684: How to Raise Your First Round of Funding with Healthcare API, Redox Founder Niko Skievaski
Niko Skievaski. He\u2019s the co-founder of Redox, a modern API for healthcare. He also used to do some work at Epic.
Famous Five:
- Favorite Book? \u2013 Moments of Magic
- What CEO do you follow? \u2013 Judith Faulkner
- Favorite online tool? \u2014 Calendly
- How many hours of sleep do you get?\u2014 6
- If you could let your 20-year old self, know one thing, what would it be? \u2013 Niko would have asked himself to start something rather than working in a big bank
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Time Stamped Show Notes:
- 00:40 \u2013 Nathan introduces Niko to the show
- 00:59 \u2013 Redox connects applications to software developers
- 01:04 \u2013 Redox\u2019s business model is licensing connections to various healthcare systems
- 01:25 \u2013 Niko deals with healthcare because he believes it is important
- 01:33 \u2013 Niko has also talked to developers that made an impact on patients\u2019 lives
- 01:46 \u2013 \u201cFrom our perspective, we really see a technology innovation healthcare something that is absolutely needed\u201d
- 02:20 \u2013 Redox charges software developers and software developers charge the healthcare system
- 02:38 \u2013 Redox initially becomes a sub-contractor of software vendors
- 03:21 \u2013 Redox charges per the number of connections a developer has in the healthcare system which is a monthly model
- 03:48 \u2013 Depending on the interface, the charge changes a bit
- 03:52 \u2013 It is a SaaS model
- 04:08 \u2013 Most developers connect to 1-3 healthcare systems
- 04:15 \u2013 Each connection system is around a thousand dollars
- 04:25 \u2013 Redox was founded in 2014
- 04:34 \u2013 Niko was in the corporate world and was working at Wells Fargo
- 04:46 \u2013 Niko went to Epic to get his hands on data because he studied Economics and wanted to understand what he could do to improve the healthcare data
- 05:07 \u2013 When Niko got to Epic, they didn\u2019t actually have the data
- 05:17 \u2013 Niko learned a lot from Epic about the provider workflow
- 05:29 \u2013 Since healthcare is digitized, the challenge is how to get the data out of the cloud to software developers
- 05:43 \u2013 Niko\u2019s CTO and co-founder, James, was helping startups hook up with various healthcare systems
- 05:59 \u2013 The idea of Redox is to make an engine that can scale across multiple health systems
- 06:16 \u2013 Redox was bootstrapped and has raised capital
- 06:30 \u2013 Niko and his co-founder have started different companies until they decided to do Redox
- 06:50 \u2013 They brought in another co-founder to round up Redox
- 07:00 \u2013 Niko and his co-founders worked in a co-working space and saved some money from their consulting gigs
- 07:21 \u2013 Redox raised a small seed round of $350K in 2014, then they hired some developers
- 07:40 \u2013 The co-founders were only getting $35K each when they were starting
- 08:05 \u2013 They made sacrifices in order to start Redox
- 08:51 \u2013 They have to convince themselves that if things don\u2019t work, they just have to get a job
- 09:11 \u2013 Entrepreneurs can easily get a job
- 09:30 \u2013 Redox has raised a couple of rounds
- 09:40 \u2013 The first application they had can determine the amount of blood loss by taking a picture
- 10:06 \u2013 It took Redox 10 months to get live with their first customer
- 10:17 \u2013 Redox raised their round A early
- 10:29 \u2013 The developer community was really excited and was supportive of Redox
- 10:52 \u2013 Redox was getting 1K MRR from their first customer
- 11:00 \u2013 The first round was a priced round
- 11:11 \u2013 You can raise based on your traction or based on potential
- 11:28 \u2013 Redox was based on potential
- 11:38 \u2013 Redox\u2019s pitch to their investors
- 11:40 \u2013 Digital health is one of the fastest growing spaces for venture capital
- 11:44 \u2013 There are too many companies trying to start something innovative in the healthcare space
- 11:47 \u2013 The common problem that they have is sharing data with the legacy system
- 12:10 \u2013 Redox really has a great team
- 12:30 \u2013 It\u2019s not about the MRR, it\u2019s about the potential of working with the army of software developers who are innovating in this space
- 12:53 \u2013 Redox\u2019s marketing strategy is getting the developers first, then the developers will drag Redox to the healthcare system
- 13:10 \u2013 Valuation
- 13:24 \u2013 Redox has closed another $9M with their series B round in January
- 13:40 \u2013 Total amount raised is $14M
- 13:48 \u2013 The new additional investor is Intermountain Healthcare System
- 14:20 \u2013 Redox currently has 100 healthcare systems across USA
- 15:13 \u2013 Redox has around $400K MRR
- 15:45 \u2013 Customer churn
- 16:13 \u2013 CAC
- 16:44 \u2013 Team size is 35 who are mostly developers
- 16:59 \u2013 Redox is a developer platform
- 17:06 \u2013 Most are based in Wisconsin and some are based around USA
- 17:46 \u2013 Niko won\u2019t sell Redox even if they already had an acquisition offer before
- 18:08 \u2013 Niko didn\u2019t think that the company acquiring Redox would be able to solve the problem as fast as Niko and the team
- 18:32 \u2013 Niko will accept an acquisition offer only if the company will be able to do it faster than Niko and the team
- 19:50 \u2013 The Famous Five
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3 Key Points:
- The continuous innovation in the healthcare space needs a data source that is stable.
- Stick with your principles and be focused on where you want the company to go.
- Raising capital can be based on your traction or the potential of your business.
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Resources Mentioned:
- The Top Inbox \u2013 The site Nathan uses to schedule emails to be sent later, set reminders in inbox, track opens, and follow-up with email sequences
- Hotjar \u2013 Gives Nathan a recording of what is happening on a website or where are people clicking and scrolling on the website
- Organifi \u2013 The juice was Nathan\u2019s life saver during his trip in Southeast Asia
- Klipfolio \u2013 Track your business performance across all departments for FREE
- Acuity Scheduling \u2013 Nathan uses Acuity to schedule his podcast interviews and appointments
- Host Gator\u2013 The site Nathan uses to buy his domain names and hosting for the cheapest price possible
- Audible\u2013 Nathan uses Audible when he\u2019s driving from Austin to San Antonio (1.5-hour drive) to listen to audio books
- Freshbooks \u2013 Nathan doesn\u2019t waste time so he uses Freshbooks to send out invoices and collect his money. Get your free month NOW
Show Notes provided by Mallard Creatives