UP053: emocha // improving medication adherence through remote video observation

Sebastian Seiguer 0:00
When you’re given medication, the nurses actually going to watch you take it. And that’s the only way that they know that you actually took it. So they stand there and watch. It’s an amazing fact that because patients then go home later, and they’re given their medication, nobody knows whether patients take their medication, nobody actually knows whether it’s taken correctly in the right dosage forgotten. We also don’t know whether patients experienced side effects or need their dosage tailored, we really know very, very little.

Jay Clouse 0:30
The startup investment landscape is changing. and world class companies are being built outside of Silicon Valley. We find them, talk with them and discuss the upside of investing in them. Welcome to upside.

Eric Hornung 0:57
Hello, hello. Hello. And welcome. The upside podcast, the first podcast finding upside outside of Silicon Valley. I’m Eric Hornung, and I’m accompanied by my co host, Mr. Russell mania himself, Jay Clouse, Jay, how’s it going, man,

Jay Clouse 1:11
I have filled my cup of wrestling interviews this morning.

Eric Hornung 1:17
I never got into wrestling. I don’t really get it. To be honest. I know that people got really into it. And I didn’t expect you to be one of the guys who was really into wrestling.

Jay Clouse 1:28
I challenge anybody to watch three straight weeks of Monday Night Raw and not be into it. I think it’s well done from a storyline perspective. I mean, it’s male. It’s a male soap opera. And the storylines are pretty compelling. However, I do think that it is in kind of a downturn. I think when I was re watching it, or when I was trying to watch it again back circa 2013 2014 was an interesting time, but they seem to have a troubling trend of going back all the way to like former superstars. The fact that the undertaker is still wrestling and Triple H and the rock. I think they brought Stone Cold back recently. I don’t think that speaks well to the future of the WWE. I think they need to be grooming new superstars. And they’re leaning too much on the legends, who have charisma on the microphone, but are less fun to watch wrestling, because they’re just old guys.

Eric Hornung 2:20
I watched the Rock’s first wrestling match. And that was pretty cool. But I I watched that like last year in retrospect, obviously, it’s been 15,20 years or whatever, since he’s since that moment in time. But I had a wrestling video game, I think it was WWE versus the world or something. And I don’t really remember much about it other than Hulk Hogan might have been in it and some guy with a painted face that I always was.

Jay Clouse 2:45
Well, specifically this morning, I was watching a bunch of interviews about CM Punk exit from WWE, which happened to me when I was watching.

Eric Hornung 2:52
Who is Cm Punk

Jay Clouse 2:52
CM Punk is a wrestler. I don’t know what else to say.

Eric Hornung 2:56
Like what’s what’s, what’s his thing?

Jay Clouse 2:58
He looks a little bit like you He is not. He’s not physically gifted. Like he’s a very average looking guy with long grease back hair. He had a lip ring and taped his hands and had an x on them because he was the straight edge wrestler. He didn’t smoke it into drugs. He was like, the hero of not falling in temptation. But then he turned heel, and he was very outspoken and very aggressive against the establishment. And when he quit, he did this like monologue on air live, just like really ripping apart a lot of the organization which was fascinating. And then when he left he was quiet for a long time. And then I just found recently that he did a two hour interview about his exit that I found to be just very interesting to rewatch this morning.

Eric Hornung 3:42
I like how you said he’s just like you. He’s not physically gifted. He has grease back hair. He didn’t smoke or drink or anything taped his hands had a lip ring, In what world like it started off as a insult. And then it just got, I don’t even know it was an insult after that. It was just that’s how you imagine me you imagine me like walk outside and just like having a fight on air before I walk out.

Jay Clouse 4:07
It’s not direct one to one, but in the face. I see a little bit in the face in the hair there. There are some similarities.

Eric Hornung 4:13
Okay. All right. Anything that is would be interesting to our audience here. Come out of that interview. That to our interview,

Jay Clouse 4:22
we talked about a lot was one of the big reasons he left was his health and how he was not well taken care of by the organization, which is something that I’ve heard anecdotally recently as well. All the wrestlers are actually independent contractors, but they they join the WWE because they grew up loving wrestling. And that’s like the one show in town. So the organization has a ton of leverage, and in a lot of ways really takes advantage of these guys, and they’ll end up leaving with horribly like broken bodies and addictions and, and just bad, bad news bears.

Eric Hornung 4:55
Well, speaking of health and hopefully better health. Today, we are talking with who Jay,

Jay Clouse 5:01
we were talking with Sebastian Seiguer, the co founder and CEO of E mocha mobile health. E mocha is a mobile health platform that saves lives by connecting remote patients to healthcare providers. They improve medication adherence using video technology and human engagement. Basically, he mocha provides direct observation via recorded video in their applications to ensure that people are adhering to their medications in the correct doses.

Eric Hornung 5:29
Do you think there are any wrestlers that use e mocha?

Jay Clouse 5:32
I don’t know. Maybe

Eric Hornung 5:33
Well, that that’s a that’s a good answer right there.

Jay Clouse 5:36
emocha was founded in 2014. It’s based in Baltimore, Maryland, our first company in Baltimore, they’ve raised close to $2 million in seed funding to this point and another $4 million in non dilutive funding through the National Institute of Health, Small Business Innovation Research Program.

Eric Hornung 5:53
Love some non dilutive funding, Jay, that’s a thing here on upside that we are a big fan of.

Jay Clouse 6:00
That’s true. And it seems like it might also be a university spin out technology, which is another trend that we’ve pulled on. I already have a sniff that this is going to have some similarities to our script drop interview when we talk about patient adherence. So it’ll be interesting to hear if this is a complimentary or competitive approach to the same problem. But without just speculating more, why don’t we just jump in and talk to Sebastian?

Eric Hornung 6:25
Let’s do it. And if you have thoughts on this episode, reach out to us on Twitter at upside FM or if you have something a little longer send us an email at hello@upside.fm.

Jay Clouse 6:37
Hey, guys wanted to give you a quick note and ask for a quick favor. Eric and I have once again entered the South by Southwest panel picker competition to have a panel or maybe two panels at this year South by Southwest festival. Last year, you guys came out in droves and voted for our panel and gave us the opportunity to go and speak with people at South by Southwest about geography versus investing does location matter. And this year, we have two panels up for vote that we appreciate your help in supporting. Eric, you want to talk a little bit about your event.

Eric Hornung 7:10
Yeah, so mine is quite the tongue twister, Jay. So if I get through this in one take, it’s going to be impressive. It’s called capitalists capitalist running a cashless fund. I nailed it. It’s about what Jay and I are doing here on the podcast, which is essentially running a venture capital fund without making investments of money. But instead of making investments of time and giving people media attention, I think this idea can apply to a lot of other spaces. And we’re going to tell our story. And also talk about other ways that you can think like an investor act like an investor without making specific investments. What do you got on the docket Jay,

Jay Clouse 7:47
my panel is called connecting tech communities outside Silicon Valley. It’s not nearly as fun to say as yours. But this is a panel exploring the ideas of how to connect community builders and different ecosystems across the country to one another is sort of this platform role for community that we’ve talked about more than once here on the podcast. And so if you guys wouldn’t mind tossing us a vote, you just have to go to upside.fm/vote. I’ll say that again. Go to upside.fm/vote, please give us a vote on both submissions. And hopefully one of them comes through and we’ll see you again this year at South by Southwest in Austin, Texas.

Jay Clouse 8:28
Sebastian, welcome to the show.

Sebastian Seiguer 8:30
Thank you for having me.

Eric Hornung 8:32
On upside, we like to start with a background of the guests. So can you tell us about the history of Sebastian?

Sebastian Seiguer 8:39
Absolutely. So I’m a Baltimore native. I grew up here eventually ended up going to college and law school in New York. Yeah, I’ve got a brother. I’ve got a sister. My parents were both docs. So healthcare has always been you know, I’ve grown up around healthcare. Actually, my my sister is also an infectious disease doc as is my wife. after law school, I worked in London for a year at a law firm. They were sending me to Munich, Germany for a customer pretty much once a month. And when I was going over there, and staying in beautiful Munich, there was nowhere to go to get a cup of coffee. And I ended up starting a coffee chain from scratch in Munich, I expanded it throughout Germany. At some point, this would have been 2009 2010. We were at 25 locations. And I thought it was a you know, I liked it. It was fun. It was quite social. And it’s always nice. When you start to get something right. We could we franchised it out. So we were giving licenses out there was very exciting. But I wanted to do something more impactful ended up selling the business and moving back to Baltimore and worked with Hopkins to find my next thing, which I had determined was going to be in health care. Because, you know, I look the people around me, they are so motivated to do what they do, which is help other people in some way. And the cash register opening all the time was was a nice sound in the coffee world. But doing something that will help other people is a great way to do business.

Jay Clouse 10:09
You said you were in law school when you’re traveling to Munich?

Sebastian Seiguer 10:12
No. So I graduated law school in 1998. And my first job out of law school was in London, at a big big corporate law firm in the city center there.

Jay Clouse 10:22
And so family of doctors, you became a lawyer. And then at some point you decided while in Munich, I’m going to start a business. Was that something that was new to you? Had you ever done anything entrepreneurially up to that point?

Sebastian Seiguer 10:35
So I’d always I’d always had a lot of ideas that were completely stupid and on unworkable. My for a lot of lot of the, you know, the friend group I had in law school was jumping off and doing internet businesses rather than, you know, go into law. And coffee was the best thing I could think of at the time, to be quite honest. And although I did enjoy the practice of law, I really didn’t see myself. And I didn’t I didn’t have a role model there in a firm, right? Where I could see myself just, you know, practicing law forever just didn’t seem like the right fit for me.

Eric Hornung 11:09
What kind of corporate law were you doing,

Sebastian Seiguer 11:11
was actually doing derivatives law, which is, you know, documenting contracts for trades, you know, futures options, things like this. It’s really interesting. Yeah, exactly. Just like coffee and healthcare.

Jay Clouse 11:24
I’m curious about coffee, because I’m one of the guys that goes to a coffee shop. And I’ll sit there for five hours using the Wi Fi drinking a single cold brew or cup of coffee. How does the model behind coffee shops work? What makes a successful coffee shop?

Sebastian Seiguer 11:36
Hmm. So a lot of different things. But couple, maybe a couple points just for this, for the purposes of this interview, when coffee is of a high quality, consumers will drink more of it, they don’t really think about that they’re not judging it. But their their body can’t handle bad coffee. So that’s a basic consumption point. But in the end, coffee shops are a real estate play, because you can control every single cost. And to a certain extent, you know, you can drive your revenue, but your location will determine everything because you know, there’s only a certain amount of revenue you’re going to do out of a location and your rent is going to steadily increase. So that business model requires serious real estate acument. When I started that business, I knew absolutely nothing about business. I was an inexperienced lawyer, I was 27 years old, I had no clue about anything. The it is a miracle that we survived the first three years and absolute miracle. And the only reason we did survive is because there were absolutely no coffee shops in Munich. And everybody wanted American type coffee. And we named it Calif. San Francisco Coffee Company because Germans love California. And so those two facts right there, there was no coffee on the street, and Germans love California. That’s a business model.

Jay Clouse 12:52
Wild

Eric Hornung 12:53
when you exited that business, was that a significant liquidation event? like did you need to work again, 25 coffee shops is a lot of coffee shops.

Sebastian Seiguer 13:03
It was not a significant liquidation event. It was enough money in my pocket that I felt good about having spent nine years you know, running a retail business. And it was enough that I didn’t have to work for a couple years. So I you know, I did an MBA at Hopkins in healthcare. But no, it was it was not. So actually, when I started San Francisco Coffee Company, a company called Seattle Coffee Company had been bought by Starbucks at a valuation of a million pounds a location. So you know, that’s that’s where my mind was going. And then I met the head of Starbucks Europe at a conference three years after I started the coffee chain. And I asked him, you know, well, how are things going with Seattle Coffee Company that they had taken over? And he said, you know, what, Sebastian, the biggest mistake Starbucks ever made, was buying that chain.

Jay Clouse 13:49
Wow.

Sebastian Seiguer 13:50
Yeah. So you know, we sold to restaurant tours, who could afford to pay out somewhat at you know, okay, valuation, but no, not a major event.

Jay Clouse 14:01
So you went and got your MBA, I think I saw on your LinkedIn that you ended up at john hopkins technology ventures. And so I’m interested to hear what that next step look for you after you took a couple years off and dove into the next phase.

Sebastian Seiguer 14:13
Yeah, so I was, um, you know, at that point, like a 37 year old Columbia Law grad. And I worked for 12 bucks the hour at the tech ventures office, just I was very open with them, I just said, Look, I want to know every you know, every piece of intellectual property that’s here, because I want to start a business out of something here. And I will do you know, to sit here, I’ll do whatever, whatever you guys need done. So I ended up analyzing these the license agreements and helping chase royalties for them for a couple years. But at the same time, I got to meet some amazing inventors. And I got to meet a team in infectious disease, led by Dr. Bob Ballinger, he’s a world renowned HIV and TB expert. And they create software, the software was quite basic, but it was compliant with the big healthcare regulation, which is HIPAA, and had been operation for four or five years. So it was, it was e mocha, which is what they had called, it was one of the first mobile health platforms ever invented with the first app going out in 2008. Meant for helping patients with HIV in rural Uganda, and right for commercialization,

Eric Hornung 15:25
real quick question, how much IP was there? at Hopkins, you said you wanted to see every piece of it. So like how much was there,

Sebastian Seiguer 15:33
so more than I could possibly have seen, they will file about 200 patents a year. And so there are, you know, I was quite naive going to healthcare and having a strategy like that to like sit at a tech ventures office. I mean, the diversity of of intellectual property is tremendous. There’s genes being patented, there are therapeutics, there are essays, and I ended up in the area that I could understand, which is software to make coffee chain with 25 locations profitable, there’s no way to do it without software. And we had configured our own setup from cash register to inventory management to personnel. And I knew our personnel spend, I knew our cost of goods, and I knew revenue down to the detail every single morning, there was no way to be profitable without software. So software was something I could understand. But at the same time, no technology ventures office in the country really understands what to do with software, because it’s very hard to patent and its copyright protections not really a you know, a scalable, predictable piece of intellectual property. So to be honest, there was more than I could see more than I could understand. And that’s actually the big problem in tech tech ventures in general is that there’s just too much there.

Jay Clouse 16:49
So you you gravitate towards this software play called e mocha, was it called e mocha before you started looking at it?

Sebastian Seiguer 16:55
Yes. And that’s important, because I would never come from, you know, the coffee business and name of company, something that’s similar. And we, I didn’t like that it was that it was so similar to something I had previously done. But the team of scientists had named it e mocha, electronic, mobile, comprehensive health application.

Jay Clouse 17:14
Oh, it’s an acronym.

Sebastian Seiguer 17:15
Yes,

Eric Hornung 17:16
e mocha could easily be the name of an online coffee shop,

Jay Clouse 17:20
it could, or the software behind a coffee shop crazy. So we’ve had a few University spin out technologies on the show. And before we dive deep into the pure E mocha, you know, kind of model and customer, I’d love to hear about the process of using that IP and what does look like for you.

Sebastian Seiguer 17:39
So the relationship with the team at Hopkins is very, very deep, right now, as you can imagine, software develops based on end user needs and market needs. And so what we started with has almost nothing to do with what we have today. From an intellectual property perspective, it’s very hard to look at what we have today and see see a, you know, from a, let’s say, from a pure lawyer point of view, you know, how these two things are matched and how they align. But from a relationship point of view, I see our licensing of technology as a relationship. And I attribute almost I would attribute at least 50% of our success to that team at Hopkins and 50% of the success to our team that has just really, you know, we’ve been very capital efficient, we have made a massive improvement in health care in the public health, health space, and impacted thousands of patients already. So I would say that, you know, looking back, we were we were in additional licensing a reference software, which we could use to build future iterations of a product, we got ourselves into an amazing relationship with great people who really care about patient care, and who wanted entrepreneurs to help them get their technology into the, into the commercial domain. It’s been really awesome, and one of the nicest parts about this company.

Jay Clouse 19:08
So how would you describe to the listener and the new user of the emocha what emocha is today?

Sebastian Seiguer 19:15
So today, e mocha is a platform, which helps patients take every dose of their medication, using video technology. That’s what we do.

Eric Hornung 19:26
And how does that work?

Sebastian Seiguer 19:27
So first of all, maybe a little bit of background on the problem that we address, if that’s okay,

Eric Hornung 19:32
yeah,

Sebastian Seiguer 19:32
this is maybe a medical or scientific fact, you may be aware of, when patients don’t take their medication. It doesn’t work, right. So the only way for medication to work is when the patient takes it.

Sebastian Seiguer 19:48
And that’s a huge problem makes sense. Another fact is that when you’re in the hospital, and you get treated, you may notice it. I don’t know if you guys have been in the hospital anytime recently, but whether it was in the past, or whether recently, when you’re given medication, the nurses actually going to watch you take it. And that’s the only way that they know that you actually took it. So they stand there and watch. It’s an amazing fact that because patients then go home later, and they’re given their medication, nobody knows whether patients take their medication, nobody actually knows whether it’s taken correctly in the right dosage forgotten. We also don’t know whether patients experienced side effects or need their dosage tailored, we really know very, very little. So about 40, 40 years ago, for certain diseases, the standard of care became observation, watching a patient take every single dose of their medication. And today, it remains a fact that the best and only proven way to make sure that patients take their medication is observation. So with that background, our system allows for the two major factors in making sure people take their medication to be scalable. And those two are observation and enagaement with the patient. So first of all, there’s patients use a smartphone application, they download it to their device, they video record themselves taking their medication at every dose. And they also can message with their provider to ask any questions they may have, or just to let them know how they’re doing. On the other end, the provider or our team, depending on the customer reviews the file, and then messages back to the patient at every single dose to keep them on track, we developed a habit, and we’ve proven that we can achieve the same rates of adherence. So adherence means taking your medication, as if you were to perform this technique in person, as it’s been done for, you know, for decades now successfully. For several diseases.

Jay Clouse 21:46
What are the main reasons for non adherence?

Sebastian Seiguer 21:49
There are a lot of different reasons. And that’s why you’re not going to just throw technology at this one and solve the problem, or AI or whatever else you want to throw at it. The simple reasons that that lay people think of is that people forget, then come some more subtle ones, like patients are sick, and they take their medication and feel better. And so they think they can stop. There are basic basic access problems that are really hard to fix. Like you can’t afford medication, which is becoming, you know, with Medicaid coverage expanding has become less of an issue, but it’s still a problem. And then there are some concerning ones like you know, the medication actually makes the patient feel really sick. And they’re experiencing a side effect, which could be quite dangerous for them. So lots of different reasons.

Eric Hornung 22:35
You said that either the provider or your team messages them back at every dosage that seems very labor intensive to just constantly be monitoring people’s doses. Can you just walk me through how that looks?

Sebastian Seiguer 22:49
Yeah.

Eric Hornung 22:50
Is there any way to make that automated?

Sebastian Seiguer 22:52
Yeah, so the question is, what what do you want to automate in this process? This gets to the role of technology and the role of humans in healthcare. I’ll just take us step back real quick to answer your question comprehensively. One more time, the only way that you could possibly secure medication adherence to high rate is directly observed therapy. There’s no other proven method for an oral or an inhalable. that’s taken daily. Okay. So what does that process consist of its ops observing the patient, in theory, you could automate that. But what happens when something else occurs, like the patient asks you a question, or their skin coloration is a little different, you know, there’s all sorts of other things that relate to medication that you could also observe, and that when you’re in person, you can talk to the patient about. So think about it this way, directly observed therapy is a comprehensive, holistic way to secure adherence. When you’re going digital, there are things you can automate and things you can. So I could, you know, perhaps we actually can, and I’m a won’t go too deeply. But maybe we know that a video consists of a patient taking their medication. But what if the patient is outside, and it’s 20 degrees out and they’re wearing a T shirt? I want to tell them that they should, you know, put on a jacket. What if the patient then also asked a question like, you know, I’m not feeling too well, right now. And I’m feeling light headed? What if that’s a major, major adverse effect from that medication? So observation, if observation was the problem, it would be solved today. It’s not observation. It’s everything else around engaging with a patient about medication.

Jay Clouse 24:32
And so what does that look like for your team in terms of who’s doing the observing, they have to also have other responsibilities? Right? So from a pure numbers standpoint, if I’m a nurse, I probably oversee dozens, maybe hundreds of patients. How does this actually work? logistically?

Sebastian Seiguer 24:48
Right. So the majority, the vast majority of our customers right now are doing the observation themselves. And they’re doing it because let’s say in public health, or an academic medical centers they have, some of them have capacity. And they have an interest or financial reason to do that. As we get into health systems, health insurers, they do not have the capacity to do that. And we have to fulfill that. We started with our first customer late last year, a health plan in Maryland. And we started with layperson coaches, meaning non clinical, and now we are adding clinical people, because the questions that come up may need a clinical lens. So our team makeup was lay person lead until very recently, and now we’re adding nurses and pharmacists,

Jay Clouse 25:34
what is the requirement for someone who wants to be a lay person, you know, could you like make this an Uber, you sign on you get paid some rate to do this? Or does this person need to have some level of training or certification,

Sebastian Seiguer 25:45
the Center for Disease Control has a standard for that for a directly observed therapy worker. And that’s what public health departments, every single public health department in this country is 3007 public health departments, they will for example, for tuberculosis, they will monitor every single dose using a directly observed therapy worker, they recommend training, and a high school degree for those type of workers. Of course, every public health department also has nurse supervision and physician supervision. So these directly observed therapy workers are quite well trained. And supervised to your question, could you Uber this, you could for certain things, mostly observation. But I think that our current strategy is to bring the clinical perspective in and then then ramp down to lay people, as we start to understand all the various questions that are coming in from patients,

Eric Hornung 26:41
how many patients can an average clinical person cover in a day or a week or a month or whatever you track

Sebastian Seiguer 26:48
with our current technology, it’d be about 100 in a day. And I think that we should be able to using technology, get that up to about 150 or 200?

Eric Hornung 26:58
And what is it in like hospital right now? How many could observe or track?

Sebastian Seiguer 27:03
I think it really depends on the patient, the condition, and it depends on why they’re doing it. So I would say that currently, you know, in public health, one single person won’t handle more than 25. And they’re also they’re also responsible for other aspects of care. So it’s not just about you know, you don’t have people in our customers, and it’s about like, 75,80 customers right now, they won’t have people who are only dedicated to using the mocha, they’re doing other things to

Jay Clouse 27:32
you said that this is video recorded by the person who is taking the dosage. So these observers aren’t observing in real time, they’re looking at some sort of archive of video footage.

Sebastian Seiguer 27:42
Correct. They should review within 24 hours, though, because you’re a lot of the communication that happens on the platform has nothing to do with whether they took their medication or not. So for it to be relevant, it’s got to be recent. So we try for a very short turnaround on reviewing the video engaging back,

Jay Clouse 28:01
how is the user incentivized to use a mocha?

Sebastian Seiguer 28:05
You’re talking about the patient the patient?

Jay Clouse 28:06
Patient

Sebastian Seiguer 28:07
That’s a great question. It’s actually the heart of the matter in public health. The motivation is that for it’s twofold, one, I don’t have to come to the clinic, I can do this from home, and nobody’s going to come to my home, because sometimes people from the clinic will come to them. The second really interesting motivation is that we work with patients who are in really hard situations, these diseases are very dramatic, you know, tuberculosis, HIV, diabetes, some of these patients have very hard lives. having another person who actually cares about how you’re doing is very, very important to them. So that somebody noticed that you missed the dose yesterday, that somebody cares whether why it is that, you know, this diabetes medication is hurting your stomach, because you don’t have enough food to eat. Having that other person on the other end is, is massive, really important. And a lot of these patients are quite isolated. So that’s a that’s a big motivator. we’re experimenting with a couple other models as well. So we do have two studies ongoing, where patients are paid, they’re given a financial incentive at every single dose. I think that may work for some patients, but it’s not going to work for everybody,

Jay Clouse 29:21
when they’re not being paid. Is the healthcare provider saying we recommend you use a mocha, are they saying as part of your treatment, we expect you to use this every day.

Sebastian Seiguer 29:31
So the latter method is the most effective. There’s something called the default bias in behavioral economics, which shows it’s been proven that when a a caregiver, the doc or a nurse says that the default standard of care, they state what that is, so for example, you have to use e mocha, the patients are more likely to accept it. Obviously, not all patients are going to like to video record themselves taking their medication every day,

Jay Clouse 29:59
you said you got have 75 to 80 customers now break down for me what the typical customer is, is it the payer Is it the healthcare system who is actually paying for this to exist?

Sebastian Seiguer 30:10
We have about so that that number was quite rough. So we have about, let’s say, 60 public health departments all over the country that are using the mocha and they’re paying for it. So these are municipalities, probably about 15 academic medical centers using the mocha mostly in the research or clinical trials context. So they’re testing a medication or they’re testing, they want to isolate whether patients take their medication or not. Because otherwise they they just don’t know. And now we have two payers using e mocha, and two health systems using e mocha,

Eric Hornung 30:43
why aren’t there more payers and health systems in your kind of purview? I feel like they have the most incentive to track this.

Sebastian Seiguer 30:51
I think you’re absolutely right. And that’s where I think all of our growth will be in the next couple years. So first things first, we go one step at a time, and we nail one market at a time, we are the standard of care and public health. As opposed to a lot of digital health companies, we have real patients well over 1000 a day recording videos and actually using our system. And that has really helped us develop the product. Now as that market has become quite our sales process is quite regimented, quite efficient. And our you know, our time from, you know, let’s say presenting e mocha to selling it and implementing is quite short. Now we’re ready for other markets in the and here’s the biggest learning we’ve had in health systems and payers, there is zero appetite to use a new technology. So earlier this year, we recognized that our business model going forward is a complete turnkey medication adherence solution. That means that the only thing a payer health system has to do is enroll their patient in e mocha, and then we will do the rest, more interfaces, more provider facing interfaces, more alerts, more information is not helpful. Right now, physicians nurses have too much to do on the digital front. electronic medical records are you know, in the lifespan of healthcare relatively new, and they’re struggling? They’re underwater with data entry?

Eric Hornung 32:16
What about the data that comes out of e mocha does that? How does that feed into what is existing in the system now,

Sebastian Seiguer 32:23
we have never before seen data we are seeing when patients take their medication, what medication, what side effects are related to it, what other things that they’re doing, besides taking medication that could impact their health care, we know at about 12,13 doses whether a patient is going to be adherent. And that’s great. That’s an amazing thing. But what’s what will be really interesting is that, as we learn to pick out these patterns across different disease states we’ll probably know in advance where a patient’s going and what does that allow you to do I mean, having that data means absolutely zero to a provider unless you can intervene. So and that’s actually the point we will know when to intervene we’ll know that you know, for Metformin at about 30 doses, patients going to start having stomach problems. And we’ll know that well in advance and start, you know, interacting with the patient to change diet, perhaps to reevaluate which medication they’re on at the right time. So it’s incredible. And I think that over the next couple years, that data set will mean at this point, we have well over half a million videos on our on our bench of our data bench. So it’s interesting,

Eric Hornung 33:39
half a million videos, how many patients is that?

Sebastian Seiguer 33:43
Off the top of my head? I couldn’t tell you right now. Also, I would also like to keep that to myself. But you know, let’s say on a day like today will get over 1000 videos.

Jay Clouse 33:53
Yeah, I hate to read. I mean, this does so much public good. And I see how, how much this can do for people. So I hate I almost hate to asked this question. But you know, healthcare is one of these regulated industries that for someone starting a business or for someone looking to invest in businesses in this space, they’re saying there’s money to be had and healthcare. So is the value proposition for capturing value here in this space cost savings to payers to systems? Is that what you have to kind of hinge on? Or is it like this proprietary data where you can say, we can help you create better drugs,

Sebastian Seiguer 34:25
that ladder point, the data aspect comes later. For right now, we continue to be in the same position that we’re in five years ago. The reason the reason why health systems are bleeding money for patients who have been discharged is medication adherence, that is the problem. They don’t want to or they can’t recognize that right away. Because nobody knows what’s happening at the patient’s home. Everybody knows that patients have problems with this. But the major reason why it can’t be recognized because the feeling that they can’t do anything about it. And that that’s just the case like health systems payers, they know that this is a huge problem, they feel they can’t do anything about it. And throwing technology at it, you know, there are smart pill bottles that you open them, they send them their text reminders, all of these things have been proven to not do much. So we have a massive opportunity. It’s probably one of the biggest opportunities in health care. If a patient with diabetes or COPD goes home, and they take half of their meds, they’re coming right back. Period. If you ask if you sit down with any health system, and you ask them, you know, you ask their case management team, you ask their cmo, how much of their medication are your patients with COPD take, they will get very concerned right away. So for us our sales cycle, we are poised to take over these markets very, very quickly. Now, because there is no solution out there. There is nothing working. And we have just validated with about three and a half years of data that we can hit really high rates of adherence. And we’re actually doing it all over the country.

Jay Clouse 36:08
Is there any risk for whether it’s your lay people observers? Like do you guys have any liability of what you’re reporting? And if there’s an adverse adverse consequence after the fact?

Sebastian Seiguer 36:19
I would think so i think i think not really, if it’s a lay person. And you know, we’ll try to disclaim as much of this as we can. I think when we get into clinicians, after we’re licensed reviewing videos, I think that there is a little bit of risk there. I also think that the regulatory environment and the legal environment in general is, is really actually the opposite. It’s encouraging of these technologies, because people are geographically isolated, they can use every every tool that they can. So for example, CMS met, so Medicare now reimburses for the review of a patient submitted video as of January 1. So there’s actually reimbursement to use something like e mocha. And I don’t think that liability is a major concern for us.

Eric Hornung 37:04
If you bring on a bunch of payers and health systems at a pretty rapid rate. How does scaling your observation team? Look when you want to target clinicians? Like is there enough supply out there?

Sebastian Seiguer 37:15
Yeah, I think that’s a good point, I think that we will be starting with clinicians in order to get that model nailed down. But we will eventually follow the exact same model that public health has followed, which is lay people doing observation for the issues that they can catch, which will be about 90% and triaging the other 10% up to clinical staff who can you know, who can provide the right answer?

Jay Clouse 37:40
Similarly, I’m looking, I’m just curious, in this environment. What does the pace of like when you when you talk about reimbursements? You know, how does the actual flow of money work between different players in this space? And how long does it take? Like, is that a concern with just cash flow growing a business like this?

Sebastian Seiguer 37:57
Yes, you can’t rely on reimburse, I don’t believe you can rely on reimbursement as your business model. that’s a that’s a mentality and healthcare referred to as fee for service. Generally speaking, the models moving to value based, which means you’ve got to be able to reduce costs for your customer, I think we’re in a fortunate spot that for a payer or for a health system, if you can solve medication adherence for a small percentage of high utilizes, you will save thousands and thousands of dollars. So I think you’re right, if you rely on any one strategy, if you rely on any one market, it’s going to be very capital intensive. And you’re going to need a lot of venture backing to take those losses.

Eric Hornung 38:39
How has the venture backing gone for you to date? And what are you looking at in the future? Is this going to be a venture back model or bootstrapped? or what’re we doing?

Sebastian Seiguer 38:50
Yeah, I’ve followed a quite a mixed approach here. So on the one hand, you know, I was in, I was in the retail world and cash flow was, was king, right? So we had our first customer within three months of launching a mocha, and we’re, we’re selling software at about six months. So we’ve always had revenue, that’s important to me. But you know, it’s it’s healthcare. So you’ve got to validate your technology, otherwise, nobody’s buying it. So we’ve been really, really lucky to be based out of Baltimore, with Hopkins roots because the National Institute of Health is right here. And they’ve provided over $4 million in non dilutive capital for us to do our product development, validation. We’ve also raised 2 million, about 2 million in seed funding. And so our philosophy is, the venture money is to grow the business, the non dilutive cash is to build the product. And hopefully, venture money plus product money gets you the revenue it takes to be profitable and sustainable. I do think, though, to bring on a clinical team, we will now need to take on, you know, venture funding. So we’re looking at a series A towards towards the end of the year.

Eric Hornung 40:00
What does that look like in Baltimore? What is the venture capital scene in Baltimore,

Sebastian Seiguer 40:04
you have a core group of angel investors who are really committed to the city. And you have also some public institutions. One of them is Maryland, Ted Co. That will back startup companies. I’d say that about 60% of our venture funding came from Baltimore investors, and the rest came from Silicon Valley investors.

Jay Clouse 40:26
How big is your team right now? Sebastian, what’s it look like?

Sebastian Seiguer 40:28
We’re at 23 people.

Jay Clouse 40:30
And what’s that breakdown of the type of roles? Is that a lot of technology people? Is it like a clinical team?

Sebastian Seiguer 40:36
Right? So we’re we have two clinical people, two people who are lay people for reviewing videos, we are at four or five engineers, four or five design product people. The rest are business. So sales, marketing, and let’s say, yeah, that’s that’s about right.

Jay Clouse 40:56
Are the contracts in healthcare and municipality space are those pretty sticky? Like once you’re in, you’re just kind of in for a while,

Sebastian Seiguer 41:03
I’ve been told that. And we have had no churn, which is great. And I like to attribute it to the fact that the product is great, and they love it, they absolutely love it. And it helps them it works. And they can do their job in a much more efficient way. So it seems pretty sticky. So far,

Eric Hornung 41:21
when you go to a health system or a payer, who are you talking to, to sell this product to?

Sebastian Seiguer 41:28
Well, remember, there’s a there’s only four customers right in that in those two spaces. So far, we it’s resonated with the chief medical officer, and the head of pharmacy was the head of pharmacies very aware of this problem, their strategy is get refills up, because that’s what their pharmacy partner their PVM is going to be also a proponent of. So if you get refills up, then at least patients could take their medication.

Jay Clouse 41:54
Yeah, we had a company early on in the days This podcast is based here in Columbus that there model is making sure that the patient gets their medication in the first place, because they found this problem of it’s hard to even get it in the customers hands sometimes. How big of a role do you see that playing in adherence? Like how how much of that is a hurdle?

Sebastian Seiguer 42:14
Well, it’s a it’s a great baseline, right. So if patients don’t have their medication, they can’t take it. So that’s very important. But let’s say Who is your Who is the most expensive patient in the entire health system, that patient has 100% of their medication of their very expensive medication. And they take none of it, right, because then you have the pharmacy cost, and you have really poor health care outcomes, which translate into costs. So I think that for patients who have zero to 20% of their medication, they have an access problem getting them their medications, very important for people who have like half of their medication, if they took it, they’d need to refill it. And for patients who have all their medication, you better make sure that their actually taking it otherwise, you’ve got an extremely out of control pharmacy spent,

Jay Clouse 43:04
does this model translate to outside of the US?

Sebastian Seiguer 43:08
It does, I think that you know, a few disease states, let’s say tuberculosis are bigger problems outside the country than they are here. And in single payer systems, you have a bigger public health footprint. But we’re really focused on the United States, where let’s say innovation in healthcare is moving faster than in other countries.

Eric Hornung 43:27
How do you price something like this.

Sebastian Seiguer 43:30
So our coaching service where I can tell you what how we’re pricing that it’s about $290 per patient per month, I’ll take a lot of things into consideration there, it’s really expensive to have a nurse doing that, we have to be really efficient and spend only a few minutes on every single video, otherwise, we’re going to be losing money. On our on the software as a service side, we’re trying to hit a certain percentage cost of goods, right. So we want a very, we want as high margin as possible. And part of that is is just how a really good product that doesn’t require maintenance. So yeah, in this case, I guess on the healthcare system side, on the payer side, you’ve got to look at the total cost that a patient is generating how utilizes, let’s take COPD I utilizes for COPD, or crossing $10,000 per patient per month to health system, or to a even to a pay or either one. So there’s there’s a lot of, there’s a lot of margin there, you know, and there’s a lot of room for efficiencies, but they’re also doing a lot of things to try to help those patients at the same time. So we’re competing against all sorts of other things that have nothing to do with adherence. So we’re pricing it in a way that, you know, if we have a few thousand patients, we’re we’re going to be in serious, you know, double digit, millions of revenue. And that’s a good starting point.

Jay Clouse 44:46
You are deep into health care at this point. And I’m sure even with a family background, you thought you knew a lot about health care, but I’m sure at this point, there’s still things that are absurd or difficult for you. So what was the most unforeseen challenge of entering the healthcare space?

Sebastian Seiguer 45:02
The most unforeseen challenge? Well, I think that’s changed over time. At the very beginning, I was just shocked that there was no technology and healthcare, I couldn’t believe that all the technology innovations that were available, were not available in healthcare. And I think every non healthcare entrepreneur who goes into healthcare probably feels the same way. At this point, I would say, at the rate of technology, innovation, I am just still in shock, that it’s so obvious that when people don’t take medication, nothing actually happens, and that the health system isn’t dropping everything to go to go figure out how to deal with that. But at the same time, I’m really very, very happy that we get to take pole position on this one, and drive a solution. And then maybe last thing is this is a long, Healthcare’s a long one, right? It’s a long road, you know, you might pick off one or two opportunities, they go fast here and there. But in general regulation, entrenched practices, evidence, which is required means that your plays a little bit longer, you got to be a little bit more patient.

Eric Hornung 46:11
So neither Jay or I have a background, a deep background in health care. Is there anything that we should be asking that we’re not asking?

Sebastian Seiguer 46:21
Hmm, yeah, maybe what else is out there for for for solving this problem? I mean, if it’s such a big problem, what else is there? What else? What else? Is there?

Eric Hornung 46:31
Yeah, I got that. I got a great question coming up here. What else is out there for solving this problem.

Sebastian Seiguer 46:36
So you have a lot of attempts that are inadequate. So there are there are certainly programs and there are certainly technologies that are inadequate, many of them are focused on securing observation. So there are AI, image recognition type of type of attempts, there are digital sensors, which if you swallow them, then it’s you know, it’s, it recognizes that it’s in your stomach, because all of these focus on observation, they’re not going to be sufficient, because it is what they’ll do is they’ll tell you that patients are taking about half of their medication. On the other hand, you have health systems that are sending nurses to people’s homes, to take care of all sorts of things, one of them being whether they’re taking their medication or not. And those programs can be effective for certain things. You know, like, for example, I know one health system, they’re sending repair people to people’s homes, because they want to make sure that that patient that got discharged with COPD, that they don’t trip and fall on, you know, broken step or carpet that’s up because if they fall and go back to the hospital, they’re not getting reimbursed for this, right. So there’s a lot of things happening here. And then the biggest, the most interesting one that I find is patient education, patient education. So you’ve got call centers that call patients to educate them to take their medication, which is a really interesting approach. My father was a doc, he was very educated healthcare that didn’t stop him from enjoying South American wine and smoking two packs a day. So you know, educating people, there’s there’s actually a strong evidence base for the fact that that does not work because it doesn’t even work on on educated, you know, healthcare professionals. So not a lot of adequate solutions out there. It’s an open market,

Jay Clouse 48:21
wild, maybe we need more stick than carrot

Sebastian Seiguer 48:24
need a combination of both. So you know, how do you get people to do something, right? While you can get them to do all sorts of things that are entertaining, it’s really hard to get people to do things because it’s better for them. It just is very hard. And that’s one of the challenges that we’re up against. We have to figure out how to motivate patients to do this. The stick has helped in public health to a certain extent because it’s the default in the broader market will have to motivate patients. Awesome. Well, Sebastian, this has been fascinating. Thank you so much. If people want to learn more about you or a mocha after the show, where should they go? They should go to E mocha. com. We’re also available on @emocha health. If you look at twitter. Yeah, you can also one day go step into your local health system.

Jay Clouse 49:14
All right, Eric, we just spoke with Sebastian Seiguer of the mocha mobile health back into some uncomfortable waters for us. In healthcare and health tech.

Eric Hornung 49:23
Yeah, man, I it’s a space that I don’t get, I can speak for you here that like, it’s not your bread and butter. I think we should have someone on it as a coffee chat to kind of talk to us about healthcare medtech just how this ecosystem really works, because it is confusing.

Jay Clouse 49:39
medtech is a better word than health tech. Yeah, I even spent a year in this space. And it’s still pretty confusing to me, you have all these different stakeholders, you have the patient who’s getting the care, and you have the doctors who are providing the care, you have this group of providers outside of that you have health systems, you have hospitals, you have independent physicians, you have payers, you have this whole weird suite of what does insurance look like around this outside of just your typical payers. There’s a lot of stakeholders. And the confusing thing for me when it comes to companies like e mocha just comes from, where do you actually get paid as a startup? Who’s actually paying you? and under what terms? are they paying you? How are they paying you? When did this become a big thing? It feels like people look at healthcare, and they say, oh, there’s so much money. It’s such a big opportunity. But when you dig deeper, it’s like for who and who’s paying for that opportunity? And those are some of the questions I still had here with e mocha, but we’ll try to work through that here in this deal memo,

Eric Hornung 50:33
I think we can start kind of there because so much of I think what I’ve learned from the healthcare system is that the products that are coming to market in terms of startups are helping the patient most, but the patient isn’t the customer. So how do you kind of balance? Who’s feeling the pain, no pun intended, as in terms of the patient? And who’s paying? And do they feel the same level of pain, the maximum value here is probably going to go to the patient, but they’re not going to be the ones paying directly for this service.

Jay Clouse 51:06
And that’s another kind of axiom that happens in this healthcare space is people say, well, insurance companies will pay for this because it saves them money. I hear that so often, insurance companies will pay for this because it saves them money. I can’t imagine how often insurance companies are just hit with companies saying we’re going to save you money pay us. And I wonder what that process looks like from there from that conversation? Does that? Does that pay or have to really come forward and say, Yep, this absolutely cost us a ton of money. This is what the value is to us? Or how much of it is proving on behalf of the company that hey, I bet this cost you a lot of money does it cost you about this, it just seems hard and inaccessible in cloaked to actually know what it is costing an insurance company because they have to have these models in the back end that are serving their underwriting and their risk that as a startup company, it’s probably really difficult to understand. And you do this dance with them to figure out okay, when would you pay for this? How would you pay for this? How much would you pay for it? Meanwhile, you’re trying to survive and pay your bills and pay your employees and pay for research and development.

Eric Hornung 52:06
Yeah, the life of a med tech startup, I think one thing I like about Sebastian will transfer to transition to the founder here for a second is he kind of comes from a medical background in terms of family. So his whole family’s in the medical space. He’s been kind of surrounded by that growing up, even though he ran chain of coffee shops out in Europe for a bit. And he has that business experience. He went to Johns Hopkins, which is one of the largest and probably best research medical research institutes in the United States, very prestigious. And to navigate this world, you have to have that experience that exposure. And I also think it’s a pretty good sign of his ability to navigate by the first customers that he brought on, which are these academic centers, research institutes, people that are studying the space, so that he can learn better about how to attack this space. From the commercial side of things.

Jay Clouse 53:01
I definitely felt a lot of comfort, and I felt at ease talking to Sebastian. Even though this was such a difficult to understand model, the technology is not that difficult to understand. We’re talking about medication adherence and people watching somebody here or not adhere to that medication. Conceptually, it’s easy to understand the model is what felt difficult. And Sebastian was very comfortable and answering all of our questions. It seemed second nature to him. He did not feel rushed by timelines or crunched by timelines or cash flow, it seems like they have paying customers now they’ve gotten some non dilutive capital in the past, he feels you’re seems very in control of the relationship with the research institution, this technology came from and the people who developed it even though the product itself has taken a very different shape since pulling it out of that research institution. So as a founder, pairing, that interaction, that experience with Sebastian’s noted track record of the coffee shops, I feel good about Sebastian as a founder, like I trust that he is navigating things and figuring things out and feels on top of it himself.

Eric Hornung 54:08
One quick shadow I have is just the scalability of this. So it’s definitely more efficient. I think he said, your current clinician can see 20 people can observe 20 people in a day, your current observer can observe 20 people on day and now this is one observer observing hundred patients a day. So that’s a five x increase with getting up to 150. That’s a seven and a half x increase over current. I mean, that’s a huge efficiency boost. My question is more on the scalability of this. Every time I think you read read up on nurses or clinicians or anything, you have this supply issue where there’s not enough nurses, there’s not enough doctors, there’s not enough of these trained people. And their model is to first start with clinicians before they get to lay people. So if they get a big enough customer, how do they scale quickly to meet that demand? In terms of both number of observations, they have to make a number of people that they have to train and get on their platform?

Jay Clouse 55:06
I agree. That was a little bit of a question mark for me to that even though we asked it and he spoke to that I still just couldn’t quite grasp or feel totally comfortable with, if everybody who is taking medication needs to adhere to it. And we can ensure that best by having observation, who is observing these people? How many hours a day? What level of accreditation do they need, he said they the CDC has a standard for observation therapy, which is training in a high school degree. So maybe that’s a shift in employment for some of these people who have to shift employment because of technology. You know, you hear the argument all the time of when people are not afraid of automation, they say, well, there’s gonna be new jobs that are crazy that you can’t predict. And this feels like it’s actually something that fits into that camp of new jobs that are created that you might not be able to predict. But I still can’t grasp the math quite,

Eric Hornung 55:49
the proverbial truck driver becomes a smartphone observer.

Jay Clouse 55:54
Yeah. So let’s try to back into a little bit of math right now, which is going to be rough, but we’re going to try. So e mocha has 75 to 80 customers now 60 of them public health departments that are seeing over 1000 patients a day. 15 are academic medical centers, doing research and trials, two are payers, two are health systems. those last two payers and health systems is where they really want to get into which seems like where he believes the money can truly be. But they don’t have a lot of appetite for new technology said and there’s just not a ton of them. As far as total market in absolute numbers. As far as like the number of payers, the number of health systems. Right now they’re generating approximately $290 per patient per month. And so with those disparate numbers, you start to see how this feels like it could be a big opportunity, if you got into one of the pairs already into the pairs. So if those payers are really pushing a mocha as a tool for the patients under their purview, at $290 per patient per month, you get a pretty big number pretty quickly. I don’t I think I had any number on margin, or how much of that is, you know, takeaway for e mocha? So things are still a little obtuse for me, Eric?

Eric Hornung 57:11
Yeah, I would agree. I don’t think this immediately falls in our it’s so big, we don’t have to worry about it number, I think probably going through the TAM calculation with some more numbers would be something I would want to do for this opportunity. $290 per patient per month, is that high? Is that low? And by higher low? I mean, is it going to revert? Where’s the mean? Is it going to revert up? Are they discounting themselves right now? Or is it going to revert down? And because they’re operating in a smaller scale, they get to charge more, and they’ll get some downward price pressure from larger customers? I don’t know which way it’s going to go. I think that I would want to do more math around understanding like, are we talking about a potential billion dollar business? Are we talking about hundred million dollar business? Are we talking about something much, much bigger?

Jay Clouse 57:58
The other? What’s the opposite of a shadow? I guess, an opportunity. Something that was spoken to that we didn’t get a witness been a lot of time on but seems like some real upside. There we go. Oh, look at that. The the titular adjective. Some real upside potential here is the proprietary data of knowing how and when people are using medication and being able to intervene. When that’s not happening appropriately. He said that his data that they have that no one else can quite match based on how their model works, which does seem like a big opportunity. Because if you can intervene, that is going to be somewhere that anecdotally, I definitely understand insurance companies are feeling pain, their people are not adhering to their medication. It’s a big problem. And if you can show when to intervene on that and effectively intervene, that is a big opportunity to save the system some money and save a lot of lives.

Eric Hornung 58:50
Love that love saving money, love saving lives. All good stuff, Jay.

Jay Clouse 58:53
All right, Eric. So what are you looking for six to 18 months from now from e mocha?

Eric Hornung 58:58
I want to see those last two categories of customer? Are those payers and providers? Are we getting more of those signed up for pilots for trials? Are their contracts being sign of their contracts in the pipeline? What does the reception look like in terms of price point? Is that going up or down? So I just want to hear more about the commercial development side of e mocha, what about you?

Jay Clouse 59:21
I would agree with that i was looking at specifically the revenue per patient per month for e mocha in the context of payers and health systems as they roll out more of those customers. I’d also say I’m interested to see what their onboarding process or what their plan looks like for scaling the supply side of their marketplace, their their observational users are observation therapists. So I can understand better what that plan looks like moving forward. Well, if you got some numbers or understanding of this company that we missed here in the deal memo, we would welcome your thoughts. You can tweet at us at upside FM or email us hello and upside down FM, we have to hear it. If you are somebody who is deep in the med tech field, or know someone who is that would be a good guest to enlighten Eric and I. You can also email us hello@upside.fm.