This week, Color co-founder and CEO Othman Laraki shares the strategies that helped him build a billion-dollar business in an industry he had zero professional experience in.
To Learn a New Market, Start by Building Your Product — Tactics From a Twitter PM Turned Healthcare Founder
Having a beginner’s mindset can help you build a more resilient product — by being open to getting a lot wrong.
When Othman Laraki teamed up with Elad Gil to build a cheaper genetic test for cancer screening, the duo approached the problem from a technical perspective. They were former Google PMs who’d just sold the startup they co-founded to Twitter. Gil had gotten his genome fully sequenced, which sparked curiosity about the astronomical cost of genetic testing. Laraki had a family history of cancer and felt compelled by the idea to make screening more accessible. They figured it must be an engineering problem, so they started with what they knew: building a product.
But as they waded deeper into the foreign waters of the healthcare industry, they had to constantly rethink their assumptions.
“When you enter a new space, it's important to be willing to question the status quo, but also have a lot of humility,” says Laraki. “It took many years and pivots to hone in on what worked. At every step, some people might feel that change is a failure, but in my experience, that’s often the wrong reflex.”
Untangling the web of buyers, incumbents and unit economics in healthcare led them to pivot from a direct-to-consumer testing service to a virtual cancer clinic that sells directly to employers and health plans. Today, Color is a billion-dollar business that has partnerships with the American Cancer Society and the National Institutes of Health.
In this exclusive interview, Laraki shares what the Color team learned from a years-long iterative building process in a market the founders previously knew nothing about. Here are a few of his immersion tactics:
- Follow the money and decision-making. Laraki thought like an anthropologist and set up exploratory conversations with key healthcare industry insiders to map out the market. For healthcare, that meant plotting how a transaction moves through suppliers, manufacturers, distributors and buyers. “Who influences, who decides, who sets the price, who sets the terms, how the transaction actually occurs and how you get paid — this is what you have to untangle,” he says.
- Find “unsexy” experts and identify creative ways to work with them. Since Color’s early days, Laraki has sought out respected cancer researchers as advisors. Getting the product in these experts’ hands helped the team validate its scientific rigor. “Find advisors who are doing the work — not the ones who spend most of their time talking about it,” he says.
- Study the incumbents to find your wedge. It was ultimately learning about how insurance incumbents control pricing dynamics that led Color to pivot away from being a testing vendor. “With consumer products, if a more competitive product shows up, that product can win in the market and gain traction. But in a market like healthcare, it’s the polar opposite. The mechanism of accessing the market is held by insurance companies extracting margins out of services,” says Laraki. “If you show up with a better mousetrap, you don’t have an open liquid market to compete in. You still have to break in and figure out how to force your way.”
Thanks, as always, for reading and sharing!
-The Review Editors