Founder Story: Yoni Shtein, Co-Founder and CEO at Laguna

Leading With Values: Yoni Shtein on How to Innovate and Navigate in Healthcare

Thanks for sitting down with us Yoni. To start, please share with us your background. Are there any key aspects in your life that have inspired and shaped you?

To summarize my story, I was born in Kishinev, Moldova, and left when I was nine. I then spent several years in various places in the US before moving to Israel. The experience of moving around was really valuable and made a big impact on me because it taught me about different cultures and how to connect with others. As a builder, especially in healthcare, it’s our job to connect the dots, and people are a big part of that equation.

I love this question about inspiration because I’ve been inspired and influenced by different role models at different stages of my life. For example, my first big corporate job was with Microsoft, where I met my current co-founder Yael Peled Adam. We were both software engineers, and I admired her technical ability. We remained close and developed a lifelong partnership. Microsoft was my first big corporate job, and the corporate VP of Microsoft at the time was a really inspirational figure for me. He came from a former USSR background and was geeky like me, so he was someone I could easily relate to. He was also known as the guy who came back to Israel and really put it on the map in terms of tech. When I was accepted to Harvard Business School and MIT, he was the one I went to for advice on the decision.

Post-business school, I joined a startup that went public. I saw the founder and president of the company as a mentor and drew inspiration from his ability to build something so successful from the ground up. We decided to partner on our next venture and started a fund that was later acquired by a large private equity and credit fund called Fortress.

Fast forward to today, I’m here because of all the inspirational people who played a role in my life. I often like to say we have the privilege of building a company in healthcare, but it’s a very difficult privilege. Healthcare is not the easiest of industries, but it has the most meaningful mission and the impact from your endeavor can truly make a positive change.

It seems obvious, but the reality is that truly positive-driven founders are few and far between. Of course, people do things for different reasons and incentives, but the collective group of entrepreneurs that get up every day and do what they can to genuinely make the world a better place — they are my driving inspiration.

What motivated you to start Laguna?

Our founding story is intertwined with our personal journeys and definitely played a role in my family’s move back to Israel from San Francisco, where we spent about a decade of our lives.

In terms of Yael’s journey to Laguna, here you have this unbelievable Olympic athlete who broke her knees three times and had to endure three intensive surgeries. On my side, we lost my mother-in-law in Israel, post-hospital, completely unexpectedly. It was a devastating and massive shock for our family.

Yael and I had an existing friendship, but we also had a shared pain in that we were somewhat let down by the healthcare system. COVID hit in 2020 and we started thinking about the recovery and transition time post-sickness.

When looking into these post-acute transitions, we recognized that there are six million acute, planned and unplanned surgeries or admissions that take place in the states every year — a dramatic number. Most of the discussion in the post-acute space is about home health, long-term acute care and skilled nursing facilities.

Thankfully 90% of individuals who are 65 years old and younger go home, and that number is a little over 50% for those 65 years and older. They go home with instructions to an environment that is termed as “self-care”, which is a bit of a misnomer because it’s quite far from a self-care environment. In reality, as we’ve learned, it’s not really self-care because health insurance companies have huge departments of what’s known as care managers who are meant to help guide them. Usually, these are either nurses or social workers employed by the health insurance company, calling to follow up with you, because it’s in the economic best interest of the organization for individuals to be healthy, and because it’s their mission.

 

But what we’ve also found is that those care managers are stretched so thin, that in between the scripts, workflows, legacy plans, and forms, they have a really difficult time being empathetic, attentive, and effective in the interaction with the patient.

So that’s the problem we set out to solve.

How was your journey trying to solve it, especially with all the regulations that come along with healthcare?

Healthcare is a tough industry for many reasons, there are a lot of forces at play..

When you think about it, why do people buy innovation? Because they have to, it’s driven by competitive forces, and different industries are competitive in different ways. If you’re a software company thinking about buying cyber solutions, you’re in a very competitive space, and you have to take any advantage you can because if not, the other guy will eat your lunch, breakfast, dinner, and probably you. This isn’t the case in healthcare because the barriers to entry and innovation are typically incredibly high. This isn’t a get-there-quick industry, and rightfully so because real lives are on the line. When you combine that with profound regulatory moats it creates very different incentives.

If we look at the evolution of healthcare industry trends over the past few years, we find a lot of innovation in digital health was led by employers in a pre-COVID environment. , The race to acquire and retain employees was led by the benefit function. Then you had a crescendo of M&A activity during COVID, companies were rapidly growing and consolidating, but that time is behind us.

I say this to say that during our evolution, there have been meaningful inflection points for the problem we’re solving and so we adapted to the ever-changing industry.

We started with solving post-acute transitions to the home. What we originally built is called a tech-enabled service in the healthcare industry. We had amazing clinicians delivering care and utilizing our technology to do it. We’ve done multiple randomized clinical trials demonstrating exceptional outcomes, high engagement, high satisfaction, and high results measured by 35% readmission reductions and close to 50% reduction in cost, which is truly unbelievable.

But then we learned that healthcare companies are not happy to delegate their patient member population to an outside vendor to deliver the service. So we thought it would help to remove our people from the equation and just give them all the technology for their care managers to use.

Then, we learned that the replacement cycle for such a big piece of technology in healthcare is a a problem, especially with the pace of growth we intended. So we kept adapting, chiseling, and growing until we made it to the promised land — product market fit.

Let’s talk about AI and NLP. How are they changing healthcare? Where do you see the future headed?

AI is a huge category with a lot of surrounding excitement, fluff, and some proven pockets of pragmatic value. Right now conversational AI is taking us to amazing places, and AI itself has been around for about 70 years within the healthcare industry.

It really started around five years back with machine vision for radiology, and there have been amazing companies taking the early steps in that space. AI has evolved dramatically over the last several years from that starting point, with the NLP and specifically conversational AI being the predominantly growing functional areas.

Other industries have already widely adopted NLP and conversational AI, and now it’s finally getting to healthcare. At the moment, it’s being used predominantly for automating note-taking, and specifically in our case, also for intervention suggestions.

Recall the last interaction you had with a clinician, and think about what percent of the meeting they held eye contact versus them typing notes.I can guarantee that’s not what they had in mind when they chose their profession. They wanted to help people like us. Nor is this what we want as the patient. We want to be helped and have an empathetic, effective relationship.That’s why automating note-taking has such a big impact, it helps foster a relationship and also solves for efficiency at the same time.

Most AI companies are focused on the provider, clinical health system, and hospitals because the cost-benefit math is quite easy. We differentiate from that materially by focusing on selling to payers, health plans and care management companies. We find this to be a really interesting space because you have to deliver the same efficiency value, and you have to go even further. You also have to help them be more effective in their operations and prove you’re driving outcome improvements to the members.

In terms of where AI is taking us in the future, I’m biased but I believe conversational AI is massive and while it may be a fad, it’s also not going anywhere. Consider the fact that the majority of communication between patients and the healthcare industry (insurance companies, clinicians, etc.) is done verbally..

The amount of note-taking and critical information required to not only record, but also digest, is massive. We’re still in early innings of AI, and you’re seeing tech behemoths like Microsoft partnering with AI companies like OpenAI and New Ones partnering with Epic, the largest EHR company in the space.I The potential is massive, not just to dramatically increase efficiency and effectiveness, but more importantly the humanity of healthcare. Many of the processes, workflows, and systems built to date have eroded the humanity out of a very human and empathetic industry.

I think AI will help remove some of the noise and friction to refocus us on the human core.

Speaking of humans, can you share more about the values you have at Laguna, and how they play a role in shaping your employees/culture?

Our practice values come down to:

1. Care deeply — Care about the company, the members, the employees, and the industry. The beauty of values is that once you’re able to distill them, it’s a great tool to help you sift through the noise. We’ve been able to build an incredible team by knowing if they are a personal fit.
2. Love to learn — We’re constantly learning and growing, refining the art. It’s incredible at the individual level, even better jointly.
3. Enjoy more together — Ego can really get in the way. The ideal thing to do here is yes, let the opinions battle out, but allow yourself to loosen the ego. When you do, incredible things can happen with collaboration.

Are there any healthy routines or habits you learned while building Laguna, that you can recommend to entrepreneurs looking to lead healthy lives?

Sleep and exercise. Being an entrepreneur is an incredibly, incredibly intense ultra marathon.

I’m a runner, and I love running, but you have to find balance. I discovered this in 2023, when we raised our series A and I was going my 100%, which is a lot. Unlike other experiences in my life where someone is there to stop you when you go overboard, no one stops you here.

It’s you, your competitive juices, and your anxiety, or whatever motivates you.

At the end of the day you have 168 hours in a week. You can stretch it a lot, but it’s not a sprint. People have different limits, the key is to figure out what your limits are.

Figure out how to sprint when you need to sprint, but also how to recharge within the crazy, amazing, difficult journey that is entrepreneurship.
To manage all of that, what I find that works well for me is exercise and sleep. You may not be able to getI sleep eight hours straight every night, but you can get creative. If you only had four hours of sleep, make it up later.Same with exercise, it doesn’t have to be very regimented, but creatively prioritize it because it will energize you in this ultra-marathon.

We have several balls to juggle which we can do, but it requires intentional creativity.

What advice would you give to founders in healthcare?

Know the difference between spoken priorities and practiced priorities, and how to implement them together.

Healthcare is a tricky industry. We keep talking about how mission-oriented it is, but at the end of the day, it’s also a business. This duality can complicate things for healthcare founders because your priority is not necessarily what you need to do.

Organizations may say they care about patient safety, member satisfaction, world peace, you name it. But at the end of the day, what they buy is what aligns with their ongoing business priorities and necessities. This sounds like a subtle point, but it’s a huge one for us builders because what that means is you don’t want to be a complete cynic and only focus on the practiced priorities. Yet, you also don’t want to go into it completely naively and focus only on trying to make the world a better place.

You need to do both. You have to cater to the spoken priorities, because it’s the right and smart thing to do, while at the same time, selling, proving, and building to the practiced priorities, because if you’re not building — you’re out of business.