Aneesa S. Majid, MD, MBA, FSIR CPE is an experienced physician leader, executive coach, and entrepreneur, with nearly 20 years of clinical and business experience. Dr. Majid is a board-certified interventional radiologist, and previously was a partner in one of the longstanding IR/DR practices in Dallas, TX. She also earned her MBA from Northwestern University – Kellogg School of Management.
In 2013, Dr. Majid became a founder of ZipData, INC; a healthcare IT interoperability company currently focused on removing the e-fax from medical communication and improving data transfer. She assumed the role for CEO in September, 2020. ZipData is currently undergoing commercialization in the US market.
Have you ever been frustrated by how much money we spend on healthcare and yet how bureaucratic and inefficient the system is? Or wondered why nobody’s fixing it?
The good news is somebody already is! And it’s an amazing woman, no less, who’s also an accomplished doctor
In this episode, radiologist and tech entrepreneur Dr. Aneesa Majid talks about how her frustrations with an antiquated healthcare system that still sends billions of faxes prompted her to found Zip Data.
Listen to Aneesa’s hard-won insights on how she manages a tech startup as CEO, what she recommends women and minority founders do to improve their funding prospects, where she gets high-value advice on game-changing money matters with her startup, and much more.
- Capitalism at loggerheads with efficiency and progress?
- How to run a startup with a full-time career
- The challenges of b2b tech for fundraising and profitability
- How to play well with multiple cofounders
- How to use your category to maximize your economics
- How using an end-to-end view improves your pricing effectiveness
- How to develop a good sales strategy
- Surprising ways a network helps improve your fundraising
- The one expense a founder should never skimp on if fundraising externally
- How to maximize your chance of success as an under-represented woman founder
Links & Resources
ZipData – The health tech company that Aneesa co-founded and leads
Matter – Healthcare incubator based out of Chicago
Kellogg – Business school at Northwestern University in Evanston, IL
New Chip -Accelerator based out of Auston, TX
Tech Stars – global accelerator for tech-focused businesses
Crunchbase -Leading provider of private company data for investment, funding, sales and more
PitchBook – Venture capital, private equity, and M&A database
Saastr – leading content aggregator and community of SaaS executives, founders, and entrepreneurs
Savvi – A lifecycle legal and financing platform providing services to founders and investors
Scroobious – a pitch-support and investor/ founder connection platform focused on diverse founders
Investopedia – Financial content aggregator and educational platform
Hubspot – Integrated CRM platform
Shubha Chakravarthy: Hi Aneesa! Thanks for joining us on Invisible Ink today! We’re delighted to have you.
Aneesa Majid: Thanks for having me. I’m excited to be here.
Shubha Chakravarthy: So you have a pretty interesting background. You’re a radiologist, you have an MBA, and you have founded more than one company in the past. Can you tell us how this whole journey transpired and what got you into entrepreneurship in the first place?
Aneesa Majid: So, for me, I think there was a natural evolution and there was a market change to go and start my own private practice with a couple of people. I would never in a million years think that I was going to start a private practice on my own but that’s what the situation at the time presented and I felt that it was the right thing to go. Moreover, whether it’s a private practice or a startup or a tech startup, it has all of the same principles and that’s where I really fell into “entrepreneurship”.
Simultaneously, four colleagues and I had said several years ago, “Let’s try to make this app just to solve this one problem.” Thinking it was much easier than we thought we kind of fell down this rabbit hole of what really the problem is and why nobody had really solved it and we chose to kind of keep going and try to learn and try to solve it. That’s how we have evolved the company of ZipData.
It is definitely something that has evolved and I think the experience of doing it once allows you the confidence to continue to learn and get better and take the skills that you learn on one side and try to apply it to another side.
Shubha Chakravarthy: So, what is ZipData and what does the company do?
Aneesa Majid: ZipData is on a mission to kill the fax machine in healthcare communications.
What a lot of people don’t know is that we spend about 9 billion dollars on fax and phone and that doesn’t really count all of the operational costs and the delays to make that happen. The reason for that is because everybody is required, whether you’re an enterprise system like Northwestern or Memorial Sloan Kettering, to have an information system and an electronic health record, but nobody is required to make those systems talk to each other.
In order to make them talk to each other the people who own those systems, whether it’s Cerner or Epic or eClinicalWorks, or the smaller companies, that is a capitalist option for them, right? So, they’re going to charge for each pipe that you want to connect to somewhere. So, for a physician’s practice in particular, that’s very costly. They would have to pay anywhere from five, in some cases $20,000 per pipe to make those connections — and that’s just insanity.
As physicians and consumers of healthcare ourselves who have had to deal with the delays of faxing, of getting patients in, and also on the business side the operational costs of faxing and of exactly how many people you have to pay to try to get paper in and data entry it, and then make sure that things get done right it needs to be solved. It’s ridiculous. We’re in 2022, and we are still dealing with fax and in of the biggest GDP industries of the country.
With COVID, we really saw that it caused a lot of delay in care and in just getting test results and now in the new work environment — a hybrid one, people may be needing at this point 5 or 10 days to quarantine. Maybe we’ll get to three. Either way, you’re losing staff that have to be on premises to take paper and enter it into an information system.
ZipData removes all of that by taking AI and ML and using technology that is there — virtual print driver, OCR readers, all of that stuff, in order to be information system agnostic from the doctor’s side as well as the receiver’s side and enables you to just transfer the important pieces of information, whether that’s me sending you a request for an MRI or referral for orthopedic surgery or oncology or whatever, to decrease this.
Shubha Chakravarthy: You mentioned that you had started down the path a few years ago and now you are once again down the path of entrepreneurship, were there any connecting dots between your first startup and this, that you kind of just picked up, or was this like a de novo idea that you had to start from scratch while you were practicing?
Aneesa Majid: ZipData was a de novo idea that evolved for the five of us while we were practicing. Honestly, we were just trying to solve the problem for ourselves. We were business owners who owned an imaging center and paid five FTEs to handle phone fax and scheduling. That’s a significant amount for one imaging center.
When you really go down the pathway for it, you’ll find that most practices have, if it’s one location, about three to five FTEs to handle this. A larger practice that I know that’s in the Northeast corridor, a large orthopedic practice, they have two locations, five faxes, three to five FTEs and it becomes super burdensome.
So, our idea of, “Hey, this should be quick! We can make an app. We just want our referring physicians to be able to know that it’s easier to order for us than anybody else.” And market competition really led to, “This is a super huge problem and nobody’s really solved it. Why haven’t they solved it? Why can’t we solve it? And are we in the best position to solve it since we deal with it every day?”
Shubha Chakravarthy: I now see the identification of the problem. You feel the pain, what happens next? I mean, you’re doctors, you guys are not technical experts. Right?
Aneesa Majid: Yeah. That’s not us. So, we had to sit there and kind of figure out, “What do we know?”
We knew that we needed to make an entity. We needed to figure out where we were going to put money in to pay for initial development. We knew we needed to find lawyers and developers but at the end of the day, we knew that we needed to get somebody else involved because we were working full time to pay for this as a side gig. We needed someone to be our interim CEO and help us take the concept to product and to market.
So, in that process we learned a ton. We learned that there were things like fractional CEOs, what the process is, how do you figure out developing companies, what the difference is between having somebody here and a team in India or having a full team in India or offshore, what are the costs overall, and such things.
We started learning about other little aspects of the business as well, “Do we need insurance at this phase? Do we not? What does a board look like and how do we go about having an advisory board? Do we need that now? Do we need that later?”
Then getting to the point where it’s like, “Okay, we’re willing to put in X to see if this idea is viable. Well, once we get to X and it’s viable, now what do we do?” That took us down the path of, “Okay, well, here are the different ways that we learn how to start up and it has been kind of a step by step thing to every step for us in terms of the evolution of — What does the solution need to be?”
Then dealing with different forces, for instance, we kind of started this around 2013-2014 and got a product from scratch ready to market in about three or four years and obviously, it took me a long time to learn this, but a digital solution like this that changes the way all of the market works will take 8 to 10 years anyway, but we were ready to do our MVP in 2019 and we did, but then we were ready to sell and then we had COVID and well and we were never gonna be able to sell in COVID when all of our target customers are having a hit in their revenue.
When we stop medical care, everybody’s revenue goes down. Well, they’re not going to look to invest in something, even if it might seem like it would be great if we had that solution right now, so we’ve had to adjust along the way and I think a large reason why we’re still here is because we believe in the product.
We believe in the fine tuning that we’ve done for it. We’ve watched it sell itself when we present it to non-health care people and healthcare people in terms of a solution.
Shubha Chakravarthy: Is it fair to say that you’re still practicing as a physician while you’re managing this on the side?
Aneesa Majid: Fair to say that, yes. It takes us a long time to generate revenue. It takes a longer time than say a consumer product. So, a non-consumer product in the healthcare field takes a longer time as a solution product to get the traction, which means it takes a longer time to fundraise, particularly when a lot of the fundraising opportunities are really more focused on biotech, med-tech, life sciences, and digital health tech solutions, and that’s not our world.
So now we have to deal with proving that the market wants it and whatever traction means to an investor.
Shubha Chakravarthy: You mentioned that there were five of you in the practice and all of you are kind of all into this as well. How does that play out since physicians are not normally entrepreneurs other than the fact that they run their own practices? How has that dynamic worked out through this process?
Aneesa Majid: What we have evolved is a system — whereas in the beginning all of us were at every meeting, all of us were in all of this stuff and we were trying to learn at the same time, now we work on our own strengths.
One of our founders is a much more “technically thinking” founder and they did informatics and benefit management and all of that stuff. So he was really able to be involved in more of the nitty gritty of building the design, guiding a tech team, and working with our previous CEO on that.
Then one of our founders started her own practice and she’s very good at marketing and branding. Even if it’s not on her to make the website or do any of that, but the feedback, and finding the right people to do that has been helpful.
One of our founders is very good at one-on-one client facing. So when it comes to talking to sales people and helping train them and bring them forward and then be in more client facing meetings then that’s where he comes in. We don’t really expect much of each of them on other things because everybody’s working and we want everybody to work to their strengths and that’s how you make a good team.
One of our founders is just kind of a fill-in here or there and all this stuff and then I, because of my MBA and my other experiences, I’ve taken over, during the pandemic, as a growth CEO.
Shubha Chakravarthy: Did you have any concerns jumping into this other than the fact that you’re trying to manage essentially two full-time jobs? Did you have any concerns about your skills or the risks you were taking? Anything like that?
Aneesa Majid: I think you have concerns about that every day, multiple times a day. There are some good days and there are some bad days. I think that there is some comfort to the fact that you have a job that’s paying to help sustain you to do all these other things.
I think for me, having gotten into an executive MBA and having to time manage that really allowed me to be able to multitask in a day and to keep on every day being a CEO of a company but still be able to manage my practice. I’m also in a unique practice situation where I I do cases and in between cases things can be juggled and controlled a little bit better. But I think that’s one of the great keys for doing an MBA later while you’re an executive is that an executive MBA the time management part to be really efficient really helps you, but there’s concerns every day.
There’s a risk every day, right? Particularly for us through all of the ups and downs of what we’ve learned, to be a tech company, which is in our area but knowing what it can solve and going through a CEO change and going through the pandemic, now we’re really kind of primed to go and so that kind of keeps us going.
Shubha Chakravarthy: You talked quite a bit about product and getting traction with your customer markets and so forth. Can you talk a little bit about how you developed your business model? How did you come up with the right revenue model?
Aneesa Majid: At the end of the day, when you strip everything away from what we’re trying to solve, we end up being a B2B software service solution model. We are a software solution and we are dealing with volume and operational costs. So, our business model from the very beginning because of the volume that we were dealing with was always going to be a subscription-based model. With some one- time onboarding fees and then trying to provide within that model as much service as we could so that it’s not like after three years you’re going to pay for this level of upgrade.
We’re just going to keep the product iterated and updated and provide service. That’s how we came to this revenue generating business model and then fine tuning how that gets priced out takes some time and has required some mentorship I feel between my business school network and other people who have built software service solution sales. So, while we initially started to think that, “Well, it has to be how many clicks per month?” We’re looking at billions of clicks happening and overall it’s very hard to price that effectively.
So, we have evolved to consider, “Well, what’s your cost that you’re saving? How many people are doing this? What are they paying for that?” How can you price it by saying, “Hey, listen, instead of paying for XYZ, pay us X per month and for however many clicks you do” and the benefit to that for us is that we don’t have to count clicks.
It’s far more laborious for us to make somebody on our tech side count clicks or create the automation to make those clicks and as we started to build the infrastructure of the company, we made our product, but as you start to build the infrastructure of the company to go from sales to accounting and billing and invoicing, how do you make that as a software service thing, which is, if you don’t have a consumer product like Dropbox, then how do you go from sales to accounting and invoicing every month and make that simple.
The simpler way is to say, we are solving your problem on operational costs and improving your efficiency. So we are going to say, “Year one — it’s this. Year two — it’s that. Year three — it will be this.”
Allowing for year one will probably take a certain amount of time to onboard as they expand but that’s how we have evolved to our business model and our pricing model.
Shubha Chakravarthy: That’s incredibly helpful. So, selling into the healthcare market and especially selling to healthcare systems, from what I’ve heard from other entrepreneurs, there’s this argument that needs to be made in terms of 5x or 10x of your initial investment? Do you face that issue as well when selling into health system?
Aneesa Majid: Yes and no. We have approached it from an entirely different perspective, which is that we have approached it from what the workflow inefficiencies are that we solve. “What is the operational cost?” — we solve and presenting it a hundred percent as a solution in a non-enterprise world. So, I think a lot of the times when people are talking about 5x and 10x, they’re also talking about enterprise systems because everybody loves to talk about healthcare and enterprise systems, the Northwesterns and the advocates and the Memorial Sloan Ketterings, right?
That’s what everybody loves to talk about and also when you start saying software as a service, everybody loves enterprise accounts. But the reality is, when we fell upon this idea, we were one little practice with one location that was paying five FTEs to handle paper and dealing with the fallout of not getting a patient in a timely manner or not getting something approved and all that stuff.
So when we look at it, we look at it in terms of “It is great if we can get some enterprise traction”, but we look at it as the rest of medicine, which is the majority of medicine, like if you look at Ottawa, Illinois, where I grew up, it is not an enterprise place but every one of those doctors has an electronic health record system. Every one of them is sending faxes back and forth. That’s revenue for us at a very high rate. We can break into that market and our margin is only sales because our product is developed and has fixed costs. Now it will only be iterated to whatever it needs to be. Well, that’s your fixed cost of development.
So other than bonus metrics for sales, everybody else that comes into the company is going to have a salary and an appropriate end of year bonus moving forward. But our margin is really going to be to incentivize our sales.
We look at it very differently and we really didn’t bring in 5x or 10x costs because we’re not looking at the enterprise world. It is great if we get it but we’re more likely to be able to get a small regional hospital. Let’s take Midland Memorial hospital in Texas. There’s nothing really around it. They are the center of the healthcare world in that town, all of the outpatient imaging, all of the surgeons, everybody is in that professional building. Then it’s a different calculation of 5x or 10x.
Shubha Chakravarthy: So, the flip side of it is, at least from the outside, it looks like the health market is getting more concentrated. My neighborhood practice got bought over by a hospital.
I’m seeing that increasingly after ACA. How does that impact the potential and the upside for your business and is the emergence of bigger health systems a risk to you? Is that an opportunity or are you neutral to that?
Aneesa Majid: We’re pretty neutral because we’re still dealing with the fax. Even if a smaller hospital or smaller practices get bought out and now they’re part of patient first primary care, particularly in the primary care world they’re still sending faxes.
Who are they sending faxes to? Orthopedic surgeons, physical therapists, labs, hematology, oncology, all of that stuff. So you’re still dealing from our perspective between two disconnected information systems. So, every sort of entity has an information system and every entity is either receiving faxes from a non-connected system or they’re sending them.
That’s how we look at it. Ultimately what we’re trying to really build is something to say, “This is the pentium chip that you need in all your systems because it’s very niche.”
It’s not very sexy, right? Like if you go to Matter, 1871 and such, people are doing all these sexy things like AI, ML, and all and they’re solving diabetes here and heart disease there. That’s all great. But at the end of the day, a lot of our waste in healthcare is in the infrastructure, in how we go about it and a lot of our patient care delays are also in that.
A lot of our patients being lost in the system is a frustration for the patients as well in the sense that they never heard back and they don’t know what’s going on and why they have to fax a million more things and all. They have an electronic health record when they go to see their doctor, isn’t everything there and didn’t they already say that every single time? It’s reasonable frustration. It’s also very frustrating from our side, from the doctor’s side because we don’t have this information.
It’s also very frustrating when you bring the behemoth of insurance in. I had a patient not get their authorization done because somebody said, “Oh, it was missing this piece of paper and if we don’t have everything, we just shred it all and then you’re just gonna have to send it all to us again.”
At the end of the day for us, it’s still a patient at the end of all of that paper. What’s really kept us driving forward in this is that we know that ultimately it will help patient care to get patients scheduled faster. We also know it will help patient care if their doctor’s office isn’t constantly interrupted in their workflow with phone calls to get things sent to them, which leads to burnout and frustration.
Moreover, we haven’t even touched on the part that there’s no HIPAA, there’s no security, there are multiple things that this can solve, but at the end of the day, we personally ask patients and as physicians who have seen patients get delayed or denied, we know that this solution can lead to that and that’s ultimately what we want.
Shubha Chakravarthy: Changing gears slightly to talk about acquiring customers. It certainly, I think helps that you guys are all physicians yourself. What was that process like? How did you tackle it and what have you learned through that process and where have you evolved to?
Aneesa Majid: The process is difficult but it’s not difficult for the same reasons that you always hear, which is that, “Oh, doctors, don’t like to try anything new.” That is not actually the problem. The problem is that healthcare in general does not like to change technology because of costs and because of the downtime that could happen by introducing something new and also just the frustrations that people have experienced.
That’s mostly with a larger electronic health record system but everything has a deal. So, that’s one of the things we considered when we were building, “ For somebody to use this, how many clicks does it require and how easy is it to install? How fast can we get it installed in all of that?”
In terms of customer acquisition, we initially went down a pathway of, “Let’s take our one vertical of radiology. Let’s talk to the information systems that are in the imaging centers. Let’s work with one of them, integrate with one of them, and distribute to the imaging centers they’re at.”
It was a good concept. It’s very hard to put it in place because we are really at the last mile of sale into that selling process and unless we can be there at that last part of it, like in the pitches or in interfacing with their customers, we can’t always get them to use our product because when you’re selling your product as a startup or as a person, you’re the people who sell it best, because you’re passionate about it and you have all the details about it.
So, to kind of hand it off to a distributor who is like, “Oh yeah, we pitched your product to 200 people.” Well then, “What’s the return on investment?” It’s not really there unless we pitch our product. Then when they’re integrating, we are there to show them, “Look how easy this is.”
In our first foray down that path it was helpful to us because they also helped us with our MVP and we got really good feedback and results and all this stuff. But in terms of a revenue generation model, it was not helpful. It might be something that we return to as we grow, because now we’ve learned what we would need up front, what assurances we would need upfront in terms of how the partnership would be structured.
The second way to do it is, “How most software is service companies do it”, which is just dialing for dollars and putting out an account executive that handles everything and getting traction that way and then growing from there to different avenues of directly selling to an information system and just saying, “Okay, integrate our product and here’s how we can market with you and move forward.” That’s actually what we have pivoted to and are starting to do now in terms of growing our customer acquisition but what’s the good thing about being in an industry that is hesitant to change technology is that once they get you, your churn is very low. It’s the getting in part which is tricky.
The other thing that I think we have more of an advantage than other people out here for this is that we understand the workflows. We are actually not going to go to doctors to try to do this. We’re going to go to their office managers and their IT administrators and we’re going to pitch to them because they actually understand the nuances of the workflow that’s interrupted and they’re usually the people, their PA, their MP, or their front desk person, who are actually sending these faxes. So that’s also a very specific way that we’re going about targeting our clients.
Shubha Chakravarthy: We talked about funding earlier and you mentioned that you used the proceeds from your practice to fund the business. I imagine that the funding needs at some point either have already outgrown or will outgrow what the practice can put in.
So can you talk a little bit about what your funding approaches have been like for you? What have been your learnings from that process?
Aneesa Majid: Funding has been really hard and painful and we went pretty far, about 350K-360K, just amongst the five founders before we started talking about outside funding. Then the first thing we did was involving our friends and family with the option of founders to invest, which at that time would’ve been considered seed, which it’s not anymore.
I find fundraising to be a little bit like Charlie Brown in football. It’s constantly moving and never stable. We raised a good amount that way and then we got close to running out of funds. One of our founders provided a line of credit. One of our investors, again, friends and family provided a promissory note with very favorable terms during the pandemic and we had another convertible note.
We’ve been very creative about raising funds but also keeping it within our family and friends works until you get to the point where you are purely ready to run growth. In that case you need higher operational capital and then you have to start looking at seed funding. Seed funding can be anywhere from $500,000 up to 1.5 or $2 million, as long as you know what you’re putting that for.
I think it’s the classic thing, “How long will this money run you and what will you accomplish in that time?” and that’s really kind of where we’ve been and it’s been hard just because fundraising gets easier the next time you try to fundraise after you’ve had a successful exit because you’ve met all these investors, you have warm contacts, and they know that you’re an easier thing. All of a sudden checks get written for $500,000 and a million dollars much faster but when you’re in our stage and we started out of Dallas, Texas, which is not an entrepreneurial hotbed, it is starting to become one and Austin is really the center of that, then you really have to work harder to start building your networks.
That is what I have spent a lot of time during the pandemic downturn to do, which is to expand the network. So for instance, we joined a growth accelerator, NewChip growth accelerator in Austin actually and that’s something where what I know now is that something like Techstars or something like that a little earlier in our development would’ve been helpful. It’s something we just didn’t know about and by the time we knew about them, Rock Health, Techstars, and a lot of these – Y Combinator, which gets touted a lot, we were just too mature — product wise, and we were actually too far down the company development path to really benefit from those scenarios.
Also, for Y Combinator at that time, pre pandemic, we would’ve had to give up six months and be out there physically and that wasn’t something that we could do. Whereas during the pandemic and now post pandemic, the virtual options are so much greater that the access to that is so much better. But, I circle back to Techstars a lot and every time I circle back to it, we’re not a match for it.
So, then you have to really work on who the people are that are in our level of seed funders or working through we did not join 1871 earlier in our development, but we joined it when they developed their growth program because that’s when we felt like it was more of a match because as you know, every one of these programs requires a financial investment to some extent too, to grow that network. So that’s something that you have to put into your operational cost, “Well, we want to be a member of 1871. That’s X.”
It’s the same thing for, “Well, what’s the cost of investor data? Do you just use Crunchbase or do you invest in LeadLoft or PitchBook? Really, I think the amount of things that get thrown at you, the more you grow into different stages of your company the more that you have to spend time searching through. That has also been a big learning experience for us to figure out.
So, we chose to invest in PitchBook Data and have an intern who’s going through that data to sort it out and figure out how we can be more effective at sending a good email to a potential investor that would be more aligned with where we are. I think that’s also something that is a big learning curve because people will tell you, “This is how you send a cold email and if I got this cold email I’d invest.”
But consider who you are sending it to. How do you figure out the right investors to send it to? How do you navigate to that? That’s where I think a network like Kellogg or 1871 or Matter becomes very helpful to help you to kind of discern where you have to spend your time for that. Otherwise, you’re sending a lot of emails and you’re getting no response. You don’t really know why and that can lead to burnout and founder fatigue very quickly.
Shubha Chakravarthy: A couple of questions in terms of a follow up. Earlier on, you mentioned promissory notes and convertible notes. You’re a doctor, when did you figure all this out and how did you learn the ins and outs of what a promissory note is. How you structure a deal, like a friends and family funding deal. It could be equity. It could be debt. It could be convertible debt. How did you learn all that?
Aneesa Majid: So one of the things that I personally am a big fan of spending on is legal advice from the very get go.
You don’t have to spend a ton of money. I know there’s a corporation that we have learned about through Newchip and that’s where some of these early accelerators like Techstar and then even growth accelerators have an exposure to a bunch of things that give you good deals and discounts at the startup thing.
So I know there’s an organization called Savvi Legal that can help teach you all of that. But for us, we chose to have a local legal council when we set up our entities for each step of the way. Then I think you try to find a group, a practice council, that you can grow with because then they have your history and they can help you grow.
It hasn’t been easy. Lawyers leave. I was with a firm and I went over here and you have to decide what you’re going to do. Then there’s also things like the fact that I got my MBA, but even with that, the whole startup world is a whole different world.
Understanding SAFE notes versus convertible notes and how the valuation cap is and what do they mean when they’re talking about valuation caps? Are they talking about pre-evaluation? Are they talking about post investment evaluation? That was a whole new one for me. I had to sit down. I had to go through all of that on convertible notes. Why is that good before a SAFE note? Why would you not want that? That’s interest bearing, safe notes are not and all. So, these were all the things that we had to kind of go through and learn.
Then the other thing is, even for founders, once you get your friends and family to become investors, it’s okay. We need a cash call to keep the lights on. Well, how does that get structured? For us that got structured as convertible notes because we took risks early and that has an interest component to that note that benefits us for taking that risk early.
But now as we go to a seed round and we’re going to get more institutional investors, they have a full product. They’re going to invest into a sales team, a product, a cyber security already set, a CTO, a development team. They’re not taking as much risk as we took to put these things in place. So they get a SAFE note, right?
They get a SAFE note to help us get to a Series-A when everybody converts to full equity and so these are just things that we’ve kind of picked up along the way in terms of, “How do we show that founders put in this money and how will that convert and show that they have X amount of equity because they did it?”
Shubha Chakravarthy: That brings up two interesting points. One is about the fact that you said you learned a lot about these notes. Was that through reading books like Brad Feld’s book, was it through your participation at 1871 or Matter? What was your best resource that somebody could use to go in and learn about this in an efficient way?
Aneesa Majid: Honestly, my best resource was my legal counsel. I did some reading and I talked to some people at Kellogg. I did my own Google searches on convertible notes, start up funding, all the way down but when we started getting the tit-for-tat part of it all, our legal counsel was like, “Listen, if you do this, this is how it’s going to play out and this is what the note’s going to read and if you do this, then this is what it’s going to read and this is how that’s going to work. Let’s run down the path of what does that look like at a seed runner or a Series A round.”
I thought that that was probably the most helpful and I think that’s where having your, even if it’s not an official advisory board to the startup, which I don’t know as we don’t have one but we have our advisors and some of those are my own personal advisors in different areas but having, as a CEO or founder — your own personal advisors, whether they officially are listed or not, is very helpful to guide you along that. It might even be like, “Hey, listen, this friend of mine, and I’ve had this, this friend of mine had these three exits so talk to them.”
You talk to everybody you can talk to and maybe through that conversation they get you connected to somebody who really helps you and that’s like our sales team that’s coming on board. I think talent acquisition channels are something we don’t talk about a lot in terms of the nuts and bolts of how to figure out and how to find them.
There are a lot of people who talk about what type of talent you need or how to retain talent or how to set up contracts for talent. But when you’re a software service person and you’re like, “We need sales people”. We did it totally wrong. We went to our sales reps that we knew in healthcare. We thought they understood the field they sell in so we brought them on and we did all this work. We trained them on HubSpot and they were like, “Okay, well we want to go into the offices. I was like, “This is solution sales. What you need to be doing is calling. This is not a catheter where you need to go show it. You can do this virtually.” And they said, “No, we need these handouts.” So I was like, “No, We’re not aligned here.”
We had to start from scratch and so there were a couple of people who had reached out to me who said, “Call me anytime.” And it was one of my low points and I called everybody and they connected me with the people that we’re working with now and I talked to them about talent acquisition and then it turned out that they offered services and this was their niche.
Their niche was helping tech companies and software service companies build their sales team and they were experts at setting up HubSpot and they bring on the BDRs (business development representatives) and they work for them and we control our payroll and payroll costs and that’s how that happened. Somebody said, “Talk to this person.”
Shubha Chakravarthy: My other question is that there’s some data that I’ve seen out there that says that when it comes to negotiating equity stakes women founders end up settling for less. Can you talk about any observations you have on that? Any advice? Any perspectives?
Aneesa Majid: From a CEO minority female founder who has been pitching, I a hundred percent think it’s harder to get the checks and I’ve talked to a lot of people about that. I feel that we have shown traction in a lot of different ways without necessarily getting the revenue part of it in terms of getting accepted into an accelerator, accepted by Oracle for startups, accepted by Microsoft for startups, having an NDA, have a commitment for $2 million client to come on this year and we’re still not getting a check. I feel like a male would’ve had a check and said, “Oh yeah, you’re going.”
We’re not talking about product development. We are talking about infrastructure building. We’re talking about people development, right? It’s really just the fact that we can grow if we have money to put people in place to help us grow and I feel like those numbers of how many pitches it takes before a female founder as the face of the company gets the checks are true.
I think that in terms of equity stakes, we have good legal counsel to prevent something like that from happening and I think again, that’s why having legal counsel that you trust and can grow with you is very helpful.
Also, I am not the sole founder. I have three men on the founding team and that changes the dynamics in terms of when we actually go to close the deal. We are a very diverse founding team, from white male to nonwhite female and immigrant LGBTQ in between. So, we check a lot of boxes.
I think that once we get to the point where people are like, “Yeah, we’re ready to write the check”, which we’re pretty close to. Then that concern for us about equity isn’t as big. If I was a sole female founder or it was just me and a female partner, I would be more concerned that I would be more taken advantage of.
Shubha Chakravarthy: To those who are in that position, do you have any advice or observations, any remarks on how they might overcome some of those challenges?
Aneesa Majid: I think that there are some really good organizations out there. One of them that I’ll promote here is called Scroobious, which is run out of Boston by Allison Byers. She is a female founder herself of this company but also having done pitches and having done fundraising and from that, she has developed a program for a very effective video pitch.
So, I worked with her, like I sent her a video pitch and we worked on ways to fine tune this pitch. How do we get this pitch to five minutes or less? What are the things that you can take out so that instead of sending a pitch deck, you send the video link. I think that’s really good but it’s also an organization that is very dedicated to providing resources to female founders and underrepresented minorities and I think that there are several other organizations that are starting to do that. The best thing is to start working with those organizations as much as you can. They’re very focused about it.
1871 has a component to this, but it’s not its only focus whereas here what Allison has built with Scroobious and her network opens up to several other of those networking things and starting to expand that outside of Boston is very helpful.
Then back to the legal advice, this is where it’s very important to have legal counsel that gets you. So there’s legal, but there’s not to say that there isn’t implicit bias with legal also, everybody has implicit bias. So you want to make sure that your legal team is not pushing you to think, “No, this is a great deal. Just take this and then you can build on it” At every stage it has to be, “What’s the best deal for me and the company that lets us grow?”
I now gravitate more and more towards organizations like that, like Scroobious and others and their network and their LinkedIn and their Twitter connections to find support and openings that are not the traditional type, like PitchBook.
You need to do something like that but that is more research oriented, to know that you are targeting the right investor, and it’s very in-depth and no founder can do it by themselves. We have an intern saying, “You can go all the way through, see the deal, see who they made a deal to try to get the warm intro and all this stuff.”
But organizations like Scroobious are very dedicated to effective pitching as well as providing opportunities to pitch and providing support, whether that’s marketing support and all these things, to women and underrepresented minorities, I think that is a much better way to go.
There is a lot out there for African-American females and for Latino females as well. So, I think finding those organizations is really going be more helpful and we have to look at those rather than the traditional paths that everybody says you should follow.
Shubha Chakravarthy: Excellent. This was very informative. Thanks for that.
So, a couple last questions before we wrap up. We talk a lot about the external challenges. How about some of your own internal struggles? Were there any dark moments or at least any particularly noteworthy dark moments?
Aneesa Majid: I think every day you have some doubts. I was very hesitant to take over when our CEO chose to leave and it was a little bit without warning. We weren’t expecting that notice at that time and I had a lot of doubt about stepping into the role because my strengths aren’t in tech. I’m not the tech CEO, I’m the growth CEO. I’m about marketing and branding and sales and operational efficiency and organizational structure. So, I had a lot of concerns there.
I think there’s a lot of stress also because our friends and family have invested in this. Failure means all of us lose the money that we’ve put in and it’s not insignificant because we’ve been dealing with digital tech and that was my biggest thing, which was like, “Yeah, I did get an MBA. Yeah. I am a doctor”, but really having to put pedal to the metal and being like, “Okay, can we do this? Here’s your chance to put some things in place. Can you do it? How will you do it? How are we going to balance this?” That was probably the biggest challenge for me personally. I think also for the company as well — that was our biggest challenge.
A second was trying to figure out our initial customer distributor partnership and ending it because that was still some revenue for us and ending it would mean that we would be without revenue for a period of time until we regrouped and was that going to be worth it to do?
It took a lot for us to get to that decision. It took us a year from the time I took over as CEO to get to that decision and my instinct was that this isn’t working for us. It hasn’t been working. We have to figure out why it’s not working and if we can’t fix it, we need to get out of this because we’re spending more money than we’re making. But because they were our only customer and it was kind of one of those situations where it’s like nobody in our team regrets ending that relationship but all of us probably were ready to end it sooner.
I probably stuck it out longest to make sure that we had turned over every stone to try to make it work but it took a lot of not just that but also talking to advisors and saying, “Should we let go of this? Should I let go of this because it’s our only revenue and I don’t know when we’ll get revenue again?”
To a person, they said, “You know, this is not going to turn out as well as you think, even if you hold on. So, that was my second. Just in general — you secure a client and then there’s a delay. And then we kind of thought we had sales and then there was a delay and the starts and stops of getting your company to work the way it needs to, which isn’t always what everybody says.
So, getting sales and getting sales that’s right for you are two different things and those starts and stops have been a little frustrating. Although I think now we’re operating on kind of all cylinders. I was just doing my CEO review to the founders and that will go out to investors and as we’ve gone through it we’ve seen that we’ve done a lot in a year and 10 months since I took over. So I feel this is a good day because you get to kind of take a second and look back and say, “Okay, this is where we’re going.” But still, we have to constantly say, “Well, how long will we go putting money in to try to make this work? And then what is our exit option?”
Our exit option has always been, “Once it starts going, we feel that one day it’ll be acquired”, but do we need to look at that sooner? Do we need to put a sooner time date on that? If we don’t generate X amount of sales in a certain time period moving forward? And I think that’s always a question you have to have.
I think for us, we would feel like it’s a little bit of a sense of failure because we have these goals for it. But on the other hand, it’s still an exit. You still learn so much, it will still be a stepping stone to whatever is the next thing for all of us. Should that be a scenario that we pursue?
Shubha Chakravarthy: Can you also comment on what has been the impact of your ethnic and cultural heritage coming from where you come from? How has that played into your whole entrepreneurial journey?
Aneesa Majid: I think it’s a little hard because from our background there’s this push for excellence and success to happen. And the entrepreneurial journey is “stop and go” and squiggly lines and back and forth to get there. It’s not a straight line and it’s hard to measure success.
It’s hard to — on a day when you feel like, “Oh, we’re really rocking and rolling here”, to explain that to your parents or family or friends where it’s like, “Yeah but how much money are you making? Can you quit your day job?”, that’s the harder part.
On the other hand, I think that our background, particularly the Asian background has a very strong work ethic. It’s the grinding work ethic. We are willing to get into the grind of it and that, I always laugh and say, there’s that song, “It’s the climb”, and it’s really not, “It’s the grind”, like every day. In successful startups, it’s about the grind of it and you have to be willing to be in the grind for a long time to taste the success and I think that if you don’t keep that in mind and try to have a positive outlook on it, you can feel like you’re failing every day because you’re just like, “Wait, what are you doing? Your family’s invested in you”, and they’re like, “When is this going to happen?” My dad and mom, they’re just like, “Are we going to lose money on this?”
I think it’s a little bit harder because there are different expectations that you come to in terms of — if you put in the work and you put in the grind, seeing that success of it, seeing the payoff of it, even that success, but the payoff of the work, it’s so much longer and maybe it’s different if we made a consumer product that just happens to be shown on TikTok and then it takes off. But that’s not the integrity of this company and these founders and the only reason we’re here is because we really think this is a huge problem in healthcare and that we’re uniquely positioned to solve it appropriately.
So, I think that’s also what makes it harder, when it is like you’re really kind of doing it more out of an altruistic side, knowing that if we solve it right, the money will come. It’s very different from making a consumer product or making an app for the Apple watch and Apple health or for diabetes or all of that stuff.
We’re really in the nitty gritty of operations and what does that mean for patient care? And so that also, I think, when that is your goal, it takes much longer because we want it to be right for the people who are using it.
Shubha Chakravarthy: And on the flip side, has there been one moment, something particularly noteworthy, when everything came together and you felt, “This is why I’m doing it”?
Aneesa Majid: So the client that has been delayed this year, but is scheduled to come on board, that’s probably a 2 million ARR or so. We had pitched to that CEO either right before the pandemic or right at the beginning about our product and she kind of didn’t get it. It wasn’t a match, but it was like, “Well, keep us posted!” We ended up reconnecting with them because they had acquired imaging centers in Dallas and weren’t just Houston based and one of my partners works right next door and they started talking to the manager of that company.
So we ended up getting another meeting. At that meeting, the CEO and the head of business development told us our entire pitch back. They basically told us after we demoed the product, all the advantages of having this product down to the marketing tool and the reporting data to use it as a marketing metric for their marketers.
I was like, “This is going to work.” I just got off the phone and I talked to our founders and I said, “This is going to work. They just told us everything we envisioned this product doing this for them.” So, that was probably my highlight day.
We had let go of our previous client and a month later we got this pitch and they were like, “We want this. This is all the things you’re going to replace and this is how much you’re going to save us, we know, straight off the bat.” And I was like, “Okay, we’re going.”
So it’s been a little frustrating that we haven’t gotten them onboarded yet, but that is not from our side, from their side, but they still want it so we know it’s out there. That was the best day because we showed our product and we showed it to a decision maker and they were like, “Yep.”
When you don’t have to pitch your own product then you get pretty lucky. So that was a great day.
Shubha Chakravarthy: So in conclusion, what words of wisdom would you give to your earlier self or to other women entrepreneurs in particular who are maybe earlier on that road than you are?
Aneesa Majid: I would say to them that you have to be passionate about your product and what you’re doing and why the market needs it and if you can’t answer any of those, like why it’s so important to you or why the market needs it or why it’s better than everything out there, then you’re not ready to go down that path because those are the questions that you’re gonna be asked. Like, “Why should I pay for this?”
You really have to be passionate and believe in it to stick through the ups and downs and to say, “No, this is where it’s going to be.” So if you’re not passionate about it, then why would anybody else be that wants to buy it?
The second thing I would say is that it feels like it’s a lonely road, but it’s not as lonely as you think. And I’m just going to circle back to the fact that particularly for female founders now versus when we kind of started down the path a few years ago, or even when I took over, during the pandemic as CEO and prior to that, there are more support systems now for female founders, underrepresented minority founders, African American women, Latin American women, Latinx because of the pandemic than there were previously.
Take advantage of every single one of those you come across, it may not be a perfect fit but explore them and find out what you can take from them or not to help you move forward and particularly what services can you get that are discounted to help you kind of put things in place.
We’re kind of behind, I feel a little bit in branding, marketing, and social media and being able to find people who are freelancers on Fiverr, Upwork, or through these organizations that would maybe do it for free or for a discounted price to like build the relationships so that they could be full time for you.
Those are things that are very important because we kind of build this company piece by piece. First we made a product. Then we figured out our dev team better and then we said, “Okay, we need this person”, and then we said, “We need to fundraise”, and then we said, “We need sales and now we need marketing”, but when you are ready with your product, you kind of need to do a little bit of all of that in the beginning, particularly for sales and marketing.
So that’s something I wish that we had focused on a little earlier at the time when our product was becoming finalized or ready for MVP and the other thing about that is that I would say, and it’s something I do now, but you should talk to everybody. Even if you don’t know them, even if you listen to a lecture, go up to them afterwards and say, “Can I talk to you afterwards? You said this so can we follow up on that?” Maybe they’ll give you money. Maybe they’ll give you something else. Maybe they’ll connect you with somebody.
The final piece of advice I’ll tell you, which is advice that was given to me, which is, “Ask for advice and you’ll get money, ask for money and you’ll get advice.”
So, if you want money, talk to investors and ask for advice and they’ll start following you and trying to help you and ultimately they’ll probably invest in you or get you connected to an investor that might help you.
So once somebody told me that early in my CEO-ship, that’s all I do whenever I talk to investor, unless it’s like purely a pitch set up from like Newchip accelerator, they have an investor relations team and they get us in front of investors. So, unless it’s something like that, if somebody says, “Oh, you should talk to this person and they’ve invested in this, this, and this.” I never ask for money. Just ask for advice and they’ll usually try to help you find money.
Shubha Chakravarthy: Aneesa, this has been an amazing conversation. I enjoyed it and I know that a lot of our listeners will too. Thank you very much for taking the time to share your thoughts today, and I’m sure that ZipData and you will reach great heights! You have our best wishes for that.
Aneesa Majid: Well, thank you. Thank you very much for inviting me on. It’s been very enjoyable. I look forward to speaking with you again sometime.