How CoverMe CEO Taylor Phillips grew to $739.9K revenue with a 11 person team in 2021.

hey folks my guest today is greg phillips he's the founder and ceo of cover me a health tech sas company using ai to help people find paying sources for health care bills in a real-time marketplace he's bootstrapped and profitable the team has doubled along with revenue in each of the last four years greg guardian takes the top i'm ready to go let's do it all right what gave you the idea to do this did you have a health scare yourself and a bunch of medical bills or what happened i have i actually started as a health care administrator i ran uh parts of the health and human services commission in texas and one thing i realized was the government in particular is really really bad at eligibility and enrollment and all of these things that are out there and um and so once i got out and and sort of escaped i thought well i'm going to try to make i'm going to try to make a living in government and then as this group grew on and on and on i realized you know what you can't you can't scale this i can't do it and so and so uh as we started easing off into long-term care and easing off into the hospitals about that time i got sick i had cancer had all kinds of nonsense going on and fussing and fighting with the insurance companies about what they would pay and why they would pay something and why they wouldn't like this is absolutely insane i'm not a stupid person but i can't figure this out so we took some of the lessons we learned from enrollment we took some of the lessons we learned from eligibility uh over the last uh 30 or 40 years and really turned them into a an ai driven solution that helps people find ways to pay for their health care in real time what are some of those ways to pay for health care in real time well you've got a a plethora of government programs ranging from medicaid medicare you've got workers comp you've got all kinds of government-based programs but there are also these days you know tons and tons of hospital-based programs so the hospitals need to have ways to get people to pay for their health care that can't so they have financial assistance programs they have charity programs they have cash discount programs they have all sorts of other programs and then finally the commercial finance markets have really stepped up to the plate in a pretty big way here providing all sorts of low interest no interest loans to help people pay for their pay for their hospital bills and and it's starting to make a difference starting to make an impact the hospitals need it cause they need to keep their cash flow moving uh patients need it because people like me you know you know don't want to spend our life savings on on uh on our health care bills and once that's you know once you sort of blend all that together pop a little ai in on top of it and a whole lot of work and and voila you've got a real-time solution so when did you guys get your first dollar revenue what year um 2016 our first dollar in this business 2016. well and how much revenue that year do you remember yeah like a hundred and eighty thousand it was really really spooky spooky and scary we we had come out of uh doing um i tell people all the time that i crashed and burned this business a couple times one of the ways i did it was was saying i'm not going to do any more state-based business ever again i don't like working with state governments i'm just not going to do it rather than sort of easing into that pronouncement i just okay we're done that's it i'm cutting it off and then we started looking around like okay now so we we went into a very dev centric uh time frame really over the last five years where we've spent a lot of time really trying to own and understand the market but also growing because we decided to bootstrap and and push our own you know some of our own capital up front how much of your own money did you put in we put in about 800 000 total how'd that feel was it scary it was a little scary um you know at times more scary than others um but as we began to realize just how significant the market was and we we we sort of made a pivot from just being a very narrow niche to now we're we actually provide a marketplace for our patients where they can go or our hospitals where they can take their patients into the marketplace and not only find them finance solutions but we can find them drug discount programs we can find them community programs that help and serve them and really help make the uh the patient's health journey a little bit better greg who is we you mentioned co-founders do you have one is there a bunch of you guys oh there's two of us you split it 33-33-33 or what no i own a little bit more than a majority of my two co-founders on the rest okay and so where did you go i mean were you like super wealthy from a family or something where did you get 800 grand to put into the business yeah just over time i'm kind of an old entrepreneur and so over time we had tried to do some different things and i had built a couple of uh small sort of tech companies that were centered around automating different pieces and parts of healthcare and automating the back of the day automated the training process uh back before uh learning management systems were cool we did a uh a literacy training program that we pushed worldwide trained 250 000 people from from kenya to the ukraine to to the jungles in thailand uh using the using satellite discs and buying transponder time so wow okay so that makes sense and you use 800 and get the mvp you do 160 or 180 000 bucks your first year how much revenue do you do this year you think uh this year we will finish the year at about one six our arr our arr will be a little bit heavier than that because we're really diving off into a a i guess it's we sort of consider this game time and so we're amping up our sales and marketing efforts i have a new sales director we have a new marketing director um how many people total are on the team 22. and how many folks are engineers oh gosh uh uh 13. and how many sales people uh three plus uh half of me and half of my co one of my co-founders how many of the three or four have a quota uh two okay you do have a quota what's your quota target uh we have just this is newly established so you're hearing it here first so anybody that's complaining that you might publish this you feel free to do it uh what would you what we decided what we decided to do was look we think the market is significant here and we've tested into this enough with uh with our products to really understand that if somebody's really working this this this market either in the hospital side or on the nursing home side we have two separate sides um the the ability to sell a million dollars worth of worth of the uh worth of the product is easy and doable so we pay them a pretty good bait a decent base we pay him a hundred thousand as a base and then ten percent on their on their first year on the first year of the revenue and then there's some residuals that's great and just to understand your growth rate so if you're going to finish here at 1.6 in terms of ar like what was your monthly revenue just last month oh uh let's see i can tell you uh we just added three new customers so we added uh two point or excuse me 270 000 in revenue last month in ar in ar correct got it so you added to about 22 500 of mrr but what was total mrr last month uh one point or excuse me uh 131 131 i think 31 000 and where was it exactly one year ago in the middle of covet oh we we struggled a little bit last year we dipped all the way down when we were dragging around about a hundred a month and uh it was it was a tough time i was sick and had cancer and and you know everybody was struggling through things and selling into hospitals you just had cancer this was just last year yeah i still in fact next thursday i go in to see uh see if it see if it's all gone so i'll see how it goes well i hope it's i hope i hope you're well and it's all better and you're super healthy now well you're under your way one of the greatest things of all nathan that happened during all of this effort for me personally as it sort of chokes me up a little bit think about it as an entrepreneur you sort of have this this belief that you know i'm sort of important to my to my company and if i'm not here what's going to happen it's amazing the way some of the leaders in this company stepped up uh my co-founders in particular but also people really across the board from our automated testing teams to our uh chief architects really stepped up into our indus fill some roles that were kind of leadership roles in a way that i had left you know as a void i was working maybe half time or so but people really stepped up and i think the most valuable lesson that i personally learned during all of this was i do have a few ideas and the company was was in large part founded on a few of my ideas but the the future of cover me and the future of where where this company ends up is really in the hands of some of these young smart people that are that are developing the marketplace and developing all the all the products in the future so it's been it's been great i love hearing that that's wonderful and you've done all this bootstrap right we did yeah there's any plans to raise you're gonna stay bootstrapped yeah when we first set out um you know i actually actually sort of sought counsel from you you probably don't even remember it but when we first started dragging into this thing you know i was really focused on i don't want to raise i want to keep this equity for myself and for my co-founders and so we embarked on that but we had this packed between us that from zero to to a million in arr we would try to just keep loaning ourselves the money generate as much cash as we can to keep the thing moving between one and two one and two point five we thought if we need to get some commercial debt or we need a line of credit or something like that to sort of even out the cash flow we'll do that which we did should you raise in debt uh one 125 000 total in a line of credit okay uh and i don't think there's any i don't think we have any of it out right now yeah i'll double check on that but but anyway the the our point was that once we got to that 2 million to 2.5 range we felt like our margins were strong enough to support um getting us there but also that would put us in in a good position in a good place to start to scale this thing and that's where we find ourselves down we're going to start looking at that raise in q4 how much is the right amount well we're still fuzzing around about it you know to scale this thing and do it right i think we need four or five million yeah yeah and what do you think the valuation could be well uh but we we we're sitting down to talk about this here in about a month or so but you know i think we're probably realistically looking at maybe maybe one point uh maybe 12 million uh uh somebody's no you're good no worries do you think if you raise 5 million on a 12 million free something like that yeah something like that we're we're still fuzzing around about it uh one of the exciting things about where we are today is that bringing in these new sales people and watching them perform quickly and out of the gate has really given us some confidence to start to make other investments and do other things we need to do how many customers are they are they managing now how many customers total 36 total okay and they're hospitals right hospitals and nursing homes it's a little bit different there's slight slightly different markets um in part because of the way they're funded so a nursing home might bring it you know might bring us uh 25 000 or so a year a couple thousand a month for a home um but because very few operators only have one home they might have two three or four we're just now getting into understanding that market a little bit better and and maybe right-sizing our pricing um that a lot will allow us to bring in some additional nurses so that's exciting to us and we're excited about it we think we can get that revenue per contract i'll call it as we call it up to probably the 50 or 60 range on the nursing home side on the hospital side it's a little bit different because we have several different products um the hospital sides depending on the size of the hospital ranges between 5000 a month and maybe 12 500 a month we have one that's a little bit bigger than that but all in all it shakes out to around between the two of them together hospitals are about give or take a little bit about a hundred thousand a year and nursing homes are about 25. we think we're about 50 beneath the market on both of them so we're going to start looking at some price increases we've got some new value props that we're adding into the into the marketplace and we think we'll easily our customers will easily be able to absorb it uh based on the the roi for our our product offer greg it's a helpless story man we're rooting for you let's wrap up here with the famous five number one favorite book man i after i got sick i started reading the bible two years ago next week i will have read the bible for 732 days in a row so something i i get i get leadership uh ideas from i get commitment ideas from and all sorts of um all sorts of uh feel-good uh uh components to that so that's a that's an easy one greg is there a founder you're following or studying you know nathan i don't want to blow your horn too much man i guess people have probably done this i haven't listened to all your podcasts but you have been very important to us and our growth we look to not only your slack channels for for ideas and some of your founders that you connect us with but also reading your book and listening to your podcast we get more good ideas from you than just about anybody else in the space oh man i appreciate that greg thanks so much i'll pass it on to my team we have a great support system running the whole thing i appreciate that uh number three what's your favorite online tool for building cover me oh that's easy there's a san diego-based startup called re-hinged they are a spin-out from a vc company out there and these guys are absolutely killing it they take data and they apply ai to it and push it into sort of an an easy to use dashboard for marketing purposes and in fact i just invested some some of my own money into that deal re-hinged is going to be a superstar in that space interesting they have a very very ai heavy site so it's not surprisingly very interesting uh what's your situation married single kids man that's complicated i've got two great kids i've got two amazing grandkids i'm really good at my job but not super great at relationships but uh you know you and me i get to i get through life and it's all good so not married two kids is that right that's right and how old are you greg i am i'll be 61 next month 61 years young i love that how much are you sleeping these days how many hours uh five or six hours okay pretty good all right take us home here something you wishing you when you were 20. man i wish i i wish i would have known that you don't have to work for other people that you could do this yourself if you just get in be committed stay going where you going keep your eyes on the prize and always step toward the fire i i you know anybody could do this guys we're thinking positive thoughts greg is going to go into his uh doctor next week and get the all clear he battled cancer hardcore last year and realized the problems associated with paying bills it's a nightmare he's a smart dude but it's hard to figure out that's why he built cover me currently is now growing very quick they were doing a hundred thousand dollars a month about a year ago now doing 131 000 a month across 36 hospitals and nursing homes who paid them to help their patients figure out ways to pay more effectively using things like workers comp medicare cash discount programs charities things like that they've done this bootstrap which we love with a team of 22 people greg owns about fifty five percent of the business greg thanks for taking us to the top nathan thanks for everything one more thing before you go we have a brand new show every thursday at 1 pm central it's called shark tank for sass we call it deal or bust one founder comes on three hungry buyers they try and do a deal live and the founder shares back end dashboards their expenses their revenue arpu cac ltv you name it they share it and the buyers try and make a deal live it is fun to watch every thursday 1 p.m central additionally remember these recorded founder interviews go live we release them here on youtube every day at 2 p.m central to make sure you don't miss any of that make sure you click the subscribe button below here on youtube the big red button and then click the little bell notification to make sure you get notifications when we do go live i wouldn't want you to miss breaking news in the sas world whether it's an acquisition a big fundraise a big sale a big profitability statement or something else i don't want you to miss it additionally if you want to take this conversation deeper and further we have by far the largest private slack community for b2b sas founders you want to get in there we've probably talked about your tool if you're running a company or your firm if you're investing you can go in there and quickly search and see what people are saying sign up for that at nathan lacka dot com forward slash slack in the meantime i'm hanging out with you here on youtube i'll be in the comments for the next 30 minutes feel free to let me know what you thought about this episode if you enjoyed it click the thumbs up we get a lot of haters that are mad at how aggressive i am on these shows but i do it so that we can all learn we have to counter those people we got to push them away click the thumbs up below to counter them and know that i appreciate your guys's support all right i'll be in the comments see ya