TSP030 | Michael Walsh – Transcription
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John Livesay:
Today’s guest on The Successful Pitch podcast is Michael Walsh, who is the co-founder of Cariloop, which in a way, is Match.com meets Expedia for the healthcare industry. So, if people have an ailing parent or grandparent and need to send them to a nursing home instead of having to try and figure out where to go? They figured out a platform that allows you to analyze all that very quickly. Michael has some great insights that a pitch is really a story you tell your investors. He also started a group in Dallas, the chapter called Health 2.0 and that really gave him the insights and connections to be the go-to expert in the health world in his arena and as if that wasn’t enough, he went up to an accelerator, got incredible contacts, went on to raise $500,000 and he tells us all about it in today’s episode.
Hi and welcome to The Successful Pitch podcast. Today’s guest is Michael Walsh, who is the founder of Cariloop, which is basically match.com for healthcare. How smart is that? And he also has some great stories about going through an accelerator, how he’s raised money after that, and has started something called Health 2.0 in Dallas area. Michael, welcome to the show.
Michael Walsh:
Yeah, thanks so much for having me.
John:
I want to find out a little bit about you and your background. I know you’re a big health enthusiast personally and in your career, which is fantastic, because when you’re talking to people about investing in you and your idea, what I found is you really have to establish yourself has an authority in health if you’re talking about I’m running a health-oriented program. So, can you take us back to how did you first initially get interested in health, what made you come up with the idea of Cariloop and tell us all what that is.
Michael:
Yeah, absolutely. So, I graduated from Purdue University, I studied business. My first job out of college was with a company called Protiviti. It’s a big consulting and risk management firm. I was based in Chicago. A lot of my clients were health systems. I had a couple of manufacturing and energy clients as well, but all the work I did was in healthcare helping a lot of these health systems. Understand a lot of problems that they run into with their business.
A lot of their process issues and helping to build good sound controls and good sound process throughout so that when they go to bill an insurance provider they’ve got good checks and balances or when they check out narcotics out of their pharmacy vault that nurses are taking the right precautions, just little stuff like that. It was very fascinating. Every health system is different. Every business in healthcare is different and what I found was with actually some of my manufacturing and energy clients, it was the same. It was repetitive. I was walking in and I was telling them the same things. It didn’t matter what they made, it didn’t matter what they distributed. It was they had a manufacturing line, they make widgets, they put them in boxes, they send them out. They all use UPS or FedEx. It was kind of the same thing over and over.
So, healthcare is just very dynamic, it’s always different, it’s always unique and I found that to be very challenging. So, I loved surrounding myself with that and you think back to kind of the last five years of health care and how much has changed and how exciting it is to be part of this chaos. There’s so much opportunity. So, I’m very drawn to that, so I spent four or five years at Protiviti. I left there in 2011 to start Cariloop with my co-founder Steve Theesfeld. So, yeah, that’s my background. I mean, I’m also a certified personal trainer. Big kind of nerd when it comes to eating right and cooking and being in the gym. I love all that stuff. It’s a big deal to me.
John:
I think it’s a big deal when people walk their talk, it gives you a lot of credibility with everybody, including investors. Tell us how did you and your co-founder come up with the idea for Cariloop? Where did you come up with the name and is it in fact like Match.com for healthcare?
Michael:
Yeah, we used the whole Match.com analogy for a while. It’s sort of has evolved a little bit more beyond that, but taking a step back, Steve and I, Steve was the original founder of the company. He got it going back in 2010. I was still at Protiviti at this point. He worked on the senior living side of the business. He was a manager for a memory care community in Minneapolis, Minnesota and he kind of saw this issue from the healthcare provider side.
He’s like, we’re having to spend a lot of time and effort and money marketing ourselves locally to try and attract new patients, new families to get hospital systems to know who we are so they’ll send people our way and he was saying, you know, we’re doing all these things and these things are so old school.
We’re advertising in newspapers, we’re putting ourselves in magazine. He’s like, if I’m shopping for this stuff, I’m online now, right. I’m going to Expedia to book a trip. I’m going to Auto Trader to buy a car. Like, I’m not looking through newspapers, especially people in the demographic that we’re going after.
So, he came up with this concept of create this, basically this hub or database where locate healthcare providers could put their information specifically as it related to open beds and pricing. Again, originally this was meant to be this database, this platform where people could go and they could look up open beds, pricing, I’m looking for this type of room in this area for this cost, show me what’s available, you know, it’s involved a lot sense then.
I mean, so then as we got into, I’ll cover this in a minute, as we got into the Health Wildcatters accelerator here in Dallas, you know, we expanded upon the idea and we created more of a platform where we took elements of Match.com and its assessment technology to say, you know, I’m a male in Dallas, I’m 30 years old, I’m looking for these people with these interests and it takes that, it matches you up with people to date. We took the same concept and said, I’m a consumer, I want to be in a facility in Dallas, I’m looking for these services at this price, match me up with the right healthcare provider.
John:
It’s a little bit of Match.com meets Expedia for the healthcare industry.
Michael:
Exactly. Right. We even took elements of hotels.com user interface and brought it into ours.
John:
Very smart.
Michael:
Took these two and brought them together and it was this really innovative kind of experience. It took you like five minutes, you’d go through it and at the end of it, you could see all the providers that we based on a data we have on these providers, we collected all this, we could show you how you matched with them on a level to zero to hundred. Really cool system, but what we were missing with it was that people have so many more questions about this stuff.
It wasn’t just help me find a nursing home. It’s, mom is sick, how do we pay for it, what legal documents do we need, what do all these things mean, what services does she need, what does this mean versus; it just became one of these were we were so focused on such a small issue that we were missing a lot of the other – the user’s pain was. So, our new platform actually just released about a month ago. It’s really cool. It’s kind of more of a collaboration tool so if you’re familiar with products like Basecamp or Slack.
John:
Sure.
Michael:
We’ve taken kinda now a little bit of a viewpoint like that where it’s – we want to help a family come together, collaborate and almost project manage this entire process of finding help for mom or dad or grandma/grandpa, that includes finding healthcare providers.
John:
Right, but much more than that.
Michael:
It’s more than that. What we’ve now also does is we’ve added a feature that allows you to press a button and you can schedule time to have a video chat just like you and I are having right now with a healthcare professional.
John:
Fantastic. You know what I like this idea so much, it’s so helpful for our listeners, is not only did you start with this, what’s a problem and how are we going to fix it in healthcare, old school versus new school, take new technology Match.com meets Expedia, now you’ve taken it to one step further for the target audience of baby boomers – not baby boomers, but people who have parents who are – baby boomers whose parents are aging, basically, even younger, that are using tools like Basecamp and Slack, so they’re already familiar – and they love trying to control things that work and having gone through this with my own father, I know how out of control it is when your parent is ill and you don’t know where to go and you don’t know what to do and if you had something that could give you some structure, give you some comfort, and it reminded you of managing a project at work, it would be so wonderful. So, kudos to you guys for really tapping into not only the pain point, but making it familiar, the solution familiar, in a way that gives you control back. It’s really quite smart.
Michael:
Yeah, it’s something that a lot of people haven’t touched this problem. Like, everybody knows this is a problem. If you have a parent or a grandparent, you’re intimately familiar with this if you’re been through it and if you haven’t been through it, you’ve probably heard from others that have. You don’t feel the pain yet, because you haven’t dealt with it, but you know it’s out there one day.
John:
It’s coming.
Michael:
Right.
John:
Everybody knows the aging baby boomers and how many people are growing. I saw a commercial, it’s by, you know, 2040, if my memory is right, 20% of the people in Texas will be considered senior. So, that’s a huge growth market for you, clearly. Tell us a little bit, take us back to the, what made you go to an accelerator, how did you pick that particular accelerator, and what did you learn there?
Michael:
Sure, so I was originally from, you know I mentioned I was in Chicago. I moved to Dallas, Steve moved to Austin for us to get Cariloop started. It was like 2011-2012 and there were, this was kind of a time where the accelerator model started to become more and more popular. Down here in Dallas, Tech Wildcatters has been now since 2010 or 2011 and right around the time we had moved down here, Tech Wildcatters was on their second or third class and they were starting to be recognized as a, like a Forbes top 10 accelerator program across the country.
So, I just took it upon myself to go and meet the leadership team over there and just ask for some advice, you know, who should I talk to you, yadda yadda, and what came to fruition was is that, because of the success of TW and because Dallas is such a healthcare hub, some people had approached TW about spinning off the program and creating a health-related accelerator program in 2013 and so I kind of just kept my eye on this and this was something that we decided was going to be the best course of action for us, just because of the success of TW and all the startups coming through that program that were raising money and building their business, so in 2013, we applied.
It was, you know, you get $30,000, to get in the program you get $30,000, they take 8% common, but I attributed a lot of our success the last few years to everything we did during that program. We met all of our first round investors out of that program. We met several partners. I hired a couple of different people on a contract basis that I met during that program.
John:
Mentors probably?
Michael:
Yeah, absolutely and I’m still in constant communication with them as we’ve evolved, so it was a big decision for us. You asked what we learned, you know, you can’t imagine what it’s like. It’s almost like being back in college. I can’t even really describe to you what we learned, but when you’re surrounded by 50-75-100 successful entrepreneurs, investors, mentors, people that want to do nothing else for 12 week but help you and see you succeed, you can’t possibly describe the value of that.
John:
I bet.
Michael:
I couldn’t quantified it if I tried.
John:
It’s great.
Michael:
For 12 weeks the press is calling you every week wanting to talk to you, like everybody, you are the talk of the town for a few months.
John:
Well, that’s great and obviously you’ve capitalized on it because after being through the accelerator program, you went on to raise some more money, can you tell us about that?
Michael:
Yep, yep. So, we came out of the program. It was November of 2013 and, you know, kind of a unique time frame for this program because you graduate and the next six weeks are Thanksgiving, Christmas, New Years. So, a little bit of a touch time to try and collect investor checks, but you know, I had done a pretty good job during the program of courting a lot of investors during the program to sort of tell them what we’re doing, get them interested, so that when we got back from the new year, we could kind of sit down and talk about it. So, we raised a little bit of friends and family money right out of the gates, which was a big catalyst and ultimately us raising kind of rest of the round, but we were able to raise, we raised $150,000 with friends and family money and then we raised another $350,000 from either angels or some early stage venture firms here in Texas.
John:
Great, so for a total of $500k. So, that initial $30k that you got and giving up 8% really paid off for you because it allowed you to get another $500k. Did you learn anything during the accelerator of 12 weeks about how to pitch?
Michael:
Oh. Every week. Every Wednesday there’s pitch practice. You’ve got, and they’re timing you, you’ve got five minutes, you’ve got ten slides and every single investor or mentor of the program shows up every Wednesday, so you’ve got 30-40-50 people there watching you and then they give you 5-10 minutes of feedback each week after and, I mean, these guys, they don’t hold back, John. They let loose. They tell you what they really think, so kind of similar to being on Shark Tank if you’ve ever seen it. You’re sitting there really taking some tough feedback at time, but it really helps flush out the story, value, prop, everything that you’re trying to accomplish. So, yeah, absolutely. We had a lot of practice.
John:
Can you give us one or two sentence what the pitch is now?
Michael:
Sure. So, before like you hit on it, was kind of we’re that Match.com meets Hotels.com of senior living and senior services. The way we say it now is that Cariloop helps plan for and manage an older loved one’s health care transition. We use words like plan and manage, taking more of that global view as oppose to Match.com meets Hotels.com for senior living.
John:
I can’t emphasize enough to the listeners the importance of every single word has to be crafted and thought and tested to see if it resonates with your listeners and investors so they have a rich understanding. I mean, it’s all about storytelling, wouldn’t you agree, Michael?
Michael:
It is. I think I saw this on your site, I know it’s talked about a lot, you know, the golden circle theory from Simon Sinek about telling people why you exist. It’s the truth. So, why do we exist? We exist to help people, help families plan and manage this chaotic process that they’re going through in health. That’s why we exist. How do we do it? We’ve got a software platform and a services platform to help them go through this to answer their questions, to help them collaborate and share information, but start with that why the hell am I here, why do we exist as a business, what are we trying to do?
John:
Right, the only thing that a lot of my listeners are constantly asking is, how do I figure out how much to value my company? If I’m going to ask for $300,000, how do I know what percent that’s really worth, especially if I don’t have a lot of revenue coming in yet? Can you speak to what you’ve learned at the accelerator and, of course, now that you’ve been out and raising more money?
Michael:
Yeah. There is no science to do this. I have found now as we’ve raised one round and we’re preparing to raise the second round how different it is as you look in different pockets of the country, because we raised round one completely in Texas where investors have certain appetites. The market in terms of valuation is one way, but if I were to go out to California, out to Boston or New York or Chicago right now and I had the same conversations, I’d get completely different reactions. So, it can also be very geographically focused as well.
So, it’s something to be aware of, but the question being how we took a good look at, you know, AngelList was great. We took a good look at a lot of the other companies that were sort of in our space, you know, healthcare, health IT, aging services, platforms, things like that. Where they were raising money, at what rounds, so that gave us at least a starting point and from there it’s just negotiation. It’s just picking a starting point, it’s like selling a house, you know, you put the house on the market for $250,000, it doesn’t mean you’re selling it at $250,000. You know, somebody else might come back and say, okay, I’ll give you $225k and you negotiate.
John:
Great. I love that. We’re going to Tweet that out from the show. Figuring out the value of your company is like selling a house.
Michael:
It is!
John:
It’s great. It’s very helpful to have that frame of reference again. You’re like, okay, this is my asking price. I realize I have to come down from that, so don’t start off too low, etc, etc. So, how long did the $500,000 last you and what kind of traction have you had that’s caused to go off of your next round?
Michael:
Well, thinking back the way I’ve explained the story and our evolution, sometimes to also add to the story is, you know, kind of who our target user was. It’s not that the target user necessarily changed. Let me rephrase. It’s not the target user, it’s the target channel. We have – with that first version that we came out with after the accelerator that Match.com kind of assessment tool, we were going direct to consumer with the product.
We were spending a lot of money on pay media and we were even looking at doing some radio and some television here locally. We were putting on a lot of events here to try to really get the brand and the name out, because the idea was we want people to go to the site. We were doing SEOs and all those different tricks. Lots of social media, lots of content marketing. We wanted people to go to the site, because the business model is setup more on the back-end where we were monetizing the providers. We were changing them referral and lead fees as they were accepting these patients.
Well, what happened was we said hey, we need to take a little bit more of a board base planning approach to the user experience, what we realized was we could actually sell the platform and the service as a bundle to large groups. So, we could approach a large corporation and say hey, you’ve got ten thousand employees, wouldn’t it be fantastic if you could offer this to all ten thousand so if they go through it, they’ve got access to this and hopefully we can crate a return on your investment by getting them back to work, keeping them protective.
John:
What a huge nugget you’ve created right there. That’s another really smart way for the listeners to understand what you did. It’s really brilliant I think, because you are so distracted at work when you’re worrying about your parent and getting phone calls and now you’re dad is sicker and now this. Now you need to decide where you’re going to put him and you don’t have any resources and if companies need to keep people focused during that crisis mode or just an ongoing this is endless mode, that is an incentive to really lower your cost of customer acquisition in a very clever way.
Michael:
Yeah, thanks. I mean, so and again, I’m sorry, a little bit of background there, so back to your question now about how long has the money lasted us, what attraction have we gotten, so that $500,000 bought us, you know, we had intended to keep our burn rate somewhere around $30,000 a month, so we wanted to get 18 months out of it, which we have successfully done.
John:
Great.
Michael:
While we were doing that, we were of course then trying to monetize on the consumer side for that first year. Now as we’ve shifted to this group model, we’ve also secured kind of our first thousand members that are paying for this on a monthly basis.
John:
You really have some proof of concept now, huh? That’s great.
Michael:
Yep. So, now as I go to raise round two, this story really is a compelling one. We went out to the market with a product in one channel. We’ve made some adjustments. We launched a version two product. We’ve made some adjustments to the channel we were playing in. We’ve got kind of our first customer sign-in in this channel that are paying every month and started to use the service.
John:
One of the other things you’ve done that I think would be really great for listeners to grab on to is you started a whole organization called Health 2.0 in Dallas, which is a good of innovations and technology people. To me, it reminds me of Startup Grind except it’s health focused. Is that accurate?
Michael:
Yeah, so Health 2.0. I mean, I didn’t start Health 2.0. It just like Startup Grind. It’s kind of these, chapters in every city. I want to say there are around 90-100 chapters world wide now, so it’s a huge organization. They’re based out of San Francisco and this would be advice I’d give to any entrepreneur that’s just getting started. Again, establishing yourself as that thought leader. When I moved to Dallas, I knew nobody. I’m from Chicago. I literally I could count on less than two hands the amount of healthcare networking connections I had and so my thought was instead of spending all of my time going to other people’s networking events, I’ll just create my own network and I’ll establish myself as the leader of this group and big things that are happening in the healthcare space I sort of now have inserted into the middle of it.
John:
That’s really great. So, you’re the founder of the Dallas chapter, not the whole company.
Michael:
Yes.
John:
But still, the fact that you’re willing to do that concurrently with all the other responsibilities. A lot of people say, oh, I don’t have time to fund raise, I don’t have time to do any networking, and it’s really important that you make the time.
Michael:
Yeah, it is. I started, like you said, get the stuff from San Francisco. Started doing the meet ups, put some money on the table to sort of pay to get this thing off the ground. We’ve got, I think, we’re a little over two years out there. We’ve already got 600 members. We do meet ups like every month or two. So, it’s a big deal. There’s a catalyst to kind of establishing myself here locally.
John:
Let me ask you about this, because one of the other keys I think to really making a successful pitch that investors really want to hear is what our barrier to entry from competition, right, what’s to stop somebody else from coming up with Cariloop version whatever, right? Uber versus Lyft. Can you address that? Has that been an issue for investors as part of your pitch or did you address that in your pitch?
Michael:
No, you know, I think this is something probably, early on this was a question that really scared the crap out of me, because it’s like, this is the investors saying they don’t really believe what I have is special, but that’s not actually what they’re saying. Like, they, I think entrepreneurs, sometimes they want to believe there’s no competition out there that I’ve got this first mover advantage and no one else is going to do it. Someone else doing it is not a bad thing, it’s a good thing, because if someone has come before you and done it, especially if they’ve had some sort of liquidity event, the investors salivate at that. They see that and go, opportunity to make money doing something slightly different that somebody came before us just did and cashed out on.
John:
Right.
Michael:
So, that’s not something to be afraid of. Of course that question comes up with us and I answer it that, of course we have competition. This is what they’re doing. This is how much money they’re making. Like, be educated on these things. Really study them, but point out why what you’re doing is so much better than what they’re doing. Don’t bash them, but point out that this does this, this is what we do, this is what we think the opportunity is. You know, it’s a good question that should come up.
John:
Right. My guess is that what you’re doing is more one stop shopping and your competitors just have pieces of it.
Michael:
Correct.
John:
That would be my takeaway.
Michael:
They’re focused on little pieces of this process where we’re trying to take more of a broad concierge-type of viewpoint, you know.
John:
So, besides the geographical differences of leaving Dallas for your angels and friends and family now that you’re expanding to investors outside of where you live. They might not know you as well as the other people that initially invested. What is the other big difference that you see going for this next round past the $500,000 that you’ve raised?
Michael:
The big different in terms of what I’m running into with the investors?
John:
Yes and your pitch, obviously, has it – obviously you’re talking about not only the traction you have, but is there anything else. Do you tell stories in the pitch of one particular person who had a parent that was sick and how Cariloop came to the rescue?
Michael:
You just said a word that I was going to use. You know, I actually don’t use the word pitch. I realize it’s part of your show, but let me tell you way. Pitches, especially in the sense that you’re talking to investors, it tends to be this really formal scary word that entrepreneurs, oh, I have to make this pitch. It’s not a pitch. It’s a story that you’re sharing with these investors about what your company, your product or service does, and why it’s so important.
John:
We’re going to tweet that out. A pitch is a story you tell your investors.
Michael:
It is. When you go in to meet with investors, you sit at a table or you stand up and you give a presentation. I always make it a story. I actually got made fun of coming out of the accelerator because my pitch was such a story. Like a lot of these entrepreneurs still kind of give me a hard time about it, because of the phrasing I used. I would start my story, my pitch, with, imagine that you’re in this position and I really set the stage the pain that people feel when they find out that mom has fallen and broken her hip and what the hell do I do about it. Like, this panic and you have to put the investor in that moment. It is a story, it’s not a pitch, it’s a story.
John:
Okay, fantastic. I love it. It doesn’t contradict what I teach and believe with my clients at all. It’s completely there, because people remember your stories, not your numbers.
Michael:
Exactly. They’re not going to sit here and get caught up in, you know, the little itty bitty features of what it is, it’s like, they’re going to remember that you solved this really big thing, especially if they’ve been through it themselves. They’re immediately going to pull the heart strings of these people. Like, oh my gosh, this was terrible. It was so awful. Like, I remember, you put me in that moment and you could have solved it for me. Tell me more.
John:
Well, Michael, as we get towards the end of the podcast. Is there any one book that you’d recommend the listener that have helped you either as a person, as an entrepreneur, or since you’re a health expert, we’d love to have a book on what you think is a great read on health.
Michael:
This question for anybody changes depending on when you ask them, right. Every single last book I read is the best book I’ve ever read. The book I would bring up that has been the best, actually, I’ll give two books. The book I just last read, to me, has been the best so far was Delivering Happiness by Tony Hsieh. The Zappos story. I actually made my people read this book. I made our employees read it. One of our board members even picked it up and read it. I made Steve, our co-founder read it. We all have read it and this is a book that any entrepreneur should read. It tells such a great story.
John:
Great and how can our listeners follow you, follow the success of Cariloop and most importantly if someone needs Cariloop, how can they find it?
Michael:
Yeah, absolutely. So, the best way to follow me would be on Twitter probably or connect with me on LinkedIn, both of which I can share links with you for the podcast page, but as far as utilizing Cariloop, if anybody out there is going through this and they want to try what we’ve created and see what the experience is like, you can go to Cariloop.com. You can tweet to us at @Cariloop. You can email us at [email protected]. These are great ways to get in touch with us and these goes right into our coaching queue and we grab a hold of these and you hear from us the same day.
John:
Wow, that’s some great customer service, especially in something this urgent for people. You’re doing a great thing and your inspiration of how you’ve grown the company and what you’ve done in the community, it’s a well deserved success. Congratulations.
Michael:
Yeah. Thank you. I appreciate it. It’s been a hell of a journey.
John:
Well, I’m going to have a lot of fun continue that journey and helping us all. Thanks for being on the show, Michael.
Michael:
Yeah, thanks a lot, John.