The Secret 3-Step Master Plan to Cure Healthcare

NexHealth is Raising a $31 Million Series B to Fuel its Ambition

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Happy Thursday! 

After years of avoiding healthcare, both as a patient and as an analyst, I’ve gotten more interested recently. It’s a massive market -- $4 trillion in health spending accounts for 17% of US GDP -- with regulatory tailwinds and the opportunity to positively impact hundreds of millions of lives. 

Healthcare is not for the faint of heart. Cityblock takes a vertically integrated approach and balance sheet risk to deliver care to the most underserved patients. NexHealth, the focus of today’s post, built an entire SaaS product in order to get the data and integrations required to make it easier for anyone to build healthcare products. Healthcare has always scared me, but the patient (no pun intended), complex strategies required to succeed in healthcare are exactly my jam. 

For people who are new here, a quick refresher on how Not Boring works:

  • On Mondays, I write essays on big, mostly public, companies and broader trends.

  • On Thursdays, I write about startups, often via Sponsored Deep Dives or Investment Memos.

Today’s post started out as a regular Sponsored Deep Dive conversation, but 30 minutes into my call with NexHealth CEO Alamin Uddin, I was so impressed that I asked if I could invest. So this is a Sponsored Deep Dive x Investment Memo, a format I think will become more common when round timing allows. I said that I only write Sponsored Deep Dives about companies I’d want to invest in (read about the decision process here), and I’m putting my money where my mouth is. 

This post is about NexHealth, but it’s also about Worldbuilding, ambition, Plaid, why building infrastructure is so hard, and how to execute a multi-step plan over a very long time. It’s full of lessons for entrepreneurs who want to make an impact.

Let’s get to it.

The Secret 3-Step Master Plan to Cure Healthcare

NexHealth Just Raised a $31 Million Series B to Fuel its Ambition

When building a startup, ambition is half the battle. 

Ambition helps you think really, really long-term. 

Ambition carries you through necessary painful bumps in the short-term. 

Ambition lets you set an insanely high bar for talent, and not hire until that bar is exceeded.

That’s why I’m betting on NexHealth. NexHealth has ambition in spades. 

That was evident from the first 30 seconds I spoke with NexHealth CEO and co-founder, Alamin Uddin. The first note I took was: 

Ambition: Want to build a huge, global, $100bn market cap co, platform that accelerates innovation in healthcare

If you just looked at its first product, NexHealth’s ambition wouldn’t be entirely clear. For its first few years, the company has been selling a Shopify-like SaaS product to dentists. That’s a big market, for sure. Already, the company is doing millions in ARR. But the SaaS product alone doesn’t match the company’s ambition. It’s just a necessary first step. 

To really understand NexHealth, we need to start with the long-term and work backwards. NexHealth’s mission is to accelerate healthcare by connecting patients, doctors, and developers. It wants to do to healthcare what a typhoon of startups, from Stripe to Plaid to Marqeta to Unit and more, have done to fintech: make it easy for any talented developer to build products in what used to be a prohibitively cumbersome industry. 

If you’ve been reading Not Boring, for a while, or even a few days, you’ve probably picked up a theme: startups that build infrastructure, obscure complexity, and deliver a clean, easy experience to customers will build some of the world’s biggest businesses. Stripe. Scale. Twilio. Agora. These companies don’t just capture value; they grow and change markets in unpredictable ways. They’re some of the biggest and most fascinating companies in tech not just because of what they build, but because of what they enable others to build.

Nothing’s free, though, and everything has trade-offs. It’s insanely hard to build infrastructure, particularly in healthcare. Companies have tried the obvious strategies already, and failed. To build the infrastructure layer for healthcare will take a Worldbuilder

Worldbuilders are my favorite companies because they zoom out, see things others don’t, and devise counterintuitive plans to achieve massive goals over a very long time. They have three characteristics:

  1. Predict something non-obvious about the way the world is moving before others see it and before the market is ready for their ultimate vision.

  2. Create a wedge into the market and leverage it into a much larger opportunity. The public often ridicules or dismisses the initial wedge product. 

  3. They timestamp their vision, whether in public announcements or confidential documents.

NexHealth is a Worldbuilder.

NexHealth time stamped its vision in the name itself. As Alamin explained:

We were originally called Nexus -- the connection of many things -- because that’s what we wanted to build for healthcare. Once we realized in order to build the thing we needed to build a vertical SaaS first, we knew we needed a .com domain. So we went with, the closest thing available.

Vertical SaaS is a full-business-as-a-wedge, the first step in a three-part master plan: 

  1. First, build a SaaS product for healthcare SMBs, starting with dentists, like Shopify.

  2. Then, use the integrations it accesses in step one to build APIs for healthcare, like Plaid.

  3. Then, use the doctors and patients and developers it acquires in steps one and two to build a three-sided platform, like Microsoft.

Success is far from guaranteed. That all of this works is implausible. 

  1. Companies have tried and failed to scale SaaS for healthcare SMBs before, and NexHealth needs to prove it can move from dentists to other medical SMBs. 

  2. EHRs are notoriously hard to wrangle and integrate and NexHealth is competing with a new government protocol used by competitors in the healthcare API space. 

  3. Two-sided marketplaces are hard enough; three-sided marketplaces are rare for a reason.

Fortunately, NexHealth now has the resources to be aggressively patient. It just raised a $31 million Series B at a $431 million post-money valuation. Josh Buckley is leading the round for the second time in a row, and is joined by Seed round lead Point Nine and a murderer’s row of super angels including Rahul Vohra and Todd Goldberg, Scott Belsky (Behance, Adobe), Jeffrey Katzenberg (Dreamworks), Zach Perret and Jean-Denis Greze (Plaid), Sujay Jaswa and Chenli Wang (Dropbox), Connor Theilman and Ershad Jamil (ServiceTitan), Turner Novak (Banana), and me. 

The NexHealth story to date is a master class in what it takes to build a modern infrastructure company in an outdated industry. Making it easier for others to build is incredibly hard work. 

To understand what NexHealth is attempting to pull off, we’ll explore: 

  • The NexHealth Story

  • The NexHealth Team

  • Easier and Harder Than Ever

  • How Plaid Started

  • Integrating with EHRs: Not as Easy as It Seems

  • Three-Step Master Plan: SaaS → API → Platform

  • Challenges All the Way Down

  • What the World Looks Like if NexHealth Succeeds

This isn’t a story about healthcare, really, although that’s part of it. It’s a story about the ambition it takes to tempt the odds and make an impact. 

The NexHealth Story

NexHealth exists because Alamin realized that he wasn’t going to be von Neumann. 

See Alamin was good at math in high school, and he went to college wanting to be a mathematician, but he also wanted to make an impact on the world, and he realized that he wasn’t going to be able to make an impact as a mathematician unless he was really good. Like, von Neumann good. And he wasn’t. No one really is. 

But starting in high school and into college, he started collecting experiences that made him perfectly suited to make an impact in another way. Specifically, he had taught himself to code in high school, switched from math to pre-med in college, and then got a summer job as a receptionist at a health clinic in the Bronx. He unintentionally constructed the perfect NexHealth founder in the lab. 

His job during the internship was essentially to make calls to labs, pharmacies, insurance providers, other doctors, patients who owed money, and all of the other stakeholders that make a small medical practice tick. That wasn’t particularly stimulating work, and Alamin knew how to code, so he figured he’d just use Twilio, which makes communication APIs, to automate his calls. The process should have been easy: 

  • Write a few lines of code to connect Twilio to the Electronic Health Record (EHR) system that his clinic used, 

  • Make some rules (i.e. when patient has appointment in 24 hours, call to confirm), 

  • Kick back while the machines did his job. 

But it wasn’t that simple, or we wouldn’t be here today. He tried to get API access from the EHR vendor they worked with, but they didn’t have public APIs. It would have cost $40k, multiples of what he was making, to implement the process manually. 

That set Alamin on a journey on which he’s still just embarking four years later, based on that experience and a couple of realizations:

  1. He missed out on the early days of the internet and believed that healthtech was the next frontier. It was the place he could make his impact. 

  2. He’d make the biggest impact by building infrastructure that enabled others to build healthtech products. 

So he teamed up with Waleed Asif and the duo founded NexHealth in 2017. 

NexHealth’s three-part, Worldbuilding strategy is what makes NexHealth so fascinating. Alamin, Waleed, and the team they’ve built is what makes it believable. 

The NexHealth Team

The NexHealth thesis is centered around the team

The strategy that they devised is ingenious. It’s amazing that they even came up with the plan you’ll read today, and that they’re executing on it, but success isn’t guaranteed. Selling to medical SMBs is very different than selling to developers, which is very different than selling to consumers. To pull off its plan, NexHealth will need to do all three, while fending off competitors with a narrower focus whose entire orientation is around selling to one specific subset of just one of the three groups. 

A bet on NexHealth is a bet that Alamin and Waleed will be able to convene a team of people who can execute on their wildly ambitious plan. Luckily, according to investors, the team is NexHealth’s strong point.

I asked Harry Stebbings, the host of The Twenty Minute VC and NexHealth investor, why he invested. His answer was simple: “Alamin is a machine.” 

Josh Buckley agrees, telling me:  

Alamin is phenomenal. He will go down as one of the best CEOs of our generation, for a couple of reasons. First, he genuinely thinks on a multi-decade time horizon. Second, he has a Stripe-like bar for talent. Even the quality of candidates he turns down is incredibly high. He’s building a talent powerhouse.

As evidence of that, over the past twelve months, NexHealth has built a leadership team from Netflix, Upwork, Redfin, Marketo, Optimizely, Amplitude, SAP, and more. The leaders they hired from those companies were early -- all except for the SAP and Redfin hires started when the companies were under 30 employees -- and scaled the companies through IPO. Hiring people who’ve scaled from zero to public is a good way to reduce execution risk. Overall, the team grew 6x over the past year, from under 20 to 120 employees. Meanwhile, it grew customers by over 300%.

NexHealth is growing fast. Customers love its SaaS product (it has a perfect 5 stars on Capterra). It’s already built out a public-facing API used by small businesses, independent developers, and public companies alike. Month-over-month gross churn is below 0.5% and MoM net retention is over 100%. It has the right team in place.  

NexHealth exceeds expectations for a startup at its stage. On its current trajectory, the company could well be worth a few billion dollars in the coming years. But that’s not the goal; $100 billion is. To build a $100 billion company that accelerates innovation in healthcare, its team needs to execute on building clean infrastructure for healthcare. 

Easier and Harder Than Ever 

There’s an interesting bifurcation happening in software startups.

For most startups, it’s never been faster or easier to build a product. That’s largely because of how much good infrastructure has been built over the past decade. In Ramp’s Double-Unicorn Rounds, I wrote: 

Today, a top engineering team can take so much good software off the shelf that development timelines have been dramatically compressed. Logan Bartlett, a VC at Redpoint, guessed that just a decade ago, it would have taken seven or eight years for even a great company to build what Ramp did in two.

But for the startups building the software that those other startups get to take off the shelf, it’s never been harder. 

Infrastructure-via-API has become such an obviously strong position in the value chain that any of the remotely easy spots have been grabbed, leaving only the hardest of the hard. Healthcare infrastructure, which requires integrating with Electronic Health Records (EHRs) and Electronic Medical Records (EMRs) in the thousand places they live today, fits the bill. 

For the most part, the consumer experience in healthcare sucks. There are plenty of good excuses -- regulation is overly complex, incentives are misaligned, insurance is a racket -- and no one technology company can solve those directly. But technology companies can build infrastructure to unleash the collective energy of thousands of entrepreneurs on the problem.

In spaces in which good infrastructure exists, hungry entrepreneurs can snap together different building blocks in the backend, and spend most of their time focusing on a good and differentiated experience on the front-end. In APIs All the Way Down, I described the impact that has: 

This is the beauty of API-first companies. They allow customers to focus on the one or two things that differentiate their businesses, while plugging in best-in-class solutions everywhere else. 

Without that infrastructure, though, teams waste time and resources reinventing the wheel. Many, daunted or overwhelmed by everything it would take to build even a good enough product skip the space entirely and opt for something smoother. You don’t see a lot of 17-year-olds hacking on healthtech in their bedroom. 

Specifically, in healthtech, the challenge is that there are thousands of EHRs that are tiny, fragmented, and antiquated, many of which don’t have APIs at all. That means there’s no one System of Record, or source of truth, that anyone building products can tap into to understand everything about a patient. Your dental records may be hidden in one system, primary care records in another, hospital records in another, insurance information elsewhere, and so on.

NexHealth exists to fix that. If NexHealth is successful, in a decade or even longer, a new generation of entrepreneurs will be able to build healthtech products as easily as they’re able to build fintech products today. 

It will do for healthtech what Plaid did for fintech. 

How Plaid Started

To understand NexHealth’s strategy, you first need to understand Plaid

Plaid is an API-first company that lets developers connect their apps to peoples’ bank accounts. If you’ve tried to fund an account, like Robinhood or Coinbase, using your bank account, you’ve likely connected via Plaid. If you use an app that pulls all of your financial data into one place, you’ve likely added all of your accounts by logging in via Plaid. Developers love Plaid because instead of having to integrate with thousands of different banks, all with different requirements, and then maintain all of those integrations, they just integrate with Plaid. Plaid does the rest. 

Today, Plaid partners with nearly every major bank, and many smaller ones, but back in 2013 when Plaid launched, it didn’t. What bank would trust a young startup with its customers’ credentials? So Plaid got creative. 

Venmo was Plaid’s first big customer, accounting for roughly 40% of its revenue in the first few years. Instead of Venmo integrating with all of the banks itself, it plugged in Plaid via API. When a Venmo user set up an account, they chose their bank and entered their credentials via Plaid, and Plaid logged in on their behalf. Plaid manually scraped, pulling information from the bank account and making transfers to Venmo on users’ behalf. Like the Wizard of Oz, Plaid looked like a fancy, integrated tech product on the front-end, but was really just a screen-scraping man behind the curtain. 

Some banks tried to stop Plaid, but eventually, Plaid got big enough that banks had no choice but to play ball. If their customers couldn’t use Venmo  or any other number of fintech apps because their bank blocked Plaid, that might be a good enough reason to switch to a new bank. 

Today, Plaid is massive. It partners directly with banks. Visa tried to buy Plaid for $5.3 billion in 2020. The Department of Justice blocked it on antitrust grounds. In seven years, Plaid had become so enmeshed in the financial plumbing that the government thought that Visa owning Plaid would create a monopoly. It worked out well for Plaid, though. In April, Altimeter led a $425 million Series D that valued the company at $13.4 billion.  

So how do you build Plaid for healthcare? 

Integrating With EHRs: Not as Simple as it Seems

Healthcare today is still where fintech was a decade ago. It needs its Plaid. 

There’s an obvious approach to take: integrate directly with the largest EMRs/EHRs. Out of Pocket’s Nikhil Krishnan recently wrote about one company taking that approach, Particle Health

Particle Health provides an API that allows companies to query patient records using demographics like name, date of birth, address, across a bunch of different data sources (EMRs, prescription data, etc.) riding the new interoperability rules. Particle Health gives you a single API to plug into and gives the data output in a structured FHIR format.

There are a few things to note about Particle Health. 

  • First, it integrates directly with the biggest EHRs like Epic and Cerner, which cover most of the population and focus on hospitals, not SMBs. 

  • Second, it doesn’t work like Plaid, but as a store of patient records. Particle pulls in data from EHRs and makes it queryable for developers, but developers can’t integrate with a doctor’s EHR via Particle. 

  • Third, Particle works with the government’s FHIR protocol, which was created by the Health Level Seven International (HL7) health-care standards organization. The government mandates that EHRs use the FHIR protocol if they want to accept Medicaid. It is all as painfully boring as it sounds. 

FHIR is a great step for the industry, but as you might imagine, a government-mandated protocol has some limitations. One, it’s a government-mandated protocol. Second, anyone who works with the FHIR protocol still needs to work with EHR vendors, who act as gatekeepers to the information. The APIs with which Particle and others taking a similar approach integrate are still the ones created by the EHRs, who can limit read/write functionality, rate limit, and make developers go through a long application process. 

Nikhil points out that the process can take 3-24 months when working directly with data vendors,  but “Using Particle, you just have to interface with Particle and according to Particle the implementation time is about 7-8 weeks.” After 7-8 weeks, you essentially end up with a queryable database of records, but not the ability to integrate with the EHRs. Particle is relevant to hospitals or clinics that accept Medicare and Medicaid, so it covers a huge portion of the population, but according to Nikhil, “the long-tail is looooooong” and hard to capture.

So by working with the government’s protocol, you end up with messy APIs, gatekeeper control, and no clear way to actually integrate with EHRs or reach the long-tail of lives. The approach that seems straightforward isn’t. So what do you do? You build a new system from the ground up. 

Introducing the NexHealth Three-Step Master Plan: SaaS → API -- Platform. 

Step 1: SaaS 

NexHealth’s big insight was this: to build a “single API for healthcare,” you actually don’t start API-first. And you don’t go through the gatekeepers, you go around them. 

Unfortunately, in healthcare, there’s not one Venmo to piggyback on. There are over 700k SMB healthcare practices in the US, 80% of them use on-prem systems instead of cloud software, and they use EHRs from over 1,000 vendors, none of which has more than 3% market share. Many were built by local IT shops to serve the dentists or doctors in any given market.

NexHealth started by reaching out to those vendors directly. Maybe they’d be interested in partnering to improve the patient experience? The vendors all told them to buzz off due to a combination of laziness and their own retention strategies. These were closed systems, which made it hard for doctors to switch, and the systems were “good enough” for the doctors, who had other things to worry about. 

So instead, NexHealth made its first counterintuitive bet. It decided to build a SaaS product for healthcare SMBs and sell it vertical-by-vertical, starting with dentists. One analogy is that the product is like a Shopify-for-doctors. It lets doctors easily set up their online operations and accept payments online. But a better analogy is ServiceTitan, which makes all-in-one software for field services professionals -- HVAC, plumbing, electrical, and more -- to run their businesses. It helps them with the basics, like a website, scheduling and payments, alongside modern sales, marketing, and customer retention tactics to help them grow their businesses. 

NexHealth does the same thing for healthcare SMBs, starting with dentists. (It’s no wonder ServiceTitan’s execs are investors). It was the right time to build a product that let dentists and doctors market more effectively to potential patients. Obamacare and the internet combined to make it necessary for medical SMBs to go direct-to-consumer, and they didn’t have the tools. Doctors didn’t have software that could talk to their EHR, their system of record, so NexHealth built it. They said, “We have this product. Let us into your server to integrate it, pay us $550 per month, and we’ll turn you into an ecommerce business.” 

If you’d looked at the company for the first three years of its life, you wouldn’t think that it did anything else. All of the copy on the website was geared towards the SaaS product. 

Alamin’s only done a couple of podcast interviews ever: one with Dentistry Uncensored, the other with DSO Secrets. (DSO stands for Dental Support Organization. DSOs offer non-clinical administrative support to dentists, stuff like marketing, billing, etc…) On both podcasts, he just patiently described the value of software to non-technical audiences of dentists. 

He’s a more patient man than I am. I would have burst out and said, “Don’t you see! This is just my wedge! Here’s my grand plan.” He just talked about the importance of following up with your patients and why online patient reviews weren’t necessarily a bad thing. 

Alamin and Waleed just put their heads down building SaaS and selling to dentists. They didn’t make a fuss, or any bold proclamations. It was too early, they didn’t want to disclose their secret or confuse the message. When NexHealth raised a $4.2 million Seed from Point Nine Capital in September 2019, it did so exclusively on the strength of the SaaS product! Alamin didn’t mention the master plan, even to potential investors. Again, I would have been touting my strategic brilliance. They just built. Why? 

NexHealth is competing with companies that solely focus on one of its three customers -- doctors, developers, and patients. If it loses focus on the task at hand and looks ahead too quickly, it will lose before it has a chance to get to the next step. 

To be clear, the SaaS business is a good one. When I spoke to Josh Buckley over the weekend, he told me, “The SaaS product is working. There’s a clear path to hundreds of millions of dollars in ARR.” But the SaaS product is only a part of the plan; NexHealth has had a Plaid-like strategy all along.

Their ServiceTitan-like SaaS product was just the Trojan Horse into EHRs, their equivalent of a Venmo user logging into their bank account. When the admin at an SMB signed into NexHealth, and then connected to their EHR using their admin credentials, NexHealth scraped the database to access patient records and integrate them with NexHealth, and reverse engineered the systems. Once they had one customer that used eClinicalWorks, for example, NexHealth could integrate with any eClinicalWorks system. 

Instead of building on top of FHIR protocols, NexHealth decided to take the long road and build their own system from scratch, EHR-system-by-EHR-system. They chose to go around the gatekeepers instead of playing by their rules.

NexHealth didn’t even really expand beyond dentists for a while. Here’s why. There are over 1,000 EHR systems across all of the different SMB healthcare practice areas. Patient records are stored separately across different verticals. If you try to take the blanket approach, you’re spreading yourself too thin, not getting critical mass in any one vertical. Instead, NexHealth focused on dentists, who only use a small subset of the total EHR systems, and integrated with 22 dentistry-specific EHRs. Those 22 EHRs represent almost all of the 200k dentists in the US within a $140 billion dental market.

It was time for Step 2. 

Step 2: APIs

Once NexHealth had integrated with enough dentistry-focused EHRs, it went to dentistry-focused companies and developers and said, “Here. If you build with our API, you can integrate with all of the EHRs you need for one low price. No FHIR, no gatekeepers, no extra fees. Just the NexHealth API.” 

By focusing on just dentistry to start, NexHealth built enough density, concentration, and coverage in that one huge niche that it could provide a compelling offering to developers who wanted to build dentistry products. This is textbook marketplace expansion -- flood the zone, create density, find the supply-demand balance, and only then move on to the next -- and NexHealth proved that it could execute brilliantly. 

When NexHealth announced its $15 million Josh Buckley-led Series A in June 2020, it also announced its “new universal EHR API,” as well as one of its first partners: quip. Quip, which sells bluetooth-connected toothbrushes and a dental insurance product, used NexHealth’s APIs to synchronize patients’ brushing data with their dentists’ systems. 

This year, in March, NexHealth announced that SmileDirectClub is an API customer. SmileDirectClub is a $3.5 billion publicly traded company that makes clear aligners. Using NexHealth’s API, SmileDirectClub customers can schedule appointments with its Partner Network of local dentists or orthodontists to get fit for an aligner. 

Partnerships like the one with SmileDirectClub have direct benefits -- SDC pays to use the API -- and indirect ones, too. SmileDirectClub works with over 10k dentists, who will be exposed to NexHealth when they see a patient booked through SmileDirectClub but the data is synchronized with their EHR through NexHealth. They might become SaaS customers, too. More SaaS customers mean more revenue, more integrations, and better APIs. 

Part of the magic of the APIs is that they make it easy to work with the messy tangle of EHRs. The other part is that they include features and APIs that NexHealth used to build its own SaaS product. Since NexHealth had to build user-facing features that had other APIs built-in -- Stripe for payments, Twilio for calls and messaging -- they bundled those APIs into their own APIs. Stripe, Twilio, and the other API-first companies are happy to work with a healthcare-focused partner like NexHealth who can make sure that everything is HIPAA-compliant and that data is stored properly. 

What NexHealth is really trying to build is a way to empower the next generation of entrepreneurs to build great healthtech products without worrying about all of the associated baggage. It’s starting to happen. 

Alamin told me that a PM from one of Silicon Valley’s hottest companies recently left to start a claims processing company. In his pitch deck, on the “Why Now?” slide, was NexHealth. He’s able to build a company because NexHealth exists. According to the company, there are now hundreds of developers building using its APIs.

Today, NexHealth integrates with over 45 EHR systems, supports 75k providers, and touches 30 million consumers. That means there are still nearly 1,000 EHRs and hundreds of millions of consumers left. It will go vertical-by-vertical, selling SaaS, integrating, and packaging everything into APIs. By the end of 2022, it plans to expand to over 500 integrations, which Alamin says will allow it to reach over 80% of the US population. It will keep going from there, until it integrates with all of them, or not integrating with NexHealth is a reason for doctors to switch to a system that does. 

That’s one way that it’s going to expand. The other? 

It wants to build a platform. 

Step 3: Three-Sided Platform 

“Alamin really respects Microsoft,” Josh Buckley told me. 

Microsoft is a bit of a novel role model in startups. It’s normally Amazon or Stripe. But given what NexHealth is trying to pull off, Microsoft is a fitting choice. 

Microsoft Windows is the canonical example of a three-sided platform, connecting users, third-party application developers, and hardware manufacturers. On top of that, it develops its own applications: the Office Suite, including Excel, PowerPoint, Word, and Outlook. It’s incredibly tricky to pull off, with a complicated chicken-and-egg-and-coop problem. In order to attract developers and hardware manufacturers, you need users. In order to attract users, you need to be on the right computers and have the right applications. If you can pull it off, though, it’s incredibly sticky, for the same reasons. All of the developers want to keep developing for the platform that has all the users, the users want to keep using the platform that has the best applications, and so on. 

NexHealth is trying to build something similar: a three-sided platform for healthcare. 

Today, doctors, patients, and developers use NexHealth for functional reasons. Doctors need the tools that come with the SaaS product, patients need to use the software that their doctor uses, and developers want to be able to integrate with EHRs through one, clean API. 

Long-term, in-line with its ambitious mission, to accelerate healthcare by connecting patients, doctors, and developers, NexHealth wants to use its platform to not only deliver tech, but customers. By building a marketplace of products built on NexHealth, it can: 

  • Connect doctors on the platform with more patients, and with apps that help them manage and grow their business. 

  • Connect developers with practices and patients who might use and pay for their products. Customers will trust that if a product is on the NexHealth marketplace, all of the necessary integrations and compliance are built in. 

  • Connect patients with their doctors and healthcare apps, finally making it easy to understand and action your health as it is to handle your finances. 

Again, this is really hard to pull off. It could fall apart at any step. Three-sided marketplaces are challenging, and successful ones are incredibly rare. And the three-sided marketplace is the third piece of a plan that needs to go right. 

Challenges All the Way Down

It seems almost silly to write a separate challenges section for NexHealth. The whole thing is challenges. It’s challenges all the way down. Coming up with a bear case is easy: 

Each one of the things that NexHealth is trying to do is hard. 

  • Selling SaaS to a fragmented network of medical SMBs is hard. Many others have tried and either pivoted away or failed. 

  • Integrating with over 1,000 tiny, separate, often clunky EHR systems is hard. It requires a slow and methodical process of going system to system, vertical to vertical. 

  • At any point, an EHR could cut off NexHealth’s access (although since customers use their login credentials, they’d need to shut off their customer to do it). 

  • Success in one vertical doesn’t guarantee success in the next. 

  • Once they integrate with enough EHR systems in a given vertical, and open up the API to developers trying to build in that vertical, they need to sell to developers as well as SMBs. 

  • If all of that goes well, they earn the right to build a three-sided marketplace, which is challenging enough on its own, let alone while running two other businesses. 

  • If NexHealth pulls off the three-part plan, it wants to build a consumer product to tie everything together, which brings its own challenges -- consumer product, sales, and marketing is a different set of muscles than B2B or developer-led. 

NexHealth is trying to build three separate businesses. The first of which is in a crowded space in which others have tried and failed, and in which it has to go vertical-by-vertical to succeed. Each business depends on the others’ success. On top of that,  it’s competing with a new government protocol. Challenging is an understatement. 

But climbing this pyramid of challenges is what Alamin and Waleed signed up for. 

When NexHealth launched back in 2017, they had a really hard time actually maintaining the EHR integrations. They signed customers and kept losing them. By Q1 2018, they couldn’t raise and ran out of money, they only had $4k left in the bank. They reduced the team from twelve to four, and still kept burning. They were doing $24k in MRR and expenses were $33k. At its leanest possible, they were still losing $9k per month. 

Alamin and Waleed were college dropouts, so they had an easy out and a choice: 

  1. Shut down, go back to school, and chalk it up as a great learning experience.

  2. Turn cashflow positive and make it work. 

They chose to make it work. Throughout all of that, Alamin had been working on signing a new DSO with twelve offices. Normally, customers pay month-to-month, but Alamin convinced the CEO to pay the $36k annual amount upfront. That got the balance back up to $40k and gave them another month of payroll. Then, they turned cashflow positive. With only four people, and two eventual hires, they went from $24k to $200k in MRR over the next 18 months. 

“That brutal, painful experience did not temper our ambitions,” Alamin told me. “If anything, it fuels them even more now.” 

NexHealth has raised over $50 million since its account hit $4k. They’ve since hired a team of seasoned operators, but they don’t hide the fact that if they want to have a lasting impact on healthcare, this is what it’s going to take. For the type of person with massive ambitions, this is fun. 

Plus, each challenge it knocks down becomes a moat. Each success it has in building up one leg builds up the others. Every time it sells SaaS into a new vertical, the more valuable the API becomes. Now, thanks to extreme focus on each step, it has the best SaaS product and the best API product, and each keeps making the other better. Every time it works with a new practice, developer, or patient, the more realistic the three-sided marketplace becomes. That momentum spins NexHealth’s flywheel.

If NexHealth can spin the wheel just right, it has a chance to transform healthcare in ways that haven’t been possible before. 

What the World Looks Like if NexHealth Succeeds

So what does the world look like if NexHealth succeeds? 

The short and pithy answer is: we don’t know. That’s the beauty of technology that empowers entrepreneurs to build. It’s impossible to predict what they’ll come up with. Buckley said it well: “When you reduce friction in any industry, you can’t know what will come of it.” 

“We don’t know” would be a weak way to end an essay, though, and we can think of some things by answering the question that Lux Capital’s Josh Wolfe likes to ask: what sucks?

Unfortunately, that’s an easy question to answer in healthcare.

  • It sucks that it’s nearly impossible to tell what a treatment is going to cost ahead of time, and that out-of-pocket healthcare costs can be financially ruinous.

  • It sucks that you have to fill out the same paper forms every time you go to the doctor or the dentist. 

  • It sucks that it’s as hard as it is to understand everything about your own health because your data lives in siloes and outdated systems. 

  • It sucks that the smartest young developers are often scared away from building in healthtech, where they could have the biggest impact. 

When NexHealth is successful, it will fix that last point so that talented builders can fix the rest. If building healthtech is as easy as building fintech, and NexHealth delivers demand to the best products built on top of its platform, it would unleash a wave of innovation in the space. 

Imagine going to your doctor’s website, scheduling an appointment, logging in with your insurance provider, and getting an upfront estimate of what you’re going to pay. Because NexHealth will work with so many doctors and insurance providers, a product built on NexHealth’s APIs could even tell you if you’re getting ripped off. 

Imagine filling out your paperwork digitally, one time, at your dentist’s office, and filling out forms at any medical office that works with NexHealth just by entering your phone number. (NexHealth is already starting to do this with TriBeCa Dental Care).

Imagine one app that connects all of your doctors in one place, along with all of your connected devices and online pharmacy. Your doctor might get alerted when your heart rate is irregular, and prescribe you medication, which you just need to click a button to accept. 

When Plaid launched in 2013, and the wave of fintech infrastructure companies launched in the intervening eight years, it was hard to imagine the specific impact they would have. Back then, building financial products was not cool. Not a lot of people did it successfully. 

But better infrastructure attracted more entrepreneurs, and fintech is now one of the most attractive spaces in tech, minting unicorns seemingly every week. Today, there are neobanks focused on serving a range of customer segments with tailored financial products. Transparency and competition have dropped fees and put pressure on banks. Investing is being democratized. And entrepreneurs keep building. 

When NexHealth achieves its mission, the same thing will happen to healthtech.

Transparency will lead to lower costs. Doctors will be able to focus more on care and less on admin work. There will be digital health products focused on serving a range of customer segments with tailored healthcare products. I might even know where to find my medical records, and what to do with them to make myself healthier. 

When that happens, NexHealth will be worth $100 billion, but like a true platform, the value it creates will be much larger than that.

Thanks to Josh for introducing me to Alamin, and to Alamin and Aditya for your input.

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Thanks for reading and see you on Monday,