AI SaaS for Hospitals Does $50m/yr up from $25m last year, Reveleer CEO

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Who you're going to learn from now is someone that understands data, understands growth, understands how to do it in a full control kind of way. Please help me give it up for Jay at Reveleer. Jay, come on up.

Thanks for being here, man. It's super, it's super good to see you. I remember we caught up recently because they had you back on the podcast. And I never know how people have grown in terms of revenue. And you said the number, I said, what?

Yeah.

What's going on? This is incredible.

Yeah, well, we're going, we're going to make 100 this year.

Well, here you go. Stage is yours. Have a lot of fun. Coach us up.

All right. Well, I'm feeling a little out of place. I definitely don't have the cool pants going. And hard to, hard to beat the two sessions before. But I'm excited to be here. I guess I have the socks, so maybe not the pants, but I got socks to be my thing. I'm excited to tell you the story of Reveleer. We're, we're in an interesting space. Our story is not one that was birthed overnight. We've gone through our challenging times, but now we're in a great place. And, and I'm proud of you because we've been really great stewards of capital. We've raised capital from institutional investors. We've never raised a crazy round at some valuation that we couldn't live up to.

And it's allowed us to build a phenomenal business. So as, as I spend 20 minutes with you today, we're going to cover three things. A little bit about Reveleer. We're in the healthcare space. It's complicated. It's a bit technical. Give you a little bit of kind of understanding of what we do and how we're on a path to build a billion dollar company. Talk about our superpower. I think everybody has a superpower. When I interview executives, I'm trying to understand what their superpower is and how do they bring that to our company. And I'll share what our company's superpower is and how it's allowing us to succeed in a big space and one that many might consider crowded. And I'll share some learnings.

The words here might look like they're simplistic and trite, but I'll hopefully share some learnings that we've gone through, where we've skinned our knee, where we've fallen, and hopefully you won't do the same. Yeah, we've had a pretty interesting ride over the last few years. What's important here is, over the first six years that I've been running this company, it took us six years to go from 1 million to 25. And we had many moments where we thought we were on that hockey stick and it was all going to be great from there on in. We were feeling that way and coming out of 2019, and then all of a sudden COVID hit.

Our first reaction was, we're in healthcare. We're in a government-sponsored part of healthcare. It's not going to impact us. And next thing, the government shut down a lot of the markets that we were in. So we took a pause, but coming out of '21, things really took off. And so, six years from 1 to 25, one year from 25 to 50, and this year we'll go from 50 to 100. And we're really excited about that. And we're generating cash and we're generating really strong EBITDA, which is giving us an opportunity to drive this business with some smart and strategic M&A, which I'll talk about. And I think there was, we have some things in common with the earlier speaker.

So, Reveleer, at a glance, we're a healthcare company. I'm passionate about making healthcare better, and we're in the corner of value-based care.

And for the audience here, value-based care, simply put, is about getting payers, thinking the insurance companies, and providers, health systems, and doctors to work together to ensure that a patient, their member, gets better. The typical healthcare model is a fee-for-service model. You go in, you're treated, you leave, and that doctor, that healthcare professional, does not really have an incentive to make sure that you stick to a care plan and you get better. So we're in the value-based care world. We're using AI and workflow automation to bring those payers and providers together to better understand what's happening with the patient. And we're taking off. Like I said, we'll do about $100 million this year.

We'll probably have an end-of-year ARR of 105 to 110. And I think that puts us in a position to do 200 million next year. But what's really important, we get strong gross margin, now generating EBITDA, and it allowed us to do a debt raise that Nathan referenced earlier. So we did a $65 million debt raise with a company on the bottom, Hercules Capital. And we're excited to welcome Hercules as a capital partner, along with two institutional equity partners, Oak HC FT, which is well-known for their work in healthcare, and upfront ventures located in Los Angeles, your typical broad-based, long-term venture investor.

So how do we build a company now approaching $1 billion of value? One, we had the vision early on. We had a vision to take a tech-enabled services market and transform it to software. The typical Marc Andreessen software eating the world. Our marketplace that we're selling into has been served by tech-enabled services, armies of people working offshore to digest clinical data. And we're doing it through automation. So we started there, and then we saw a bigger opportunity to be the platform for value-based care. And that's where our M&A strategy aligned with strong product innovation is really driving transformative outcomes.

We brought on a transformational capital partner in 2021. And you know, people talk about when you go out and look for an institutional investor, it's more than the money.

That's true. When you really need the money, maybe you're not always thinking about what else they bring. But we brought on Oak HCFT. They had a shared vision with me on how we could build this value-based care platform. And we immediately aligned on what we could do together. And they have been nothing short of amazing. We went from closing our round with them in November of 21 to closing our first acquisition in March of 22. A company that I've built a relationship with over a number of years. And so, one thing you'll hear from me on our M&A, and I have a slide in a few minutes to just talk about how we've done that. Every company that's in our pipeline, we've built relationships with over a long period

of time. My head of corporate development's in the back. I think this year alone, up until September 1, we've talked to 60 unique companies. We're working on a transaction now with a company that we first brokered a relationship with in early 20... late 21. So, we try to start with a partnership, make sure there's product-market fit, and if our values and our culture align, we try to make something else happen. But Oak has been a transformational capital partner. Product-driven M&A. I think Chili Piper was talking about, there's consolidation in healthcare. Why is there consolidation? Because there's concern about PHI risk. All the data that we all sit on and what would happen if a company's breached.

There is a well-known breach that took place early this year with a company called Change Healthcare. Massive $8 billion revenue company that shut down the healthcare market. And it's really turned off big insurance companies and health systems on dealing with point solutions. They're concerned about the risk. So, scale matters. We have a great product team, but we are rounding it out with thoughtful, strategic M&A. And with every good story, there's grit. We've had those moments where we weren't sure we were going to make payroll. We were stuffing some invoices in drawers and we were paying the loudest person that was calling. There was a moment in 2018.

After a successful run at a prior company, I bought kind of the last house I thought I would ever own. In 2018, I put that house up as collateral. When we couldn't make payroll and we went for debt financing just to bridge us. And that's what you do when you believe in the vision. You believe in an opportunity and you have confidence in your team. So how have we been able to scale this company? So 2019 was our first time that we introduced machine learning into our product. Now, everybody's calling it AI. I mean, AI is machine learning, its rules.

We introduced it in 2019 in a way to read a medical record. We now ingest almost a billion pages of medical records annually. Think about that, it's like 3,000 pages a minute. So we introduced that, which drove a lot of automation in our platform, which led to us signing our first national health plan. 21, Oak comes in. First time we have capital on our balance sheet to shift from playing defense to offense. Allowed me to go out in the market, make some new executive hires, upgrade talent. It's interesting to think about the talent that you can attract when you're sub 5 million, from 5 to 10, above 10. And now, we just brought on a new chief product officer who joined our company.

We can go and what we can get with a company that's 100 million going to 200 million. And then, we did the two acquisitions. We did an acquisition beginning in '22, a company that rounded out a solution set for us, and a company in '23 that moved us from payer into the provider space. And we'll talk about how that's expanded our TAM. And so, as we've been thinking about this business and as I think about where we're going, I am always focused on the total addressable market. I do think it gets overinflated. I think that was a comment made earlier. And so we work hard to say, in that market, how much can we really sell into? Are there players who will never buy what we have to offer?

And we keep thinking about how can we broaden it with new solution offerings? That makes sense, that are largely the same buyer inside of the logos that we're selling to. So we started with a $2 billion market, which seems pretty big. Hard to build a really scaled business on a $2 billion TAM. 2020, we introduced our second product suite through our product team, and it widened our TAM immensely. And then in 2022, with our first acquisition, it moved us into another product suite, adds another couple billion dollars to our TAM. And then most recently in '23, with our second acquisition, add about four and a half billion to our TAM. And now we sit with a company that 100 million in a $20 billion market

with clear line of sight to build a half a billion dollar business. Our superpower is around how we ingest data. And so at the heart of healthcare, you have massive amounts of clinical data being generated daily. Estimate right now is 1.2 billion clinical records being created annually. The problem with that is it's a massive amount of data that your doctor can't digest. It's hard for them to get a hold of it. It's hard for them to understand that and to be able to use that to their advantage in a 12 to 20 minute visit. And that's what we do. We gather that, we distill it, and give them three to five recommendations when a patient comes into their office.

And that's our superpower. All right, so let's talk about strategic M and A. So as I said, we've been able to grow our company through it. And if you look at our 100 million in revenue for this year, roughly 10% of that is acquired revenue. So we didn't hit, we didn't go from 50 to 100 by making this massive transformational acquisition. We saw our product app. We knew if we filled it, we could sell a large Solution, solve a bigger problem and get ourselves in opportunities where that door was being shut on us in the past. And I'll show how that's played out at the end with a couple of metrics. So we've done two, and those two, as I said, had about 10 million in ARR at close.

And in 12 months, across the two of them, we've been able to double the business. But also fueling our other solutions. And interestingly, on the first one, we were 75% equity, 75% cash to pay for that, 25% giving them equity. Our second deal, the equity shifted to be in 50/50 equity and debt. So we had our debt partner. And now we're working on our third, where we'll be 100% funded by debt. And we can do that because we're generating strong cash in our business. And it's given us the ability to control that, manage our cap table, ensure that we're taking care of our investors.

Yes. So here we are, with a couple acquisitions under our belt, company scaling, really leading to some pretty fantastic metrics for the business. Top, I thought I'd just show kind of go-to-market coverage. Actually, I think for 2025, our go-to-market coverage will be 65 million. So I talk about superpowers. I think one of my superpowers is go-to-market, how do you scale a business in the marketplace? So I think all the time about how much quota we have on the street. I'm at an industry conference, I'm always trying to talk to sales reps of competing companies to understand what they're doing, how they're incentivizing their people. Do they actually have proper compensation plans?

And I'm shocked at how often they don't, when someone says, "I don't have a commission plan, I'm bonus." I'm like, "Well, if you have a bonus, you're not a sales rep." So we're thoughtful about how we go to market. It's leading to larger deal sizes. It's amazing that we were doing average deals of under 200K in '21, and our average deal today is over 800K. We're in a lumpy business. It's B2B enterprise. So we have 70, you know, unique logos, maybe approaching 80 at this point. We're not selling to tens of thousands of endpoints. So when you get one of those, you try to have a big impact and you've got to make sure you focus on retention. And you can see net retention in lower left. And I'll talk about some of our learnings on that front.

And on historical headcount, I just want to show we're a growth company driven by product innovation. And you can see how the headcount is jumping. Our R and D team, product, AI, engineering, jumping significantly from 21 to 24. And our go-to-market team making big strides in 21, 22. We had two reps. The problem with two reps is you never want to let go one who's underperforming because then you're down to one and you're kind of held hostage. And now we have a large sales team, broken out by payer, provider, strategic reps, field reps, folks focusing on our install base. And it gives us an opportunity to continue to upgrade and strengthen the team.

All right, so what are some of my critical learnings over the last eight years? And talent, everybody talks about talent. Talent's important. I used to interview every single person we hired. Can't do that any longer. I'm fascinated by those leaders who say they do it at sizes, companies much bigger than ours. I don't know how they do that. I'm impressed by it. I do interview every VP. From our executive team, here's an interesting metric. I'm proud of it at times, but I also question my own skill. The average tenure of an executive on my team right now is 1.75 years, if you take me out. If you put me in there, you know, being here eight years, it kind of bloats the number, but 1.75.

And the point of sharing that is we've steadily upgraded the talent as we've summited a new mountain and we're looking at the next. And that might sound harsh, but it's really important and it's critical if you want to build a large and sustainable business. You know, I heard an interesting quote. I'm a sports guy. I played hockey. I have two boys who play baseball. And so now I'm like in the baseball world. And I heard a baseball coach recently say to a player, this is a college coach, "My job is to figure out every day how to replace you. Your job is to figure out how I can't." And I think you have to think that way with talent. Scale. Scale matters, particularly in vertical SaaS. That's the world we're in. Scale matters.

Point solutions aren't going to survive. And so we are moving aggressively down this inorganic, inorganic path. And so if you're in vertical SaaS, I would think hard about how you scale. We've done a lot on the innovation front. And we did it when we didn't have capital because we found partners who believed in us and we innovated with them. We had one partner very early on that leaned into us when we were talking to big companies that we just didn't think they would pay attention and help us at time of need. And then we ultimately bought the IP back from them as we got more scaled. So I believe in partners. I believe in partners, but I believe you also need to know what is critical IP for you and to make sure that you get that back if it's not in your house today.

Lastly, on customer retention, and it's a humbling one for me to share because I was one of the preeminent folks around customer success before it was its own function. And as I look back on my time leading this company, we've had a couple of moments where we've stumbled on the customer success side. And when you do that in vertical SaaS and B2B with large deals, it can be hugely disruptive. We had a lighthouse customer that got noisy. We thought they were being overly demanding. We started to push price higher. And then on July 3rd, right before July 4th, they send a notice of nonrenewal. And it almost led to 30% of our company being laid off coming out of the July 4th holiday.

We launched a project to figure out how to grow through that. And we successfully signed a company that was four times larger within about 60 days. But it was a great lesson to not get, if you have that kind of lumpiness in your company, you need to be really smart about how you deal with those enterprise customers. And so we're leaning in really hard on our customer success team now to ensure that that doesn't happen again.

All right, so I think I'm at the end of our time. Hopefully, I've done a good job of giving you insight into how we're building a billion-dollar business. I think we're really on the cusp of achieving that for our investors. It hasn't been easy. It comes through a couple of superpowers, how we deal with product innovation with our AI and machine learning, how we're using Thoughtful M&A, and how our capital and equity and debt partners are fueling our growth. And hopefully, you won't go through some of the -- you won't skin your knee the way I have over the last eight years. And thanks for listening. Enjoy the rest of the day.