The Inside Story of a Scorched-Earth Breakup Between Two Founder Friends

Two health-tech co-founders went from biking buddies to the bitterest of enemies. Now competing lawsuits, accusations of racism, and claims of theft, plagiarism, kickbacks and fraud reveal the blurry lines crossed on the way to unicorn status.

At 31, Erica Johnson, a neuroscientist and engineer, had never been rich, and certainly not tech-unicorn, eff-you-money rich. At Stanford Medical School and University of California San Francisco, Johnson researched brain health and cognitive function, earning between $45,000 and $55,000 a year. Making big money would be great someday, sure, but it wasn’t what got her out of bed in the morning.

But then, in 2017, a friend from her women’s engineering group introduced her to Alyson Watson, an energetic aspiring tech founder gunning for a slot in Y Combinator, Silicon Valley’s premier startup incubator. With a background in operations, Watson needed a technical co-founder to complete her application, and she laid out her idea for Johnson: an app called Modern Health that would deliver digital mental health treatments and remote therapy sessions to employees.

The timing made sense. Corporations were increasingly looking to demonstrate more compassion for their employees’ mental well-being, and recent studies showed that treatment for common but often stigmatized disorders such as anxiety and depression could improve employee wellness and productivity.

Watson’s business vision dovetailed with Johnson’s research interests, and after a shotgun two-month courtship, Johnson said yes to becoming Watson’s co-founder. They were admitted to YC. When the $125,000 YC investment hit their First Republic Bank account, they took a screenshot and cheered. They were on their way.