Six Great Tips On How to Start a Company
By Jeff Haden
Here's a common tale: a successful financial services litigator who works with large hedge funds, financial institutions, and major commercial concerns one day decides to abandon his thriving career... and start a healthcare business.
Okay, maybe not so common after all.
Yet that's the story of Scott Vold, co-founder of Fibroblast, a company that makes software to ensures no patient falls through the cracks in the healthcare system--and then misses out on potentially lifesaving care.
Of course there's more to the story than that.
"Not that law isn't a great profession," Scott says, "but it wasn't the most fulfilling job for me. Then one day I was chatting with a friend and he asked for advice. Andrew is a gastroenterologist and colleague of his had a patient who had a microscopic amount of blood in his urine, so his colleague referred him to a specialist. He tried to follow up with his patient several times, tried to get in touch with the urologist he referred the patient to... and eighteen months later learned the patient had died of bladder cancer.
"Andrew says this kind of thing happens all the time. He only knows who shows up in his office. He doesn't know about the patients who should be coming to see him. And he doesn't know if the patients he refers to other specialists actually follow through.
"I went back to my office and I couldn't focus on anything else. It became this burning idea: we need to solve this problem because it touches everyone. In time Andrew and I realized it was not just an idea but a business--so together we started Fibroblast."
So what has Scott, a first-time entrepreneur, learned about starting a business?
1. Build a MVP.
After four or five months of sketching ideas on notepads we learned about lean startups and the concept of Minimum Viable Product. I went to a little business center and spent five or six hours putting together mockups of screens and we found a developer to build the alpha version of our product.
Then we just kept putting that in front of practicing physicians and their staff to get feedback, and we finally got several small practices to help us prove our concept.
Always start small. You don't know what you don't know... and a MVP is the perfect tool to get the feedback you need to create a product that customers will actually love.
2. Think beyond the customers you know.
Since Andrew is an independent gastroenterologist with a great network of physicians and practices, in the early days of the company we felt if we could solve the problem for those practices our software would catch on like wildfire. So we started selling to those practices... but that's not easy because their margins are shrinking, their numbers are dwindling, they move slowly... And we soon realized we were growing too slowly.
Then I pulled my head up from the weeds and thought about the Affordable Care Act and its affect on the overall healthcare market. Fee for value was a growing trend and major health systems needed better tools to make sure patients didn't leak out of their systems. So we started to sell to big health systems.
While those deals move slowly and are incredibly complex, they are also great deals in that they allow us to gain scale very quickly.
3. And then leverage reference-based selling.
As in many industries, healthcare is all about reference-based selling. Once you land your first customer, every one after that becomes incrementally easier. (Large providers don't want to be first.)
Multibillion-dollar companies lead the market, and those systems are unable to take risks on smaller, earlier-stage companies because their margin of error has been slashed. So it's a catch-22 of sorts: when you get the first client that is the right size, right shape, etc, and can point to it and say, "This system that looks like you trusts us... and here's some data to support what we've done... and here's some people you can talk to..." that goes a long way.
4. Truly understand your customers.
At first we were eager to sell to anyone; in time we realized we really needed to segment the market, create a profile for an idea customer, and thoroughly understand why a healthcare system would buy our technology.
That let target our messaging use language that they use and understand--and that got us in the door because our message resonated deeply.
5. Embrace a different (better) kind of stress.
Our early days were stressful, but the level of stress and type of stress I feel now is categorically different than what I felt as a lawyer. When I was practicing the stress was heavy, oppressive... every single interaction was an argument with someone else.
What I have now is a positive type of stress: I can see the goal we're trying to achieve and we're working hard to get there, but the outcome is uncertain. But, there is much more of a direct line of sight between effort and outcome: I feel much more in control of my own destiny and the company's success.
There is also the stress of knowing there are patients in that healthcare system that should be seeing a specialist or getting additional care... and they won't. If they had our software they would get the care they need. We hear countless stories from people saying, "I wish my aunt or uncle or dad had something like this when the doctor told him to get the colonoscopy. They never did, and unfortunately he has colon cancer."
That's also a stress of sorts. We're worried that patients aren't being taken care of. But it's a good kind of stress, because it's incredibly motivating to know we can make a real difference in peoples' lives.
6. Don't think you need to move.
We're a tech company but we made the conscious decision to stay in Chicago. I'm a native, my co-founder moved here for his residency, and we're committed to growing the healthcare community here.
There are good business reasons to stay in Chicago as well. We have an incredible ecosystem for healthcare: world-renowned healthcare systems, some of the best pharmaceutical and medical device companies, major public and private support, angel investors and VCs who want to support homegrown companies....
Put all those things together and this is a great place to be--we have everything we need to meet the needs of our customers.
Plus I'm proud of my city and I want to help be a part of the growth of the tech community here. We're working to build a company we're proud of--why not do that in a city we're proud of?
The opinions expressed here by Inc.com columnists are their own, not those of Inc.com.
Published on: Jul 8, 2015