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46: Building an App-Based Startup the “Right” Way with Tim Steele of Parrot.MD

Published September 29, 2020
Run time: 00:43:52
Listen to this episode with one of these apps:

If we were to write a playbook on how to start an app-based business, the first-time entrepreneurs behind Parrot.MD would be our case study. But every story has its conflicts. Parrot.MD’s CEO and co-founder Tim Steele joins the show to talk about the creation of the app, the role social equity plays in fundraising, and the essentiality of focus groups.

In this episode, you will learn:

  • The importance of finding the right development partners
  • What to look for in building an experienced team
  • What depositing and withdrawing have to do with social equity and raising funding
  • How to get users interested in investing in your product
  • Focus group indicators that you’ve got something hot (or that your product is a dud)
  • Why your revenue model might not go as planned, and why that’s okay
  • How to overcome conflict when building your business
  • Why the relationships you have at the beginning of your business won’t be the same at the end
  • How far to forecast when raising funding

This episode is brought to you by The Jed Mahonis Group, where we make sense of mobile app development with our non-technical approach to building custom mobile software solutions. Learn more at https://jmg.mn.

Recorded September 17, 2020 | Edited by Jordan Daoust | Produced by Jenny Karkowski

Show Notes:

Episode Transcript:

Tim Bornholdt 0:00
Welcome to Constant Variables, a podcast were we take a non-technical look at all things technical. I'm Tim Bornholdt. Let's get nerdy.

Today we're chatting with Tim Steele, the CEO of Parrot.MD. Parrot.MD is a mobile app that allows physicians to sell their on call assignments to other credentialed physicians. We at The Jed Mahonis Group have been working with them for the past couple of years. And we're excited to finally see the product live and out in the world. In this interview, Tim and I talk about being an entrepreneur, fundraising, focus groups, and really a whole lot more. And, you know, my allergies here may make me sound a little weird, they certainly do not impact the excellent conversation we had. So without further ado, here is my interview with Tim Steele.

Tim Steele, welcome to the show.

Tim Steele 1:03
Thank you. I appreciate the opportunity.

Tim Bornholdt 1:06
Yeah, so we've been working together here for a little while. And more than most people I've ever met, you are the consummate salesman. And I know that if I give you an inch, you're gonna just continue to talk about Parrot till the cows come home, which I love. But I want to give you a chance up front here to tell us all about Parrot and tell us what Parrot is and and why did you build the app in the first place?

Tim Steele 1:30
Well, thanks, Tim, really, I do appreciate you having me on. I really do appreciate that very much. The story starts back in the operating room. I've been in the operating room with physicians for about 35 years. And every Friday, as you get to build a relationship with the physician, you would ask them, Okay, how's the weekend look? And they would say, Oh, I'm on call. And then on Mondays, you know, or Tuesdays, when you see the physician again, I would ask him, Hey, how's your weekend. He said, Oh, I was on call. I hate call. And, you know, repetitively, it just became, there's got to be a solution to this.

So I met for lunch with a couple of guys and a doctor. I told them about this dynamic. And I said, Well, there has to be a solution. And the truth is, we took a paper napkin holder, put it in the middle of the table, and said, That's the hospital. And then we took, you know, salt shakers and other products around that hospital, and said, Here's the practices that surround it. And as we're looking at that, I just came to the realization, the practices aren't talking to each other. They can't trade that call shift at all. They're stuck with it. And that was the essence in the beginning of we could trade these shifts among the other practices. As long as those physicians are credentialed at that particular hospital, everybody can can take that shift. So instead of just trading the shift with just the practice you're stuck with, and some of these practices had three guys, some of them had ten guys, some of them had, you know, eight physicians, and you know, you're kind of stuck. You kind of get stuck with the same person always trading over the years, and you end up giving up holidays, and it's all quid pro quo.

Now, you know, you can open it up to those 20 surrounding physicians that can actually pick up your call. So that's how the service started. And then we all decided the best way to do this is on an app, and there's no technology, you know, there's no real technology for the physician that they can use on a daily basis to help improve their own situation. So that's where the idea originated. And we have been working on it for three years. Luckily, we met with JMG, your company, that has just been spectacular to work with. And we've developed the app, and we're ready to launch at the end of this month.

Tim Bornholdt 4:04
I know you were working on it before you even came to us. You had about a year or a year and a half where you were kind of working with other people. How did you first decide who you were going to work with before you even came to us? Where was your first thought of how to get this built?

Tim Steele 4:19
Okay, one of the founders, there was four of us that were sitting at that lunch table that day, it was a physician that had a friend that was in the app development market. So we went to him, obviously, to try and keep our costs down and do it as a favor. And it ended up being really a disaster. We worked with them for about, I don't know, maybe 8 or 10 months. It became apparent that, you know, the fella couldn't really deliver what we needed. And he really struggled. And, you know, we ended up spending like 24,000 bucks and got nothing out of it. So we learned the hard way which is you know, everyone tells me in startup business, you make a lot of mistakes, and then you kind of figure it out and you get more efficient and more proficient as the months go by. But we made a big mistake going out first, but then you know, we got a reference to your company. And it's been a really great relationship sense.

Tim Bornholdt 5:21
I always just find it fascinating, being a developer myself, if I need an app built, I just reach into my laptop and build it, you know. But as far as other people go, like you were, if you have no idea where to get started, it's interesting to hear where the process was for going and getting that first build. One thing that you mentioned in there was, how important it is to find good partners, and you kind of went one place, and then decided to go to another place. When you were picking out first hires, you said you had the four core people, and I know because I've been with you now for a while, I know, it's two physicians, and you and Tony, who both of you guys are sales guys. But there's a lot around a startup business, that you need some support. And I think that's one thing that I've always commended and found very admirable about you is that you're willing to go out and find people that can fill those holes. So in terms of marketing and business development, how did you go out and find all those other people to to help kind of bolster the business?

Tim Steele 6:28
I have 35 years of medical device experience. And you're in the process of pre commercialization with a product, and then you go into commercialization with a product. We were obviously in a pre commercialization stage, and in that area, you need to go out and do some focus groups. So we're gonna need a good solid marketing experienced person. You know, we're going to go into into the financial markets. We're going to go into the venture capital markets. You need somebody that has that type of experience. We're going to be talking to physicians and conferences and working with societies. So you need someone that has experience in that end of the market. I had a lot of experience in selling and some management experience. And then Tony was really heavy on the management side in sales, and we have both been through multiple startup companies. So I work with a guy like Josh Makower, somebody you might want to Google. He's sort of the God of medical device development, sold multiple companies for, you know, hundreds of millions of dollars to some of the biggest corporations in the world. And watching Josh, I was with him for 10 years, and just watching how he put people around him that ,A, that were honest, B, that you could trust, 3, they worked as hard as you worked or not harder. And number four is you really want someone smarter than you.

And you know, when I selected you guys, for example, JMG, I could tell you guys were really smart. You were a very willing partner. So you had the willingness, instead of the unwillingness, you had the willingness, which I love, then you were talented, you're experienced, you're younger. I was looking for a little bit of youth, because our surf markets probably going to be sort of the younger group coming up to use the app and very comfortable with an app. So I wanted some youth in the organization as well. You know, I found you and Rob to be extremely honest, which is for me personally, it's probably the number one trait I look for. And so, you know, I've never had to question your honesty, and I really appreciated that.

And then the last thing was, you knew we were a startup. You knew our budget was tight. You knew our money ebbs and flows. And you were very flexible to work with us and around any bumps in the road. So that was why we picked you guys.

Then I needed a marketing person. So I knew of somebody that was in that millennial group that ran her own company. She was kind of getting started, very good digitally. I met her in another organization. And I was really impressed with her. So I sought her out. And she's been great. She's developed a really deep digital program for us, LinkedIn, Twitter, Instagram. And then I met a person at I Heart Radio who helped us with radio spots, television spots, streaming television, you know, geo fencing, all this area. She was really smart and really helpful. Then I met our CFO and our chairman of the board, and he has multiple years of experience in the VC market and it was just a blessing to get him to help us. He's extremely experienced. He's taken companies from startup to finish, and he really loves our concept. He really loves our company. He really likes our structure. And these guys are tough to hold on to. If they sense that your company is not going to make it, they will bail on you. So he's been really great. He stuck with us.

And then the last person we got was, you know, obviously, we have two doctors and we went out and got another physician who was more of an extrovert. I knew of this physician. He did plays in college. He was kind of in the front of the room. He was very vocal. He was not introverted at all. We needed that energy as well. So we went out and got him. And then the last piece was our person who does a lot of the conferences, a lot of the academia conferences. She's been doing it for years. We asked her and they all came together. Now, they're all, you know, 1099 consultants for us. But we, obviously we're going to compensate them down the road with some of the option pool that we have. So it'll be lucrative for them if we do make it, you know, into the large area.

Tim Bornholdt 11:08
When you make it, when you make it.

Tim Steele 11:10

Tim Bornholdt 11:15
I was gonna say, the team around Parrot is phenomenal. And I know with that kind of talent, it's not cheap. And you kind of alluded to that, like everyone right now is kind of a contractor and doing Parrot as just trying to help get it bolstered up at this early stage. One thing that would help, obviously, keep them around is money and funding. And you kind of touched on that already a little bit. But talk a little bit about how you, with the friends and family around at the beginning, how did you get any money to even get this project off the ground? I mean you mentioned before, it was like 24,000 with just the guy that didn't even get the app built out. But I know you've raised a bunch more than that. You have so many things, you said like TV spots, and all the marketing, everything that goes into it. How did you get all the money to be able to go out and do this?

Tim Steele 12:04
As you know, my background is in sales, and I've had multiple years in this market, and have a trust and relationship with a lot of the physicians, and you know, a lot of business people that I know that surround the medical device market know me as well. And as I mentioned to you earlier, honesty is a characterization that I really, you know, passionately work on every day with everybody. And when I work for these doctors or work with these business people, it's like banking. I always want to give a deposit, because someday I may need to withdraw.

So, fortunately, you know, the opportunity arose. We needed to get some seed money. And we set our minimum at $5,000 to invest into our company. So I wrote a list of 110 contacts that I had, a lot of them were physicians, a lot of them were business people that I'd known. I put together a portfolio that explained the opportunity. We paid for that portfolio. We had a company out in California make our slides. They looked really nice. We incorporated them into a hard packet cover with, you know, sort of the PPM in there, the information about the stock, and we sent that out to those 110 people and 44 of them came back with a check in the packet. So we ended up raising about $610,000 of our initial seed money. And it ended up like 18 of them were physicians.

So I swear we we had only about 90 days to raise the money. It's kind of the window that they give you in order to see if you have what it takes to raise that seed money. And then you can go ahead and get your stock executed. And with our legal group from downtown, Fox Rothschild, they were really great, really great to work with as well. So you know, we got that started. And we started our Corporation. And we are now looking to raise Series A money, which we're looking for around $2 million to go national. So the 610,000 got us started. We paid for a lot of legal, we paid, obviously, to have our app developed. There was a lot of miscellaneous expenses that we had to take care of as well. We had to pay for our consultants.

And now we're paying for marketing into a local lodge, which is going to be the Minnesota area. It's not a best market for our technology. Our technology really is very, very geared and very focused towards large urban markets, i.e., New York, Philly, Dallas, Houston, Miami, San Francisco, Seattle. These are these are really big, large medical center type cities where you might have, you know, 500 physicians within a six or eight block area. So that's our target market. We want to be the Uber service for them to trade their call shifts between each other. So we need to be in those urban markets. Minneapolis, unfortunately, not that big, and not a great market for us. But we really want to test drive this app, and we want to test drive the premise of the app. And so far, so good, we're getting a lot of interest. And we're actually gonna be launching at the end of this month. We're very excited.

Tim Bornholdt 15:38
There was a couple of points you made in there that I really liked and I wanted to highlight. The first one, you were mentioning from like a social perspective, you always deposit because you might want to withdraw. I think that's a really great point. When you're building a startup, a lot of times the more successful founders, they're able to draw on some social equity that they've banked up over time and call in some favors and get some references and get the right person in front of you to close a deal or to raise money for your app. Which leads me to the second point of, I've been doing this for a few years now, I don't think I've ever seen somebody go out directly to the users in a way that you did to go and raise that money. And I wanted to highlight that as well. A lot of times people come to me, they have an app idea, and they want to go out and build it, but they don't know how to get the money for it. And often I'll say, Why don't you go ask your users for the money. And that's kind of a dead end for some people because they don't have a laser focus on who their audience is. And I thought, that's so cool that so many of your initial seed investors were actually physicians. It just speaks so much. It tells such a powerful story for you when you go for higher rounds of money, or when you're going out and just selling the product is this is all very much physician-led, and so many physicians believe in it that they're willing to even cut a check and give it to you to make this thing happen.

Tim Steele 17:07
Yeah, another caveat to that, Tim, is, before we got our seed money, you know, we obviously had to put a few of our own dollars in. And as we were developing the app, you have to conduct focus groups. So we did four or five of them, probably within a year, maybe six. And inside those groups, I would, you know, obviously go out, talk to the user, let them know that we'd love to have their commentary. We would pay them a couple hundred dollars to come in for that afternoon or that morning, and participate. We would lay out what the app looks like. They would give us a lot of feedback back. But as you're developing those focus group attendees, I knew that these were guys or gals that I was going to go back and ask them for seed money down the road. So I knew that there was going to be a withdrawal. But I wanted to make deposits along the way in terms of taking in their information, getting them close to the app, getting them to understand us, introducing them to my team. And I would have several of them back for multiple focus groups. And when it came time to see if they were interested in investing, you know, when the packet came to them in the mail, they wrote a check quickly. So, it's all part of the process of gaining that initial seed money. And, you know, those focus groups really helped us gain some of that. And then they would tell others, which was really cool. A lot of the people that actually weren't even physicians, were people in those physician circles that were interested also in the opportunity.

Tim Bornholdt 18:55
Those focus groups, I found them to be so valuable. And this is one of the first apps that we've actually had a lot of hardcore focus groups and so many of them. What gave you the idea to have focus groups going on for getting ideas for the app?

Tim Steele 19:13
Well, in my background, Tim, I spent eight years in marketing with a company called Becton Dickinson. Also at Boston Scientific, I was in their marketing department for a year or two, then I went into sales from there. But in my marketing experience, anytime in pre commercialization when you have an idea for a product, you have to gather some users and lay it out for them and then, you know, you know gather some people that are gonna end up being your end users and the surf market and maybe you bring somebody in from New York, maybe bring somebody up from Florida, maybe bring somebody up from the south. And they'll give you lots of ideas and lots of information about how that product will fit or if your products a bust. But what we found, and I know you saw this as well, Tim, is, a lot of the docs after the focus group would come up to us to say, Are you guys investing? Are you taking investment? So they saw the opportunity, they saw the idea. And if you're starting a startup, and you're getting a lot of negative, you know, This isn't right. It's not gonna fit. Maybe that's something to guide you. But what we found, and I was talking to my wife about this last night, I said, ever since we started this, whenever we have a meeting about the technology, I never left that meeting with the feedback that this was not a good idea, or this would never work. It's always been sort of a progressive building, kind of feel to it. So you know, those focus groups are absolutely essential. And I picked up on those, and I used to conduct them back when I was in marketing.

Tim Bornholdt 20:53
I would imagine having a lot of those focus groups, one of the cool things is, if you know it's a dud, people aren't asking a lot of questions, and people aren't really firing back and engaging with you during those meetings. But I know sitting in all of those meetings, people were getting really heated, which is probably one of the best indicators during those meetings of, you got something here. Because people were, No, it has to work this way. No, no, no, you have to keep this in mind. And you wouldn't get that kind of passion and excitement if they thought it was a dud. They would just sit back and just be like, Nah, this is dumb, and move on to the next thing. So yeah, that makes it makes good sense.

Tim Steele 21:31
You know, Tim, in the early focus groups, it's like a big wide funnel. And you just throw the idea in, and everything that anybody says, you want to kind of capture it. And just let them talk, don't let the the idea or the people involved talk. Let them talk, and let them steer, then as the focus groups go along, that funnel gets really tighter. And then all of a sudden, you have an hourglass, and you're kind of stuffing it down into the hourglass. And at the bottom of the hourglass, there's your concept. And by the time it gets to the bottom of the hourglass, you know, you have consensus with that 8, 10, 12 people you have around the room, because you've already had three or four focus groups and you've really hammered the concept to the point where it's doable. You know, it takes the risk out of it. It really helps with your messaging and your basic selling proposition. And, Tim, you know our project. Our basic selling proposition was very different than it is today, you know, three years later. And it's really getting fine tuned to the point where now we have, you know, instant recognition of our technology. Plus, it's so simple. And yet it's so marked, that you know, they pick it up instantly. I'll show the app to a millennial, and I can't even get the basics of it out of my mouth, and they're like, Okay, how do I sign up? And then I'll tell the older folks, the older doctors 55 and up, they get it, and then you know, it has to sink in a little bit. And then I see them two weeks later or a month later. And they're like, Man, that's really insane. So the process is so different.

Tim Bornholdt 23:20
Well, and one of the things that you touched on was how much things have changed from the beginning to now and one way that I know things have evolved was directly around revenue models. Because I know, initially, we had talked about, you know, charging a yearly subscription fee. We've really played with that subscription model piece quite a bit, the revenue model piece quite a bit. Talk about how it's evolved from your perspective, and how have you kind of followed the feedback to really fine tune how Parrot makes money.

Tim Steele 23:50
Again, almost the exact opposite of the development process, you always start off with like, We're gonna make so much money. Your grandiose, forecasts are wonderful, and it's great, it's okay. Lay it out there and let the market and let the forecast and let the focus groups kind of chisel it down. And when they chisel it down to where their expectations and your expectations are really close, that's probably pretty close to what you can actually put out there into the market and let the end users and potential investors know and you have a very high comfort level.

But you know, we started out with trading a particular dollar amount for each trade, was was probably a little high. We talked about having a membership fee, sort of the Costco model where we would charge them. We thought that you know, the value of the app service warrants a membership fee. We kind of got away from that when we started getting down the road towards the end here when we're thinking of launching it out and some of the docs were stopping of entering into the profiling process or the membership process when they had questions about, you know, How much? So there was a lot of that stop sign stuff. So we decided to take that out. So they can go right in and make it very seamless. So, pieces of sort of your grandiose marketing ideas or revenue ideas kind of get out in the wash. But what stays is sort of that meat of the idea, the right price, the right ASP, and the right number of usages, you know, for each of the doctors.

And, you know, we would have older doctors that would say, they literally told us, you know, a doctor usually has somewhere between 30 and 70 call shifts a year. We've had doctors tell us, I'm putting all my call shifts on this thing, as soon as it comes out. I hate call. Then we'd have you know, young guys that would say, I'll pick up shifts as often as I can because I get so much student debt. I'd be happy to pick these up. So you look for that sort of community feel with the doctors and how those millions and millions and millions of dollars that the hospitals pay these practices, because they need coverage 24/7/365. So they've got to spread out that responsibility among the practices that surround their hospital. And they give the doctors about $500 a shift. So, you know, where does that $500 ASP go? We feel that when it's a shift that's close to a holiday or close to a weekend, that that dollar is going to go up, that shift value will go up. If a doctor wants to get rid of all his shifts in January for June, July and August, you know, those shifts are probably going to sit there for a little bit and be a little bit lower price. Our lowest price is 350. So it'll fit somewhere in there. And they'll be exchanged, people will pick them up. But again, it all comes down to how close to the holiday, how close to a weekend, and the buyers will know what level of desperation you are to get rid of your ship. And they'll price it accordingly. So we have a really cool model.

Tim Bornholdt 27:15
Yeah, I would agree. And it's been fun watching it evolve and seeing so many people weigh in on what it should be and what it shouldn't be. It makes me wonder how you think about conflicting pieces of feedback, because I know, going through some of those focus groups again, you hear people say, you know, the app should do this, this and this. And then you talk to a second doctor in a different department or a different kind of specialty. And they say, Oh, no, no, no, it has to do this, this and this, and you kind of get a lot of different ways of thinking of how the app should work and how it should be. How do you personally think about that? How do you kind of square getting those two different pieces of feedback to kind of go in and figure out which one is the, quote unquote, right way to do it?

Tim Steele 28:00
Well, this is clearly the difference between the first company that we went with, and your company, and then I'll just use that as an example. But the first guy, he just wasn't experienced enough. His opinions were too strong. And he led us down the wrong road. Where with your company, you have lots of experience. You need to make sure that you can actually perform these features that we're asking for. And what I loved about our process was, we chalkboard them all. And we had doctors come in just for that chalk boarding process in your development rooms. And that was really, really helpful. And what kind of developed Tim was, the app was kind of getting complicated then it got less complicated, which was really nice. And you guys were flexible. You read us as customers, you adapted but then you kind of steered us with really good ideas to kind of make the app smarter, easier. And then you know, the doctors feedback as well.

And here's where you just hire people that are smarter than you at what you're trying to develop. And you know, my skill sets are different than your skill sets. But when it comes to apps, your skill set I have to rely on and it worked out really well and it was a really healthy process. But as the CEO of the company, I can't be the the answer to everything. You have to let the smarter people make the decisions for those particular aspects of the business that you are not as competent.

Tim Bornholdt 30:00
Yeah, and as the CEO of the company, I think it's really interesting because correct me if I'm wrong, but this is your first entrepreneurial venture right? Have you started other businesses before?

Tim Steele 30:12
No, this is the first time.

Tim Bornholdt 30:14
So the first time you've had a go at this and as far as I can tell, you've done it the right way. If I could write a playbook and point anyone to a business and say, this is a great case study in how to start up a business, I would point them to Parrot right away. But every story needs some conflict in it, right? What have you seen as the CEO of this company, in being your first entrepreneurial journey, what's been some unexpected setbacks or things where you were just completely floored and didn't see this kind of fork in the road or you had to make this type of choice? Have there been any kind of key moments like that that have stuck out in your mind?

Tim Steele 31:02
Yeah, there was a couple. We call them roadblocks, and you're gonna hit them, and they could literally stop you. So you have to get creative. So the first one was, obviously our first app person. We had to break that relationship. One of the founders had a really close relationship with that particular guy. And, you know, it was tough to break that friendship, and then we just had to all come to the conclusion. The other thing was, we have four founding members. And, you know, obviously, everybody is a strong person and experienced and everyone is passionate, and getting consensus, and we were on a consensus path, really, our whole way through, you know, usually three out of four of us had to agree, as we moved on and early, it was four out of four. So we've kind of adjusted that a little bit. But, you know, getting past the app was hard. A lot of times, before we got our seed money, we had to put our own dollars in so that's when you really can tell if you're passionate, and you believe in the product. So we went through a little window of that as well. That was probably number two. But as long as you keep bringing in smarter people than you, around you, the actual job that I have has actually gotten easier. So you have to be a good listener, and you have to be patient, and you can't get too emotional. You have to kind of keep yourself in check. And people that are around you will be emotional, and that's good, that's a great thing. But you can't let that, you know, disconnect you. You've got to make tough decisions too, and if you can just hold your ground, people in the long run will see that you're making good decisions for the company, and not just for me or a favorite person in the group. You have to be fair, and I will always keep my eye on the prize, which is getting this product into the market, and I know it's going to take off, and we're going to be very successful with it. So, you know, those are some of the challenges of being the CEO. AndI'm older now. I've had, you know, multiple years in multiple companies. I've watched a lot of ladies and men at these levels, kind of observing them. And, you know, that sort of banking analogy that I gave you of, you know, I'd rather make a deposit with people than withdraw. And then, you know, when I need to withdraw, they know I've made lots of deposits with them. And they're more apt to give me what I need at that particular time.

Tim Bornholdt 33:42
Yeah, and you can see that very clearly. And I think it's an interesting point that you bring up that a lot of the conflict that you see is between the founders because a lot of times people equate business partnerships with marriage, in that it's a constant compromise. And you know compromise almost has a negative connotation to it. Because really in a perfect partnership, your partner is looking out for you just as much as you're looking out for them and you're trying to figure out what's best for them. And I think sometimes in those tough conversations when you have four partners that are really in it together. And they see something that they think this is going to put the business on the right path and you as the CEO at the end of the day have the final say and you have to figure out, sometimes somebody may be super passionate and see it one way but the other three see it another way and you have to kind of continue to salvage the, not salvage the relationship, but find a way to break it to them of, you know, we're going to go down this path, but make people feel heard and that their opinions certainly still matter. But you know, you're in it for the health of the company. That's really what has to come first when you're at any stage of running a business.

Tim Steele 35:03
I guess the thing that I really want to let people know is the relationship that you have at the beginning of your company is not gonna be the same relationship you have at the end. And it goes through some serious ups and downs. You know, there's been some shouting, there's been some harsh words, there's been a couple of weeks of not discussing or talking. And there's been some great times, there's been some high fives after focus groups and hugs, and 35 minute phone calls after the meetings talking about just how jacked up we are, and can you believe that doctor said this, and what a great idea that was. So it's a roller coaster of emotion. So you have to watch that. And when you go to the bottom of the roller coaster is when you really need to just keep your eye on the end game. Don't take your relationship to a spot where it breaks up, or people are furious and that kind of thing. You just got to show that you're in it for the company. And the company is more important. And it might take a week or two, it might take a month. But every relationship that I have in my company has gone a full circle. And it always kind of comes back to, Yeah, yeah, you're right. We're good. We got for the company, and, you know, it comes back around. So you know, just be steady. That's what the CEO does. You just have to be steady.

Tim Bornholdt 36:38
Yeah, I agree. Looking to the future and talking about where Parrot's going to go. You mentioned earlier about going for a Series A, looking for $2 million. I'm curious, how did you arrive at that figure? And I think that's something that a lot of people that are at this stage where they have their MVP, they have their proof of concept ready to be out and hit the market and start getting some traction, and they're looking for the next round of funding. How do come to that number of, this is how much money we need to really push it to that next level?

Tim Steele 37:13
Okay, so we raised 600,000, and we raised that, you know, well over a year ago, and obviously I went out and hired my consultant, my venture capital consultant, my CFO. We built a budget around what we had at 610,000. And, you know, we've been working it every month, kind of trying to save money, spend it where we need to. So you kind of watch how your monthly flow goes. We were experiencing, you know, $15,000 months, $20,000 months, you know, $8,000 months, and so we're managing the money. You can kind of get a feel for what your flow is, and then obviously, development and some expenses, you won't have in a year. Maybe we go more into a maintenance.

But we're aggressive. We really want to develop another software tool for another segment of the market. And we have big plans for this organization. So I can see our spend being pretty solid over the next couple of years. So I've got to fill that expectation. I've got to fill where I think the company is going to go. I've got to forecast where I think the sales are going to be, and, you know, right now, we're looking at about a $2 million raise. It will take us out a couple of years. It'll allow us to spend the necessary marketing needs for a national exposure, because we know right now, what it costs to do one state, you know, obviously, there's 50, and we want to expand out. We've got a good relationship with I Heart, and they're kind of showing us the kind of numbers we're going to need to go national. And so I know that number. We're going to have to watch how our sales numbers go in this first three months, and then you know, we can project out. We take those sales numbers and put them into a Philadelphia or put them into a New York City, and, you know, it's, you know, 5 times, 10 times based on population, based on the number of doctors, based on the number of hospitals. There is some math you can do to come up with some pretty decent forecasts.

And I kind of live my life in three year windows, and this is no different. We just finished our first three year window with the app, got through pre commercialization. Now, the next three year window, I think we're going to need about $2 million, and we're just starting commercialization. So that's kind of how I look at this business.

Tim Bornholdt 39:55
That's awesome. It's always interesting to hear how people arrive at those different figures. So thank you for going through that.

Tim Steele 40:03
Oh, no problem.

Tim Bornholdt 40:04
And I like what you said about the three year arc because it seems like people try to forecast too much too far out into the future. And it's like, you know, who can predict COVID, who can predict all sorts of things that happen within three years. So I think it is interesting. You need some kind of forecast, but there's way too many variables the further out you get for trying to figure out all these things with businesses.

Tim Steele 40:32
Yeah, and think about it. The next three year window, we won't have as much development, we won't have as much legal cost. What's beautiful about the app businesses, there's no bricks and mortar, or very little. You have a few employees do a whole lot of work and make a whole lot of impact. We're gonna be the only app with we call brand ambassadors. We're going to have a small mini sales force that's going to go out and sell the app and get it deeply penetrated into the market. So we're gonna have a salesforce with our app. We also want to shift our development dollars over to the next development product. And we're obviously going to start working on a product that'll serve the nursing market too.

Tim Bornholdt 41:19
And I can't wait to have you back on to talk about Parrot.RN at some point.

Tim Steele 41:25
It'll be great.

Tim Bornholdt 41:26
Any last final thoughts you want to share with the audience about Parrot or about being an entrepreneur? Any final wrap up thoughts you want to put out there?

Tim Steele 41:34
You know, researche your idea. Medscape did a survey on physicians and I spoke to mentors along the way about the idea. I spoke to doctors about the idea before I really took action on it. Do your homework, get a feel, trust your gut, always trust your gut. It's your moneymaker. So, you know, trust your gut, be friendly but be firm. Use your experience to your advantage. Hire smarter people than you. Oh my gosh, it's probably the best thing I've done so far with the team we have. And you know, be honest. It's probably the number one thing, just be honest. And you can always get into the next day without any worries.

Tim Bornholdt 42:25
There's a ton of great wisdom in that. Thank you so much for coming on the show today, Tim, and everybody should go check out Parrot.MD and if you have any physicians in your life, make sure they get on the app and reach out to Tim to learn more about how that all works. Thank you so much for joining me today, Tim.

Tim Steele 42:42
Thank you, Tim, for the opportunity, really appreciate it.

Tim Bornholdt 42:46
A big thanks to Tim Steele for joining me on the podcast. You can find more about Parrot.MD by visiting www.parrot.md.

Show notes for this episode can be found at constantvariables.co. You can get in touch with us by emailing Hello@constantvariables.co. I'm @TimBornholdt on Twitter and the show is @CV_podcast. Today's episode was produced by Jenny Karkowski and edited by the nifty Jordan Daoust.

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