Andrew: Hey, everyone. My name is Andrew Warner. I’m the founder of Mixergy, the place where I interview entrepreneurs about how they built their businesses.
And I am so glad that we are probably the only interview place that has pre-interviews with guests and researchers to look into them because, man, I’m looking at my notes here from this interview from the team. We’ve got weapon sales coming up in this interview. We’ve got entrepreneurial depression that nearly led to suicide in this interview. We’ve got partner issues, the kind of stuff that people need to know about, and eventually we’ve got a real business with millions in sales and many happy customers.
I love this kind of story. Frankly, I shouldn’t say this kind of story. I’ve never had an interview with this kind of story. This is definitely unique. The founder you’re about to meet, his name is Saud Juman. He is the founder of PolicyMedical. They make software that allows healthcare professionals to spend more time with their patients and less time with all the administrative tasks that they’re forced to put up with. That’s what they do. That’s what he’s built up.
And this whole interview is sponsored by the company that will help you hire your next great developer. It’s called Toptal. And the company that will help you finally get on the phone with people or see them in person because it’s great for scheduling. It’s called Acuity Scheduling. I’ll tell you more about them later.
First, Saud, man, good to have you here.
Saud: Thank you for having me. I really appreciate it.
Andrew: What kind of revenue are you guys generating at PolicyMedical?
Saud: We’re between $7 million to $10 million. We’re privately held, so I’ve got to give those ranges.
Saud: Highly profitable.
Andrew: Impressive. And before we get into the weapons thing, why don’t we get into the DJ thing? How did you become a DJ?
Saud: I became a DJ because I found my way into university. I’m in Canada. So we call everything university. I found my way in postsecondary education. I loved music at that time and I needed a way to pay my tuition. I started DJing a couple of parties. I was pretty good at it. At that time, I became a pretty popular DJ, and that led to sort of the next step and the next step in that evolution of that world.
Andrew: And one of the things you realized as an entrepreneur is, “Hey, you know what? I am promoting or I’m getting a promoter and the promoter is making a lot of money. Maybe I can do that.”
Saud: Yeah. The entrepreneurial bug that was really planted in me as a young teen or tween, if you will, by my mother sort of surged again at that time in my life and yeah, I said, “You know what? Why am I being a DJ when the promoter pays me?” So I became the promoter.
Those events became very, very large. I remember I was counting cash at the end of the night as promoters do at 2:00, 3:00 in the morning in a kitchen of the venue, and my head of security, because we had to hire a head of security to take care of the lineups and all the stuff, he just said, “You know what? You should just have your own venue.” I thought, “I should have my own venue.” I kind of locked into that thought, and about a year and a half later with a few partners, we ended up with our own venue in Toronto.
Andrew: How much did you pay in rent?
Saud: This is a long time ago. What did we pay in rent?
Andrew: I’m just getting a sense of scale here in that.
Saud: It probably cost about I think $10,000 to $12,000 Canadian per month.
Andrew: A month? Okay. Did you have a bar and everything?
Saud: Yeah. It would be categorized as a nightclub. A differentiating factor, Toronto is a cold place, so we built one of the first large scale rooftop patios. That was a big draw at that time in the summertime.
Andrew: All right. Somehow, this led into what? How do I put this, the weapons part?
Saud: The weapons part was really a byproduct of what I was surrounded with in that world. So the first year or so, it was great. A guy in his early 20s–I’m much older now–a guy in his early 20s, you’re making money, you’re surrounded by members of the opposite sex. It’s great. And then you start learning about, at least in the ’90s, early 2000s, around there, why those places exist. I realized there’s an underbelly, an underworld that’s really connected to that particular world. I started to get to know them. They made it a point to get to know me. And I don’t look like them. So I don’t look like them at all.
Andrew: Meaning you’re not white.
Saud: I’m not Caucasian. I don’t ride a motorcycle.
Andrew: But you’re saying that–I’ve obviously been to clubs a lot. I thought the whole thing was maybe drugs underneath and definitely people just trying to get laid. But you’re saying underneath that, underneath is another underneath and that’s people who are doing illegal things much more than that. For you, it was people in a motorcycle gang. Am I right?
Saud: Yes. Some of it is actually pretty comical at times, even in the daytime. It may have changed. My experience is my experience at that particular time, but I would show up to my club and some of my partners, they would have all of these racks of clothes just inside of the club and I’d ask, “Where do these clothes come from?” The answer is they kind of fell off a truck. By the end of the day, it would be shipped out where it needed to go. It was really a transit point for lots of things at that particular point.
Andrew: Did you help move weapons? Did you sell them?
Saud: I was involved in the organization that moved them. I was very, very good at running the nightclubs. They knew that. I don’t drink. I don’t smoke, don’t do anything. So I had a straight head to keep track of everything. In that world, I was known as a genius, even though I almost failed my grade 11 high school math class and I struggled in calculus and university. But in that world, I was a genius, so I could keep track of a lot of numbers, a lot of spreadsheets if you will.
Andrew: But you were the front?
Saud: I was the front, yeah.
Andrew: And they would then, your partners would get to sell the stuff.
Andrew: How’d you find these partners?
Saud: Some of them I knew growing up, ironically, and that’s how I got introduced to some of them and then you learned who protected certain turfs, certain blocks, certain neighborhoods within where you operated. Back then, that’s how it worked. If you had a venue, it wasn’t good enough to have a venue. You had to have the protection around you to protect you while you had that venue. Part of that protection is letting them do what they need to do.
Andrew: Why are you talking about this now? You’re a guy who runs a medical software business. Why are you opening up about this? You knew I was going to ask about it because we talked about before the interview started. I’m just surprised you’d be willing to get into this and I’m appreciative, but why?
Saud: You know what? It’s my truth. PolicyMedical, which is our software company, it’s in its 16th year.
Saud: 16th year. It’s been a great education for me, but the last two years I’ve started or two and a half I started talking about this because I want entrepreneurs to know that it’s okay to just freaking be real. You don’t have to put on this certain persona that’s not real to carry out your business. I also want the broader population to know that if one person like myself could walk away from something that wasn’t really them, wasn’t for them and try to restart something with just hope and faith and whatever else comes with it, it’s possible.
Andrew: Are you Muslim?
Saud: I am.
Andrew: Are you afraid as a dark-skinned Muslim man having this be out there on the internet in the world as it is today? Did I just put the fear of that into you?
Saud: No. I’ve thought about this, even coming on to a podcast like this. It came up actually in another interview a little while ago. I would be lying to you if I said a part of me wasn’t afraid because it’s such a very weird political climate in this–I don’t know if you want to edit this out, but up until yesterday, I hate shaving. I hate how shaving feels. This is relevant because I went for a hike last night with my wife on our date night. We live out in the wilderness here.
So we’re hiking. I said, “I’ve got this podcast tomorrow and I’m going to be on there.” I had this big beard last night because I just don’t shave. And she said, “You’ve got the podcast. What else is going on this week?” I said, “I’m giving this keynote speech at this entrepreneur thing in Toronto on Thursday night.”
She said, “Who’s the audience?” And I said, “I don’t know Mixergy, I think the audience is like this, entrepreneurs, blah, blah, blah, especially in the United States, probably and the entrepreneur thing is this.” And she said, “Yeah, you should probably shave.” And the decision to shave actually is because of what you’re hitting at. If I came on–
Andrew: So you don’t look like a suspicious dark-skinned guy who’s sold weapons in the past and could potentially scare the audience. I see.
Saud: Yes, so I don’t look like a terrorist.
Andrew: As much as you want to be open and honest and tell people that’s the way to live, you even battle with it yourself and need to figure out where that line is.
Andrew: I get it. All right. Did you make any money from the weapons?
Saud: I made lots of money.
Andrew: How much? We’re talking about weapons, what, guns, something else?
Saud: I made lots of money from that world. My direct income was derived from the nightclubs. Part of my deal being there is keeping track of all the stuff. So when I walked away, I walked away by asking to leave because the exit interview, there’s no buyouts, there’s nothing. You have to ask permission to leave that world. They were fine, the people I was surrounded with, but one thing I chose to do which I think allowed me to leave free and clear is to give up my stash.
Andrew: All your money?
Saud: My money, yeah.
Andrew: What the . . .? Really?
Andrew: So you take on the risk of being associated with this, and you don’t even get to walk away with the money. How much money did you give up?
Saud: Close to the revenues of my company.
Andrew: So we’re talking about millions of dollars in cash you give.
Andrew: You literally had millions in the bank?
Saud: There’s no bank in that world.
Andrew: In a safe deposit box?
Saud: In a few Adidas gym bags.
Andrew: At home, millions, literally.
Andrew: And you didn’t drink? Did you have sex?
Saud: Yeah. I did.
Andrew: I was trying to get did you get to enjoy any of this stuff, or were you a goody two-shoes who had to run the books and didn’t get to touch the money and didn’t get drunk, didn’t get laid, didn’t get any of that?
Saud: No. I had relationships. I had girlfriends. There was even a point in time where my partners would be like, “You’re so stuck up. You need to drink something.” I tried all those different types of alcohol and none of it was for me. Or sometimes I would drink or sometimes I would do what they taught me, which was the shoulder toss. You buy me a shot, we cheers, you look away, I toss it over my shoulder.
Andrew: I’ve done that. I’ve done it on the floor. I take a sip and then I kind of drip it down so that it touches the floor and then no one looks because if it’s down there, as long as I’m not dripping your foot, it’s fine.
The thing I did, I did something just like you. I didn’t like alcohol, but I kept going to events where you needed to drink and I went to a bar in New York in Midtown that was empty and I said, “I want you to give me one of every one of the popular drinks and I’m going to taste each one of them and figure out which one I can deal with. I remember it must have been a few hundred bucks for Midtown drinks, but it was worth it. I walked out with I think it was like scotch and soda that I ended up with.
By the way, speaking of drinks, I’ve got to acknowledge what I’m about to drink here because it’s going to look a little weird on camera. One of my long-time fans and members created this Evil Energy Drink. I told him that I’m tired because I’ve got kids that I’m taking care of in the middle of the night, wake up in the middle of the night, new baby. I’m also working a lot. This is his energy drink. I’m going to try it. It’s going to make this water a little purple.
How do I know this is true? Let me ask you that question. How do I know this is true? I can’t check in with anyone? Is that a jerky question for me to ask?
Saud: No. Any question is a fair question, right? I guess you’d never know if it was true. If you knew anybody in that world, the way it works–there are certain streets when I go on a date night with my wife I don’t even walk on anymore, not for safety, I just don’t want to see those people.
Andrew: What’s one thing that only you would know because you were on the inside?
Saud: One thing . . . I know who all the dirty cops are.
Andrew: Who all the dirty what?
Saud: Cops are.
Andrew: Cops. I see. Okay. All right. It’s not enough, but I get it. I’m with you on this. Frankly, here’s why I’m with you on this. You don’t have that much to gain from talking about this. This doesn’t help your business. You’re not like a longtime vlogger/podcaster who’s going to get more street cred from this. You have a business and, frankly, it makes for a good story. So I’m in with you on that. Why did you decide to leave instead of keep the money? Then we’ll get into what happened next.
Saud: I have two people to probably credit for that. So I grew up not with my father around. So we didn’t have much of a relationship. We still don’t have–if we go deep into my issues, that’s a pretty deep issue.
Andrew: Father issue.
Saud: Absolutely. So, while I was at one of my clubs one night, my father just showed up. He would visit once a year or so. He showed up in Toronto, doesn’t live in Toronto, showed up in Toronto with some of his buddies. I see him. He sits down in a little booth and they’re enjoying that night. That night, we get busted. The police were surveilling some of our partners, but they busted us not for anything heinous or dramatic. They busted us on a technicality of the liquor license of that venue.
So they came in right when the night had started, turned on all the lights, very cordial, not arresting anybody, saying, “Hey, here’s the violation, blah, blah, blah. We’re going to remove all the alcohol from the club.” They spent 45 minutes or something removing it all, putting it in this paddy wagon in the parking lot. Then they said, “Hey, have a nice night, guys. Good luck with the night.”
Then you went to nightclubs, what happens if somebody takes all the alcohol away? Even if you’re out with your buddies. They’re going to go somewhere else. So the club emptied out. My father said, “Can we chat?” We went up to my office. We had like a 30 to 120-second conversation. The closeness just wasn’t there. It still is kind of being bridged to this day. He just said, “You know what, Saud? This life isn’t really for you. It’s not who you are. You can’t have a family life. It’s not your nature.”
That was like an arrow that went like straight inside of me. It was ironically the criminals I was surrounded with, when I would see kilos of certain types of drugs or tons of pills of other things or all these stolen cars in a warehouse, I would get enthralled with like, “I wonder what that’s like.” Those guys, they also became like my big brothers, my protectors. They wouldn’t allow me to partake or even try any of that stuff in a lot of ways.
Andrew: I see.
Saud: So, when my own father came along and said that, I started feeling really, really weird.
Andrew: I see. That even if these criminals know that you’re not part of their world and your dad, who you’re not with every day says the same thing, at some point, you’re seeing it from lots of different angles–people who see you on a daily basis, people who don’t, people who know you from work, people who know you from birth. You said, “I’m out.” All right. The thing you then moved on to is software.
Andrew: Okay. What were you doing in software?
Saud: Well, I moved first before I did that. I moved back home. So I gave up all that stuff and moved back home actually with my mother in a little place called Scarborough, Ontario, which is a suburb of Toronto. I’m there and you already mentioned that I’m Muslim. I grew up going to one of the first mosques in Toronto. I went back to the mosque and I asked the caretaker after the prayers were done that night if I can just stay in the mosque that night. He knew who I was because I grew up there, so he let me stay there that night.
Andrew: Meaning overnight?
Andrew: He’s letting you just sleep in his place overnight?
Andrew: Not his place, but in the mosque overnight.
Saud: Yeah. He knows me from when I’m like a little tiny kid.
Andrew: And what are you going to do overnight in the mosque?
Saud: I didn’t pray at that time. I didn’t practice any kind of religion. I just sat in the mosque in the open area and I just started like asking without words for some kind of second chance, like show me some guidance. I did that for ten months. I would go back almost every single night and do the same thing and do the same thing and do the same thing. I don’t know. You can call me crazy, but at like month three or four. It became like a two-way conversation, where something greater than me told me that, “Hey, you know what? If you’re going to get a second chance, your purpose is to make people–to try to impact their health, to try to impact their happiness.”
Saud: I kind of locked in on that thought. One thing led to another in a few crappy startups and I ended up in a really crappy startup in Toronto being part of the sales team selling healthcare intranets. These were like intranet solutions for hospitals where they post like, “Meatloaf is in the cafeteria today,” and all the other information. That’s where I got the idea for what’s now known as PolicyMedical.
Andrew: The reason you had the idea was they were telling you, your customers, as a salesperson, your customers were telling you they wanted what?
Saud: The customers of that company at that time, they were pretty much calling up when we were able to sell it and saying, “Hey, we needed to do this,” and this was the same thing, which was they needed it to manage the hospital’s policies and procedures.
Andrew: Because what? What was the problem? Just as I have everything else in the notes here, what I’m seeing in the notes from our team’s conversation with you is you began to notice a customer need that was being unmet. It was that need that made you say, “There needs to be a better solution.” What was that need and how did they express it to you?
Saud: Well, the need was specifically in the United States. The U.S. hospitals found us first. I think it was right around when Google AdWords started. We used that to get in contact with them. They said the need is because we have tons of regulations, bylaws from the Center for Medicare Services. There’s another organization in the U.S. called the Joint Commission.
So all of these things they have to stay abreast of, they need to keep track of it and they write policies at the hospital level to follow all that stuff. They have no way of tying in the regulation to the policy. So I thought, “Oh, okay, there’s an opportunity here to build a document management system. There are tons of them out there, but build a document management system that syncs up the policies to the regs.” And that was the origin point of the software. It’s evolved from there over 16 years obviously, but that was the initial need.
Andrew: Okay. You took that back to the CEO of the company and let’s hold that thought and we’ll see what he said. But first, I’ve got to tell people about one of my sponsors. It’s a company called Acuity Scheduling. Saud and I used it to frankly book this interview. He and I connected–I’m looking here at one of my pieces of software. It was maybe about a month ago–no, 70 days ago exactly to this day is when we put you in our system.
And we work hard to research you first, make sure this company is legit, make sure that as much as we can we understand before we have you on Mixergy. Considering all the work that we put in, we don’t want to lose you the way we used to in the past by sending you a potential date for an interview and then you come back and say, “I’m busy that day,” blah, blah, blah. We’ve done that. We’ve done a lot of work with guests in the past and we lost them. We didn’t get the interview because we made it just a little too hard for them to actually pick a time and book the interview.
Then someone on my team, a guy named Bob Hyler, an advisor and mentor of mine said, “Hey, Andrew, did you know there’s a piece of software called Acuity Scheduling?” I said, “I have no idea what you’re talking about. What does it do?” He said, “You connect your calendar to it. You pick the dates you’re free to do interviews. You get this URL they can give to guests. They pick the dates that they want that fits within your calendar.”
I said, “Yeah, but what happens if my wife schedules a lunch with me or if there’s another meeting.” He goes, “Put it in your calendar,” and then Acuity reads your calendar and knows, “Don’t book Andrew for an interview on that day.” I said, “Sold.”
So I went to Acuity, I signed up. I figured out that I could actually also ask guests questions–their name, their phone number, that kind of thing, and that I could embed it on my site. So I did. I embedded it on my site. So now when someone wants to do an interview, I can send them a simple URL that lets them book with me and I get all their data and they get a calendar link that puts my interview on their calendar so they remember.
I’ve done now hundreds of interviews with Acuity Scheduling, over a thousand probably. I think I maybe have five to ten people in the thousand who forgot about the interview. So I’m here, lights on, I’m ready to go. They are here too and we’re not wasting each other’s time. That’s really powerful.
Now, I know you’re not doing interviews, but you probably, if you’re listening to me, trying to get customers on the phone, potential customers on the phone, trying to onboard people right, get your sales people to actually talk to the people that they’re selling to. Well, if you want to use the same tool we have, you’ve got to go check out Acuity Scheduling. It will integrate with all the software you use, not just through Zapier, though Zapier is available, but all the other apps that you use are connected there. So, as soon as someone books, you can also add them to your CRM. You can also get your team moving on them.
Anyway, I think the best way for you to check it out is to actually try it. The best way for you to try it is to go try it for free using the special URL. Here it is–AcuityScheduling.com/Mixergy. Acuity is spelled A-C-U-I-T-Y, AcuityScheduling.com/Mixergy. They’re even throwing a private one on one consultation with someone on the team. So, they will help you use this right and get the results you’re looking for.
All right. Saud, coming back to your story from the ad, you went to the CEO of the company and you said, “Here is a need. It is unmet,” and the CEO said?
Saud: “Go back to your cubicle. Sell what we have.”
Andrew: Because he didn’t want to get involved in another business, right?
Saud: Well, his business was raising money from the angel they had, which was an older gentleman that built a cookie empire. So they were getting rounds of funding from this individual at that time. I just left. I’m not a developer. So I don’t know how to code, but I can draw on a whiteboard. So I asked the head developer. I said, “You know what? Let’s leave. Let’s leave and start this thing.”
Andrew: The two of you, 50-50 partnership starting this business together?
Saud: Yeah. We were 50-50.
Andrew: We’re going to get into what happened because that’s another issue. This is one of the biggest challenges for entrepreneurship. I think it was Paul Graham from Y Combinator who said that’s one of the biggest reasons why Y Combinator-funded companies break apart. But you wanted to make sure that you actually were on the right track. What did you do while he was coding up the solution?
Saud: Well, we tried Google AdWords, which–
Andrew: To try to get somebody to potentially buy this thing that didn’t exist so you could call them up and understand why they wanted to buy it. Am I right?
Andrew: And did that work for you?
Saud: It worked. I think what still worked back then which I still believe is needed today but much less is cold calling. My background professionally within my career at that time was a technology sales guy. So I was well-versed in cold calling. We had this thing called the Hospital Blue Book, which is like a phone book for every hospital in the United States. I’d make 100 to sometimes 150-200 calls a day as much as could to look for people who were looking for our software.
Andrew: What would you say your hit rate was when you’re calling them up to actually get someone on the phone and talk to you about what software should be?
Saud: You know what? I feel like the answer has always been the same. It’s 10%.
Andrew: Ten percent? That’s high, frankly.
Saud: You make 100 calls, you’re going to get 10 people that will say, “Yeah, you know what? Send me an email. It sounds vaguely interesting.” Now, out of that 10, you’ll get 5 that will say, “Show me the thing” Out of the 5, you’ll get 2 or 3 that will say, “Yeah, you know what? I think I’m going to buy.” And then you get 1 or 2 that will actually buy. So, as you dwindle it down, it’s 1% to 2%. The initial hit rate ratio of having a pulse right away is 10%.
Andrew: I’ve tried the whole Google AdWords thing to get people on the phone. That’s what Tim Ferriss said in “The 4-Hour Workweek” worked for him. That’s also what Eric Ries talked about in “Lean Startup.” I asked Eric Ries in one of his later interviews with me about that and he said, “You know what? It’s true. AdWords, AdSense, it’s just not going to work the way it used to, but you need to find new ways.”
I think the way that you’re talking about, just picking up the phone and calling, that’s probably the best because you’re hearing the frustration in people’s voice. You’re getting a sense immediately if you’re into it. But most people are afraid of doing it. Most people don’t know how to do it right. I’ve tried it too with some of the people in my audience. It’s a challenge to get people on the phone. What do you do to actually get a 10% hit rate and to actually get results? What did you do based on your sales experience?
Saud: I think it’s law of averages, really.
Andrew: You’re saying you don’t do anything special. You just are willing to sit and make 100 phone calls where most people will punk out at 5.
Saud: Yeah. I’m not the best sales person out there. There’s no secret sauce. I still to this day, now the company has grown so we have people, we have a chat thing that comes up and people chat and the sales guy will be there and they will call them back. That’s all good.
You know what drives me nuts even when I mentor, I advise other startups is if you’re like my business, the list of people you can possible sell to is pretty small. We’re selling to like 5,600 accredited hospitals in the United States. Out of those 5,600, we’ve got a couple thousand specific people I want to talk to. So I’m old school, just get to them. Pick up the phone and get to them, email them, figure out a way.
Andrew: What did you do to hold yourself accountable and stay on track. I interviewed one entrepreneur who used to put a stack of question on the left side of his desk and then every time he made a phone call, he moved one coin until the right side until the stack moved all the way to the right side of his desk and that’s how he knew he was making enough phone calls and not punking out. What did you do? It seems like you had some process.
Saud: I think that discipline was already drilled in to me by the time I got there. One of my older brothers, he had a tech company that I worked at. That’s how I learned to sell since I was 17 years old. His company was a lead generation company for other tech companies. So I knew how to cold call. I knew how to do that whole “Glengarry Glen Ross,” “Boiler Room,” stuff, right? I knew how to get down–
Andrew: Do you have any tips for us based on that? I don’t want to go through your whole experience to get the lesson, I want to actually get it from you, get that shortcut.
Saud: You know what? I think you should know your freaking industry really well and know your product. I think those two things, many sales and marketing people, they try to still come up with like the right thing to say or the right technique. But if you generally know your product and your industry better than who you’re calling, then you can actually teach them something on the phone. My goal has always been when I get off the phone or I walk out of a boardroom, they almost feel like they should have paid me for that time?
Andrew: Why? What was in it for them, for getting on the phone with you? How would they even know that you had something to teach them?
Saud: They wouldn’t, right? They actually wouldn’t. But by me getting the right person on the phone–I would tell them. I’d say, “You know what? Are you dealing with such and such a pain?” “Yeah.” “You’re probably also doing this.”
Andrew: That’s what I mean. What’s that such and such a thing they were dealing with that you knew that you can help them think through?
Saud: So, if I got the person that was managing all these documents on the phone, it’s usually a her, so I know it’s a her. I’m not being sexist. I just know my demographic. I get her on the phone. I would say, “You’re probably managing an Excel spreadsheet that probably has x-amount of rows.” “Yeah, I am.” “You’re probably trying to get all the other executives to update the document too but they’re not paying you any attention.” “Yeah.” “And probably the hospital has a lawsuit or claim of this size and then it comes back to you.” “Yeah.”
So I’m proving that I know her world and her pain and then I say, “You know what? We’re working on this thing.” But back then it was really hard because everybody wanted a reference. They’re like, “Okay, this is great. Now give me a reference.” We didn’t have any references but we had one customer that managed to give us a break.
Andrew: What did you learn from all these phone calls?
Andrew: What did you learn about the product or the need because of the phone calls that you didn’t know before having walked in knowing so much?
Saud: It was so valuable. I didn’t know everything. So every phone call, every email exchange, it would help us to refine and craft the product further and further.
Andrew: Do you have an example?
Saud: Yeah. They would send us–I remember Champlain Valley Physicians Hospital in Plattsburgh, New York, still a customer of ours, they ended up sending us a requirements definitions spreadsheet that itemized every single thing a piece of software has to have. I literally took that document, went to Josh, my cofounder, and I said, “Dude, build this.”
That’s really what we did. We started getting–then I knew there were these things called requirement spreadsheets. So, when we’re dealing with a demo or a prospect, I’d say, “Do you have a requirement spreadsheet?” “Yeah, we do.” Take it, figure out what we don’t have, tell Josh to build it. It was that simple.
Andrew: That’s really powerful. Did you get that first customer you started to mention? Did you get them on board at all before you started, before you built or before you launched?
Saud: We got them on board when we were still in the prototype phase. So I was honest. Honestly got them on board because the CIO, chief information officer, I believe she’s still there at that hospital, she said, “I feel like we’d be your first customer.” I told her, “I think your feeling is correct.” She said, “Can you give me a break in the price?” I said, “Yeah.” She said, “What’s it going to cost?” And I just made up a price back then. It was a very, very low price and they still pay that same price today.
Andrew: I see, because they’ve grandfathered into that price and they’re so close to the company 16 years later, wow. I have this understanding having done these interviews where if you approach a customer who has such a deep pain that they’re waiting, that they’re thirsty, hungry for a solution, they will talk to you, give you feedback, help you build the product and even settle for an unfinished product just because their pain is so deep that they need you to build it. They want you to get good at it. Am I right that that’s what was going on here, that there was that kind of deep pain in the industry?
Saud: You’re right about that. That was at the early adopter phase. We were getting the early adopters that sensed the pain, that knew how valuable the stuff was and they gave us those breaks.
Andrew: Can you tell me more about the pain as they experienced it? Why was it so bad that they were willing to take a call from a stranger and work with you and accept a half-baked solution?
Saud: Their reality is very, very stressful. So, back at that time within the healthcare world, new titles started surfacing to help deal with this at the hospital. So you’d have these compliance professionals. A compliance professional, they’re in charge of making sure the hospital complies to everything they need to.
But what would be happening to these poor people is they would be following these regulations and they’d have these inspectors that were called surveyors that would show up to the hospital to survey if they’re following the rules or not. Now, the surveys we learned are unannounced. So, basically, they have to be in a perpetual state of readiness at any given time because the surveyor can show up at any time of the year.
Andrew: By the way, just to give people clarity on the kind of policy they had to comply with, you gave our producer the example of scalpels needed to be disinfected after surgery. So this is something that they can then be inspected on, if I’m understanding you right, and this could happen at any time. I could see the stress that goes along with that. How are you helping them get through that? What was it that you were going to do?
Saud: So, from a very simple basic level back then, it’s changed now. Back then, if a nurse needed to get to a policy, let’s use a different example. Let’s say they’re getting sued because somebody slipped and fell in the lobby of the hospital and broke their leg. They’re now in a court case and they need to prove that a nurse at any given time could get to the fall prevention policy.
Even that alone was a disaster for most hospitals because the nurse would have to go to a bookshelf, pull out a binder, find the fall prevention policy. A healthy amount of time, they’re finding the wrong policy, an out of date policy or no policy. Hospital loses court case, they have to pay out. So now, with a piece of software, they’re able to get to the right version at the right time.
Andrew: I see. And that’s the solution that you were offering them and that’s the big problem that you were identifying for them. I see. And then the first version you told our producer took you guys nine months to create, to get to a shippable point. How much of the solution that you just described was available in that first one and what was missing that only an early adopter would be willing to put up with?
Saud: At first, it was essentially a file sharing solution, which when I was demoing, I was the sales guy at that time, I was selling much more than that. I was selling the potential of what’s to come. Some of the things that were missing were what they would call version control, how do we keep track of all the different versions of the document? Another big thing that was missing is proper workflow collaboration. If we’re in different parts of the United States, how do we collaborate on a document from different places. Remember, back then, there was no Box.net. There was no Dropbox. There was no Office 365.
Andrew: I was going to say basically you were selling them a crippled version of Google Drive. Don’t get me wrong, Google Drive was a crippled version of Google Drive back then too.
Andrew: Or it didn’t even exist, if I remember right. I see. So you gave them a place to put their documents and search their documents, and that was essentially it. What was missing was the ability to collaborate on their documents. What was missing is all the other stuff that you said. But because it was such a big problem that you were addressing, they were willing to put up with that.
Andrew: Okay. All right. How long did it take you to get profitable, to pay yourselves?
Saud: We were pretty simple. Even when I talked to other entrepreneurs these days and they tell me about minimum viable product, I don’t understand these things because it sounds like they’re trying to build some crap to get funding, so for us, it was so beautiful and simple back then, I remember the first purchase order for that hospital in Plattsburgh, New York came in this big, huge fax machine. Our office, by the way, was my mom’s basement. So it came into that fax machine and it was for $9,995. That’s the price–
Saud: We just made it up. We didn’t know how to price software. We knew there had to be a recurring amount, which back then you charge 15% to 22% of that. So we just charged them $1,200 a year, which in retrospect almost crippled us later on because we realized we have all these customers but they’re on this old perpetual model and our recurring revenue was really low. We had to switch to subscription. But that’s a whole chasm we had to cross. Back then, $10,000 came in. We put it in the bank. I say, “Josh, here’s $5,000. Here’s $5,000 for me.” That was our mindset back then. It was very, very simple.
Andrew: One of the big mistakes that you made was you and Josh just got started. Was there an agreement to the partnership?
Saud: No. This is like one of the biggest things I feel people don’t pay attention to at the onset of a venture and it leads to massive deterioration.
Andrew: By the way, this is what I’m glad that you’re talking about. Now that I moved here to San Francisco–I’ve been here now four years or so–going to dinner with friends, this topic comes up all the time, but people don’t talk about it publicly because they’re, I think, a little too afraid of hurting someone else’s feelings when, in reality, both partners are willing to talk about it and they’re willing to put up with someone saying the wrong things about them because they’re just okay with it. I’m glad that you’re talking about it. Tell me what happened.
Saud: So I think the time to do this is early days, just when you start, not when things go wrong. So, when we started, we incorporated, we got things set up. I think our second lawyer in, the second guy who did it, he just set up our articles of incorporation, I guess, is what you call it. The first real lawyer we had, which is still our lawyer today, he said, “You guys should have a shareholders’ agreement or a partnership agreement.” We said, “No, it’s fine. It’s going to be fine. I’m going to sell. He’s going to build software. It’s going to be good.”
Then later on–I have nothing bad to say about my cofounder. If anything, I just have sadness and guilt about what I did. We both, I think, are to blame for what ended up happening.
Andrew: Why did you guys break up then?
Saud: We both decided–have you ever read “The E-Myth” by Michael Gerber?
Saud: Right? So that book ended up happening. The apple pie, which is imagine we had an apple pie company, the apple pie was the policy management software. So, as the business grew, there were more roles to be had–taking care of the finances, hiring people, marketing, sales, all the other stuff. I naturally started taking on more and more of that type of stuff. We both got to a point where we said, “You know what? One of us has to leave.” I said, “It’s not going to be me.” And he said, “He wanted to leave.”
That’s where that was good because he’s also the type of the guy who’s more of a chilled out guy. So we decided to leave. But what ended up happening is another company found out that we were deciding to part ways. That company kind of got in between both of us and started whispering to both of us. I was pretty firm saying, “No, let’s go with what we agreed on.” That company started saying, “If you both sell us the company, we’ll pay you this.”
Andrew: And you didn’t want to sell, he did, I’m imagining?
Saud: Yeah. He wanted to sell to that other company. I didn’t want to sell to the other company because I knew there was this thing called due diligence and just because they were giving us a figure, once they do due diligence, that could easily change. Plus, I was enjoying the ride. PolicyMedical has been the best education for me so far.
Andrew: Let me tell you something also–not tell you, I think you’ll agree with this–I feel like a lot of companies do due diligence as a way of kind of sweating you down. You get distracted as a business. Your heart isn’t in running the business anymore. You’re almost imagining yourself on an island, and then they come back and they say, “Here are a few flaws that we discovered and as a result of that, we have to give you a lower price.” What are you going to do at that point? You’re already on the island mentally. All right. You’re nodding.
Let me take a quick moment to tell people–look, one of the reasons why Saud actually partnered up with someone is he needed a developer. A lot of people are looking for great, phenomenal developers and as a result, they’re willing to do anything, spend days, weeks–days is nothing, months, years sometimes, finding the right developer, or giving up equity to someone who they’re not sure they’re ready to give up equity to, but they’re desperate to find the right developers because in software, it’s the developer that matters. It’s the developer that really will create this great product that people are going to be willing to pay for.
Well, there’s another way. The other way is Toptal. There’s a reason why Andreessen Horowitz invested in them. This is the future of hiring developers. Toptal said, “We’re going to find a network of the best developers out there. We know what it takes to find the right developer. That is going to be our focus as a business. We are going to be in the business of screening them and we know the best developers like a really challenging screening process so they can get to the end of it and feel proud of having been accepted into the network,” and so that’s what they created.
Toptal put this network together of the top three percent developers and they said, “Great, now any business that needs to hire developers can come to us and often within days, we can find them the right part-time, full-time, sometimes even a whole team of developers to go into their company and help create the best software possible.”
That’s what Toptal is about. Many people that I’ve interviewed have gone and hired from them because they’re such a good company. If you want to check them out, I’m going to give you the same deal they’re offering every other Mixergy person and nobody else. The deal they’re giving us because it’s created by two long-time Mixergy fans is if you’re a listener, you’re going to get 80 hours of Toptal developer credit when you pay for your first 80 hours. That’s basically the equivalent of two full work weeks for free when you work with them and that’s in addition to a no risk period of up to two weeks.
So they’re covering your risk completely and my sense is they’re losing money on you in the beginning because they know that if they can make you happy and they can show you how great it is to work with Toptal, you’re going to want to work with them into the future and tell your friends about them.
Here’s the URL. Go to Toptal.com/Mixergy. That is top as in top of the mountain, tal as in talent, Toptal.com/Mixergy. Be sure to look at that really very attractive model on the right side of the page on Toptal.com/Mixergy.
All right. So you decided not to sell. He wanted to sell. You had no agreement. Saud, how did you clear it up?
Saud: It ended up coming down to lawyer to lawyer communication and a–
Andrew: You hired a lawyer, he hired a lawyer, you stopped talking to each other and that was it?
Saud: Yeah. It was horrible. Then we ended up going to mediation. It took a one business day mediation session to figure it out. At that point, I got up in there and I just told him, I addressed him and said, “The only people making a lot of money today are all these advisors and lawyers we have around us.” But always, I think we both got to a valuation of the company that we both were unhappy with, and I think that was probably a good thing.
Andrew: How much did he get for the part of the business he had?
Saud: A quarter-million dollars.
Andrew: Quarter-million dollars? And this was how long ago?
Saud: It was I think 2009.
Andrew: Okay. So we’re talking about a significant amount of time ago. Today, you’re doing more than that a year in profit.
Saud: Yeah, definitely.
Andrew: I see. Do you guys still talk at all?
Saud: You know what? I’ve just got to be real in all of these interviews I do. I would love to talk to him. He’s just not ready yet. I think my only way of contacting him is through LinkedIn. I tried. He did get back to me and said, “You know what? Not yet.”
Andrew: He said not yet?
Saud: Yeah, he said not yet. For nothing else, other than just mending it, saying sorry. At the end of the day, business is just business. He’s a guy that I always liked. I have nothing but respect for him. If we can mend things before we leave, then that’s good.
Andrew: Meaning before you die?
Andrew: Speaking of dying, at the top of the interview, I think I mentioned that there was depression. Again, another issue that entrepreneurs deal with that they talk about in private but they don’t mention to other entrepreneurs outside of their little friendship circle. Let’s talk about this experience you had in a hotel room in was it Oklahoma?
Saud: Yes, Norman, Oklahoma.
Andrew: What were you doing in Norman, Oklahoma, by the way?
Saud: I was saving the business.
Andrew: What was going on in the business at the time that you needed to save it?
Saud: It’s pretty much bankrupt on paper. At that evolution of the business, we neglected product development.
Andrew: When was this?
Saud: This was shortly after I bought Josh out.
Andrew: So you bought him out and then you guys are close to going out of business. You’re essentially on paper bankrupt, meaning your debts are higher than your assets. That’s not bankrupt. What made you guys . . .?
Saud: We were on our way. Our burn rate was going up. Our revenue model was really–
Andrew: You were going to run out of cash is what you’re telling me.
Saud: It was going to run out of cash. Yeah.
Andrew: Got it. And then at some point if you can’t pay your people, you can’t pay your expenses, you can’t continue to run the business. Okay. Why did you guys get to that point considering how well the business was going from the beginning?
Saud: We neglected product development. So one thing with healthcare is it’s very difficult sometimes to get that customer, but once you have that customer, your attrition rate, your churn is very low. I can probably count both hands over 16 years that amount of customers we’ve lost. We took that for granted. We took our customers for granted that they’re going to keep on paying us. They’re going to keep buying. Then the buying slowed down because the competition entered and we didn’t innovate our product. It was just average at that point.
So what I was doing in Norman, Oklahoma is I went on the road for–this is right around when my first child was born–I was traveling, visiting every customer I could with a Moleskine sitting with every decision maker saying, “What do you think of us?” the answer was always the same, “You guys are good,” but it wasn’t like, “We can’t do without you.” I asked, “What would make us great? What’s that stickiness?” I’d write it down. I’d write it down So, I was in Norman, Oklahoma.
Andrew: You were asking them what would make you great. You were asking them basically to tell you how to improve your product, not what they wanted.
Andrew: I see. Okay. And was it useful to ask that question, “What would make us great?” Is that something I should be asking?
Saud: That’s what saved the company, in my experience. They told us. They literally told us, “You know what? Since you’re asking, the product should do this and should do that.”
Andrew: What’s an example of something they told you that you didn’t know before, that actually made the product really great enough that they would be willing to pay more for?
Saud: It needed to be healthcare-specific. We were only healthcare-specific by sales and marketing, the name of the company, we would say we’re healthcare-specific. But nothing with the actual product back then actually made it healthcare-specific. They wanted us to sign partnerships with the regulators, exclusive partnerships to start to embed the regulations within our actual application. They wanted us to have the Dropbox capability or the Office 365 capability, figure out a way to do it, don’t just say you’re going to do it.
Andrew: Meaning integrate in with the software they use, which is Office.
Andrew: At the time it wasn’t even Office 365, I don’t think, but it was Microsoft Office.
Saud: It was Microsoft Office. We ended up figuring all that stuff out once it was mapped out for us and I started seeing the actual trends.
Andrew: But before you actually got to that point, you were at that hotel in Oklahoma feeling depressed and how close were you? What led you to think, “I’m done, I think I’ve got to off myself?”
Saud: It’s the way I was abusing myself as an entrepreneur. I would sleep three or four hours a night. Remember, I was traveling incessantly. I barely drink coffee. Even though I just drank one, I barely drink coffee. So I was having about seven cups of coffee a day. A couple of them were these doppio espressos, double espressos from Starbucks. I was just in a bad, bad place. That night in Norman, Oklahoma, the thought came to me, “What if I just ended it all?” It meaning my life.
Andrew: I see.
Saud: “What if I just ended it all?” And the gates of Heaven didn’t open and I didn’t have an epiphany, but I stopped and I asked myself, “Why the hell am I having this feeling. What the hell is going on?” I learned something at that point that I’m still trying to master. If I can share one thing with whoever is listening to this, let’s say this right hand of mine is me as a CEO of my venture and then this is who I really am. I took those two identities and I mashed them together. So, when the business was, in my perception at that time, failing, I to my core, I felt like a freaking failure.
Saud: I vowed, I said, “You know what? I need to separate this stuff.” I told myself, “If one day, the business is ever doing tremendously well, I’m still going to remember this because I need to deploy humility at all times because I shouldn’t feel like a king if the business is doing well. So this is the one thing I always tell my mentees, my entrepreneurship mentees, that you are you. The business is your business. I’m not saying separate personal and business. I don’t believe in that, but it’s a different thing. Your identity is different. Actually that allowed me to operate from a different place over the next several years to make different decisions in a very calm way.
Andrew: I have to keep reminding myself of that. I had that problem dramatically a long time ago because what happened was I was identifying myself with the business and if the business sucked, then I sucked. Now, if I suck, how the hell am I going to fix the business? I can’t because I suck.
The only way I was able to figure that out was to separate it, have a life outside of the business where I could do really well and feel really strong and if I’m feeling really strong and the business sucks, then I can go and fix the business as opposed to being in lockstep. I guess that’s what you’re saying too. What’s an example of something you were able to do once you came to that conclusion?
Saud: I started working on myself. I started figuring out, asking myself, “Who am I? What do I need to do? How do I get the help?” So I went to my family doctor. So I’m just being as real as I can because I want entrepreneurs that are listening to this to know that you shouldn’t feel ashamed if you have these thoughts. I went to my general physicians and said I had this thought. He said, “Did you have thoughts afterwards?” “Yeah, I did.”
Andrew: Wow. Okay.
Saud: “I feel very, very stressed out. I feel like I’m a complete failure here.” So then I tried psychotherapy. So I got a therapist. It was a vehicle for me to just start talking about this stuff. I did that for several years. I was a martial artist since I was a little kid. I still teach little kids martial arts on the side for fun. But I thought–I guess it was all the Kung-Fu movies I saw growing up, I though the Kung-Fu guy in all those movies, he was a great fighter, but he was a healer as well.
So I knew through my teachers, my masters growing up that there was a healing side to those arts. So I embraced meditation. I started journaling. Those types of things to see what would work to try to express what was inside of me to come out so I could start making sense of it.
Andrew: I see. What about this, though, that–sorry, I’m telling the guest who I’m supposed to talk to in three minutes I need more time with you. There, I just told him and he understands. The thing is though, what you did seemed necessary. I have no idea what I would do if I were in your position. All these notes you took while you were drinking your coffee and pushing yourself to the limit were actually helping. Shouldn’t you continue like that? What happens when you stop doing all this stuff that works?
Saud: Well, it’s working. Everything you mentioned is working for the business. It’s not necessarily working for me. My son was, at that point, several months old. I’m not even seeing him at that point. I mean I have four of them now running around a couple floors below me. That’s more important to me. Once PolicyMedical is gone, the one certainty, as Steve Jobs, I believe, said is death. So let’s leave religion and everything out of it. We all know we’re going to die.
At that last moment, I always remind myself on a daily basis, “Am I really going to care what my financial scorecard said this month?” I had the board meeting for the company just before this, actually. Am I going to care? I’m not going to care as much about it. It’s the time with family and friends, that type of stuff. That’s just the way I’m wired. So I wanted to focus on that. That whole saving the company stuff, it was necessary but not at the expense of myself.
Andrew: Okay. So you took all those notes. You went back to the team. You now had the team all within your control. You didn’t have a control within your control but also your responsibility. You started building. Customers started coming in as a result of that?
Saud: Well, I realized that I didn’t have what it took to evolve the product. I wasn’t good enough. I didn’t have the skill set. So I decided I needed a mentor or somebody to help show me that. I looked and looked and in Silicon Valley, I found a guy. We started off as mentor/mentee because he had built a company just like mine, bigger, exited, all that stuff. Then he started advising me on the product.
Eventually, to cut a long story short, he came in, got awarded equity and he’s now my Chief Medical Officer, which is a fancy word for head of product development for a healthcare company like mine. He’s the one that actually took all those notes. We built this prototype in this thing called Axure. I remember spending many, many nights with him when we churned out this prototype of what the product could look like. Then we decided, “It should be cloud-based.” Before it was client server. It was installed at every single hospital all over the place.
Andrew: Oh wow. I see.
Saud: That was a whole other journey.
Andrew: Oh, good god. Right. I forget about how life was so much different 16 years ago.
Saud: Yeah. You’d have to go and install it in the server room next to the eight air conditioning units and everything else. We had to migrate the whole thing to Amazon Web Services.
Andrew: This is Sanjaya Kumar. I’m looking him up to get a sense of who he is.
Saud: Yeah. That’s the guy.
Andrew: One thing I like about the site is you make it really easy to get to know the people behind the company, like you have your own interview on the site with everyone within the company. There’s clear photos, clear description. All right. Congratulations on turning this around. I really like that this is something you’re willing to talk about publicly. There’s something about being in such a safe place in the world, where your company is not about to die at any minute. You’re doing well. You can actually take some time to tell us how you got here and I really appreciate you doing that.
As I’ve looked you up, I’ve discovered that you do talk publicly, but I think your SEO juice is really low, so it’s hard to find your personal site, for example. I had to look it up and like go to the second page of Google just to find your website. But it’s Saud Juman, which is not spelled like you’d think, but SaudJuman.com is your personal website where people can connect with you. What’s another way for someone who says, “Hey, you know what? Your story touched me. I happen to be here,” you’re in Toronto right now?
Saud: I’m in Toronto, yeah.
Andrew: They happen to be in Toronto, they want to connect. Is there a way for them to reach out to you?
Saud: That’s something I’m trying to figure out. As you said, my SEO juice is low. My social media juice is low as well because I don’t use a lot of those platforms very much. So, as I talk and I speak, it’s happening organically, but I’m trying to figure out what channel works for me. Facebook, Twitter, all that stuff doesn’t work for me because I just don’t use it as much.
Andrew: I know. You really need to have the time and the patience to do it. I stopped doing it for a while and someone on my team just said, “Hey, you know what, Andrew, I’m going to get on the phone with you every week and we’re going to think through how we can push you to get back on social media.” So, every week on Tuesday, I get together with someone and she says, “Come on, what’s going on in your life? Why don’t you talk about that?”
All right. But you know what? Your email address, I’m going to give it out right now.
Saud: Go for it.
Andrew: It’s SaudJuman@gmail.com. If anyone wants to connect with you, that is your personal email address.
Andrew: Are you pissed that I just gave it out?
Saud: No. Go for it.
Andrew: All right, SaudJuman@gmail.com and SaudJuman.com is your website. I hope that as people get to know you that they’ll come back and tell me about their relationship with you. One of the things that I found here in doing these interviews is there are some entrepreneurs who are really good at reaching out to the people I interview and they get so much out of it, both sides do. I hope that will happen from this interview.
Frankly, the easiest win for anyone who’s listening who says, “I like Saud. I want to get to know him.” Is to say, “Saud, I will help get more traffic to your,” you don’t even care about traffic. “I’ll increase your SEO juice. Here’s the plan. Here’s what we’re going to do.” That’s a low hanging fruit for a guy who’s way too busy to be able to do this on your own. All right. Saud, thanks so much for doing this interview.
Saud: Thanks for having me, Andrew. I really appreciate it.
Andrew: Me too. I’ve enjoyed getting to know you. The two sponsors are Toptal.com/Mixergy and AcuityScheduling.com/Mixergy. And I’m not really into energy drinks. I’ve given them up. But I’ve got to tell you this Evil Berry thing I’m drinking, I don’t know if I can call it an energy drink. I thought it would make my heart race as I talked to you the way that Rockstar energy drinks and others do. It’s not. It’s just kind of like drinking juice. I’m sure I’m getting some kind of caffeine from it, but it’s not like all at once.
All right. I’m only mentioning it because it was created by someone in the audience and I appreciate what he sent me. Look how much he sent me. Look at that. That’s a lot. All right, Saud, thank you so much. Bye, everyone.