Chris Kuenne, founder and CEO of Rosemark Capital at 90 Nassau Street, has always been willing to offer investment advice — he teaches business classes at Princeton University, has given speeches, and is writing a book about his theory of the four cornerstones of corporate growth. He has already proven his business chops by founding the successful digital marketing company Rosetta, which he sold four years ago for $575 million to the Publicis Groupe of France, which also owns such ad agencies as Leo Burnett and Saatchi & Saatchi.
Now he is putting his financial theories to the test in the growth equity arena. Rosemark, which was launched 16 months ago, has made its first investment: a $23.5 million round C stake in Jiff, a health technology company. Other investors include GE Ventures, Venrock Associates, Aberdare Partners, and Aeris Capital.
Jiff offers programs that help employers run a leaner operation, literally. The company provides a health incentive program platform for employers who run self-funded health insurance programs. In a self-funded health insurance program, when employees get sick, their employer pays the bill. This means that such companies have the most to gain by having a healthy workforce. Jiff’s platform connects to a number of health tracking programs, such as the Fitbit wearable tracker. For about $1.50 to $2 per employee per month, someone in the client’s HR department can use Jiff to design fitness incentive programs and, crucially, see how effective they are.
For example, the company might offer employees some kind of financial incentive in exchange for losing weight, or walking a certain number of steps each day. Or it might pit the marketing department against sales in a contest to see who can log the most steps on their fitness trackers. Then the HR people could see how many pounds were lost or calories burned. The information is kept anonymous, so the boss wouldn’t be in a position to see which individual workers drank a six-pack on Friday night versus which ones hit the gym.
Kuenne says he found Jiff through an extensive market research effort. Kuenne knew ahead of time what kind of company Rosemark wanted to invest in. Rosemark then had interns from Princeton compile a list of every company in the “population health” market of the healthcare sector. He was interested in companies that already had a product with a good market fit. Kuenne says Rosemark wanted to invest in companies “where the dog was already eating the dog food.”
“We found every single company in the domain and began to research them against our criteria,” Kuenne says. “Then if we were interested we went on Linkedin to find the founder.” The founder of Jiff, Derek Newell, like Kuenne, is a highly educated entrepreneur with a technology interest. Newell has an undergraduate degree in molecular and cell biology with an emphasis in neurobiology from Berkeley. He then earned an MBA, with an emphasis in healthcare finance and a masters in Health Policy and Administration, also from Berkeley.
According to the Jiff website, Newell “has 20 years experience growing and leading innovative healthcare technology and service companies. Prior to taking the helm at Jiff, and making digital health a reality for everyone, he was president and CEO of Robert Bosch Healthcare. While at Bosch, he worked with the management team to build Bosch into the world’s largest remote patient monitoring company. Prior to joining Bosch, he was the CEO of Health Hero Networks, a remote patient monitoring company, which he sold to Bosch in 2007.”
On top of all the credentials, the two also shared a mutual friend. Kuenne wrangled an introduction and began to take a closer look at the company. Jiff has already gained a foothold in the market, and is already helping employers track about 350,000 workers.
Kuenne says he evaluated Jiff against his “four cornerstones” theory. Kuenne believes these cornerstones work together to enable companies to grow exponentially.
1.) Think big. Focus on a big economic problem for your customers. “Few problems have a broader economic impact than the healthcare expenses of this country,” Kuenne says. “The domain automatically put us past Cornerstone One.”
2.) Be different. Your product or service has to be highly differentiated, and it has to be scalable on a platform that will allow you to acquire customers and retain customers at scale, Kuenne says. Out of the many health incentive companies Rosemark looked at, Jiff was the only one that allowed employers to tell which programs were working, and for what population of employees. “This problem is similar to the ones that Rosetta solved,” Kuenne says. Rosetta was known for using data to assess the effectiveness of marketing campaigns.
3.) The company must have strong branding and corporate culture. Kuenne says he was impressed with the leadership of Jiff. “Derek Newell runs a masterful and compassionate operation,” Kuenne says. “He cares deeply about having an impact on healthcare and cares deeply about recruiting the right team. He is literally one of the best operators I have ever seen.
4.) There must be a way to measure the value. Kuenne credits management guru Jim Collins for the final cornerstone, which is to have some sort of “value creation metric” that allows the company to rationalize the investment made by its customers. This was one thing, in addition to money, Rosemark brings to the deal. “We’ll be working together, bringing my experience on how to measure value,” Kuenne says.
Kuenne says the first deal is an exciting milestone for Rosemark. “We are known as a growth equity firm, and a lot of people in the growth equity business haven’t done a deal yet,” he says. “We are now on the other side of that. People would say, ‘Well, that sounds like a good theory, but let us know when you’re really doing a deal.’ This deal really puts us in business.”