He Left a $73B Hedge Fund to Fix a BROKEN System | Daniel Schoenbrun

You're going to help us at like, you know, with a business lens, with a strategy lens, make our business stronger. But we're also going to teach you about investing. You could try different types of investing. I got to try equity investing. I got to try like, you know, public equity, stocks, as well as private equity, a little bit of manager selection. So, a fund of fund strategy, the analysis is completely different. When you're evaluating mature business, you're looking at financials, you're looking at numbers, you're using multiples, you've got comps. The the problem is that in the time it took you to do that job, your competitor may have already won that patient away from and that patient is a very valuable patient because most nursing homes have empty beds. It's hard to sell efficiency, especially if you can't quantify it into like how many people you can cut your team, which is never a fun conversation anyway. But if you can deliver revenue, you have PMF, but selling revenue is actually relatively straightforward. You need to know what good looks like. you need to know to sync well with your team and ultimately you need to deliver is just a how we're solving problems in the real world starts a PMF that comes down to customer experience and user experience did you actually make people's lives better and only last which technologies do I need to solve welcome to the let's talk business podcast a project of the PEX group gain valuable actionable ideas from the world's top business leaders to help you take the next step in your business journey and now here is your host Manny Hoffman coming to you from PET headquarters in Brooklyn, New York. This is the podcast for non nonsense advice to help you learn, grow, and lead. Today, I'm so excited to welcome our guest, Daniel Shonrom. Daniel is the CEO of Exceptional, a fast growing software company that fixes one of the messiest part of healthcare, postaccute care. From the outside, it sounds like just another niche, but inside it's a broken system full of delays, miscommunication, and missed revenue where Daniel built a software around. Now his background is wild. He worked at BCG, Mecklesdale family office and hedge funds managing billions in assets. But he left all of that to solve one realworld problem and it's making waves. If you're building something, leading a team, or trying to bring real structure to chaos, you're going to want to hear this. Without further ado, here is my interview with Daniel Shomb. Daniel, thank you so much for joining me on the Let's Talk Business podcast. Thank you. Great to great to be here, Manny. So, we met for the first time at a healthcare event. Uh was a great event and um I found out that you're building um a business, a software uh a SAS business from the ground up. Learn a little bit about your past and I figured that you know we might have a good conversation going and let our listeners into that conversation. So, thanks for having us. Sure. So for our listeners that don't know anything about you uh give us a little bit of your background and then we'll move into uh what you currently do. Absolutely. Um you know my background is uh mostly in finance. Um I started out out of school with a business focus. I did management consulting with Boston Consulting Group and then I switched over to finance. I was in finance for about 13 years. I did few years at Michael Dell's family office and then at a hedge fund called Blue Mountain that managed 20 billion of capital and then eventually at Millennium which is a pretty uh it's a it's a big giant right now at 73 billion. Um and I never I never fell in love with hedge funds. I never fell in love with finance. Um and I'd always wanted to innovate. I'd always wanted to make the world better in some more tangible way. and the opportunity it presented. Um, you know, I'd always loved software. One of the nice things about being in finance is there is a lot of software, a lot of data, a lot of analytics. So, it really was my language. Um, and then, uh, you know, eventually we we met nursing homeowner operators. Um, and we we heard that they're in a lot of pain and in pain and ways that we can help innovate. Um, so that's it's actually really exciting for me um, to have said goodbye to finance. Finance was fun. It was interesting, but not nearly as interesting as solving very re real world problems for real world people. Um, and Barashem in ways that can make health care better. Um, and you know, it's a beautiful thing. Great. So, we'll go into details about what you currently do, how you're solving the problems, the pain points as you mentioned before. Um I do want to um try to go back a little bit if you don't mind uh on the finance side of things because I feel that there is a bunch of lessons that people could learn and there's a bunch of misunderstandings when it comes to this whole um VC hedge fund uh space and so on um you know this this whole space. So first of all what got you into finance in the first place like like what got you to that uh to that space? Good question. Um, I'd always been numerate and like I'm going to say fluent in finance. I wasn't excited about it as a career because I didn't know I I didn't know what my special sauce could be. Um, what brought me there was a lot of people who I'd worked with, a lot of people who I'd seen who they are and how they what they're capable of, they were going to finance. in particular, most of the people I knew are going to private equity. Um, and I I try to stay really open to the signals around me in the world. And if a lot of smart people who I like are going to try a thing, I thought, well, maybe I should go try that thing. Um, and the role at MSD Capital is pretty unique. Really wonderful experience, an incredible experience. Um, and it was a hybrid role from the beginning. it was we're going to you're going to help us at like you know with a business lens with a strategy lens make our business stronger but we're also going to teach you about investing you could try different types of investing see if any of it speaks to you so I got to try um equity investing I got to try like you know public equity stocks um as well as private equity um a little bit of uh manager selection so fund of fund strategy um I didn't get involved in real estate there, but they had different types of teams there that specialize in all different types of fundamental investing. So, I got a lot of exposure to it. I got to try a lot of different things. 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I look forward speaking to you and seeing how I could bring more clarity to your business. Could you give us a quick crash course the difference between private equity um hedge funds um VC money like and this is a this is a topic that comes up a lot. I speak to a lot of early stage invest uh investors and and companies. Okay. So, I'm going to first separate um because none of these definitions are perfect. Perfect. Um hedge fund private equity. I'll do what's easiest first. Private equity. Private equity just means that they're buying equity in private companies. Um though often they also provide other forms of financing. Um private equity is a very big thing. It includes a lot of very different looking things. So it could be earlier stage and riskier. It could be middle stage where they've got a major growth strategy or it could be mature business where they almost have no vision for growth but they just try to milk all the cash out of the business. So PE though it's one word is actually a very broad set of different types of things. There's different types of private equity. Um venture capital I actually think of as a subslice of private equity. It's just the earliest slice of private equity. it is the riskiest part. Um, where the analysis is completely different, right? When you're evaluating mature business, you're looking at financials, you're looking at numbers, you're using multiples, you've got comps, and a lot of public equity investing looks like that. But when you're all the way at the beginning, the product isn't even real yet. There are no numbers. There's no revenue. What are you going to do? What's your analysis? So, they're buying into the vision of the vision of the They're buying into the vision. You know what? I would actually say the best investors are usually not buying into the vision as much as they're buying into the founding team. Um is this a is this a group of people who is um uh generally has their eyes on the right like you know on the right things but but it's actually also about adaptability. I mean really um I'm a first-time founder almost everything I'm doing is new. Um I'm learning a lot along the way and uh if someone were not a fast learner I think they would struggle to do this job. Mhm. Got it. And does it make a difference um like when somebody wants to go out and raise funds um does it make a difference like which avenue they take? Could it make a big difference on the type of investor they get from the get- go? Um you're saying um could you ask a little bit differently? Is this directed towards my business and how we raise capital? No. Before we speak about your business, just general as a as a general rule of thumb when somebody is looking to for an investor. So they could go to friends and family obviously which is the closest to home or they could take the route. Correct. Um so there there are drawbacks to raising from venture capital. Um as a as a general principle, if you're raising from venture capital, you're no longer running your own business. um they own your business and you work for them. Um what I would add to that um is that venture capitalists usually don't share the same incentives as the founding team. A venture capital firm might be comfortable with you going out of business um as long as you're part of a portfolio of companies that really went for it. So their incentive might be to have a portfolio where where they encourage everyone to go for it and they're okay with some failing. I can tell you as a founder I'm not comfortable um with that risk model. Uh and the way that we operate is uh we protect our business and our team first. Uh and and the growth the growth is very important to what we do. Growth comes second. Um so it's it's different incentives than a VC. If if you're a more established business, a VC won't even be interested in you. You go to private equity. Um family offices. I mean, you didn't mention family offices. Michael Dell, like I worked at Michael Dell's family office. Family offices, I think, are one of the most attractive investors out there. If you areworked with family offices and you can speak their language, um, they are capable of moving mountains very very quickly. Um, almost like no other group out there. Um, but it's, uh, you know, it's it's it's not everyone knows a lot of family offices. Uh, and then hedge funds. I mean hedge funds usually when you say hedge fund they're mostly working in like tradable securities. So usually you're not fundraising from them. They're already in the secondaries world once someone has already raised money. Um so you're usually not raising money directly from a hedge fund. But there are some exceptions. Um just as a strategy usually you don't fund raise from a hedge fund. Got it. Which means is some of those investors will get money from hedge funds. Um, yeah. I I mean there are So, if it's an opportunistic hedge fund that also does private investing, that's the most likely. Um, there's also hedge fund strategies that I mean, they're part of the fundraising machine is specifically when companies IPO, they participate in the IPOs. Got it. So, that that that is a major strategy that's out there and Millennium, they're one of the biggest that strategy. Got it. Okay. So just just for our listeners there uh when you hear the word investors looking for investors know that it's a whole industry. You got to know a which type of investor you're looking for and more importantly who that investor is because they could put you out of business the same way they could help you grow. I think that's great advice. There you go. That's great advice. Okay. So now let's get So Daniel went out of finance wants to be a a founder starts a pro finds a a problem and starts a business. What what is the problem you're trying to solve? Um, well, I'm going to say that we found a customer before. We found a problem before we found the business. But the problem that we're trying to solve is the amount of time it takes for a nursing home to evaluate new admissions. Um, it's currently a very manual intensive process. We've spoken to countless admissions teams. um they have to go through potentially hundreds of pages of medical record and they have to go to multiple different websites to figure out if they can accept one patient. It's very important. You can't get it wrong. It's an important decision to make accurately and correctly. The the problem is that in the time it took you to do that job, your competitor may have already won that patient away from you. And that patient is a very valuable patient because most nursing homes have empty beds. It's not even just about are we using all of our beds, but are we using our beds with patients we can support who we can make money from. Um, so our software uses automation and AI and human centric design to take what is currently today like a 30 minute plus process into sub 2 minutes so that when new patients are available for your nursing home, you can see them and raise your hand and say you want them as quickly as possible. So, so just to um bring it down a second in terms of um the details. So, and a nurse usually a patient was admitted to the hospital they going through a procedure whatever is and now they can't go back home they need to go to a nursing home. So, which means the at the moment the the local hospital has that patient. So, where where's your system getting the data from? That's right. So the my system collects the data from the hospitals that are looking to discharge patients. Got it. Got it. Got it. Got it. So So at this point um you're um eliminating um you know today you could have relationships with hospitals, you could have social workers in hospitals. Your system is bypassing that that so so it is not that is an excellent question. many um the the software actually disrupts very little about business as usual except for two parties. Um the admissions team which now their life will be 10 times better and they'll be 10 times faster and the hospital. Now the hospital only knows that you're getting faster at responding. That's all that they can see. They're happy about that. They like fast responses. So that's who's impacted. The relationship, if anything, remains the same. If there's someone in your nursing home that has a relationship with the hospital, they'll continue to do that. And now they could bring a report saying, "By the way, we get back to you within five minutes on every single referral. Please send us more referrals. We're a great partner." Wow, that's interesting. Okay. So, and so you started this business. Zero technical background to my understanding. Uh zero zero is strong. I know some uh basic coding from college and then in hedge funds I would say about half the time in hedge funds I was designing or launching software for portfolio managers and research analysts. Got it. So it's um if I were to say before we came here my focus was on vertical software. So that's software that's designed for specific industry and a specific user. And so in my past life, 15 years in finance, my customer, my users were investment teams, but I built tools for them to make investment decisions. Got it. So I took that same uh general knowledge and knowhow and I brought it to nursing homes. So first of all, a lesson here for for our listeners and I think it's important to to highlight is that and this is something I'm going to just go on a tangent for a minute. Forgive me for that. I love it actually because we're, you know, the job market is not as strong as it used to be and and and I always speak to people looking for jobs or looking to replace their job and they always say that I'm looking for the perfect job. And I always say my response to them is always that you're never going to get the experience that you're going to need for that perfect job without being in the workforce. And so go out, take a job. Yeah. Nobody takes a job to leave the next week. Go out, take a job, be in a job. it could chances are it is going to work out and if it's not going to work out you're going to learn skills that you're going to be able to take further in your new your new career. I think for our listeners what you just mentioned is that sometimes you you think that what you're learning in a certain ski in a certain position you can only apply to the exact same position just in a different company. Here you have somebody that built software or we're trying to fix, you know, anal analytical data points with investors, but now you're using some of that experience and now it's a whole software for a whole different category. I I I think that's a beautiful point. Um, at least part of my experience, and this was true, was you need to try some things to even figure out and confirm what you like and what you want to do. And you don't know what you don't know till you go out there and try it. Got it. And so much was transferable. But if I were to add a uh um a caveat, sure, is I think your your mentality matters. So if you go into all these job experiences caring about excellence, caring about what great looks like and pushing yourself to do that 100%. But some people I've met in the workforce are just taking orders from a boss. They do what they're told. They take their their their paycheck. And I'm not saying they don't learn through that experience, but you're look that type of learning is narrower and less likely to transfer something else. But if you if you hold yourself accountable to having a story for how you produce great outcomes in whatever you're doing that that you could bring with you. So true. So so I want to get into um a little bit more of the founders mentality in terms of getting from going from idea to actually execution. uh because you know there's old saying there you know ideas there's a dime a dozen my version of my version of that is not every idea is a business not every business is an idea so you need to combine the two you need to have the idea but then turn it into a business um and a lot of a lot of people have ideas and they will spend years and whatever months and years to to put something on paper and put something together and then find the investor find the perfect office and just to get started uh what was your first few steps that you took that our listeners could appro could appreciate. Um I I think it is two things that went in parallel. Um if I just got these two things right, Denu, I didn't need anything else. Um the first one is PMF, product market fit. Um I'm going to speak for a few minutes about that in a second. And then the second one is your team. um the team, those are the people who actually make things happen. Um and I I think that's evidently important, but um I don't hear a lot of people talk about it. So I'll go in order. Let's start with PMF, product market fit. Um there's a large literature of philosophy and a scuffle about product market fit. Um, I I'll give the one-s sentence version of what everyone agrees it is, which is if you are providing a market, I'm sorry, if you're providing a product that customers are happily paying for and along the way you generate a margin, you have product market fit. And if you have a bigger market with bigger margins, you have more product market fit. So that's product market fit. Um, and for us, we didn't want to build anything that would not have product market fit. And so we wanted to pinpoint where it was before we built it and then have a systematic way of getting there. And I think we did that very well. We call PMF first and we made sure that there was a customer with money ready to pay for the thing we were going to build before we built anything. So that's step one, PMF first. Step two is um the team. Um, so I'm sorry before we get into team because I think product market fit is so important because it is people don't realize that they they're building and sometimes in in in you know in a cave building something and and and going home excited every night and then all of a sudden it's ready for market and nobody's there to buy or even they're ready to buy they're not ready to pay the amount of money you want. So I guess my question to you is um what how do you do product market fit? Are you surveying? Is it is it speaking to customers and getting analytics? Are you going as deep as understanding how much they have to pay for it? Like how how far do you want to go into that detail to make sure that you're comfortable? Yeah. Um so I'll walk you through a few steps because because we did it in order. Um the first step is um we believed we would have more PMF in a large industry with a lot of big customers. So I'll just use nursing homes as an example. There are 15,000 nursing homes in the country. All of which are reasonably big businesses with big budgets. Um so that is uh a lot of customers and a lot of them are big. That was step one. Step two did not come out of my head. The gdolum of software and innovation have already taught us that people don't buy vitamins, they buy painkillers. You must identify sources of pain. And there is a book that's become very popular recently. One of my BC friends told me about it a year ago called the mom test. And it is a methodology for interviewing customers to gauge the pain. So step two was to interview verticals the different industries to listen for the pain signal. And when you do this you don't even tell them about a product. You literally just interview them and you say you're the expert on you. So I'll interview you about you. You don't know anything about product or technology or solving problems but I'll interview you what you're the expert on. So I did this a bunch of times. mostly with industries and finance, by the way, because I didn't know about healthcare yet. You know, I have a lot of conversations, but no real strong signal jumped out. And like, I'm new to this. I don't even know what I'm really listening for. And then I speak to nursing homeowners like, "Oh, this is it. This is it." Because when you speak to nursing homeowners, a they're all in pain. I have yet to meet one not in pain. And they give the exact same reasons um without they're not they're not conspiring behind. Like, these are different people. They're all just saying the same things over and over and over again. So that is step two. Step one was big industry with big customers. Um step two was a strong shared painoint signal. So now I've got a customer. Now the next bit um was to dig in more about what those pain points are and then it's more brainstorming. So they're hypothesis. But we worked um you know a lot of people like to be very secretive. Um, we took the exact opposite philosophy. We were as open. We spoke to everyone about what we were thinking about and it really helped us move faster. It helped us kick the tires. I helped us circle around the right thing. But ultimately what it came down to was I had to sell this to someone and until someone said I agree to pay money for this thing, I don't want it yet. And so it's, you know, as we circled around and we learned that by making a team faster, we could earn revenue. Okay, let's talk about PMF for a minute, guys. Um, efficiency is nice. It's hard to sell efficiency, especially if you can't quantify it into like how many people you can cut your team, which is never a fun conversation anyway, but if you can deliver revenue, you have PMF. I I mean, assuming you could do it at scale with a margin, but selling revenue is actually relatively straightforward. So, the moment that I heard that there was a revenue angle to this, I got really excited and we dug in. Um, the next bit I'd say about PMF is, and again, I'm not I didn't invent this. I'm just observing it from the world. Um, I think Apple is a great example. Um, Apple has succeeded in making more profit on phones than anyone else by far. And they did it even at times that people were making no money on phones, they always protected their margin. I think one way to understand that is that of companies they understood the focus on customer and user experience better than anyone and they understood that if you really make customer users life as easy as possible then you can capture the margin like saying here's an extra 50 bucks but you get a much better exp they'll always pay it they'll always pay it so when we think about what we build we always think about it from how do we make this the simplest most userintuitive approach possible. We're very human centric in our design. We do not just write things and build it. We sit with users. They talk to us. We show them things. We iterate. Iteration is everything we do. Um so I would say, you know, to recap, um big market, big customers, lots of shared pain. Uh listen to them and brainstorm with your customers. They'll tell you what to build. Um, if there's a way to improve revenue or profitability, it definitely has PMF. Um, and then lastly, you need to sell it before you build it. If no one can be convinced enough to actually buy it, don't build it. Wow. Very powerful. Very powerful. So, now let's move on to speaking about team. Let's go back to number two, which is team. So, I'm still learning. Um but he there there's who did I steal this one from? Frank Slutman, Snowflake CEO. Um he has a book called Amp It Up. I recommend it to anyone especially in software. Um and one of the terms he uses is he splits the world into drivers and passengers. Um does this does this make sense to you many? Drivers versus passengers. Okay. So you know it's everywhere. It's everywhere. And I got to tell you because I've worked in some big organizations. You want to know where bureaucracy comes from? I'll tell you passengers play a really big role in it. Yeah. Um Reed Hastings, that's a Netflix CEO, also spoke about glue people. There's lots of different words for the same thing. Um we wanted to build a culture that was drivers only. Drivers only. Uh we also have no managers. Anyone who needs to be managed isn't ready to work at Exponential. like that is the bar. You need to know what good looks like. You need need to know to sync well with your team. And ultimately, you need to deliver. Um we have a weekly process where at the beginning of the week, we say what we're going to deliver that week. The end of the week, you say if you delivered it. Um and I would say that's been the chorus part. It's a pretty simple test, but is someone reliable enough that they can do that? Um we I would say that we also have a fully fleshed out culture of what we're pursuing. Um we break it into ambition, grit and teamwork. So ambition for me is about the what? Because what is always more important than how. So do you know what to go after? The second bit, the grit part. And I'm not making this up. I took this from Angela Duckworth's book, The Grit. Uh grit. grit has been identified as one of the greatest predictors of success more important than books smarts. I actually think it's um part of the evidence is the from community. The amount of grit in our community is really tremendous. Um and I think it has contributed to a lot of wonderful entrepreneurship. And the last one is teamwork. But we actually spend the most time talking about teamwork. Um I have seen teams of all kinds. I could tell you that teamwork produces compounding effects. Um, and so many stories of the rise and fall of a company can be pointed directly at the failures of teamwork. Um, so it's it's a fireable offense to be bad at teamwork. Um, in fact, I would say it's fireable offense not to be excellent at teamwork. Wow. Um, we are direct with each other. Um, we solve the big problems right away. Um, and we focus on the what versus the how, so we don't get confused. We all stay on the same page. Wow, this was very helpful. Hey listeners, are you struggling to create beautiful looking proposals? 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That's pex.co/pan. co/pan da d let me ask you um what are some um good uh practical advice in the hiring process in order to weed out the people that are not drivers as you said um I have more mistakes than uh successes in this so you're qualified to answer um I'll tell you that references matter a hot and one of the most valuable things that I have is a large network of um high performing people um which just means that when they meet me and they see how I like to do things um they can connect who's a good fit um and most of them have come that way um I try to be scary with culture um I also we are a founders mentality um so we actually pay people less cash especially in the earlier time with the company, we pay above market in equity. Um, and that also self- selects. It really does. Um, if someone's not ready to go for it, they usually don't take a deal like that. Yeah. So, so I want to unpack a couple of the points that you just mentioned. Um, one is, um, in terms of the the hiring process, um, I think this is a a huge missed opportunity for so many companies that they'll they'll not tap into the existing employees to bring them the next employee. Uh, we have had many times in our company, we would offer an incentive for existing employee to recommend somebody else. We have a ongoing program where we do all kinds of incentives and we would the first the part of our um hiring process is the first the first round will be through our internal employees asking them if they know of anybody because they know already the culture. They know what who will make a good fit. They also want to work in a good environment. So they wouldn't want to bring in somebody they don't feel will make their fit. Um so that's that's a good thing just to to mention. Um I I want to speak about the point that you mentioned about um that you also some of the you know some of the comp compensation packages with equity and and this is something I I even want to know you know for myself this is something that I've I've been also involved in other companies with this this came up the the question is um I know there's always a vesting period of of when this goes into effect because th those people still have to prove themselves that they're capable they're going to stick around with the What's the what's the basis of setting up such a such arrangement? Um, I don't know if this answers your question, so I'll give you the quick one sentence. You'll tell me if this isn't the right direction. Um, when we hire, we we call the beginning part a trial period. So, we target a two-eek trial period where it's understood that we really might go separate ways after two weeks. Um and then for earning equity, we have a threemonth cliff it's called, which means that um you don't get to keep your equity if we separate within the first three months. Um however, beyond the first three months, um every month we vest. Um and I I'm gonna say I say this I say this honestly, I am happy for them to keep the equity. If you earn something, it's yours. I'm not taking it away from you. Um I mean anyone who goes into something like this they're pouring their heart into it like everyone earns it. So you have you have different different structures for different types of people or it's like a cross a blanket across the organization. I I'm going to say that it's 90% the same but every deal is custom. Um especially when when you're talking about the balance of equity versus cash. Cash is a very personal decision. Exactly. Um there really is no oneizefits-all for cash. Got it. And then and that and then if if um you know at one point those those employees um leave, they would just uh turn in their equity. Um so they they they stay with it. They stay with it whatever vested. Every single one of these people I would love to have on my cap table whether they stay as an employee or not. Wow. This is very powerful. Okay. So uh let's speak a little bit about um you know obviously with growth comes pain you you're solving a pain uh uh pain for uh an industry we said you have a product market fit but every company not you know the life of entrepreneur is not straight up you know comes with challenges in your business you know obviously like the high level on a high level what are the challenges you face when building a software is it is it in the development is it getting you know in bugs Is it in getting quick enough to to revenue or do you want to know specifically for my company or do you want to know my view whatever it's easier for you to the industry? For the industry whatever our our listeners could learn the most from. Okay. So I think I think the industry may actually be the most helpful then. Sure. Um so I'm going to use a very simple framework to characterize the most important activities in any business and that's product and sales. Um, and if we're talking about building innovative technology, um, that product part begins with the product market fit activity that we talked before, which is can you articulate the thing that someone will give you money for if you solve it for them and do you have evidence that you have that? Um, and it's important that that thing be written down, ideally in a very visual way, not just text, in a way that people can absorb it and really get it. And to have your entire company see that thing. If you do that for product, you've already solved 90% of what needs to be solved. You have created a shared understanding of the vision of the thing that's actually valuable. What happens in most companies that don't take this seriously enough to write it down and make sure everyone understands it is that people effectively have different understandings of what they're actually trying to build and the complexity can compound because you have multiple different people with the evolving definitions of what we're actually trying to do and they start building entire logic and everyone's just going off and out of sight. PMF's the most important thing. Everyone needs to understand that. Your engineer who's writing code, the executive assistant who's answering the phone needs to understand it. Uh it's going to be relevant and also everyone on the team impacts everyone else. So someone says something wrongheaded about what your business priorities are, someone else heard it and now thinks a wrong-headed thing about your business priorities. So having that priority here at the top and then it flows down that um we have people who are in charge of delivering a great customer experience and a great user experience. So they define what needs to actually be delivered. And downstream of that is engineering technology. They take orders. Not every technology operates that way because these are extremely talented, high performing people. Normally when you think about a hierarchy, you would think well obviously the co-founder CTO should be at the top of the ladder, but he takes orders because he's technology. Technology is just a how. We're solving problems in the real world, right? that starts a PMF that comes down to customer experience and user experience. Did you actually make people's lives better? And only last which technologies do I need to solve? So that's the product side. On the sales side, um, you know, I I don't think there's a one-sizefitsall answer. Um, I think that every market is different how you need to sell it, but it's a very real pound the pavement speaking to real customers. If you're not speaking to real customers, you're not doing it. Did that help? Yeah, absolutely. Um I want to go one step further which is um you know it's the you know every company we always say it's like it's it's very easy to grow a company. It's managing the growth which is the hard part because the first round of growth is pretty easy because you have a product you have the few first batch of customers and you're excited and what once you start managing the growth which means scalability of the company that's when you have to put in so many different layers in the company in order to to to to build a proper foundation. I guess in software um there's a there's a ton of the unknown. You know, you speak to founders of software. I thought I'm going to be x amount of dollars in in development. All of a sudden, our MVP, our minimum viable product wasn't there yet. Our beta, our alpha, whatever, all these terms in technology is in my life. Okay. So, the question to you is, um, at which point, you know, this is always the, you know, the, you know, the two sides of the coin, these these visionaries, entrepreneurs, and saying, you know, let's go for it. Let's let's put fuel to the fire and let's just put you know in and obviously in a business it's money. Let's throw money at it. Let's throw money at it and then at one point we'll be this company and then we'll grow and then all of a sudden we'll have customers and then somebody will come and buy our company. You know that's that's the vision of a of and then there standard. Yeah. And then there's these entrepreneurs that say you know what let's build slowly but surely one customer at a time. Let's solve it. Let's have real revenue. Let's have real growth. And then who knows? I don't I I'm not building for your exit. If I'm gonna have a good opportunity, of course, you're gonna take it. But but ultimately, it's a different mindset throughout. Yes. Is it a It is a fundamentally different mindset. Okay. Is that dictating decision every day decisions differently? Um so once upon a time, I had to like drill this in more. It just I don't even need to say it anymore because everyone already knows my answer. My answer is that we're always building for forever. Um, and because we started in an industry agnostic way, I actually do plan to do this forever. Um, and ideally in a way that scales. So, ideally, you know, I'm launching one product this year. Ideally, it's two the next, four the next, eight the next, 16 the next, keep going. Now, the only way I can pull that off is if I have an incredible team that knows how to run the play and that we can run these plays over and over again, get better and better at them and train other people to do it, too. Um, so I had to explain all that at the beginning because no one who joined Exponential conceived that that's what I wanted to do, but that's what I want to do. Um, and that's how we do it. So, we we do have playbooks for um, and they're not dense, hardto- read things. We actually need to write in one page. which is called a onepage playbook. Um but for everything important in our business, there's a onepage playbook. Um and there's a team that's been mandated to deliver. Beautiful. But let me ask you um in terms of of finance obviously um you know this is where investors come in and money. Um I'm going to I'm not going to ask you specifically about your business. I'm going to ask you again about industry standards or what your recommendation would be for other founders or other people listening which would be um a lot of times we have seen companies take outside money a little too fast too early. Uh what would be advice um how to go about you know to um go about the timing of finding an investor? Great question. Um I'm going to say this with a lot of humility. This is not an expert opinion. It's just what I'm saying right now. Um, I would work backwards from runway. Um, so I would say before you even start, know what your runway is, i.e. how long you can operate without needing additional cash coming in. Um, and to have I'm going to say at least six, but the answer is probably eight. Eight plus months of runway. Oh wow. Um so if you are getting close to that mark I would say start fundraising and fund raise in a way that you know you don't have to fund raise again right away. So like getting getting you more months run away. Um the the additional piece I'd add to that is ideally time it around important milestones that make it clear to your investor that you're more of a business than you would have otherwise been. Right? That's like the ideal time. Okay. So, it might be when you've gotten in your first two design partners, like two earliest versions of a customer. Then you can fund raise and say, "This isn't just ideas in a on a PowerPoint. I've got two customers, right? Now, they're barely customers. They're design partners, but that's something." Um, the next could be once you've got like something that you can demo, you can show an actual piece of software that's working. Um, I would say that once you have revenue, uh, you're a very different kind of business once you have revenue. Um, so you know the the ideal time to have raised is not the day before you got your first dollar of revenue. It's about a month or two after that when you've got revenue growing and then you can show that to somebody. Very very good. Um, and it's not only like just because you you mentioned this um so many times you could see uh people have these great ideas, they're visionaries. They're the behind the product. They're literally the the the chief product officer as well and then all of a sudden they get sucked into the raising of the capital and then all of a sudden that becomes their full-time job and now the product suffers. 100%. Well, um that is true. I I think that we've done a good job sidstepping that challenge um because we made we packed the house with product talent. Wow. So from the very so I really am very lucky about this. My CTO is also a way above I would say he's an excellent product manager and we made sure to hire a product manager and then we hired a director of customer success who who is also good at product management. So we just had a lot of people with eyes on the product um that I could fund raise in in peace. Beautiful. I still got pulled in. I you know you never you can never really it's still a startup it and product is also the most important thing it just it always is. Okay. So let me ask you this question which is um obviously you worked for large companies um you know multi-million or billion dollar organizations um and and you have seen a lot. What is the one or two things you took away from that part of your life that you really incorporated the way you're building this company? Um the first one is the obsession with teamwork. Um and there's a lot of sub bullets that go to that including we do radical transparency. Um including we speak very directly with each other. Um including with feedback, including in public. We're very respectful. Um you know, we I think we do it very appropriately. Um but I've never been in a business that was able to resolve things nearly as fast as we can. Um, and those things that kind of like grade at you that can sit and rot. We don't let anything rot. Uh, and I'm sure, you know, I say that overconfidently. I'm sure I'm missing something, but we'll get it. That when I smell that rot, we're going to get to it and we're going to deal with it right away. Um, and you see the way when people are all of a sudden everything needs to be a conversation in this closed room and then I have to go talk to that person. It just everything takes 90 steps and it's like let's just get a room and figure it out. Um, that sounds simple, right? Yeah, but it's all about communication. Today's day and age is all about proper communication. Communicate communication. It is um it is arguably the most valuable skill. And I'll say that, you know, you asked me about interviewing. If I were to add one more thing to that list, it would be you can tell if someone's a good communicator in an interview, especially if you want direct and clear. And if someone's not good at it, they're not getting better fast. Like that's a multi-year transition at best. So, you could pick for that pretty quickly. The second thing I learned from versus big I'm going to say something I've learned positive from the big places. Um, ambition counts. If you don't try to do something that's best in the world, you're definitely not going to. And thankfully, everywhere I worked at had an attitude of we are going to be the best. Let's go be the best. Um, and I would want it no other way. Wow. Very powerful. So um how could people find out more about you and about the company? Absolutely. Thank you. Um you can find us on uh LinkedIn if you search for Exponential or you could come to our website exponentialtriage.com. That's the name of our first product. Um and if you if you attend healthcare conferences, you're going to see me. Very good. For the links, resources mentioned this episode, check out the show notes at www.petgroup.commpodcast. Let's close with the four rapid fire questions. Are you ready? Yes. Number one, a book that changed your life. Atomic Habits. Number two, a piece of advice you got that you never forget. Be yourself and find the perfect partners. Wow. Number three, anything you wish you could go back and do differently? No. Love it. And last and final question, what's still on your bucket list to achieve? Uh, build a one tr 100 trillion dollar company and give half to Ted. Beautiful. Daniel, thank you so much for joining us. I know your time is valuable. That is why in the name of our listeners, we'll forever be grateful for sharing some of your time with us today. Beautiful. Take care. It's been a blast. Thank you so much. That's my conversation with Daniel Shon. My takeaway from this one. Number one, fix real problems, not trends. Daniel built exceptional not to chase tech, but to solve a broken process in real people's lives. The market rewards clarity. Number two, ask where's the friction? Every manual task in healthcare is an opportunity for software. Start by asking what slows people down. Number three, complexity is the enemy of adoption. Daniel focused on making the product so simple everyone could use it. That what makes it scalable. Number four, choose your early clients carefully. Instead of chasing everyone, exceptional picked early adopters who wanted to innovate. That feedback loop made all the difference. And number five, your job as CEO is to create clarity. In a fast growing company, confusion spreads fast. Daniel's main job is to keep everyone aligned, so what matters most. And that's a wrap for today's episode of the Let's Look Business podcast. I hope you enjoyed the practical, nononsense advice that our guest shared. If you found value in listening, I would be so grateful if you could share the episode with your friends and if you could give the show a five-star rating on Apple Podcast or wherever platform you listen. Subscribe to the show and get notified every time we publish a new episode. The Let's Talk Business Podcast is a PEX Group original production. Until next time, make it a great day. [Music]