How to Raise Your First Round of Funding with Healthcare API, Redox Founder Niko Skievaski

Niko Skievaski

In Episode #684, Nathan interviews Niko Skievaski. He’s the co-founder of Redox, a modern API for healthcare. He also used to do some work at Epic.

Famous Five:

  • Favorite Book? – Moments of Magic
  • What CEO do you follow? – Judith Faulkner
  • Favorite online tool? — Calendly
  • How many hours of sleep do you get?— 6
  • If you could let your 20-year old self, know one thing, what would it be? – Niko would have asked himself to start something rather than working in a big bank

Time Stamped Show Notes:

  • 00:40 – Nathan introduces Niko to the show
  • 00:59 – Redox connects applications to software developers
  • 01:04 – Redox’s business model is licensing connections to various healthcare systems
  • 01:25 – Niko deals with healthcare because he believes it is important
  • 01:33 – Niko has also talked to developers that made an impact on patients’ lives
  • 01:46 – “From our perspective, we really see a technology innovation healthcare something that is absolutely needed”
  • 02:20 – Redox charges software developers and software developers charge the healthcare system
    • 02:38 – Redox initially becomes a sub-contractor of software vendors
  • 03:21 – Redox charges per the number of connections a developer has in the healthcare system which is a monthly model
    • 03:48 – Depending on the interface, the charge changes a bit
    • 03:52 – It is a SaaS model
  • 04:08 – Most developers connect to 1-3 healthcare systems
    • 04:15 – Each connection system is around a thousand dollars
  • 04:25 – Redox was founded in 2014
  • 04:34 – Niko was in the corporate world and was working at Wells Fargo
    • 04:46 – Niko went to Epic to get his hands on data because he studied Economics and wanted to understand what he could do to improve the healthcare data
    • 05:07 – When Niko got to Epic, they didn’t actually have the data
    • 05:17 – Niko learned a lot from Epic about the provider workflow
  • 05:29 – Since healthcare is digitized, the challenge is how to get the data out of the cloud to software developers
  • 05:43 – Niko’s CTO and co-founder, James, was helping startups hook up with various healthcare systems
  • 05:59 – The idea of Redox is to make an engine that can scale across multiple health systems
  • 06:16 – Redox was bootstrapped and has raised capital
  • 06:30 – Niko and his co-founder have started different companies until they decided to do Redox
    • 06:50 – They brought in another co-founder to round up Redox
  • 07:00 – Niko and his co-founders worked in a co-working space and saved some money from their consulting gigs
  • 07:21 – Redox raised a small seed round of $350K in 2014, then they hired some developers
  • 07:40 – The co-founders were only getting $35K each when they were starting
    • 08:05 – They made sacrifices in order to start Redox
    • 08:51 – They have to convince themselves that if things don’t work, they just have to get a job
  • 09:11 – Entrepreneurs can easily get a job
  • 09:30 – Redox has raised a couple of rounds
  • 09:40 – The first application they had can determine the amount of blood loss by taking a picture
  • 10:06 – It took Redox 10 months to get live with their first customer
  • 10:17 – Redox raised their round A early
  • 10:29 – The developer community was really excited and was supportive of Redox
  • 10:52 – Redox was getting 1K MRR from their first customer
  • 11:00 – The first round was a priced round
  • 11:11 – You can raise based on your traction or based on potential
    • 11:28 – Redox was based on potential
  • 11:38 – Redox’s pitch to their investors
    • 11:40 – Digital health is one of the fastest growing spaces for venture capital
    • 11:44 – There are too many companies trying to start something innovative in the healthcare space
    • 11:47 – The common problem that they have is sharing data with the legacy system
    • 12:10 – Redox really has a great team
    • 12:30 – It’s not about the MRR, it’s about the potential of working with the army of software developers who are innovating in this space
    • 12:53 – Redox’s marketing strategy is getting the developers first, then the developers will drag Redox to the healthcare system
  • 13:10 – Valuation
  • 13:24 – Redox has closed another $9M with their series B round in January
  • 13:40 – Total amount raised is $14M
  • 13:48 – The new additional investor is Intermountain Healthcare System
  • 14:20 – Redox currently has 100 healthcare systems across USA
  • 15:13 – Redox has around $400K MRR
  • 15:45 – Customer churn
  • 16:13 – CAC
  • 16:44 – Team size is 35 who are mostly developers
  • 16:59 – Redox is a developer platform
    • 17:06 – Most are based in Wisconsin and some are based around USA
  • 17:46 – Niko won’t sell Redox even if they already had an acquisition offer before
    • 18:08 – Niko didn’t think that the company acquiring Redox would be able to solve the problem as fast as Niko and the team
  • 18:32 – Niko will accept an acquisition offer only if the company will be able to do it faster than Niko and the team
  • 19:50 – The Famous Five

3 Key Points:

  1. The continuous innovation in the healthcare space needs a data source that is stable.
  2. Stick with your principles and be focused on where you want the company to go.
  3. Raising capital can be based on your traction or the potential of your business.

Resources Mentioned:

  • The Top Inbox – The site Nathan uses to schedule emails to be sent later, set reminders in inbox, track opens, and follow-up with email sequences
  • Klipfolio – Track your business performance across all departments for FREE
  • Hotjar – Nathan uses Hotjar to track what you’re doing on this site. He gets a video of each user visit like where they clicked and scrolled to make the site a better experience
  • Acuity Scheduling – Nathan uses Acuity to schedule his podcast interviews and appointments
  • Host Gator– The site Nathan uses to buy his domain names and hosting for the cheapest price possible
  • Audible– Nathan uses Audible when he’s driving from Austin to San Antonio (1.5-hour drive) to listen to audio books
  • Show Notes provided by Mallard Creatives