Last week, the ball dropped, a new year dawned, and we smooched our lovers. I woke up the next morning with the breath of a new year and decided to take a look back over our Redox journey to reflect on where we've been and share where we're headed. Surprisingly, our startup journey has closely aligned with the Gregorian year marker. I guess that's the psychology of the new-year's-reset we all give ourselves. Review. Exhale. Restart.
We got the band together for the very first time in February of '14 at the annual HIMSS conference. 100health, our first idea/company, was a think tank/incubator of sorts .We should have seen it back then—the business we were launching wasn't the right one. Though true, creating 100health was a necessary step that forced us to live through the problem that we're currently trying to solve—again and again and again. Through experience, 100health showed us that it's far too difficult to innovate in healthcare, and by the end of the year, we were focused on the right problem to solve and the right company to start:
Redox would connect innovators with healthcare organizations through an interoperability platform.
This was my 2014 review (complete with the logo—or lack thereof—we were using at the time). It's amazing how much has changed since then; it's amazing how much has stayed the same. We closed the year with an idea, a $350K angel round, four people, and no customers.
2015 - Starting the engine.
Our vision for why the world needs a new kind of interface engine was solidifying, but we still weren't sure who our customer was. The new world, as we imagined it, would require a platform utilized by a two-sided network: healthcare organizations and software developers. Like so many startups with big dreams, our platform-play needed an egg... or a chicken? Or both?
This is the perfect stage in a company's lifecycle to do an accelerator. We did three. The experiences designed by the programs—the onslaught of mentor meetings, business model canvases, pitch practices, etc.—didn't really help us find our customer. Rather, it was the focus and camaraderie that the accelerators heaped upon us that brought clarity and progress.
We drove back and forth to Baltimore for Dreamit Health. We drove to Houston for TMCx. We finally decided that it'd be a more productive to fly, so we flew to Salt Lake City for Healthbox. Everywhere we went, we saw innovators in pain over integration. Eventually, we figured out how to help this side of the market—and we found our egg.
It took us the first three quarters, but we rallied these startups around an integration platform designed specifically for them. In October of 2015, we went live for the first time with Gauss Surgical at Hackensack. (Here's a demo form Winter Tech at JPM.) Luke got the whole team 1st place medals.
Celebrating our first go-live, October 2015
Having live customers changed everything—it was our move from zero to one, and the implications were immense. First off, there was now important patient data flowing through our platform. In the case of Gauss, it's blood loss data for emergency C-Sections. Mothers' and babys' lives were (and are) on the line, so stability, performance, and security became paramount.
Secondly, it proved we discovered how to add value to a certain type of business. Now it was time to figure out how to do it again and again. We would build our two-sided network, starting on the software vendor side, by helping them stand up these integrations with the healthcare organizations they sell to.
We ended 2015 with twelve people and four live customers at four different health systems. We call these "connections," Redox's true north metric. Brimming with more potential than traction, we miraculously raised $3.5M. This was the 2015 review, aptly named "Starting the Engine."
2016 - Product market fit for software vendors.
Game on. Time to scale, right?
I started 2016 feeling like our startup days were numbered. The generalist, operating with urgency, is the ideal early-stage startup team member. But as the flywheel starts spinning, the team began to specialize based on activity. Suddenly, we had clearly-defined teams: Marketing, Sales, Customer Success, and Development. (And even today, these teams have fractured further into more specialized pieces.)
To build a two-sided network, you need to find and subsidize a value proposition for one side to keep them engaged while you build out the other. Early-stage software vendors were our target and our single-sided value proposition was access to the development tools and integration strategy we could provide, even before they went live with their customer. We sought to engage with every healthcare startup out there who might need help with integration and designed our platform and services to meet their needs. That was the name of the game in 2016.
Strategy session at a team retreat in February 2016, Puerto Rico
While everyone else sold to health systems, we sold to the people selling to health systems. This was a bit of a numbers game, as only some would succeed. We had to engage startups in such a way that balanced our efforts while ensuring they'd pull us into their sales at the right time.
We ended 2016 with a team twice the size of the year prior and more than 10x the live connections. We were running in 50 health systems, none of which we sold to. The year ended with us being named to Forbe's 30 Under 30 in healthcare list.
2017 - Scale with vendors and find product market fit for health systems.
Like much of the country, we started the year off a bit worried. Of course, this was the year Trump became president. Much of the technology innovation we were seeing aligned with the shift towards value-based care. When the industry was marching toward value (cost/outcomes), efficiency was the name of the game. Would the policy agenda of the new administration derail this course? What will replace Obamacare? What would this mean for our customers?
Looking back a year out, I feel relieved. It turned out that nothing replaced Obamacare, and we're still steadily marching towards a value-based reimbursement system.
From our Badass Women in Health Tech series launched in January 2017
In January, as usual, Luke and I went to JPM. (It's the big healthcare investor conference in San Francisco where the days are spent wooing investors and nights networking at endless receptions across the city.) But this time, we had just signed a preemptive term sheet with RRE Ventures for our $9M series B round. We just couldn't tell anyone yet, so we left investor meetings intentionally ambiguous, to say the least. We closed the round and announced the investment the week later.
This investment was about taking the next step in our business model. Sure, we could get startups to work with us, but could we support vendors at scale? Could we actually parlay the work we've done on the vendor side of the network to the health system side? This was the focus for 2017. In April, we extended the B round another $1M in to include Intermountain Healthcare as our first strategic investor, bolstering further credibility with other large health systems.
Some of the early stage startups we first deployed with back in 2015 were starting to scale and bring us into dozens of health systems with them. We began seeing multiple applications being used at the same healthcare organization, utilizing the same Redox infrastructure. Health systems started to reach out to us, asking why all the vendors they're talking to are using us. This was the signal that it was time to start selling to health systems.
This was a new frontier, and selling to health systems was like starting a startup within a startup. We needed to balance this new work while continuing to serve bigger software vendors. So we sectioned off our health system team to allow them to focus on the task at hand without distracting from the machine we've built. Nevertheless, we ran into channel conflict pretty quickly.
If a health system we're selling to is working with one of our vendor customers, who pays? One answer is: we don't really care. For us, it's about getting the connection up and running. That's where we see the impact while still growing the network. Another answer is: the health system. If the health system pays, they'll achieve volume quickly, as it's ultimately up to them as to how a vendor interacts with their EHR data. But getting the health system to pay us directly introduces another sales cycle that potentially delays deployment.
Devin and Erin at Brigham Health
We've learned a lot by working with our first health system customer, Brigham and Women's Hospital in Boston, who came to us through a few startups they were looking at adopting. Innovation initiatives at healthcare organizations are often tasked with finding, building, piloting, and deploying the best tools for the job, and we've come to realize that we're a perfect partner to these initiatives. This was our champion and our way into IT.
Nick Hatt's FHIR talk was a favorite at our Interoperability Summit
This year has been one of maturing. James mentioned in an internal blog post that this was the year "Redox went to college in that we were proverbially learning to do laundry and cook for ourselves, what it means to have to pay rent, and how to get a passed out drunk person off your couch." I’m not exactly sure who the proverbial drunk person is, but I can get behind this metaphor.
In December, one of our old friends from Dreamit Health mentioned that of the 40 companies who made their final round of interviews, 30 use Redox. It was just two years prior that we were part of Dreamit without a single customer.
That about brings us up to date. We are nearing 200 healthcare organizations on the network, only a handful of which we needed to sell to. The team has doubled in size again with 53 people.
Redox Team, October 2017 in the North Woods, WI
2018 - Juice the network.
The network is big enough now where we should be able to create network effects and help each vendor we work with sell to healthcare organizations already in the network. And we should be able to help each healthcare organization we work with adopt and deploy the best tool for the job.
Now, we get to embark on a bit of market-creating activity while we match-make our way into more connections.
Our hypothesis has always been that one side of the network will help the other side grow. Does supply create demand, or the other way around? The magic of the market is how these forces perpetuate (and necessitate) the other, like the two blades of scissors cutting one piece of paper. We found one blade, then started pushing on it while looking for the other.
To belabor the metaphor, in 2018, we're focusing on squeezing.