EVERLYWELL, INC. IN AUSTIN, TEXAS
Creating a successful startup is always a daunting task. Entrepreneurs risk their savings, their careers, even their reputations when they decide to begin a new business, especially when they use other peoples’ money to start. But suppose that in addition to the common challenges of starting a new business, you add being an attractive young woman in a traditionally male industry, and you also add entering a field where there was recently a high-profile failure of just such a female entrepreneur.
That just might make you reconsider the wisdom of your course.
Julia Cheek, however, persisted, and in doing so, has created a startup in the burgeoning field of home-based self-sampling for medical tests. And yes, that is essentially what the recently failed Theranos claimed to be doing. EverlyWell is not another Theranos, however. EverlyWell has not invented a new blood test; it does not manufacture its own testing equipment; it is not located in Silicon Valley, but rather in Austin, Texas; and most importantly, the company does not deal with medical insurance companies. Customers pay directly for any of EverlyWell’s diagnostic tests. 31
So, Julia Cheek is not intimated by the frequent comparisons made of her business, EverlyWell, to the spectacular failure of Theranos. Such comparisons are certainly irritating and as she pointed out in an interview with Jen Wieczner of Fortune magazine, the recent FBI raid on another female-led startup, uBiome, has not helped the situation. She makes a strenuous effort to distinguish EverlyWell as well as herself, and she directs her employees to do the same.32
Julia Cheek did not start as an entrepreneur, nor does she have a background in health care. She does have a Harvard MBA however, which she received in 2011. After receiving her degree, she was employed as the Director of Strategy and Operations for the George W. Bush Institute and later as Vice-President of Corporate Strategy and Global Communications for MoneyGram International. 33 Her interest in health care arose because of a perplexing set of symptoms, including fatigue, pain, and a general feeling of lessened cognitive function. Because of these symptoms, she consulted with several physicians, each of whom ordered various medical tests. Despite the time and money that she spent, she remained without a specific diagnosis. Further, she stated that she did not even know what tests had been performed.34
Her less-than-wonderful experience as a patient led her to start EverlyWell.
Once she decided to create the business, she followed a familiar path for raising capital. In April 2016, she raised $2.5 million in initial seed funding. 5 Next, in November 2017, Julia Cheek appeared on CBS’s program, “Shark Tank,” where she won a additional $1 million investment, for which she gave a 5% equity position to the investor. This beginning was followed by other equity investments by venture capitalists, eventually culminating in a $50 million Series B financing award led by Goodwater Capital and Highland Capital Partners.36
The company has grown rapidly during its existence. According to the Wall Street Journal, EverlyWell has shipped some 275,000 testing kits to date. 2018 revenues are said to be close to $20 million. The company offers 35 different testing kits covering issues ranging across a variety of physical conditions. Kits are sold online and are available at various retailers, including CVS Health Corp. and Target Corp.
CASE DISCUSSION QUESTIONS
- The case includes a statement that EverlyWell” followed a familiar path for raising capital.” How would you describe how Julia Cheek raised development capital for the business?
- The Shark Tank investor furnished $1 million in seed capital in return for 5% of the ownership of EverlyWell. What total value for the business does this investment imply?
- The information available about EverlyWell does not mention any borrowed capital. What might be the reasons that EverlyWell has not borrowed any funds for capital?
- How would you explain the apparent success of Julia Cheek in creating a medical testing business, given her lack of experience in the field of medical care?