My article on Forbes was quite controversial, especially in a ex-Soviet culture that dislikes criticism of any kind from foreigners.
In 2009 my buddy Mischa and I wanted to make a ding in the healthcare universe. We were both pretty fed up with the status quo for consumer health, and felt like we could build a communications app that made it much easier for doctors and their patients to communicate digitally.
We learned some really harsh lessons about the American healthcare system. Namely, some of the powers-at-be who want to maintain the status quo can make Russian mobsters look like pussies.
DoctorBase was also a lesson in competing with better-funded competitors as a bootstrapped startup by sticking to your passion for building the best damn product with superior marketing tactics – and ignoring the VC hype machine.
Our closest competitor HealthXXXX had raised 30x more money than we did, but at the time of our acquisition we were a totally employee-controlled company and was doing over triple their revenues with nominal churn.
VCs had passed on us because, well HealthXXXX had raised much more money and (according to their formulas of prediction) that meant they were going to win.
A very, very famous VC told us that “HealthXXXX is going to run away with the market.” I printed out his email and taped it to my desk so I could stare at it every Saturday when I showed up to the office.
We eventually raised $1 Million via Angelist only after we were profitable (as a cash cushion) and at a healthy valuation that kept us founders in total control of the company.
When other digital health founders ask me how we did it, the short answer is that we approached our startup differently than our competitors – we treated software development and product marketing as the same discipline.
Many folks assume my first startup Five9 was more important to me because it became a much, much larger company, but in truth my time at DoctorBase were the best five years of my life (even better than college!). I think it was because we all felt like we were on a mission, and the team was small enough to feel like family.
At the time we sold the company we had about 18,000 doctors communicating electronically with nearly 9 million American patients. We were small, but we were a badass gang. I mean, not as bad as Russian mobsters, but still.
My core team and I set up a [software development + product marketing] agency in Kiev, Ukraine. If you have a digital health project in mind, drop us a line. Or you can email me at email@example.com
As the founder of two startups (one IPO, one cash sale) I’ve leveraged offshore labor to save on the
crazy high costs of operating in California. My first startup was venture funded and the second mostly bootstrapped, but we used offshore software and marketing teams to start both. Here are the top 3 things I recommend to non-technical entrepreneurs seeking my advice.
#1: Rent a Part-Time CTO First
I can’t emphasize this enough.
You magnify your chances by one or two orders of magnitude when the lead developer has actually launched successful applications before.
But you will not find this person at an outsourcer or a freelancer website.
The best outsourcers can build you an MVP for a small beta, but they can’t build you an application that will be commercially successful. In 22 years in the software business, I’ve never seen it done – and in private conversations at conferences – outsourcers will admit the same.
In each of my two startup projects, I found a solid part-time CTO first and had them directly manage the outsourcer’s team. The part-time CTO was financially unaffiliated with the outsourcer, and it needs to be that way to audit for common vendor shenanigans (upselling skills, overbilling on hours, taking shortcuts on code quality, etc.).
Good CTOs also have the product experience to 10x your chances of success, drive down development costs because they make the team go faster, and create well-architected code that can be sold to an acquirer one day.
Please trust me when I say an acquiring company’s CTO/VP will audit your code heavily (often for days) before final purchase.
Good CTOs, like good sales managers, pay for themselves fairly quickly.
#2 Negotiate Prices One Skill Level Down
It’s very common for outsourcers and recruiters to sell interns as “Junior Developers” and mid-level developers as “Seniors.” The entire system incentivizes vendors in this way.
When hiring additional team members, before settling on a fixed rate, agree on an initial per hour pricing during a 30 day trial period. Your part-time CTO can spend some time in a pair programming session with the new developer and quickly assess the speed with which they will execute tasks successfully.
10% – 15% rate reductions are common if your CTO identifies this common practice early on and can offer to coach the developer (which adds value to both the outsourcer and your project).
You can also use this time & cost savings to fund your part-time CTO.
#3 Have an Ongoing Marketing Plan
In between startup #1 and #2, I was a “Growth Marketing” consultant to numerous successful tech companies such as UpWork, RingCentral, Qualys, and LGC Wireless. Even some non-tech organizations like Miller Heiman and the State of California.
So I got to see a lot of firsthand data on what worked and what didn’t.
One of the most common mistakes that first-time founders make is to assume a Product Hunt launch or PR will bring a critical mass of users.
Launches are often best done in phases, likely with miniature pivots at each stage, and while you may not need a Chief Marketing Officer yet, having an experienced demand generator create a basic “Go To Market” plan is critical.
After two decades and two startups in Silicon Valley, my two CTOs and I decided to set up a software development shops in Eastern Europe (Poland and Ukraine). Hope this article saves you time and money on your project’s journey!