Webpt Revenue & Funding (2017)

hello everyone our guest today is nancy hamm she's the ceo of web pt and has focused on guiding the company through its next phase of growth bringing her wealth of experience in developing growing and operating private and public health care i.t companies during her robust career she's achieved powerful results in healthcare it and was named one of health i healthit's 25 most powerful women thought leaders by health data management nancy are you ready to take us to the top absolutely where do you want to start all right so web pt first off it sounds like you're not the founder but you were brought in as a ceo is that accurate that's correct the company was eight years old when i joined a year ago okay so it was eight years it was founded in 2008 or nine nah 2008 okay and why were you brought in well first off tell us what the company does and then tell us why you were brought in so web pt makes the leading electronic medical record or emr software for physical therapist occupational therapist and speech therapist and we're a web-based platform hence web pt physical therapist and i have to tell you the origin story super quickly okay classic story our co-founder dr heidi janinga practicing physical therapist running her clinics frustrated by being on paper and using a lot of expensive transcription went to look for a better solution couldn't find one that well maybe i could write something that i could use in my clinic uh she got together with some i.t guys produced a beautiful piece of software and soon enough people were knocking on the door and saying hey can we buy that thing you wrote for yourself and web pt was born that's amazing and was the company bootstrapped up to when you came in or had they raised capital on you raised capital the company is uh has a lot of core values one is dumas with minnows so do more with less and so very much a bootstrap mentality i love that i'm sitting here at my lovely ikea desk and the company only ever had to raise a million dollars because they were so capital efficient and then in 2014 partnered with battery ventures a leading private equity firm so they came in to help platform us for the next phase of growth as part of that we brought in a new management team you know people who really had the experience of scaling from you know 30 to 40 million to 100 million and that's where you came in and that's where i came out now were you an eir at battery no but chelsea stoner who is our partner at battery i got to know her about eight years ago when she looked at investing in the company i was then running and that deal didn't happen but we clicked and so when the opportunity arose to work together it was an easy yes that's great so how much capital has been infused in the business to date well only the million dollars ever came in okay you know help provide some liquidity for the founders got it it was a secondary offering yes and since then we have been making uh acquisitions but we've been able to do it out of our own cash flow or off our own balance sheet oh it's a beautiful thing isn't it it is all right so give me more of the kind of the story here tell us give me a story about how a customer is actually using you guys so a lot of your listeners out there have probably been to physical therapy and in the old days you would go in you know you obviously meet with the therapist and think about the challenge they have people walk into a clinic with every kind of physical injury you know i'm a 16 year old soccer player i blew out my acl so i'm an 85 year old who just had my hip replaced and so they have to go down many different diagnostic pathways based on the body part the injury this you know the diagnostic pathway and so that was very hard to figure out how to get a computer to do that how to have that elegant flexible customizable clinical workflow and that's really the secret sauce of web pt also since then we've built on a whole ecosystem of surrounding capabilities ranging from billing to marketing automation to home exercise programs because again some of your listeners might have been to a therapist and they might have gone home with pieces of paper that had little stick figures bodies on them with little cryptic notes about like lift your right knee 20 times or something now we send you home with a mobile uh digital experience with videos you could see you know what you're supposed to be doing and you can communicate in-app with your therapist about how that's working for you because your at-home therapy is just as important as you're in clinic therapy and i imagine this is all hipaa compliant and that's why you guys are cropping out a niche versus some other just general marketing automation software doing this well absolutely i mean the key is the clinical documentation the electronic medical record and what makes webpt special is there are lots of electronic medical records you know your hospital your physician uh thanks to what was called meaningful use the government really motivated everybody to to purchase one but most of them were very generally uh developed and so there's a negative nps or eight of the top nine medical emrs all the big ones negative nps and in physical therapy our competition as a group has a negative nps of 17 whereas we have a positive nps of 32 because we really figured out how to give you software that is adaptive to your workflow and help support your ability to treat the patient to um measure their clinical outcomes to bill for them compliantly so nancy just to be clear you're selling to the doctor not the consumer we're selling to the physical therapist who is the clinician yes okay and are you selling directly to them or actually to like their parent company well in the beginning 10 years ago pretty much physical therapy was what we call single shingle so a therapist graduated from school opened their practice so they're an entrepreneur and they're a clinician and so we have about 10 000 customers for those smaller groups but now the industry's obviously growing up and changing private equity money is coming in and creating bigger chains so now we have customers that range from big hospital systems like medstar and dc to people who are running 20 clinics 50 clinics 100 clinics so we now have an interesting mix of customers still we love those out of school entrepreneurs who are opening their clinic for the first time up to our very large sophisticated clients now so uh we could go and spend hours talking about all your different cohorts but i want to just kind of ideally focus on kind of your main i guess target what would you say your average your average target customer that's signing up today what are they paying per year would you say so our classic customer is that single clinic practitioner and they're paying us about 350 a month okay 350 a month and how many of those did you say you had you said about 10 thousand we do okay and and are those um let's say you sign up the big one you just said in dc and there's a thousand there is that a thousand included in the ten thousand yes uh but that's a thousand uh we have ten thousand clinics and we have tens of thousands of cl uh physical therapists in those clinics i see i see all clinics could have fifty therapists and some could just have one okay got it so what how am i i'm curious what that number is how many total clinic like physical therapists do you have using you across the ten thousand locations yeah we have more than 50 000 users wow and maybe a different way to help your audience understand this is we have about 30 of the market okay we are clearly the industry leader for outpatient physical therapy with 10 000 clinics out of about 30 000 about 100 000 therapists out there that's great and i mean can i back kind of into your size in terms of the business at 10 000 folks there's obviously more than one per 10 000 location but minimum 10 000 times 350 bucks i mean that puts you well over 3.5 million a month in revenue or 42 million bucks a year you guys are above that right you're pretty good at math on the fly there nate you like that nancy and it's early in the morning yeah so yes good i know you like metrics so i do our uh seven year growth rate we have a 57 percent caker and we were very honored this year to be in the inc 5000 for the fifth year in a row and only seven percent of eight nominees have been in it for five years in a row so that that's amazing nancy and can you give us a sense of what you the size you were at 12 months ago so in december 2016 run rate yeah we're growing about 25 to 30 percent a year so since you're so good on that i'm gonna let you go backwards so yeah you would have been somewhere in the 35 36 million range back then that's right that's great okay when's the big champagne celebration when what year do you think you break 100 million in arr well 2020 is our target now that is our b hag our big hairy audacious goal but that's what we're shooting for that's great okay and what is the um i want to understand how someone like you a lot of great experience smart intel how did they convince you to take on this role what i mean how do you get incentivized to do this well i've been in healthcare for 25 years and my career has followed really the maturation the industry because when i started really very little was digitized anywhere in healthcare and so i started at the beginning helping create electronic claims that i moved on to electronic clinical transactions to electronic prescribing to then exchanging all this information in real time and so i worked my way through primary care in hospitals and a big part of the healthcare ecosystem is called post-acute and physical therapy is a big part of the post-acute ecosystem and so it was just a natural evolution to come to a part of the industry that is relatively under digitized compared to the rest of healthcare and where there's a lot of opportunity to make a huge impact on really what's called a triple aim in healthcare which is trying to provide better health at a lower cost with a higher patient satisfaction and that's what we're really doing because we provide electronic software that helps our customers be efficient and compliant we help them build correctly and yet maximize you know what they're able to collect and we provide data-driven outcomes so they can see are their patients uh getting better at the amount of time at the rate of success that we would predict from our benchmarking data so it's really exciting to come into a big part of healthcare where there's so much opportunity to bring data and technology to uplift it to the next level of success and i imagine kind of getting these folks onboarded is a fairly cumbersome process however once they're on they're on what does your churn look like annually well we have 99 retention because logo or revenue um both actually pretty closely correlated but our onboarding process is actually super efficient so we do everything virtually we sell you today you give us your credit card today we onboard you in about 30 days and you are up and running that's amazing we spent a lot of time learning how to do it virtually and with a lot of clever digital and video and training support for you so what's your what's your team today and how many on your team are dedicated to the training to support the onboarding so we have about 308 employees we're headquartered here in phoenix but we have major offices in denver and boston and the onboarding team is only about 20 people they're very good at what they do and they graduate people very quickly that's that's great and sorry where did you say you guys were based we're based in phoenix okay phoenix and you so that's amazing you've imagined to figure this out where they don't actually have to go in person anywhere correct interesting by the way congratulations one thing i always like to look at is revenue per employee and you're you're you're like right above where standard is so you're beating 60 other folks you're about 137 000 bucks in revenue per employee so that's great and it's growing rapidly because one thing i'm passionate about is automation uh really for two reasons one i want our employees to have great jobs so if i see somebody who's stuck in a job and they're doing some kind of manual repetitive you know task where we can automate that so you can do something more interesting so one i want to create better jobs that use higher you know brain functions but also for our customers i'll give you a quick example we're always looking at why our customers calling us we offer unlimited telephonic support we love talking to our customers but we know they're busy and they probably prefer not to call us so with one project we automated part of that onboarding process and that stopped 1500 phone calls a month that's amazing okay so you're i love how focused you're on numbers what have you been able to drive cac down to what's it cost you to acquire one of these new 350 a month customers that i i'm gonna just take the fifth because that's not something we uh don't want our competition to understand quite how good we are at that i understand but that is something you figure out how to drive really low i imagine well yes and part of being uh backed by a company like battery ventures you know they've invested in more than 100 sas software companies across many industries and so we have access to their sas benchmarks yeah and we're constantly looking at that and from a sales and marketing perspective we are one of the most hyper efficient companies in their portfolio and one reason is webpt does a lot around thought leadership our mission is to help rehab therapists achieve greatness and practice and so we do tremendous amounts of free education blogging webinars and we get millions and millions and millions of web hits a year and so people come to us virtually they get demos virtually and then the whole process begins we're the third most searched source of information in physical therapy after medicare association that's great nancy before we're running out of time here i got lost in the conversation which is a good thing but let me ask this a different way because i want to give credit for your efficiency and i'm going to try and figure out a number that works that doesn't compromise what you don't want to share uh payback period i mean how long how long does it take you to recover like all your money and get paid back oh less than six months less than six that's incredible that's and that's per that's per physical therapist per call for uh her logo well per clinic per clinic i mean that's i mean again that's amazing if you've got people paying 350 bucks a month times the six months and you're getting all that i mean you're getting all that back in six months that's incredible why not efficient because we're not charging very much money and you have to be we're also focused on what's the roi back to the customer which i think is the more interesting number you know we need to be efficient and have a short payback but what we focus on is what is the roi to the customer and we have a lot of products now but across our products you know we see roi's to them ranging as high you know from one time to three four even five times on what they're paying us what do you assume number for us yeah before we wrap up here with the famous five nancy what do you assume lifetime value is on one of these accounts since your churn is so low it'd be easy to lie to yourself and say they're worth infinity because they never churn you know that's a subject to a lot of debate because you're right and so i think you know you see in healthcare people will assume six or seven years um is a good number rather than saying it's infinity yeah okay there's a lot of consolidation and so the customer you have today might get bought or become part of another entity so that's the kind that's the envelope i think about it that's good yeah so you're a lifetime buyer then you know 350 bucks a month and six years at 72 months that's about 25 grand in lifetime value per person you sign up that's a good that's a good model right and then you figure out later on when you want to get to 100 million in ar what other things you can sell them right exactly so we uh we've been busy on the product innovation front because we want to help our customers be successful clinically financially patient satisfaction patient outcomes and so we have brought to market a lot of different other solutions uh to help them achieve greatness in practice which is what we're all about all right nancy let's wrap up here with the famous five quick answers here number one what's your favorite business book a grit by angela duckworth number two is there a ceo you're following or studying right now not now but uh i'm very inspired by mark berlini who i had of aetna who i had a chance to work for uh in my career and especially his focus on social responsibility when he lifted etna's minimum wage to 15 bucks an hour uh that was a proud moment number three what is your favorite online tool for building your business you know i i'm actually gonna give you a personal answer which is wunderlist which is a way to keep track of everything you need to do create and share list with friends family or colleagues and i find that keeps me organized which is crucial to my success number four nancy how many hours of sleep are you getting every night i think sleep is crucial i'm a solid eight hours that's good and what's your situation married single you have kiddos i am married with a very supportive husband that's good and no kids no kids no kids okay and do you mind me asking how old you are i am in my mid-50s okay wonderful take us back about 30 years what do you wish your 20 year old self knew my 20 year old self was studying chemistry and thinking that she was pre-med and so i was in studying something i didn't like and didn't have an aptitude for because i had an artificial goal so what i would tell her is study humanities do what you love history art philosophy literature and there's time later on to learn the more technical aspects of a trade there you guys have it from nancy study the humanities she founded web pt they own about 30 40 percent of the market the company was founded back in 2008 when the original founder basically built the software for herself and then it scaled and they only put a million bucks in the company they grew it now nancy has come in when battery ventures did a secondary offering and and provided liquidities to some of the early shareholders the company is now serving over 10 000 that's great 10 000 different locations paying on average 350 bucks a month so they're doing about 3.5 million bucks a month that's up from about a 35 million run rate just 10 or so about 12 months ago so growing rapidly in the space super healthy payback period actually almost one of the best in bessemer's entire portfolio so nancy congratulations and thank you for taking us to the top this was really fun thanks so much