Omer (00:11.840)
Welcome to another episode of the SaaS Podcast.
I'm your host, Omer Khan, and this is the show where I interview proven founders and industry experts who share their stories, strategies, and insights to help you build, launch, and grow your SaaS business.
This is the second episode of 2016, and I think it's a story that you are going to love.
The interview is with a guy who bootstrapped a business and went on to sell it for $43 million.
But like episode 101 with Aaron Fulkerson of Mindtouch, this wasn't an overnight success story either.
It took my guest over 20 years to build the company to a point where he could sell it.
And if you're looking for a new startup idea, then I think this story might inspire you because great ideas are everywhere.
You just need to keep an open mind and find problems that need a solution.
In this case, my guest started up a conversation with a neighbor who he'd never spoken to before.
And from that short conversation, they had the idea for a business and eventually became co founders.
It's a great story.
All right, today's guest is an entrepreneur and startup advisor.
His previous company, Definitive Home Care Solutions, provided a software product for the home infusion pharmacy industry called CPR Plus.
He and his co founder started the business with just $400 and went on to sell it for $43 million.
But this wasn't an overnight success story.
It took them over 20 years to build and sell that business, and they also had two failed attempts trying to sell the company before they were successful with an exit.
We're going to talk about the successes, failures, and challenges of that 20 year journey and the lessons learned to help inspire you to keep going with your startup.
So today I'd like to welcome Stuart Crane.
Stuart, welcome to the show.
Stuart Crane (02:15.530)
Great.
Thanks for having me, Omer.
Omer (02:17.130)
All right, so let's start by, you know, I like to ask my guests what gets them out of bed in the mornings?
Do they have a favorite quote or what drives them?
So is there a quote that resonates with you?
Stuart Crane (02:31.289)
Well, there's a quote that I really latched onto when I was very young, right out of college.
I did a lot of listening to the motivational speakers back then, like Tony Robbins and Dennis Waitley and Brian Tracy and Jim Rohn had a philosophy.
It wasn't really a quote, but it was a philosophy that kind of hit me hard.
And the quote is, set a goal to become a millionaire, but not for the money, but set a goal to become a millionaire for what it will make of you.
And I listened to that when he was talking about that.
I'm like, why would I set a goal to be a millionaire?
Not for the money.
And I didn't get it really at all.
But I listened to Jim Rohn a lot of years, and over the course of building my business and really earning a lot of money, it really resonated with me.
And it does make a huge difference in your life.
By setting a goal to become a millionaire, it really makes something of you that's totally different than prior to that.
So it's a neat goal I think about quite a bit.
And so that kind of got me out of bed when I was building my business.
I want to make my business successful and be a success and become a millionaire and see what it would make of me.
So that got me out of bed when we were building the business.
Omer (03:48.490)
That's an interesting quote.
I've never heard that before.
So give me an example of something that setting a goal like that made of you other than the money?
Stuart Crane (03:57.930)
Yeah.
I think in order to become a millionaire and have a successful software company where you have a lot of customers and it's bringing in a lot of revenue, and you're basically doing it in a bootstrap mode like we did, it takes a lot of time.
You talked about a little bit in your intro, and over that time, you learn a lot of things about what works in a software business, what doesn't work, what customers need, and you as a person really begin to build confidence and critical thinking skills, and you get more engaged with what is happening.
And it does change you dramatically when you're building this business.
And then when it's really taking off and bringing in a lot of money, then you can see what you can do with the money, not just personally, because there's obviously a lot of things you can do with money personally, but with the business.
As more money comes in, you think about how you can leverage that to get more customers and grow the business.
And then it gets into the whole world of hiring employees and how you help them and your customers.
And we can talk about that a little bit, but it does change you quite a bit.
Omer (05:11.800)
Okay, so let's travel back to.
I guess it was sometime in the 80s that you must have started this business.
Where did the idea for this software product come from?
Stuart Crane (05:27.720)
Okay, it does start back in the late 80s when I was a consultant to a number of companies here in Columbus, Ohio, doing mostly database management work.
Now, you can imagine in the late 80s, there was no Internet, there was no Windows.
It was basically a lot of mainframe stuff.
But also the personal computer was getting big and a lot of client server applications were coming out.
And that was my expertise, was database management for client server applications, where PCs were proliferating and then databases would hold information.
So I had a lot of projects going on in Columbus.
And the interesting thing about the start of the business, this was actually about 1990, 1991, is I moved into a house on just a regular old residential street.
And my backyard neighbor, I would see him out there every so often raking leaves.
And I would be out there once in a while and for probably six or seven months, never really met him.
And then one day we just.
We happened to be out there at the same time, shook hands and, you know, what is the first thing you do when you meet your neighbor?
Is you ask him, well, what do you do for a living?
Or what do you do?
And my neighbor, Jeff, backyard neighbor, was a nurse for a home care company, specifically Home Care Pharmacy.
And this was actually a division of our largest hospital here in Columbus.
And he was doing all of the patient management, patient tracking, going out to people's homes, patients homes, and doing, basically helping them with their intravenous medication, with their infusion medications.
So this company that he worked for, which was part of a hospital, would essentially get drugs from the manufacturers and the suppliers, and they would make them in the pharmacy because it wasn't pills, these were intravenous medications.
And then they would go out to the homes of the patients and do what's called IV hookups.
And it was kind of a niche business, but it was actually bigger than you would think it was because there's a lot of patients that needed what's called home infusion therapy.
Instead of getting pills and just being able to take them, they needed this infusion, this intravenous medication.
So these companies are out there doing that.
And he had such a tough time documenting all the information that he had to document about the patient.
You know, you had to use these paper forms where you take them off the shelf and write their name, address, city, state, zip, and their demographics and Social Security, and then all their medical information, all the treatment plans and the care plans and the medical information, what drugs they were taking.
It was just an enormous amount of documentation.
So, you know, he told me about that and what he did, and he said, what do you do?
And I said, well, I write database management systems for companies here in Columbus.
And he's like, oh, my gosh, I've been looking for software to help us automate or at least just document all of this information that we have to do for our patients.
And he said, sometimes these patients and the patients are a lot of times they're elderly and they have cancer or aids, and that's why they're getting interested intravenous meds, and they're so sick.
A lot of times these patients, some of them would die before he would have a chance to do the documentation all by hand.
So he was like, it's justit was just crazy.
So he was using, or trying to use WordPerfect, if you remember Word Perfect back today.
Yeah.
To basically pull up a document there and put information in, try to have it line up and fill out forms and then save it as a different patient.
And there really was no software available for his kind of business.
There was some billing software, a little bit of pharmacy software, but nothing for the patient documentation.
So, anyway, first thing we did when we met really, was start talking about this possible software project, which was to take all these forms that they were using at their company and turn them into essentially screens in a software program and then printouts on the laser.
Because the LaserJet was just getting really big back then, the LaserJet printers, HP LaserJets.
And so the printouts would be beautiful and so forth.
So we talked about it, and then literally within that week, I went into his offices with his boss and we sat down and just kind of talked through what I could do for them.
And it had nothing to do with starting a company or anything like that.
It was really just, let's build this software program, custom, for what you need for your documentation.
So again, it was like I said, 90, 91.
I think by this time that we kicked off this project and I began writing the software in a program called FoxPro, Microsoft FoxPro for DOS.
There was no Windows back then.
And I was very familiar with this application development language, just because I'd been using it a lot at a number of different companies in Columbus.
And it really allowed you to build an app back then that wasn't called an app, but a software program from start to finish, where you could install it on a PC, you could bring up screens, you can enter information, store it in a database, print things out, and close it out.
And it also had networking capabilities, so you could have a centralized database and have multiple PCs access the data.
And back then, in 1990, that.
That was really a big deal, and people were or companies were starting to see the capabilities there.
This is before even the Internet was really available.
To.
So we did that.
We built a very basic database management software program for his company or, you know, the hospital essentially he was working for.
And we put it on one computer in kind of a corner office.
And basically the nurses and some of the pharmacists, but mostly the nurses who had to do this documentation because there was about, oh, eight or ten of them, they would come and sit down at the computer and it was green screen, monochrome, IBM PC, I think it was a 386.
And they would enter their information into the screens and hit the print button and the laserjetter would print these beautiful forms out, and then they would take them and put them into what's called patient charts.
And these charts were essentially paper based, and everything was still paper based, but what it allowed them to do was create a paper chart that looked beautiful and they could basically update the information as it changed, rather than having another piece of paper and scratch things out and that sort of thing.
So go ahead.
Omer (12:10.010)
So at this point you said it wasn't about starting a business.
So was this more like a consulting gig where you were just providing a service to this company?
Stuart Crane (12:22.970)
Yes, exactly correct, Omer.
I basically engaged with the hospital, my standard hourly rate to build software.
And I had these agreements or these engagements with other companies in Columbus was pretty straightforward.
It was just me basically engaging my services with them for an hourly rate.
And we just built it.
Essentially I would work in the day, but really my partner and I, or my friend, my neighbor and I, Jeff would basically work on nights and weekends because he was working in the day.
And then once it got installed, we would talk a lot in the day and I would come into the office and install updates using a 3 1/2 inch floppy.
But yeah, it was essentially a contract programming job.
Omer (13:06.000)
Okay, so I guess the question for me is, like, how did that become a business?
And were there any kind of IP issues around who owned the source code for this product that you had built?
Stuart Crane (13:24.800)
Exactly.
So here's the next step is it went so well for the next probably six, seven, eight months.
I don't have an exact timeframe, but it went so well that we put the application on all the computers.
They bought all computers for everybody on their desks, and we networked it and they started using it in a network environment, had shared laser printers, and they were walking around going, oh my gosh, how did we operate?
How did we work without this software program?
It's just transformed our whole business because it's so much better.
It was just revolutionary to them.
Back then.
So as time went on, Jeff, basically he's very entrepreneurial himself.
Even though he was just working for a hospital, he was young and engaged and everything.
He's like, Stuart, we could take this program that essentially you've written, but I knew nothing about what it needed to do.
So it was essentially half his idea or half his program and half mine.
I just coded it and he said we could take this.
And there are thousands of, not tens of thousands, but thousands of other companies around the country.
Some of them are hospital based, some of them are private mom and pop, but they're out there that do this exact same thing, which is to provide specialty drugs and infusion drugs to patients in the home.
And if we don't have something, we being his hospital, if the hospital didn't have anything that did this, he's, he was convinced that they didn't have that because he had been doing a search, you know, for, for the software.
So I said, hey, I, you know, I was very entrepreneurial too.
I had my own business doing consulting and, and that sort of thing.
I was, I was so immersed in, you know, learning about business and that sort of thing.
I'm like, yeah, let's start, let's start a business that does that and sells it to them.
So, and then you had a good question also about the, the, the, the information, the, the intellectual property and the ownership of it.
You know, the first thing we had to do was get a look at how the product was developed and what the ownership rights are.
So as it turned out, and this took probably two or three months or more, as it turned out, there was no work for hire where I had signed any document with the hospital that said that they owned the product.
So by default, the way intellectual property ownership works is that the creator of the product by default owns the product.
So we had some documents drafted up that we had the hospital sign that said that we owned that, just to have that in writing.
But then also they became our first customer and we sold the product to them for $1 and basically said that we would maintain it if they would basically be our first customer and pay a very nominal maintenance fee or maintenance agreement.
So on April 1st of 1993, we formed definitive Home Care Solutions, officially got the vendor's license and all that.
That was the official first day of business that said, okay, we now have a product that we're going to sell to other home infusion companies all across the country.
Now we weren't going international really the way healthcare is, and even to this day it's very much US Based because there's so many differences in other countries.
So we were focused on not just Columbus and not just this hospital, but the entire country.
Any company pharmacy that basically did the same business, which was home infusion therapy.
We were going to try to reach out and show them the product and sell it to them.
And our initial price was $4,996.
It was $4 less than $5,000.
That was our price for purchasing the software.
So how we do that.
Omer (17:25.650)
Yeah, so I'm sorry to interrupt.
I'm curious why you charge the hospital just $1 when you were sort of valuing this much higher.
Was that a sweetener to get them to agree?
Stuart Crane (17:40.250)
No.
And I did kind of skip over this part, but if you may recall, you probably don't, but this is quite a while back.
But in 1992, when George H.W.
bush was in office, there was a pretty major recession that hit the United States.
It's a big recession, if you look back at the stock market and a lot of things.
And it just happened to a lot of the back on a lot of expenditures in the hospital for whatever reason, for that reason, essentially.
But they decided we are not going to basically pay for any consulting work any longer.
So it was basically cut from the budget my time.
And we were like, well, that's okay because we are basically going to create a company and we'll basically sell it to you for $1.
And we just wanted their blessing, obviously, you know, get the ownership rights, but we kind of had that anyway.
But we wanted their blessing is that we have a really good sized, good customer that then when we go out to market.
So.
And you know, it wasn't like we would be nice to have $5,000 from them, but literally within a few weeks we found a few other customers that did pay the full price.
And we.
And we basically started the company like you said in the opening of the show here.
We started the company with $400.
I put in $200 and Jeff put in $200.
And we opened a business checking account with $400.
And that was our seed capital, essentially.
And then within about a month or so, we sold our first system for $5,000.
But the guy only gave us half of that because he wanted to see how it went.
And we were like, that's fine.
So we got $2,500 in our bank account, plus the 400.
And then, you know, we.
We basically kind of ran from there.
Omer (19:23.980)
And this was still around the time of the recession.
Stuart Crane (19:26.780)
Yes.
Yeah, it was 90, 93.
Kind of the recession started to slow down or started.
You know, the economy started to pick up in 93 and then into 94.
But, but definitely the.
And once the.
The hospital said, hey, we're kind of putting a halt on consulting, we weren't looking to them for any more money.
We were just kind of wanted them to.
To help us to build the program and get more capabilities into it as we were approaching other customers.
Omer (19:57.520)
So I think it's interesting because maybe a lot of people would have looked at that and said, you know, this probably is the worst time to start a business in the middle of a recession.
Now, having said that, I think if you go back and look at history, a number of companies that started in a recession turned out to do really well.
I mean, companies like Apple and Microsoft and Disney were all started in recessions.
But was that something that played on your minds at the time?
Stuart Crane (20:38.550)
No, not at all.
I mean, what we were thinking about Omer the entire time was what Jeff had identified, which is that there are thousands of companies out there that do exactly what you know they do, and they love this program.
Like, you couldn't take it away from them.
And he was like, I just know that they will pay $5,000, 10,000 for this product.
There's just no doubt in my mind, even with a recession, they have to basically service their patients, and what this does for them is worth every penny of that and more.
And, you know, he turned out to be correct that the recession didn't really affect us too much.
And 92, 90, early 93 is kind of when it hit, and then it just kind of like, didn't really affect, certainly not the healthcare industry.
I think a big hospital just kind of got a little paranoid and they said, oh, we're going to just take off doing consulting work and not pay that.
But really, there was not much effect on health care overall.
And we went through a lot of recessions.
You think about starting the business in 93 and sell till 2013.
You think about.
There's been a lot of dips over the years, 2001, the big crash and all that.
But in 2009, you know, and we, we got through those just fine.
Omer (21:53.680)
Okay, cool.
So you.
How were you going and marketing the business?
Or were you just kind of going out and cold calling?
And what were.
What were you doing to get these next few customers?
Stuart Crane (22:08.640)
Okay, so.
So I'll walk you through what we did.
And I just want your listeners to keep in mind the era that we're talking about, we're talking about 1993.
So there's no Internet.
Okay.
And there's no email, really.
I mean, there's email internally, but you can't reach people by email externally, really.
Not at businesses, anyway.
Omer (22:30.990)
So, you know, the thing is, I, I'm like you.
I remember those days very clearly.
And I think it show shows our age.
But I think it's fascinating, now that you think about it, that there are, there are actually entrepreneurs out there running companies who never knew of a world where there was no Internet, right?
Stuart Crane (22:50.440)
Oh, absolutely.
You know, I mean, it's just a lot of entrepreneurs that are that way.
And so I just want to preface that as I describe and explain some of the marketing tactics and how we got customers and therefore, you know, really grew that this is the situation we're dealing with, which we knew nothing, we knew nothing else anyway.
So it was not like, oh, my God, we don't have the Internet.
How are we going to do this?
But there was no Internet to know about.
So anyway, to your question, there were, let's see, two main ways, three main ways that we got customers.
The very first thing we did, Omer, is now, even though there wasn't the Internet, there was a thing called CompuServe and Prodigy and AOL was just getting going.
But CompuServe was our key source to get lists of companies.
And there was this thing, and it's still out there now, but it's called the SIC codes.
The SIC codes, and they're essentially industry codes that categorize companies.
And we would go on to CompuServe and we would download the lists of companies by sick code.
And the sick code we used was home care.
I think it was home health care.
Home health agency.
I'm not sure what it was, but it was as close as we could get to our niche market, which was home insurance fusion.
There wasn't one for exactly home infusion.
So what we would do, and I would do a lot of this because it was kind of technical, is I would get down, I would get in there, get this data, and it was basically the name of the company, maybe a contact name, maybe not address, city, state, zip, phone.
And there was no email or website, of course.
And we would get this information and then we would.
Jeff would go through and say out of these 800 companies, we would pick maybe 3 or 400 of them that we thought would do home infusion.
And then we did physical mailings.
Physical mailings.
So what I'm talking about is a small packet of information that basically was a couple pages.
And then we would put it into, we would include a postage paid reply card in this little tiny packet of information.
And what it was, omer, was the actual printouts from our program.
Because that's really what shined in our program was the printouts because they were used to doing paper charts.
And we would say in this there was a cover letter and then the example printouts, we would say, would you like your home care documentation to look like this?
And they would turn the page and then see it.
And they were like, oh my God, this is the most gorgeous thing I've ever seen.
If our documents could look like this, they're charts.
I mean, they had to have charts.
So we would get these postage paid reply cards in the mail back to us after we would shoot out maybe 100, then 200, 100 more to different states.
And so in the mail, we would check the mail and we would get these reply cards and they would say, yes, send me more information.
That's all they really had to do is check a box and put it in the mail.
And then what we do, omers, we would have their, we would know their name of their person.
So we know the person, we knew their title, we had their phone number, we know exactly who they were and everything.
And so we would then put together a much more detailed packet of information.
And I actually wrote a program in FoxPro that basically took all their company information and merged it into these forms.
And we would send them a much more thorough packet with probably 15 or 20 pages of all of every document that our program produced, our software produced with their information at the top.
So it was totally personalized to them.
And then also in There was a 3 1/2 inch floppy disk with the actual program in the packet.
And that's what we would call our initial evaluation packet.
And so the pharmacist or the nurse or the owner or whoever our contact was, we get this packet of information.
It was much thicker this time.
It was really thick.
And it basically had.
And we would FedEx it.
And that's what would kind of really, you know, make them like, wow, this thing is in the FedEx.
You know, so they would get it FedEx and they would open it up and there would be all this documentation that has their name on it.
And then there would be a floppy disk.
And in the day that people knew how to install floppy disk because AOL starting to get out there and stuff.
And so they would put it into their computer and type a install and all the instructions were in this document or in the packet.
And they would install it onto their computers.
And they didn't have to install it on a network, they could just install it on their C drive and it would come up and it would welcome them.
And they could begin to enter the patient information if they wanted to.
Now they didn't have to.
And then Jeff, my partner, he would basically call every single company that we send these packets to when he thought they would get it, like the next day or the day after that and just, you know, say, hey, did you get our packet?
Would you like to set up a time for a demonstration?
And these were over the phone demonstrations, this is before GoToMeeting or Citrix or WebEx or any of that.
And they would say, yeah, sure, I'll, I'll, I'll take a look at it first.
And then if you want to do a demo.
So basically we did mailings and that was the one area that we got a lot of people that were interested in seeing it based on a mailing.
And then the other thing we did is we would go to industry trade shows for our industry, which is the home infusion industry.
And there was, I think, two main ones, the Pharmacy association and then the Infusion association and then there were some Nurses association.
So there was probably, actually probably like three or four shows during the course of the year.
And we would go to all of them and they would all have exhibit halls, know booth space, and we would get a booth and we would set up our software with big screens and turn them towards them.
And we had a printer right there.
We would actually, we would brew coffee in our booth and these nurses, they drank a lot of coffee.
They would come to our booth and look at these printouts and we would get, and then we have a sign up sheet right there at the booth.
And we would sometimes get 50, 60, 70, 80 or more than 100 in some shows, signups of people who wanted more information about the product.
So as soon as we would get back from the show, we would fly home and literally the next day or even that night, we would sit there and enter all this information into our systems.
And I wrote all these systems for us to do.
I wrote it all in FoxPro and it would all go in there.
And then we would do the same thing.
We would do is when we would get the lead from the mail, the mailers that we did, we would send the exact same thing to these people who were interested in, through the trade shows, and they would get the packet and then we would, you know, Jeff would be inundated with demos and he would, he would do demos from, you know, 7:30, 8:00 in the morning to sometimes 7:00 at night, you know, the west coast time and everything.
And he was just, he was getting burned out just doing demos, you know, and, and they basically would turn into deals.
You know, obviously it took time, but the one thing we did which is really great, which was huge for us, is this 30 day evaluation disc, because we would have customers, well, prospects at the time, actually start filling prescriptions, loading the patient information into our software, filling prescriptions and printing labels.
Because the labels are the key part of what they do is for the drug bags.
And just as, you know, with pills, you see a label on a pill bottle, well, our software produced the label that goes on the medication just like that.
And they would actually dispense medications using our software before they even bought it.
And we had a 30 day trial period and they would pop up in 30 days and they would get a red screen and it would say, thank you for using cpr plus your evaluation period has expired.
Please contact us to purchase or.
I don't know exactly what it said, but they would call.
These people would call us in an absolute panic wanting to, they were like, my patients, the information is in there.
I got to get this prescription out the doctor door.
And then, you know, of course we would forward the call over to Jeff and he would pull them up in our CRM that I wrote, actually, and we talked about that a little bit, but he would pull them up and he would see exactly when they got it and what conversations we've had with them so far.
And then I had it programmed so we can give them.
We would get them into the program for another day, another seven days, another two weeks, another 30 days or 90 days.
Or we had a forever code which would open it up forever if they're paid in, in full.
They purchased and paid in full.
Omer (31:34.970)
Got it.
Okay, so.
And they knew about this, right?
When you sent them the information and trial version of the software, they knew it was a 30 day trial.
They knew how much they would have to pay.
Yeah, okay.
Stuart Crane (31:47.290)
They knew the price.
They knew they could even buy it right then and there.
We certainly had people that would buy it right away before their trial was up.
But it's just, they would kind of forget about the fact that, you know, they, they didn't buy it or whatever and they're just using it, you know, so that was just a certain handful of Them that would do that.
But most of them, obviously, we're calling them, we're following up with them, seeing how their evaluation is going.
Did they install it and have you entered any patients?
And we would push them to actually use it.
Omer (32:15.940)
So I think that so far, the story sounds too good.
Right?
So you.
There's almost this sort of this synchronicity and this.
This opportunity that you had to.
To bump into your neighbor.
And where you identified this opportunity to build this business.
And using that the hospital as the first customer helped you to really get the product right.
And then you guys were able to turn this into a business and start to bring more customers on.
And there was clearly a need for something like this, based on what you're telling me, because you didn't have to do much selling, right.
I think the product basically sold itself.
And I think somebody listening to this might say, okay, well, that story from the big.
The early days sounds great.
And I know Stuart went on to sell this business for $43 million, but there must have been some tough times in between, right?
And so tell me about maybe one example of a tough moment that you guys went through where maybe you didn't think there was a future in this business anymore.
Stuart Crane (33:34.700)
Well, the only time that we didn't think there was a future in this business, because there weren't many, if any at all, was one day when we got back from the accountant's office and they told us how much taxes we had to pay based on how much money we made.
And.
And Jeff about flipped out.
He couldn't.
I mean, this is like the first year, I guess.
And because we were making a lot of money, it was very profitable from the get go.
I mean, we would bring in, you know, 7, 8, 900,000 on very little in expenses.
And then he would say, wait a second, we have to pay 3, 4, $500,000 in taxes.
You know, so.
But, you know, everybody has to pay the taxes at the same pretty much rate across the board and everything.
It's just we had never experienced that reality because we never had a business like that.
So that was.
I mean, to your question of that was the only time we thought, well, could we really do this?
Is how much taxes we would have to pay.
You know, so we got that under control, and we had.
We had to make quarterly estimates and we budgeted that.
And so, okay, we gotta make sure that all this money is getting set aside because, you know, the tax man's taken a huge chunk of what we're making because we were Just so profitable.
From day one it was all that was tax, because that's what you get taxed on your profit.
As far as the tough times and the challenges going back to the beginning, I mean we had a lot of different stages and phases in the life of the company.
Obviously being a 20 year old company, you can think about the changes that we went through from the very beginning in DOS and character based and networks and stuff, all the way up to moving to the web and graphical user interfaces and then dealing with private equity firms and competition coming after us.
But I think going back to the early days, there were some really tough times that we had with bugs.
Since your show is all about software companies and it's all about software, you think about how difficult it is to build good software.
And you know, to this day it is a challenge.
Whatever you're trying to build, you have code and code is not going to be perfect.
And we had some pretty bad bugs in the early days that, you know, we got through them, but we're talking about errors that would come up and just totally freeze the program and they couldn't get their work done.
We had one error or one bug in there where the program literally deleted their entire patient file.
And if they didn't have a backup, they were basically sol.
I mean it was horrible.
And it only happened to this one customer like multiple times, but it happened to a couple customers.
And that's all it takes is a couple situations like that.
And it shakes you to the core where you basically your software is controlling this business where they have all of their patients in there, they're filling prescriptions, the patients are reliant on them to get life saving drugs of theirs and then their whole patient file gets deleted because of our software.
So that was probably the worst scenario.
We had some mixing of patients where patients were getting shared like someone's information was coming up.
When you brought up another patient, that was a really bad bug we had.
And then we just had a lot of errors.
And I, you know, I blame myself for this because Jeff, he didn't know anything about programming, he knew nothing about computers, you know, really.
And I was the one that coded everything.
And, and it was, it was hard for me to, you know, get in there and say I got to fix this stuff.
And I certainly, I had a network of, of people that I could reach out to and ask about things and there was books in there, you know, but it wasn't like there was no Internet back then, you know, so there's no way you can Go on Google and just say, well, you know, search this or whatever.
It was challenging.
And, you know, when something like that would happen, you'd be like, what are we going to do?
And you just have to deal with it, you know.
So we're talking about bugs, we're talking about errors that really aren't just your, oh, well, I got an error and then I'll just skip it.
We have had tons of those where you just have an error and you skip it and you move on.
Or when you fix it in the next update, we're talking about just really bad, bad bugs where the program would totally crash or we had performance issues, where it was kind of a bug in the sense that we wrote it or I wrote it, although we had programmers that came on after myself that did the same thing where it just wasn't written, written properly, the code wasn't written properly, and somebody would go to run a report and we had larger and larger customers coming on board with us that had thousands of patients and massive files that the report would basically take forever.
It essentially wouldn't end.
It was like in an endless loop.
And then it would take down everybody else because it was using the processor at 100% or stuff like that.
So I think that was just.
That was probably, for me personally, anyway, those were the hardest times.
And the hard thing is about it, it wasn't necessarily like, oh, you just fixed it and you're good and you move on, because software is software and there's just.
And there's thousands, tens of thousands, hundreds of thousands of lines of code that I had written most of it and that you have to keep track of.
And we grew.
And when I say we grew in terms of getting more customers, that was absolutely true.
But our customers grew up.
So we would sell a customer and when they first started the program, they might have a couple hundred patients or three hundred patients.
And next thing we knew, in like a year or two, they would have thousands or tens of thousands of patients and they wouldn't do.
There was a lot of M and A in our.
In our customer space.
So they would get acquired or merged with companies and they would take their databases and combine them.
And the next thing you knew, our program was basically having to deal with massive quantities of data that it just wasn't programmed to deal with.
You know, so we had to find DBA experts to come in and really look at how the application was written and how the data was stored and indexes.
And, you know, I don't get into the weeds with It.
But it was tough.
That was probably the toughest part.
Omer (40:10.160)
And I think that the thing here is that.
But what was the impact of some of those bugs?
I mean, this wasn't like, you know, my Snapchat app isn't working right.
This was like, no, this software is being used to provide care for people who could potentially die if they don't get the right care at the right time.
Right.
So that brings a whole bunch of challenges.
And I think the other thing maybe might not have come through from what you said is also, in those days, it wasn't as simple as, oh, I've got a SaaS app and I've got a bug.
Let me fix it and then let me just push it out to my production servers.
You had a distribution challenge as well.
Once you fix this code, you've got to physically get, I guess, disks out to all of these customers.
Stuart Crane (41:05.370)
Right?
No, that's a great point.
Omer (41:06.970)
And everything.
Stuart Crane (41:07.690)
That is.
That is a great point.
Now, in the very, very early days that in the very beginning, first year or two, we did have to typically ship out an update disk, a 3 1/2 inch floppy.
We quickly, within a year or so had a bbs, the bulletin board system that had all of our updates on the bbs.
And we would basically make sure that all of our customers had at least one PC with a modem that had a phone line, that is a dedicated phone line, not a fast line, that it would get interrupted.
And we would make sure that they knew how to get onto the BBS and download an update.
And.
And we would walk them through that almost before they could really use it.
We wanted them to have that capability because shipping disks would take.
It would take a day, and let's say it took us a couple days to fix the bug.
Maybe, you know, now a lot of the bugs we really had to be on immediately, and we would fix them literally as they.
As they were found, but they were hard to fix.
But anyway, so yes, we had to do disks in the very beginning, and then we did the bbs.
And then obviously, after however many years into the, you know, late 90s, early 2000s, we obviously had our website and we had a download off of the website.
But.
But the BBS was really kind of in between phases, between the 3 and a half inch floppy and the Internet.
Omer (42:26.000)
Yeah.
Okay, so it's almost time for us to wrap up, but before we do that, I want to just touch a little bit on the set, you know, the sale of the company.
And so tell us a little, just Briefly about what was the.
How did that come about and
Stuart Crane (42:51.190)
what
Omer (42:51.590)
did you guys have to go through to sort of make that decision and eventually go and sell the company?
Stuart Crane (42:58.560)
Yeah, so it's a long process of getting interest in there.
It was automatic interest in the company.
Automatic meaning we didn't even reach out to companies and acquirers that were interested in our business.
I mean, they would hear about us through us just being the.
We were the dominant player in home infusion after so many years.
We actually made two acquisitions ourselves in 2005, 2006, we acquired two of our competitors and got all of their customers over the course of a couple, three, four more years after we acquired them onto our software.
So we were rolling up the industry ourselves.
But there's always bigger fish.
So in markets like this, in larger software enterprise markets, you have this bigger fish eat smaller fish and then there's even smaller fish.
And we were kind of in the middle where there was companies that we could acquire that were smaller than us, but there were certainly bigger companies than us that would be interested in acquiring us, given that everything was what they wanted in a company and price and so forth.
Anyway, over the number of years, we were approached by three main types of organizations.
The first one was competitors.
Even some of our competitors about the same size as us, some were bigger than us.
Maybe adjacent markets like home medical equipment instead of home infusion, which is kind of an adjacent market that they want to combine software into one.
So competitors would approach us and want to buy us.
And then you also have private equity or financial buyers, buyers that basically just want to either put in a lot of money and make it grow and flip it, or buy the whole thing out and do the same thing, flip it over time.
Financial buyers typically are looking to flip it over five to seven years or something, something like that.
And then the third type would be a strategic buyer, maybe not a software company, but maybe a company involved in pharma because our customers were all dispensing high dollar medications, billions of dollars worth of drugs.
So the drug companies and the suppliers and manufacturers in the drug space, in the pharma, in the biotech space.
So those are the three main areas that we had interest in our company from.
And we had several false starts.
Like you said in the opening.
We had a couple companies that we had engaged and for a number of reasons won't get into the nitty gritty details, but just couldn't close with them.
And it was just not the right fit overall.
In late 2012, one of our competitors who had wanted to buy us for probably two or three years, but they were publicly traded and they just didn't have.
They couldn't afford the valuation of the company, but they really wanted to buy us.
They were actually acquired.
So how does a publicly traded company get acquired?
Well, they get taken private, and it's called a take private by a private equity firm.
So a private equity firm came in, bought all the shares off of the stock exchange and took them private at that time.
All this information is public on how much it was purchased for and all that because they were public.
We looked at that and we said, well, what's the valuation?
Because really everything is based on what is the valuation of the company, what is getting paid for that.
We saw that it was right about in the range that Jeff and I, my partner and I felt like if we could get that valuation that we would sell for that amount.
So literally the day after this company got taken private, the private equity firm, they reached out to us immediately and said, hey, you probably saw this transaction that we just did with your competitor.
Are you guys interested in talking?
So that got the ball rolling.
And that was in late 2012.
We went back and forth with them, and since we had had some failed or not closed transactions in the past, we really wanted to go through a process where we had multiple buyers all bidding for the company.
And we thought that was the best way to get the highest valuation and really get the serious buyer to the table.
And also they want us to be serious.
And when you go out to a process, and this is what I'm talking about is a process where you hire an investment banking firm and they basically represent you and they put together a book and you have a teaser and all these things that we don't have to get into.
Essentially you go through a process where you are up for bid with companies that are interested in acquiring you.
So we did that over the course of.
It probably took three or four months from late 2012 into the spring of 2013, where we had started with about probably 40 or 50 companies that we reached out to with our teaser that said, this is the company, and if you're interested, you have to sign an NDA.
They sign an NDA and then we send them what's called the book, and that's essentially a very, very thick document about a lot of stuff related to the company, all the financials and the strategic and the employees and the management structure and the intellectual property, and on and on and on.
And then they decide whether they would like to have A phone call, that's the first step.
And then the next step is a face to face conference call or conferences where they come into your office.
And so you just kind of take it step by step.
And it took, you know, from, like I said, the fall, late fall, winter time, I guess, of 2012, till literally we closed, it was July of 2013 is when we closed with, with the ultimate buyer of the business.
Omer (48:49.020)
And then so as we, as I mentioned at the start, you sold the business for $43 million.
And I assume you and Jeff owned 50% of the business each, correct?
No other.
Stuart Crane (49:02.680)
Okay, correct.
Omer (49:03.880)
So you started this journey sort of with the quote from Jim Rohn talking about set a goal to become a millionaire.
Not from the money, but what it will make of you.
And you had some really interesting experiences along the way, but that goal of becoming a millionaire turned into a multi millionaire.
And how did life change for you after that?
Stuart Crane (49:31.930)
Well, other than the fact that I didn't have the business after we sold the business, that's the biggest change.
But as far as my quote and becoming a millionaire, I mean, I became a millionaire back in the late 90s and early 2000s because we were throwing off so much cash that really the business grew so much and we were so profitable that Jeff and I were able to really benefit from it all along the 20 years.
So, you know, we would have great years, we have great quarters and we would bonus ourselves and you know, so we did, we did very well all along.
So it was many, many, many years ago when I became a one millionaire, you know, or so.
And then, you know, you have your own personal investments that you have personally and then the business is really the largest asset that have.
But it's not realized until, you know, fully, until you either sell it or maybe you pass it down to your kids or something like that.
But, you know, we.
One thing I wanted to kind of, kind of make this point to your listeners is we built something that we would call the golden goose.
And Jeff and I would talk about it from time to time.
It wasn't very often, but every once in a while something would come up and we would talk about the golden goose.
And it's like what the golden goose is, is essentially the business being something that just continually gives and gives and gives.
If.
If you take care of it, so you take care of that goose and it produces these golden eggs over and over and over.
So what, so what specifically, there was three things that really made up that golden goose.
And the first thing is the product itself.
The product, the software has to be good.
It has to be great, and it has to be working properly.
And we talked about you got to get those fixed, and it's got to work right.
So you have to take care of the product.
That's the first thing.
The second thing you have to take care of in your golden goose is your employees.
I mean, we had such good employees when we sold the company, omer, we had 80 employees.
So you think about 80 people working for us.
You have to take care of them, and you want them to do their best for the customers because they're the ones that are making the product better and taking care of the customers.
So we had to.
Jeff and I had to take care of our employees.
That was the second piece of this golden goose.
And then the third piece, of course, is the customers themselves.
They're the ones.
That's where all the money is coming from.
The money is not coming from investors.
The money is not coming from anywhere but the customers.
Every dime that we ever got through the course of 20 years, which was many millions of dollars, not just the 44, but many millions, is basically from the customers.
We would basically have this philosophy of taking care of this go golden goose.
And if we took good care of it, it would keep laying these eggs whether we sold the goose or not.
You know, so it was kind of an analogy that, you know, it was kind of corny, but at the same time, it was so apropos to what we were doing.
It kept us focused on, okay, we got to take care of this thing.
And so, you know, to your question of how have things changed?
I mean, not really radically as far as my philosophy and money really at all.
All.
It's more time now and my kids, and more time to learn about things and really not having a business really to run anymore.
Omer (53:03.200)
Yeah, that's a great story.
All right, it's time for our lightning round.
I'm going to ask you a series of questions, and I'd like you to answer them as quickly as you can.
Are you ready?
Stuart Crane (53:13.360)
Sure.
Omer (53:13.920)
Okay.
What's the best piece of business advice that you ever received?
Stuart Crane (53:18.740)
I would say it is to work on your business rather than in your business.
That's something I learned really early on, and it's very important for your listeners to work on their business and not just in their business.
Omer (53:32.420)
Just qualify that a little bit.
So the point hits home a little bit.
So give an example of what you mean by that.
Stuart Crane (53:38.100)
Well, and this is going to your next question about, you know, a book that I Read very early on, very lately.
The first year I was in business in 1993 is when you work on your business, you are doing things to improve the business itself so that it can be successful.
When you work in your business, you're really just the product itself.
You are the software that you created is what you're basically just.
Basically going through the motions of servicing the customer and you're essentially just an employee.
So when you work on your business, you are doing things to grow the business and make it more successful.
Omer (54:15.500)
Yeah.
Great.
So what book would you recommend to our audience?
Stuart Crane (54:19.660)
Okay, so I've got three books real quick.
The first one is E Myth by Michael Gerber.
And this is good.
In the very beginning stages of your business, if you're just starting out, you need to read E Myth by Michael Gerber.
It goes right to this point of working on your business versus we're just working in it.
And then as you grow your business, the best book you can possibly read is called Good to Great by Jim Collins.
And there's a lot of information in there about how to grow your business and how successful businesses have grown and then when related to selling your business and exiting and kind of the final stages.
I would read how to Get Rich by Felix Dennis.
Omer (55:01.690)
That's one I haven't heard of before.
Stuart Crane (55:03.770)
You have to read that book that was probably my all time favorite books is how to Get Rich by Felix Dennis.
And it's not a book that just walks you through.
This is how you get rich.
It is about Felix Dennis and everything he has done and he is amazing what he's done.
And that's a must read.
Omer (55:22.630)
What's one attribute or characteristic in your mind of a successful entrepreneur?
Stuart Crane (55:27.830)
I think the biggest thing for me is persistence.
I know everybody says that and oh yeah, persistence, but it is so true.
It's so important that you persist and every day you just do as much as you possibly can do to take care of the business and make it better.
So persistence to me is the number one.
Omer (55:47.450)
What's your favorite personal productivity tool or habit?
Stuart Crane (55:52.010)
For me it has to be getting up early and essentially getting in early, getting into the office or getting started early.
I think the earlier you get up and, and the quicker you get your day started, at least for me, the better the day goes and just the more powerful you are.
So getting up early and getting in there early.
Omer (56:12.550)
Is there a new business idea that you have that now you have the extra time to pursue?
Stuart Crane (56:18.630)
I'm interested in looking at CRMs that are for particular Niches.
So it's kind of like what we built with CPR plus, in a way, it was obviously an enterprise application.
But CRMs I've always been intrigued by, and there's tons of them out there, but for a particular niche where it's customized.
Not saying I'm going to do that, but I am doing some research in those areas.
Omer (56:42.330)
What's an interesting or fun fact about you that most people don't know?
Stuart Crane (56:46.810)
Well, it's funny in a way, because a lot of people think I'm this genius, especially all these years I had this business, this very crazy, successful business, and making all this money, and I wrote the software from scratch and everything, but I barely got into college.
When I was in high school, I got rejected to the first three or four schools that I applied to.
And then my mom was like, you got to get into school.
You got to get accepted somewhere.
And she took me actually to her alma mater, where her and my husband or my dad met.
They were a husband and wife.
They met there.
Anyway, they got me in there, but I barely got into college, which is kind of crazy to think.
Wow.
Omer (57:24.180)
And finally, what is one of your most important, important passions outside of your work?
Stuart Crane (57:28.540)
Well, probably the most important passion is my kids now.
I mean, I've got one in middle school and one in high school, and it's great to have the time to help them learn what they're learning and just be part of their lives.
That's probably the most important thing.
But I'm also passionate about astronomy.
I've really been getting into astronomy, and it's not really an important passion, but it's kind of neat to study that and have the time to do that.
That.
Omer (57:51.910)
You know, I always thought about getting into something like that, but I. I never could figure it out.
And I found this cool iPhone app the other day which kind of uses some sort of augmented reality where you can kind of point up at the sky, and it kind of helps you figure things out.
But, yeah, it's great.
Stuart Crane (58:08.030)
Yep, I have that as well.
Omer (58:09.190)
It's amazing how.
How much easier that's getting.
Stuart, thank you.
It's been a pleasure chatting with you and you.
As I said, you have a great story, and.
And I know there's.
There was a lot to cover over what happened in 20 years, and I'm sure we could have talked a lot more, and maybe we'll do that one day.
Is.
Is.
Is drilled down into some of the other stories over that time.
But if folks want to get in touch with you, what's the best way for them to do that?
Stuart Crane (58:39.100)
Probably.
They can get me on Twitter.
I'm SD Crane S D C R A N E. Or just shoot me an email.
I'm on my email all the time.
It's Stuartewartcrane.com awesome.
Omer (58:53.350)
Stuart.
Thanks again and I wish you all the best in whatever you decide to do next.
Stuart Crane (58:58.030)
Great.
Thanks for having me, Omer.
Omer (58:59.350)
Cheers.
