01: How to Get Your First Investment Check Without Asking for It - The Power of an Organic, Relationally-Funded Startup with Shannon Goggin of Noyo

This is Dan Hightower with Product Market Misfits, talking about one of the coolest startup business models today, API platform companies. And one of the most exciting early-stage startups in this space was started by Shannon Goggin and Dennis Li at Noyo. Noyo's API platform enables more efficient, reliable connections between benefits and HR platforms. You might be familiar with names like Rippling, and insurance carriers like Humana, Beam Dental, and Ameritas. The outcome is a more affordable and transparent health insurance system. So I'm incredibly excited to welcome Shannon to Product Market Misfits today to discuss her startup. For those who don't know, Noyo is the startup that's building modern infrastructure for a modern health insurance industry, just like Stripe for payments or Plaid for financial services. Noyo offers a simple API for developers to trade data with insurance companies. Noyo is Series A stage, and Shannon has raised money from some incredible investors, including Spark Capital, Costa Noa Ventures, Homebrew, Precursor, FICA, and Garuda Ventures. On the personal side, Shannon was a product manager at Zenefits, building out its insurance offering during its prime, and was previously a management consultant. I also want to briefly thank James at Gruta Ventures, Natalie Salmon at Spark Capital, Hannah Thompson at Beam Dental, and Tanya Z at Girls Who Code for their amazing questions to ask Shannon. And speaking of Girls Who Code, they're here to change the face of tech. The international nonprofit runs virtual computer science programming for girls of all ages. Visit girlshocode.com to learn more and to access their free online and offline coding activities, or follow them on social media. @GirlsWhoCode on all channels. Shannon, how are we today?

Doing very well. It's great to be with you.

Really excited, super excited to be here. Uh, before we talk about how awesome you are and Noyo is, let's just open up, uh, briefly by touching on how you got to where you are today. And I love this question, uh, what was one of the mistakes you made along the way early on? Could be like product growth or maybe fundraising.

I did not envision myself to be a tech founder. That was not one of my goals growing up. I grew up in Portland, Maine. I started my career in management consulting, as you mentioned, and when I finally moved out to San Francisco and started to break into tech, it was when I got my job at Zenefits, and I really just wanted to be part of something that was growing really quickly. and see what it was like to make an innovative business model come to life. And when I left and started Noyo, it was because I really felt a commitment to this idea and this belief. But I think one of the things early on that I would do differently were I to start over was at the beginning, we were very— we held it very close to the chest, what we were working on. We spent a lot of time talking to clients, potential customers, people in the industry, understanding and validating our idea, but we were pretty quiet about what we were building and working on to our friends and our personal and professional networks that were not directly related. And I think that was partly because we wanted to— we wanted to make sure this was going to work. But what I've found is that the more conversations you have with people, the more positions you put yourself in, That's where opportunity comes and fresh ideas spark. And so I think I would just be a lot more forthcoming and vocal about what we're doing from the start.

Absolutely. I'm also a huge fan of building in the open and getting feedback early and often. And, you know, you spoke about your time at Zenefits, and, you know, so many great startup ideas are born when someone experiences like a real pain at their current job. And I'm curious if you remember You know, when or how you initially saw that, that pain. And then, you know, from there, how you confirmed that this pain was big enough to think about working on.

So I was at Zenefits in 2014 working as a product manager. Zenefits is an all-in-one HR payroll benefits software platform. So selling to small businesses and saying, hey, we'll help you manage all of the administrative part of your business, make sure your employees get paid, get their insurance, get their 401 connections, and do that in a really simple, beautiful beautiful software experience. My role was building our insurance product. So we were building sort of a Kayak experience for insurance, which meant, you know, employers could come and shop and compare the options for benefits packages that they could put together for their employees. These are the medical plans you can have. This is the life insurance that we are going to offer you. And this was the first time that a real-time shopping comparison site for this had really been built. And there wasn't much of a playbook, so we had to create our own. There's a lot of moving parts in a product like that. If you think about it like e-commerce, you've got 3 main sections. There's what's in the catalog and how much does it cost. In insurance, it would be getting your shopping for your price quotes. Second part is, okay, I've now picked my items, let's make an account and check out. In insurance, this would be I've chosen this medical policy and I want to get that set up with the insurance company. And then third is Shipping it to my door. You know, how do I get that package off of Amazon? In insurance, this is getting everybody actually enrolled successfully in insurance so they can go see the doctor or the dentist. Our customers really loved the experience. It was just a massive improvement from what they'd been able to do before. And by far the most difficult part of this for us was not designing or shipping the software. It was figuring out how to trade information with the insurance companies. At the time, no insurance companies had APIs. That was a really foreign concept for them. It was even difficult just to get a list of plans that they sold, policies and prices. They were— that information was not readily available. And then on top of that, anytime somebody would need to make a change to their insurance policy, so if somebody had a baby, you want to add that child to coverage, if someone moves, they need to change their address, if somebody, you know, and a new employee gets hired, they need to be enrolled on coverage. This meant for us, we had to navigate a maze of manual operational processes that was different from every insurance company, and it was different in every state. And often within one insurance company, there may be 10 or 15 different processes based on different scenarios. So it really didn't scale. And as a product manager, I wanted one place I could connect to that would reliably handle this all for me so that the engineers and the operations people on our team could focus on building better experiences for our customers instead of just trying to figure out this basic plumbing under the hood. I wanted my Stripe or my Plaid. It didn't exist, and that's why we started Noyo. So it was a pain that I had really felt and worked with deeply. And, you know, I think the biggest question was, we're experiencing this at Zenefits. Are my friends at Gusto experiencing the same thing? Are my friends at You know, even the older, more established benefits platforms or payroll companies like an ADP or a TriNet, are they experiencing the same thing? And so I spent a lot of time digging into how common was this problem, and from there just really saw how deep the rabbit hole actually goes.

Amazing. So you saw the rabbit hole was plenty deep, and so how do you go from, okay, here's the idea, It has legs, there's a market, now we're gonna take this huge leap of faith. What was the, I guess, decision-making process around that? How do you get the courage to take the plunge from Zenefits that has like tons of brokers and groups using it today to this like brand new concept?

By the time I left, the company was fairly large and I'd seen it through a huge part of its growth. Which was an absolutely amazing experience. And I knew I wanted to go earlier stage and be part of defining the product and the company from the earliest days. So I had a few ideas that I was kicking around in my head. I was talking to a few other early-stage startups, you know, 5 people, 10 people. And I— when I started dreaming about insurance APIs and sketching those out on the bus, that's when I really knew This was the one, I think that the biggest feeling was, this is gonna happen, it's inevitable, somebody's gonna build it, and if it's not me, how am I gonna feel when that happens? And that's when I knew it was time to go all in.

Oh, totally. Okay, so then, so you've got this concept, you're devoted, you're bought in, it's time to start. So you teamed up early on. How did you decide between bootstrapping the idea yourself or fundraising. I'm curious to see how you kind of worked through that at the earliest of stages.

Yeah, so Dennis, my co-founder, and I had worked together at Zenefits. That's how we got to know each other professionally, but also became personal friends. And so when we were mapping out this idea, it just became very natural that, you know, he was one of the people I would call all the time. And so we just started to kind of map it out together. When it came to deciding whether to bootstrap or fundraise, we actually didn't raise money for a little while. It was not the first thing we did. The first thing we did was, you know, we were able to dedicate all of our time to this. We went full-time on it, but for several months, it was just us and another engineer that we were working with, moving on this idea every day and trying to push it. The question for fundraising versus bootstrap for me was really opportunity. scale, and what are the time trade-offs needed. So, KnowYour is building APIs to bring the insurance world into modern day. That's a massive opportunity. It's also a massive technical undertaking, and it's not something that we could build incrementally with the scale and speed that we needed to. And so, that's when we realized this is really a venture-backable idea, and also one that, with more fuel, we can move more quickly on the pieces that we We know we need to execute on.

Okay, that's huge. So building on that, when you decided to raise money, what was the hardest thing about it, you know, starting that process? And then how did you solve for it? I mean, some startups spend months fundraising. I'm just curious how that process went for you from the earliest days.

The hardest part for us was knowing when and where to start. There is so much startup advice out there. There are so many essays, so many Twitter threads, so many people offering their perspective. And I think a lot of it presumes a certain background or a founding story. I didn't necessarily see myself in a lot of that. Dennis and I are not, you know, technical. We hadn't started a company before. We hadn't worked at a VC firm. I didn't know how the mechanics work. And so part of it was just deciding when we knew it was time, feeling confident that we could go tell our story in the right ways. I started putting myself in a position to meet more people in that world with that experience. I started going to some events. I started asking people for coffee to just talk with absolutely no expectation. And frankly, I think some people would take a meeting with me expecting me to ask them for money. And then they would get excited about the idea and what we were building, and I would sort of leave the coffee and say, well, great, thanks for the time, you know, really great to meet you. And then they— I think they were sort of waiting for the question. And so actually, our, you know, everyone wants to help. I would leave those meetings, they would say, well, you should really talk to this person. You know, she's an expert in enterprise sales, or he's an expert in, you know, in underwriting. And it was great. I think that's one of the amazing things about the Silicon Valley mentality, whether, you know, that's not geographically limited, but the entrepreneurship space, people want to help you. And I also was fortunate to have some mentors that I could lean on a lot, talking to them about the concept, and they helped me, navigate and guide this. So we were really confident about our vision for Noyo and the need in the market. We were being pulled by clients. Everyone we talked to wanted this. We were hesitant about the VC process, mostly because of the unknowns. So our approach was keep building the business, talk to customers, design the product, work out the business model, build the momentum. And our first checks, we actually didn't ask for them. We had 2 angel investors be very direct and they said, Hey, you're ready to raise money. I want to put, you know, this check in. So that gave us the confidence and sort of the signal to know we were ready. And we were really fortunate to have built those relationships slowly and again with no expectation from them. And I'm really grateful for them giving us that push and the boost that really catalyzed us and the fundraising processes that we've been through since then.

That's amazing. So I mean, like preemptive relationship building with investors, Essentially just saved you the struggle of, you know, starting from scratch in a fundraise. And that's what you hear like so often, right? Okay, we're gonna start fundraising next week, whereas it should be, you know, an ongoing relationship. And I'm curious if those took like formal approaches, like did you send an investor update, you know, the monthly email that everyone typically sends, or was it more Like text message, like friend base? Just curious how that actually like happened.

I do the more formal things now, but at the time it was, it was very casual. It was, you know, getting together for coffee, calling and texting. They would ask, you know, how are things going? Hey, did you end up talking to this person? What can I do to help? And, but, but they were also not being transactional with me because I wasn't being transactional with them. So my end goal wasn't build a relationship so they'll fund me. My end goal was build a relationship because this person seems smart, and I like talking to them about this idea, and I want to make Noyo stronger, the strongest it can be. And so in the very early days, it was much more about that and personal things. So we have a relationship, they'd say, I think you should talk to this person, and having that warm introduction helps. I also recognize that it's very— not everybody has the chance to just do that. Part of that was where Part of that was my professional network, part of that was where I was living. It was very easy to sort of create those opportunities for myself, but it was a— yeah, it was more informal at the time. When we decided, okay, we're going to take some angel checks and then let's actually raise a pre-seed round, then it became more formal. We made a deck and we started to make the list of investors we wanted to talk to, and we were able to rely on those early angels to help us navigate that process and get those meetings.

That's super cool. So I mean, at that point they got your deck and they were like, yeah, I know, I don't need to read all the slides, like I know what you're doing and I'm already in, here's the check. That's so great. So at that point you've raised some money and then James and Natalie, your investors, both mentioned that you did and continue to do an amazing job of team building. I'm curious if you could speak to how you think about deciding on a co-founder early on, And then how you think about hiring that initial team, because it's obviously super hard to do the right way, and getting the first team members is— getting them right is probably the most impactful thing you can do for your startup.

Yeah, there really aren't shortcuts for this one. Deciding who you're going to start a business with, as you know, Dan, is, you know, it's a 10-year partnership if it goes well, and you need to have trust and respect with your co-founder. Dennis and I had worked together previously. He had actually moved out of San Francisco to Durham. And so when I started to call him about this idea, it was just a few months after he'd left. And, you know, he was starting a new phase of his life with his family. And— but we just, we just kept talking about it. He was excited. And we really— we have a personal relationship, we have a professional history together. And I think just this respect for each other, when I would talk through something with Dennis, I really value his perspective, and when he's giving some feedback or having an idea, I really, I really respect it, and I want it to work well. So I think that's been a really powerful part of our relationship. Initially, we were almost wondering, are we too similar? Do we have too much overlap in our skill set? But I think far more important in choosing your co-founder than having a complementary skill set is Having a complementary person who can challenge you, hold you accountable, who you want to do right by, because that's the foundation for the whole company.

Yeah, absolutely. So your co-founder moves across the country, you have team members on board, money raised, then COVID hits. So, you know, you're kind of already on your way to being a remote company, but in, in this particular age of extreme remote work, What's the biggest improvement you've made, do you think, to your remote work process? And, you know, how, in what ways, or what areas, either productivity or culture, have you seen your company improve because of that over time?

Yeah, we've, as you mentioned, we've always been somewhat distributed. We started the company with 2 offices in Durham and San Francisco, and we've built team in both places from the start and been very intentional about wanting there to be sort of that the offices are equal. But we also hired some spectacular people who are in other cities. We've got engineers in Houston and Seattle and Columbus, and we will continue to do that. What the challenge was when we moved to remote was we used to fly back and forth and see each other in person all the time, and we would have quarterly get-togethers where we could have dinner and relax and celebrate together. And the part that was really great about starting distributed from day one was we've always been intentional about communication and decision-making, writing things down, not making a huge decision off of a hallway conversation. That was really great to build into our culture from the start. But one thing that surprised me about going to fully remote is we heard— we actually did a survey on this for people. What's, what's feeling harder? What's feeling easier in a few different areas? And one thing that surprised me was it was people found it much easier to socialize now. And that's because usually the socialization would be with who the people were in your office. So if you've got a few people in Durham or a few people in San Francisco, you can go get lunch and build relationships with them, but it was harder to build relationships outside of work with the people in the other spaces. Now, because everybody's distributed, we've put in place— some people on our team have come up with really fun ways to get to know each other more casually, have more social events where everyone can participate and build relationships regardless of office, which has been a lot of fun.

Oh, that's super cool. That reminds me of a story. My friend, he works at Plaid, said that Plaid mails them like wine and they get on like Zoom calls and just partake, and it's been great for them. And I imagine that, you know, there are other areas that are difficult too. I don't know, in my startup, you know, achieving a deadline is something to be celebrated, but, you know, celebrating can be difficult. I'm not sure if you've cracked that. But, you know, how do you celebrate wins remotely? I'm just curious.

We have not cracked it, I will say, and that's the part that feels the biggest miss. I mean, what have you tried?

I mean, it's lame, right? It's like posting some emoji-filled Slack thing, right, about this person achieving the goal that they set out to achieve. I mean, it's got to get better. Probably a huge opportunity, right, for some startup to come in and like Be like the celebration as a service platform in this 100% remote world. I have no idea. I mean, yeah, that's how it is right now. It's like, great job, here's the Slack post about it. It's super underwhelming.

Yeah, it definitely— it misses something about the let's all get together and do this fun thing together, or just relax together after a big milestone. One of the things that is, is small but has been incredibly fun and valuable for us is as simple as having a high-fives Slack channel. And people just put it, you know, whenever something comes in, it's like, high five to this person for shipping that feature, or high five for handling that client thing. And, and it's consistently the most, most, uh, highly rated part of our, uh, our Slack culture.

Absolutely. Okay, so like, especially hard for you guys, and, and just, you know, my prior background was also a digital health company. And, you know, when you're selling into these large incumbent industries like healthcare, you know, it can be stodgy and slow and like all the more reason for celebration to be top of mind and make it more exciting for the team, right? So on that front, selling into large incumbent, you know, industries like insurance can be daunting. especially for a startup. And, you know, one of your investors, Natalie Spark, was— she mentioned that, you know, you had some tricks up your sleeve to make yourself seem a little bigger than you were at the beginning to help you get in front of these massive enterprises. I'm so interested to hear more about that because I think that's something that really any startup selling into a big scary space is probably facing right now.

Yeah, and there's something about being a 3-person company trying to sell into a Fortune 500 that's always going to be a little challenging, especially when it's an insurance company. They, you know, they look at risk professionally. And one of the things, actually, one of the pieces of advice I got really early on was never show up to a meeting alone. That simple.

Oh, wow.

Like, if you're going to go to a meeting, they're going to have 10 people there. And so even if this person isn't in your company, just bring a friend and have them sit quietly. Never come to a meeting alone. It makes you look bigger. That was one of the kind of small tricks I heard early on. The other parts are, I mean, we were selling into an industry where we had a lot of relationships. And so we were very— we were able to navigate that by calling on people that we knew and trusted, which is how we did some of our early product and diligence on the idea for Noyo. Generally, it was calling people we'd worked with, very senior executives at these insurance companies who I built relationships with. and say, hey, this is what we're thinking about. Where does this pain rank for you? How are you prioritizing things internally? That was incredibly valuable, and then using that to sort of navigate in, find the right opportunities. But, you know, the other parts are thinking about the things that you do have in your control. How slick is your process? How quickly do you send the follow-up email? How quickly do you send the proposal? How quickly can you get the deck in order that responds to them? Those types of things being buttoned up, Really helps build their trust and confidence, even if you're a small company.

Uh-huh, absolutely. So, uh, I'm curious, so you, you mentioned reaching out to the executives in your network, uh, to sort of float them the idea early on. Was that before you took the jump? I mean, how did you use your, you know, awesome network at Zenefits to pre-vet, or did you, you know, decide to start the company, leave, and then start You know, tapping into your Rolodex?

It was all post, all post Zenefits. Yeah, it was a few months later. I was pleasantly surprised with how willing they were to engage with this. Insurance is a large industry. It's sort of not known for its innovative breakthroughs, but there are people at these huge companies who feel the same way about the future that you and I do, and if you can find them, and find a way to help them drive their vision within their own organization, it becomes a really powerful partnership between you and relationship. And I think we've— we had some champions internally, not necessarily champions to buy our product right away, but champions to say, hey, you're doing something really important, and let me help you make progress on it and chip away. And getting those people who are equally excited about the future as we are, and even helping connect them to each other from different insurance companies or different partners, has been really valuable in community building.

Wow, okay, so like activation of your champion inside your target customers. Yeah, I mean, I love that. Um, so, you know, you're having these conversations, you're feeling this market pull, uh, they're super interested in what you're doing, you're getting champion buy-in, it's turning into customers. How did you know you were approaching this initial feeling of product-market fit?

When we started hearing— well, when we signed our first contract and we were 3 or 4 people, that was a pretty good signal that they really needed this. And the other part is just being able to— people calling us and saying, hey, can you help us with this other piece, this part that's adjacent to what you're working on now? or I have a new idea for how I might be able to use you to advance my own business objectives. That's really exciting for a company because our goal is to make everyone successful and ultimately align incentives to provide a better healthcare experience for consumers, people like you and I who might want to go to the doctor and not be afraid to get a huge bill or, you know, not unexpectedly have dropped coverage. And so that was a big part of it, was just feeling the same pain points being expressed by many different people in this ecosystem, that we were able to put ourselves in the center to help solve it for everyone and create this network effect of we're making it better for these people over here, and when it's better for them, it's also better for their partners on the other side, um, was one of the first signals.

Okay, great. That's awesome. Okay, totally switching gears here. I had a chance to connect with Tanya Z. I cannot pronounce her last name, the Director of Communications at Girls Who Code, about our interview here. And I, I have 3 sisters myself, and for all the aspiring female founders out there, Tanya recommended that I ask you to share a bit about being a female tech founder today in this male-dominated tech and VC community, where that's impacted you, And then, you know, lastly, do you have any advice on the topic for the female founders out there?

I've been fortunate. I haven't experienced overt examples of sexism or harassment, fortunately. Many women have. But I think the challenging part for me is actually benchmarking my experiences I've had a couple of obvious times where somebody introduced me to set up a meeting with someone, and they mistook me for the assistant to schedule it for the other person on the chain.

Oh no.

It's fine, and it's all on email. They were appropriately mortified and apologetic after it. I do not hold it against them. But, you know, I only had a couple things like that. But the hardest part, I think, for me has been I don't know how to benchmark my experiences because I've only ever been a woman. in this role. And so one of the things that I've done and found very helpful is building a network of other women entrepreneurs for sure, but also leaning on my, my male friends and fellow founders and my investors to tell me, is— are the terms I'm getting normal? Is the response to this, uh, what you might have experienced? And that has been really helpful for calibration.

Okay, great. So benchmarking there, that's super cool. Okay, so to wrap up, Let's talk secret weapons. This is fun for me. So the things that give you this unfair advantage in your work and life. The way it works, I mentioned 3 topics that impact your day-to-day, and you tell me the thing, tool, person, resource, or whatever that's your secret weapon for it, and then why. So, uh, you ready?

I'm ready.

Okay, uh, so what's your secret weapon for Personal learning, getting smarter just generally.

Very clear vision for what I believe, but total humility that I don't know everything about it. So listening and learning from people who disagree or have a different take. If there feels like there's friction, I lean into it to try to figure out what's going on and try to figure out how I can apply that to, to our situation.

Okay, and remote world question: what's your secret weapon for keeping your team aligned?

I think this is the same for if we were in person— very clear North Star goals and every team knowing exactly where they fit in to drive that. So we have an all-company meeting every Monday and Friday morning, company stand-up basically, where we review what are we trying to get done this week, and we look at those metrics every single meeting. And so people can see, is it moving? Is it not moving? What do we need to do this week to drive that goal?

Awesome. So last one. Oftentimes having investors, advisors is like step 1, and step 2 is trying to figure out how to activate them to actually help you. So what's your secret weapon for getting the most out of your advisors and investors?

So one is monthly updates with very clear requests. And we'll say, you know, this is what's on our mind. We're trying to figure out how to structure this department, or we're trying to figure out how to, you know, price something, and people will respond to that if you give them something clear to react to. The other part was— actually, this was an idea from James, one of our investors— was put a shout-out section in the investor update. So in the investor update every month, we say, here's our progress, here's what's what we've launched, what's exciting, here's what's on our mind, and thank you for, by name, XYZ people who helped us over the last month. And we've heard from a few different people, hey, what do I need to do to get on that list?

Oh, nice.

Give me a chance. And that's been, uh, that was, I thought, a clever suggestion.

Yeah, playing on some social dynamics there. I like it. Okay, that's super brilliant. All right, thank you so much for spending time with us today. Are there any closing thoughts you'd like to offer up to the audience?

Thank you for this conversation. This has been great. There's, there are so many important ideas to be worked on, especially in the healthcare space. And there's a huge amount of appetite for it. So, you know, I would just encourage people who are thinking about an idea, just start. There's nothing that should gate you from it. You don't need money to start working on an idea. You don't need a team to start working on an idea. Everything you can do to push your idea forward makes the other pieces easier to fall in place.

Okay, great. Thank you so much for listening. Please subscribe for more amazing conversations with venture-backed founders like Shannon, and you can find the notes from this episode at productmarketmisfits.com.