About CareStack
CareStack was co-founded by Abilash Krishna and Mark Huzyak, an Orthodontist in Central Florida, in 2015. CareStack is an award-winning, vertical SaaS solution for dental practices in the US that offers a 360-degree solution for scheduling, reporting, billing and patient engagement for both large multi-site DSOs (Dental Service Organisations) and single-location sites.


Chapters:


Note: Below is an edited transcript of a chat between Poorna Nayak, Co-founder of EnrichVideo, and Abilash Krishna, Co-founder & CEO of CareStack- recorded in 2021.

‘Our goal is to improve health delivery, outcomes and cost’

In India, we are mostly recognised for building a vertical SaaS platform for dentistry. But that's just one part of our journey. The larger goal is to improve health delivery, outcome and cost by integrating oral health management into medical care and chronic disease management. That's the journey we are on.

The company's strategy was to apply technology as our driver and build a digital health platform. It starts with making a practice efficient and creating smart dental practices. We then went on to improve the convenience, accessibility and transparency for patients. Later we built a set of solutions for reducing the total cost of care from an insurance company's perspective.

We have been selling a commercially viable product since the beginning of 2018 and served only North America. Today we serve 1,000 offices distributed across the USA. At present we are a team of 460 people, with 400 people here in Trivandrum and Cochin - we are mostly a Mallu company - and roughly have 60 people in the USA who are split between our offices in Florida and Minnesota. We have raised over $60 million of capital from A tier-1 venture funds and very large strategic enterprises in the health segment in the USA. That’s our journey in a nutshell.

Serendipity: Discovering their niche

Prior to CareStack, I started a consulting outfit in 2010. It was a complete service business. We were a small team of six people, three people in the US, and three in India. We did user experience design and requirements, and product management.

During that journey, I started working with customers across care management, insurance management, clinical trials, pharma, med-devices - almost every segment that comes and fits in as part of a healthcare ecosystem.

One of our customers in 2013 was a chronic disease management platform. They wanted to go and build an end-to-end digital health platform for the management of a disease called obstructive sleep apnoea. Interestingly the whole journey was the treatment protocol for sleep apnea management was to be administered by the dentist. That's how I got introduced to a dental office.

In 2013 and 2014, I worked in a dental office to incorporate sleep apnea management into the management of a dental office. I worked with multiple divisions and practice owners. We figured out that the dental sector needed six different software systems and most of these systems did not communicate with each other well.

So besides adding administrative costs to the process, the staff time was lost in redundant data entry. As a result, there was less time for patient care.

So in 2015, we decided to fix the system and use dental as a set way to hit the consumer base. From this, we planned to expand later into other aspects of care like chronic disease-related or medical care-related diseases.

Before writing code: Strategic partners & early investors

I met Mark Huzyak, a clinician, at the first practice where I spent two years. Mark took a leap of faith based on a PowerPoint slide and became a co-founder and opened up his practice to me. We put together this thesis for a big all-in-one oral health management platform.

He became the first investor when we did not have a product, with a million dollars. A dozen other private investors known to Mark had similar backgrounds and knew the context of the problem. They came together and invested $5mn to get CareStack started.

Mark’s practice was owned by America's largest dental insurance company called Delta. They came on as investors. It was a key portfolio. This gave us the money, resources, time and space to make many mistakes, and got us strategically associated with the very top end of the value chain.

We started with selling the concept before developing the product. Only once the co-founder and first investors were onboard did he start building the product.

Mark opened up his entire operations for us to play around with to the extent that when we deployed the product at his first practice, his revenue dropped from $10mn to $6mn. However, Mark understood the journey and had faith in the destination. The dental industry is quite antiquated. Innovation happens very leisurely. You get a huge luxury of time to make mistakes.

Three years of talking to users & re-writing code

In the first three years, I did door-to-door sales visiting dental offices, probably hitting around 200 customers who were the first customers of CareStack. I was building demand so that when the product was in, I could take customers along. However, when we launched, we understood that the decision-makers who liked our idea were not final users of the product.

It took around three years to do the rollout of the first version of the product. We rewrote it three times subsequently. Post-launch, it took 18 months to move the needle inside offices.

Taking the time to understand our end-users helped me recognize the missing pieces of the product and position it better. It took me three years to understand the nuances behind building a brand versus selling.

From 2015 to the end of 2017 it was about doing trade shows, conventions, Dental Society meetings, meeting influencers in the space, building those networks and relationships, it was all outbound. I was travelling 10 months a year on the road. Those three years felt like a bag-carrying sales guy, not a product founder. I probably met 90% of the people out there in dental, at least once.

Getting positioning right: Brand promise trumps competition

I learnt a couple of things from selling on the ground. This is an industry where large distribution behemoths dominate.

Initially, we thought technology could be the driver and we would position the company as a vertical SaaS company. However, we realized a modern technology product would not be good enough to move the needle. The rest of the guys will catch up at some time during the sales process in the first 200. We were also faced with the challenge of a massive process-change management. We were trying to move people who have been on a single system for more than a decade to a modern system like CareStack.  

We decided that we have to really call ourselves a company that ‘does more than they are paid to do’. When somebody hears the name CareStack, the very first thing that should hit their mind is to identify us as a business partner who is willing to do more than what they're willing to pay us for. The doing more mindset became the brand promise.

This means that the product we have should do more in terms of powerful features, sophistication, more in terms of intelligence, more in terms of providing support to the users, etcetera.

By the end of 2017, we launched into Mark's practice. By the fall of 2018, we perfected the product and oversold a product. Fifty percent of the customers we sold to in 2017 churned out. I corrected all of the kinks and by early 2019, the product was flushed out. Ever since that, the philosophy of doing more has basically gained a deeper strength.

This ‘doing more’ philosophy and brand promise gave us the roots to go against the behemoths full of conviction. That's how we got customer love and reference-ability and went from zero to 1,000.


Hiring: Early mistakes & re-alignment to brand promise

It was not enough to get the concept, product or positioning right. At the operational level also CareStack had to ingrain the ‘do more’ attitude.

We were truly worried about customer success after launching the product. We wanted to give frontline users a better experience and comfort during the process change management. Our operations needed to do way more for consumers than what they are willing to pay us for.

Initially, CareStack hired people out of Microsoft, swayed away by theories of talent density. We tried setting up engineering teams in Boston, and we built a 25-member team, which we shut down in less than six months. We had to churn a lot of people in our early stages, both in India and in the US.

Actually, it's horses for the courses. So getting the hiring right, in many ways, is a function of what you want your brand to represent. We wanted to do more, therefore the only way to do more is to have people who are willing to do more. That became our core driver, the way we hired.

Once we found the soul of our product. It had a cascading impact on the people you hire. We stopped worrying about talent density, and we started looking for people who will work for us and who are willing to do more.  

Activating inbound: Building the demand-gen engine

By the end of 2017, the focus started shifting away from an outbound process. This happened once we found the brand statement and moved away from positioning CareStack as a modern SaaS company for dental. We branded it as a business management, business solutions company, which ‘does more’ for dentists than what they pay us for. This brand promise then translated into a demand generation strategy.

We started building all the levers of demand generation, including an ad-based strategy on social platforms, a content-based strategy delivered over webinars and podcasts, and an influencer-based strategy around both online and offline.

  • Dentists’ acquaintance with influencers helped create an influencer network. They became CareStack advocates working on the company payroll as affiliate partners.
  • CareStack then formed a referral-based strategy around extracting customers out of referenceable clients.
  • Then came a product-based partnership model, which was built around very compatible companies in the dental space that were product-led.
  • Finally, an office manager based team was built, which started creating content. It started creating tools and checklists, which enables office managers to have more time for themselves.

Once that whole reel of demand generation was built and staffing was initiated. Now the sales process is completely inbound, so the demand generation basically turns. CareStack hit 25%-30% demand generation.

At present CareStack has a 14-member inside sales team which is structured around a process called Sandler.

We also have tool-enablement which ties demand generation and sales together on HubSpot with metrics. This helps track deal flows across all of those stages. It has become a science in what used to be an art.

Optimal pricing: ‘Qualification of pain is seminal to understanding pricing’

Pricing has never been a deterrent for customers because product-love exists. We are the highest priced product in dental. We are priced 40%  above legacy competition. We take the largest market share on deals. We have displaced the top five to six established companies in the dental industry. These are companies that are more than half a century old in the industry. We compete against enterprises with a $40 billion publicly listed distribution business.

Qualification of pain is seminal to understanding pricing. The normal sales process of following leads and hard-selling only results in customers ghosting you.

Getting a lead, going into the process of talking to a customer and trying to impress them with the product, solution, and features won’t work. This fails in the absence of a process around qualification.

Pricing is also a function of how well you have understood the sales process. This entails that a specific methodology that works for the market is followed. This allows you to perform to the buyer, so that you can size the buyer, and that intelligence can allow you to price your product that doesn't make you at the low end of the value chain.

The two effective concepts picked up from Sandler’s methodology that worked for CareStack were upfront contract and negative reverse question.

  1. Setting up an upfront contract with a client allows you to have a parity of power in this twisted relationship called a sale. The conversation with the customer is opened with a set of outcomes. One of the outcomes is, the customer is free to stop the meeting whenever they think the product is not a good fit.
  2. The second concept is the process of qualification. Instead of talking about the product and its features, the questions are set to elicit responses from the customers. This uncovers the pain and reinforces their perception that they are in pain without you having to be vocal about it. That process of qualification is so critical to getting and understanding pricing. It's about listening, conducting the process of qualification in a negative, reverse manner.
Uncovering that pain and delivering on the promise is your biggest driver towards finding optimal pricing. And if you don't price well, if you don't build the depth of pricing and you don't differentiate yourself on the pricing, you will have a product which dies a slow death.

On raising a seed round

Vertical SaaS companies are a rare breed in the Indian SMB landscape. Investors are sold on the vertical SaaS aspect of our enterprise. However, our choice of investors is very cautiously drawn. Our picks are made based on who understands our end-state mission. Investors have to resonate with our journey, our pivots and understand us.

CareStack's first investment of $5mn came from my co-founder, Mark. Shekhar Kirani from Accel, was our first institutional investor. He came with empathy, understanding of the space and was in sync with our journey. He was among the early set of angels who knew what's the end-state we were working towards.

Your first institutional investor pretty much means everything in this kind of space. Vertical SaaS companies are like a 12-year rollercoaster. If your first institutional investor loses confidence in you, it’s very difficult to raise subsequent runs.

Led by financial investors, you have to figure out techniques to keep the strategics under 10% ownership. You need to very carefully craft the cap table, keeping five or six strategics on the cap table who will eventually bid to acquire.

It is way easier to raise a lot of money when you don’t have numbers to show. Grow on potential so that you can get into arbitrage. Build something hard and deep for a large market. Build something which goes into the heart of the problem you're solving.

When you raise a Seed Round, don't have numbers, try and raise $3-5mn. If it's a large market and you're solving a hard problem, raise a large enough seed. Go orthogonal, capitalize on that state. This basically takes you to the next round.

Advice for entrepreneurs in the vertical SaaS space

Go slow: In vertical markets, you don't sell things to more people. You need to have an accurate understanding of the end-state experience post launch. Your rate of growth is not your real north star metric. Those things don't apply in markets like healthcare with heavy change-management and fragmentation of customers. The rule of thumb is to not sell something until your product-market fit at end-user levels is validated by at least 100 customers. So go slow, it took us 100 customers to perfect the hairstyle.

Don't go to market early: Building the brand, perfecting the product, building credibility, getting the right hires and doing more for customers counts more than numbers in the early stage. Hiring mistakes are all tied to finding your soul before you hire.

We brought in the community effect until we were ready to take off. All the work done in the community also allowed us to engage, network and build this virality to the connections.

This shift towards a “do more” mentality helped achieve zero churns. In the vertical SaaS space, the high retention businesses offer exponential revenue expansion opportunities. “The upsell offerings take you all the way to 50,000 bucks a year with the digitization of the entire stack of things that happens in the office.”

Being unique and staying away from the mainstream was a huge part of our success story. “hat eye for orthogonality is kind of what we have knowingly or unknowingly found as our DNA within CareStack. From building the product, finding the investors, capitalizing the company with a healthy mix of strategies, financials, re-investing more on customers, to how we are thinking about an end state, CareStack has been on a different journey.

Get comfortable with the uncomfortable: Once you carve it into your way of life, no shit matters. Your problems don't mean a damn thing to the markets. So get used to it.

Compiled and edited by Minakhee Mishra


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