Story of my startup (ClinicUp)

0:00 Hi everyone. In this video, I'll talk about my startup, ClinicUp. ClinicUp grew to see about 1,100 patients. I hired 10 physicians. We got a $6 million acquisition offer, and then we got sued and lost it all. I'll go in depth about the journey through ClinicUp, and I'll give you a few tidbits, both from a founder perspective and an investor perspective as well. To give a bit of context, I'm a physician. I am an angel investor as well. And I've had one startup, which is ClinicUp. Let's go back to 2020. COVID has just started. There's lots of predictions that the telemedicine space, remote monitoring space will take off. The telemedicine market in 2020 is worth about 20 billion North America, and currently I believe it's about 26 billion.

0:48 It's a really good space to be in. We tend to think of our successes as internal and our failures as external, but usually it's the opposite. Market tailwinds and market timing drive a considerable amount of success in startups, especially. And something like a big tailwind would be COVID, and it's a good tailwind to ride to success, I would say. So I'm working as a hospitalist at Surrey Memorial Hospital in Vancouver. And I'm enjoying my hospital medicine work, but I'm bored and I'm finding work very monotonous. I want something more from life. I want something more from work. I started talking to my coworker and my first co-founder, Sam. We have a similar thought style and we get along well. And we meet for coffee every day and we start talking about different things that could be better in medicine. At this point, I know nothing about the startup world, but I am looking at it as a good opportunity. So I started learning about startups. I started learning about how to start a company and identify a key insight, which is you have to focus on a problem you're solving and provide a clear value prop. We thought about different things in medicine that could be better, that could be more efficient, that could be cheaper, that would generate both a clinical and a financial return on investment or value. We landed on travel medicine. The reason

2:21 we landed on travel medicine is because it did not need a physical examination. If you think about it, when you go to the doctor, usually say you go for a belly pain or your throat hurts, we'll ask you a few questions. We'll examine your throat or your belly, and then we'll say, okay, this is what we think the diagnosis is, and this is the treatment we suggest. For travel medicine, we don't need a physical examination. We just need to ask you a few questions, and based on your answers, we recommend certain treatments. If you think about it, you don't really need a human to be involved in this. A computer or a software can ask you these questions, and that was their idea. So we wrote down these algorithms or clinical decision trees on a Word document, and we said, okay, let's get this into a software or an app. We talked to developers from all over the world, North America, Eastern Europe, India, and we got quotes from anywhere from $500,000 to $5,000. We were somewhat cheap. This is the first mistake we made, so we went for the $5,000. We had no experience in writing code, and we were not software engineers. We were both physicians. We really did not know if we were getting the right code or not, and what ended up happening is we got an app that was somewhat working but wasn't reliable and was not compliant with the privacy laws and the regulatory standards that needed to be compliant with here. So we're back to square one, and we're like, okay, we have this app. It's not really working. We have written these algorithms. We just need someone to code them. We started looking for a co-founder. Luckily, a friend of my brother's and a friend of

3:57 a good friend of mine was looking to get involved in another startup. This would be his sixth startup, and let's call him Mark. And he said, yeah, this looks interesting. I'll join you guys. As Mark joined us, we started getting things more in order. We started getting some documents we needed like articles on corporation and shareholders agreement, founders agreement, things like that. Two main points here are vesting and a cliff. Vesting is when you're dividing equity within your team. It should be given to your team over a set period of time. So say there's four of you, and you get 25% each. You can say you get 5% per year. So you have to stay in the full five years together to get 25%. This is very important to do, and I would recommend everyone does this.

4:40 The standard is four years, but I would advise six years as well. The second part of this is a cliff. The cliff is essentially if you leave before a certain time period, you get no equity. The standard again is 12 months, but you guys can decide what you want to do in terms of the time frame. So the three of us started working, and as time goes on, it's fairly clear that Sam is not able to commit to what needs to happen. And it is Mark who comes to me and says, okay, Rishad, what is Sam doing here? He's not doing the work that needs to be done to an extent. So I have a hard conversation with Sam. I said, Sam, you can have 20% of the equity for the work you've put in so far, but me and Mark should be making decisions and me and Mark should be the operating team here. Sam says no. He takes the brand and the initial work we've done, and he goes to form that company and he takes on with that. And we rebrand it as Clinic Up. I'll put another point here. As I was building this company, I was taking advice from a couple of mentors I have, Samarth and Neil, they're both friends of mine and they have their own startups.

5:56 And the one key thing they said, which I ignored, was your initial team needs to compliment each other and not have the same skillset. So me and Sam, we're both hospital medicine physicians, we have the exact same skillset. And it's essentially a duplication, which does not work early on in a startup. It's something I look for in my founders as well, is each member needs to bring their own strength and they need to compliment each other, not double up on the same skill, because it's not needed and it doesn't work out. So we have this travel medicine algorithm, but COVID happens and it's really not taking off. Travel medicine has, for essentially, travel has been banned in Canada and no one's getting travel medicine consults.

6:46 We think about what else we could do. We think, my wife brought up women's health, which is a very underserved region, but to be completely frank with you, it's not something that, we're not women, and it's not something that resonated with us on a personal basis. It's something that I would like to be involved in in the future, but at that point, the time wasn't right. We talked about mental health and we talked about just general travel medicine and we landed on a blended model of those two things. Mental health was really, there was a mental health crisis, it was required an expansion on the mental health treatment options available. And we thought that would be a good space. And with my background as a family physician, I deal with mental health diseases quite a bit. It's about, I'd say, a third of my practice. So I had deep industry expertise in mental health as well.

7:37 The next big decision we had to make is, do we do private pay or do we do public pay? I'm based in Canada, so private pay would mean we're in, we're billing the government and we get paid about $37 per consular as private pay, we would be able to bill privately. We decided initially to do private pay as our margins would be better, we'd have more control over the workflow and the we could have better efficiencies. It did not work. There was little demand for private pay in Canada where the public is used to a free model of healthcare, free for end user fees anyways.

8:24 So I interviewed about 50 clinicians, hired about three, but unfortunately, as we had no demand, we had to shift to a public pay model. As we shifted to a public pay model, we really needed help with SEO and marketing. My wife has a degree in journalism and I'm very thankful for her for helping out during this time period. She started work, our whole social media strategy, our marketing strategy as well. And we got our customer acquisition cost to $5. This is both good and bad, this is really odd in a startup. It's bad because it somewhat means that we're leaving money on the table in terms of not prioritizing growth. And also when people talk about economies of scale and when people say, you know, our margins will be better as we get bigger, what does that actually mean? It usually means your customer acquisition costs will go down and your cost of goods will go down. And for us, our cost of goods were fixed as we were service providers, essentially paying our clinicians, which is a fixed cost, it's not going to go down as we scale. And our customer acquisition cost was so low, it was $5, that's not going to go down either. Essentially, as we grew, our margins would not get any better. And we had low single-digit margins, billing the government for our services. So we thought about, okay, how else can we get revenue? And one thing we landed on, apart from offering private services in the parallel, which again, there's not a big demand

9:56 for in Canada to be frank with you. And the demand there is, it exists more in the cosmetic space, which we cannot do to the same extent on a telemedicine environment. Also, I'm not an expert in cosmetics. So we said, okay, let's focus more on partnerships. So we approached pharmaceutical companies, we approached mental health counseling companies who maybe needed some physician input. And initially we approached telemedicine companies. I actually had a meeting with Expedia, which I thought was a partnership meeting, but it turned out to be a sales call, and them selling me their advertising package. And I was very excited about that. Something I've learned is, if it's not written on paper, it doesn't exist. A big pharmacy chain early on verbally offered to put us in 40 of their pharmacies, and that didn't end up pending out either.

10:50 But we did get some partnerships with some great startups, Pilway, Hesu, Lightwell, and we had a bit of revenue sharing agreement as well. Another partnership that I was lucky to get into to an extent was Devan, which served international students. And these students were not covered by the government, so they were all private pay. We initially offered them a free pilot, and then the plan was to convert them to a subscription model later on, which would be quite a bit cheaper than what they pay if they were to go to a clinic on the ground. I was doing all the outreach through LinkedIn, mostly messaging, direct messaging using Sales Navigator. But as we started to grow, as we had more patients sign up, our numbers looked good on paper, but as I said, the margins weren't really there. Both me and Mark, we were having a difficult time balancing our work and the startup. I was working in my clinic five days a week, nine to five, some evenings, some weekends, and I was working on my startup at 6 PM, and I was working on my startup at 6 PM, midnight. We thought about going part-time, but at that time, we thought if we went part-time and put the brakes on, that would hinder our growth. The other thing was I was seeing a lot of the patients. I saw the first 400 patients myself out of the 1,100, so I needed to be on. What the

12:24 patients liked the most was how soon we got back to them. After you requested an appointment, usually our average wait time was within 30 minutes. We had you talking to a physician and getting your treatment that you needed. If no one was available, that physician was me. I was essentially always on from 8 AM to 10 PM every day. In terms of fundraising, a good friend of mine had invested $120,000, and I'm very thankful for that. This led to more pressure to an extent on generating a profit and more growth. As I said before, the government pay mode, there's not enough room for profits and for growth there, so we thought about launching into the States.

13:12 We looked for a service provider there. My good friend, because he hired a few nurse practitioners there, and everything was set to launch, but we just wanted to get everything in order before we went there. At this time, a couple of people reached out asking if I'd be interested in selling the company, and given how burnt out I was and how burnt out my co-founder was, we were like, yes, yes, we would be interested. We met with a public company who offered us $6 million on the premise that they wanted to look at our P&Ls, which is a profit and loss statement. Again, I did not know what P&L was. I had to Google it when they asked for that, but we got an accountant to get our statements in order. Unfortunately, their leadership had some personal issues, and we had to delay the acquisition. In this time, we got sued by another company in a different province. It was a frivolous lawsuit, and they were saying that we are using their trademark, and their name was OpCenter, and we are Clinic Up. I didn't see much there, but they had deep pockets, and initially we fought the lawsuit, but they were willing to go the distance.

14:40 So at this point, we have this lawsuit. We have a potential acquisition, but it's being delayed. We are growing pretty fast, and our month-to-month growth is over 200%. We are not profitable, which is okay for a startup. The problem is we don't have a path to profitability. We are just growing, and being a service provider without any significant software, there is really no trajectory for a hockey state growth. We decided to close the company at this point. It was a hard decision. I think my biggest learnings from Clinic Up are, number one, hire for commitment. Don't hire rock stars initially. Adam Grant talks about this in his book, Originals.

15:34 As you get bigger, you hire the rock stars as experts, but initially the biggest predictor of hiring success is hiring for commitment. Have a path to profitability. Your initials obviously don't have to be profitable, but why it's not profitable is very important. If it's not profitable because of a high customer acquisition cost or a high cost of goods cost, which as you scale will get better, then great. But if it's not profitable because the business model in itself isn't profitable and the fixed costs are too high, then that is a bad sign. My third point is all founders should bring something distinct. If there is some replication or some duplication in skills, that is a red flag. The reason is as you bring more people on, others will ace, say that why do you have two people doing the same thing or why do you have two people with the exact same skills? That's not to say you can't learn different skills as you progress.

16:41 And there is likely some cases where it's okay to have two founders with the exact same skills, but in general, you should have complementary skills. The last point I would make is something I've learned in the past year and from my time reflecting back on my time in clinic up, is you should have a structured approach to decision making and apply intuition after your structure. So I use this in my investing in which I score each of the two things that I evaluate based on a scoring criteria. And after the scoring criteria, I apply intuition. I have a very strong proclivity to action, so I want to use my intuition all the time, but it's led to some poor decision making and it's not something I would recommend anymore. Thanks for watching guys. And if you like this video, please subscribe to my channel. I'll be having more videos like these and I'll be having more guest interviews as well.