Become a Creator today!Start creating today - Share your story with the world!
Start for free
00:00:00
00:00:01
Building the asset-light hospital chain | Himesh Joshi @ Ayu Health
339 Plays1 year ago
Ayu Health is on a mission to fundamentally disrupt the patient experience at hospitals by using transparency and tech. Himesh shares his journey as a first-time founder, what he learnt from it, and how he changed his approach to shaping Ayu Health.
For more such interesting founder journeys, subscribe to our newsletter www.founderthesis.com
Read more about Ayu Health:-
2.Making affordable healthcare a reality for the middle-income group
5.After selling their previous startup to Quikr, Zefo founders are building an OYO for hospitals
Recommended
Transcript
Introduction and Mission of IU Health
00:00:00
Speaker
Hi, everyone. I'm Hemesh Joshi, founder and CEO at Aluhilt.
00:00:16
Speaker
If you have ever admitted a loved one to a hospital, then you would surely realize how chaotic and overwhelming the whole process is. IU Health is a startup on a mission to fundamentally disrupt the patient experience at hospitals by using transparency and tech. In this episode
Hemesh Joshi's Entrepreneurial Journey
00:00:32
Speaker
of the Founder Thesis Podcast, your host Akshay Dutt talks to Himesh Joshi, the founder of IU Health.
00:00:38
Speaker
Himesh is a serial founder whose first venture was in the used goods segment and he raised almost $20 million for it before settling for an acquisition by Quikka. In this candid conversation, he shares his journey as a first-time founder, what he learned from it and how it changed his approach in his next venture. Stay tuned and subscribe to The Founder Thesis Podcast on any audio streaming platform to hear lessons from serial entrepreneurs on selecting the right problem and building for scale.
Educational Background and Early Career Choices
00:01:13
Speaker
Where did you grow up? I grew up in Rajasthan. So I was born in Rajmeer. And then my father was in a bank, so we keep moving around. Most kids in Rajasthan, like them, I went to Kota. I failed the first time. So I actually dropped. I spent three years in Kota right now. And I was expecting to get
00:01:35
Speaker
top 200 300 in my own school. And one more year over there and that year was relatively easier. I didn't get in eventually pretty good bank. So
00:01:51
Speaker
Did you have like a, you know, cultural assimilation challenge joining IIT Bombay, having lived a short of life? So the IIT culture was very different and different in a good way, but it was new for everyone. So everyone was getting adjusted to it and IIT Bombay is one of the, or at least in my time, I don't know how it is today, but in my time it was one of the
00:02:13
Speaker
nicer campuses for a freshman. There was almost zero ragging. Okay. As a very friendly, the hostel culture was pretty good. It was fun. And what did you choose as a careers, like what's you finished your engineering?
00:02:30
Speaker
So, I got into management consulting. I worked in that for two years in India. I spent a year in Benok. I think management consulting attracted me at that point because I felt it was a good way to get to know the world. You do a lot of things. You have pretty good exposure. So, in that sense, it worked out well.
00:02:51
Speaker
Yeah, but I will be honest and I wouldn't say that it was a very thought or two decision. It was just the cool job to get. And I had a pre-placement offer, so I was an opposite for two companies and the only two I sat for were the top two consulting firms because I didn't even think that the third one was worth. So yeah, I've been there two years and I think then
00:03:13
Speaker
Once I got my son started thinking, okay, what makes right? Let's break free on that more than I think that's probably when my first name did something that was not expected. So even at that point, most of my batch was getting into private equity or venture capital after a year and a half, two years at consulting. And
Transition from Consulting to Entrepreneurship
00:03:36
Speaker
I didn't even apply. I mean, I applied to one place and I just redo because I said, I don't want to do something else. And I was lucky to get an opportunity to move to New York, which I felt was an interesting thing at that point because I would get exposure to a different environment. And I also was never really sold on the idea of an MBA.
00:03:57
Speaker
So I came back and by then I had had enough of consulting as well. So that was when I started thinking, let's, let's do something else. And at that point, what attracted was key, let's do something of our own. So I do not just meet them. They were by then I had my other co-founders who continue to be my co-founders today. Okay. As when they were friends or you might never be saying. So there were four of us when we started my previous venture. Three out of the four now are co-founders at IUHIM.
00:04:28
Speaker
So out of the four, two of our friends from BCG, we are part of the same core. And then Arjit, who's my co-founder today as well, is a friend from school. So friend from Kota, we realized then that we were from the same town. He went to boarding school, so we never went to the same school, but we were from another way. What are the odds of that?
00:04:50
Speaker
When we started thinking we wanted to start up, obviously, there were these three consultants, but we wanted a guy who understood it. And as it was the one I called up, he also was at that point looking to do something of his own. He had been in the Amazon tip card, Adobe, so he had done the usual stuff. And he was looking for something different. So, ultimately for us, he felt excited about what we wanted to do.
00:05:10
Speaker
And that's how we got together. I mean, was it an idea first, or was it like less to entrepreneurship? It wasn't that. We were all clear that we wanted to do something of our own. And actually, Rohit and Karam over the other two co-founders were actually working at venture capital.
00:05:27
Speaker
They had also seen this up close. 2015 was still early days, I would say. Starting up was not as common and the ecosystem was still fairly missing. But they had also seen a lot of companies from close quarters.
00:05:45
Speaker
like big basket was just beginning to start and ended up being invested over there. So yeah, we got excited about that. I think we felt this is a good time for us to try something of our own. We were all fairly young. We were not looking to get married for a while. We had all made decent money so we could take a risk.
00:06:04
Speaker
And that is what sort of got us together. And then we, as you said, we were, we had a very analytical approach like all consultants and let's let's scout the event for what we think is an interesting idea. Tell me, like, you know, the zero
E-Commerce Venture and Market Challenges
00:06:21
Speaker
to one process of from wanting to be entrepreneurs to actually launching something. So I think that that conversation lasted for almost a year. Say six months into my New York state, I was here, I want to do something of my own.
00:06:33
Speaker
The rest of the folks were also beginning to arrive in the same conclusion. So we had started talking and we were elaborating on a bunch of ideas. Eventually, what got us excited was e-commerce for used goods. The thesis at that point was that India had gotten used to buying online. Like in the US, you have eBay, you have Craigslist, which is actually the number one platform. That point was number one. And the difference that he felt was, and India also had OLEX in quicker at that point. Yeah.
00:07:03
Speaker
become large-ish. But the difference that we felt was that India was inherently a low-trust market. So the pure classified model would not work here. And that is something that reflected when we spoke with users as well. How do I trust someone who has put up a TV for saying that TV works? Or if I might, I bring it to my home and after two days, it just stops working.
00:07:23
Speaker
Right. And that had not happened this way. And then if you're going to call them that guy and say, Oh, sorry, I want to give it time. So because India is a low-trust market, if you look at all used goods categories, the dominant players are the ones who own the transaction. So we felt that therefore that the pure classified model won't work in India. So our approach was that we even take ownership of inventory. So if you are
00:07:48
Speaker
If you want to buy a used sofa, you will buy it from us. So we would have bought that sofa from a user or from a business that was looking to sell end of life inventory or surplus stock. And then we are putting.
00:07:59
Speaker
Our marker, we're putting our warranty on the product. We're giving you a return window. We're giving you... Everything that you expect with an e-commerce experience. But obviously the price here is half of what it cost to buy a new product. And that we sell was an interesting model. Obviously it was a little complex operationally because you would then have to want to invent it to have these e-curbation centers. But the margins kind of justified that and we...
00:08:27
Speaker
failed that it was fairly
00:08:30
Speaker
While it was a lot of work, it was not a lot of different work, a different category. So you had this playbook that you had to put in place and then you just do the same thing again. So that's what we did. We started off with furniture because that is what we felt was the highest friction category because furniture is also difficult to carry around. So you might still trust me, okay, the sofa is good, but how do I even get it to my house? So there's an statistical problem as well. So we found that was a category where the
00:08:58
Speaker
problems were more pronounced than the other categories. And we eventually got into large appliance sales, then into TVs and mobile phones. What was your MVP? Your MVP must have been a website with some logistics integration? Yeah, so logistics was our own.
00:09:17
Speaker
So it was essentially just that integrating logistics was not so easy that time. It didn't exist at that point. You didn't have the ship rockets or the oil. You had to do everything you're saying. So the first delivery people were a co-team. I delivered probably the first hundred orders myself. We would send that rat and go around the city all day.
00:09:40
Speaker
The first product was just a website and interestingly, we launched the website with 100 odd products. I remember our office was inside a warehouse, we had taken a small warehouse in Gappal Road in Bangalore and basically constructed a small cabin over there and it was just 10 of us. So we had a small meeting room and an open area to work on.
00:10:01
Speaker
Yeah. So this was, I remember very clearly this was around 10, 11 in the night. We took the website live and we were all very excited. Obviously we were not expecting any orders because nobody knew that this website existed. And then one of the co-founders posted the link of this website on a Facebook group.
00:10:18
Speaker
Okay. Good transaction is good. And suddenly you start getting orders. And you know, it's like that, you become, I mean, where you think, okay, this thing adds value. So we were like, I remember we were all working out of the warehouse, we were just going to shut it down and we would do all of this. So I said,
00:10:35
Speaker
Yeah, right. And then we just got so excited. There was a maid lying around and we want to start on it. And then we think, okay, five more days, six more days. I was having an hour in the middle of these two hours because we had one truck. And these are all made from various parts of the angle. So we started with a problem. We were able to deliver those. Based on conversations with other founders, my understanding is that
00:11:02
Speaker
Use goods, e-commerce is more about finding supply than finding demand, because it is cost-conscious, so demand exists if you find good supply. So how did you, with you listed 100 products, how did you source those 100 products? So these are all bought, these are all bought from users. And we have bought from OLA, so we can pick it back on existing platforms. So we would call them up, we will go and visit.
00:11:30
Speaker
or do a QC. Eventually we had people coming to us directly. And I think that's the other reason why we found the model would work because when we spoke with those sellers, they were also unhappy because you would get these hundreds of these calls and people would just haggle, nobody will actually turn up, someone will turn up and then unco-turn their cheap rate. And it was a nightmare to send stuff. So they also appreciated the fact that there was this one platform that's giving me a guarantee as long as the product is good and they'll come in and pick it up.
00:11:58
Speaker
So, it was a 1-0 for us. We would understand the user is that based on what you told us, this is the price we'll offer. Now, if the product is not in good condition, it's a zero. Otherwise, it's a one, we'll pick it up. There's no, we're not going to come in and haggle in that. Even if you choose a slot when you get it picked up, you'll send a team that's professional.
00:12:17
Speaker
And we take care of not growing up your house paint while we take the stuff out. All of that stuff is important for people. So we were solving problems for both. The other thing that also happened on the SAD side was, and this was again very circumstantial. So we knew the Urban Ladder folks because these were friends from college and then a few other people. In fact, Urban Ladder was one of the
00:12:39
Speaker
Their team was always very helpful, no matter what we wanted to help with. So I was visiting their warehouse and I noticed that their team was working on a brand new dining table in the warehouse. And I was like, why are you guys using your new products and just having your team sit on it? And you're like, no, no, this is the second product. So then he showed me there was this small chip on one of the legs. And I was like, this is great. We will buy it.
00:13:05
Speaker
One of the most popular categories was born, so we would call it unboxed category, where essentially we were saying we will go and buy products from all brands. This was all major furniture brands, all major mobile phone and appliances brands. And these are products that would have, say, a refrigerator that has a dent on the door, right? Now, you can't say it is a new product, but if I set it for 70%, people will line up to buy it. So that became an interesting part of supply as well. Interesting. Okay.
00:13:35
Speaker
And how did you fund it? Like you had employees earlier, you had a van or a truck or something. So we did raise money with an ID on paper. And I think we were privileged in that thing. So my two of my co-founders were from a venture capital firm. Those guys were kind enough to believe in what we wanted to do. So we had that money. Okay. Okay. Amazing. Okay.
00:13:58
Speaker
So, I'm wondering why you didn't take the Casify approach, like, you know, Casify is it to use FODS and their approach is, send on Casify. I mean, everywhere they advertise, their marketing spend is, send on Casify, you know. But what you were spending on, buy from Zepho. Like, that was what your marketing spend would have been done. So, what is the difference between these two approaches and why did you take the latter?
00:14:27
Speaker
So we were actually spending on both. We were spending on buy and sell. And we felt it made sense because at least for Harnej and Rajat branches, we wanted to retain the entire spread. So we felt that there was value in keeping that inventory and then selling it on. And what it also did was it would create this virtual cycle. So every product that we would sell, we will put a buyback guarantee on that.
00:14:47
Speaker
So the behavior that we saw was people would buy something, and then in a year, they'll come back and exchange it for something else. And at buyback would have a certain premium if you're buying something again from us. So people started using this as a model where, you know, I want to change my coffee table. Okay, now I'm bored of this. So we felt it was a better model in that sense.
00:15:07
Speaker
However, the Casify model is the meta model for mobile phones, and that's something we figured the moment we started it. Mobile phones were something we started only towards the fag end of our Altenier HFO, and we realized that the problem is that phones, the obsolescence cycle is very, very high. So do not want to be sitting on the product for too long.
00:15:30
Speaker
And if you want to get it into refurbishment and all of these things for phones, then the product keeps depreciating in value very fast. So either you have a very, very strong refurbishment engine and your refurbishment put it back up for sale. Otherwise, you're better off in just giving it to these resellers who will then have the means to refurbish and then send them on or they just cannibalize them for parts and then still make money out of it.
00:15:56
Speaker
So, you know, tell me, like, from year to year, like, you know, 2015 was like, in that year, what was the categories you were doing? What kind of sales did you generate? And what kind of address did you do? And, you know, if you can, like, paint a picture of your journey at ZFO. So, see, 15 we started, I think we started in
00:16:18
Speaker
March or April, or at least March is when I landed in Bangalore. So maybe the time went live in August. And we were just doing furniture in Bangalore. That's it.
00:16:32
Speaker
Then 16 is when we started larger appliances. What did you do in 15? Like what was your GFP? We would have exited here, maybe doing 50 lakhs a month. Pretty good. Yeah. I mean, it was, it was more than we had expected. We thought it'll take some time for us to get the money, but we were always of my concern at that point. Like we would always
00:16:58
Speaker
especially the unboxed category, that was a huge hit. So we will get in a new Almond Niner law, and we will go in two days and then we'll have to wait. So you're right on that point that there was the high, the best selling products are always applied and changed. And so yeah, 50-60 now I think probably towards the end of the year, then
00:17:18
Speaker
beginning of 2016, we started large appliances. So again, we were not doing TVs still because we thought TVs were still easier. What was more difficult was refrigerators, washing machines, and so on. So we started that and then three months on we started TVs as well. And 2016 is also when we started daily. So we got into NCR as well. We set up a greenhouse and go to government, we were catering to the entire region.
00:17:41
Speaker
How
Scaling and Acquisition by Quikr
00:17:42
Speaker
did you find it? This is the year. You would be in a lot of working capital, right? We would. The more categories you have, the more working capital you need because you are paying in advance.
00:17:51
Speaker
Yeah. So initially it was equity, but obviously that was not a sustainable solution. So we started then doing invoice discounting and some of these practices then. So we got, we would raise net, especially say if you were buying products from businesses, say Amazon. So there we will have to pay upfront, but then we would raise debt and that would be big debt to our account structure. Okay. So you had like a institutional BNPL mechanism.
00:18:19
Speaker
Yeah, you could say that. And so we had these sellers on our platform who will buy the products from Amazon or Flipkart or any other brand. And then we would help them raise the money through say someone like a trade X.
00:18:34
Speaker
Oh, okay. Okay. Okay. What a giraffe, which didn't exist back then, but no Dutch. So, your platform had like seller onboarding also, like sellers could directly list because you said you wanted to control the whole. Yeah. So, we were, we were in sellers who would buy the inventory, but the inventory would be sitting in our way and we would be the ones who know what the inventory is. So, these were, these were essentially sellers who were just putting in capital.
00:19:03
Speaker
and allowing us to not put our own money into buying the product. We would still do our own QC on it. There will be sellers who will come up with product that were ready, but then we would still insist on those to be in our warehouse. We would still insist on checking. We might not refurbish them. So we opened up that at some point because we realized that we also needed more supply and they were these quote unquote dealers. But we would never allow them to ship directly because we were never sure if they will do a good job.
00:19:32
Speaker
Interesting. And how did you acquire these sellers? Like this was like, again, cold calling, telling them, sell through us. Yeah, there was a, this was again, not a very large portion of the institution center. So, but this was done through a team that was on the street and you know, they would make Bangalore has a few hotspots where there are a lot of these good sellers, right? So you know where to find them.
00:19:57
Speaker
the individual centers would all come through our own marketing efforts. So we would also advertise to sellers, people who are looking to sell. And then the institutional relationships would be stuck by a different team. So we were also powering the exchange for say Flipkart and Amazon. So Diwali, for example, it used to be a big deal for us as well because then somebody Flipkart would do thousands of units of machine machine and they would want us to deal with everything. So we would take a new warehouse. We would then have a bit of a gaseous-type model where we will
00:20:27
Speaker
the inventory will be segregated and say whatever is not good enough, let's just leave it out directly and only the cream gets kept for refurbishment. So those were institutional relationships were done in a very different fashion but then there were not a lot of those. These are usually the large brands and the large e-comp platforms. Okay, so coming back to 2016, so you opened up Delhi, you opened up large appliances and you also opened up television towards the end of the year.
00:20:52
Speaker
Yeah, we opened that up in I think 2016 and we also went to Bombay. So we were in the three cities. And I think this was the year when things were all rosy and we were growing pretty fast. We had a phenomenal Diwali. I remember 2016 Diwali, we did very decent numbers. So for us, it was the first wave of Diwali is powering the exchange programs and all that supply. And then the second was our own sale. Maybe we'll try to also sell a lot of these things.
00:21:16
Speaker
Yeah, you raised your CDSA also, I think in 2016. We raised your CDSA also. So CDSA happened in 2016 on the back of some other service. So Sequoia came on board at that point. And this was also quite primitive for us because until then, one of the big problems for us had been a lot of investors we would talk to will want to move even.
00:21:38
Speaker
a model like this existed in a China or a US. Yeah. Yeah. We have pains to explain that there is a different market in India, there is a different market and it requires a different approach. And that's why I am actually forever grateful to the investors who did come in because
00:21:53
Speaker
You know, I could see that they wanted to back an idea that was different. It was for Eon which was the seed check and eventually Seiko and a couple of other investors also came in. So they didn't want us to tell them why this was working in other markets. They were more interested in why it was working in India. I think we would have gotten it most to about a 10 CR a month mark. 6-10, maybe not 10. 10-10 is what could have done the year after.
00:22:22
Speaker
But yeah, it had grown phenomenally well. So when you say you were profitable, that induced the cost of acquiring the customer or removing that cost you were profitable on the transaction. So cost of acquiring the customer and the cost of servicing product and the logistics cost. So we were in Bangalore, I remember we were profitable.
00:22:46
Speaker
in a very short span of time because the margins were very good. When the category of the furniture you have upward the positive side margin. So, the game positive was never a challenge for us. It became a challenge at the later point when we heard about also trying to grow and talk about this even growing that time to grow games the green.
00:23:05
Speaker
But initially, it was very easy in that sense. Amazing. So what was the burnout? Like building the technology stack. So our technology team was about 16. I think it would have been 10 people altogether. 10 to 15 people to product and technology combined. It was always a fairly lean team. Even at the peak, we had more. Okay.
00:23:31
Speaker
But you said that you were still burning money in 2016. What was it like? So the bond would go on a newer 50s. And this is when we had launched Mumbai and NCR. And Mumbai and NCR were not as easy to crack in terms of economics, especially in NCR, for example, huge geography, the delivery costs were high. You also need to get to a certain scale for routing efficiencies to come in and out of the reason all. So CAC was also one. And the other was this
00:24:01
Speaker
a lot of these HO costs, so technology, product, marketing and the cost of the teams. But that was where most of the money would go in. And I think 17-18 is when we started getting to a point where we realized that we wouldn't hit a cap in each market.
00:24:23
Speaker
So we will get Bangalore furniture to a certain point and then it became a little difficult to grow. We'll get Bangalore appliances to a certain point and then it became a little difficult to grow. And that is when we started acknowledging the fact that the market was not as large. And that was a tough realization.
00:24:41
Speaker
We always had known that the market was not insanely large, but what we had banned was back on was that it will continue to grow quite fast. So I think that is where the thesis sort of went on. But in terms of why there was a gap, if I look at the demand side, there was, there was, and there continues to be a bit of a taboo around use goods in Indian context.
00:25:04
Speaker
don't necessarily want to buy a unit started unless there's strong value on it. And what happened in late 2017-18 is that Flipkart and Amazon became quite aggressive with their private levels.
00:25:15
Speaker
So you had new televisions and new appliances and new furnitures being sold for those to use good prices. These are obviously ideal quality. So we would be selling an LG TV for $8,000, but then you would have a fifth-card branded new TV for $8,000. That is important. And people don't care. They'll say, but this is new. Then there was an uphill battle for us to convince them on why this was in good quality.
00:25:42
Speaker
So that became Manjang. The other bit was supply here.
00:25:47
Speaker
I think the problem for us was that our model was still decently operationally heavy, right? So I couldn't suddenly open up a new market without going up and setting up a warehouse and setting up a reservation center. And you'd have to buy trucks and all for logistics and all of that. Absolutely. So we won't buy them, but we would lease them, but that's a cost that gets added on. So you need the market to be of a certain size for you to be able to serve it in a manner where it makes sense.
00:26:16
Speaker
It's not going to grow unless we got into a mode where let's go and create the category. But then that required a very different way of operating and it required a very different skill set from us as well.
00:26:30
Speaker
Market creation requires a different mentality. It requires, you know, a certain charisma and ways that money requires a certain skill set in terms of marketing. And we didn't have that. Help me understand this, like creating a category challenge. So you're saying like, say, what Oya Roams did was like creating a category where they raised and they were valued at like $18 billion at their peak or something like that. So that would be... Yeah.
00:26:56
Speaker
That's what it means to create a category. I mean, yes, to a certain extent, but even then also the need for a hotel room exists. This is a different and easier way for you to get a room that has a predictable quality. True creation of a category is
00:27:14
Speaker
Say you look at grade, for example. Nobody could have said there is a need for something like this. But now people use it. Right now, it's still questionable on where it'll land. But it's still a category that has come up from nowhere.
00:27:31
Speaker
It could be say a consumer product, say Airwords is a classic example of that. When they started, people would have seen the market for wireless earphones is a subset of the market for earphones. That's no longer the case of product in itself. So I think that's what I meant by category creation. So we had to, we realized that we had to go out and get people to think of used goods in a very different way than they do today.
00:28:00
Speaker
People like us, you know, people living in Bangalore, the more affluent ones, kind of it in a different way, you know, like, especially people who are not married, who have invented apartment, they would say, I need something for two years, this is a better option. But that was not a thought that a lot of other people had. So that I think was the was the challenge over there.
00:28:21
Speaker
So we got, we hit that point, then we briefly thought about raising that ton of capital to do that. Also tried to be honest, we didn't succeed in that. Okay. And that's when we said, let easier to, you know, then get acquired and work with a brand that's already large and probably has a way to
00:28:39
Speaker
do something like this. And that is when she did get acquired by Quikr. Did you consider leasing, like leasing out furniture, like rental, furniture rental? We did. So for us, it was- And a lot of action around that. There were two, three start-ups. Yes. So I'll tell you, I only spent that it was a subset of our market because this required an even more
00:29:15
Speaker
Yeah. So it was always, for me, it was always a checkout option, right? That is just a way for me to pay for something, which is now what's happening with all the BNB and stuff. So what we did was we actually emailed a rental to a rental mojo and that was doing that. Okay. We got into a partnership with them. You could buy a furniture on appliance, prom zero, but instead of being upfront, you could rent it out. And what we do at the backend is the inventory gets sold.
00:29:25
Speaker
in terms of the customer's behavior because it's never a better economic proposition to lease something unless you are leasing it for a very short duration.
00:29:42
Speaker
to rent a mojo, which then takes care of leasing it out. And then we also told them that once you get it back, we will give you a buyback price, so you can give it back to us. But it was more of underwriting, it was more of connection, and felt more like a fintech play than an e-commerce play at that point, when it's still not become a completely empty industry. Okay, interesting.
00:30:04
Speaker
Do you think it would have been better to do less categories and you might have grown more like say if you only stuck to furniture? No, I think the problem was still that the category itself was not large. So the problem was never the complexity or the fact that for whatever reason it was difficult to manage more categories. In fact, it was helpful because the moment we started up Manchester, the order values ended up. So it made our marketing even more efficient. And the reason we started with Manchester was that you move into a new place,
00:30:34
Speaker
You want to buy a bed, but then you also want to buy a refrigerator. Or if you are moving out, you want to sell everything. So a lot of our sellers would tell us, are you taking this furniture? Why don't you take my appliances as well? So that with more categories was not a problem. The problem was that each of those categories was small, which is why we started mobile phones. Because there, the size was not a problem. Unfortunately, for us, the problem was that we figured in that category had a different rhythm of execution. It's where we have to classify as graduate. And it didn't really fit well into our model.
00:31:03
Speaker
So we always keep wondering now that had we thought of doing used cards or used bytes back then, it turned out to be the good markets and used goods. I'm looking at how spinny is doing now and there's a compute base on those bytes as well. But instead went to mobile phones which didn't play out as we had expected.
00:31:25
Speaker
Interesting. And Jan's approach after you buy something was like low touch. So the way we thought about it was, we will buy it, but we know we can refurbish it. So for example, in TVs, where the economy is dealing, it changed for us was when we would buy these TVs at broken screens. And they come from everything. They come from individuals, but then they'll also come from businesses. Like you've got to protect them of them.
00:31:48
Speaker
in their logistics. So this is a new TV with a broken screen. And we would import these panels and we would refurbish them and we would put new panels on those. And there the margins are very good. Interesting. So what led to the quicker sale? The sale to quicker. Yeah. So as I said, it became very clear 2018 that this was not looking like it will become a very large business. We were doing about 20 crores a month.
00:32:18
Speaker
which was still way lower than what we would need to do for this to be a large outcome for some other investors. And by then you raised $6 million in your series A? Yes, we did an internal series B with the same investors, which
00:32:40
Speaker
You know, it's also probably a mistake in hindsight because then, what is that? This was done when we were flying, we were doing really well, and investors were also happy. They said, you know, why don't you take this money?
00:32:50
Speaker
For that, some people are like, yeah, this makes sense. We don't like fundraising. But the problem is when you do that, then the next time if you're not doing that well, it might have helped to have one more investor who could have said, you know, I will back you for at least one more wrong. But us are investors and already done that much. And honestly, we were not doing as well as we should, right? So they also didn't feel comfortable to back us again. I'm not going to blame them. But had we had one more striking or deep pocket investor,
00:33:24
Speaker
So, going back, we stopped growing, or at least we were still growing, but the growth was coming in at a cost that didn't make sense. So, we could still
00:33:38
Speaker
we could see that we can grow this to a 2x, 3x, wherever it was, but then the incremental marketing spin was just way, way, way high. That just didn't make sense to us. So then it was a question of either going and raising more money and going into this category creation exercise or
00:34:00
Speaker
getting acquired by a larger brand that already has the ability to attract these users. So we didn't go down the race part, partly because you're not able to do it, partly because you're also not 100% convinced that it was a good fit for us. And therefore, we started scouting for acquisition. And at that point, there were only three or four entities that where this could fit well, like Flipkart, Amazon, where they're too large, ecommerce.com, and then they were quicker and OLEX.
00:34:24
Speaker
Michael was the one where the conversation was most interesting, especially because they had also realized that classifieds won't work. So they were trying to get into a transaction, owning the transaction across all categories. And this was a very good fit into their entire business. You didn't have to change a lot of things as such. They needed a business that was doing this. This was already there. Not a single person had to be let go.
00:34:49
Speaker
It was a very clean fit in that sense and we did believe that quicker had the skin and the brand value at that point too.
00:34:58
Speaker
to take this to the next level. Unfortunately, it did not happen. But that's what felt like the right model at that point. And did the investors make money? No. I mean, so this was a shared swap. So they got quicker. So they would make money if we can eventually end up having a great outcome that right now is still up for debate.
00:35:23
Speaker
Okay, interesting. So did you have a lock-in period with Kukr? Did you work there or did you want to immediately move out then? Yeah, so we had a six-month lock-in to hand over the business. I think it was pretty clear from the beginning that we had too much of an on-driven analyst project to be tied down there for too long. So we stuck around for those six months, handed over the business and then we were out thinking about what next.
00:35:50
Speaker
Okay, so tell me that process now, you and again, static from scratch, did you? So we started thinking again, and this time, you know, this time, we want to do sort of learn from our mistakes, and, you know, do a slightly better job. So again, very analytical and consulting kind of an approach. So look back and say what went wrong, right? And the biggest answer was market, like not bad. Right. So I will say, you know, this time, whatever we do, the market has to be very much like we are not going to compromise on that.
00:36:17
Speaker
And we started thinking again. And what happened in this thing was that healthcare was a sector that came up very early in our deliberations. And it's obviously very large. The thing that excited us was that this is one of the two sectors where not a lot has still been done. If you look at the impact of a technology net over the last decade or two, yeah, this is one sector where you still haven't seen
00:36:43
Speaker
a lot of change. So it was also exciting in that sense that there is probably a very large outcome needed to be built. And there is not a lot of competition. It was obviously a fairly difficult sector to crack as well. I remember when I met friends and like folks from the investing community to discuss what I should do. People told me healthcare is a startup graveyard. What also
00:37:10
Speaker
One of the contributing factors of getting into healthcare was that my co-founder comes from a family of doctors. His parents are both doctors and brother is a doctor. Most of his extended family is full of doctors. His father was running his own super society hospital.
00:37:26
Speaker
So he always felt like the odd one out in his family and he always had the urge to do something in healthcare. And this time we were like, you know what, let's actually do something over here. And in fact, after, because he had briefly moved back home, so his father was running a hospital that had not been doing as well as they had expected.
00:37:44
Speaker
A typical Ralado was an NIH consultant, and then he realized he doesn't work out and it's a very different business and it's not easy. He was also not able to do a lot. So he was the one who kind of was just, let's look at his hospital space. It is interesting. It's not easy, but it is interesting. And I think the part that brought us over the hump of
00:38:13
Speaker
Healthcare not being viable enough from a business point of view was the fact that we realized that most of the things that had happened so far were either in the primary healthcare space or preventive healthcare. And unfortunately, the ticket size in any of these transactions is not very large.
00:38:32
Speaker
Very difficult for a company to make money unless you build like a lot of scale, like a grain brand. Otherwise, if you're monetizing a 500 rupees consultation, that is just not enough for everyone to make money. So this time we said, we even go after tertiary care and secondary care. So inpatient care, the transaction sizes are a lot higher. So these are upwards of 50,000 in one side.
00:38:56
Speaker
And therefore, at least there are margins available for someone to come in and demand a certain pie from that, as long as they are adding value. Within primary care, even if you add a lot of value, it's still very difficult. And the quantum is just so small that the scale has to be very large.
00:39:13
Speaker
Can you define these terms primary, tertiary, secondary? Yeah, so primary is a consultation. I was playing badminton, now I have pain in my shoulder. I just want to go and meet an orthopedic doctor. That's primary care and I'm just getting a consultation done. Second to your tertiary care, your inpatient care is
00:39:32
Speaker
I want to know, I was diagnosed, I got a test done and it turns out I don't my ligament and I have to get some surgery done to fix that. The consultation was 500,000 rupees but then this surgery is upwards of 1 lakh.
00:39:49
Speaker
What we said was we ideally want to be sitting on this side versus the primary care side. So that's the one reason why we felt that at least we would not run into the same problem as everyone else. We might run into a different problem, but it'll actually be different.
00:40:05
Speaker
The part that obviously did get us very excited was that no matter how you got in, this was a very very large marketing. Patient care today is upwards of 80 million dollars in India. And then whatever cut you want to put, you remove government, you remove tier 3 tier 4, you remove the large brand. It's in a very very large market that is out there. And on the patient side, one thing that became very clear as we spoke with patients was that
00:40:34
Speaker
most patients did not have a go-to brand that they could trust. People like given me where we are privileged enough to have the ability to walk into an Apollo or a medanta or a protest. And we have that implicit trust, you know, they might overcharge me, they might not pay me very well, but clinically it's going to be great. I'll be fine. Most of the
00:40:54
Speaker
average folks do not have the ability to walk into these hospitals because they just don't have the cash or they just don't have an insurance plan to back that. And in the absence of that, they don't have a go-to brand that they can have the same line dressed on. On top of that, the problem is that I don't have that dress. I also don't have a great experience. I was talking about how the sector hasn't had a lot of
00:41:17
Speaker
improvement at all based on technology and internet. So, experience is still the same as what it was 20 years, 20 years back. And there is also an inherent lack of transparency when it comes to pricing. You don't know what you will be charged until you're getting discharged. They'll give you an estimate, but then there is some extra, something extra that you always get charted on. And there is not much you can do at that point. You just feel that you've been cheated in some shape and form. So, very clear opportunity to build
00:41:48
Speaker
a go-to brand for the average audience, which could solve for the pinpoints of clinical quality, experience, and transparency on pricing. And that those three pillars is what we felt would allow you to be trusted. And what we also figured
00:42:06
Speaker
on the supply side was that there were a lot of high quality hospitals that were struggling. And this to me was the biggest shock because I had always grown up with the thinking, you know, you are a good doctor, you set up your own hospital, that's it, you are sorted for life. That's not the case because all doctors tend to think of it this way and all of these doctors
00:42:26
Speaker
And setting up hospitals in tier one cities, because you know, that's where they were all working. So think about a doctor who was a 15 year old and a polo or a footage, or any of these. And now they want to set up their own hospital, they're not going to approve their family and move to tier three down.
00:42:40
Speaker
They're going to do it in a metro or a tier one city. And these cities have a bit of an oversupply today. So there are a lot of these independently run mid-sized, technically care or actually care hospitals. And these hospitals don't have a great brand yet. So the doctor might have a great brand, but the doctor's brand only allows for 20% immunization of the hospital. How do I fill in the rest of the bed? As a doctor, I don't know. What compounds problem is that
00:43:09
Speaker
This is perhaps the one sector where the owner of the business, who in most cases is the doctor, is not a good businessman. These people have not been trained to do business. What they love to do is practice medicine. They care about clinical quality. They care about outcomes. Now suddenly they have to deal with suppliers of drugs and negotiate prices. We have to figure out how to market themselves. They have to deal with
00:43:32
Speaker
you know, putting out ads in newspapers and this is all alien territory. So as a result, a lot of these independent doctors, doctors and hospitals are struggling. And this is where we saw the opportunity where we said on one hand, you don't have a great estate brand that people can go to. On the other side, you actually have good quality supply.
00:43:49
Speaker
that is not able to do well. And, you know, the patient knows that there are these 10 hospitals in my locality, but as a patient, I don't know which of these 10 is clinically sound because they all look similar from the outside. And unfortunately, there is no clinical data that any of the hospitals shared. I don't know what the success rate of a procedure in a hospital A versus B, C, and D. So what we do now is we said we will go and partner with
00:44:13
Speaker
these independent in hospitals, which are clinically sound, right? So I'll go to a locality. I'll partner with one hospital out of the 10 that is clinically great. They have good infrastructure. They have good infection control protocols. They have good quality of nursing. I will co-brand them. I will tell them that look, I'll start driving more patients to your hospital. And then over time, I will also work with the hospital on
00:44:39
Speaker
all of the other non-clinical functions. So, you know, it could be putting in technology for better experience. It could be putting in technology for processing insurance names. It could be lending for patients. It could be procurement of drugs incontinable where I can not only bring efficiency, but I can also bring in scale because I work with 500 people like you. So, our benefit to the hospital is that we are the new age franchise model that you want to go for. So, you partner with us and we can then make sure that
00:45:05
Speaker
Your economics are sorted. And for the patients, this becomes the brand that they can trust. I'll go back to those three pillars, clinically, go to clinical outcomes, which comes by virtue of us being very, very careful about who we work with. Pricing, we put in a fixed price package wherever possible. So one of the features of our product is if you come to us, you want to get a surgery done, we will give you a price that is fixed. That price does not change, irrespective of the number of days of staying in the hospital or some extra work that has happened.
00:45:35
Speaker
And lastly, we are putting in our own counseling layer. We are putting in our own technology. We'll ensure you get your documents on WhatsApp. You can do a follow-up instead of going to the doctor to visit again. There is a counselor who answers all your questions. We'll ensure that the doctor is more receptive to the question than they usually are. All of that adds up into a meaningful experience.
00:45:58
Speaker
Tell me about the first hospital you outroted. What all did you do for them? One of the other learnings we had from some JFO was what works in Bangalore doesn't work elsewhere. We wanted to be sure that we are building business networks. We are in the entirety of India or at least a good part of it, since there's three or four metros. So we went to Chandigarh to start. Why is that? Because that felt like a market that was a good mix of
00:46:28
Speaker
modern healthcare and modern city with very traditional thinking. Chandigarh doesn't have a lot of migrant population. People who live there have been living there for a while. In most magnitudes, they will have at least a GP that they will go to, so they will know where to go. And that is what most of India looks like. And like a Bangalore where
00:46:49
Speaker
Most of the population has only been here for the last five years. So I don't know who a good doctor in Bangalore is, but if I were living in Chandigarh, I would not have a good idea. So we said let's test ourselves in a market that is exactly opposite. And if it works there, then obviously it works in Bangalore as well. And then what helped was that current spirits were in Chandigarh. So among all the tier two-ish places that we could have chosen, Chandigarh was the one that we did because
00:47:14
Speaker
We would get meetings with hospitals because of his father. But father was running the hospital himself. He was running the hospital himself. You didn't want to take that up as your first hospital? No. It felt like a bit of a conflict of your own. But because of him, we did have at least a connect with him.
00:47:34
Speaker
a bunch of other hospitals. But that is all we got. We got connects, right? So you tell them that people are going to come and meet you. And then we would wait for hours outside the doctor's cabin. I remember the first few meetings, very clearly, they would all laugh at her face. They were like, coming from Bangalore, and you'd bring in a metric.
00:47:57
Speaker
There is no way you can write a single version for me. I mean, we were obviously, we also didn't know, right? So we were like, well, what did you say? We might be right, but give us a chance. And I think what worked for us back then and what works for us today also is that ours has always been a performance based partner. So as a hospital, you pay us only if it is available, otherwise you don't. And it's not that we come in and ask you to revamp
00:48:21
Speaker
We don't ask you to retain your revenue shares. You take a revenue. Exactly. So it's not even an uptrend marketing. It's not that I'm convincing them to go and put money on a Google ad and then you'll get a funnel and you'll be able to make money out of it. I'm saying I'll do all of that. If I get you a patient, you give me at certain percentage. So that is what
00:48:43
Speaker
God has named, right? They said, you know, I don't think you can do anything. But, I don't know, you have to try it out. And our foundations were just, were simple. We wanted a counselor from RN to be in the hospital. We call them the IMITRA. We still have them. They are the bridge between the hospital and our patients. And they ensure that the patient is treated well enough. The second was we wanted some control on pricing, which again, because we were getting the patient in the hospital was fine. And that's about it.
00:49:12
Speaker
And we have wanted some co-branding, but nobody gave it. And I said, get some patients and then we worry about it.
00:49:20
Speaker
So we had a very rudimentary website, we got started and we were then able to actually start arriving these patients. And I remember even in the first few patients, there was always this doubt that the doctor will have, this guy might have come for my name. But then as the scale went up, they realized and the patient would also tell them, I looked up online, these guys were very clear on where I should go, they helped me understand.
00:49:43
Speaker
So gradually we started building that equity and that is what then opened the doors for us to do a lot of the other things that we do in the hospitals, where there is some effort needed from the hospital. If they want us to process their insurance names, there is some effort that we need to put in. So all of that then eventually came in. But yeah, the first few hospitals were all highly skeptical. And you opened the hospitals in Chaddigarh, like you wanted to cover the cities.
00:50:10
Speaker
I think we had about five hospitals and we started. And the idea was that we wanted to have a good coverage of all specialties, which is how we didn't think of our network. So we either want, you know, all specialties to be covered reasonably well, we want at least three or four specialists. And secondly, we also wanted options in
00:50:29
Speaker
You know, all geographies. Chandigarh is also a fairly large city geography. So, you have a Panchkula, Chandigarh, even Mali. So, just one or two hospitals in Kaur Chandigarh are not good enough to serve the entire region. So, we had, in the first, we had a hospital in Mali, we had, I think, two in Chandigarh, one in Panchkula to begin with.
00:50:49
Speaker
And then gradually we added on a little bit more. Okay, interesting. You said you give patients a fixed price, which means you are now taking on that risk that it may cost more than what you are promising the patient. How did you figure out pricing?
00:51:07
Speaker
Yeah, so I think what worked for us and partly why we went ahead with this approach was that the hospitals were already used to this with the insurers. If you want to look at an agreement that a hospital has same with someone like an ICIC longboard, there is a fixed price. ICIC will say for this procedure, I'll pay you 70,000 rupees. Now the hospital by trying will move and then get the patient to pay it, but ICIC is not want to pay more than that. So they were used to this as a concept.
00:51:36
Speaker
And what we did was, we said we won't want to necessarily say what the price is, at least have them. Today, we have a view on that as well. But at that point, we said we will not tell you that the price should be 80K and not like that. But the moment we finalize one lakh.
00:51:51
Speaker
It can't change after that. And the problem in the hospital is that they will tell you a nag and say, he can't take a nag. But then at the time of discharging and say, you know, I had an experience, I had like this for as long back. You're getting out and then, oh, we had to use this extra medicine. There was this extra dogs that had to get you in consumables. They only added up what options to have to pay.
00:52:16
Speaker
So, we wanted to avoid that. So, we even showed that all our patients were offered this package and that was one thing that then the patients also liked and appreciated. Okay. So, again, tell me that journey. What was your work when you had these five hospitals? It started in then COVID happened, right? 2019 was your work? Not IDM start.
00:52:35
Speaker
2019, December is when we went live. We had one practical proposal for 2020, so we were barely getting started and then the lockdown happened and I remember we scraped well to put together a teleconcentred product in three days. That is when the teleconcentration guidelines came out, so the doctors were also then sort of, okay, we're doing that. So first thing we did was some teleconsults and that's it.
00:52:58
Speaker
Yeah, because we're not doing any other procedure except for handling COVID cases. So, therefore, you could not. We can't even have COVID cases. So, if you remember the first wave, even the hospitals are empty, there was nothing happened. In the way everyone had COVID cases, first case there was nothing, only emergency was being taken care of.
00:53:18
Speaker
We had no way to, nobody would call us again. We had zero revenue at that point. What we had was these people who were doing teleconself and it was a pipeline getting built up for whenever the log gets lifted and we saw some of them come back and get procedures done. But that was about it. But the good part about it was that we had just gotten started. So we had a few initial learning. And usually what happens is as you get that initial bit, you start scaling up and
00:53:47
Speaker
You don't always get your house in order, right? So we got that opportunity to say, okay, you know, we started with this thesis, at least a few things behave differently. Now we have these two months, we started working on our product, we got a very good back end, CRM and like a few of those standard systems built. So then at least when the lockdown board lifted, we were ready from a broader standpoint. You never have the luxury of when you start off.
00:54:14
Speaker
But yeah, so it got lifted. And then I think we started seeing a pretty good response. And then what happened was, we noticed that
00:54:23
Speaker
Our superpower was that once we got a patient to a hospital, they'll convert over there. And that is what the doctors and hospitals also noticed because the experience was just so good, right? So they will feel that all of these things together were, but so they could trust it so much that these patients who had no idea of IU Health and we were like very small, we had no ADL, like there was no presence at all. But they would come in and see these hospitals, they would come in and see the service and they would then start converting.
00:54:49
Speaker
The conversion happened because of the Ayubitra, like you had that Ayubitra there. So the regular hospital experiences, you have to wait a lot and you have to go from room to counter to room to counter with no, no one to really guide you. Whereas here, there is an Ayubitra who's like doing more handholding than the regular experience.
00:55:09
Speaker
Yes, that was one of the big reasons. The others were the pricing being transparent and the people were able to get on that. I think the other part that we realized after we started working was the
00:55:23
Speaker
benefit of a network. We would see a lot of patients would come in with these insurance plans that might not get accepted in one hospital, but then we'll always find a hospital in the network which can accept that. And that was always a strong value add. So we raised more money. So we had raised a seed round before we started.
00:55:40
Speaker
and then we raised a series A. I think about 1.3 billion was your seed and then series A was about 6 million, 6 odd million. Correct. Yes, 6 odd million. So we raised that in late 2020 and then we got to Bangalore.
00:55:58
Speaker
And then Bangalore was obviously easier. We always knew it was going to be easier. It's obviously in other cities, so people were more professional. It was easier for us to get them to agree to our town. It was easier for us to get them to treat the patients in a better fashion. What was not as easy was generating demand because this was also more competitive. This is where
00:56:18
Speaker
Everyone else is spending money online, including the hospitals and the larger teams. If you go and search for a knee replacement in Bangalore, you will see everyone running. A doctor could be a hospital, it will be in a photo. So that part was more challenging. 2021 is when we raised that fundamental round. 27 billion. Yeah, 27 billion. So this was like,
00:56:45
Speaker
Properly large money. And then we got into NCR. What kind of GMV were you doing by that time or revenue wise? By end of 2021, we were doing about three crores of procedure values. So in our business,
00:57:06
Speaker
There is also a lot more GMBs. There could be diagnostics on top. There could be consultation in GTV. There could be GTV of insurance might be processed. There could be some lending that we might have enabled. But the core demand in GTV was about to get older at that point.
00:57:28
Speaker
So we raised that down and we launched NCR and Jaipur, and eventually Hyderabad has been. So now we are in five regions. We work with about 130 hospitals. And the focus now is to sort of continue to go deeper in these markets. I think the good thing for us has been that we've seen that we are able to drive a lot of depth in each of the markets. And with hospitals that we work, any major hospital will drive 15%, 20% of their
00:57:55
Speaker
overall top line. So today, if these five was markets, it's then we see the ability to grow another 45X from where we are. We are already now at about a 5X of where we were last year, when we raised and we had another 45X by the end of 5X. We made these five markets.
00:58:16
Speaker
Amazing. So was this $27 million round like an opportunistic release, like the market was hot? Because you had just raised $6 million. I was assuming you would not have needed funds so soon. Partly, yes. I mean, so the $6 million was raised about a year back, right? Like we raised that in December 2020, and we only announced it in 2021. So actually, I think what concludes with people is that when you look at at least the
00:58:43
Speaker
when we talk about the, the series and then suddenly there's talk of, of TV, but the rounds are actually
00:58:50
Speaker
almost 12 months separated from each other. That's it. When we raised, we still had the money. So it was not that we wanted the money then or we had to go and raise them. But one of the things that you learn also when you've been a founder for a long time is A, you want to be fundraising at all points and ideally optimize for not just the time, but also the quality of the investor.
00:59:15
Speaker
If someone had been talking to for the last more than a year, they started talking to us before we raised our series. And they were very clear that they would not do the series, but they were still talking to us. And they built that conviction on the business over that one year. We built conviction on them.
00:59:32
Speaker
I think when they eventually did come to us and told us that they wanted to put money, it felt like a good time. And then we also added on a little bit. I think what was opportunistic was we went out to raise about 20 million. We ended up raising almost 27 million of debt. And that ad nation was a little bit opportunistic, right? So there was strong demand. Obviously the market was very good at that point.
00:59:59
Speaker
back with the mind. We also know how long this thing goes on. The money is coming in on decent terms. When it's available rather than to be hunting. Absolutely. As long as it's coming from people that you like. I think what we've been very lucky with at IU is if I talk about one of our investors,
01:00:23
Speaker
starting from standardized vertex, fundamental mind, you know, some of the other newer ministers that have come in has been their own very aligned
01:00:32
Speaker
with the way we want to build this business. And I don't mean it in a way that they agree with whatever I want to do. We do disagree a lot. But, you know, they are aligned with the fact that we want to ensure that the quality always remains. We are okay to not do a 10X year on here. We'll do a high index 4X, but we'll do it in a sustainable fashion. Long before the market came, I remember our board had been telling us
01:00:54
Speaker
You should not try and burn this all in a year, there's no point. Back then, not as... Not a popular opinion. I don't know the popular opinion at all. Everyone was looking elsewhere and saying, oh, look, this guy is more money, this guy is more money. Amazing. But what do you need money for? What do you need to burn on? What are the things? Because you're asset light, so compared to Zephyr, where you actually had to take those warehouses and do all of that work, here you don't need to...
01:01:22
Speaker
I mean here it's pure rev share, no asset investment. So what do you need to spread them? So one is marketing. And like Zeffo, at least in IU for a while, we were not making money on the unit. We still had to go out of here to convince people on why they should trust IU. So our acquisition costs were higher than the revenue that we made. And that is no longer the case.
01:01:45
Speaker
There's also more competition for those same customers, right? Because like when I'm searching for some issue, I will probably also see a practice for the doctors and like the Apollo and Fortis also. And then Pristine Care is also like a competition, right?
01:02:04
Speaker
Yeah, no, so there definitely is more competition, no doubt. So that does play a role. But I guess it's just that there is an upfront investment into some of these things. So for example, just the way the funnel behaves. Today, you spend money to acquire a potential patient who will get a consultation done today.
01:02:26
Speaker
the decision on whether they need a surgery might take some time. So people take the wrong time to decide. So that funnel takes some time. I think your cost is put up. And then we, we do invest a decent amount of money in brand buildings. So, you know, ETL holdings and all of those things. So there is a definitely a marketing investment.
01:02:54
Speaker
Brand building at the hospital provides like putting up your holding there are also like in general, like more hyper-local approaches to put up holdings in that area. So, I mean, the holdings are cheap, right? The holding at the hospital is cheap. You just have to put your own branding. But doing the rest of it is costly. So, that is what
01:03:20
Speaker
has taken some money. And obviously then there is a team. The leader team is staffed today to start for a much larger business. So what at least we've been focusing on is that the majority should start becoming profitable. Today, Chandigarh is already there. Naglo, which is our second market, will turn cash flow positive in six months. It's not just contribution, but cash flow positive.
01:03:42
Speaker
The way we look at our model is you start a CPE, you put in a lot of cost of rent, both in terms of people, in terms of your brand building efforts, but then over time you start reaping the benefits of that. Mignon and Bangalore, almost 20% of our patients come through our word of mouth theft.
01:03:58
Speaker
Oh, that has been bringing down the taxing of when we just like, you know, make money on the unit and make money at the second. So what is the funnel like for a patient, there'll be an inquiry, they'll fill up a form that what happens. So they will discover this online, or they will discover this through an offline partner who will, you know, who will refer them to IU Health.
01:04:19
Speaker
this could be a diagnostic lab, this could be a chemist, this could be a GP, everyone in the healthcare ecosystem essentially. And they get some referral bonus. They get some referral bonus. For example, we might work with a chemist where we give them a certain loan for every lead that comes to us. Like that's an example. Now, once a patient
01:04:40
Speaker
reaches out to us, they'll talk to our team who will help and will try and understand what is it that they need help with. A lot of patients that we speak with actually have no idea who they should go and meet. The classic case is, I have test beam, this must be gas, I want to meet a guest to find the largest. It ends up being a cardio case more often.
01:05:01
Speaker
So the team will do, you know, basic understanding of what that issue is and who they should go and meet. And then they'll fix up and also understand where the patient wants to go. So in terms of where they are based, but also if they have an insurance plan, then in what hospital in our network does it get accepted. And then sometimes the patient also wants to know which doctor is there. The doctor might be specialized in one thing or the other. So they'll fix up an appointment.
01:05:28
Speaker
So this team is like an inside-scene team? It's like an inside-scene team, yes. And their sole focus is to drive an appointment. Like this team has to get patients to come and visit our doctors. Now once a patient visits our doctor, that's where the eye urethra at the hospital takes over.
01:05:47
Speaker
They'll need the doctor. The doctor might give a decision immediately or the doctor might suggest a few diagnostics that need to be done and then make a decision happen. In case it's diagnostics, they also get support from us in getting those done. And then they can maybe do a tele-consult later.
01:06:04
Speaker
Just talk to the doctor because the doctor doesn't need to see them in person again. About 30 odd percent of patients that come to us get recommended a surgery. And then we are very careful about this number. So for us, any hospital or doctor that does more than 50 percent, they don't incinerate, lag in our clinical team.
01:06:21
Speaker
I don't want to be recommending too many surgeries. That's the usual abuse that tends to happen. And that is an instant trust. I as a patient, go to IU Health, I don't know, get a surgery, otherwise it's going to be something, something, something. Then I go to another doctor, he says, no, it's just time for medicine. It will be fine. It instantly kills all the trust.
01:06:42
Speaker
So very careful about that. And that's a complete doctor decision. So there's no incentive or any influence on the team as well. And once the surgery is recommended, that's when then the rhamitras will try and understand what the patient wants and convert them into getting the procedure done.
01:07:00
Speaker
Okay. Okay. Okay. Yeah. And then post-op, again, we will sort of be around to help. So, you know, at the time of hospitalization, you need help with insurance processing, bunch of other things. Post-discharge also, you know, there are follow-ups that happen. If they need an appointment, then you set up like a follow-up appointment and all that. Yeah. That'll happen. So they can do it on the app. They can do it on our WhatsApp channel. Usually, they'll call up the IMS rather than strike a good number with those things.
01:07:27
Speaker
So what's the tone of tech in this? One part of tech is of course lead gen, where you would have like that whole lead gen process, you would have made digitization there. What else is there? So tech is the main in the middle of the business. There's a lot of moving parts across the business. So, you know, I like to compare this with say e-commerce where again,
01:07:50
Speaker
you know, when a flip card, they're essentially getting an order, picking a product from the mail. But what holds it all together ensures that there is predictability on the SNAs, there is, you know, visibility on what's happening. The same is true here as well. So, you know, when you call us, for example, and the insights here talks to you, there is a very strong recommendation in the back that helps the agent understand who
01:08:15
Speaker
the patient should go and visit. It's something as basic as just asking the patient for their location and then instantly showing hospitals and I was the nearest and you know what is the distance. It's a very very simple thing but then it could be something as complicated as asking five questions from patients and then throwing up recommendations based on those five references. So there's a strong recommendation aspect.
01:08:39
Speaker
Once they are in the hospital, we spoke about how the iOmitra plays a very important role. Our invention vision is that a lot of what the iOmitra does is something that product takes care of.
01:08:48
Speaker
Today, Ayyumitra is the one person I can ask any question I want. Increasingly, a lot of those questions are moving on product. Ayyumitra is a person who will help me get insurance processed. We're not building a product where we're trying to integrate with all the insurers so that when you go into a hospital that we run through us, instead of taking five hours for an approval to come, it takes half an hour.
01:09:13
Speaker
So that's where you process the claim on there we have because you will get the... The claim on there we have, we help the hospital internally directly to ensure that we will build in efficiencies there. So that is what plays a role in each of these steps and keeps it all together and keeps ensuring that the quantity of the service at each point gets better. So is there an app for patients also? There is an app for patients, yes. What does that do for them? How does it help them?
01:09:42
Speaker
So it's that will allow them to browse hospitals and allow them to search for specific elements, specific strategies. And then it also gets customized a bit based on where the patient is in the journey. So if a patient
IU Health App and Patient Experience
01:09:57
Speaker
has already seen a doctor, they've recommended a procedure, then the app will also throw up certain recommendations.
01:10:02
Speaker
you know, what the patient might want to read about, for example, like say, I go into a hospital, and I've been recommended a surgery, but I'm just very wary of getting a surgery. That's it. Right. So what the app shows me is testimonials. It shows me a video talking about how simple this procedure is.
01:10:23
Speaker
Whereas when you go in, your concern is price, let's say. Then the staff will talk about, oh, you can get financing done. Here are five other options of other hospitals in the network where you might get a better price. So each sort of customizes the flow a little bit based on what the patient might. What about patient health records? Is that on your roadmap?
01:10:47
Speaker
Yeah, so today we do that in a very rudimentary way. The document gets scanned or if it's already electronic, then we pick it up and put it into the patient's health record that's accessible on the app. But there's obviously a lot more that could be done. I think that's one area where
01:11:08
Speaker
It will only really take off once the government mandates those things. Today, the doctors are just very comfortable writing something on a piece of paper and even have tried a lot to convert that text into. So we have a new realistic about what we can do over there. But that said, I think that is the next level. And at some point it is going to happen with all the digital focus.
01:11:31
Speaker
So what are your wild ambitions about IU Health, stuff that you want to see it achieve maybe in a 10 years span? What's the long enough vision? See, I think there are two things over there. One is you can look at Apollo. I think that's the company I get really inspired by within healthcare. Like Apollo, Spain probably
01:11:55
Speaker
a few decades, building a brand that stood for high quality healthcare. That is all that they did. They were running high quality hospitals, great outcomes. They are the pioneers. Every new technology will come to Apollo for the first time.
01:12:08
Speaker
And now they go to a point where Apollo as a name is synonymous with trust in healthcare. Now when they do Linux, which are your franchise, or diagnostics, or initial implant. Yeah. It's all something that the patient trusts. That's one bit of where we want to be, right? Like we want IDNEY, we want IU Health to become a name that's in the IDNEY where
01:12:33
Speaker
You know, the name stands for trust, which is why we don't focus on... We never say we are the most affordable option. The focus is just that we are the most trusted healthcare platform that you should go to. And then eventually, once I have that trust, then I can do a bunch of other things leveraging that trust. Obviously, I have to continue to maintain that trust, but it's a lot easier. Versus someone who stands for affordability trying to do that.
01:13:00
Speaker
So, it's always a bit of a challenge for people to come from that side and do the other. And the other bit is, which is the wild ambition, right? Eventually, our vision of I event is that this becomes
01:13:13
Speaker
not just a hospital network. It becomes a, you know, the on-compassing health care plan that you go for. So the way I see it is a patient should subscribe to an IU Health plan, right? That includes a certain cover on inpatient, on consultations, on diagnostics, on pharmacy. And I just have this
01:13:36
Speaker
Let's trust my events, whatever I need, I'll go to an IU health hospital and I'll be taken care of. Amazing. So you would want to go and set light in all of these or would you want to, for example, acquire an e-pharmacy, acquire a diagnostics company and build out all parts of this full stack? Yeah. I don't know yet. I think I'll tell you the approach that need be driven by is we will do what's scalable.
01:14:02
Speaker
But at the same point, the primary driver will be what allows us to retain this trust. No, because something like diagnostics, you could just do like what Healthians does, you know, where you have like an aggregating labs.
01:14:22
Speaker
That's one approach, right? The other is what you see someone like an orange health has taken, where they think they own everything, but they will give you a very fast service. My sense is, and again, I might be wrong here, but my sense is that the main thing in that speech is also building some comfort with the quality of the test. I have spoken to a lot of patients who don't trust a lot of these newer platforms, because they're saying, I don't know if the test will be accurate.
Discussion on Trust and Market Comparisons
01:14:46
Speaker
No, actually, I have no idea. I don't understand this, so I don't know if getting that test accurate is a big deal or not, but it is the big deal in the minds of the patients. It's again a pharmacy by the Thirocare. You can see the rationale behind it because the pharmacy doesn't carry that trust, but the Thirocare does. Right. Interesting. So Jan, the immediate competitor is Pristine Kale. What is the difference between the two of you? I would say they are not an immediate competitor. They are actually a very, very different business.
01:15:14
Speaker
So first of all, the overlap on the kind of surgeries we do is hardly 10%. They are exclusively focused on taking care.
01:15:25
Speaker
procedures like kidney stones or any opines, which are all sub 50k procedures, many commoditized, you know, people are usually shopping for the best price. On us, that's 10% of what we do. Our focus is more tertiary care or medical management, right? So for us, cardiology is the largest category. ICU admissions is very large. Things like dingo or COVID when it was around was large.
01:15:51
Speaker
So in terms of demand, we are not going out in the same sort of patients in most cases. And in terms of supply also, our models are very different. Christine's model is that they will have their own doctor seeing the patient in a clinic that Christine runs. And they will then take the patient to a hospital
Revenue Streams and Competitors
01:16:08
Speaker
where the hospital has spare capacity and, you know, they get paid something to use that capacity. Our model is that we will go and partner with that hospital. And we are, we have been as strategically more important partner because I'm not saying that I'm going to take 80% and give you 20.
01:16:26
Speaker
We are the way to improve their business. And then the way we are positioned to the patients also is that we are a hospital gene or a hospital network. So very different business in that sense. And then a lot of our revenue now comes from a bunch of these value added services where we will enable insurance processing for our hospitals. We will enable them to buy drugs in a better fashion. We will enable them to lend to their patients, which might not even be brought by us. These are patients who want them to the hospital, but they need financing.
01:16:54
Speaker
That is now about 31% of our revenue and continue to grow. So someone like Apollo, Fortis and maybe like if you take a step below, right? Because that's again, a very premium audience. We also probably won't serve that today, but our audience is then going to a Spanish, right? Or they are going into a hospital that has say two branches in Bangalore.
01:17:16
Speaker
So those are our large competitors on the demand side. On the supply side, the competition is more say the traditional franchisees or there is this O&M model in healthcare where you will have someone come in and run the hospital for you.
01:17:30
Speaker
Whereas what we are saying is that you want you to run it, but we'll make it very easy for you. We'll give you the operating system and you can run the hospital on with minimum ID. What do you want? Say like a Fortis, right? I've seen a lot of. Yeah. Yeah. So they will take on the hospital. They will, it's like a Marriott, right? Like someone else owns the hotel, but then Marriott comes in and runs it. Okay.
01:17:54
Speaker
Lending is interesting. You have like a FinTech product now where you have NBFCs who are letting out at you helping at the writing and all of that. How does lending work for you?
01:18:06
Speaker
Yeah. So today we don't underwrite ourselves. We will work with FinTech partners who will do the underwriting. We sort of are the bridge between the hospital and the lenders. And then in some cases we will do part of the underwriting because say we might be processing that insurance and we know what the amount is that is likely to be accepted by the insurers.
Partnerships and Future Expansion Plans
01:18:29
Speaker
Eventually we might want to become a lender and that's the plan somewhere down the line.
01:18:35
Speaker
So, you're working with NBFCs or with FedEx who further have their own network of NBFCs? Right now with FedEx. Okay, got it. Because NBFCs won't directly lend to...
01:18:48
Speaker
two patients, unless they're very credit worthy, which gives them anyways, get alone on that red card or through the profile that needs lending is the one that is today catered to by my friend takes, or they will have to then come in and do, uh, put in their own, uh, underwriting and, and do that job of a print deck. Um, but there's a regulatory angle to it, which you have not yet explored. So we are not technically an authorized. So we don't need someone else to come and do that for us. Okay. Okay. Got it.
01:19:16
Speaker
So you have like a procurement portal for hospitals where they can order their regular supplies. Like in a way, like a mobility is not technically. That's part of the vision. So the vision is that.
01:19:32
Speaker
We're not a platform, right? We are essentially the buyer representing the hospital. Like if you look at all of these large things, they have these centralized buying units. When Apollo will have a CBU that will go and negotiate, but at least the 80% of drugs for each hospital in the internet. So what they do is they'll go to the brand and say, look, I'm going to buy
01:19:53
Speaker
this amount of this drug, what is the best price that you can give me? And today, the problem for a small hospital is that they can't charge as much of the patient as an Apollo. And the cost of consumables cost of drugs is actually 30, 40% higher than the larger. So they're getting, you know, it's a double army for them. We're saying we'll go and resolve that. So we will not become a distributor ourselves, which is say what a pharmacy or at least pharmacy's parent entity or a magna magd or, you know, some of these guys will be.
01:20:20
Speaker
So we would rather align a price directly with the brand or a large distributor and we will get you access to good quality of service through a good distributor and good prices through our direct relationship with the brands. That's the next module over there. Okay, so hospitals on your network can log in and place their orders and those orders are directly fulfilled by the manufacturer or the suppliers. Yeah, suppliers, the approved suppliers of the manufacturers.
01:20:48
Speaker
Right. And those prices are negotiated by you. So hospitals are getting access. So it will always be a better price than what the hospital gets on their own. Yeah, because of collective buying happening here. Connected by. Okay. Very interesting. Okay. So, you know, do you see yourself raising more funds in the next two, three years or what is your path to profitability like?
01:21:15
Speaker
So as I said, we will be profitable in our core markets very soon. Chandigarh is already there.
Profitability and Fundraising Goals
01:21:20
Speaker
We will be profitable in Bangalore, middle of this year. We should ideally get close to profitability in some of the other markets also very soon. So we are not looking to raise right now. But we will mostly want to raise, say, by the end of this year. Because I think that will be a good time for us to launch more cities. Today, we are very razor focused on doing more within the existing markets. So we will want to launch more cities, which will require some capital.
01:21:43
Speaker
And then we also want to start building up on some of our other products. So I talked about insurance processing, procurement. And a lot of these are fairly large independent businesses in their own right. And they require that sort of an effort. Today we are sort of copping them together. So you've talked about procurement, portal and all that. It's not really a portal today, right?
01:22:02
Speaker
how you typically hack it as an early startup. So these are all very early stage businesses among what is probably like a mid-stage business. But at some point we want to start giving them a lot more ammunition. And some of these will serve not just our network. For example, on internal processing, we serve people outside of our network as well.
01:22:24
Speaker
How do you monetize insurance? Hospital pays? The problem for the hospital is that the insurance desk is not always very well run. So they will not get paid on time by the insurers and they'll also not get paid in full. It could be a 5, 10, 15% disalliance. So what we're telling them is that instead of filing the name directly with the insurer, you file it.
01:22:47
Speaker
on our system. We will have the ability to process that name in a manner where you are getting paid faster. So, you know, initially it was manual intelligence. Now we are sort of prioritizing some of it. You can make sure the things are crossed basically. Exactly. Exactly.
01:23:06
Speaker
And then we also then want to go and talk to insurers and do something similar to what we're doing in procurement, right? Where we tell the insurers and look, they're giving you these hospitals, they want to ensure that there is minimal abuse, there's minimal fraud. But in exchange, you give some preferential terms to these hospitals. You treat them like you would treat a larger hospital where you don't worry about things like fraud.
01:23:27
Speaker
I mean, preferential term, what is that translated to? Like, quicker payment. That will translate into better prices. It'll translate into faster payouts. It'll translate into lesser queries. So, you know, like, for example, how an insurer will work with a holder or a manipulator is that the default is that the name is legit.
01:23:44
Speaker
The exception is that there is some abuse.
Conclusion and Listener Engagement
01:23:47
Speaker
The smaller hospital is the other way around. Unfortunately, that also happens because there is also a lot of fraud that generally happens in small hospitals. What we are trying to tell the insurance is that we are putting in that layer. We will check for all of those things. Maybe we will underwrite that risk. But then you trade them like you would trade in Apollo. You ensure you would pay them quickly. Then you can choose to audit five out of the hundred cases and if you find any discrepancy, we will come back and we will resolve or we will bear the risk on that.
01:24:13
Speaker
Amazing. Amazing. Is there something I should have asked you? No, I think we covered pretty much everything. We know chat. And that brings us to the end of this conversation. I want to ask you for a favor now. Did you like listening to the show? I'd love to hear your feedback about it. Do you have your own startup ideas? I'd love to hear them.
01:24:32
Speaker
Do you have questions for any of the guests that you heard about in the show? I'd love to get your questions and pass them on to the guests. Write to me at ad at the podium.in. That's ad at t-h-e-p-o-d-i-u-m.in.