The June 2016 edition of Denver Founders welcomed Carm Huntress into the hot seat. Denver Founders prides itself on the participatory nature of our meetings, and it was clear that the assembled group was quite smitten with Huntress’ company, RxREVU, as the questions came early and often.
— Jason Myers, PhD (@Content_Doctor) June 30, 2016
RxREVU is a prescription decision support company. If that raised an eyebrow when you read it, don’t worry. We’ll unpack what that actually means a bit more. The premise behind RxREVU is that doctors should have a lot of data about patients when deciding which drugs to prescribe to them.
In a nutshell, RxREVU is a cloud-based platform that connects drug data and patient data. This information is then piped to point of care devices that enable doctors to make more informed decisions when prescribing drugs. The intent of RxREVU is to provide data that enables doctors to make more consistent and measurable prescription decisions.
For example, Huntress noted that if someone has high cholesterol there are a lot of different drugs that treat it. Some generics cost $4 while others cost $1,000. The reality of the situation is that doctors rarely know how much drugs cost. RxREVU provides that type of information to doctors when they meet with patients so that doctors can choose the right Rx for that patient before they leave their appointment.
So how did Huntress, a serial entrepreneur end up as the co-founder and CEO of this particular company? Well his wife is a physician so he already had some tangential knowledge of the medial field. But it was when he met his co-founder Kevin O’Brien, a pulmonologist. O’Brien had been personally tracking prescription decisions for about five years. He had all the information written down in a little book. At one point he showed the book to Huntress and mentioned that he was considering self-publishing it on Amazon.
It quickly became apparent to Huntress that there was a big opportunity with this information. So in 2013, they set to work putting this type of information to work. The first major iteration of the company ended up selling transparency tools directly to patients. Essentially this was a widget that they could plug their information into and use it to evaluate their own prescriptions. After about a year and a half, and although the company had some contracts and got some traction there were some questions about scalability.
By this point Huntress had already raised between $1–2 million for the company. But the scalability concerns resulted in a hard pivot from selling to consumer to selling to health systems instead. Huntress mirthfully recalled that when they came to this conclusion, their collective thought was “oh God! We’re going to start selling to health systems.”
Although there is a lot of money in pharmacy and health care IT, it is also a very complex industry that few people really understand. This means that sales cycle is muchlonger, especially compared to the direct-to-end-user cycle in their rearview mirror. Now Huntress says that he thinks 10–20 years out in terms of strategy, rather than the 1-5 year windows that most startups have.
The Google of Drugs?
Huntress and RxREVU hit the big time in 2014. He was at a local event a journalist approached him saying she wanted to write a piece on him. He gave her a brief interview and didn’t think much more of it. That is, until his inbox started to explode.
The resulting article was “This Startup Wants To Become The Google of Drugs.” The piece ended up on the front page of Yahoo Finance. Soon CNBC came calling and Huntress ended up appearing on Squawk Box.
While the notoriety was fun, Huntress was quick to remind folks that there is not a direct correlation between that type of publicity and business success. At the end of the day, being on TV was a fun experience. Huntress noted he made some helpful contacts and it opened a few doors for the company, but it didn’t affect their day-to-day operations.
Entrepreneurs are better served to keep these kinds of experiences in perspective and to focus more on developing products than riding a publicity wave, according to Huntress.
One of the topics Huntress talked extensively on was fundraising. To date he’s raised about $3.5 million and says he’ll likely need to get that number to $4M by the end of 2016. Because of their long sales cycles, RxREVU runs a very tight, lean, mission-driven operation. They have small team of fourteen people at this point.
The company had a few early angel rounds of funding in 2013–2014 and Huntress summed that process up saying they’re all about “being smart, having a good team you can sell, and being likable. It’s a volume game. You just have to push the volume.”
Huntress met with venture capitalists as well. But after talking to 93 different VCs not a single one came on board. He chalked this up to the complexity of the health care IT space and how few people really understand it.
The goal, Huntress said, was to get to the point where you company is doing a few million in revenue. Once you have that viability in the pharmacy and health care IT space the funding floodgates open up.
When asked about what it’s like to work with his co-founder, Huntress took the opportunity to impart some wisdom for early-stage founders. As someone who started multiple companies before RxREVU, Huntress understood the value of transparency and asking the hard questions first.
Basically you need a good lawyer and to run through every possible scenario, ask the hard questions, discuss options, and come to a decision about what to do in those situations. For instance, what to do if one of the founders leaves, ownership shares, how to handle company equity, and what each person’s role and responsibilities are all constitute important topics to address. These are hard decisions to make and difficult discussions to have, but getting it all written down and agreed upon from the outset saves a lot of pain in the future.
“It’s all about scenarios,” Huntress said. “Even if you all want the same thing there’s no single way to get there. At the end of the day this is about maintaining your current relationship regardless of what happens.” People tend to be their most bullish right when they start a company and things are going well, but Huntress suggests that this is the time when founders need to be the most cautious.
Board of Directors
The last broad topic that Huntress covered that bears repeating relates to his experience assembling his board of directors. RxREVU didn’t jump right in with a board of directors. Instead, Huntress relied on an advisory board. This consisted of unpaid scientific and professional advisors.
Huntress and emcee Chris Franks agreed that anyone who requests to be paid from the get-go for an advisory board position isn’t the right person for that role. These are your go-to people when you’re troubleshooting a problem. Huntress did note that once a relationship with one of your advisors turned into a natural dependency, that’s when it makes sense to start thinking about compensation and defining roles more formally.
It wasn’t until several of the people on his advisory board recommended putting a board of directors together that RxREVU actually did so. By this time, Huntress at least had a rough sketch of the company and where it was headed. Therefore, it made more sense to have a board at that time.
There was plenty of discussion about the stereotypical antagonism between boards of directors and founders. Huntress hypothesized that this was often a result of knowledge gaps. Your board members aren’t in the trenches. So their knowledge of where things stand can be 30-60 days behind where you are as a founder.
He’s found that the key to smoother board meetings and relations is to work to close that gap. As a result he spends the first 20-30 minutes of every board meeting going over the most recent numbers. This transparency helps get everyone on the same page and generates consensus about the facts. That way they can spend the next few hours discussing strategy and tactics.
Whether or not RxREVU is the “Google of Drugs” remains to be seen. But it’s evident that at this point Carm Huntress has his ship headed in the right direction.