MedStackrevenue, valuation & funding

Intro you're gonna love this interview just got done editing it i'm glad i got it live for you i'll be in the comments for the next 30 minutes hanging out answering any questions you have in fact leave a comment below about data points or what you think is going to happen to the company and i will respond to every comment additionally if you're just loving the content click the thumbs up and i will go and check out your profile as well and give your videos some love as well in the meantime enjoy the interview About MedStack hello everyone my guest today is balaji gopalan he is the ceo and founder of a company called medstack focused on uh he is an educator and thought leader in the platform and software product strategy and is passionately driven by the role of technology in addressing societal problems medstack supports many digital health companies in protecting patient and as protecting the patient and has been awarded accolades in the canadian advanced technology alliance and tech crunch all right bellagio you ready to take us to the top i am indeed all right so give us a real example here because health you know health tech stuff people sometimes don't understand how is somebody using you and who is using you yeah that's right so our customers are companies building digital health solutions which is any kind of product that deals with health data in the cloud and health data could actually be something biological such as a condition or prescription or even just something that identifies the patient their address their appointments etc if you're a company dealing with any of that data working with someone in the healthcare system a hospital an insurance company public health organization clinic network etc they will require you to meet certain standards that they are beholden to from a legal perspective for protecting that patient's data those companies companies doing things like telemedicine at home monitoring health care scheduling even things like diet and fitness trackers and then more complicated things like monitoring medical devices they use us as a infrastructure with pre-built commitments and guarantees for to their customers of how they're handling the data in the cloud and what policies they are following we help them with all those guarantees we answer all the questions for them and then we provide them an infrastructure that's pre-defined with security and privacy protocols built in so that when they use this as a back end all those guarantees are actually met because of the virus Moving digital there's a lot of health care flows right now moving digital your business should be exploding right now it is indeed yes yeah uh i mean i'm i i need to be careful how i characterize it but i think the thing that i'd like to say is in this uh crazy situation we're in this pandemic a lot of people suffering we're fortunate that we have innovators who are building solutions we can take advantage of uh to solve some very very specific things pertinent to the pandemic the first is as the healthcare capacity gets strained with so many people going to the emergency department the importance of telemedicine and video consults with doctors not just for coping 19 testing but for any medical condition have suddenly become far more important especially if you consider maybe the patient or the physician themselves are in quarantine how do you continue with that engagement secondly things like using ai for genomics analysis and dna analysis to determine a vaccine and find a cure that has suddenly become more important companies that that do home monitoring for chronic conditions so that the patient doesn't have to go to their specialist if they have a heart condition or diabetes as much or as often because they have systems at home that monitor the condition that's become more important and then finally things like um remote testing devices for the virus itself which may be using a cloud-based technology in the back end and the data from the patient to determine if they actually have it there's a lot of companies working on building things like that and all of this requires data in the cloud and all requires trust because as soon as this mass adoption of this digital health technologies is coupled with a breach the public trust and the trust of the healthcare enterprises will be dropped and that will grind everything to a halt but is it isn't that less of a question of if and more of a question of when i mean if russia can get into like government accounts and emails right now and let's say all of us are now at home and we have you know let me come up with some device the device that you know the hospital will put on your finger to test like your oxygen levels in your blood let's say we all have one of those at our home and we transmit that weekly via digital you know channels to our healthcare providers let's say that gets hacked are you saying your technology basically is what sits in between there and tries to keep that safe yeah yeah so i mean anybody who's in it who's the security technologist will tell you that unhackable is a myth right so everything can be if you work long and hard enough at it what our technology does is provide the right kinds of assurances that says we are tracking who had access to the data when they accessed it how they accessed it from a back-end administrative perspective we're managing the the the giving of the rights and the removing of the rights of access to the data the data backups the infrastructure data security and the monitoring for such things as security incidents so we don't assume that that security incidents will never happen we provide a system in place to make sure that we know that they're happening and to reduce the likelihood so you don't necessarily have a bunch of cybersecurity experts that you pay on your payroll trying to prevent hacks what you're trying to say is you're going to document everything so if a hack does happen it's clearly documented well it's more than just documentation we have a system that monitors the infrastructure so that it knows automatically and provides us an alert if there is an untoward event interesting okay very good so last time Customers it came on was back in july of 2018 you said you were serving about 45 customers at that point how many customers are you serving today uh close to 70. okay it's been yeah yeah probably 70 by now uh obviously the last couple of months have been or last month last few weeks have been pretty interesting for us from a dynamics perspective um and we've had a lot of not only new customers come on board but a lot of growth with our existing customers and i think the big things that have happened since we last spoke uh there's been a number of pretty important changes the first one obviously we raised some financing at the end of that year um and that was used to completely from the ground up rebuild our product so how much raised to date uh total raise to date is uh 1.8 million Raised okay so you raised about 1.3 million after our interview yeah well sorry one pay 1.8 was the raise and then we'd raised half a million before that oh god yeah so 2.3 total um since the life of the company and uh and we used that we used the raise to rebuild a new product called med stack control which delivers all the same privacy and security commitments we delivered to those original set of customers but now introduces a lot more power for them because the problem was before they would need to work with us if they wanted to make any iterative changes to the technology architecture to support their app a bigger server a different server a different kind of framework running on the server all the security stuff we were handling but their ability to iterate was limited because it was a concierge service through us med stack control is a completely self-service machine driven system so they have a console they can log in they can add and delete administrative users and change and grow and shrink the infrastructure as they need so we launched that at the third quarter of 2019 it's the only thing we're selling now uh it's completely changed our kind of sales cycle and then we've also introduced a new business model that's more in tune with our value proposition this is actually a very recent development um but uh but it's worked very very well for us so now we're saying you know what you're paying for is med stacks assurances all of the policies all of the support for the questionnaires we're actually have a little bit of a national language processing element that helps us answer those questions as well and that's our sas fee on top of that we simply pass through the underlying cloud infrastructure cost that you actually use with a very small markup on top for the security technology that we had on top and that's our newest model customers are still you know average rpo still about 700 bucks a month it's grown a little bit because of the new business model but that's very very recent so we're probably close to a little bit over eight now maybe 850. okay 800-ish i mean so can i take 800 Monthly recurring revenue ish per month on average times those 70 employees i mean you're doing like 50-60 grand a month right now in revenue yes we are okay and that's up from like 20-30 grand a month about 18 months ago yeah so healthy growth now to drive that growth did you burn through that full 1.8 million or do you still have some of that cash in the bank we are doing a seat extension right now a lot of that was put towards the building of med stack control uh and some uh some marketing experience we did we've done a recent shift to a more inbound focus strategy which is actually working well for us uh and uh we've done a lot of sort of cleanup of our operational costs and infrastructure efficiency how much of these how much is the extension for uh the extension is a half a million Currentvcs okay and so i mean what is that like right now you're in the middle of a recession you're going back to your current vcs and potentially a new one saying hey can we get a half a million extension i mean how do you get that done in today's environment yeah it's it's not i i won't lie and say it's it's easy it is certainly challenging but what i think people are looking for is you know where do if you're an investor where do you go right now um with with so many companies that are cash unfortunately they hold cash but people are looking also for what's going to be the next thing and so we have had actually a good amount of interest from people saying well what is this digital health thing that everybody seems to be gravitating towards and what are you guys actually doing with it uh and you know fortunately we're in a situation where you know we're still running pretty lean actually very very lean um what does that mean like are you profitable today no we're not no okay so what does lean mean like less than 100 a month burn uh yeah yeah there are boats okay we grew the team we we shrunk it a little bit uh we found some efficiencies and optimizations of where we wanted to actually focus our resources so now we're a team of seven uh we were a little bit before um and uh and we're looking to bring on a couple more in the next uh in the next you know a couple of months uh probably stay up at that level for the major part of the year uh the other big thing that we did wait those two things are opposite are you staying at seven or you're hiring more we're hiring a couple more in the next few months and then we'll stay that that way for the rest of us i see how many engineers do they have seven how many engineers of the seven uh bet half okay so caught three four and then any quota carrying sales reps uh one one okay fair enough Extension yep interesting okay so so a couple questions on the extension right why do an extension it's gonna obviously be pretty dilutive i imagine um yeah it depends where you know we where we we've come up with terms that we feel are favorable to the current environment taking into account the growth that we have we're not being terribly aggressive uh it's not a massive raise you know we're we're looking at a half a million dollars basically the reason we're doing the extension is there's things we want to achieve to put us in a better position for a series a and that was a decision even before the current crisis actually hit uh you know we want to cross the 100 company mark we want to cross the millionaire our mark we want to have a few companies of a larger size which i think tells a bit better better story and we're getting some of those in now uh so um the the you know finances from the raise were used to build med stock control the other thing that they were used to to do was to achieve some very very complicated and important industry certifications which we now have and have done in a way that actually our customers can inherit large parts of them for their own certification activities which is pretty significant would you ever look at raising this capital not on an equity basis but raising debt we looked at it because we are a company that services very small companies on a sas month-to-month basis we don't have very large ar which is sometimes required for a debt uh type of transaction so that's uh we're exploring all the options right now but that's sort of been the surprise that we've actually sorry you're saying because you're less than a million dollars in ar the debt providers won't don't want to do a deal with you no it's more it's more of the fact that what they're looking for is to collateralize on longer term contracts that are much bigger whereas our contracts are less than a thousand dollars and they're months to month right so which is which is pretty typical of a developer platform type company yeah i mean i i know many debt providers that don't care about how big the contract is what they care about is customer concentration risk so they they don't mind if if you have a thousand customers paying a dollar or one customer paying a thousand what they care about is that not one customer makes up more than 30 of your monthly revenue which you don't have we don't have that yeah so we have had a number of conversations with some debt providers and some of those are ongoing as well yeah interesting all right let's The Famous Five wrap up here with the famous five number one favorite business book favorite business book right now hard thing about hard things number two is there a ceo you're following or studying uh the ceo of following i'm studying uh probably semester i gave you last time uh the ceo of shopify and i think some of the things he's doing in the current environment are pretty admirable number toby uh number three what's your favorite online tool for building the company uh online tool for building the company still slack number four how many hours i sleep to eat every night not enough five six okay and situation married single kids saying uh married two kids who are over there kind of doing homeschooling right now and how old are you i am 47 47 last question what do you wish your 20 year old self knew uh what i wish my 20 year old self knew was uh how important it would be to constantly be questioning the assumptions that you have yep guys good stuff again the company medstack playing in the med and health tech space trying to make sure that information sent from patients back to the healthcare providers is safe and secure and the document and the data access is well documented they've grown their company from 300 grand in ar up to 600 700 grand in ar today hoping across that million dollar mark here in the next year or so they've raised 2.3 million to do it looking for a five hundred thousand dollar extension right now as they continue to scale out onto their product maybe bring on two or three more people seven on the team right now three engineers one sales person burning about a hundred thousand dollars per month balaji thanks for taking us to the top thank you very much nathan appreciate it you guys know i fight like heck to get these data points for you from these ceos that rarely do these kinds of shows if you want more shows like this make sure you subscribe right now we're trying to get 10 000 youtube subscribers by the end of september here 2019 and it would mean the world to me if you clicked now to subscribe additionally i've got two more great interviews for you if you want more data points from the world's leading sas ceos click and watch one of them right now