Since 2017, Dr. Yusuf Sherwani has been building Pelago into one of the most trusted names in virtual behavioral healthcare. In this Health Moonshot Update, he sat down with us to trace Pelago's nine-year path from a scrappy telehealth startup to a company reshaping how the industry delivers – and pays for – behavioral health support.

Nine years ago, Yusuf Sherwani, MD, co-founded Pelago – then known as Quit Genius – as a virtual clinic for substance use disorder – long before virtual care was trusted, let alone expected. "Digital health is not for the faint-hearted," he says. "What seems like an overnight success story is typically years in the making."

That patience has paid off. Pelago has grown into a scaled digital health company, raising $150M and partnering with self-insured employers and health plans across all 50 states to treat adults and teens with alcohol, opioid, stimulant, and nicotine use disorders. By rethinking the underlying care delivery model, Pelago has cut the cost of treatment by 10x – from $30,000 for traditional inpatient rehab to less than $3,000 per patient – while returning $5.50 for every dollar invested, based on independent analysis.

Getting there wasn't a straight line. Pelago tried selling direct to consumer in the UK and found people weren't willing to pay what the care was worth. It tried the UK's national healthcare system and found early success but limited scale. It wasn't until the company shifted to selling through US employers that the model clicked. "The magical thing about product-market fit is you know when you have product-market fit," Sherwani says. "If you're asking whether or not you have it, and you're seeing vague signs, then you probably don't."

Now Pelago is going through what Sherwani calls a refounding: Pelago 2.0. The shift is driven by a simple, uncomfortable fact. Behavioral health costs have grown four times faster than overall healthcare costs over the past five years, yet more than half of people with a mental health condition still aren't getting the support they need.

Pelago's answer is Sona, an AI mental health specialist built to serve as a first line of assessment, triage, and support. Sona is designed for people who don't need a therapist but do need a compassionate, always-available companion – one built to recognize when a person's needs go beyond what AI should handle alone, and escalate them to a clinician. "There's always a clinician in the loop," Sherwani says. "We're upfront about that from someone's very first intake."

Sherwani doesn't see Sona as competing with tools like ChatGPT so much as addressing what he sees as a meaningful gap between them. "There's a big difference between a great assistant and a great therapist," he says, pointing to the distinction between AI built to inform without influencing, and therapy built to help people actually change how they think.

For founders building in behavioral health, Sherwani's advice is consistent with how he's approached Pelago from day one: stay close to the clinical literature, keep clinicians in the product development process, and measure what matters. "There are ways of getting great engagement that don't ultimately move the needle on outcomes," he says. "And outcomes is really what our industry needs."

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