William Leonard
Ladies and gentlemen welcome back to the Atlanta Startup Podcast. I’m William Leonard, your host, and investor here at Valor Ventures, a leading seed-stage venture capital firm in Atlanta, Georgia. Today, I’m really excited to sit down with Ryan Jones, co-founder, and CEO of Florence Healthcare. Ryan, thanks for joining me today.
Ryan Jones
William, I’m so excited to be here. Thanks for having us and thinking of us. Of course, of course,
William Leonard
Definitely wanted to start off by saying congratulations on being placed on the Inc 5000 list again this year as being part of some of the fastest-growing private companies in the country. How does that feel to be on that list, man?
Ryan Jones
I guess we’re a seven-year overnight success. When we started this business, it was just three and then five of us for a long time trying to make a dent in how healthcare gets delivered in the market. I don’t think we ever anticipated growing as fast as we’d been able to and being able to help as much as we’ve been able to help over the last couple of years. It feels pretty good. Because as any entrepreneur knows, his first couple years are a lot of sweat and a lot of uncertainty. It feels great.
William Leonard
That’s awesome, Ryan. Talk to us a little bit more about the origins of the company. When did this idea first hit you and the other co-founders? How did you execute an idea starting out?
Ryan Jones
Florence is a software tool that helps advance cures for disease. Our aim is to help, as many research teams in the clinical drug trial process, in fact, help more research teams than any other technology in history. We’re about halfway to that goal. We’re sort of even with a lot of the dominant technologies that have been around for decades after only about five years in the market. If we just continue our growth right now, we’ll be able to secure that in the next 24 months or so. But in a nutshell, that technology connects the doctors that are at hospitals and clinics all around the world that are administering experimental medications to patients. It helps them automate some of the paperwork that’s required for doing that as mandated by the FDA or the EMA, or the UK Medicines Agency. And in doing so, we let those doctors spend more time thinking about the trial and spend more time with patients and ultimately make the trial run faster. It’s been an amazing journey to do that because we’ve focused primarily just on what are the tasks that those doctors and nurses have to do, that take them away from being in front of the patient. And then we’ve had a heck of a ride because we took that kernel of an idea. We were able to build a business building software applications that did that for hospitals around the world. We did that for about three years and by the time we looked up, we had about one out of every three hospital systems that were running clinical trials using us for some of their work, and that was pretty satisfying. And then COVID hit. When COVID hit the traditional way of connecting those physician teams back with Pfizers, the Novartis, the Medtronics of the world was people paper and airplanes by actually carding back scanned copies of documents that how the trial was running at that hospital system. When COVID hit that ground to a halt, we were able to tie together our network of clinic customers and of hospital customers into a digital network that allowed the Pfizers and the Novartis of the world to do that stuff remotely and to collect that data remotely. Before we knew it, we were the system of record for the Novartis, for the Janssen study, for the AZ study, for the Pfizer study, and we’ve been able to help in a much more meaningful way ever since.
William Leonard
That’s a really interesting origin story there. You mentioned you are aiming to really increase the time that the doctor is spending with the patient or the researcher is spending on a trial now. Thinking back to 2014, or when you first got this idea, how long did it take to manually handle that paperwork and think about the hospitals on an individual level? How many hours per year or per week or per month were doctors spending away from the patients doing these manual tasks? And now that Florence is in their life, what are some of the time savings that they’re seeing now that this is done digitally and remotely?
Ryan Jones
If you think about the physician themselves, it’s about a third of their time is spent doing these tasks. If you think about the team that supports them, it’s about 80% of the time that that team spends in a given week. We cut that time just about in half. If you think about applying that metric across the nurses and the administrators that work with them, they get about half their time back, the doctors get about 20% of their time back. All of a sudden, it’s like you’re creating brand new research teams that didn’t exist before. Brand new research teams that can make progress against cancer, against Crohn’s and Colitis, against the Coronavirus, against blood disorders like Sickle cell, against conditions that teams didn’t have the time to double down on rare diseases. For example, before we worked with a consortium of research physicians called SWOG, Southwest Oncology Group. They are connected with some of the most advanced research hospitals in the world and coming up with new treatments for cancer. They estimated that over the last three years, the studies that were on their network gave back 14 million years of life to cancer patients, that without those cures would have died much earlier across hundreds of thousands of cancer patients. They got decades of years back in their life. We weren’t directly responsible for all 14 million years. But we helped bring to market some cures that contributed to that awesome total. Those are extra birthdays, those are extra time with family, those are extra, sometimes, several years and sometimes decades of life, that new cures for cancer give back to these people. It’s a pretty cool thing to be a small part of.
William Leonard
Personally, I’ve lost some family members to cancer. You think about that number, you just said 14 million years. That is remarkable. You all weren’t responsible for all of it but certainly played a large part in really extending and bringing hope to a lot of people. That’s really interesting there. You’re bringing this enhanced level of efficiency to physician workflows and researcher workflows now but how do you think about the competitive landscape in this space? How do you think about Florence Healthcare’s strategy, your company philosophy, and how it’s differentiated from other players in this space?
Ryan Jones
That’s the most fun part. Moving away from healthcare and just talking about entrepreneurship. For a second, that is the most fun part of my job. Right now, we found product-market fit, which was hard as hell. It took us about two years to find product-market fit and start getting repeatable sales and pivot from finding that initial fit to scaling the business. Now that the business is scaling nicely, there are two new challenges. What do we want to be next? How do we win competitively? How do we fulfill the destiny that we plan for ourselves several years ago? In order to sandwich what’s going on in our marketplace, you start at the beginning. The story is similar to lots of software businesses. You have some really smart people in your audience that have an interest in investing and entrepreneurship. This tale is not different than how software penetrates a lot of other markets. The first thing is, the software first enters a marketplace like clinical research because it follows the money. There are two categories of software that existed because it follows the money. One was a clinical trial management system at the hospital because they need to figure out how when a patient came in and took experimental medication from Pfizer, like how did the hospital get paid for that for running the trial? And so clump trial management systems figured that out. They sat alongside electronic medical record systems which also were invented to track money. When you and I go visit the doctor, that was the first reason EMRs existed. It wasn’t to create some exemplary record about your health condition. It was really to make sure the doctor got paid. The other thing that another way of following the money in the first chapter both of software and clinical research was on the pharma side. Pharma collects a bunch of data and runs a bunch of processes in order to get the trial done. A lot of these cases are seven-year cycles, from animal testing of new cancer therapy, let’s say all the way till it becomes commercially available on a standard of care for cancer is about seven years. And so there’s a ton of data and processes. The pharmas have big readily available checkbooks, and most of the software investment went into the pharma side. Then we came on the scene and around 2015. The only software on the hospital side was these management systems for getting paid and the only software to help with workflow and getting work done were being sold to the pharma companies to say it was easier for them to write the check. That left this vacancy out at hospitals that were running research studies, there was nothing helping the doctor and their team actually get the unglamorous work done, get all the paperwork done. That became our definition. We go where the work gets done, we help the team that’s slogging through those tasks when other companies that have come before us didn’t want to focus there. We had this blue ocean opportunity. Now that we’re 5-7 years into it, a lot of competitors are coming out of the woodwork. We were lucky that part of our strategy for filling that void was a lot of hand-holding and care of our hospital system customers. In many cases, this was only maybe the first or second time that those in hospital systems have bought software in that department. We had to have excellent customer service in order to help them make that leap. And luckily, that’s been a great competitive differentiator for us. It also helps that in this industry, it’s highly regulated. NAC they have to write standard operating procedures that name our software application. And so once you do that, the competitively the software comes really sticky. It’s tough to extract you because they’re building regulatory records around this thing that you built. Tough to get in, but then also really tough to get out.
William Leonard
Healthcare isn’t a one size fits all industry, right? There are so many different ways to find early product-market fit, especially as a software startup. But you’ve successfully navigated that process and we touched on the difficulties of it. Can you provide any practical, tangible insights and advice to some of our listeners who may be a pre-seed, seed-stage healthcare startup, really may be struggling to find product-market fit right now in the healthcare space? What are some practical ways that they can improve their chances of finding that product-market fit sooner rather than later?
Ryan Jones
I was lucky enough to be invited to do a talk at Georgia Tech here in Atlanta, I guess it was two years ago now. What I figured out is that there’s an XY chart. On the x-axis is smart And on the y-axis is time and repetition. The perfect startup as an entrepreneur, you’re really smart about what’s going on in the marketplace, and you know what to build. And the first thing you build has a product-market fit. And that’s good not only because it can help you grow fastest because you stumble upon this thing, but you also have to burn less cash figuring it out. If you’re down on the x-axis going across the horizontal and you guys spend a lot of time looking for the pattern recognition, you burn through more cash, you have to build the product or tweak the product a few times everything gets a little bit harder and more time goes under is longer until you find product-market fit and feel successful. You spend a lot more money on that journey. And it’s kind of a drag. I’m not a very smart entrepreneur. I’m just a determined entrepreneur. And so we spent a lot of time and talked to 275 customers before we wrote our first line of code. My partner, Andres Garcia and I and Mike Kassin, and Angela Nelms did before we wrote a line of code, and it’s hard to have that discipline, to live on ramen noodles and not try and raise a lot of money. It’s gonna take a while before you have enough success, where it’s responsible to raise a lot of money. I guess the only advice I have for folks that are pre-seed is to try and think about how many conversations you need to have before you recognize the pattern. For us, it was almost 300 conversations. And then try and plan out how you’re going to support yourself through those 300. I was lucky that my wife worked. She had a tolerance for me sort of living off her income during that year. The really successful entrepreneurs never raise money and can deal with that pain, and figure out a way to see the pattern in a vacuum without spending a bunch of capital. My advice is actually not to do that. My advice is to raise money at the right time because you’ll burn yourself out and it’ll stress out your home life, etc if you don’t have income coming in if you aren’t able to start paying for marking, staying in hotels that cost more than 100 bucks a night, all that wears you out. It is objectively the wrong move after a while because no one is superhuman. It starts to become unnatural. And you create all these weird dynamics with your family and your work and stuff. The key is to find that sweet spot where you’re burning and live and lean for just the right amount of time. And for us, that was about a year before we raised our first money, and that that fell about right. I think that’s my getting the right blend, of smarts to stay in lean and see the pattern enough, but not stretching out so long that it creates sort of an unnatural state.
William Leonard
At that early stage, when you’re fundraising for your business, is it more about finding the right investor? Or is it more about getting that capital to help get you to that next level of growth to that next milestone, as a pre-seed or seed company? What is the balance of thought there as a founder?
Ryan Jones
I’d love to hear your point of view on that. You may have seen that pattern more than me. But with my two cents, the pre-seed or your seed investors are believing in you as the human to be a problem solver and sort of figure out the pattern recognition. And I don’t believe that they actually bring other than the personal relationship and the trust, they’re not going to bring a lot of magic resources to your business, because you’re just figuring out and what you may need six months later, maybe different than in the first six months. So I think the personal relationship of your seed or pre-seed investors is the most important thing. Do they think the way you think generally speaking? Are you a good cultural match? And do you have trust? That was my observation, what have you seen?
William Leonard
I think it’s really finding a healthy balance of both, right? You’re looking for a lead investor, oftentimes for your round. And that lead investor is supposed to be the strategic counsel, making those customer introductions, making strategic introductions to you at that early stage to get you in front of potentially your first 5 or 10 customers. So I think you have to know and really leverage the expertise in the network of that early investor. But oftentimes, I see a lot of pre-seed companies just raising capital to raise capital. And sometimes it can be from an angel, it can be from a syndicate but you really have to focus on how can you get those first customers and get that first investor to make those intros for you. Because if you are at the pre-seed stage, you’re not going to meet those milestones without customers, right? You can have the capital you can build the product but ultimately, to raise seed capital, you’re going to need some type of traction and you’re seeing startups raise seed rounds now, they’re still pre-revenue in a sense, but I would say most investors are going to want to see some type of contracts in place, some type of revenue, and your pre-seed investor should be pretty strategic I think and making customer introductions or even other investor introduction to could introduce you to other customers as well.
Ryan Jones
That might be a way to look at it. The revenue fixes so many things when you are seed or pre-seed and it forces you to go all the way through the sales process as opposed to making bets. Talk is cheap among your prospects. You don’t want to make bets on the direction of your company based on something some like procurement officer said or some director of marketing or whatever your prospect, you want them to go through the whole process, to help you prove to yourself that you understand all the people and factors that go into the first decision that matures your company, as you go through that one time even, that matures your company so much, and investors that can help you get through that first journey or that second or third journey, all the way to a signed and wired customer. I think that’s a great criteria for helping select the right investor. And as you point out, it’s what the other side needs as well. That’s what the investor needs to see is getting to that milestone. It’s all about booked revenue. That’s the key milestone to raise funds responsibly.
William Leonard
As we kind of transition the conversation here, you’ve been in this space as the CEO for some time now at Florence. What’s been the evolution of innovation that you’ve seen specifically in this clinical trial space over the last seven years or so? What big changes have you seen? What big changes do you think still need to be implemented into the industry to bring even more efficiency, more diversity to trials, just better insight, and better innovation to this clinical trial space?
Ryan Jones
It’s been an amazing time to be in this industry. Because this industry is making two categories of bets at the same time, one category of bet is the science itself. Is this new molecule or biologic or device going to make people better? Will it be safe and effective? Will it advance humankind by improving people’s quality of life? And in parallel, they’re making a bet about how do we demonstrate that more efficiently than ever before? And that’s really all clinical trials are. Can we demonstrate that this experimental thing works? And is there a way to do that better than we did it in 1990, in which a lot of drugs are still getting in the market by only making the one bet on the science and not making any innovation bets and how the research gets done? And we, of course, fall in the second camp, like we’re changing how the research gets done by digitizing a bigger part of it. But watching those two things happen simultaneously, it’s just a thrill. The change that we’ve seen on the science side is that targeted therapies, specifically antibody therapies, as well as genetic modifications, like mRNA have opened a brand new chapter about using the body to fight off things that we used to think a chemical was only able to fight off. You look at it like Merck’s KEYTRUDA trial which was targeted at lung cancer. That biological innovation, cut the cancer death rate by like, 80% during the period of their examination, and so these aren’t like subtle changes to how people’s quality of life is being improved. They’re just radical, the mainstream media doesn’t comment on them nearly enough. It’s crazy the time we’re living in, it’s gonna allow us to have much less suffering in our lives and live a much longer time. Alright, so that’s sort of the scientific side that’s cool to track right now. And then on the execution side, how do you get those things to market and prove that they work? It’s still surprisingly early days, our business thrives because we’re allowing people to do things remotely in a way that a lot of us have become accustomed to doing things remotely like with banking 30 years ago. Because the stakes are so high in drug development that the industry is a little bit late to adapt. The cool execution things, I think, will really start to accelerate as we get into 2025 and beyond where your phone truly becomes a laboratory where your data becomes portable and usable for the common good. And then in a final way, the phone also becomes an equalizer, creating equity in clinical research allowing access to humans that don’t live by a suburban academic medical center. That’s where a lot of research progress has been made is by humans that volunteer for studies because they live in Decatur, Georgia, not humans that live in southeast Atlanta, that might find it hard to get to Decatur, Georgia, and they’ve been excluded and disenfranchised from research. But actually, phones can help fix that technology. It’s being deployed into CVS and Walgreens can help fix that. I think we will see not only amazing scientific advances over the next five years but amazing advances in access at the same time.
William Leonard
On that access tangent, is there an opportunity for trial participants to monetize their participation in these studies? Is that going to be a trend where they have full ownership of their data that these hospitals and researchers aren’t collecting? Or is that still pretty far off?
Ryan Jones
Awesome. That’s a super sophisticated question. There are three levels, the most basic level is subjects or participants can monetize their participation in the study today. But that’s like a transaction, you show up, you get some blood drawn, maybe you get the new hay fever, maybe a new flu vaccine, for example, as part of that trial, and you get compensated for showing up and taking that experimental medication. That’s where compensation has been around for decades. Phase two of that is having lasting participation based on your data, as you said. There’s a company called Acclinate out of Alabama, out of Birmingham, with a real smart human named Del Smith running it, that is going into communities and creating a database of potential participants. Based on some other medical event, like maybe you get the COVID vaccine. And as part of getting that vaccine, you enter some data in a database. But then it’s finding how to continue to compensate that individual for use of that data over and over again, maybe you’re enrolling additional studies, maybe that data gets used in a synthetic study, where only the data is analyzed and you don’t need another intervention. That chapter two of reusing your data, again and again, we’re just starting to see emerge. And then chapter three is putting that all on a device that you control, and you have the mainstream, the Googles and the Apples of the world help facilitate that. They haven’t been super successful so far with that, I think. I think we need a little bit more time to go under the wheels and people to become comfortable with that second model that companies like Acclinate are managing before we get there. Just an awesome time to increase access through not only a transactional way, which has been the history of clinical trials but in a lasting sort of rich data retained way.
William Leonard
I think that’s going to be something that really comes to light here over the next decade or so. Del and the team are certainly doing an amazing job of leading those efforts. Really excited about what they’re doing. Ryan, you think about the success of Florence that you all have seen so far, and it’s still early days, man. I think Florence is going to be a huge company to come and you think about the community that you all have served, what are some of the responsibilities that a successful, growing private company that’s building software like Florence? What do you need to do in the community to really improve the areas that you’re building and be that growing, contributing force to the world?
Ryan Jones
Thanks. It’s something we have the luxury to think more and more about as we have some scale. I wrote a post on this on LinkedIn a couple of months ago. I think more than any other time in history, software companies have an obligation to their community to be a force for good. There are a couple of dynamics that drive that mandate. One is that the traditional institutions we connected with, like the church are becoming a smaller part of most people’s lives on average. And then meanwhile, we have Slack in our phones and always on the email that connects us to our company, whether we like it or not, during more hours a day than historically on average, all of a sudden, like the company is a big part of people’s information workers live than it used to be. So if that’s true, it should be a missed opportunity to not use that for good. The other thing that’s happening is no other time in history like the valuation multiples on software revenue, using technology to make software companies more profitable is easier than it’s ever been for. So these things have more slack and more resources to be able to contribute back to society than ever before. The combination of those two things gives us an obligation. We’re being really intentional with that. We’ll be announcing shortly a sponsorship of paying the salary of the first one, but then several clinical researchers in oncology studies that are simply dedicated to expanding access to oncology trials. Using capital for good, we also are creating jobs and a hiring process that’s specifically designed to increase our diversity. Here at Florence, meeting really any diversity benchmark, we’re taking up the challenge, because we’re lucky to be in a good position to help outside the building, by being a force for good in the world as well as inside the building. Personally, I’m hoping to spend more weeks every week or more of my time every week, just focusing on that, because then the benefits come back to us. People want to work with us in the industry for success that will attract better talent here in the Atlanta community, if we’re successful, that it becomes a better place to come to work if we’re successful in that. So that’s one of the things that has me most excited as we go into ‘22.
William Leonard
You see a lot of companies that achieved this level of success and don’t pour back into the community, oftentimes. I think pouring into your community enables you to unlock that next vector of growth because it brings you into the social aspect of things, and not just the financial aspect of things. And you think about the space that you’re working in, social capital and social currency are huge in healthcare. I’m really excited that you all are taking that approach. You mentioned this community, the city of Atlanta surrounding areas of the metro area, what impact being here and in the state of Georgia, what impact has it had on the success and the growth of Florence healthcare thus far?
Ryan Jones
We’re lucky that it was a perfect combination in that the software industry is growing faster here than in many of the traditional tech hubs. You look at Austin or Boston, and I think there’s this acceleration that’s happening here in Atlanta and attracting talent. People want to move to be closer to family or out of bad weather. And so the South, I think I wouldn’t bet against the South in terms of software companies in the next decade. But then the other thing that’s happened is based on the CDC and Emory for the most part. There’s a strong healthcare hub here that and so the combination of those two things is responsible for allowing Florence to exist. You know, my co-founder, Dr. Kassin was a resident when we started this business. He’s now a researcher with the National Institutes of Health in DC and has a successful cancer research practice there. But the things that attracted him to Atlanta and the things that attracted me and my co-founders to Atlanta, that’s very real and 100% responsible for the success of this business.
William Leonard
I think the city is really at an inflection point in the growth and seeing a diverse amount of industries, creating a strong footprint here, you think about the financial sector, and fintech in Atlanta has been known for that. But it’s becoming increasingly known for successful health care companies and in cloud companies now as well. I think we’re only going to see more of that happen as more companies begin to move here like the Microsofts of the world, Airbnb, and other companies like that. I’m really excited that you all are here and that more companies more people are moving here to take advantage of the network effects in this region.
Ryan Jones
I’m excited that you’re here too. As I’m sure you’re experiencing a lot of the private equity markets and limited partners that want to find fast-growing VC funds. They’re not looking at Silicon Valley and New York anymore. They’re looking where else they can find an out of market gain and Atlanta is right in the crosshairs in a good way with that.
William Leonard
Certainly. Well, Ryan, this has been a really insightful dialogue here. I think a lot of your insights around finding product-market fit as an early-stage company, your story speaking to almost 300 customers before writing even one line of code is a true testament to the grind and the grit that it takes to grow a startup from zero to one, and then one to five, and other increments like that. Really thankful you’re able to join today and I know our listeners will find and extract a lot of value out of the insights that you shared today. Really appreciate your time, Ryan.
Ryan Jones
It’s great to be with you. Thanks for thinking of us and I look forward to talking more. Thanks.
Lisa
Thank you for listening to the Atlanta Startup Podcast. You know, we’re not just a podcast, we’re a community, and we’d love to see you at one of our digital or physical events, go to valor.VC and sign up for an event that makes sense for you. We have events for founders and the investors who back them. Another event you might enjoy is Startup Runway. The Startup Runway Foundation is a Valor organization that provides $10,000 grants to founders who are women or people of color building next-generation software products. Applications are free and we’d love to hear from you at startuprunway.org. And as always, thank you so much to the organizations that make this podcast possible. Not only Valor Ventures, but also Write2Market, a tech marketing and PR agency in Atlanta, Georgia, and the Startup Runway Foundation and Atlanta Tech Park Valley’s headquarters, and also headquarters for over 100 local entrepreneurs, building global businesses. See you next week. Please bookmark the podcast and join us.
