The following interview is a conversation we had with Vijay Sikka, CEO & Founder of Sikka, on our podcast Category Visionaries. You can view the full episode here: $30 Million Raised to Power the Future of Retail Healthcare Technology
Brett
Hey, everyone, and welcome back to Category Visionaries. Today we’re speaking with Vijay Sikka, CEO & Founder of Sikka, a retail healthcare technology platform that’s raised over 30 million in funding. Vijay, how are you?
Vijay Sikka
I’m good, thanks, Brett. Nice to be here.
Brett
Yeah, you too. Super excited for this conversation. And one of the reasons I’m so excited is unlike some of the other guests that we have on where they founded the company a couple years ago, you’ve been at this for a very long time. So let’s talk about that long time. Take us back to 2004 and the.
Vijay Sikka
Founding of the company, of course. So I had sold my second company and were kind of semi retired. We bought a house in Morgan Hill overlooking a lake and the city lights. And my wife, who is a dentist, she basically decided to jump in to owning her own practice. And when I saw that, I said, you know, let me help you out. And she says, so long as you stay out of my way. And so I did. I actually worked in her office for two years as an office manager. And remember, dental offices are kind of like reverse pyramid. The person who is the most qualified is also doing the work. I mean, if he or she doesn’t show up in the practice that day, the practice does not make any money.
Vijay Sikka
And so I worked in her office two years, laid out all the business process maps, and then I went to her and said, hey, you know, it seems that you’re leaving some money on the table by not optimizing your fees. And she says, or how much? I said, $50,000. She says, I need this tomorrow. And that’s kind of the genesis of this company.
Brett
And then what was that early idea? Like, what was that early product?
Vijay Sikka
Yeah. The biggest challenge that I saw was that dentists are not great business people. And I mean, there’s nothing wrong with it. They are really amazing clinicians. And I noticed that it’s not just dentists, but, you know, veterinarians, optometrists, chiropractors, orthodontists, oral surgeons, anything that we call as we refer to as retail healthcare, which is almost approaching a trillion dollars in market services a year in the United States. But it’s completely ignored. It’s 50 years behind the hospital based healthcare technology.
Brett
I’ve heard this a lot, especially the founders that I bring on who were doctors and they left the practice to go and build companies. They say it was a painful transition because they spent their whole life learning medicine. All of a sudden you’re dealing with accounting and taxes and you just have no clue what you’re doing. You were never trained to do it. I think the same thing I’ve heard that with lawyers, like that is like the thing, right? If you spend your whole life being trained in one profession that handle the other side is very difficult.
Vijay Sikka
It’s super accurate. And the thing is like remember one of the things about this industry that I noticed is that it’s a reverse pyramid. As I mentioned, the person who is actually at the bottom of the pyramid, who’s supposed to be the individual contributor, is also the most qualified. And that’s the dentist, that veterinarian, that’s the optometrist, that’s the one who if he or she doesn’t show up in the practice does not make any money. And people who are managing are two years out of high school or vocational colleges. And the whole idea is that this is a reversed scenario where there’s huge business inefficiencies and that’s really the reason why I wake up every morning and come to work.
Brett
Let’s talk about vibes. As much as I hate that word, I think that’s a good word to talk about what were like the vibes around technology in 2004. So I know a lot about what it was like in 2020 or sorry, in 20 or 2001 can’t even say this. It’s a foreign year for me to try to say, yeah, we know all about the dot com crash. What were things like though in 2004?
Vijay Sikka
2004 was a very interesting year. I mean if you really go back in time you will notice that AOL and the dial up Internet was actually the most popular amongst the dentists. And they hated there was high speed bandwidth, high speed Internet available. But they hated, you know, the possibility that their front office is going to be surfing MySpace which is the precursor of Facebook. And so they were always concerned about it. But what we noticed was that there was awareness and within a matter of a few years the entire industry was just completely on high speed Internet, was using the most available tools.
Vijay Sikka
And that’s one of the reasons why it’s retail healthcare, because they do tend to use online banking, they tend to use all the most recent tools, but when it comes to their practices, they have technology which is 50 plus years old. And that’s where we saw the opportunity. I’ll mention what we saw. We saw that there are all these siloed, completely fragmented systems, and There are over 400 practice management systems and financial systems that the dental industry uses, same as with veterinary, same as with optometry. And we just saw that as the opportunity to bring something, all of them together in one place, which then would not require the dentist to make investments in trying to change anything in their practice because they’re afraid of retooling their practices.
Brett
At what point did you make the jump from focusing on dentists to the wider retail healthcare market?
Vijay Sikka
Great question. So the thing that we learned was the retail industry works in the exact same way. A dentist role, a veterinarian’s role, an optometrist role, chiropractors role, orthodontist role, is exactly the same. It’s siloed small. And there are over 250,000 practices in the United States between these. And the same applies to Canada, for example. And so we realized somewhere around 2016 that, you know what, this entire, it’s just a continuum and our solution is applying to everything. I’ll give you an example.
Vijay Sikka
So what we do is kind of like Twilio or Stripe where, you know, if you go to a new city and if you use Uber application and if you call your driver, you know, it doesn’t matter whether you are using, whether you are in Budapest or in Mumbai or in Boston, and it doesn’t matter what the driver is using in terms of communication system like Vodafone or AT&T or Verizon, it works. And the reason it works is because of Twilio or we built the exact same similar thing in retail healthcare where we built an API platform which lets you connect with 96% of the market if you just build to one platform. So it’s build once, deploy everywhere.
Brett
That’s super fascinating. Let’s talk a little bit about the money side or the fundraising side. So as I mentioned there, you’ve raised 30 million to date. As I also mentioned, the company was founded in 2004. So it’s a pretty unique history, I would say, with a lot of startups, I believe it’s like, or venture capitalists, it’s seven years. That’s where they’re looking to have their returns, roughly seven years what types of investors do you have where they’re okay with the company having the history that it’s had?
Vijay Sikka
So it took us 10 years plus to build all the connections to 450 practice management systems. And once we did that, now we had a platform which would connect with 96% of the market in the United States and Canada. And we brought our first investment around 2017, 2016, 2017 timeframe. Before that, were operating completely independently and just building all the technology connections. And once we brought the investment, we had very supportive investors. We started to see rapid growth. We expanded our platform. We won four best health API awards, the latest one being just this year a couple months ago. And we started to see that from a number of installations perspective, we approached close to 45,000 practices, adding 20 to 25 new practices a day.
Vijay Sikka
And so the investors actually have started to see us take the company in a direction where we became EBITDA positive, which is remarkable for a software as a service company. 90% plus recurring revenue, all of those are indicators in a direction which actually is something that our investors really support.
Brett
I see. Okay, that makes more sense then. So you weren’t raising venture rounds for the early part of the company. That didn’t come until much later in the journey.
Vijay Sikka
Absolutely, absolutely. And now we are starting to see a rocket ship type of a growth, which is really welcome because once you establish the technology moat, I mean, if somebody else tries to do it’ll take them six to eight years trying to just get to connections that we already have built. And we are running as fast as we can.
Brett
How are you surviving between 2004, then in 2017? Were you just pumping in your own money to support?
Vijay Sikka
We kept growing organically by servicing our customers. We kept growing our install base. I mean, in the early days, I would get chased out of the room by the investors because were so focused on dental. And they would say, oh, dental is not a big enough market. But you know, as we kept expanding, as we kept growing, we started to become a very significant leader, early leader in the industry. And once our installments reached the critical mass, we started to see that we could turn the knobs on insights. And that’s really kind of what my background is all Stanford AI and that when we started to add insights to what we do, we just started to see the growth just explode.
Brett
Was that the master plan all along was to bootstrap, to self fund it, then eventually when it got to a certain point to raise venture capital or initially did you say, I don’t want a venture backed business, I just want to bootstrap this thing?
Vijay Sikka
Initially we thought honestly that we’ll just build a bootstrap business. But then as we started to grow and once we started to see that the opportunity is or to build a platform and optimize an entire industry, which being retail, healthcare, this dental, veterinary optometry, we said the best way to do that is to bring really professional investors. And we are very lucky to have private equity as well as top Silicon Valley investors on board.
Brett
During that 10 years of R and D and building, did you ever have any concerns that like you were too early or maybe what you were building was not possible or in your mind, you know, it was possible, it was just going to take some time?
Vijay Sikka
No, always. The concerns are always there. I mean, you know, the, A good friend of mine a while ago had said that having a startup is like, you know, you’re late to a investor meeting, you have a flat tire and there’s a car on your tail. You’re driving a car which is running out of gas, have a flat tire, there’s a cop on the tail and you are late for a meeting. And that’s literally how you know, working through a startup is you’re always short of cash, you’re always trying to figure out how to fix any problems that you might be having. You always have regulatory and other things that you want to be very aware of.
Vijay Sikka
You know that you are taking care because especially in human health, you know, HIPAA and all the regulatory approach, you have to make sure that those are taken care of. And you’re basically running against the clock when it comes to the market.
Brett
That reminds me of the Elon Musk quote, which I’ll probably get wrong, but I think he had one that was something along the lines of entrepreneurship. Entrepreneurship is like chewing glass, staring into the abyss. And I think that very well.
Vijay Sikka
Very true. And were lucky that, you know, I mean, the way I look at entrepreneurship is three hacks. The first hack is product market fit. The second hack is distribution, which is kind of go to market. And the third hack is people. So, you know, great CEOs actually master the three hacks. Not just the first hack, which is product market fit. Product market fit is great, but you know, that’s just the first step, distribution. How do you get your product out there? How does, how does the product expand? That’s the second hack. And that in my opinion is really way more valuable and harder to do than the first hack, which is the product market fit. And then the third hack, which is people finding the best team, which can kind of become inevitable in terms of success.
Vijay Sikka
How do you make the success inevitable? How do you make it a self perpetuating growing machine? That is the most, I mean, in any case, people who. Bringing the best people, best team members is in my opinion the greatest achievement of life.
Brett
Well, let’s go deep on hack number two on the distribution side. So if we just look through your marketing strategy, how have you seen that evolve over the years? Maybe there’s like chapters we can break this up into or however you want to break it up, you know, like what have been those big evolutions of the marketing strategy.
Vijay Sikka
So marketing strategy does evolve. And you know, as I mentioned, once we got the product market fit, at that point I was running around the entire country and my, I remember my kid was like 4 or 5 years old at that time. He used to say, hey dad, could you put me in a suitcase and take me with you? Because I would be out on the road all the time and I, you know, three days out of five I would be on the road and I was going around talking to every single study club and every single groups of doctors that I could get to.
Vijay Sikka
But as these things start to evolve, the things that we realized was direct sales and direct one one is really not the best approach because you could probably be raising 100, $200 million and still not be able to get to this highly fragmented market. As I mentioned earlier, this is a, you know, there’s 250,000 providers in this market and there are some big channels. And the opportunity that we started to explore was how do we build something where we have force multipliers and we use the channels as a great growth strategy. And the channels being, I’ll give you an example. You know, I mentioned the uber example in the Twilio earlier. So we have some of the biggest names in the industry. Dental, veterinary, optometry, for reputation management, revenue cycle management, payments, business performance management.
Vijay Sikka
All of them are using our platform in order to run their applications. And what that does is that gives us these channels which allow us. Because all the doctors, when they approach the doctor, they bring the doctor to our marketplace. The doctor signs the C. AI paperwork, business associate agreements, and then starts to get that service. So you see how our distribution is built into our business model.
Brett
Was there another company that had built out a similar distribution model that you were studying or considering from different industries or different parts of the world? Was there a model that you kind of modeled this after or is this a very unique approach that you just really dreamed up in your mind?
Vijay Sikka
There have definitely been companies which built some unbelievable distribution models. Mulesoft was an early player which was acquired by salesforce.com and we also saw that there were a few other companies I mentioned, Twilio and Stripe, they built an amazingly fast growing distribution model which is very similar. So yes, were inspired, but within the retail healthcare there weren’t.
Brett
Makes sense. What’s it like selling into the retail healthcare market? What are those buyers like? How do they think about technology?
Vijay Sikka
So we realized that solo practitioners, which would be the individual dentist who opens an office on Main street, are usually harder to reach because there’s a lot of gatekeepers and there’s a lot of. And they’re busy. So we took an approach of, like I mentioned the entire thing where we enabled application builders who would bring their solution to the doctor and in the process get Sika platform installed. Because the Seeka platform enabled access to any practice management system which is being used by over 96% of the practices. So that’s the first thing. And then the second thing we found was that dental service organizations, DSOs, so what is a DSO in the United States, funded by private equity, a large number of practices have started to consolidate or be consolidated into groups of practices.
Vijay Sikka
So kind of like what you would expect, a highly fragmented market is starting to consolidate. And those dental service organizations are sometimes multibillion dollar publicly traded companies. And so what we do is we bring our solution, our platform, ours is an infrastructure as a service to those DSOs because they may have offices all over the geographic locations within the United States. They may have different practice management systems at each location. And they really cannot transform, convert all those practices into the same practice management system because it’s really hard and it takes too much commitment and it takes two years or so to convert. And during that process, the revenue stops and you cannot really stop the mother’s milk, right? I mean, you got to make sure that the practices are continuously working and the revenue generation is happening.
Vijay Sikka
So our sales strategy included selling to DSOs and selling to group practices in the veterinary world also. So that’s basically what we use to drive growth.
Brett
Can you tease us with some numbers about the growth that you’re seeing today?
Vijay Sikka
Yeah, I mean the company is growing at around 40 to 45% plus. We are EBITDA positive and we are actually really enjoying. We have our first year of profitability this year, which is something which makes, you know, it’s a strangely empowering thing because for a software, as a service company with incredible net dollar retention, we are approaching. We are about 110% on net dollar retention. So when you start to see gross profits at the kind of 80% plus range that we are at and EBITDA positive and the growth rates, we start to be in this group where what we want to do is to just continue executing and reach fairly significant milestones in the next few years.
Brett
If you reflect on that success that’s led to that growth, what do you think you’ve really gotten right as an organization?
Vijay Sikka
I think the innovation part, and staying relevant, like you mentioned earlier, for a company which is over 15 years old, the most important thing for us was to be innovative and staying relevant. And I think we have successfully done that. And innovation is in our culture. We have a very respectful culture in our company. Highly innovative. Just to give you an idea, our average age of team members is actually 15 to 20 years below the average age of where, you know, where Silicon Valley technology companies are. And our women to men ratio, if you will, is also 20 points better than where the Silicon Valley is. And so one of the things that we have done is we have built a diverse team. We have built a, you know, highly, you know, we focused on culture.
Vijay Sikka
As I mentioned, the third hack is the people, right? And how you build the culture, how you build the team, how you build the people, and the innovation portion of it. That’s really what, in my opinion, has been the reason for our success.
Brett
What do you think people see when they leave a job behind to join the team? Why are they joining it? What are they buying into?
Vijay Sikka
The feeling, the experience, the opportunity, and to make a difference in the lives of thousands of doctors, millions of patients. We have 150 million patients on our platform. And in terms of processing transactions, we are processing a billion transactions a day. So that kind of gives you an idea, the sense of pride. And we are still 45 people. So the company is not a giant in the sense that you lose your sense of identity, you still understand how to run how the business works. And that, I think, really appeals to the entrepreneurial team members who want to join us to learn how to grow. And someday they will probably run their own businesses.
Brett
If we look at the. Let’s see, the next year. So if we’re planning for 2025, what are the top priorities that you have for 2025? What are those top objectives?
Vijay Sikka
Brett, we are AI company. I mean, Sika AI. And one of the things that I want to share with you is that my background is 30 years ago I was actually publishing and writing papers on AI and this is when AI kind of died off and then was sexy again. Right. So we are talking about leveraging insights and how we take the information that we have. And we have, As I mentioned, 150 million plus patients on our platform. The doctors with consent with, you know, dotting all the I’s and crossing all the T’s. How do we make sure that we bring the best of benchmarking and real time AI into this industry? So we built this thing called dental LLM which is the first LLM built for dental industry. And the key thing about that is that it actually beat on benchmarks.
Vijay Sikka
It beat ChatGPT4.0 and Claude by anthropic and Gemini 1.5 by Google. And that’s because of course it has dental domain. So, you know, I mean, it knows what the dental industry and veterinary industry and others are really looking for. It’s not a general purpose solution, but it’s an LLM which does not transfer your data out into some mega corporation somewhere. So the dentists and the DSOs and the veterinarians and they all love it because their information stays within the bounds of what they want. And so that’s an example of what we are doing in 2025. So we have also applied AI beyond the generative AI. We have AI using other models. For example, for life insurance, our platform is being used to do underwriting. And now oral health. As you probably know, oral health and cardiovascular health are connected.
Vijay Sikka
I mean, the plaque here is the same plaque that is gathering around the heart. And the crazy thing is that we have been able to prove, working with some of the largest reinsurers and others, that oral health, if you take care of your oral health, you actually improve your mortality. And I know it’s morbid and sounds really weird, but that has a direct impact on underwriting. And so our platform and the AI that we use to build our models on mortality are now being used by, you know, around six or seven life insurance companies with consent to do underwriting. Similarly, we are working with, you know, industry manufacturers to hone research and product development, again using benchmarking and clinical data. And all of that uses AI. So you asked me, you know, what is the focus in 2025? The focus is AI.
Vijay Sikka
The focus is sales and marketing. That’s really the two areas that we are driving forward.
Brett
Amazing. I love it. Well, that’s our final question. So we are up on time. We’ll wrap here before we do. If there’s any founders that are listening in, they want to follow along with you. Where should we send them? Where should they go?
Vijay Sikka
So my email is Vijay.Sikka@sikka.ai. And I love opportunities of interacting because I’ve gone through, like I mentioned to you earlier when were talking, that I’ve gone through school of hard knocks and taken lots of left turns in my life. Entrepreneurship and running a company is not easy. It’s definitely one of those challenges that we are always trying to balance multiple things. So if I can be of assistance to anyone, I’m here.
Brett
Amazing. I love it. Well, thank you so much for taking the time.
Vijay Sikka
Thanks, Brett.
Brett
All right. Oh, that was so fun, man. Such a great conversation and love.
Vijay Sikka
Thank you.
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