Building an Exciting Healthcare IT Company From Chicago: LaunchPoint CEO Terry Ryan (Part 3)

Sramana Mitra: So about 2008, you were done with HP?

Terry Ryan: That’s when I started the current business I’m running. I had successful exits in the 90s with companies in which I was an early employee but I wasn’t a founder of those companies. I had some nice exits in three or four cases before I started Knightsbridge. Fast forward to 2008, I sat down with HP management and said, “I think if I point my guns in one direction for the next decade, I can move this battleship and make a difference. At the same time, I think I can make a bigger difference going out and building my next company.” I politely gave them all the time they wanted. I decided I was going to take six months off and think real hard about what I wanted to do next. I wanted to build on what we did in the Knightsbridge days, which was build world-class data warehouses that solved business problems. I wanted to take the next step, which was not only to do that, but also to own and build the software and solution set that provided great business value for the clients.

I looked at the waves over the years. In 1990s to 2000s, it was data warehousing. Early in 2000, partly because of HP, I saw the cloud and SaaS marketplace coming on like an enormous tidal wave. The rest of the world didn’t see the shift that they see now. I decided that I wanted to build applications that go to market in a SaaS type of format of 100% cloud-based. I wanted to basically build the IP that sat on top of those complex data warehouses and hide that warehousing from the clients that were buying that, making it very simple for them to see value in the solution set. Helping them understand, only if they wanted to see, how complex it was underneath to produce some pretty simple value for them.

I started the company with a couple of other people. I raised just shy of $10 million in seed money. This was in the first two years of the business. I basically said, “I’m going to focus on the space of cloud software healthcare with high-end analytics. Those are the pillars I’m going to operate with. Who’s interested in joining me?” That’s where we took off in 2008. Although we’ve been offered institutional money, I haven’t taken it. There will be a day and age for that. Currently, the company is focused on healthcare. We sell payment integrity solutions to the major healthcare providers of the nation.

Sramana Mitra: Can you talk about the process that you have used to determine where to focus this company? Obviously, you came into this with a lot of experience, which is why you’re talking about $10 million dollar seed round from angels. It’s very unnatural, right? Most people don’t raise seed round of that scale. Can you talk about the process of how you look at the market and zero in on an opportunity?

Terry Ryan: It’s not an easy process. It’s quite complex. I’ve already talked about how I look at waves in the technology space. That’s one of the selection process. For example, I didn’t choose mobile. I chose cloud architectures and software within the cloud. Probably the more difficult one at the tail end was to choose healthcare over some other industry. I studied transportation, education, and financial services. There’s a lot of factors in the marketplace that you can’t control. They are the factors of the marketplaces or the sub-marketplaces themselves. You want to give yourself some time to look at those marketplaces but not so much time that you aren’t making progress.

I spent probably about three months with a few people that I got on board to study those marketplaces and look at the different drivers like government regulation. Basically, healthcare was the marketplace we decided to spend time on. There’s a lot of reasons to choose it and there are lots of reasons to choose other ones. At the end of the day, you want to spend so much time studying, reviewing, and talking with people, but you’re never going to have all the right information to make the perfect decision. You have to dedicate an amount of time. Once you get there, you say, “Based on what I know and what I’ve seen, healthcare is the space.” That’s the simple of way of how we went about it.

This segment is part 3 in the series : Building an Exciting Healthcare IT Company From Chicago: LaunchPoint CEO Terry Ryan
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