In 2008 Oren and Roni Frank packed their belongings, and left Israel for NYC with their two young daughters.
Oren Frank had a meteoric career in advertising in Israel, and was offered a dream position in the advertising capital of the world, as Chief Creative Officer of one of the world’s largest and most reputable advertising agencies. Roni left a career in software development in Amdocs, one of Israel’s pioneering tech companies.
Upon arrival to NY, the Franks enjoyed the comforts of life in the city, with a top-paying advertising career, and celebrity sparkle that comes with the position, a year after Mad Men originally debuted. Upon arrival to NY Roni decided to change direction, and started her graduate studies in Psychotherapy, while Oren was cementing his position as one of NY’s star advertising executives. During those first years in NY, Oren continued to write a weekly column in one of Israel’s largest newspapers. Anyone who read Oren’s column realized that while Oren was in a position of service to the most powerful and wealthy corporations, he had a rebellious side to him, even radical in the eyes of probably many of his clients. So, it didn’t come as a big shock to his close friends that one day in 2012, Oren decided to leave his comfortable advertising position, move to New Jersey to a slightly less glamorous lifestyle, and, at the age of 47, start, along with his wife and partner, Roni, Talkspace, a Startup aimed at fixing one of the most broken markets in the US, the mental health care market.
I met Oren and Roni for the first time in 2012 in a BBQ in their home in Tenafly, New Jersey. I was introduced through Adam Singolda, a mutual friend of ours, and the rockstar CEO of Taboola (one of our earlier portfolio companies) . Oren and Roni just started Talkspace (which was called Talktala at the time), and it was a rough start, nothing seemed to be easy. In this first meeting with Oren and Roni, I loved the concept, and admired their courage to start a very risky new startup in the middle of their life, with two girls, far from home in the US.
I was spending a lot of time in NY during the first years of Talkspace. After many years as early stage investors in the Israeli market, my partners and I decided to establish a new fund dedicated to late-stage investments – Qumra Capital. I was raising our first late-stage fund, Qumra I, and I was feeling firsthand the difficulties of starting a new business.
During this time, I got to see Oren and Roni, mostly in social occasions, and I became more enamored with this incredible couple, and the truly exceptional company they were building, but it was still too early for our new late stage fund. Three years after founding Talkspace, in 2015, the business finally started to take off. Talkspace pivoted from a group therapy, live-video conference model, to a subscription-based, text therapy model, and the business started to show real signs of growth. So, when by the end of 2017, Roni and Oren started raising round C, and we just closed our second late-stage venture fund, Qumra II, I immediately started working on the deal, and in perfect timing, the deal was closed by year end.
I read a lot of “Why We Invested” posts, and although there is total consensus in the venture market that we invest primarily in people, the “Why We Invested” posts almost always focus on the business, and not the people. I felt I had to dedicate the beginning of the post to the real reason why we invested in Talkspace. Below please find a description of the tremendous business that Oren and Roni built…
Talkspace is a text-based therapy platform that’s now the global leader in online therapy by being affordable and accessible. Users are assigned a primary, fully licensed therapist and can message them confidentially at any time, from any PC or mobile device. The therapist gets back to them twice a day, 5 days a week, and for further help users can schedule a video call.
Talkspace has quickly gained popularity across the United States. Just recently, Olympic icon Michael Phelps and TalkSpace partnered to release a national TV ad campaign supporting therapy as a means to improve mental health.
Addressing a Broken Health Care System
Health care in the United States is generally regarded as flawed and inequitable. Costs are through the roof and the quality of services is below par. There are millions of people without access to health care, which also includes mental health services. The need for mental health treatment is clear. One in five adults in the U.S. lives with a mental illness. Untreated mental illnesses costs the nation more than $70 billion in lost productivity.
Traditional therapy averages at $125 an hour. Talkspace offers therapy subscriptions with fully licensed therapists starting at just $49 a week. All services are delivered directly via the online platform so you’re no longer tied to a specific time during the week or having to make office visits. Users can write to their therapist any time of day and they usually get back to them within a few minutes, and at the most a few hours. The average person has never had a professional support system that’s so accessible, and at this price point.
Next Steps: Expanding to Psychiatry & B2B Partnerships
Roni and Oren were smart to initially build Talkspace as a B2C offering. They were then able to build a word-of-mouth reputation and get the media attention that opened doors for them in the B2B market, but mostly, like in any marketplace, create the needed match of supply of Therapists, in parallel to creating the demand in form of patients. This was especially difficult, as Therapists are state regulated, which means that a Texas resident can only be treated by a Therapist regulated by the state of Texas.
Talkspace is now scaling dramatically. They are actively building partnerships with health care providers, and just signed with Magellan Health, a clear win in this area, cutting costs for providers who are struggling with inflated premiums, and enabling their subscribers to better utilize mental health services. They are also bringing TalkSpace to enterprises that see the clear benefit to supporting their teams’ mental health and by making those services easier to access.
TalkSpace will soon add Psychiatry to their services. With video conferencing, therapists can meet the appropriate examination legally required in most states to prescribe medication.
Disruptor Redefined: Expanding, Rather Than Replacing, The Market
Talkspace is the most recent of a long line of companies in Qumra’s portfolio that is transforming large, traditional markets in order to meet shifting consumer demands and harness new technologies, including Fiverr, Minute Media and Sweet Inn.
The company’s impact on the mental health is very similar to Uber’s on transportation in urban areas; it didn’t replace existing modes of transportation, it increased the market. Talkspace keeps finding new ways to widen the market and the demand keeps growing. At Qumra Capital we’re super excited to be supporting them as they aim to become a full-service provider for behavioral health.