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Capital Efficient Entrepreneurship from Arizona: Heidi Jannenga, Co-Founder of WebPT (Part 2)

Posted on Tuesday, Apr 18th 2017

Sramana Mitra: Let’s do this story a bit more as a journey. What year did you face the problem that you needed some sort of a system for managing your physical therapy practice?

Heidi Jannenga: It was an ongoing problem from 2003 to 2008 where the company that I was working with had promised that they would be transitioning to some sort of a documentation system. It never happened. We were using transcription and dictation.

Finally, it was a decision, “I’m running these practices now. I want to take this issue head on. I think we can find a solution to solve this big problem.” When we discovered that the problem was much broader than just my own problem, we realized that it was an opportunity to not only help my clinics but also to help my industry as a whole, which was daunting to say the least. At the same time, it was very intriguing.

Sramana Mitra: When did you actually put a software together in that continuum?

Heidi Jannenga: We started building it in 2006. We had something up and running by the beginning of 2007. By mid-2007, we had 12 clinics using the platform and we continued to iterate throughout that whole process. Then we launched the company in February 2008.

Sramana Mitra: By this time when you launched in 2008, you had other clinics who had expressed interest?

Heidi Jannenga: Yes, we had paying clinics who were using the platform while we were in beta. We had vetted out the process. We had solved the problem. People were giving us tons of feedback. They wanted to use it and they were willing to pay, which is the point at which you go from not just being an inventor to becoming an entrepreneur.

I think there’s a lot of people with great ideas. The moment that you create a business around your solution to a problem is when the entrepreneurial component comes to life. We were now creating a business based on a solution that is resonating with an audience willing to pay for that.

Sramana Mitra: Right. What about pricing? What did you learn from this audience? How much were they willing to pay?

Heidi Jannenga: When we looked at the market, we found that server-based systems were already in the industry, but they were serving the enterprise group. When we did the market research, we broke down the types of personas, if you will, that we can sell to.

When we broke that down, we found that 60% of the market accounted for small businesses. The middle tier, about 30%, were the multi-site practices and had multiple facilities. At the tip of the spear were the large 500 clinics. The most underserved of that market was that big 60%. They were maybe a million and a half in revenue. They had three or four potential users in the clinic. They were sort of similar to my situation where we didn’t have big capital expense budgets.

What was unique is that we came into the market with a SaaS platform where you pay a monthly subscription fee. That immediately appealed to our target market which were those small businesses because they didn’t need to have the capital expenditures of a huge check every year for maintenance fees or upgrades. Our pricing is still the same today. We started out at $49 per user. We did a per user charge. When we came out of the gate with that pricing, we got immediate traction.

In understanding the budget and what businesses were willing to pay for software, we had to balance it with what they could actually afford. We found that $49 really worked. We also charged an implementation fee. We started out at a $995 charge. We got a lot of pushback on that. Over time, we played with it and got to a $695 rate which seemed to not be a barrier to sale.

People understood the value they were getting and how that money was going to be spent. We never charge maintenance fees. We never charge for customer service. We believe that with SaaS, the service component should be a part of what you’er paying us every single month. The other piece that was very unique for us is in the SaaS model, it was month by month. There was no long-term contract. Even though we’re a software business, you have to win that business every month. Customer service has always been a strong foundation and, honestly, a differentiator for us from the very beginning.

This segment is part 2 in the series : Capital Efficient Entrepreneurship from Arizona: Heidi Jannenga, Co-Founder of WebPT
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