Locked Down and Uptight? Israeli-founded Online Service Might Be the Solution

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Illustration: An online therapy session.
Illustration: An online therapy session.Credit: Muqamba / iStockphoto via Getty

The online psychotherapy service offered by BetterHelp sounds like it was created especially for the coronavirus crisis. Millions of people around the world are suffering from anxiety, loneliness and emotional distress because of lockdowns and fears for their health and financial wellbeing. But they can’t leave the house to get help. For them, BetterHelp has 10,000 certified therapists available by video, telephone or chat.

“Even though we have grown quite quickly in the last few years, the last few months have been something else altogether. The growth is like nothing we’ve seen before,” president and founder Alon Matas told TheMarker. “For problems of depression, anxiety and tension, we’ve seen an increase of more than 100% in inquiries, compared with March through July in 2019, both by current and new users. It’s all due to the stress and anxiety of the health and economic situation, and the bleak mood.”

But it’s more than coronavirus restrictions that have made online therapy a viable option. “There’s also a long-term trend of people growing accustomed to working online. What happened with shopping in the late 1990s is happening now in other areas. There’s more openness to using online services in areas that once were exclusively for face to face interactions,” says Alon. “My wife, who four months ago had never heard of Zoom, just finished a yoga lesson on Zoom. The [online] trend has gotten a big boost. It’s something that I don’t think is going to disappear even when the situation in the world improves.”

Matas founded BetterHelp in 2013, and sold it two years later to Teladoc, a U.S. company traded on the New York Stock Exchange that specializes in telemedicine services. Coincidentally, BetterHelp’s chief competitor, Talkspace, was also founded by Israelis – husband and wife Oren and Roni Frank. So at present, 90% of the online mental health services market in the United States is controlled by companies founded by Israeli entrepreneurs.

BetterHelp president and founder Alon Matas.

BetterHelp is Matas’ fourth startup. Ten years ago he moved to the U.S. to found the U.S. office of an earlier startup, the online advertising company MediaBoost. “It was going okay for us, we had revenue and we were breaking even. But there was a lot of drama and problems with the investors. As the founder, I was suffering isolation and emotional stress, and so I started to look into psychotherapy. I didn’t realize how complicated, inaccessible and expensive it would be. You have to set aside an hour and a half or two hours a week, to explain where you’re going. So I ended up dealing with things by myself.”

The startup was eventually sold, but Matas was left with the feeling that there was an unmet market need he could address. A quarter of Americans could use therapy, but only a small percentage go for it, according to experts.

“I’d been to couples therapy, and it was a life-changing experience. For most people, therapy is of huge value. But the process isn’t accessible enough and there are negative stigmas attached to it. On the other hand, psychologists are not well off by and large. The top 1% fill their appointment books with sessions that cost hundreds of dollars an hour, but most struggle to get by. It’s an odd situation – a market with two sides to it, one that wants to give and one that wants to get – but they’re not connecting. We realized that unlike regular medical care, psychotherapy is all about communication, you don’t need the physical presence. You don’t have to touch anyone.”

Matas and his partner Danny Bragonier founded BetterHelp, which initially allowed people to correspond with certified therapists by text message. The site went live at 4:00 P.M. on August 30, 2013.

“At 4:30, the first customer had already typed in his credit card number,” Matas says. “It took us one week to see that there was a good match here between the product and the market. And really, since then we haven’t made any major changes. The product is still very similar to what was launched in 2013. It’s not a complex tech product: There’s a therapist who knows how to provide therapy, and we facilitate the meeting and take care of the billing, the security, the technology and the marketing – but we don’t touch the therapy itself.”

The company has never raised outside capital. After it really started to take off in 2014, with $2 million to $3 million in annual revenue and many therapists and patients, the two founders wanted to raise more capital. Matas figured it would be a walk in the park, but it turned out to be much harder than expected. “I think it has to do with the field. Today, mental health care is more accepted, but six years ago the situation was different.”

Then an article about the service appeared in the Wall Street Journal, which attracted the attention of the vice president of finance at Teladoc. “He emailed us and asked to meet with our vice president of business development. We were just two people, right? I wrote him back, ‘Dude, I’m support and the product, the design and the marketing.’”

Teladoc acquired BetterHelp for just $3.5 million in cash plus Teladoc shares. Shortly after the acquisition, Teladoc went public and its share price has since risen by 650%, including a sharp increase since the onset of the pandemic. Still, in retrospect, it was a bargain for Teladoc. By 2019, BetterHelp recorded $100 million in revenue. The company now employs 100 people and operates with relative autonomy under Teladoc.

Looking back, do you have regrets about selling cheaply?

Matas: “Of course I think about it, but I don’t let myself get caught up in it. I don’t know how things would have developed if we hadn’t sold. Maybe we would have made different decisions that led us somewhere else. Also, I remind myself that, to a certain degree, BetterHelp began because of the trauma I experienced with my previous startup. ... [Instead] I was able to focus on creating the business without constantly being on the brink of death – that’s worth a lot. I’m not sorry on the financial level either. Because of our success and because of the way things are built, it was very rewarding. Besides, I never had a start-up before where I received five to 10 emails a day from people telling me that we changed or saved their lives. It’s a unique experience I don’t see how I could have had otherwise.”

In April, somewhat under the radar, BetterHelp launched its service in Israel, its first non-English-speaking market. For a regular fee of 115-185 shekels ($33.50-$53.80) a week – slightly less than U.S., rates if $40 to $70 – a client can see a therapist by video chat, phone or text in real time at a pre-scheduled hour. There is also an option of communicating with a therapist by text not in real time. The client sends a question and receives an answer either the same day or the next day. There is no limit on the amount and type of use. Matas says dozens of therapists and hundreds of patients have already signed up for the Israeli site.

“Half of our users in the U.S. use written communication – messages not in real time. Others combine a weekly video chat that follows the more traditional 50-minute model, and between sessions they also correspond by text,” Matas says. The therapists receive payment based on how much they work in the system. It is not tied to their clients’ payments to the company. Matas says that in the U.S., about a third of the therapists are full-time or almost full-time, and for the rest it’s supplemental income. “The therapists at the top earn more than $100,000 a year.”

Why did you choose to expand to Israel?

“We work in the U.S., all of our therapists and staff are in the U.S. We aim at an English-speaking audience – in America, Canada, Australia and Britain. But we have ambitions of expanding to other local markets. ... We focused first on countries where psychologists are widely used. In that respect, Israel is an excellent destination, because Israelis are open to the idea of therapy. Second, it’s sad, but insurance coverage for psychotherapy here is among the worst in the West. In Germany, for instance, a doctor writes a prescription for an unlimited period of subsidized psychotherapy. From this perspective, a private player like us, which isn’t supported by insurance, can easily compete in Israel. The other thing is that I know the Israeli market and we have other Israelis on the team. Also, on a personal level, when the coronavirus crisis started and people from Israel were asking, ‘Why isn’t your company in Israel?’ I was a lot more interested in helping Israelis than anyone else.”

Patients, as a rule, have no problem with the idea of online therapy. But it was a lot harder for therapists and psychologists to accept it at first. Many were skeptical of whether a real emotional connection based on mutual trust could be created by video chat and all the more by text. The patient and therapist have to be sitting in the same room together, so they can discern body language and facial expressions.

“The first therapist I spoke to about the idea, an Israeli woman from Palo Alto, hated the idea and said it was dangerous,” Matas says. “We spoke again four weeks ago and I asked her how things had been going since the coronavirus started. She said she switched all her patients to Zoom and it was working pretty well. I asked her if she would return to the clinic now and she said, ‘No, I think I’ll keep most of my patients on Zoom.’ So sometimes necessity makes us try something and then you find out that it actually works very well.”

For many therapists, it wasn’t easy to adjust to the new treatment method. “They said the best method is the weekly 50-minute session. And I said, “Really, are you sure? Maybe the best method is a 10-minute talk every day. Or 35 minutes twice a week.’ The reason we’ve gotten accustomed to the weekly 50-minute session is that logistically it’s more convenient for the therapist.”

Matas says that in online therapy, where the user corresponds via text from his day-to-day environment, openness and connection and trust actually develop a lot faster than in regular therapy. But there are drawbacks, too, he is quick to admit. “A lot of therapists say that patients whom they hardly know are pouring out 10 years’ worth of problems in the first message, and that’s not easy to deal with.”

Another challenge is the strict regulation of psychotherapy in the U.S. “It’s like medicine, you need licenses. In Israel if you think you’re a smart and successful person, you hang up a sign – ‘Couples’ Therapist’ and go for it. In America, you’d go to jail.”

The company’s main competition comes from Talkspace, a New York-based start-up, which seems to be ahead when it comes to branding and marketing, though Matas says that BetterHelp has a larger market share.

“I think it’s good they are raising awareness about this category. In our internal discussions, we say things like, ‘Talkspace is doing such and such, or they’re beating us here.’ I’m competitive, but I think the competition isn’t really over the slice of the pie. Our competition is with the neighbor or friends, the people from whom people take advice instead of talking to a certified therapist – advice that doesn’t necessarily lead them in the right direction. The pie is huge, online therapy is just 2% of the therapy market,” he says.

When the company was launched, Matas mapped out the market and found that there were 35 online psychotherapy companies. The two that have survived are BetterHelp and Talkspace. They are rivals but Matas says that he and Oren Frank, the founder of Talkspace, talk. “I wouldn’t say that we’re working together. But we do have a shared interest in the issue of regulation,” Matas says.

“What sets us apart, besides the fact that we’re both Israelis, is that we’re the only ones who don’t come from the field of therapy. Others came from that world and tried to take their clinical knowledge and apply it to a consumer product. They were mostly concerned with the therapist’s side of it. We’re all about a consumer product. What matters to me is what the consumer wants and what his expectations are, what he’s willing to pay for and what brings him value. The service provider? He’ll work it out,” he says.

In general, he feels that founders of consumer technology companies should not come from they industry they are entering. “I see this working in the biggest success stories: If the founders of Uber had known something about transportation, they never would have founded Uber. If the Airbnb people knew anything about the hospitality industry, they never would have founded Airbnb.”

What do you think about introducing tech solutions, like artificial intelligence, to provide psychotherapy or automatically identify problems based on what the patient says?

“I get asked once a week when we’re going to use AI. I don’t see it happening. It’s a solution in search of a problem. You could use language-identification technology on a patient’s correspondence to diagnose that he is suffering from anxiety. But if a therapist isn’t able to read a text and tell that a patient is having anxiety, he probably shouldn’t be a therapist.”

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