How Redox CEO Luke Bonney grew Redox to $181M revenue and 200 customers in 2024.

good morning everybody my guest this morning is nico steve ascii he is the co-founder of redox the modern api for healthcare he also used to do some work at epic will dive into both of those now nico are you ready to take it to the top yeah totally all right so start us off first what is redox and what's the business model yes sir redox connects applications so software developers with health systems our business model is essentially to license connections to various health systems so if a software developer is selling an application to five health systems we charge them five licenses to share data with those health systems on the other side you must have the patience of mother freaking Teresa to deal with healthcare why on earth do you get into this market the the woman fuzzy answers that it's important right you know as entrepreneurs we all say we're out there trying to change the world but the cool thing for us is every day we got to talk to entrepreneurs software developers who are building technologies that will actually impact patient's lives make health care more efficient make care more effective for patients out there so at the end of the day that's what it's really about from our perspective we really see technology innovation in health care something that's absolutely needed so our technology this API layer that enables the use of this data is a real core piece of that infrastructure so that's what that's why we do it it's you know you you joke about it being taking a while in the healthcare space and that's totally true but someone's got to do it right we've got to see the innovation come from technology in the space and so we're gonna see that over the next few years as health systems adopt more and more technology and how do you make money yeah so we charge the software developers the software developers charge the health system so we try not to get in the way in you know we are in middleman in between health systems and software developers but we try not to throw another contract into the sales cycle with health systems that is a unnecessary piece of friction that we try to avoid so we've become essentially a subcontractor to the software vendors another part of their technical stack you know they might be paying Amazon for hosting and they will add-on redox for that API layer to get health systems it's kind of part of that infrastructure that a developer thinks about when they're building out their technology and is this the pay-as-you-go model or it's a monthly fee for a certain amount of API calls or what yes so we thought about doing the numbered API called model but the sad reality of the healthcare data space is that it's often a firehose the health system will send hundreds of thousands of messages for every patient in its organization and you know we can apply filters but it's not often up to the application developer on the types of data that they're getting or the amount of data so what instead we do is charge for the number of connections that they have to various health systems and it is a monthly model so if you're connecting to one health system then it's one licensing fee and it increments from there based on the number of health systems you're connecting to it does scale a little bit depending on the type of data so if you just need to know what patients are wearing the health system that's one type of data but if you also need to know you know the medication list for every type of patient and that's another sort of data feed so depending on the interface it scales a little bit I mean is a SAS model then yeah absolutely okay so we don't sorry for statement of works or upfront implementation fees or anything like that it's it's all SAS and they pay again based off kind of per connection so what's the average kind of software vendor or data provider or software developer paying you per month Oh couple grand so most people are connecting up to one or two or three health systems each health system connection is around $1,000 so I've got that average of two three grand per customer and what is it what's the back story here what you're just found the company in we found it in 2014 okay and was this like right at a college for you I mean where were you in your life at this point yeah so I had been working in the in the corporate world for about seven years I did four years at Wells Fargo as an Operations Analyst and then went to grad school and then went to work at epic so the big electronic medical record company I actually went to epic to to get my hands on the data I went to school for economics so I wanted to try to understand you know what we could do to use data to make healthcare better right the amount of data that stored in electronic medical records has a ton of potential to identify you know trends in the data things that we might be able to intervene on from a behaviour aspect and when I got to epic realize that they actually don't have the data they the data has kept in the basements of you know in data centers that health systems manage all around the country so you know while I was there I really learned a lot about how epic does a lot for the provider workflow and how electronic medical records do a lot to help providers become more efficient but one of the challenges is is you know now that healthcare is digitized how do we get that data out of the basement into the cloud where software developers modern app developers can use that to become more efficient and that's you know a lot of where the idea behind Redux came from my my CTO and co-founder James he was helping startups as a consultant hook up to various health systems and basically doing the same project over and over again and realized why don't we you know build an engine to put this together so that's that's where the idea came from is let's say let's do this in a scalable way let's make an engine that can scale across multiple health systems it's basically any health system any electronic medical record we plug into it and standardize the data so developers don't have to take on that task and did you throw your own money at this as you built it or did you decide to go out and raise capital yeah well we did a little bit of both which I think typically happens right we hit the first the first it was probably two years after leaving epic where James and I were working together but not really understanding what to do with our hands um we we started a whole bunch of different companies really on a you know in hindsight it was really about discovering redox we started a co-working space we started we helped to start many health tech companies in the Madison area and eventually found ourselves with the utter realization that redox was the thing we needed to sink our teeth into we brought on our third co-founder to really round up the company Luke and for the first year of working on this we we basically made no money we we we worked on 14 yeah this is 2014 we worked out of that co-working space that I mentioned we started so we had very like next to next to free office space and put our head together right lip the cup lived off of savings and side projects and consulting gigs until we formed around this idea of building the scalable interface engine in the cloud we raised a small seed around them so that very yet 350 grand at the end of 2014 that allowed us to hire first couple developers so we all paid ourselves basically the minimum we all needed to survive on for that next year which was it was a so we literally came together and said okay everyone take your bills out and let's figure out you know what we need to survive and we were all very transparent with each other so I think it was around 35 K per person and so we and we all paid each other the same because we said every you're talking about the three founders about three grand per month yeah the three founders and the we hired pretty much three people in the next couple months so our this group of six we all paid ourselves exactly the same 35 grand and you know it was a huge sacrifice for all of us because at the time everyone in the company had worked in epic epic you know big tech company pays very well market salaries you know very well in comparison we're rocking like 200 150 yeah yeah and you know that ballpark so this was a huge sacrifice for everyone everyone had to convince their significant others that this was a good idea that's always the hardest part how did yours respond are you are you with somebody yeah yeah my my wife she worked to that pick also she joined a start-up after she left at baking so she understood here change to double risk you're both in a start-up yeah yeah and so she she understood you know the why we were doing this and you know the at the end of the day the sort of convincing that I had to do was hey if this fails if it's this doesn't work you know we have about a year runway on this this 35 grand well on this 350 grand that we raised if it doesn't work out like worst-case scenarios I'll get a job and that's that's the kind of cool thing for entrepreneurs is literally worst-case scenario you can go get a job and typically entrepreneurs you know we have background and some specialized skill set we can go get jobs in different areas I could go work in health care at a health system or with other health tech company so that was my fallback plan was you know I'll get a job no big deal and Nico fast forward a so I mean have you raised in total the 350...