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

Intro (00:00:00)

• Mario Schlosser and Josh went public with their company in March 2021.
• The stock price fell significantly after the opening.
• Mario emphasizes the importance of staying calm and composed during difficult times.

Background (00:00:57)

• Mario believes that the best entrepreneurs are shaped early in life.
• As a child, Mario displayed a high degree of intrinsic motivation and independence.
• He received a Sinclair ZX81 computer from a friend of his father and became fascinated with programming.
• Mario's persistence, intrinsic motivation, and disregard for others' opinions were key factors in his success.

Early Signs of Exceptionalism (00:02:15)

• Mario Schlosser believes that exceptional entrepreneurs show early signs of exceptionalism, but it's difficult to predict who will achieve incredible success based solely on one aspect or a measurable test.
• Schlosser emphasizes the importance of persistence, caring about what others do, and cognitive capacity in driving performance.
• He suggests that having lower expectations can lead to higher resilience and a greater sense of accomplishment when achieving success.
• Schlosser highlights the value of being around people with high expectations to expand one's mindset and see the potential for greater achievements.
• He mentions the German competition "Jugend forscht" as an example of how exposure to high-achieving individuals can inspire and motivate others to pursue exceptional endeavors.

Understanding Stock Market Dynamics (00:07:11)

• Mario Schlosser highlights the challenges of innovating in healthcare due to market complexities and the need for deep domain expertise.
• Schlosser cautions against investing in founders lacking healthcare expertise and emphasizes the importance of understanding the unique characteristics of the industry.
• Despite the potential for disruptive changes like AI-based doctors, Schlosser notes the absence of such advancements in the past 15-40 years.
• Reflecting on his own experience, Schlosser would still choose to start an insurance company in 2012 due to its novelty at the time.
• Schlosser acknowledges the influx of smart, tech-oriented individuals entering the healthcare industry, which was not the case during his initial venture.

Reflections on Going Public (00:11:59)

• Mario Schlosser, CEO of Oscar Health, discusses the reasons behind the 94% decline in Oscar's market capitalization after going public.
• One reason was the perception that Oscar was running out of money, leading to negative analyst reports and a declining stock price.
• Another reason was the lack of clarity among investors about Oscar's business model and its potential to disrupt the healthcare industry.
• Schlosser acknowledges that Oscar could have better communicated its efficiency and impact on healthcare economics to the public and Wall Street.
• He emphasizes the importance of understanding underlying figures and data when evaluating a company's performance, rather than relying solely on stock price fluctuations.
• Schlosser highlights the challenges of communicating complex financial information to public markets, which have limited attention spans and prefer simple explanations.
• Direct CEO communication can be helpful in simplifying messages and connecting with investors.
• Schlosser expresses no regrets about going public, emphasizing the value of the experience and the capital raised through the IPO.
• He stresses the importance of securing sufficient funding to avoid dilution and potential bankruptcy.
• Schlosser describes the emotional toll of experiencing a significant market decline, including embarrassment and self-doubt, and sought professional help to cope with the psychological impact.
• He recommends seeking professional help during difficult times to maintain functionality and fulfill responsibilities.
• Schlosser discusses personal strategies for dealing with difficult times, including tracking moods and emotions to gain insights into personal patterns and well-being.
• He highlights the potential benefits and drawbacks of using anti-depressants, particularly in relation to entrepreneurship and decision-making.
• Schlosser emphasizes the importance of maintaining a stable family life during challenging periods and the support it can provide.
• He suggests avoiding constantly monitoring stock prices as a coping mechanism during market downturns.

Balancing Personal Life & CEO Responsibilities (00:28:57)

• Mario Schlosser discusses how to cope with a significant decline in market capitalization, emphasizing the importance of emotional support from loved ones during challenging times.
• He suggests finding stability in nature and learning from past experiences to better face future difficulties.
• Schlosser advises entrepreneurs not to take departures personally and to view challenges as opportunities for growth rather than obstacles.
• He reminds us that business struggles are often less severe compared to real-world conflicts like wars.
• Schlosser recommends that CEOs focus on customers, employees, and shareholders, while cautioning against relying solely on stock advice from VCs and books.

What CEO-ship is About? (00:33:31)

• Mario Schlosser, former CEO of Oscar Health, discusses the challenges of providing universal dietary advice due to individual differences in metabolism and genetics.
• Schlosser emphasizes the importance of self-awareness and understanding one's strengths and weaknesses rather than comparing oneself to others.
• He warns against having a fixed vision, as it can underestimate one's true abilities and potential.
• Schlosser describes his decision to step down as CEO and transition to the role of CTO, citing concerns about his ability to effectively lead the company through future crises.
• He highlights the importance of finding the right successor and emphasizes the need for different leadership skills at different stages of a company's growth.
• Schlosser criticizes the idolization of tech founders and argues that they may not always be the best CEOs as companies evolve.
• He stresses the significance of fully committing to a transition out of the CEO role and avoiding situations where former CEOs continue to exert influence.
• Schlosser shares his insights on delegation, discussing tasks he enjoys delegating and those he finds challenging.

Building Organizations Based on Personal Preferences (00:44:55)

• Mario Schlosser discusses his preference for building organizations based on personal preferences and the challenges of transitioning from a position of top authority to a more collaborative leadership style.
• He acknowledges the difficulty of delivering tough messages and his tendency to shy away from hard conversations due to discomfort and a desire to be liked.
• Schlosser highlights the importance of having difficult conversations and emphasizes the need for direct and honest feedback, even when it is unpleasant.

Having Hard Conversations (00:47:14)

• Schlosser stresses the significance of receiving honest feedback, even when it is difficult to hear, and encourages individuals to be willing to accept criticism.
• He describes a personal experience where he felt overwhelmed by negative feedback and discusses strategies for coping with difficult situations, such as opening challenging emails in the presence of others.
• Schlosser mentions a specific instance involving the redistribution of revenue by the federal government in the insurance market.

Dealing with Bad News (00:48:40)

• Mario Schlosser, the CEO of Oscar Health, discusses the challenges of dealing with risk adjustments in the insurance industry, which can significantly impact revenue.
• Schlosser emphasizes the importance of emotional support when facing difficult situations and suggests sharing the burden with others.
• He advises founders to build organizations according to their own preferences and leadership style rather than blindly following the advice of professional managers.
• Schlosser highlights the value of learning from others but cautions against strictly adhering to conventional management systems.
• He stresses the significance of regularly reviewing company priorities with team members to ensure alignment and focus.

Pitfalls of Professionalizing Management (00:53:08)

• Mario Schlosser believes that professionalizing management at the top level leads to a cascading effect where everyone below tries to do the same, resulting in excessive layers of management, meetings, and spans of control, and fewer people doing the actual work.
• Unspoken expectations about how things should run can also be problematic. Schlosser cites an example from Oscar where the company didn't have written values for two years, which led to confusion and inconsistency.

Importance of Expectations & Behaviors (00:54:43)

• Companies should establish clear and specific values that align with their culture, rather than using bland and generic statements.
• Mario Schlosser believes that others should assess his worth based on his contributions to society and trusts the system to allocate value accordingly.
• Schlosser emphasizes the misalignment of values in healthcare systems and the need to address inequities faced by women and people of color in terms of opportunities and compensation.
• Schlosser suggests that those who achieve great wealth often possess a strong sense of entitlement and self-delusion, which may be necessary for success but can also be detrimental.
• Schlosser highlights the contrast between the normal distribution of IQ scores and the power law distribution of wealth and influence, indicating that non-linear and random factors influence the transition from one to the other.

Relationship with Money (01:01:23)

• Mario Schlosser achieved millionaire status during a fundraising round in 2015, experiencing a mix of accomplishment, relief, and increased responsibility.
• Schlosser believes that mathematicians and Nobel laureates often produce their best work before age 35 due to their risk-taking nature and willingness to explore the unknown.
• He aims to overcome the sense of improbability associated with success and recapture the naivety and confidence he had in 2012 when approaching future endeavors.
• Schlosser values intellectual freedom and finds joy in activities like language learning and programming, without being driven by material possessions.
• He discusses the concept of discounting improbable events and emphasizes the importance of influence and being in the right social circles, comparing it to Mark Zuckerberg's potential desire for exclusive events.
• In the attention economy, particularly in Silicon Valley, Schlosser suggests that influence becomes more valuable than money.
• He highlights the significance of being sought after for knowledge and expertise, rather than focusing on material possessions or celebrity events.
• Schlosser acknowledges the creativity and performance level of actors and writers, emphasizing the value of engaging in stimulating conversations.

Quick-Fire Round (01:08:15)

• Mario Schlosser reflects on his changed perspective on time and productivity, appreciating each day and seeking meaningful tasks.
• Having children has shifted his priorities, teaching him to cherish time and find joy in everyday moments.
• Schlosser emphasizes communication and shared experiences for a happy marriage, suggesting interesting conversations and adventures to strengthen the bond.
• He believes maintaining attention and having things to talk about is key to a successful marriage, as attraction and other factors can fluctuate.
• Schlosser prefers being in a cage with a tiger over swimming with a shark, viewing drowning as more unpleasant and appreciating the ability to scream louder in the tiger's cage.
• Reflecting on his experience with Oscar, Schlosser advises entrepreneurs to acknowledge the pain and lows of entrepreneurship and to step outside themselves to observe their progress and resilience.
• Mario Schlosser emphasizes maintaining intensity and not letting it fade away in business.
• He highlights the value of working with people who complement each other's skills and strengths, rather than seeking a perfectly balanced partnership.
• Schlosser stresses the significance of recognizing that business is still a business, and that relationships should not be solely focused on one person.
• He expresses his hope for the future, aiming to be in a position similar to Oscar in 2012, where he can make a significant impact in an overlooked area.