Understand.com: Selling Everything To Get Off The Ground – with Darik Volpa

How does a guy who cashes in almost everything he owns to start a multi-million dollar company?

Darik Volpa is the founder and CEO of Understand.com, a global medical education company that uses 3D animation to explain complex diseases, conditions and procedures.

He sold his house and liquidated his stock options to get this company off the ground.

I invited him to tell us what happened.

Watch the FULL program


 

About Darik Volpa

Darik Volpa is the founder and CEO of Understand.com, a global medical education company that uses 3D animation to explain complex diseases, conditions and procedures.

Raw transcript


Mixergy’s audio transcription is done by Speechpad

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Andrew: Hey, there freedom fighters. My name is Andrew Warner and I am the founder of Mixergy, home of the ambitious upstart. How does a guy who cashes in almost everything he owns end up building a multimillion dollar company? Darik Volpa is the founder and CEO of Understand.com, a global medical education company that uses 3D animation to explain complex diseases, conditions, and procedures. He sold his house, liquidated his stock options, and so much more. Sacrificed all that to get his company off the ground. I invited him here to talk about how he did it and what happened to the business. Darik, welcome.

Darik: Thanks for having me, Andrew.

Andrew: It seems like, well, actually before I even get into that question, you’re willing to talk about revenue. What size revenue are you guys at right now?

Darik: Yeah, so we’re going to finish the year at right around 2.6 million. We’ve got $800 thousand in pending business. I’m trying to cram it in. We’ve got six selling days left for the year so, assuming we don’t close any of that, we’ll finish at about 2.6, so a lot on the plate for next year if we don’t.

Andrew: With all that coming up in such little time, thanks for recording this interview before the end of the year.

Darik: Oh, indeed. It’s an honor. You’ve got a great program. I love it. Good stuff.

Andrew: Thank you. What I was going to say earlier is it seems like a big reason why you decided to strike out on your own was a conversation that you had at an event at your previous company. You were working at a company called Stryker. The boss pulls you over and says what?

Darik: Yeah. It was time for my annual review. I had been with Stryker for eight years at this point. I had a great career with them. I’d worked hard. I traveled all over the world. I took a product line that was losing market share, and I came in-house and I turned it around to industry leading growth rates. I got marketing professional of the year. I was a marketing rock star, so I thought.

It’s time for my review and we’re at a tradeshow in Dallas, Texas and my manager, the VP of sales and marketing. He takes me back to this service corridor at the Dallas Event Center. Whatever it’s called, I don’t know the name of it is, but . . . We go back and we sit on these Dixie cup boxes and there’s food service people walking by with trays of food. I thinking this is an odd place to do my interview.

That kind of laid the groundwork. What I found out was he informed me that he loved me, appreciated all the hard work he was doing but he was bringing someone in from the outside from a different division and he was going to come in and be the new director of marketing and I would report to him. That was a punch in the gut. This guy was also a former roommate.

Andrew: The guy he was bringing in was a former roommate, who you would be working for.

Darik: He was a former roommate of mine. Exactly. We didn’t really get along, so that was like salt on the wound. And so at that moment I knew that I was done with Stryker. I remember going out into the parking lot and calling my mom on my phone. And, I mean, I cried and I just knew that, you know, it’s up or out at Stryker. If you don’t get a promotion you just, you know, you just kind of float along and so that was it. Yeah, that was the moment.

Andrew: And you knew then, at that point, I’ve got to go start my own company. Not I’m going to go get another job, I’m going to work at a competitor, I’ll survive here for a little bit and try another day. You knew at that point, do you think?

Darik: Well, no. I didn’t. And I wasn’t the kind of guy- I’m very loyal- I wasn’t going to go work for a competitor. That just wasn’t in me. I mean, I had been born to, you know, hate and despise every competitor of Stryker and so I was probably still wired that way. And that really just wasn’t my style. But what it did is it was a moment of clarity and reality where I realized I didn’t want to work for someone else, have them tell me where I’m going to live, how much I’m going to make, what I’m going to do. You know, I kind of- over the course of the next few days- did a lot of soul searching. Now, I think it’s also important, as this is going on I am watching one of my best friends. He started his company like the proverbial start-up story. A little computer in his apartment that was the server and he bought all of these domain names, and then he bought financial aid. He worked his business model into this…

Andrew: You mean financialaid.com? He opened up.

Darik: … Financialaid.com Yes. So I’m watching him as my career is, you know, happening at Stryker he’s starting this and he just crushes it. I mean, he moves to San Diego from Fresno. You know, they’ve got 70 people working for them. He ends up selling the business for 38 million dollars. So, I’m watching this go on as this happens and I’m thinking… It was inspiring, you know, to see this. And so that kind of gave me the push to do my own thing. And I’m a very independent guy so it was kind of the perfect storm. If that hadn’t of happened with my boss and the Dallas thing, I mean, it’s very likely I would have continued on at Stryker for, you know, a long time.

Andrew: Because this was a good job. You’re not just leaving a job where you’re flipping burgers or where life isn’t good. Can you tell people a little bit about what the life style was at this job?

Darik: Yeah, it was- So, I’m from Fresno, you know, and prior to me starting at Stryker I took my last final on a Thursday and I start with them on a Monday. I probably had been on an airplane maybe two or three times. You know, so I moved from Fresno to the [??] Valley and it’s 1994. So, there’s a lot going on at the valley. I mean, there’s a buzz. The internet is just really starting to rev up. I get an expense account, I’m going all over the country, all of the world. I finally got a chance to go to Europe, I went to China, I mean, I was going all over the place. I was performing. I was, you know, I was respected. I had a lot of great things going on. I told you, I felt like a, you know, like a marketing rock star. I got to live all over the country. I did all sorts of different things. You know, well paid, stock options. Stock did very well. You know, everything was going really well. And I had a great mentor for most of my career at Stryker. So, yeah, it was tough to make that decision. It actually wasn’t. Once that happened it was very easy but that needed to happen to give me that push to go out on my own. So…

Andrew: All right. And Stryker is a medical technology company. Understand.com deals with health but I’m still curious about how you go from working at Stryker to coming up with this- it’s an incredible idea- how did you come up with it?

Darik: So I’ll go back to- I get the news- and I was ready to hit the rip chord. I didn’t know where I was going to go. I knew I wasn’t going to work for a competitor but I new I wasn’t going to stay there. OK.

Andrew: Mm-hmm.

Darik: I mean, I wasn’t going to report to this guy and I wasn’t going to be a good soldier anymore. So I was going to do something. So I reached out to a former mentor of mine- the guy who actually hired me at Stryker when he was a product manager (hired me as a marketing associate). So, he is still at Stryker. He has had a phenomenal career. And he manages multiple divisions. He’s responsible for billions of dollars of products. He has gone to a new Stryker division. So, Stryker makes hip implants, knee implants, beds and stretchers. They’re about a 7-8 billion dollar company, they’re publicly traded, so big company. So I reached out to him and I told him what happened and he said ‘Hey, listen. I got a home for you here.’ He was now at Stryker Biotech, it is the name of the division he was at. He said ‘Why don’t you came on from to the Bay Area. I’ll find a home for you here in Boston and we’ll get ready to launch this new product and you can run it’ and I say ‘Heck, OK. Let’s do it’.

So I got out, left the [??], went to Stryker Biotech and I was there for a year. But the damage was already done. Once you get kicked in the gut like that, I knew that I wasn’t long for Stryker. So I stuck out a year and started working on a business model while I was there kind of like on nights and weekends.

The epiphany, when it really hit me, I got to do a lot of unique things at Stryker. One was we got to shadow a trauma surgeon at the University of Maryland for 24 hours. So I slept at the hospital and I followed this doctor around on his rounds and we ran out to the helicopter pad when there was an accident. It was really interesting stuff. But I watched him interacting with his patients during his office hours and he’s trying to explain, you know, what his patients are going to have done in surgery and just the look their face was just blank and numb.

And so that was kind of when the light bulb started to go off and really from there I started working nights and weekends and I left a year after I’ve been at Stryker and moved to Reno in May of…

Andrew: Forgive me. I want to slow this down because in order for me to understand this. I thought this experience was[??]. A doctor’s telling me what’s wrong with me and I struggled to understand and I can’t keep up and I say ‘Please wait. Let me take a note on it’ and they often don’t have the time to take to let me take the proper notes and ask the questions.

But I experienced it differently than you did, partially because you were shadowing this doctor. So why at Stryker would you shadow a doctor and follow him through every part of his day including sleeping?

Darik: So anywhere for medical devices companies, many times you spend a lot of time in the operating room with the physician. I mean, you are there in scrubs, now you’re not scrubbed in doing surgery, in the OR. You’re in scrubs, you’ve got your mask and gown. You got your laser pointer and you are instructing them and telling them many times how to use your product. I mean, so you can imagine this kid from Fresno who is a sales and marketing guy.

Andrew: Not a doctor, not surgeon.

Darik: Yes. I mean, I knew I really didn’t know, I almost didn’t know an ACL from a gull bladder. It was that bad. I just didn’t spend a lot of time on this world growing up.

So I’m thrown into this environment where I’m consulting with doctors and helping them use products in surgery. I mean, it’s incredibly stressful so I’m just a sponge trying to bring myself up to speed. And I’d either find material that was too simplistic, that didn’t do me any good or it was really complex and so for my entire career at Stryker I was always out looking for information and a better way to understand surgery and I couldn’t find it. I never really found it.

So I had all that frustration and I’m watching this doctor. So I follow this doctor, you follow him so that you can understand the life of a doctor, make sure a better marketing professional if you can understand the pain points the doctor’s face.

Andrew: Do you have an example of something that you saw when you…I’m so fascinated by this that even though I know the story’s going to be fantastic coming up, I can’t wait for people to hear how this unraveled. But I’m fascinated by this part of it.

So do you have an example of what you learned by shadowing a doctor that helped you market it better? How you understood his pain so that you could sell it, sell the product?

Darik: Stryker products or mine?

Andrew: Yes. The Stryker products because I feel like your own business came in the same way that you’re understanding how to market for Stryker happened, it was through shadowing.

So do you have an example that you learned by shadowing that helped you market or helped you understand your customer better?

Darik: Yes. So this one’s a trauma physician. So a trauma, an orthopedic surgeon, a trauma surgeon many times they’re at the hospital and they’re sleeping and there’s a car accident and they’re up and they go right into surgery and then they’ll see rounds and they’ll meet with the patients. They’ll meet with the families of the patients.

So when you’re a trauma surgeon, you’re on and you’re always on. So I would follow them, I spent a lot of time in the OR. That’s where you learn the most. That’s where you see your products in use. The doctor gives you feedback on this one should have a 45 degree, or have you thought about having a different coating on the metal? Can you make the screws have a deeper pitch?

Andrew: And see when you’re watching him struggle because the screw doesn’t have the right pitch or because the handle’s not the way that would be more comfortable for him, then you understand what he needs and you can take that back to Striker [sp?] and they can improve your products. Or, you can understand what other product he might need that you’re selling so that you can tell him about that.

Darik: That’s exactly right. My rule at Striker then was to go spend time with the physicians, understand their needs, identify opportunities, and come back and articulate that to the engineering teams and help develop new products.

Andrew: I see. All right, and in this process, you discover your business. You say, ah-ha, these patients don’t even understand what their own doctor is telling them about what’s going to happen to their body. There needs to be a better way.

Darik: That’s it. Health care literacy is just not good in the U.S. There was a study that I just read. 463 patients, 40% could not read above a 6th grade level. It’s just shocking. Physicians may be good physicians, but they are generally not good communicators. They have an exam room full of patients. Patients are nervous, they don’t know the right questions to ask, the entire process is filled with opportunity. That was when the lightbulb went off.

Andrew: OK, so what’s the first thing you do now that you have this idea for making it easier for patients to understand what is about to happen to them?

Darik: I started spending my nights and weekends formulating my business plan, and I’m not a technology guy at all, so I really focus on the sales and marketing piece, and the product and what the product would look like. I had no idea how to build it. As a matter of fact, for fun I just went back through the old records and I got my old business plan. How do you like that clip-art there?

Andrew: I see, it’s kind of squeezed, too.

Darik: Isn’t that a million dollar business plan?

Andrew: Oh, that’s wonderful.

Darik: We were Med Tech Interactive [SP?] when we were putting together this- this is garbage, Andrew. It was so bad.

Andrew: Why?

Darik: It just really wasn’t a good business plan.

Andrew: Because it was out of touch with the product, or with something else?

Darik: I spent more time crafting the perfect business plan and less time talking to physicians and thinking about scale and thinking about global opportunities. I probably spent too much time looking for that skeleton clip-art I have here than I did on [??] and forecasts and talking to physicians. I think you run into- and I’ve heard this from many people on Mixergy- new entrepreneurs many times are afraid to talk to other people about their idea because they think that someone is going to steal it, and no one is going to steal your idea. It’s pretty rare when that happens. I would have used my time better if I would have been more open rather than trying to craft the perfect business plan. So, looking back, I spent my nights and weekends crafting this business plan and it’s great fodder now.

Andrew: What did you imagine the product was going to be, and who did you imagine you were going to sell it to?

Darik: The original product was not very good. It was a good idea, we just didn’t execute it very well. We took the product sale-able in September, 2003. Let me step back- we create animations, we create content, that physicians license to integrate into their website. That’s about half of our business.

Andrew: I see. And so, a doctor tells me what’s about to happen to my body. But he says, okay, you may not fully understand this. Go to my website, you will see a 3D animation of what’s about to happen, and that 3D animation was created by your company. That was the vision, the website was going to be the physician’s website, and that’s the model. You were going to charge the physician for the ability to distribute your content.

Darik: License our content and integrate it into his website. When we launched the product though- They had to get our website, when we first launched. So, if you liked our content, you had to also get our website, and then there was no customization or flexibility.

Andrew: They had to give up their website?

Darik: They had to give up their website, yeah. Brilliant.

Andrew: Ah okay, so in order to do business with you, they have to give up their website.

Darik: Or get a second website.

Andrew: Or get a second website, and can’t change your designs. So their customers might go to their site, see a link over to your site, and say, this has no connection. What is he really giving me, a brochure?

Darik: That’s right. It doesn’t make a lot of sense now. Yeah, they had to get our website. We quickly realized that that wasn’t going to work.

Andrew: Actually, you know what. I rushed to explain why that didn’t work. I don’t want to come across as a know-it-all. I want to understand from you.

Darik: Yeah.

Andrew: Why didn’t that work? Why wasn’t it right to say to a physician, link over to our site and we’ll explain it to your users. You don’t have to create your own website. You don’t have to invent our content. Why wasn’t that the right model?

Darik: We quickly realized that physicians don’t want to do that. They want great content on their website. Right? They don’t another website. They don’t want patients to link to another website that doesn’t look, I mean, they don’t want that. Back in 2003, there were still quite a few physicians that didn’t have websites so we thought that we’d address this growing area of physician websites. We quickly realized that the physicians most inclined initially to buy our product were the doctors who already had websites, and embraced and appreciated technology and they wanted to make it better.

That was kind of an initial problem. I also realized, I mean, doing websites is a pain in the ass. We’re not going to be a hundred million dollar company doing doctor websites. It’s just not going to happen. The amount of work and time and filling out all the content that went on the doctor’s website. It just wasn’t a good business model.

We realized that quickly, fortunately, and then changed to the model that we have today which is create great content. Provide it as an I-frame and integrate it into the doctor’s website. We’re the Intel inside, so to speak, on a doctor’s website for patient education.

Andrew: So you just tell them add this to your site and we’ll take care of the rest. Just this little bit of code.

Darik: Yeah. We’ll even add it to their website if their web developer’s busy. We try and make it as easy as possible for them.

Andrew: I want to break down the process that got you there. But first, I said that you sold everything. You did. You liquidated your stock options. You sold your home in Massachusetts. You moved to Reno, which we’ll talk about in a moment, why Reno. You believed in this that much, or are you the kind of person who always goes all in?

Darik: Yeah, I sold my home in Boston. I want to be fair here. I sold it because I had to. I bought another home in Reno. I knew I wasn’t going to be in Boston. I wanted to move to Reno. I had been to Reno one time prior to this but it’s a tax friendly state. I wanted to give myself every opportunity for success, so that seemed to make sense. Plus we could still drive to Fresno and the Bay Area. I was newly married. We were starting a family. I didn’t want to do business in California. So Reno made sense. We did buy another home here. It’s not like we got an apartment.

Andrew: But there still, was there a difference? Were you able to use some of that cash to start the business?

Darik: I think we broke even on our home.

Andrew: OK.

Darik: I don’t know that we made a lot of money. I did cash out all my stock options and savings. I didn’t have a lot of savings. Between my stock options and my savings, we were definitely all in.

Andrew: How much money would you say that you invested in the business?

Darik: My stock options were probably, after taxes, $150,000 and I don’t know what I had in savings, maybe $50,000, $40,000. Something like that. I had no debt other than our mortgage and my wife worked. We hadn’t started our family yet. We would start our family actually.

We thought for sure we had so many friends where it takes a long time for people to start a family and have babies. My wife got pregnant a week after we started trying. It was a big surprise. It was a little more added bit of stress to the equation. Literally, I think we found out, she told me on my birthday maybe two weeks after the product went salable, so it was pretty ironic timing. I did have a wife that worked which really helped. I mean, that was good stuff.

Andrew: OK. And you worked out of your home so you kept your expenses low.

Darik: Yeah. No office and two contractors.

Andrew: You launched the product as you imagined your customers would want it. How do you figure out that this isn’t right? What happens that tells you they don’t want it this way.

Darik: The first red flag. I had forecast that we would have 500 physicians by the end of calendar year one. So the product went salable in September and by December 31st, I was going to have 500 physicians. Because, I mean brilliant marketing and sales guy. Right, Andrew. That’s what I told myself. We took out a print ad in a journal, and that went back to September, and at the end of, I had missed my goal by 493 surgeons. I had signed up seven doctors.

Andrew: Wow.

Darik: Yeah. I totally missed the mark. I knew that what we were doing wasn’t going to work and that we needed to reconfigure things. The initial idea, having a better mousetrap for patient education, was real and viable and physicians wanted it. They just didn’t want the website. They wanted more flexibility and they wanted a better user interface and metrics, and all of the things that we learned over time. We quickly adapted and we made those changes.

Andrew: You know what, how do you know that physicians need it? So far, what I’m understanding is, that their patients certainly need it because their patients are confused. But to have the doctor understand what their patients need and care enough about it to buy it and to experiment with the software and so on, and to put it on their site. That’s a pretty big leap. I’ve seen people take that leap before and find that the ground isn’t there when they land.

They might come back here and say, you know, Andrew, patients needed this. This should have been a consumer-based site where we should have addressed patients’ needs directly to them. You didn’t have any marketing that told you that doctor’s would pay for this. You didn’t talk to doctors beforehand who said, I do see that same blank look that you saw when you shadowed your doctor. I do want to pay to make that go away. Was it just that you took the shot and it worked out.

Darik: I asked a handful of surgeons. I did run it by a number of doctors and they all thought it was a good idea. I really did believe in the need. I had seen the doctor patient interaction process enough times to know that it just wasn’t good. It was pretty clear to me that this was something that physicians would find value in.

Andrew: Why? What was their burning need that they were willing to pay to make go away?

Darik: Imagine being a physician, and every day, or during office hours, you’ve got an exam room full of patients and you say the same thing over and over and over again to people who, by and large, don’t know what you’re saying. You draw things on the wall and you have a wall chart or an anatomical model or maybe you give them a brochure. Patients still don’t get it.

I knew that if we could come up with tools that would make that process easier for doctors, help them save time, and, at the end of the day, have a better educated patient, I knew we could monetize that. They would be willing to pay for it. If I could save the doctor’s time, they’d find value and they’d buy our product.

Andrew: OK. So you put the product out there, you get this, basically, feedback in the form of lack of sales. How do you then understand what their issues are so you can fix it?

Darik: You listen. You talk to your clients.

Andrew: You called the seven . . .

Darik: The seven doctors you have.

Andrew: You called the seven doctors.

Darik: Yeah, yeah. You hear the same things over and over and you begin to adapt and change. I had a home office. I didn’t have any employees. I gave myself a lot of runway. I knew that I would figure it out eventually. I didn’t have the stress and pressure of a gigantic payroll and rent, and all the other pieces.

I knew I’d figure it out, but really saved my bacon, so to speak, and really allowed us to ramp up. It’s important I had one library in sports medicine when we launched, so all my eggs were in this sports medicine basket. I didn’t have enough money to do anything else after sports medicine. I was going to have to monetize sports medicine to get enough capital to do something else.

This is where entrepreneurs are adaptable. I reached out to my former mentor, Stryker, and Tim Scannel [sp], and I started looking at the corporate opportunities that the business might have. He made introduction for me. He was now running a different division within Stryker. He made an introduction to Jerry Pennington and we did a really nice deal that gave us a lump sum of cash and a lot of recurring revenue each month.

Getting that infusion of cash allowed me to create more libraries and make the changes that the doctors wanted. I had this recurring component that we could bank on for years to come. Nine years later Stryker Spine is still a client of ours and a key partner of ours. That’s what really allowed us to make the changes and expand the libraries for the physicians.

Andrew: I hear that a lot in stories of entrepreneurs who sell to enterprise. They get their first big client by going back to their old boss and saying, hey, will you buy this. Their boss essentially says yes, and maybe even helps out by doing what they did for you which is pay and commit to pay more or by helping adjust the project.

Then you use that company as social proof for other businesses and say, hey look, this big company bought, so, I just wanted to recognize that pattern of getting customers in enterprise. When you went to them, how did that conversation go? Did your mentor just set you down and say this is their product, and they said sh-? How did you get their feedback to tell you what to build and how to build it?

Darik: I had an idea for them. I had a sports medicine library and I thought that we could do the same thing for Spine and we would do it. Stryker would pay us to create this library and website and then they could give it away free to their doctors, and they would just pay us a monthly license fee to do that. Tim made the introductions for me. They were open and they were interested in doing something like this. It was really good timing and I hit it off well with Jerry and we were off to the races.

Andrew: Had they ever done this before at Stryker? When we worked for them, seeing that they would pay another company to create stuff that they would then give away to their doctors as a way of winning their business in the future?

Darik: No, they hadn’t done that.

Andrew: Never?

Darik: No.

Andrew: OK. So it’s not like you walked in there going, hey, they did this for five other people when I was there [??]

Darik: No, they hadn’t done it. I thought it was a good idea and it’s a great way for them to really differentiate their services. Instead of the reps going to the physician and trying to sell them a new screw or a new cage. They could go and offer a solution that can help them make their practice more efficient, and then give it away to them for being a good customer. It was a very non-salesy way for a salesperson to build relationships with their physicians.

Andrew: All right. I want to get to the terrible thing that happened soon, but one more question here. You know where I’m going with that. You are now in the business of creating 3D animation. Animating not just a bunny walking across a screen, but something really complex where every piece of it needs to make sense and be accurate? You don’t have that kind of background. How did you know how to do that, Darik?

Darik: Well, I still don’t know how to do it. I have no clue how to do medical animation. You hire great people who do know how to do it.

Andrew: How’d you find them?

Darik: And you get out of the way. Through trial and tribulation. There are animators who specialize in medical animation. Over time, the better you get, the more appealing you become for other animators in the space to come and work for you. Nobody probably wanted to work for us in 2003. I mean our content was just not very good, but as we’ve progressed and gotten better and better, talent attracts talent. We’ve got a great team now of medical animators.

Andrew: OK. This skill existed out there in the world because you were plugged into this part of the world. You were in medicine for a long time. You were able to know where to go get the company, the people who would do this for you and that’s how you hired them.

Darik: Yeah, essentially. Sure. You kiss two toads and you find a prince, and . . .

Andrew: Was there a toad there?

Darik: There have been a lot of toads, Andrew. Lots of toads. My body is riddled with warts. No, we’ve certainly kissed a few toads. I’m happy to tell you, a few years ago, everybody on the team is incredibly talented and hitting on all cylinders. When you reach that point after years of struggling, you can really focus on so many other things outside the business. You attract talent that is a force mulitplier and they’re providing ideas and solutions. that is where we’re at now. It’s taken a long time to get here.

Andrew: All right. One of the challenges you have is that you are not a technical person. You don’t develop websites as a hobby. You don’t code, and so you had to hire technical people, and you had an issue with one of the first developers that you hired. Right? What happened?

Darik: Yeah, so 2003 we start and I had a gentleman who was with us for probably a year. He was a contractor.

Andrew: [SS] see their name here. You don’t have to give their their name in the interview. [??]

Darik: We won’t do that. Yeah. This gentleman was with us for a year. Maybe a little over a year, and was in the Bay Area and it was him and he did the technology piece. He did our website and he did a little bit of the backend. And then we had one animator.

So we get that Stryker deal and this gentleman helps us with that and he’s kind of doing that and that’s good. And then we get an opportunity to do business with Johnson & Johnson. And this is huge for us. I mean, really, really exciting.

So I work on this deal for 6 months and we get it and we’re about to start working. We establish a timeline and some deadlines and then my guy tells me that he wants a lot more money. He wants an agreement for, I don’t know, 2 or 3 years and he just waited for the worst possible time to spring this new package that he wanted and I wasn’t in a position to do that. And I was really pissed that he did that. So we split ways.

Andrew: But this is just as you’re about to land a huge client.

Darik: Yes. I think if I recall the timing, we had landed them and had agreed on the deadlines and now we’re about to start working and he drops this bomb on me. He wants a lot more money and he wants a long term contract.

Andrew: And couldn’t you give it to him because you just got this big client and you’re finally on your way?

Darik: I mean, could I have given it to him? Financially, I don’t remember. Frankly I don’t remember if I could afford it or not. It would have been a hardship no matter what. I mean, we weren’t rolling in cash.

But I was pissed that he would do that at this time and give me this, you know, this kind of ultimatum. This is the way it is now and if you don’t do this, the relationship was poisoned and I wasn’t going to capitulate to that and certainly I wasn’t going to sign a long term contract or agreement with somebody who would play that game. So I gave him the boot.

Andrew: So now you’re on your own. You lose someone who’s key to the company just as you got the client that you want to impress. You take that kind of a risk.

Darik: Johnson & Johnson.

Andrew: Yes. People in the audience may not, probably don’t know Stryker. They all know Johnson & Johnson.

Darik: Right.

Andrew: Stryker is a huge company no doubt about it but it doesn’t enter their world the way that Johnson & Johnson has since they were babies. So it’s huge company, huge honor. And you just took this big risk by saying no.

What do you do to recover from that? How do you replace such a key person?

Darik: Yes. I’ll tell you what you do. You flutter around and experience great pain like I did. So Reno is a small town. It isn’t the Bay Area. Our talent pool, there’s 99 great reason to do business in Reno and there’s 1 or 2 not so good reasons and finding great tech talents is one of those. I didn’t fully appreciate that at the time. I didn’t.

So I’m desperate. You go to Craigslist. You take out ads. I really thought it was going to be easier to find somebody. Interviewed a lot of folks but as you said, I’m not a tech guy. Can’t look at a line of code and tell you if it’s random keystrokes from a monkey or if it’s the greatest code since I don’t know, great code.

Andrew: Since fill in the name of great coder.

That’s a challenge. People who say Hey I’m not a developer so I’ll just hire one, they’re skipping over a key part. You don’t know who a good developer is if you’re not a good developer.

Darik: You’re right and he had this portfolio of this great websites that he had done.

Andrew: Oh, so you got a bite on one of these job listings with this guy.

Darik: I did. I got a lot of bites but you meet with people and you just know it’s not going to be a fit. But this guy, this guy, boy, I tell you, he came across as a big shot programmer and had this really impressive portfolio and made all these grand promises and he required a sign in bonus if he was going to come work for understanding and grace us with his presence.

So I said OK. Paid him a sign in bonus and at this particular time, I was traveling a lot for the business so I think I hired him and than a day or two later I was on this road trip to go up drum business on the East Coast and I was gone for a lot of the next 52 weeks.

And so immediately the red flag started popping up. He’s coming in late, he’s missing work. He’s leaving early. It’s just like, the writing’s almost instantaneously on the wall and so I come back from my trip and he’s gone. He sends me an email that night, tells me he’s resigned. He’s going to keep the same bonus because the code that he had done for those two weeks was so good, it was so much more valuable than the sign in bonus.

Andrew: That is something.

Darik: Yes.

Andrew: Was it that good?

Darik: No.

Andrew: Did you end up using it?

Darik: He did absolutely nothing.

Andrew: Unreal.

Darik: Yes. It was, I got totally scammed.

Andrew: All right. Time to go out there and get a third.

Darik: That’s right.

Andrew: What happens then?

Darik: You couldn’t think that it could possibly go from bad to worst but it goes from bad to worst.

So I do a Craigslist, I extend my Craigslist search. I go to Vegas and I go to Sacramento and we’re really trying that . I think I probably went to the Bay Area, really expanding the search and I had this husband and wife team. This is not going to end well. When I say a husband and wife team you know that this is not going to end well.

Andrew: And so why did you even consider them with that in mind?

Darik: I was desperate. I mean, I was desperate. They had a portfolio and they had a resume that it looked ok. I mean, what I found out if you’re really enough nefarious individual, you can link to all sorts of work that you’ve done and you probably haven’t done it.

So I’m desperate at this point. So they want a relocation package, right. So I’m desperate. We don’t have a lot of money. Even though we have all these big clients, we got to deliver. It’s not like J&J paid me a lot of money. So times are lean.

So I give them this freaking relocation package and they drive up and from day one, maybe there was a honeymoon for a day. But on day two I was already going Shit, what have I done?

So they’re constantly bickering with each other and nothing that they do works. At least, they did things. They would create something and then it would work like half the time and, you know. But the writing was on the wall pretty soon that I had made a really bad decision once again.

And so they probably stayed with us for maybe 3 months. And just floundering and just excuses. And Brett and Rebecca. I won’t say their last names but God Bless you, little bugs. So I mean, nobody in the office liked them. It was just, they were not good times.

Andrew: By the way, we’re intentionally talking about this. You’ve seen my interviews. You heard one recently with Trent [??] where he flipped the bird to his partners. What’s the value for you as an entrepreneur to hear a story like the set of stories that you’re just sharing with us?

Darik: Yes. You are not alone. That is the message. When we get into our own little universe and you’re completely focused and we got our blinders on as we should and we bet it all on our business, it is really refreshing and inspiring to see the struggles of other people had and you’re not alone. And in your darkest moment be that not getting your promotion at Stryker or having a deadline with Johnson & Johnson and unable to hire technology talent, that got you going, that other people have been there. Other people have been much worst.

I mean, some of your interviews with the folks completely put things in perspective. I thought that I had it bad. So I mean, that’s my message.

Andrew: You know what? I always, I mean not always but way too much, if I hire someone and it ends up being a bad decision, I think maybe I’m just not good at this. Maybe we just don’t have the ability to hire a good developer. Maybe there’s something wrong with me. Maybe there’s something wrong with my business. And it’s really reassuring to hear these stories and to just remember that there’s a purpose behind those stories, to influence me and the person who is listening to us at the points where we’re at our deepest doubts and maybe thinking that there’s something wrong with us.

Darik: You know what? That’s it. I mean, I will tell you and I can laugh about it now, but so I go in to the office, and the goal…can you edit that? I didn’t mean to say…I didn’t say the whole last name…

Andrew: You didn’t say the whole last name.

Darik: Yeah. Brett and Rebekah had left. They had left in the dead of night, took all their stuff and they were gone, okay? And, I will tell you, he sent me this email, it was like pages, OK? It was like a manifesto. It was like the Uni-bomber manifesto, with Scripture about how horrible an individual I was and that I was the worst leader and businessman on the face of the planet. And I will tell you, even though it came from them and even though I didn’t like them, I read that and it was tough, man. It really was a punch in the face, and I was really questioning, I was really questioning my ability to be an entrepreneur and to be a leader. It was tough. Now, I can look back and laugh now, but at that moment, man, it was deep and dark. And the deadline was approaching for Johnson and Johnson, you know?

Andrew: And then, you meet someone else. How, and what happened?

Darik: Yeah. So, I met my current VP of technology. Ian Berry-Jewett, who I just love. And we meet…how did we meet? I met Ian through another guy that I hired, and I wanted to really get to Ian. And Erik was a good guy, and I like Erik. But really, Erik was a sales and marketing guy, but they had worked for this start up that wasn’t going anywhere, and they were on their last fumes. And to get to Ian, I had to go through Erik, so I ended up hiring both of them. And, I had met…we looked at maybe doing a partnership with their company, and that’s how I initially met Ian. And the timing was right, their company was just winding down, and I hired both of them, and I tell you, God bless.

Andrew: I can see it on you right now.

Darik: Yeah, you know, I can’t tell you that I’m much better at assessing technology talent, but thankfully, I haven’t had to try to assess technology talent anymore. Ian has been a savior for the company, and he’s been a great leader, and he’s been, you know, he manages some other folks. Joey Szakara, who is just a rock star on the team, and really, my…not only has my quality of life improved dramatically, but the business has been able to grow and flourish in so many other ways because that piece is taken care of. I don’t have to worry about that. I can go focus on other things that are important.

Andrew: So, we talked about how you improved the product because of Stryker. They came in, they gave you an understanding of what they were looking for and a willingness to actually pay for it. How did having Johnson and Johnson and future customers, how did you start…how did you continue to improve after that?

Darik: Yeah, it’s…So, you said something earlier. Getting Stryker allowed us to get Johnson and Johnson. You know, we wouldn’t have gotten J and J if we weren’t, you know, we were already doing business with Stryker, so that gave us a lot of credibility. And frankly, even though I had the relationships at Stryker, I wouldn’t have gotten Stryker if I didn’t have a product, even a shitty product, to show them, to demonstrate that I could do it.

Andrew: Yeah.

Darik: So each thing kind of led to something bigger and better. So, that was important. And that just continues. I mean, once you’ve got Johnson and Johnson, well then, it’s a heck of a lot easier to go out and get a dozen other companies. And, having Ian on the team now allowed us to address and execute on a lot of the ideas we had to make the product more customized and more unique, with a better user interface and all of the other things that were, you know, moderate incremental improvements to the product that just make it easier and easier to sell. And you reach a certain point where, you know, you’ve got something that’s good.

Andrew: What’s your process now for understanding what to build next?

Darik: Yeah, so about half of our sales are physician sales and the other half are corporate sales. And about…

Andrew: Physician’s buying directly?

Darik: Yes. So, physicians will buy directly from us. They will buy a…they will license a library and integrate it into their website. So it’s a SAS licensing business model, a recurring revenue. It’s fantastic. I’m a big fan of recurring revenue. So that’s about half of our sales. The other half is corporations, the Strykers, the J and Js. That’s continued to be a part of our business. And we will either create unique animations for them, or we will do deals like we did with Stryker where we’ll create programs that they use, that their sales force will use. About 90% of our sales are now recurring which is important. It’s just a nugget and something I’ll throw out there. Really, as an entrepreneur, think about ways to have a recurring element in your business model. It may be difficult. It may not be intuitive.

Maybe it’s service agreements or something, but having a recurring revenue business model has really allowed us to forecast our growth, expand, add headcount without a lot of stress. I’m not out selling a capital item every month and living and dying by that, which is a good thing. It’s really helped us scale the business. Yeah.

Andrew: How do you keep them on? If someone is paying you month to month, there’s an incentive for them to say, why don’t we just find a way to buy the product once from someone else, and no more of this month to month. Every month they’re reminded that they are your customer, that money’s going out of their account into yours. How do you keep them happy?

Darik: Yeah, you understand this business model, don’t you. You understand it really well.

Andrew: I’d like to understand it even better.

Darik: Yeah, so here are some nuggets, some things that I’ve learned. We don’t do month to month. We do annual.

Andrew: So before it used to be 40 bucks a month. No more of that.

Darik: No more of that. We’ll still do it if an account really wants to go monthly, we’ll do that, but over 90% of our sales are now annual. I am of the belief that you charge them one time a year. That is a better approach. Provides more capital for the business, and you’re not constantly on their credit card every month. My experience has been that an annual license is better than a monthly license.

Andrew: OK.

Darik: I don’t want to lose fact. We’re continually upgrading and adding and expanding our libraries. We never stop. Our clients are always getting better animations or new procedures. They don’t get charged anything extra. We provide true value. We are helping them educate their patients and we’re not nickle-and-diming them.

Andrew: I see. If they did go and hire someone who would do it for them, which is not likely, or pay someone else a one-time fee, they would still have to go back and rehire or pay another fee to get the newer stuff, the newer [?]

Darik: If a plastic surgeon wanted to replicate our library, we have 40, 50 procedures in there, it would take a team of animators years to do that and it would cost millions of dollars.

Andrew: You know what else though, when I say animation, I think I put a different vision in people’s minds of what the product is. If they just go to understand.com, and this isn’t a sale pitch because no one’s going to go to understand.com as a result of this interview.

Darik: [??]

Andrew: . . . and [??] sign up. But if they go to understand.com, they will see that calling it just animation doesn’t do these videos and do these images justice, so I see what you mean. You were telling us who your two different kinds of customers are . . .

Darik: Yeah.

Andrew: . . . because you were explaining to us how you improve your product, how you make yourself better this year than you were last year so that people keep wanting to spend money year after year.

Darik: Yeah.

Andrew: How do you do that?

Darik: Two things. We want to make sure we have good retention rates, for the physician piece, and we want to make sure we attract new clients. Retention is a function of having a great product, and we do. We finally made it great over time. It’s great now. It’s very expensive and costly for a physician to replicate, and they’re just not going to do that. If they want animation, which I believe is the better mousetrap for patient education, they’ve got to go through a company like us.

You’ve got to be integrated well on the physician’s website. Once you’re integrated well, and you’re all over the site, not only is it used by patients more frequently, it’s easier to find the content. But it’s more difficult, frankly, for those clients to take you off and then replace it with what? They’re going to write content. They’re going to go to istockphoto and drop a bunch of images in? That’s just not going to be very good. [SS]

Andrew: We heard how Stryker [sp] understood what their customers were doing with their products, what their customers needed by shadowing them. Do you have an equivalent of that? What’s your process for understanding your customers?

Darik: When we go to trade shows, we spend a lot of time talking to clients on the phone. We see them in person. I get emails from lots of physicians. We talk to our clients a lot. A lot of the features and functionality in the interface that we have now are all a direct result from the feedback we got from physicians. We’re intimately involved with our physicians. Yeah.

Andrew: All right. Two more things. There is one thing that I wish I heard years ago about a glass cube that you gave your mom. I try not to talk too much about myself in these interviews, but I got to tell you that, after you tell that story, why I wish I heard that about ten years ago. The other thing is, there’s one point where you considered selling your company. Can you talk about that publicly, what happened?

Darik: Yeah, sure. So this was four years ago. We were approached by a large private equity company and they gave us a very, very strong offer to acquire the company. I went through the entire due diligence process and it was a great experience. I enjoyed it. I learned more in that period of time than probably in any other period of time. It was really fascinating. The deal fell through.

The deal fell through right as the financial meltdown was happening, and this company put all deals on hold. We were one of a number of deals they were close to closing. It was two weeks before closing. We were very, very far through the due diligence process. Great experience. I think many times entrepreneurs can define themselves. I have defined myself by selling a company.

That’s like the holy grail. I think that when this happened, I found myself more distracted and looking at the exit, and not focusing on a great company with great people and great products. It was interesting. The whole experience was great. It was valuable. But after it fell through, I kind of was, like, you know, all right, time out. I’m not going to define my success by that.

I’m going to define my success by building a great company and that will take care of itself. The exit will take care of itself if you do all the other things and you have a long-term vision and you’re patient. Entrepreneurs aren’t patient. I’m not patient but I’ve learned that, for me, that has worked well. Patience, long-term vision, don’t get caught up in the exit.

Andrew: You know what, I’ve talked to entrepreneurs here. I haven’t in a while, but when I interviewed entrepreneurs years ago about the heyday of the internet, and how they used to have offers and then, suddenly, the offer would go away. I remember several of them saying that they got depressed, that they couldn’t really regain their confidence after that deal. It wasn’t like a quick bounce back. How did you bounce back so quickly?

Darik: Well, I don’t know that I bounced back so quickly.

Andrew: How long did it take you?

Darik: It was probably a few months. I had spent a lot of time. I got the word via e-mail that it wasn’t going to happen. I kind of had some feelings that things were not going real well and I got the word. My parents were in town once again, my mom and dad. I met them at Applebee’s or Chili’s or something. I came in and they knew immediately when I walked in something wasn’t right. It hurt, man. It hurt. A lot of time, effort and energy. It was a really good offer. You could start spending that money.

Andrew: Yes.

Darik: And, Jeannine, you know. Oh, wow, you know, you can dream. I was dreaming and so to have that dream end abruptly took a little bit out of me. But I’m thrilled it didn’t happen and I learned a lot. Onward and upward.

Andrew: I had that too, where I started to imagine where I was going next. I said, I’m tired. I’m finally ready for a vacation and to relax, and I knew the part of the country that I was going to go to relax in. The whole thing was in my mind and then when it was taken away, was it so hard to go back to work.

I’ll tell you, Darik, I’ve actually seen other entrepreneurs do this to their competitors. Dangle that deal in front of them, go through the process, be accommodating on what they don’t ask, because they don’t want to make the person uncomfortable, with the intention of taking it away at the last minute and making the person feel bad about his company. Or taking it away at the last minute with the intention of coming back with a much lower offer. It is part of the game.

Darik: It is part of the game. I don’t do well in that type of environment. That’s tough. I mean, hey, you know, all’s fair in love and war, right. I guess, watch, if anybody ever acquires this and they watch this interview, they’ll know my weaknesses, won’t they, you bastards. If you do that to me I will terminate the deal. I will warn you right now. If you pull it away, I’m done. I’ll walk.

Andrew: Well, maybe it’s like the chickenpox. Maybe not the chickenpox, but like a virus. If you put a little bit of the virus into someone’s system, they don’t get it again there.

Darik: That’s right. Vaccinated.

Andrew: Vaccinated. Yeah, and this was also a private equity company. So, it wasn’t a competitor. Let me say this. I want to talk quickly about Mixergy Premium and ask you about that thing that you gave you mom, that I wish I had found out about years ago. hat we’re you going to say?

Darik: No. I’m listening. No, no. So, my mom gave it to me. I didn’t give it to her.

Andrew: Oh. Your mom gave it to you? OK.

Darik: My mom gave it to me.

Andrew: In my case, I gave it to my whole team and we all displayed it on our desks, but I’ll get back to that in a moment. For now what I want to say is…I want to talk to people about Mixergy Premium. Jeremy, our producer who put together the notes that drove this conversation, and who you, Darik, got to meet in person recently when you were in Chicago, he keeps telling me “Andrew, it’s great that you talk about the course, but it’s the interviews that people often prefer to the courses.” He actually said this at a time when we were on the phone with a third team member here at Mixergy, with Alex Champagne and Alex goes “That’s why I joined Mixergy Premium.”

So, I’m going to tell you guys this. We have hundreds of interviews with entrepreneurs who have shared their stories in raw form, where they told you what they learned along the way as they built their businesses, so that you can learn from them and go out there and build your own company, including Trent who talked openly about what happened with his cofounders, and how he almost got screwed, but instead turned the tables. Including my early interviews with people like Seth Godin, where you’ve seen me a little bit shaky, but Seth Godin talked about how to build an audience, and I remember at the time tat I had did that interview. I wasn’t asking these theoretical questions like, “What if you’re an entrepreneur who needs to build an audience?” That’s because I was struggling to build my audience, and I used what I learned from that interview with Seth Godin to build up to the point today where we have more people in an hour, I think, than I had in a month back when Seth Godin first came on.

So, it’s real entrepreneurs really sharing what worked for them, and if you use it the way that I did over the years I think you’ll see results in your own business. in those interviews we don’t set out exactly step by step what to do, but what I find is that when you hear someone else’s story, you take it in, in a different way, more receptive. It sticks in your mind in a different way. I think about the stories that we talked about here today, in this interview about how shadowing a doctor helped Darik come up with his idea. That story is going to stick in your mind. It’s going to come up at just the right time, when you’re trying to think of how do I get my ideas or how can we learn from our customers, and that’s the whole idea behind these 800 plus interviews that are now on mixergypremium.com. If you’re not happy with it, of course, I’ll give you 100% of your money back. If I didn’t, guys like Darik and the hundreds of entrepreneurs who I interview here would kick my butt, if I took advantage of you guys. That’s not why I do it, but that is a penalty that’s always out there. Darik, what do you think of Mixergy Premium?

Darik: I love it, and you know, it’s so rare. You know. You watch the news. You watch CNBC and you read an article in Forbes, or Past Company, or Wired, and you just get the 30 second sound bite or you get a few paragraphs. The thing that I love about Mixergy is the depth and detail, and frankly, I don’t know. I kidded you about this earlier, but you are like the Barbara Walters of entrepreneurs. I mean, people disclose incredible things. Incredible things, not only, they’re interesting, and they are real, and they are metrics and ideas, and things that really resonate with someone when they’re starting their business. So, I have found incredible value. I love it. I mean, I’ve laughed out loud at some of the stories and re-watched certain segments. I mean, it’s gold. So, bravo. Well done.

Andrew: Thank you, and thank you for being a member for this long. Beyond what you’re getting out of it, I have to say to you and everyone else who is a premium member, you guys are helping to fund this. The research that I do here by talking to entrepreneurs, the research that I do in preparation for these interviews are what makes this work so valuable. I know we have maybe like a fraction of one percent of the impact that we will have, and when you see that impact grow and grow and grow over the years, because I’m dedicating my life to this, you can take pride of knowing that you did this. That you Darik, that you the person who’s listening to us, helped put this together. I want to make you guys proud everyday that I come in here to do interviews, even on days when I feel exhausted I go “No. They’re now too many people counting on you because you promised that this thing is going to have that kind of impact in the world.” Alright. Enough about me and Mixergy Premium. I want to get into, Darik, what this thing, what is it that your mom gave you?

Darik: Yeah. It’s…I don’t have it. It’s at home. It’s at my home office, right. You know, I get it and I pull it around. But, you know, I had very high expectations. I have very expectations for the business, and, you know, my goal was that in five years, we would have a $50 million dollar valuation. A valuation is always a nice thing, because it’s not $50 million in sales, but maybe you get some crazy multiples and…

Andrew: Right.

Darik: You could have this valuation.

Andrew: Right

Darik: It’s a fudge factor. So I probably did the same thing you did. So I had this mantra. I made up these…I had this fancy logo made up, 50 in 5. Gave it to all the team members, everybody had these framed things in their offices and in their cubicles. You know, and my mom, for Christmas or my birthday, she got this glass globe and had it engraved with 50 in 5. And that sits on my, you know, that sits on my desk as a reminder of a good thing. So I do believe the best is yet to come. We didn’t get that $50 million valuation in five years, but it doesn’t mean we are not going to get there eventually.

Andrew: So what I did was that I launched a sight called Grab.com where we were offering a big jackpot and I said “We’re going to get 30 million people in here and 30 million people to register for this contest, and we’ll generate $30 million in revenue from it.” And so, I took, I guess those powerballs or lotteries on TV, how they have those balls that shake on the screen?

Darik: Yeah, sure, sure.

Andrew: I had 30 of those. I bought 30 of those. I had them put into these elaborate box…these labeled boxes, and I handed it out to everyone on the team, and of course, I had it at home. And a few months later, we didn’t hit $30 million in revenue from that. And, we were like on a tear anyway, and I thought millions would just come out of thin air. We didn’t get $30 million people, we had maybe three to five, I forget the number now, of fully registered people, who gave us their names, emails, addresses and everything. But because I had this symbol of where I wanted to be and the reality that was a fraction of where I wanted to be, I was embarrassed by it, and I felt defeated by it, and this was a symbol of my defeat, and I actually carried it around with me for a years after Bradford??? to remind myself of how vulnerable I was and how I better fight like mad because…but it scarred me. For you, it’s something that you talked openly about with Jeremy. It’s not something that weighs on you. How do you keep it from weighing on you when everyone in the company knows where you wanted to be and everyone in the company knows that you’re not there. And today in the audience, everyone knows. How do you keep it…

Darik: Yeah.

Andrew: From doing that to you?

Darik: Yeah, well I’m older and I’m wiser. And I think growing up when I did, with all the craziness of the dot.com and watching my friend start this company and sell it for $37 million, I didn’t have an appreciation for how frigging hard it is to do it. I did not. I thought it would be easier than it was. And I’ve learned, you know, I’ve learned that I have a whole different level of appreciation for the blood, sweat and tears that it takes to get there. So I wouldn’t say that I wasn’t embarrassed. I think that there was probably an element of that. And I’m sure that some of the folks back then snickered at me when we didn’t hit it, but I have a pretty thick skin, and now it just serves as a nice reminder and, you know, hey, it’s a dot dot dot, Andrew, right? We haven’t got there yet, but it doesn’t mean we’re not going to. And I absolutely believe, I don’t care if you stub your toe or get bird flu, okay, understand we’ll have content that covers every healthcare disease, condition and procedure, and we will get that crazy multiple, or we’ll just keep going. You know, who knows?

Andrew: Yeah. What a fantastic success story. I mean, really, it is incredibly hard to build a business, to get even to $1 million. People spend their whole lives hoping to get to $1 million in revenue, and here, you’ve built this company that’s done it, that’s done it a couple of times, that continues to grow. I’m in awe, and I think anyone who has heard this story understands why, and if they go to Understand.com, they’ll even see the product. We don’t even talk about the product here, but man, is it stunning. And before I say thank you to you, I also want to say that we talked about other people who you’ve worked with, and what I often say is that these aren’t perfect memories, and these are just your side of the story. Not just your side of the story, but we don’t all love everyone who we work with. And just because, what I’ve found is that sometimes when I say something like this, it reassures the person who heard themselves being talked about and lets them know, you know what, we’re not saying that you’re terrible, we’re saying the fit was terrible. The fit didn’t work out, and our perception of the fit is what we’re talking about here. This isn’t a medical textbook where everything needs to be accurate. It just needs to be a communication of the story the way that we remember it and feel it, and that’s what Derrick and I did here in this interview.

Darik: I don’t agree with that at all. Some of these people were horrible, all right?

Andrew: Take all that away, people.

Darik: Hey, but you have to have a sense of humor, right.

Andrew: Thank you so much for doing this.

Darik: So don’t lose that.

Andrew: Thank you for doing this. Thank you for being such a supporter over the years. And frankly, this is the kind of interview that I’m especially grateful for. There are not enough doctors in the audience for this to be a marketing call for you. You are doing this purely as an entrepreneur who wants to help out other entrepreneurs by sharing your stories openly as you have, and I appreciate it.

Darik: Absolutely. Thank you. I’m honored and really appreciate it.

Andrew: Thank you. Thank you all for being a part of it. Bye guys.

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Share

  • http://www.facebook.com/profile.php?id=607569652 Jeremy Weisz

    thanks for sharing Darik! so much great information and so little time. This interview could have easily gone on for another 3 hours with all of the great stories you have. Thank you again.

  • Darik Volpa

    It was my pleasure and the whole process was great. Thank you to you and Andrew for providing an invaluable resource for entrepreneurs. If any of your viewers have specific questions or need help email me- darik@understand.com. Onward and upward!

  • TaphaNgum

    Great Guest. Thanks Darik, for doing the interview.

  • http://www.JiansNet.com/ Jian

    mp3 link is broken, could you kindly fix? Thanks,

  • http://www.facebook.com/profile.php?id=607569652 Jeremy Weisz

    you are very welcome. thanks for sharing your wealth of experience and knowledge with everyone! I am sure you will get some great thank you emails after they watch your interview.

  • http://fewtureweb.com/ Raheem Sarcar

    Excellent interview! Darik, how did you find the information to make each video? Did you also hire doctors besides the animators?

  • Darik Volpa

    Thanks Raheem. We have internal writers with a strong science and medical background who work with our medical advisory board of MD’s to write the scripts and storyboard for the medical animators. The physicians (consultants) review the script, storyboard and animation multiple times before it goes live.

  • http://mixergy.com Andrew Warner

    Great question. I should have asked that.

  • http://mixergy.com Andrew Warner

    Sorry it was broken. We fixed it, but I didn’t get a chance to tell you till now.

  • http://profiles.google.com/dennisgorelik Dennis Gorelik

    Darik, why don’t you show prices for your product on your web site?

  • Darik Volpa

    The only product we offer that has a set price are the physician libraries. These prices are listed in the store. The pricing for other products is dependent on scope so we need to understand what the client wants before we give them a price. For example, there is no set price for a custom animation because it’s like making a movie specifically for them. Same thing goes for our e-learning platform where each client requires a different amount of involvement from Understand.

  • accenture_survivor

    This is an absolutely stellar example of why I recommend Mixergy to people, Andrew. Great interview and clearly an example of the effort you and your pre-interviewer put in.

    Darik, great story. It seems like your roller coaster experiences, both good and bad, are really paying off. As a strategy consultant for a vertical market, I spend a ridiculous amount of pro bono and mentoring time helping people to avoid those who inflate their technical prowess. Sadly, the web industry is heavily abused by this.

    On a “okay, this is a cool interview” note, my fiance is a cardiothoracic surgeon. Finally, I think I can get her to listen to one of my “biz nerd’casts”, as she refers to my ipod’s play list contents. She was definitely intrigued when I showed her the site. Cheers and continued success.

  • http://mixergy.com Andrew Warner

    Darik, thanks for being so helpful!

  • http://mixergy.com Andrew Warner

    Thanks!

    What I usually do with programs that I think Olivia will like is save them for when we have a long drive together ;)

  • Darik Volpa

    Thanks for the comment!

  • Dev

    Darik,
    Thanks so much for sharing your story. This is one of the best Mixergy interviews.

    By the way, how big is Understand.com team?

    And one more thing… How did you end up getting Understand.com domain? I bet there is an interesting story behind it.

    Fantastic interview.

    Cheers,
    Dev

  • Darik Volpa

    Hello Dev,

    We have 18 employees, one full-time contractor, and one part-time contractor.

    When I started the company in 2003 our name was UnderstandSurgery.com. Understand.com was taken long ago by a gentleman in Georgia who was not doing anything with it. I always had my eye on it, but didn’t have any extra capital to buy it and I wasn’t sure he even wanted to sell.

    Once we had some traction and extra money I reached out to him via email through his registration info on whois. I did this many times but he never responded. In a last ditch attempt I sent him a FedEx with a hand written letter and an offer which he responded to. To my surprise he emailed me back and accepted the offer.

    We brokered the deal through escrow.com from there. I literally never talked with him voice-to-voice, which was a little crazy.

    Darik

  • http://twitter.com/nomuu__ Simone

    Oh I loved this interview. Darik was so open and genuine. I think the people that Darik hired early on were there to help him grow. You can always learn lessons from bad experiences.

  • janis

    Darik, really nice interview i like it. but it seems i have the same problem, you had in the past..
    customer/employers need a solution. i found and they love it.. but… the decision people/board (in your case doctors). they don’t see the value/needed(but they like the solution), even if they get feedback of the customer/employers that they needed it.

    how do you convince ‘doctors’ about your product??

  • Guest

    Darik very nice interview..
    i have question .. you saw that people needed this product en doctors like it but don’t wanna pay for it…
    how did you change the doctors to use your product?

    lot of people can say to me yeah i like it or i needed.. but still i don’t buy this service/product…

  • Darik Volpa

    Most doctors were willing to pay for it, when it was finally packaged and presented in a way that fit their needs. That’s where we initially missed the mark by requiring them to also get a web site. As time progressed, we made the product better and better at no additional cost and we are able to better articulate how our product would solve problems for their practice. I’d say we really perfected the product 2-3 years post launch.

    If you are solving a problem/need that is significant enough, people will pay. Identifying how much they will pay is the next step. My .02…

  • Darik Volpa

    Hello Janis,

    I think the response above also fits your question. For me, getting those first few sales was the most difficult part. Be persistent. If you fill a need and have the right pricing, you will sell the product.

    The more doctors I spoke and listened to, the more feedback I got on the product which in turn made it better long-term. I also got better and better at selling the product. At some point, we reached a tipping point. We have been able to carry that momentum with us to this day.

  • Kyle McDermaid

    Back in 2004, Darik & (I assume his initial business partner that he parted ways with) spoke in front of my Marketing 210 class at the University of Nevada, Reno. It’s awesome to see that he still has the same enthusiasm when speaking about Understand.com as he did when it was still in it’s infancy. Great interview, thank you for representing Reno in a positive way!

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  • http://twitter.com/jamesashchem James Ashenhurst

    My favorite quote: “It was a moment of clarity and reality where I realized I didn’t want to work for someone else, have them tell me where I’m going to live, how much I’m going to make, what I’m going to do. ” That about sums up why many of us become entrepreneurs.

  • Mark Schultzmann

    GREAT STUFF!!! LOVE IT!!!

    Quoting Darik’s own words “But the damage was already done. Once you get kicked in the gut like that, I knew that I wasn’t long for Stryker” – I know the feeling. I was kicked in the gut in a similar manner, perhaps worse.

    My story has so many similarities to Darik’s amazing track of success. It makes me happy to share it, as I see Darik as a real role model, a true example of success. And here is my story…

    I was sitting at home, browsing the web, and I found this great little travel gadget. I did some research and found out the company was looking for sales reps. They were small but were growing even in a bad economy. So I flew a long distance and met with the company’s CEO and his pupils. They made an offer, basic yet interesting, and I took it. My mission would be to market this product in Latin America. So, I left my job at the time, as I really thought I had found “THE” product to sell. This was it! I was going to make it big! I was going to make them proud! I was wrong, so wrong….

    The product was not yet ready to be sold, nor did it meet most countries’ local regulations. To make it harder, it was not yet translated. But that didn’t stop me. I worked several months (for free) and got the product adapted and ready to be sold. I gave my blood and sweat. And, after lots and I do mean lots of hard work, I turned this little product into a hot-seller. It became a must-have. I invested, I sold, I wore the shirt, I ate, slept and breathed the business.

    During the first year, things were going great (so I thought). Until one day, things changed. I don’t know exactly why, but they did. The product was no longer the new thing in the market, and we needed to improvise and improve. We needed to act fast. We needed to adapt to the new market needs and demands. And that’s what I did. Obstacles didn’t stop me and I didn’t give up. I continued selling and marketing the product, including searching new markets. The company was not having as many new sales, but the recurring business model was working. We had clients with a good retention rate. We needed to sell more, and I needed help. I could no longer handle everything with my fantastic team (me, myself, and I). So I reached out for the first time, asked for help, made a well elaborated plan, and I was shut down – for the first of many times to come. But I didn’t give up.

    I took a few bullets to the chest and a nice handful of slaps to the face. Heck, I even spent my own money to help the business during “hard times” (sure they were hard – for me, not the business). I would hide expenses and pay them with my own money so they wouldn’t complain about paying for some emergency cab fare, or for a phone call, or for some overpriced facsimile fee at a 5-star hotel (yeah, these trade shows were always at renowned hotels, but I always stayed across the street at some cheap shack, to save the company a few bucks). It came to a point where I was basically paying to work, but for some reason I stuck around (main reason being the fact I needed a paycheck). With all the cons, I still loved the product. I believed in it so much. Such a neat little gadget. Such a pretty little shiny blinky thing. It had so much potential (so I thought)… But it died. It was murdered. Killed in cold blood…

    My supervisor at the time, a true “genius” simply ignored and tossed away months-worth of solid planning and research, never listened to a single word I said, failed to think outside of a very small and constricted box, NEVER paid me on time (and I do mean NEVER). They changed my commission structure several times in order to make it more interesting (for the company of course, not for me). The “Einstein” decided to take a smart move and started billing clients’ credit cards without prior notice, and so the lawsuit threats started to pop – and they were directed at me, the little guy, of course. So, I “bribed” clients and reimbursed them with my money. I needed to survive and at that time I could not afford a team of 500 dollars-per-hour attorneys, so I thought it was best to pay the clients. And so I did. My poor-man’s paycheck and miserable commission was used in great part to reimburse our angry clients. And believe me, it was hard. My wife once found a wire-transfer receipt of a nice lump sum used to reimburse a client. She still holds that against me to this day, however I believed I did the right thing (so I hope).

    Meanwhile this “Galileo” of a man, this true “Da Vinci” of the modern era continued with his brilliant ideas. He killed our marketing budget – completely. No more print ads in our niche’s main publications. No more investing in email campaigns. No interest in giving the product to a handful of very influential individuals in our niche. These folks were the opinion leaders of our market. All it took was a nice mention of our product during a meeting and our sales would improve. But, all my ideas were bad. All their ideas were great.

    My equipment became obsolete. I would go to meetings and shows with a laptop, a silly over-sized banner and a table cloth. People would ask me “how can you sell this little travel gadget without having one to show to clients?”. I didn’t have an answer, but my boss thought it was possible. In his mind, all it took was a person who could explain the benefits of this product and it would sell itself. Meanwhile all the other companies had nice equipment, great material, handouts, freebies, product trials, fully-running marketing campaigns. It was embarrassing. So, I spent more money in renting equipment for these tradeshows. I wanted to look good. And I spent more money…

    So one day, the “Isaac Newton” of technology finally cut my poor-man’s salary, all because “it would motivate me to sell more”. I was basically left in the middle of the Atlantic Ocean, with an inflatable boat with a big hole in the middle and a pair of oars with broken tips. And to top it off with a cherry on the icing, during one business trip, I was left standing in a hotel lobby without the means to pay for my room (after a 26-hour international flight with 3 connections) – this was the final straw. So I finally gave up.

    And so, I cried. And ironically, I also called my mother. Oh, the poor lady was so sad, so disappointed. She would tell me how she vividly remembered my countless nights (months) working on the business. And so, I cried some more…

    I stuck around for a while, because I needed that paycheck, miserable as it was. Eventually, that “Thomas Edison” supervisor left the company and I was made another offer by his replacement. It was a fair offer, very inviting indeed. But, as Darik puts it very well, the damage was already done. It was like cancer, deeply embedded under my skin. I was no longer motivated. I had lost that fire inside of me. It sickened me to even think about work. I had no pleasure in presenting nor selling that darn little shiny blinky gadget. But I stuck around…

    I was sitting in my home-office, worrying about bills and the phone rang. To my surprise, it wasn’t another law-suit threat. Instead, it was a client, calling to see how I was doing. And I remember his words to this day (not exactly, but something on these lines): “Hey man, how are you? I’m just calling to see how you are doing. I wanted to see what you’re selling these days. I only bought that shiny blinky worthless gadget because of you. Because of your personality, your impeccable customer support and your professionalism. I bought it because of YOU. Because you’re a nice guy. What do you have for sale today?”.

    And that was the life saver I needed. That was the patch to my boat. That was a new pair of oars. So, I left. I QUIT! But not before taking half the clients with me (the good half). Clients followed me. They would call me because they missed me. I was the new high-tech gadget man, the market penetration expert of the travel industry. They believed me. They wanted my opinion. They wanted to buy my new products.

    I opened up my own business, with even more dedication, more sweat and blood as I now depended on myself alone. I made my decisions. I elaborated my plan, listened to my heart, worked countless nights (still do) and improved my product and service as often as possible. I hired talent and treated them everyway differently than I was treated by my previous employer. And they stuck around (still do). Old clients started calling me and I presented my new business model. They loved it. They bought it. They signed up for my plan (and still do).

    And so, here I am, working hard but prospering and will soon hit the 7-figure margin in less than 3 years of hard work. I love it. I work more than ever, but I make what I deserve. I treat my clients the way I feel they should be treated. I understand the differences between distinct markets. I am willing to negotiate. I am firm yet forgiving. And the references come in, all the time, every week, sometimes several in one day. And I love it. I LOVE IT!!!!

    A few lessons learned:

    – Believe in yourself and be true to yourself.

    – Take risks and don’t give up.

    – Be honest with your clients, always. They are YOUR clients and not your employer’s. They will follow you wherever you go.

    – Improve your product/service as often as possible. If you want to survive, you will need to make constant improvements.

    – Know how to recognize differences amongst distinct markets. What works in New York may not (and probably won’t) work in Utah.

    – Value your clients equally. The small ones are just as important. They may be small now, but you never know what will happen in the future. They could know the big fish out there and make a nice reference.

    – Read your contracts. Get them signed by all parties involved. Don’t trust your employer’s good faith.

    – Don’t settle for small offers and inflated titles.

    – Don’t believe employers when they use the economy status as an excuse to pay you less. As the Japanese say “Crisis equals opportunity”.

    – Don’t lie. Don’t cheat. Don’t steal.

    – And so many others….

    Thanks Darik and Andrew for the fantastic interview! A true thumbs up!!!