Impacting 166k people a day is easy.
Just ask Matt Douglass, cofounder of Practice Fusion.
All it takes is two years with barely any salary, a few nervous breakdowns, and several failed startups over the course of 15 years.
Piece. Of. Cake.
Today Practice Fusion’s software manages 5M patient visits, every month.
Matt was gracious enough to sit down with us and share his entrepreneurial journey.
And to think…
It all began with a computer and Q-basic
When he was young, Matt wanted to be Indiana Jones.
It started with wanting to be an archeologist, I don’t know why, probably Indiana Jones had something to do with it. Obviously, in retrospect, I didn’t have much of a grasp of where the market was for that particular career.
That obsession didn’t last very long because when I turned five, my dad bought a computer for me and I was hooked. I wrote my first computer program when I was seven. From that point on there was no doubt in my mind what I was going to be when I grew up. I had an immediate affinity for computers.
I consider myself incredibly fortunate that my dad had the ability to put a computer in front of me at such a young age. Best gift he could have possibly given me.
From there, Matt took the typical route, school, college, and consulting on basic database functionality and website creation.
It was through this process that Matt learned that…
It takes a few tries before a mega success
A little known fact: Practice Fusion is actually my third attempt at starting a company from scratch. The first was a simple contracting gig, just my own company where I would contract out work for basic websites and database functionality to run the website for a number of different verticals.
I did some work for local retail in Houston, more advanced systems while in Boulder.
As someone who started helping small businesses with IT support, I could relate. It was clear that he found a need in a small niche and filled it. After that he moved to Houston, where startup number two was launched.
In Houston, I tried to start a company with a few coworkers. We made the mistake of trying to keep our day jobs while expecting to have enough energy, time, and resources to start another company on the side. In 2004, we were attempting to build tablet-based software that would utilize RFID to manage wireless inspections – anything that a municipal inspector would need to replace the paper forms and associated workflows..
The idea was that we could turn what was normally a six-to-eight week process for filing the paperwork and processing payments into a five minute quick inspection process that could be paid for with a credit card on the spot. The idea was a little ahead of its time, but we were also quite naïve to the amount of work that was ahead of us. But the fatal flaw was expecting to simultaneously be able to keep our day jobs.
Of course, I had to pry about…
When Matt Douglass’ second company failed at 24 years old
After putting so much time and energy into his company, I was curious how it felt to see it fall flat?
Well, it wasn’t heart breaking, I saw it coming and I didn’t have high expectations for it. I was 24 at the time, so I didn’t have a whole lot riding on it. But I’m a pretty fierce competitor, so I don’t like failing in anything. It was disappointing, sure, but it gave me a small taste of entrepreneurship and building something from nothing.
I knew I wanted more. I knew that was the path I wanted to take with my life.
It didn’t lose anyone too much money, thank goodness, and I learned a lot of valuable lessons along the way that set me up for the move to San Francisco and, ultimately, the proper mindset to start Practice Fusion.
I see it as a pretty clear-cut example of failure being necessary for success.
Which quickly led to the topic of…
Failing is only failure when you fail to learn
Knowing Matt well, it was hard not to digress into an existential discussion about failure during our interview. We’ll save you from that, but during it an interesting point arose:
I agree that failing without learning is the only real failure. I think a lot of people buy into the axiom that success breeds success. And people who are successful have had nothing but success along the way. That may be true in a few anecdotal cases, but I think that’s largely false. The only reasonable predictor of success is one’s work ethic.
Which is something I’d been thinking extensively about as I prepare my talk for the Lean Startup Conference. We all talk about “redefining failure”, but it’s another to live it, learn from it, and accept it. My suggestion when mentoring entrepreneurs is to look back at a highly negative moment of life, say a breakup with a long term ex, and map out all the unexpected results that came of it. For myself, if it wasn’t for an ex-girlfriend I wouldn’t be writing to you today and I’d never have met Matt.
It’s not just redefining failure, however, it’s what you do after that counts. After the failure of his second startup, Matt does everything right – resulting in a serious home run.
So we moved on to…
After the failure
“I wasn’t pursuing what I promised myself that I would pursue”
[After my second startup failed] I moved to San Francisco without a job because I knew I wanted to be right in the middle of the tech boom. By moving, I was maximizing my chances of finding my purpose. In Northern California, I’d be much more likely to find an idea, a mission that I could really pour my heart and soul into. I was super ready to take the plunge.
“I was maximizing my chances of finding purpose” – beautiful. Although he didn’t know how, Matt knew that by putting himself in the environment where everything was happening he maximized his chance for success.
And then life happened.
I took a job in an investment firm in the Bay area and after eight months of that I started kicking myself again. I woke up in a cold sweat one morning and realized that the same thing was happening as when I was in Houston: I wasn’t following my dream. I wasn’t pursuing what I promised myself that I would pursue–something really substantial–really something that I could pour my whole life and energy into. That afternoon, I started actively hunting for someone who had an idea that had the potential to change the world in a positive way.
Of course, like all entrepreneurs Matt was successful “overnight”… after 8 weeks of hard work.
[During that time of searching] it was starting to get under my skin that, well, maybe I’m not going to find anything. Self-doubt kicked in. Maybe I’m destined to work a nine to five for The Man for the rest of my life.
I wasn’t despondent about it, but I was quite frustrated, and that definitely spurred me to just keep looking. I knew that if I continued to put myself out there and make it known to people that I was looking for something big and important, then something could come out of nowhere. Being passive was not a recipe for success.
Which paid off when…
Matt and Ryan Howard meet. Everything changes.
“From the moment I met Ryan, we had immediate rapport… I quit my job the next day”
After his 8+ weeks of searching, talking to various startups that ranged from solo entrepreneurs to teams of 15, Matt gets introduced to his destiny.
I got introduced to Ryan [Howard] through a mutual friend who knew that I was looking for something big. I had skills as an engineer that fit naturally well with someone like Ryan who had a big idea, but was lacking someone who could execute on the tech side of things.
I was incredibly fortunate to have met Ryan. It was at Starbucks in the Marina [of San Francisco]. I walked to the back in my awful investment firm monkey suit. He looked like he hadn’t shaved or showered in about a week. Maybe he truly hadn’t even had time to, since it was clear after 5 minutes of talking to him that he had been pouring his entire heart and soul into his baby: Practice Fusion. From the moment I met Ryan, we had immediate rapport.
He pitched me on his idea that from the day you’re born, to the day you die, all your medical information is available to any medical professional who needs secure, authorized access to it. Ryan is an incredible salesman and he didn’t have to say even 10 sentences before I was completely sold. I quit my job the next day, started at PF two weeks later, and we launched our first Electronic Health Record product to the market about eight weeks after that. I think it’s safe to say that we moved really, really fast.
And things kept simultaneously moving incredibly fast, and incredibly slow. Two years after their meeting Practice Fusion was running on fumes. They were slightly ahead of their time.
And that’s when…
Things get rough and wallets get tight.
The sequence of events was Ryan had raised money from friends and families, sold his house, sold his car, to get the company off the ground for two years prior to our meeting. That was enough to kickstart the business.
It turns out that Ryan also used the settlement money he received from a motorcycle accident to eke out another few months of runway. But by the time things turned around:
“Everyone working for us hadn’t taken paycheck in a few weeks – Ryan and I hadn’t taken a paycheck in quite a while.”
Which was incredible that…
When the cash was gone, the vision pushed them onward
For an entrepreneur, this is where the rubber truly meets the road. When you’ve sold all your possessions; begged and borrowed financing; and keep working 100+ hour weeks for no money.
It takes more than potential cash, it takes huge vision, grit, and faith that something will work.
We knew by the year 2020, if we looked ahead to that day, it was incredibly likely that there was going to be a Cloud-based electronic health record provider that would be a dominant player in the field. And we wanted to be the ones to do that. We didn’t want it to be somebody else. When that is your mindset, it can sustain you through difficult times.
Then lightning strikes when…
Practice Fusion becomes (essentially) mandated, and the phone melts
Running on vision alone, near the end of the rope, Practice Fusion gets the break they’ve been looking for.
In Obama’s 2009 Stimulus Bill was the HITECH Act, which allocated tens of billions of dollars to encourage US physicians to adopt electronic health records.
Literally the day after that stimulus bill was signed in early 2009, we were getting calls and emails from people who previously wouldn’t return our calls, wanting to invest in us. They saw what was happening, which was a quasi-mandate from the government for doctors to adopt our software.
Flush with fresh funding and enormous demand, the “real work” begins.
In fact, Matt ended up…
Coding so hard, a concert couldn’t even keep him awake
“My buddy had to elbow me halfway through their performance”
There are many mentions of Matt’s epic coding sessions – some lasting 2-3 days at a time. Of course, I was curious, were they true?
Yeah, there’s a bit of urban legend around my late night coding marathons, but there are kernels of truth to them. When we launched our second version of our product in 2008, we had a deadline to provide confidence to existing and potential investors. I had to code two nights straight and I got maybe an hour of sleep over a three day period. I was aided by only caffeine, by the way, to answer a common question that I get.
Here’s an inside story most people don’t know. Right after that 72 hour marathon session, I went to a concert at Bottom of the Hill here in San Francisco with my friend, Gary.
I was so beat, but I really wanted to hear a few of the bands playing that night. The final band, A Place to Bury Strangers, came on. Most people would describe them as Noise Rock. Essentially a wall of sound. Here’s how tired I was. Halfway through their performance, Gary had to keep elbowing me in the side because I kept falling asleep. I was standing up, maybe 10 feet from these huge amplifiers, and I was falling asleep. That’s as exhausted as I’ve ever been in my entire life.
And now the great success, right? Well…
Still not out of the woods: Matt has a nervous breakdown that leads to breakthrough
“The last three or four years of my blood, sweat, and tears flashed before my eyes.”
You’d think that after all of this, Matt would be unstoppable. But, like all humans, he had a snapping point.
One of the more crucial moments in my life was a nervous breakdown that I suffered in 2010, after an overnight release of our EHR hadn’t gone so well. The next morning, our customers weren’t able to log on to their EHR for a few hours. As we were resuscitating the system, basically the last three, four years of my blood, sweat, and tears flashed before my eyes. I felt those 100+ hour work weeks from the last 3 years starting to crash around me. Obviously, I was sleep deprived too because we spent all night trying to get the system back online.
That was probably my darkest day. It felt like everything we had poured our lives into over the last 3 years was about to go up in smoke. Fortunately, I had hired some really remarkable engineers and our lead architect, Robert Ryan, was able to figure out the problems that were occurring. Everything was great from there on out.
What was my darkest day turned into my biggest revelation: you can’t keep trying to do all this yourself. I can’t tell you that tough experience was worth the learning that resulted from it, but I can tell you that I’m a more balanced person because of that experience.
Now, over 8 years after Matt joined Practice Fusion, the company is poised to single-handedly put San Francisco’s health innovation scene on the map. While they still have a little ways to go before an IPO, all signs point to a grand slam.
From Indiana Jones, to investment banker monkey-suits, Matt pushed through.
Of course, he wouldn’t be himself without a few more pearls of wisdom.
Find your grand vision by mapping your options
One of the things that I’d like to impart on anyone who is bold, daring, and audacious enough to try to create a company from scratch is: it’s okay to not know how you’re going to get to where you’re going. But keeping your eye on a goal–on some target–you put out there for yourself and your team is extremely important. That constraint allows you to really focus on potential various paths you can take to get there.
Then, by laying out those paths, you force yourself to be really honest about what it’s going to take to execute on those options.
Once you have your options, get a partner
If there’s one universal truth, it’s that you can’t do any of this on your own. Trying to do it all on your own will crush you, it will zap your entire spirit.
If you’re doing it on your own, you don’t have anybody around to lean on to take some of that burden off of you. Going solo also makes it much more difficult to raise investment cash.
Once you have a partner, delegate intelligently
“ I need to hire as quickly as possible and delegate even faster.”
Once you form your team around you, it’s really important to delegate intelligently. The power of delegation is probably the biggest power that you have. And you can’t just delegate the work – you have to delegate the responsibility, the accountability. Delegate the idea and try your best to not to be prescriptive of how it’s accomplished. Because ultimately, the end product is what is important, not necessarily how you get there.
For a long time I thought, yeah I got this I don’t need anybody else. I can do this better and faster, and more intelligently for the long term than anybody else can. And then I realized, unfortunately after a nervous breakdown, that
- No, I can’t do all this myself;
- Absolutely, other people can do it more intelligently than I can; and
- I can really rely on somebody else’s experience who’s gone through this before so we can help plan for the future.
I had to look back from that realization. I realized right that moment, I need to hire as quickly as possible and delegate even faster. Learning how to delegate was probably the most important lesson of my adult professional life.
Focus on your strengths
When searching for a co-founder, Matt knew what he was good at, and what he wasn’t.
I was an engineer looking for a big idea. I racked my brain and thought about some big things that I might do on my own. But I kept going back to the realization that I was probably better off being the technical guy and responsible for building something from nothing. And somebody else was going to be good at raising money, at pitching investors, at PR, at sales.
I hunted for people who were like that and I must have gone through five or six, formal or informal chat with founders before meeting Ryan.
I’m so grateful for the time that Matt put into this interview. I hope you’ve enjoyed it and please be sure to check out Practice Fusion, especially if you’re a healthcare professional.