Jon Lensing Transcript
Clint Betts
Jon, thank you so much for coming on the show, it means a lot to have you here. You have had an incredible career, particularly for how young you are and everything that you've done so far, it's fascinating. You are the CEO of OpenLoop, which you founded in 2020. It grew significantly, particularly during the pandemic, as a lot of health tech startups and companies did. I'm actually interested in learning how it's going now post-pandemic and what you learned through that period. But why don't we start with what is OpenLoop? And how did you get to be where you are today?
Jon Lensing
Sure, yeah. Well, I appreciate you having me on. Right off the bat, OpenLoop is, for better or worse, a white-label telehealth provider, if you will. So, we help power the next generation of digital health entrepreneurs, brands, and organizations by offering white-label telehealth services. On a more granular level, there are four key areas that comprise this offering, if you will, Clint. So first, we've built and supply all of the technology to actually run and do digital health across the US. This includes everything from the actual core electronic health record that stores patient records, all the way to the ability to write prescriptions to a patient's local pharmacy, send for lab orders or imaging studies, the patient engagement, patient support, the billing systems, the scheduling, all of that bundled up into this tech platform.
The second component is staffing. So, we also supply all of the clinical labor to our telehealth clients. These include about 16,000 docs, nurses, therapists, dieticians, health coaches, you name it. The third area for us is our legal compliance and HR infrastructure stack. So all of the fun back office work that's necessary to go into actually running and seeing patients across the US. Then the fourth and last piece of it all is our billing infrastructure. We work with companies that just offer cash-pay services, and we built all the billing and collection systems for that. But on the flip side, we also work with all major insurance carriers across the country, so we can bill for those insurance services, collect back from a payer, and then see and charge patients that way. So, all that being said, I've been in it for about four years now, as you mentioned.
Quick background about myself. Originally from Iowa, a small rural farm town with 10,000 people. I ended up staying around and headquartered in the company here, not too far from where I grew up. I left the state for a bit to go up to Grand Rapids, Michigan, for undergrad, studied sciences up there, and knew I wanted to go into the medical field. I started a smaller drone company while I was in college there, doing a lot of aerial surveillance with these drones right when they came out for consumer use. Grew that up and then sold that off as just a smaller business. Made my way back then to the University of Iowa for medical school. Progressed throughout my studies there, graduated. Matched into plastic for reconstructive surgery for residency and started down that pathway. But had simultaneously started OpenLoop as a passion project and was going to run on the side. Lo and behold, I saw enough growth and traction with the pandemic that it made sense for me to jump into this full-time position. I am just continuing further clinical training and have been doing this ever since.
Clint Betts
That's incredible. How did you know that something like OpenLoop was needed?
Jon Lensing
From what we do now, we went through a pretty hard pivot, I'd say. The initial idea for OpenLoop was just based on experience and the University of Iowa Hospital. I was seeing patients drive five to six hours one way just to get the care they needed, and that was problematic. Patients would delay their treatment, so they'd come in sick, or they'd require more prescriptions, and they'd require more surgical interventions. It was an overall larger financial burden, once it was all said and done, for the payer, the patient, the hospital, and everybody in the mix. When we dig into that problem, we find that there's just a huge shortage of healthcare providers nationwide. Particularly in rural areas, accessibility is a massive question. It became this question for me: how do I take the preexisting population of providers, the doctors, and the nurses out there but make them more efficient with their schedule so they can see more patients? How do we build efficiency leverage with them?
So, in its infancy, OpenLoop was actually a matching system. Hospitals would come in and say, "I need the ER covered from 8:00 AM to 8:00 PM Tuesdays, Thursdays," and then it would match them up with a physician or whatever provider they were looking for that was within a two to three-hour driving radius around them. So, tapping into the unused hours that some of the clinical providers in the country have, I realized that it went really well when we first launched in early 2020. Over the course of four months, we signed up 26 major health systems and 1,000 docs, and we ended up covering about 700 shifts during that time.
And then, as the pandemic got deeper and deeper in the US, it just really shut down our market, Clint. After that, we sat around for the next four months, twiddling our thumbs, wondering what the hell we were going to do. Then, we ultimately ended up finding our way into the digital health space because it was dramatically taking off. I then applied the same business logic there but then slowly listened to our customer and added on all the other service lines afterward.
Clint Betts
What was that like once the pandemic hit, it shuts everything down? I mean, the whole world's different all of a sudden. So you spend four months just trying to figure out what we do now and how we do it? And you land on this thing that is incredibly needed, which is telehealth. Where does it go from there? Once you realize, hey, we have something that actually is going to work, did it just take off? During COVID, so many health tech startups just grew like crazy and learned a lot. Were you part of that?
Jon Lensing
It's interesting. The pace at which we were assigning hospitals before the pandemic was just unprecedented. And then there was just one day where the lights flipped off and it was just radio silence. I couldn't even get an email response back from the people we were trying to interact with anymore. For us it became this question of, is this pandemic ever going to go away? If it does, when is it going away? And then what does the return to normal process look like? And so, we were really hesitant to turn away from our original business model because it was working so well. But at the same time, we're like, if this continues to drag on, we're going to have no business left. And we had just gone out and raised a pre-seed round, so we're sitting on investor money and not putting it to active good use. We made the decision late, at the end of summer, so let's begin testing this. Let's see what it looks like to start working within the digital health space. Again, the same sort of business logic. Match the supply to the demand, except now do it within the telehealth sector. We started doing that; it started taking off pretty dramatically; we were signing clients left and right.
Then the big pain point became, well, hey, these partners of ours need to use our clinicians, but we can't deploy them fast enough, so we added the compliance and credentialing arm, all that back office stuff. Then, our clients were seeing so much patient demand that they were on homegrown tech solutions, just non-enterprise, non-scalable solutions, so we built that tech layer over the next 12 months. That really started taking off. And then they were only doing cash-pay clients and wanted to start accepting insurance, and they didn't have a good way to do that, so we built out this insurance-based billing arm. So that's how we got to this full-rounded stack. But you're exactly right. On the back of a lot of these telehealth companies, we are their infrastructure provider. We are their clinical operations infrastructure. Since 2021, and when we really jumped into the digital health space fully, we've averaged six to 700% year-over-year growth ever since then. I mean, even from last year into this year, from this year into projected for next year, it's still a massive market, it's still continuing to grow, it's not slowing down by any means.
Clint Betts
What does a typical day look like for you these days?
Jon Lensing
That's one of the things that caused me to get burned out by medicine; it is just the monotony of it all. I find this role to be very rewarding, as well as the variety of things that I get to do and see and the people I get to interact with. My days are varied, which I do really like, but there is some sort of baseline routine. I prefer to work out in the mornings. I find that if I get up early, I can use those first two hours after waking up to do something mindless like a workout. So I'll go do that in the morning, usually in the office by 7:00 or 7:30.
Throughout the day, there are a variety of meetings now; it really depends on the season or cycle in which we're in. If it's, hey, we need to go fundraise, the majority of the day is spent with investors. I'd say, on average, it's about 25% internal meetings, 25% investor board relations, both prospective investors and current investors, and 25% is spent on sales or external activities, partnerships, large clients, enterprises that we work with, and vendor management. The remaining 25% is free-thinking, time to catch up on tasks, reading news articles, figuring out where the market's going, and where we want to position ourselves. And then, at the end of the day, I typically like to be out of the office by 6:30 or 7:00, go home, and grab a quick bite to eat. Again, I like to do something mindless, so I love flipping houses, remodeling, working on old motorcycles, and fixing those up. It's something where I could still work with my hands like I did within surgery, but it doesn't require all the brain power that running a team does.
Clint Betts
What advice would you have for entrepreneurs who are thinking about raising money? What did you learn in your process of raising money? I assume you raised money from venture capitalists. What did you learn through that process of raising money that you would give advice to people who are thinking about doing the same thing now?
Jon Lensing
You have to decide what business you're going to build, right? That's at the core of it. Somebody asked me this the other day, and I said, "Well, pitch me your idea." They pitched it, and it was. I think it was a fishing lure company, if I remember correctly. They were building fishing lures. They had a great product actually because I like to fish. But I said, "What's your strategy? How are you selling right now?" They're like, "Oh, we have a few bait stores." And I'm like, "Well, you're building a lifestyle business at the end of the day. You shouldn't go raise money; you bootstrapped this far. Continue doing so. Slow grow it. You don't have a patent on anything; there's no IP here. Work what's currently working for you."
At the heart of that conversation, we really got down to the following: Are you building a lifestyle, a long-term 20, 30, 40-year business that you want to run? Or are you trying to build something that goes national or international in the span of three, four, or five years, and you're trying to capture as much of the market as possible? Those are two very separate businesses, and they both have two separate game plans for capital. I said, "If it's the latter, that's where you want to go raise venture dollars. If it's about growth at all costs and just speed to market. If you don't do it now, other people are going to beat you to it; good, go raise the venture dollars." And I said, "Venture dollars are a two-edged sword. On the nice shiny part of it, it's like yes, you're going to get brand exposure if you raise from some of the name brand VCs, you're going to accelerate your business tremendously quicker than you would if you just bootstrapped it continually. You're going to get to that higher valuation a lot sooner. And it's just going to give you the operating potential to go out and acquire, roll up, and just grow a lot faster expeditiously." But on the other hand, it's like, who are you as a business owner or founder in terms of mindset of control? You're going to lose a lot of that control. Sure, you're still the CEO, but you're no longer working just for yourself. You're working for your investors. You have a fiduciary; you have a legal responsibility then to use that money wisely, turn that into revenue, or at least give it your best effort. There are pros and cons to both sides. It really comes down to what you want out of your business.
The thing that I've learned is you need to be incredibly selective with who you let on into your cap table. If an investor is demanding from the get-go, chances are they are going to be demanding throughout the entirety of the life cycle. In medicine, we used to say, "You want a good nurse, or you want a good assistant that you can spend eight hours across the table from every single day doing surgeries with." The same thing is true in venture, right? You want an investor that you can spend the next seven or eight years, the entire life cycle of the business, working with and having phone calls with because they're going to be there through the ups and the downs of it all. And so just being very selective. You're building a relationship. It's almost like choosing a girlfriend, boyfriend, spouse, whatever; you need to be very closely aligned with them so they ultimately have faith in you and that they're going to go out and do good work for you, too.
Clint Betts
What do you read? What reading recommendations would you have for us?
Jon Lensing
Anything that piques my interest. As far as day-to-day stuff, The Wall Street Journal, TechCrunch, Business Insider, Forbes. I just like reading about market trends because that dictates a lot of the strategies. The greater macroeconomic environment tells us where we think the overall market's going to go, where consumer spending habits are going to be, and how's that going to affect our business.
Some of the best advice I ever got was from a mentor within the first week of me just coming up with this idea. He said, "The best CEOs that I know don't worry about the pennies here and there of the business; that's for the CFO to worry about. But what they do worry about is understanding the entirety of their market, their industry, and their sector and knowing all the ins and all the outs of it. Where does the money come from? Why does it come from there? Where does it go out, and why does it go out there?" And so that's what we try to do at a senior level here: understand our landscape and the different levers that we can pull. Why are people doing certain things the way that they do them? Who's paying whom, and what's the value created there?
Personal edification books that I like ... When I first started, I loved books on persuasion and sales. There's a really good one by Ryan Holiday called The Obstacle Is the Way, and it's helped me reframe my thinking for a lot of different things. So, books of that nature. Traction, EOS I really enjoyed. CEO Excellence is another one that I've enjoyed. Just personally, I love fiction. I like a really good plotline story, so Atlas Shrugged and all of Ayn Rand's books are some of my favorites. Fountainhead.
Clint Betts
Yeah, for sure. How are you thinking about artificial intelligence within your company? How have things changed since you founded it in terms of AI integration into your product?
Jon Lensing
It's a really good question, Clint. A lot of investors are almost jaded by the prior blockchain bubble that happened a couple of years back, as crypto boomed, and then boom, you had all this blockchain technology that came out, and it was the buzz for a couple of years there. I think AI, in its current form, has some of that hype that will diminish over the next couple of years. However, there are some core technologies in there that are not going to disappear and are incredibly valuable. The way that we view it, particularly in the medical space, is that patient-provider interaction is solidified and built upon empathy and rapport. That, in and of itself, should never go away; there always needs to be some sort of interaction there. The place that we're really leaning into AI is how we can maximize the time that a doctor, nurse, or therapist actually spends facing patients and not doing everything else behind the scenes. How can I decrease clinical documentation times?
So our CTO and team have built an AI tool that takes all of the patient's past medical history, takes their clinical intake form of why they're there, matches it up, and generates an entire summary for our doctor saying, "Hey, this is why we think the patient's here. Here's the top differential diagnosis of why they're there. Here's some treatments for each one." Then, it'll finalize the note for them. Whereas it took a physician 10 minutes to document at the counter, after they're done, it's taken them 25, 30 seconds to review and click approve. The same thing applies to clinical protocol optimization. How do we get more patients through this pathway faster?
There are also a lot of logistics challenges within telehealth because you have to have a doctor who's licensed in the state where the patient is located, even though that provider might be located in a completely different state than where they're licensed. Scheduling overlaps, making sure you have the right licensure coverage across the entire US for the demand that you're seeing. Our AI tool actually drives a lot of that optimization for us. All of the back office wraparound stuff, all the operational pieces that surround the actual core component, which is a clinician meeting with a patient, that's where we're thinking about it.
Clint Betts
Yeah, yeah, that makes a lot of sense. Is it changing in your conversations with healthcare providers, and hospitals, and physicians, and doctors, how they operate?
Jon Lensing
Absolutely. I mean, just anecdotally speaking, our clinicians now have about 45% more productivity during their day with the tools that we've built them. There's always hesitancy, right? Clinicians, in particular, have gone from paper records to being forced to use electronic medical records. They have to use different technologies in their day-to-day lives. There is hesitancy around it at first. You have to show them and prove to them that, hey, this is actually beneficial for you day-to-day. It's going to increase your time, and it's going to allow you to do more of what you actually want to do. And if you learn this piece of technology, it's actually going to decrease the amount of other technologies you have to use. It's been fun.
There's been a lot of interest, particularly within our sector, because by nature, these clinicians are interested in technology; they're doing telehealth. A lot of them have brought up to us and said, "Hey, how can we automate this through some of the AI that's been built? Or, is there some sort of solution to this problem that we're facing?" There is very good communication between our clinical teams and our product teams, which has just been tremendous to see.
Clint Betts
What do you think about the current macroeconomic environment and just the current state of the world? As CEOs, you have to begin to think about that stuff in today's day and age, whereas maybe 20 years ago, you didn't really have to think about things outside of your company. Or maybe I'm misrepresenting that, but you get the idea. You really do have to think about what's happening in the world around you. In the political sphere, I mean, we have an election coming up. I'm not asking for who you're going to vote for or anything like that. What is your current sense of where we're at as a country and in the current environment? How are you thinking about it as it relates to your company?
Jon Lensing
In 2021, early '22, I was sitting there ... And I remember it vividly: I was in my truck driving to the gas station. I like real estate; I like the housing market, and I just like following trends there. And stuff just kept going up and up and up. What goes up eventually has to come back down. That translated into our business, which meant that there was so much extra money from low interest rates and pandemic stipends that our patients had extra cash in their pockets. They were willing to pay for clinical services out of pocket if it meant convenience and speed for them. And then I said, "Well if that ends up going upside down, everybody still has" ... "The majority of people still have health insurance. They're going to fall back to wanting to use insurance; they're not willing to pay cash out of pocket anymore." So that's why we built a lot of this insurance-based engine based on what we do: to be able to accept insurance and allow our clients to piggyback off that to accept insurance from their patients.
Taking that same analogy, I'd say that we are still going down. We would be worse off if it wasn't an election cycle, is my own opinion. Towards election cycles, incumbents always prop up the economy a little bit to make it look better and get reelected. The stock market is soaring right now. But if you look at a lot of the actual trends in consumer spending behavior, going back to the real estate market, I am on Zillow two or three times a day, sometimes if it's just five minutes. It's a personal hobby, it's my social media. The number of houses now that I've seen get listed, and they stay on the market for two, three times as long as they did, and then they'll actually get a price cut, which means that inventory is increasing, and the rates of before are ... The actual price points which they were getting before are decreasing.
That signals to me that people are slowing down buying behavior, and we're likely going to ... The economy's going to dip; I just don't know when. Could that change if we have a switch up in whose elected? Absolutely. We're taking into consideration how we're planning out for 2025 and 2026, particularly in startup environments, whereas the past couple of years have been dictated by growth at all costs. We're much more focused on profitability, right? We operate a breakeven business right now. I'm still being risky by reinvesting a lot of that profit that we make into growth to keep it at breakeven, but we can flip that switch if and when we want to.
At the same time, I'm not investing heavily in operations, but I'm investing heavily in business development and growth. If I acquire the clients, as soon as I get to a contracting process, then I know the recipe and ratios to go add operations folks. We're phasing things out appropriately. But I am very much wary of the markets. However, that being said, some other piece of advice I got once before is it's a lot easier to pass 20 cars in the rain than it is in the sunshine. There is some risk involved in there. There are some things that we're doing that might be perceived as a little more financially dangerous, but it's worth it in the startup realm. You got to make some big bets to get the big wins.
Clint Betts
We end every interview with the same question and that is ... At ceo.com we believe the chances one gives is just as important as the chances one takes. When you hear that who gave you a chance to get you to where you are today?
Jon Lensing
Great question. There's more people than I can even imagine. First and foremost that always comes to mind is just my parents. They're not risk-takers, they've been very safe and secure, but they provided very well for myself and my siblings and allowed us the security blanket to take risks of which like I am taking. They taught us to be critical thinkers. I think that's one of the most valuable skills out there. Additionally, my fiance's extremely supportive of everything I do. My hectic travel schedule, the life that a startup demands, and she's been supported every step of the way.
I guess the last two, the employees that have joined us along the way, right? It's incredibly difficult to leave a safe, secure job at a big corporation with nice benefits to take a risk on a mission-oriented, mission-driven startup, and pour your life and soul into it and put a lot of faith in the team that's leading it. Those are the people that allowed us to operate and build this company to what it is today. Of course, our investors they've taken a leap of faith and put a lot of trust and responsibility in us managing their capital.
Clint Betts
Jon, thank you so much for joining us. Seriously, I'm so impressed with what you've built, continue to build. And I'm sure we'll be following it and follow up along the way. But congratulations on everything so far. Really appreciate you coming on the show.
Jon Lensing
No, I appreciate it. Thanks for having me, Clint.
Edited for readability.