Nobody Wanted to Fix the Fax. That's Why It Was Worth $605M.
Why the highest-leverage point in healthcare wasn't a cure. It was the paperwork everyone ignored.
Why the highest-leverage point in healthcare wasn’t a cure. It was the paperwork everyone ignored.
Here’s a number that should bother you more than it does. Roughly one in three Americans gets referred to a specialist every year, and more than half of them never make it to the appointment. Not because the diagnosis was wrong. Not because the treatment failed. Because the paperwork got lost.
A referral shows up at a specialist’s front desk by fax, email, or e-portal. Someone has to read it, decode it, check the insurance, and route it. Multiply that by hundreds of patients a day and you get backlogs, denials, and people who quietly fall out of the system while they’re waiting to be seen.
That’s the problem Tennr decided to own. Founded in 2021 by Trey Holterman, Diego Baugh, and Tyler Johnson, the company didn’t build a new drug or an AI doctor. It built language models that read the referral, pull out what matters, route it, and automate the back-office grind that used to eat hours. The result so far: a $101 million Series C led by IVP at a $605 million valuation, with a16z, Lightspeed, GV, ICONIQ, Foundation Capital, and former Snowflake chief Frank Slootman backing it. They’ve processed referrals for millions of patients across hundreds of providers, and tripled revenue in two quarters.
My favorite part is the origin story. The idea came partly from Holterman’s mom, a family-medicine doctor who’d been complaining about the referral mess for years. He joked he probably should’ve listened to her sooner. Most of us know that tale.
The model: Leverage Points in Complex Systems
In any complex system, not all problems are created equal. A leverage point is a spot where a small, well-placed push moves the whole machine. Find the right one and a modest change cascades. Push on the wrong one and you can throw enormous effort at the system and barely budge it.
US healthcare is about as complex as systems get. The instinct is to attack the glamorous nodes: the cure, the device, the AI that replaces the physician. Tennr found leverage in the node nobody respected. The handoff. The fax. Fix the information flow at the point where patients get lost, and patients stop getting lost. That’s leverage.
My take
The highest-leverage problem is almost always the one wearing the worst outfit. Boring, manual, compliance-soaked, beneath the founders chasing flashier wins. And that ugliness is the moat. The hyper-specific, unglamorous work isn’t worth it for the giant generalist models to chase, which is exactly why a focused team can own it.
I see the same thing at /mkt, building in a heavily regulated corner of the market. The friction-heavy plumbing keeps the tourists out, and that’s usually where the durable value sits. The lesson travels: don’t look for the prettiest problem. Look for the load-bearing one everybody’s been ignoring. Then go read the fax.
If this was useful, share it with someone who builds things. And if you want the full toolkit of 50 mental models, my book is coming soon.
This newsletter is for informational and educational purposes only. It isn’t investment advice, nor an offer or solicitation to buy or sell any security. References to companies, including /mkt, are illustrative and not recommendations. Figures cited are drawn from public disclosures and reporting. Do your own research and consult a licensed professional before making any financial decision.