Apr 5, 2024, 10:00 AM ETInterview

Mario Schlosser: "How to Deal with a 94% Decline in Market Cap" | E1136

Oscar Health went public on March 3, 2021, with founders Mario Schlosser and Josh Tyler ringing the bell.
The stock price opened low on the first trading day and subsequently fell 94% from its peak.
Schlosser attributes the initial crash to market skepticism regarding cash burn, leading to a vicious cycle of downgrades and dilution fears.
The stock's 95% decline is attributed to Wall Street's inability to validate the connection between Oscar's disruption claims and its underlying business model economics.
Schlosser insists the IPO was necessary, having raised $1.5 billion to avoid forced fundraising at unfavorable terms later.
Despite the volatility, Schlosser states he does not regret going public, viewing the experience as a crucible for resilience.

Schlosser experienced a severe depressive episode following the IPO crash, requiring prescription antidepressants (Sertraline) and professional psychiatric intervention.
He maintains a daily mood log (scale 1–10) dating back to 2012 to track emotional baselines and the efficacy of medication.
The founder admits to using the "low expectations" strategy as a coping mechanism, having grown up in Germany with no expectation of attending elite US universities.
Schlosser argues that entrepreneurs should not compare their performance to peers like Elon Musk, noting that such comparisons often lead to unhappiness.
He identifies that "not caring what others think" and high intrinsic motivation are the two most critical traits for early-stage exceptionalism.
Schlosser acknowledges that while he lacks the "self-delusion" of typical billionaires, he views this trait as a potential barrier to reaching the very top tier of wealth creation.
He notes that having a stable family life served as a critical anchor during the stock's collapse, preventing the projection of professional frustration onto his children.

Schlosser stepped down as CEO to become CTO in early 2023, appointing Mark Berlini as the new CEO.
The transition was driven by the belief that a new "bag of tricks" was required for a crisis phase that the founder might not be psychologically equipped to handle a second time.
He cites the German 2018 World Cup exit as a metaphor for the need to replace leadership when the coach loses their ability to inspire.
Schlosser admits his primary weakness is avoiding difficult conversations and delegating authority, fearing the loss of status and influence.
He believes the "founder-as-CEO-for-life" model is often flawed, as different company stages require different skill sets and leadership approaches.
The decision to bring in a professional CEO was made after extensive due diligence, including reading Berlini's biography and weekly interactions over two years.
Schlosser plans to focus on personal projects, such as building games and learning languages, which he views as more intellectually rewarding than corporate management.

Schlosser identifies "misunderstanding market dynamics" as the primary reason for the lack of innovation in US healthcare, specifically the absence of a broker-like buyer for quality and price.
He argues that successful healthcare startups must have deep domain expertise; he would not invest in founders lacking this background.
Oscar was launched in 2012 specifically because it was a blue-ocean market with zero competitors and no established category.
He rejects the trend of "reinventing" sectors like chips or LLMs in favor of investing in areas with low competition, terrible talent brands, and inefficient legacy infrastructure.
Schlosser contends that the healthcare system relies on "pedestrian" improvements, such as replacing 40-year-old COBOL codebases, rather than radical theoretical disruptions.
He criticizes the "big idea" mentality in healthcare, noting that simple workflow optimizations often generate more value than revolutionary but unproven concepts.
The interview highlights the importance of finding markets where the "bar" is set low due to incumbent inefficiency, allowing new entrants to easily gain traction.

Schlosser rejects the "one-size-fits-all" professional management systems recommended by consultants, preferring to design workflows around his own cognitive strengths.
He advocates for writing down specific behavioral expectations for meetings (e.g., brainstorming vs. execution) rather than relying on vague, generic company values.
He argues that generic values like "integrity" result in a "boring middle" and that companies should adopt polarized, specific values to avoid ambiguity.
A key scaling failure point identified is the tendency for every layer of management to replicate the CEO's meeting style, creating unnecessary layers of bureaucracy.
Schlosser believes that "A-plus" talent is a statistical impossibility at scale (e.g., 3,000 employees), leading to inevitable quality degradation in large teams.
He emphasizes that the "money is the best metric for societal impact" is a functional reality of the market, despite its imperfections.

Schlosser plans to pursue a new venture in 10 years that targets an industry currently ignored by the venture capital community, similar to Oscar's 2012 position.
He values having the financial freedom to pursue "ineffective" intellectual projects, such as learning Arabic or building riddle games, without immediate commercial pressure.
The founder states he no longer judges himself by the "improbability" of Oscar's survival but aims to rediscover the naive confidence he had in 2012.
He predicts that his primary source of satisfaction in the future will be professional influence and the ability to be consulted by smart peers, rather than material wealth or social events.
Schlosser advises future founders to expect deep, recurring lows and to practice "stepping outside themselves" to observe their resilience in the moment.
He identifies that the "attention economy" and influence are more valuable than monetary status once a founder reaches a certain level of success.
The interview concludes with the sentiment that while a finite amount of time exists, the intensity of focus required to make an impact is the founder's primary responsibility.