Fruitstreet Revenue & Funding (2024)

this is the top where I interview entrepreneurs who are number one or number two in their industry in terms of Revenue or customer base you'll learn how much revenue they're making what their marketing funnel looks like and how many customers they have I'm now at $20,000 per top 5 and6 million he is help on global domination we just broke our 100,000 unit soul Mark and I'm your host Nathan lka okay top tribe this week's winner of the 100 bucks is Jose Aila he is a 17-year-old that doesn't want to go to college and he wants to start his own business for your chance to win a 100 bucks just like Jose every Monday morning simply subscribe to this podcast on iTunes right now and then text the word Nathan to 33444 to prove that you did it top tribe you know I don't have a lot of time to waste that's why I use fresh books to send out invoices and make sure I'm collecting my money to get your free month go to Nathan lad /f freshbooks and enter the top in the how did You Hear About Us section Nathan ladka here this is episode 575 good morning everybody hope your jog is going well or your ride in is going smoothly and you have something to look forward to tomorrow we've got road luar coming up I simply asked will this mobile payment startup survive it's really on the edge we'll see top tribe good morning Nathan lka here our guest today is Lawrence Gerard he is the CEO and founder of fruit street.com he was a pre-med student in the undergraduate degree program at the Harvard University extension school for 2 years before he decided to pursue Fruit Street full-time and moved to San Francisco in high school he played soccer for the New York Red Bulls Academy as a goalkeeper which sparked his initial interest in health later he decided to pursue a career focused on social impact and spent a year volunteering in an emergency room at Huntington Hospital in Northshore Long Island Jewish Health System he's grown obviously since then now focused exclusively on Fruit Street Lawrence are you ready to take us to the top yes thanks for having me on the show yeah thanks for coming on man so tell us first what does Fruit Street do and how do you generate Revenue uh Fruit Street is a hippoc compliant tele medicine software product that's licensed to Health Care Professionals and it allows the healthc care professional to do hippoc compliant video consultations with their patients but also monitor their patients Health diet and lifestyle with medical devices wearable devices and mobile applications for example each patient that uses the software has a personal health record that integrates with Fitbit products to track physical activity and sleep Wireless bathroom scales FDA approved blood pressure costs and glucometers and then our mobile application which allows the patients to take pictures of their food get feedback from a register dietitian for example and so we use the software as a service business model where the healthc care professional will pay us a monthly licensing fee to use the software with the patients in their medical practice and then walk us through uh so it's obviously SAS company um fairly new but break down some of the numbers for us you were telling me before the show where do you guys at in terms of monthly recurring Revenue to date so we're at 15,000 a month in uh monthly recurring revenue and um you know the company started in May of 2014 and you know we've raised about $6 million of funding from 180 Physicians that have invested in the company as well so I want to talk about that in a second so you said 6 million from how many 180 correct yeah so I want to talk about that in a second uh but first breakdown that 15 grand and month they're curring revenue for us on average what's the customer paying you per month uh yeah so it's typically about $200 a month for the software uh and right now it's been mostly small medical practices but we're starting to do um institutional Pilots with larger institutions where if the pilots go well we could have sixf figure Enterprise contracts um as well and so the typical price for the software is $200 a month and how many current customers are you working with right now there's around 100 um customers in some cases we've given discounts which is kind of how it comes out to about 15,000 a month of Revenue but there's about 100 practices using the software right now and what is the uh just fill out the picture here a bit more in 2016 what was total revenue um so yeah I mean I don't have that number off the top of my head we're at about 100K annual um R what run rate right now we've generated about $130,000 of total revenue y um and so you know most of it came in 2016 there might have been a little a little bit in 2015 but most of it was in 2016 anyone that has started paying you have they anyone left what's your what's your gross customer turn per month uh yeah so I mean definitely the answer is yes um but I mean I would say we only lose about like 10% of our customers I mean when people sign up there annually or per month um it's on a I would say on an annual basis I mean we're we're still kind of getting into that phase where we're like tracking those metrics a little better we've been more focused on like kind of learning about like product features people want to build and now you know 2016 was about like let's build a minimum viable product that people are willing to pay for and now 2017 is about you know how do we scale from 15K a month of Revenue up to you know 100K a month of Revenue and like reduce the turn rate increase the lifetime value of the customers get more referrals from our existing customers and so now that we have the product we have we're going to be more focused on metrics like turn rate lifetime value the customer acquisition cost in 2017 you said you wanted to increase LTV do you know what that is now what's current lifetime value um yeah so it's I think it's about um we're using a software called bare metrics actually to track this um so actually I don't have a perfect answer for you so I think I'm going to hold off on that answer for now but um hopefully if you interview me again next year we'll have a better answer for you that's okay it's early I mean any lifetime value calculation now would be based off extrapolated data you know taking the arpo Divide you know times the number of months they're paying that arpo which is a Rel you know function of the churn right which you guys are still trying to finalize so it makes good sense um you launched in 2014 what's the team size to date yes so we have uh nine full-time employees on the sales side uh but we actually have an interesting joint venture agreement with another company called VC which is v.com they're the world's market leader in hippoc compliant tele medicine software they have about 52 full-time employees and about 10 of them uh work on Fruit Street on the design and Engineering side and so they own a portion of our company and develop our product through a joint venture agreement which would make the team size in total you know around 20 people um yeah do it does and where are you guys based uh so fruit streets in New York City in the financial district we're at a a Wei work location down here and then uh VC is in San Francisco Okay cool so let's let's break down I think an interesting thing you did here so you raised six million bucks from 180 folks walk us through the thinking behind that yeah so we really wanted the company to be funded by um Physicians instead of venture capital firms for multiple uh reasons so we feel that since we're developing a a medical product that we would have very valuable input from Physicians that could actually use the product with patients in their practice and give us feedback from their patients and their Healthcare Providers on how we can you know improve the software which is one reason why Physicians more valuable in many cases than a venture capitalist also the Physicians act as a sales network introducing us to potential um customers as well and then we also felt that the Physicians were more interested in not only getting a financial return on investment but having a social impact and so fruit Street's actually a public benefit corporation which means we are for-profit but we also write our social Mission into the bylaws of our company which is to prevent and treat lifestyle related disease using tele medicine wearable devices and mobile applications and the final point on this is that you know we like to think of it as if we needed to raise $25 million why not have 500 Physicians invest an average of $50,000 each and make this more of a Grassroots movement of Physicians that want to improve health care with technology uh rather than going down the traditional Venture Capital route best investor is your customer right right what are there any tax benefits to being a public benefit Corporation so there's no tax benefits um I mean the legal structure was started to give Founders and and well really board of directors members the option to make decisions that are not necessarily the most profitable but might take um societal impact into account the reason why we did it was because we wanted to attract investors and employees and partners that were primarily motivated by the social impact um and not primarily motivated by the uh Financial outcome and so we feel like that helped us attract uh you know those team members that were interested in a social Mission talk about dynamics of raising around financing it's hard enough if you have to get five investors to sign way more difficult 180 structurally how did you manage that process yeah so we reach all the Physicians through Linkedin advertising actually uh because about 75% of the Physicians are on LinkedIn and actually do one-on-one calls on our tele medicine software to give them a full business and product presentation but in terms of our cap table um you know we have a full-time attorney uh Chris who actually graduated from Harvard Law School 40 years ago and works for us full-time and so he does all the paperwork but then we use a software called the eshares to manage the cap table and then we also have a dual class stock structure similar to the way that Facebook is structured where I've actually retained full voting control of the company uh even though we have five board members MERS uh and the purpose of that is just to make sure that you know if we eventually have 500 Physicians as investors that you know we don't become a very slow moving organization since the primary advantage that startups have over big companies is the ability to execute very quickly but we still you know engage these Physicians and get their feedback but we do have the structure that allows us to make quick decisions as well do you put them all though in a Syndicate and just that one Syndicate company's listed on your cap table or are there literally 180 different line items in your Excel sheet for your cap table for every name of every investor yeah there's literally 180 um shareholders so they're not in a Syndicate um we might have to do that if we ever reach the point where we hit the sec's um investor limit and then uh it used to be 2,000 I think they raised it to 5,000 I don't think we'll hit that I mean we'd have to raise quite a bit of capital to hit that so we try to keep the minimum investment at 25 to 50K we've had some positions put in like 100 or a quarter million um but so I don't think we're going to hit that limit but if we did that would be one reason to start moving them into like special purpose vehicles or something like [Music] that okay top tribe as many of you know I sold heo and Everyone is always ask me what my expenses were when I was building hoo well a big expense was that I spent over 3 Grand per month on financial services to keep me out of trouble in terms of taxes you know my mom would always haror me Nathan you got to keep all your receipts and put them in a freaking box or something to make sure you don't get an audit or things like this I'm like Mom I'm a millennial you think I'm going to keep all these receipts I now use fresh books I use their mobile app to take a picture of receipts and it makes taxes a cinch additionally I don't have to hire a $3,000 per month person to manage all my finances it's like saving so much money and my mom's happy additionally I don't waste a bunch of time creating invoices I use their templates and I can avoid using word templates or Excel files I just use fresh books to quickly send out invoices and it works like a charm to get your free first month go to Nathan lanka.com /f freshbooks and enter the top in the how did You Hear About Us section again go to Nathan l.com freshbooks and enter the top in how did You Hear About Us section yeah makes complete sense Lawrence let's jump into the famous fivey year number one what is your favorite Business book favorite Business book um actually reading a book right now called the science of growth which talks about how a lot of entrepreneurs think that the way to build a successful company is to build a product people are willing to pay for but then there's this whole separate science of growing that product things like why did Facebook win against fster and so um I would say that's my favorite right now number two is there a CEO you're following or studying currently CEO I'm following or studying currently tough tough tough question to answer there um I would say I would say Milton Chen who's the CEO of VC he's my personal life Mentor you know maybe not uh you know world famous on the level of Mark Cuban or Larry pagee quite yet but I think he will be one day he's the C he's the CEO of what of VC which is our our software partner it yeah so Milton Milton has a PHD and computer science from Stanford and uh it's kind of one of the world's leading design experts when it comes to Tele medicine software interesting number three is there favorite online tool you have like top tow um so many good ones tough decision um I like ring central actually because it gives me the ability to follow up with potential customers and investors through my desktop application instead of uh through through text messaging instead of manually putting everything into my phone my second favorite would be e- shares just for cap table management makes good sense number four yes or no do you get eight hours of sleep every night maybe five out of seven days okay got it and what's your situation married single you have kids uh just started dating someone um as well so I have a girlfriend right now no kids no kids no kids turning 25 January no kids all right take us back five years Lawrence what do you wish your 20-year-old self knew my 20-year-old self H I would say um I would say put significant emphasis on uh the team when you are starting a company which really comes down to the the most most important thing at the end of the day and people that you could see yourself working with for uh you know 10 or 20 years top tribe there you have it put significant emphasis on the team when you were launching your company from Lawrence again launch this company Street raised 6 million bucks from over 180 different potential customers which is a great way to go did about 100 Grand in 2015 Revenue RP is about 200 bucks per month current Mr is about 15 grand looking to grow that this year as they double down and focus on unit economics like lifetime value CAC and shurn Lawrence thank you for taking us to the top thank you if you enjoyed Lawrence today go back and listen to Luke stwok yesterday Luke takes us through why he's buying A2 million 600 Acre foron Farm and how he's going to plan to make $450 per acre per month literally shaking money from these fruit trees and pecan trees top tribe I love giving away free money I feel like o we're giving away cars and I have something special for you today how many of you have heard our super sharp guests talk about success they've had with Facebook and Google ads well all of you listening right now yes if you're listening you get $100 in free AdWords here's how you get it okay again again thanks for listening get the free $100 from Google right when you sign up with my website host provider HostGator go sign up now to get your free money hostgator.com Nathan again that's hostgator.com Nathan okay top tribe I'll see you bright and early tomorrow morning and don't forget before you listen to any other episodes subscribe on iTunes right now for your chance to win 100 bucks every Monday [Music]