Bootstrap First, Raise Money from Kleiner Perkins Later: William King, CEO of Zephyr Health (Part 4)

Sramana Mitra: What was the customer segment that you were going after and what was the pain point that you were solving for them?

William King: We’re a technology company first that is focused foremost on life sciences. Simply put, we wrangle this universe of Big Data and put it to use for pharmaceutical companies. What does that mean in practical terms? It means there’s a lot of weakly connected and even disconnected data that exists in the health ecosystem. A great example would be information about physicians, patients, and hospitals. You’d think that there would be strong correlations. What we found is that data is weakly connected or not connected at all.

What we’ve endeavored to do is take three categories of data, co-mingle that, and then present it to a pharmaceutical company to help improve their operations both on the R&D side as well as on the commercial side. Specifically, these are data from the public domain, data that our customers are buying from vendors, and data that they’re generating. We co-mingle and create strong linkages where there are no weak connections. We then serve that up in an application layer that empowers business users to make decisions about whatever the specific area of focus is. If I’m a clinical trial person and I’m tasked with finding clinical trial sites that are productive in patient enrollment, we have an app for that. That’s exactly what that analytics does. If I’m a commercial person and I’m thinking about how to take my new drug to the right physician, there’s a different app that can help me get that drug in the hands of the right physicians.

Sramana Mitra: What did you go to market with as a minimum viable product? Who were the early adopters?

William King: One of the things that I think is really interesting is the notion that data and using data need not only be relegated to Ph.D. Statisticians and super-trained data folks. What we did in the early days was take that idea and operationalize it. For our MVP, we looked at about 10 data sets. We co-mingled these 10 data sets and then we went to a business person and asked, “Are these data sets valuable? Are they valuable individually?” He said, “Yes.” We asked, “Are they valuable when they’re merged together?” He replied, “Much more so.”

Then with a very intuitive consumer-grade enterprise product, we put data in and asked the business person, “Will this help you solve your critical needs?” The person replied in the affirmative. That was a massive validation of our initial product. This individual not just used the product, they used it in meetings. When they were making decisions, they would show the software that we had and say, “This is why we should do this option versus the other.” That created early adoption. That was absolutely critical to our growth. In particular, when you’re a young company, every dollar matters. It was great that we had this enthusiasm such that it created inbound interest.

Sramana Mitra: At what price point were you selling? How were you pricing the product? How much of the product were you able to sell before going out to raise money? It sounds like you raised money since then.

William King: We have raised money in 2013.

Sramana Mitra: 2008 to 2013 is a five-year window that you were bootstrapping in?

William King: Yes. Technically, 2009 was when I left J&J. From 2009 to 2010, I was doing some research trying to set everything up. 2011 was when we officially filed for incorporation with Zephyr. Part of the reason for this is that my wife was pregnant in 2010. In 2011, it just became clear to me that this was a very real opportunity. It also became clear to me that the market was moving enormously fast and that this notion of data in healthcare was rapidly becoming critical.

One of the things that I would say to entrepreneurs is as you think about your partner in life, make sure that you are really aligned and that those people are supportive. In 2011, we filed for incorporation. We went out and bootstrapped the company. We created an MVP. I put my own money up. My daughter was born on a Saturday. That Monday, we had to shift our products. It was an interesting timing, but it was obviously well worth it.

Another thing that I would say to entrepreneurs is that pricing is a very important component. You have to know your audience. I was very fortunate in spending a lot of time in J&J. I understood their budget. I understood how people spent money. From a pricing perspective, we could be very specific about where we felt the price points would land.

Our goal in 2011 was to do six figures in contracts. We were very fortunate in that we got traction very early. We did quite a bit more than we were hoping to do over the course of 2011. If I fast forward to 2013, I think we were 40 people or so. We had a very robust customer base and we were growing nicely. Frankly to your point about fund raising, we didn’t have a pressing need because we were, by definition, cash flow positive.

This segment is part 4 in the series : Bootstrap First, Raise Money from Kleiner Perkins Later: William King, CEO of Zephyr Health
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