Aug 17, 2020 · 1h 5m · how-i-built-this
Zocdoc: Oliver Kharraz
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gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
In this episode of How I Built This, Zocdoc co-founder and CEO Oliver Kharraz shares the journey of revolutionizing healthcare scheduling, overcoming the challenges of a two-sided marketplace, and executing a risky business model transformation to achieve sustainable profitability.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Guy holds 31.4% of the talking time here. How this is scored →
Guy as informed peer 4.4 Guest teaching 2.1 Guest disagreement 0.2 Guy pushing back 0.5
speaking balance: gold is Guy, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 54:14 Reframing the revenue risk of the business model transition
Oliver directly rejects Guy's assumption about a revenue drop, clarifying that the fundamental risk was losing top providers and upfront cash flow rather than immediate topline shrinkage.
Hardest push from Guy ▶ 48:34 Guy presses on why co-founders couldn't reconcile at a $1.8B valuationGuy pushes Oliver by comparing their split to married co-founders who stayed together through divorce, asking why they could not compromise with so much value at stake.
Biggest teaching moment ▶ 31:10 Explaining the physical post-it note barrier to digital syncingOliver explains the messy real-world reality of medical scheduling, educating the host on how office staff bypassed software using sticky notes on monitors.
Guy holds their own ▶ 42:52 Guy cites market coverage, unicorn valuation, and exact pricing numbersGuy demonstrates deep research by detailing Zocdoc's 2014 expansion across 40% of the US, its $1.8 billion valuation, and the specifics of its $3,000 annual provider fee.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Guy as informed peer | Guest teaching | Guest disagreement | Guy pushing back | Why |
|---|---|---|---|---|---|---|
| Oliver Kharraz's Early Life and Work Ethic in Germany | 3 | 2 | 0 | 0 | Guy Raz sets up Oliver Kharraz's backstory and asks about his upbringing in Germany as the child of an Iranian immigrant doctor. Kharraz reflects openly on his 'visual accent' and how facing prejudice forged his intense work ethic. | |
| Leaving Clinical Medicine for McKinsey Consulting | 4 | 2 | 0 | 0 | Guy notes that McKinsey functions similarly to business school for aspiring founders. Kharraz explains his structured criteria for evaluating business ideas, focusing on mission, market size, defensibility, and contrarian insights. | |
| Partnering with Cyrus Massoumi at McKinsey | 3 | 1 | 0 | 0 | Guy asks about the formation of the friendship between Kharraz and Cyrus Massoumi. Kharraz describes their complementary working styles—Massoumi's charismatic passion versus his own measured, analytical demeanor. | |
| The Spark for Zocdoc: Uncovering Hidden Medical Supply | 4 | 3 | 0 | 0 | Oliver recounts how Massoumi's ruptured eardrum revealed the inefficiency of finding a doctor. Kharraz educates the listener on the industry's 'hidden supply' caused by cancellations and no-shows. | |
| Starbucks Validation and Deciding to Resign | 4 | 1 | 1 | 1 | Guy expresses amusement that Kharraz approached random Starbucks patrons with gift cards and paper mockups. Kharraz explains that outside opinions were far more encouraging than those of fellow McKinsey consultants. | |
| Self-Funding and Recruiting Nick Ganju | 3 | 2 | 1 | 1 | Guy presses Oliver on the exact dollar amount saved before quitting McKinsey. Kharraz politely deflects, noting he is 'too German to discuss personal finances,' before describing bringing on technical co-founder Nick Ganju. | |
| Finding the Name Zocdoc and Digitizing Healthcare | 4 | 2 | 0 | 0 | Guy inquires about the origins of the name Zocdoc. Kharraz explains that premium domain names were too expensive, so they chose an invented name to build brand identity from scratch. | |
| TechCrunch Deadline and Grinding for the First Doctors | 4 | 2 | 0 | 0 | Kharraz explains how acceptance into TechCrunch accelerated their launch timeline by three months. He credits Massoumi's determination to knock on doors and face rejection to sign up the first eight dentists. | |
| TechCrunch Debut and Tackling the Hyperlocal Marketplace | 4 | 2 | 0 | 0 | Oliver shares how TechCrunch judge Guy Kawasaki publicly dismissed the concept, leading to just five bookings in the first month. He details tackling the complex hyperlocal matching of doctors, insurance, and zip codes. | |
| Mid-Episode Break and Re-Introduction | 3 | 3 | 0 | 0 | Kharraz describes embedding himself in doctor's offices to diagnose calendar sync issues, discovering office managers were relying on physical post-it notes rather than digital schedules. | |
| Pitching Silicon Valley and Securing Series A | 5 | 2 | 0 | 1 | Guy discusses the fundraising pitch on Sand Hill Road. Kharraz recounts learning that VCs distrusted McKinsey consultants in khakis, prompting them to switch to Gap t-shirts and jeans before landing a $5M Series A. | |
| Weathering the 2008 Recession and Expanding to D.C. | 5 | 2 | 0 | 0 | Oliver discusses navigating the 2008 recession and using a $100,000 Forbes contest prize to fund their second market expansion into Washington, D.C. | |
| Scaling Nationwide and the Flaws of the Subscription Model | 6 | 3 | 0 | 0 | Guy details Zocdoc's rapid expansion to 40% of US markets and unicorn valuation by 2014. Oliver explains why the $3,000 flat annual fee model created churn among low-volume practices and required heavy sales spending. | |
| Co-Founder Disagreement and Cyrus Massoumi's Exit | 6 | 2 | 1 | 3 | Guy presses Oliver on the painful split with co-founder Cyrus Massoumi over whether to stay on the subscription model or switch to transaction pricing, comparing it to other startup splits. | |
| Rebuilding Company Culture and Redefining Values | 6 | 2 | 0 | 2 | Guy brings up damaging 2015 investigative reports alleging a toxic sales culture and substance abuse. Kharraz candidly acknowledges the failure in culture and outlines how he overhauled company values. | |
| The 'Second Founding': Transitioning to Per-Booking Pricing | 6 | 3 | 0 | 1 | Oliver describes shifting to per-booking pricing. He recounts the near-disaster in New York where doctors organized petitions when bills spiked tenfold, forcing a listening tour and extended grace periods before achieving profitability in 2019. | |
| Accelerating Telehealth During the COVID-19 Pandemic | 5 | 2 | 0 | 0 | Kharraz explains that rather than retrenching during the March 2020 COVID lockdowns, Zocdoc accelerated two years of telehealth development into two months, launching a free video tool. | |
| Rebuilding Relationships and Defining Success | 5 | 2 | 0 | 0 | Guy asks about Oliver's current relationship with Massoumi and how he weighs luck versus hard work. Kharraz emphasizes that while luck is paramount, hard work is the sole variable founders control. |
Statements from this episode (23)
Kharraz: The best companies are built around contrarian insights
“And also I wanted it to be based on a contrarian insight because I thought that all of the best companies have that at its core.”
Kharraz: Long doctor wait times stem from hidden supply, not shortages
“Most people thought it's normal that people have to wait 24 days to see a doctor because there's a doctor shortage. And our insight was really that, no, you know, doctors have last minute availability because of these last minute cancellations, no shows, resch…”
Kharraz: Zocdoc validated early wireframes in Starbucks for $5 gift cards
“You know, we, what we started doing is actually mocking up the site and how we imagined it back then in PowerPoint and just the image of a website. Yeah, wireframe. Exactly. We would, And then we'd go to Starbucks and we'll chat up strangers and say, hey, here…”
Kharraz: Doctors and McKinsey consultants dismissed Zocdoc, but consumers liked it
“Oh, everyone. Everyone told us we're crazy, and we got a lot of negative feedback on the idea, too, right? People would say, this is, this just won't work, you know, I would never pick my doctor on the internet, or I already have a doctor or, you know, doctors…”
Kharraz: Domain owners wanted millions for doctors.com and physicians.com
“For a while we wanted to have a descriptive name, so we looked at physicians.com and doctors.com, and we actually tracked down the owners of one of these domains, and they wanted several million dollars for the domain name, and we were funding the company ours…”
Kharraz: Zocdoc had to install internet in doctors' offices
“In the early days, when we went out there, we were the ones installing internet in the doctor's offices. You know, we, they were many times just migrating from paper books to scheduling systems. We were sort of at the cusp of digitization for healthcare.”
Kharraz: Selling to doctors is one of the hardest sales challenges
“Selling to doctors is one of the hardest things to do.”
Kharraz: Zocdoc launched with dentists to maximize patient repeat visits
“So we began with dentists because our thinking was that people go to dentists most often, and we wanted to make sure that we have an offering that is relevant for patients as often in their lives as possible.”
Kharraz: Guy Kawasaki publicly panned Zocdoc at TechCrunch 2007 debut
“Guy Kawasaki, who we knew and valued, As an evangelist for Apple, he came out and just said he didn't get it, he would never use this in front of everyone, right? And his direct quote was something like, honestly, it would just never occur to me to go to any s…”
Kharraz: Zocdoc got only five bookings in its first month after launch
“It actually took three days before we got our first legitimate patient, and in this entire first month, we only got five bookings.”
Kharraz: Healthcare marketplaces require matching zip code, specialty, and insurance
“When you think about it, healthcare is hyperlocal and very complicated, so you have to match supply and demand on a zip code specialty level, and then we have thousands of insurances to take into account, and so we realized that our odds of actually finding a …”
Kharraz: Early medical office software was not built for calendar synchronization
“It was incredibly complicated to sync the doctor's calendars with ours, because none of the software was actually made to sync”
Kharraz: Zocdoc gave patients Amazon gift cards for failed early appointments
“I was our customer service I personally would call the doctor and confirm the appointment was all set, and if it wasn't, I'd Personally contact the patient to let them know and then I would offer them an Amazon gift card alongside with an apology.”
Kharraz: Zocdoc originally charged doctors $50 per month after a free tier
“Initially, we offered it for free, but we eventually started charging 50 dollars per month.”
Kharraz: Zocdoc raised $5M in August 2008 from Khosla, Bezos, and Benioff
“And so in August of 2008, we ended up raising five million from Coastal Ventures, Bezos Expeditions, Marc Benioff.”
Kharraz: Zocdoc charged doctors a flat $3,000 annual fee
“Yes, we charge doctors 3000 dollars a year, and that was a flat fee, no matter how many bookings ZocDoc actually facilitated for them”
Kharraz: Zocdoc analysis showed payback on many doctors took years, if ever
“And, you know, at some point during this time, you know, Nick Actually ran an analysis that showed that it would take us several years, if ever, for us to make our money back on, on many of the doctors we signed up.”
Kharraz: Very few scaled companies survive a business model pivot
“Very few companies really change their underlying business model once they have a certain scale and then live to tell about it, right? We know the names of the companies that have done this, like Netflix went from DVDs to streaming, Adobe you know, from box so…”
Kharraz: Zocdoc facilitates one in five new patient-doctor relationships in NYC
“Yeah, you look, in New York, We facilitate roughly one in five new patient-doctor relationships in the entire city on ZocDoc.”
Kharraz: Zocdoc reached near-zero churn and profitable growth after pricing shift
“Yeah, we, within a year, we had we finally had some incredible momentum. You know, it was really going better than we had expected in our wildest dreams. You know, our existing client churn went down to essentially zero. I mean, people still retire and move jo…”
Kharraz: Zocdoc in-person bookings plunged 50% to 90% in March 2020
“So when the lockdown started happening, we saw in-person bookings declining. Anywhere between 50 to 90% by the end of March.”