Bootstrapping With A Paycheck From Atlanta: Ingenious Med Founder Steve Liu (Part 3)

Sramana Mitra: How much did you do in your first year?

Steve Liu: I honestly do not remember. It’s been so long. Over the first few years, we quickly got to a couple of thousand users. During that time, we enhanced the product and started increasing the price. Pretty quickly, we got a lot of clients—enough for a startup at least.

Sramana Mitra: It’s always helpful for us to know the pace at which a startup is scaling because when you’re recommending strategies, there’s also metrics that help validate what is really happening. Was it just you or were there other people in the company at that time?

Steve Liu: There were three other founders who jumped on board with me. We all were wearing different hats. I ended up taking on various roles and providing a cohesive focus for the group.

Sramana Mitra: The other three co-founders were also physicians at the hospital?

Steve Liu: All of them were physicians I worked with.

Sramana Mitra: All of you were physicians in the hospital and all of you had your day jobs. You were doing this project on the side and ramping it up using your very solid knowledge of what hospital physicians needed. You basically started selling very quickly.

Steve Liu: Very quickly, which was great. It was tough. It involved taking on personal guarantees and the whole credit card thing. We got offers for things. To your point on the whole bootstrapping, thank god we did. It took us several years to get to, what I would say, where the numbers looked good. After a couple of years, we had a solid and rabid fan base. There was a story to be told to investors.

Sramana Mitra: You went out to raise money at that point?

Steve Liu: In about two to three years into it, our first angel funding was from other people we knew at the hospital. Back then, it was a lot of money but it was only a couple hundred thousand that we bootstrapped from friends and family.

Sramana Mitra: This is an interesting point actually. I have seen other case studies of entrepreneurs who are doing products for physicians and have raised angel financing from physicians who understand the product, and who are actually the customers of the product. Physicians tend to have money to invest. This strategy of selling healthcare IT that is focused on physicians and funding it by your customers works really well because they all become champions. They all will try to sell the products in their network.

Steve Liu: I agree.

Sramana Mitra: We did a case study on a company called Modernizing Medicine. If you’re interested, you can look at that. They did exactly the same thing.

Steve Liu: Interesting.

Sramana Mitra: You’ve got now $200,000 in angel financing from your physician friends. Can you let us know what is the scale of the company at this point. We are in 2003?

Steve Liu: At that point, we were probably at a thousand users. It was still just us. I don’t think we had hired our first employee. Maybe we had one staff member who was a tech support guy. One of the scariest days was hiring my first employee because that guy was quitting his job and jumping on our company. You have to make it happen. It’s a big responsibility. We were still small at that point.

Sramana Mitra: That’s great. I believe that it doesn’t take that many people to run a business if you’re doing it efficiently and diligently.

Steve Liu: I agree. One thing I learned was to try to get some equities if you can instead of using your sweat. It’s a lot of work in running lean. We ran lean for a long time. You might even argue that we ran too lean for a while. I’m not sure that was a bad idea.

Sramana Mitra: I don’t think it was a bad idea. Part of it is because it sets up the foundation of the business in a very disciplined way. You don’t develop these bad habits of spending money on rubbish. When you have a lot of money to play with, you do.

Steve Liu: It makes you stronger for sure. You can withstand any sort of dips and trends.

Sramana Mitra: It makes you more resilient, absolutely.

This segment is part 3 in the series : Bootstrapping With A Paycheck From Atlanta: Ingenious Med Founder Steve Liu
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