The board of directors of fast-growing Seattle telehealth startup 98point6 let co-founder and CEO Robbie Cape go last month because he was looking for a new leader who could position the company for its next phase of growth.
That detail, as one 98point6 board member explained, is the latest wrinkle in the mystery surrounding Cape’s abrupt departure. The board’s move surprised people in the Seattle startup community, in the healthcare tech industry, and even within the 6-year-old company, which has raised $ 247 million and reported a huge increase in demand. of customers during the pandemic.
“Robbie was an exceptional CEO of the startup,” said Lisa Brummel, a 98point6 board member who was involved in the decision to remove Cape from the CEO role. “We needed to make a change because we felt we need a CEO who can scale the company right now.”
Brummel, a former Microsoft chief of staff who joined the board in March at Cape’s request, said the company was not required to have a formal vote to remove the CEO as part of its bylaws. Cape also left the company’s board of directors.
Brummel said there was “nothing inappropriate” that led to Cape’s firing, emphasizing that it is not unusual for a founding CEO to step aside to allow a leader with different abilities to take the helm.
“It turns out that we are in a super dynamic market, which means if you blink or wait too long, the market passes you by,” she said.
While many Seattle startup employees and observers were surprised by the move, Brummel said it was not abrupt from the board’s perspective. She added that Cape “understood and appreciated the board’s decision.”
Cape declined to comment when contacted by GeekWire, but emailed a statement expressing his support for the company and the current leadership team.
98point6 did not have a new CEO in place when Cape resigned.
The company is now being led by Acting CEO Jeff Greenstein, a Seattle business leader and philanthropist who was sentenced to 50 months in prison a decade ago for conspiring to defraud the Internal Revenue Service and assisting and assisting in filing a return. false as part of a tax shelter fraud of approximately $ 240 million. A spokesperson said Greenstein served 38 months and the $ 240 million was returned, plus interest and penalties.
Brummel defended the election of Greenstein, an early investor in 98point6 through his investment firm YIS Capital and president of the company, as interim CEO. She said the past felony conviction was not a topic of discussion when the board made the decision to remove Cape and insert Greenstein.
Greenstein co-founded 98point6 in 2015 with Cape, although his role was largely under the radar. Brummel said Greenstein has been instrumental in getting investors for the company and “helping us keep the company on the great track he’s been on.”
Through a spokesperson, Greenstein declined to be interviewed for this story. However, the executive recently published a blog post in which he discussed his new role at 98point6 and the lessons he learned from serving time in a minimum security federal prison camp, a period that he called “unimaginable and beyond distasteful.” .
“I used this time to grow up wondering literally every morning how I could be better and get closer to the ones that mattered in my life,” he wrote. “It is especially gratifying and humbling that many of these relationships are partnering with us at 98point6 to build an incredible business striving to make the world a better place. While the experience was miserable on many levels, it was also the epitome of improvement. relentless”.
Greenstein cited two core 98point6 values in his blog post, including “Relentless Improvement” and “Uncompromising Integrity.”
When asked why the company didn’t wait to find a replacement for Cape, Brummel said early-stage startups operating in dynamic markets may often not follow traditional timelines or the pathways of larger companies, where the Succession planning is more firmly established.
“We have been talking about the evolution of the company since Robbie started and as he progresses. So it was not abrupt from a company point of view,” she said.
“I think it’s just a point in time where you say, ‘You know, hey, we need to make a change here because we’re looking at the horizon and saying, What are the competitors coming into the market? Who are they? What are they? are they doing? How are we doing the twists and turns? Where is the money going? ‘ And we have to be able to answer that. ”
Brummel said a permanent CEO will be chosen when they find the right person for the position.
In the first comments from him since he was fired and stepped down from the 98point6 board, Cape emailed a statement to GeekWire saying that Greenstein is an “amazing human being.”
“He’s a phenomenal businessman, philanthropist and family man,” Cape said. “He was instrumental in our fundraising efforts and in maintaining relationships with our long list of investors. He is also responsible for recruiting many of the impressive board members who are now dedicated to our success.”
Looking at the 98point6 future, Cape is bullish, even though he no longer has a direct role.
“I can’t say enough good things about what the company is preparing to do. The team, culture and work they are doing could not be more significant,” he wrote in his statement to GeekWire. “I was instrumental in recruiting every member of the leadership team whom I deeply respect and trust. 98point6 is a magical place to work and be. I remain a significant shareholder and will continue to feel tremendous connectedness to the company.” .
Cape is a veteran of the Seattle tech scene. Before launching 98point6, he sold the Cozi family scheduling app to Time Inc. in 2014 and previously spent 12 years at Microsoft.
In 2015, Cape founded 98point6 along with Gordon Cohen, a professor at the University of Arizona, and Greenstein, who founded the investment management firm Quellos Group in 1994 and sold it to BlackRock for more than $ 1 billion in 2007.
Greenstein helped operate a tax shelter scheme from a Quellos subsidiary fund called Point that allowed wealthy clients to avoid paying approximately $ 240 million in capital gains taxes.
The conduct was described as “not an aberration, but rather a highly complex systematic scheme to deceive,” by a sentencing judge in 2011.
Greenstein returned $ 6.4 million to the government that it earned from Point’s transactions.
Greenstein is an active philanthropist, launching the Greenstein Family Foundation with his wife Judy Greenstein in 2010. It focuses on “Jewish continuity, community support, medical research, education and the arts,” according to his website. .
He previously was a trustee of the Seattle Art Museum board and a founding member of the UW Investment Committee. He founded The Greenstein Lab in Seattle with his wife in 2015 as a space to showcase and promote contemporary art. Greenstein graduated from UW Business School.
98point6 raised $ 118 million a year ago to support growth as the pandemic spurred demand for virtual healthcare services. The company provides virtual primary care in all 50 states to more than 3 million patients, connecting them in real time with their doctors along with an AI-powered digital chatbot, text and images. Clients include giants like Boeing and Chipotle, as well as health plans and health systems. The startup also offers a direct-to-consumer product.
Private equity giant L Catterton and late-stage investment firm Activant Capital led the $ 118 million Series E round in October 2020. At the time, the company was valued at $ 518 million, according to PitchBook.
In addition to Greenstein and Brummel, other 98point6 board members include:
Regina Benjamin, 18th Surgeon General of the United States
Michael Farello, Managing Partner of L Catterton
Larry Fink, Founder, President and CEO of BlackRock, Inc.
Nader Naini, Managing Partner, Frazier Healthcare Partners
Jim Sinegal, Former CEO and Co-Founder of Costco Wholesale Corporation
Sarah Smith, Former Chief Compliance Officer and Chief Accounting Officer, Goldman Sachs
David Viniar, Former Executive Vice President and Chief Financial Officer of Goldman Sachs
98point6 is ranked 29th on the GeekWire 200 list of the best tech startups in the Pacific Northwest.
The company is among a group of healthcare tech startups seeing increased use and attracting investor interest during the coronavirus crisis. Competitors include MDLive (acquired by Cigna earlier this year), Amwell, Firefly Health, Teladoc, and others. Aetna, a CVS Health company, just launched its own virtual primary care service last month.