She Raised $1.3M, Delivered Results, Then Shut Down

A product can work and a startup can still fail. Mary Beth Snodgrass learned that the hard way after building Healthiby — a peer-powered, incentives-driven behavior change platform that delivered real health outcomes — and watching it unravel due to sales friction, unclear payer dynamics, and a story she never fully told.

Key Facts

• Capital raised: $1.3M across angel and institutional investment (Pablo Srugo)
• Target population: People at risk of or diagnosed with type 2 diabetes, hypertension, or high cholesterol (Mary Beth Snodgrass)
• Chronic condition prevalence: Estimated ~60% of Americans have chronic conditions — and likely higher now (Mary Beth Snodgrass)
• Healthcare sales cycles: Bessemer Capital cited 12–24 months pre-COVID; likely longer now (Mary Beth Snodgrass)
• Program length: Programs eventually became 4-month and 12-month cohorts with longitudinal biometric tracking (Mary Beth Snodgrass)

What Healthiby Was: A Science-Backed Behavior Change Platform

Healthiby combined health science, social behavioral science, and behavioral economics to help people with cardiometabolic conditions measurably improve their health — rewarding them with virtual incentives tied to real health outcomes across 4- and 12-month cohort programs.

Healthiby was founded around a deceptively simple insight from a physician co-founder: patients talked easily about betting on sports games but found eating healthy nearly impossible. Why couldn't healthy behavior be made as engaging as gambling? That question became the product.

The platform used peer cohorts, structured programs, and a virtual incentive system called 'healthy bucks and healthy cents' to reward 20 specific health-related actions. Participants tracked weight, biometrics, and behaviors — both manually and through fitness tracker integrations. Programs were eventually CDC-approved for pre-diabetes and available in both English and Spanish.

The long-term vision extended beyond short-term rewards. As Snodgrass explained, the backend was designed to support 20- to 30-year health savings accounts — essentially a '401k for your health' — where incremental rewards compounded over time and could reduce life insurance costs.

"We utilized a combination of health sciences, social behavioral sciences, and behavioral economics to design our really comprehensive, robust solution." — Mary Beth Snodgrass

"Maybe you're earning a few hundred dollars a year, and then over 10 or 20 years, you've got tens of thousands of dollars in a healthy box." — Mary Beth Snodgrass

The Pivot: From Employers to B2C to Prove the Core Thesis

Legal and perceived legal issues around employer-based health incentives forced Healthiby to pivot early. The team shifted to a self-funded B2C model to prove that financial rewards could measurably change health outcomes — using their own capital to validate the core thesis.

The original plan was employer-focused wellness. But that channel hit a wall fast. As Snodgrass put it, even the perception of legal issues was enough to kill momentum. Employers were reluctant to be seen incentivizing employees to 'not have diabetes anymore,' regardless of whether it was actually prohibited.

So the team made a deliberate choice: strip away the complexity, fund the rewards themselves, and just prove the thing works. They partnered with Walmart pharmacy events and local clinics in Houston to find early participants. A regional pharmacist champion helped open doors — reflecting how relationship-led, ground-up distribution can unlock early users in regulated markets.

The early program was raw. The first cohort ran over WhatsApp with a dietician. It didn't work. The team iterated to Zoom, refined content weekly, and built structured programs through direct feedback — a genuine build-in-public approach grounded in real patient data.

"There were too many legal issues or even perceptions of legal issues with employers incentivizing their employees to not have diabetes anymore." — Mary Beth Snodgrass

"We were building the plane while we were flying it." — Mary Beth Snodgrass

• Employer channel dropped due to legal friction around health incentives
• Team self-funded rewards to prove behavior change thesis in B2C
• Walmart pharmacy events and local clinics were early distribution partners
• First program ran on WhatsApp — then iterated to Zoom-based cohorts

Why It Failed: The 7 Reasons a Working Product Still Loses

Healthiby failed not because the product didn't work, but because of compounding structural problems: complex payer dynamics, reimbursement friction, behavior change resistance inside enterprise systems, long sales cycles without a sales-focused founder, shifting investor commitments, and a story that was never fully told.

Snodgrass is candid: the core product worked. Outcomes were real. But the business couldn't get paid for those outcomes. Healthcare's payer complexity — fee-for-service codes, value-based care reimbursements, revenue cycle gatekeepers — created layers of friction that slowed or blocked every enterprise deal.

One particularly telling failure: when Healthiby tried to understand reimbursement timelines with health systems, they couldn't even reach the right people. 'We couldn't even get to the people who had answers about how long it would take to get reimbursement,' Snodgrass said. For providers already burned by reimbursement issues, any new program represented cost and risk, not opportunity.

Sales cycles compounded everything. According to Snodgrass, Bessemer Capital estimated 12–24 months pre-COVID — and that figure is likely higher now. Without a sales-obsessed founder on the team and with a CEO being pressured by an investor who ultimately backed out, the commercial pipeline stalled. The macroeconomic environment shifted. Budget priorities moved. And Healthiby ran out of runway.

"I'm someone who likes to solve problems and that's what I prioritized more than sales." — Mary Beth Snodgrass

"Because so many providers have issues with reimbursements, there was just so much friction and hesitancy because doing anything new is a cost and risk for them." — Mary Beth Snodgrass

• Reimbursement complexity blocked health system deals from progressing
• Sales cycles of 12–24+ months demand a dedicated sales leader
• Investor withdrew after attempting to pressure a prospective client CEO
• Macro budget shifts killed at least one commercial pilot mid-process
• No sales-focused co-founder meant the pipeline was always underpowered

The Lesson She Wishes She'd Learned Earlier: Tell Your Story

Snodgrass had a powerful personal story — reversing Crohn's disease through behavioral and dietary changes — that directly validated Healthiby's mission. She didn't tell it early enough. For founders in health tech, personal narrative can unlock trust that data alone cannot.

Years before Healthiby, Snodgrass was diagnosed with Crohn's disease. Told it would get progressively worse and that medications were only 50% effective, she chose a different path — years of dietary and lifestyle changes that eventually led to her becoming symptom-free. That lived experience was the emotional core of why Healthiby existed.

But she didn't tell that story publicly until late in the company's life. 'Something that I didn't do as a founder that I should have done is figure out a way to tell my story better,' she said. Watching other founders tell difficult stories well, she now believes early investment in personal narrative would have changed how investors, partners, and customers connected with the mission.

This isn't a soft lesson. In enterprise health sales, trust is the primary currency. A founder who has lived the problem builds trust differently than one who studied it. Snodgrass's story would have been a competitive asset in every room she walked into.

"I know the journey, right? And I know how unhelpful actually healthcare can be in that process." — Mary Beth Snodgrass

"I've over the years seen founders who tell really difficult stories well. I wish I had invested more time in doing that." — Mary Beth Snodgrass

Advice for Early-Stage Founders: Systems, Workflows, and Humility

Snodgrass's top advice: deeply understand the operational systems and workflows you're selling into, not just the problem you're solving. EHR friction, reimbursement cycles, and institutional inertia are not edge cases — they are the market. And stay open to hard feedback from founders who've gone further down the road.

One of Healthiby's product strengths — longitudinal behavioral and biometric data displayed in a clean clinical interface — was praised by providers who said their EHRs should work that way. Snodgrass took that as positive signal. In hindsight, she underweighted what it actually meant: the existing workflows were so entrenched that being better wasn't enough to get in the door.

Her final advice to founders is about receptivity. In the early excitement of building, it's easy to dismiss questions or concerns from more experienced founders. 'Over the past year, I've met with first-time new founders. And I said, well, what about this? And they're, eh, no,' she said. The lesson: you don't have to act on the advice immediately, but you should hold it. Six, twelve, or twenty-four months later, you may understand exactly what they meant.

"I didn't fully appreciate the extent that these current workflows and EHR issues inhibited our ability to really get in the door." — Mary Beth Snodgrass

"It's really important for founders to at least hear the advice from other founders who've been further down the road. Even if you don't take their advice in that moment, 6, 12, 24 months later, you may really appreciate what they learned the hard way." — Mary Beth Snodgrass

Fee-for-Service vs. Value-Based Care: Healthiby's Reimbursement Paths