How Febo Health Reached 14,000 App Downloads and Closed a $106K SAFE Round at a $4M Valuation (Interview with Chairman and Founder Nicholas Focil)

Introduction: Nick Focil and Febo Health

Nathan Latka

00:00Folks. My guest today is Nick Focil. He is the chairman and founder of febohealth toolbox SaaS app used globally by chronic condition patients to help make life a little easier. After obtaining his biochemistry degree, he worked in several positions and is the CEO of Fomat Medical Research in addition to his role at febo. Nick, ready to take us to the top?

Nicholas Focil

00:17>> Let's do it.

Nathan Latka

00:18Alright. So people wanna follow along. It's febohealth.com. Tell me who's paying for this product. How are they using it?

No Revenue: Entirely Funded for Growth

Nicholas Focil

00:27>> Right now, it's entirely embedded. There's no revenue. There is we're not looking to make any money on it for about the next two to three years. It's entirely gonna be funded for for growth at this point.

Nathan Latka

00:41Okay. So how are you paying bills? Have you raised a bunch of capital or what?

Nicholas Focil

00:45>> Yeah. We've been raising we've done we just finished our safe round. We oversubscribed it, actually. So we're pretty excited about that.

Nathan Latka

00:52How much did you raise?

SAFE Round: $106K at $4M Valuation

Nicholas Focil

00:54>> It was a 106,000, safe round one at $4,000,000 valuation.

01:01>> And the that was that will take us to a roughly about end of June, and then we're looking to raise safe round two. Our projection value at that point will be about 8,000,000. We're looking to about total between the first round, which was 3%. Second round is about gonna be 6%.

Nathan Latka

01:20Sorry. Second round is 56 percent of what?

Nicholas Focil

01:23>> 6%. 6%.

Nathan Latka

01:246%.

Nicholas Focil

01:25>> Yeah. A total of 9%.

Nathan Latka

01:27So so got it. So just speak when did you write the first line of code for the tool?

Nicholas Focil

01:32>> This was about two years ago.

Nathan Latka

01:35Okay. So how have you if you just raised a $150,000 today, how have you funded salaries and things for the past two years?

Funding the Company Through FOMAT Medical Research

Nicholas Focil

01:41>> So this is a byproduct of my company, FOMAT Medical Research, the one I'm CEO for, and that's been it's a product of it. So it's been paying salaries. Self funded self funded, let's say, myself, to

01:53>> answer So sorry, a product.

Nathan Latka

01:54So you have an agency and this is a product of the agency?

Nicholas Focil

01:57>> Correct.

Nathan Latka

01:58Okay. And what does the agency do?

Nicholas Focil

02:00>> Clinical research.

02:02>> We do research for a living.

Nathan Latka

02:04Okay. Interesting. So in 2020, give me a sense of the size of the agency. How much revenue did it do?

Nicholas Focil

02:10>> The FOMAT Medical Research?

Nathan Latka

02:12Whatever the agency is. Yeah.

Nicholas Focil

02:13>> Yeah. So, you know, seven, eight figures.

Nathan Latka

02:18Got it. So so, I mean, what? So, like, 8 to $10,000,000, something like that?

Nicholas Focil

02:22>> Somewhere around those figures. I I mean, I don't wanna enter into too much of those details if if you may if you may.

Nathan Latka

02:28So well, so so tell me what so 8 to $10,000,000 agency revenue, it's it would be hard for me to get distracted from such a big revenue stream to go build some SaaS tool. Why how are you balancing your priorities?

Balancing the Agency and the SaaS Product

Nicholas Focil

02:40>> So I honestly have a phenomenal team. Like, it just, you know, top, top, top notch team. People that see the vision of this company, see the vision of the software, and obviously have some skin in the game as well. And so I I think I lean heavily on them. Also, I know I don't sleep, and I see this future in the health care space needing this. Chronic condition patient, there's a huge need for them. So while

03:11>> I was obviously managing this company, I I noticed this huge elephant in the room and and figured I needed to to solve it or at least try attempt to.

Nathan Latka

03:19So how much capital to date has the agency invested into the SaaS company, febohealth?

Agency Investment Estimated at $500K to $750K

Nicholas Focil

03:26>> I don't know. I don't have any direct number for you. I would I would guess somewhere in $500,000 to $750,000.

Nathan Latka

03:33Okay. 750,000.

Nicholas Focil

03:35>> That's correct.

Nathan Latka

03:36And then the the the obvious question is you have so much revenue coming from the agency. Why go raise a $150,000 from angels? Why not just keep funding it from the agency and keep the equity?

Nicholas Focil

03:45>> Right. That that is a good know, there's multiple reasons, kind of one of the bigger ones, if you will. When you and I actually wrote about it too. We talked about your book recently, and I also wrote about this concept. There's different models of business depending on what type of business, you know. Brick and mortar is you have to solve it certain different ways and technology certain ways. And in this particular space, it's all about quick

04:09>> growth. It's all about, you know, being in the market immediately and being there quick. And for that, you need you need to infuse it with a lot of capital. And you need to have top talent. You need to have top connections. It's a different model of business than the one we do for research, which is more structured. It's more slow moving, which, you know, that's more it's more organic, if you will.

Nathan Latka

04:32Oh, what's going on there, YouTube? Good to see you guys. Now imagine this. You love watching these interviews with SaaS founders, but imagine if we took all of the valuation data out from over 2,807 interviews I've done manually. Saves you a lot of time. Well, we've done this. We've built it into the beautiful interface inside of Founderpath. Check this out. I'll show you how you can access this in a second, but you log in, you connect

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06:55the interview. I understand that. But if you have a $10,000,000 agency, it would seem weird that you're out spending your time and energy raising a $150,000, especially when you've already put $750,000 from the agency into the business. It just is I'm I'm missing something here.

Nicholas Focil

07:09>> I it's a different also, by the way, another thing is I'm not the sole owner of the of the agency, as you say. I'm a shareholder, but I'm not the sole owner. I'm the CEO of it. And, you know, it's part of it is part of a package, if you will. Febo, I am the sole owner. Now I've obviously been diluted by by raising, but it is a different it's a different company.

Nathan Latka

07:33I see. So so Nick owns right now about 90, well, I mean, 98% of febo and a couple percentage points go to that people that just put in a $150,000.

Nicholas Focil

07:43>> Plus, have the the employees that have been have given shares. There's a certain amount of stock given for key employees that we've already researched it on the side.

Nathan Latka

07:51I see. Yeah. So an employee stock option pool. How much did you set aside for your ESOP pool? Usually, it's like 10. Well, you're sort of the same?

Nicholas Focil

07:57>> Correct.

Nathan Latka

07:58Alright. Okay. Got it. So 10% ESOP pool, you know, you own 88%, maybe these new investors own one or 2%, something like that.

Nicholas Focil

08:05>> About 3%. Correct.

Nathan Latka

08:07Okay. Got it. So got it. Got it. Got it. Okay. Interesting. Let's talk a little bit more about the why behind this. Right? So give give me an example why you're building. Who who's using it? What are they paying you for? What are they or not paying you yet, but what are they using it for?

One in Three Americans Live With a Chronic Condition

Nicholas Focil

08:19>> So imagine a world that where, you know, one one in three, something some some people say one in two, people suffer chronic conditions in The United States. They're like, well, that's that's crazy because the word chronic condition is is defined loosely. You know, hair loss, which I I do I have, if you will, that's considered a chronic condition. It's not life changing. Right? But when we're thinking of life changing chronic condition, think lupus, Crohn's, Parkinson's, Alzheimer's,

08:44>> those you the modality current modality is you you see your doctor, you get diagnosed, you you get on a treatment plan, and you then check-in with your doctor maybe every four to six months. But there's a direct dependency on you and the physician, you and the infrastructure, you and the system, if you will, every four to six months. What we're trying to what we've noticed is depending on the size of the disease, there's more or less

09:07>> attention on that particular condition. So, why depend entirely on the condition on the system? So what we wanna do is create a system where you depend on yourself. So giving you all the tools where you start having agency agency on yourself, and you have to start taking a little bit of control over. So meaning tools like simple things like, for example, pill reminder. That's an easy one. Right? But then you're entering into things where you can

09:33>> do crowdsourcing. So think of pill reminder, but then if I have a room of 10,000 people with lupus, wouldn't you think that I now know people with lupus that have these kind of general kind of variables are taking this medication. It's working. Here are the side effects. Now why couldn't I have a crowdsourced solution to that where I'm now see compare myself. Well, a person across the state is also taking this medication, but they're taking in

10:00>> combination with this other medication. So now I go to the doctor, and I'm like, hey. You know, twenty percent of the population is taking it with this Otsu thing, and it's working really well compared to what I'm doing. What what are your thoughts on it? So now you've kind of empowered the patient to push it to the doctor. The doctor will be like, no. I I don't recommend that

Nathan Latka

10:16because you are Isn't it very hard to convince people to tell everyone else what medications they're taking, which is critical for you to understand and tell a neighbor that someone across the state is using another medication, but you you tell them, obviously, you try and keep it anonymous. But isn't it hard to get people to opt into that?

Anonymous and Encrypted: Solving the Privacy Problem

Nicholas Focil

10:30>> So, yes. A 100%. So there's a few things we're doing. A, entirely anonymous, entirely encrypted, double encrypted. You don't need to even put a name to it. You don't need to put an email. Like, you don't even have to create you can you can have it be entirely fake where you can put a wall, like, can put a different picture. We don't request any information from you. It's entirely anonymous and double encrypted. So that's kind of

10:52>> to help that part, but also there's multiple ways. So you said that one of them is the medication, which you just said, which we're just talking about, but there's other things like symptom tracker. So you put your symptoms, right? So let's say you have fibromyalgia, and let's say you woke up with headaches, or you're waking up with different bloated, and you start tracking your symptoms. If we're comparing patients with Crohn's with these symptoms and across The

11:16>> States, the same thing, we can now compare variables. So it's a lot of crowdsourcing with your own intel being put in.

Nathan Latka

11:23I know. I'm just saying you have a very, very serious chicken and egg problem here. I mean, I just bought an Apple Watch, And despite the fact that it can give me my ECG, my heart rate, to my steps, everything, I'm not wearing it right now because I find it annoying. I still don't know if I want give Apple all of my information. I can guarantee Apple security is tighter than yours because their dev team is

11:41infinitely bigger. I just think I mean, how do you get people to sign up for this?

14,000 Downloads and the News Feed Flagship Tool

Nicholas Focil

11:46>> So, again, yes, you're you're absolutely right. And we're right now about 14,000 downloads and growing. We just opened up the App Store June 2021. So we're about a year and two months into it. Sorry. And I'm a little bit off on my numbers there. A year and seven months into it. But we're just we just ranged. We just closed the round. So we're now officially up until that point and entirely organic. The reason why is that

12:14>> we have multiple tools and each tool like, for example, I don't use all of them. I only use, like, one of the easiest ones, which I think most people can get behind of is our news tool. So let's say you have lupus and, Japan recently approved a drug for the treatment of lupus. That drug is not approved in The United States. That that article, this is a patent pending patent pending algorithm, is that article is being

12:42>> translated to English and it's getting pushed to you in real time. So you get to read it and you tell the doctor about the art. So you can, like, immediate news feed on all things lupus from a validated source. And those are easy. Just like you're following CNN every morning, you follow your news feed on whatever condition you have, and it gets pushed to you. You read whatever you want. You don't read whatever you don't want,

13:02>> and then you can comment on it if you want. So that's a generally easy topic to do, and that's where we see that that's one of our flagship tools, if you will. And, again, there's a crowdsourcing concept to that as well.

Nathan Latka

13:14I mean, doesn't Apple just kill you or any watch just kill you in a year?

Nicholas Focil

13:19>> So we I mean, not not really. So Garmin, for example. Garmin reached out to us for a partnership. So we they if you have Garmin, you can integrate it to our app, and it pulls that information to, like, pre fab pre fill some of the information. In our tool for the for the news, for example, our steering committee says it's articles they can't find on Google yeah. Sure. You can find it on Google, by the way.

13:42>> I'm not saying you can. It's like we're but you'll have to go, like, page 17 to find it. You know, it's published by Harvard or whatever. They they those are not gonna be high targeted words. It's gonna be more so, like, maybe something that Google thinks is more important for you to read while we're

Nathan Latka

13:56I'm just saying, Nick, what I I am not seeing a clear moat here of something that's so unique to your experience, your background that you can accurately and predictably, like, defend against Apple just adding a little thread in the Apple Watch Health app that says, oh, we told you you have lupus. Here is the Japanese. Like, here's a new a Google Alerts little system for lupus. I'm I don't see an advantage that you have over everybody

14:16else.

Nicholas Focil

14:17>> I guess my clearest advantage is we're I mean, it's not it's a it's a market focus, if you will. Apple, for them to move the needle, they have to focus on a larger audience. And we are not focused on a larger or, like, you're not my customer. I mean, I don't know whether or not I'm assuming here, but we're our customers are the chronic condition patients, which are, like, life changing diseases. We're doing we're doing tools

14:42>> that are very specific to that particular condition.

Nathan Latka

14:45I see. I see.

Nicholas Focil

14:46>> Yeah. Log, for example.

Nathan Latka

14:49Okay. So how do you obviously, one one day you have to make money on this. Otherwise, you're gonna sell your all company into VCs and have nothing left. Right? So how do you make money from this?

Path to Monetization: 100,000 User Threshold

Nicholas Focil

14:56>> So in two to three years, we'll start opening it up. We're looking to get to a minimum threshold about a 100,000 users. And at that point,

Nathan Latka

15:04when you How many downloads last month?

Nicholas Focil

15:07>> I don't I don't have that data. I do know that we had last week, so I can kind of extrapolate if you will, about 200 downloads, so about 800, if you will, probably. We're just, as as of yesterday, turned on the engine to be paid advertising. So we do expect a a pretty large uptick on on downloads.

Nathan Latka

15:28How much do you think you're gonna spend to get one new download?

Nicholas Focil

15:32>> We're spending about the national average is $2.80. We're right now at, like, $1.70 something.

Nathan Latka

15:41So what's the sample size though to get the $1.70 number? How much of your $150,000 that you just raised have you already spent to test ads?

Paid Advertising Launched February 1, 2022

Nicholas Focil

15:46>> Zero. The of of the money that we've raised, we haven't spent any money yet. We we that were launched as of yesterday to February 1 is when Okay. So you

Nathan Latka

15:54don't know what your CAC is yet. You're guessing. But you're gonna try and figure that out.

Nicholas Focil

15:58>> That that we've been doing it, but through FOMAT, if you will. We've been spending

Nathan Latka

16:01Through what?

Nicholas Focil

16:02>> FOMAT is the parent company, the agency, as you call it.

Nathan Latka

16:06I see. Got it. So how much have you spent via FOMAT driving downloads of the app?

Nicholas Focil

16:11>> I would say somewhere around maybe $10,000 to $20,000 worth of advertising.

Nathan Latka

16:16Okay. Got it. Is that included in the $750,000 the agency has put into the business?

Nicholas Focil

16:19>> Yeah. That is correct.

Nathan Latka

16:20And you didn't mention the agency on the cap table earlier. So how did why the agency put $750k into the app if they don't own any equity?

Nicholas Focil

16:27>> They do own equity. They do own some equity. I I

Nathan Latka

16:30I imagine it's a fairly big chunk of equity, right, if they put in 750 k?

Nicholas Focil

16:36>> Not it is a percent. It it's not substantial, but it is as you also have to remember is I'm also part owner of the agency. So it's part of my bonus structure, if you will. Instead of receiving an extra bonus, I receive more shares of of it, if you will. I I I opted out of bonus to get more shares of febo.

Nathan Latka

16:57I opted out of the bonus to get more shares of febo. So you told me earlier right now there's an ESOP pool of 10%, investors own 3%, and you own 87%. That's a 100%. So I don't know where there's room left for the agency to own anything.

Cap Table Breakdown: Founder, Agency, ESOP, Investors

Nicholas Focil

17:10>> So I don't own 87. I own 82. The agency owns 5%. I I

Nathan Latka

17:15Oh, I see. So you basically were able to get the agency to commit to $750,000 for 5% of the business?

Nicholas Focil

17:20>> That's correct. Over a period of two and three years.

Nathan Latka

17:23I see. I see. Interesting. Very cool. Kudos to to you for jumping out, using agency to learn, and launching your own thing where you have way more equity upside. I hope you can get it to market and generate revenue, and congrats on closing the seed. We're out of time, though. So let's wrap up here with the famous five. Number one, favorite book.

Famous Five: Books, Sleep, and Lessons Learned

Nicholas Focil

17:39>> My favorite book?

Nathan Latka

17:43Sure.

Nicholas Focil

17:44>> That's a hard that's a hard one that I'm reading right now is about VR, technology and healthcare space. Things are really Number

Nathan Latka

17:49two, is there a CEO you're following or studying?

Nicholas Focil

17:53>> I would say super cliche, Bill Bill Gates. I think he's just innovative in multiple spaces.

Nathan Latka

18:00Number three, what's your favorite online tool for building febo?

Nicholas Focil

18:04>> I think a powerful tool in Asana from project management perspective.

Nathan Latka

18:08Number four, how many hours of sleep do get every night?

Nicholas Focil

18:10>> Five to six. Five.

Nathan Latka

18:12And what's your what's your situation? Married, single, kids?

Nicholas Focil

18:15>> Married, two kids, happily married.

Nathan Latka

18:17That's awesome. How old are you?

Nicholas Focil

18:19>> 35.

Nathan Latka

18:20Last question. Something you wish you knew when you were 20.

Nicholas Focil

18:23>> I'm sorry?

Nathan Latka

18:24Something you wish you knew when you were 20.

Nicholas Focil

18:26>> Something that I was wishing when I was 20.

Nathan Latka

18:28Something you wish you knew when you were 20.

Nicholas Focil

18:32>> That yeah. Oh, that's a group. That's a phenomenal question. How to raise, I suppose. Because I yeah. How to raise appropriately.

Nathan Latka

18:39Guys, there you have it. Launch of an agency consulting directly in the health care space, doing eight to ten million bucks in revenue. He wasn't the sole owner, though. The agency decided, you know what, I want to spin this out and launch a SaaS app. He now owns over 80% of the SaaS app. This goes to seed round to start driving growth. They have 10,000, 14,000 downloads, helping patients, chronic patients understand updates, innovations in their space

19:00so they can test new treatments, pattern recognize across more other people with the same chronic disease and try and improve their health. We'll see what happens next. Nick, thanks for taking us to the top.

Nicholas Focil

19:10>> Thank you. Thank you actually for that interview. I really appreciate it. It was a great time.

Nathan Latka

19:15One more thing before you go. We have a brand new show every Thursday at 1PM central. It's called Shark Tank for SaaS. 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 1PM

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20:24for that at nathanlatka.com/slack. In the meantime, I'm hanging out with you here on YouTube. I'll be in the comments for the next thirty minutes. Feel free to let me know what you thought about this episode and 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

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