Catching a Steady Wave🏄

Jason Yeh
October 26, 2021
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October 26, 2021

Catching a Steady Wave🏄

In 2016, Guy Friedman was a successful startup founder with an exit. Most would think that would make raising money for his next company SteadyMD a breeze. Instead, none of his prior investors decided to back him and he was on a familiar grind to getting funding. Fast forward to 2020 and Guy was steadily growing his core business when a wave hit in the form of acceleration towards telemedicine. All of the sudden he was surfing and fundraising became a very very different experience.

Episode Summary

In 2016, Guy Friedman was a successful startup founder with an exit.  Most would think that would make raising money for his next company SteadyMD a breeze. Instead, none of his prior investors decided to back him and he was on a familiar grind to getting funding. Fast forward to 2020 and Guy was steadily growing his core business when a wave hit in the form of acceleration towards telemedicine.  All of the sudden he was surfing and fundraising became a very very different experience.

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Episode Transcript

[00:00:00] Guy Friedman: So it's kind of started out asan experiment and then unlike anything I've ever experienced in business, itwas just a crazy, almost viral pot in terms of inbound demand to us for thatservice.

[00:00:21] Jason Yeh: This is funded a show wherefounders who raised millions in venture capital share the gritty side of whatit actually. To get that money in the back. I'm Jason Yeh. Not too long ago. Iwas trying to get my ideas funded. And back in the day, I was a VC listening tofounders, pitch me for money. Huge advantage to fundraising is having raisedbefore.

[00:00:44] Jason Yeh: The answer is yes, according totoday's guest, but it's not for the reasons you might think because not asingle one of guy Friedman's past investors went for his current venture steadyMD, a telemedicine startup that just raised a $25 million [00:01:00] series. Led by deluxe capital. Instead itallowed him to go through fundraising with the Zen calmness around rejectionthat makes some of the best fundraisers, so successful.

[00:01:12] Jason Yeh: And Friedman's past experience.Raising millions for startups in the education space, helped him see anopportunity that makes sense now, but felt like a pipe dream only a few yearsago, telemedicine made available to all 50 states, but in between his series aand series. He and his co-founder made a pivot to that vision instead ofgrowing a consumer-facing operation, he wanted to grow steady MD as a B2Bplatform, but flash back to 2016 and guy just knew he had a good idea and aspace.

[00:01:45] Jason Yeh: He was excited by

[00:01:49] Guy Friedman: with steady envy. Um, I wrote mydad an email. And I didn't say, what do you think this idea said, this is, thisis it. I know it. And I have to do this. [00:02:00]And so I think when you have that moment, you sort of, once you getexperienced, cause I have hundreds of ideas, you know, I'm not one of those.Uh, I always find it interesting when people say I can't, I want to do a start,but I don't have an idea.

[00:02:12] Guy Friedman: I have like 10 a day. It's just,you know, um, so I wasn't hurting for ideas that were all great. But there'sthese ideas in the category of, I hope someone else does this and I can justuse it, you know, or I can, I can, I can be a customer of this, but I don't wantto build this when I thought of steady. And the, I just, I knew it.

[00:02:33] Guy Friedman: So I just like, I have to dothis and there was no stopping me or no, no debate

[00:02:38] Jason Yeh: about it. Okay. Can I ask you aquestion and I'm going to make a guess and I could be wrong. When I look atyour background, you know, you studied economics. Went to business school atWharton, like both at Tufts and Wharton, both amazing institutions and wentthrough a lot of just sort of high-end intelligence-based jobs.

[00:02:59] Jason Yeh: And [00:03:00]you in fact were a part-time associate at a venture capital firms. So you havea lot of this exposure to. Business right. And opportunities. Would it be fairfor me to say that when you started with higher, next that you maybe didn'thave the passion for this industry and space that, that when you decided onsteady MD, you had.

[00:03:23] Jason Yeh: Yeah, I can be completely wrong. Sojust kind of, if you could go back to your first business, we'd love to hearhow the starting points where the same.

[00:03:31] Guy Friedman: Yeah. So, so Wharton is kind ofa, um, really well-known for consulting and finance. I think I went to oneconsulting interview and then decided it wasn't for me.

[00:03:42] Guy Friedman: Uh, just didn't fit in there.Um, I really loved VC. That was really fun. When push came to shove, Irealized, um, if I go into venture capital and I'm only doing it as a means toan end to start my own startup. And so, [00:04:00]uh, I said, why then why even do that? You know, I think, um, there's alwaysthis idea of like, get some experience to learn about the industry and thenyeah, yeah.

[00:04:11] Guy Friedman: All that. But, um, I think, uh,this is what I was meant to do, and this is all like, this is what I'm best at,which is creatively solving problems and launching companies and products, uh,and being able to get, you know, get things stood up and operating as quicklyas possible. I think, um, I would have been fine in like banking or consulting,but I wouldn't.

[00:04:36] Guy Friedman: Excelled as much as I have instartups, this is just what I was meant to do. So I started realized that overI interned and worked with this venture capital firm locally in Philadelphia,and then they ended up. Finding my company. So, so it worked out pretty well,

[00:04:50] Jason Yeh: but in terms of what you chose tostart with, like, do you remember the decision matrix and how you came toonline proctoring?

[00:04:57] Jason Yeh: Did you ever just have this burning

[00:04:59] Guy Friedman: passion? [00:05:00] So don't forget incorrigible different. Yeah. I starteda whole different business before that. So out of the original idea was.Actually I raised all the money on it and similar to study MD if there was apivot after the initial fundraise, but I had this idea around, I wanted it.

[00:05:18] Guy Friedman: I was exploring online educationand I just got obsessed with like standardized tests and the idea of, um,there's a brand. It has dominant design. Basically, once everyone establishesthis score as the admission criteria to get into X school or X, X profession,uh, certification exams, as well as entrance exam.

[00:05:44] Guy Friedman: And it's like, as long as theexam, you, you, you keep it up. The brand is super strong in terms of creatingdominant design. So I just got this like thing in my head where everyonegraduates from college. GPA's and degrees are completely [00:06:00] unstandardized. Even within the school, weneed a, like an sat or an AP test to enter the corporate world.

[00:06:07] Guy Friedman: And so that was the originalidea. Kind of just add a million ideas. That was just one that, that, uh, stuckout to me is like, I can be the father of a standard. I can be the, theoriginal for a standardized test. That could last hundreds of years and just bethat, that's what got in my head. That's what I raised money on.

[00:06:27] Guy Friedman: That was like the big, the bigidea. And then, um, and then suddenly you got to administer it. So how do youadminister a standardized test? You got to go to online. In-person proctoringcenter. It's just like you do the GMAT or GRE. So I signed a contract with oneof those, and then I, I actually use Proctor you for this for a little bit,cause I'm like, okay, how do we move this online and lower the costs.

[00:06:50] Guy Friedman: And then in kind of a silly way,I said, let's just build our own online proctoring system. So we built, uh,we've got the very rudimentary online Proctor and system. And then, um, [00:07:00] got a little bit of traction and propertyyou buy.

[00:07:03] Jason Yeh: Th that is a funny arc, you know,um, sometimes when I'm talking to founders and trying to help them understandhow good they are gonna, they're going to be at fundraising.

[00:07:11] Jason Yeh: What I'm trying to find out islike, if they have like a deep expertise for a space or a very core excitementand like passion for whatever, and you fit into this third category or thiscategory of like, Curious business operator like high-performing operator thatsees opportunities and feels like he can execute it.

[00:07:34] Jason Yeh: He or she can execute on them.Earlier in the season, I talked to Christina Cassiopeia, um, the founder andCEO of Vantaa and built this amazing business in SOC two compliance. And wetalked about it. I'm like, are you passionate about SOC two compliance? No. Iworked at Dropbox. I worked at union square ventures.

[00:07:53] Jason Yeh: I just like seeing opportunities andexecuting on them. And for me, when I hear it, when I look at your backgroundon, I see what you [00:08:00] did, you do fitinto that, that category, which I actually find to be really hard to identifyin a first time founder. Like it's hard to know whether or not someone willhave it in them to be able to like run the playbook and execute and becomfortable with that pivot.

[00:08:16] Jason Yeh: Always comfortable with like, Yeah,searching out and sniffing out when there's a great opportunity to executeagainst. And I think, you know, there wasn't, it sounds like there was a pivotand, and steady MD too. But with. A company under your belt where you able torun the company for three years and learn and make all those mistakes.

[00:08:36] Jason Yeh: Right. But combining that withsomething that is probably a little bit more core to something that you reallywanted to do, which was be within the next generation of, of health tech andactually help people is probably a supercharging combination that I think wouldbe so powerful within your ability to fundraise as well as execute on

[00:08:56] Guy Friedman: the business.

[00:08:57] Guy Friedman: Yeah. And then I think, um, ofcourse, if you're an [00:09:00] industry expertin something that's different, but, um, I do think you have to, it's reallyhard not to carry deep. It's hard to just make it an intellectual exercise. Andthat's, um, a lot of times I talk to MBAs, sometimes it gets a little too, um,Intellectualize.

[00:09:18] Guy Friedman: I'm like guys wake up in themorning and just like be obsessed with this problem. Not just solving itbecause it's a brain teaser. Like you have to deeply care about the mission oryou're not going to make it, like, it's going to be really, really difficult tosustain your effort. And if it's just this like business case study or doing,and a lot of times that that's the idea is that sometimes, you know, some folksfrom the Yeh.

[00:09:46] Guy Friedman: MBA world or business world orconsulting that they'll, they'll come up with something that works. I called itworks on the spreadsheet. That's my phrase, but I'm like, you gotta, you gottabe obsessed with it. Uh, I'm just kind of obsessed with, [00:10:00] I'd say, um, I love business problems andsolving them, but also, um, taking a process like that and making it better.

[00:10:10] Guy Friedman: And scaling that. Um, I'm alwayslooking at every, every room I walk into, I'm starting to like brainstorm waysto make the business or the, or anything, anything work better and moresmoothly and, and to improve it. So it's, it's kind of just like a mindset ofmine. And then if you, you're going to be a lot more successful, if you caredeeply about the mission and problem you're trying to solve and want to talk toeveryone about it.

[00:10:35] Guy Friedman: Um, also I'm a little moreintroverted and shy. And so, but when it comes to my startups and ideas, I'mlike crazy aggressive telling everyone about it. So, um, it's, it's a, it's a,it's just like, I don't know if I could do that if I didn't believe so deeplyin what I was doing, I love

[00:10:53] Jason Yeh: that you brought that up.

[00:10:54] Jason Yeh: Um, I think great operators andhonestly, great fundraisers can be introverted or extroverted. [00:11:00] Um, and I think a lot of first timefounders. Are really scared about their abilities to sell their company, sellthe opportunity, especially if they're an introvert. So maybe we can use thisas a transition point to you're talking about raising your first round ofcapital for a steady MD.

[00:11:17] Jason Yeh: And I'm looking at the timeline ofwhen things happen. And they're just some interesting things that happened inthe world around all, honestly, most of these pivotal moments of raisingcapital, but when you think about going out surveys for steady MD, the first.Bit of capital, which sounds like it was just kind of a pre-seed convertiblenote at the time, it would probably would just been called an angel round.

[00:11:39] Jason Yeh: Right. You know, how, how was thatfor you? Uh, did you have a great network that would, that you'd be able torely on or was it a struggle at all?

[00:11:47] Guy Friedman: So first, yeah, I hooked up withmy co-founder and we both put a little bit of money and just to. So that waslike hire a first developer type and know, keep it going on that not payingsalaries or anything like [00:12:00] that, tostart, get a view one out the door.

[00:12:02] Guy Friedman: So that, that was helpful to,um, we were on our way to like building the first version of the product. Itwasn't just us with no money at all. And we both were proven founders. He hadmy co-founder has had multiple startup experiences under his belt exit. Bigrounds, all that. So we had a pretty good network, I would say.

[00:12:23] Guy Friedman: Um, it still is not, it's notsimple. We didn't make three phone calls and just have the route, you know,the, even the seed round, um, had that a lot of meetings, you know, test themarket, talk to all my old investors. Old business. I don't think I eveninvested, even though I had a good exit though. So, um, we made the rounds talkto our internal networks and started to raise like, uh, you know, small checksjust to get, just to get it going.

[00:12:51] Guy Friedman: What's it

[00:12:52] Jason Yeh: like to have been a successfulentrepreneur and going to pitch your last investors and get [00:13:00] those notes? Like, what was, what was theexpectation going in?

[00:13:03] Guy Friedman: Yeah, it's funny, like after 10years of this. Fundraising, like not much phases me like you, like I think, orthe earlier you are in the process of being a startup founder, the more youtake, like every meeting, every word as if it's like this, well thought outthesis from the investor that they were versus just them having a conversationwith you.

[00:13:29] Guy Friedman: And you're going to talk to 100of 100 or 200 meetings to get this around. And then maybe 10 of those meetingswill result in a actual check. And so not much faze me like the second timearound. I was just much more experienced it. Not getting too excited, eitherway, you know, someone, you have a bad meeting or great meeting, not too high,not too low.

[00:13:52] Guy Friedman: Yeah. You basically work thefunnel like at like anything. Of course, as people we really liked that reallywanting to come in and, uh, there's the first [00:14:00]meeting where we were like super investor, super excited, and then they nevercall you back. They all happen. That that stuff happens time. Yeah. So I'm, I'mso used to it now.

[00:14:09] Guy Friedman: It's like also in the business,like ups and downs. I've been on a rollercoaster for 10 years. I'm not. Itdoesn't phase me as much now as it did my first, first time around like theshock of someone saying, yes, it was like a huge, huge for me. I was like, ohmy God, you're actually going to do this. And then, um, you know, when someonesaid, no, I like analyzed, analyzed it to death.

[00:14:33] Guy Friedman: Now

[00:14:37] Guy Friedman: it also, um, it really, reallyhelps to have a co-founder. I did my first startup all by myself, solo founder.Really hired, uh, never really hired like super senior execs, maybe, maybe ahandful, but, um, just kind of was on an island. So it was just like, I wasexperiencing all it, you know, all of it by myself and then with, with myco-founder is a lot more, um, [00:15:00]productive.

[00:15:01] Guy Friedman: Bouncing ideas off each otherand like analyzing things and then also a lot more fun and it's a lot more fun.And, you know, if you're going to be in a company for years and years, it'sreally good to have a great partner. So

[00:15:13] Jason Yeh: go through the highs and the lows.

[00:15:16] Guy Friedman: We both had our network. So wewere both, uh, we were both, uh, tapping our networks to see who, who wouldinvest.

[00:15:23] Guy Friedman: And it was, it was a lot morefun the second time. Well,

[00:15:26] Jason Yeh: it sounds like the seed round, um,you know, was a bunch of just numbers game, making sure that you could piecetogether. These checks. Let's talk about the series a, because at least fromwhat I see online, the timing would have been interesting when you closed theannounced date.

[00:15:44] Jason Yeh: At least it was April 2nd, 2020.You know, a couple months prior to that, the, the world like got flipped upsidedown. Tell me a little bit about what caused you to go out to raise the age.Like what was the setup point there? The trigger point and what was the [00:16:00] timeline around that

[00:16:01] Guy Friedman: we actually closed? Well, we gotthe whole egg committed before COVID in 2019, I guess.

[00:16:08] Guy Friedman: So, um, because we didn'tannounce it. We did get kind of a fun process. Uh, not that we promoted it assuch, but, uh, there was a lot of press saying, look at this tele-healthcompany that raised right when COVID hit, um, as if we did it all in one week,but it really took a while. So, um, yeah, I know we had a, um, great, greatseed investor in Pallium ventures.

[00:16:31] Guy Friedman: They co-lead the AA as well. Wemet, you know, we did the normal process. We met with hundreds and hundreds offunds. Um, not easy in digital health. To in 2019, it was much harder to raisemoney. It just, just a whole different world than today. Or you see like thesecrazy huge rounds for companies that are a year old, then you really had toshow all the great SAS metrics, you know, [00:17:00]very solid growth.

[00:17:01] Guy Friedman: And one thing like you had thata minimum revenue threshold, even getting a door, which, um, a lot of. Folkswill say it's based on like unit economics or the team, typically that's afteryou've hit the revenue threshold, then they dig into that other stuff. So, um,we got there and then we were able to solidify palliative on.

[00:17:23] Guy Friedman: And then after that we got, um,next ventures in the round was a cold lead, which is, uh, which is, which is afund focused on like health and wellness. So that was a really great partner.And then we, we started gathering, uh, Other folks as well. So a lot of ourseed investors came back in

[00:17:44] Jason Yeh: when we come back steady, M D takesoff as the world shuts down.

[00:17:58] Jason Yeh: I spend most of my days, [00:18:00] one-on-one with entrepreneurs, helpingthem understand strategies that make a difference in fundraising. Some thingsvary from founder to founder because not everyone's story is the same, onething I'm super consistent about no matter who the founder is, making sure theysend their decks and materials using a document sharing.

[00:18:17] Jason Yeh: And for that, I always recommendDocSend DocSend lets you know, what's happening with your deck after you sendit along with real-time analytics and notifications, did the VCs actually openit? What slides did they spend the most time on? And if you think it got sharedwith the wrong people or maybe you made a mistake and sent it to quickly,docksin lets you control access and Nick updates.

[00:18:40] Jason Yeh: Even after sending sign up for afree two week trial at that's D O C S E N Back to the show.[00:19:00]

[00:19:01] Jason Yeh: Healthcare is in a unique spot inthe VC world in the sense that nearly everyone is a customer, a single nichewithin the healthcare industry can turn out to be a billion dollar opportunity.And so now in the middle of a worldwide pandemic that has moved many servicesand jobs online, it's a no brainer that many doctor's visits would take placeonline.

[00:19:24] Jason Yeh: I wanted to know, did guy plan toraise a series B post COVID or is that just a happy accident?

[00:19:35] Jason Yeh: You recently raised a series Bactually quite a large series B and to me it feels like the shift in the.Industry and the way the world is operating is kind of all pushing in yourfavor. You're like, you're just on the wave. Tell me a little bit about whatthe last year or 2020 it had been like for you.

[00:19:57] Jason Yeh: And then was the series B [00:20:00] something that was thrust upon you or isit just the timing and opportunity?

[00:20:07] Guy Friedman: We had been running thisconcierge virtual primary care operation for years. So for five years we wererunning that business and it was growing methodically. Really good, like costof acquisition retention, like all the, all these great numbers. We had a lotof subscribers nationwide. But what we realized even before COVID was this ideathat we could recruit, train and manage clinicians, uh, in a really robust way.

[00:20:36] Guy Friedman: Um, we'd established andmaintain all these clinical frameworks around referrals, labs, prescriptions,asynchronous care, synchronous care, urgent care long-term care. So we we'd,we'd all these like operational clinical chops. And then. Patient facing aswell as provider workflow and management technology and a [00:21:00] regulatory infrastructure in all 50states.

[00:21:02] Guy Friedman: So all those things combined,we, uh, we realized we had a really great asset there that, um, would be usefulfor the rest of the digital health industry, uh, to help them scale and grow.So we sort of experimented in early 2020 with this idea that. As a way toaugment our consumer business, we could, um, allow our clinicians to work onother platforms, given all this infrastructure we build and help the otherplatforms with some of their capacity issues.

[00:21:32] Guy Friedman: So it's kind of started out asan experiment. And then, um, unlike anything I've ever experienced in business,it was just a crazy, almost viral pop in terms of inbound demand to us for thatservice.

[00:21:49] Jason Yeh: So was that, is that the pivot thatyou, that you likely read

[00:21:53] Guy Friedman: that was it fast? So we wentfrom a direct to consumer business, which we still, we still operate, but, um, [00:22:00] just got called by.

[00:22:02] Guy Friedman: You know, everyone in theindustry, because there was almost, it was almost like there was a rumor thatthere was a company out there that had a tech enabled clinician workforce thatcould execute really well. And so we just started signing clients in thatspace. We really didn't do this considered rollout pivot.

[00:22:24] Guy Friedman: We just took our existing team.We didn't really even change the website and started just executing. We werehiring like two or three doctors a month for the consumer business. And then westarted hiring hundreds. Like for the plot, we call it the platform businesskind

[00:22:39] Jason Yeh: of like the AWS play. Right? Likeyou, you were like building a technology stack.

[00:22:43] Guy Friedman: Yeah, exactly. So if you thinkabout what's a, what's a great business in the digital health space or anyspaces do something like really complex and rigorous that doesn't help the.Core client or partner [00:23:00] sell more oftheir product or as a core competency of theirs, it's just like their cost ofdoing business.

[00:23:05] Guy Friedman: So in order for any digitalhealth company to operate, whether it's labs, devices, um, obviouslyprescriptions long-term care, virtual primary care, anything you need alicensed clinician in the state where the patient lives in order to. Execute thattransaction or have that visit. And that's actually a really hard thing toaccomplish.

[00:23:30] Guy Friedman: It takes years to get a 50 statenetwork hired all the regulatory infrastructure set up, and then you constantlyto be recruiting and training those clinicians and taking a big risk on thecost side to, to maintain that network and capacity. So we do all that for ourclients. Whether you're big or small, it's a really needed and valued servicein the digital health space, because it's just like, uh, we saved them so muchtime, effort and money, but [00:24:00] by, by,by doing that service for them.

[00:24:02] Guy Friedman: So we're, we're executing acrossthe whole industry right now.

[00:24:06] Jason Yeh: I, you know, it's funny when, as I,as I was asking you the questions to tell me a little bit about raising thenext round, I kind of would, I made this reference to being on the wave at theright time. And, um, I kinda thought it was just COVID, but it, it was evenmore than that, right?

[00:24:21] Jason Yeh: Like you weren't even trying. Irecently took up surfing and I had one of my first waves that I caught was. Iwasn't trying to, I just happened to be on the board at the right time and theperfect wave hit me. And it was just like, I guess I'm on, I guess I'm on thiswave. I should probably stand up and surf this wave.

[00:24:45] Jason Yeh: And it sounds like you, you raninto something really similar. So as it just started happening, you said youweren't even proactively building that business. You didn't even change thewebsite. It just started getting this viral pop. Where did you [00:25:00] realize, like we should hire money forthis go to market?

[00:25:02] Jason Yeh: Like we should hire, you know, Istarted, we should raise money for this go to market. Or did it just kind ofpeople start hearing about you and start reaching out? Was it a proactivearound or, or was it something that kind of organically came

[00:25:15] Guy Friedman: together? Yeah, I think it'sjust like, um, you know, at every inflection point you kinda reassess and we,we definitely like.

[00:25:24] Guy Friedman: We needed capital to hire theright team, to keep executing. Imagine going from a handful of clients to a lotmore, uh, all the infrastructure and team needed to support that, um, supporthundreds of clinicians across different categories and manage them. Um, and soI think the there's just, uh, you know, we're hiring.

[00:25:48] Guy Friedman: Um, and I think we went from 20people, 25 people at the end of the year. We're at like 75 now, I think, ormaybe more, I mean, so I'm just like [00:26:00]staffing up as quickly as possible to help support our partners and, and allthe projects we're doing. Um, I would say though, It wasn't, uh, there was amove that we had to lean in to the business.

[00:26:14] Guy Friedman: Um, so it wasn't all just thesurfing metaphor. Uh, I think, um, you, you, you, you see what you have andthen obviously like over the years, I've learned how to identify. Oh, Th that'ssomething we should lean into and explore. And you do a million experiments.Um, if you'd have asked me at the beginning of the business, what's the pivotyou might do eventually if the consumer businesses isn't a viral, I would havesaid the chat app and the technology would have been the thing that oh.

[00:26:47] Guy Friedman: That we can lean into that andalways have a business around. Like, I wouldn't have said the, the inf theprovider network, infrastructure and management tools around. But, um, so itcould have [00:27:00] gone a few differentways, but we saw the signals and leaned into it. Um, it's pretty, pretty cool.Um, pretty, pretty fun.

[00:27:07] Guy Friedman: Of course the COVID windsgreatly accelerated. Uh, I do believe even without COVID we would've stillleaned into that direction. I guess we were doing it even pre even before COVIDstarted.

[00:27:20] Jason Yeh: And what does a, what does afundraise feel like when you have some of those numbers? Is it, does it feeldifferent?

[00:27:28] Jason Yeh: Of course.

[00:27:31] Guy Friedman: Yeah. I know. It's just, it wasa lot, um, you know, I I've been fundraising for awhile for like, you know,multiple rounds across my different startups. Um, and this, this by far waslike where, where, uh, we were perceived that. I think because a lot of, uh,VCs were looking for something like the picks and shovels of the digital healthindustry or the infrastructure play.

[00:27:54] Guy Friedman: And we S we were really like, weslid right into that thesis. So I think, um, [00:28:00]we were, a lot of times we, I started to pitch the company and not a lot, butlike the best conversations where a lot of the venture capitalists looking atthis space had already kind of like. Came up with a thesis for our business andalready had an idea in mind and they were looking for us, which is totallydifferent than let me convince you that, like this brand of virtual primarycare is going to take over the consumer world, which is still a really good,solid venture backed business.

[00:28:30] Guy Friedman: That is, uh, you know, we weregrowing and we could just scale that as well. But, um, in this case it was likesuper clear to everyone like Yeh. This is a winner,

[00:28:42] Jason Yeh: right? And I know by the way, likewe have the same vision, but oh, by the way, here are the numbers to showwhat's happening. Of course, everything is about telling a story and everythingfrom your background to how you tell the story to the insights you have to thenumbers.

[00:28:58] Jason Yeh: They're all trying to [00:29:00] support a story and you can, youdefinitely get things done without the numbers and telling stories, but thingshas changed when you have that sort of hockey stick growth. It's like, that's areally compelling story. Um, very cool. And you ended up closing, uh, from afew great funds who led the series B and who'd you

[00:29:17] Guy Friedman: bring on Deena, Shakira Lux, Luxcapital.

[00:29:22] Guy Friedman: Yeah, she's off. Um, we're solike blessed to work with her. Um, she's, you know, very hardworking andreally, really understands this space. Probably the premier investor in digitalhealth, I'd say right now, and of all VCs. Um, and I've met them all. I, Irespect everyone, but I put her number one. That's

[00:29:47] Jason Yeh: fantastic.

[00:29:48] Jason Yeh: Given your experience withoperating companies and fundraising and having such a variety of. Um, differentexperiences while fundraising what's what's one or two things that you wish you[00:30:00] knew as you were, you know, as youwere thinking about raising for, um, higher next, um, things that you wouldtell a younger guy, um, that would have helped the process go forward, or, ormaybe something that you'd tell a young founder today about, um, you know,executing that process well and running the startups.

[00:30:18] Jason Yeh: Well,

[00:30:20] Guy Friedman: yeah. Um, I'd say. Um, one thingthat's kind of a misnomer in this space is like, I think it's, deemphasizedtraction and revenue as, as just like, these are the table stakes to be in thisconversation. And, um, and you know, they obviously care about the team, theunit economics, the market size, like all that.

[00:30:46] Guy Friedman: But, um, a lot of times they'reseen so many deals. If you're a venture capital. You know, 10 a day that theirfilter is that revenue number. And so you, you, that's what you're executingagainst to get to the [00:31:00] next round alot of the time. Um, I think of course, like, like you said, there's a, abigger story.

[00:31:08] Guy Friedman: When I even, even though in thelater rounds, there's a bigger story about like, here's the market opportunity.We're well-positioned to. Attracting attack this and capture it. But I'd sayearly on that, the filter of VCs, uh, I think they, they're less likely to tellyou that revenue is up filter. Um, of course then you got, then you have to bein terms of.

[00:31:31] Guy Friedman: Vibe with the team, make sureyou're culturally aligned to make sure you know, that they agree with yourvision and business. Moving forward. You can work with them for years, allthat. Um, that's one thing that kinda stuck out to me over the

[00:31:43] Jason Yeh: years, and I think different roundsof different table stakes to that that people need to understand.

[00:31:49] Jason Yeh: So like, if you're, if you're goingafter angel and pre-seed where you're not going to have certain like rev. Canyou think through what the table stakes of what people need to [00:32:00] believe and people need to see before theycan even consider the round, um, is a really good sort of pragmatic piece ofadvice.

[00:32:06] Guy Friedman: Yeah, I would say that that theearlier you are the more it's about you and are you the right person to leadthis business? I think like table stakes is your business model works and theybelieve. That's just, that's like, if you're arguing about that, uh, it'sprobably not a good fit, you know, if it's like, I find it really where youconvince someone to invest, if their initial instinct is, um, like you'll getthe VC hits of, they'll ask you questions completely unrelated to what you justsaid in your pitch.

[00:32:44] Guy Friedman: Like about some other industrythat, you know, always they'll dig into the very edge case. Like, um, that hasnothing to do. Like that's not even a consideration. Usually those aren't goingto work. Right.

[00:32:57] Jason Yeh: And those cases, I think that theinvestors [00:33:00] just almost trying to burntime intelligently and like on your side, you totally understand, like, as anexperienced fundraiser, you kind of know that feeling in the first five minutesof like, oh, is this, is this going down the right path?

[00:33:13] Jason Yeh: And I think that's another big.Yeah.

[00:33:15] Guy Friedman: They're yeah. If they're leaningin and paying attention, asking like intelligent questions, um, that's a reallygood sign. If it feels like they're just having a casual conversation with youand asking random questions, uh, typically that that's not going to result in afruitful relationship.

[00:33:37] Jason Yeh: That was my conversation with guyFriedman. The co-founder of steady. A telemedicine company on both the patientfacing and provider facing side of things with doctors and all 50 states,helping clients navigate their local regulatory and legal frameworks. If you'veever had to call your insurance and get a straight answer on something, you canimagine how hard it might be to understand the [00:34:00]rule book on insurance and everything else that falls under health care.

[00:34:04] Jason Yeh: Suddenly we understand the need forsteady. Yeah, picks and shovels business, helping customers build more andbetter telemedicine services. When we come back, my producer, Olivia who's far,far, far outside the VC world asks what it's like to fundraise when yourbusiness model is undergoing a major change.

[00:34:30] Jason Yeh: Early on at my last company, we hadthe chance to sell into a large public company, but ran into a wall. Theywouldn't work with us unless we were SOC two certified. We really tried forweeks to get something done. We were Googling how to get SOC two certified andinterviewing expensive consultants. But in the end we abandoned the dealbecause it was too.

[00:34:50] Jason Yeh: So, when I learned about Vantaaccompany, that was just backed by Sequoia used by hundreds of SAS startups toget SOC two certified. I was so annoyed. I, man, I really wish they had been [00:35:00] around back then. Vanta makes it supereasy to get a variety of certifications like ISO 27 0 1, SOC two, the certificationwe needed to get and HIPAA, they integrate with your cloud provider and othertools you already use to automate the super complex and time-consuming processof preparing for.

[00:35:19] Jason Yeh: Anyway, if you'd like to drop amonth's long process down to weeks, like I would have back then and actuallysigned those major contracts, you should check out. Vantaa also, I'm reallyhappy to share that listeners have funded get hooked up. You all can get $1,000off your service by going to dot com slash funded.

[00:35:37] Jason Yeh: That's V a N T Okay.Back to the show.

[00:35:47] Olivia: Wanted to start with a few. There werea few turns in this. I'm kind of embarrassed because I think that

[00:35:56] Jason Yeh: we've covered this before. Gosh, Ibeen, you know, I've [00:36:00] been ravingabout how good of a student you are.

[00:36:05] Guy Friedman: I'm

[00:36:05] Olivia: sorry. I don't remember. Okay. Hockeystick growth just means like very good growth, right?

[00:36:13] Jason Yeh: It means very good grass becausehockey players are great athletes.

[00:36:17] Jason Yeh: So.

[00:36:19] Olivia: I'm just kidding. Oh, okay. Yeah. Iwas like, aren't all. If you're a professional athlete, you're a professional.

[00:36:26] Jason Yeh: No, it's the shape of a hockeystick goes like this. So essentially highly accelerated growth from like flatto almost vertical. It will now

[00:36:37] Olivia: I'll remember it. Okay. Uh, don't meanto. Uh, to get in, but I feel like I wasn't given that visual the first timearound and now that I have that

[00:36:49] Jason Yeh: visual, I will never

[00:36:52] Olivia: forget it.

[00:36:53] Olivia: Okay. Um, the other thing was, youguys talked about the table stakes. Okay. [00:37:00]We, and now that I've said it out loud, I feel like I might have had abreakthrough. Does that just mean the necessities to get someone to sit down.At the table.

[00:37:10] Jason Yeh: That's right. I guess that would bepoker analogy, but it's like in certain poker games to even play the game, youneed to put X dollars into the table.

[00:37:19] Jason Yeh: So those are the table stakes. Andwhat we were talking about is that different arounds, you know, earlier, later,later, what do you even need? To be able to be considered for investment. Andwe were saying early, early on it's like I was saying, you know, a great visionand story and, and, um, connection to the business and, and guy added also abusiness model that made sense.

[00:37:44] Jason Yeh: And he was saying later on,especially as when, when he was raising his is B it's like. Table-stakes orjust to have a certain level of revenue, if you didn't even have that, thenlike there's no point in even going wait,

[00:37:57] Olivia: so is that, but let me, sorry. [00:38:00] This is a little granular, but are thetable stakes and actual.

[00:38:05] Olivia: Door keeper to getting the meeting? Oris it just that like, like for example, do you have to prove your revenue toget the meeting? Or is it just that you'll get the meeting kind of regardless,but you might just not get the investment or are there, like, how does it work?Like, are there emails exchanged ahead of time where you have to prove therevenue or is it just something.

[00:38:28] Olivia: Those are the table stakes in themeeting or is it the table stakes to get the

[00:38:32] Jason Yeh: meeting that might seem, you mightthink that sounds like a silly question. Is there a really good question? Um,the fact of the matter is there are no formal table stakes. There isn't a formthat you fill out and you say, Hey, this is my revenue, or, Hey, this is mybusiness model.

[00:38:50] Jason Yeh: And in fact, like we werediscussing table sticks and we had a bit of a. We had a bit of a, um, debateabout what was [00:39:00] required at eachstage. And I think it's very, very subjective. Okay. So it is, you can getmeetings, you can start the process, but when we talk about table stakes, it'skind of like once you get into it's like, will.

[00:39:14] Jason Yeh: Will an investor take youseriously. That's kind of the way I would think about it. Do you have the tablestakes to have an investor take you seriously? You might be able to beintroduced to them, but once they see like you're at a S you know, you're notthis, you're not that they, they probably won't consider you.

[00:39:30] Jason Yeh: The thing that I'd point out thoughis, you know, we may on average, believe that to do a series B, you need to be.Scaling towards X million dollars of annual revenue. But the fact of the matteris there is, there are always outliers. There are always, um, there are alwayssituations where people are able to convince an investor without some of thosequote unquote table stakes.

[00:39:59] Jason Yeh: And that's where I [00:40:00] think like story and charisma andenvisioned kind of always have a plan X factor.

[00:40:07] Olivia: No. That's cool. That's cool. I haveone more question for you. And I think it's actually kind of like a big one.Um, so between, um, his series a and series B guy kind of changed the businessmodel of steady MD, where it went from a patient or consumer facing business tothat, but then also a B2B.

[00:40:30] Olivia: And I was wondering how often doesthat happen? Like in my mind, That seems like it could make a series Bchallenging, but also that might be a lot of the reason why people like thatmight be why people have a series B is because they are trying to grow. In anew way and they need fundraising. So is that, can you just tell me about likethe prevalence of [00:41:00] that and if thatdoes make a fundraise challenging, or if that's kind of expected with theseries B?

[00:41:06] Jason Yeh: Yeah, I think the first part is theevolution of his business, I think is actually pretty prevalent or it's common.Um, the first part of landing in an industry and working on one thing and thenshifting to another is actually pretty prevalent because what you do when astartup is you have an idea and you want to help a certain type of user.

[00:41:31] Jason Yeh: And when you jump in there, youthink the first problem is the biggest problem. You're like when you're workingin there, you're working in there. And w as you're working, you happen to be sodeep with the customer that you noticed. There's actually a bigger problem.Like there's actually something that is of higher concern to them.

[00:41:50] Jason Yeh: And then you, you can start sayinglike, actually, like they need this more. They want this more, they're willingto pay more for this. Let's start working on that. I'd say a ton of [00:42:00] businesses sort of evolve that way. And sothe second question you're asking is, is, is that happening during the series Bor does, is that common for the series B to be connected to that?

[00:42:10] Jason Yeh: I think it's the last. Um, commonfor around to be connected to that, that pivot point, the series B will almostalways happen when there is like revenue that's scaling that's, that's actuallyhitting something that looks more like a hockey stick. Um, and it could add,you know, the pivot in the business or the evolution of the business could havehappened well before or right before.

[00:42:36] Jason Yeh: And so series B's aren't, aren'tactually connected to that, um, that actual.

[00:42:41] Olivia: Okay. Gotcha. I guess I have one morequestion for you and it's do you ever, do you ever see doctors online? Is thissomething that you, I feel like you, in my mind, I feel like you are so likeSilicon valley, [00:43:00] like man of thefuture, that like.

[00:43:02] Olivia: Probably do everything online. So likehave you made this leap yourself?

[00:43:07] Jason Yeh: You're right. I would be somebodythat would really hyper, like hyper efficiency, not want to spend timecommuting to a doctor's office and try and telemedicine the I, for whateverreason, I've been less drawn to telemedicine for myself, but.

[00:43:25] Jason Yeh: I have been super interested inpicking up a telemedicine provider for my dog. Oh,

[00:43:32] Olivia: interesting. Okay.

[00:43:33] Jason Yeh: Because I can't talk to my dog. So like your, especially as a new

[00:43:40] Olivia: dog, I don't even think I knew you had a dog.

[00:43:43] Jason Yeh: Oh yeah. It was a, it was a, uh, it was a COVID pandemic. Oh, okay. But it's, it's been great. It's a huge evolution in my life.

[00:43:51] Jason Yeh: But as a new dog, parent, Are they supposed to eat this? They're like scratching their face against the floor.Like, I just want someone to [00:44:00] belike, that's fine. You should bring it.

[00:44:08] Jason Yeh: Thanks so much for listening. There are tons of insights that each founder recover on funded has around startups, fundraising, and life, and we don't have time to cover it all. So if you'd liketo get a free insights pack based on guy Friedman from steady MD, go to Steady MD. If you're looking for more insights, strategies, and support around fundraising, subscribe to our weekly newsletter@fundedpod.comslash newsletter.

[00:44:34] Jason Yeh: And find me on social I'm at J Yeh that's J a Y Y E H on almost every platform. I respond to the newsletter replies in DMS. So hit me up. This episode was produced by Olivia Rheingold.

[00:44:48] Olivia: Hi from Florida, where I'm about to play settlers of Catan with my family.

[00:44:55] Jason Yeh: Thanks also to John or Lee from adamant ventures. Hello friends. [00:45:00] And thanks. The guy from steady MD for helping people like me avoid those annoyingIRL trips to the doctor's office as always one last thing. So our sponsorDocSend the most trusted document sharing platform.

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