WebPT achieved 30% market share and transformed an entire vertical with a purpose-built solution in a tech-averse industry. In this session, hear from three women who founded, funded and are leading WebPT, one of the nation’s fastest-growing SaaS companies in the specialty electronic medical record sector. Learn what it takes to create your own category, achieve scale in a niche SaaS vertical and how it requires more than just discovering an unmet need.
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Heidi Jannenga | Co-Founder & President @ WebPT
Nancy Ham | CEO @ WebPT
Becky Buckman | VP, Marketing Communications @ Battery Ventures
FULL TRANSCRIPT BELOW
Becky Buckman: All right. Thank you very much. We know that this is a busy day. There’s a ton of sessions available to all of you, so we really appreciate you taking time to come to our session today. My name is Becky Buckman. I run marketing and communications for Battery Ventures. It’s a global technology focused investment firm. I’m actually standing in for my partner Chelsea Stoner who’s on the board of WebPT. She had a medical issue today. I’m super excited to be here and be joined by two amazing women from WebPT, Nancy Ham and Heidi Jannenga. Today for about the next 40 minutes, we’re going to talk how both of you and your respective teams helped propel WebPT to become and industry leader and emase I think it’s now 13 thousand customers around the globe. I’ll let you two introduce yourself and just tell us a little bit generally about WebPT.
Heidi Jannenga: I’m Heidi. I am the PT in WebPT. I’m a physical therapist turned tech entrepreneur. Prior to starting WebPT, I had been practicing for about 15 years specializing in sport’s medicine and out patient orthopedics. I worked my way up through management, became a clinic director at one of the largest sport medicine practices in the country. That’s really where the idea of WebPT was born. I had penal responsibilities. One of our largest expenses was transcription and dictation. I wanted to find technology that could replace that. When we looked, there really wasn’t anything out there that met my needs. From that point on, we built a product and we launched it in February of 2008 out of a back of a coffee shop with one employee. Fast forward today, as Becky mentioned, we have almost 13 thousand practices using our platform, which equates to just shy of 40% market share, and over 65 thousand users hitting our platform every single day.
Becky Buckman: Nancy?
Nancy Ham: Well hello everyone. I’m Nancy Ham. I’m the CEO of WebPT. I had the chance to join this amazing woman two and a half years ago to partner up and help fuel the growth of WebPT. My background is 25 years in health care IT. First company was Greenfield startup to IPO. Then a public company turn around and recap. Two venture back companies, to strategic exits, and then running a large tech division for a very large payer. I’m really delighted to be here today.
Becky Buckman: All right, great. I think we’d like to drill down without further ado into our main topic, which is eight lessons learned from creating your own category. I think naturally this starts both from the company’s perspective, but also from an investors perspective with looking outside of mainstream markets for opportunity. From our standpoint at Battery, we have a history of looking outside major tech hubs like Silicon Valley, or Boston and New York to look for companies. With WebPT being based in Phoenix, that was a great fit and a really interesting opportunity for us. We were obviously very excited to partner with a female founder who we’re seeing more and more of in our portfolio. Also, obviously we were taken by the fact that WebPT was thriving and growing in a market that a lot of our competitors weren’t paying attention to.
Becky Buckman: I think that one of the things that’s also interesting is that when WebPT decided to go and look for a new CEO, when Nancy joined, they wanted somebody who knew something about SaaS maybe, but even more important, they thought that domain expertise in health care IT was something that was equally or more important. Nancy maybe you can just talk about that and your choice in joining the company.
Nancy Ham: When I joined, I did have 25 years of health care domain expertise. Specifically, digitizing health care, starting at the beginning from primary care, the first electronic claims transactions, electronic prescriptions. I did have a lot of experience in helping different sectors of health care go from offline to online, then to really accelerate as a profession. It had all been enterprise software, no SaaS. I said, I got this. How hard can it be? So I’ll just tell you a couple quick stories of my very impressive first week at the company. I started in the marketing department. I thought, wow. We have a lot of people in marketing. I’m sure we can tighten that up a little bit. Liberate some operating expenses. So I went down the hall, met with the head of marketing, and I discovered a lot about in bound SaaS, about SMB, the importance of building this machine as I call it now that generates all these lovely leads.
Nancy Ham: I had to cross idea number one off my list of rationalizing marketing. In fact, we were below benchmarks for SaaS companies. Then I went over to the sales department. I said, hey I logged into Salesforce and I can’t find any pipelines. They all looked at me really weird because remember, I’d never done SMB before. They said, well Nancy, that marketing machine you just met, they generate all these consistent leads. We schedule a demo in the same day. The demo is the sale and we close everybody in month. We don’t need any pipelines. I’m like, oh. Okay. I’m not doing very well here. I was a CFO, so I went down the hall to finance to meet my people in finance. I said, I know what we’ll do. In enterprise software, it’s all about contracts, long term contracts. We should do that and lock in all these customers, thousands of customers. They said, well trying to be nice to the new CEO. We have 99% customer retention.
Nancy Ham: We have over 100% MRR retention. Credit card swipe, monthly, why do we need to change? I thought, oh boy. So I went down to my office and thought, I better quit having any bright ideas. The only good thing I did my very first week on the job was I injured myself. Heidi promptly referred me to a good physical therapist so at least I started acquiring physical therapy domain expertise. Needless to say, I’ve learned a lot about SaaS and it’s been a really fun ride.
Becky Buckman: And you didn’t get injured on purpose just to get more experience?
Nancy Ham: You know, I was really trying to do something right my first week. I will neither confirm nor deny that.
Becky Buckman: Clearly you were somewhat of an insider your first week, which is one of our first lessons. In my experience though and probably in yours, being successful isn’t just about finding a place where no one’s been before. Heidi, do you want to talk a little bit about that?
Heidi Jannenga: Sure. Just because you’re the first to do something, doesn’t mean necessarily that it’s the right fit or it’s the right thing to do. I think sometimes when you can’t actually find a solution for something, it does take a little bit of initiative to just go out and build it yourself. That’s exactly what we did. The WebPT store starts in 2006. As I mentioned, it was born out of the need that I had as a clinician and also as a practicing therapist and clinic director. When we took a look at what was there in the physical therapy space and the landscape, there were server based platforms. They were very expensive. I would’ve had to hire IT staff to deal with hardware. There really wasn’t anything specific for the rehab therapy industry. It was very physician based and the workflow of a therapist, if any of you have been to a clinic before, very different than the once a year visit that you might see a physician for.
Heidi Jannenga: When we finally said we’re going to build this, originally it was just supposed to be for my practices. When we actually did our market research, we found that 80% of physical therapists were still using and documenting on pen and paper back in 2007. Light bulb goes off and we understood that the problem I was having was actually ubiquitous within the industry. We might have stumbled onto something here. So we launched the company in February of 2008. As we continued to grow, we recognized that the market looks like an upside down pyramid. Where 60% of the market was small businesses, you had a middle tier of medium to small size. I’m sorry. Medium size and then you had enterprise, which is really where all of the competitors had really looked to as going to the enterprise space. Specialized mainly in billing because you want to get paid first and foremost.
Heidi Jannenga: We zigged when everybody else zagged. Having the domain expertise as a physical therapist, our biggest pain point was documentation. That’s where we started. We partnered with a best in breed strategy of being able to connect to a lot of these billing platforms. None of our customers had to change anything they had instituted. It was really now bringing on a new product within their clinic or organization. We started out true SaaS. We were the first web based application, first SaaS product in the industry. We charged 49 dollars per provider per month. Sold five clinics our very first month and here we are today with close to 40% market share. That’s in ten years. Fast forward 2019 so its been an amazing ride, but hitting our stride in understanding, really understanding the market. Also, creating the category for ourselves through multiple ways, which we’ll talk a little bit more about as we go along.
Becky Buckman: I think Heidi, you and I have talked to about how you carve out and create your own category. Sometimes you have to say no to expanding into other adjacent markets, which can be very alluring.
Heidi Jannenga: As we started to grow and you got VC starting to sniff around, even as we approached angel funding after we had been boot strapped for four years, the first question well is your market size too small? It seems like your market size is very small since you’re very niche. One thing we get a lot of credit for now is having the discipline to stay very focused on our core competency, which was rehab therapy. And with the ability to continue to grow our ten, but also with the Greenfield opportunity was there. We just took advantage of owning our space and owning our market. That’s what we’ve done.
Becky Buckman: I think from an investor perspective, having you guys be such an expert and so dominant early on in that one specific vertical. I sometimes call it a niche market. As Nancy reminds me, it’s really not so niche.
Nancy Ham: 33 billion dollars is not very niche and with a lot of opportunity for it to double or triple in the near term.
Becky Buckman: Exactly. Exactly. There’s a lot of other niche health care markets. Just as an example, at Battery we invested in a company called Bright Tree, which is outside of Atlanta, which makes software for the home health care market. Even another company similar health care IT company that made software for clinical blood laboratories. It’s amazing what the efficiencies and the low costs of the cloud can allow you to do as far as industry specialization. I think that brings us to lesson number three, which is think depth, not breadth. Nancy, maybe I’ll turn this over to you. Do you want to talk about how by narrowing your market and staying focused, you can actually expand your revenue? In particular, your MRR per customer.
Nancy Ham: For sure. As Heidi shared, the company was founded with one killer product, electronic medical record, and a maniacal focus on being the best, being first, being SaaS. That made sense because that is what you have to have. As time has gone one, what our customers told us is once they got off pen and paper, so amazing, and started moving to digital. They said, hey we see so many opportunities now to digitize the rest of our business both clinically and financially. That’s the path we’ve been on. We have more than 13 products now in our 11th year. We started with other products that were must haves like the need to bill out electronically of course, to schedule patients, to do appointment reminders. Then we started inventing products that they didn’t know they needed, which has been really cool.
Nancy Ham: Things like patient relationship management, ways to engage the patient clinically between visits, now referral relationship management. We’ve really been able to expand all the ways that we help our customers. While we’ve been expanding horizontally though, we’ve also been going deeper clinically in each product. Ten years ago, physical therapy was mostly orthopedic related, sports medicine. You hurt yourself running or skiing, you had a knee replacement. But now the industry is much more clinically intensive. Now there are specialties in pediatric physical therapy, speech therapy, occupational therapy, geriatric care, women’s health. So as we’ve been expanding horizontally, we’ve had the opportunity to go deeper as well.
Nancy Ham: A quick example, hand therapy. To serve hand therapists, you have to be able to document what you’re doing, bill for it, have a clinical outcome, have a home exercise, have the supplies that you need, and have analytics that are relevant to that particular need. So expanding horizontally as well as clinically intensively.
Becky Buckman: That’s allowed you guys to essentially double MRR, right?
Nancy Ham: Yeah. Now MRR has grown by more than 50% in the last three years alone. We’re in that really happy place where we can more than double the company if we just sold … Just sold all the current products for all the current customers.
Becky Buckman: Okay. Great. Obviously creating deep relationships with your customers, and having that knowledge within your industry seems to be a real theme here and a real driver behind the company’s growth. I think this leads us to lesson number four, which is continuously innovate through proactive listening. Obviously if you’re not listening, you’re not going to hear what your customers need and be able to serve them better. As far as taking your company and really separating it from the rest of the pack, how have you leveraged customer feedback specifically?
Heidi Jannenga: I think that has been part of our secret sauce from the very beginning. We really wanted to create a community around WebPT where it wasn’t just about a product, but it was actually truly embracing the industry. We call our customers members because we wanted them to feel like they were a part of what we were doing. Early on, we created something called the ideas portal where it was actually within our application. They could actually submit ideas of what they thought were the most important things that were that we needed to enhance our product. It was open source so people could actually vote things up or down. The theory was that we would carve off the things at the top of the list that most people had voted for, and really put some effort into building those.
Heidi Jannenga: We’ve obviously advanced our contact with our customers overall. Our product team is very involved in many aspects of dealing with our customers, including creating an advisory group in different cohorts within our platform of the types of users. Whether it’s analytics or if it’s our billing platform, having other subject matter experts that can contribute pre product, so during the build phase to really give us understanding that yes. We are building the right thing and we are making it most efficient possible because in the world of EHR and EMR, efficiency absolutely has to be the name of the game for adoption and continued usage. Product is at the focal point of that involvement with the customer. But we don’t stop there. We think that in order to build great software, you really have to have a deep understanding of your customer.
Heidi Jannenga: We instituted internally something we call our member moonwalk, which essentially is a goal for every employee within the organization, especially our developers to actually spend a day at a clinic understanding and seeing our platform in action. When you have a mission critical application, it is critical for people to understand how it’s being used on a daily basis and what happens if it’s not functioning the way it’s supposed to function. That’s been a strategic goal actually for us from a culture perspective. Of making sure that we have our employees out there in the trenches, understanding how our product is being used, and what it means to our customers. Then finally, I would just say Nancy mentioned it when she came on board. Truly understanding the customer means creating processes internally that meet your customer needs and demands.
Heidi Jannenga: When we’ve again, first started going out and looking for funding, everybody wants to amplify your sales strategy. How can you sell more product? The first thing you bring in your playbook on sales. It’s usually cold calling. Well, in the SMB space within physical therapy, most of the owners are actually operators as well. They’re treating patients all day. You’re not going to get to a decision maker by making a cold call. We had established ways of meeting them where they were at, whether it was through continuing education, or at trade shows, things like that where we could generate leads. At the end of the day, it was really about listening and understanding your customer that has really led us and been a foundation of our success.
Nancy Ham: I love the member moonwalk because not all of our employees are as dedicated as I am.
Heidi Jannenga: To get hurt.
Nancy Ham: Generate a need for physical therapy so it’s the next best thing.
Becky Buckman: Just one thing I was going to add Heidi, I think you guys also have a fairly large number of product managers who have experience as rehab therapists as well. That’s important.
Heidi Jannenga: Yeah. That’s something we’ve really developed as we’ve come along in our product team to look for specific experience. Whether it’s been athletic training or actual physical therapists that have been a part of our product management team has been tremendous. As Nancy will talk about later in terms of our M&A strategy, one of the really cool things that we’ve been able to do is have other acquisitions and products that have actually been developed within our industry that we’ve been able to bring under the WebPT umbrella. Those therapists are now part of the WebPT team. I’ve embraced obviously them as the original founder, but embrace them. We’ve created something we call the founder’s collective within our organization, which I think is super cool because we all have this interesting domain, expertise. We’re different ages and really it brings a lot of value to the organization to see us as therapists being able to give feedback and create more ideas for better products.
Becky Buckman: Okay, fascinating. I think that’s a good transition to the next lesson, which is align with investors who have deep vertical expertise. I don’t want to talk too much about Battery, but obviously we’ve done a lot of health care IT deals. We’re a firm that has done a zillion software as a service deals in the past. Obviously it seemed like a good fit for us. Nancy, you weren’t at the company in 2014 when we first partnered together. Heidi, you were there. Do you want to just talk about that process a little bit? I know for many people in the audience, obviously finding the right investor is critical.
Heidi Jannenga: As I mentioned before, we were boot strapped. We started building in 2006. We launched the company in 2008. We were profitable by 2009. We hit a million dollar run rate by 2010. Some compliance factors had added fuel to our fire in terms of more people wanting to adopt. We saw this opportunity to grow faster, but we needed capital. In 2010, we decided to go out in Phoenix to do an angel round of funding. We found a partner, Canal Partners that was led by Jim Armstrong, who was the founder of JDA Software. One of the largest point of sale services in the world, platforms in the world. He joined our board. What we were looking for at that point in time was SaaS experience, but also expertise and had a scale. We knew if we were going to do what we wanted to do and really truly disrupt the industry, we needed to be able to scale our platform. So we did. We took a million dollars in at that point and turned that million dollars into 17 in two years.
Heidi Jannenga: Our metrics were off the charts. As you can imagine, I don’t know how they do it. Venture capital always finds you, even when you’re in Phoenix. They came and started knocking on our door, and taking a lot of interest in what we were doing. We actually got to know Battery in around 2011 or so. Actually they cornered us for quite a long time. We kept saying no, no, no. They said, well we can help. Let us help you and sure enough, they did. They made really great introductions. We did start a process in 2014 and ultimately Battery did win the deal. We did an institutional round with Battery Ventures in 2014. At that point, our thesis was really around we had obviously significantly grown, but this was how do we take the company to the next level. How do we really grow? We had crossed the 100 employee barrier because we really wanted to scale to get to that 50 hundred million dollar mark.
Heidi Jannenga: Looking for domain expertise and also obviously having Chelsea talk to us about the Bright Tree playbook that they had done really helped to solidify our understanding that yeah, this is going to be the right partner to take us to that next level. Not only that, but just their discipline overall of just the business practices. Also, letting us continue to be operators. I will just say that their belief in our vision and hanging around for so long really made us understand that they truly were interested in what our opportunity was going to be, and being able to stay very, very clearly focused in the rehab therapy industry all led to our great partnership with Battery.
Becky Buckman: I think we’ve talked about this before. How many investors did you talk to? It was quite a few, right?
Heidi Jannenga: We actually went through two processes with Battery, making it to the finals the first time. We got evaluation stars in our eyes the first time, but walked away at the altar because at the end of the day we do have a very strong culture at WebPT, with a set of core values that truly is a foundation of our company. We took a step back. It just didn’t feel right the first time and we walked away. That was a big decision for the organization. About eight months later, we decided to go out with a process. We went to probably a hundred dinners. We had invest in banker, it was we just kind of wanted to understand the landscape a lot more. The second time around was a much shorter process. We were very focused in the people that we had liked previously that we brought back to the table. Also, made the decisions which was different from the first to actually give up control of the company.
Heidi Jannenga: We gave up 51% of the company. We were, as founders, able to take some liquidity off the table, which really allowed us to be a lot less risk averse in making decisions and really being able to swing to the fences as we’ve done. It’s paid off.
Becky Buckman: Definitely. I think I want to bring the conversation back to another theme that has come up a couple times, which is expertise. Domain expertise, expertise by the company, expertise by your investor. Naturally there’s a lot of knowledge in expertise internalized within your company. I think that is something that we wanted to talk about as far as lesson number six, which is lead your industry. Don’t just sell them software. Can either of you maybe share with us how the team at WebPT turned that internal expertise into a real engine to drive growth for the company?
Heidi Jannenga: I’ll kick it off. From the very, very beginning being in physical therapy, it’s my industry that we were trying to disrupt. We were trying to make changes in. As I even recall back when we were truly trying to write down the vision in what we wanted to build with WebPT on the back of that ATM envelope back in 2007, it included advocacy. It included this thought leadership, hey we need to put this out there because in general, physical therapists are not recognized for their expertise in the greater health care industry landscape. We had a brand problem if you will. Getting the physical therapy name out there to help increase the volume of patients would only help us in the long run because we would get more clinics that would have to open up to serve those patients. When we took our first round of funding in, in 2010 we committed to a marketing strategy that really solidified that thought leadership in terms of content marketing and digital marketing.
Heidi Jannenga: We started flooding the internet with blogs, we did free webinars. We did all kinds of content out there to help people understand more about what we were doing, because there wasn’t a lot of understanding around the business side of physical therapy in general. Today we’re actually the third most sought after resource behind the Center for Medicaid and Medicare services, and the American Physical Therapy Association with any key words that have to do with physical therapy. All of that has really helped us again, as a brand that a known entity within the system, within our industry. Any time even if you aren’t looking for an EMR today, when you’re ready, we want to be the first thing that comes off in your mind as to, hey they’re at least the person I should go to first. Nancy can attest too as we’ve know moved up market, that has helped tremendously in terms of the brand recognition, and understanding what we’ve done for the industry.
Nancy Ham: I sometimes think Heidi created two companies. The commercial software company and this incredible industry advocacy company. It’s really been a big part of our success. She mentioned some of the tactics but not some of the numbers that really blew me away when I was looking at joining the company. We get over seven million web hits a year. Webinars in enterprise, if you get 300 people to come to a webinar, that’s amazing. We get 35 thousand people a year. The impact of WebPT as an advocate for our industry I think is really impressive. Now we’ve started the WebPT Foundation even to build on that. When I came in, one of my charters was to help the company go up market towards enterprise, my sweet spot. I was able to take what Heidi had started and just augment it.
Nancy Ham: For example, for all that’s a 33 billion dollar industry, there’s not a lot of good business information available on it. So we started the first annual state of rehab therapy report. Our marketing team puts a lot into it. Chelsea, when she saw it last, said wow you can charge thousands of dollars per person for. This year we expect to have about ten thousand respondents. It creates a profile of our industry, of demographics, of trends, concerns. Of course, technology, adoption, et cetera that no one else has. It put us on the mind map of C suite executives at these larger companies. The second thing as Heidi mentioned briefly before that she started a thought leadership conference five years ago called Ascend. I was really happy to hear Nick made it a gain site. Talk about his pulse conference because we really did something similar.
Nancy Ham: So not a clinical conference. There are plenty of those, but a business conference for larger enterprises. This year we tried two new things that I was really excited about. We created an invitation only club called Executive Summit that met the day before. We invited only the largest operators, and that was fun because we don’t know all the largest operators coming from SMB. Our marketing team created this really beautiful, bespoke, physical invitation gift box that went to all the industry thought leaders with our survey, with other information about the company. We worked the phones and we were able to convene over 50% of the large operators to come meet, and not to sell them anything but to talk about the state of the industry. That executive summit we’ve taken on the road now. We have executive summit dinners in major cities about every six weeks.
Nancy Ham: Then with Becky’s help, we tried something yet again new, which is reaching out to the investors on the clinic side. Today there are over 20 private equity investors active in buying up clinics, buying up these SMB businesses, and aggregating them into larger chains. These are the board members and investors of the people we want to sell to. We partnered with Battery and at an industry investment conference we invited those 20 investors to come to breakfast with us. Working together, we got 80% of them to come. Think about the power of that being able to speak to the board room of the people we want to sell to. Certainly leave them with a good impression of WebPT, but also to advance themes that we think will double or triple our whole industry to everybody’s behalf. That’s been a really cool journey building on that SMB thought leadership and taking it up market.
Becky Buckman: Exactly. I did want to just double click for a minute on the big industry report that Nancy mentioned, the state of rehab therapy. I think no matter what your industry, doing these kinds of deep dive research projects can pay dividends on a number of levels. I’m a marketer so I think also from a PR and a calms perspective. Journalists are much more likely to want to write about interesting industry data than they are about company specific marketing pitches. That’s something you got … You were able to leverage this I think through multiple channels, right.
Nancy Ham: Such a good point. Two things that we had a spotlight on this year were we created the first pay guide for a whole industry because pay scale and tools like that don’t follow physical therapists. Number one most downloaded thing we’ve created, but it put a spotlight on gender gap and pay. That’s a theme the journalists will pick up and run with. The second general theme we created was the crisis in student debt. Over 100 thousand dollars to get a doctorate in physical therapy versus what you can make. Using that to create this bridge to a broader market. The third is the opioid crisis, which we might get around to talking about. Absolutely.
Becky Buckman: It’s a super, super effective marketing strategy. I think you guys have been very astute with marketing. I think positioning, positioning yourself in the industry is a core part of that. I think after you guys established your core position, it strikes me that one of the things you did next was look at expanding your market share beyond just selling to your core customers. That is lesson number seven, which is develop channels to expand market share. Nancy, why don’t you give us your thoughts on the one?
Nancy Ham: Channels have been huge for us. I think they’re huge for any company as a way to amplify your reach, amplify your selling effort at a very low price point. My only word of caution is to focus on ones that are really going to move the needle. It’s easy to do partnerships that result in a press release but don’t generate any revenue. Really think quality and go after the people that are hard to catch frankly. At WebPT, we have three kinds of partnerships. The first is around data. Patients move around the health care system and everyone is frustrated by the clip boards. Why don’t you know all this information about me? We do consider it part of our duty frankly to take the data we have ane move it around, and let it follow the patient across the health care eco system. Also because we’re the market leader, if anyone wants to sell to physical therapists, we have 40% of the market. They want to partner with us.
Nancy Ham: We have a really robust data ecosystem. We’re a very open company. We have about seven thousand date interfaces running every day. We haven’t been able to monetize those over time too, which has been cool. Second co selling partnerships. Who is where you want to be? Our case, there’s a very cool company called modernizing medicine that is a leader in selling software to orthopedic practices. Well, ortho pods generate a lot of referrals to physical therapy. You go in for a hip or knee replacement, you go in with a sports injury, they’re going to refer you over. So we were able to forge a joint offering so that when a big orthopedic practice who also has physical therapy is making a software decision, they can have the best of breed for both sides in a really, really deep integration. The third, which is interesting for a SaaS company. We have a distribution partnership. Physical therapy clinics buy a lot of physical goods. They buy tables, they buy capital equipment.
Nancy Ham: It costs hundreds of thousands of dollars. We partnered with one of those companies that has more than 140 feet on the street going in and out of clinics ever day. They’re now carrying us with them and so as a SaaS company selling SMB, having that physical footprint has been really a game changer for us.
Becky Buckman: Customer expectations are at an all-time high, making it more and more difficult for companies to please them. Companies who understand their customers well are the ones who rise to the top over their competitors. New Relic, provider of real-time insights for software-driven businesses has this formula figured out. Hear from Roger Scott, New Relic’s EVP and Chief Customer Officer as he shares his 7 tips and tricks for keeping your customers happy— and how to do so at a large scale. : I think you wanted to talk about network partners too, right?
Nancy Ham: There’s a stat that I’m obsessed with. That’s the fact that 90% of the people who would benefit from physical therapy every year, over 100 million Americans don’t ever go to physical therapy. Instead, they sit at home, they take Ibuprofen, they get on opioids, imaging surgery. 100 million people there we need to serve. I’m working on partnerships now to go out in the world and see who aggregates those people. So insurance companies, large employers, and how can we create a relationship in which they educate those individuals about the value of physical therapy, and steer them to physical therapy, and steer them differentially to WebPT customers. Because then people will buy us not only for our amazing software, but because we can change their fundamental business dynamic. Super cool.
Becky Buckman: All right. I think we have about five minutes left. That’s good timing for our final lesson and then a wrap up, which is know when to grow through M&A. This has been a real driver of growth for you guys. Maybe tell us both how you approached it at a high level, and then tactically how you executed on that.
Nancy Ham: The first thing I will tell everybody is that M&A can be a game changer. I’ve done 15 deals I think over my career. They’ve all been really additive. The important thing is to have a thoughtful, purposeful strategy. It’s easy to be reactive. Bankers show up all the time, they have a book, you get excited, you get the competitive fray. You end up buying the wrong things and paying too much. You need to be like Battery. You need to build a pipeline, relationships that you patiently nurture for years because you understand what they’re going to do for the company. For us, there were two themes we wanted to address through M&A. One is that the number one reason we lose customers is they’re purchased by someone else. I mentioned those twin EPE firms rolling up clinics. The market was getting big fast and we needed to keep up and scale up. What was really important for me is to have a portfolio that every single person wanted to do business with us. This is a challenge when you have the core workflow product like and EMR.
Nancy Ham: Once you have one, you don’t wake up every day thinking you want to switch to a different one. When I came in and I started knocking on that enterprise door, which is not where WebPT started, the conversation went something like this. Nice to meet you, of course I know WebPT. WebPT is awesome, but I’m not looking to switch my EMR, good bye. Click. Super dissatisfying. So we set out through M&A to acquire products that would work with anybody’s EMR so that everybody in the industry would want to do business with us. We want this lovely company, five guys, a girl and a dog named Lucy who were EMR agnostic and already selling to those guys. The second thing is when you’re in a vertical, you need to be over 50% market share as fast as possible. You need to race to the top. We were getting there really well on our own, but we were able to buy a major competitor, someone we had been wooing for a few years. Coming together, it gave us a lot of great employees, which we needed for growth.
Nancy Ham: It gave us great customers at the higher end of our market. It really finished out this end to end platform that we needed. M&A has been crucial. We’ve more than doubled the company in the two years since I joined. We’re now knocking on that magic number of 100 million of ARR.
Becky Buckman: Oh wow. Okay. I was going to ask about any other specific metrics when you think about just overall how successful that’s been for you, that strategy. Okay great. I think in sum, I want to take it back to the founder, which is Heidi who started this growth machine. That as we now said, is actually pushing 100 million in ARR. When we think through these eight lessons that we’ve talked about, which of the ones are most resonate for you maybe that are most sailing, that you think too to the audience of people who have maybe smaller companies now. Ten, 20 million in ARR and they’re trying to grow.
Heidi Jannenga: Trying to narrow those eight down to a few, I think the three most important if I was you and your receipt taking it away, would really be the first being super disciplined and focused on your industry narrowness. Trying to do much for too many, it’s very easy to get distracted. When people come to you and say, oh this is really cool, what if it did this? Have a very clear plan and strategy of how you want to grow. Be disciplined enough to stick to that as you continue to get successes. That would be the first one is really staying just very disciplined. The second one would be the choosing your right partners and leaders. We didn’t talk too much about culture during this session. That has been one of the foundations of our organization and helped us with our core values within the organization to make decisions with those in mind. Not only from an M&A and strategic planning, but definitely from partnership and leadership folks coming into the team.
Heidi Jannenga: We didn’t just bring in Battery and an amazing CEO like Nancy just because of their expertise and experience. It was a lot more about them matching up with our core values of who we are as an organization, but also the belief in our vision of what we wanted to do. It’s amazing just even sitting here. I’ve heard Nancy talk many, many times. We talk all the time inside the company. The passion that she now has for the rehab therapy industry when she had no domain expertise coming into this two and a half years ago, still gives me chills. When I hear support people on the phone talking with more expertise sometimes than even the provider on the other side of the phone, is what has really again been not only just a game changer for us internally, but also what differentiates us from any of our competitors. Then finally, I would just say that the establishment of the brand and the thought leadership.
Heidi Jannenga: For us, having that foundation of going into any conversation and somebody already have heard our name, and understand that we are more than just an EMR company, understanding that we are standing with them as far as advocacy for the industry, that we … Even internally that we have this true driving purpose in North Star that we’re trying to tackle that 90% and create more benefit for everyone. It’s truly meaningful to us as a brand, but also from a recruiting standpoint and all other aspects of the business. It’s really paid dividends in terms of starting that out from the beginning. It’s been an awesome ride.
Becky Buckman: Those are great take aways. All right. Both of you, it’s so impressive what you’ve built. Thank you for the knowledge.
Heidi Jannenga: Thank you.
Nancy Ham: Thanks everybody.