Sramana Mitra: You’ve done all this organically. Right from the beginning, you didn’t raise any money.
Heidi Jannenga: Yes, we are huge proponents of bootstrapping. We have been building it for four years. We’re profitable. Within two years, we were at a million dollar run rate. They passed the Affordable Care Act around the same time we launched. That was a huge compliance impetus for the industry to now become much more aware of electronic medical records. Even though physical therapists didn’t receive incentives from the government to adopt an electronic record, it was “the rising tide raises all boats” situation.
Physicians were getting incentives. They were adopting EMRs very rapidly. Professionals couldn’t be sending handwritten notes anymore. This ground swell of the compliance burden was now helping drive our sales and awareness of what electronic medical records were and how important it was to practice this. Every month, as we were growing, you had to make a decision with the money that you’re making. Do you buy another server? Do you hire another customers service rep? What is the biggest prioritized need of the business?
We honestly were having difficulty keeping up with sales because we were just doing great on the sales side. In 2010, we decided that we wanted to really ramp up the business but we needed more capital to do that. We did some pitching here in the local Phoenix market and got overwhelming response. We went on a roadshow starting mid-2009. Not a whole lot of action was happening back then. This is right in the midst of downturn. Seeing a company that was taking off this way, we got a lot of attention. We were able to raise $1 million dollars in our first angel round in the middle of 2010.
Sramana Mitra: Who were the investors?
Heidi Jannenga: Angel investors. They’re a local group called Canal Partners led by Jim Armstrong who actually was one of the founders of JDA Software. He built it out of his garage in Canada and grew it to a multi-billion dollar company. He sat on our Board as well. We felt very lucky that he took interest in our company as well as saw the potential that we had of putting some cash flow into our business to take it to that next level. During that period, we learned a lot with our nose to the grindstone.
The entrepreneurial community in Phoenix was very small. We didn’t have a lot of mentorship or opportunities to seek out people to give us advice as we were going through these few years of process. As we started pitching to these angel groups, a lot of people started taking interest. One of the interesting things was that, during that two-year period, we only spent $50,000 on marketing. With this inundation of sales, they said, “If you would just put a little bit more money in the marketing, here’s all the things that you could do.”
That’s when we started down this path of being the thought leader in the industry and doing all of the education and content-driven lead generation. During this period of time, we also looked at what we needed to take our business to that next level. We had the technology and visionary background. We also had very strong operational and people management. We were missing a bit of the piece on process and developing metrics. At that point, we hired a CEO. We’re now a triad of leadership which actually was very important. It was a tough but a very important decision for us. We’ve now been Inc 500 winners for four years in a row.
A lot of the things that we’ve heard over the years is, that triad is actually one of the keys to successful organizations – having someone who’s very strong operationally and taking those ideas and putting them into action and having that third process-oriented person who comes in and makes sure that execution is as efficient and as process-oriented as possible.