SaaS Interviews with CEOs, Startups, Founders
972 How Battery Paid Off Early Shareholders in Secondary Offering of $40m+ ARR Health Tech Company WebPT
23 Mar 2018
Chapter 1: What is the main topic discussed in this episode?
This is the Top Entrepreneurs Podcast, where founders share how they started their companies and got filthy rich or crash and burn. Each episode features revenue numbers, customer counts, and other insider information that creates business news headlines. We went from a couple of hundred thousand dollars to 2.7 million. I had no money when I started the company.
It was $160 million, which is the size of many IPOs. We're a bit strapped. We have like 22,000 customers. With over 5 million downloads in a very short amount of time, major outlets like Inc. are calling us the fastest growing business show on iTunes. I'm your host, Nathan Latka, and here's today's episode. Hello, everyone. Our guest today is Nancy Hamm.
She's the CEO of WebPT and has focused on guiding the company through its next phase of growth, bringing her wealth of experience in developing, growing, and operating private and public healthcare IT companies. During her robust career, she's achieved powerful results in healthcare IT and was named one of Health IT's 25 Most Powerful Women Thought Leaders by Health Data Management.
Nancy, are you ready to take us to the top?
Absolutely. Where do you want to start?
All right. So WebPT, first off, it sounds like you're not the founder, but you were brought in as a CEO. Is that accurate?
That's correct. The company was eight years old when I joined a year ago.
Okay. So it was eight years ago. It was founded in 2008 or nine?
Eight.
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Chapter 2: What is WebPT and what does it offer?
People walk into a clinic with every kind of physical injury. I'm a 16-year-old soccer player. I blew out my ACL. So I'm an 85-year-old who just had my hip replaced. And so they have to go down many different diagnostic pathways based on the body part, the injury, the diagnostic pathway.
And so that was very hard to figure out how to get a computer to do that, how to have that elegant, flexible, customizable clinical workflow. And that's really the secret sauce of WebPT. Also, since then, we've built on a whole ecosystem of surrounding capabilities, ranging from billing to marketing automation to home exercise programs.
Because, again, some of your listeners might have been to a therapist and they might have gone home with pieces of paper that had little stick figures of bodies on them with little cryptic notes about, like, lift your right knee 20 times or something. Now we send you home with a mobile device.
digital experience with videos so you could see what you're supposed to be doing and you can communicate in-app with your therapist about how that's working for you because your at-home therapy is just as important as your in-clinic therapy.
And I imagine this is all HIPAA compliant and that's why you guys are carving out a niche versus some other just general marketing automation software doing this.
Well, absolutely. I mean, the key is the clinical documentation, the electronic medical record. And what makes WebPT special is there are lots of electronic medical records. You know, your hospital, your physician. Thanks to what was called meaningful use, the government really motivated everybody to purchase one. But most of them were very generally developed.
And so there's a negative NPS or NPS. eight of the top nine medical EMRs, all the big ones, negative NPS. And in physical therapy, our competition as a group has a negative NPS of 17, whereas we have a positive NPS of 32, because we really figured out how to give you software that is adaptive to your workflow and help support your ability to treat the patient and
to measure their clinical outcomes, to bill for them compliantly.
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Chapter 3: How did WebPT originate and what was its initial challenge?
So Nancy, just to be clear, you're selling to the doctor, not the consumer.
We're selling to the physical therapist who is the clinician. Yes.
Okay. And are you selling directly to them or actually to like their parent company?
Well, in the beginning, 10 years ago, pretty much physical therapy was what we call single shingles. So a therapist graduated from school, opened their practice, so they're an entrepreneur and they're a clinician. And so we have about 10,000 customers for those smaller groups. But now the industry's, I'll say, growing up and changing. Private equity money is coming in and creating bigger chains.
So now we have customers that range from big hospital systems like MedStar in D.C. to people who are running 20 clinics, 50 clinics, 100 clinics. So we now have an interesting mix of customers. Still, we love those out of school entrepreneurs who are opening their clinic for the first time. up to our very large, sophisticated clients now.
So we could go and spend hours talking about all your different cohorts, but I want to just kind of ideally focus on kind of your main, I guess, target. What would you say your average target customer that's signing up today, what are they paying per year, would you say?
So our classic customer is that single clinic practitioner and they're paying us about $350 a month.
Okay, 350 a month. And how many of those did you say you had? You said about 10,000?
We do.
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Chapter 4: What role did Battery Ventures play in WebPT's growth?
really very little was digitized anywhere in healthcare. And so I started at the beginning helping create electronic claims, then I moved on to electronic clinical transactions, to electronic prescribing, to then exchanging all this information in real time. And so I worked my way through primary care and hospitals. And a big part of the healthcare ecosystem is called post-acute healthcare.
And physical therapy is a big part of the post-acute ecosystem.
And so it was just a natural evolution to come to a part of the industry that is relatively under digitized compared to the rest of health care and where there's a lot of opportunity to make a huge impact on really what's called the triple aim in health care, which is trying to provide better health at a lower cost with higher patient satisfactions.
And that's what we're really doing because we provide electronic software that helps our customers be efficient and compliant. We help them bill correctly and yet maximize what they're able to collect. And we provide data-driven outcomes so they can see, are their patients getting better at the amount of time at the rate of success that we would predict from our benchmarking data.
So it's really exciting to come into a big part of healthcare where there's so much opportunity to bring data and technology to uplift it to the next level of success.
CRMs might be the tool that I fight with the most. I just haven't found one that I really liked. I don't know if you guys are the same way, but they're just so tricky. And a while ago, I had a guy named John Lee on my show. He's the CEO of ProsperWorks. And he told me they just passed 40,000 customers and 24 million in annual revenue. So they're doing about $286,000 in in revenue per employee.
And I said, wow, why is this working? And I said, you know what? I'm going to try it. So I went to prosperworks.com forward slash love your CRM, signed up, and it immediately became clear why it worked. Those of you that love growth hacking, you should go to that link just to see how they do the onboarding. That's prosperworks.com forward slash love your CRM. In short, it's like magic.
You know, I'm not the guy that, you know, finishes the sales call and then takes the time to actually put data into the CRM. They have this magical way of just doing it. And it's a beautiful thing. So every morning when I wake up, I just go, okay, what leads are ProsperWorks telling me to reach out to because they're most likely to close and it works so well.
And you guys know, I love money and I love only focusing on the leads that are going to close. So I encourage you to try ProsperWorks or sponsoring the show. Check them out at prosperworks.com forward slash love your CRM folks. That's again, prosperworks.com forward slash love your CRM. I imagine kind of getting these folks onboarded is a fairly cumbersome process.
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Chapter 5: What unique features set WebPT apart from competitors?
Okay. Wonderful. Take us back about 30 years. What do you wish your 20 year old self knew?
My 20-year-old self was studying chemistry and thinking that she was pre-med. And so I was in studying something I didn't like and didn't have an aptitude for because I had an artificial goal. So what I would tell her is study humanities, do what you love, history, art, philosophy, literature. And there's time later on to learn the more technical aspects of a trade.
There you guys have it from Nancy. Study the humanities. She founded WebPT. They own about 30, 40% of the market. The company was founded back in 2008 when the original founder basically built the software for herself. And then it scaled. And they only put a million bucks into the company. They grew it.
Now, Nancy has come in when Battery Ventures did a secondary offering and provided liquidity to some of the early shareholders. The company is now serving over 10,000. That's great. 10,000 different locations paying on average $350 a month. They're doing about $3.5 million a month. That's up from about a $35 million run rate just 10 or so about 12 months ago. So growing rapidly in the space.
Super healthy payback period. Actually, almost one of the best in Bessemer's entire portfolio. So, Nancy, congratulations and thank you for taking us to the top.
This was really fun. Thanks so much.
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