Exclusive: This AI Startup Raised $35M To Make Dentists Smile
Lassie’s founders went hands-on, then built an AI agent to help dental practices save dozens of hours of busywork. Now, a16z has signed on.
For Steijn Pelle, an ideal customer meeting looks very different than your typical startup founder.
His favorite focus group: a bunch of dentists in an Invisalign study club.
Pelle’s startup, Lassie, sells software to help small businesses run their operations. And not just any small business, at least for now. Specifically, Pelle solves toothaches for dentists across the U.S.
And it all started with a cry for help from his own dentist in the Bay Area.
The founder and owner of Grace Dental, Kwon is one of the region’s more successful dental practitioners, with an in-office team of about 20 staff who see nearly 100 patients per day at a new 4,000 square foot office in Menlo Park. But six years ago, Kwon ran a smaller practice out of a 900 square foot space in Palo Alto that was bursting at the seams.
His office manager had left, and Kwon was personally staying up until 2am each night filling out, and mailing, hundreds of health insurance statements and adjustments for his patients. Even with three hours of sleep and six days a week of grind, he was nearly $1 million behind in payments from his accounts, and worried he’d run out of cash on hand.
“The image that really sticks with me is how paper was just everywhere,” he says. “Stacked on my desk and at home, spilling out of file cabinets, and my backpack. We were just drowning in it.”
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In desperation, or maybe just to vent, Kwon told his patient Pelle, whom he knew had a tech background as a product leader at Robinhood, and who as a native of The Netherlands originally knew what a more efficient system looked like.
But Pelle did more than just give advice, or point Kwon to a website. That month, he embedded for a few months with Kwon as an employee, perched on a bar stool near the fridge and learning how to manage Kwon’s finances and bookkeeping first-hand. At night, Pelle would call his technical co-founder Frédéric Renken in Canada, and the two would work out how they could automate those processes with software.
“I was looking for a hard problem,” Pelle tells Upstarts. “I knew that I didn’t want to build a chat app.”
Fast forward five years, and Lassie has spread, one dentist Invisalign study group at a time, to work with more than 700 practices. For bigger ones like Kwon’s, Lassie’s autonomous system can save more than 100 hours per month in admin work; on average, Lassie saves them at least 30 hours, nearly the cost of a full-time staffer.
Now, Lassie has raised $35 million in a Series A funding round led by a16z to grow even faster. The funding values Lassie around $250 million, a source with knowledge tells Upstarts.
Night Capital and a host of domain expert angel investors joined the round, including co-founders of Superhuman, Plaid, Wise, and Reforge, product leader Gokul Rajaram, and the dentist father of Facebook’s co-founder, Dr. Edward Zuckerberg.
With the funding, Lassie hopes to expand what its software can handle for practices, while making it easier for new ones to sign up. Eventually, the ambition is to move beyond dental practices to other doctor offices, Pelle says.
The story behind Lassie’s product is the stuff of movies – new board director and a16z general partner Alex Rampell compares Pelle to a great Method actor like Daniel Day-Lewis training to play President Lincoln – but it’s got two embedded lessons that are useful for any startup builder.
Its founders ‘out-obsessed’ the competition
It operates in a ‘Goldilocks’ zone for AI
“I think this is an optimistic case for AI, where you have business owners and patients also suffering,” Pelle says. “And these small businesses, they can kick us out if the agent doesn’t actually do work that they like.”
We break down each point below.
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Obsessive opportunity
Kwon’s compelling yarn wasn’t enough to launch a startup on its own, but it got Pelle researching. The Dutch entrepreneur had worked at a virtual health practice just after moving to Silicon Valley in 2016, then spent formative stints at Coinbase and Robinhood working in product.
Teaming up with Renken, an engineer and the first product hire at Superhuman (now Superhuman Mail), the two talked to about 80 doctors and business owners to validate the problem. Pelle actually worked a stint at another practice, too, filling in at a gastroenterologist’s office in Scranton, Pennsylvania for a few weeks in mid-2020 before his stint working for Dr. Kwon.
When Renken was able to move to the U.S. and join Lassie fulltime in 2021, the two didn’t rush to ship a product. Over the next two and a half years, they visited and onboarded 100 doctor’s offices onto test versions of their software, starting with basic use cases like managing claims with one insurance provider.
They named their startup Lassie because, according to Pelle, Americans are obsessed with their dogs, and they wanted a product that customers would similarly love; plus, both could help save people from drowning, whether figuratively or on TV.
Dental practices needed to digitize their records, so they were a good place to start. “You can’t send an AI agent into a file cabinet to automate it,” Pelle says. And small businesses – while they might be harder to onboard or win over at first – provide a strong feedback loop, he argues.
One early customer was Dr. Suffiyah Webb, a New Jersey-based pediatric dentist who operates a practice in Newark, as well as a service providing high-volume pediatric care in preschools and elementary schools.
Webb met Lassie at her industry’s annual conference, where the startup was exhibiting on the show floor, and raised her hand to become a test customer two years ago. Lassie was able to organize her payments, then go back and clean up months of claims and unpaid accounts receivable.
“It was like getting a big broom, and a big dustpan, and cleaning up what was happening,” Dr. Webb says.
She’s become such a loyal customer that peers have asked her if Lassie is paying her to promote it, she notes. It’s a fair question: Kwon, as Lassie’s first-ever customer, received advisor shares and has vested interest in the startup’s success. Not Dr. Webb.
“I’m not getting a kickback for this, I just think it’s excellent,” she says. “It’s allowed me to have more time with my daughter. I was coming home from work at 6pm to post payments, right?”
The secret to Lassie’s success isn’t kickbacks, its CEO argues, but its obsession.
“You will not find many other people that are willing to obsess for so long, and so deep, over this,” Pelle says. Working on a problem for an ‘unreasonable amount of time’ was pivotal at other tech standouts like his former companies Coinbase and Robinhood, but also others like Shopify and Stripe.
“Founders are too impatient,” he adds.
The ‘Goldilocks’ zone
Another explanation for Lassie’s growth: it’s finding enough value in a category that previously would have been considered too small to sustain a startup, but isn’t so big that Anthropic, OpenAI and the big AI labs are bursting down the door.
“It’s in this nice ‘Goldilocks zone,’” argues Rampell, its investor at a16z. “If it were too big, it would be the number one focus. Too small, nobody would spend time on it.”
Lassie’s insight: doctor’s offices, and specifically dental practices, weren’t buying software to manage their back office functions because existing options didn’t do enough; no one was building better software, meanwhile, because the average customer value (ACV) of such a practice, in the hundreds of dollars, wasn’t worth the trouble.
To unlock an ACV in the eight figures ($10,000-plus), Lassie needed to generate more than that in value. Obvious enough. How it did it, though, was to find a way for AI tools to help solve a problem: high turnover, and a lack of qualified applicants, for admin roles at these practices.
By training its AI agent to automate about 15% of the labor needs of keeping up with a practice, Lassie can save its customers $30,000 or more in cost.
While it might sound like Lassie’s AI is replacing humans, the customers who spoke to Upstarts say that hasn’t been the case. Dr. Kwon’s practice increased the number of patients they could see, allowing him to grow the number of doctors and hygienists he employs from four to 10.
Better conversion of claims and reliable projections, meanwhile, helped Dr. Webb recently open a second location for her practice in Hoboken.
“It’s not replacing people, but freeing them from juggling countless roles and wearing so many hats,” says Dr. Kwon.
Dr. Webb still employs someone to manage her bookkeeping, she notes, with Lassie as a backstop: “AI allows my practice to be a lot more human-connected.”
Consumers are skeptical about AI decreasing their quality of care. Technologists who dismiss those concerns should read threads like this one, from Reddit yesterday, where patients say they’re avoiding offices that check them in automatically.
The key will be systems that don’t just help the small business owners, whether their dentists or other small businesses that Lassie might support in the future, but that also provide a better customer experience, too – from a human who has time to show them they care.
“A lot of businesses still need humans in the loop,” says Pelle. “We just like to build stuff that people love to use.”
been amazing working with the Lassie team!!!
Live like a monk, listen like a lover, and build like a craftsman.
Love your work Team Lassie!