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Inside the shakeup at 98point6: Board member explains abrupt CEO change at well-funded startup

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98point6 CEO and co-founder Robbie Cape. (98point6 Photo)

The board of administrators at fast-growing Seattle telehealth startup 98point6 let go of co-founder and CEO Robbie Cape final month as a result of it was searching for a brand new chief who might place the corporate for its subsequent part of progress.

That element, as defined by a 98point6 board member, is the most recent wrinkle within the thriller surrounding Cape’s abrupt departure. The board’s transfer stunned folks within the Seattle startup neighborhood, within the well being tech trade, and even contained in the 6-year-old firm, which has raised $247 million and reported an enormous enhance in buyer demand in the course of the pandemic.

“Robbie was an exceptional startup CEO,” stated Lisa Brummel, a 98point6 board member who was concerned within the choice to take away Cape from the CEO function. “We needed to make a change because we feel like we need a CEO who can scale the company right now.”

Brummel, a former chief folks officer at Microsoft who joined the board in March on the request of Cape, stated the corporate was not required to have a proper vote to take away the CEO as a part of its constitution. Cape additionally left the corporate’s board.

Brummel stated there was “nothing improper” that led to Cape’s firing, stressing that it’s commonplace for a founding CEO to step apart to permit a pacesetter with totally different abilities to take the helm.

“We happen to be in a super dynamic market which means if you blink, or wait too long, the market passes you by,” she stated.

Jeff Greenstein. (Photo by way of YIS Capital)

While many staffers and Seattle startup watchers have been stunned by the transfer, Brummel stated it was not abrupt from the board’s perspective. She added that Cape “understood and appreciated the board’s decision.”

Cape declined to remark when contacted by GeekWire, however he emailed a press release voicing his help for the corporate and present management staff.

98point6 didn’t have a brand new CEO in place when Cape stepped down.

The firm is now being led by interim CEO Jeff Greenstein, a longtime Seattle enterprise chief and philanthropist who was sentenced to 50 months in jail a decade in the past for conspiring to defraud the Internal Revenue Service and aiding and helping within the submitting of a false return as a part of an roughly $240 million tax shelter fraud. A spokesperson stated Greenstein served 38 months, and that the $240 million was paid again, plus curiosity and penalties.

Brummel defended the selection of Greenstein — an early investor in 98point6 via his funding agency YIS Capital and chairman of the corporate — as interim CEO. She stated the previous felony conviction was not a topic of dialogue when the board made the choice to take away Cape and insert Greenstein.

Greenstein co-founded 98point6 in 2015 with Cape, although his function was largely beneath the radar. Brummel stated Greenstein has been instrumental in touchdown traders for the corporate, and “helping us keep the company on the great trajectory that it has been in.”

Through a spokesperson, Greenstein declined to be interviewed for this story. However, the manager lately revealed a weblog put up during which he mentioned his new function at 98point6 and the teachings he discovered from serving time in a minimal safety federal jail camp, a interval he known as “unimaginable and beyond unpleasant.”

“I used this time to grow by literally asking myself every morning how I could be better and get closer to those that mattered in my life,” he wrote. “It is especially rewarding and humbling that many of these relationships are partnering with us at 98point6 to build an amazing business that is endeavoring to make the world a better place. While the experience was miserable on so many levels, it was also the epitome of Relentless Improvement.”

Greenstein cited two 98point6 core values in his weblog put up, together with “Relentless Improvement” and “Uncompromising Integrity.”

Asked why the corporate didn’t wait to discover a substitute for Cape, Brummel stated that early-stage startups working in dynamic markets usually might not observe conventional timelines or pathways of bigger firms, the place succession planning is extra firmly established.

“We’ve been talking about the evolution of the company since Robbie started and as it moves forward. So it was not abrupt from a company standpoint,” she stated.

“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 doing? How are we doing the twists and turns? Where’s the money going?’ And we need to be able to respond to that.”

Brummel stated a everlasting CEO might be chosen after they discover the suitable particular person for the function.

In his first remarks since being let go and stepping off the board of 98point6, Cape despatched an emailed assertion to GeekWire saying that Greenstein is an “incredible human being.”

“He’s a phenomenal businessman, philanthropist and family man,” stated Cape. “He was instrumental in our fundraising efforts and 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.”

As to the way forward for 98point6, Cape is bullish, although he now not has a direct function.

“I cannot say enough good things about what the company is setting out to do. The team, the culture and the work they are doing couldn’t be more meaningful,” he wrote in his assertion to GeekWire. “I was instrumental in recruiting every single member of the leadership team who I deeply respect and have the utmost confidence in. 98point6 is a magical place to work and to be. I remain a major shareholder and will continue to feel enormous connectivity with the company.”

Cape is a veteran of the Seattle tech scene. Before launching 98point6 he offered household scheduling app Cozi to Time Inc. in 2014 and beforehand spent 12 years at Microsoft.

In 2015 Cape based 98point6 alongside Gordon Cohen, a professor on the University of Arizona, and Greenstein, who based funding administration agency Quellos Group in 1994 and offered it to BlackRock for greater than $1 billion in 2007.

Greenstein helped function a tax shelter scheme out of a Quellos subsidiary fund known as Point that permit rich purchasers keep away from paying roughly $240 million in capital positive aspects taxes.

The conduct was described as “not an aberration, but rather a highly complex systematic scheme to cheat,” by a sentencing choose in 2011.

Greenstein paid again $6.4 million to the federal government that he earned from Point transactions.

Greenstein is an energetic philanthropist, launching the Greenstein Family Foundation together with his spouse Judy Greenstein in 2010. It focuses on the “Jewish continuity, community support, medical research, education, and the arts,” in keeping with its web site.

He was beforehand a board trustee on the Seattle Art Museum and a founding member of the UW Investment Committee. He based The Greenstein Lab in Seattle together with his spouse in 2015 as an area to exhibit and promote up to date artwork. Greenstein is a graduate of the UW enterprise college.

98point6 raised $118 million a 12 months in the past to help progress because the pandemic spurred demand for digital healthcare companies. The firm gives digital main care in all 50 states to greater than 3 million sufferers, connecting them in real-time to its docs alongside an AI-powered chatbot, texts, and digital photographs. Customers embrace giants corresponding to Boeing and Chipotle, in addition to well being plans and well being methods. The startup additionally affords a direct-to-consumer product.

Private fairness big L Catterton and late-stage funding agency Activant Capital led the $118 million Series E spherical in October 2020. At the time, the corporate was valued at $518 million, in keeping with PitchBook.

In addition to Greenstein and Brummel, different 98point6 board members are:

  • Regina Benjamin, 18th Surgeon General of the U.S.
  • Michael Farello, managing accomplice of L Catterton
  • Larry Fink, founder, chairman and CEO of BlackRock, Inc.
  • Nader Naini, managing accomplice of Frazier Healthcare Partners
  • Jim Sinegal, former CEO and co-founder of Costco Wholesale Corporation
  • Sarah Smith, former chief compliance officer and chief accounting officer of Goldman Sachs
  • David Viniar, former govt vice chairman and chief monetary officer of Goldman Sachs

98point6 is ranked No. 29 on the GeekWire 200 record of prime tech startups within the Pacific Northwest.

The firm is amongst a bevy of health-tech startups seeing elevated utilization and attracting investor curiosity in the course of the coronavirus disaster. Competitors embrace MDLive (acquired by Cigna earlier this 12 months), Amwell, Firefly Health, Teladoc, and others. Aetna, a CVS Health firm, simply launched its personal digital main care service final month.

GeekWire co-founder John Cook contributed to this story.

Editor’s word: This story has been up to date so as to add the period of time served and restitution paid following Greenstein’s courtroom sentence.