Why Speed Beats Perfection in Healthcare Startups

TRANSCRIPT SUMMARY

00:00 Why Speed Beats Perfection in Healthcare
01:17 Delivering Faster Impact for Healthcare Customers
08:06 Why Seth Schedules Weekly Tinker Time
10:47 How WellBe Health Supports Chronic Care
15:30 Validating Ideas Through Real Customer Conversations
20:25 Turning an MBA Project Into a Business
22:34 From First Customer to Full-Time Founder
26:25 Scaling WellBe Health to 75 Employees
28:09 Moving Upmarket to Enterprise Healthcare Customers
33:15 Competing Against Best-in-Class Healthcare Companies
40:12 AI, Profitability, and WellBe Health’s Future
42:59 Start Before Everything Feels Perfect

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FULL TRANSCRIPT:

Seth Merritt (00:00)
You know, we could talk to a customer, put together a plan and just deploy it right away. Go talk to customers and never stop talking to customers ever. Because that's the only way you actually get feedback from people. Everyone has ideas, everyone has thoughts about what this is gonna look like. Do this sooner than I did. You're never gonna have the perfect anything.

Jeff Holman (00:18)
Welcome

back, everybody, to the Breakout CEO podcast. I'm your host, Jeff Holman, with Intellectual Strategies. I'm here talking with awesome CEOs who have who are building companies. They're they're usually building companies in say the five to fifty million dollar range, sometimes a little smaller, sometimes a little bigger. But they're they're here to share some of the behind the scenes moments with us so that we can see, you know, what CEOs are dealing with, how they're making decisions, what what types of points they're reflecting on.

insights they're gaining and and you know what types of breakouts and breakthroughs that they're achieving. So thanks for joining us today. Today I've got a a great guest here, Seth Merritt with Well Be Health and a career that he left that he didn't have to leave, but he left to build this new thing and try it out. And I'm excited to talk with talk with you today, Seth. Welcome to the show. Yeah, it's gonna be good. We we had an icebreaker segment just before this that the audience will probably have seen already, but

Seth Merritt (01:08)
Yeah, thanks. Excited to be.

Jeff Holman (01:17)
I think we dove into a bunch of stuff there. I wanted to kind of pick pick back up maybe where we were. I don't always do this because it's not intended to be like a flowing segment, but you you had so many things that you mentioned in there and I made a note of a couple of them. the one that I wanted to kind of just kick off with here was your comment about how quickly you can deliver or impact your customers in the type of business you're in now. Well like tell me tell me more about that. I think

I think we all would say that seems naturally correct, right? Like startups move fast and big companies move slow and but but that's an interesting phrase to kind of pick out and and and and even vocalize and just say, Well, I I I'm seeing the impact. Like I love making an impact faster with my customers. Wha what t tell me more about what that means to you?

Seth Merritt (02:06)
Yeah, I mean, I spent probably twenty years in health insurance, which is just naturally slow, very risk averse, very corporate, and just moving was was difficult. And I remember, you know, trying to bring things out, whether it was, you know, new ideas around contracting or payment models or just technology things I was trying to deploy with the team and it w it was just like impossible. Everything required.

17 levels of approval. There was always someone who was a no, they didn't like it. You had to convince them for whatever reason, personally, politically, whatever, why this is a good idea. And it just didn't happen. And that that wasn't the reason I necessarily started and became an entrepreneur, but seeing now, you know, we could talk to a customer or we could recognize a gap in our own business early, put together a plan and just deploy it right away.

And whether that makes things cheaper, faster, it's a better product, we see a gap in the market, customers are complaining to us about like X, Y, and Z. Can you solve for it? We can just do it much faster. Or even like from the company perspective, something as stupid as like, Hey, our benefits aren't working the way we want to. We wish we had this added to it. We wish we had some sort of like incentive program for the team, anything like that. We can just do it, you know? And

You see it so much faster. So, you know, for example, you know, we had an issue for for our business, you know, being able to like outreach to patients and explain what the program is. you know, we just didn't have the capacity to go call all of these patients and explain everything. So we started looking at different like AI voice solutions to be able to go deploy it. Within sixty days, you know, we had a fully functioning, like very automated solution that was actually doing better than our own team in terms of

consent build out for the patients. it's quite robust. It answers questions. It does everything we would want it to do. And like thinking about that, finding a new vendor, implementing a new technology, adding AI, putting patient outreach consent into like a new tool.Anywhere I ever worked before, that would take like two years, three years to even just like consider this. And it's like we had it up and running within 60 days. We were able to continue to tweak it. And like I just love that because

You know, we're solving a problem, we're getting patients into the program faster. That's helping our clients, that's helping us. And, you know, it gives us like a whole new tool. We built this thing. And then it was like, hey, this thing could actually do seven other projects for us as well. Like, why don't we build X, Y, and Z on top of it? And it's just like the level of innovation and constant movement is satisfying. You know, so for me, being able to see things grow on the company.

For like the team being able to give them access to stuff that they didn't have before. And then for like our customers being able to give them solutions that they can't do internally. And it's kind of funny. Like we sell a lot of things into health systems and in provider groups and they're naturally slow as well. So it's like we are able to show them, no, we spun this thing up, you know, in two weeks and it's like fully vetted and you know, it's it's got all the

HIPAA security requirements, everything that you would want on it. And just the fact that we can move that quickly is surprising to like a lot of the customers that we end up working with.

Jeff Holman (05:30)
In the in the time that they're they're in their natural cadence with their extended sales conversations and and you're like, Wait, we already built it for you. Like the last from the last call to this call, w the thing you talked about, we listened, we heard, we and we built something. So you you can not only, you know, have it in the future, you can have it right now.

Seth Merritt (05:49)
Yeah, that's literally, I mean, we've put that in pitch decks. Like we'll talk to a provider, they'll talk to us about something. Okay, like let's set up a follow-up call in two weeks. Then we're able to show them, like, hey, this thing is live. We already did this. This is like the MVP version of it, but they'll have something spun up quickly. and for us, you know, if it doesn't work, it doesn't work, that's fine. We've learned something about it. But if it works and it's valuable or we see the value in there, even if it's not for this customer, it gives us something to like focus on in terms of building. So it's kind of interesting to see.

you know, let's us push sort of the forefront of innovation and technology and things that we can do to make our business better. and also lets us show customers what is out there. Cause I think a lot of them are probably in the same position I was in, just kind of frustrated by like, I see there's value, there's ways we can be doing this differently, but I'm stuck within the constraints of my organization that doesn't want to move here. So we try to put things in place that make it easy to kind of like move the needle.

Quickly for our customers.

Jeff Holman (06:51)
I love that. I love it. As you're talking about all that, I I've got some personal theories about what I call insight profiles or or maybe you could call innovation profiles. You you mentioned, you know, 'cause when you talk about the ability to move fast, iterate, you know, with your customers in real time and and just the satisfaction that brings, the impact it creates, it makes me wonder a a little bit more about you personally, Seth. Like would you say that

That what drives you is the fact that you're creating the impact on the customer. Cause I think different different people have different reasons, right? And it's and I think we could wrap it all up in one big ball, but I I'd love to know if we can maybe maybe dissect it a little bit more. Is it the impact you're creating on the customer? Is it is it the fact that you're able to build something and have it done and be like, look what we just made. Like it's, you know, fun to have something that you built and it sits in your hands or sits on your phone and you can use it.

is it just the the the innovation process, like the idea of exploring into the unknown that you like? Like is there a specific part of this of this kind of innovation process or this impact process that that really drives you? Or is it really kind of you love all of it?

Seth Merritt (08:06)
I love all of it. As you're saying that I'm like, Yeah, that's it. And then the next thing like, Yeah, that's it. No, that's it. I definitely love tinkering with things. I've I've definitely found myself to be a builder and that's something that as I've evolved in my like C CEO journey and like less around the tinkering and building, that's a gap like I miss. So I actually carved out separate time on my calendar called Tinker Time where I just like build stuff. nice that's

interesting to me, you know, and try to deploy it out to like our product team to kind of take it from there. But I love building something out of nothing and I love the innovation process of getting something together, getting feedback on it. I think one of the biggest gaps in like any sort of evolution is just doing the first step. Like everyone has ideas, everyone has thoughts about what this is going to look like when it's completed. Not that many people are willing to be like, okay, well let me get the first like crappy version out and just see

works. So I'm always like, let's get the first crappy version out and just see if it works and then we'll fix it. but then I also do love, you know, the recognition from like your your customers that when they see something and react to it and say, this is awesome. This is innovative. This is not in the market. I love what you're doing. Like build more of this for me. Like I do enjoy that. But I think what's actually driving me to do it is probably

fundamentally centered around just like building something out of nothing and and creating something that didn't exist before.

Jeff Holman (09:35)
Okay. Yeah, that's fair. And and I think we're all kind of a mix of of these different profiles. But there is one one of the profiles I I actually designate as a builder and the building process is fun because I think you know, if you're driven by the building or you're driven by the, you know, the networking, the social side of it, you're driven by the innovation, whatever it is that drives you, I think there are some there's some things that counterbalance that too. Like sometimes our fears sit in different places, depending on what it is that we like to do.

you know, a builder might want to build regardless of the regardless of the validation they get. whereas an innovator might say, I'm gonna explore I'm gonna explore something new regardless of whether or not I end up building something. Like I it's the exploration that I like. And so I th I think there's this balance between our interests and maybe our our fears or our kind of inhibitions is probably a better word, for each of these types of profiles. So thanks for sharing that w with me 'cause I I I'm

I'm doing some informal informal s surveys, I guess, or some studying on my own time about these types of things. So I'm just curious

Seth Merritt (10:40)
I think it's definitely builder. that's that's what I would resonate with of all those just fundamentally what I think pushes me.

Jeff Holman (10:47)
I love it. I love it. Well, let's get into what you have built then. Welby Health, tell us a little bit about Welby Health and you know, give us some history about the, you know, where it came from, what it looks like today, and we'll get into later some more of the you know, building is kind of the first stage in the breakout arc that we're gonna talk about. What you built, then we'll talk about maybe what broke and a breakout moment and then the breakthrough at the end.

Seth Merritt (11:12)
Yeah, sure. So high level basically like WellBe Health provides care for patients for their doctors in between all those office visits for those patients who have chronic diseases. So we focus on things like high blood pressure, diabetes, congestive heart failure, things that happen that are not going to get solved in the fifteen minute office visit when you go see your doctor. That all happens in between the visits. So making sure

People are compliant with their medications that they need to be on, answering questions for them, making sure they're showing up to their specialists, making sure they're, you know, on a diet program, exercise, all the stuff that has to happen. So basically, we provide that that care for doctors, basically in between the office visits for their patients who need it. and it's it started, we started essentially in 2022. That's when we like launched. And like I said, I had spent my career.

working for health plans, we were trying to make this shift into what they call value based care. So moving away from just billing every single time you come into a visit to basically how do we pay doctors for outcomes. And what I saw from the from the payer end was really not much more than like a financial exercise of like shifting who's at risk for payment. But at the end of the day, everything's still centered around an office based visit for care. So

Jeff Holman (12:30)
Transactional. Very transactional, not outcome based.

Seth Merritt (12:33)
Yeah. And what we were doing was basically we'd go into these like health systems provider groups and and say, Hey, if you can better manage the population, we'll cut you in on some of our money. If you can't manage the population any better, you owe us money back because we're taking risk now on you. But at the end of the day, we weren't talking to patients or doctors who were the only two people who really matter whatsoever. This was just like, Okay, we have a new contract structure about how we're getting paid, but

Who's going to change the way care is delivered to that patient? You know, they're still going to walk out of the office not knowing what to do about their diabetes. The doctor's still trying to see 20 patients in a day to make sure they hit their numbers and nobody's really getting the care they need. So kind of my builder thing we were talking about, I was just bored and I was like, hey, I'm gonna I'm gonna learn how to write software. So I wrote a patient-facing app for diabetic patients to just see if we

gave them tools to learn more about their health, how they could, you know, eat better, diet, manage their stress, that that kind of stuff. It's gonna move the needle on their diabetes. so I built something, assuming it would just like die. You know, I was doing like five other projects at the same time just for fun. And like patients actually downloaded this and used it, which to me was surprising because like, who am I? Why are you even downloading this app and you're trusting me?

Jeff Holman (13:51)
Did you do this inside of the company or or was this outside side project?

Seth Merritt (13:55)
This was outside side project. So this was just something I was like building off on my own. it was actually when I went back to get my MBA and we had to do like a project. So I was like, I'm gonna do an actual project. And part of the coursework was like going out and talking to customers, actually like iterating the product and like reporting on what happens. So it was like a little bit of a formalized process. and it was just kind of interesting. Like we did it pay like when I talked to

patients as customers. They were like, Yeah, I don't have anything like this. I would use it. so I was like, okay, I'm gonna talk to some of the providers that I work with. They didn't have anything. So it seemed to me there was a need there. There was a patient need, there was a doctor need, which was kind of surprising. Again, like this was me building something in my loft. I'm not a engineer. I'm just building what I can figure out on my own through YouTube videos. and realized this was totally pre AI

Jeff Holman (14:47)
Pre AI, right?

So when you say build something, that means something totally different today than it than it did in twenty twenty two, like

Seth Merritt (14:55)
Yeah. It's even worse now though, because now my like CTO is like, Seth, stop like building stuff 'cause now you can generate like new stuff with with Claude in a

Jeff Holman (15:04)
Every

week you're like, Hey, I got an idea. He's like, No,

Seth Merritt (15:07)
Literally they're just like, stop, let me like implement the last thing you did. But yeah, this was like back in the day, you know, just building something from scratch and just starting it. And then yeah, when I realized there was actually a a need for on the doctor side and on the patient side, I just spent a little bit more time with it until it actually, you know, ultimately evolved into what Welby is. But I can I can go into that if you want.

Jeff Holman (15:30)
Yeah, want to get there. But but tell me how you did the valid validation with the project because that's you know, that's a hard part for a lot of people. a lot of our CEOs are are obviously past that point. They're they're into the scaling r stage of their business. But but for any listeners that we have that are kind of at the founder stage, their early stage, trying to get validation. Like what did you do? Did you go to doctors first? Did you go to patients first? Did what did that what did that look like?

Seth Merritt (15:55)
Yeah, I would say this is probably the best advice is like go talk to customers and never stop talking to customers ever. Like I think people don't do that enough. Even like founders who are scaling businesses, like I don't think they talk to their customers enough. And it was awful. Like I hated randomly like going up to people in coffee shops or like w cold calling, walking into doctor's offices and being like, Hey, I'm working on a project. Would you look at this? It was

It was very uncomfortable, but it was totally worth it because that's the only way you actually get feedback from people because anyone is gonna say yes on like a phone call or an email and be like, yeah, this or your friends are gonna be like, yeah, this is totally cool. You should do it. You should not do that until you actually talk to real customers who would would pay for it. but yeah, I literally, you know, went into coffee shops and showed

Jeff Holman (16:45)
Yeah.

Seth Merritt (16:46)
random people like, hey, I'm working on a project for school. I'm thinking about this business. Like, would you use something like this if it if it was available? And, you know, I would get stories about people or their parents or like their friends or like what they're using for this kind of stuff. and then took that to to doctors and it was a different value story, but it was like, hey, if I could do this with your patients and this is how it

you know, worked for you afterwards, would you use something like this? I literally had to like walk into cold doctors' offices and talk to them or talk to their administrators and, you know, explain what it is we were doing. And all of them were like, Why are you here? you know, but it was like really good to get their real feedback about how it was actually working.

Jeff Holman (17:33)
Were any of those doctors' offices that were they receptive to it or were they all kind of like, this isn't our normal process?

Seth Merritt (17:39)
No, they were receptive to it, but they were just kind of like, Why are you here pitching me some product that doesn't exist? You know? they were busy, so they were open to it when I would explain what it was, but it was just, you know, odd for someone to just show up into like their primary care physician's office and start asking them about some business idea that they, you know, were not expecting.

Jeff Holman (18:00)
Especially if you don't bring food or pens or something to get to them, right? Totally. Well so so what is it you found from that process that that kind of became the core of what you built out, you know, as the business today?

Seth Merritt (18:14)
I think it just validated my fundamental assumption that there is a real gap on the provider side, the actual physicians who are trying to manage these patients, who have chronic health issues, that they really have no solution. Like if I'm coming in there with sort of bottom of the barrel MVP thing I just barely put together and they don't even have anything that good, I'm just like, How are you actually doing this? You know, like I know the experience, like both of my parents.

Our profile customer, you know, patients who have diabetes hypertension trying to manage the stuff at home. And when I talk to them about what are you doing, like their doctors aren't paying attention, like they're on medications for it, they're really not like engaged in any sort of comprehensive plan about how they're gonna deal with it. And just seeing that this is how the vast majority operates was was eye opening. And my thought from there was, okay, well, we they need this.

If I can figure out a way how to monetize this within like the current structure of payment, then we would actually have a business. So that's where I went back and said, like, okay, here's the core issue. You know, we're trying to connect with patients who have these chronic diseases at home. What is the reimbursement mechanism we could like tack onto this? and then we were able to find some reimbursement for it. So it was at least like covering costs. That was probably like

the breakthrough, at least initially of like, well, how am I gonna actually go do this? How am I gonna convince a customer to go pay me for services was tacking on some reimbursement level to it so we could build a value story around ultimately like how do we provide better patient care for your patients?

Jeff Holman (19:55)
Yeah. I I love this 'cause I I'm really curious. I did my MBA program, we did some of these types of projects and I'm trying to think if anybody from my class ended up starting a business around the project they did, and I don't think they did. And maybe it was because it was an executive program and people had jobs and this was you know, this was more like an assignment. Was there a point where you're did you go into this assignment or this project and say, I like I wanna start a business? Or did this start out more as an assignment and it and eventually you're like, wait a second.

I think I gotta start a business around this.

Seth Merritt (20:25)
It was kind of both. like it was the assignment, I was doing the assignment, I wasn't sort of guaranteed a business was gonna come out of this, but I also was like, I've invested time in this. I know this could be a business. If I'm going to vet it out, I might as well do this. Like one of the assignments was, you know, build a whole marketing strategy around a business. And some of the other people in the course were like, I'm gonna take a shoe company and like write a whole marketing plan around it, or I'm gonna take, you know, like

Publicly traded company and write a marketing plan around it. Like to me, that's just waste. It's you're gonna throw it away. Like, if I'm gonna do it, why don't I do the marketing sear summary on our business and like think about it, get feedback from it? And I would I would always complain to other people in the class. I was like, you guys are literally throwing away just a massive opportunity to like learn something here just by kind of like phoning it in and getting the assignment done. Yeah. Because there was there was one class.

It was so awesome because they literally took people from undergrad and it was like computer science, engineering, marketing, business, and paired them with an MBA team to like go build a program. It's like I have free engineering talent, I have a marketing talent, I have computer science, I have a business major in here. Like I literally have an executive team. They're obviously college students, so they're not

Jeff Holman (21:48)
So they're not constrained by convention is w what that means, right?

Seth Merritt (21:53)
Exactly. And they were like like some of the other people were just like again doing sort of like just boilerplate stuff to throw it in. But I'm like, you're not gonna have this experience where you get to work with this group of people who can bring like a lot of unpaid labor to like build something out. So if you're interested in starting a business, you should take advantage of the resources that you have here. Cause I found that hugely valuable for me.

Jeff Holman (22:19)
Yeah, I love I love this. What did the trajectory look like as you started to build? I mean, when you you brought people on, you you started to find customers, like where when when did you feel like you were kind of in the groove? Like, hey, we're we're actually building a real thing here.

Seth Merritt (22:34)
so I was doing everything when I started. I was like doing the marketing stuff, I was doing the code development, I was doing the cold calling. I was literally like cold calling physician offices to ask them if they would deploy this program. two points, maybe three. One, like we got our first customer. That was insane that somebody actually said, Yeah, I'll sign a contract with you to go do this. I'm like, that's awesome. Then I remember like doing work for him.

And then he actually paid us, you know, we paid at the end of the month and it was like an eight hundred dollar invoice or something. And I remember feeling so excited, like, my God, this guy just paid us eight hundred dollars for like this app I built in my, you know, loft here. That that sort of validated that there was a customer, even though it banned, you know, nothing in the grand scheme of things. And then where I really knew we were like moving was basically it came to the point where.

You know, I was still working my day job. I was doing this on the side after hours and it just got to the point where like I couldn't even service the customers. Like I was trying to like hire some people to like do some ad hoc work for us. I was trying to respond to customer questions about things. And I'm like, I either need to shut this off or I need to go in full steam and do it. and that's where I was talking to my wife about like, hey, what do you what should we do? Like, I think I can make this work, but I'm gonna have to quit. And then

The deal was, well, if you can at least like replace most of your salary, at least your base salary, like you can go do this. So I'm like, okay, how am I gonna go do this? I have to go raise venture capital. And then I found out how to raise venture capital. Like got a list of people I should reach out to and started that process. And that's where I felt full on when we finished like a round of fundraising. I was a W two employee. We hired like our first real employees. That's that's ever since that I realized this is like

Definitely a full on business that I'm running and transferred from being, you know, my side project into the actual company.

Jeff Holman (24:36)
And when was that time frame approximately?

Seth Merritt (24:38)
That was like the first customers were like twenty twenty one, I think. and then that got too big by like Q three of that year. So that's when I started looking to raise money. And then I quit and started full time like the beginning of twenty twenty two.

Jeff Holman (24:56)
Okay. Well you were in that ti did did you hit the timing well on the funding side? 'Cause that was there were there was a lot of lot of money flowing at one point and then it shut off pretty quickly.

Seth Merritt (25:06)
Sort of like I I got like the tail end of when the funding was pretty clean. Like I don't know if I could get funded now or in the last year because it got more tight for sure. So it was definitely like a nicer time. But then at the same time, every time since then, if we were raising, it was always in like the worst possible time. You know, it was just all downhill. So we were kind of it was kind of funny. Like I had the easiest time with

zero customers or like, you know, a handful of customers and a deck. Whereas every other time we tried to raise money, we had like real growth, real customers, like a real process. Like things were good, but it was always like, well, you could be doing better. You know, we we want you to be like double the margin or double the revenue or double the growth rates or or whatever. Where, you know, it's like I I can only do so much. You know, we haven't raised that much money where we're just gonna go

blow the doors off or anything. so it was kind of funny. We started at a good time and then every time since then it's always been a tight market. But, you know, we've done we've done well enough.

Jeff Holman (26:12)
Yeah. Well that's good. Well tell tell me and give me a picture of where what what does the company look like today? How many h what what do you want to share about that? Employees, revenue, customer base, like whatever whatever you want to share or not share.

Seth Merritt (26:25)
Yeah, we're bigger than I thought we were gonna be. So we're about seventy-five employees right now. so it's managing a bigger team than I had really ever expected. We are, you know, in the like high single digits of revenue, still at like a double digit growth rate. So our goal from twenty twenty five to twenty twenty six is about double revenue. So looking to end at about twenty million in revenue. And the main thing we've been really focused on is how do we scale this.

company appropriately. You know, like it does require a lot of headcount. It requires a lot of staffing to be able to manage that. And, you know, doing that thoughtfully in a way that actually like produces value for us and for our customers is important. So we've been trying to kind of like dial back and understand how do we scale the organization effectively in terms of hiring, you know, comp structure for our employees, like growth plans for our employees, all that kind of stuff. Because, you know, we've a

We've probably like 4X'd in size in the last twelve months. just based on growth rate from the customers. And we've really, you know, part of where we did sort of, you know, have a break and breakout was around like the customer profile we've pursued. We started moving further up market and it's been really game changing for us in terms of just the value story, how the sales process works, how those things scale, like what outcomes they're expecting. And we've been

really targeting like a much bigger customer base and moving from like the S B kind of small market into much more enterprise, you know, health system market where they have a different pain point, I think, than like the independent practices we started with.

Jeff Holman (28:09)
What what at what point did you recognize that that you needed to do that? I mean, was there a was there an issue? Did the the revenue stall? Or was it just you know you're just looking to add revenue, push by investors? Like what what was the or maybe maybe somebody from the enterprise level came and said, Hey, we've been looking for somebody like you. Ha ha like w what what happened in the business where you said, Huh, we we've we've got to do something a little bit differently than what we've been doing?

Seth Merritt (28:34)
It's actually funny. So like we would see these providers, the smaller providers, and really like their sole focus was on revenue. Like all they really wanted to see was like revenue driving. And I knew that wasn't our value story. You know, we were not gonna get the cheapest stuff in the market. We're not gonna like skimp on technology or on people. And they just wanted like the cheapest thing and like generate the most revenue for the practice. So they were literally like, Well, just, you know, kick these patients off the program if they're not generating revenue.

It's like, no, that's not the point of the program. It's not to generate revenue. So it was it was kind of like a fundamental concern with them. And then as we grew, it was like we had these great revenue numbers, but then it was a struggle to ever get them to pay. You know, so it's like, okay, we generated a million dollars in revenue, but it's like I'm not getting the cash for like 90 or 120 days because they are treating their contract as, you know, a guideline rather than like a process. So I was like, we need to move. And it was actually funny because

I got a lot of pushback from a couple people on the board who were like, don't go enterprise. There there's gonna be a two year sales cycle, three year sales cycle. You're not ready to compete with those people. Like you're doing well growing with these like small customers to do it. And I was like, No, I don't think that's our right profile. I don't think they're I don't think we're serving them the way I want to serve our customers. So it was a bit of a like debate.

And we're like, I know if I fail at this, I'm going to hear about it. You know, so it was pretty, pretty deliberate for us. And we just knew we had started getting into these like larger customers that were, you know, 10, 20, 30 doctor practices. We nailed one enterprise customer and could just see like the conversations they were having with us were much more aligned to what we wanted to do. Yeah. So I was, you know, we knew if we could show how we could scale this customer up, even if it was just one of them.

it was going to be a much better value story. So we ultimately like split our customer profile into like no more selling into small market customers. 80% of the time should be invested in the larger end of mid market and then keep 20% of the time to enterprise customers. And we started building more of like a referral base of customers who were, you know, referenceable in that space. So we had to like move up, get some customers that

looked like the other customers we wanted to be able to, you know, use them in a sense to show, yeah, we've done this before with another customer that looks like you.

Jeff Holman (31:05)
Sounds like you had a very programmed approach to to making this transition. It wasn't just, hey, we wanna we wanna get a bigger customers, let's go figure it out. Sounds you and maybe there was some of that, but would did did a lot of this come from the team or did it did did you have to push for it? Like how did the team respond when you said, I think we're gonna stop selling the to the customers we have right now?

Seth Merritt (31:27)
Inter yeah, we literally went through and said, I think I'm gonna terminate all of our customers right now because

Jeff Holman (31:32)
Not only stop selling, you're you're gonna be like, I think we're done with

Seth Merritt (31:36)
Yeah. I mean, we just put through like, hey, if these customers like met this criteria where, you know, they were small panels, they were not paying on time, they were difficult to work with, like, we're just gonna issue a term notice and be done with them. These ones, if we think we can maintain them, here's the criteria we need to be able to keep them. They need to grow to a certain level, they need to make sure they're paying on time, updating their contract. So we did keep a handful of them, but then going forward, was like, we're not selling to this customer anymore. We need to sell to these other customers.

I think most of the team was super happy about it because, you know, like our operational team was like, hey, this is way more like predictable. I understand how they're gonna work. It's easier to manage one large client than ten small clients. But the one place I would get pushback would be from sales where it's like, hey, I was successful selling into this small market account. Now you're asking me to sell into something that is more difficult. but we've kind of went through the whole Yeah. And

I mean, it wasn't it wasn't like difficult, but it was just like, okay, well, if you're gonna make me sell into this new kind of account, I need tools to be able to like sell effectively into the account. So we went through kind of like a whole ideal customer profile exercise. What is their pain point? What exactly is the customer we're looking at? Where do I get these leads and like how are we gonna go pursue them? So it did require like reinvestment on the company side of okay, let's get

together the materials, the messaging, like the marketing and everything we're doing after this specific customer, to help them sell a little bit better.

Jeff Holman (33:15)
Was there anything in that transition that that surprised you? Like what what didn't work out the way that you thought it would? And maybe it was better, maybe it was worse, but but what did you try and you're like, I think we're gonna get this, and then all of a sudden you you learned that that's not how it worked.

Seth Merritt (33:30)
I was surprised in a good way about how well we competed and that market and how we were basically over engineering and overselling into the small market. So, like we were investing in things like the technology and, you know, how we were investing in our clinical team, where I think our earlier customers didn't even see the value in any of that. They didn't care one way or the other whether they had an awesome nurse on their panel or a medical assistant on their panel.

And then by the time we did start selling into the bigger practices, you know, they were evaluating us against really like best in class competitors. And they were like, Yep, you guys are head to head. Like it's gonna come down to X, Y, and Z, whether it's, you know, pricing or reliability or, you know, relationships or something. But it was never like, your technology is way better or their solution is way different and better than what you're doing. We were always really competitive that was surprising because, you know, like I said, we're

relatively small, like in the space. and to think we're able to compete with so much less resource is, you know, was exciting to kind of see.

Jeff Holman (34:39)
Yeah, I was gonna say that's gotta be validating for somebody who's who's kind of a proclaimed builder, you know, to be the one who says who who I'm sure you contributed a lot to the how that system and those pro policies and processes were built out. So seeing that it seeing that adoption was not as difficult as it could have been otherwise with these this new ideal customer profile, that's that's gotta be really exciting.

Seth Merritt (35:02)
Like that's why we start we literally started like I would take anybody, like anybody who was willing to sign up and pay, like there was no criteria. If you were willing to do it, like we'd figure it out. and I was always afraid, like, I don't want to put this in front of anybody who, you know, is really gonna like vet it out because like it's untested. You know, we don't know if this is actually gonna work, how everything is gonna operationalize. So I just got like more comfortable with that as we started dealing with bigger and bigger people.

Now I'm very confident, you know, we can put this up against anybody, whether it's, you know, our clinical model or our software or hardware solution, like anything I know we would do at least as well or at least be fine being in the same room, even if it's like, this one's like a little bit nicer on X, but nothing where, you know, I'm I'm ashamed of the product, which is exciting, you know, and it's not not just me like everybody's built this out and just seeing kind of how that all expands has been exciting.

Jeff Holman (36:00)
Yeah. Yeah. And when you're I mean, the metaphor I like to use is when you when you paint your own house, you know where all the flaws are, you know where all the drips sit. So it's it's nice to have somebody come over and be like, this is really nice. I you did a great job. So I

Seth Merritt (36:13)
Actually funny 'cause that is like I'm the worst at trying to pitch anything for the company because like I know everything that we've done and like

Jeff Holman (36:23)
Do

you caveat everything? You're like, Hey, by the way, I probably don't need to tell you this, but I'm gonna let you know.

Seth Merritt (36:28)
Yeah, exactly. Or like, don't talk about this thing 'cause this thing's like broken. This is not like the way it's supposed to be. So I've tried to like divest that that off and like not spend as much time with it. Or to your point, like I understand that I'm the I'm the painter, I know what happened and it's still a good paint job, even if like I know what's sitting underneath it. 'Cause I think everyone deals with that as a you know, a builder or doing something that that they put together.

Jeff Holman (36:54)
The good thing though is is it doesn't stop you, no? I've I I've worked it doesn't stop you from taking action, as we I think we talked about earlier. Because I know a lot of inventors, and I call it the inventor syndrome, right? A lot of inventors who like to invent things but not actually make or sell things. They just invent and then they don't want anybody to call their baby ugly. So they don't ever show their baby to anybody. And you're like, well, that was an expensive, you know, expensive trophy like like the ones you see back here, right? expensive trophy to buy, but

But you know, you kind of missed out on all the fun of building the business from it. So I'm curious, is there anything from the kind of the core from the early days that you built that carried over into the product today and has been, you know, or or or did you or did you have to rebuild it for the new client and all of a sudden it's kind of a different product? Were there any threads that kind of carried through?

Seth Merritt (37:49)
I mean, every like even the core application is still the same thing we built originally. So the actual software is the same. It's obviously been way bulked up and built upon, but there's still things, the stuff that I actually built that I'll still go in there and see. And it's kind of funny. Like I I will randomly go into the software and I'll like, man, this is cool. We did this. This is nice. I didn't know this was here. but the main framing of it is still the same. and

Like the model ultimately is still the same. But from a a building perspective, I'm not allowed to touch the core code anymore. my CTO won't let

Jeff Holman (38:26)
Not

your not your role anymore.

Seth Merritt (38:28)
Yeah, no, he doesn't let me do it. But I was doing it cool for quite a while.

Jeff Holman (38:32)
Yeah, that that's really cool. It sounds like it sounds like maybe a testament to the to the validation that you did early on and what you built matched the validation probably, so

Seth Merritt (38:42)
Yeah. I think that isn't like that's one thing that's kind of cool or interesting is I'm not a super technical person. I mean, I can fiddle my way around to get it done, but I I had enough to like build an MVP. So when I did bring in a CTO, he didn't have to figure out like what's in your head, Seth, like how am I gonna go build this? It's like this is functioning. I need you to go learn from what's working and then how do we like make this enterprise scale?

And he came from no healthcare background whatsoever. So it was kind of like an interesting matchup where I just showed him this these are the core things that like need to happen, but I need you to build it from like a technology perspective. And he kind of kept the core things, ripped out what didn't need to be there, started building on top of it, and just learned a ton. So, you know, I was able to give him enough to work with so he could kind of understand how the healthcare stuff operates. And then now he's so vested in the actual program.

you know, that he really is the one who's like building more of the expansion and ideas and things like that. So it was kind of an interesting blend, you know, when I found my CTO to really like help scale it. But he's been super instrumental in getting the product where it is now.

Jeff Holman (39:55)
Yeah. No, it's cool to see what you've built. and the adoption and y you know, doubling your revenue this this year is that's a that's a fantastic metric to to hit. Are there other things in the business where you're you know you're excited for what's gonna for what's kind of on the roadmap for the next three to five years?

Seth Merritt (40:12)
I mean, our our big goal is to really get like a handful of additional enterprise customers. Like we're starting to get into more like you know, it's like risk sharing arrangements with some of our customers, expanding into different clinical services. Like we started doing things with like OB care for, you know, high risk pregnancies and things like that. So just seeing how far we can evolve the model and from a regulatory perspective.

I think just a lot is changing and pushing more in this direction, whether it's how do we use technology and automation to help patients like get better care, get better access. and then also with all the stuff with AI, how's that gonna fit into like the model? Like I said originally, we had to find some sort of financing mechanism that pays for things. So as, you know, Medicare or any of the the commercial plans start paying for, you know, AI.

based like treatments or assessments or anything like that, like being on the forefront of that, because I think that's going to be super exciting about being able to do that. We always say, you know, our AI is not making clinical decisions. It's superpowering the people who do. So being able to like use more of that to help people make their decisions clinically is going to be exciting. my shortest term goal is like, I want to get the business profitable. We're we're quite close to getting profitable, but

Being in a position where you're not required to raise, you know, venture capital or debt to kind of sustain the business would be super exciting for me. like I've never been one of those people like, let's just raise a ton of money and like burn a bunch of money and then figure it out in two years. Like I've been very thoughtful about how we spend money, where we're spending it. And again, back to my initial point about being validated, like to say.

We built a profitable company that's generating revenue, generating returns for like our investors would be super exciting. So I really want to focus on how we operationalize this in a way that eliminates a ton of the risk, if not all of the risk, of just being a sustainable business first and foremost. And then how do we, you know, take that success and then scale it up into a bigger version of the company?

Jeff Holman (42:26)
No, stability. there's there's value in stability, right? The getting to that point where you say, we can we can sustain this for the long term. is there is there part of your journey where you would where you would if you were talking with either your younger self, right, in in the business or or somebody else who's on a similar path but maybe hasn't crossed all the all the bridges that you've crossed. Is there something you would tell them, some type of advice you'd give to them?

from your journey an insight that you could share that they might not be thinking of?

Seth Merritt (42:59)
if I was telling my younger self, I would definitely say do this sooner than I did, you know, because like it would have been way easier to start. I mean, I don't I don't know. I mean, part of me thinks, you know, starting a business straight out of college is way easier. You know, I started my business, I was in my forties, you know, so I had a mortgage, I had kids, I had a wife, I had pets, you know, it's like how do you give all that stuff up and like go into this like high risk.

place. You know, it's super hard and it's not going to get any easier. You know, so if you wanna build your career and then go start a business, like the odds probably go down dramatically. So if you're gonna do it, go do it. And then just the general thing is like, I think too many people wait until they've got it all figured out and like, okay, I've got the perfect business plan. I've got the perfect amount of capital. I've got the perfect team around me. Like now I'm gonna get started. And like that's never gonna happen. You're never gonna have the perfect anything. So

If you've got a thought, you want to go try to do it, go do it. I tell everyone the the coolest thing that ever happened to me is I read a book called The Hundred Dollar Startup. And it was literally, I don't know if you've ever read it, but it's like literally, how could you start a business with a hundred dollars? And I was always of the mindset, I gotta raise ten million dollars in venture capital. I've got to like fund my whole team, I've got to build a product, and then I'm gonna go sell. And this hundred dollar startup was basically, you know.

If you've got an idea for a clothing company, put up a website with some designs on it. If people actually come to it and want it, you know you have a viable business. If nobody does, don't bother. If you wanna start a consulting business, make a website and say you've got consulting resources. If people actually will pay for you, they'll go there. You know? So like you can actually find out pretty quickly and cheaply whether your business actually makes sense and there's no need to go hire a whole team, especially with AI now. I mean like

You could spin up a website, build an MVP, get stuff like out and running into the market pretty quickly. And they'll tell you whether or not your business idea is stupid or not. You know? So like just go build it, figure it out. And where we are as a company now is probably like, if not 180, maybe 150 degrees different than we were when we started. And it's just because of what we learned as we were building the company and

recognizing customer problems, seeing things we could do better and, you know, evolving the company. Like we started, it was like not supposed to be a clinical services company. It was it was all technology. And then as we talked to people and look like looked at the market, it was like, it doesn't matter if you have an app, if they don't have a someone to work with, it's not going to move the needle. So we ended up like staffing up all these clinicians. So like I thought we were building a tech platform. Now I employ like

60 nurses to go help these patients with their care. But, you know, it's just what has to happen. And it's it's worked out. You know, we've been able to build careers for some people here. we've been able to like really help a lot of patients. It just wasn't what I thought we were doing, you know, and you're never gonna have the roadmap kind of mapped out for you.

Jeff Holman (46:07)
Your point about the hundred dollar startup, the the the cup of coffee doesn't cost that much. I I I I hope someday I read an article that you've written about your your coffee shop validation efforts. I think there are a lot of people that would benefit from that. Sounds like it's in alignment with the hundred dollar startup yeah concept too. Well, Seth, this has been a fantastic conversation. sorry to sorry we've come to an end here, but I gotta let you go. You you probably have some important stuff to get back to that I'm keeping you from. But

Seth Merritt (46:25)
Yeah.

Jeff Holman (46:37)
But this has been fantastic. I really appreciate you coming on the show and sharing some insights, talking about how you've built your company. Is there anything, if you just put a plug in for Welby Health, anything you wanna you wanna leave with the audience or somebody who might hear this?

Seth Merritt (46:49)
Yeah, just any happy to give input to any other CEOs who want help. I told you it was a it was it was a lonely, interesting job. So anyone who wants to chat, always open to it. And then we're always looking for customers, you know, if you've got anyone in the healthcare space that wants to learn about what we're doing, you can go to WelbyHealthy.com and take a look. we're also hiring a bunch of clinicians. So if you know any good nurses, send them over our way. Happy to talk to them.

Jeff Holman (47:14)
Love it. Love it. Well, appreciate you being on the show today, Seth. it's been a pleasure having you here and glad to get to know you and your company.

Seth Merritt (47:22)
Yeah, awesome. All right. Thanks, Jeff.

Jeff Holman (47:24)
You're welcome. And for everybody else who's joined us on this episode of the Breakout CEO, thanks for coming and we'll see you next time. Be sure to follow or subscribe on your favorite podcast platform. And if you enjoy the show, a rating or a review goes a long way. Our mission is to promote the stories of breakout CEOs in scaling SaaS, e-commerce, and tech companies to equip peer CEOs with valuable perspectives and confidence.

Thanks again for joining us on this episode of the Breakout CEO. I'm Jeff Holman, and I'll see you next time.

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