what? Yeah, a combination of paid marketing and just support that's required to do the business. Because before we had built much, it was a human heavy business. Now it's not, but it was at the beginning. then the world shifted a little bit and we realized that probably not going to be a venture scalable business if we continue with the current economics and it turns out that this is where we actually got really lucky in that the like i don't know anything or didn't know anything about paid consumer marketing like it's not something we ever did at palantir it's not something everyone tried to do i did become very good at navigating bureaucracies and doing like what would broadly be considered enterprise sales.

20:16I think Palantir trains very well at that.

20:19Cobi Blumenfeld-Gantz:Maybe Palantir should have done more paid marketing. They probably should have. So people would know what it does, to your point? Yeah, exactly. But we got lucky in that as paid marketing was becoming more and more expensive, and as the VC willingness to fund that changed, the enterprise part started working very well. And we were able to build a flywheel of our better product with more aligned incentives, gives us access to more trusted institutions who have access to and the trust of senior population, which creates a much lower acquisition cost channel, a much more defensible and scalable channel.

20:52And when we really figured that out in, I think, late 22, early 2023 is when it started to really click. And through 2023, we were able to scale very quickly. But those first two to three years were very hard.

21:03Cobi Blumenfeld-Gantz:What does product market fit look like in your category of tech? I think it's important to think about product market channel fit, not just product market fit. You have the product, you have the customer, and then you have the way you're getting to the customer. And all three actually need to work. You can have two of them. If the third one doesn't work, you're screwed. So for us, you need to have a product that does the thing. So that helps people navigate Medicare in a way that they trust and in a way that provides good guidance. So better health care. you need to be able to get to seniors. So that's our channel is these enterprise partners and they need to trust us.

21:43And they need to be effective at promoting chapter to their audience, which is not always a given. Some of these are very good at this and some of these are very bad at it. So it takes a lot of handholding in some cases. And then you need the actual customer to trust you and good retention, efficient sales, all those things. And there's a lot of ways to measure it. You can measure it in NPS, you can measure it in CSAT, you can measure it just in dollars, like what's your LTV to CAC? So for us, all of those metrics, we've unfortunately been very good the past couple of years.

22:15Cobi Blumenfeld-Gantz:And when we think about sort of the end patient here or the customer like your parents, you know, that senior, does this make them get more care for the same amount of money or effectively, you know, get more bang for their buck or sort of what is sort of the outcome that is the winning outcome, you know, from their perspective from chapter? Depends a little bit on the person, we think about it as first, it's a hard constraint that you need to be getting the care you need. That is a hard constraint we put on our recommendation engine. And then from there, it's minimized cost. And so where you are on that amount of care you want or need is up to the person and up to their health needs.

22:51But in some cases, it's you get identical coverage and save a lot of money. We can save people thousands of dollars a year, sometimes tens of thousands of dollars a year, just by optimizing their coverage. And then sometimes it's their doctor isn't in network or their prescriptions aren't covered and they actually can't get the care they need or their procedure isn't covered and we're getting them the care they need at an affordable price. So it can be either.

23:10Cobi Blumenfeld-Gantz:Do you ever see a type of customer, a market where you're like, you know what, Chapter currently can't provide the lowest cost or the best solution? And if so, does that just become like a target for you guys to sort of add later? Or how do you sort of think about making sure that you're always providing the best value there? Within Medicare plans And specifically, we benefit from the fact that it's a government-run program. And by law, all of the data has to be published in various forms in different places. So we are able to get full inventory, which is, I think, unique. I think we might be the only insurance brokerage of any market in the world, whether it's Life or PNC or Auto or Home, that has full inventory of plans, which is kind of cool.

23:53So it's impossible to get a better Medicare plan anywhere else because of the regulatory regime mostly. But there's a lot of other things we don't do today or we don't do as well as I want us to do today that we are thinking about. A lot of that is follow-on communication. How do we help people activate their benefits? So, great, they're on a plan. How do we make sure they use their plan most effectively? We do a lot of that, but it's not perfect. And then as we think about building things out more, there's so much opportunity to help people save money, not just on their health expenses, but on everything, which is really where we want to take the company next.

24:21Cobi Blumenfeld-Gantz:Yeah, we wrote in Upstarts last year about a company that was trying to solve the problem specifically of the phone call bombardment that happens with these renewals and maybe try to automate check-ins or do more of that after, I guess, what would be the right phrase for that? Post-enrollment, yeah. Yeah, so they're trying to do the post-enrollment side for, I guess, other brokerages. Is that something that you guys would also be able to do over time? Yeah, we do a lot of that today. Some of it we've built ourselves, some of it we work with other voice AI companies to build. Our philosophy on building is we're not dogmatic about what we, we don't have to build the whole stack ourselves.

24:59There are pieces of it that we want to make sure we own and we're opinionated about, but we partner with a lot of companies and work with a lot of different companies to deploy the best software. but broadly you have to have really good data in medicare and so we spend a lot of time not just building our initial data ecosystem but constantly making it better and getting feedback from users and i think we're the only company in the medicare ecosystem that has the end user feedback at scale the medicare advisor so the expert at scale and we have enterprise partners who also are able to give us feedback on on different elements and so because we have kind of including the doctor we have all stakeholders giving us feedback in real time i think we're able to create the best data asset.

25:36But on the sort of follow-up voice components, I think voice AI is a huge opportunity for seniors in Medicare and beyond. We're investing a lot into making it really good. The reality is the LLMs still aren't perfect at it. They're good when you have a very confined sort of narrow parameter set. Like if you want to book a reservation at a restaurant, all you kind of need to know is what time and how many people. Two parameters. It's like pretty easy. And LLMs are very good at that today. But if you want to have a conversation on a Medicare plan, thousands of parameters over dozens of minutes or an hour long conversations, very hard for LLMs to do this well today.

26:14So we think about constraining these into more targeted workflows of we know someone has a question about how do I redeem my OTC benefit? So we'll build an agent and a workflow for that. And that LLMs can be very effective for. But seniors, and I still think in general, a lot of people aren't yet comfortable talking to robots entirely. And I think we're in a couple-year transition period there.

26:37Cobi Blumenfeld-Gantz:When you think about what has been the most sort of uphill battle for you, your upstart moment as we talk about it on the show, would it be winning over those initial seniors? Would it be the fundraising? Or would it be another point in the journey where you really felt you were back to the wall? I've had a lot of back to the wall moments. The most salient one I can think of at the moment is actually this past year, a year ago. So a lot of Medicare activity happens in Q4. It's called the annual enrollment period, similar to commercial health insurance. You have sort of a period when you can sign up.

27:07The government was shut down at the beginning of the annual enrollment period. And the government does not produce all the data, but they do produce some data that we need to do our jobs. And every Medicare advisor needs to do their jobs. And because we have this very opinionated stance that we don't want to be reliant on insurance carriers for incentive and bias reasons, we don't take data by and large from insurance carriers or we don't rely on data from insurance carriers. We did not have data for the beginning of the enrollment period on the new Medicare plans. Like we didn't have the fundamental data to do our jobs on the busiest period of the year.

27:40It was very frightening for all of us. So huge kudos to the team, in particular the engineering and data teams. They were able to figure out, like reverse engineer a bunch of stuff and figure out how to fill in a lot of the gaps that the government didn't publish so that we were able to operate on the first day of the enrollment period. But it was terrifying being in that position. So reliant on the government data there.

28:05Cobi Blumenfeld-Gantz:Were you all unusual to not be just leaning on the insurers? Like would your competitors have not had the same challenge? The reason this was a challenge unique to us was everyone else in the industry relies on the insurance carrier provided data, which A, is limited to that insurance carrier. It's limited to insurance carriers you have contracts with, and we want all of them. And they don't provide the level of granularity that we need to provide actual recommendations. So we can't just rely on that. So we are the only people in the industry who actually rely on the government data in many ways.

28:36And that was terrifying.

28:39Cobi Blumenfeld-Gantz:Were you tempted? Was there a discussion like maybe we should just this one time aggregate all the data from all these partners to sort of jury rig that? We did do that as a backup plan. We weren't happy about it because it was not as high fidelity as we wanted. Like we did the tests and we had that as a backup plan. But fortunately, we didn't have to rely on that one. So there was a lot of redundancy planning. okay and so how long a period are you in the the room kind of not sure this is going to work out with a reverse engineering process uh it was like a week-long period and we do a lot of planning across the entire business for the interim period because so much of the year's volume happens then both because we're a lot of volume happens then but also because we're growing like q4 is going to be bigger than q1 so you have the compounding effect of just a lot of volume in q4 for the business.

29:29So a day or two of not great volume actually has a material impact. So we couldn't have that. So the full week before the enrollment period started was very stressful.

29:38Cobi Blumenfeld-Gantz:This happened again? Would you guys be able to run the same playbook or would you be sweating all over again? I think we're in a good spot now. Like fortunately, when we run into these, I don't want to call them existential, but very critical issues, we do build them in such a way that they're repeatable. So next year, if the same thing happens, or if the government doesn't release data on time or whatever, we're fine. We have it built now. So we can, with minimal, probably like a day of work instead of a week of work. When the government did release the data, did you make any calls and be like, finally, guys, like we've been waiting or what was going through your mind?

30:12There were some strongly worded emails in between. Yes.

30:17Cobi Blumenfeld-Gantz:Fair enough. Fair enough. When you think about sort of the next phase of chapter with this funding and sort of looking ahead, what gets you excited about the future of care you can provide? First is we just want to be the default advisor for all Americans. I think if consumers are not using us, they're getting screwed by the system. We are unfortunately the only Medicare advisor that actually does a lot for seniors and puts their interests above our own. And there's a real cost to that. It's very expensive. But I think it's the only way to build this mission-driven company. So that's sort of one which we're on the path of doing.

30:50Two is there are so many other parts of retirement that people ask us to help with that we aren't able to help them with yet. We think about it across their health, their wealth, and their purpose. So broadly, what does it mean to be retired in this country, especially as we live longer? How do people spend their time? What are people able to afford? And do they have the health care to do it? We're really excited about tackling the financial aspect next. And then beyond that, we will tackle the purpose aspect, but we can't do everything at once. So really thinking about how do we make sure seniors don't overspend and don't fall prey to scams and fraudulent transactions.

31:30Cobi Blumenfeld-Gantz:I think I saw you might be the first startup to be backed by vice presidents from both sides of the aisle. We might be. We might be the first. I'd have to double check that. But yes, very fortunate. As I said, it's not like a deliberate strategy. It just happens to be that I think generally people who are successful in one arena can be successful in both arenas, between politics and financial life. Also, I think what has happened is most of the VC world in Silicon Valley lives in a bubble. They don't see Medicare. They don't see a lot of problems that seniors face because they just don't. And when people spend time in the government, especially at the executive office, they see how big of a problem and how complex these systems are, in particular Medicare.

32:13So I think they uniquely understand the problem space and the importance of it in a way that a lot of other VCs don't.

32:19Cobi Blumenfeld-Gantz:If Chapter is not intended to be divisive, maybe like a Palantir is, whether you would agree with it or not, who is opposing you or who is not on Team Chapter right now? And does it matter if you can win them over or not? There are a lot of people that don't like us. There's the legacy Medicare industry. I am one of the most hated people in the industry. There are YouTube videos of people trying to take me down. Why? Because you're just bad for business? Because I'm bad for their business. Yeah, right. Exactly. I'm competition. And there are private Facebook groups that people have shown me pictures of, of people trying to plot against us.

32:55We've been sued by our competitors, usually for really silly things. I was told that I'm not allowed to recruit. As the CEO of the company, I have no non-solicit or non-compete with any of these companies. Obviously, I've never worked there. And they've told me I'm not allowed to go and do a recruiting event in their city. like just the most absurd stuff because they expect this is their turf there's some sort of

33:18Cobi Blumenfeld-Gantz:maybe sounds kind of a legal agreement between them that you're not playing yeah which i will play no part of um so yeah there's legacy medicare industry i was actually very worried when we started the company that insurance carriers wouldn't like us um they actually really do like us because even though our whole goal is to provide information transparency which they don't always love and to be do what's best for the consumer which they say they love but they don't actually The reality is when we enroll people in the right Medicare plan, it is a more profitable placement for the insurance carrier because the user retains longer and has better lifetime value for the carrier.

33:52And our quality is way higher. Insurance carriers get paid more when the customer satisfaction is higher because of the way Medicare reimbursements from the government work. So they actually do really like us. And then broadly, I think there's another part of the healthcare industry called an FMO, a field marketing organization that also feels probably not the most positive sentiment toward us.

34:16Cobi Blumenfeld-Gantz:Why would FMOs not be a fan of Chapter? Generally, FMOs, since we're a field marketing organization, they sit as a layer between the insurance carrier and a lot of brokerages, especially when they're smaller. The difference of opinion we often have is, again, we will always do what's right for the consumer. And many FMOs are really oriented around the insurance carrier as their customer. So it really goes to who is your end customer? Is it the senior that you're delivering Medicare items to, or is it the insurance carrier? And not that they're malicious in any way, but sometimes those do come into conflict.

34:47And that's where we have a difference of opinion.

34:50Cobi Blumenfeld-Gantz:Have you been successful enough that you also have startups trying to copy you guys, or are you still maybe more of a black sheep or outlier from the sort of tech side of things? There were seven or eight startups that started around when we did. This happens in any industry. You had Vanta and Drata and probably a couple others start around the same time. This happens in every category. We have a bunch of VC-backed startups within a year or two start. Same thing happened here. We're one of maybe two that still exists. There was a lot of competition of tech-enabled brokerages, Medicare brokerages when we started.

35:21There's not anymore. I think broadly, hopefully, we've been able to prove that not only our model works, but we hope other people don't want to compete. But if they do, that's fine.

35:32Cobi Blumenfeld-Gantz:What would you say for other startups might be the lesson in outlasting or sort of out executing that field to be one of the couple survivors? One of the most frustrating things early on was the noise. There was so much noise in the industry, so many other startups around, like these seven or eight other companies. and it's not just from those companies at all. I didn't really interact with them, but it's more from the VC community, from other people. You hear about, oh, this company is growing at 10X. Why are you only growing at whatever, your 4X or 5X? And it's really hard to not be distracted by that.

36:07And I think one really important lesson is just stay focused. You want to be aware of what's going on with competition, but you can't let it change your plans or get too distracted or worry about it too much because if it's hard for you, it's hard for everyone, like everyone's struggling. Um, and a lot of times what you hear from other people is hype and not real.

36:27Cobi Blumenfeld-Gantz:Is there a moment or a lesson that you learned at Palantir that you try to remind yourself or sort of invoke, you know, with your team as you're building chapter? Yeah, I think one that's so important is just the enduring, uh, nature of talent density. Like you have to have really good people at your company. and that will get you through anything. There was a period of, I think, three or four years when Palantir actually didn't grow or didn't grow much. Can you imagine? At the time, they were a$20 billion private company for three or four years growing. I don't know exactly what percent they were growing.

37:06Probably like 20-ish percent a year. That's a death knell for a company today. And they were able to build their way out of it because we had really good people. We had really good engineers who were able to build good products to figure our way out of it. But if we hadn't had an amazing team, I don't think Palantir would exist today. And if the company hadn't raised a two or two and a half billion dollar round right before that flat period, I don't know if that was pressured or not, but it was a good move.

37:33Cobi Blumenfeld-Gantz:Having a war chest can help. Having a war chest is also very helpful. But yeah, I think just keeping the talent bar very high and being willing to eat the pain of doing so much, whether it's slow growth, like dealing with slower growth or just having to do so much individual work because you don't have the people. It's way better to have no one than the wrong person. Like continuously learned lesson from Palantir today. How have you been able to get the top tier talent to be passionate about chapter? Are these mission driven folks? Is it just a big intellectual problem? Or what is the way that you get that sort of elite group to buy into what you're doing?

38:08I know that most people to no one is waking up every day thinking about Medicare. Like, it's not even what I thought about until six years ago, five years ago. So it's not we're looking for people who care about Medicare. And in fact, I don't think we've ever hired someone who's ever worked in health care, really. Because generally, it's not saying that there are no good people in health care. Of course there are. But broadly, especially in the tech world, the talent density is much lower in health care companies. so we really try to get people who are excited by the idea of being at a mission-driven company and can learn to be excited by this specific problem set because it is a really interesting intellectual problem and a really important mission problem so that we're solving so it's more that and then we try to select for people who really want to be on a lean team that has really high agency and expects a lot and we push like it's uncomfortable we push people to grow a lot.

38:59That's another thing we talk about at Palantir a lot and push people a lot. But most people coming from even medium stage companies or what you might consider to be a late stage company with a couple hundred people, it is a shock to them when they come to chapter how much we expect of them. And so a lot of it is finding people who are very excited by that.

39:19Cobi Blumenfeld-Gantz:Now, you are someone who said you did not love authority or some of the sort of hoops that you have to go through to get a job at a place like that. are you putting people through hoops to work in chapter? Are you, yeah, would you hire yourself? I have no idea if I'd hire myself. I probably wouldn't hire myself. I have no idea. We, our interview process is actually not atypical. It's a few interviews. The thing that's atypical is we don't do any outbound. We don't really go like cold, or we don't do any cold outbound at least. We aren't going in like sourcing. We don't use outside recruiters. It's all network-based.

39:55and that I think has a natural organic selection component where we're only talking to people for whom it's easy for us to reference. So we have some sort of base layer of trust and if someone who's really good says this person's good, it means a lot more than if someone we don't know says this person is good. So a lot of it is built in there and then it's a relatively standard interview process and it's a lot about how do you think, can you grow quickly, are you mission aligned and less can we catch you on a brain teaser?

40:24Cobi Blumenfeld-Gantz:Does someone have to love the Palantir kind of connection and sort of everything they're doing to be a good fit at a chapter? How do you sort of think about sort of different missions, you know, different teams? We actually have very few Palantir people today, Palantir alumni today. We still have a few, but the way that Palantir has evolved, it's a very different business model. And I think today, most of the people at Palantir are very good at building that thing, but they're not always as adaptable to building what we're building. is what we found at least in the people we've talked to. And a lot of people at Chapter don't agree with a lot of the way that Palantir builds.

41:01And I think there's a lot that I've learned about how not to build on the technical side in particular. Palantir is very dogmatic about its technical stack in a way that's, I actually think, not great in this AI world and especially for a startup of our scale. For Palantir, it makes sense, but for us, it doesn't.

41:19Cobi Blumenfeld-Gantz:What about for your parents and I guess their peers who might be customers of Chapter? Is it easier to explain what you do now? It is easier to explain what we do. I still get, I mean, I get a lot of lovely emails and feedback from our members every day saying like, oh my God, thank you so much. You helped us so much. I also get some nasty grams from people like, you're evil. I can't believe you've taken money from Peter Thiel. I can't believe you worked at Palantir. They're evil. So I get a little bit of that certainly still, especially from the senior demographic. A lot of them, when they are more removed from technology and they don't actually understand the underlying technology, it can be really hard to trust.

41:56Cobi Blumenfeld-Gantz:So do you just send them back like I'm backed by Al Gore too? Or do you just not respond? That's very recent. That was only the past week. I actually try to get on the phone with them. I've gotten on the phone with a lot of people. And in almost every case, it's very productive. They're like, oh, I explain what we did at Palantir and explain why there's nothing to be ashamed of. And they're like, oh, that's actually very reasonable. And then I explain how we use data and how we use it at Chapter. And they're like, oh, that's actually amazing. and then most of them become chapter members. There's only been one conversation I can think of where that didn't happen.

42:24Cobi Blumenfeld-Gantz:So you've taken the old church and synagogue visits and now you're just doing it kind of digitally across the country. Exactly. Yeah. Very cool. In terms of sort of what you're excited about with the product moving forward, anything we should keep an eye out for? One of the problems that we don't solve in a great way today for seniors is really their entire financial lives and their financial spend. And today, seniors control 70 % of discretionary spending in this country, trillions of dollars a year. And yet the tooling that seniors have access to for a lot of this spend is very poor. So we are currently building a financial platform that we're really excited about.

43:02Can't go into too much detail, but at the high level, there has never been a way for seniors to have a consumer advocate always on the lookout to make sure that they are spending the right amount, not getting overcharged and being protected from scams. And that's really what we're trying to deliver.

43:18Cobi Blumenfeld-Gantz:Awesome. Kobe, I'm really excited to see how Chapter evolves and sort of what you guys can do for these seniors moving forward. So thanks for coming on the show. Thanks for having me. Thank you.