The following interview is a conversation we had with Ty Allen, CEO of SocialClimb, on our podcast Category Visionaries. You can view the full episode here: $12 Million Raised to Power the Future of Healthcare Marketing.
Brett
Hey, everyone, and thanks for listening. Today I’m speaking with Ty Allen, CEO of SocialClimb, a healthcare marketing platform that’s raised 12 million in funding. Ty, thanks for chatting with me today.
Ty Allen
No problem, Brett. I’m really glad to be here.
Brett
Yeah. So to kick things off, could we just start with a quick summary of who you are and a bit more about your background?
Ty Allen
Sure, sure. Yeah. I guess I’m the kind of entrepreneur that just keeps trying. Maybe that’s not serial, but that’s an entrepreneur that doesn’t give up. I’ve had a few businesses that I’ve done well with, and this one is kind of a new flavor for me in that I have a very personal connection to it. But before I get to that, I’m married, have five daughters, I have lived a lot of places in the country. My dad was in the military when I was younger, so we lived all over the US. And all over other parts of the world. But have the last 18 years really been focused here in Utah working on tech startups? And one of the key points in my background that I would point out is that I’ve started businesses in the past because I saw opportunities in the market that seemed like they could be lucrative.
Ty Allen
When I kind of started this one out for a different reason. In 2014, I was in an accident and had a spinal injury, so ended up having to have spine surgery and then started through a rehab process where I learned to walk again and learned to use my hands and arms again. And as a patient, I experienced a lot of frustrations in the healthcare space, in the healthcare patient experience space, and in the way that some of these groups that provided great service were terrible at telling their stories. So my background as related to this business leads directly into why I chose to focus on healthcare marketing and a.
Brett
Couple of other questions we’d like to ask really just to better understand what makes you tick there behind the scenes. First one, what CEO do you admire the most and what do you admire about Mean?
Ty Allen
The easy button is Elon Musk. Just because I think he’s a crazy man with amazing vision and amazing work ethic. But the guy that I worked for years ago that nobody would know on this listening to this podcast, his name’s Scott. He was kind of my original mentor. He’s retired now, but watching him and his approach to business. His approach to taking care of people was a real value to me and all my efforts to start businesses.
Brett
And what about books? Are there any specifics books that have had a major impact on you?
Ty Allen
I try to read a couple of books a month, and so when you asked that question, I was looking through my list. I really like atomic habits. James Clear. Yeah, I recently reread that one, and I’ve really been working hard to try to use that as a tool to help me get the things done that I want to get done. Recently read never split the difference. Chris Boss. I thought that was really let’s I’ll just stick with those two for now.
Brett
Huge fan of both those books, especially Atomic Habits. Yeah, I used that. I went from like, four years ago, I wasn’t doing anything fitness related, and now I’m doing, like, ultra marathons and ultra running, and I literally just used Atomic Habits to build that skill and embraced his philosophy there. And it works. And I’ve been very impressed with that. That’s most, like, practical and tactical book that I’ve ever read on that type of stuff.
Ty Allen
Yeah, it’s awesome.
Brett
Now let’s switch gears here and let’s dive a bit deeper into the company. So can you just give us a high level overview of what SocialClimb does?
Ty Allen
Yeah, SocialClimb is a platform SaaS delivered platform into a space that has traditionally been dominated by agencies who, while they can do a good job, they are a little disconnected from what’s actually going on in a medical practice. So my experience as a patient caused me to be very frustrated with a lack of information I could find online on about eight key decisions I had to make over my year long rehab process. So that meant started off with choosing the neurosurgeon that did my spinal fusion and then an inpatient rehab facility, rehab doctor, multiple occupational and physical therapy, inpatient and outpatient needs. And as I looked back and I went through that process, I realized that marketing in healthcare has kind of been the unfunded ignored layer. And today, depending on the specialty, in some cases, 40% to 45% of the patients that are selecting to choose a specialist are doing what’s called self referral.
Ty Allen
They’re not getting a referral from some other provider, and they’re choosing the doctor that they go to based on other factors, primarily around marketing. So there’s this big gap where healthcare marketing is about 15 years behind on marketing tech and doctors and even some hospital groups are just waking up to the idea that they’ve actually got to embrace modern marketing tools to remain competitive, especially as the landscape and healthcare changes with all the private equity money that’s flowing into practices and consolidating the space.
Brett
So do agencies view it as SocialClimb, displacing them and disrupting them?
Ty Allen
Possibly. I would say those are the near sighted agencies, the ones that are capable of understanding how the landscape is changing, are embracing our platform and using it to make their own staff more capable of working through more customers, solving more for less effort. And so the agencies that have partnered with us have grown their business significantly versus the agencies who are always kind of trying to say, we want to continue to do this with manpower.
Brett
And are there any general purpose? Tools that would be considered competitors that aren’t focused necessarily on healthcare, but they have similar functionality. But it just doesn’t work as well, because I’m sure healthcare is so specific and so nuanced.
Ty Allen
Yeah, there’s a lot of tools out there. So if you look at our footprint in marketing, in healthcare, it crosses multiple layers from managing the reputation of the practice, doing its paid search, patient targeting data so that we can identify patients that are higher in the funnel that might be soon seeking care outreach. On top of that goes into postcards or into display ad management, and also a lot of patient data collection for government and payer compliance so that’s surveys of all sorts and all flavors, all of those features cross a lot of different places. Some of the competitors to us in those are non healthcare specific, maybe more horizontal players. And then some of those are very vertical medical players, but only play one of those features as their Mead offering. So we don’t have any competitors that actually compete with us across all those different layers.
Ty Allen
But in every layer there are multiple players that do a great job.
Brett
So is the idea then to really build the all in one healthcare marketing platform so they wouldn’t need to have a fragmented toolkit, it would just be everything they need right there in one spot?
Ty Allen
Yes, that is exactly right. The key to that is tracking the return on investment for marketing dollars spent. Here’s how it works in healthcare today. In order to actually see the patient data and see all of the HIPAA controlled components of a patient’s experience with a practice or a hospital, you have to sign a Baa Business Associate agreement. That agreement puts you at risk as an entity. If you lose that data or are breached, you have significant liability at that point.
Brett
Wow.
Ty Allen
So what we see is most agencies and many technology providers refuse to sign those agreements. I understand it. I wish I didn’t have to sign all those agreements, but I do because of the way that my service works and the things that were data we’re collecting, we can’t collect data from an unknown patient and map it back to an actual patient for reporting to Medicare, Medicaid or to a payer network. So we have to embrace that concept of being inside of the controlled area from HIPAA’s perspective. And because of that, we can do something that most cannot do in healthcare. We can attribute marketing efforts all the way down to the patient, a list of patients acquired by each marketing tactic. And in many cases, we can also help the practice understand what the lifetime value is on those customers, what the customer acquisition cost really is on each one of those customers, what the pattern for growth and where the right categories of spend for the type of growth or patient type of procedure type that they want.
Ty Allen
So we live in this space where we’re the guys who actually give them the data that makes them act more like a tech startup than it does a traditional healthcare practice. When I first started doing this, if I would have said, what is your customer acquisition, your CAC your customer acquisition cost, most of my customers would have said, I don’t know what you’re talking about today. A lot of them know what that is because as soon as the PE money lands in the practice, it’s one of the first things they start asking.
Brett
And can you just talk through what’s happening right now with private equity moving into these private practices?
Ty Allen
Yeah. So about four years ago, we started seeing a pretty significant increase in the number of practices that were consolidating together. It was happening on two sides of the fence. You had the PE money starting to come in, and then you had the private practices pushing against it and banding together as independents. That still continues today. But undoubtedly the private equity backed growth pattern is much faster than what the physician owned practices are doing. However, there are big groups in both categories that we service. So what we’re seeing with the private equity groups is they first started buying up smaller practices, maybe less, where the reimbursement rates were lower on a per physician or per practice basis for per patient basis. And then over the last two or three years, we’ve seen that move even into the higher paying procedure types and higher paying specialties.
Ty Allen
Orthopedics is a good example of this. When private equity first started coming into healthcare, they weren’t buying the Orthopedic practices. Now it’s a bit of a feeding frenzy and only really strong practices that have a really good balance sheet and are sitting with younger doctors are remaining independent. We’re seeing a lot of the practices that either have some sort of weakness or older doctors who look at this as a way to cash some chips in right now who are opting in for these acquisition opportunities.
Brett
What’s a typical multiple of a company like that sell for?
Ty Allen
Yeah, well, it was a little better a little while ago. It’s typically an EBITDA based multiple and I’m hearing them in the eight to 14 range. These practices can make a lot of money. When you look at a ten doc practice or the docs, the practice primarily leans out its bank accounts every year. I don’t know if everybody understands how that works, but a practice that’s got partners in it, basically, if there’s ten partners, they basically pull all the money out at the end of every year. But when you push all that money back in and look at what your real EBITDA numbers are, there are some practices that do extremely well. And so at 1213, maybe a little better multiple, where they’ll then sell a minority position or sometimes a majority position, and then they’ll work to recap it within two or three years.
Ty Allen
We’ve seen a couple of big groups really be successful with this, which has caused everybody else to really accelerate their efforts.
Brett
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Brett
And when it comes to the actual users of the platform, are they typically marketing folks? Like, are they marketing people who’ve been hired into these organizations? Or is it someone else at this company who has no idea what they’re doing with marketing and it’s just kind of fallen in their lap that now they’re a marketer, or at least now they’re responsible for marketing?
Ty Allen
Yeah, great question. The answer is there’s a little bit of both, depending on the size of the practice. So our customers who are sub 20 doctors often don’t have a person on staff who is a marketer, who would literally declare themselves a marketer. They have somebody who has some other role who’s been tagged to take care of marketing and that person needs the platform to be super simplistic for them, very automated and something that they can basically manage with 2 hours a day or less of their time. As you move up strain, you get to the 30, 40, maybe up to 100 doc practice. We typically see them hiring a marketing person who does have some experience. The truth is, it’s really hard to get a really skilled marketer to want to work in that scenario because there are a lot of restrictions related to HIPAA and how the physicians actually want them to tell their story online.
Ty Allen
It’s not quite as sexy a marketing opportunity as you might see outside of healthcare. But those guys are marketers, they know what they’re doing, they need tools. And so that’s a sweet spot for us. We service both on the low end and the mid market. And then the thing that we’re really working hard on is our feature set working well for the 100 to 1500 doctored practices, which are what’s coming out of these private equity acquisition patterns. Those groups actually run their businesses more like private equity backed business of any other sort where they’re all about growth patterns. They’re all about the next transaction. And so customer patient acquisition is right at the core of that and how they can bring in talented small teams that could be highly efficient at marketing in 400 geographic locations because they just bought 50 different practices spread all over the Southeast as an example.
Ty Allen
That is where our tool set really shines and really helps these groups understand where to spend and what the results they’re getting from their spend are.
Brett
And you give us an idea of the type of growth that you’re seeing today. Our audience loves metrics and numbers, so anything that you can share that you’re okay with, we’d love to hear it.
Ty Allen
We’ve always grown at more than 30% per year and our pace this year is well above that. So we’re a 40 plus percent annual growth SaaS business today. I actually think we’re going to beat that number by quite a bit, just based on our first two quarters of this year. A lot of that is driven off of the growth pattern that we’re seeing within customers where they’re consolidating and bringing us to new practices that they’re recently bought. But also it ties back to some new features that we released in Q. One that give our customers the ability to use predictive data to identify high value cases in their area and target those patients that will bring them more profitable revenue versus just any kind of revenue. That is something nobody seems to have done yet, at least at a scale that will work in the private practice space in healthcare.
Ty Allen
So, combination of those two things, we feel like we’re well on our way to growing closer to hopefully 50% this year. And we are just about to break even. We were break even and then I took some money about over two years ago from a great investment group out of Baltimore, resolve Growth Capital and started to spend to prepare the business for higher growth with adding sales team and adding marketing team and some new features and starting to pay off now. So it’s pretty fun.
Brett
And from a marketing perspective, what do you think you’ve gotten right? How were you able to rise above all of this noise? I was googling around and there’s a lot of noise in healthcare marketing. There’s a lot of content that’s out there. What have you done to rise above all of that noise and really earn the trust of all of these amazing logos that you have on the homepage of the website?
Ty Allen
There’s a few things. One of the best things that I did was to hire a product manager who’s not me, a guy who knows marketing, knows healthcare marketing. And this guy was actually a marketer, never had experience doing product management. It was a bit of an effort to convince him he didn’t need to come work for us as a marketer. He needed to come lead our product marketing effort because I made the decision that getting an expert in the product needs is more valuable than getting someone with expertise in product management. This guy has learned how to do product management and couple that with his understanding of product or of marketing in healthcare. That’s helped us deliver the right features that seem to really hit the sweet spot with these groups. And we couldn’t have foreseen when we did this that the private equity money was going to change the nature of the space.
Ty Allen
There’s some dumb luck in that. Thankfully, our feature set matches really well with what the private equity operations teams immediately want to do with a practice when they initially get control of it and start looking at how they’re going to accelerate growth. I would say another thing that we did that I already alluded to a bit is we decided we would embrace our position of understanding the actual disposition of patients in these practices because we have to sign a Baa so we can actually give real ROI data to our customers, which typically is not what they get. They get a lot of guesses and assumptions when they work with an agency or others who don’t want touch the actual patient information. And since we can actually point to case studies where we can show what the ridiculous ROI numbers are when you use our tools and tactics, signing up to customers is more a process of just helping them understand what they can do.
Ty Allen
It’s not a difficult sell.
Brett
And final couple of questions. Based on your journey so far, what would be the number one piece of advice that you’d have to share with a Founder who was just starting a healthcare technology company that was going to be selling to a similar demographic that you sell to?
Ty Allen
A couple of key points. One would be getting the product market fit is the most important thing. I know you hear things in startups all the time about you got to get the sales messenger, you got to get the sales team right. You got to get all those things follow. The number one thing was getting connected to a couple of practices who would be lighthouse customers and were willing to actually sit down with us and walk us through what their pain points were, what they hated about working with an agency, or what they were frustrated with their internal teams and what they felt would be really valuable to them. What they tell you is not always 100% right. In fact, a lot of times it’s wrong. But just going through that journey with them helped me and my team, my engineering team, understand more about the gaps in the market.
Ty Allen
And then we worked really hard to fill those gaps and go back to those same customers, make them successful. They then turned around and have been amazing references for us to this day. There are two groups who were first month, second month customers of the business who are amazing references for us. And those references continue to bring more value because they can speak with authority to other groups and they don’t just tell them, hey, this stuff works great. They tell them these guys will listen to you and solve your problems. So that’s one of the things that we’ve established in the market is SocialClimb never sits still. We release new features every three weeks. We continue to evolve the product. We continue to listen to every customer’s needs. Of course we can’t solve all of them. But getting the customers to feel like we’re on their team started from day one when we really worked closely with a couple of Lighthouse customers.
Ty Allen
And I would suggest that product Market Fit was the reason we succeeded in the first year and continues to be at the core, which is difficult for me because scaling the business without me being involved in everything was a bit of a change for me. I had to take a step back and make sure I was hiring the right people to do it. But that continues to be that most important thing is just staying close to the customers and hearing what they need and it’s solving it.
Brett
Super useful advice. And final question here. Let’s zoom out three to five years into the future. What’s that vision look like and what do you hope the company will look like by then?
Ty Allen
Three years ago or even five years ago? The healthcare market looks so different than it does now that it makes me a little nervous to think about where it might be three to five years from now. I mean, we don’t know what the payer landscape will look like. We don’t know what the ownership landscape will look like. We don’t even know. Physicians themselves are starting to change their attitudes about the way they approach their jobs. But our vision that we’re building into our product is that a complete suite of tools that allows patients to find the physicians in their area that are really good at solving their problems and allows physicians to target patients that map best to their abilities to solve patient problems. Sometimes that’s for procedure type needed. Sometimes it’s availability, sometimes it’s how can this patient pay and how does that fit into our profile as practice?
Ty Allen
Those are never going to change without dramatic changes in the healthcare space, which I think are politically a ways away. So our focus is we feel like we’re kind of landed on it right now. We’re just polishing and growing that layer of helping patients find docs and helping doctors find the patients that match their pattern for the growth that they want in their practice. That might mean that we’re servicing a lot of private equity owned groups that are all about growth. I hope that what’s happened with private equity injection into healthcare that it doesn’t change the quality of care that we deliver in the US. I hope it optimizes our ability to deliver it and lowers costs. I hope that’s what happens, but either way, there’s always going to be a need for acquiring patients, and that’s what we’re focused on.
Brett
Amazing. I love it. All right, Ty, we are up on time, so we’re going to have to wrap here before we do. If people want to follow along with your journey as you continue to build and execute on this vision, where should they go?
Ty Allen
Best way to follow us is at Social. Obviously, LinkedIn is a great place. I spend a lot of time out there. I would say follow our team on Facebook, Instagram, but we would love to have any kind of conversation with any entrepreneurs that wanted to learn more about healthcare. I’m open to being as helpful as I can. Thank you.
Brett
Amazing. Ty, thank you so much for taking the time to talk about what you’re building there and to really share some of those valuable lessons that you’ve learned along the way. I’ve really enjoyed this. Our audience is going to as well, so thank you so much for taking the time. I really appreciate it.
Ty Allen
Thanks, Brett.
Brett
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