Mentor Night Series: How David Norris builds a great team

+ Add to

I did a search for a doctor on Yelp and the first review I saw said, “with ‘my man’ Dan Chan you can’t go wrong!”

Today’s guest has a company that ranks physicians based on facts and data, like how many times they did the procedures.

So if you’re going to have knee surgery and you want to know how often the doctor has done that surgery, and how often it went wrong, they’ll tell you.

David Norris is the founder of MD Insider, which uses big data to rank doctors.

David Norris

David Norris

MD Insider

David Norris is a co-founder and CEO of MD Insider, an innovative and disruptive healthcare technology company that uses big data to lower healthcare costs for employers and insurers.


Full Interview Transcript

Andrew: Hey there, freedom fighters. My name is Andrew Warner. I’m the founder of, home of the ambitious upstart.

All right. So, before the interview started, I went to Yelp and I did a search for a doctor to see what kind of reviews can you get if you want to find a doctor and get some help from the community. The first review I saw about this guy, Dr. Dan Chan, here’s what he’s said, “You can’t go wrong with my man, Dan Chan.” I thought, “Huh… That’s the kind of reviews you get on Yelp.” Think about helpful or unhelpful that is if you’re really going in for something critical.

Well, today’s guest has a different approach. Instead of subjective feedback, he wants real data, real facts, like how did past procedures go. So imagine, for example, that you’re going to have knee surgery. You don’t want to know that “My man Dan Chan” is the guy to go with. What you want to know is how often has the doctor you’re considering done this surgery before. What’s happened in the past? How many times have there been mistakes and things have gone wrong? That’s really what you need to know. The problem was there wasn’t a website to do this. There wasn’t a company that handled it. So he launched a business that does it.

David Norris is my guest today. He is the founder of MD Insider, which uses big data to rank doctors. I invited him here to talk about how he did, how he got traction, how he got his data and how he raised a boatload of money, which we’ll talk about in this interview.

I should say the whole interview is sponsored by HostGator. Look, you’re going to be listening to these interviews and you’re going to be inspired. Maybe it’s a big business idea. Maybe it’s a small idea. Maybe it’s something that you’re not even sure of, maybe just a fun website to put up. Well, what do you do?

Well, you could write about it. You can think about it. You can do all kinds of stuff or you can just go to and launch the site. By the end of the day, the site will be up and you’ll be able to see do you feel good about it? Is it the right idea for you? How do other people interact with it? Maybe you’re just playing around trying to figure out what the idea is. Don’t do it on paper, do it online. Get some feedback from people. See how it feels as you have it up and running.

More importantly, with HostGator you get a really low price and HostGator will be there for you as you grow. I don’t just mean that they will be there and give you great service–they will. But if something goes wrong, they’ve got a support number. You can call them up and have a real person handle your calls. So many extra features, such a great price if you go to

David, welcome.

David: Thank you. Nice to be here.

Andrew: Before the interview started, I read you that review from Yelp, you cracked up and you said, “I’ve heard even better.” Do you remember one that was even wackier than this?

David: Yeah. I’ve heard so many interesting reviews of doctors on sites like Yelp. One of them, a woman was complaining that the receptionist was very rude and that’s why she wasn’t going to go back to the doctor. Another commented that the waiting room wasn’t big enough and that’s why she wasn’t going to go back to that doctor–things that have very little to do with the actual competency of the physician.

Andrew: And some of it, a large number of it is very well-meaning. Somebody had a good experience with a doctor and wants to give you feedback, wants to share it with the world. The problem is it’s not especially useful. How did you even come across this problem? Where did you identify it?

David: Well, I had the problem with my family and friends.

Andrew: Give me an example of a time that you needed a really good doctor and there was no way for you to find it.

David: Well, I’ll give you a personal example. So I had my knee done about 15 years ago. I didn’t really do that much due diligence on the physician. I went in, had the procedure. It was going to be boom, boom, in and out the same day and went home. Three days later, my knee was the size of a watermelon. I went back in. They pulled some fluid out and said, “You have a staph infection.” I go back in the hospital to get the knee redone and the CDC has to oversee the drugs they were giving me. They were giving me such powerful antibiotics.

I was in the hospital for two weeks, almost died and I spent about six weeks on these really strong antibiotics–all of that because somebody didn’t take care when they were actually doing the procedure. It was so simple. No big deal. In and out. Yet, I got this thing called a staph infection, which at the time I didn’t really know about. It’s actually very serious.

Andrew: And more common than you’d expect.

David: Well, post-surgical infections happen about 1.8% of the time with different procedures. The problem is some physicians have a lot more than that. Obviously you want to be careful. Also, facilities–sometimes you go to a certain facility and it can be better or worse.

Andrew: So, a lot of people would have experience and say, “The healthcare system stinks,” and go into politics. Others might say, “My doctor stinks. I could go do it myself,” and become doctors themselves. I think your response to the problem says a lot about who you are. Is this the way you come up with business ideas? This isn’t your first time, right?

David: No. This is the sixth business for me. In this case, the data exists about physicians. So, if a site like ours had been available to me back 15 years ago, I could have avoided going to this doctor.

Andrew: What do you mean the data exists? Where does this data exists that if my doctor gives someone an infection, where does he report it? How does it exist?

David: So we gather data. We have billions and billions of claims records from the providers, from the physician side. So, we built this cloud-based infrastructure that allows us to ingest, process and analyze claims data. From that, you can see everything a doctor does, every procedure they do, how many patients they’ve seen, what went right, what went wrong, the whole thing. The picture is there. No one has ever taken this data and built a solution to help consumers with real factual data about physicians. That’s why we started this.

Andrew: That’s why I want to understand how you think that allowed you to get to that. Because most people wouldn’t be aware that exists. So, what is your process for dealing with frustrations like this and turning them into business, or maybe it’s the other way around. Maybe it’s just that you look for businesses and you say, “Where are the opportunities?” What is your process?

David: Well, you know, I had this happen to me a long time ago. Over the past 10 or 15 years, I’ve considered this problem. I met some physicians about four years ago and we started talking about this problem and my very strong desire to solve the problem. After talking with them, we envisioned this idea of a business and we had to go off and spend some time first making sure that the data does in fact both available and within a budget that you can actually build a business to achieve what we wanted to do.

Andrew: Okay.

David: So, once we figured out that it was feasible, we stared the company. That was two and a half years ago.

Andrew: Okay. So, the data exists. Your doctor whose surgery led to the infection, one way or the other, where does he report that? Where does he go and file this issue?

David: So, what happens is every time you go to the physician and they have some procedure, either an office visit or some surgical procedure, they will bill the insurance company for that procedure.

Andrew: Okay.

David: The way the flow of the data goes, it goes from the physician through a number of steps and then all the way to the insurance company. Billing clearinghouses are one place that you can collect this data and be able to analyze it.

Andrew: And the clearinghouses also collect data on the mistakes?

David: All the claims data. So you get all of it. So you see everything.

Andrew: How do you tie a mistake? How do you tie an infection back to an operation?

David: Well, so, in the data, the billing data, it has codes that the medical professionals define, ICD-9 codes and CPT codes that specify what the diagnosis is and what the treatment is. So, we were able to capture those codes in the data. One of the codes for diagnosis is post-surgical infection. So, you can literally see it. So, you can see that first a procedure was done on the knee and then very soon thereafter, a few days, there was a diagnosis of a post-surgical infection on the same patient. So, you can see it.

Andrew: I see. So, you can see it but there still needs to be some intelligence to connect it back to the operation, but the data is there.

David: That’s right. The data is there. It’s very complicated. You’re talking about billions and billions of claims across hundreds of thousands of doctors. There are about 850,000 doctors and 100 million to 200 million patients. So, there’s a huge amount of data. That’s the challenge. Building infrastructure to allow you to handle that data, process it, find what physicians have done and then how well they’ve done it is the challenge, and that’s what we’ve built.

Andrew: You know, for a moment there, in the middle of a question, I think I hesitated and I should say, the reason I hesitated is I forgot to give credit to Mentor Night for introducing me to you. I sat there and said, “How do I know this guy? This is amazing.” And then I realized, “Wait, it’s Mentor Night,” this event in Los Angeles where entrepreneurs get to meet people like you. I went to the founder of Mentor Night and said, “Can you introduce me to some of the big guys that come in, someone we can learn from. And that’s how I connected with you.

David: Yeah. Tony is great. I’ve been working with him on that now for several years. He’s put together a great program and I’m happy to be one of the mentors there.

Andrew: And he found you before you had the huge raise, before everyone was talking about you, it feels like, online. But let’s continue with this. Now you understand the problem. You have an idea for where the data is that will solve the problem. And you said, “I have to figure out if we can actually acquire this data at a reasonable enough price to solve the problem.” So, what do you do to figure that out?

David: Well, we first had to go through hundreds of different data sources in the industry to identify which ones were feasible, which ones had the data at the level of granularity that we needed to be able to see which physician did which procedure and then could we acquire the data rights necessary. So, we went through a fairly lengthy process. It was about the first 18 months of the business. We built the infrastructure to process the data and we went out, found, sourced and then did the deals for the data.

Andrew: When you say “we,” it’s you and your cofounder?

David: Well, we had three founders of the company and then we built out a management team and overall we’ve now hired a lot of people. So, it initially was me and two cofounders and then obviously a good team that really gets credit for doing all the hard work.

Andrew: And at that point you’re funding this yourselves? Sorry, just lost the connection. At that point, you were funding it yourselves for the first few months?

David: Yeah. It’s interesting because we raised money at the beginning like most startups do. We had no money, and then we started raising money from friends and family and the first set of investors we brought in were doctors. As we explained this idea to doctors, they loved it. Our initial set of investors were primarily physicians. Most of the good doctors love this idea that they can be represented more factually because they hate Yelp.

By the way, I have never found a doctor that likes any of the review sites because they don’t think they’re represented fairly. They want to be represented fairly and honestly, and most of the reviews on the site just don’t do them justice.

Andrew: I can see it. I can see when doctors ask for reviews in the reviews.

David: It’s also a problem because they can rebut–because of the privacy laws, they can’t really go back and rebut any comments. So it’s a little bit of an unfair situation. So that’s how we actually got the business started. We quickly raised $7 million, and then went on to raise the largest round ever in a crowdfunding round on Angel List and then closed an additional $5 million or so. So, we closed a $9.5 million series A. It was quite successful.

Andrew: I keep, I think, implying that you’ve never raised any money or boxing you into this idea that you’re bootstrapped and I’m sensing you push back on it and rightfully so. But there’s a certain pride that you have in having raised money. What is that? Help me understand it.

David: Well, I believe that you should run a startup–anytime you build a business, regardless of how much money you raise, you should run it lean and mean. I think it’s sort of a cultural thing. You set the tone for how the company behaves.

I’ll just give you an example. I fly to the East Coast a lot for meetings in New York and Boston. As I do, I typically take the red eye flight so I can save a hotel night. So, I’ll fly in that morning, I’ll stay two days and only have to pay for one night in a hotel. Now, I don’t have to do that personally. I’ll stay at the Four Seasons normally. But I do this because it sets the tone for the company.

It really drills it into your head that money is really important and you need to be very careful with every dollar spent. It may not seem like a lot for a hotel night in New York, but it’s more the tone. You actually say, “We’re going to be really careful about where we spend money and how we spend it.”

Andrew: If there’s someone in the audience who has an extra couch, do you want them to reach out to you in New York?

David: No. That’s okay. I sleep on the plane on the way over, so I don’t need a couch.

Andrew: You’ve done well for yourself, but you also have struggled. Before I started recording this interview, we were talking about a time that you were at the airport thinking about an IPO. What was going on there, year 2000?

David: Yeah. That was my second company. I built it up to a great success. It was about a $40 million run rate in revenue. That was the really difficult time in 2000, when the market crashed. So, I was sitting in an airport. We had just filed our S-1 to go public, raising $400 million–raising $100 million on a $400 million market cap and the market started tanking.

As the market started to go down, I thought, “Well, that’s okay. We’ll just wait a couple of days. It will come back up.” Obviously it didn’t. After a year, it still didn’t. That made life really difficult in terms of building a business. So, I’ve seen sort of the ups and downs of the industry and for no fault of ours or any of the other businesses, you get affected by this huge shift in the industry. It left a pretty good mark on me.

Andrew: We’re talking about ObjectSpace?

David: Yes.

Andrew: Did it eventually go bankrupt?

David: Yes.

Andrew: It did?

David: We raised money. We had raised about $30 million overall and got the company up to an IPO. Once the market tanked, it was really difficult at that point to raise additional capita. So, timing is everything, as they say. So, we kept it going for another year or so, sold off some of the assets and then liquidated the rest.

Andrew: So, that’s what we’re talking about. This is like there are some people who have the Depression mentality because they came from the Depression, there are others who have the bubble-bursting mentality and are much more aware of money because they’ve gone through it. That’s what informs your decision to fly overnight.

David: You know, it’s not just that. It’s timing. Certainly money is important, but it’s also when you have the opportunity to do things–if we had gone public one month earlier, we would have had a lot of money in the bank and we would have been in a great position. I think it’s a whole combination of things that you need to run lean and mean but you also need to be pretty nimble and execute quickly on opportunities. They may not stick around.

Andrew: Right here in the drawer next to my desk is an offer letter that I got from someone who wanted to buy the business for–I don’t remember what? $75 million? A business that I had at the time. When the market went bust, I remember going, “What was wrong with you? Why did you just take that? Or imagine if you had taken it.” It was part of my funk. Did you go through that at all?

David: You know, I’d say it hurt there for the first couple of months when the market was tanking, but in general, I look at these as learning experiences.

Andrew: Even in the moment, you can actually say, “Hey, you know what? This is a learning experience. I’ll live.”

David: Yeah.

Andrew: Have you ever been depressed or are you somebody who’s always optimistic?

David: No, I’d say I’m pretty optimistic. But let’s face it. This is not life or death.

Andrew: It feels like life or death. I feel like if I don’t’ make this happen, then my life, maybe I won’t fully end it, but it will be like unexciting. Doesn’t it feel that way to you?

David: No.

Andrew: You must have a rich life apart from work, where you actually have stuff you enjoy.

David: I do. But I also really enjoy the team that I work with. To me, being able to build a very successful company with a team of people, if it goes good or goes bad, obviously we want it to succeed, but you can’t affect things like the market. If the market tanks, there’s nothing you can do about it.

Andrew: Where do you come up with this attitude? How do you do it? Most people have a hard time living that way.

David: Well, you have to be a little crazy to be an entrepreneur in the first place, to go jump off the cliff and not know if you can actually build a business and then do everything you can do to make something happen from nothing. Okay. You’re a little crazy to start with. To do that multiple times, you’re really nuts.

Andrew: I see. And you’re someone–you counted six, but frankly we can got even further back with you. When you were 12 years old, you started a lawn mowing business. What made it a business as opposed to just doing lawn mowing?

David: Well, I had a lot of customers. It wasn’t just like mowing the neighbor’s yard occasionally. I actually had a set of customers.

Andrew: What did you do? Did you go knock door to door and actually have the guts to ask people to pay you?

David: No. I did direct marketing. I actually went around to a very large area and actually marketed to all of the people that needed lawn mowing services.

Andrew: What do you mean? What kind of marketing does a 12-year old get to do?

David: Things on the door. You go and create literally 1,000 little brochures.

Andrew: Really? You printed up a bunch of this stuff. We’re talking about back then. You couldn’t do it, or maybe you could, on your home inkjet printer?

David: No, no, you just go to a place and they do copies of it.

Andrew: Interesting. As a 12-year old you went and did that. Where does a 12-year old come up with that idea? Did you have a dad who helped you do it?

David: No. No. I think I was very much inspired by my parents, but I was driven. I was driven to build businesses.

Andrew: Why? Why at 12 years old were you driven? I was driven because my parents were driving me crazy and I thought that if I could be rich then everything could be okay.

David: I definitely had different motivations along the way. I think back then it was more about getting enough money to buy the cool stereo system you wanted and the new bike and things like that.

Andrew: And your parents hooked you up with the belief that if you can make money with your business, then you could get the cool stereo or the bike.

David: From the beginning, anything I wanted to do, they would reward me for doing something, whether it was a menial task or whether it was doing something more significant. They taught the behavior that I ended up integrating into my business life. So, if you work hard and you have a pretty good idea and you put a really good group of people together, you can build any business.

Andrew: And you said that along the lines there were different motivations for doing it. The nicer one to talk about in public is you want to leave a legacy. It’s all true. I feel that way too. But if you were to go like lower chakra, what was one of those motivations that you’re almost embarrassed to but you’re proud you outgrew?

David: Well, when I was young, I wanted to be a millionaire by the time I was 30.

Andrew: Okay. So, what was the motivation for that?

David: Cool cars. It was very materially-driven.

Andrew: I see. And materially-driven goals seem to have something that’s deeper, deeper purpose. What was it? Did you feel like an outsider? You look like a handsome guy. It wasn’t that you were an outsider, right?

David: No. No. I think I was just driven to achieve. One way to measure achievement was financial rewards.

Andrew: I see, putting points up on the board. I see.

David: And then I did that. I went through and I achieved that goal early and had a lot of interesting things that I wanted at the time.

Andrew: How young were you when you did it?

David: 26.

Andrew: 26?

David: Yeah.

Andrew: Interesting. Do you remember the day when you did it? Do you remember looking down and seeing–no. But you knew at 26, “That’s it. We did it.”

David: Yeah.

Andrew: What did it?

David: Just hard work and building businesses.

Andrew: It was Xcel Tech that did it?

David: Well, no. the first business I built was actually while I was in school. We had a crazy idea nobody believed in–

Andrew: The gas station idea.

David: Yeah. But this is back before–so, most of the people listening probably won’t actually remember that, but in 1983, we had the idea of putting credit card readers on gas pumps and checkout stands of grocery stores. At the time, that was not the most popular idea.

Andrew: So, you would put a credit card processing machine on a gas pump. Did you tie it into the gas pump so that only the amount–that they would charge properly, I guess?

David: Yeah. The idea was to eliminate some of the credit card fraud that was going on at that time. It was really bad and it was not a lot of sophistication in the fraud prevention system. So, gas stations were getting ripped off a lot. The convenience factor of having it on the pump seemed to be a pretty good idea. So, starting back then, I really focused on building innovative and disruptive businesses.

Andrew: I see.

David: To me, it was more exciting to do the disruptive part. If you have a successful business and it happens to disrupt the market, that’s more exciting.

Andrew: Got it. Interesting. That explains the long hair too and the outlaw attitude.

David: I’m just from California, what can I say? I finally moved here because everybody said I look like I should be in California.

Andrew: Does it feel like home now? Do you feel like, “Hey, they directed me to the right place?”

David: Yeah. I think they were right. But I don’t’ surf. If you’re going to ask me, I don’t surf.

Andrew: You know what, though? I lived in Southern California. I couldn’t surf either, but I wanted to. People who surfed seemed so much happier. They seemed fitter. they didn’t seem to have to work too hard to get at that versus me, I would try to go to the gym. I hired a trainer for five to six days a week. Nothing happened and I was miserable the whole time.

David: So, I’m a cyclist. So, I’ve integrated cycling into business. So, I go out cycling with customers and partners and candidates.

Andrew: Really?

David: If you want to work here and you can cycle, it’s a very, very good–

Andrew: You can actually go and have a conversation with them as you bike?

David: Oh yeah.

Andrew: So, you are really big on hiring the best. That is something you kept stressing to our producer, Jeremy Weisz over and over, “I want to find the right people, the best people,” and you said this even to me. You had the idea. You started calling around to see if the financials made sense. But you also hired people. Where did you find the first hire, the very first person you brought in?

David: You know, LinkedIn is definitely one of the sources we use pretty consistently to identify candidates, but then obviously you put them through a screening process and you find a small number of really great candidates and obviously a bunch that you don’t’ hire. But LinkedIn is a very strong resource for us.

Andrew: You’re still using LinkedIn? Six businesses later, all kinds of connections–you are?

David: Oh yeah.

Andrew: Wow.

David: And we use it on the sales side too. We use it for identifying customers and prospects and partners. But it’s a source. It’s not the only source for candidates, but it’s certainly a good one. We also obviously use referrals from people that we know. It’s one of the best sources.

Andrew: LinkedIn, by the way, is such a tremendous resource for just a few bucks. We use it for finding guests. For a few bucks, you can do things like figure out who is in this part of the country, has this number of employees and so on and then you get directly to the right people and then we go and find their email address somewhere else so we can contact them directly.

David: Exactly. I think it’s actually an entrepreneur’s dream to have LinkedIn because before LinkedIn, it was a lot harder.

Andrew: So much harder. The only person, by the way, I think I ever reached out to through LinkedIn was Reid Hoffman and that guy responds right away through LinkedIn, or at least he did with me. Yeah.

David: That’s the thing. People reach out to me and I try to be courteous about responding, not if they approach in a salesy point of view. I don’t really love that sales approach. But if they’re honest and sincere, I’ll always respond.

Andrew: So you were looking to get the data. Where did you find the data to acquire?

David: We buy data from a lot of sources. They include practice management software that physicians use, billing clearinghouses. We go through our customers, which are typically large employers and get it from their insurance providers, so through the employers.

Andrew: I’m sorry. Go ahead.

David: And we also get some from the federal government, from CMS, the Medicare and Medicaid, just a small portion of that.

Andrew: And employers actually–they get the data back about which physicians are doing what and they can sell that to you?

David: Well, they get the billing data. So, if you’re a large self-insured employer, which if you go over 1,000 employees, generally they’re self-insured. They own the data. It’s theirs. So, they have the ability to share that kind of claims data with us because they own it. From that claims data, we can derive some of the information that we use. We have other sources also, like clinical data. But certainly the claims data is one source that’s quite valuable in identifying which physicians are doing which procedures.

Andrew: You told Jeremy, “We spent a lot of time quietly working on this. Months of this analysis, which is what made us feel comfortable that we were on to something.” What was going on in those months?

David: Well, the first 18 months was building the infrastructure and being able to ingest and process billions and billions of records is hard. You have to correlate that with which physician did the work and which patient they were seeing. All the privacy rules around dealing with patient data–so, we have to be careful of that.

So, that was the first 18 months or so. In parallel with building the system, we acquired the data. So, we spent millions of dollars going out finding, sourcing and then buying the data so that we can power this infrastructure and now, two and a half years later, we have a full-fledged solution that allows you to search for doctors of all types.

We also did things like we invented our own taxonomy, which is how you can search for doctors. So, in most systems, if you go into one of the big insurance carrier sites and you have someone look at your knee, you start with orthopedic surgeons. But you don’t actually know which ones work on knees because orthopedics covers hips and shoulders and ankles and everything else.

So, in our system, you can actually just type “knee.” Imagine that. And you actually get back doctors that actually have done knee and have a minimum set of experience doing knees. What a novel concept.

Andrew: Why don’t you allow people to just go right away and search on the site? In fact, it doesn’t seem like you want your site to be the portal.

David: Well, we really looked at the different business models carefully. Most of the consumer sites are advertising-driven. The advertising model we did not feel like was good for us in our business. We’re very much a data business. We’re providing factual data about physicians.

So we went to the market that really needs that, which includes the employer market, where people are paying a lot of money for health insurance and the health systems market, which is large hospitals and networks of hospitals. So those are our two targets. There’s really no money in it for us if we put up a consumer site and let consumers use it. There’s no good way to make a lot of money out of that.

Andrew: But if you charge a company for being able to white label your content and present it to their employees, then the company will pay you for it, the employees will be happy and you get the charge per employee and have a solid business model. That’s the thinking.

David: That’s correct. If you choose the right doctors, you can save a lot of money. Imagine the scenario. You go like I did to the doctor and you screw up your knee and you have to go back a second time. You know what that cost difference was? The second time you go and you spend two weeks in the hospital, that cost was in excess of $100,000. And the whole first procedure was $6,000 to do my knee in the first place. So, what you end up finding is the better doctors are overall much more cost effective. And by the way, you don’t have to go through the pain of having your knee redone.

So, for employers, it’s much better to send your employees to good doctors. Even if they’re slightly more expensive, generally over a long period of time, they’re actually cheaper. So, they may be more expensive for one step of the process, but you really should go to the doctor that has a lot of benefits.

Andrew: This makes a lot of logical sense. I’ve talked to a lot of entrepreneurs, though, that had business models that made a lot of logical sense and then they started calling up customers and they couldn’t get through to the right person. How did you find your first customers?

David: Well, I’ve done it a few times. So, we know a few people.

Andrew: Okay. So, you tapped your personal network.

David: Yeah. I tapped my personal network. And we actually went out and just started calling. The right target for us is the chief human resource officer, so the head of HR in large employers. The response was extremely positive. They were very open even though they were sold to all the time. What we were presenting was such a unique value proportion and a unique model that it was extremely well-received.

Andrew: Did you learn anything about how to present that unique value prop as you were making calls?

David: Well, as I kind of have emphasized, to me, the team is everything.

Andrew: So, it wasn’t you. It was the team that was doing it.

David: No, the first thing we did is we actually formed an advisory board that represents our customers so we could ask them, “How should we sell this to you?” So, they could tell us, so we could do that.

Andrew: So, David, before you even had customers, you had an advisory board of your target customers and you said, “Tell me if this is the way I should be presenting this. Does this make sense?”

David: Even broader than that, I asked, “How should I present this to you?”

Andrew: Oh, really, open-ended form the start?

David: “And why would you say yes and how much would you pay?”

Andrew: And they just did this voluntarily to help you out because…

David: Well, in my experience, having done this a few times, what I did was a formed a customer advisory board and I compensate those people with equity in the company so they have a vested interest in our success. That sort of puts them in the boat with me. As we put them in the boat with us, you can look at our website. We formed a customer advisory board of some pretty good people. These are people that really know what we do.

So, this is the chief human resource officer for Oracle, for Starwood Hotels, for Expedia, for Qualcomm–these are big name companies and people that have real world problems that, without understanding what they’re going through, it’s very difficult to sell them a solution. So, they provide direct feedback to us and I’m a big believer in these kind of advisory boards because it really does give you firsthand knowledge of what your customers think.

Andrew: By the way, I’ve seen people do this even without giving equity, just saying, “I need a collection of customers who will represent the kinds of people I want to target. I’ll keep them on Skype or now on Slack, whatever it is, and I’ll just ping them with ideas and they’ll get to influence the product and they’ll also get to see what we’re thinking.” So, what did you learn from this advisory board?

David: Everything. They helped us shape the product, shape what it does, how it was presented to them, how it would be deployed and how it was priced. We literally went through the entire product.

Andrew: Do you remember one thing they taught you that you said, “This is mind-blowing. Even with my great team I wouldn’t have known this on my own.”

David: I don’t’ think there was one thing. There’s a whole set of things that came out of it. For example, their emphasis on, “How do you get employees to use a product like ours?” So, employee engagement is a big topic. So, we have pretty extensive discussions around, “If this kind of capability was available to the employees of a large company, how and why would they use it?” That’s one example of not a simple answer to that question, but a lot of different pieces of input from different kinds of employers.

As you can imagine, some have very mobile workforces, like Joe Bosch at DirecTV. A lot of his people are installers. They’re out installing. So, they use mobile devices to do all of their physician lookups and their insurance and all that. Whereas if you’re on more the corporate side of things, like a Qualcomm, people are sitting at their desktop.

Andrew: I see. And they’re giving you all this insight into how their people are using their websites and what you can do to get their people to actually use this because they pay you no matter what, right? They pay you per employee.

David: That’s right.

Andrew: So, they have an incentive to get more people to use it and you have an incentive to get more people to use it because the more they use it, the happier your customers are and the less churn you have and so on.

David: Exactly.

Andrew: Got it. And that’s the kind of stuff you get by having a customer advisory board.

David: That’s correct. You kind of allow yourself to align with the customer in many different aspects so you have success on both sides. It really makes a lot of sense.

Andrew: You also said in the pre-interview that you did a lot of rapid iterations over the 6-12 months that you were working on it. Do you remember what one major iteration was, something that wasn’t such a small thing, that stands out?

David: Oh yeah.

Andrew: What was it?

David: We went down a couple of different roads In the beginning. We wanted to be able to evaluate physicians. So, we started off with a number of ideas. One of them was we were going to rank the medicals schools. So, if somebody went to Harvard Medical School versus Cleveland Clinic, which one is better? We actually went through and built a pretty sophisticated way to do that. If you imagine, you have to go back 30 years or so because somebody graduated medical school maybe 15 years ago. Well, how good was Harvard Medical School at pediatrics 15 years ago.

Andrew: I see.

David: So, we went through and built that and in the end, after about nine months, I just put that on a shelf. I said, “Stop. I don’t’ believe in that. I don’t’ think that is a way that you could actually determine whether one doctor is better than another,” even though we tried pretty hard. That was one of those things that you put on the shelf. Now, we may use that in the future, having built it. We do see some value in it. But it’s just like an engineer. If you were going to hire an engineer from Stanford versus Yale, which one is better? You can’t tell, not by the school they went to.

Andrew: It’s so interesting that the school alone isn’t enough, even the year that they were in the school is important to know, but that’s not enough either. You said, “I don’t believe in that.” How do you know whether you’re right?” How do you know confidently enough to go to a data-driven company and say, “I think we’re wrong. I don’t believe this is what we should be doing.”

David: Well, that’s where we hit our first fundamental decision. That was about nine months in. We decided we would go with factual data, not our opinion about whether something is better or not somebody else’s opinion about whether this medical school is better than that one. So, that’s where we really sort of hit the rubber in the road. We said, “From this point forward, we’re going to use factual data,” so, there’s no opinion. Now it’s only about which factual data is more valuable to you than another, but they’re all factual.

Andrew: So, what kind of factual data would you have been able to get to allow you to decide yes or no on using schools?

David: Nothing.

Andrew: Nothing. I see. That’s why, “If I can’t get some kind of data that shows me, then we shouldn’t be pursuing this as a decision.”

David: That’s right. There are all kinds of surveys that say, “This medical school is better.” But they’re all surveys. They’re all based on people’s opinion. What we’re focused on is exactly how many times did the doctor do this procedure and how many times did it go good and how many times did it go bad. That’s facts. We don’t have to interpret that.

Andrew: I see. Can’t you then tie it back to a year of school and see how many of those doctors make mistakes as opposed to all the other years of other schools or something like that?

David: We could, but a correlation wouldn’t be that useful because it’s going to vary so much based on other factors, like where you’re practicing. The hospital that you’re in, the facility can make a big difference for a doctor. Another thing is does a consumer really want to know that? Do they really care? If I tell you this doctor has done 586 knees and their success rate is this and their failure rate is that, that’s what you want to know. The fact that they went to a particular medical school, it doesn’t really help you.

Andrew: I see.

David: The other thing that’s interesting is people will pick doctors for the weirdest reason, like the picture or the last name. That also doesn’t matter. So, one of the things that we resist is putting pictures of the doctors up because should you pick a doctor based on a picture? You should pick them based on real facts.

Today, because they don’t have facts, before MD Insider, sometimes they would have to make these choices based on these really bizarre things, like was the reception area nice. That doesn’t make sense. So, we try to provide factual data that can actually make a real impact on the decision.

Andrew: What about the softer things that are harder to measure? In some cases, yes, mistakes are a problem. But even if someone doesn’t make a lot of mistakes, if they just don’t jive with you because they’re too quick, they’re a bad doctor for you or because they’re too slow they’re a bad doctor for you.

David: Right. Really, really good point. I want to say for all of the negative things I’ve said about the reviews, there is that soft side that is important, especially if you’re going to a doctor that is not going to do a specific procedure on you.

So, if you’re a general practitioner, someone you need to be a good listener and have good bedside manner–that is important. We don’t want to minimize that at all. There are plenty of sites. There are over 200 sites that have reviews that are Yelp-like, and we think those more than satisfy the need in terms of giving the soft side. What was missing was the actual factual side and that’s what we do. We are not providing that kind of soft side feedback because there is so much of it already out there. We’re trying to fill the area where there’s a huge void.

Andrew: So, we talked about the board that you have that’s made of customers. But they’re not the end users. The end users are actually your customers’ employees. Now just because this data-driven model is better of their employers doesn’t mean that they’re actually going to use it or understand it or care enough about it. What did you do to make sure that your product is actually going to be something they wanted, the end users wanted.

David: We do extensive user testing. So, some of those advisory board members connected us to their employees and we talked to them. We also use a variety of solutions for broad scale user testing–huge fan of it. We put our product in front of novice users and people from different backgrounds and people from different geographic areas and see how they like it. We’ve actually been very, very impressed with some of the latest tools that are available to do that.

Andrew: What’s one that you like?

David: We actually use them. It’s phenomenal. They video tape each of the usage scenarios.

Andrew: And you get to see the person as he’s struggling with your site.

David: And they talk through it. So, they’re talking about how they use it. We use it extensively. We think it’s a great product. I love getting that feedback of seeing people try to figure out how to do something and they’re like, “I don’t know how to do it. I can’t figure it out.” And that’s how you can really fine tune your product.

Andrew: You know, I’ve seen a lot of people get value out of that. At the same time, I remember one of my first interviewees was a guy named Derrick Stevens who worked at a lab that did stuff like this and he said, “You know, if you tell people what to do, their reaction is going to be different than if they decide they need to do something and they go off.” So, have you found that there’s a correlation, that when you say, “Go search for doctor,” people’s reactions there are the same as what you see from the broader community of people who are just researching on their own?

David: Yeah. I think in our product case, we position a need. So, we say, “Okay, you need to find a doctor because you have back pain.” At that point, using our product is similar to somebody that would not have been positioned with that problem because, let’s face it, you need to find a doctor, you have back pain. So we’ve found a very strong correlation between that. I can see there are certain products where that might not be the case, but in ours, it’s very straightforward. You’ve got to find a doctor and you have to navigate the tool to try to get the best doctor.

We really dive into the areas of why does certain information seem meaningful to that user. That’s the key to us. We can present a lot of different pieces of data. Some people think of us as like baseball stats for doctors. You can line them up and what would you use? I think getting that kind of feedback on which pieces of data are relevant for their choice is really valuable.

Andrew: I’m trying to see–you know what? The thing that my head keeps going to is the fact that you taught Harvard.

David: I have taught a number of classes.

Andrew: Taught a Harvard MBA class. It just keeps going on in my head. For some reason, I’m aware of it as–did it make him into a better communicator? Obviously I’m stuttering here for some reason today. I guess we have on-days and off-days. But I’m trying to understand. Did it make you a better communicator? Did it make you into more of a leader because you had to explain to a room full of students?

David: Well, I wouldn’t say that specific scenario, but I do a lot of that kind of teaching or seminars or speaking and I’m very open to sharing the lessons that I’ve learned. I think that’s valuable to hear from somebody that’s done something both right and wrong. I’ve made quite a few mistakes of my own. So, I like going in and being able to teach those.

The class I taught at Harvard was sort of a finance class for MBAs. So, most people that go through school don’t come away with a real world understanding of how finance works. So, I presented that in a way that I thought was very different than you could do it from a theoretical perspective.

Andrew: What do you mean by different?

David: Well, I made it more real world. I think a lot of the students were not prepared for that, which made it fun.

Andrew: What do you mean?

David: It’s just dealing with the things that you have to deal with in a business as a startup is different than some theoretical bookkeeping. As you see when you go into these universities and you talk to the MBA students, many times they don’t really get it. They don’t really know a lot about finance, even though they’ve gone through a lot of training and stuff.

Andrew: So, you brought in your personal financials or one of your company’s and you said, “Let’s analyze this?”

David: I actually went in and said, “Let’s model a company. So we’re going to build a budget.”

Andrew: Oh, I see.

David: It’s like the most obvious thing that we all have to do as entrepreneurs, you need to raise money. Well, how much money are you going to need? What are you going to spend it on? We did that process and it was eye-opening, I think.

Andrew: I see, because you’re starting from scratch, you’re seeing every element of it. It seems almost a little too basic. What was the part that was most shocking to them? Cash flow?

David: I think trying to project revenue in a company that was a new idea that they didn’t really know. That whole concept of trying to figure that out. They were more focused on consumable good companies, like large companies and trying to do the finances for that rather than, “Oh, you have a new idea, how much revenue will it generate?” “Well, we don’t know.” It’s a different perspective, for sure.

Andrew: Interesting. Because for me, the opposite is easier. The part where you just sit there with a spreadsheet and you get to say, “What if we do another 50 percent? Can I do 100 percent? I believe that.” And then the reality hits and you can’t do it.

David: Yeah. Exactly. You have to figure out why haven’t you projected a certain amount of cash based on that, so if it doesn’t happen you run out of money. That’s part of the challenge.

Andrew: It is such a great exercise to do though. I did that for my grades in school. I would have the spreadsheet where I would plugin my grades day to day or week to week. I was so anal about it. I wanted to see how would that impact the overall grade of the class and how would it impact my overall grade in general and I wanted to graduate with high honors. I said, “How does it impact that goal?”

David: I like it.

Andrew: That stuff was good. You do that stuff on your own for your own personal budget? Do you budget your own stuff like that?

David: Yeah. I’m very goal-driven. So, I set goals. At the beginning of each year, I’ll set goals for what I want to achieve in various aspects of my life. A lot of spreadsheets.

Andrew: Like what? How many miles of cycling do you need to get done this year?

David: Well, I count more on a weekly basis. So, I usually do 10-12 hours a week of training. So, over a year I’ll ride 5,000-10,000 miles.

Andrew: I see. And then what’s the big hairy goal for this year for 2015.

David: Oh, I’m doing the Death Ride.

Andrew: What’s the Death Ride?

David: California Death Ride. It’s over in Markleeville. It’s one of the hardest events in the US. It’s 16,000 feet of climbing and 120 miles.

Andrew: Wow. I see it. This is the one that has a skeleton on a bike as a logo.

David: Yeah.

Andrew: Gotcha. Then you raised money. How did you connect with Tim Ferris?

David: You know, I knew a lot of people and Tim and I had connected and had a chat and he wanted to invest in us and then he made the suggestion, because he was an early investor in Uber and Facebook and Twitter and Angel List, he said, “How about if we take part of our larger round and put it out on Angel List and raise money there?”

Andrew: I’m sorry to interrupt, but how did he understand there was something here? If you look at Tim Ferris’ investments, they seem to by and large be consumer based investments, right?

David: Well, I think Tim has a very strong passion for health and fitness and wellness. So, he was fascinated by this because he’s had his own medical challenges. He tears up his body quite a bit. The challenge is how do you identify which physicians are better than others. So, he’s had that personal challenge. So, he totally related to what we do, being able to apply data to pick a doctor makes sense.

So, once we started talking about it, my interested was really in him as an individual. Again, I focused on adding to the team, so I thought he would be a great member of our investment team and then he added that putting it on Angel List might be an interesting experience. Since I hadn’t done a crowdfunding round before, we tried that and it was very…

Andrew: Why did you believe that it was going to do well?

David: I had no idea if it was going to do well.

Andrew: And you just said, “I’m going to give it a shot.”

David: Yeah. Literally we put it out and had no idea we were going to raise–we raised $9.5 million on the series A. So we took $1.5 million of that and put it out on Angel List. When we pushed the button to start, it filled in two minutes. And it was six times over-subscribed. They called me back and said, “Hey, do you want to raise more money. There’s a lot of money here. We just stuck with the $1.5 million.

So, the experience of going through that didn’t stop there, as you then look at, “Okay, how are those investors.” It turns out many of them are very wealthy individuals. Some of them are general partners at venture capital firms. So, we got a lot of exposure from the 130-plus people that invested as part of the round. So, it was a good experience all the way around.

Andrew: I saw that. When I click most people’s more link under investors, I get maybe another ten investors, tops. For you, it just felt like dozens and dozens of people. So, can you tap those people? Have you tapped them?

David: Absolutely.

Andrew: Do you have an example of one of those investors who you’ve gotten to connect with?

David: There are actually a whole bunch of them. I can’t really expose the individuals, obviously.

Andrew: The individuals are connected on the site. But you mean you can’t disclose what you’ve done and how you’ve connected with them.

David: Exactly. I’d see the overall support from those investors has been much better than I’ve expected. They have not nickeled and dimed us to death.

Andrew: What do you mean by nickeled and dimed?

David: Well, I was worried about some of these people would be coming in, asking, “Hey, I need this update. I need this information,” nonstop. And it hasn’t been that way at all. They’ve actually been completely supportive of the business.

Andrew: How does it work? Do they all go through Tim’s syndicate to get information from you or can they contact you directly.

David: They can contact us directly. They get information directly from Angel List.

Andrew: I see.

David: Angel List helps manage that. They do a great job. That whole process, they manage the whole thing. So, I was very pleased with that.

Andrew: Yeah, over 100 investors what I’m seeing here on Angel List.

David: Yeah. It was about 130-something. Again, hadn’t done it before, highly recommend it, think it was great.

Andrew: Why didn’t you go for more, then?

David: We had other sources and other people that wanted to invest. So, we didn’t want to take too much money from that one source, plus I wasn’t actually sure until after four or five weeks after the round closed, what it was going to be like. So, now it’s been some time. Now I know, “Okay, it’s really good.” So, if I had to raise more money today, I would definitely go back out and raise. But at the time, it was still new to me.

Andrew: I see these people. Frankly, a lot of them aren’t brand name people. Here’s one that I see, Cristobal Cuart. I don’t know anything about him, but the guy works at Kohlberg Kravis Roberts, one of the top equity firms in the country. There’s a movie made about the investment firm. How many investment firms have a movie made about them. That’s the kind of person that’s investing in your company.

You told Jeremy–again, I keep going back to the notes–we ask guests, “If there’s one thing you could teach, what would it be?” And you said, “Fundraising 101.” What would you teach entrepreneurs in my audience about fundraising 101?

David: Well, I think first you should definitely teach about how to get started from the very beginning–how to raise money and stay out of the weeds. A lot companies go in the beginning. They start raising money and they make very bad decisions that hurt them downstram, assuming that they succeed and get bigger. So I think get a great law firm on board, don’t pay them that much money up front. You don’t have to. Form a partnership with them. Put the right kind of structure in place so that as you raise money it doesn’t hurt you downstream.

The other thing is I think you can raise money, things like convertible notes, you can raise money earlier than most people think. And there are all kinds of ways to get in touch with investors that many entrepreneurs don’t use.

Andrew: For example?

David: Like LinkedIn, as an example. You can easily reach out to people on LinkedIn, present investment opportunities in a way that is non-offensive.

Andrew: What’s a non-offensive way to reach out to a stranger on LinkedIn and get them interested?

David: Be sincere. Approach them as you would want to be approached as a human, not a template email that goes out to 1,000 people. But approach them on a one-on-one basis. That’s what I did.

Andrew: I was at a dinner the other day and someone said, “I approached the people I wanted and I just asked them for advice. Then they felt they were guiding me and once they felt they were guiding me, they felt invested in me emotionally, so then they invested in me publicly.” This guy’s got apparently an Evernote doc that he shows to his friends to show them the process that he’s used. Does that sound right to you? How do you do it?

David: That seems a little bait and switch for my taste. I do it a little more sincerely. So, I build a network of people that I enjoy being around and I get to know. If I’m willing to spend the time on the relationship, then that’s a good one. If I’m not, then I don’t spend any time with them. I don’t go in with one intent and switch it to another intent. If I want an investor, I’ll say right up front, “I have a really interesting business and I think you might be a good investor. What do you think? Are you interested?” And if you want to know more, I’ll tell you more.

Andrew: Interesting.

David: So, I don’t do it the other way around. If I connect with people, I try to separate it. Let’s face it. Nobody wants to be used.

Andrew: I don’t know that it feels used, but I get what you’re saying, it’s a different approach.

David: Well, if you’re going to somebody with an expressed intent of getting them to be an investor and you’re not telling them that up front.

Andrew: Oh, yeah. I guess it’s not so much of, “Here’s step one, I’m going to ask you for advice. Step two will happen tomorrow right after you give me advice,” and then you’ve got a drip campaign going on after that.” But I take your point. Your preference is to just be up front, “Here’s my business, the investment I have available to you, do you want to discuss it?” And you take it that way.

David: Right.

Andrew: You also mentioned you should have the right structure. What is the right structure? It seems like you’ve seen the good and the bad there.

David: Well, I have a lot of people, a lot of small companies that will come and ask me for advice and they start off as an LLC, as an example. And they’re trying to figure out how to distribute stock options and how to raise capital. As an LLC, in many states, that’s really nto the best way to do it. They go down that road. Pretty soon, they end up having to convert, but it’s pretty messy. So, that’s one example. A good law firm would keep you out of trouble in that area. They would immediately advise you that it’s much easier to start a C corp right off the bat.

So, those kinds of things. I see a lot of small businesses that will raise capital using structures that don’t make sense. So, for example, promising people that they will get a certain return or a certain liquidation preference with non-preferred stock. When you’re an early stage company, sometimes you will make decisions that you think are so desperate you have to take the money, but in reality, you shouldn’t.

Andrew: I see. That’s what you meant by don’t sacrifice long-term for a quick move.

David: Right. And they need education. The whole fundraising for the first couple of years, it’s an area that most entrepreneurs are not very experienced at.

Andrew: Your revenues now are just over $1 million?

David: Actually, we don’t really disclose our financials because we’re growing very rapidly.

Andrew: Even on Mixergy? It will be bigger by the time it’s published.

David: It’s going really well.

Andrew: Is it over $10 million in sales?

David: I can’t comment.

Andrew: You can’t even comment on that.

David: But it’s going really well.

Andrew: All right. You know what? Here’s my final question. Tony’s got phenomenal people over at Mentor Night. What’s in it for you? Why would you go and help Tony by being a part of his event, talk to all of these entrepreneurs who just need advice from you? The world is asking you for advice. You could be going cycling instead. Why be a part of mentor night?

David: You know, it’s just a great way to help people that need help. When I was early in my career, I had people that helped me and it’s only fair that I help others that need help, especially the young entrepreneurs that haven’t done this before. It feels good to do feels like something that as a society here in Los Angeles, I would very much like to see our group of early stage companies and investors grow and be able to do something really significant.

Andrew: Why? I remember when I was in LA there were a lot of people who believed that too. I get why some people do, why newer entrepreneurs need a good tech community so they have people to bounce ideas off of, to introduce them to partners and investors and so on. You’re a guy was so accomplished. Why do you need a good tech community? You can get whatever you needed with one phone call?

David: I think it’s more for the city. It’s more for the culture here. Los Angeles, like any other place, fights to have more jobs and create more opportunities for the people in the city. This is one way that we can do something that lasts for a long time. If you create a great tech community here, you spawn new businesses that create new jobs and spawn new revenue streams. It’s just good for the city. It’s something that if we don’t do it for the group that’s coming up as the new entrepreneurs, who will?

Andrew: Well, the website for them is Your site–I don’t even know why anyone should even go to your site. Here’s what worked better for me. They can go to But I don’t feel like the site is meant for them. The best thing to do is to just Google news for you or just scroll right to the bottom of the site and look at the news articles because you guys have done phenomenal things in such a short period of time.

David: That’s right. If your employer doesn’t provide our kind of tool for you, tell them they should. We provide our kind of tool to all kinds of employers. It’s easy for them to use it.

Andrew: I wish I had access to this. You know what? Do I need to sign up for–what was that tool you used? The feedback tool that you used?


Andrew: I might need to sign up for UserTesting just to use your site if I ever get injured.

David: Well, don’t worry. If you need a doctor, just call me. We know somebody that can help you out.

Andrew: I will, actually. I really appreciate that. All right, everyone. Thank you so much for being a part of this. David, it’s so good to have you on here, beyond the fact that you’ve got a great story, I feel like you’re just an easy person to talk to. As people have noticed, I’ve enjoyed the conversation.

David: Well, I really appreciate your time. It’s great to talk to you.

Andrew: Thank you all for being a part of Mixergy. If you like this interview, subscribe to the podcast where you can every single one of my interviews directly delivered to your phone, to your Chromecast, to whatever device you have, to your–oh, check this out guys–to your Apple Watch, a thing that doesn’t really do that much. But actually, you can’t get a podcast.

You can’t get anything on there, but maybe in the future you could. When they allow podcasts on Apple Watches, I will be there. The best way for you to get it is to subscribe to the Mixergy podcast. If you want to help out, please go to iTunes and leave a review, it helps other people find my work.

Thank you all for being a part of it. David, thanks so much for being on Mixergy.

David: Thank you very much. Have a good day.

Andrew: Bye everyone.

Who should we feature on Mixergy? Let us know who you think would make a great interviewee.