Winning recognition from Y Combinator, the prestigious Silicon Valley startup incubator, isn’t easy. Overall, less than 3 percent of the companies that apply are accepted each round. Since 2005, Y Combinator has funded more than 1,588 startups, including Airbnb, Dropbox, and Weebly.
Two Haas companies, Onederful and Players’ Lounge, made it into this year’s winter Y Combinator cohort, each receiving $120,000 and an opportunity to work closely with world-class mentors to grow their businesses and refine their investor pitches.
“Teams, like Onederful and Players’ Lounge, who dig in and do the hard work are natural fits for Y Combinator,” said Rhonda Shrader, executive director of the Berkeley Haas Entrepreneurship Program. “They’re great founders, focusing on the fundamentals.”
Here’s the skinny on the two startups.
Onederful
Karen Yee Taylor, EWMBA 19, co-founder & CEO
It all started with a toothache.
Karen Yee Taylor, EWMBA 19, found a dentist, went in for a 10-minute appointment, “and it turned out it wasn’t a big deal,” she said.
A week later, she received a huge bill “because the office didn’t verify my insurance and I actually wasn’t covered for this check-up.”
Since her father is a dentist, Yee Taylor suspected that something wasn’t right. “I decided to dig in, and what I discovered was a massive problem in the industry. Sorting out insurance benefits by making phone calls and faxing documents back and forth is a big waste of time and money.”
Yee Taylor and her brother, Alex Yee, are now building Onederful, a web portal that allows a dental office to verify a patient’s insurance information in seconds. The information is standardized across all the insurance carriers so offices can quickly find what they are looking for. The site is currently being tested by about 50 dental practices.
Before settling on a business plan a year ago, Yee Taylor and her brother interviewed dozens of dentists and their staffs. They found that the routine process of checking on a patient’s insurance benefits could take up to 30 minutes per patient, and reduce revenue by approximately 7 percent due to denied claims caused by eligibility errors.
To solve the problem, Onederful connected to 240 dental insurance carriers. Subscribers to its service can go to Onederful’s secure web site, type in a patient’s information and get access to their insurance plans in a standardized way.
Because patients’ dental records and related insurance information are regulated under federal HIPAA rules mandating high levels of privacy and security, much of the $120,000 awarded by Y Combinator to Onederful was used toward secure software and services, Yee Taylor says.
The team is using the remainder to pay living expenses while they work to launch the company.
They head to Y Combinator headquarters once a week to meet with mentors and work through the company’s growing pains.
“We’re meeting with great people and getting great advice,” Yee Taylor says.
Yee Taylor said a course called “Innovative Leadership Through Design” with Haas Lecturer Angèle Beausoleil helped shift her focus to users and their problems first. “It’s been the approach I take any time I question what to build or tackle next,” she said.
Players’ Lounge
Mark Murphy, MBA 17, co-founder and CFO
As an undergraduate student, Mark Murphy played multiplayer online soccer every day with his varsity soccer teammates Austin Woolridge and Zach Dixon.
Then the group graduated.
“Playing was something that we found increasingly hard to do on a consistent basis after school and it was something we really missed,” Murphy said.
As with so many inventions that fill a need, the team came up with the idea for Players’ Lounge, a video game social startup for Xbox and PlayStation users. The site hosts head-to-head matches for money, along with free tournaments for cash prizes for games including FIFA (soccer), Madden (football), NBA2K (basketball), MLB: The Show (baseball), NHL (hockey), and Call of Duty.
Players can be matched with an opponent who wants to bet, play each other online on Xbox or PS4 for no money, or join a tournament to win money.
The company is growing quickly. Both revenue and visitors to video game tournament host Players’ Lounge have roughly tripled in the last year, Murphy said.
The surge in performance has largely been driven by the video game stars, called streamers, who are paid to interact with the Players’ Lounge audience, Murphy said.
At Haas, Muphy took his idea for Players’ Lounge through the Lean Launchpad process, a rigorous methodology that helps students discover early on if a market demand exists for a product of service.
Murphy and his team conducted 50 to 60 interviews with potential customers.
The team’s original plan was to host live game-oriented events. (The team met Dan Delaney, their current CTO, at their first event.) But feedback Murphy received during the UC Berkeley LAUNCH startup boot camp program convinced him that building an online gaming platform and community had a better chance of success.
Now, the team is using the Y Combinator seed funding to help pay the streamers and fund a marketing campaign.
Murphy said the intensive mentoring provided by LAUNCH and Y Combinator has proved invaluable. (Four other LAUNCH teams —Xendit, Lendsnap, Innovein, and Dost—were also past Y Combinator startups.)
“We’re already a lot more focused,” Murphy said. “If you can’t grow with that kind of help, you probably have a bad business model.”