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Q&A: Concur co-founders on their new venture, and the transformation of Seattle’s startup scene

Q&A: Concur co-founders on their new venture, and the transformation of Seattle’s startup scene

Raj Singh (left) and Mike Hilton (right), co-founders of Concur and now leaders at healthcare tech startup Accolade. (GeekWire Photo / Todd Bishop)

When Raj Singh and Mike Hilton co-founded Concur with Steve Singh more than two decades ago, the technology startup scene in Seattle was quite different than it is today. The web was in its infancy. And Seattle wasn’t really on the map as a tech city yet.

“It was a different world,” Hilton recalled. “For one, there was no venture capital in Seattle really to speak of. There was one or two firms, and tech was just hieroglyphics (to them). So the only place to go was Silicon Valley.”

It’s a new era now. Singh and Hilton left Concur after enterprise technology giant SAP travel and expense management company German software company SAP for $ 8.3 billion in 2014. And just over a year ago, they embarked on another startup journey: taking the helm of healthcare tech startup Accolade.

Speaking on the GeekWire podcast, Hilton and Singh said that their journey back into the startup world has been eye-opening.

“It was like a breath of fresh air. I look at where we are today compared to where when we started Concur in 1993, there really wasn’t a tech community — if you didn’t work at Microsoft — to speak of in Seattle,” Hilton said.

Now, Seattle has investment resources, tech-savvy venture capitalists, startup incubators, a strong entrepreneurial program at the University of Washington, and a thriving startup ecosystem and community.

“I am so encouraged and excited about where the Seattle tech scene is,” he said.

Raj Singh echoed those sentiments, and added that Seattle is a tech hub in its own right.

“Let’s remove the chip on our shoulder about San Francisco. We don’t have to be San Francisco,” he said. “There are things about [Seattle], whether it’s the tech community, whether it’s the environment, whether it’s the cost of living, whether it’s the politics, that are spectacular … that are better in this city than they are anywhere else.”

In fact, Seattleites are starting to see San Francisco less as a talented older sibling and more as a warning of how growth can get out-of-hand.

“My concerns would lean towards: how do we have smart plans when it comes to development, and are we growing smartly? I think growing is a great problem to have, and growth-related problems are the problems you want,” Hilton said.

While the community grapples with these challenges, Hilton and Singh say they are happy to be back in the grind of startup life, and are excited to continue embracing Seattle’s startup community.

Listen to the podcast of our full conversation with Singh and Hilton above, and keep reading for an edited transcript. 

Concur Raj Singh and Mike Hilton - Startupday 2015
GeekWire’s John Cook with Raj Singh and Mike Hilton at GeekWire Startup Day in 2015. (GeekWire File Photo)

John Cook: You joined up with Accolade just about 14 months ago. Tell us about what that’s been like in terms of the journey going from a big company in Concur back to the startup ranks here. Although it’s a startup with 800 people, so a little bit of a different twist.

Raj Singh: That’s right, it is a different twist. Why don’t you take it, Mike?

Mike Hilton: Yeah, first of all it’s been a great journey: the 14 months for me — incredibly satisfying. I’m having more fun than I’ve had in a long time. Obviously, when we left Concur, it was a billion-dollar company, and it’s continued to grow and do well. To go back to a much smaller environment is an adjustment. A lot of friends who questioning, I think, both of our sanity for wanting to go back and roll up our sleeves and get to work. But Raj and I took nine months off after we left Concur and explored a lot of options, and we really settled on Accolade very purposefully, I think. We’re very inspired by the mission. We wanted to go and build something again. I think we’re fundamentally entrepreneurs and builders at heart. I know I am. I think that’s playing out. It’s a joy to come to work every day. It’s really fun being closer to things again, getting hands dirty, so for me it’s been a great experience.

Singh: I would only add, to your point John, that it is a different thing. We went through every stage of growth at Concur, from zero to coming up on the end about 5,000 employees. You think you remember what the early days are like. I think even Mike would attest that the first six months was a brand new learning experience to remember what the maturity level of a company is with 700 employees. And so there was an adjustment period, absolutely certain an adjustment period.

But to Mike’s point, we were really most focused on this idea that health care is a place in the United States where you could have a really positive impact and build a great business. That sustained us through that first six months of adjustment period, and now we’re having a good time. Now it’s all ours.

Cook: I think it would be hard to step into a 700-person company because they have their own culture, they have their own style set up, and here you are these West Coast Seattleites jumping into the mix. Did that cause any tension at all during the process?

Singh: Certainly there was an adjustment period for everybody involved. When we came in, you’re exactly right — this was a company based in Philadelphia and here we are in Seattle, and Philly and Seattle are two different towns for sure, and two different vibes. But we spent a lot of time digging in with Accolade before we joined. The mission of the company is so centrally — ultimately, what do we do? We help people navigate through the healthcare system to get the best possible care for them and their families. And the people who are attracted to that company, whether they’re in Philly or whether they’re in Seattle, have some things in common. Meaning, they’re mission-based people who want to build something great but want to do it while doing something great, which we sort of bridge the divide between the two cities

Todd Bishop: For people who may not have followed this, the background here is that you led and built Concur from the ground up into a travel and expense management technology giant, and it was sold to SAP for $ 8.3 billion, so obviously one of the most successful exits of a startup out of Seattle in a long time. I can’t imagine — can you think of any that were bigger, John?

Cook: No, that’s one of the biggest on record certainly, and a testament to these guys. They’ll even tell the story, I’m sure, of — it wasn’t always easy for them because there were times when Concur was trading in the pennies, right?

Hilton: 28 cents, or whatever it was.

Cook: 28 cents, yes.

Singh: Not that we remember that.

Cook: There were investors out there that missed the mark on that. There was a buying opportunity at one point.

Hilton: We had an $ 8 million market cap at our lowest and we had many times that in the bank in cash for those of us that were around—

Cook: People had given up in other words.

Hilton: A lot of people who don’t know the whole story of Concur don’t remember. We were given up for dead, and it wasn’t always up and to the right. There’s a lot of great stories there. But absolutely, it was a 22-year ride for us and not always up and to the right.

Cook: In that instance, with Concur, you were trying to transform and disrupt how travel expense forms were processed and essentially moved into the cloud and people could work with their expense management forms. Now you’re trying to do something similar with health care. Both are kind of complex, bureaucratic industries. What are the lessons from Concur that you’ve transferred over to Accolade?

Singh: The first and foremost is that the consumer of health care and the consumer of travel, especially when you’re talking on the business travel side, have to be at the center of how you try to solve the problem. In the business travel world, oftentimes it was more focused — the other constituencies in that ecosystem — oftentimes were more focused on cost or more focused on compliance than they were on the consumer. I think what Concur brought to the table was saying were going to be obsessed with the consumer and doing the right thing by the consumer.

The healthcare industry needs some obsession with the consumer, and the motives are not aligned, the incentives are not aligned to create that obsession. Meaning, the people who are paying for healthcare are not the same people who are receiving it. The people who are delivering health care are getting paid by different people than the ones who receive it. All of that lack of alignment needs to be solved.

Bishop: In a nutshell, what are you trying to do at Accolade to solve that?

Hilton: Accolade was really founded — and we’re continuing to push forward — on the idea that, in a world of consumer-centered health care, you’ve really got to focus on the consumer experience. There’s this belief that if you can do the right thing for the consumer, when you answer their questions, when you help them navigate to the right care, get them to the right spot the first time, you’re not only going to create a delighted consumer — you’re going to improve their health because they’re going to get the right care the first time.

There’s a lot of studies that show that of the $ 3 trillion that get spent every year on health care in the US, about a trillion of that is wasted because people just don’t know what to do. They make the wrong choices. If you can get them to the right care the first time, you’re going to make them healthier, but you’re actually going to save money on healthcare cost. It’s what they call the triple aim in health care: happier consumers, better health, and cheaper costs.

That’s what we’re aiming to do, very much focused first and foremost on the consumer experience. So as a product person — back to the question of thinking about the analogies to Concur — all industries are moving to the cloud. That’s a huge component here. Health care is absolutely ripe to go move to the cloud. It’s becoming more about ecosystem connectivity, and healthcare is a lot like business travel in that it’s an incredibly complex ecosystem, in fact, much more complex and in many ways much more antiquated and much more ripe for reinvention. Lastly, you need to have digital consumer experiences to go augment the offline experiences. That’s a huge component of health care as well. Most of you would probably agree, there are not great mobile experiences when you think of health care. Simple questions, we’re incredibly focused on all of those things.

Bishop: Who’s your customer?

Singh: That’s maybe the most interesting part of the story. The people who pay for health care right now, your employers — so if you’re a decent size employer, say you have 2,500 or 3,000 people in the United States, you pay for health care for your employees. You might contract with a health plan to do the transactional bill paying, or for their network so that you can use their doctors and their negotiated rates, but the dollars come right out of your bank account. So we sell to self-insured employers who are covering the cost of insurance for their people, or we’ll sell to health plans and health systems. The world’s changing a lot in health care, and it’s going to change even more as we have a new administration in place, but health plans, when you’re working at a smaller business, oftentimes those health plans take the risk on your coverage. So we sell to self-insured employers and to plans. What they do is they provide our service which is really a navigation service for their employees which is built off of people, like incredible people who help people navigate through the healthcare system as well as … Those people are surrounded by clinicians, doctors, nurses, claims specialists, pharmacists. All of that is tied out to a whole set of technology tools that Mike referenced before: mobile applications, analytics capabilities, and really importantly a machine learning capability that says when we watch a how a diabetic progresses through the system, the next time someone who comes in with attributes like that diabetic, we can be smarter and smarter about the care we give them.

So we sell to self-insured employers and to plans. What they do is they provide our service, which is really a navigation service for their employees which is built off of people, like incredible people who help people navigate through the healthcare system. As well as, those people are surrounded by clinicians, doctors, nurses, claims specialists, pharmacists. And all of that is tied out to a whole set of technology tools that Mike referenced before: mobile applications, analytics capabilities, and really importantly a machine learning capability that says when we watch a how a diabetic progresses through the system, the next time someone who comes in with attributes like that diabetic, we can be smarter and smarter about the care we give them.

Cook: Isn’t this frustrating for you guys as technologists, trying to dive into health care? Because this has been talked about for a long, long time. Everyone has talked about how health care needs to be disrupted, but it seems like it just stays a morass. How do you navigate that as technologists that want to make immediate change?

Hilton: Yeah, it’s a great question. There’s a lot of ways to look at it. I’ve had people tell me ‘you’re an idiot for trying to solve health care,’ because there’s a lot of scorched earth behind you. And there’s been a lot of money thrown at trying to solve health care. Go back to the early days of the internet, just a long list of people who have tried to tackle the problem. Because the argument will be you’re staring at a lot of big, giant corporations, pharmaceuticals or health plans or giant provider networks, and it’s very difficult to affect change. You can either see that as a challenge or as an opportunity. We’re obviously the kinds of people — and had to deal with that in the business travel world with Concur — I see tremendous opportunity.

And the world is changing. It’s a really important thing that’s different today than even five or 10 years ago. Five years ago, there was about a billion dollars a year being invested in health care by venture. Today, that number, — 2016, I think it was about $ 6 billion, roughly that number. So you’ve seen this dramatic spike in venture private equity-type investment in health care. It’s the number one sector that that kind of money is going into now. That’s going to eventually lead to innovation and change and disruption. It’s one of those industries that’s just ripe for reinvention. And I think that we are finally at a place where a combination of the investment, the technology advancements, as well as just economically health care has to do something different. The conditions are pretty ripe for change. We see us as being in a great spot because the consumer is really becoming the center of the problem, and we’re focused on a solution that’s very much about the consumer experience.

Singh: To add to that, I would say, here’s what we know. We spend more on health care in this country than in other country in the world, per person. We spend about $ 10,000 per person. In the developed world, countries that are getting better outcomes than we get here in the United States are spending $ 4,000, $ 4,500, $ 5,000 per person. Health care is 19% of the US GDP. One out of every five dollars spent in this country is spend on health care. It’s staggering. You’re talking about a $ 3 trillion space — that grows. If you look over the last 10 years, the growth rate is somewhere on average between 5% and 7% depending on whose numbers you look at.

Here’s one thing we know for a fact: health care can never be 100% of GDP. It can’t keep growing this fast. We have to figure out a way to control it. The government has taken a stab at trying to control it, via things like the Affordable Care Act. This administration will take another stab at public policy changes that are trying to control healthcare costs. But we know for a fact that costs can’t continue to go up at this click. It’s just not sustainable. Specifically, it’s not sustainable for US employers who are saying, “I have to compete on a global market and I pay twice as much for health care as everybody else that’s doing business outside the United States.”

Now the challenging part of the story is that health care is, people talk about it as a $ 3 trillion space like I just did, but really it’s about 3,000 $ 100 million space or a $ 10 million spaces, because it’s regional. Your coverage and your care is often very regionally focused. We’ve got 14 major health systems here in the Seattle area. Then on top of that, it’s broken out by the category of care you get. I mean this is how complex the system is. You’ve got Medicare for people who are over 65. You have Medicaid for people who are economically disadvantaged. You’ve got self-insured employers. You’ve got the Veterans Administration. Every one of those systems is different, has a different set of problems, and has a different set of needs for the consumers.

That’s the complexity that really — when it stops people in their tracks, it’s because you might be used to in the old world, or maybe in our old world, for Mike and I building software solutions, you think, “I build it once, and I solve the problem for everybody.” Here, that 65-year-old or that 70-year-old Medicare consumer is a hell of a lot different than the 25-year-old who’s working at Google. Their needs are different, their care coordination and management is different, and you’ve got to think about your solutions in that kind of context. That’s where it’s super complicated.

Cook: I was just to say, I was going to make the point, it’s like developing for different operating systems. Whether you’re developing for iOS or Android, well, maybe not Windows phone anymore but similar. That’s what struck me as you were providing that example.

Singh: For Mike at our company here, every technology dollar we spend has to be massively leveraged so that it can apply across the different market segments that we’re serving. I would say, and you tell me if you agree with this Mike, we have to be way smarter about the spend because it’s way more complicated and the space is way more fragmented.

Hilton: Yeah, I would agree 100 percent. And we have an interesting service that is a combination of humans and technology. Health care, it’s different from a lot of other things. One, it’s really emotional. Your health, your family’s health, there’s nothing more personal than that. I equate it to buying a house times a hundred. You think of big financial decisions, those are emotional, and that’s why real estate agents still exist. You want help. You need advice. You need guidance.

Health care is like that times a million. Your kid’s sick, your spouse is sick, there’s nothing that gets you more emotional that can lead to bad decisions, can lead to stress, and you’re not generally in a good mode. Then it’s compounded by the fact that you have an ecosystem that’s so complicated. It’s just hard to understand, even when you’re in a good state of mind. So we have a huge human component to what we do. It’s essential, and we’re augmenting that with technology. So the 25-year-old Google engineer can be texting through our mobile app for advice or self-serving things that they need. Whereas that Medicare patient is going to want to talk to somebody. Asking them to use a mobile app is not going to work. They’re going to need a different kind of conversation, different kind of care. So I would agree with the point that our dollars have to bring those together for maximum leverage.

Bishop: Let’s talk about the elephant in the room. The Affordable Care Act is going to be repealed, apparently, and replaced in some form. It’s unclear what it’s going to do. Do you have thoughts on what should be changed based on your last 14 months or so?

Singh: It appears that that’s true. The Affordable Care Act will repealed. But I would say this, if you had asked me that same question the day after the inauguration, I wouldn’t have said exactly that. But it appears at this point, based on the behavior of the administration, that that’s what’s going to happen. And they’re not entirely crisp today on what their replace strategy is going to be, which means here’s really what’s going to happen right now. We think for sure they’re going to try to retain some components of the ACA that people like. You can still cover your kids under 26 years old on your policy. If you have a preexisting condition, you can’t be denied access to care.

On the flip side of that, things like the individual mandate, which was the requirement that everyone in the country buy insurance for themselves — which ultimately was how the country was paying for coverage for those who couldn’t afford it or who were sick and had preexisting conditions — the individual mandate appears to be going away. It also appears that a lot of the taxes that funded Obamacare will go away. There are some really hard things to manage next that the Republican administration and Congress are going to have to figure out how to deal with. If you’re not going to ban preexisting conditions, if you’re going to keep kids on coverage, that means you’re going to still have some very sick people who have access to care. Somebody has to pay for them.

Bishop: And if you take the mandate away?

Singh: If you take the mandate away, there’s only a couple of things you can do. Paul Ryan’s plan speaks to the idea that they want to create what’s called high-risk pools. Those pools are for the sickest of the sick, and that the government, in some way, shape, or form, piles out a bunch of money to go pay for those people. Those haven’t traditionally worked. This is an idea that has been tried in the United States in the past and hasn’t traditionally worked. This administration today is saying that they’re going to dump way more money into those high-risk pools than they have ever before. If that’s true, we’ll see. It’s never been tried with $ 25 billion available to a high-risk pool, so we’ll see. Today, I would say there’s a lot of uncertainty about what’s going to happen, and it’s a little scary.

The last point, because I’m rambling on — the one thing that really did happen with the Affordable Care Act that I think we should acknowledge is that the debate has now shifted from should people have coverage to the fact that, yes, you should have coverage, how should you get coverage? That’s a beautiful thing, number one. Number two, there are elements to the Affordable Care Act that had nothing to do with getting people coverage. They had to do with shifting the conversation in our country away from what’s called fee-for-service — which is perform the operation, get paid a certain amount — to fee-for-value. Are you delivering value to the consumer? Are you improving their lives? That fee-for-value conversation has now been embraced by the private sector. That, which I think got a huge boost from the Affordable Care Act, is a trend that won’t go away even if they repeal the Affordable Care.

Hilton: Great points. The only things I would add, first I find it fascinating how much public support there is for the Affordable Care Act and how much resistance there is to repealing it. The support for some of those core tenets that Raj spoke to speaks to the fact that regardless of where go from here, there’s some really important tenets that have been put in place that the American people want to keep. Preexisting condition is a huge one. I think that’s a good thing. That’s nothing but a good thing.

But when I step away from the broader trends and think about product and what I have to build, I think that there’s trends that are going to continue in terms of the impact to all of us as consumers. Deductibles are going to continue to go up. There’s a broad theme, which is that responsibility is getting pushed down to each of us. My parents never had to worry about health care the way that I do, in terms of which doctor should I go to? Which care should I select for which situations I’m in? Because it’s increasingly my dollars at stake. I just think that puts a tremendous burden on being educated, knowing how to navigate the healthcare system which traditionally has been extraordinarily difficult, and just giving me some guidance, help me. So you have this interesting industry where traditionally the consumer experience has not been good, not easy to navigate, not easy to understand, and we’re being forced as consumers to have to deal with that.

That’s kind of at the center of what Accolade is about. We’re trying to create a very delightful experience on top of this really hard problem. I think regardless of where the Affordable Care Act goes, there’s these broad trends — that’s going to do nothing but increase. That consumer focus and consumer responsibility is the constant theme that I think is here to stay for us as Americans.

Singh: That’s so important when you think about, if you’re making $ 70,000 a year and your deductible keeps going up and now your deductible is $ 4,000, your healthcare decisions are mission, mission critical. Meaning, you’re making some choices on different days as you eat into that deductible between rent, groceries, car, and health care. So the capacity to understand — those deductibles going up has effectively shifted the decision to the consumer. When they make mistakes, they can be really catastrophic to their lifestyle and to their lives. That’s a new thing that’s happened in this country over the last 10 years and is maybe even more pronounced given some of the policy shifts that we might see.

Cook: How do you think the new administration might impact your business?

Hilton: Well, I think this last conversation is very related to a lot of that. I think, as Raj spoke, exactly what the replace part of repeal and replace is is still a bit uncertain. We happen to have some great board members at Accolade and experts that we get to draw from. We’re very connected to what’s going on in Washington. And I think there’s still a lot of questions that are being answered. There’s not consensus on some core questions to exactly where health care will be going.

Again, I would say, I think in terms of the impact to Accolade, I don’t think the very broad trend of consumers being asked to do more themselves, being asked to take on more responsibility for the choices they make in health care — that’s the broad trend that no matter what happens, I think we have a lot of confidence that that’s here to stay.

Again, I do think that that’s at the center of what Accolade is about is we provide someone who’s on your side. We provide tools that make it delightful for you to figure out what my benefits are, what my deductibles are, helping you find a doctor, answering that question about the bill. “I got denied a claim. I have no idea what happened.” Those are the everyday problems that we solve, and those problems are not going away.

Singh: Yeah, John, I would say it’s unlike to have a really material impact in terms of their healthcare policy. Immigration policy, different story. But healthcare policy is unlikely to really have a material impact because our customer is really the private sector.

Cook: I do want to talk to you about immigration.

Singh: That’s a shocker!

Cook: Obviously, this has been a hot button issue here in the last several days. Raj, a lot people might know you were born in the US, but your parents were both immigrants from India.

Singh: And my brother and sister were both born in India.

Cook: And your brother and your sister, Steve Singh, who’s still at Concur SAP and leading the ship there.

Singh: Yeah, he’s doing OK for himself over there.

Cook: Yeah, I’m sure. How has this last few days struck you as a child of immigrants and with a brother and sister who were born in a foreign country?

Concur CEO Steve Singh speaking with GeekWire’s Todd Bishop during the 2015 GeekWire Summit. (GeekWire Photo)

Singh: I would say, you’re right. Because I’m the child of immigrants and my brother and sister were both born outside the country, maybe it has a specific painful, emotional impact on me. But I think — here’s the beautiful news about this country — I think it had a painful, negative impact on a lot of people who aren’t immigrants or who were immigrants three or four or five generations ago.

I’m going to digress, and then I’m going to answer your question. One of the most beautiful things that happened this weekend is I looked online and I saw people going to JFK and LAX and SeaTac. No one wants to go the airport but to go to protest for people that weren’t you, it was just like a beautiful, emotional reminder of how great this country can be. It was awesome.

Now, let me answer your question. This policy fundamentally, in my mind, attacks what’s beautiful and great about this country. In fact, Mike and I both spoke out pretty vocally this weekend about what we think, which is this is bad business. It’s bad morally. It’s bad ethically. It’s bad politics. It’s bad everything. By the way, there’s a whole bunch of national policy security experts who will tell you it’s not going to make us safer either, and so this is bad all the way around.

For me personally, and I mentioned this to you before we walked in here, John, we have an iOS developer who is on a green card —a lready gone through the process of getting a green card — who was in Baghdad last week and was trying to get back in the country this weekend. He got through. With some delays, he got through. But the idea that that young man has to go through some sort of crazy additional scrutiny to get back into the country after all he’s already gone through to get here is absurd.

So how do I feel about it? It was emotionally painful for me, but more importantly I think it was a good moment for all of us to remember, hey, we’ve got to stand up and talk about this stuff. Because if we don’t, it doesn’t matter how good our business is, we’re deteriorating what makes the place great.

Cook: I don’t think it was you, I think I’ve heard Steve, your brother, talk about your father and how he would tune into the Concur earnings calls. And that was his entertainment, would be listening in on Concur earnings calls. A couple questions there: first off, what has he said? Have you been able to talk to him about what’s transpired here on the immigration ban?

Singh: Oh, we traded emails on this. My dad would— this is even not about the seven banned countries, because India’s not one of those seven banned countries, but if you look at the trajectory on immigration in this country — if you read Satya’s statement from Microsoft, if you read the CEO of Google’s statements, every single one of these guys is saying the same thing: our industry is fueled by the most brilliant brains around the planet, and they don’t all necessarily come from the United States. They come from all over the world. So our capacity to maintain a leadership level of innovation is required to be able to access the most brilliant brains in the world. I did have a chance to email with my father this weekend. His reaction, as you might expect from a first generation immigrant, was, “hey, make sure and speak. Say what’s on your mind because people need to hear.”

Bishop: I’ll point out those executives, the CEOs that you just mentioned are both immigrants themselves.

Singh: Immigrants.

Bishop: Then you have Dara Khosrowshahi, the CEO of Expedia.

Singh: From Iran.

Bishop: Right.

Singh: From Iran, one of the seven banned nations.

Bishop: That’s right.

Singh: We’re probably better off with Dara, don’t you think?

Bishop: Yes, yes.

Singh: I think so, too.

Expedia CEO Dara Khosrowshahi speaking at the 2016 GeekWire Summit. (GeekWire Photo / Dan DeLong)

Bishop: Mike, any thoughts on this?

Hilton: I couldn’t agree more. I’m one of the people Raj referred to — most of my family is several generations immigrated. I have relatives back the 1700s from the US, so I’m kind of on the other side mostly, American mutt, like many of us from way back. But I think to Raj’s point, this isn’t about just immigrants. It’s about all of us. I think it’s a fundamental right for all Americans that’s under threat here. So I couldn’t agree more with this idea that it’s incumbent upon every American to speak up.

As Raj said, it hit home personally for us. Having someone in our Accolade family that was impacted and spending the weekend not just watching the news but effectively having to deal close to home, it really puts it in perspective. This isn’t some hypothetical problem. It’s a real problem. I’m very committed to my opposition to this and to making sure that we get it right.

Cook: You’ve seen the tech industry really speaking out quite vocally about this. I’m curious, the industry you’re in — health care — I’ve haven’t seen as much energy going towards this. Why do you think other industries aren’t stepping up here, and what can you do maybe to get leaders from other businesses and other business segments to join in?

Singh: I think there’s a false narrative out there, John, that says it’s bad for business to talk about politics. I think that’s generally true. I mean Mike and I have been in this neighborhood for 22, 23 years. The number of times we’ve vocally talked about politics as it relates to business is probably zero. But there are moments where I think you have to think bigger than your business.

I think in the healthcare sector right now, I think there’s a bunch of CEOs —and I think some probably have spoken out and we haven’t read about them — but there are a bunch of CEOs saying, “well, I’m not sure what’s going to happen with the Affordable Care Act. I’m not sure what’s going to happen with prescription medication and their prices. I’m not sure what’s going to happen around regulation associated with shared risk. There’s a bunch of things, and I’m not sure what’s going to happen, and I don’t want to make anybody mad right now.” I think, though, what was nice about watching Satya and others come out and speak was that sometimes you just got to come out and say what’s on your mind because it’s the right thing to do. So more people will. More people will.

Hilton: Just thinking back, same sex marriage in Washington State was one of the times at Concur where we were vocal and spoke up and took a stand. I think to Raj’s point, there are certain issues that cross the threshold that require speaking out. This, without question, is one of them.

Cook: Raj, I mentioned your father joining those Concur earnings calls back in the day.

Singh: That’s a true story.

Cook: And he was giving advice and feedback on the way you should be running this company and this business. Has he provided any advice or feedback as it relates to the healthcare business, and what have you taken from him?

Singh: Mike mentioned that there was a bunch of people who told us how crazy starting over again was. He was a guy, notably — and my mom, by the way — on the other side of that equation. And he was a guy I sought out for sure, and Mike probably sought it out as well, and his advice was very much, “it’s time to follow your heart. Do what you think is right.”

Here’s the good news about that, John, I think when we started Concur, we followed our heart. Here, we thought, “Hey, you know, maybe we know a little bit more 22 years later, or maybe we’re a little bit smarter, and if we’re a little bit smarter, maybe we can tackle something even crazier and harder and one that a lot of people have gone up the hill and fallen back down the hill on.” But it was a little scary. It was certainly scary. He was a nice steel in my spine when I was a little scared and thought, “you know, it’d probably be easier to go do something else,” to say, “why would you go do something easy? Easy’s not what you’re searching for.” Which, I think, is, by the way, pretty good advice.

Cook: So 14 months in, what’s the biggest thing you’ve learned about the healthcare business?

Singh: This is definitely not easy.

Hilton: Here’s the answer I’d give, John. A big part of choosing this particular company and industry for me was the mission. Again, we all have health stories: us, our families, our friends. Health affects us all. It’s a huge problem. It’s really messed up in the US. I have been more inspired by the mission part of Accolade than I even expected I would be. To be at a company that actually saves lives — every week there’s stories where we’re saving lives, it’s a pretty special company. At Concur, we made business trips easier, which is awesome and I’m so proud that we did that for hundreds of millions of people.

But saving lives is another level. The fundamental impact we can have on a family, it’s really inspiring, far more so than I even thought it would be. The other corollary to that is I think being inside of a company of like-minded people who are equally inspired by that who came to this company very deliberately — I work with a lot of people who could probably be doing a lot bigger things and making more money in terms of that being bigger — but deliberately chose to work here. It just creates a really special space. I think health care is really special in that way.

Singh: When we first sat down and talked with the two of you, we were probably just getting started in Seattle for Accolade. Soo it was February, March maybe I think. We were five guys in the office. We expected to be about 50 by the end of ’16. We’re about 70 right now. We’re staffing faster than we thought we would, which is hard to do in this market, and a lot of that is mission.

Bishop: This is the Seattle region specifically?

Singh: This is the Seattle office, exactly right. We’re just on 7th and Pike. We’re 70 people strong now, and we’ll be at 100 in the not too distant future.

Bishop: Is the corporate headquarters technically both places?

Singh: It really is. It’s in both places. It’s actually fantastic. Meaning, what you have in Philadelphia is you’ve got Penn. You’ve got Temple. You’ve got Drexel. You’ve got some unbelievable colleges in town. Here in town, of course, you’ve got unbelievable world-class talent. I think when we first got to Philadelphia and we said, “hey, we’re going to open up another headquarters in Seattle, don’t worry; it’s going to be fine,” people in Philadelphia were a little, “Aaah, I don’t know about you Seattle guys.” But we’ve grown the Philadelphia office, and we’ve grown the Seattle office.

I’d say the short answer to how you overcome those sorts of issues, one, it takes time. People — they’ve got to hear your words and then watch you execute on your words. Two is you define your culture. You define your values. You define your mission. You say, “this is what we believe in, and we’re going to behave this way, no matter if you’re in the Seattle office or in the Scottsdale office or in the Philadelphia office.” By the way, we opened another office in Prague as well. What we’re seeking are the most brilliant people in the world who can come help us solve this stupid, hard problem. Because all of those offices are growing now, people are through any concern of where the nexus of power is. The nexus of power is people who are kicking ass.

Bishop: Mike and Raj, you probably don’t know this, I had my first newspaper job in Philadelphia, so I’m a little familiar with the media market there. Talk about the difference — I’m sure you’ve been interviewed by reporters there. John George, I’m sure, has probably been knocking on your door.

Singh: Sure, yeah.

Bishop: How do the reporters compare? Who’s tougher?

Singh: Reporters everywhere are kind of tough guys. They’re kind of tough. I think that in the Philly market—

Bishop: Come on, answer the question, Raj!

Singh: Have you ever been to a football game in Philadelphia?

Bishop: I have. I’ve dodged batteries being thrown from the stands.

Singh: I would say that the Philadelphia, New Jersey, greater New York area has a greater tendency to get to the point really fast. They’re not all that concerned with the backstory. They want to know what you’re doing right now. And t’s not as tech-focused. It’s way more focused on the business angle or the healthcare angle. It’s a huge healthcare market.

Bishop: It is.

Singh: Here, people want to talk more about tech, and they are a little bit more interested in the backstory because we’re Seattleites.

Cook: You’re kind of the size here at 800 — I don’t know if you’ve disclosed revenues or not— but 800 employees, I would think there’s a significant amount of revenue behind the business, and it seems to be growing. Have you considered or talked about taking the company public? Is that in the cards for Accolade?

Singh: Get ready for my filibuster here.

Cook: I wanted to do a tougher Philly question here.

Bishop: Here’s the Philly question: “hey, when are you going public?”

Singh: Yeah, there it is. We’re totally focused on building something great and enduring here. We just raised a round of capital in June — I think June, July, somewhere around there, we raised some capital. We’re in good shape as it relates to capital. Here’s what we’re super focused on. We’re finding great traction in the employer market, and we’re finding great traction in the health plan market. If we’re continuing to grow at the clip we’re growing, then there is a next step for us. Whether that’s a public offering or whether that’s raising more capital, we’re not 100% certain, John. The mission of the company isn’t to go public or anything like that. The mission of the company is to keep growing.

Hilton: It’s the beauty of your last gig being 22 years long, you can have some credibility when you say, “I’m not in it for the short-term.”

Cook: You’re not going to flip this one.

Hilton: Yeah, we’re not exactly flippers, and we can say that with some credibility.

Cook: I’m sure your backers and investors appreciate that. That was another comment you made in terms of, you had to go out and raise venture capital again. What was that like for you?

Hilton: Yeah, that was fun. Boy, Concur went public in—

Cook: Did Things change in 20 years in the venture market?

Hilton: Oh my god. Well, Concur went public in the late ’90s so venture capital for me — I was the CEO of Concur in the very beginning and had to raise the first two rounds as the CEO. It was a different world. For one, there was no venture capital in Seattle really to speak of. There was one or two firms, and tech was just hieroglyphics. So the only place to go was Silicon Valley. That’s an enormous difference to have a company like Madrona come in in our last round and just to have local venture capital. That scene, that’s as mature as it is, is a huge change for this region. I think it’s a huge part of why we’re doing so well, an important part of the ecosystem. Yeah, it’s very different, of course. You got to think back — when Concur raised money, there was no internet.

Cook: There was no angel list!

Hilton: You were still printing out pitches.

Cook: No unicorns, no super angels.

Hilton: Exactly.

Bishop: No Donald Trump. No, wait. No, he was there but just different capacity.

Hilton: Fun but different I would say.

Singh: There’s a ton more capital in the market. We were lucky because this is way we do it. This is our style: right when we got there, the market kind of went to hell. So we didn’t want to choose an easy time to do it. We waited until the market was on its cusp. Then we jumped in and went out to raise capital. We were lucky enough that — Andreessen Horowitz and Madrona were the guys we wanted. Those were the two firms that we absolutely wanted to do business with. We knew each of them from our past lives, and we were incredibly fortunate to find them. The market has mass influxes of capital when the market’s hot, like way more than it ever used to be, and so all of a sudden it gets almost ridiculously simple to raise capital. Then when it dries up, it dries up in ridiculous way, and companies get punished for it. So we were lucky to skip that.

Cook: Where do you think it’s at now in terms of the market for venture capital startups raising money?

Singh: In the healthcare tech space, which is where we really classify ourselves, John, it’s tough to know right now as a company. If you’re looking at a company like Oscar, for example, that raised $ 400 million or some number like that — don’t quote me on the exact number, but it’s a number like that — and they built their whole business focused on Affordable Care Act exchanges. I mean that’s a huge bet on a single thing. It seemed like a really smart bet in 2008, when there was a bunch of really smart investors who funded it. People are going to figure out what happens to Oscar now. What’s going to happen to these guys who placed huge bets or built businesses around those exchanges? I think you’re seeing more waiting on the sidelines right now until the — public policy has a massive impact on health care, so until you understand public policy or know what direction the winds are blowing, you’ll see more people sitting on the sidelines.

Cook: But don’t you think that’s just going to go on for four years? Do you think in four years under this administration there’s going to be a clear, concise path of where things are headed?

Singh: You know John, it’s a —

Cook: I mean personally I just think it’s going to be week to week and a new —

Bishop: Crowd size debate.

Cook: Yeah, a new debate each week.

Singh: The private sector in a $ 3 trillion space is going to eventually land on — if the president and his administration don’t decide to move, there’s a bunch of congressman who have to get reelected in two years and there’s a bunch of senators who have to get reelected every two years as well. The market will push on some certainty. We’re not going to get in the first 10 days. I totally agree, John, that this is the most dizzying first 10 days I’ve ever seen, but certainty will come. It will come over some time because I think — and this is an interesting point that I never thought I would say — I think there is a plan underneath what these guys are doing. It’s just they’re not ready to tell us what the plan is because I think there’s going to be some pain in parts of the plan and they’re not ready to tell you about the pain yet. But sooner or later, it’s going to have to come out in the wash.

Bishop: All right. Any other just final overarching thoughts on the Seattle tech community, where you guys are with the lessons learned? Any final thoughts that you’ve not made yet that you really want to get across?

Hilton: Boy, just I am so encouraged and excited about where the Seattle tech scene is. That’s a big thing I would say.

Bishop: Really?

Hilton: Yeah, absolutely. As someone who was building a company for so long and relatively heads down, it wasn’t until near end of Concur that I really made a lot of conscious effort to get back into the startup part of our community in particular. It was like a breath of fresh air. I look at where we are today compared to where when we started Concur in 1993, there really wasn’t a tech community — if you didn’t work at Microsoft — to speak of in Seattle. I look at where we are 20, almost 25 years later and it requires an ecosystem that includes people like you guys, and it includes the incubators we have. It includes the angels we have. It includes the University of Washington and the incredibly exciting things that are happening there.

As someone who has to compete for talent every day, as someone who has a very vested interest in making sure this community is fantastic, I could not be more exited about the state of where we’re at. In terms of things like a lot of Silicon Valley coming up here, I view that as a tremendous compliment to what we’ve done in the Northwest and I say, “bring it on,” and welcome it, and it’s nothing but great news for our community. I think that the state that we are in is great. My concerns would lean towards: how do we have smart plans when it comes to development, and are we growing smartly? I think growing is a great problem to have, and growth-related problems are the problems you want.

Singh: First of all, I agree with everything Mike just said. You guys were surprised by how bullish we are.

Bishop: Yeah, I would say John’s been a little down on the Seattle tech community lately.

Singh: You know what? I would say I look at your bright spots. You look at what Sunny Gupta is doing at Apptio, or you look at, there’s a bright spot of a tech company that started on Bainbridge Island that continues to grow, Avalara, that no one really talks about, but that company’s actually on its way to being something very, very special around the world.

Bishop: What? You mean people don’t want to talk about sales tax automation?

Singh: Exactly! Listen, brother, I grew up in expense reports, man. I spent 22 years of my life on expense reports.

Cook: Seattle’s really good at building really strong, boring businesses.

Singh: Yeah, strong, boring companies that employ thousands of people and that keep growing. I think Mike’s right, what Vikram and those guys are doing at the University of Washington kicks ass. I mean you go there, and you can’t leave that center without being inspired about what’s about to happen next. You think about the Bellevue campus that’s about to come together with the Chinese university, the University of Washington, all of these things are very difficult to pull off. If I had anything that I would counsel people in Seattle

If I had anything that I would counsel people in Seattle on, if I’m allowed to counsel people in Seattle, because I’ve been here for 23 or 24 years now so I feel like a native, is let’s remove the chip on our shoulder about San Francisco. We don’t have to be San Francisco. There are things about this city, whether it’s the tech community, whether it’s the environment, whether it’s the cost of living, whether it’s the politics, that are spectacular and are better in this city that are better in this city than they are anywhere else. That I’m super bullish on.

Cook: I think that’s changed I’ve seen in the last two or three years where the Seattle tech community used to look at Silicon Valley as something they aspired to be. Now there’s a movement where how can we avoid the mess that’s down there and build something that’s extra special here?

Singh: I think that’s Mike’s point on growth. Let’s do growth right.

Cook: Exactly. I was joking about the boring companies.

Hilton: It’s not the shining city on a hill. It’s a harbinger for what we could become if we’re not smart. That’s how I think about it.

Cook: Absolutely. I think that mind shift has actually started to change quite a bit. There’s enough momentum here in Seattle now, especially with all the Silicon Valley tech companies that are coming in that want to be here and mine the talent, that we have to really watch how we grow so we don’t repeat Silicon Valley’s mess.

Hilton: That’s the diligence. I think if there’s any core responsibility of the tech leaders, including us, it’s to be really mindful about this problem because it will happen to us if we let it. We can become overwhelmed and end up with all the same problems. And that’s a non-trivial problem. It’s a non-trivial problem.

Singh: Let me add one thing that we’ve tried to extra special, thoughtful on now that we’re older. I don’t want to say old because we’re not old yet, are we? We’re not old.

Bishop: You’re not.

Singh: Thank you — is that we have an opportunity now as well that there’s a bunch of young companies being built in this city — to focus on things that matter because they’re going to make your company better if you do them from the outset. That’s diversity. That’s inclusion. That’s women in leadership, women in engineering. Those types of things are areas that we can focus on, and we can be better in Seattle than we are anywhere else. You asked if there’s one thing I wanted to get out. I would say: there’s so much to be proud of here. There’s things we can be better at. It’s a city that wants to focus on those things and do the right things — we should do those.

Startups – GeekWire http://www.geekwire.com/2017/qa-concur-co-founders-new-venture-transformation-seattles-startup-scene/

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