Chase Adam at Startup School 2013

Hi everyone. My name is Chase, and like Jessica said, we recently had the privilege of being the first nonprofit to go through Y Combinator. So, to tell you just a quick one minute about Watsi, we're a nonprofit crowdfunding platform. The easiest way to think about us is that we're basically like Kickstarter for healthcare around the world.

You can go on our website, see photos, and read stories of patients all over the world that need access to low-cost high-impact medical care but can't afford to pay for it. You can donate as little as $5 and directly fund, say, life-saving heart surgery for a 12-year-old girl in Nepal or directly fund a prosthetic arm for Jose, a 46-year-old man, father of five in Guatemala.

So, I spent a lot of time thinking about what on Earth I was going to talk about today, and I thought about all the good startup presentations I've ever heard in my entire life. I realized that every good presentation falls into one of two categories. There are informational presentations, where really smart people get on stage and tell you that A plus B plus C equals startup success, and there are motivational presentations, where really successful people get on stage and tell you really funny stories about all the mistakes they made and all the hard lessons they learned on the long road to success.

I was really frustrated when I realized that I couldn't give either one of those two presentations today. On the one hand, I'm not experienced or smart enough to have the slightest idea what the formula for startup success is. If I did, I would be doing $10 billion a year. On the other hand, I'm not successful enough to tell you funny stories about all the lessons I think I learned because I have absolutely no idea if those lessons are ultimately going to result in success or if they're ultimately going to result in failure.

So, I procrastinated like crazy. Two days ago, I remembered the best startup presentation I've ever heard in my entire life. The best startup presentation I ever heard was when Brian and Nathan of Airbnb came to Y Combinator and told us the story about how Airbnb spent their first thousand days searching high and low for product-market fit. I'd never left a presentation more motivated, more inspired in my entire life.

But I had one problem with the presentation—a nagging thought that I just could not get out of my mind. It was that Brian and Nathan, and everyone else at Airbnb, earned their right to come to Y Combinator and tell that story. But I couldn't help but go home and wonder how many other startups have persisted for days or maybe a hell of a lot longer and ultimately failed.

That’s when I realized the one thing I could actually talk about today—the one story I could tell you guys. I could tell you our story—the story of Watsi—and I can tell it with an honesty that successful people can't. I can tell you the story of Watsi on our 999th day, the day before anyone knows if we're going to be a massive success or if we're just going to be a spectacular failure.

So, about two and a half years ago, I was serving as a Peace Corps volunteer in Central America. I was sitting on the back of a bus right at the Panama-Costa Rica border. At that point in my life, that bus was the absolute last place in the entire world I wanted to be. It was hot, it was muggy, I was sweating like crazy. There was this old guy sitting next to me that kept kind of nudging into me, and I was just curling up against the window trying to sleep, but the bus was too bouncy so I couldn't sleep against the window.

I remember I just kept constantly smelling mildew because I'd been living in the tropics for a year and a half. Your clothes never get a chance to dry, and so I'm just smelling the mildew coming off the collar of my shirt. I remember there's a black North Face duffel bag at my feet, and in that black North Face duffel is every single thing in the world I own. I'm $10,000 to $12,000 still in student loan debt. I have another $2,000 in credit card debt I have no hope of paying off until I'm done with the Peace Corps.

And that's not the worst part. The worst part is that I just the day before got off a plane from the United States. I was back home in the United States for my grandmother's funeral, but while I was there, I caught up with a bunch of my old college and high school friends in San Francisco. I have no idea why I thought this, but before I saw my friends, I figured they were all going to be miserable.

I was the guy that spent the last 5 to 7 years working with nonprofits, traveling around the entire world. I figured they were living the office space life, working dead-end jobs in cubicles in San Francisco, miserable day in and day out. But that wasn't the case. My friends were all happy. Every single one of my friends had an awesome apartment. They actually had girlfriends and boyfriends—they went out, they got to date, they were having fun.

But beyond that, they were working for companies, building products, and solving problems that they cared about. They were happy. They found a way to do good and do well. In contrast, the six years I had spent traveling around the world working with nonprofits seemed slow, bureaucratic, underfunded. It didn't come with the same energy, optimism, and innovation that San Francisco had.

And so, this is a direct quote, but I told every single person I knew—my friends and my family—when I was back in San Francisco, I said, "I'm done with this. That's it. I'm not going to sell my soul." I said, "I'm not going to sell my soul, but I'm going to come back to San Francisco and, like all of you, I'm going to find a way to do well and do good."

So there I am, sitting in the back of that bus in Central America, trying to think about how on Earth I'm going to get through my last five months in the Peace Corps, and this woman gets on the bus. This is a picture of one of the actual buses. The woman gets on the bus, and she starts asking all these local passengers for donations to pay for her son's medical treatment.

Now, the second I hear that, I just tune her out and stop listening. I'm immediately skeptical. People in Central America get on the bus every single day, one after another, asking for donations, preaching, selling products—no one ever buys. But a few minutes later, I noticed this woman was walking down the aisle of the bus toward me, and all of the local passengers were giving her money. I could not, for the absolute life of me, figure out why all of these local people trusted this woman when they had never trusted all the women that came before.

It turns out that these people trusted this woman because she had her son's medical record with her. She was passing it around the bus. It was in a red folder. They were grilling her with questions about the doctor, or the hospital, or the condition, and she seemed to earn their trust. She got to the back of the bus; I gave her 500 colones, which is like a dollar. Since all these local farmers were donating, I didn't want to be that one stingy Gringo that doesn't give her any money.

She gets off the bus, and I get goosebumps. I think it's crazy that we have websites like Kickstarter where, with the click of a button, you can crowdfund really any type of creative project. We have websites like DonorsChoose where, with the click of a button, you can crowdfund a classroom project for a student really anywhere in the United States. Why on Earth is there not a website where we could crowdfund really the most important thing of all, which is healthcare for people that can't afford to pay for it?

So right then, having been the most jaded I've ever been in my entire life five minutes earlier, I decided to start Watsi, and I decided to name it after the town I was traveling through when the woman got on the bus. This is my home. So this was my little hut in the Peace Corps. It had one outlet, one light, running water for one hour a day, but for those last five months were really the best five months of my life.

I just became obsessed—like obsessed—with Watsi. All I could do was think about Watsi for 10 to 15 hours a day, and I would play a game. The game I would play is I would just think of every possible issue or problem or externality that could arise with the Watsi model, and I'd try and come up with a solution for five months.

To you guys, that probably sounds crazy. Most of you could probably build Watsi in two months, and here I am sitting in the middle of nowhere thinking about the idea for five months. But in retrospect, those five months for me were some of the most important five months in Watsi's history. The reason for that is that nonprofits oftentimes need to be a little bit more careful, a little bit more skeptical, and a little bit more introspective than for-profits.

The reason for that is that with nonprofits, it's often really, really hard to know if you're succeeding or if you're failing. With a for-profit, I envy all of you guys. It's so simple. You build a product; if people want that product, they buy it, and they give you money. The better your product, the more money they give you. The more people buy it, the more you succeed. The worse your product, the fewer people buy it, the less money they give you, the less you succeed. You can measure success in real time and you can measure success in dollars and cents.

Nonprofits are a lot more complicated. We have to go to one group of people; we have to convince them to give us money. We have to turn around 180 degrees, take that money, and give a product to an entirely different group of people. That's where the problem is. It's really hard to get feedback from that second group of people. It's hard because of communication—they often speak a different language, they're living in a really isolated area, they don't have access to the Internet, they don't have access to a cell phone, maybe they're not even literate.

It's also difficult because when you're giving people something for free, or when you're giving people something that's heavily subsidized, they're really reluctant to give you any negative or critical feedback at all for fear that you're going to stop giving them whatever it is you're giving them. It's also hard because sometimes you give people things that help them on day one, and they end up hurting them on day 365.

I remember when I learned this lesson the first time. Before I was in the Peace Corps, I was living and working in Haiti. In my third week in Haiti, a local Haitian friend of mine took me to this outdoor Haitian market. I got to the market, and there were 50-plus Haitian women in little groups of women, maybe five to seven in a group, and they're all squatting in kind of like a semicircle.

The first group of women was selling eggs; the second group of women was squatting down and selling plantains and bananas. My friend taps me on the shoulder and says, "Chase, look at the third group of women." I look at the third group of women—they're squatting down just the same, but they have white bags coming up in front of them, and the top of the bags are rolled down. On the front of the bags is an American flag, and inside the bags is rice with a little cup to scoop out a cup of rice.

He said, "Those women are selling rice for pennies on the dollar. They're selling rice for one hundredth of what it should actually cost." He said, "The reason they're selling rice for so cheap is that every time there's a humanitarian disaster or there's a crisis in Haiti, what happens is a bunch of nonprofits and a bunch of governments, many of them in the United States but not only, go to one group of people, they ask for money, they take that money, they go to U.S. companies, buy a bunch of rice, send that rice to Haiti, and give it to people that are starving. Makes a lot of sense. The problem is that this has happened so many times, right, that we flooded the Haitian market with free or heavily subsidized rice."

He said, "Chase, we've put all the local farmers out of business. How can a local Haitian rice farmer compete with a free product?" I remember hearing that story and getting really frustrated and thinking, "But the problem is so clear, right? People are hungry." But the solutions, and really the whole nonprofit world, can oftentimes just be really complicated.

So, I got back to the United States after the Peace Corps. We put together a volunteer team. We were 10 people. We had Grace, who was in India at the time helping us with marketing; we had Jesse in Portland doing all of our coding; we had Howard in South Carolina doing all of our finances. We got on a Google Hangout every Tuesday night and we'd work on Watsi. We had no funding, no office, no salaries, no users, no revenue, and we didn't want any of those things. We didn't care; we didn't have any desire. The last thing in the world I wanted to do was build a big nonprofit organization.

We were only doing Watsi because we thought it was cool, because we thought it was fun, because we wanted to start a nonprofit that we ourselves would donate to. In retrospect, being small and being obscure actually gave us a huge advantage. It enabled us to do whatever we wanted; we were beholden to no one, and we could take risks and we could do things that the big nonprofits could never do.

So, during that year and a half, we made five decisions that I think shaped the future of Watsi. The first was we decided to be radically transparent. We were going to be the most transparent nonprofit in the world. That means exposing all of our operations, all of our financials, and even doing extra work to do things like take screenshots of each funds transfer and post them online so people can see exactly where their money is going if they donate on our website.

The second thing we did was a 100% model. If you donate on Watsi, 100% of your donation funds medical care. We will never take a cut, no matter what. The third thing we decided as a team was just minimal fundraising. We had all seen how operational fundraising can just destroy nonprofits. It is such a distraction. There are so many nonprofits out there that get so obsessed and so dependent on fundraising things like annual galas that they forget about why they started the nonprofit in the first place.

We decided we were going to have a circular organizational structure. What that meant is that there's no bosses, there's no hierarchy, right? There's no management, and everyone at Watsi is responsible to every other person. We even got rid of founder and co-founder titles. There are no founders at Watsi; we believe Watsi is in a perpetual state of being founded. It's crazy to me. Every new person that joins our team brings something completely new—they change the entire trajectory of the organization, they change the future of Watsi. It's nuts to think that we've been founded, right? We're constantly changing.

The last thing we decided was that whenever we were making a decision—any decision that impacted our patients or impacted our donors—that we'd always treat our patients and our donors exactly how we would want to be treated if we were in their specific situation.

So, we worked on Watsi for a year, year and a half—every Tuesday, built the site for nothing, and then spent $3,000 to try and get a nonprofit, which we did ourselves and got denied. Then we figured out a way to get it. But I’ll never forget the day we launched. We launched on August 23rd of 2012. We launched at 9:00 a.m. in the morning, and we sent out an email to our entire network.

I remember thinking, “Okay, it's going to go crazy now.” 10 minutes, no donation. 15 minutes, no donations—crickets. My mom donated, then Grace's mom donated, then Jesse's mom donated. Our friends and family slowly donated, and then about an hour and a half, two hours after we sent out the email, that was it. That was our big fancy launch—two, two and a half years of work—that was it.

I decided that I wanted to post on Hacker News. I'd never posted on Hacker News in my entire life. I had never even made a comment—I was too scared that people were just going to destroy me. But I did. I decided not to tell our team because I figured no one was going to upvote it, and I didn't want them to all get disappointed. So, my plan was that I would post on Hacker News, and if it got upvotes, I'd tell the team. But if it didn't get upvotes, I was just going to delete it and pretend like it never happened.

So, I posted on Hacker News, and by lunchtime, we were the number one post on Hacker News. 16,000 unique visitors to Watsi funded every single medical treatment almost instantly in our entire pipeline. We had 189 comments on Hacker News, hundreds of tweets, hundreds of Facebook posts, hundreds of emails, text messages—it was just absolutely crazy.

I remember I told my boss. I was working in finance in the city at the time, and so my boss was like, “I need the day off.” I just sat at my desk shaking, answering Hacker News comments for the entire day. So after we launched, we got Hacker News, and then a few days later, NBC picked it up and wrote an article about Watsi, which was like the coolest thing ever.

Then a few days after that, I was in bed, and I got a Google alert that TechCrunch had written an article about Watsi. I had no idea they were going to write it, and I had no idea they even knew who Watsi was. I remember—this is so embarrassing—I was crying; I was so happy. We were on TechCrunch! That was like the biggest thing in the entire world! I had been reading TechCrunch, and like, Watsi was on TechCrunch, and I didn't even know they were going to write about it.

I remember turning to my girlfriend at the time and saying, “Do you think all the startups that TechCrunch writes about are secretly as crappy as we are?” She looked at me and said, “What? What do you mean Watsi's not crappy?” And I'm like, “I know Watsi's not crappy. The idea is awesome, and the website's good, but we have no office, no full-time employees, you can't even donate to a patient on our website because we're completely out of patience and you would donate on Watsi, and we wouldn't even send you a thank you—we wouldn't even send you a receipt. You would just donate, and that was it! Like it was absurd!”

But none of that mattered. We were on TechCrunch, and that was—I mean, we were on top of the world. And so then, like all good startup stories, these are our actual numbers. This is our monthly revenue since day one. TechCrunch was that first kind of like blob; our designer kind of smoothed this out so it’s normally pointy. I think she was trying to secretly make us look better, but that first trough of sorrow was we never thought about what would happen after we launched.

We never in our wildest dreams thought that we would fund all the patients. We thought we had six months' worth of patients, and they were funded in a few hours. Everything was broken; nothing was working. I decided to quit my job, and I said, “I got to do this. I got to try and do Watsi full-time.” The next rational thing to do was to fundraise. We had no money, and the only way to run an organization is to get some money and pay people.

So, I went out and started fundraising, and fundraising was just a complete disaster. No one gave us money. I can tell you one of the worst parts about being a nonprofit is that no one will ever tell you no. Everyone will go like this—they'll pat you on the back and say, “Good job! You're doing something really good for the world, that's awesome! I really want to help you!” But they'll never write you a check, right?

And so, I did that for like three months, just spinning my wheels. I kept telling the team, “We're so close. There are like these 50 people that are about to give us money, I promise!” But they never gave us money. Then about three months later, it's November 22nd, and I'm flying to Southern California to spend Thanksgiving with my dad. The plane lands in Southern California. I check my email, and in my personal email, there's a message from Paul Graham.

Paul Graham has seen a recent post about Watsi on Hacker News. He found my personal email through my Hacker News account, and he just wrote two sentences, and the sentences were, “Are you in the Bay Area? If so, I'd like to meet.” I remember being so excited that I got off the airplane and left all my luggage for Thanksgiving on the airplane—just left it there! All I needed was my cell phone!

So, Jesse flew down from Portland. We met with PG a few weeks later in Mountain View. We met with Jessica, and he wrote us our first check within like an hour. I had been meeting with people for three months, and no one had to check. PG made our first donation. We joined Y Combinator—Y Combinator is the best thing to ever happen to Watsi.

People always ask why, and the big three things we got out of YC—the first was focus. It enabled Jesse to come from Portland, Grace to come from New York. The three of us lived and worked in Mountain View. All we focused on was Watsi. Beyond that, what Airbnb had actually taught us was to only focus on one metric. We only looked at one metric for three months, and the only thing we tried to do for three months was to get more people to donate—just weekly donations. We managed to increase weekly donations by 30% every week.

The second thing YC gave us was a network. It's like when you go to college, you're like, “Wow, everyone here is kind of like me.” YC is like that but times a thousand. I mean, it's the most amazing network of advisers and entrepreneurs I could honestly ever have imagined being a part of.

The third thing was the stamp of approval. I think that now that YC is accepting nonprofits, this might actually maybe be more important for nonprofits than for-profits. But in the nonprofit world, nonprofit philanthropists and foundations are the most risk-averse group of people on the planet. No one is willing to take a bet on a new nonprofit. Everyone's afraid of being burned.

To have YC come on board and say, “We're taking a bet. We're making a public bet on Watsi” made it really easy when we eventually went out and started fundraising. So, we went out fundraising—take two. I learned my lesson the first time, and I said we made a new rule that we're only going to fundraise for three months, and that's it. Even if we don't raise a dime in three months, we're not going to fundraise again for 18 months. We’re going to work as volunteers, all bartend—screw it! I don't care. I'm not gonna fundraise a day longer than three months.

So, I went out and started fundraising again, and again it was a complete disaster. It was a complete disaster because I didn't know what we were selling. When you're a for-profit, what you're selling is obvious. You're selling a return—give me a million dollars, and I'm going to give you a billion dollars in 10 years. You don't even need to talk about it. With a nonprofit, everyone gives you money for a different reason, and it's really complicated.

At the start, I got talked into reading these God-awful books on nonprofit fundraising that just ruined my brain. But these books told me that I should sell emotion. They said you should go out and tell stories about your patients and make people happy and make people cry, and then ask them for money. But I felt like a complete fraud. It was just stupid.

So, I tried to do that, and the meetings were just terrible. No one gave us money. So, that lasted for like two days. Then the next thing I tried was I thought we should sell impact. A lot of nonprofits do this—you sell impact, right? So, I created all these really fancy models and went to all of our donors and said, “If you give us money, it's better than giving all these other nonprofits money. You give us money; look at this model, and you're going to somehow manage to help education in Rwanda in 15 years by funding this girl's medical care.”

But I felt like a fraud. I was just like inventing numbers. Watsi was six months old, and I had no idea what impact we were going to have in six months. So, that didn't work either. I finally realized what we were actually selling at Watsi, and what we're selling at Watsi is a vision. And that vision is incredibly simple.

If I asked all of you right now to raise your hand if you would give me $500 for global health right now, raise your hand if you would give me $500. Oh my God, we should all go get beers after this talk! Now look to the person sitting next to you—actually look at them in the eye. I'm like matchmaking right now; I can see it! Look at the person in the eye, and now imagine I told you that unless you give me $500 right now, that person's going to drop dead in the next minute. Raise your hand. Raise your hand if you're going to let that person die.

You're the people I don't want to get beers with after that. That was the vision we were selling at Watsi. And the vision was incredibly simple: the vision was that if we make the world smaller, we're going to make the world better. And that vision worked.

We went out, we had 138 meetings in five states over the course of three months. Of those 138 meetings, 36 people wrote Watsi checks of over $1,000. Of those 6 people, 13 wrote Watsi checks of over $25,000. The median donation amount was $255,000, and Watsi raised $1.2 million, which, if you do the math, is $8,800 per meeting, which is just mind-boggling.

We got really lucky. Some of the best people, some of the best technologists, best investors, and best philanthropists in the world took a bet on us: Paul Graham donated, Ron Conway donated, Khosla donated, 10Cent donated, Jeff Ron donated; it blew my mind. And that's not a responsibility that we take lightly.

Watsi is in a crazy place right now. On the one hand, things are as good as I could have ever imagined. First nonprofit in Y Combinator, we have 18 months of runway in the bank, we just built the most awesome team I could have ever imagined, we're in donated awesome office space in the mission by Teespring—my favorite freaking startup in the world—with all of our friends.

Like, we are living the dream, and it's awesome. And on the other hand, things are crazy. We just got started; we just have a ton of challenges. We just started getting hit with an onslaught of credit card fraud. These jackasses in Jamaica are stealing credit card numbers and donating on Watsi to see if they work. A billion-dollar healthcare company is talking about taking us to court for trademark infringement, right?

And our operations are pulling in so many patients, which is a good problem to have. They're just crumbling our donations—our operations—it's just Grace. She just processes everything; nothing is automated, and it's all breaking. So, there's a ton of challenges at Watsi.

But if I can offer one piece of advice in my 25 minutes of rambling, even though I said I wouldn't offer any advice, my one piece of advice would be this: find something to work on that you care about more than yourself. As far as I'm concerned, Watsi cannot fail. It's actually impossible. And the reason it's impossible is that all we ever have to do is fund one more patient, one more human life. That's all we ever have to do.

If I have to spend the rest of my life trying to fund that one patient, and even if I die before it happens, my life will have been a success because I went out trying to do something right. I went out trying to do something that mattered more than I did. And I don't know, but for me, I couldn't imagine a better way to go out than that.

Thanks, guys!