Solo Student Entrepreneur to $5M: David Liu, CEO of Deltapath (Part 5)

Sramana Mitra: When did the Japan hospital deal happen?

David Liu: This was around 2014. It started in 2012. It was a pretty long cycle. With the funding, we opened up our Japan office. We hired five people.

Sramana Mitra: Was this a use case that you were then going to sell to other hospitals?

David Liu: Yes. We wanted to become the de-facto standard. We started doing other public hospitals. As time goes by, we integrate with a lot more IoT devices like sensors and radars. We basically work with the entire ecosystem. We form a whole ecosystem of partners that help us to make our solution even stronger.

Sramana Mitra: How did all these sales and marketing infrastructure expansions translate into revenue? We are now talking 2017 to 2018 timeframe?

David Liu: It’s also when we realized that Japan is very slow. It’s not that their economy is slow. Decision-making is very slow. The selling cycles for hospitals could be two to five years. Today it’s a little bit different because there was a pandemic. The pandemic further pushed it out another two years.

Some of the deals that we closed today were from more than five years ago when we started engaging them. Japan took a long time to see the cash-flow positive. Other markets like Taiwan have been, surprisingly, a good market for us, mainly because US companies are establishing entities in Taiwan.

Sramana Mitra: This is not the hospital use case; it’s the general enterprise communication use case.

David Liu: Yes. In the last three years, we’re seeing significant growth in Taiwan.

Sramana Mitra: Where are you now revenue-wise?

David Liu: We are close to $5 million.

Sramana Mitra: How many people are you?

David Liu: 50 employees. One of the things we started doing was to transition to recurring revenue. While the topline didn’t grow significantly, at least 50% of our revenue is recurring.

Sramana Mitra: Did you pursue that hospital use case elsewhere?

David Liu: We pursued the use case in Taiwan. We started last year. This year, we are starting this use case here in the US where we are actively connecting with nurse call manufacturers in the US to add our capabilities into their solution.

Sramana Mitra: That’s a very nice story. We are big believers in capital-efficient entrepreneurship too. Well done in managing your cash and managing the business model transition, which is not easy.

David Liu: It’s a very difficult and painful process. You just have to do different commercial models in different markets. For example in healthcare, these hospitals get subsidies from governments. You cannot do subscription. They just wouldn’t approve the grant. The grant is for you to invest. It has to be CapEx.

Sramana Mitra: At the same time, you can build businesses by being flexible about the business model. Where it becomes complicated is if you have a lot of investor money and you’re trying to go public. The public market doesn’t like all these hybrid business models. They like to see consistent, repeatable business models. As long as you’re largely bootstrapped and private, you can do whatever makes sense.

Thank you for your time.

This segment is part 5 in the series : Solo Student Entrepreneur to $5M: David Liu, CEO of Deltapath
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