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- [00:02]
A
Hi, everyone. I'm Alexa and I've been working behind the scenes with Sam Parr on Moneywise. If you didn't hear his announcement last week, we're actually trying something new on this channel, taking the same transparent approach that we took to finances and applying it to company building. So please let us know in the comments what you think and enjoy this episode with Mario Schlosser, the co founder of Oscar Health. This is Mario Schlosser. Since 2012, he's tracked every single minute of his life in a spreadsheet. Most people would call that insane, and maybe it is, but it's. But in that same timeframe, Mario co founded Oscar Health with Josh Kushner, a tech powered health insurance company that's now worth over $4 billion. We sat down with Mario last week and he walked us through the three things that made Oscar possible. Things anyone can use to take stock of your time, deconstruct complex problems, and handle conflict before it kills your company. It starts with a 56,000 sales spreadsheet.
- [00:51]
B
I've been tracking my time on a minute by minute basis every minute since 2012. When I started researching new company ideas, I said to myself, I'm way too undisciplined. I start reading an article about health insurance and after four minutes I'm like, that's enough for today. I'm gonna go watch Game of Thrones now. And so I thought a good forcing mechanism would be if I write down when I start doing something, I write down when I stop doing it and then I can see, oh, this was at least 30 minutes. Great. I can feel good about this amount of work I've put into this task. Now I can go and, you know, get a beer or something.
- [01:24]
A
Mario didn't just use his time tracker to reclaim his focus. He used it to make data driven decisions.
- [01:29]
B
So I track when I start doing something, when I end doing it, what I did, who I did it with. Sometimes I add a tracker on a scale of 1 to 10, how I feel about it, with 7 being the expectations, like how people measure objectives and key results. Now I can put into cloud code and can give me all kinds of cool statistics about myself.
- [01:45]
A
But it mattered most when his instincts pointed one way and the time tracker pointed the other. The best example of this is when they took the company public.
- [01:53]
B
I struggled with mental health after the IPO process actually went sideways, really went public and stock price went down right away. And it's the first time in my life I talked to a therapist and then I went on antidepressants. Actually, for a while, I think that was, was great to see for me because I, I think my mind fights, fights the effect of drugs because it wants to rationally understand why something's happening. And in this case, actually seeing this drug just push up the floor of my moods and peg it to a certain point, to a certain level was very helpful. And I think it created a self perpetuating cycle of. All right, this is how it's going to be. More recently, since taking the CTO role and stepping down from the CEO role, one thing that I noticed happen, and then I saw it in the data as well, is I started spending too much time with external work. It's all kinds of people who start calling you for advice. And in the past we've said, look, I just don't have any time. I would love to give you advice. And before long your entire day fills up with you just giving advice to other people. And that is a great thing. And I love the fact that people think I have anything worthwhile to share, but it can completely just consume all the energy you have that you could put in something more creative that would be even more worth asking later on for your advice about. So when I saw that in the data, I realize I have to really start turning that dial again in a different direction.
- [03:18]
A
But in the early days, he wasn't spending nearly 100% of his time on Oscar, and he believes he didn't have to.
- [03:24]
B
I looked at how much time did I spend on Oscar and when in 2012 and how that ramped up. And that was also very interesting to see because for months I didn't spend more than 20% on it. Sort of like researching a bit but not doing that much other work on it. And I think that gives me some orientation today when I do something new that the new thing you're doing doesn't have to start right away. You can play with it for a while, you can stare at it for a while, and it sort of will develop a life of its own. If it is a real thing, potentially you have to also give it that life. But still, you don't have to overthink that. It's gotta be amazing right from the get go.
- [04:02]
A
In the beginning, Mario was only giving Oscar 20% of his time. And as the idea proved itself itself, that percentage continued to grow. But how did he actually build a health insurance company with zero experience in insurance? Well, he leaned on something that he learned from Ray Dalio while he was working at Bridgewater, an idea called Radical decomposition. And it's how you take an impossibly complex problem and break it down into parts that you can actually solve.
- [04:27]
B
So I was a Bridgewater for a couple of years, big global micro hedge funds. And the best idea underpinning in all the Bridgewater, in my view, is this idea of. I'm not sure they call it that way. I call it that way. Radical decomposition. You say, I want to know what inflation will be next year. How do you do that? Well, the government tells you how they report inflation, and you can just look up on the websites of the governments of the BA or BLS, whatever, how they report inflation and the 200 categories that go into the inflation basket in the US and you can then go through the 200 categories and you can have an estimate for each one of the categories, and you add those up and you get probably some estimate of inflation going forward. And so you take some complex piece, you break it down to its constituents, and then you go one by one, basically. And for building Oscar as an insurance company, that list of constituents was the list of components that we had to go and operate again, claim system, network, all these things. Over the summer, I found a couple of documents, filings from insurance companies, public filings that you can download from regulatory offices across the. Across the country were certain think tanks writing about the state of health insurance in New York State, whatever, stuff like that. And those reports showed me the components of what insurance company has to have again, claim system, network of physicians, underwriting, utilization management, all these things. And so I made a list of these components. I made a list of the possible vendors. I realized, again, you can look at these filings of insurance companies and see who. Who they pay. And so that way I could see which vendors they were paying for certain components. And then we kind of knew what we had to go and do. That was one blueprint. And I had a chart early on that showed these components as bubbles. And then the chart was, you know, like a fifth filled with liquids with gray. I always like, I'm colorblind, so I like black and white presentations with thick black lines, you know, and maybe some gray in it. And over three years, 2014, 15, 16, this vessel of health insurance component bubbles would be filling up with liquids, Meaning we would take all these components in house. We would start with an outsourced claim system, take it in house. We would start with an outsourced customer service team, take that in house. And that is what we did up until in 2017, we insource pretty much all the important Components of what Oscar did, what Oscar does, what an insurance company does. And to this day, I think we're the only insurer that has really every one of these components in house. In most cases built on our own technology infrastructure as well.
- [07:06]
A
Over 30 other companies tried to enter the market at the same time as Oscar, but almost all of them failed. Oscar was able to survive because of radical decomposition. They broke down the components of insurance, brought them all in house, and were able to survive market volatility that way. But there's a third thing that made Oscar possible. And it's something Mario learned the hard way. You see, right before Oscar, Mario was running a gaming company called Vostu. He and all the other co founders scaled it to 700 employees and over 50 million in revenue. But they all got fired due to internal conflict.
- [07:38]
B
And then Zynga, the biggest at the time, American social gaming company sued us for copyright infringements because we supposedly had been copying their games, which was true, but shouldn't have really mattered because they were copying all of their games. This is social gaming. Everybody had a farm game, a cafe game, whatever else. And it was bull. We settled the lawsuit for like 50,000 bucks, whatever, a year later. But that year my eyes were totally taken off the ball. I knew all of our games the best. And so I had to fight this lawsuit in Brazil, in federal court in California. We had all kinds of high powered lawyers. The lawsuit laid bare a bunch of the other conflicts we had between the founders, between Daniel, me and others, and the at the time, lack of strategy we had with shifting from this local social network in Brazil called Orkut to Facebook, which was coming into Brazil at the time, and then shifting from online to mobile as well. So you had all these platform shifts happening also at the same time. And that was too much. We all started fighting. The thing blew up basically. And then a few other folks took over the boards that then fired all the founders. Basically a few other folks took over.
- [08:43]
A
Mario said that getting sued wasn't the real problem. The lawsuit almost felt exhilarating because the entire team could rally behind it.
- [08:49]
B
Those issues. They felt exhilarating almost. You know, we were fighting something that was noble and worth fighting essentially. And the stress that I find devastating is the stress when something internally doesn't work, when you're fighting with people on your own team, when people on your own team doubt your leadership, want to leave or think they can do it better or whatever else that I always found the worst.
- [09:13]
A
So how does Mario kill internal conflict at Oscar? One rule run Straight into the fire immediately.
- [09:19]
B
The issue of don't ever have there be daylight between the founders if there's conflict brewing, that's unsaid. It's gotta get discussed. You gotta run into the fire, not away from it. These are all issues I think I would have sort of gracefully let fester if I hadn't experienced them before. And that was incredibly important because Oscar was a way bigger. A way bigger pressure cooker, I would say, than the gaming company ever was. We had so many regulatory and political and whatever challenges that Oscar, it was at a very different level of investments and company size than the gaming company ever was. And if I had not had that experience, I think it would have not been a good outcome. And Josh likes to say, over time you learn that the world doesn't end that often. By definition, the world can only end once. I always think that's a great saying because you do realize going through a crisis, you lose a lot of money in a given year, whatever, and you feel absolutely horrendous about yourself because you've clearly mess things up. And whatever that as you get through it, you may in the situation then occurs again in some shape or form. You've seen it before, you've seen yourself get through it before, mentally, logically, in the way you lead people through it and whatever else. It just helps to have experiences as you write like this before and be able to apply a few lessons that you haven't just read in a book, but actually experience yourself.
- [10:49]
A
But practically, how do you run into the fire? Well, Mario's answer is extreme transparency. So extreme that his co founder, Josh, would often kick him under the table during early investor meetings.
- [11:00]
B
If we would raise money from an investor, we would always make sure to sit next to each other at the table, whichever table we were, whichever room we were in. So that if I go too deeply into the weeds, he would kick me under the table and pull me back up again. I couldn't help but say, well, this could go wrong and that could go wrong. And also, I don't think we're very good at this. I don't think we're very good at that. That's the other situation where Josh would kick me. He'd be like, dude, you know, like people. People will just misunderstand you. You know, they're not used to people being dishonest to them. Investors aren't. And therefore they will judge you differently or will judge the company differently if you tell them these things.
- [11:36]
A
With his own team, Mario took transparency even further and did something most CEOs would never do. He encouraged his board to audit him.
- [11:44]
B
There was a time in Oscar history where we hadn't raised money in a few years. Growth had really slowed. It was two years or so after the Affordable Care act almost blew up, so people were already exhausted. We'd gotten through the thick of it. But then suddenly, again, growth started slowing down. The company's directories are looking very, very different. And within a span of like, 1 month or so, several of my senior leaders all said to me, I want to quit, and I want to go to something else. And it was clearly all of them, on the one hand, thinking, the market will never amount to much, the company will never amount to much. The other hand, probably thinking, and Mario should be doing something about that. He's not doing. And I asked the board to step at the time, get him, Joel Cutler, who's the CEO of General Catalyst, now chairman emeritus, to step in and say, just talk to people in the company and see what they think. And then Joel did that and came away thinking, yeah, you got to keep doing what you're doing now. And the few people want to leave, let them leave. And then, lo and behold, most of them didn't leave and got fired up again. And we raised money later that year from Google at a big valuation, and it sort of all snapped back into place.
- [12:51]
A
The last and honestly, most entertaining thing about how Mario leads his team is whenever there is something he would classify as an external enemy, like bad news or a crisis, he doesn't face it alone. He uses it as an opportunity to rally the whole team around it.
- [13:06]
B
There's an annual report that the government puts together that determines how much we have to pay other insurance companies in the Affordable Care Acts. It's called Risk Adjustment Transfer. A very large part of Oscar's revenues have to get paid to other insurance companies because our members tend to be healthy and younger than the others insurance company's members. And the government puts that together, that data, all data driven, and sends it to you in March and June of every year. And that used to, early on, look very bleak for Oscar in the early years because you didn't know how to do this well or whatever. So we would always open this report and lose another 20 million bucks. And eventually we had this ritual of, when that report comes, we all meet and we have whiskey, and then we just take whiskey shots and we find out what the report is like, and that helps. So as a management method, it's not the whiskey that the management method, it's the communicate with people a lot, tell them stories.
- [14:01]
A
Oh, and last thing I forgot to mention, we are making this video for you. So let us know what else you want to see here. What are some problems that you're having in your business that you think that we should cover here? And if you are a founder, check us out@joinhampton.com.