Breaking News

Outcome Health’s Path: From A Northwestern Classroom To The Courtroom

But just days after announcing the aggressive hiring plans, the company laid off dozens of employees, though it said it hired more that quarter.

In October, The Wall Street Journal ran a story that said employees had misled advertising clients regarding the ads' performance. The investor lawsuit followed.

"Yet again, here's Chicago holding up a success story which is not a success, really," said Jason Fried, CEO of Chicago-based software company Basecamp. "To me, it's celebrating the wrong things."

Fried draws a parallel between Outcome and Groupon, once a rising star that brought national attention to Chicago's tech scene when it went public in 2011. Once the company that was fastest to reach a billion-dollar valuation, Groupon debuted on the Nasdaq at $28 a share -- but it has never again matched that high point.

There's more to success than rapid growth, Fried said.

Fried doesn't think the allegations surrounding Outcome Health will have any real impact on Chicago's tech ecosystem, despite Shah and Agarwal's places in it.

The two founded investment fund JumpStart Ventures and made a name for themselves as mentors to budding entrepreneurs.

Smaller startups have subleased space in the company's office. Shah serves on the boards of health-tech incubator Matter and tech hub 1871, the 5-year-old home to more than more than 400 early stage digital startups and satellite offices for area companies and universities. The high-profile founders were frequent speakers on panels and at events, talking about the company.

The tech scene is different from other industries in that entrepreneurs who find success tend to reinvest in the industry, said Steve Blank, a lecturer at the University of California at Berkeley's Haas School of Business. That reinvestment can come in the form of mentorship or funding. "But if you're struggling for survival, the odds are you're going to be inward-focused for a while," Blank said.

Everyone, from investors down to early stage entrepreneurs, is paying attention to the allegations against Outcome Health, said Nimit Maru, co-founder of New York-based coding school Fullstack Academy, which expanded to Chicago through an acquisition last year. "It's definitely a warning call for the whole ecosystem not to promote shortcuts," he said.

Maru acknowledged that while the allegations against Outcome Health, Shah and Agarwal are still just allegations, less-experienced entrepreneurs could learn from the situation. There's a lot of pressure in the startup world to prove investments are justified, he said.

A provided statement from Outcome Health said it remains committed to improving health care and creating technology jobs in Chicago.

"We're grateful for the support from so many entrepreneurs, investors and partners in our hometown that have helped us thrive," the statement read. "We're proud that Outcome Health's headquarters is in the city that works."

Related News

Leave a Reply

Your email address will not be published. Required fields are marked *