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The Decent team in Austin, Texas. (Decent Photo)

After selling a startup and leaving full-time work for the life of an independent consultant, Nick Soman stumbled across the idea for his next company. It came in the form of a health insurance bill that was higher than his rent in San Francisco.

Decent CEO Nick Soman. (Decent Photo)

“Wow, this is extremely broken,” he recalled thinking at the time.

After graduating from Techstars Seattle, Soman founded matchmaking platform LikeBright and later Reveal, a Seattle-based chat app that sold to Napster in 2015. After that, he went on to lead growth at Gusto, a payroll and health benefits software company.

But healthcare had never been far from Soman’s mind. Both of his parents are doctors, and when he asked them why health insurance is so expensive, he learned about the “perverse incentives” that reward insurers when medical costs go up.

Soman also knows first-hand how important healthcare can be. When in graduate school, a battle with the autoimmune disorder Guillain-Barré Syndrome left him paralyzed and hospitalized.

As a consultant, Soman was surrounded by independent workers who were facing the same insurance dilemma. He decided to start Decent, a company that lets people come together and self-insure. “We’re allowing them to do what companies have already done,” Soman said.

The startup recently landed $8 million in a seed round led by Menlo Ventures with Foundation Capital and more than 30 other investors.

Soman aims to use technology to “take out the traditional middleman” from health insurance. Eventually, he wants to do this through smart contracts based on blockchain, the technology underlying bitcoin and other cryptocurrencies. Soman was an advisor to several blockchain companies prior to launching Decent.

(Decent Photo)

The lack of affordable health insurance options for the self-employed amounts to a “gigantic, gaping hole in the social safety net,” Soman said. It’s also a significant market: About 16 million Americans are self-employed, according to the Bureau of Labor Statistics. If you count people hired by those self-employed individuals, the number rises to 44 million.

California Governor Gavin Newsom this week signed a bill that will limit companies’ ability to classify workers as independent contractors rather than employees, thus giving more workers access to rights such as health coverage, a minimum wage and sick days. Ride-hailing firms Uber and Lyft have spent heavily to fight the legislation.

The idea that freelancers can band together for health insurance isn’t new. The New York-based Freelancers Union, for example, offers insurance to freelancers. But rather than insuring people directly, Decent is imitating the system already used by companies across the country. The startup, which offers ACA-compliant plans with unlimited free primary care, says it’s able to help people save 20 to 30 percent on the cost of a plan.

Though Decent is headquartered out of Seattle’s Smith Tower, the company decided to launch in the Austin, Texas market. Soman said that the company was attracted to Austin’s rapidly-growing freelance community and Texas’ business-friendly policies. Decent employs 20 people, some of whom are based out of San Francisco and Poland.

The startup is partnering with the Texas Freelancers Association to reach self-employed people in the state. It has also inked partnerships with Costco Health Solutions, a pharmacy benefit manager, and HCA Healthcare, a large for-profit hospital network.

As for the name Decent, it was inspired by a speech given by Franklin D. Roosevelt called “The Second Bill of Rights.”

“FDR is a hero of mine,” Soman said. “He talked a lot about healthcare and he talked a lot about a place to live, and he used the word ‘decent’ a lot.” After settling on the name, Soman used a line of credit to buy the domain name before he had raised any money from investors.

“I wanted to light a little bit of a fire under my butt,” Soman said.

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