“I left a16z and Raised $41M in 72 Hours” | Zach Cohen, CEO at Ease Health

0:00 Within 24 hours of resigning, you raised 41 million. No one's ever offered me 40 million bucks when I resigned, so >> the same thing up until September. I flew to SF to basically tell my boss that I like He probably thought I was trying to lobby for a promotion that I was, you know, actually leaving to start a company. And his response was like, "Send me the deck. Let's be the first to term sheet." I had a hundred different permutations of how it was going to go in my mind. That was not one of them.

0:24 >> Yeah. >> I'm Marco Di Marelles, and this is Undercovered. Today, we're at I Fior, one of New York's most beloved Italian restaurants to enjoy a delicious lunch while talking tech. Here's Zach Cohen. He resigned from Andreessen Horowitz, raised $41 million in 24 hours, and built software that's replacing paper charts and a dozen disconnected systems across behavioral health. And he'll tell you why the hardest part of selling AI to health care has nothing to do with the technology.

0:50 >> Yes. Like, software will replace labor staff. 100%. >> Right. >> But, that is not where we are in health care. At least, it's not where we are in behavioral health. For me to come in as a software vendor, give you a pitch, and tell you, "Hey, you can fire your 15 utilization review people." I am discounting the fact that that is actually like a really hard thing to do. They're not only giving up control, they're also potentially giving up people that they have relationships with. That's going to take them 6 months.

1:13 >> And I need them to feel And I'm doing heart surgery, so I need to you to know that you're going to be much healthier and better right after the surgery, not in 6 months. >> You had a different product philosophy than most founders in that you're building three plus products at once on day one. >> So, I think one is Yes, we are building three system of records concurrently, but there's also like heavily overlapping features between those system of records.

1:37 >> One of the hot takes you had was around >> Basically, verticals are becoming horizontal. Say a little bit more about that. >> Diagonal is the better phrase. What we're seeing right now is >> Zach, thanks so much for joining me today. >> I'm excited to do this. I get one of the things I want to start with is when I was preparing for this, I saw in my show notes that within 24 hours of resigning, you raised 41 million.

2:09 I guess I want to unpack that a bit. Is it true? What was the real story? >> Totally. >> No one's ever offered me 40 million bucks when I resigned, so >> the same thing up until September. I feel the same way. it's it's mostly true, which is the good part of the story. >> Yeah. >> And I think it's a lot of it's a credit to A16Z as a firm. They kept talking about being founder-first, founder-friendly. they put their money where their mouth is.

2:31 >> That's awesome. >> Cuz I flew to SF to basically tell my my boss that I like he probably thought I was trying to lobby for promotion that I was, you know, actually leaving to start a company. and his response was like, "Send me the deck. Let's be the first to term sheet." and then went to IC like 16 hours after that meeting. We finished dinner at like 9:00 and IC meeting the next day and then got a piece of paper that was like, "Hey, we're going to lead your round." And it was an amazing experience. And then we had a bunch of other funds over the next couple of days. So the 41 was raised over probably 72 hours, but the Andreessen lead was raised in essentially 24. So it was amazing to have the vote of confidence from the firm you've worked at. And then also the way they like treated me on the way out was amazing. It was almost just like, "Why are you still here? Go build a company."

3:17 >> Wow. >> So it was kind of really nice to have a firm who's like you've put a bunch of time in and they've I've like spent a bunch of energy trying to have them believe that I'm going to be a great investor and they, you know, maybe believe that, but they believe that I'd be a better founder. And they were like, "Let's just give you capital. This mission makes a lot of sense. We trust you." And I had a hundred different permutations of how it was going to go in my mind. That was not one of them. So it was a it was a pretty awesome experience and I'm super thankful for A16Z to like start the momentum and they've been instrumental in building a company.

3:47 >> Well, it says a lot of great things about you and of course as partners. I guess I want to get to Ease, but even before then, talk a little bit about some of your investments, whether it's a business like Raspberry AI or some of the others. I noticed, and I get this too, by the way, as a consumer ex-consumer partner at a large traditional fund who's now done a lot in defense and health care and other spaces, how you went about navigating that shift from consumer to health care.

4:16 >> It's an interesting question. I get it all the time from consumer founders who are like, "Should I pivot to health care?" Health care founders being like, "Oh, how cool is it to do consumer stuff?" You know, I I think the one thing that I was always just attracted to just broadly with companies, I think my investments kind of show that, and then also the company that I'm building is I wanted to invest in daily active tools.

4:36 When you look at most B2B software, most health care software, you don't have daily active tools. and for me, when I thought about building Ease, which is essentially the operating system for every single employee at a behavioral health company, from clinicians to admins, to billers, we can get into what the company does later, the driving force for me was I want to build a a product that like everyone is in every single day. And consumer that landscape is small, right? There's messaging, there's email, there's maybe some social products. In B2B, you know, a lot of these amazing companies are not workflow tools every day, or they're workflow tools for a specific person at an organization. so, I was always attracted to like the operating system, the super app building mentality, and I think you know, that was kind of one component here. I think health care is always like my consumer interest always leaned a bit of health care. And also like I started my I guess clinical career when I was like 19, I sold an education business to a small private equity firm, and I always knew I wanted to work in education or health care, whether it was like through the consumer landscape or through B2B kind of wasn't the vessel or like the medium I was thinking about. It was more how do I build a product that every single person in the organization uses every day, and that's their driver, because I think that's how you affect change the most and I also think that's like what drives me and what gets me to get really ambitious people to work at this company is you know, you have a drug addiction center, they are working 24 hours a day, 7 days a week, and they are in your system all day to do everything from medication administration to claim submission to intake and admissions.

6:06 and that to me was like, I want to go after something like that from an ambition ambitious perspective and also just from like a thinking about product in a way that just feels incredibly wide-reaching and complex is kind of what drew me to say, "Hey, maybe this isn't consumer, but in a way it has to be consumer. People have to enjoy using it. It has to be delightful. it has to be an experience that they feel like when they log in, it's a positive login, not a oh man, I have to enter this system again."

6:33 >> Right. And were there I guess things you did to acquire that healthcare expertise either pre-launch, pre-business, or during the early days? >> You know, the whole basic thing is not listening, but in my last 6 months there I moonlighted as like in a bunch of ambulatory clinics across a bunch of different kind of different therapeutic areas just to understand kind of what the systems are, how people use it, what the flow was. I was always a like researcher type person, so this was kind of like a really cool research project.

7:03 >> Yeah. >> and then as I got deeper, spent a lot of time just with a few different therapeutic areas, I started to kind of hone in the idea. I was like, okay, system of records are interesting. Daily active system records are interesting. Okay, in healthcare, that what is that? That's the electronic health record system. Okay, there's like, you know, Epic and Cerner in large health system, and then there's like these long-tail ambulatory markets. Let me go look at the long-tail markets. Which ones are large? Which ones are filled with and the kind of the private equity companies that are just not using kind of AI or it wasn't core to their thesis. And you know, kind of like thinking about markets and and and doing that and then just spending a lot of time with the end users themselves. And I think what you find when you're working in a market that doesn't often get venture capital attention, people are really open to talk about to talk to you and hear out their problems, to let you into their facilities, to let you into their offices, their clinics, ask them the questions, see their data, understand what's going on. And I spent basically 6 months before starting the company doing that.

8:03 >> Wow. >> and then started the company and you know got the pitch to a point where it felt like it was tight enough and I felt deep enough from a conviction standpoint that you know by proxy I can get my investors to feel that conviction or at least half the conviction I feel so that they would write the check. and then the last 9 months were, you know, school of hard knocks. Implementing EMRs into facilities is very different than you know, talking about them and thinking about these things on a PowerPoint and Excel sheet, but it's it's also like it's a continuous learning process. Every organization is a bit different. We spoke to a total brain injury group today that has 200 homes. Each home has two to three beds.

8:44 They take care of people that have like traumatic brain injuries. That is a totally different billing system. They have these like service hours they have to hit and different types of services and their rev cycle component is way different than someone who might have a rehab center and I think you just have to go with a mindset of like, "Hey, we're going to learn. We're going to figure things out. We're going to ship things quickly in the sales process and we're not going to say no to mostly anything if it feels reasonable."

9:06 >> Yeah. When you think about I guess there's different perception is a behavioral health. And if you think too narrowly about it, it can seem crowded on the surface. how should I think about behavioral health? >> Yeah. So I think like when we talk about behavioral health, people from VC land, they think like Grow, Headway, Alma. Maybe they start to think about Equip and Charlie, which is kind of the newer age higher acuity scale venture players.

9:33 It's a much larger spectrum than that. behavioral health goes from outpatient, intensive outpatient, partial hospitalization. There's medication assisted treatment. Within medication assisted treatment, there's like opioid and Suboxone treatment. Then you have inpatient care, which is, you know, residential care for, eating disorders, for addiction treatment, for all other types of treatment. You have residential psychiatry. And then you have inpatient psychiatry. So there is like levels of levels of care here, which is incredibly important because behavioral didn't look like this 20 years ago. It was like, you know, you either have a 28-day residential stay or you see an outpatient. And now we've evolved to have sober living and compare, you know, in tandem with PHP.

10:12 And like that is kind of really important. What that also does is it has a ton of complexity to like the technology that supports it because you now have organizations that have the full continuum of care. And then what it also does is it also makes revenue cycle a lot more complex. >> Yeah. >> and that complexity and the fact that these organizations are increasing the amount of service lines they have to increase the continuum of care so they can see a patient step up or step down in the same organization leads them to kind of feel the pain from the technology companies that were built in an era that that wasn't actually the way the market was structured. So, when I think of behavioral health, I actually think it's like fairly not crowded. Take inpatient psychiatry at these free-standing acute psych hospitals.

10:50 There's about 2,000 in the US. about half of them are on paper. >> Wow. >> So that's greenfield, right? >> For their intake and >> For their EMR. They're like clinical medical. They are on paper. >> Wow. >> Yeah. So like that is totally greenfield. Now, substance abuse 15 years ago was completely greenfield. now it's not, but there's also like basically no venture competitors in the space. So we can do things that other competitors can't. Not only can we attract really good talent, not only can we say, "Hey, we don't have to care about these single equity gross margin economics of this single customer right now. We just want to make them super happy. We see the long-tail enterprise value of this contract. So we don't have to charge implementation fees."

11:29 But also we can build things that are commodities in our system and it don't hurt our economics. But if you built your system 15 years ago, they're not commodities. >> Yeah. >> So, API usage, custom forms, you know, clearinghouse charges, like we can just kind of eat a lot of this stuff because we have the ability to sell a lot more in different tools, and we can get into what that means. >> Yeah. >> I don't think it's crowded from a venture standpoint, for sure. There is like a super long tail of bootstrap companies or small-cap private equity companies. They just don't have the ability to attract the talent and ship the way we do and also have the like lack of technical debt that we have because we were starting a company as of 10 months ago.

12:08 >> Yeah. >> So, I actually think it's probably like the most wide-open market. Part of when I like recruit candidates, I'm like, "Go demo our competitors." >> Hm. >> Like, "Hey, you're thinking about going to work at Deckagon? Like, you're going to have to fight against Sierra. You're going to have to fight against Fant. You're going to have to fight against some really good AI customer service tools, and maybe that's the best company, but for me, I'm like, "Go look at our competitors. You'll see that the software has not changed in 10 years.

12:32 The basic things don't work for them, >> Yeah. >> and the pain is real." So, I think from a competitive landscape, I lean really hard into that when we recruit because I do think that makes it very, very, very different. I talk about what why we talk about moats a lot also when we recruit, but from a competition standpoint, I don't view it as crowded, actually. >> want to get into talent pitch cuz I think the beauty of your background is you've seen greatness up close, and you know what that looks like. but even before that, when we think about I guess just in this category post LLMs, like give me a concrete example of what's possible with an AI-native product versus a product that maybe was architected eight years ago.

13:11 >> Yeah, for sure. So, I mean, I think like core example, let's take like chart auditing, for example. So, for people who don't know, chart auditing is essentially you're reviewing the chart to make sure that you are hitting all the compliance rules and all the payer rules for the the code you're billing for. It's really, really important. Organizations have kind of three approaches right now to do it before AI, which was they had a full team of reviewers that are basically clinical directors reading reading every single note or a large bulk of notes.

13:40 Obviously, that's not scalable and that's very expensive. Or they don't do anything and they're kind of like, "Let's leave it up to the gods and hope that we don't make mistakes." Also problematic. Or the third thing is they would use a technology company to basically pull out randomly one out of every thousand notes to to like go over and then they would like review that note, you know, with a technology company. With language models, like we can do a ton of that contextual review ourselves and with like a bunch of prompt engineering and custom rules building, we can actually like ingest a note, read all the context in the note and say, "Hey, is this going to like be Carford Joint Commission compliant based on the treatment plan you had and the progress mentioned?" And by the way, you're billing this interactive complexity code here, like does the documentation support that interactive complexity code? Yeah. that is a tool pre-AI you could not build. Now, what does the market look like today for that tool? If you want to buy an AI tool that does chart auditing, there's a few companies who do that.

14:37 They are third-party companies where their basic bread and butter is deployed engineering, which I'm sure you talk about FDEs all day long, but the reason why they're deployed engineers is because they work in these legacy EMRs and they figure out how to pull these notes out of the EMRs, normalize that data, review it at as a AI clinical director and then push the learnings back in. That is a very hard task to build in a legacy system. When I think about an AI native system, I think about the fact that I can structure my notes so that LLMs know how to read them. I can bring the chart auditing into the note and by the way, I can bring it into the note at any given point in time versus a third party has to figure out when the EMR is going to let them touch that note.

15:15 And for me, I can say, "Cool, I actually don't have to do any of the plan engineering work." What does that help me? It helps me ship products faster. It also helps me be pretty competitive on pricing because I don't need to price in the cost of having two engineers do six months of deployed engineering work, right? And I just have to price in the cost of like, okay, there is a model call here. There is some prompt engineering.

15:37 And now I'm like, maybe chart auditing becomes a commodity in an AI native system, maybe not. We charge for it today, but if we decided not to, like, sure, our gross margins might go down, but also we might be able to blanket the entire market. >> Oh, that's interesting. So, post LLM times, there are core features you can make commodity products. >> One of the reasons I was really excited to do this was I felt like outside-in you had a different product philosophy than most founders in that you're building three plus products at once on day one.

16:07 >> Yeah. >> And, you know, the conventional wisdom is do one thing in a really narrow way, deliver a ton of value, be great at that, and then earn the right to expand the the TAM of your business. It seems like you're leading with an EHR and RCM business and a CRM. >> Yeah. >> Why build three products at once? >> Yeah. No, it's a it's a good question. I think it's like the hottest take I have as the founder is the approach of our company building three system of records concurrently.

16:34 >> Yeah. >> I think there's like a few things to point out here. So, I think one is yes, we are building three system of records concurrently, but there is also like heavily overlapping features between those system of records. So, yes, we call it a CRM, but the CRM is essentially everyone who is not yet a patient, all the process you have to do to get them to become a patient. And then you need to convert that client or lead into a patient in your EMR.

17:01 Everything that you do previous to them becoming a patient actually mimics stuff that you do that have as a patient. They take an intake packet, you do some like medical questionnaire, you assess is there the proper patient for you, you do an eligibility check, you might take a payment. And all of this stuff needs to flow directly to the EMR. Yeah. So, when I talk about CRM, like when we talk to customers, it's like, yes, it your admissions team and your business development team and your marketing team is working in it. And they're not giving clinical services, right? But they are talking to patients, they are collecting information, they are checking insurance, they're doing all the pre-work that is essentially all the stuff that you would be able to do as a patient in the EMR.

17:39 So, to me, I'm like, okay, we should be able to build a CRM because it basically like mimics our EMR with like less permissions and less like access to clinicals. >> Yeah. >> So, that's kind of CRM. On the revenue cycle component side, like it is such a pain point in our current market that people practice management systems or revenue cycle management systems are a third-party tool. There's three reasons for that. I think it's creates a ton of reporting debt because like you basically have no feedback loop into your clinical documentation or into your intake admissions because all of your revenue is being basically adjudicated on a separate platform with basically no visibility. Second thing here is like, you can't do a ton of automations on revenue cycle if you don't control the clinical workflows.

18:19 Because how is a claim created? Documentation is finalized, services are delivered, claims are created. The third thing is basically that the more you have in your system of record flowing through, the more value compounding happens. So, if you use chart auditing and we help you basically make sure that all your notes are supporting the procedure codes that you're billing, but you're billing outside of our system, doesn't really matter. >> Yeah. >> Right? But if you're billing inside of our system and our system connects that hey, actually the chart audit failed, we should bill the proper procedure code, not the one you coded. Or we should upcode because you actually didn't reach that you had you didn't notice you had interactive complexity, but you did.

18:55 Then it's like, okay, we can actually see all of the flow in our system. >> Right. >> And we're not passing our training value to other people. So, I think that's kind of how I think about one is like they are very overlapping. I think the second thing here is I just don't think the current market structure of, especially in behavioral health or in these like ambulatory markets, are sustainable. The companies that we're basically going up against is hey, do I buy EASE Health or do I take my legacy EMR and buy 11 AI point solutions on top of it?

19:30 >> Right. >> The problem with that is like their legacy EMR has like probably a pretty bad data model. It's probably pretty hard to work with. They're probably not super friendly around their API. It becomes a game of like how good are they at like RPA or Chrome extensions or building kind of data pipelines out of the system. And every 11 every company of those 11, maybe they have a great product, but it's their only product. And they have to charge 80% gross margin to be, you know, a good business in the software world. They're 70% gross margin. So now you're a company and you're like cool, I'm going to buy this EMR and then I'm going to buy 11 point solutions that are probably more expensive than my EMR.

20:04 They're all trying to make 80% gross margin and my software spend is going to balloon. And sure there is like labor savings, but we can talk about that. Like I don't know if I fundamentally believe that is like enough of a driving force >> Yeah. >> to make that decision. So I think for us the second thing is just like okay, there is a consolidation of like hey, I either buy these 11 vendors or I buy EASE.

20:25 The last thing is like I just think where we are in the AI world today, like I want to be building the most operationally complex software company. I'm very nervous of Anthropic and OpenAI. They are clearly very good at shipping very good software in different domains. >> Yep. >> That feels scary. If I have a single piece of software where in a single model release, my software becomes fully commoditized, 20% commoditized, that feels really hard. >> Yeah.

20:52 >> So I think like the future of my business is that like we have a bookings revenue lag. I need implementation specialists. I need nurses on my team. I need billing specialists on my team because I need to configure my system. I need to basically build workflows around them. I need to basically customize their system to fit their organization. >> Right. >> And that 90-day bookings to or you know, Carta our lag, to me I'm like, that will never get commoditized.

21:15 >> Yeah. >> Or we are far away from that. So, that's kind of the three reasons why I think about like, hey, I know it's ambitious, but I also think it gives you the most defensive business where the ROIs kind of compound onto each other and you actually have the ability to build the most comprehensive products in the shortest period of time because you're just kind of focusing on the application layer of those products and not worrying about the commoditization of a single feature.

21:37 >> Right. Does Ease Do you want to be able to integrate with the EMRs in your spaces? >> No. >> No. >> So, you can't just use Ease for RCM or CRM? >> No. And my Yeah, my joke is essentially like, you have a person who comes to you, they have a really, really bad heart, maybe they're overweight, right? And your doctor says, "Oh, I'm going to give you a Whoop." >> Yeah. >> It's not going to work.

21:59 >> Yeah. >> I'm going to give you a Factor meal kit. >> Right. >> It's not going to work. >> Right. >> Right. And maybe they buy it cuz like it's an easy way out, but like after it, it's not going to help. >> Yeah. >> I'm like, no, no. We're going to do triple bypass surgery and then I'll sell you the Whoop. >> Yeah. >> And then I'll sell you the meal kit. And that is described the ambient documentation, the authorization tooling, the autonomous rev cycle, like we need to do heart surgery on you.

22:18 >> Right. So, in nearly 100% of your sales, you're replacing the EMR. >> paper. >> Yeah. >> But the paper is EMR. So, 100% of our sales are EMR. >> That's great. And when you think about I guess the other place I thought you were unconventional was in go-to-market, too. One of the hot takes you had was around basically verticals are becoming horizontal. >> Mhm. >> Say a little bit more about that. >> Yeah, I mean, maybe like diagonal is the better phrase. Horizontal is probably a little bit stretched, but I think there are just like what we're seeing right now is we're getting a ton of inbound from other markets.

22:53 Other kind of, you know, hey, you're in behavioral health, I'm in ABA, I'm in skilled nursing, I'm in hospice, I'm in home health. I have the same problem. What you're building is amazing. I tried to generate together AI solutions. It doesn't work. It's too expensive. And what we're basically seeing is like, cool, let's take a step back. What we did the last 8 months, we built really good intake and emissions tools. We built really good clinical documentation tools. We built really good compliance tools around those documentation tools.

23:17 We built amazing medication tools for med management, for prescriptions, for labs, for urine testing, for medication administration records, for inpatient care. And we built a really good revenue cycle claims submission tool that works for both institutional and professional claims. Those are all fairly agnostic tooling that basically like if we say we're going to go into another market, we are 30-40% of the way of just like, hey, through like four engineers, a like subject matter expert, and our EMR, they can go build a skilled nursing mode, an ABA mode in our EMR, and it won't affect any of the behavioral health customers because AI is amazing. We can permission, we can flag, we can change the user experience.

23:57 And we've done all the heavy lifting of like, hey, we've built the tools that like kind of everyone needs if they're doing inpatient and outpatient care. >> Yeah. >> I think that our full stack >> That vertical to diag- diagonal analogy is true in healthcare specifically, or does it extend to other domains? >> I think it's probably more specific to healthcare is my gut. It's hard to say cuz I haven't built anything obviously in other domains.

24:22 >> Yeah. >> But I do think the like >> Again, the the knowing how to implement >> the knowing how to hook into insurance, like these things just take a lot of time >> Yeah. >> to learn how to do it. And if you're good at them, and if you know how to build software in the age of AI, it's kind of like why are you building a super vertical company other than the fact that, hey, the proxy for me to build a really good other vertical company is to build one vertical company.

24:44 >> Right. >> And then kind of tilt it horizontally. >> Right. >> So, I think hard to say in other markets, to be honest, but I definitely see that in like my market in the HR and healthcare more broadly potentially less difficult. Healthcare has this like weird integration, interoperability problem that like we've kind of now seen and there's all this like state legislation. So, I think a lot of this stuff is yeah, like skilled nursing might look different, but also we've seen something that like is analogous to that right and we know how to handle it.

25:11 >> Health care companies and AI talk about ROI. What I found is you talk about it differently. You're not very much focused on replacing people or labor. >> No. >> Say more on like where the philosophy comes from. I'm sure you've been pitched in your old >> Yeah, yeah, and I believe I believe it. It's not that I don't believe it. Like I think yes, like software will replace labor some. 100%. >> Right. >> But also we need to realize that like we are in worlds of Silicon Valley and a lot of those companies are selling to CTOs or CISOs or people who are like in and around that market or knowledge workers who understand that to a deep degree.

25:47 >> Yep. >> That is not where we are in health care, at least it's not where we are in behavioral health. The other part of this is like I've done private equity before, I have acquired companies before, I've done change management in my prior life. Like it's really hard. Like it is really hard even if you're really good and even if you have a really good plan. I mean, you ask anyone from Alpine they're going to tell you the same thing.

26:06 >> Right. So, >> for me to come in as a software vendor, give you a pitch and tell you, "Hey, you can fire your 15 utilization review people." Like I am discounting the fact that that is actually like a really hard thing to do. They're not only giving up control, they're also potentially giving up people that they have relationships with or their workflows or people who are really excellent and they haven't thought about like reorging them. And to me I'm like, I get that.

26:29 And some people are like, "Well, like they can figure it out or we can help them with that." Sure. But that's going to take them 6 months. And I need them to feel and I'm doing heart surgery, so I need to you to know that you're going to be much healthier and better right after the surgery. Not in 6 months you'll be out of the hospital, right? So, to that degree we pitched software consolidation only into our initial sale.

26:52 An EMR system, a medication ma- administration record system, an AI scribe system, a revenue cycle system. And when I say when I'm counting them, these are different vendors. They have an analytics system, they have a chart auditing tool, they have a CRM tool. >> Too many tools. I mean, I could keep going. I mean, I think it's like I think it's I think it's nine or 10. >> Which is common, by the way, which >> Which is common, right? And they're a nice size organization, they run a bunch of locations, hundreds of millions of dollars in revenue.

27:21 And their EMR vendor contract is like $700,000. But they spend 2.5 million on software. I want to come in there and say, "If you're going to spend 1.5 on me, we're going to consolidate that 2.5 to 1.5. I'm giving you a million dollars back." For a healthcare business that's doing a lot of outpatient, that is actually like probably a really helpful to their EBITDA margins, which are industry-wide like 10 to 12%. So, "Hey, I'm going to give you back a million dollars. You're also going to get all these efficiencies on on my platform. But you don't have to believe me.

27:52 You're consolidating your vendors, which you don't even like any of them. We're going to give you a much better system. Your clinician NPS is going to go up. Your billers are going to be happier. Your admin team is going to be happier. Intake and admissions team is going to be happier. They're going to all have to do less work. You save a million dollars. Now you're on a platform for 6 months. Our QBRs are all about labor replacement. Our QBRs are, "Hey, here's all the efficiencies you're seeing.

28:13 Here's all the workflows that we see that are not efficient. And here's all the tools you should be buying to buy And now we've gained trust. You've saved a million dollars. You're happy on our platform. And now we are a partner to you. And as as we are a partner and we've shown you we can do other things, then there's a trust where I feel like I can start to sell, 'Hey, your P&L can improve by 3% if you buy this software.'

28:34 And that feels like the motion we want to go after. So, it's not that I don't believe it, I just think leading with it leads to really tough sales cycles that are just longer because they're like, "Oh, I need to figure out my org design before I buy the software." I don't want that friction at all. >> And how much shorter do you think your sales cycles are because of it? >> I think it probably three times faster.

28:50 >> Three times faster? >> Yeah. I mean our sales cycles are like our ACVs are 200k with like 65-day sales cycles. Like health care does not care. And we're doing EMRs. Like this is big. Like you need to do eight demos. But like we move fast and they're they get it. And listen, there are some that have taken seven months to close and some have taken 12 days to close. But on average, like I just think it's a lot faster of a sales cycle because of this.

29:17 >> you don't pitch a revenue ROI. There's no revenue growth or incremental revenue as part of it. >> We talk about it. I mean they see they see the platform and they're like, "Oh, wow." Like They see this They see this They see the platform and there's like three kind of things that we get usually, which is "Oh, wow, this will save us a bunch of time." That's great. And that's from clinicians, that's from billers, that's from admins. So obviously there is like a ROI attached to time saving. Now, how do I think about like clinician productivity ROI? Like I don't think I need to build that case studies on that. They just are like, "Oh, our people people will save time and they'll be happier." Great, less turnover, all of that stuff. But I don't need to build an ROI chart for that.

29:54 That's like pretty obvious. >> Right. >> The second thing is like billing. There's a lot of like lost revenue, not only from like down coding or upcoding, but like bundled billing. Like a lot of our customers actually like if they do four services in a given month and they put it in a bundle, they get paid 75% more than if they billed those individually. >> Hm. >> That is like a crazy deal. Like you can't miss a bundle. They're actually going to base their chart on like manually bundling all of this. Right? So they're like, "Oh, actually like you could bundle it and you won't miss a bundle." Now, how many bundles have you missed? I don't know the answer to that, but I promise you you're doing it and you're missing it.

30:27 >> Right. >> And I think they're like, "Okay, that's great." And then the third thing they're seeing is like, "Okay, if they start to buy the like chart auditing tools or they buy like the intake and admissions tools, then we start to talk a little bit around ROI, around clawback protections, around like the lack of like being nervous around compliance and audit roles. Like all of that to me matters, but I think the first two is essentially just like, "Hey, this system is going to make people happier. You're not going to miss out on revenue. You're going to make sure that everything is coded properly and bundled properly and billed timely and it's not going to take a bunch of manual work."

30:59 >> Yeah. >> And then the third thing is kind of what I mentioned before. >> And so for the average new clinic that comes on platform, are you basically trying to provide them with that million bucks of consolidation spend savings or is that atypical? >> Yeah, I suppose it's called 30% of software savings. I would say it's not 100% of our sales. I mean, obviously like people coming off paper it's a very different situation. Fun fact, paper's actually really expensive for storage. Medical paper storage is actually really expensive. It costs more than software.

31:26 >> Paper's super expensive. >> Paper's super expensive. We learned that the hard way. When we quoted someone they were like, "Oh my god, that's really cheap." And I was like, "Ooh." >> Yeah. >> But yeah, paper's expensive. So I think it's different based on the complexity of the customer, but I would say the larger enterprises it is like a software consolidation, get out of the software that you hate, and save money. It's kind of the pitch that's like really landed.

31:47 >> Yeah. >> Also just everyone in one system. So the the other part of this whole like Clearly I'm talking a bunch about fragmentation that exists in our market. There's 11 vendors. People are using different CRMs, EHRs, RCMs. It's like a jerry-rigged stack. >> Yeah. >> The other problem is like you have no visibility across your org if you have that. Different data models that don't talk to each other. So very often you have like sophisticated customers building data lakes and they're trying to like replicate the data and it's just a mess and they can't get real-time reporting on like "Hey, this intake came in. It took them this long to basically get into care.

32:17 They're in care for this long. They're This is the claims that were associated with them and this is what the payment is." >> Right. >> And essentially this is like how much revenue you generated on that one admission and how much time it took to get that admission through the door. >> Mhm. >> That data's like impossible for them to get >> Yeah. >> in a fragmented environment. So all of this comes together to the CEO who's like everyone loves this like what's in it for me? And I'm like pure like operating metrics across every single user because everyone's logged into the same system and we have attribution on every single click in our system and you can look at all of that in real time.

32:44 >> That's great. I want to switch gears a bit to company building and I think what's interesting is you chose to build a company in New York. You know, I'm seeing so obviously I built our firm here. My wife built a venture back company here in New York as well and I'm very bullish on New York, but I'm curious like the tension you may have felt and why you chose to build it in New York. >> Yeah, I mean I selfishly love New York City. I think my co-founder also does. I think we talked about SF briefly.

33:14 I think the thing we we we we thought about New York City was like kind of three things that were like okay, this is the company this is why we want to build a company here. I think the first thing is just very selfishly like me and my co-founder wanted to be here. And like we wanted to live where we wanted to live and wanted to build a company where we wanted to build a company and we thought that that would just basically like a fuse through culture of the company of like we're happy we're in the city we want to be building and we're like feeling really really energized.

33:37 I think I've often seen founders move to SF because they feel like they have to and then be like pretty unhappy that they're in SF, but they're building their company. I fundamentally don't believe in that. I'm not someone who's like running offsites every single month to build culture. I'm like I want people to just be really happy here and to be a place where people work really hard, but they come to work and they're like living the life they want to live in and around work and at work. So I think like the number one for that proxy for that is like are your co-founders doing that?

34:02 Is that like being infused through culture? I think that was kind of one thing that we were like 100% we need to do. Yeah. Second thing is just like I've been in New York my entire career. Even at Andreessen I was like the New York guy. My co-founder was in New York last 5 years. Like we did have differentiated kind of networks of talent in New York. I think New York talent there are tons of amazing people in New York. I think the like top 1% in New York rival the top 1% in San Francisco. I will stand by that.

34:29 And we are both you know very confident founders that we're like okay, if we get the top 1% in New York, like we're going to be great." And I think we've done that. Like I think the team that we've assembled is amazing from, you know, we have our head of revenue cycle came from Andreessen, who worked there 4 years before me. We have our head of sales was like leading all XAI API sales. We have staff engineers, senior staff engineers from Addepar, from Amazon. We have three principal engineers from Palo Alto Networks. We have folks from Scale, folks from Netflix.

34:56 Like we we've really like kind of recruited really, really talented people. I do think we have to do maybe a little bit more work to find that 1%. So, I think our like yield from like interview to offer is probably a lot lower than it would be in San Francisco. >> Yeah. >> And then I think the third thing is like you have a lot of folks who are just tangentially connected to healthcare in New York, I think a bit more than San Francisco.

35:17 >> It's just a bit more prevalent here. A lot of spouses, their you know, their spouses are very often like their spouses are doctors. My wife's a PA. My co-founder's wife is a doctor. we have you know, multiple partners at the organization who have like are in medical school or you know, are dentists or maybe like it just it kind of permeates through and I think there has to be like what we're doing is so hard and you need to have a reverence for the providers or even for the admin who is like writing emails for intake. And if you don't have that reverence, it's a very hard to be an engineer here. So, I think that like that came pretty naturally with a lot of folks in New York. and you know, on top of that, like the city is just you know, you got to work really hard to make it. So, I think it's kind of like, you know, there is a level of intensity that come with people who like chose to live in New York. So, >> Going deeper on the talent side, how did you outside of your co-founder, which you should give context on?

36:08 >> Yeah, please. >> How did you test your first three to five hires? Like what was there a work trial philosophy? How did you structure and run them? Like what specifically did you do? >> Yeah, my co-founder's amazing. I like no way the company would be where it is without him. >> And he's technical. >> He's Raymond, yeah, his name is Ray. He's our CTO. He was I think engineer number like 15 at Okta. He was engineer number one at Expensify. And then he led all East Coast engineering teams at Palo Alto Networks.

36:34 He was a cyber guy for a long time. We were kind of mutual friends for a while. And then kind of every time we met, it was like not a VC meeting someone who was like good to back. It was just us talking about ideas. The last time I met him before we decided to start something, we were actually thinking about very similar ideas. He was trying to build an operating system in home health, and I was thinking about doing a payroll. So, it like felt like it was really going to work and we were kind of really aligned. And then on the first employees, like we were very lucky that we both kind of hired people that worked with us previously. You know, I think the you know, first three engineers worked with Ray.

37:08 Our first kind of RCM person worked with me. Our first sales person I knew pretty well over a few years. So, I think the first three to five hires were just like, let's bring in people that we thought were the best people we've ever worked with. And Ray and I kind of knew going in before we raised, we kind of like circled those people. And I think I when I talk to seed founders, I'm like, before you get raise your seed, like line up your three hires that you're going to make right away.

37:32 Because that is the best proxy for an investor getting you capital so you can go materialize that into labor. And we took that pretty seriously. So, I mean, the the day we basically raised around, we had five people join us even before the cash hit the account. And I think that was kind of really exciting. Going forward, I think we on the like technical side have like a pretty rigorous technical screen. And then we usually bring folks into the office just for kind of like lunch vibes connection.

37:56 And yes, that has done a pretty good job here in terms of like we've had no attrition on the team, which is pretty amazing in the last 10 months, and it's been an intense 10 months. >> How many people are you today? >> About 48, I think. And we have another five starting in two weeks. So, that number will continuously going up. We've also just been a like, hey, we run lean until we really can as a philosophy. And I think 45 sounds like a lot, but we are such an operationally intensive business that like 22 of those are engineers. The rest are in customer success, implementation, revenue cycle services, go to market.

38:27 So, it's been great. I think we are like we've tried the work trial. I'm like middling on if it works or not. I think it's really really hard set up, but I think we're definitely like reference heavy. We definitely run like a pretty robust interview process. It's very fast. You know, it's like three very intense interviews, but we are also just like very foregoing on our information. Like I just I don't believe you should be able to recruit really good talent because you have asymmetric information across the table from someone else and you can talk ambiguously about all your success. Like very often I'll like open HubSpot and be like, "Oh, you want to look at our pipeline? Like why don't you just look at our pipeline?"

39:02 >> Yeah. >> Like I'm not going to like make an Excel sheet for you. I had an engineer in our office yesterday we're recruiting and he was like, "Oh, I want to see like your bookings." And I was like, "Cool. Just like give me a second." I popped HubSpot on the screen and like "This is what's happening." >> That's great. >> "What's the biggest fear of your company?" I'm like, "Oh, here. I have a fear doc. Let's go read it together."

39:17 So, I think there's like a level of just like we're startup. Things are going great, but also like we're a startup, right? It's like we're flying at the edge of the cliff always. So, I think that's kind of how we think about philosophy of recruiting those people. I think we we want people who are just also like and I say that as this to everyone which is just like "Are you super passionate about this?" Because the overall hiring narrative of people who just work harder and are happier here are just like, "This is the best job I could have in the world."

39:43 >> Yeah. >> And if you feel like, "Oh, this is like a cool engineering challenge or this is a cool go-to-market challenge. It's a new market. It's sleepy." Like it's just not enough. >> Right. >> So, we we have a joke internally that we call this like we call like Jewish conversion >> Yeah. >> reviewing which is I don't know if you know about Jewish conversion, but they push you away. >> It's hard. >> They push you away.

39:59 >> Yeah. >> So, we often are like "Hey, you shouldn't want to work here because of these three reasons." And usually those people who come back are like they were probably the right ones. So, we do very little selling initially and then obviously when we like you we've we've done the conversion we push you away then we're happy to welcome you into the you know, East Health tribe, but it's a little bit of that. Yeah, we do that also on the sales side also. We do a little bit of like pushing people away, making people want it more, just as like a philosophy of the company.

40:22 >> What's been the hardest role to recruit for? >> I think the like hyper niche roles in healthcare have been hard because I think we have to just make the decision of do we hire a really smart general athlete? Do we hire someone who has done this specific role before, but maybe at a company that not maybe at a company that has definitely worked at snail's pace compared to us? >> Yeah. And that's not the person's fault, that's just the market that it's in.

40:45 >> Or do we pick like a jet a healthcare adjacent person who knows about healthcare, maybe they were an investor, maybe they were an operator, maybe they were a consultant, and they can kind of jump in? >> Right. And I think we've like that's like >> who leads our RCM services team? Who does like revenue cycle management implementation? Who does EHR implementations? Do we hire an EHR implementation from the private equity companies that we are competing with? Or do we hire someone who's coming out of McKinsey for 2 years and is just like willing to grind and wants to get in front of customers?

41:10 >> Right. >> They're hard because we've we are still not sure which path is right and we're kind of playing >> all those cards >> right now. So, I think we're still kind of figuring it out. Those hires, but those have been definitely probably the most challenging. >> Yeah. What's in the fear doc? I've never heard that articulated that way. >> There's a lot. There's a lot more in the exciting doc, which is a another way it's probably not actually document, but it's why I don't get I get up and and work hard every morning.

41:36 I think for me it's, you know, we are doing probably like I don't know if there again there's another as operationally intensive business in healthcare as us. I don't know if anyone has as ambitious of a product roadmap as us. Like we are doing a ton. I think we're also you know, Ray and I are hyper confident that we can kind of do a lot more than everyone says and you know, ignore the scripture sometimes and I think that's like worked for us so far.

42:06 But at the same time it's like, you know, why isn't patient psych on paper? Right? No one has solved it. Why has no one solved it? And are we going to solve that and solve, you know, addiction treatment care at the same time? I think yes, but there is like a level of, you know, ambition that comes with like, can you manage four concurrent road maps? Can you manage 75 ongoing implementations? Yeah. Can you manage recruiting an entire team, scaling teams, and doing all of that in parallel? I think yes, but I also think that like, you have to as a person understand the way in which you're taking those things on. And if I didn't, I don't think I would give it the proper support and focus.

42:43 So, I think that's like usually the top of the fear doc, which is just like, is our ambi- ambitious meter like even high for me? I think we've managed it really, really well, but I think we need to consistently do that as more customers go live, as more, you know, as our product services increases. The other thing here is like, the velocity of the company is insane. Like I I'm so proud of the people that work at our company and the speed at which like I'm going to pick up my phone after this podcast and I'm going to have 850 slacks from 40 different people on like real things that are probably major updates.

43:17 So, like how do you communicate all of that? And not just like product and engineering changes, but also sales changes, and implementation changes, and hey, we shipped a bunch of new features on this product. Now, implementation needs to know those features, they need to train on those features, and they need to train the customers on those features. I think that is the other part of the fear doc is like, I don't know if this is like to every founder who's like working at Mach speed in the AI world, it's like, how do you do cross communication in a really good way? And it's not just like a company at scale pinging everyone in the company about a release. Like we tried that, it doesn't work, right? So, there needs to be an understanding here. And you also have people who just have different levels of capacity of understanding technical products, which is totally fine. We've structured the org that way, but if our implementation person doesn't understand how our rules-based calendar now works, then they can't actually implement it on the customer, and the customer is getting none of the value that they saw during the demo process, and they're going to be an unhappy customer. So, I think that's like those are the two things I think are And and they're overlapping in a way, but probably those are like on my sphere dock.

44:08 >> When you think about one of the questions I love to ask when I meet really talented people is understanding really who they think the most talented people are that they've worked with. And so, if you were to name the most talented person you've ever worked with who's not at Eaze today, who comes to mind? >> Yeah, I mean, the funny part is like the five people that come to mind are all at Eaze today, which is like pretty amazing.

44:30 >> Yeah. >> If I'm thinking of not at Eaze, I mean, I'd probably say the Function founder, Jonathan, showed me a lot and gave me a ton of confidence that I can be a founder and not because I'm like, "Oh, if he can do it, I can do it." It's definitely not. But, the level of kind of resilience and the level of like creative deal making, decisions, like he is just not like, "Oh, we send more cold emails out, we get some B2B business." He is like locking up influencers, building these really interesting equity deals, just thinking really creatively how to build modes around his business, renegotiating rates, building better margin profile of his business. I think like he is probably the most talented person I have worked around, and he's hyper-scaled a business to a hundreds of hundreds of million dollars run rate revenue in like 3 years. So, he's someone I think about, but like candidly, the like four or five people we recruited at Eaze were the people that I probably would have answered that question to, which is amazing, and it wasn't easy to get them because everyone else knew that they were really good. But, yeah, that's kind of what I think about.

45:29 >> And where do they come from? Palo Alto Networks? >> The early folks were like from Andreessen from XGI, from Palo Alto, from Atiphar, >> Yeah. >> Scale, like Amazon, like they've been just incredible. Like, I think the level of like, "Hey, I'm just going to do the thing, and the thing feels really large and scary, and I don't know anything about the thing, but I'm also just going to become a product engineer if I wasn't before. If I was, I'm going to stress test myself to a point that I was never comfortable to, or I'm going to context switch across the three different system of records to build products.

46:04 >> Yeah. And that is like really really kind of amazing. >> Yeah. Something that I I love your background because not only is it relevant but to me but you just have seen so much game film. >> Yeah. Like when you think about what you do to manage investors and how you work with your investors, like what do you do differently than your typical founder who wasn't in your seat? >> Yeah. I I talked to a lot of founders about this. Not only just raising but like also managing or you know, managing preemptive interest to make sure that like people are around the table when your pan is hot, right? So I think there's like levels to this. I think there's like probably an entire podcast on like how to pitch narrative to VCs which I won't kind of belabor here. I think the management of investors, I think often people are very nervous to share wrong information.

46:50 I don't feel that way. Yeah, I'm just like, hey. This is my business. I It's also like it's a product of the investors I feel comfortable with and who I've brought on my cap table but >> Besides Andreessen who who >> Yeah, Sunflower, Box, Abstract, Maven, F3, then a bunch of kind of like angels. but they all know what's going on in our business pretty and like it's not because I write investor newsletters. They call me, I call them with problems.

47:14 I'm very honest. It's not just like, oh here like we're about to grow 15x this year. Like that's great but also like growing 15x is really really hard. And like here are the 17 things that keep me up at night. Here are the roles I need to hire. Hey, like here are the things that I'm struggling with as a founder. And I think like being more open with your investors will just go a longer way. >> So you make the time to call all seven?

47:35 >> I Yeah, I mean it's like texting, calling. But it's like three-minute phone calls. >> Yeah. >> Like I think it's like, hey I'm going to touch base. Then it's usually on Saturday or Sunday and I'm just going to be like, here's what's going on. Here's the three things I need from you. Here are some three things that like are about our business that like happened this week. And I don't think I do it at a specific cadence. I don't think I like set reminders to myself but it just feels natural where like if I get a question from an investor and it feels distant to where we are today as a company, I will make note of it in my head and say I'm going to go call them and like fill them in.

48:01 >> Yeah. >> the other thing is like we do share board materials with all of our investors who are not even on the board. Obviously, we redact information that that can't be seen, but I'm like cool as a presentation about our company, like let everyone see it. we we even show it to our own employees. So, this level of transparency I think is really important and then on the preemptive intro side, I think it's it's very similar, which is just like tell people what's going on. Like it's not a secret. Like it shouldn't be a secret. Like I don't know withholding information I think is actually a game that doesn't work with VCs or at least I haven't felt that way and when I was an investor, I was like, cool, if I don't have this information, I can't act on this information. Now, I'm not saying that you should send financial models to Vinod Khosla when you want to like raise a round in 1 minute. There's like degrees to this thing, but there is also like a hey, like tell them where you are, tell them what's moving along, tell them what's gone live. You know, talk about the things that are great about the business and you know, I think they'll feel more connected to you. They'll feel like they understand the business a bit more. They feel like they've got a head start. So, I think that that is kind of like a degree of openness that maybe I have as like a former investor trusting that they like want my best interest. Now, if you have an investor on your board that you don't feel that's the way, then like that's a bigger problem. And you should just not have those type of investors on your board going forward.

49:12 >> Yeah, fair enough. >> Anything you could do to change it now, I would. >> Yeah. We didn't cover the pitch to talent, but you know, I think what I've learned about E's it's a really strong one. Could you elaborate on it? >> Yeah, I mean I think it's like an amalgamation of everything I said in this podcast, which is just like if you want to work on incredibly ambitious product roadmap at an incredibly operational complex company. If you want to work on AI tooling across every spectrum of the life cycle of a patient.

49:40 Because you have companies who are just doing prior auth, right? We have a prior auth feature in our system, but there's 10,000 features in our system. Right. So, if you kind of want to work across that on an extremely ambitious roadmap on a team that is moving really fast and working on like hard and meaningful problems. Like these are amazing organizations. I mean like we just went live with like an adolescent stabilization unit in New Mexico. Like these that's a really really tough place, but it's super needed and they're helping people at basically their lowest point and stabilizing them so that they can actually go get care. And they can go get go into group therapy and they could actually like attend and be mindful and get well. And I think like those organizations are don't have technology that support them to go do those things and they're worried about billing and not having enough money and I think if you want if all those there's three things seem super interesting to you and you want to work on again really hard technical problems because this is a product that gets used 365 days a year 24 hours a day, you know, I don't know if there's many other companies who can say those things.

50:39 >> That's great. Let's talk growth. It feels like Outside In you guys have been quite on a tear. Like tell me a little bit about how the business is growing. >> Yeah, I mean I think the when I was starting this company I was like okay, system of records EHRs they grow 20 30%. You look at like the AI native ERP market maybe they're growing three four five times and investors are salivating because selling system of records are really really hard.

51:02 We have basically been in market with our product since end of February and we're now kind of closing on July. We will probably grow seven or eight X in that period and probably close to 13 or 14 X by by year end. >> Wow. >> So bookings is is really up and then we are going live with customers basically every two weeks and they're just massive enterprises in our pipeline now. We're now seeing deal sizes 750k plus annually three year three year terms, ability to scale those deals tremendously as we release more products. So I think it's really exciting. I think it's especially exciting because nobody knows who we are, right? We're just like weird company that's got like some nice typography and a green font compared to maybe some of the older logos and then we're just like a bunch of young people trying to sell them software, and that matters. And there's a lot of like, who are you? I don't have two reviews about you. I don't You only have three case studies.

51:54 But we've been able to mitigate a ton of that by just like showing product, showing up, extremely professionally, running an amazing sales playbook, running an amazing like sales and engineering combined playbook of like, "Hey, these are the three features you wanted a week ago. They're in our system. They're in production. Here are the forms you struggled with. Here are the reports you struggled with." And we'll build them all out. "By the way, this is a proxy of like how your implementation will go, which is like we're going to make everything work for you." So, I think that's like that was like my fear was we weren't going to grow fast enough.

52:18 Now we are growing at massive pace or at a kind of really, really pace. And it's accelerating. Like July will be our best month. I believe August will be our best month again. >> Wow. >> So, it's not just like, "Oh, everything's compounding into July." It's, you know, it will continue to grow. And you know, I I think when you think about system of record companies and being able to grow that pace when no one knows who you are, I'm also just like, next year's going to be crazy. Like if we have case studies from all these big customers who are now paying us are are happy. And those case studies will be about clinician NPS and about efficiency, but they'll also be about EBITDA margin improvement. We're going to be talking about software consolidation. I feel like every middle market private equity platform is going to try to get on this. I think we're going to have a bunch of customers who are like, "Oh, I know those brands.

52:58 Those are the best brands, and they're on this platform." And it's just going to be all of the friction and inertia people have felt to switch on to a new product will go away. >> Yeah. >> And I think next year will just be an even crazier growth year, which is kind of really exciting. >> And so, today you're at dozens of customers approaching >> hundreds. >> Hundreds. >> customers, yeah. >> And when you think about like absolute penetration and where you can get to, is that in the thousands, tens of thousands?

53:21 >> in the like mid single digit thousands. >> That's great. >> Yeah. >> I want to ask two questions. one of which is, given the premise of this show is on the uncovered, like are there problems that you see in healthcare that are still uncovered or more broadly from your time investing? >> Yeah, I mean, I think the like uncovered, I I mentioned a little bit of it in this podcast, but I think when we started this company, we were not talking about inpatient psychiatry.

53:45 We never really thought about that as like a like level of care we would push into. I think as we go deeper and deeper, we're starting to realize that like it's a growth market, it's a need. The rates are higher. so people are moving and putting money into it. And you have this like supply-demand mismatch where demand is just outpacing supply, and which is why the rates are higher, which is why there's like grants and licenses are getting kind of gifted.

54:11 And I think for us it's it's a super interesting undercover market where it's either paper, Epic or Cerner. And Epic Cerner is way too expensive because these are free-standing acute psych hospitals. They have 40, 50 beds. Maybe they're making 20, 30 million dollars a year. They can't pay 2 million dollars for Epic. Right? But they can pay 500,000 dollars for software, but Epic starts at, you know, 2 million dollars. paper's expensive, and now there's a bunch of like reporting requirements and a push for everyone to get on electronic health records. So there's really good tailwinds there. and then lastly, there is like the EMRs who kind of do it, which is like, "Hey, we do these 15 markets, and inpatient psych is one of them." And they're still prohibitively expensive, and they're pretty old. So I think like to me, I'm like, "This feels like a really undercover problem."

54:51 And the nice part of this problem is, "Hey, if you can do medication inventory for such a high level of care, and you go all the way to the lower acuity ladder to like Spravato or TMS outpatient clinics, and you have all of this robustness around medication management, downstream it actually makes our product way better." Yeah. And it doesn't make it actually ill-fitting for that. It actually makes it, "Oh, wow, you have this like super robust inventory management tool. Hey, we have esketamine, and we have Spravato in our clinic. We need that robust tool. But hey, SimplePractice doesn't have it.

55:19 Other outpatient groups don't have it." So we're like, "Oh, well, we're going to do that." So I think the undercover problem is inpatient psychiatry, but almost the like higher acuity work does drip down if you're very thoughtful about the products to the lower acuity. Yeah. Because all of the residential addiction sites want to operate like a hospital. >> Right. >> Because they operate like a hospital, their their patients are going to get better care, their compliance bar is higher, and they want to basically operate in a way that like they're operating at a degree higher than they're actually licensed to operate at.

55:52 >> Right. >> And I think that just kind of trickles down. So, I think the undercover problem is like this kind of hierarchy way trickle down in patient site world is probably where I think about. >> Really well said. Yeah. I guess one final question I have is if you were able to put a message on a billboard for a billion people to see, what would it say? >> Everyone in my company will laugh, but just do the thing.

56:10 Like that's it. I mean, like I say it all the time, which is just like I am not a consultant. I am not someone who spends a lot of things. often times, if you just kind of do it and if it's a little bit of the wrong way and it gets done, it's okay. >> Yeah. >> So, there's like very often times it's like just do the thing or go founder mode. Like we talk about that a lot as a company.

56:32 Which is just like do the thing, understand what you're doing the thing, and then iterate on the thing once you have information iterate. >> Right. >> So, I think it's just for people and like I get a lot of people go, "Oh, how do you start a company? How do you make sure your idea is good?" Like often times I give pretty frustrating feedback. I'm just like, "Just do it." >> Yeah. >> Just kind of do it. Like I couldn't tell you if this EHR company is a good idea 9 months ago. I mean, I pitched it to investors saying it was a great idea, but obviously my heart I'm like, "There's 10% chance this is like a worse idea than a spork." But, it wasn't and I only found that out by like 9 10 months of grueling work and being like, "Oh, this is actually like a good idea." And if I didn't do the thing and I spun on research for a while, then I would have never known and someone else probably would have taken the idea.

57:14 >> Well, that's a great place to end. Thanks so much for joining me, Zach. >> Thank you for having me. >> Yeah, it's great having you. That's it for this one. Thanks to today's guest and to the team at the Ultramarine Restaurant Group for the food. If you're building something nobody's writing about yet, or you know someone who is, get in touch. Subscribe on YouTube, follow Follow show on Spotify and Apple Podcast, and we're on Instagram, TikTok, LinkedIn, and X. We'll see you at the next one.