Appature co-founder Kabir Shahani shares his insights into starting a profitable enterprise CRM company that targets the healthcare industry.
Interview conducted by Nathan C. Kaiser on Monday, August 6, 2007 in Seattle, WA.
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.
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.
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.
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 are working with Fortune 50 companies, who have complex data needs and detailed security and confidentiality requirements. We’re meeting all those criteria.
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.
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.
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.
I was not. I was early on in a team, but I was not the co-founder.
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.
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”.
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.
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.
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.
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.
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, 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”.
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.
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.