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Watsi, the crowd-funding healthcare site, proves that not every change-the-world Silicon Valley start-up is a scam

Published September 13, 2013 11:46AM (EDT)

Patients on       ( by Salon)
Patients on ( by Salon)

The "conference room" in the San Francisco office the crowd-funding healthcare start-up Watsi shares with two other fledgling companies is a Silicon Valley cliché. There's a ping-pong table and a couple of chairs and that's it.

Chase Adam, the casually dressed but clean-cut 26-year-old founder of Watsi, also, initially, appears to have come straight out of central Silicon Valley casting. He's passionate; his rhetoric about how Watsi provides "low-cost, high-impact medical care for people in need" flows in torrents. He believes that young people in Silicon Valley can "create great value." He looks appropriately tired; his eyes display a tinge of red that suggest long hours spent staring into monitor screens. But he is also refreshingly convincing. These days, it is hard to resist rolling your eyes when you hear Silicon Valley start-up CEOs talk about their plans to "change the world."

But Chase Adam means it.

Watsi applies the crowd-funding principles pioneered by Kiva into the healthcare "space." So instead of loaning money to help someone in Uganda get a new freezer for his or her grocery store, visitors to Watsi help pay for the medical costs for someone in Nepal facing an acute healthcare crisis. Since going live in August 2012, the site has steered over half a million dollars into around 700 "interventions." Demand is growing steadily ... from donors. Right now, says Adams, the site is scrambling to find qualified patients.

But along with the cash, Watsi has also raised eyebrows. To some critics, there's something distinctly neocolonialist and off-putting about the spectacle of well-off do-gooders in the U.S. choosing which brown people live and die in the developing world based on who has a cuter picture on Watsi. Others wonder whether focusing donations on individuals, no matter how worthy, diverts funding and attention from efforts aimed at tackling the more systemic causes of inadequate healthcare in impoverished parts of the world. Watsi must also bear the misfortune of coming of age during a simmering backlash against Silicon Valley. We've gotten tired of hearing the name brand Silicon Valley bigwigs who have invested hundreds of thousands of dollars in Watsi talk about the merits of "disrupting" existing industries, when all that really seems to end up happening is that a few people get rich while the competitive screws tighten on the many.

Chase Adam has heard all the criticisms and is ready with thoughtful answers. In a tech economy landscape littered with hustlers for whom getting rich is the first priority, he makes a solid case that he is exactly what he seems to be: an idealist taking advantage of technology to make the world a better place. When, after an hour of hearing his life story, I ask him what his long-range plans are, I find I believe him when he looks me in the eye and says: "This. This is what I want to do for the rest of my life. I never thought I would find my thing, but I've found my thing."

* * *

It would be hard to script a more stereotypical tale of contemporary California idealism than the story, so far, of Chase Adam. Raised on a diet of public schools in Marin County in Northern California, he went to college at the University of California at Santa Barbara, where he appears to have spent at least half his undergraduate years living abroad -- a year studying in Chile, a summer in Barbados, another summer in Indonesia.

He says he got interested in microfinance during his senior year: "Like everyone else at school I read 'Banker to the Poor' by Mohammed Yunus and started thinking about how you could do business for good." He Googled "microfinance and Santa Barbara" and soon found himself stuffing envelopes for Anne Hastings, the director of Fonkoze, a microfinance institution active in Haiti. After graduation, it was straight to the Peace Corps, where he spent two years setting up microfinance banks in Costa Rica.

He recalls his work in Costa Rica as "successful" but says that at the same time he was already getting burned out by the slow pace at which things got accomplished. "I'm an impatient person by nature," he says. "I wanted to do something bigger."

Meanwhile, back home in Northern California it was 2010 and the tech economy was starting to boom again. "Stealing" Wi-Fi off a satellite provider dedicated by the Costa Rican government to the local indigenous population, Adam started getting restless at the news from Silicon Valley.

"I got really interested in technology and start-ups. I started reading Hacker News. I would read all of Paul Graham's essays and dream of this other life that was the complete opposite of my life. A lot of cool powerful things were happening in Silicon Valley, and a lot of people were doing good, and a lot of people weren't getting credit for how much good they were doing. I saw Silicon Valley as a space where young people were actually having a pretty massive impact, at least from my perspective as a person in the Peace Corps on the other side of the world working on a project that had no funding."

Then came the epiphany. Near the end of his two-year Peace Corps tour, Adam was on a bus on his way back to Watsi, the town where he was working. He watched a woman get on the bus and start begging people to give her money for her son's medical care. He didn't understand why everyone was contributing -- "I'm a skeptical person," he says, "I don't give money to people on the street" -- until he realized she was showing the bus riders her son's medical records. In essence, she had vetted her own solicitation.

"She got off the bus and I had the epiphany. There's Kickstarter, there's Donor's Choice, there's Kiva -- it's crazy that we don't apply this model to healthcare."

Back in San Francisco, while holding down a day job at Pacific Community Ventures, he hooked up with a group of geographically distributed volunteers and started putting together what became Watsi. Every Tuesday evening the globe-spanning group would hang out online for four or five hours hashing out Adams' original idea. A software developer named Jesse Cooke agreed to build the site for free. By August 2012, for the trivial cost of $3,000 over the previous eight months, Watsi was live.

* * *

In January 2013, Watsi became the first nonprofit to be accepted into Paul Graham's Y Combinator start-up accelerator. The recently controversial investor declared that he had "never been so excited about anything we've funded." By July, the nonprofit had secured an additional $1.2 million in seed round financing from Graham, Sun Micrososytems' co-founder Vinod Khosla, Silicon Valley angel investor Ron Conway, and others. You would be hard put to round up a more likely group of suspects responsible for funding the nonstop Silicon Valley greed machine, but in this case, there isn't going to be any profitable return on their investment. There will be no IPO, no cash-register "exit event." Watsi is a nonprofit. The business goal is ultimately to be self-sustainable, not to "disrupt" incumbent healthcare players and steal their revenue streams.

But still. What about that neocolonialism? I've looked at the home page of Watsi, all packed with grinning brown faces. It feels weird to try to choose who gets medical treatment and who doesn't based on whatever illusory "connection" I might feel to one person's life story or appearance. In 2006, I wrote about how Kiva felt like a bizarre variant of online dating. Adding life-or-death tension to that equation is troubling.

Adam is quick to acknowledge that having one's access to medical care depend on how bright one's smile is would indeed be troubling. But that's not how Watsi works, he says.

"We believe very strongly at Watsi that donors shouldn't be making medical decisions. All we want to do is establish a meaningful connection between donors and patients. So the way Watsi works is that we accept every single patient's profile before the patient receives care. Just like an insurance company. We're not retroactively approving things. We guarantee funding. We won't take a profile down until it is fully funded. No other crowd-funding platform that I know of works this way."

The patients we see on Watsi's front page are preselected by local doctors and medical institutions who are best situated to know who is in critical need of care that would not otherwise be funded. The patients must fit Watsi's criteria -- the cost of medical care must be under $1,500 and there has to be a 75 percent chance that it will make a significant difference to the patient's living standards. But once they are in, they're in. If donors haven't contributed in time to pay for addressing an acute crisis, Watsi will cover the out-of-pocket costs from an emergency fund.

You can question how real the "direct connection" between donor and patient is in a system where every patient will get care regardless of how quickly donors rally to their side, but Watsi's strategy does seem to address the ickiness factor. There's also a good answer for why Watsi focuses on the developing world, even when there are plenty of people with acute healthcare needs right here at home in the United States,

That, says Adam, is a simple matter of economics. Watsi would love to operate in the U.S., he says, but right now, the cost of healthcare "is just prohibitively expensive here."

"Our donors have contributed about $450,000 to $500,000," says Adam, "and that's like just a couple of heart surgeries in the United States. Instead, we've been able to use that same amount of money to do over 700 procedures around the world."

But even so, some wonder whether person-to-person donations are the best use of such funds. In a BBC News clip on Watsi that aired earlier this summer, Will Dow, a professor of economics at the University of California, Berkeley, questioned Watsi's basic premise.

"If you're relying on crowdsourcing and showcasing instances of people who have particularly heart-rending stories, then you may be funding people who seriously need help and you may be saving their lives, but with that same money could you have saved many more individuals, by investing in even more cost-effective global health efforts, for example, on prevention?"

In other words, if more lives could be saved by distributing bed nets that prevent malaria, shouldn't Adams be fundraising for bed nets?

It's not clear to me that Watsi's funding model actually siphons money away from other healthcare initiatives. The whole point of crowd funding -- which makes it extraordinarily easy to donate cash with a personal specificity that contributing to a large charity doesn't offer -- may well unlock contributions that would otherwise never be made in the first place.

But the prevention versus treatment tradeoff, says Adams, is a big issue for every nonprofit that works in the health domain.

"Doctors in hospitals are asked to make a very difficult decision every day," he says. "They have a 10-year-old girl in their waiting room that has a condition that is likely to kill her unless she gets access to medical care, and treatment costs $500. And they have a community health program where they can pass out $500 worth of bed nets."

Watsi can come in and offer a way out of that dilemma, says Adam, by focusing specifically on the treatment piece.

"What is so frustrating to me and a lot of people in the nonprofit space is that the problems are oftentimes so clear. Someone is homeless and they don't have a home. Someone is hungry and they don't have food. Someone is sick and they don't have access to healthcare ... But the solutions are so complicated. You have these questions, should I be helping this person, should I even be in this country? Am I creating dependencies, am I doing more harm than good? There are all kinds of nasty questions that people have to deal with in the nonprofit space. And sometimes we try to do good and we end up doing more harm than good."

"What we liked about healthcare, is that to us it seemed like the answer was unequivocally right and unequivocally good, that if you have a 10-year-old in Nepal who is going to die for lack of a treatment that costs $1,000, and there is no other option, then I can't understand an argument for why it's wrong to save that 10-year-old's life."

I find it hard, almost crass, to push back against Adam. His tiny, six-person team, a gender-diverse group crowded around an island of tables festooned with giant monitors, doesn't exude the same air of opportunistic charlatanism common to so many other contemporary Valley start-ups. It's easy to be skeptical of some of Adam' grander dreams, like his belief that Watsi's model could lead the way to some kind of cross-border universal medical care system, or that one day Watsi could be working with every medical institution on the planet. But it also certainly doesn't seem wrong to have figured out a way to redistribute funds from those who have them to save the lives of people with no other options. We're all on the same bus, right?

By Andrew Leonard

Andrew Leonard is a staff writer at Salon. On Twitter, @koxinga21.

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Crowdfunding Developing World Health Care Healthcare Kickstarter Kiva Medical Care Silicon Valley Watsi