Story of my startup (ClinicUp)

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Hi everyone. In this video, I'll talk about my startup, ClinicUp. ClinicUp grew to see about

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1,100 patients. I hired 10 physicians. We got a $6 million acquisition offer, and then we got sued

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and lost it all. I'll go in depth about the journey through ClinicUp, and I'll give you

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a few tidbits, both from a founder perspective and an investor perspective as well.

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To give a bit of context, I'm a physician. I am an angel investor as well. And I've had one startup,

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which is ClinicUp. Let's go back to 2020. COVID has just started. There's lots of predictions

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that the telemedicine space, remote monitoring space will take off. The telemedicine market

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in 2020 is worth about 20 billion North America, and currently I believe it's about 26 billion.

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It's a really good space to be in. We tend to think of our successes as internal and our failures

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as external, but usually it's the opposite. Market tailwinds and market timing drive a considerable

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amount of success in startups, especially. And something like a big tailwind would be COVID,

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and it's a good tailwind to ride to success, I would say. So I'm working as a hospitalist at

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Surrey Memorial Hospital in Vancouver. And I'm enjoying my hospital medicine work, but I'm

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bored and I'm finding work very monotonous. I want something more from life. I want something more

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from work. I started talking to my coworker and my first co-founder, Sam. We have a similar

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thought style and we get along well. And we meet for coffee every day and we start talking about

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different things that could be better in medicine. At this point, I know nothing about the startup

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world, but I am looking at it as a good opportunity. So I started learning about startups. I started

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learning about how to start a company and identify a key insight, which is you have to focus on a

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problem you're solving and provide a clear value prop. We thought about different things in medicine

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that could be better, that could be more efficient, that could be cheaper, that would generate both a

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clinical and a financial return on investment or value. We landed on travel medicine. The reason

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we landed on travel medicine is because it did not need a physical examination. If you think about

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it, when you go to the doctor, usually say you go for a belly pain or your throat hurts, we'll ask

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you a few questions. We'll examine your throat or your belly, and then we'll say, okay, this is what

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we think the diagnosis is, and this is the treatment we suggest. For travel medicine, we don't need a

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physical examination. We just need to ask you a few questions, and based on your answers, we recommend

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certain treatments. If you think about it, you don't really need a human to be involved in this.

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A computer or a software can ask you these questions, and that was their idea. So we wrote

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down these algorithms or clinical decision trees on a Word document, and we said, okay, let's get

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this into a software or an app. We talked to developers from all over the world, North America,

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Eastern Europe, India, and we got quotes from anywhere from $500,000 to $5,000. We were somewhat

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cheap. This is the first mistake we made, so we went for the $5,000. We had no experience in writing

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code, and we were not software engineers. We were both physicians. We really did not know if we were

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getting the right code or not, and what ended up happening is we got an app that was somewhat

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working but wasn't reliable and was not compliant with the privacy laws and the regulatory standards

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that needed to be compliant with here. So we're back to square one, and we're like, okay,

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we have this app. It's not really working. We have written these algorithms. We just need someone to

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code them. We started looking for a co-founder. Luckily, a friend of my brother's and a friend of

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a good friend of mine was looking to get involved in another startup. This would be his sixth

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startup, and let's call him Mark. And he said, yeah, this looks interesting. I'll join you guys.

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As Mark joined us, we started getting things more in order. We started getting some documents we

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needed like articles on corporation and shareholders agreement, founders agreement, things like that.

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Two main points here are vesting and a cliff. Vesting is when you're dividing equity within

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your team. It should be given to your team over a set period of time. So say there's four of you,

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and you get 25% each. You can say you get 5% per year. So you have to stay in the full five

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years together to get 25%. This is very important to do, and I would recommend everyone does this.

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The standard is four years, but I would advise six years as well. The second part of this is a cliff.

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The cliff is essentially if you leave before a certain time period, you get no equity. The

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standard again is 12 months, but you guys can decide what you want to do in terms of the time

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frame. So the three of us started working, and as time goes on, it's fairly clear

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that Sam is not able to commit to what needs to happen. And it is Mark who comes to me and says,

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okay, Rishad, what is Sam doing here? He's not doing the work that needs to be done to an extent.

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So I have a hard conversation with Sam. I said, Sam, you can have 20% of the equity for the work

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you've put in so far, but me and Mark should be making decisions and me and Mark should be the

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operating team here. Sam says no. He takes the brand and the initial work we've done, and he goes

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to form that company and he takes on with that. And we rebrand it as Clinic Up. I'll put another

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point here. As I was building this company, I was taking advice from a couple of mentors I have,

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Samarth and Neil, they're both friends of mine and they have their own startups.

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And the one key thing they said, which I ignored, was your initial team needs to compliment each

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other and not have the same skillset. So me and Sam, we're both hospital medicine physicians,

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we have the exact same skillset. And it's essentially a duplication, which does not work

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early on in a startup. It's something I look for in my founders as well, is each member needs to

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bring their own strength and they need to compliment each other, not double up on the same

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skill, because it's not needed and it doesn't work out. So we have this travel medicine algorithm,

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but COVID happens and it's really not taking off. Travel medicine has, for essentially,

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travel has been banned in Canada and no one's getting travel medicine consults.

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We think about what else we could do. We think, my wife brought up women's health, which is a very

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underserved region, but to be completely frank with you, it's not something that, we're not women,

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and it's not something that resonated with us on a personal basis. It's something that I would like

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to be involved in in the future, but at that point, the time wasn't right. We talked about mental

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health and we talked about just general travel medicine and we landed on a blended model of those

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two things. Mental health was really, there was a mental health crisis, it was required an expansion

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on the mental health treatment options available. And we thought that would be a good space. And

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with my background as a family physician, I deal with mental health diseases quite a bit. It's

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about, I'd say, a third of my practice. So I had deep industry expertise in mental health as well.

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The next big decision we had to make is, do we do private pay or do we do public pay? I'm based in

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Canada, so private pay would mean we're in, we're billing the government and we get paid about $37

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per consular as private pay, we would be able to bill privately. We decided initially to do private

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pay as our margins would be better, we'd have more control over the workflow and the

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we could have better efficiencies. It did not work. There was little demand for private pay

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in Canada where the public is used to a free model of healthcare, free for end user fees anyways.

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So I interviewed about 50 clinicians, hired about three, but unfortunately, as we had no demand,

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we had to shift to a public pay model. As we shifted to a public pay model, we really needed

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help with SEO and marketing. My wife has a degree in journalism and I'm very thankful for her for

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helping out during this time period. She started work, our whole social media strategy, our

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marketing strategy as well. And we got our customer acquisition cost to $5. This is both good and bad,

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this is really odd in a startup. It's bad because it somewhat means that we're leaving money on the

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table in terms of not prioritizing growth. And also when people talk about economies of scale

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and when people say, you know, our margins will be better as we get bigger, what does that actually

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mean? It usually means your customer acquisition costs will go down and your cost of goods will

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go down. And for us, our cost of goods were fixed as we were service providers, essentially paying

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our clinicians, which is a fixed cost, it's not going to go down as we scale. And our customer

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acquisition cost was so low, it was $5, that's not going to go down either. Essentially, as we grew,

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our margins would not get any better. And we had low single-digit margins, billing the government

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for our services. So we thought about, okay, how else can we get revenue? And one thing we landed on,

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apart from offering private services in the parallel, which again, there's not a big demand

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for in Canada to be frank with you. And the demand there is, it exists more in the cosmetic space,

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which we cannot do to the same extent on a telemedicine environment. Also, I'm not an expert

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in cosmetics. So we said, okay, let's focus more on partnerships. So we approached pharmaceutical

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companies, we approached mental health counseling companies who maybe needed some physician input.

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And initially we approached telemedicine companies. I actually had a meeting with Expedia,

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which I thought was a partnership meeting, but it turned out to be a sales call, and them selling

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me their advertising package. And I was very excited about that. Something I've learned is,

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if it's not written on paper, it doesn't exist. A big pharmacy chain early on

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verbally offered to put us in 40 of their pharmacies, and that didn't end up pending out either.

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But we did get some partnerships with some great startups, Pilway, Hesu, Lightwell,

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and we had a bit of revenue sharing agreement as well. Another partnership that I was lucky to

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get into to an extent was Devan, which served international students. And these students were

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not covered by the government, so they were all private pay. We initially offered them a free

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pilot, and then the plan was to convert them to a subscription model later on, which would be quite

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a bit cheaper than what they pay if they were to go to a clinic on the ground. I was doing all the

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outreach through LinkedIn, mostly messaging, direct messaging using Sales Navigator. But as we started

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to grow, as we had more patients sign up, our numbers looked good on paper, but as I said,

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the margins weren't really there. Both me and Mark, we were having a difficult time balancing

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our work and the startup. I was working in my clinic five days a week, nine to five, some evenings,

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some weekends, and I was working on my startup at 6 PM, and I was working on my startup at 6 PM,

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midnight. We thought about going part-time, but at that time, we thought if we went part-time and

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put the brakes on, that would hinder our growth. The other thing was I was seeing a lot of the

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patients. I saw the first 400 patients myself out of the 1,100, so I needed to be on. What the

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patients liked the most was how soon we got back to them. After you requested an appointment,

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usually our average wait time was within 30 minutes. We had you talking to a physician and getting

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your treatment that you needed. If no one was available, that physician was me. I was essentially

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always on from 8 AM to 10 PM every day. In terms of fundraising, a good friend of mine had invested

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$120,000, and I'm very thankful for that. This led to more pressure to an extent on generating a

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profit and more growth. As I said before, the government pay mode, there's not enough room

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for profits and for growth there, so we thought about launching into the States.

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We looked for a service provider there. My good friend, because he hired a few nurse practitioners

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there, and everything was set to launch, but we just wanted to get everything in order before

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we went there. At this time, a couple of people reached out asking if I'd be interested in selling

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the company, and given how burnt out I was and how burnt out my co-founder was, we were like,

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yes, yes, we would be interested. We met with a public company who offered us $6 million

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on the premise that they wanted to look at our P&Ls, which is a profit and loss statement. Again,

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I did not know what P&L was. I had to Google it when they asked for that, but we got an accountant

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to get our statements in order. Unfortunately, their leadership had some personal issues,

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and we had to delay the acquisition. In this time, we got sued by another company in a different

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province. It was a frivolous lawsuit, and they were saying that we are using their trademark,

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and their name was OpCenter, and we are Clinic Up. I didn't see much there, but they had deep

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pockets, and initially we fought the lawsuit, but they were willing to go the distance.

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So at this point, we have this lawsuit. We have a potential acquisition, but it's being delayed.

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We are growing pretty fast, and our month-to-month growth is over 200%. We are

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not profitable, which is okay for a startup. The problem is we don't have a path to profitability.

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We are just growing, and being a service provider without any significant software,

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there is really no trajectory for a hockey state growth. We decided to close the company at this

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point. It was a hard decision. I think my biggest learnings from Clinic Up are, number one, hire

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for commitment. Don't hire rock stars initially. Adam Grant talks about this in his book, Originals.

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As you get bigger, you hire the rock stars as experts, but initially the biggest predictor of

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hiring success is hiring for commitment. Have a path to profitability. Your initials obviously

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don't have to be profitable, but why it's not profitable is very important. If it's not

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profitable because of a high customer acquisition cost or a high cost of goods cost, which as you

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scale will get better, then great. But if it's not profitable because the business model in itself

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isn't profitable and the fixed costs are too high, then that is a bad sign. My third point is all

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founders should bring something distinct. If there is some replication or some duplication in skills,

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that is a red flag. The reason is as you bring more people on, others will ace,

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say that why do you have two people doing the same thing or why do you have two people with

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the exact same skills? That's not to say you can't learn different skills as you progress.

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And there is likely some cases where it's okay to have two founders with the exact same skills,

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but in general, you should have complementary skills. The last point I would make is something

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I've learned in the past year and from my time reflecting back on my time in clinic up,

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is you should have a structured approach to decision making and apply intuition after your

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structure. So I use this in my investing in which I score each of the two things that I

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evaluate based on a scoring criteria. And after the scoring criteria, I apply intuition. I have a

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very strong proclivity to action, so I want to use my intuition all the time, but it's led to some

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poor decision making and it's not something I would recommend anymore. Thanks for watching guys. And

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if you like this video, please subscribe to my channel. I'll be having more videos like these

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and I'll be having more guest interviews as well.