Pace launches out of private beta with a plan to scale virtual group therapy

One in five people have a mental health illness. Pace, a new startup founded by Pinterest and Affirm executives, wants to pay attention to the other four in that statistic.

“Nobody is perfectly mentally healthy all the time,” said Jack Chou, Pace co-founder. “It’s a non-existent idea, everyone is sort of swimming in between being clinically mentally unhealthy and perfectly mentally happy.”

While diagnosable mental health conditions might get an individual medication or therapy, those that live in a grey space might still need resources to stay afloat. After Chou experienced the detrimental effects of burnout while working for Pinterest and Affirm, and co-founder Cat Lee, formerly of Pinterest and Maveron, experienced a personal travesty, the former colleagues realized there needed to be a way to help people who didn’t fit squarely into one bucket.

So Pace, which launched out of private beta today, wants to address this fallacy by creating small-group training classes for people interested in taking care of their emotional and mental health. It is launching with $1.9 million in seed funding. Investors include Nellie and Max Levchin, Jeff Weiner, Emilie Choi, Ben Silbermann, Box Group, and SV Angel.

The core of the product is a 90-minute live video group session once a week, delivered through Pace’s platform. The video component integrates with Twilio and Agora (and interestingly, not Zoom, because its SDK lacks personalization options). Users can attend the sessions on Web, iOS or Android.

Image Credits: Pace

Pace forms cohorts of eight to 10 people around shared interest or identities, such as a founder group or parent group. Then, Pace interviews a new user for 15 to 30 minutes to learn about what they hope to get out of the experience.

Once a group is formed, they meet weekly with a facilitator at the helm. While it’s not trying to be a therapy replacement, the startup is looking for facilitators who are licensed in mental health practice. To help them do this, Pace secured two founding members who are psychologists: Dr. Kerry Makin-Byrd and Dr. Vivian Oberling.

When users sign on, they are prompted to pick three words that describe themselves from dozens of options. Those words show up under their video as they talk, and help skip some small talk in the beginning of the sessions.

The group talks about a variety of topics, from how to manage stress to how to adapt to a remote world. There is no formal curriculum, but each class has a takeaway for participants to leave with.

Pace doesn’t follow any specific curriculum during the meetings, but instead uses the time for people to talk through their feelings. Facilitators are licensed mental health clinicians, with the majority of the leaders being part-time or freelancers. It plans to introduce asynchronous ways for group members to chat and stay in touch beyond the weekly class, as well as spend time building out a product that feels beyond a Zoom call.

Mental health software startups are on a tear right now. Last month, Lyra Health raised $175 million at a $2.25 billion valuation to connect employees to therapists and mental health services. Another telehealth provider, Talkspace, announced today that it was going public through a SPAC. There’s also Calm, last valued at $2 billion, and Headspace, its biggest competitor in the mindfulness app space.

Pace’s focus is more similar to the latter than the former: It’s avoiding the telehealth label and positioning itself more as supplementary to formal health services.

“Our hope is that as [therapists] have individual patients who they’d like to incorporate some group work, or need a next thing, that we’re here for that too,” says Chou.

One of Pace’s closest competitors is Coa, which launched with $3 million in seed funding in October 2020. The startup is similarly using small-group fitness culture and applying it to mental health. It mixes lecture-style teaching with breakout sessions to breed conversation.

Pace wouldn’t expand on how it differentiates from Coa beyond alluding to upcoming product features and community investments. Coa charges $25 for drop-in classes (sticking to that fitness class theme) while Pace charges $45 per week for the same group to meet for months at a time. While Coa has licensed therapists, Pace has licensed mental health clinicians.

Coa co-founders Alexa Meyer and Dr. Emily Anhalt say their service is unique from Pace in a curriculum perspective.

“Although all of Coa’s classes are facilitated by licensed therapists, Coa’s classes are different from group therapy,” Meyer said. Coa uses Anhalt’s research around mental happiness to create programming. Both companies are still pre-launch, but Coa says it has 6,000 people on its waitlist.

For both startups, the hurdles ahead are common for any startup: customer acquisition, effectiveness in tracking outcomes and scaling an innately emotional and personalized experience. As Homebrew’s Hunter Walk pointed out in a recent blog post, vulnerable populations being exposed to venture-level risk is a difficult phenomenon. Startups fail often, and in this case, that could mean leaving without once-critical support people who are depending on group therapy.

Going forward, the real winner in the mental health fitness space will come down to a thoughtful curriculum and a user experience that brings out vulnerability in people even over a virtual setting. Regardless, innovation pouring into the sector couldn’t come at a better time.

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The founders of $1.4 billion startup Talkspace talk going public and why the 'second pandemic' will be a mental health crisis

Summary List PlacementTalkspace, the $1.4 billion company aiming to overhaul behavioral healthcare, was itself born out of a mental health crisis.
Oren and Roni Frank’s marriage was on the verge of collapse around 2005, five years after they had married. Oren was a marketing and advertising executive who’d worked a long stint at McCann Erickson. Roni was a software developer for Amdocs. But their professional success, their busy lives took a toll on their relationship.
“She left me,” Oren told Insider. “That’s the short version of it.”
Couples therapy was the only thing that knitted the Franks’ marriage back together.
“We learned so much about ourselves and about our relationship and it really empowered us as a couple and as individuals,” Frank said. “We were lucky to have access to therapy, to mental health care, unlike millions of people.”
The Franks never forgot their experience in talk therapy. Rather than resume their separate careers for long, the couple began planning to launch their own company around mental healthcare. They decided to launch Talkspace in 2012.
The goal was to “democratize access” to mental healthcare, providing affordable, convenient behavioral mental healthcare to consumers, especially the estimated 70 million Americans suffering from mental health illness. Talkspace accomplishes this through an app that currently serves 46,000 active members, pairing them with professional therapists for virtual appointments.
Now, thanks to its upcoming merger with Hudson Executive Investment Corp., Talkspace is set to become, in Oren’s words, the only public “pure-play behavioral healthcare company in existence,”  by which he means a company focusing solely on mental healthcare services. Talkspace and Hudson have agreed to merge, although the merger itself likely won’t take place until later in 2021.
Hudson is an acquisition company that went public in June 2020. The merger will provide the company with $250 million in growth capital, and Talkspace’s estimated net revenue for 2021 is $125 million, a 69% spike from 2020.
“We found the Hudson team to be — and we work in a relationship company — a really good match for the kinds of partners we want to have for the mission that we do,” Roni said.
The company has seen an unprecedented expansion during the COVID-19 pandemic.
Not only has the virus forced mental healthcare providers to go virtual, but plenty of individuals are facing mental health crises during this traumatic, unstable time. The Franks estimate they’ve seen five to six years of growth in the virtual behavioral healthcare space crammed within five to six months. 
“We’re not happy to benefit from COVID,” Oren said. “It doesn’t feel good.”
The Talkspace founders said that by opting to go public, they are bracing for the “second pandemic” of mental health issues that they anticipate will arise after COVID-19. The Franks want to “democratize” mental healthcare, and bring it to an international market. And they believe that, by merging with Hudson, they’re ramping up the pace of their growth.
“As a publicly-traded company, we will be able to extend the service that we brought to hundreds and thousands of people to millions of people,” Oren said.
While COVID-19 may have accelerated Talkspace’s growth, the founders feel that it’s largely just shined a spotlight on ongoing problems within the behavioral healthcare space. Roni noted that the state of mental healthcare amounted to a “crisis” long before this unprecedented year. The behavioral healthcare company is advocating that individuals begin treating their mental health like a priority. That goes for those who are “worried well” — or individuals dealing with life crises rather than clinical mental illnesses.
“We all go through the human condition,” Oren said. “We get fired, we lose someone, we lose our jobs.”
But the traditional delivery of mental healthcare services, in the Franks’ view, has always failed to put patients first. Behavioral health treatment, in their view, has long been expensive, inconvenient, and potentially alienating to those who try it out. 
“There is no reason, in the post-COVID world, to go back to the expensive, inconvenient traditional services,” Roni said. “And that’s why it’s a game-changer for telehealth.” 
The Franks said that patients, for the most part, have welcomed the changes. Resistance has come up in the form of clinical therapists unused to telehealth, or unwilling to commit to Talkspace’s more outcome-focused methods. Oren said that behavioral healthcare — especially talk therapy — is a “traditional” landscape that has changed “little in the last century or so.” 
The concept of virtual care isn’t the only aspect of Talkspace’s business model that some mental healthcare professionals balked at. Oren said that, while he appreciates the “romantic view” of therapy, his company is looking to bust open the “black box” model in order to provide better patient outcomes.
“We truly believe in measuring clinical outcomes and generating feedback mechanisms and trying to understand what works and what doesn’t work,” he said. “It’s not good enough if you want to build something that’s really scalable and can really democratize good care. It’s not just the access to any care. You have to be able to generate the clinical outcome.”
That being said, Oren said that Talkspace didn’t receive nearly as much “pushback” as he expected from mental health professionals.
In recent years, the company has received thousands of applications from therapists looking to work with the app. And with the COVID-19 pandemic forcing so many therapists to embrace telehealth, there’s unlikely to roll back.
While the company is a disruptive force within the world of talk therapy, it is looking to work with the traditional set of large health insurance providers. Oren said that Talkspace currently works with five major insurance companies. 
In terms of major competitors, the Franks say large telemedicine platforms, including Teladoc Health, Amwell, MDLive, and Doctors on Demand have behavioral offerings or the capacity to add such options. They also counted Lyra Health — noting that the company has “smart people doing good work” but more of a focus on life coaching than behavioral health — and the smaller-scale startup Ginger. Oren told Business Insider that he doesn’t believe the market for virtual mental healthcare is “winner takes all.”
“I think there should be more competition, to be honest, because the gap is so huge,” Oren said. “We are a tiny drop in an ocean of need and misery. It’s very flattering to think that we can solve everything by ourselves, but it’s probably not true.”
Roni said that one standout for Talkspace is the fact that it focuses on mental health, even though that has meant winning over large health insurance providers, wrangling with interstate regulatory issues, and convincing professional therapists to sign on despite the “traditional,” often technology-adverse nature of the business.
“I remember my friends and family saying, ‘Oh, maybe you should do wellness. Maybe you should do coaching,'” she said. “And I think this is because of stigma. Like it sounds heavy — mental health.”
Roni said that removing the stigma from mental healthcare has always been a fundamental part of Talkspace’s mission. 
“My dream is that if you get up in the morning and you feel that you need professional help, you know that within a few minutes you can get connected with a licensed professional,” Roni said. “And feel comfortable to do it and get the help you need.”SEE ALSO: Talkspace mulls possible sale as consolidation heats up in the US telehealth market
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