Chase Adam at Startup School NY 2014

• Chase Adams, the founder of Watsi. Watsi is the crowdfunding platform for healthcare that lets anyone donate as little as $5 to fund medical care for people in need. So before starting Watsi, Chase traveled, worked, and studied in more than 20 countries. He spent time in private sector intelligence in Washington, launched a national health program in Haiti, and served in the Peace Corps in Costa Rica. Watsi was the first non-profit that was funded by Y Combinator, and we're very happy to have him here today.

Welcome, Chase.

• Thanks for having me. I love New York. I was just walking here and there was this really old construction worker crossing 42nd, and he was walking really slowly, and there was this young delivery guy in a van. He was obviously in a huge hurry, and he just lays on the horn, and the old construction worker just stops in the middle of the street, and he looks up, and he just gives the guy the finger. And then a second or two later, they just both break down laughing.

It was beautiful, but that would never happen in San Francisco.

So about three and a half years ago, I was serving in the Peace Corps in Central America, and I was sitting in the back of a bus and I remember that at that point in my life, that bus was the last place in the world I wanted to be. It's really hot, it's muggy, I remember the smell of dried sweat kind of coming off the top of my shirt. There was a black Northface duffel bag at my feet, and in that black Northface duffel was just about everything in the world I owned. I'm in credit card debt, I'm in student loan debt, and I remember the worst part was that the day before I had just gotten off a plane from San Francisco, and I had been home in San Francisco visiting friends and family for the first time in a year and a half.

I don't know why I thought this, but I kind of expected that everyone back home would be kind of miserable. I had spent the last 6 years of my life traveling the world, working with non-profits trying to do good. I figured that everyone back home was, you know, living the office space life, working 9:00 to 5:00's for big corporations, but that wasn't the case. I remember being really surprised when I got back to San Francisco and realized that most people were working for companies or starting companies or building products that they really believed in. It seemed like a lot of people had found a way to do good and do well.

And, in contrast, a lot of the work I had done abroad with non-profits, it felt really small, it felt really slow, and it felt really bureaucratic when compared with the scale and speed with which things were happening in San Francisco. And so, I remember saying to everyone I saw, and this is a direct quote, I said, "Fuck, non-profits." I said, "I'm done with this." And I want to make it clear that I believed then and still do that non-profits are incredibly important.

There are certain problems that markets and government just do not solve. Imagine a 10-year-old girl in Somalia needs $1,000 for a life-saving surgery and her family earns less than a dollar a day. The local government doesn't have the resources to provide an adequate social safety net and the market just hasn't found a way to create profitable businesses that provide surgeries to people that can't afford to pay for it. That's where non-profits come in. Non-profits will come in, they'll fund her health care, she'll live to see her 11th birthday, she'll go to school, get a quality education, get a job, contribute to her local economy, pay taxes, and hopefully in the future if she has children and they get sick, hopefully either she, her family, or the government will be able to cover the cost of her medical care.

So when I said that I was done with this, it wasn't because I thought non-profits weren't important. It was because, from my perspective, the most important problems in the world were being solved so slowly. So there I am sitting in the back of this bus, in the most beautiful place on Earth, during the most exciting time of my life, and I'm somehow jaded beyond belief.

Then, a woman gets on the bus, and she starts asking all of the local passengers for donations to pay for her son's medical treatment. And I'm embarrassed in retrospect, but I just reflexively just tuned her out. People get on the bus every day and ask for money and almost no one would ever give. So I looked back up a few minutes later, and I see that almost all of the local passengers are giving her donations. She's holding this plastic bag, it's almost bursting with money, and I cannot for the life of me figure out why all of these local people trust this woman when they had never trusted all the women that had gotten on the bus before her.

And it turns out they trusted this woman because she had her son's medical record with her. It was in a red folder; she was passing it around the bus, people were looking through it, asking her questions, and through that process she seemed to earn their trust. So she gets to the back of the bus, I make a donation, almost everyone around me makes a donation. She gets off and I get goosebumps and I think, "Why on Earth is there not a website where you can fund medical care for individual people that need it? Why is there not a global crowdfunding platform for healthcare?"

So I decided to start Watsi and decided to name it after the town I was traveling through at the time. To go back to my house, this is where I lived in the Peace Corps. I recruited my two best friends, Mark and Howard, to join the organization. We spent our last six months working on the business plan for Watsi, and I'll never forget that a few weeks before the Peace Corps ended, all the volunteers decided to rent a house on the beach and celebrate by having a party.

And at this point in Watsi's history, my primary objective was to find a developer who could build the website because none of us knew how to code. So we were at the party, it's the last night, everyone's on the beach, drinking, having a good time, and I decide to start showing people mock-ups I had done of the Watsi website. And so if you think people's start-up ideas are annoying in San Francisco or in New York, here I was on the beach, at a party, in my bathing suit, holding my $200 Netbook in my hands, going around to every single person I could find, shoving my computer in their face, making them look at my absolutely horrific mock-ups for an organization website that didn't even exist, and asking them if they knew any developers that would be interested in joining the organization.

And by some absolute miracle, the next morning, it wasn't even that night, the next morning this girl, Chamise, offered to introduce us to Jesse, her ex-boyfriend, a developer who lived in Portland. We jumped on a few Skype calls with him and after basically convincing him that Watsi was a hell of a lot more established than we really were, he agreed to join the organization.

So we got back to San Francisco, we decided to do Watsi part time as volunteers, you know, Mark went and got a job with a start-up in L.A., Howard went to get his MBA, I was working in finance in the city, and we just built this amazing team of part-time volunteers. Grace joined to help with marketing, Sally joined to help with medicine, etc., etc., and we would jump on a hangout every single Tuesday and talk about our progress.

At one point, we were 8 volunteers, across 4 continents, and 6 time zones, all working on Watsi. And in retrospect, not raising money and starting Watsi as volunteers was one of the best decisions we made, and it was good because there was really no downside. The only downside was that it just took us a lot longer to launch, but that didn't matter because we had no users who were waiting on us, we had no funders who were expecting results, and we all had jobs; we could support ourselves.

But the upside was huge. The upside was that we were beholden to no one, which meant that we could take risks and make decisions that we otherwise probably wouldn't have been able to. So we made three decisions during that year as volunteers that I believed shaped the future of Watsi.

The first was that we decided that 100% of every single donation would directly fund medical care. We'd never take a cut. We decided that we'd be completely transparent. We'd go through the extra effort to put all of our financials and operations on the website, and that instead of just focusing on top-line growth like a lot of non-profits and start-ups, that what was actually most important to us was the ratio of how much money we spent on our operations compared to how much value we were creating for patients.

So after working on Watsi for a year as volunteers, we were ready to launch to the public. I'll never forget the day we launched. We launched on August 23, 2012. We sent out an email. We did the Facebook post... all the things and I remember thinking, "OK, it's just going to explode now. It's going to be huge." My mom donated, Grace's mom donated, Jesse's friends and family donated, and then it just died. A few hours, nothing was happening.

And so I decided to post on Hacker News; I had never posted on Hacker News before, was terrified of all the comments that were just going to destroy me. So I created a user account, posted on Hacker News, and I don't tell the team because in the event the post flopped I was just going to pretend like it never happened. So I posted on Hacker News, and within what feels like minutes, we’re in the number one spot. 16,000 uniques hit Watsi, we funded every single medical treatment we had in our pipeline for the next six months in a matter of hours.

So completely exhausted, I spent the entire week trying to do my job and also doing Watsi and a week later, I remember sitting in bed and getting a Google alert that Watsi had been featured on TechCrunch. And another embarrassing moment in retrospect, but it was hard for me to actually hold back the tears. That's really embarrassing, but I was so excited. TechCrunch, you have to understand, like TechCrunch and Hacker News for me and the team was like the entirety of our start-up education; we hadn't missed a post in the last few years.

To be featured on both prominently over the course of a week was more than we actually ever thought was possible for Watsi. So I remember reading the post a few minutes later after the kind of like the emotion died down. I remember turning to my girlfriend at the time and asking, you know, "Do you think that all the start-ups that TechCrunch writes about are secretly as crappy as we are?"

I figured, you know, I was like reading about Watsi in TechCrunch. I saw some Hacker News and I figured there's probably at least one human being in the world that thinks we’re like a real organization, but in reality, on the inside everything was broken. No full-time employees, we had no patients on the website, no operations, and at this point in my life, I was still naive enough to think that all other companies were perfect.

I actually had this image in my mind of employees at Google and Facebook just playing ping pong all day. Like, I just thought that's what people at start-ups do is just play ping pong because everything was automated; computers did everything, nothing was broken, and all the graphs would just magically always go up into the right. I since learned that's not true. I've learned that pretty much every company, probably at any start-up, you always kind of feel like you're standing on a house of cards, and I imagine that the more successful you are, the larger that house of cards feels.

But at Watsi, that house of cards was really about to come tumbling down. I mean, to give you an idea of how broken our operations were, we had never in a million years expected that we would fund all the treatments we had in our pipeline. So we had no idea how we were going to find more patients. We were completely unprepared; people were going to the website, there were thousands of people going with nothing to do.

So we have two hospitals we work with, one in Nepal, one in Guatemala. We call in both frantically saying, "We need more patients! We need more patients!" So they go out, they're trying to find patients, they go through all this work, and then they compile this information, and they put it into a Word document, and they email it to us. We have no forms, no admin, nothing, and they email us this Word document, and the Word document would go to Mark, and Mark would make sure all the privacy waivers were there, all the information everything was signed, and then Mark would send it to Sally.

Sally was doing her residency in emergency medicine at UCSF, which basically meant she was working 24-7 as a doctor, and Sally was our bottleneck. So we would text message Sally like 15 times in one night, "Sally, you've got to approve this patient, we have no patients on the website." Sally would sneak into the corner of the emergency room and basically approve the Watsi profile from her phone.

Then Sally would email it to Grace, and Grace was responsible for editing the content and publishing it on the website. But Grace had been working on Watsi so much from her day job in New York that she was having to sneak into the bathroom to edit and publish Watsi profiles from her phone. So it became clear pretty quickly that we needed at least one full-time employee if Watsi was not going to implode.

Um, and so I decided to quit my job and work on Watsi full-time. And I only had three months of savings in the bank, so my objective was to go out and to raise enough money to cover at least my own salary, then hopefully the salary of a few other people. So I read a bunch of books on non-profit fundraising, um, I went out, had a million meetings, I had no connections in the Valley at all, um, and just fell completely flat on my face. Not a single person would give us a cent.

Just like with for-profits, one of the most challenging things about raising money initially is that no one wants to be first. No one wants to be that first person to take a gamble and support you, but beyond that there are a few things that make fundraising as a non-profit even more challenging. The first is that as a for-profit you have the opportunity to go to a fund and say at least attempt to a $500,000 convertible note. As a non-profit, you usually have to go to 100 people and try to raise $5,000 from each one; it's just incredibly time-consuming.

The other thing is that there's no deadline, there's no roundness about to end, there's no limited amount of equity, so there's no urgency. You just constantly get pushed to the bottom of people's to-do lists. And the last thing is that people are just too nice, and they don't want to say no to you, so they kind of just end up stringing you along forever, and you just kind of keep turning your wheels until you eventually give up.

So I went out, um, wasn't able to raise any money; we started getting really desperate. So we decided to enter this Huffington Post competition. We made it to the finals of this HuffPo competition; the prize is $10,000, which at the time seemed like the largest sum of money on the planet. I was like doing the math, I was like, "I can live for a year on 10k." Um, so we enter the Huffington Post, um, we made it to the finals, and the way the finals work is that it's an online vote between us and one other non-profit.

I will never do another online voting competition for as long as I live, um, but it was the most stressful week of our lives. We emailed everyone in the world we knew, we Facebook messaged every single one of our friends, I got defriended by like 100 people because I'm being so annoying. We're stopping random people in the street asking them to vote for Watsi, and then it's 9:00 p.m. the night before; the night before voting closes at midnight and we're still, like, neck and neck with this other non-profit.

And then all of a sudden, we start getting a bunch of votes, and I have no idea where these votes are coming from. I'm like completely out, like, if I send another Facebook message, I'm not going to have a single friend left, um, and it turns out that Grace was at a bar and she convinced this bouncer to get every single person to vote for Watsi on their phone before coming in. [laughing] [clapping]

So we end up taking the lead, we win the competition, and at midnight, the bartender apparently rings the bell and buys shots for everyone in the bar to celebrate it. Um, so we won the HuffPo competition, um... Immediately after, I'm flying down to Palm Springs to spend Thanksgiving with my dad. I'm on the plane, the plane lands and I start getting all these messages on my phone, and I see that I have an email from Paul Graham.

Um, he had seen a recent post we had put on Hacker News; the secret reason we had posted this post on Hacker News was to get votes for the Huffington Post competition. Um, he had seen a post we had done on Hacker News, and he wrote an email with just two sentences, and it said, "Are you in the Bay Area? If so, I'd like to meet."

And I remember being so excited; I just could not believe this was happening. It was like an out-of-body experience. I was so excited that I got off the airplane and left all my luggage for Thanksgiving on the airplane, just completely left it behind. Um... But, it didn't matter; I had my phone. I remember, like, I got to my dad's place and I had like 15 people read my, like, one sentence reply to make sure there were no spelling errors or grammatical errors, um, took me like 10 minutes to send it.

Um, but I got back, um, the next week Jesse flies down from Portland. Um, I don't think anyone at YC knows this, but that was only the second time Jesse and I had ever met in person despite working together remotely for over a year and a half. Um... We met at a coffee shop where we like to kind of plan out what we're going to say. We met with PG, had an amazing meeting, um, he wrote us our first check and invites us to join YC.

So that's enough to get Vince, Grace to move from New York, Jesse to move from Portland. We rent a little apartment in Mountain View; we have three bedrooms upstairs, we convert the living room into a full-time office, and we just worked on Watsi, you know, 24-7. Um, learned a ton during YC. I think the biggest things for us, um...

The first one was to just focus on one metric. That it was so easy for us to, like, get distracted by the million things that we had to do, and when we realized there's always a single thing that is most important, there's always one thing at any point in time that is the most important, and that for us it was just so valuable to focus on that one thing. For a lot of YC, it was really just donations, average weekly donations; that was like all we focused on.

Um... The second thing that we realized during YC that we learned, um, was that we're not in this alone, um, you know. I think it's so easy to think that all your start-ups are perfect and this was a time in my life where I realized that really all the other companies were facing the exact same challenges we were.

They were facing the same problems, the same opportunities, um, and what we learned at YC was that really the only thing separating us from success was just hard work and not giving up. We realized that if we never quit, it's impossible for us to fail. And the last thing we learned was that it's OK to hand-crank things; it's OK to do things manually in the beginning when you're still trying to figure out what's going to work and what's not.

So we did YC, um, obviously the way YC works at the end you have Demo Day where you pitch to a bunch of investors, and I just started having these recurring nightmares. We're the only non-profit that's ever been accepted at YC, and I'm having these recurring nightmares that I'm going to get on stage and I'm going to do so terribly that YC is never going to invite another non-profit to join. I'm like, "I'm going to be that guy that ruins it for everyone."

So I practiced the pitch so much that I end up losing my voice the day before Demo Day. Fortunately, my voice comes back; we do fine on the pitch, and it kind of kicks off, um, our next round of fundraising. So this time we learned a lesson, and we tried to do something crazy. We decided to raise a round of donations, and really, all that meant was that we picked an arbitrary date, three months in the future, and we said, "The round is closing on this date," and everyone said, "We're stupid." Like, "Why would you stop raising donations?"

Um, but it worked, and for whatever reason just having that date, despite it being arbitrary, was enough to convince people to at least make a decision within those three months. Um, so it wasn't easy. We went out, we had 138 meetings in 5 states over 3 months. We ended up convincing 14 people to support our operations, and we got really lucky.

Um, some of the best investors in technology and entrepreneurs in the world decided to back Watsi. Um, PG donated, Ron Conway donated, Vinod Khosla donated, Paul Buchheit, Geoff Ralston, Tencent... just the most amazing group of people on the planet, um, and that's not a responsibility that we take lightly.

So since raising that round a little less than a year ago, we've been lucky enough to grow the team, and we've definitely grown the team pretty slowly compared to other start-ups, um, at our stage. And I think that was the right decision, um, and I think it was the right decision because, you know, to be honest, like, we're not trying to build an organization or a start-up where worst-case scenario, we cannot go higher than a year and a half.

Um, that's not possible because we're non-profit, but even if it was possible, we're not interested in that. We're really trying to build an organization that if we do well, and if we get really lucky, that we hope will be around for 100 years, um, and what that means is that founding that initial team is just so important.

Um, not just from a technical perspective, but from a culture and from a mission perspective, because if we do get lucky and Watsi does exist for a long time, hopefully the characteristics of that founding team will be compounded exponentially time and time again.

Um... And the last thing is just efficiency, that, it's so tempting to just look at those top-line revenue numbers and just hire more people, hire more people. But with efficiency being our core value, um, we found that it's actually kind of nice sometimes to just embrace the challenge and the awkwardness of not hiring, of not having enough people to do everything that you need to do because it forces you to be more creative, it forces you to be more efficient, and it forces you to focus on what's ultimately most important.

I've made a ridiculous number of mistakes at Watsi, as the team will attest to; I tend to learn just about everything the hard way, um, but I think one thing that I fortunately did right was from the beginning only agreeing to hire people that were a hell of a lot smarter and a hell of a lot better than I was, um... And as a result, I think we built one of the most amazing teams in the world.

We have Grace, who is without a doubt the hardest working and most passionate person I've ever met. Dan built the medical philanthropy team here, Tom is just an amazing engineer, Netta the most talented designer I've ever known, um, you know, and as a result, actually, every day I come into the office, you know, I think to myself, you know, I hope it's true; I hope it's true that you end up becoming the average of the five people you spend the most time with because if that's the case I think I'm honestly, um, I'm honestly one of the luckiest people out there.

So as a result of the work the team did, we grew 1007% in our first calendar year, um, but the stat I'm actually the most proud of is the fact that every single team member at Watsi raised more than 10 times the amount of money for patients that they took in their own salary.

So with growth comes challenges; we have no shortage of them. A few that we're facing right now which are maybe of slight interest to you guys is just the first is unsustainable growth that definitely falls in the good-to-have problem camp. Um, but one of... there's, like, press and hype is kind of like this double-edged sword because for our first year, you know, it was really hard for us to balance resources between kind of like managing these short-term spikes in growth that you'll get from an article or a press release and actually building features that are going to help you succeed in the long run.

You obviously have to do both. You have to have patients next week when every article comes out, but you also have to invest in the future, and balancing those two is always challenging. The second is the internet. When we started YC, we were working with hospitals in two countries. We're now working with hospitals in 19 countries. Most of those hospitals just got access to the internet very recently, and for most of them, internet access is spotty at best, and so it's been really challenging to find out the best and most efficient ways to collect and disseminate information.

And the last is marketplaces; they are just really challenging. I mean, you obviously have to manage both sides. We have donors on one side, patients on the other, but what makes Watsi even more challenging is that it's not like really a free market because we leave patients posted until they're fully funded. We never want to promise someone health care we can't deliver, but at the same time the cost of health care doesn't fluctuate based on donor demand, which means if a surgery is $500, it's just $500 regardless of whether or not there's 1 donor interested in funding it or 100 donors.

So behind the scenes, we have to do some really interesting stuff to try and replicate natural market dynamics. So in closing, one question people always ask us; they think we're crazy, they ask us, "Why? Why are you doing this?" Um, you know it's obviously not for the money. If money was the single most important thing, there are a bunch of other places we'd be working, um, it's not for the fame. Honestly, the anxiety of preparing for a talk like this probably takes a year off of my life, and it's not because it's easy.

Building a non-profit start-up, especially Watsi is probably one of the hardest things anyone on our team will ever do. So why do it? And I think the answer for us is that the idea that everyone matters, matters to us. You know, think back on human history, you know, and ask yourself, "Is there a difference? Is there a difference between denying someone, you know, their rights because of their race and denying Prianca the right to use her hand because she was born on the wrong side of an imaginary line?"

You know, ask yourself, "Is there a difference? Is there a difference between denying someone the right to vote because of their sex and denying Y-Lin the right to see because he was born into a poor family?" You know, and ask yourself, "Is there a difference between denying someone the right to speak their minds and denying Titus the right to live long enough to ever learn how to speak in the first place?"

In the next 10 years, just about every single person on the planet is going to be connected for the first time in human history, and I believe that that's going to be the beginning of a transition. Just like we transition from families to villages, from villages to towns, from town to cities, cities to states, and states to counties, I believe we're in the process of transitioning from countries to a world.

And when that happens, it's going to be impossible to deny the fact that every single person in the world matters. And I honestly, we don't know, we don't know what role Watsi is going to play in that process, but what we do know is that when we look back on our lives in history in 50 years, that whatever we accomplish would have been worth the effort. Thanks.

[Applause]