How did a flawed M&A deal lead to a $132M company?

I don't ever want to go raise money from anybody. >> >> How did you get to 132 million revenue? Like what's the secret sauce there? >> When you raise money, your next instinct shouldn't be hiring people. It should be a lot of employees are not bought into the company motto. It's just a job. They just want to survive, not get fired, and make sure they're successful in that sense of their position. >> startups in the healthcare space navigate as the bigger companies have more resources, more compute power to innovate and have the distribution already? >> This is like one of the toughest ones. I hope everybody listens to this one. >> Everyone, welcome back. Uh today we're talking to Deepak Patel, uh a friend and a partner at Thunder, but also a seasoned uh experienced founder, builder, and operator. Deepak, your first company, Gado, you know, you raised about 5 million in the proptech space, had a 4x return for your investors. And then you got into other business endeavors, in particular one at NAO where you scaled revenue to 132 million in revenue, which is wildly impressive. What I want to kind of kick things off with is like going back to your first company, you know, Gado, give a little bit of context to the audience of what that was, what you built there, and kind of what was some of the most the most pivotal moments prior to selling that company that you think would be useful for founders to know about you. >> Uh thank you for the flattery. Um you know, one of the biggest biggest things that I learned in Gado is that when you take money, you have to treat it like a loan. It's not rigid like when you raise money, your next instinct shouldn't be hiring people. It should be realizing how can we return that money? So, each dollar spent after the raise, treat it like a loan. Cuz you don't want to be burdened with a loan. Like that's the way I was raised, that's the way my partner thought, like each dollar that we took, think about it that it's a dollar that we don't have an interest on. So, this is like it's free money in that sense of that we want to pay it back, but we want to show value cuz this shows value in the company and the growth. So, the next thing is like, you know, we didn't go hire a program manager right away. What we did was we hired someone a little bit less than a senior role and had gave them equity and we told them, "Look, hey, you work this out. We're already successful. Can you take us to the next stage and help us be more efficient, be more streamlined where we're dripping money or there's money leaking? Figure it out for us." And once we do this, then we can go hire someone else or we'll promote you. The whole fact is about staying lean and efficient as a founder. That's the first thing I learned about the first company. It's like, the more lean you are and you realize you don't need the necessity or a bloated tech stack or expensive spend, the better you are. In hindsight though, I will also say we should have probably hired a CTO and stop outsourcing everything because we weren't the technical founders. Tech enough, but not technical founders is, you know, we didn't have AI. I wish I did. It would have been a whole different story on the growth of the company. One other thing is I've learned is I had to leave and sell that company as a founder because my founder got sick. He had cancer and I know the value of the sell was detrimental to his kids. I didn't have any at the time. So, that's like the biggest benefit why we sold or what we were pushed to sell. But, one thing I did learn through the process that I'll always repeat in anything I do going forward is that always think of an exit strategy. Never think about going IPO. I don't think that is the exit strategy as a founder. Let's take a step back. >> What did Gator do? What was kind of like the the core piece of it for for founders to know? >> Okay, so the core piece it started as us getting into assets, buying real estate, but we internally realized for us to understand the space, we need to go to conventions. We need to go to, you know, any real estate meetup in the area in LA or even in Chicago or New York, the big three at the time. And this is during the downturn, so you know, housing crisis, we're still turning the economy around. So, everything was cheap and we realized we had some success. So, as we were going to these conferences, we started hanging out with CREs and from enterprise companies cuz that's who were there. And you know, Edison, they were trying to wow all these big companies, enterprise companies. We started realizing like there's one big common theme. Like there wasn't a tech play. Yardi was there, but there wasn't many tech play. And we started realizing that, you know, Java was le- uh sorry, Flash was leaving, HTML5 was coming in. We can make dashboards out of HTML5 that were web web-based browsers. So, login, do it. And what we realized is that there's expenses that CRE has. And this came from just listening to the old guard. Like their pain stakes, the issues cuz they were always asking around how to solve a solution. Um never sharing what the solution might be in their mind, but always just complaining about the problem. And that's where we learned how to listen and optimize what's in the market. And we got to took that in, we hired out, you know, outsourced, and we told them our vision. Like literally took paint, drew how we wanted the cells and what each column should be, then moved it to Excel and sent them out and saying this is how the dashboard should be like, you know, what is the electricity cost? How do we submit a ticket for an issue internally on the building for the CRE teams, for all their property management teams, or you know, maybe an employee submit a ticket or they're not happy with the bathroom stalls. Just measuring every piece of data that might make operations bleed less on the property, right? From HVAC, energy cost. We were actually ahead of our time and we had FRO for cafeterias that several locations had. Um on on that. So, that's food recovery. Like how much was waste can be compounded to fertilizer and get funds back. Like we even set up a partnership with uh this uh farm that was out in the not Modesto, uh Bakersfield, pistachio farm that would take the food waste that's organic and make it fertilizer and pay for it. Um and so we had to figure that out how to do that just being nuanced and that's really what Got You was. It turned into more of a tech play like a It was a CRM tool for support ticket for any CRE related issues. And one thing we realized like hindsight after everything going through like we could have done it for bigger apartment units um and make it better. But I think we also exited at the right time not having a CTO at Got You because a lot of players came into the play like AppFolio um Real Page and they had more serious money, more traction, and they had a they had a CTO. They had a better team on the tech side. Um but that in hindsight is what Got You did is that we did We started off as asset buying, but we turned into a tech play on the CRE for waste management and everything else. >> What ultimately, you mentioned that your your partner got cancer and it was the right move to sell, right time to sell. How did you have a buyer? What was that, you know, kind of M&A sell process like for you? >> This is like one of the toughest ones. Um and this is I hope everybody listens to this one. Uh I went through a real estate lawyer that we had. We trusted him. He was our counsel for everything that we've done in the past. Um we thought he he never did wrong by us for that, right? But I think when it comes to M&A, one of the biggest things you have to realize is that there's money left on the table after escrow. There are fees that you have to pay. And not a lot of people know that. And your middleman could be benefiting from the purchase from both sides. He had contracts and stuff with our buyer. And at the end of the day, we did you know, I saw a dollar value, I thought it was great. I didn't realize that wasn't the best offer that we could have got. Nor did he have the entirely the best interest for us. It was very rushed, very just sign here, do this, and we trusted him cuz he never let us wrong in a lot of other stuff that we've done. You know, we had ADA lawsuits, we had issues, and he always saved us at the end of the day. So, we didn't think it was a wrong thing. We just realized he didn't know M&A either. He was just winging what he knew from whatever he studied. Um and that was kind of our process. Like, it was really really fast. Like, we got our first offer in like 8 months, and it was lowball. And I knew that, so I said, "Hey, this won't work." And he was going to a private equity firm. We said, "That's This just like some of what they're buying is just worth that. Like, one unit, you know?" Um cuz they were getting asset and the tech. And And that's the other thing. It's like, we didn't understand the tech play was actually a 10x sale instead of a 2x sale. Like, I I could have been sitting on a bigger cash bank um behind me, more liquid um if I would have done that properly cuz that data itself was very very very good. Uh and from that process I realized is like, do a breadcrumb strategy. Never give away your numbers uh cold shaped opportunity. And that's what I kind of did with Nao's. Like, we I'm sorry to transition, but we hired a better team. Um But, that's the story of like Godu. Like, we we were ripped off um at the end of the day. I'll bluntly put it. And it's not the buyer. Um they have every incentive to buy you at the least possible dollar amount to get their value, right? Um That's what you and I would do if you want to go acquire a company right now. 100%. Right? So, I can't blame the buyer. I think who I blame is Yeah, I blame the advisor in the middle. >> Should have had more of a better interest for us versus his own interest. >> I could tell you empathize with you. I had the same problem when we sold the Walmart. We were supposed to sell the Samsung and our board got greedy, did not have our interest in mind. We were very happy with the price and the deal terms, but he was like well, this was meant to be my most successful investment. I wanted this to be a billion dollar outcome. So he pushed back on price and try to you know, blow up the deal behind our back and ultimately had to lay our transaction three weeks and time kills deals. You know, things aren't moving quickly, there's no momentum. And what ultimately ended up happening, a complete black swan, the CEO gets indicted for fraud or not fraud, um political corruption in South in Korea and goes to prison. And every deal in the company stopped. And you know, it's hard to recover from. You know, this they don't care about buying a you know, kind of future play thing when their core business is at risk due to you know, corruption. So that blew up our deal. We ultimately sold the Walmart which was a good transaction, but would have been substantially better for me personally had we had that those three weeks back and closed with Samsung. >> >> Well, I'll kind of ask that question. You know, when we say potentially better, I kind of want Donnie and Snow it's not us just it's great to have the generational wealth, but I think more so is as founders, if we sitting on cash, we're not spending it like lavishly per se, like we're doing nice things. I think sitting on money is like if there's the right play again, I'm going to jump back in. I can just be bootstrapped. I don't ever want to go raise money from anybody. >> >> If I don't have to, right? Unless it's strategic. And that's another thing we've got to do. we raised 5 million only cuz it was strategic option. We just wanted to have some validity in the market and kind of show the big guys, look, like we have substance behind us. You don't believe my mouth and word, that dollar value that we raised was just totally for us to show you that there's value. And that's the thing. Buyers kind of, and it's wrong, they don't sometimes look at the product for the success it is. They're looking at it as do other people find value in this by giving you money? And I SAS health tech is the same place, same thing that I'm seeing right now. No one cares if you organically grew, which I think is just bad. >> So, let's transition. So, you sold to CBRE, like you had that transaction. What happened after? Did you stay with the transaction? Did you stop? And then kind of what was your trajectory thereafter? >> So, after I sold, I you know what? To I stayed on for about 60 days, 90 days. And I had put that cap on it. Just cuz um I wanted a break. I I having my partner be really really sick and stuff, and kind of seeing that like I should take a break and spend some time and smell the roses. Um So, actually after I sold, I actually went on like 3 months and stayed in Chamonix. Um so, I skied frugally. Um >> And you were with your wife at the time or >> Yes. Yes. Yes. Yes. >> Was she on the Chamonix trip? >> No. No. She would come in. I would go back. But it was just more like my like reset. And we were both individually like she wanted to scale her career. So, that's where that was at. But back to it, on the CBRE side, I stayed on for 60 days and I helped them through the next three deals for them to show them how it works, how it operates, to internal team, and onboard who they wanted. They didn't keep anybody on the company. That's another thing like people don't understand. When you get acquired I you know, I'm going to throw a stat out and this is my own personal opinion stat that I've seen or heard is that at least 45% of the time they don't keep anybody on except for one or two of the founders if those founders want to stay. Most buyers are okay just dumping everybody out of the company once they learn how to run it. That hurts. You know, it hurts cuz even though those employees or you know, who I call colleagues and teammates, um I will never call them employees cuz that's what they were and always have been. Um yes, they you know, made out. They did well. But they still need to work and they still need to grow and getting cut out of a job and not expecting it sucks. So, there's just some negotiation tactics that firms like Thunder do for you on behalf of you know, I'll throw kind of throw a PSA that's something that you give us autonomy to do is on advice, right? Like and I love that. But back to the question. Yeah, stayed on for 60 days, walked them through every pin and needle. We had a PM doc, um troubleshooting doc, walked them through that thinking it'd be they would care. Um No, not so much. They don't care what hiccups come up. They just care about how they can earn their value, you know, what they spent back in about two to three years. Um and this was from the horse's mouth. Uh that's all they really cared about. And so, showed them everything. Even though it bugged me basically telling them for every $3 you spend, you don't want to see a dollar return >> >> on your customer acquisition costs. So, walked them through it, told them I was successful. At the end of the day, they killed the tool within 90 days after I left and just resold the data for triple the value of what they got it for. So, that's where I circle back to having the right middleman for you. Doesn't have to be a lawyer, just has to be the right team that can put the best foot forward for you. >> Pretty good deal to uh 3x on your on your without actually having to build anything. >> Yeah. >> But kudos to never deal making. Uh you know >> Absolutely. >> Um so let's >> there's a little bit of jealousy. >> Yeah, a little bit. Hey, you created that value. That was you know you get to at least say you created that value. It would have been um you know possible that was. So, walk me through this kind of post sabbatical going into kind of the next thing and you know how how you got started with NAO? What was NAO and kind of how did you get to 132 million revenue? Like what's the secret sauce there? >> So, after post exit, did the skiing, um a lot of hiking, just soul searching. And then joined a company and I had this kind of passion like you know you see Uber scaling and DoorDash scaling and you're in enterprise health and you kind of know the big players in cafeteria like Aramark, Dexso, Compass. Um great great companies. That's a field that a lot of people should look into um in the tech side. There's just a lot of money on the table. Um but anyway, looking at them, knowing them at them, having worked with them on sites with our CRE tool for the FRO. Um kind of realized like it'd be kind of cool to go into a startup that has like a tech scene of food service and tech and a cool company was hiring uh called Fooda and kind of joined them and got to learn the space. It was kind of cool. Uh I will tell you I sucked at selling and I'm a pretty good sales guy and revenue minded guy, but learning curve in that was kind of tough cuz you realize like this isn't a multi-state deal. This is literally maybe two three people and you're in and out. It's like one of the quickest sales process I've ever done in my life. The process can take long, but once the papers are out and stuff, like 30 to 60 days is nothing on a sales cycle in my opinion. Like, at least from the enterprise side, like that is probably the fastest deals you could ever close in your life. And these were like some of the companies were big. Like, you were cafeteria placement or you were placed with maybe 800 employees on site. Not every 800 employee came to your location, but those are 800 employees you're trying to capture and bring in for your daily sales. And it was kind of a it was like a B2B2C play and that really changed my mindset on how to sell and scale even better from the enterprise side how they operate cuz I got to learn and connect with a lot of HR people cuz that's where it sat. And HR is like the gatekeeper for any kind of sales tool or anybody you want to sell to CTOs and stuff, connect with HR and the finance HR side. And get to just know them. Be friends with them. So, I did that and then, you know, company was great, loved it. Really thought I would just end my career there. And scale it. They were growing really, really fast. I thought there might be an acquisition for everybody in that play or they would just become as big as Grubhub. And even better in that service on the enterprise side versus going B2C or D2C. Unfortunately, COVID hit and that was detrimental to every food company at the enterprise level out there. But at that point I had gone to couple conferences and Travis Kalanick and his stuff at that time, Cloud Kitchens and various other companies that are underneath it had reached out and went in and helped them design that enterprise play for catering. Cuz I kind of had that nuance to it. Took contract just cuz I didn't know how COVID it was going to be. I didn't know if it was going to be successful or not. Um and as you and I know, if it's like a big series C to D and they still don't know where their product market fit is, it's not fun working. Um no matter how much you yell, this is your product market fit, people aren't listening. Um >> Aren't you listening to my fit my product market fit? >> >> Yeah, and that's that's another thing. It was like Groundhog Day. You keep repeating the same thing every day and you're not scaling or growing and I see, you know, that's another advice to founders like you take $20 from a raise, like don't have a Groundhog Day every day. Don't be coming back and trying to solve the same issue that you have internally. Like there should be steps that are resolving these issues. Um and you should be on to the next step. And so I did that and during that time I went to a conference and I was on stage and a a potential customer got up and asked me a question saying, "Hey, we love what you're presenting. We want you in our location, but you need to do this, this, this for us." And I knew instantly we can't do that for you right now. We're probably 10 months out. And I told him that, "But hey, the competitor can do it, but give me 10 months and come back and you can sign with us, you know, we'll we'll we'll handle that even better and give you a lot of other stuff." And that's when the two founders um they actually didn't have a company name um and I kind of whipped it up together. We just called it not another one. Um thought it was kind of fun, witty. Uh they were successful in Southeast Asia and uh Eastern Europe. And so they heard me and they loved they they basically said, "We We love that you didn't oversell. You did not oversell. You did not overpromise. You told the truth. And what we see in that is that you're going to keep your accounts alive. You're going to bring revenue and it's going to be sustainable." And they're like, "We kind of want to see our sales guy that can expand us to EMEA, the western half, and USA." And this is a during the time of COVID where a lot of companies were starting, didn't want to spend on a full stack team for hardware firmware design, they kind of want to outsource it and test the waters. And this is where big firms were downsizing cuz they were running into issues with corporate enterprise not wanting to pay top million dollars to Deloitte or Cambridge Consulting um or two million dollars for like a six-month stint, right? Some of these quotes were expensive. Where we came in for a million or two million, you got it for two years, you know, we were happy. Uh we could provide that service and program a lot of it for you as an outside firm that people hire, right? Um I did it. I know a lot of founders have done that. It's cheaper to hire tech outside than hire three or four guys in in the states and that's just what it is, right? Especially for the deliverable on time, it's just amazing out there. Um can't blame that. So, we I quickly they gave me an offer. It wasn't like the greatest salary in the world, but it was more about the equity play, right? Being a founder, you realize I like this concept. I'm passionate about it. I don't need that salary up front, but I will take that equity cuz guess what? With that equity, I'm going to treat it like it's my own little baby again. I'm going to scale it. My growth is to exit. And I told those founders like, "Yeah, I don't want to IPO. There's two options for you guys if you want to have me is that we make the sustainable business to where we can live off what we grow and profit share, right? Like that's the mindset that I have. Second is that or we exit. Let it be seven or eight years, but we exit and we get a tremendous value back." >> Real quick, if you're a founder doing over five million in revenue and want to know what the best hundred million dollar plus founders are doing to fuel their growth, then make sure to subscribe to our hundred million dollar exits newsletter. Get the playbooks that are proven on how to fund, grow, and sell your business. I'll even give you a curated list of investors that want to invest in your business. It's totally free. All you have to do is click that link down below, subscribe, do it now. I promise it's worth it. You won't regret it. You got nothing to lose. Go ahead, subscribe now. Back to the show. >> As you scale, you made that decision, things start to pick up. How what was kind of the sales motion that grew the company to 100 plus million? >> The first, you know, biggest thing was what is our CAC? Like what is your customer acquisition cost? And the reason I ask that and the reason I always dive into that is cuz it'll give me a solution on how to move forward to scale and it shows me the problems. What are we spending? You know, they really were only spending $1.50 for a customer acquisition cost in CAC and they were making $2 back. That's 50 cents revenue, right? That's 50 cents profit. Like that's not that's great. I think in my opinion, um but that was also the problem is that they were spending too many ad dollars on Instagram and marketing and doing all this stuff they didn't need to do cuz as effective as it is on the enterprise level now, cuz you see data bricks spam you on Instagram, uh just for the individual user, it doesn't work in a consulting in a consulting firm. You have to target the one or two decision makers. Um and the way to do that is spending dollars on doing a bottom up bottom up and top down approach. Um so it started spending more money on LinkedIn sales nav messages, curating, um little good flyers or videos on how we save money for a company. And then second is building a referral market. That's the biggest thing that I've ever done is that all these procurement teams talk to each other at conferences. They always ask for advice. I'll ask you a question, Jason. How many times have you asked someone for, you know, how to run automation now with AI? You know, we stick our head out the window and ask everybody just to learn. >> I'll do that. >> Yeah. Uh so good procurement teams do that and I sniffed that out early on in my career. Everybody always asks what you're doing when they see you successful um on something. Um cuz at the enterprise level, a lot of employees are not bought into the company motto or ethos, right? It's just a job. So, they just want to survive, not get fired, and make sure they're successful in that sense of their position, right? So, they'll always ask for help. So, we started targeting referrals from companies, basically giving PSAs about us. Then I also set up the first thing that I've, you know, I gimmicked up and thought about in my head is set up a hey this These are the four companies. They'll send you a referral on how we operated and what we did for them. You can take time, email them, or text them. We had a separate text number for them and then we forwarded to the the the client that we currently had to say, "Hey, this is the value we got from them." And forward it back. And that was like one of the biggest biggest deal time shorteners. Like our average sales cycle would be about 12 to 18 months and that narrowed it down to 10 months a lot of times for us. That's huge. >> And when it came to There's something that you and I have talked about in the past that I find absolutely fascinating that I think it's important to kind of show what it takes on the sales front. Like tell tell me about your cookie uh animal >> That's yeah. >> So, I want to know how detail-oriented you are in, you know, navigating your relationships and adding value in the simplest way. So, walk walk everyone through your cookie strategy. >> Okay. The cookie strategy came from an you know, I'll give a shout out to um Adam from Fooda. He kind of like, you know, you take them to one of our locations, let them taste what we have, right? Um at Gado, I used to give a champagne bottle, but I kind of realized afterwards, how many people drink champagne? You know? Um but cookies and dessert, you can't say no to. Everybody loves something savory. Uh even if you're a spice person, you love something savory, you know? Maybe not too sweet or not, but the cookie aspect is if you send a good dessert, something that's memorable. Um let it be a barcode. I you know, there was a cookie place that was scan you know, they would graft a barcode onto your cookie that gave them a landing page. I would do this at NAO and I would send a cookie out. Um just to the front desk, you know? To the HR team. Um hey, I'm looking for something like this. If it doesn't matter, enjoy the cookie. And you know, just respond back to me in an email what you liked about the cookie. That's how simple I kept it. Just tell me about the cookie. Just tell me about the cookie, you know? And it's just a touch. Touch base of humanizing like the sales process. Yes, there's AI tools, there's all these processes coming out to expedite sales, but at the end of the day at the enterprise, it's a human person at the end of the day across from you making the decision and if they make the wrong decision on that procurement, it's their job. They do do their diligence. And I realized cookie was that ice breaker. Like let's talk about the cookie, then we'll talk about the problem. Yeah. Right? And the problem and what I've always done with my sales team is that never show them what you've created, show them the dollar problem they have in front of them. What you solve on what they're leaking, right? On the dollar. How well you can solve the problem for them and save them dollars. And that's what that cookie mindset was, right? And on that detailed level of cookies like I would learn what kind of dessert they like. You know, I might have messed up with the cookie. Um maybe they like cake. So, there was all these avenues of once I knew that I had some kind of response from him, even if it was a no up front, I would send them a cookie maybe two quarters later or that that that cake. Two quarters later. Hey, I still remember you. I know you didn't like the cookie, but here's a cake. I just came across this cake place. It's amazing. It's really good. I want you to try it. 20 bucks, 30 bucks here and there for a lead. That's going to give you a two to three million dollar contract is nothing. It's cheaper than spending 20k on ads on Google. That's not going to land you an enterprise. And then when I talk about enterprises like Fortune 100 companies, Fortune 50 companies. These are big big companies. It's not going to land you a contract. It might work here and there. A drip campaign on email might work. But those all add up money where the $30 the cookie got me a response. Not not, you know, you may not think it's going to close the deal, but even hearing a no and turning into hey, we may not be a fit for you at the end of the day and my response and to all my sales guys, do you know anybody else we might be a fit for you've come across in your circle or network that might need us? Now, I'll tell you I have gotten a five five million dollar deal for NAO and then which pivoted us into health care because that person's like, "Hey, my husband does this and this is the issue they're running into." >> So, let's talk about that transition from cookie delivery to five million dollar contract to pivot into health care. Let's talk about your experience in health care and how that account transition to, you know, growth in health care for you guys and and but and also for you personally in terms of your interest in that category. >> Well, the interest kind of comes for me is that my entire family, there's like three options and how we transition NAO for that and I'll get I'll circle back to that is that um um I have a lot of doctors in my household. Understand the space. I have lost, you know, quite a few people around me to cancer and it's detrimental. And you realize the struggles and pains that it comes from. To where I actually did this while I was doing my first company cuz in my culture you have to have some kind of masters or whatnot and you know, uh uh >> Name of the game. >> Yes, it's name of the game. And so I know it. I know it well. Um just from education, my undergrad is biochemical engineering. I did internships at Nestle for their veterinary pharma side and then to Bayer for a little bit and I realized, and this is why I became a founder, but that's a whole different story. So, I know the pharma side really, really well. Um I know the medical side really, really well. Um A lot of my neighbors are doctors. A lot of the parents that I hang out with are doctors. Um and that's what kind of helped me on the transition to um health care and health tech space. I was kind of always in it, always looking to invest into cool companies, you know, like when 23andMe exploded or you had um I forgot what's her name, the the lady that got caught for fraud, the one blood test. >> Oh, yeah. Um Elizabeth Holmes. >> Yeah, Elizabeth Holmes. Um all those kind of companies always were on my radar. There was one company that I had invested into right after my first exit was beaming um blood samples from the battlefield via satellite. So, scrambling, sending up, sending it back. Very cool DARPA health uh concept. It got gobbled up by the government. I don't know where it's at. Um I'll say broke even on it at the end of the day. Uh It was just a throwaway. It worked well. Um I thought it was a cool concept, but that's how my knowledge is. Like, I'm into those kind of things, right? Uh more preventive medicine out there and how can I do better preventative help survivability go up, especially from the cancer standpoint. That's like kind of like the heart of me, philanthropic side. And so, when this transition came into health tech for NAO, was that lady uh Sarah. And she's like, "My husband, David, does this. They work on a glucose monitor company. Um and they are struggling with the housing on it from manufacturer that they currently had." Well, NAO had relationships all through China, Singapore, Vietnam, and the Philippines. Um cuz we did all that in-house. You know, we had these contracts, we'd go negotiate for you, or we managed all of it for a cost. And when he came to the table and said, "We were struggling," they were spending about 200 to 300k uh a quarter for just redesigning with this manufacturer. They were using them to do it all. Um and we realized, "Hey, for half of that, we'll take it. We'll get you a better contract, we're going to pivot you to a different manufacturer." And these were just for studies cuz it wasn't approved yet um on the state side. So, we got in, we handled, and that's where I got to learn like even more so how clinical rotations go on the health process, how drug discovery goes on, how universities are a big impact, how enterprise health that are tied to universities actually help drug discovery in the process of the FDA, right? Um how all of that goes. And we realized a lot of those people on the forefront if you're not big pharma with big big money, you don't know how to navigate that. You're going to spend a lot of legal dollars for stuff that's going to go down the drain. >> And so, when you deal with that level of detail in this industry, cuz I feel like as a founder, you have touched so many different areas. I just as a I wouldn't even say as a founder, as a just a human that has kind of experimented both from understanding the family perspective and everything you're exposed to. It's also all these different companies and projects you've worked on. But, when you kind of see what's going on in the industry of health tech and health care, like, where's the where's the puck going uh from your perspective as an industry as founders are building companies in this field and trying to navigate their next move. Kind of like, what what are your insights and what are you seeing? >> There There's two halves, right? There's founders who are running the Silicon Valley model of health tech, which I think you're going to have two or three unicorns and everybody else is going to fail. Um at least on the enterprise side, right? Like, I'm thinking about like hosp- like selling to big health care uh hospitals, not the little mom and pops. Um this is a pure enterprise health care tech place like AI scribes, RCMs, and stuff. You have people who are trying to take AI plus blockchain and combining it. What they don't realize is that on the health care side, there's more nuances to that. Cutting and shortening steps doesn't mean it's a benefit to the process. It could be detrimental to where a doctor misses out or the nurse or the admin staff misses out on a crucial piece of paperwork or the diagnostic before the surgery or they get misdiagnosed with medication. Right? Like, that is a serious serious issue. And yes, the Silicon side of the mentality is we close a deal, we don't care what happens. At the end of day the doctor will be held responsible, not the company cuz they can just file bankruptcy and restructure and start over again. There's no laws protecting the individual from the tech mistakes, right? There's laws to help us go after doctors, right? For a misdiagnosis or an issue, but there isn't against the tech companies. There's a lot of avenues for them to escape. Um there's whole I've seen hold harmless clauses in a contract with a big enterprise health tech or mid-market health tech company where I'm sitting there and I'm like, why are you signing this? Even though it benefited me, I kind of raised it like inadvertently and, you know, my founders who hired me at the time may not like that, but if they would have listened, they would have closed 10 more deals if they would have been proactive about that. Wow. >> But I guess to go back to my my question on the trend. >> Yeah. I'm curious to hear >> yeah, on the trend I see on the enterprise health tech like AI scribe stuff. You have Anthropic, you have ChatGPT, you'll have Google. Um they are going to just whip up what you're doing and 10 times better. Right? So your mindset should be if I'm already like I'll give Nabla. Nabla has USC. I don't think USC is going to drop Nabla anytime soon. Right? Um unless Cerner, their EHR, comes out and their tech is even even better and can give it for cheaper, then I see Nabla getting whipped out. But what people don't realize with the enterprise health tech, once they buy into the tech, rarely are you going to lose them after 10 years. It's such a long process to onboard and on weed. Um a it's just a long process. Even in enterprise, like the Fortune 100 companies, they're not picking up open cloud overnight, right? It's >> Yeah. >> Now teams may have access, right? Like the the tech team might have access to test out new stuff, but the mass employee will not have access to it. Security, all that. Like I to be honest to this day, like, you know, we get hacked on the healthcare side and it's still hard, it's still not a lot of data loss, right? Cuz it's so siloed and protected. Uh and that's what I see transitioning on the Silicon Valley side is those companies who are pivoting now and looking through the mess and the new technology that comes out every day, but realize how to take that and organize it will be the winner of the healthcare tech space on the enterprise side from Silicon Valley. Now, the second side that I see succeeding is companies who are building their tech with the physicians in play. And these are data plays. These are data assets to train these Silicon Valley companies to be better, right? Or the nuance of what I call Six Sigma, if anybody's familiar with that industrial process improvement. Um those tech plays in healthcare who are using doctors to improve using this mindset are the ones winning at the mid-market tier. And they're winning small departments at the enterprise healthcare tech. And those are going to survive cuz their NNR is great. They can lose you know 13 clients but their 23 other clients they're going to keep and they're going to keep upselling and they're going to keep this NNR, right? They can only add, you know, they can add one new brand logo a quarter and they'll be still great. Right? Um cuz they're running lean, they're running properly and they're not going to lose clients, in my opinion, because they have built properly. They've understood the nuance. So, who's going to lose? I think who are going to lose is the people that are chasing just growth. And they don't understand what problem they're solving. They realize they've created a solution for the problem but it's just a band-aid. And I'll use the health it's just a band-aid. It's not a suture to close the wound. You're still bleeding. You haven't solved the problem. You've just patched the problem which has added 10 clicks to a nurse's day. day. It hasn't improved it. I know for a fact that AI scribes doctors take about a year to have it perfected to how they take notes. Right? And I'll give an example is in India, if you go, it's cheaper for the doctor to have a scribe behind them per minute than it is to pay for this AI scribe. Wow. >> How much is AI scribe? >> Right? It depends on the contract. Like that's where it comes down to. Like my brother-in-law who works for Kaiser and he's been at Kaiser for the last 25 years, 32 years. He literally told me it took him a year and a half to train the scribe to be perfect in his eyes and he still has to proofread. Cuz he goes one thing the scribe doesn't realize and the company doesn't realize is if I misdiagnose or I mistake a note or suggest something wrong to me for the solution, right? Cuz there are scribes and there are people who have these new metrics that say save time, save this. Because it can guide you in the diagnose diagnostics. Doesn't tell me if I'm making a mistake or not. It's not there yet. You still need that human experience layer to audit what is getting written. >> It's a human world building AI to solve human problems. And >> health care, right? It's health. Someone can die in an instant, right? That's the scary aspect and the way I see growth and the success in these companies and acquisitions is people who are buying realize this and they're buying the pure good data play. So they can go and they'll do effectively with a tech stack they're building. We'll build a proper tech. Like I'll give an example of Epic. They accepted partnerships with all these AI scribe companies, everything. And mind I'll tell everybody you need to go look at the founder of Epic. She is more badass than Steve Jobs. Um and a lot of people disagree, but go look at her from the SAS standpoint what she built and she's done it effectively. Um she's made it so sticky, it's amazing. Um, anyway, she allowed all these AI scribe companies to come in, do these partnerships, whatnot, have a stringent process. But guess what? They rolled out their own. It's not perfect yet, but mind you, she's sitting on the on all that data, and she's very smart. She has smart people around her. She will perfect the hell out of it and undercut these companies. >> So, that brings up another conversation before I before we wrap up is like the world of consolidation, like the inevitability of things consolidating um, as the bigger companies have more resources, more compute power to innovate and have the distribution already. How how do startups in the healthcare space navigate that world? >> It's not spending money on lobbying. I'll say that now. If your advisor investor comes to you and says, "Hey, we can lobby for we can lobby this to you so your state and you know, a trickle-down effect." I think what you need to really look at is the economic cost, right? And play that on how to raise money, like what is the economic value you'll bring to enterprise healthcare and that individual user. So, you really really in this tool that you're building, you have to look at it as a B2B2C. And the consumer is a nurse, a doctor, that administrator staff at the enterprise healthcare. And that is how you're going to tackle this growth problem and your barrier to entry and product market fit is actually sitting down with these doctors at a conference that come and listening to them and then taking those notes and then reaching out to other doctors in your family or people you may know, or even showing up to, you know, providing doing a luncheon. Pharma does this. I'll give an example. Follow what hell Pharma does in their sales process. Every quarter or every month, when they want to test a drug out or move certain drugs, they'll do a luncheon with these doctors that are mandatory for them to sit in, and it's a free lunch for the doctor. >> Yeah. >> They love it. Trust me, they love it. And they'll talk about the drug, but more so the good savvy MSLs, medical science liaisons, and pharma team sales teams. They talk about the drug, but then they also talk and listen to what the doctor's day-to-day is for the issues on the diagnosis of these medicines or whatever they're providing. And that's what you need to take these tools and kind of sell. So, like if I'm a company who's going to start in health tech, two things. I would look for the right advisor on the board that knows the industry. And second is have an exit plan cuz I guarantee you the speed bumps, the walls, and the barriers you run into are going to be so detrimental to that if you only have one enterprise client and you pivot away from small SMB to mid-market because you thought you can hit a big just trying to get big fishes, you're going to burn out of cash. You're going to die um out in the middle of the sea. Yeah, but it's the truth, right? Like you're going to see it. And the reason I say that is look at the whole Delve issue. This is a known fact in the industry what they were doing. If you were smart, and I know this personally cuz when I was doing some fractional CRO working in the health tech space up until now, Delve would come in and you ask these questions after learning and it there were some flags that went up cuz your their competitors weren't saying this. They were charging you more for a reason cuz they were doing a proper process. >> That's scary. >> Right. >> up with them. And it's crazy when that that kind of stuff goes down. Um Gib out, this has been an amazing episode. I'm really glad that we kind of were the first two introduce you to the podcasting world and get you on and share your story. I think you have a lot more to share specifically on the latter part of just what you're seeing in the market and a lot of uh ideas and trends that I think founders in the healthcare health tech space should be listening to. So, I'll make sure to get you back on in the near future where we can kind of really unfold some of these concepts a little bit further and kind of see what's happening in the market. >> Yeah. I I say last thing for healthcare, you guys remember what I said like minimum of 12 stakeholders you have to go through. So, when you're doing your sales process like minimum 12. So, learn close on each 12 and that's where each dessert will help. >> Each each cookie. >> Yeah. Not 12 cookie minimum. >> 12 cookie minimum. Yeah. >> Does it? Uh well Demark, um what's the best way for people to get a hold of you if they want to have a chat? >> Um look at my LinkedIn profile. You can see my calendar there. It's booked via Thunder. Um that's the only way I'm going to take my bookings right now. So, just let you guys know. Um hey, and that's the one thing I'll say is something that we do great at Thunder is um we'll give you some kind of advice even if we don't work with you that will benefit you. >> I agree. Uh worst case scenario we spend 30 minutes together but it plants a seed that takes you into a valuable direction. I pretty much can say that for pretty much all calls. >> And we'll try to save your hairline. That's something I'll tell everybody. >> I I had to pay for mine. I had >> I hide mine. So, >> That's great. Yeah, you don't have to. >> >> I had nothing here and then uh But yeah. back after mine started. Um well Demark, I will if anyone wants to reach out I would say reach out to to you on LinkedIn. We'll put that in the show notes down below. Plus, if you want an introduction directly from me, go ahead and just leave a comment down below and I'll be happy to do so. Demark, thanks for coming on the show. Get you on a new one soon and have a great rest of your day. >> Thank you. >> If you were inspired by today's episode, then go ahead watch this next episode. Promise it's worth it. And if you really enjoyed this last episode and you want to connect with the guest I had on today, make sure to leave a comment down below telling me why you would like an intro to this guest and I'll make it happen.