SaaS Interviews with CEOs, Startups, Founders
HealthTech SaaS Bootstrapped to $600k ARR, 1200 Customers and 500,000 Patients
09 Sep 2021
Chapter 1: What is the current revenue and customer count for AppointmentMed?
If we're talking about numbers, we're about like 40 to 50K MRR now. So it's not that big, but since we are a small team, we're only five people.
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Hey folks, my guest today is Patrick Enzinger. He's an independent designer, entrepreneur, and startup advisor with a passion for product and interface design. In addition to more than 17 years of working with brands like the Reds Carlton, Porsche, Red Bull, and others, and multiple successful startups all over the world, he's also the founder of a healthcare company called AppointmentMed.
Chapter 2: How did the team structure impact the development of the practice management software?
It's practice management software for healthcare professionals. Patrick, you ready to take us to the top? Yes, let's go. All right. Why is a forward-thinking product-led guy like you going into healthcare, a very slow, stodgy industry? Yeah, funny that you ask. I'm doing a lot of those industry design thingies, basically. So I did a lot of work in the online banking industry.
I did a lot of work in the insurance industry. And all of that is very complex and slow and old, basically.
Chapter 3: What challenges did they face when entering the healthcare industry?
And actually, the team that I have with Appointment now is the same team that we tried to build a startup in the financial sector back in 2011 or something like that. How many people are on the team? We're only five people, so it's very small and it's small by design. I really like to keep things tight and don't want to have too much management stuff in there. How many of the five write code?
Two. Two, okay. And then what are the other three? I do the design and all the business stuff. We do have one marketing person and we have another one doing mostly marketing and customer support and stuff like that. And when did you guys get off the ground? When did you launch? We started with appointment or the initial ideas in 2013 and basically treated it as a side project.
So all of my co-founders are self-employed. They used to have their own business. And then we figured out, yeah, let's not trade hours for money. Build something that basically provides an income passively. So that was basically the idea. And yeah, that's pretty much. Do you remember back in 2013 what total revenue was that year?
Chapter 4: How did they determine their pricing model for the software?
Yeah.
Yeah, 2013 until 2016 is pretty much zero. It took us a long time to get the prototype ready. It took us a long time to have all the security stuff in place. If you deal with patient records, it's very, very, very important to secure all of the data. We do have almost half a million patients now in our system. So it's critical to have... Across how many customers?
Um, I'd say about 1200 or something like that. 1200. Okay. So 500. Okay. And who are some of these customers? Are they hospitals? No, we started off with doctors, like independent practices. But we quickly realized that those people, they do have the money, but they don't like to spend money. So it was very hard to get those people on board, especially with a completely new solution.
They're used to having Windows applications and a Windows 2000 server running somewhere in their office and stuff like that. So they are not used to software as a service. So it was really hard. We had sales cycles up to three months per customer in the holidays. And through referrals and connections, we started going more into the therapist sector.
So we do a lot of physical therapy and stuff like that, where it became easier to sell products. So this is our main target group now. And Patrick, what do these customers pay you per month on average? On average, I'd say it's about 50 to 60 euros per user. So if a practice grows, we grow with them.
So if they onboard new people or they increase their team or whatever, they basically have to purchase another seat for them. Hold on, what is a user? Is a user a patient or someone that works at the doctor office?
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Chapter 5: What marketing strategies contributed to their growth?
No, that works at the doctor's office. Okay, got it. So round that out. I mean, what's the average team size when they join you? It depends. I think the largest practice that we have now is like close to 50 people working there. But the average is about six to 10, I'd say. Okay.
So would you say that if I take six times 80 United States dollars per month, so each customer pays you about $500 per month on average? Yeah, that's about it. Okay, interesting. Very cool. Why did you decide to price against number of workers at the doctor's office versus number of patients the doctor serves? Because the patients is very hard to judge.
I mean, we do have the numbers in the system, but if you have like 20,000 patients in your practice, it's not really a good KPI to measure the price of our product because not all of those 20,000 will be showing up at our practice every single day. So we figured it would be easier to do like the CRM way. For example, send us Excel or something like that.
They do the pricing per seat working with the software. So that's one of the reasons why we went there. So then can I multiply 1,200 doctor's offices times 500 bucks a month on average? That would put your MRR at about 600,000 bucks a month. No, that's way off. That's the pricing we do have now, but we do have a lot of legacy customers.
So if we're talking about numbers, we're about like 40 to 50K MRR now. So it's not that big, but since we are a small team, we're only five people. One of the things that we track is revenue per employee, right? So you've got a lot with a little, which we love. So if you're at $50,000 a month today, where were you a year ago? A year ago, we were close to 30, I'd say.
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Chapter 6: How do they ensure customer retention and manage churn?
Where did the growth come from? How are you finding these new doctor's offices? We did everything. We did snail mail campaigns, we did cold calling, we tried email campaigns, and we basically revamped our entire marketing strategy in 2017. and focused on search engine optimization and revamped our website and stuff like that. And ever since we did that, it's mostly inbound.
So people find us via Google or via some ads we ran. How much did you spend last month on ads? Nothing. We don't do ads anymore. That was back in 2017 to 2018, 19, maybe. Most of our growth now is referrals from existing customers. So last month, we had 70% of our growth was referrals from existing customers because they are so happy with the software that we provide for them.
How do you track that? Do you pay them a kickback or something? Yeah. Yeah. They get a little bonus basically on the next invoice. It's 50 euros, something like that. So it's not a huge amount. No, 50 euros. So about 60, $65. They get $65 for every new customer they refer to you. Yeah. That's pretty cheap for a referral program. That's nice work there. Yeah, it works out for us.
And the rest of the growth is basically word of mouth. So we don't do any sales or key account management or whatever. It's basically we implemented Intercom on our website to easily reach the entire team. So if you have any questions about our software, we can just type a question in and we will respond in less than five minutes. What about SEO?
So when someone searches terms organically on Google, what are some of the terms you rank really high for that drive you a lot of new trials? Yeah, well, that's hard. It's mostly like German terms, so it's hard to translate off the top of my head, but it's basically like doctors practice scheduling or patient records or something like that. Interesting. Okay.
And are you only focused on the German market right now? Yes, it was easier to start that way, but the entire company language is English. So in case we want to branch out and reach out to other countries, we can easily do that.
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Chapter 7: What role does SEO play in their customer acquisition?
All of our internal documentation is English. The communication is in English. So if we take on new workers, we have one where we had one working from Kazakhstan for a couple of months. It's very easy to onboard those people. So the goal is to roll out an English version of our software by the end of the year or beginning of next year. And Patrick, you've done this all bootstrapped, correct? Yes.
We invested about, I'd say, 150 to 170K in the early days. Again, we have been all self-employed. a very high skill level in our team. So everybody was making a good amount of money before appointment basically. And that gave us the luxury to invest in our own company. So we didn't have to go to investors. We did go to investors, but most of them turned us down.
The Austrian investment scene wasn't really that great. Yeah. So how many co-founders are there that own equity? We have four. Okay. Did you split 25, 25, 25? No, it's more like we started out with two and then added another one and then added another one. So it's more like how long you are in the company, basically. How much do you own today? I own 34%. Okay, got it.
And then I guess whoever you co-founded with in the beginning probably owns around the same amount, right? Yeah, right. And then the other two own a little bit less. Yes, right. I see. Very cool. So what will it take? What skill do you guys have to reach for everyone to quit their cushy full-time gigs to do this full-time? Oh, that's a good question.
I mean, it depends on the fixed expenses that those people have. So... A few on our team, they're like driving Teslas and do have their expenses basically. So they needed to be covered. For me personally, I started out full-time in 2017 or 2018. I took a pretty big pay cut, but I have everything that I need basically.
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Chapter 8: What insights can be gained from their bootstrapped journey?
So it's not really about the money. I like the flexibility of doing my own thing. No, I love the flexibility too. Can I ask you sort of what you pay yourself now at the company being one of the only full-time ones? Um, right now we're about, uh, 4,000 euros a month. You kind of whisper that. Does that like make you nervous? Yeah. I mean, it's a lot of money, right? So it's yeah. Money's relative.
I mean, if your living expenses are four grand, then you're living paycheck to paycheck. Sure. Yeah. Oh, then you're living like a king. That's, that's the point that I was trying to make earlier. We have people who have a lot of expenses every month, so it's harder for them to get by with that amount of money. But I'm very frugal, basically. And $4,000 is a lot of cash. Yeah.
Are you guys profitable? Or do you sort of reinvest everything back into the company? We reinvest most of it. But there's a good amount of profit in there as well. Do you keep just so that you feel good about life in general? Do you keep a cushion in the bank? And if so, how many months of runway cushion do you like to keep? Yeah, we do have about two years left.
So we have enough money to basically do our thing and don't have to worry about anything. Can I ask how much cushion that is in the bank? He's like refreshing his bank account right now. I should have checked on the numbers before the call. It sounds like it's going to be like 150 or 200 grand, something like that. Yeah, something like that. Something like that, yeah. Yeah, yeah.
Because what total expenses are what, like 30, 40 grand a month, something like that? Yeah, not even that. I think with all the salaries and we are very, very tight on infrastructure. So the whole operation basically, or the system is costing us like 25 to 30K a year. So it's very lean, very small. So I'm a big fan of every dollar that you don't spend, you actually have in your bank account.
So this is the philosophy behind this. And Patrick, are people sticking? What does churn look like? It's basically non-existent. We're in a good spot where people, if they switch, and that's the challenge, getting people to switch to software in that environment and in that industry. Once they switch, we basically don't have any churn that is due to people being unhappy with the software.
It's more like external circumstances. For example, we had one customer outgrew our feature set, basically. So they basically turned into a little clinic and they, of course, had to cancel their contract. But most of them are sticking with us for years. We still, I would say, generate just like single digits. Yeah, very cool. Let's wrap up here with the famous five. Number one, favorite book.
Favorite book? Dune, actually. I started reading sci-fi books. What was it called? Dune. Dune. Okay. Number two, is there a CEO you're following or studying? Yeah, a lot. I mean, Elon Musk, obviously. I was a big fan of Tesla and SpaceX and stuff like that. I'm also a big fan of Dan Mall. Not everything he does, but most of the stuff. Great.
Number three, what's your favorite online tool for building a business? Oh, that changes like every other month. I was a big fan of Notion, a big fan of Slack, although I'm not a big fan of Slack anymore. I think they're going in the wrong direction. And quite recently, we switched our internal communication to Around.co, which is a great video communication tool. Why do you like them?
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