The CQ | Investing in Headway to Scale Therapy That's Finally Insurance-Covered
Plus the Forerunner Team's Top 10 Reads of the Week
The CQ is Forerunner’s weekly newsletter rounding up the most pressing consumer news and analysis, plus some bonus musings from our investment team. Subscribe now to get the latest edition in your inbox every weekend.
Two things are universally true about the US’s mental health crisis: 1) its growing urgency, and 2) its enormous access barrier, with untenable prices due to the prevalence of out-of-pocket practices.
Today, about 1 in 4 Americans have a treatable mental health condition, but most don’t get care. Accessibility is the primary culprit — finding a therapist that’s a great fit is a notoriously painful process of trial and error, let alone the added layer of trying to find someone who accepts insurance. Historically, therapists have been forced to make the painful trade-off of building their practice efficiently on their own terms or go the cumbersome route of accepting insurance (hence only a third accept it).
Exhausted by his own search for a therapist that accepted his insurance in San Francisco and then all over again in New York City, Andrew Adams built Headway to eliminate this bottleneck. The company’s business-in-a-box offering leads with the ability for providers to accept insurance, and in doing so is building a mental healthcare system that everyone can access.
At Forerunner, we’ve been doubling down on opportunities that reshape small business growth for SMBs & solopreneurs that have been historically late to benefit from modern commerce tools—e.g., independent retailers (Faire), independent travel agents (Fora), restauranteurs (Table22), local home service pros (Topline Pro), registered dietitians (Fay)—and Headway has proven therapists to be a highly consequential class of small business owners to build for.
The platform’s value to consumers, therapists and insurance providers is abundantly clear. In this burgeoning market it’s helped pioneer since in 2019, Headway has scaled its network to 34K providers leveraging its platform to run their private practices, and is in-network today with 40+ commercial health plans across 50 states. Next up: Medicare and Medicaid.
Forerunner couldn’t be more motivated by the vision and to back the next chapter alongside Spark Capital, Thrive Capital, A16Z, and Accel.
What We’re Talking About on Slack:
The white-collar hiring rut is here. That’s bad news for young college grads. Recently, hiring for jobs that require a B.A. have dipped to below 2019 rates—and young people are getting hit the hardest due to lack of turnover and more companies opting for layoffs to trim spend. According to a spring survey, employers said they planned to hire 6% fewer new graduates than they did last year. Many companies are also shifting investments to gen AI to take over the tasks of some traditionally in-demand workers.
Google is keeping cookies in Chrome after all. After four years of battling with advertisers and regulators, Google has decided not to replace the tracking technology which would have made it difficult for digital publishers, ad-tech companies, and data brokers to utilize data to target online ads. What is changing is that Chrome users will be given a prompt to choose whether to turn cookies on or off. “Under Google’s new approach, users may opt out en masse. That could effectively make cookies obsolete, but shield Google from any anticompetitive liability for blocking them.”
Bloomberg delves into the real reason Erewhon is a cult brand. “Don’t let the sea moss gel and spirulina fool you: Erewhon isn’t successful because it’s weird—it isn’t even all that weird. The company is successful because it understands just what young Americans seem to want from their grocery stores.” They’re cooking less than other generations but the increasing costs of eating at restaurants has driven them to the deli sections of grocery stores—where the margins work in favor of the grocer. And with Whole Foods struggling to maintain popularity, Erewhon saw the perfect opportunity to swoop in.
The data that powers AI might be disappearing fast. As more publishers and online platforms are taking action to restrict their content from being used to train AI—whether through setting up paywalls, changing terms of service, or blocking automated web crawlers used by companies like OpenAI, Anthropic, and Google—a new study from a M.I.T.-led research group has discovered an “emerging crisis in consent.” Some sites, like Reddit, have struck deals for the use of their data, while others like The New York Times have taken legal action for copyright infringement. “A.I. companies have claimed that their use of public web data is legally protected under fair use. But gathering new data has gotten trickier. Some A.I. executives…worry about hitting the ‘data wall’— the point at which all of the training data on the public internet has been exhausted, and the rest has been hidden behind paywalls, blocked by robots.txt or locked up in exclusive deals.”
The Wall Street Journal takes a look at why Americans aren’t having babies (TL;DR - it’s a mix of costs and simply not wanting to). Women without children make up over two-thirds of the 6.5% drop in average births between 2012 to 2022. And a Pew survey showed that 44% of childless adults ages 18 to 49 said they were not likely, or not at all likely, to have children, which is up from 37% in 2018. One determining factor is that raising kids is more expensive because parents want to provide their kids with more opportunities and experiences, mixed with rising costs. Middle-class households with a preschooler more than quadrupled spending on child care between 1995 and 2023. Research has also found that the longer people wait to have children, the less likely they are to have them, whether from increased risk of infertility or because they don’t want to lose their freedom. Says one 42-year-old woman, “I wouldn’t mess up the dynamic in my life right now for anything, especially someone that is 100% dependent on me.”
Sam Altman-backed group completes largest U.S. study on basic income. Altman has been an advocate of no-strings-attached cash payments to offset the negative effects of technology automating people’s jobs. For the past three years, his organization has given out monthly stipends of $1,000 to participants in Illinois and Texas. The researchers discovered that “recipients spend more to meet their basic needs and assist others, and don't drop out of the workforce—although they work slightly fewer hours. But the researchers’ biggest takeaway is that cash provides flexibility.” Participants were more likely to become more focused on their futures, devoting more time to their health, setting a budget, building savings, or moving houses or neighborhoods than the control group.
Amazon Prime Day drives U.S. online sales to record $14.2 billion. Last year, shoppers focused on pantry staples and office supplies, while this year saw a surge in sales of tablets, TVs and Bluetooth speakers. Consumers spent more per order this year, with an average order size of $57.97, up from $54.05 from last year. “Shoppers purchased fewer big-ticket items than we’ve seen in past years, and fewer participants placed multiple orders throughout the sale, indicating a shift to more conscious shopping and a preference for saving over splurging.”
FTC launches probe into ‘surveillance pricing’ that it says links cost to customer data. The Federal Trade Commission is investigating how AI is being used to allow companies to charge different consumers different prices based on data about customer behavior and characteristics. Eight companies including Mastercard, JPMorgan Chase, and Accenture, have been served a mandatory request for information from how the companies collect consumer data to how customers are using their products or services, and what effect that has on pricing.
Gen Z feels guilty over last summer’s spending, citing dining out as a major reason. A Cash App survey of Americans ages 16 to 26 found that 53% spent beyond their means. In terms of their spending last summer, 73% said they regret how much they spent and 42% said a good chunk was from restaurants. What’s also interesting is how money has led to friendship drama—73% of Gen Z have said they’ve had at least one negative experience due to cost sharing with friends and 80% have said this is a reason they’re stressed about vacationing with friends.
Semi-related: Fortune reports that Gen Z is embracing ‘underconsumptioncore’ to fight climate change and inflation. Business of Fashion continues the conversation, explaining that while young consumers are craving a simpler lifestyle in reaction to the excess of influencer hauls and their own dwindling bank accounts, some underconsumption videos can also “have a luxury bent, with the creator arguing a handful of prestige makeup products have lasted longer than cheaper alternatives and negated the need for other products.”
Portfolio News:
Axios, MobiHealthNews, and Reuters report that Headway has raised $100M, more than doubling its valuation to $2.3B.
Ritual’s Chief Impact Officer Lindsay Dahl is quoted in Vogue Business explaining what the fashion industry can learn from the brand’s supply chain.
Glossier ranks among TikTok’s top 10 indie makeup brands by follower growth and engagement, says WWD.
Axios reports how investors are increasingly interested in food tech companies, offering the example of Wonder in the food delivery space.
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I love it. It’s the the exact kind of platform we need in this day and age