Interview with Kabir Shahani, CEO of Appature

Appature is a software company based in Seattle. We’re part of a group of companies called the Nucleus Group, where we all focus on health care marketing. We have just completed version one of a CRM tool that is designed to help health care companies, medical device, pharmaceutical companies understand what’s going on in their organizations in regards to their customer segments and how they can drive more revenue.

We actually started thinking about this a while back. My father is in the health care industry and he and I have been talking a lot about technology, and how it lags behind a good five to seven years behind many other industries.

I decided upon an idea for starting Appature and at the same time I was talking to Chris Hahn, my co-founder about the problems in this space, and how he felt health care was also lagging in this. Definitely, the two ideas merged very well.

We started out by interviewing a lot of marketing executives at medical device and health care companies, which actually ended up being a really great place for us, because not only were we gathering information about a product that we were going to build, but we were also getting potential leads and prospects.

We received a lot of valuable feedback from people that are current executives at multi-million dollar device and pharma companies, and also from people at small and medium sized biomedical startups.

Getting a large range of perspectives really helped us hone in on what we thought was the right set of features and services that were key to that market.

This segment of medical devices, pharmaceuticals, is so specific, that their needs are very unique. There are a couple of other companies that also try to focus there, but most of the companies have these broad solutions. They’re all components of a larger ERP.

We’ve tried to pull CRM out of the ERP system, and really build on and sell the marketing functionality. We have made the system extremely easy to use, which is rare in this field. The complex full service solutions are inherently complex and wieldy.

Our experience in building and using consumer products helps us in thinking about how we can create a tool that not only has a lot of robust functionality and value, but is also very intuitive for the end user.

We’re seeing a good amount of adoption because it’s so easy and fun to use.

But even on the deployment side, with the IT groups, we make it very easy for an internal IT group; requiring very minimal integration on their side. We’re a completely hosted solution, so there’s not a lot of work for them to do.

So, not only does it make everybody’s life a little bit easier through the deployment; they’ll also keep the costs low.

We have developed a conceptual model, where we build data centers for each customer. Data from one customer is completely walled off from others. They are assured that all of their data is protected the same way that it would be protected if it was sitting inside of their own firewall.

We are working with Fortune 50 companies, who have complex data needs and detailed security and confidentiality requirements. We’re meeting all those criteria.

I believe strongly in our focus. When Chris and I started the company, we really felt that having focus is one thing that will move us forward much faster than if we had a broader approach. So, we look at a number of different industries, and we said, “What are the industries that have the largest gaps?” And medical device and pharmaceuticals were definitely at the top of the list, as far as gaps in the existing CRM solution.

Some of the cons, of course, are you might come across and meet somebody who is in financial services, or meet somebody in manufacturing. They have a need, and you have to say, “OK, I’m not going to take that deal right now.” It’s a tough call to make when that happens, and it has happened already to us a few times.

But, overall, I think it’s the right thing because by focusing on that industry, not only are we able to understand our customer base better, but the biggest thing is we can understand our customer’s customers better.

That’s what we’re in the business of. We’re in the business of helping our customers gain more customers, and increase their revenue, and have better customer satisfaction in various customer bases. If we didn’t understand their market, we couldn’t do that very well.

At this time, we are not. We’re talking to our clients every single day and we are a very high touch organization. This allows us to understand the needs that each of our customers face above and beyond CRM.

Every week, we receive a request for a new this or that. We for see this area keeping us busy well into the near future.

It could be in the several hundred million, if not a billion dollar market. We don’t really think about ourselves that way.

It’s really not how we think about our business. We think about our business as building something piece by piece. We want to build something that gives our customer the maximum value that we can.

There’s eight thousand medical device companies in the US, and if you go globally, it’s many more. As I was mentioning before, we’re not only focusing medical device but also pharmaceutical and biotech, that you certainly get into those other healthcare oriented vehicles, the number there are quite large.

The biggest thing is look for the opportunity. We just don’t always realize where they are or when they come along. The biggest thing is to spot the opportunity when it comes along and take advantage of it.

At a very early point, we began working with potential customers, sharing with them our goals and soliciting their feedback and suggestions. Of course, we were very open about being a new company and we made no secrets about it.

We weren’t afraid to show them screenshots that we hadn’t built yet.

Be honest about where you are, be honest with what you have, and leverage any opportunities that are there. Of course, we have been able to keep the team small and nimble. We brought on a couple of other very qualified, very intelligent people that I think incredibly highly of. I couldn’t imagine working inside this company without the team that we have. So I think that’s an also incredibly important thing to have.

I was not. I was early on in a team, but I was not the co-founder.

I helped raise a million and half dollars in financing for the company and transitioned and worked with the public relations, so I think, you know, you Google my name, you’ll get mostly hits about BlueDot.

I had no experience prior to BlueDot raising any money. I was program manager at Avanade, which was a Microsoft and Accenture joint venture. There was some minor business development involved in that role, in terms of up selling the customer, keeping the customer happy, trying to uncover other opportunities. But other than that, very little business experience, and no financing experience whatsoever.

I would say learning what to pitch, and that’s where the co-founders were very instrumental, in helping identify “this is what the investors are going to need to hear”. I spent the first three weeks when I joined the company doing nothing but writing the investor pitch. I don’t think there was anything more important than writing that investor pitch. With their help, of course, guiding me on what they felt the investors are going to want to hear.

That helps a lot, and that was the biggest challenge for me when I first started out. After that, I think we’re really fortunate to have the investors that we did. They were all incredibly talented, bright people that really believed in what we were doing, and really believed in the team. As far as advice going forward for people that are looking for financing, I would say really think through the details.

The details are very important. In my experience, the investor really needs to see that there’s a strong team put together, that the idea has some merit, but also that you’ve thought through the details. You could have a very fundamental basic idea, but if you’ve thought through a lot of the details, and you’ve got some innovation within those, maybe it’s in how you’re going to market it, or how you’re going to monetize it.

Investors want to at least see that the person involved, or the management team, or the people who are running the company understand that you have to at least think through a certain level of details. You could always go back and change it, and I think they expect some level of that.

There’s a lot to say about this. The first thing is I think BlueDot was the anomaly for me. When I started my career pretty early on, I was working for an incredibly talented individual who had started an IT reseller business.

During that experience I became very passionate about CRM and order management systems. I saw my career in the enterprise space, and Avanade is the same thing. We were implementing Microsoft products. We did some development on the platform, so going to BlueDot was definitely the anomaly in the trajectory.

However, it was at BlueDot that I first met Chris, a very senior, talented engineer who said to me, “Look, now we’ve done this thing where we’ve built the software, and we had this revenue model, we were hoping to make some money. I want to get to the point where I’m building software, and people are paying me for it”.

That was when we had left BlueDot. We were starting, and he said, “Look, this next thing that we’re going to do, I want it to be billing out and getting paid.” Yeah, I think that makes a lot of sense. I wasn’t necessarily thinking that myself at the time, but I was following his vision, as far as that goes. That was the big step right there. The other one is we really stepped back and looked a lot of the enterprise products that were out there. We spent a year and a half in the consumer space. The gaps just became so much more evident as we looked at what was going on.

We said, why is it that all these people; the marketing manager, or the sales rep, or the person who was working at ABC medical device company, and they are using some system while they’re at work. They’re using potentially a clunky, complicated, 1500 menu CRM system.

And then they go home, and they log into Gmail. Or they go home and they search on Yahoo!, or they read news on MSN, which are much more fun experiences, very easy to use, they feel really good. We said, why can’t we make using enterprise software like that? I think one of the challenges is potentially there’s this notion that enterprise software has to be big box, clunky, and tons and tons of menus.

I think we’re trying to break that model. Maybe it will work, and maybe it won’t, but already we’re seeing the reaction from people that we’re sharing the products with. They’re like, “Wow, I really feel good about this product. I feel good about the interface”. That in itself is not the whole value of the system, but I think it’s a really important aspect.

BlueDot was all about the exchange of information as related to URLs and web links amongst social communities, and I feel like Appature is all about the exchange of information as it relates to customers within device and pharmaceutical organizations. It’s a different type of information…

If you think about the distributed social network apps, people have their own lives, they’re doing their own thing, they’re very busy, and sharing information is difficult; it’s like a 50,000 foot, one sentence problem. Well, it’s similar in the CRM space for this industry, because you’ve got two issues going on.

The first issue you have is that salespeople are always out working with customers, which is what they should be doing. They’re not necessarily able to communicate and be in touch with each other all the time. The problem that we’re solving right now is they’re all just sitting in one silo. The marketing department is in this other silo.

One of the biggest challenges right now that I think any person in the CRM field will tell is you’ve got two separate silos of information that don’t really talk to each other very well. Our goal is to have both silos be connected to allow for information sharing between Marketing and Sales.

The Nucleus Group is a fairly young group, they’re about two years old, that was started when a team of people that were working at another large agency decided to all leave that agency and start their own. And my father started and lead that team, and they have very quickly built a strong book of business. Again, like I mentioned, they do advertising, marketing communications, all focused on the health care space. And they’ve just grown tremendously.

It’s just a very strong team of extremely talented people that all work very well together, that have incredibly bright ideas.

And so where we come in is as sort of the technology arm of that group.

There are a few components to it. There’s a little bit of equity exchange, but there’s mostly just support. And what happens is they’ve helped support us in the early stages, not necessarily financially, but more so in terms of giving us the space to work, as well as key contacts.

Those contact have helped us jump start the business. We’ve had to help them by giving them a broader range of services, by helping them enhance some of the technical things that they’ve been working on as things move forward.

Right now, we’re not. I feel really fortunate to be in this position, and I know Chris does as well. We have had a few people offer, if we were looking for investment, to come in early as angel investors, and I’m very grateful to those people. Right now, we’re trying to bootstrap as best as we can. There’s definitely been times where we’d say, “Wow, if we some money, it would so great, we go do this, this, this, and this. If we had half a million, we could do this. If we had a million, we could do this”.

But for right now, I think it’s working out well. We’re able to focus really hard on what we’re doing. One key issues associated with raising capital is how much time it takes and I feel like my time is so much better served focusing on providing more value to our customers, focusing on building the business through revenue and more customers.

That’s really where it’s going to be the tough decision. Right now we’re getting to that point where we’re trying to take things to the next level. We’re trying to grow our revenues, and get into growth mode. We’re at a point right now where we’re looking to scale. We know we can add more customers to the process and continue to serve our current customer base.

Well, to Chris’s credit, I would say he is the one that found me. I don’t think that I found him as much. He really was the person that was one of the people that was very inspiring to me in going out on my own. He basically was ready to do it. He said, “I’m going to do it, and I want to do it with you”. He said, “I don’t know what I’m going to do yet, I’m going to start something, but I want to start something with you”.

That, to me, said a lot. He had a lot of faith in my skills, and I feel really fortunate that he did. I’ll never forget that conversation. We were sitting at a Thai restaurant in the International district, and he said, “Look, I can build anything, and I think you can sell anything, so let’s do it.”

Yeah, we didn’t have an idea. I didn’t necessarily agree that I could sell anything, but I felt that he could build anything, so I said “Let’s do it”.

Yes, exactly. I think that was the right way to do it. I think for both of us, he’s got a very big business sense. He doesn’t get enough credit for it. He really does have a strong business sense. I think what I like is that obviously his core competency is in technology and development, and he’s extremely strong in that.

But he also thinks a lot about non-technology. He thinks about scaling the business. He thinks about keeping customers happy. He thinks about corporate culture. He thinks about things that really matter, and are more than just the technology. He also tells me that I don’t give myself enough credit for being as technical as I am.

I think he felt like not only did I have a very strong business sense about building a company and acquiring customers and building a team, but I also understood the technology, and I could speak the technology in a way that even IT folks, I can converse with them.

There are a few things. The first one is that we really believe in bringing the best people that we can find for the role that we’re looking for.

We also need to be able to work together. You could have the brightest person in the world, you could have Albert Einstein himself sitting on your dev team or on your team in the conference room, and if you can’t work with them it’s worthless.

Chris and I talk about this a lot. I would be happy doing this for the indefinite future. We both have just been having a really good time. We’re definitely enjoying the ride. There are a lot of challenges every day a lot of daily excitement. So I think we’re really just having fun working on what we’re doing. It’s hard work, it is very little sleep, it’s seven days a week.