How MedStack CEO Balaji Gopalan grew MedStack to $3.8M revenue and 90 customers in 2024.

hey folks my guest today is simon woodside he's the co-founder of medstack which is helping secure platform for digital health he's got a cs degree at the university of waterloo and as part of the apple core operating system group uh engineering program manager before that simon you're ready to take to the top i am thank you nathan all right so what tell us what med stack is are these hospitals that are paying you for hipaa compliance solutions or where are you playing we definitely uh are dealing with hospitals and insurance companies but they are at one remove from us so we our direct customers are digital health app makers and then they in turn are selling to hospitals and insurance companies so give me an example of a customer can you name one or two sure give you a couple so one is a really cool company called keratin and they're in neonatal intensive care units and they are operating a system that manages bottles of mother's milk which is critical that these are being they have to be um always go to the right person at the right time without too much delay so that's a pretty mission critical system with a lot of availability requirements and another really awesome customer is called inkblot they are doing digital health or sorry well yeah they're doing digital health therapy so it's like remote telemedicine you know one-on-one with real people um psychological therapy psychotherapy and they're pretty big um they were just bought by an insurance company uh green shield so yes and simon what are these companies paying on average per month to use the technology yeah so the average is uh you know there's definitely quite the range um from small to large but kind of like typically between you know our average is going to fall like 1500 to 2000 us dollars a month okay so that's up significantly since our last interview in april of 2020 almost double the arp who you told me back then are you moving upstream on purpose um yeah i mean it's we're not no so so we're not trying to exclude small companies i would say um we've had a lot of companies grow on the platform we've had new companies join that are bigger uh we have changed our pricing model um so we've moved to a more of like a sas pricing model where we have like a base set of tiers and then the variable component is is much much much smaller so it's basically like because we're hosting like we're a hosting platform you know we just passed through the price of like a virtual machine or a database instance um so yeah we've just adjusted our pricing and we've had a bunch of customers grow a lot too understood so how many total customers are you working with today i think it's around 90. 90. okay yeah you told me 70 about a year and a half ago so you've added about call it 10 20 more which is great um and then can i mean can i multiply those together 90 times 2 000 bucks a month you guys are what 180 grand a month right now in revenue that's about right yeah we're just we're just shy of two million ar so it's like probably a little bit less than that but uh we'll we'll be hitting 2 million are uh by the end of the year i love stories like this i don't know if you remember you know our first interview was back in the middle of 2018. do you remember that well so yeah so you interviewed my uh my ceo business partner co-founder biology uh yes i think twice now right yes oh okay that was him not you got it it was him yeah so i'm the cto uh very cool so you know i did i did get some of the numbers and make sure i had them right but i'm more i'm more expert in other parts of the business well i just love i should have begged you to write a check back in 2018 because uh bellagio shared back then you guys uh we're doing about 30 000 a month in revenue you're now five times as big here uh four years later so this is a this is an exciting story now simon have you been able to do this funded by customer growth after your 2.4 million seed round in 2019 or did you raise more uh we've raised more yes so we actually just completed a raise of 3.1 million and um uh so that was uh led by blue ventures and telus one of our previous inventors uh investors as well but yeah i mean we're making good money as well so i mean you know theoretically we might have been able to go uh revenue positive but uh you know we want to grow like we see a huge huge huge opportunity like you know you say a billion dollar opportunity like it's bigger than that you know and so we want to continue to grow quickly uh and that that meant you know and we have some great and and you know some of our investors are great partners as well so they open doors for us and you and you and bellagio are the two co-founders right you just split 50 50 at the start so i mean yeah so me and paul co-founded the company yeah back in 2015 2015. okay yeah so so yeah so obviously just managing equity right i mean you don't want to take money unless you really have a good use sport to drive that growth because you two are both managing dilution i mean most people in their seed round are selling about 20 of the business is that sort of where you guys came in at i don't have the exact numbers we've done well though like you know we're pretty much on target in terms of what you'd expect okay so got it so yeah you were right fifteen twenty percent range yeah yeah yeah we're in that ballpark yeah yeah yeah yeah so you're talking like 15 million dollar valuation something like that pre-money yeah so again why i mean that's a lot of dilution right if you believe it's gonna be big that's a lot of dilution you absolutely needed that 3.1 million or how did you go through that rationale well like i said we didn't absolutely need it we could have gone revenue neutral but we wouldn't we wouldn't be growing anywhere near the way we can with the capital so that's definitely a factor um but the other factor is just that you know like one of our new investors is is a cyber security investor um the other lead investor for this round is telus which is uh known as um as a as a big canadian uh well the biggest i think canadian tele communications operator but they are also a huge health division um so they have a huge uh digital health or you know emr ehr operation so both of those really help us uh they we have like good board members who are really helping us out connecting us with partners that kind of thing gives us a lot of credibility as well you know we're in a trust business like what we're doing is enabling our customers to be trusted by their customers so all those hospitals clinics insurance companies need to be able to trust them to curate or to to handle their protected health information with with due diligence with security with privacy and so for us trust is paramount and so having these kinds of backers is a big value for us understood what's the team look like today how many folks full-time yeah we're 15 now 15. we've been growing rapidly since we raised and are you so so where do you intend to invest most of that money or is it just a signal you want to send to the market and say look you can trust us we raise all this money we're not going to shut down tomorrow it's all going into people what kind of so you know it's staff so like you know we're we've just like doubled or more than doubled you know we're just doubling our engineering team um how many are total engineers today uh silver it's uh nine on our engineering team today including me and we're still gonna add a couple more by the end of the year um and so like we're we're scaling up that operations and engineering team slight reliability engineering application support engineering core engineering all that stuff um you know we want to scale we need this the platform to be scalable you know it already was a highly scalable platform but our goal is always to again trust right so we want to stay ahead of the market so like the way we approach security is you know most people are like you have a security team our whole company is a security team you know people say you know what's your what's your scalability we have built the whole product you know we've it's like over engineered effectively um and we need to continue to do that so always be ahead of the game so that we know you know so we don't have problems um i kind of harp it on a point on a broken record or something here but you're good it's super important for us 15 folks nine engineers hiring when you guys look at retention right of these of these kinds of customers you're working with what doesn't that dollar retention look like year over years above 100 yeah yeah yeah it is nrr is over over 100 it's pretty it's very good well i so i would consider very good compared to others like somewhere in the 140 range are you that high oh yeah uh no i don't think we're quite there i think it's i don't know i think it's it's like 1.1 or 1.2 something like that okay so like 120 percent that's i would say that's that's that's like above average uh but some i mean it's crazy when you look at a lot of evaluations happening today some of the evaluations where you're seeing 40 and 50x multiples are ones where net dollar retention is like 150 even if revenue growth overall is slower but your ndrs are really high that's by far where the premium valuations are happening today...