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Bootstrap First, Raise Money from Kleiner Perkins Later: William King, CEO of Zephyr Health (Part 6)

Sramana Mitra: This, by the way, is also a trend. For the longest time, the buyers of IT were IT departments of corporations. Today and going forward, the buyers are much more going to be the business users. The marketing department, for instance, is becoming a huge buyer of IT and other departments as well. Everywhere in the organization, there are SaaS capabilities that address specific problems. The uptake of SaaS solving specific business workflows is huge outside of IT. IT is no longer the largest buyer of information technology.

William King: I love hearing that. You get to look across the landscape. That’s certainly what we hope. We’re seeing it in our buyers, but I love that that’s a trend. Another thing that we’ve done that I’m so proud of is we democratized the data. First of all, we wrangle all the data. We do all the heavy lifting. For the BI tools, when you talk to people who use them, they say, “75% to 80% of our time is spent wrangling the data.” 15% to 25% of the time, they’re actually looking at it and analyzing it. What we’ve been able to do is take that effort out and then present it in a way that a business user can make good use of. That is so powerful. That is where we get a lot more buyers. >>>

Bootstrap First, Raise Money from Kleiner Perkins Later: William King, CEO of Zephyr Health (Part 5)

Sramana Mitra: That’s the beauty of this bootstrap first, raise money later model. You’re going out to raise from a position of strength as opposed to weakness. You’re not begging for money. You’re in the negotiating position. In any given time in the market, there is more money chasing fundable deals than fundable solid deals chasing money. If you are in that position where you have bootstrapped to a certain level of validation, success, and customer traction, the likelihood of you calling the shots in negotiation is high.

William King: Exactly. I appreciate that commentary. One of the things that was important to me is our mindset of not creating a one-off product. I’m here in Silicon Valley, but I think I’m unusual in the standpoint that I’m from Princeton and I worked for a traditional company. We’ve always focused on truly building a company. That is one of the most important lessons I’ve learned at J&J. The credo, culture, and this idea of creating sustainability—these are core tenets that made a deep impression on me. What I wanted to do was go out and >>>

Self-Financing an Artificial Intelligence Software Company: John Rauscher, CEO of Yseop (Part 5)

Sramana Mitra: Let’s talk about sales. How did sales ramp at that point?

John Rauscher: Of course, it was not easy. I cannot remember that it was a big start. We had to convince a lot. We had to be passionate. We had to be very good at delivery. My philosophy is we cannot lie. You have to tell him what is going to happen and that sometimes you don’t know, because each case is unique. You have to build trust with customers. In the end, they’ll tell you that they trust you. We have been very successful because we never tried to do quick sales. We were focusing on delivering high quality service.

Sramana Mitra: What kind of average deal size were you encountering in the market?

John Raushcer: Generally, it was in steps. People were asking for pilot applications. Probably between $200,000 and $300,000 and $1,000 to $3,000 for pilot applications. People were buying licenses later. It was probably half a million dollar deal as an average. >>>

Self-Financing an Artificial Intelligence Software Company: John Rauscher, CEO of Yseop (Part 4)

Sramana Mitra: You got your first customer in 2007. How much money did you put into this?

John Rauscher: A few millions.

Sramana Mitra: Right at the beginning, you put a few millions in the company, right away?

John Rauscher: No, not right away. We stopped looking for customers when we understood that people didn’t want to buy the product without development tools. I was not working there. I was at Oracle. We stepped back and built what people want—development configuration environment. We didn’t have a salesperson. We got sales by chance or through contacts without really looking. We really started looking for customers in 2009. >>>

Bootstrap First, Raise Money from Kleiner Perkins Later: William King, CEO of Zephyr Health (Part 4)

Sramana Mitra: What was the customer segment that you were going after and what was the pain point that you were solving for them?

William King: We’re a technology company first that is focused foremost on life sciences. Simply put, we wrangle this universe of Big Data and put it to use for pharmaceutical companies. What does that mean in practical terms? It means there’s a lot of weakly connected and even disconnected data that exists in the health ecosystem. A great example would be information about physicians, patients, and hospitals. You’d think that there would be strong correlations. What we found is that data is weakly connected or not connected at all. >>>

Self-Financing an Artificial Intelligence Software Company: John Rauscher, CEO of Yseop (Part 3)

Sramana Mitra: Can you give an example of something that was not possible for a salesperson to do before you introduced your product into the process?

John Rauscher: Let’s take an example of a financial adviser in a retail bank branch. Customers enter from time to time. You go to your bank and look for a financial adviser. You’re going to sit in front of him. The banker is going to secure your ID and account number. He’s going to connect to your data and see in front of him hundreds of data. He cannot understand the data immediately because it takes time to analyze the data. What we are going to do is immediately provide information instead of just data. Information like the customer has been with the bank for 15 years or the customer deserves preferred client status but has not applied for it. The customer actually bought a car last month and that explains why balance is very low this month. You will receive information that is very difficult to see from the data. Yseop is going to analyze the data. >>>

Bootstrap First, Raise Money from Kleiner Perkins Later: William King, CEO of Zephyr Health (Part 3)

Sramana Mitra: What year does that bring us up to?

William King: I left London at the end of 2008.  It was great to learn about business, marketing, and management. The other thing that I’ve always been interested in is the world of technology, given all the devices that we have. The thing that really struck me at J&J was the staggering amount of data that we would purchase and generate. Obviously, a company of 120,000 employees and $60 billion in revenue will produce a tremendous amount of data. When I was in London, I became very fascinated with data. I’d always pay attention to data throughout my career. In fact, one of the things that I’ve learned early on is how critical data is in decision-making. Oftentimes at a big pharmaceutical company, you don’t know the outcome of your decision for many years. Think about drug development. It’s a 10-year cycle. It’s very expensive. >>>

Bootstrap First, Raise Money from Kleiner Perkins Later: William King, CEO of Zephyr Health (Part 2)

Sramana Mitra: Tell me a bit about where exactly in the chronology of the industry you were coming out of college? What did you do at that point?

William King: I finished school in 2002. It’s an international business degree.

Sramana Mitra: Where were you geographically at that point?

William King: I was in Denver, Colorado. When I was in school, there were a couple of things that were really formative. One was studying abroad and two were internships. I have worked my whole life even as a young fellow in the summers. In school, I remember I was working for an irrigation company. Because my dad was in construction, I had many construction jobs over the years. I remember I was digging the irrigation and it was really hot. I remember having this moment when I thought, “I’m in college. We have this wonderful career center and I have never even walked through the front door. I should probably walk in there and introduce myself.” >>>