#196: Stephen McHale (Graici & Unify Labs) — Serial Entrepreneurship & the Pursuit of Inclusive Prosperity

Steve McHale [00:00:00]:
The observation is that we're still struggling with, significant portion of our population to have them in a really healthy and productive and prosperous, that's a word, environment in economy. So that is continues to be almost accepted that it's entrenched. It's just it's the way it is. And I really believe it doesn't need to be that way. And I do think that there's opportunities for us to change really the world of how people live together.

Jeffrey Stern [00:00:33]:
Let's discover what people are building in the Greater Cleveland community. We are telling the stories of Northeast Ohio's entrepreneurs, builders, and those supporting them. Welcome to the Lay of the Land podcast where we are exploring what people are building in Cleveland and throughout Northeast Ohio. I am your host, Jeffrey Stern and today, I had the real pleasure of speaking with Stephen McHale, a long time Cleveland serial entrepreneur with a 40 year career founding, investing in, and building companies. Most notably, Steve served as chairman of the board and chief executive officer of Explorus, which he formed back in 2009 in partnership with the Cleveland Clinic. He co founded and funded Explorus with Charlie Lougheed, one of my former co founders from ACTUAL, where Steve is also a board member. In 6 years, Explorus became the leader in leveraging electronic medical records, health care big data, and value based care analytics, spanning 26 health care networks, 60 hospitals, and 60,000,000 patients across the US, ultimately leading to its acquisition by IBM in April of 2015. Prior to Explorus, Steve served as the chairman of the board and CEO of Everstream, the company he had founded back in 1999, which was sold to Concurrent in 2005 as a market leader in broadband and content analytics.

Jeffrey Stern [00:01:58]:
Beyond his role serving on boards of the Cleveland Clinic, Cleveland Orchestra, Cleveland Museum of Natural History, Jumpstart and others, today, Steve serves as the cofounder and director of Unify Labs, a 501c3 he formed in 2017 to power inclusive prosperity, and CEO of GRACI, a universal personal AI powered assistant inspired by the work and research conducted at Unify Labs. Please enjoy this fascinating conversation with Steve McHale after a brief message from our sponsor. Leave the Land is brought to you by John Carroll University's Boulder College of Business, widely recognized as one of the top business schools in the region. As we've heard time and time again from entrepreneurs here on Lay of the Land, many of whom are proud alumni of John Carroll University, success in this ever changing world of business requires a dynamic and innovative mindset, deep understanding of emerging technologies and systems, strong ethics, leadership prowess, acute business acumen, all qualities nurtured through the Bowler College of Business. With 4 different MBA programs of study spanning professional, online, hybrid, and 1 year flexible, the Bowler College of Business provides flexible timelines in various class structures for each MBA track, including online, in person, hybrid, and asynchronous. All to offer the most effective options for you, including the ability to participate in an elective international study tour, providing unparalleled opportunities to expand your global business knowledge by networking with local companies overseas and experiencing a new culture. The career impact of a bowler MBA is formative and will help prepare you for this future of business and get more out of your career. To learn more about John Carroll University's Buller MBA programs, please go to business.jcu.edu.

Jeffrey Stern [00:03:48]:
The Buller College of Business is fully accredited by AACSB International, the highest accreditation a college of business can have. Steve, welcome to lay of land.

Steve McHale [00:04:00]:
Thank you. Glad to be here.

Jeffrey Stern [00:04:02]:
As far as Cleveland entrepreneurs go, it is great to have a, you know, real local legend on the podcast. And I I say that in part to set a proper stage for our conversation today, but I think, like, a lot of legends, there's a certain lore, you know, shrouded in a fog of unknown around it. And so I'm excited to brew through some of that opacity and hear it right from you, you know, your thoughts, reflections, how you're thinking about the future. And that that whole sentiment for me is, I think, personally amplified because my cofounder in Actual was your cofounder in Explorist and someone you've worked very closely with over the years. And so I think through this linked entrepreneurial lineage of sorts, I've heard bits and pieces of stories about your leadership and and navigating of challenges and different situations. And I think overall philosophy and and thinking as it's applied to entrepreneurship. So I am excited to hear it directly from you. Alrighty.

Jeffrey Stern [00:04:59]:
So I wanna start with something I feel is kinda core to you as a person. You know, people talk a lot about serial entrepreneurs and serial entrepreneurship. I think very few people I know have embodied and demonstrated that mentality more than you have, where I see it almost less than something you have done and something much deeper within, you know, who you are as a person, almost, you know, compulsory something you must do. And so I'd love to understand how you've thought about what that internal drive to build things over and over is, and really when you came to first recognize that spirit, you know, within yourself.

Steve McHale [00:05:34]:
Well, I think the elements as it relates to, you know, my core are that I like to solve problems. I really do. I just am driven by that. And to solve problems from my perspective, it requires innovation and invention, and that provides a really stimulating environment for me. As I as I graduated college and I had some job offers and I was, because I had a management information systems degree, MIS, which was a newer degree that, wasn't in just the CS, but it also, spanned across business. It was a newer style of degree. And, well, I started as a music I thought I was gonna be a percussionist, but then I I made the jump over. And then the drummer would mop the floor with me, and I was I was gonna starve, and they were gonna starve.

Steve McHale [00:06:31]:
I switched over to engineering and and management information systems. That's going way back. But I, you know, I just remember when I came out into the market and the jobs that were there, kinda had me pigeonholed into writing code because I, you know, learned assembler and Fortran and COBOL and all those languages. And I was like, ugh. I really was struggling with the concept of sitting in a cube or sitting at a desk, writing all the code. And I I did like writing code. I won't tell you that I was the best code writer because I was I was pretty good, but I wasn't, like, a superstar anyway. I was more in the business element of things and, interested in what how the world was changing.

Steve McHale [00:07:10]:
I think the awareness of that was when I changed my degree, and then I added a component to it, which was the MIS was also I added psychology as a sub major, because I was so interested in how technology was gonna change human behavior. I was, like, just really a transformative thing that's starting to come upon us. And this is a while back. I mean, I was trained on an IBM mainframe, like, it's punch cards and things like that, but I was really stimulated by that. And so I I think that's what inspired really my serial entrepreneurship is wanting to solve problems, just loving the process of inventing things, and then sitting back and watching what happens. You know?

Jeffrey Stern [00:07:54]:
So how did you break into entrepreneurship, if you will? You know, if you kinda reflect on the history of of companies that you have started and built, you know, working our way back from, you know, Explorus, Everstream, I believe it it was, McHale US Connect before that. But you're just kinda walk us through the the evolution of of your entrepreneurial journey.

Steve McHale [00:08:16]:
Yeah. The, it was that experience going on. I don't wanna be in this cubicle writing code, but more importantly, it was I I'd seen so many things that I thought could be tech enabled. I've been blessed with, you know, my dad taking me under his wing in in summers in between my college years. I would go out with him and and into the manufacturing plants. I was selling material handling equipment and stuff. And, you know, I got my spending money for the whole year by selling with my dad and working with him. But I I got to see so many systems, right, that were, you know, big steel mills.

Steve McHale [00:08:51]:
I was in a steel I was actually in a steel mill in LTV back in the day when they had a cobble. And I watched the the whole place just burst into action when the steel cobbled up in the mill. So these experiences, I think, meant a lot to me because it I could see that so much was there to invent. I kept thinking about all the people that invented the things I was experiencing and saying that would be super exciting. And then as I was watching what was happening with the manufacturers, the small and midsize ones had really no technology. They were just cobbling things together. And I was like, well, this is a growth opportunity. So I started to do research, and I found an organization that had a mini computer bay we used to call them mini computers back then versus a mainframe.

Steve McHale [00:09:36]:
Yeah. Right. Timeshare. And I aligned with them and said, let's go sell manufacturing and MRP solutions into these, into these environments. And while that really, that didn't work out with them because their software wasn't didn't fit, I did find this other group, Micah Manufacturing, that had written in Cobalt, and I knew Cobalt that built something, MRP systems for small and midsize manufacturers. And that's I went straight into that, and I loved it. So I was implementing these MRP systems and local area networks at the same time. Local area networks had just come out.

Steve McHale [00:10:10]:
So instead of putting them on, I had someone, Unix and Zenix, but I really focused hard on local area networks because I believe networks were what we're gonna run the world at some point.

Jeffrey Stern [00:10:21]:
Well, and and I think that's been proven correct.

Steve McHale [00:10:24]:
Yeah. I would say maybe I thought that. It's easy to look back and say, yeah. I was seeing it that way, but a part of it's probably luck, you know, that I, you know, picked the right horse. But, you know, my project well, I guess, maybe I could substantiate my belief in the networks. My senior project in the MIS program was to build a system, and I chose to write and build a system for the AFLCO Lettuce Pickers Union.

Jeffrey Stern [00:10:51]:
Yeah. And I

Steve McHale [00:10:52]:
chose IBM PCs who had just come out using 300 baud modems, and I got a d on it. So, you know, they're just like, what are you talking about? You know, this is ridiculous. And so there was no network cards or anything, but there was modem. So I took a swing at it. Didn't go well with the professor. But I did graduate. I did get through the class.

Jeffrey Stern [00:11:13]:
So when when you think about picking the right horse from an industry standpoint, you know, obviously, your career, I think, has spanned quite a few at this point. How did you go about understanding what even were the right problems for you to solve from a business standpoint?

Steve McHale [00:11:30]:
I've, thought about this because I a couple other, you know, part of the entrepreneurs organization and that they have you do your journey and things. So that's at least I have that experience of doing some of that work. It's like my life experiences that I listen to them, I think, and then I start to then fan out and look around and go, well, this is what's happening in my life. An example would be, Explorus, which is I was having a diagnostic procedure, just a checkup. And I was talking to my doctor afterwards, and as, you know, the scope printed out this piece of paper, and he pulled it off. He tore it off, and I said, what are you gonna do with that? And he looks at it, and he sticks it in a paper folder. And I'm going, oh. You know, I was just woke up.

Steve McHale [00:12:18]:
I was just sitting there going, this is that's not gonna last. I mean, this is crazy. I mean, manufacturing and banking were already, you know, digitizing everything, and the technology was really steaming along. And I'm like, well, this is this is gonna start to happen. So I I started trolling around the Cleveland Clinic. I just literally went and met people. I just I said, can you introduce me to somebody else? Can you introduce me to somebody else? Then I bopped around and, you know, ran into some people that were supportive and helpful and others that were just kinda, like, not. And then eventually and they didn't.

Steve McHale [00:12:53]:
It was I probably picked the wrong people. I'm not being, critical of the clinic at all. And then I finally got to an individual there that, you know, was really interested in the fact that I had experienced manufacturing and telecom and other places and saying, as an entrepreneur. And they're going, okay. Well, we need entrepreneurs. And I said, well, I'm also the money in the jockey. So I said, I've got some capital that I can invest in. So that's one example of how I observe things in the world.

Steve McHale [00:13:19]:
And then I step back and start thinking about what's the macro view on that.

Jeffrey Stern [00:13:25]:
Just to stay on the Explorist thread for a bit, you know, which has since been acquired by IBM, I believe, became the world's largest clinical database at the time. Yep. Looking back on that journey, what have you taken with you as just some of the most pivotal lessons learned along the way and how you feel those experiences have shaped your approach to leadership and maybe things that you didn't know from Everstream and and the companies before.

Steve McHale [00:13:53]:
When we were running and started actually the inception of Explorist, you heard that's how Explorist really the inception of the idea. While we are operating Explorist, I still have a great life coach that does assessments, and she's big on this. So she does this assessment on, there's one that's called Strength Finders, which you may have heard of, and then she does a much more in-depth one. And the in-depth one found in my top five, I didn't know it was a strength, called fairness. And I was like, wow. I mean, what does that mean? She goes, you really you're really strong at thinking about the world through a lens of what's fair. So, of course, that triggers my problem solving, which is okay. If something's not fair, how do you, solve that problem? And Explorers' purpose was to improve health care for everyone.

Steve McHale [00:14:45]:
And so that was a bold purpose because we knew that we'd we'd be really focused on Medicaid and people that are under resourced and underrepresented. You know, that was a core mantra for us. And, you know, what it what we experienced when we started seeing Medicaid data was the health inequities, and it was really eye opening for us and eye opening for me, which ultimately, you know, we're not jumping there right now, but was the inspiration for Unifi Labs to really get after some of these inequities and and how we could create transformative solutions to that. I don't know if that totally answered your question, but that's what was going on in my head at Explorus. And I think it was recognizing that data was the new crude oil. You know, to tell this story, when we raised our b round at Explorus, we had one slide to this venture capital group. We had one slide. One slide was, well, that's 50,000,000 lives of clinical data, and we'll create 500,000,000 in shareholder value.

Steve McHale [00:15:44]:
And they bought it. They were like, you know, we didn't miss by much. And it was really exciting because we said, the data's the new crude oil. And this is back, you know, in 2011, something like that. So it was it was a while ago.

Jeffrey Stern [00:16:01]:
Well, it it's interesting, you know, just knowing a bit of where the the puck is going in the story to hear about some of these threads that run throughout your career of fairness, the role of data, you know, recognizing that it had already, you know, been embedded and capitalized in banking and telecommunications. And now, it's application to clinical kind of paving the way for what Unifi ultimately is about, which I I think is really at the intersection of of all those things.

Steve McHale [00:16:30]:
Yeah. Yeah. It's interesting because, I mean, we learned in the telecom, we didn't have rights to the data. And so we were really, really focused on our next licensing. We didn't wanna just provide technology to health care. We wanted to have access to the data that we were supporting with our technology. It was clear that the exhaust alone from the data could fund itself, which would allow you to subsidize solutions to the provider, which, you know, are always struggling for margin and things like that. So we already had the dynamic of, you know, if you did a multisided market and put data at the center of it, the ability to create so much more value was the potential is exponentially larger.

Steve McHale [00:17:13]:
That kind of postulate is what played out.

Jeffrey Stern [00:17:16]:
So after your exit of Explorist to IBM, the the world is, you know, basically your oyster. You know, 3 companies over, you could have, I imagine, worked on almost anything you would have wanted. You you maybe didn't even need to go start another company. Walk us through your thinking of how you thought about what to work on next, and how did it align ultimately at at Unifi? What were some of the, you know, questions you were you were asking? Take us through the the idea maze, if you will.

Steve McHale [00:17:46]:
The lab was really a cool experience. It's still still running, and we we have when we flow. We we find new ideas and projects, and then we staff up or we fund, and we go and we work on it. Then, you know, then we'll either spin that out or bring that to fruition. But I think within the lab, when we formed it again, it was a mission of powering inclusive prosperity coming back from that experience with all the Medicaid data and recognizing that the current system was not working for everyone. And, again, absolutely believe in the economy and capitalism and into but looking for opportunities to fine tune things. A wave of things we were working on. We had 3 different breeds of economists.

Steve McHale [00:18:31]:
We had a computational economist that come over from Beijing, who's now a professor at Case. We had Harvard Economists that also had come over from Harvard and said Kaes, and then we had, Federal Reserve Economists. We had social scientists, data scientists, and simulation modeling expertise and skills. So we went to town, and we built a solution. Our biggest core solution we've ever built was knowledge product 1. And knowledge product 1 was amazing. You know, we aggregate so much data. We started to build models.

Steve McHale [00:19:04]:
And one of the, things that we remodeled and did a higher definition on was called the great decoupling that the St. Louis Fed had done. And we we broke it out by the top 50 MSAs, and, of course, Cleveland was in that 50. And we modeled the opportunity for that MSA to move towards inclusive prosperity versus creating more bifurcation between median household income and GDP.

Jeffrey Stern [00:19:29]:
That's what the decoupling is.

Steve McHale [00:19:31]:
That's the decoupling. Yes. That's right on. Great question. And, you know, Cleveland had a great pivotal point, I think, that was dependent on what kind of industries we picked to continue to prosper, but also ensuring that the types of, especially from a technology standpoint, that there was, you know, mid tier and livable wage jobs that would support that. So we were really focused on those things. And I think that what we learned there was quite amazing. We could see even everything from the infrastructure that how people got hired.

Steve McHale [00:20:03]:
So we're we're looking at that. We're also looking at what we call the financial vascular flow of the nonprofits. So we study the nonprofits, and we could see through their 9 nineties who their sources of funds were. And we could see, wow. You know? And then we were starting to look at their impact. In some cases, we thought that some of the nonprofits, there'd be somewhat of a health care or a nonprofit hunger games. And that, you know, if they the ones that are not effective. And by and I'm on a board of a number of nonprofits, and that's has come to fruition to some degree in that we've assimilated or acquired other nonprofits, the ones that are really good and effective, like the centers.

Steve McHale [00:20:41]:
The centers for family and children is incredibly effective and well led, and so we've assimilated other nonprofits and sectors and taken over areas of of services that are weren't being serviced effectively. So we are studying those things, and it was so exciting to be in the lab. And, you know, we had Sharon Sobel Jordan who now runs United Way in the lab, running the lab before she took the United Way job. And it was it was a great experience.

Jeffrey Stern [00:21:07]:
So when you had the opportunity to really be in the data, you know, coming from a place of recognizing that, you know, perhaps the disparities were were trending in the wrong direction when when you think about the, you know, the the bifurcation and coming at it from a place of, you know, your experience and and thinking about technology and data's role and ability to lift people up. I think that might be a good segue introduction to introduce the idea of what an Impact Venture Lab is and how, obviously, you're working on Gracie today. But from the learnings of of Unifi Lab, what the vehicle and actual model is for creating, you know, offshoots of it?

Steve McHale [00:21:46]:
I think from an overall structure standpoint, we had a model that was effective in that. We studied areas as it relates to the journey that people would have as it relates to their overall prosperity. So we started to understand everything from origin, location, you know, environment, resources, networks. And from there, we could understand better their trajectory and path that that they could be coming down or coming through as they come from high school all the way to into the job market, through the education system and process. So I think that was really insightful for us to understand what was going on, to include the economic conditions that would change, like the regions that became heavily concentrated with poverty in struggling regions in our area that the economic dynamics that drove that, like, you know, some of the wealth moving out of those regions. And then, you know, that was basically almost a flight from those areas that also created quite regional economic challenges. So those things were really interesting and insightful for us. And as we studied more and more, the first thing we noticed was that everything that we do right now that drives our economy and GDP runs on a supply chain.

Steve McHale [00:23:19]:
Everything, except human resources. It's not mechanized at all. It's just random, build a resume, say whatever you wanna say, build a job description, say whatever you wanna say, and put a bunch of people in the middle, marketing firms like Indeed and CareerBuilder and ZipRecruiter and Monster, and just, you know, go figure it out. But no science to it at all. Just really random. And that was a big, you know, We're just going, you know I don't know if anybody's looked at it that way. It would just default assumes that that's the way it is because it went from signs hanging outside of a business gun now hiring to newspapers, you know, placing ads and people, you know, flying the newspaper ads to then the online ads and stuff like that. And then next thing you know, we've got these behemoth multibillion dollar firms that are have cornered big market as it relates to marketing and advertising of jobs, which is really all that is.

Steve McHale [00:24:20]:
Right? So I think we got really super interested in the skills based hiring, which made sense. And that's really what spun out the initial genesis of Gracie, which was Unify Work, is that we said, we think there's an opportunity here on skills based hiring and mechanizing that really in building it. And we filed a patent and, like, with our the company with Explorers sold to IBM, we we ended up with 3 issued patents there on our technology, and we filed a patent for a unified worker for them matching them, well, not just people, but resources which has issued as well until we have, you know, that intellectual property. But I think that observation was, alright. Let's go test the market. So just to be fully transparent and this sometimes, you know, people and or the market might frown upon people that do this. But with every single one of my for profit organizations, we've done a full pivot. And sometimes, you know, that's frowned upon by investors.

Steve McHale [00:25:23]:
I do occasionally share with my early investors that they should consider the money that they're investing is tuition. And so we're going to learn. Right? Yeah. Right. We're going to learn, and we're gonna figure it out. Just hang with us because we've always done a pivot, and we always have. And you get in, you learn, and pivot is irrelevant. Some are really hard right turns, some might be, you know, 45 degree move.

Steve McHale [00:25:52]:
But, generally, I'm the type of entrepreneur and, leader that likes to learn on sole input driven. And, again, when you're innovating and you're inventing, I feel like you have to listen. You have to listen the whole time for externalities. For example, EXPLORIS, as we had started it and it was secondary use of data model, you know, the Accountable Care Act showed up. And so that dynamic changed everything. And we are sitting there going 38 belly right, mature, you know, we're gonna build the measures and the analytics. And I think you know part of this. Right? And we're Yeah.

Steve McHale [00:26:27]:
We're gonna come in and we're gonna start really serving the providers. We shut down our data services, with pharma so we could hyperfocus, put all our wood behind one arrow. We've mastered those analytics for meaningful use 1 and 2. We had, all the measures for gaps in care put together. We had a measure definition language, and we started aggregating data so fast, we passed the blue bloods out of Boston like they were standing still. And so we came in and we pivoted. It's what we thought. We listened to externalities, and we listened for those changes.

Steve McHale [00:27:02]:
And, like, even now with this administration new administration coming on, now is when we thrive. We just go not that commenting of good or bad, I'm just saying when their change happens, and then we start our ears really perk up.

Jeffrey Stern [00:27:17]:
Yeah. Now you gotta be attuned to the the signals and and listening to them. And it it rings true in in just the the abstracted entrepreneurial story. It's so rare that the business a company was founded on is the business that they succeed with. You know, because if you're not listening to the signals, then you're gonna just keep, you know, headed down the had you not been paying attention at Explorus, it would have been a very different outcome.

Steve McHale [00:27:41]:
Yeah. Same thing with Everstream. I mean, yeah, I know Charlie Lowheed, we mentioned him earlier. And so, Charlie, when he came in to Everstream, it was great. I mean, we we were in the streaming business. We were rolling along. We had all kinds of publishers using our stuff, and we're feeling great about it. And then we were looking at the economic load of trying to support streaming cost with, you know, banner ads and then maybe inserting some audio ads, we're like, you know, we had built a lot of great technology there, and so we went on a walkabout.

Steve McHale [00:28:16]:
It's funny because talk about adaptability of entrepreneurs. So we went to the streaming company first in Chicago, we went to one down in New Orleans, we went whenever we go there, and this is probably an exaggeration, but it's my memory, they would close their doors 2 weeks later. So I started nicknaming Charlie the Grim Reaper. I said to him, I I would it was really 2 of us together, but we'd go make these trips. And those were ones that didn't pivot. They didn't adapt. And we still had capital in the bank, and we stepped back. And we we we have plenty of money, and we said, well, we're gonna burn it all up.

Steve McHale [00:28:50]:
So we did a major reduction in force because we said that business doesn't work, and we stepped back. And we said, now let's go on another walkabout and figure out what we wanna do when we grow up. We had to make a hard decision like that, but we fortunately did it early enough because it was in a time where it wouldn't have been that easy to raise capital.

Jeffrey Stern [00:29:10]:
Lay of the Land is brought to you by Impact Architects and by 90. As we share the stories of entrepreneurs building incredible organizations in Cleveland and throughout Northeast Ohio, Impact Architects has helped hundreds of those leaders, many of whom we have heard from as guests on this very podcast, realize their own visions and build these great organizations. I believe in Impact Architects and the people behind it so much that I have actually joined them personally in their mission to help leaders gain focus, align together, and thrive by doing what they love. If you 2 are trying to build great, Impact Architects is offering to sit down with you for a free consultation or provide a free trial through 90, the software platform that helps teams build great companies. If you're interested in learning more about partnering with Impact Architects or by leveraging 90 to power your own business, please go to ia.layoftheland.fm. The link will also be in our show notes. I kinda like that that question itself. What what do you wanna be when you grow up? How might you answer that in the context of of Gracie and and what you're working on today?

Steve McHale [00:30:19]:
You know, I think the observation is that we're still struggling with significant portion of our population to have them in a really healthy and productive and prosperous, that's a word, environment in the different economy. So that is continues to be almost accepted that it's entrenched. It is just it's the way it is. And I really believe it doesn't need to be that way. And I do think that there's opportunities for us to change really the world of how people live together. And so I know that's pretty big and bold and a bit nebulous to say that. But to distill it down to Gracie, that I think the observation was that all of our experience and my experience dealing at the systems level benefited me a great deal on this, initiative. And it's, systems always trying to manage people.

Steve McHale [00:31:16]:
And this mission is for people to be able to manage the systems. So it's it's flipping that. And what was really obvious is we're in this journey. We're doing the matching and things like that. We're going we gotta go upstream. We have to understand where people are falling off and don't have the resources they need to get to a place where they can have a really good livable wage and prosperous job. And then we studied that. It was really obvious that we needed to center on the person in a way to where their value was increasing very, very rapidly because of their data.

Steve McHale [00:31:52]:
So their data DNA, what we call the digital data DNA, is of great value to do a person. Yeah. I just fervently believe that as we transform into these tech economies, we're gonna need to find a way to value people differently. And their data is one of those values because everything does ultimately revolve around that. Now Meta and Google and everyone has made 1,000,000,000,000, right, in value by just getting data for free. And I'm not suggesting we sell data or sell a person's data. What I am suggesting is they should get value for the fact that they have all this data, and that this data exists on them. So let's get it structured in a way to where they get value for that.

Steve McHale [00:32:41]:
And I think we're gonna have to start to revalue and and assess how we value humans in our society because technology is gonna do more and more stuff that, you know, we used to do labor for. It's a bold thing, but I I think we're ready for it. I think we're ready for we can see right now the ROI in the systems that we're working with, players by aggregating the data on the person and having a unified digital wallet for that person of their data, because none of the parties that we're talking to have all of it, but we will. We'll have the highest definition data on an individual ever assembled, and then that data should drive value for that person. Not just subjective value, but also economic value for that person. Because all the systems that are surrounding them leveraging their data are generating a lot of value for those systems and those companies and those players. But, you know, the person just happens to be the data chum that, drives that value. I know that that was very, you know, I'd say philosophical, but I just thought Yeah.

Steve McHale [00:33:44]:
Out there for you.

Jeffrey Stern [00:33:45]:
Well, there are a few philosophical follow ups I I have almost I mean, I'll put a pin in one of them and we can come back to it, which is, I think, related to what is probably the elephant in the room of, you know, AI being at the core of so many modern technological solutions right now. But also, you know, how it's contributing possibly to inequality going forward. But to come back to that and and maybe even set the stage for it, you know, we've talked a bit about prosperity. What does that concept even mean?

Steve McHale [00:34:17]:
Well, that's a great question. I mean, you could see people that are in more challenging economics in other countries and things like that where you see joy and you see hope and you still so it's not just money. It's about joy and hope. Right? And it's a lot of sure, I think, that if you got a reasonable economics to get that joy and hope. So it's not the elixir, but it's clearly, you know, a core element of it is to have enough money and resources to meet your needs. If you're not meeting your Maslow stack on the bottom level, it's really hard to get to that place of joy and hope. So it's, like, let's get to that. But with that is building a network and building community and things that we all take for granted.

Steve McHale [00:34:57]:
And people that are under resourced, they really struggle with that. They don't have networks that, you know, you and I know lots of people that could get another friend a job or this or that. You know, we're connected. Right? And you'd see that in the body earn bottom earning deciles, there's a lot of challenges there. But I I think it's joy and hope. And, you know, you we know by behavioral health data, again, this was in the Medicaid data, there's a lot of, you know, depression and anxiety and things. It's health inequity. You know, that's where we see the health and that we call that health inequity, but it's really shining a light on the fact that there's a big group of our population that are struggling to even get to a place where they're feeling joy and hope.

Jeffrey Stern [00:35:40]:
How do you layer on automation and and AI into, you know, that kind of thinking?

Steve McHale [00:35:46]:
Gracie is, ultimately, from a business model perspective, is Yep. A personal concierge. Right? It's a concierge for the person, connects, aligns with those that support the person as well. So it's a ribbon overlay of all these systems that are trying to cobble together with fence wired bubblegum the way to share data. Instead, all the data's on the person. So now you're beaconing out to those systems, and you're being able to then say, alright. There's a new sheriff in town doing different workflow, and that's the concierge. That's Gracie.

Steve McHale [00:36:20]:
So for Gracie, I think provides, and we've done some analysis and studies around this and research as well, provides resources to the person in a way that are continuous versus episodic, which changes the experience. So we designed it around behavioral economics. So we didn't just make something up. We went really deep on what motivates people to engage. And with Gracie, their experience, it creates an environment that promotes agency. And the agency is the superpower, really, of the human, is agency. When agency is lost, then you feel completely helpless to the system. And that's really where things degrade.

Steve McHale [00:37:05]:
That's where things really fall apart. So the number one thing we say for Gracie is create an environment for agency. And then with that comes empowerment. And so with that, of having my own concierge, my own assistant that really knows me and adapts to me and and really does things for me is creates a completely different dynamic. I mean, in the health care scenario, you'd you know, I mean, think about this. And you've got health insurance, I'm sure, and some of some model. And, you know, they offer you all kinds of benefits, right, and, things, or they'll offer you rewards and stuff like that. How much do you take up on it? You know, I've I've never taken up on the rewards that my health insurance company offers me until a couple weeks ago because I wanted to see how it compared to our behavioral economics model.

Steve McHale [00:37:51]:
And they I got a $20 gift card that went to Amazon for getting a flu shot, and I've, gotten a flu shot 2 months ago. But you see, when we're dealing with people that are really under resourced and, you know, in struggling, their engagement level into the health care system and with health plans is as low as 5th it's 15% of the population. 85% won't even connect. And even if there's good things there for them, they're not connecting. And so Gracie is about continuous engagement and providing rewards and value to them for them just engaging. Not because they get $50, you know, for a wellness check, but just engaging. Because by engaging, there's an opportunity for them to get access to and get resources they need to really help them navigate through the world. But, generally, they don't trust the apps and all those things that are coming from a plan.

Steve McHale [00:38:46]:
They just, like they're just trying to manipulate me. When Gracie pays them, literally pays them, it changes the whole dynamic.

Jeffrey Stern [00:38:57]:
That is pretty fascinating. How do you think about, I guess, measuring the agentic qualities of people engaging with the application? And what kind of behavior are you ultimately trying to to change?

Steve McHale [00:39:10]:
For the record on this video, I did not give Jeffrey that question. So that's a great question. I did not send you a free question. But the, you know, our, agentic engagement technology, which is what we've built. Right? Yeah. Which is a new category of AI companies called AI agent. So we basically use the large language models as a commodity. We use 4 different ones.

Steve McHale [00:39:36]:
That's they're not the story here. It's it's our precision coming in as it relates to the knowledge and expertise and really tribal knowledge of all the health care things that those large language models will be very challenging to get their arms around. They're not gonna do it by scraping. You know, it's gotta be lived experience. But I think from an engagement standpoint, the most important behavior, I think, is that they find trust and they get value and comfort from their concierge or from their assistant. Yep. Know that that assistant is there for them and always for them and them first. So we're person first.

Steve McHale [00:40:15]:
Hard stop. And we tell all the other plans and the health care systems and that we're talking to and engaged with right now and pile it with it. We are focused on the person. Comes down between you and the person, we're gonna focus on the person. And that's done well. I mean, the organizations that we're working with, they appreciate that. Our hope is that by engagement in building a network and building a network, in building confidence, in feeling more agency over their life, that it provides those opportunities for them for them to take advantage of, they can help move them forward into better prosperous situations. And we think that that's the goal.

Steve McHale [00:40:54]:
And that will be revealed, by the way, by all the economics around the person that start to change. Because what'll happen is, like, on the MLR, if you're familiar with that, it's a health care term, the medical loss ratio. Medical spend starts going down, and so they should be rewarded. Right? Medical spend's going down. When you think about that, health outcomes are improving, government spends dropping. I mean, it all fits into a nice ecosystem where it doesn't make any sense for us not to have our bottom 2 or 3 earning deciles start at a place of prosperity. It makes no sense. Economically, it raises all tides.

Steve McHale [00:41:33]:
It raises all boats. Right? There's, you know, the rising tide raises the boats, but it raises all boats for sure in the economic models. It's just we've never found a way to do it with our current precision as it relates to how we're operating in our, markets.

Jeffrey Stern [00:41:49]:
Yeah. It's it's really fascinating. Semantically, I I just think it's interesting that, you know, we're working towards in the application of AI these agentic models, while at the same time, you know, we're trying to raise the agency of people. Like, this concept of agency is obviously really it is important.

Steve McHale [00:42:07]:
Yeah. It's it it feels counterintuitive, right, when you're trying to rationalize that whole thing, but it's not. In the end, if you really break it down as we did in the lab. And in other ways, we learned so much that says there are other models. I mean, I personally studied Mariano Malzicato, Kate Rayworth, Piketty, you know, Raj Chetty, those guys. So I was looking at the models, and I was kinda like it just felt like they were missing some big things here. And they're great. We need thought leaders like that.

Steve McHale [00:42:38]:
I had no negative there. But I'm like, where's the application? And so that's where we'll hit the road for labs. And then, you know, and then spinning Gracie out was like, okay. It's time.

Jeffrey Stern [00:42:50]:
Yeah. What are you most excited about looking forward?

Steve McHale [00:42:53]:
I am always excited about the learning. I think we're just beginning, and we're gonna learn a lot more. And we're in an environment where many of the folks that we wanna work with, they're willing to mentor, and that's so awesome. All there is to it that we're able to get people to engage with us. They can see the vision. They know we're just getting started. You know, we're, you know, we're a little bit past just getting started, but maybe we're still table walking, and they wanna help. And I think that's really exciting because you know you're onto something.

Steve McHale [00:43:30]:
When they wanna engage and help, you know you're onto something. They see it, and they're going okay. And some are able to, and some may not be able to because of their structures and their, like, in their environment. But, ultimately, that's I'm so excited about the mentoring and the things we're gonna learn and what's gonna be next, And, you know, what's gonna really be valuable to the person and the examples that we're gonna bring forward that'll show these good and better outcomes. And that's exciting to me to see that come Yeah.

Jeffrey Stern [00:44:00]:
A few more questions here as we we kinda bookend the conversation. I would be really curious to hear from you, you know, when you reflect on, you know, US Connect, Everstream, Explorists, Unify. What have you learned at Gracie that you didn't know from all those prior experiences? As it relates to entrepreneurship or or business or or really anything that feels salient?

Steve McHale [00:44:22]:
Okay. That's great. That's a good question. Also, I did not keep that up for the record. Well, I'll tell you one thing I learned is that b to c is a completely different situation than b to b. And I learned that my wheelhouse is b to b. So along the way, as we are taking shots on goals, we say, we did some b to c shots, you know, before we adapted and adjusted and things that, you know, that we talked about as a lace that that fed into the pivot, and a standard pivot needs to be done. But the b to c is rough because, you know, the reality is the recipients, the system players aren't really receptive to change.

Steve McHale [00:45:04]:
So if you're working on one side of it, like the consumer, and then the, the recipients of that behavior change that the consumers trying to, you know, leverage may not be there. You really need to see the whole system, and you can't really play one aspect of it. So that was a big learning experience for me. I was like, wow. This is no easy thing. That's not for the faint of heart b to c.

Jeffrey Stern [00:45:30]:
Yeah.

Steve McHale [00:45:30]:
But it's it's a different model. It's a different mindset.

Jeffrey Stern [00:45:34]:
Yeah. How do you layer on Cleveland, which I think has, you know, run true through all of the the businesses you've built? Just some parting thoughts and perspective on on Cleveland's role in evolution throughout your journey as well.

Steve McHale [00:45:48]:
Well, I just think about the heart of Cleveland and even growing up here since I was 9 that, you know, in the manufacturing space, you know, obviously, steel industry. Cleveland has got such a heart. You know, it's such a just got a core Midwest, great values. It's a great place to live. It's a great place to raise your children. And I think plus that that mentoring willingness that Cleveland's got, you know, leadership infrastructure that's willing to band together and mentor each other, It's there. It's really there. And it's not in many other places.

Steve McHale [00:46:25]:
And, you know, I've been all around the world and, you know, Cleveland has really got that. And I think for me, it was a great environment for me to be an entrepreneur and an innovator. Because even when we're just goofy ideas, people would at least listen to you and, you know, they wouldn't, you know, they wouldn't, like, be, you know, negative with you. They would sometimes you'd be smiling. You could figure out that you'd get that, well, that's interesting kinda thing. But, you know, they wouldn't be hard. They'd be kinda kind. But you go back and look at it 2020, like, you know, a year later and go, oh, man, they're being nice.

Steve McHale [00:47:00]:
You know? And, just we're way off the rails. You know, we're out of line and, the people that were talking to us were being kind. I mean, they would they would just say, oh, yeah. Let's go do it just to placate you. But you you kinda look back on it and say when they would say that's interesting, but not, like, engaged, and you knew that, you know, that's that was a time when we weren't we weren't on track. You know, we didn't have the right idea. But Cleveland's that culture and, you know, it's great. I love being a clevelander, man.

Steve McHale [00:47:29]:
I love it. I do.

Jeffrey Stern [00:47:32]:
It it is a great place. I like that nuance, you know, of that that part of it. It's funny.

Steve McHale [00:47:38]:
It's good to know. Well, I

Jeffrey Stern [00:47:39]:
mean, true truly, there's so many more questions I could ask you. But I I guess I would pose before our traditional closing question. If there's just anything that feels unsaid, you know, that about the work you're doing right now or in reflection on on your, entrepreneurial journey that you would wanna share.

Steve McHale [00:47:57]:
Well, you know, my hope is that however we work out with Gracie that it creates a great environment for learning for others to stand on and build on. So and I think Cleveland's the kind of place that would look to do that. And we, you know, we wanna innovate here, and we're a place where we got a lot of heart and soul. So I think, you know, however Gracie goes, that it's we lay down some real bedrock for others to leverage and grow on and say, okay. We've we've got some real great learnings here. And, I mean, not that I don't think Gracie will be successful. I'm just thinking it's the start. There's so much Yeah.

Steve McHale [00:48:37]:
We're one element of it, and I just really hope that others find insights from what we're doing, and we continue to come together and collaborate and build and grow.

Jeffrey Stern [00:48:48]:
Well said. Great. Well, I'll ask our traditional closing question then, which is for a hidden gem in Cleveland for something, you know, other folks may not know about, but perhaps they should.

Steve McHale [00:48:59]:
Well, it's a visible gem, but I don't know that everybody really sees it all the time, and it's our metro parks. And the gem inside of it that I learned from a friend of mine that you could ride a bike around the Emerald Ring, and you can get downtown. So pretty safely, meaning you don't have to get on highways. I don't know the last leg of it because I haven't done it with them. But you can get down to the ballpark on a bicycle, and you just navigate through there. You know, not getting on 48. I'm just not getting on a big hole. It's hard to hit a gem that maybe people don't realize that you can there's a way to navigate around Cleveland, you know, on safer roads than when you're actually wanna get downtown.

Steve McHale [00:49:37]:
I thought that was cool.

Jeffrey Stern [00:49:38]:
I didn't know that. It is super cool.

Steve McHale [00:49:40]:
About 2 months. Isn't that cool?

Jeffrey Stern [00:49:42]:
Yeah. Awesome. Well, Steve, I just wanna thank you for coming on and sharing your story and just a a bit of your thoughts and reflections on all of it.

Steve McHale [00:49:50]:
This is great. I really appreciate it, Jeffrey. Thank you for inviting me to do this, and I appreciate you. And this was good for me. So it reminds me of gets me on track, you know, keeps me focused, and so I appreciate it.

Jeffrey Stern [00:50:03]:
Oh, absolutely. If folks had anything they wanted to follow-up with you about or or otherwise, where would you point them?

Steve McHale [00:50:09]:
You know, they can email me Well, my investment email, I mean, I have an investment group. It's just steven with a PH at 23bell.com, which is 23bell.com. And it's everybody thinks it's fit 23bell and the chromosomes, 23 chromosomes. I'm not no. It's the address of the beverage store in Shebrin Falls. Awesome.