Bootstrapping A Healthcare IT Startup To 50 Million: Eliza Corporation President Alexandra Drane (Part 6)

Sramana: Essentially you allowed your professional contacts to validate the product before you built it. Did you follow their use cases or your own path?

Alexandra Drane: I understood why they were approaching our technology in the ways that they were. Our technology had the benefit of perceived anonymity, which allowed them to go after disenfranchised populations. I was pigeonholing myself. Smart folks who were losing business felt they could use it because nobody was opening their letters.

Sramana: The use case you are describing sounds like a great use case.

Alexandra Drane: It was amazing. For years it was our cash cow and our killer app. I think entrepreneurs should be very careful with how much money they raise because if we had a lot of money in the mix I may have been too arrogant to listen to them. I would have probably built what I felt that they wanted instead of what they wanted. We built what they would pay us to build.

Sramana: How much were customers willing to pay?

Alexandra Drane: Our revenues early on were good money. We did not become profitable for two years, but that was because it was a sophisticated platform that required investment. I can’t recall the exact numbers, but we were able to get reasonable payments because we were creating real value.

Sramana: How did you fund the investment for the platform development?

Alexandra Drane: We had funding from angels. It was very light funding, maybe a million dollars total over the entire history of the company. Most companies in the speech recognition space were heavily funded and operated very differently. We ran very lean. Our answer to solving problem was not to hire people or hire consultants, it was to solve the problem with what we had. We created a raw ability to think outside the box.

We do some work with Walmart. Most people think they win because they have so many resources. The truth is they run very lean. They do that because they have found that when folks do not have a lot of resources that is when they make the breakthroughs.

Sramana: People are far more efficient when they are not flush with ridiculous amounts of money. When you are still in the validation stage, too much money is the kiss of death.

Alexandra Drane: Yes, it is! It is not a gift.

Sramana: I engrain validation in the 1M/1M philosophy.

Alexandra Drane: If you listen hard, the market will tell you what it will pay for.

Sramana: Get specific about what the problem is. Validation happens at more than one level. It happens at pain levels, business model levels, and pricing levels. When a customer says they are willing to pay a certain amount of money it is a advanced validation. It is one validation that is encompassing of the others.

Alexandra Drane: Amen! There are a lot of disservices that the media does to people. The media makes people think they can have babies until they are 80. They also make it sound sexy to be an entrepreneur; it’s easy, just go do it! No way! You are going to bleed out over and over again.

Sramana: A huge disservice that they media has done to the industry over the past decade is that they have equated entrepreneurship to financing. In my mind, entrepreneurship is customer revenue and profits.

Alexandra Drane: I could not agree with you more. I think it is harmful that people do not know that more.

This segment is part 6 in the series : Bootstrapping A Healthcare IT Startup To 50 Million: Eliza Corporation President Alexandra Drane
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