Starting & Scaling Papa As A Leading Healthcare Marketplace With Andrew Parker | EM Group Chat #183

Welcome back to Everything Marketplaces, where we talk with founders and leaders from some of today's top marketplaces. So this is episode 183, which is really a great group chat that we just had with Andrew Parker, who's the founder and CEO of Papa. Papa is a marketplace that pairs older adults and families with companions or Papa Pals for assistance and in-home care. Papa is one of the fastest growing marketplaces in healthcare. They've also raised over $220 million in capital from top investors like Y Combinator, Initialized Capital, and SoftBank. So this is a great chat with Andrew where we went back to the founding story and first steps for starting Papa. He shared some of the early challenges that they faced, how they pivoted to working with employers and healthcare providers directly. We did a deep dive into its leading marketplace for companionship and in-home care today, got to learn more about their growth. Andrew shared some of his key fundraising learnings after raising over $220 million from top investors, how they're leveraging AI. We also had a great group Q&A. I really enjoyed this conversation. Now you're going to find it a great watch to the end. So, Andrew, you've been a highly requested Group Chat guest for a while now, and this Group Chat's long overdue, you know, so I'm really excited to have you join us here today and wanted to start off by saying huge thanks for taking the time to do so in advance. We have a lot that we're going to dive into with all of your experience starting and scaling Papa, but I thought it would be great if you could start off by briefly sharing your background for those here that might not know you.

Thanks for having me. I'm Andrew Parker. I founded Papa. I'm here in Miami, Florida, where I am generally from. As you mentioned, Papa is a marketplace. We're a national curated marketplace, as we like to think of it, as we're helping older adults and families. And we work with Medicare, Medicaid, employers where their members can, or their employees or their users can be paired with a pal, which is our highly vetted, fun, awesome, helpful, safe care network. So I'm really excited to be here today and get into the details.

Yeah, a lot that we're going to get into here. But I guess going back to the very beginning, what was the founding story for Papa? And what were the first steps that you took to start it at the time?

I founded Papa originally in December 2015. I called my cousin and said, you always have great ideas. I have a few ideas. Maybe we can meet in person. And I was telling him about this interesting concept of— because I wasn't technical, so I figured what could I do? Well, maybe if I had an app that you press a button, I could provide assistance. And so it was just on-demand assistance. And my cousin goes, well, what if we do on-demand assistance for Papa? Our grandfather. I go, genius. And that was kind of the beginning idea of it. And then we tested it with our grandfather and he absolutely loved it. And once Papa loved it, we figured the world would love it because he didn't love much, let alone strangers. And so that was the beginning and it's been a fun ride since then.

Yeah, that's really cool. And I guess, you know, as marketplaces, you know, when starting out, we all face the chicken and the egg or kind of cold start problem. So, you know, how did you initially solve for that with Papa?

What's funny is my wife's family's religious. So they would say that the chicken came first. That said, I think at the time I didn't know about marketplaces or really have any understanding of how they worked. It really was just natural for us to think about, let's just get one person to sign up. And so we really just started with one member and then we paired them with one pal. I will say it was actually quite easy early on and actually it's something that we've always been able to understand is how to get the supply. I think naturally supply is easier than demand. Just makes sense. You're paying them versus the other one typically has to pay. And so we started off with that and we actually spent probably way too much time hiring supply where we ended up losing all the supply because there was no demand. But you don't have to like go too far out with that. It's okay to have one provider or 2, you know, or 3 providers and maybe you can spend a little bit more time with those people, get them incredibly engaged in the experience, have them kind of feel part of it, whereas they're essentially your early adopter supply network. So really just was one at a time and started off really slow, couldn't get anyone to sign up. I begged everyone. I literally had no shame. I would go door to door. I would go to senior communities. I would do senior events where I would be the entertainment, and then I would afterwards ask them if they needed caregiving. I would ask my best friends, you know, they weren't that helpful. But ultimately, I did get one user. Her name was Olga. It was my friend Erica's grandma. And every single Tuesday, we had a pal which was one of these, you know, 2 or 3 that we had at the time because the other ones quit. We had like 100, but that's not that useful. And so you really gotta think about those elements. And Olga just loved it. Every Tuesday, Olga wanted to get a ride to get her hair done. She was getting blow dried on a consistent time period. And what was nice about Paw Paw was anyone could be a pal if you're nice. I was a pal. I am a pal. Everyone at Paw Paw's a pal. Actually one of our, you know, core values. And so when our one pal wasn't available, I would actually go to do visits in between work. I was actually still working at the time. My cousin would do visits, my other cousin would do visits, my brother refused to do visits, but really kind of all hands on deck to just make sure that that one user we had had the best experience ever. And that's kind of how it started.

Yeah.

And that's great to hear as far as, you know, doing the things that don't scale in the very beginning as we always hear about, right? Yeah. I imagine that, you know, trust was probably key from the very beginning as well, right? To kind of, you know, so what are maybe some of the ways that you could like kind of initially built out trust? And you mentioned as far as, or also as far as the demand side being hard. So, you know, what are some of the ways that you initially kind of, I guess, built trust and, you know, were able to kind of reach and acquire demand?

Trust was kind of easy right away. And I think because it was such a white glove experience, for lack of a better term. I mean, the person that signed up was literally talking to me. I was being myself, which is super engaging, I think, and friendly. You know, I like to think of myself as, you know, I'm the chief companionship officer effectively. And so just using basic friendly skills and being trustworthy, like when the pals said they were going to be there at a certain time, they showed up at a certain time. When I said that, you know, Lauren was coming, Lauren came. When I said the car is a 4-door car, you know, that works, you know, that has with this license plate, that's what they saw. And so at the beginning it was like, you know, from a don't doing things that don't scale perspective, literally nothing scaled. It was literally just me orchestrating this interaction through text message, through my, you know, family, through just kind of using instinct to be really caring. And I think that helped to build trust. We of course ultimately pretty much immediately started adding background checks and we had, Now it's all automated, but we effectively used Trello to move like a caregiver, a pal from step to step. And we did interviews and pretty much everything we did in the beginning was the right thing, you know, and we didn't get it right perfectly. But a lot of this was like, obviously you want to background check someone. Obviously you want to know who they are. Obviously you want to introduce the members. So it wasn't like a lot of A/B testing. It was just obviously, how do you help You know, Gloria, who was our second member, who every week wanted to go to the pastry store and get pastelitos, which is, you know, little Cuban pastries. So I think that was really critical. And then now we've scaled that obviously. And we, you know, we went through a very public trust and safety issue with Bloomberg. I'm not sure if everyone saw this, but about 2 years ago, a year and a half ago, and we never really had a safety like epidemic of any kind. It was a couple incidents which we take very seriously. And then it's not really about like, what do you do to be safe then? It's the same thing you do in the beginning, but with scale and all the different things that could occur, you have to think about these in a really deep sense. So that's how we build trust. And the way we got our original members was funny enough, we don't even, outside of Olga, I know how I begged my friend, but With Gloria, our sec— literally, these are our second members. And then our third was Sam. I always remember Sam as a famous Papa member. I mean, he used Papa for many years. He is on our website still. His family's involved. They found us through Google, I believe, at first. And we didn't even know how to use Google Ads. Like, we were completely oblivious to these things. Our background was selling to large healthcare organizations, really finding distribution. Partnerships that allowed us to kind of get this one of many, which also helped with the chicken and egg problem. Like, you know, I'm going 1, 2 at a time, you know, that helps to get going. But when I have a health plan say, here's 10,000 people, you know, that you can enroll this year and it's on you when you start to enroll people. So we kind of had this amazing built-in demand and then we were just hired as we, as we went and improved the software as we went.

Yeah, you mentioned as far as like some of the challenges that come with scale, we'll probably get to those here in a little bit. But it is really cool to, you know, hear about some of these early stories and even, you know, the first kind of users by name. So, you know, I guess like at, you know, what point did you kind of move from, you know, doing these kind of things that don't scale and kind of the manual, you know, even kind of being a Papa Pal yourself, you know, to like really getting the kind of flywheel going and things kind of taking off?

Yeah, so probably like, I mean, we were building technology from, you know, even before I started doing it full time. And I thought the right thing to do would be build an app and it would be like a Tinder for senior care and you could like swipe profiles. And I just thought that was cool and it just made sense to me. But then, you know, really building what your users want or need, I think is a critical thing that we quickly understood. And we realized that one of the reasons that I was having such trouble getting people to use Papa was I made them go through this app experience that pretty much was like happy path or you can't use it. which is pretty typical, I think, in a, at least definitely at that time in a startup. Technology has advanced more in the early stages now, which makes it easier and harder, I think, in a way. And so we built this app, but then I realized quickly that actually people just wanted a phone because we were actually attracting seniors themselves, oddly enough, more than the families, which we also didn't expect. But we were giving people what we thought of as like true independence. You know, you don't have to rely on your daughter. to go somewhere, you also don't have to rely on your technology skills or lack thereof. You can call us and we will be there for you. And so we actually kept our app, but for the pals. And then we kind of stopped talking about the member app and pivoted to a phone number which would come to me. And when it came to me, I was good at convincing them, you know, in a thoughtful way to say, oh yeah, you should sign up for Papa, pay me $20 an hour at the time. What's funny is when, when we ended up getting into Y Combinator later, I was in San Francisco. We had like 6 people here. They were answering the phones and like days and days and days went by where no one converted and we're, I'm like, what is going on? So I actually changed the phone system to send all phone calls exclusively to me, you know, for that next 3 days. And I just like went back to the team. I'm like, I'm here on my cell phone barely trying and I'm closing like 20% of the people. 30% of the people that call and the one early guy was like my really good friend. So it was a joke, you're fired, Austin. And then every 6 weeks for 5 years later, and he now actually went and started his own company, which is pretty cool. So I think it's like using your instincts, but also thinking about like making sure you're not building the wrong thing. And it's really about solving the problem you're trying to solve, not about how you're solving it, but what you're solving. So it doesn't necessarily require AI or technology, though ultimately it does. It's actually better probably to go a little slow on these things for some elements. You know, definitely every marketplace is different. But, you know, later we then realized like we need this robust administrative platform and our pal experience is the most important. But funny enough, fast forward, we just launched our first member Scheduling tool this last year. So we went seven years with no member scheduling tool because we then needed to build that a robust technology for the call center and bring AI into that experience. And you know now what's interesting is about 40% of our visits are self-service, but about half of those are the pal having access to tools. that actually allowed them to schedule on your behalf. But I would have never thought to build any of these things if I didn't go through these years of understanding customer feedback, you know, and making a lot of mistakes.

No, certainly. And I guess it's also worth mentioning that, you know, you're a local marketplace, right? And for offline kind of services. So, you know, how did you think about, you know, did you like initially kind of constrain to markets? And, you know, and I guess like if so, you know, how did you think about when the right time to expand was?

Yeah, I think we kind of went against conventional wisdom because I don't have any of it. We just were, we didn't know what to do. We're, I've never been part of any of these groups. I probably should have been. I just was trying to build. I was just every day woke up and just put one foot in front of the other. I mean, and so we actually scaled nationally like within 12 months after getting our first health plan partner. And the reason we were able to do that was because We went from one health plan in Tampa. So that's all, I shut down consumer actually to hyperfocus on the B2B approach because one, that's what I, my background and that's what I thought would work and that's where I had success in the past. And consumers, I thought, yes, we actually were doing $1 million in ARR at the time, like early days, but it was the CAC and the cohorts, you know, were completely upside down. And you could just, or you could understand unless you're wealthy, you may not pay for these things unless your mother or father's like needing to help in the bathroom, you know? And so that's kind of the element. And we didn't, we don't do that actually. And so I scaled nationally because we found out through selling to our customers that we were gonna, oh, we're going from 1 health plan to 10 health plans. Those 10 health plans are in 25 states, you know, as an example. And so we knew in, you know, 6 months in advance, we have Pals all over the country going live. And so we went everywhere. And actually I got a crazy amount of pushback fast forward, you know, 4 years later after being into these partnerships, you know, we have the most complex marketplace because, you know, it's older people and there's no, you know, they're not good at technology, but it's also like the demand markets are dramatic. we're in counties with 100 total people. That's the whole county. There's just 100 total people. And so our marketplace team who came from Lyft and Uber and like Airbnb, really talented people, you know, pretty much spent a year trying to convince me that we shouldn't be in these low demand markets. And I just, from my gut, understood that having this ability to support low demand and for our business, which is health plans, Where there's requirements, there's rules, there's network adequacy components. Fast forward, we're filling 98, 99% of visits even in the craziest market that you never even heard of. Like the average person lives 10 miles from the neighbor, you know, type of stuff. And now it's awesome. I could get on a call with the health plan and say, press a button anywhere in the country, pal will show up. So Probably not the right thing to do from most measurement perspectives, but I understood the goal ultimately was to be able to support health plans nationally. And I understood that that was probably a necessary thing. That said, it just depends. I mean, you all probably have different marketplaces, different needs. Like you gotta just understand, and most of it is not rocket science. I'm not that talented. I just, have kind of like what I think is common sense. And so I think just like understand your problem and try to like use your gut more than anything in the beginning, especially because data, you're just not gonna, you're just not gonna get it in the early days. Then you scale and then it gives you a lot of answers.

That's definitely great advice. And there's a lot of trial and error that goes into it as well, as you mentioned. So you did, you know, mention the pivot, right? So Going from consumers to working with, you know, employers and healthcare providers. So could you maybe kind of like walk us through, you know, what the kind of insights were that led to that? And then, you know, maybe the business like right after the pivot?

Yeah. So we tried to go into business to business. I actually went and was successful at getting a partnership with Johnson& Johnson. We were going to offer their employees Papa as a family caregiving benefit. And I'm like right out the gate, like I'm telling you, like PowerPoint up Johnson Johnson HR. They're like, we're in. I'm like, oh, okay, great. You know, when do you want to start? Where do you want to start? They're like, well, we need to support our employees. I'm like, okay, great. Where are they? They go, they're literally everywhere. They're global. And I'm like, okay, I can't. That was too beyond my abilities. And so I quickly realized that that wasn't actually the right first channel employer. And then I tried other things, you know, all these things. And I said, you know what, let's just try consumer. So I hired some marketing support, did some landing pages. We already had the insight that the phone number was key. And so we really just pushed people to our landing pages and it really started to work. We went from $3,000 a month, you know, month 1 to $6,000 to $9,000, $15,000. Got into Y Combinator during Y Combinator, got up to $50,000, which was just like awesome. We put this really Kind of lofty goal out there. I never built anything like that in my life, and and it was it was working well. Fast forward the whole time I'm trying to work with health plans. I really think that's the way health plans are also hyperlocal. So unlike employers, you guys are on the call. You could be any state in the U.S. Your parents may be in a different state, different county, different zip code. Medicare is you know where they say they are, and they're all within the same place. So you get Florida Blue, you get Florida, you get, you know, Blue Cross Tennessee, you get Tennessee. And so I've been cold calling while our marketing person is helping to do landing pages while I'm answering consumer calls to try to convert people while my team is, you know, working on improving the administrative platform. And I'm just cold calling health plans and I'm doing all these things and I actually get on Twitter at the time, reach out to Nancy who is the head Herald writer at the time in Miami, had her write a story, but I only had a few users at the time and it was about Olga, the first member. And Olga was the, the best first member and it was a really powerful story. Goes on Herald. I've been cold calling Humana. My doctor, my personal doctor is contracted with Humana. So he knew someone at Humana and I'm literally in just Florida hitting all these areas. And I, and then I see this article. in outside the Herald in some other paper. And it says Humana is like really focused on loneliness. And I go out to the person in the article, her name is Melissa Blum. I remember all these people because they were super important. I, I can barely remember people I meet for 5 minutes, but this was meaningful. And finally I get a meeting with Humana. I tell 'em we're solving the loneliness problem. We have this network of amazing companions and we'd love to help you and do a pilot. And they got us approval for $150,000 pilot in Tampa. And I call Alexis Ohanian, who was our investor at the time from Reddit. And I said, and he, it wasn't like up to him, but like obviously he's like the marketplace god. And so I'm like, you gotta ask this guy. And what's the point of having these investors? And I said, I have a crazy idea. I'm gonna shut down consumer and it's doing a million ARR and growing. And I'm gonna 100% focus on this Humana program, make it go perfect. And he's like, I'm not exactly sure what you're talking about, but he had faith in the founder and we did that and we've never looked back. Actually, today we still do not offer the consumer business, though every 6 months we have a debate at the executive team and we stick with our guns to continue down the path. And so really, really great decision, you know, aligned with both the vision and, you know, timing and other things worked in our favor. And then just really look, taking a hard look at consumer, which looked good but was not that good.

Yeah, that's really interesting to hear the story behind this. I appreciate sharing with us on that. And I guess, you know, for a little bit of context, could you give us like an overview of Papa today and maybe just kind of walk through what the, you know, the marketplace experience is like?

Yeah. So typically we'll get a file of members still exactly the same as we did with Humana with members' names, and it would be 5,000 people, it could be a million people. We develop a program with the health plans, and it's highly configurable and kind of developed around their needs. So maybe they want to help people that have diabetes, congestive heart failure, go to the hospital a lot, you know, people with rising risk, you could say. And they want to give them up to 100 hours of PAPA or 200 hours of PAPA. And so we get the file, we do a certain assessment, and we say, hey, this is Andrew from PAPA. We work with your health plan, Florida Blue. We are a companion care service. Would you like to learn more? We take them through an assessment. We do a loneliness assessment. We do that throughout the program. We do an unhealthy days assessment, which is a CDC terminology. And we do some other things like social health and fall risk and digital health capabilities. And so we've really become more of a strategic care network rooted in companionship, but also there to help influence the members in positive ways. So we say, OK, great. Mike, we're going to send Andrew. He's your pal. He'll come out on Wednesday at 9 AM. And so on the way there, the pal will call you. The member gets texts, email, whatever format they prefer, call, IVR, robot, what have you. But typically most of the experience is between the pal and the member. So Andrew shows up. Hey Mike, what's up? It's me. We hang out. You know, we go to the doctor, we go to the grocery store. I help you with light bulbs. I notice you have no food in your refrigerator. I ordered some food through your Benefits that you get through the health plan. So I become like your health advocate, your companionship provider, and then also kind of an extension to your your family. All of that is fully automated and tech-enabled. You know, ninety my team would say like ninety percent. I'd say like ninety four percent. And and that's it. And then after your pal could schedule your next visit, you could do recurring visits. And then we work with the health plan. So we're a three-sided marketplace, which makes it very confusing, very complicated. You know, there's rules that the health plan has that counter into or kind of against what the member may want. The member may want things that are completely ridiculous. Like, we've had PALs go there and the member's like, oh, can you fix my plumbing and get on my roof and like paint my house? We're like, that's not what we do. Then the member calls the health plan complaints, calls CMS, the ruling body, and complains. CMS does an audit on Papa. Because we didn't paint the guy's house. And so the amount of learnings to figure that out, you know, millions and millions and millions of times a year, both with software and process. Like for example, Papa had 2.5% of our business last year were complaints, which kind of sounds good. I mean, it's like 98%, 97.5%, no complaint. I mean, that's like better than any other company. However, in Medicare, there's a rule that you have to track and document every single complaint, even if it's wrong, even if it's racist, even if it makes no sense, whatever. If a member called, I have a complaint, you must document it and send it to the government. Well, we started getting all sorts of complaints and we're like, oh my God, it's bad. And you're like, well, 2% is not bad. Well, when they have a small team in the Medicare plan and it's 4 people and every day they're looking at complaints and 70% of them are PAPA, Because the health plan members use pop-up light 100 times more than they use a hearing aid or what, you know, service. Just the order of magnitude is significant. We become noise. And so we put this huge effort to go from 2%, and now we're just at 1%. And we started realizing members were not even complaining. They were, they didn't know how to get in touch. And they were saying, oh, there was theft. We're like, oh my God, there was theft. No, there wasn't theft. They stole my hours because a pal left. 1 minute early and the member was worried even though they were wrong that they lost out of 100 hours, they now have 99.8 hours, not 100. So there's just like a significant amount of learnings and then over time technology, which now allows us to have these like kind of amazing KPIs across the platform.

Yeah, marketplaces are hard enough. So you add in, you know, make it a 3-sided marketplace and also operating in healthcare. I can only imagine some of the challenges.

So, yeah.

So I guess on that note, you know, do you have any maybe tips for, you know, founders building in healthcare?

I do. I have a lot of tips. One, it's incredibly difficult just to be frank about it. And it is harder now than ever before, I would say. And I've been selling in healthcare for my whole entire career, 15 years. So And it was never easy, but the bureaucracy and all those things make it really challenging. And it's not that like you don't convince one person to do it. It's that that one person, no matter how high they are at that company, they could be the chief executive officer, they could be the chairman of the board, they could be the founder. Even them don't really have full control over the service. So that's one reason it's hard if you're selling to large health plans. That said, it's a big, big, big, big opportunity if you are able to crack it. People do tend to say like healthcare is like whatever, trillions and trillions of dollars, but it's really like 1,000 $1 billion industries. And so that really kind of like, I think gives you some context. That said, there are really big problems in healthcare and frankly healthcare in general is probably a decade behind other industries, still ahead of trucking, I'd say historically, but It's an opportunity to really break in. I think if you're like an AI XYZ, it's a lot of noise right now. And so if you can provide like direct savings immediately, like that's gonna help you win in healthcare, which is hard, especially for us where I just like made this up. And so everyone's like, well, it sounds cute, it sounds nice, but like, are you saving money? And then I'm like, well, the lady was completely alone by herself and now she's not like, and she was going to the hospital. And now she's not. But then they're like, was it you? You know, how do we know it was you and not the text message I sent? And so like there's a lot of this debate. So if you have concrete evidence showing an impact in healthcare and you save them money immediately, I think you could win really fast. I do think marketplaces have a really, really ripe opportunity to win. And that's why frankly, I think Papa is gonna be like a very, very big company. Just because compared to other services that are trying to do in-home care or transportation or anything of that regard, they're light years behind Appa's approach now, which is super advanced and using best-in-class technology.

Yeah, such a big opportunity too, and the ability to make an impact at scale as well.

That's nice. Yeah.

Yeah. So another topic that I wanted to talk about is the fundraising journey. I believe you've raised, what, over $220 million in capital from some awesome investors like Initialized Capital, Tiger Global, and SoftBank. I mean, so what has the fundraising journey been like and maybe what are some of your key fundraising learnings?

So in my pre-seed round, again, I knew nothing. I'd never even heard of Y Combinator when I started Papa. In my pre-seed round, I just literally went to random people in Miami and just asked for money. Like my dad says, you gotta hold out both your cups. My dad's also an entrepreneur. And so you're effectively a beggar, but hopefully you have some clout or you could prove it in some way. I mean, people are just betting on you and the idea, but honestly, it's more about you because ideas change. I mean, Brex, for example, started off as like a VR company in Y Combinator and then they became Brex, the payment platform. Raising money is very hard. There, you know, people talk about 2021 being kind of like easy. Nothing about any of my funding rounds except for one was what I would call easy. And it wasn't easy because I took a lot of effort to get into Y Combinator. But Demo Day is the most magical moment in my opinion that I've had from a funding perspective. And I've been trying to replicate the FOMO that occurs during that moment ever since. I got pretty close to it, but there's nothing like getting on stage, being this hot company that's mission-driven, that's growing, you know, I mentioned the $50,000 and in front of all Silicon Valley, you know, interested in the company. But, you know, fundraising is definitely a kind of a FOMO thing. You want to be the cool kid at the school type thing. It's not easy for me because I'm a salesperson naturally. And so I like, you're supposed to play hard to get, I would say. Whereas in sales, if you play hard to get, like no one, you're just not gonna get a sale. So It was very hard for me to switch that on and off. I would even do things to protect myself, like I would schedule emails instead of sending them. And so like I scheduled for the next day, give me 24 hours to decide if I wanted to cancel it, which I would often. I'd wait a few days, I'd wait a week, you know, so kind of creating the scarcity through ways that are not that easy because like what if no one's calling you? What if no one knows you at all? How are you gonna do any of that? I mean, I do think incubators are helpful. Frankly, I think building a network in your communities are helpful. Some cities are better than others. A lot of cities are better in general now. Miami, as an example, not one Florida investor invested in Papa. And like, I'm like the Miami darling and I feel it's kind of a funny joke between us now. We're all friendly. But, you know, Papa was this like kind of crazy idea and all of these people were like, real estate, people that wanted to be VCs, but in New York, Chicago, Boston, California, et cetera, et cetera, North Carolina, there's a lot of communities. So I would enjoy things like this. I mean, it's really just about putting yourself out there. Like there's really not some sort of a secret sauce from my perspective. It's just like banging your head against the wall, you know, until you figure stuff out. And that could be around fundraising, around technology development, around hiring. I've made mistakes in every single category. I make mistakes still. I make the same mistakes again, but I keep smiling.

That's great. You got a lot of head nods on that. So, well, cool. So we're going to get into the group Q&A. Otherwise, you and I could just go on and talk for some time here. But actually, one topic that I did want to discuss briefly right before we do is, and this is something we couldn't have a conversation about, you know, without bringing up, is AI. So, you know, how are you potentially leveraging AI at Papa?

Well, it's interesting because what my earlier point was around, you know, really understanding what you're trying to measure, not like what's— it doesn't really matter how I get to the end result as long as it gives me the goal that I want, I guess. Of course, aside from cheating, that's not something I recommend. That said, we've actually been using in a very light way, honestly, AI for operational efficiencies. A couple of unique ways we use it, and I'm not that good, to be honest, at like promoting our AI use versus others. And I think maybe that's a good thing or a bad thing. I just think a lot of people are talking about AI, but not really credibly understanding the value of it. So for us, we do things like member commenting. We get comments on our reviews, on our phone calls, on our voicemail, on our email. So our software will bring that all together, look at it and try to grade it based on, you know, green, yellow, red. Is it a safety issue? Is it a health outcomes issue? So that's been pretty interesting. We're, we've used it for QA across our call center. We do millions and millions of calls a year. And, you know, we used to have a, the QA team started getting to like 20 people and now it's— It may not even be existent. I think it's nonexistent now. So we have one person that kind of looks at it and they're just using AI for that. So I'm downplaying it a bit, I guess, because that's pretty impactful from a cost perspective. We're just not really using it from a member-facing perspective though. I've looked at like, I even looked at acquiring a company that would be like a companion AI bot. I think those companies are really interesting, but just for us, our mission right now is, or our mission always is to build a new kind of care. So areas I do think we will be using it is what happens when the PAL is not there? Can we encourage the member to do things that are positive in their life regardless of that visit being with the PAL? Can we provide recommendations to our community health workers that are kind of part of our navigation team outside of the PALs to say, oh, last time you met with Mike, this happened, maybe bring up some support around food insecurity, maybe Remind him that he has access to Instacart through his health plan. So I think over the next couple of years, it's gonna be more prevalent in PAPA, but I wouldn't recommend companies just use AI for the sake of it because a lot of the times, you know, you without accurate data, it's just garbage. So you have to really make sure your foundation is solid before you start going too crazy. That's, and you guys are starting right now. I would, you know, think about AI from the beginning versus us. It's kind of an afterthought at this point.

Definitely not something we're always discussing here. So cool. So we're gonna get into the group Q&A. Hey, Olivia, do you— I saw you raise your hand. You wanna help us kick things off?

Thanks so much, Andrew, for, you know, sharing a little bit about your journey today. It's been an awesome group chat. So you spoke a little bit about distribution and kind of, you know, working with some of the health plans and brokers, but I was curious I'm curious, you know, if you could share a few learnings that you've had about what it's been like selling to HR.

So the company before Papa, actually, their entire business was that I, that I was part of MDLive. All we did was sell to HR. And funny enough, at the time, it was similar to Papa. It's like no one knew what telehealth was. No one knew what care planning and care was. I'm definitely a glutton for punishment. HR right now, I think, is in a really interesting point of their journey, I guess the HR journey, because there's getting, you're getting a lot of pressure from CFOs, CEOs that say, let's spend less money. And a lot of these point solutions occur that are essentially just solving a very niche component of the problem. And it's hard for HR to kind of filter like what's important and what's not important. What I do find is what moves the needle with these like organizations more than anything is like, does it align with their top priorities or like some sort of a systematic top priority. That's why you saw mental health kind of explode in a good way across the board because it became less of a stigma. HR companies were being— HR employees, sorry, were being asked by the employees, hey, I'm having this mental health issue, I'm having a behavioral issue, I'm having a family issue. And then I think it's also an important thought to consider, is there something they're required to do maybe, or some way you could kind of wedge yourself into the required elements? So for example, Spring Health, I'm friends with April, the founder. She's an amazing founder and CEO. She was more mental health, behavioral health, but she had this smart insight to say, oh, actually EAPs are required. And EAPs are like kind of a stone's throw away from behavioral health, mental health, and it's more expansive in nature. So she pivoted and most people probably didn't, if anyone follows, didn't even notice because she doesn't really call herself an EAP. EAPs are essentially a requirement for HR, which is an employee assistance program, which gave her the wedge in. It was required, got her— HR had to pay attention. Something, for example, with Papa that's happening is out of nowhere, all these long-term care insurance companies that offer insurance to employers for their employees are starting to grow again. And these— it was like a dead industry. My brother worked at Unum, one of the biggest ones. It was like a dead industry, but 16 states made it a law or a ruling, they're progressing in that way that says if you offer long-term care insurance to the estate, you don't have to pay this excess tax. And so out of nowhere, all these long-term care companies— so I'm like, okay, PAPA is kind of niche, but it's a very good value prop for the long-term care insurance companies that are selling to employers, HR teams, because now they not only have long-term care, they have this robust PAPA and PALL service. So we won Allstate, we want— we're winning Trustmark, we're winning a couple of, you know, another one slipping the name of it. So anyway, the point I'm trying to make is like if one door closes, that doesn't mean the channel or the end users are wrong, but you really got to think about it. And at Papa, I always tell my team like chip, chip, chip, like we're just chipping away at it and it doesn't mean it's wrong or right. But from an HR perspective, if you could save them money and immediately, I mean, that's the name of the game right now and it's required. you're hitting all, all 3. I try to do the same thing with Medicare. I mean, we found that digital health literacy is a requirement and we're like, well, pals are in the home helping with digital health tools. We could help with that requirement. And it gave us this wedge. Then they realized how good Papa is and then boom, we have a contract with them across their entire population. So, and by the way, I'm, this is an iterative approach. Every single day I'm doing this. This is, I'm giving you today's version. There was a different version a year ago. Most of them don't work. Some of them do, though. This, this one's working.

Hey, Molly, do you want to come on?

Yeah.

Hi. I'm building a marketplace in the care space as well. So really interested about trust and safety. At what point did you move from kind of cobbling together some best practices, you know, out of your own mind to implementing like a very serious trust and safety, either person or department? What did that What did that growth look like?

So, yeah, just kind of an iterative journey like everything else. I mean, we always had trust and safety when it was kind of manual. It was there. But as we grew, we added software to allow for that. We brought in typical tools like a turner checker and things like that. But what ended up happening is we ended up— we had this compliance team. It's a requirement. So we were way ahead of a typical marketplace because Medicare has all these rules. Like in the Bloomberg article, it calls out that we had 1,500 complaints. I mean, that is like, we have way more complaints than that. That's required to track those complaints even when they're wrong. They're like, even one man said he was George Washington. My reply was maybe he was George Washington. So in any case, we ended up adding a true trust and safety leader just when our incident happened, which was actually about 7 months before The Bloomberg article, which we later found out never even happened. And so there's this kind of like natural thing that is this painful thing. But as you get big, you become a target and they're gonna write about you something bad. Because though I don't want any incidents, millions of visits with one incident is like a miracle. And so I think to be honest, we had this natural safe element, which was like younger people naturally want, mostly not everyone, but even like drug dealers are gonna be nice to the grandma on the corner of the street for the most part. And I think the organic element of our business protected us for the longest time and probably blinded us to some of the issues because we checked the background. This guy, this guy that had the incident, you know, it was a clean background. But background checks are inherently flawed when you're in thousands and thousands of counties and they're using outdated software. And so we had actually built our own anomaly tracking system, kind of similar to what PayPal did. We actually brought in the head of trust and safety from, formerly from PayPal to help us like redesign it and have him do a deep examination of all of our processes and say, you know, what is going wrong? And he comes back and say, Papa's the number one most complex marketplace he's ever dealt with, you know, when comparing to Airbnb and Uber. And so it's really not like stop and do everything to understand this thing. You're gonna have millions of problems building a company and you gotta really understand like from a ranking perspective how to go about them one at a time. Because if you try to do 'em all at the same time, you're not, none of them are gonna be good and they're all gonna be broken. If you try to do one at a time, which we do now, still one thing at a time at Papa, we have one roadmap. Everyone does it, you know, one at a time. But then you're not doing stuff. And so those trade-offs could be pretty hard when you're at the beginning. It's like, do I fill this visit? Do I quadruple check the background check? You know, do I allow this person that had a parking ticket in 1997 to come onto the platform? So there's a lot of ideological thinking that goes into it. We ended up actually removing those people, which kind of sucks. They're probably good people, but we had to put our are scrutiny at a higher level. So the short answer is I think it's iterative. I mean, you want, it depends on the core of your service. Like you may want to think about bringing certain things in sooner. If you're in the home, you have to be safe and we took it seriously from the beginning. It's just at a certain point you're gonna get called out.

That's a great question. Yeah. Without marketplaces, it's not an if but when, right? So, hey, Allison, I saw you raise your hand. You want to come on?

Andrew, thanks for making the time today. Curious about how you thought about pricing for that Tampa health plan deal. I mean, it's a category-defining or sort of new service. I'm sure this health plan buyer for their benefits had never bought something similar, or maybe they had. You know, how did you think about positioning pricing in that particular deal?

Yeah, I mean, I just made it up. I literally just made it up and I'm on the phone with them. They're like, how does it work? And I just used the pricing we had on an hourly basis. I said, well, we charge upfront for 6 months. Like I was super confident in how the whole mechanics of it worked, but I was literally just making it up in real time while talking to the Humano leaders. So that's part of, I'm good in those moments, but I also had a background selling health plans. So I had experience kind of like just making it up with other companies when it comes to some of these elements. And I had a lot of freedom in my previous company to like choose pricing, you know, around that. That said, I knew it cost $15 to pay the pal, so I charged $20, which probably was not a good idea actually. So just making it up doesn't always work. It was pretty costly, but it was a smart idea for us then to pay for it upfront. A lot of times, Fun fact about health plans, they're very willing to pay for pilots upfront. They're willing to pay in different terms. They don't care. $10 million is nothing. $100 million is pretty much nothing to these health plans, you know, on the national side. You know, United does like $800 billion in premiums, meaning the money they get from the government. So I think if you find a champion, you tell them how your program works and you say it would be nice if we could get paid upfront, they could typically get That ton. But I thought about, you know, COGS and things like that. But I will say we were stuck at this $20 an hour for quite a long time too. So, but I couldn't have commanded a higher price at the time. But as we got better, as we provided more value over time, we are now $50 an hour and our model's actually very similar structurally. But then I made a huge mistake. I was excited about offering what's called like a capitation. So like For $5 PMPM per member per month, everyone gets access to Papa. They get up to 100 hours. Well, at MDLive, like, no one would use it. And we thought people would use it at Papa, but we didn't expect this. And so we did this experiment for $6 PMPM. We'll do unlimited hours. Never use that word. Never use that word. Promise me right now. I mean, we went completely upside down our whole business because of one customer that was small. Went down negative 22% in 2022. I'm not, we're scaled now. And my board, I mean, I was probably this close to getting fired. I'm like, no, we're gonna fix it. We're gonna go from negative 20 to positive 25. They're like, it's impossible. And I'm like, for Uber, not for us. We are contracting. And, and we did it. And actually now we're positive 40% contribution margin. So software helps contractually, contracting properly helps. You're going to make contractual mistakes. You can't think of it all now because you haven't made the mistake yet. You don't know what to protect against. So honestly, go forward with an open eye and just assume that, you know, there's going to be some stress on the way. But try to think about like some of the core elements like cost.

We'll try to get in one last question if we can. Hey, Stephanie, do you want to come on?

Hi, it's great to meet you. I have a 2-parter. I hope that's okay. But I have 10 more. So if we have any spare minutes, I'll gladly take the floor. I'm also building a marketplace in the, in the care space, not, not in the realm of supporting elderly senior citizens, a different area. But what I'm curious about is in your early days, how did you orchestrate the matches? And then when you were kind of pre-scale but farther along and showing some traction, what did you build to, to kind of orchestrate those matches? And then the part B, Is I'm just curious if you did that math of, you know, how much supply do you need per customer? So is it like a 20 to 1 or 50 to 1 or 100 to 1 in order to find the right Papa Pal for each customer?

Good question. So I am, I just, I laugh because I'm really just super scrappy. Like it's just super in my nature. And actually it's been a little challenging throughout the time because like, Now I'm like the CEO of a bigger company and it's like being scrappy is a little bit not warranted and I miss it sometimes, but every once in a while it comes back. But in the beginning, funny enough, I had this cool app and, and, you know, you could swipe left and right. But the problem was I didn't have any pals really. Like sometimes during the day they would turn on, but like not really. And my cousin who was helping me at the time goes, oh, we're gonna rebuild the app. I go, what are you crazy? I put my entire life savings into this app. We're gonna just make the service We're gonna change everything so that the app, whatever the app functionality has, we could hack it. That's what the service is gonna be. And so I thought, oh, we're not, we don't have any pals available, so we're just gonna make one pal. And so they couldn't swipe anymore. It was just the one card. And I put a Papa logo. They would request the pal, it would come to me, I would text the 10 pals. Ultimately I used Zapier, but in the beginning I was literally just texting them. Zapier was one of the greatest at the time, and I believe still. tools, period, for founding a company that's not technically led. And so I got a pal, I gave them the password for the one account and they would go do the visit. And then what I realized was every pal that went was loved. And so then the vision quickly became, we take the pals through a very specific vetting to try to understand like the perfect pal, like every pal conceptually matches with every member. And actually today it very much works very similar to that. However, there's other elements around matching. We use a bit of machine learning here, not really AI, which is, you know, around gender and around location and availability and background. But it's actually more on the pals to choose the members versus the members to choose the pals because we wanted to make it stupid simple. And no matter what, a pal that you like will show up. That's the idea. And we've proven that because organically what happened over time is the members started saying, oh, Andrew, you came to my house. I want you to be my preferred pal. And they started building like one-to-one relationships. And what was interesting is like 90% of the time, the first pal we sent would become their preferred pal. And so, you know, we do have some algorithms, we do have some matching, but I'd say mostly it's like been by design. We have this kind of like unified, you know, Apple-like experience versus like picking versus our competitors like Care.com or CareLynx or whatever. They have like a thousand, hundreds of thousands of caregivers. And that's kind of their model. You review, you interview. Ours is you press and you trust. And, you know, over years we've been able to prove that. And then on your second question about The ratio, it's actually been pretty similar, about like a 1 pal supports 10 to 20 active members. The reason that's true with us, and I think it would actually probably be less commonly with others, is our members only get, you know, 60 to 200 hours per year. And so there's just a reduced top limit from that perspective. So depending, like if it's Uber, I think you could see way, way, way more.

Awesome. That was a great 2-part last question to wrap things up here. So, so we're almost out of time, and I definitely want to be conscious of that. But, you know, thanks for taking the time to join us here, Andrew. This is fun to, you know, hear all the early, you know, stories, you know, how you overcame some of the early challenges and, you know, where you're at today. So, you know, huge, huge congrats, by the way. So we're all big, big fans here, and you're leading the way for us in the healthcare marketplaces. And I actually had one last question for you before I wrap things up. And that's my usual closing question, which is, if you could go right back to before you started Papa, You know, what would you tell yourself about marketplaces?

They're insanely hard. They're way, way harder. It's at least 1,000 times harder than I expected. And actually it gets harder every year. So good luck. I'm also having fun throughout it all and it's ebbs and flows, you know, because they're kind of just like a video game. It just gets harder as you go, gets more fun, you know, gets more frustrating. But The reward is definitely worth it.

Great way to wrap it up here. And now last but not least, you know, time for a quick plug. Where can we keep up with you at?

Personally, I guess on Twitter or X, my name is A Park DeLark, I think. And yeah, just on Papa.com. If you want to email me, you can. It's andrew@papa.com. If you have any questions, I will do my best to reply. Some— I try not to get on too many like one-on-one phone calls just because I started doing a lot and got to run the company, which I recommend you do. But I typically will respond back very quick. I want to help people in the community, people that are helping, you know, just anyone. It's just fun. Part of it is paying it forward. So if I can be helpful, even in a small way, please don't hesitate to reach out. Those are the best ways to do that. Awesome.

We appreciate taking the time to join us here today for the group chat. And thanks everyone for the great questions, by the way.