Mike McSherry of Xealth: “Selflessness is contagious”

Selflessness is contagious: We get inspiration from mission-driving clinicians helping others. Our customers are demonstrating selflessness every day while delivering care. That is strongly motivating and drives us to pay it forward. As part of our series called “5 Things I Wish Someone Told Me Before I Began Leading My Company”, I had the pleasure of […]

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Selflessness is contagious: We get inspiration from mission-driving clinicians helping others. Our customers are demonstrating selflessness every day while delivering care. That is strongly motivating and drives us to pay it forward.

As part of our series called “5 Things I Wish Someone Told Me Before I Began Leading My Company”, I had the pleasure of interviewing Mike McSherry, co-founder and CEO of Xealth, the leader in enabling digital health at scale for medical providers. Previously, he served as an Entrepreneur in Residence at Providence. With more than 20 years of experience in consumer technology, McSherry also co-founded several companies, including Swype and Boost Mobile.

Thank you so much for joining us in this interview series! Before we dive in, our readers would love to “get to know you” a bit better. Can you tell us a bit about your ‘backstory’ and how you got started?

Xealth is the sixth startup I’ve co-founded over the past 25 years. The idea for my first company came after leaving Microsoft in 1997 over a disagreement with its internet strategy. Working with some folks in Australia, we co-founded a web development company in Australia that became the largest in Australia and New Zealand at the time we sold it. I’ve been doing startups ever since.

Other companies I co-founded include Boost Mobile Australia and U.S. The U.S. business actually sold to Dish Network for 1.5B dollars last year. However, I also-cofounded Amp’d Mobile which raised 400M dollars but ultimately went bankrupt! Prior to Xealth, I co-founded and served as CEO for Swype, a touchscreen keyboard that invented the technology now on 10B+ phones — every iPhone and Android phone in the world.

Living in Seattle, I was on the board of a hospital system that merged with Providence, the second largest hospital system in the country. Providence’s CEO invited me to become an entrepreneur-in-residence to develop ideas for transforming healthcare.

What was the “Aha Moment” that led to the idea for your current company? Can you share that story with us?

Coming into Providence with a consumer tech background, I thought that the hospital patient portal people were expected to use was awful. We saw a better way to engage patients with digital tools in this app/web portal and jokingly called the idea MikeChart. We then worked to figure out how doctors could ‘prescribe’ these digital health tools to patients and, subsequently, monitor patients’ activity in these different apps and devices.

This is how the concept for Xealth was born.

Can you tell us a story about the hard times that you faced when you first started your journey? Did you ever consider giving up? Where did you get the drive to continue even though things were so hard?

Our initial concept was building a better ‘MikeChart’ patient portal and we devoted significant time and resources into that approach, which was not received with the fanfare we thought it would. Some hospital leaders expressed apathy, questioning “how will this make or save me money.”

In the consumer world, a five-fold user experience improvement would lead to exponential value creation. In the healthcare world, it was seen as an imposition — “if ain’t broke, why fix it.” If nobody cared about a better UX, how could we possibly build a better patient engagement solution?

I was stubborn enough to beat my head on the wall long enough to convince them of a consumer-oriented experience! It just took a slightly different form.

So, how are things going today? How did your grit and resilience lead to your eventual success?

The world of digital health has exploded during pandemic amongst consumers, health insurance companies and employers. Hospital systems have put in a few band-aid gap measures, but they are still lagging. That said, they employ over 50% of all doctors in this country. Side note: telehealth is not synonymous with digital health.

Most people trust their doctors and that should not be turned over to someone else. Xealth leverages that to engage patients in digital health adoption and patient care. We’ve reached almost four million patients across our health system customers with some form of digital health engagement.

What do you think makes your company stand out? Can you share a story?

We are working with the biggest hospitals in the country, including Providence, UPMC, Duke, Cleveland Clinic, Mass General Brigham and Atrium Health. Six of our hospital system customers have also chosen to invest in us, along with the largest word-wide pharma companies, Novartis, the largest global EHR vendor, Cerner, the largest medical device company, Philips, and the largest medical supply company, McKesson. These investors all see the broad need for a platform to automate, manage and scale various digital health programs.

We’ve never competed in an RFP…there’s not a category yet defined when you invent something. Xealth created a market and is executing on a future vision of improving healthcare through technology.

Can you share a story about the funniest mistake you made when you were first starting? Can you tell us what lessons or ‘takeaways’ you learned from that?

When Aaron Sheedy, Xealth’s COO, and I were Entrepreneurs-in-Residence at Providence, we initially thought to tackle the high-cost diseases. We arranged a meeting with the Chief of Oncology and he invited his entire medical staff. We had zero background in healthcare and yet were asking a room of 20 doctors what problems they had that could be solved via technology.

Quickly, it was apparent that we had a 20k dollars/hr brainstorm session with these incredibly smart physicians….and without one of them quitting to join us full-time, we could never learn the challenges of a specific disease state well enough to start a company.

We went back to our software roots, combining user experience and business model strategy.

Often leaders are asked to share the best advice they received. But let’s reverse the question. Can you share a story about advice you’ve received that you now wish you never followed?

There are days that I question selling to hospital systems. Clinicians devote their careers to helping others but are stuck in a complex paradigm of mixed incentives that do not always align with how they want to deliver care — or even what is best for the patient. Navigating these dynamics successfully takes a level of patience and determination that can be off-putting to an outsider.

I jumped into healthcare to make a difference. I hoped to drive down costs, improve efficiency and patient experiences. The compromises you must make on a pure tech vision to satisfy regulatory, reimbursement and bureaucratic criteria is often maddening. I want to untangle dysfunction, not integrate and propagate the complexity!

You are a successful business leader. Which three character traits do you think were most instrumental to your success? Can you please share a story or example for each?

Curiosity: Rampant intellectual curiosity. I wanted to help solve U.S. healthcare challenges so I figured my team could use our skills to advance healthtech. Along my career, I’ve done more than 40 angel investments in helping to grow, foster and learn about different tech and industry domains. Living in four countries and visiting over 60 shows new perspectives and approaches. All of this helps satiate my desire for new cultures, experiences, and continuous learning.

Partnering: Of my six startups, each one was either a joint venture from day one or the first investors were strategic. As examples, Boost Mobile was a joint venture with Nextel, Swype’s first investors were Nokia and Samsung, and Xealth was incubated inside Providence. This aligns investment with long-term business strategy.

Loyalty: My father spent 20 years in the Navy, including flying in the Vietnam War. He taught me about trust and loyalty to friends and teams. Xealth’s COO and I have worked at four different companies during the last 25 years, and I have worked with Xealth’s CTO for 15 years. By respecting your team and building trust among them, you can overcome most challenges.

Which tips would you recommend to your colleagues in your industry to help them to thrive and not “burn out”?

Find what grounds you and rely on your team. I’m married with two kids, a dog, and a cat — family keeps me grounded. Xealth’s strong COO and I are interchangeable as CEOs. When I go ‘off grid’ he can handle my responsibilities and I can do the same for him. A strong team allows for the downtime to disengage from the core day to day concerns, recharge and focus on family and life.

What are the most common mistakes you have seen CEOs & founders make when they start a business? What can be done to avoid those errors?

I see many people overly focused on equity dilution when raising money. Most startups fail. Be willing to give up some of your equity to bring onboard strong, supportive investors.

There is also an over-reliance on the individual. Startup success is a team exercise. Include executive leadership early for goal setting and strategy execution, leveraging collective knowledge.

In your experience, which aspect of running a company tends to be most underestimated? Can you explain or give an example?

Culture, camaraderie and shared vision are underappreciated. Teamwork leads to success — and it requires across the board transparency into the company strategy.

Here is the main question of our interview. What are your “5 Things I Wish Someone Told Me Before I Began Leading My Company”? Please share a story or an example for each.

  1. Charge the Hill or Siege Warfare: Know the battle strategy going in. Swype was a fast-off the ground with its technology installed on half a billion phones within two years. Healthcare takes longer and requires a multi-front approach. Knowing which you fit into impacts how you manage and grow your team, raise capital and move forward.
  2. Healthcare is full of perverse incentives: There is a shortness of rational economic frameworks, arcane reimbursement and regulatory requirements. Also, those who pay for, deliver and receive services are all different stakeholders, complicating alignment.
  3. Hospital systems as customers: With so many different stakeholders, collective intelligence takes significantly longer to make a decision and to execute.
  4. Selflessness is contagious: We get inspiration from mission-driving clinicians helping others. Our customers are demonstrating selflessness every day while delivering care. That is strongly motivating and drives us to pay it forward.
  5. Respect the institution; shortcut the tradition: I have tremendous respect for doctors, nurses and medical staff. They work extremely hard helping others and nothing should interfere with that. That said, just because you always have done things one way, does not make it perfect. Technology can enhance care delivery through automation and remote patient monitoring.

If you could start a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger.

Establish a national patient identifier. Everyone has a social security number, why not a medical number? This would help make sure patient information matched the correct person. It would have tremendous benefits for tracking vaccinations, patient registrations, claims processing, payment reimbursements, analytics…ultimately saving costs and lives.

This was very inspiring. Thank you so much for the time you spent with this!

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