I looked at a handful of mental health startups to inform my guesses on impact. I looked the most deeply into BetterHelp, but you can clearly see through their numbers that their prices have almost doubled in 5 years (and steadily, too, this wasn’t a COVID thing). From the research I did, my sense was that it wasn’t getting passed back onto their counsellors, nor fuelling an increase in growth spending. There’s no way it got twice as expensive to deliver therapy.
I think if we had to point to a single mechanism, once you run out of user growth—as BetterHelp have—your investors push you to find an equilibrium price. That price is necessarily going to be higher than the price that guarantees the broadest impact, and likely to be higher than the price for the most (breadth x depth) impact.
My best guess is regional pricing can act as a crude form of means-testing, but this probably comes with a perverse incentive to ignore the cheaper regions (as BetterHelp have—almost all of their users are in the U.S.).
(All of that goes out the window if you don’t go direct to consumers—I think deeper forms of healthtech might be quite value-aligned!)
Thanks for sharing your analysis! Very interesting to read.
I do generally believe that at the point you’re big enough to have a significant impact, it’s quite likely that your investors will pressure you to squeeze money out of it in a way that will likely ruin said impact.
Did you look into whether steward-ownership is a viable strategy for mitigating against this risk?
I didn’t. It evidently works—as do cooperatives, which I was also excited to found—but I think the big worry is up the top end. It’s very hard to imagine a FAANG company structured this way. And some of the average-case calculations above are skewed upwards by a handful of top success stories.
At Google, Larry Page and Sergey Brin control 51% of the shareholder vote thanks to their supervoting stock.
At Meta/Facebook, Zuckerberg controls 61% of the vote.
Anthropic is a public benefit corporation.
OpenAI was supposed to be controlled by a nonprofit board though Sam Altman is trying to convert it into a public benefit corporation.
Shareholders are also unlikely to remove Elon Musk from Tesla even if he does a lot of things against Tesla’s interests.
Executives are under intense pressure to make profit to prevent the business from going bankrupt, and maybe to get bonuses or reputation, but the pressure to avoid getting voted out by shareholders is relatively less.
Charities have a lot of the same pressures (minus the bonuses).
I don’t have any expertise, I may be totally wrong.
I looked at a handful of mental health startups to inform my guesses on impact. I looked the most deeply into BetterHelp, but you can clearly see through their numbers that their prices have almost doubled in 5 years (and steadily, too, this wasn’t a COVID thing). From the research I did, my sense was that it wasn’t getting passed back onto their counsellors, nor fuelling an increase in growth spending. There’s no way it got twice as expensive to deliver therapy.
I think if we had to point to a single mechanism, once you run out of user growth—as BetterHelp have—your investors push you to find an equilibrium price. That price is necessarily going to be higher than the price that guarantees the broadest impact, and likely to be higher than the price for the most (breadth x depth) impact.
My best guess is regional pricing can act as a crude form of means-testing, but this probably comes with a perverse incentive to ignore the cheaper regions (as BetterHelp have—almost all of their users are in the U.S.).
(All of that goes out the window if you don’t go direct to consumers—I think deeper forms of healthtech might be quite value-aligned!)
Thanks for sharing your analysis! Very interesting to read.
Did you look into whether steward-ownership is a viable strategy for mitigating against this risk?
I didn’t. It evidently works—as do cooperatives, which I was also excited to found—but I think the big worry is up the top end. It’s very hard to imagine a FAANG company structured this way. And some of the average-case calculations above are skewed upwards by a handful of top success stories.
At Google, Larry Page and Sergey Brin control 51% of the shareholder vote thanks to their supervoting stock.
At Meta/Facebook, Zuckerberg controls 61% of the vote.
Anthropic is a public benefit corporation.
OpenAI was supposed to be controlled by a nonprofit board though Sam Altman is trying to convert it into a public benefit corporation.
Shareholders are also unlikely to remove Elon Musk from Tesla even if he does a lot of things against Tesla’s interests.
Executives are under intense pressure to make profit to prevent the business from going bankrupt, and maybe to get bonuses or reputation, but the pressure to avoid getting voted out by shareholders is relatively less.
Charities have a lot of the same pressures (minus the bonuses).
I don’t have any expertise, I may be totally wrong.