Joshua Kushner, investor and founder of New York-based investment firm, Thrive Capital and well known for backing hot startups such as Instagram, Fab, Warby Parker and Codecademy, has been quietly working on his second startup, which is focused on the healthcare industry.
Forbes, which has revealed further details about the company, says it is called Oscar. Here are relevant nuggets from the Forbes article by Steven Bertoni:
- It is focused on health insurance.
- It is co-founded by Kushner, Kevin Nazemi (formerly with Microsoft Healthcare division) and Mario Schlosser.
- It has raised $40 million in funding from Thrive Capital, Founders Fund, General Catalyst and Khosla Ventures. Vinod Khosla is on the board of the company.
- Charlie Baker, formerly chief of Harvard Pilgrim Insurance, is on the board of the company.
- Fredrik Nylander, formerly of Tumblr, is the tech chief.
- The company is using data and user experience to reinvent what is a very traditional business.
- It has been awarded a license as New York health insurance operation.
While the company isn’t sharing details about the product yet or even talking publicly, you can bet that its health insurance offering will likely have a more customer-friendly experience that is transparent about costs. The startup is actually licensed as a health insurance operator in the state of New York, so it isn’t some kind of front-end for existing providers, sources say. It will have its own plans so it can offer something truly differentiated. The company launches later this fall and it will only be for New Yorkers at first.
Here’s the landscape: next year, some very key parts of the Patient Protection and Affordable Care Act go into effect. There will be an individual mandate, where consumers will be required to have coverage or pay a penalty. New health insurances exchanges are being established where consumers can compare and contrast different plans. Then there are also subsidies provided for those near the poverty line who can’t afford coverage.
This is already having a profound effect on health care insurance costs. New York state insurance regulators say rates approved for next year, are at least 50 percent lower on average than this year’s rates, according to The New York Times.
What that means is that there is a fresh market opportunity for new health insurance providers, especially ones that offer exceptionally good customer service, design, marketing and leverage big data.
Kushner put together a team including his old Vostu co-founder Mario Schlosser, a Harvard Business School classmate Kevin Nazemi who oversaw marketing for Microsoft’s CRM programs and Fredrik Nylander, who ran engineering and operations and Tumblr.
On the company’s board is Charlie Baker, who ran insurer Harvard Pilgrim out of Massachusetts, the only state with an insurance exchange before the Affordable Care Act was passed. The company also includes other long-time health care executives, who have at least a collective 250 years of experience working in health insurance between them.
Oscar raised $40 million from investors including Thrive, Founders Fund, General Catalyst and Khosla Ventures. Founders Fund and Khosla are both very active in the health and medical space, so their participation is no surprise here.
While Oscar’s initial funding round sounds like a lot of capital, $29 million of that round is kept in reserve because of state regulations for health insurance providers.
So only $11 million of the company’s funding is actually earmarked for operations. While working on Oscar, Kushner is going to simultaneously continue running Thrive.