Growing your startup. Even if VCs don't love you
Big meeting rooms with shiny tables make me uncomfortable. Like that room inside the offices of a big-name VC firm.
Even as I waited uncomfortably there, I lusted after the logos of many a known startup. They were displayed on plaques outside the room.
(Some are bust today. But back then it didn't matter.)
Then he came. The investor. Eating something. Crumbs falling here and there.
"Show me something that you got that no one else does!"
That was almost the opening line.
Right, I thought.
My next thought was to recall the cost of the flight tickets. Then my time. I could've met clients. Trained our people.
Or, I could've at least gone for a movie.
Ouch, I thought. But decided to go along since I was already there.
"Look," he said midway through the demo. He was staring into his phone. "We would want you to get to a $500 million valuation. Or, go bust!"
Go bust? But what about our clients? And our people?
(Wasn't it a 50 Cent movie? Get Rich or Die Tryin')
Not real money. Like profits. Or even revenues.
"But that's our model," the investor said. He was looking at me now.
"Oh," I responded.
A day later, to close the loop I told him we weren't a fit.
Well, he already knew that.
Thinking about growth differently
No meeting really goes waste. Those kind of meetings (yes, there were a few) helped me discover the Healthcare Footprint Finder. A practical strategy to grow your business in healthcare.
Another VC-friend told me this in confidence:
In reality, most of us don't understand healthcare. Or, how to sell to businesses within healthcare. The industry is too complicated. That's why we look for traction. If there's demand then it reduces the risk for us.
I know. Healthcare is complex.
Everything takes time. Your first product is often the means to your next one or the one after that.
If you can't stay put, you'll surely go bust.
In 2012, 2,000+ EHR companies went through the gate of Meaningful Use Stage 1 (part of the erstwhile Obamacare). By 2015 the time of Stage 2, only 200+ companies passed through the gate.
It's now time for Stage 3. The game gets narrower.
Healthcare requires staying power. Where you need to make real money. Not just play the valuation game.
Because even if you get an investor onboard, they will lose patience in trying fuel you again and again.
But how do you stay on in healthcare? By finding your next big idea.
And how do you find your next big idea? By looking around your existing footprint.
Observe your clients in action. You will discover many unmet needs. They may not be able to verbalize them for you. But if you work closely with them, those needs will begin to leap out at you.
Our company started by selling billing services to gastroenterologists. Today we sell sophisticated endoscopy report writing software to the same clients. We also sell MACRA consulting services and a cloud-based EHR platform. To the same clients.
We got the idea of creating software by looking around our existing footprint. Looking for newer ways to be useful to people who already love our work. Observing what was bothering them. Solving their problems.
That's how it happens. We use the Healthcare Footprint Finder model to grow.
When you approach growth this way, you will have a pipeline of services and products to develop. Because client needs become the starting point. Not random ideas. This way, your new product is likely to sell from Day 1.
Without hankering for funding, you would do the right things for your company.
So, VC or not?
There's no right answer. It depends on what you want and what the business wants. At that point of time. It also depends on finding a suitable investor.
There are many fine examples of entrepreneurs who've ditched the elevator pitch altogether. Built fantastic companies.
It's the market that sustains them. Their business models are regenerative. Always alive. In tune with market needs.
They focus on quality vs quantity. User success vs user acquisition. Sustainable growth vs quick exits.
Mara Zepada of Switchboard and Jennifer Brandel of Hearken call these companies Zebras. An alternative to the Unicorn fantasy.
But such a strategy seems counterintuitive.
At a time when everybody wants to Uber-this and Uber-that.
Even when it all comes Uber-ing down.