Capital Efficient Entrepreneurship: Philippe d’Offay, CEO of PMD (Part 4)

Sramana Mitra: What was the journey like in 2001 to 2007? It was slow as you are pointing out, but were you still getting customers? What was the sustaining strategy during that period?

Philippe d’Offay: At that time in healthcare, the consolidation hadn’t quite begun. There was this very strong entrepreneurial spirit in healthcare. We were going after the single doctors. That’s all we really could handle. At the same time though, I would say it was really lucky. We got a lead for a very large hospital system. That hospital system represented 500 different licenses. We got that business pretty early on.

We started seeing some growth because of that. The problem though is we weren’t ready for a hospital system. I didn’t negotiate the contract very well. Pretty much, the destiny of the company was in the hands of this hospital system. It almost led to our bankruptcy because we lost that business overnight. Then it was back to the single doctors.

Sramana Mitra: How much were you charging?

Philippe d’Offay: Initially, we charged $500 a month per provider. We eventually brought the price down to $200 a month per provider.

Sramana Mitra: That means that you need a lot of them to have a reasonable amount of revenue to keep this business going.

Philippe d’Offay: Yes. I calculated. It was 20 doctors just to keep the doors open while we were paying no salary to any of people working at PMD. That number just kept growing as we started growing. It seemed like it was an endless chase to break even.

Sramana Mitra: How long did it take you to get to a million dollars in revenue?

Philippe d’Offay: It took over a decade. We moved the company to New York City and then to the Bay Area in 2009. The year we moved to the Bay Area, we hit a million in revenue.

Sramana Mitra: Why did you move to the Bay Area?

Philippe d’Offay: That’s where, I think, are all companies who want to tap into the environment. This is the Mecca for technology. It was something I knew from very early on that I wanted to do. I started the company in Atlanta purely because of financial reasons. I had the condo that I owned. I had connections. It was very difficult hiring people who were truly passionate and that really got technology. I felt like, in the Bay Area, people’s first thoughts when they were born was, “I want to work for a technology company.”

Sramana Mitra: The counterpoint of that is that the Bay Area is very expensive. The talent war is very acute. Small companies tend to really struggle to stay afloat around here.

Philippe d’Offay: Yes. You have a lot of headwinds. You get really good things and you have to pay for those good things. The key for us was understanding how to attract talent, how to retain talent, and how to interview and figure out if somebody was a good fit. We were very patient and we waited for the right talent to come. That was difficult initially because we were very small and unknown. It was tough but so many long-term problems get solved. In Atlanta, we just couldn’t find the right people who really wanted to change the world. The healthcare industry is a big industry and the problems are real. You can’t do good in that industry without everything on your side.

Sramana Mitra: I don’t agree with that conclusion, but let’s move on.

This segment is part 4 in the series : Capital Efficient Entrepreneurship: Philippe d’Offay, CEO of PMD
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