The following interview is a conversation we had with Derek Streat, CEO of Dexcare, on our podcast Category Visionaries. You can view the full episode here: $110M Raised to Help Health Systems to Find Time for the Best Care
Derek Streat
Thanks for having me, Brett.
Brett
Yeah, no problem. So before we begin talking about what you’re building at Dexcare, let’s start with a quick summary of who you are and a bit more about your background.
Derek Streat
Sure. So, as you mentioned, my name is Derek Street. I’m a technology entrepreneur. And so I’ve started my career investment banking. But I very quickly, after doing that for a number of years, very quickly got the bug to start building my own companies. And so Dexcare we’ll talk about today, is my 6th venture back company that I’ve built. About half of those companies have been in kind of the ad tech martech world, and about half of them, the most recent half, have been in the healthcare space. And for the last twelve years or so, everything I do, both for profit and nonprofits, dedicated to healthcare and health tech.
Brett
And what led to that transition for you, going from ad tech and martech to health tech?
Derek Streat
Yeah, so a couple of things. One, I wanted to start building businesses that had a social impact as well. I’m very much a believer that you can do well and do good at the same time. And so I spent a couple of years doing global development work in the microcredit space, mostly india and other parts of Southeast Asia as well. And so I wanted to make social impact. And then I also, my young daughter at the time, she was very young, contracted a pretty serious illness. And so we had to kind of shut everything were doing and shut everything down, our family that were doing, to focus on her care. And once we got her stabilized, I then determined that the best way for me to make an impact to unite my entrepreneurial efforts and the work that I do along with social impact, was to focus on health care.
Derek Streat
And that was the point where, again, as I mentioned, everything that we do in our family now, quite frankly, not just me, but my wife as well, is all healthcare focused now.
Brett
Wow. And what year did you make that transition or that move?
Derek Streat
That would have been 2009. Right. So 13 years ago.
Brett
And was that hard going from industry to industry or what was that journey like for you?
Derek Streat
Well, you would think it would be kind of on the surface, but it turned out that it wasn’t quite as hard as one might expect. Because it turns out that if you’re wired to try to build a business and I’m also a believer that if you want to make impact and do it at scale, that applying business models to these endeavors is the way to do it, versus just solely a nonprofit effort. And so once you start realizing that a lot of the things that you do in building a business in any space, KPIs and OKRs, choose your acronym there to figure out where you’re going to go and how you’re going to get there. The same rules apply in these impact spaces as well. There can be more challenging headwinds regulatory environments and things like that if you’re in healthcare or education or things like that or microcredit like I was in as well in the finance sector.
Derek Streat
But what I also find is those challenges and headwinds usually can become your competitive differentiators and even the moats that you can build as well because they’re really good at weeding people out of wanting to build businesses in those spaces in the first place. And so you just find that the things you would do in any business building moats, building sustainable competitive differentiation, things like that, you have to do in the impact spaces as well. It’s just there’s some different nuances to it, but it’s the same rules. At the end of the day, at least I found it to be that way.
Brett
Yeah, that makes a lot of sense. And two questions we’d like to ask just to better understand what makes you tick as an entrepreneur. Is there a specific CEO that comes to mind that you really have studied and learned the most from and really admire?
Derek Streat
Yeah, being based up here in Seattle and just the time that I’ve come of age of building companies, I’ve always been a big fan of Bill Gates and what he’s created at Microsoft and then the work that he’s done afterwards as well to the earlier points I was making. He’s a person who not only built one of the most successful businesses in the entire world ever, he’s also successfully applied a lot of those principles to his philanthropic efforts as well. And I’ve done work with the Gates Foundation in some of my previous lives and I will tell you it’s run very much like a business as well and doing all the things that I mentioned earlier as well. So I’m very impressed with how he has ported the skills and the experiences and the things that have made him successful in the straight up business world, has ported those to these impact areas as well and has been very successful in doing things that the world needs basically.
Brett
I don’t know how I ended up doing this a few years ago but I ended up on YouTube watching the deposition tapes of Bill Gates from the antitrust days. And it was crazy seeing the difference. It was a completely different person sitting there. He was very defiant and a little bit aggressive and he wasn’t like the Bill Gates we know today. And I thought it was an AI. AI transcription a person. And then of course he really redefined who Bill Gates is and the brand around him, I think from those early days.
Derek Streat
Absolutely. And the other ironic thing about that too is Microsoft was I think, rightfully so, called out at seatstein and called out as doing antitrust and non competitive things that needed to be changed. Of course, Microsoft in some ways is sort of the good technology company out there these days as other companies, other kind of big tech names have taken that mantle.
Brett
Yeah, they’ve avoided being the villain and I think other companies now have taken that position.
Derek Streat
Right, exactly.
Brett
And what about books? Is there a specific book that’s had a major impact on you as an entrepreneur? And this can be like a business book or it could also just be a personal book that really influenced how you view the world.
Derek Streat
I guess a couple that would come to mind from a business standpoint it was a bit controversial, but I’ve been a fan of there’s a book that the ex Indiana basketball coach Bobby Knight wrote called The Power of Negative Thinking. And I found it fascinating how he would talk about how even being one of the winningest college coaches of all time, he wouldn’t celebrate or have his team celebrate midseason, even when they were on top and said they would spend the time reviewing the mistakes they made, the things they could do better. And what was going on with the other teams that were upcoming, that they were going to play. And so that rigor and focus on just continually improving and being better. I actually built a company in the surgical space years ago that was all about continuous improvement influenced me. And then more recently, I’m a fan of Yvonne Harare’s book Sapiens, which is just if anybody’s into history and just kind of meaning of life things and what makes humans tick.
Derek Streat
It’s a wonderful read through essentially the history of mankind and what makes us tick as a species and some pretty good lessons and warnings about the future as well on what could continue to make us tick or not, depending on the choices that we make going forward.
Brett
Yeah, Sapiens is such a good book. I had tried to read it years ago. I listened to it on Audible and then everyone kept talking about it and I realized that I didn’t know anything about the book. So the second time I took a different approach and you actually read it and I just had to break it up because it’s very dense and it kind of like hurt my brain when I would read it I needed time to digest and think about it because it just really challenges how you think about things. Some complex things in there, but such a great book.
Derek Streat
Yeah. Also the paper stock that he uses in that book allows him to get like twice the density of pages in the same form factor. So it is quite meaty.
Brett
So maybe that’s the issue. I can blame. It’s not that I was just slow to understand the concepts. It’s the font.
Derek Streat
There you go.
Brett
Now let’s talk about Dexcare. So can you give us the origin story behind the company and just explain to us, like, the high level pitch that you’re making to customers?
Derek Streat
Yeah, I’ll do those in reverse. And so Dexcare is a data driven intelligence company focused 100% on making access to care better for everyone. And we do that for patients, providers, and health systems. And the core product that we have, which is also by the same name, is really an orchestration platform, an orchestration software platform that connects the demand side of healthcare. So patients looking for care with the supply side, the providers that are providing that care and the institutions that are providing that care and balancing between those two ends in order to ensure that everybody gets the best care possible. And it’s never been more important than in the current healthcare environment to make sure you’re considering both sides of the equations for the health of all the stakeholders involved. We were a company that spun out one of the largest and most innovative health systems in the country, providence Health System, based here on the West Coast, although they’ve got 51 hospitals now throughout the western part of the United States and tens of thousands of providers and employees.
Derek Streat
And really, we’re a bit different in that. Well, we’ve been spun out as an independent company for about two years now at this point. We really have been a product in production inside of this large health system for several years now at this point. And that provided us a lot of validation on the product and the value that it can provide all those stakeholders. Before we took our first round of outside money and actually became an independent company.
Brett
And was the vision to always spin it out eventually? Or was it more after you started seeing it gain so much traction? It was clear that this had to be a separate entity or a separate company.
Derek Streat
Well, so I wasn’t at Providence when this was originally Ideated. It was ideated by a gentleman by the name of Aaron Martin, who was previously with Amazon and now has gone back to Amazon running healthcare there. And then another woman, Sarah Vaisdi, who is still at Providence as a chief digital officer. Two incredibly talented people, and they created an organization within Providence to essentially solve problems that were being faced by that large health system. And as a large health system, it’s a beacon for others as well. So the goal was to first and foremost solve the problems in the health system. There’s a buy, build or partner strategies that can be applied there. So they’ve got their own venture fund as well. If you have an product and engineering team that creates things as well, and they’ve got a partnership group as well. And so a handful of things just can’t be solved by partners or invested in because they just simply don’t exist.
Derek Streat
And so Dexcare is one of four companies, I now believe, that have now spun out at this point. And one of the reasons that it really creates a lot of value is just this kind of entity didn’t exist prior to Dexter being created. So I don’t know if they started out with the idea of spinning it out, but I think it became pretty clear pretty early on that they could have legs to spin out and can provide value to a variety of health systems.
Brett
And when it comes to market categories for Dexcare, how do you think about the market category? Is this part of an existing one? Is it building a totally new one? And are market categories really super relevant in this type of health care space?
Derek Streat
Yeah, I love this question because what I found in the six companies I’ve built over the years that the place to find the most value creation is when you’re creating a new category. It’s also the most fun, by the way. It’s fun to be kind of on the edge and doing things that others aren’t doing as well versus just improving operations somewhere. At least for me it is. And so this is a new category. You could broadly say we’re in the healthcare access category, but what makes this a new one is that we’re optimizing it in ways that are very different than what happens out there today. And we do that by focusing on three kind of core points of value. One is we make care much more discoverable to consumers online. And so when all of us are going throughout our daily lives, whether we’re buying airline tickets online or restaurant reservations or even looking for care, the channels that we use usually are not hanging out on a hospital website.
Derek Streat
We’re searching for things in Google, we’re consuming media in other places, we’re using other comms channels, things like that. And so those access points really haven’t been open the same way that they’re open for every other industry through kind of ad tech and Martech technologies, which, as I mentioned earlier, I’ve got experience with. And so that’s one thing that’s very different and creates this new kind of access optimization category. The other two components then are then intelligently navigating people to the safest and best care options. A lot of this is done clinically today. There’s a lot of data, a lot of decisions that are important to consumers that may not even be clinical in nature, making sure they’re getting a provider that speaks their language, has the most experience seeing people like them, can do it in the shortest amount of time, et cetera. And so those decisioning elements, if you will, are important to factor into the equation as well.
Derek Streat
And others just don’t do it. And then finally we optimize capacity and load balance that this is where the supply side comes in. And so if there are multiple options that are clinically relevant for you as a consumer, we can ensure that the best one is matched to you that’s going to make the health system more sustainable. In other words, if there’s a lot of providers whose last names happen to start with A, that get all of the patients because they show up first on a list and those whose name start with Z don’t get as many patients, sounds like shouldn’t happen. But that is a real problem that we encounter in the space. Then we can load level and make sure that those patients get distributed more evenly. And what that means for you as a consumer is that you’re able to get seen faster and less time.
Derek Streat
What it means for you as a provider is that you’re seeing the patients that are most relevant for you to be seen and not getting burnt out. What it means for you as a health system is that you can actually sustain your business now at this point in growth. And so that access optimization category is really quite novel and new versus I think historically people thought of it as scheduling or things like that, which is very kind of web 10, if you will.
Brett
And what types of activities are you doing to create the narrative around that category and then create demand for that category when there’s probably not existing demand if it’s a new category that’s been.
Derek Streat
Created, yeah, well, luckily the demand is there. It’s just, we need to often help our customers who are the health systems, map the pain that they’re feeling. This is always map the pain that they’re feeling to this new term, this new word. And so typically the pain that health systems are feeling and it’s happening right now, it was just prior to this on a call with CFOs at large at leading health systems around the country. The problems are is the cost of all the inputs in the health systems have risen just like they have for all the consumers out there. And at the same time these are low margin businesses and the amount of care that’s coming, the value of that care is lower than it had been pre pandemic. And so you have less revenue and higher costs. We all know where that’s going to go.
Derek Streat
And so these problems exist. They were here before pandemic, they’re amplified now. And so a solution that gets more people in and then routes them to the most sustainable care to lower the overall cost, helps drive growth, while at the same time lowering cost marginal or unit costs as well. And then we just give it a term, which is access optimization. But it’s the same pain that those organizations are feeling. And then we do in terms of how we get the word out there, we’re very much an organization that focuses on thought leadership. We’re a complex solution sale in an enterprise market and one of the most kind of challenging markets out there. And so anytime you’re going to do something like that, there’s never going to be a buy button for Dexcare online. This is all about building thought leadership and relationships with the leading systems around the country that are beacons for what other health systems want to emulate and then working with them and then throughout the network in order to ensure that we get maximum reach.
Derek Streat
And that’s why we have people like Toby Crossgrove on our board who ran Cleveland Clinic, the number two hospital in the entire world. That’s why we have investors like Kaiser Permanente and Providence and Mass General Brigham invested in this organization. And we’ve got just the leading organizations that are delivering healthcare connected to Dexcare. And that helps a lot.
Brett
That makes a lot of sense.
Derek Streat
Yeah.
Brett
And the point of capturing that market demand, a guest who was on the other day explained it as you’re just damning demand. So capturing that demand and then redirecting it towards your solution and then really articulating that problem back to them and then framing the solution to that problem. So it sounds like you guys are doing that exact same strategy.
Derek Streat
Yes, absolutely.
Brett
And every Founder these days, I think dreams or aspires to be a category creator. And there’s obviously a lot of benefits that come from that. A lot of the founders that I speak to are first time, second time founders. You mentioned this is your 6th time and you’ve done this before with category creation. Could you tell us any stories about your category creation efforts in previous companies?
Derek Streat
Yeah, again, what I’ve found is that category creation is it really needs to map to an existing pain. And even if the pain isn’t known right, if it’s a latent need and you’ve got to uncover it still needs to be there. You can’t necessarily create the pain. Or I should say if you’re creating the pain, you’re probably not that good of a person. So you don’t want to create the pain, you want to expose it and then address it. And so often it’s just mapping that to the right words. And so I’ve talked about Dexcare. The company I did prior to Dexcare was a company called CSAs. It was in the surgical space where we train first humans and then machines to read and interpret real time interoperative surgical video so that we could determine what was going on, improve the surgeons, and predict what the surgeon was doing was going to lead to a complication or near miss or something bad for the patient.
Derek Streat
And nobody, certainly surgeons and then the health systems we sold to, nobody started with the premise of, hey, what I want to do is what I really need to do is just watch my surgeons with some AI. But they all have the pain of just because of the volume that we’re running through and the fact that there’s variations in care, we’ve got patients that are getting hurt by this group or that group or this time or that time. That’s also costing us a lot of money in the process through malpractice claims and things like that. So that’s a pain. We don’t have to call that. We’ve got to solve it. And so we came in with a novel solution to create essentially a predictive and continuous improvement platform to provide that video analysis. So it’s still got to map back to the pain at the end of the day.
Brett
And what about analysts? What are your views there? I know that’s a controversial take or a controversial question. Some founders love Gartner and Forrester and view them as mission critical and others hate them and view them as irrelevant. So what’s your view on analysts?
Derek Streat
Yeah, I think it’s super important if you’re in a thought leadership space like we are where it’s very enterprise related and just people right. We rely on things like that to help validate the markets and help people help our customers make these very important high dollar strategic decisions. I should also mention, I mentioned earlier, I started my current investment banking, I started the banker, and then I went to the institutional equity research side of the equation. So I was more on the sell side research side there in the financial space. But I haven’t appreciated I wrote a lot of research reports in my days and covered a lot of categories. I think it was important work, if I do say so myself. So I’m a fan of it.
Brett
And are you guys very active then in engaging with Gartner and Forrester?
Derek Streat
We do, yeah, there’s those organizations, there’s the Class organization as well that we’re starting a relationship with. And then for us, we do a lot of work with the healthcare health tech specific organization. So a lot of work with the Health Management Academy and the Health Evolution.
Brett
Folks makes a lot of sense. And as I’m sure you’ve seen, startup funding is booming in health tech. There’s a lot of funding being thrown around these days. Maybe that’ll change in the next year, but for the last two years there’s been a lot of funding. How have you managed to rise above all of that noise and really capture the attention of customers and get them to really buy in and believe in what you’re building?
Derek Streat
Well, the first thing we did is we’ve had and continue to have a very valuable product that is meeting the moment right now. Like as I mentioned earlier, it was already validated and we knew it worked inside of a large health system. When the pandemic hit, it became clear that care was going to come out of this as multimodal and that health systems, our customers in particular, were going to need help in connecting that demand side to supply growing while at the same time reducing their unit costs of delivering that care. And so we’ve had a bit of win in our sales during that time period. Also with the team we’ve assembled here, we’re a team that’s done this before and has had a lot of success and all the deals we’ve done have been venture backed deals, so we’ve been able to raise the capital we’ve needed to on a good idea and a good team.
Derek Streat
And then finally there’s just been some luck as well. We did our Series B, we did a Series A and in early 2021, then were growing so fast, continue to grow so fast, we’re either doubling or quadrupling every year across every metric you look at right now in the company. So we did a Series B at the end of last year just to feed the growth and we’ll end the year with most of that money in the bank. And that was luck, right? In part, the timing was perfect to close it in mid December with market kind of blowing up the next month, so luck is always a little piece of it as well.
Brett
So you must be sleeping decently well then tonight, compared to a lot of the other startup founders out there who are at the growth stage, who are very worried about the next round, so not at all.
Derek Streat
I would say the stakes just get higher. So we’re fortunate that we’re well resourced and have great partners that support us and at the same time that just raises your aperture of the opportunity out there and the organizations that we need to work with customer side. Plus, by the way, it just puts a bigger target on your back too, by the way. Right, so I will say a year hence, doing that round, I don’t sleep any better at night. I’m kind of come from the Andy Grove school of thought, can I always be paranoid?
Brett
Yeah, when the paranoid survive, right?
Derek Streat
Yeah, exactly.
Brett
And if we zoom out into the future, what’s the future of Dexcare? Maybe let’s zoom out to just three years. What does the company look like?
Derek Streat
Yeah, our vision is that everyone everywhere enjoys exceptional access to the best expertise to treat, prevent and cure illness. And today we’re very good at providing access to the treat side of the equation, getting people that care through whatever mode they need and going meeting them where they need care or looking for care as opposed to waiting for them to come to the hospital website. I think as we evolve, you’re going to see us move more into that prevent and that cure side of the equation as well. Because the reality is once you start opening the door to having any sort of digital enablement of delivery of care and everything we do, even though we’re multimodal and support in person visits and things like that, there’s always some digital component, whether it’s initial awareness, online or online scheduling or things like that. Once you start opening that door, though, you start meeting the needs by consumers to be more efficient and just consumer centric in delivering care for them.
Derek Streat
And so that eventually gets to the point, I think, where the treatments are delivered, they could be delivered as a digital therapeutic. They could also be if it’s analog and oral therapeutic, it could still be ordered and then showed up at your door that afternoon. And then once you start getting into a treat and then the prevent where you’re starting to predict now care before you even know that you need it, this can help close care gaps, procedures that people age into, things like that, then eventually you get to cure. And so I think we’re on this journey where by making it easier for everybody to access care, and in a world doing it, in a world where patients benefit, but so do providers, they’re not all getting burned out and so do health systems, so they can be around to actually deliver care. We’re on this path to adding to the treat, adding to that the prevent and the cure side of the equation as well, which is super exciting.
Derek Streat
I don’t know that it all have happened and get solved in three years, but I think with each year you’ll see us growing into that vision more and more.
Brett
Well, it sounds like a lot of opportunities, so it makes sense why you are struggling to sleep at night.
Derek Streat
Thank you.
Brett
Amazing. This has been so much fun. Unfortunately, I know we’re up on time, so we’ll have to wrap before we do. If people want to follow along with your journey as you continue to build, where’s the best place for them to go?
Derek Streat
Well, so we have our website, dexcare.com or dexterhealth.com. We have a LinkedIn channel that we use as well, and a Twitter channel as well. And then you’ll see us, we do a lot of work to build thought leadership, so we’re usually on stage at all the big health conferences. So Health HLTH, which I was just on stage at, announcing a deal with Kaiser Vive in March. You’ll see us there, he S in April and September and some of the HMA groups as well. So you’ll see us at all those events as well.
Brett
Amazing. Derek, well, thank you so much for taking the time to chat and share your vision and really share some of those lessons about category creation. I know that’s always super helpful to hear for the listeners and. It’s always exciting for me to hear it correctly from people who’ve created categories. So thanks again and wish you the best of luck in executing on this vision.
Derek Streat
I appreciate it. Thanks for the opportunity.
Brett
Yeah, thank you. Keep in touch.
Derek Streat
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