The following interview is a conversation we had with Joshua Miller, CEO & Co-Founder of Gradient Health, on our podcast Category Visionaries. You can view the full episode here: $5.7 Million Raised to Build the Future of Medical Imaging
Joshua Miller
Thanks for having me. Happy to be here.
Brett
I see you started your first company back in 2014, and that company was farm shots. What did farm shots do, and what did you learn from that experience in building and selling that company?
Joshua Miller
The first thing I learned is that every Founder needs to go to therapy, but backing it up from there, farm shots looked at satellite images of farms, and off of the satellite images were able to pick out whether a farm had a disease or a bug eating the crop. And so this was really revolutionary for farmers because they were pretty used to hiring folks to go out and walk through their farms and look for these kinds of things. And with us with farm shots, what they got was they got a map every morning off of a satellite, said, you got a bug here, you got a disease here. Better go take care of it. So that company grew pretty big. Really started out as a bunch of college students, and we eventually sold that to Syngenta in 2018.
Brett
Were you happy with that exit?
Joshua Miller
Yeah. Well, it’s funny because it’s like, I can give you the real answer, the emotional answer, which is very happy. But it’s always like, when you’re starting your first company is a terrifying process in some ways. And so I was very happy to have the exit, but the whole process probably put myself through more stress than I should have as a Founder. It’s a lot of kind of retrospectives and learnings that came from that.
Brett
What did you learn from that process? Let’s focus on the months leading up to the deal being signed and closed. What was that journey like of selling your college baby?
Joshua Miller
Yeah, well, I got really chubby in the first couple of months, right up until the acquisition. Pretty stressful process, right when you’re negotiating kind of at scale. And it’s this weird moment where the culmination of four or five years of your life’s work all of a sudden gets boiled down to a number, right. And so that was like a very stressful and kind of scary process. And at the same time, it’s like you could be the day before you’re supposed to sign documents and everything falls apart. So it ends up taking, what’s this kind of like interesting spiritual journey that you go through as a Founder? And it boils it down to a yes no number, right? So that’s what I think I went through pre acquisition, post acquisition.
Joshua Miller
The funny story is like, I had been living in this pretty crummy apartment in downtown Raleigh, and so we sold the company for a fairly significant amount of money, but the wire wasn’t going to hit until Monday. And I remember this in my Wells Fargo account, I had negative $1.12 and I had to pay rent on Saturday. So we closed the deal. The wire transfer for over a million dollars is coming on Monday, but I have to ask one of my board members if I can borrow $300 to pay rent over the weekend. Very, very surreal moment, right? And so learned a lot from that, learned where money is important, where money is not important. And then of course, the first thing I did when we sold the company was you’re supposed to call your mom and buy her a car, right?
Joshua Miller
Thats what youre supposed to do. And so called my mom. She didn’t pick up because she was on a cruise and never ended up buying her a car. But it was a huge impactful moment. But it wasn’t like an instant of processing. It took me many months after that exit to really understand and kind of fully ingest what had happened.
Brett
What was it like going from being CEO, being the Co-Founder at the small, scrappy startup that you end up building, and then all of a sudden you’re part of a company that looks like the, who is it? Syngenta. They have what, 10,000 plus employees. What was that like, just that shift? Because that must be a massive change.
Joshua Miller
It was a massive change. I mean, they tried to get us to switch over to Windows laptops first thing. We were like, no, no, you’re not going to get a bunch of programmers on Windows. But honestly, it was a great experience. There’s a lot more magic that can happen when you’re not purely working to please VC’s and purely working to just keep a company alive. You get to breathe and think strategically in a way that you sometimes don’t get the bandwidth to at a startup. And so honestly, the transition was great. I loved my team at Syngenta. We continued growing farm shots as a product within them for three years. I mean, it still exists today. I just stepped away after three years.
Joshua Miller
It was an all around great experience, and it also gave me kind of the breathing room to process, think about what I was going to do next and also start to do some angel investing.
Brett
That’s a perfect segue to talk about what you’ve been doing. So let’s talk about what you’re building today. What are you building?
Joshua Miller
So you always got to start with the problem, right? The problem is, if you’re an AI developer, let’s say, and you’re building an AI to detect, let’s say, liver cancer, you can’t just call up a hospital and be like, hey, can I have all of your scans of people’s livers? That’s a weird and kind of creepy question to ask, but this kind of data is really important for producing life saving products. So what we did was we flipped that problem on its head. We went to hospitals all around the world, stripped all of the patient information, so names, birth dates, everything that would go along with that from these images and then make them available for research.
Joshua Miller
And so if you’re a AI company building liver cancer detection, you come to us, you get 10,000 images of what Liverpanser looks like, and then you can train your AI.
Brett
What’s the common thread here between gradient and farm shots? Is there a common thread? Is there something that makes them similar? Or are these completely different ideas, totally different concepts?
Joshua Miller
It’s a really good question because they are, like, strikingly similar, but in a non obvious way, which is the problem of finding a disease in a satellite image is, from a computer’s perspective, the same as finding a tumor in a liver. You’re trying to find something that shouldn’t be there in a picture. Right. And so from a computer’s perspective, they’re actually both company, just in kind of two different domains. When you look at it that way.
Brett
Fascinating.
Joshua Miller
Yeah.
Brett
So you have this idea, you start building to solve this problem. What are the first, like, 90 days look like? Or maybe six months? What are those early days like? Take us back to that.
Joshua Miller
Yeah. Well, it started with my Co-Founder from farm shots calling me up and being like, hey, man, I got this idea. Funny story. So we’re just like, shooting the shit one night and being like, hey, we really want to work on something in healthcare. We knew we both kind of had a passion for it. And our first idea was to see if we could build fall detection. So, like seeing if you could make it something like an Alexa device could detect when someone fell in a room, right. Especially for older folks that live alone, you want to have some kind of detection for something like that so you can call the ambulance or medical care. So the challenge was like, where do you get a bunch of audio files, people falling over? And the answer is, it doesn’t exist.
Joshua Miller
And so we had my Co-Founder just like rat fall 100 times and recorded it of just like him smacking the ground, recording a helmet and elbow.
Brett
Pads or like, what’s he wearing?
Joshua Miller
He was just full sending it, man, it was a champ. And recording that and using that as our training data for this algorithm were considering. But then we realized this is a larger problem. And it’s really the limiting factor in healthcare. AI is data because it’s sensitive data. It’s data that has to be treated really securely. And then it’s also very big data, especially when it comes to images. And so we faced this problem ourselves and said, look, if we want to enable automated healthcare in 100 years, what do we have to do today? The answer to that question we had for ourselves was, what makes the data available?
Brett
Trey, in those early days, what was the biggest mistake you made? Or maybe another way to phrase that is, whats the biggest challenge you had to overcome in those early days?
Joshua Miller
Trey? Yeah. Working with hospitals, I would say getting our first one was very difficult. As is very typical in the medical field. Getting our 20th hospital was nuts.
Brett
How did you get the first one?
Joshua Miller
We found like a local group. It was actually one of our angel investors from this group called Venture south, who we can talk a little bit more about, had a connection into a group called Cone Health, which is local to us. And we started working with them and they were a huge help for us. And thats kind of how it works for healthcare startups is you find one at the institution thats willing to take a chance on you, and then you kind of build up that momentum.
Brett
A book that I read a couple of months ago is called the Outsiders. And I think it was Bill Ackman who recommended it initially. Not to me personally, obviously, but I.
Joshua Miller
Watched, I think it was, you didn’t just like to shoot him a text and be like, hey, Bill.
Brett
Yeah, I was saying that it sounds like I’m homies with Bill Ackman, but that’s unfortunately not the case. But the Bill Ackman book called the Outsiders. And it goes to the story of, I think it’s eight CEOs who were, of course, industry outsiders and talks about the benefits of being an outsider. Do you view it as a benefit that you’re an outsider to this world of healthcare?
Joshua Miller
I think it’s both. Right? So my Co-Founder comes from a medical background and so we do have that kind of dynamic, right, where he is inside and really understands how things function. And then I’m kind of outside and able to take, let’s say, a different look at things. And so I think you actually, for a really successful company, you need to have both. You need to have the person that understands how the system works and is able to kind of integrate themselves into it. But then you also need the person that’s going to come with new, fresh ideas. And so it’s been really helpful for us to have both on the team.
Brett
I think sometimes you come in with an outside perspective, you just witness things and you’re like, how is this the status quo? How is this what everyone’s just doing? And like, no one’s thought to ask, why is this happening? Have you had any experiences like that? Are there any specific things that you’ve run into where it’s like, how is it possible that this is how medical world operates?
Joshua Miller
Totally. But medicine is not CRM management. It’s not something that you can just be like, I have a good idea, and like, people would be like, great, and we’ll adopt it. Right. Medicine in its own way requires you to work within the framework that exists and change to some degree. It is, for good reason, incremental. You want things to kind of move at a pace that is, let’s say, has its checks and balances in medicine and doesn’t move too fast. Right. That’s how you end up with problems.
Joshua Miller
And so normally I would agree with you that especially even a company like farm shots, being an outsider and bringing something that was a fundamental change was really good with Gradient, on the other hand, you kind of want to work within the existing frameworks that people are comfortable, but push a little bit on what’s acceptable, what should be done. How do you move kind of society and medicine forwards, but you don’t push too hard and come in and say, oh, I know the better way to do this. Right? You’re never going to get buy in if you do. Seldom like that.
Brett
In those early days, what do you think was the most important decision that you made?
Joshua Miller
And I think Co-Founder relationships are really important. Probably choosing to work with the same Co-Founder again was huge for me. Right. And I think huge for him. In the sense that it’s like starting a startup is such an emotional process in a way that I think people don’t think about a lot. They think about it as like, oh, you’re competing with the market or, oh, you’re competing with your competitors, but in a lot of cases you’re competing with yourself. You’re trying to keep yourself motivated and excited and happy, and that’s where a Co-Founder and a good Co-Founder I think, can provide the most value, right. Is in ensuring of that part of yourself.
Brett
What about from a go to market perspective, what was the most important go to market decision?
Joshua Miller
Starting early, right. So just like the way we got started was we took orders first and then went and found the data later, right. You really want to validate a market in that way. And we’re talking, this was like four years ago. A lot of folks I see build things and then go out and try to sell it. I think the right way to do it is to sell things and then go out and try to build it as quick as you can after someone buys it. And that’s remained true across both of the companies that have started. So, yeah, I mean, I think it’s like getting started as soon as possible on selling things and proving that people want what you’re even considering. Building is the important part.
Brett
So from the Co-Founder destroying his body, falling, to having something that you could sell, how long of a time period was that? Was that like three months? Was that six months? How long until you were selling?
Joshua Miller
Three months. I would say if you were considering starting a startup right now and you can’t reach a sellable mvp and three months, you probably need to pare down your vision a little bit more. Right? Like startups are built incrementally, not in these huge bumps, if that makes sense. And so if you’re like, oh, I need to take six months to do this thing to get my company started. Try to think of like what can you do in three months?
Joshua Miller
And is that going to be at least good enough to validate your idea, at least for the companies that Im on the board of and the companies I write angel checks into, thats kind of the most cardinal sin that I see is people spending thinking or deluding themselves into thinking, oh, I need to spend six months or a year building this thing before Im even ready to start selling it because then they go.
Brett
Out of stealth and then the market’s not interested. Right, right.
Joshua Miller
Like whenever I see a company that’s in stealth, I’m always kind of like, if you’re not doing like really hard science and coming out with a patent portfolio out of nowhere, I’m not sure that stealth always makes sense. Right?
Brett
E commerce, CRM, widget.
Joshua Miller
Yeah, it’s like, okay, do you really need to be in stealth?
Brett
Three years in the lab.
Joshua Miller
Yeah, exactly. That actually might be a detriment.
Brett
Yeah, it makes a whole lot of sense. This show is brought to you by Front Lines Media podcast production studio that helps B2B founders launch, manage, and grow their own podcast. Now, if you’re a Founder, you may be thinking, I don’t have time to host a podcast. I’ve got a company to build. Well, that’s exactly what we built our service to do. You show up and host and we handle literally everything else. To set up a call to discuss launching your own podcast, visit frontlines.io podcast. Now back today’s episode. Whats the go to market motion look like today?
Joshua Miller
A lot of its inbound. I mean, something thats been kind of fascinating for me that didnt happen at farm shots is we have Fortune 500 companies sending us emails. Gradient is a 15 person company. Its kind of unheard of in the startup world. And just goes to show you, its a relatively unsolved problem in this space. So I would say almost 50% of our go to market is inbound leads, which again, I’m still astonished by Trey.
Brett
And do you just have killer SEO? Is there a killer content marketing strategy here or are they not searching for terms? They’re searching for Gradient Health.
Joshua Miller
I think they’re searching for Gradient Health. But it’s also just like, it’s a really acute problem that a lot of bigger companies have and it’s hard for them to find a solution. Like, the more acute the problem is, the more people spend time searching for a solution for it, right. And so people just chance upon us from that. We’ve also done some pretty good LinkedIn marketing. You can kind of see our announcements and everything like that. That’s been another big driver. Right. But still, 50% of our business is outbound. Going to companies being like, hey, I see you’re doing a regulatory filing. Do you need access to data to either train or validate your AI?
Brett
If we look at the competitive landscape, can you paint a picture for us of what that landscape looks like and how you’re positioned within the landscape?
Joshua Miller
There are definitely competitors out there and I’m never one to like, talk about a competitor. Right. I think that’s you’re never doing yourself or them justice. What we’re kind of seeing is there’s this explosion of companies that are building AI in this space, and so the market is widening every day. So theres definitely room for multiple players in this space. Imaging in particular is kind of its own corner of the market where theres only a couple people playing. And so we play pretty well with them. They’re good folks. And again, startups are very rarely competing against their competitors, and they’re more so competing against their own politics and outside forces, like their market.
Brett
What’s the market category called? Is it medical imaging or is it something more specific?
Joshua Miller
The term that most people would use is real world data, which is anonymized medical data of all sorts, right, where imaging is one vertical within that.
Brett
From a marketing perspective, are there any brands that you really admire? And this can be, or this can come from the medical world, it can come from your consumer life, it can come from anywhere. Like what’s a brand or company or a Founder that has an approach to marketing that you really like?
Joshua Miller
I have to be honest with you, man, I’m really bad at marketing. Like, I am a scientist and an engineer at heart. And so like, I have always leaned on other folks to do our marketing. I think that’s an important part of being a Founder, is like recognizing what you’re bad at and being willing to admit that, and then being willing to either delegate or outsource that. Right, instead of trying to be everything to everyone.
Brett
A Founder who’s bad at marketing, but 50% of the leads come from inbound. You must be doing something right.
Joshua Miller
We work with a firm in the UK called evoline that is just dollar for dollar, the best money I’ve ever spent in my life. And that includes whatever I put down as my down payment on my house. Right, that sounds good. That was.
Brett
My next question is, how’d you figure out marketing then? Was it an agency? Was it a marketing leader? So it sounds like it’s an agency that you work with.
Joshua Miller
It’s an agency. They’re called evolene. E v o l e n E. Quick aside, I’m not going to try to do an infomercial for them, but they have been one of the keys to our success, I would say.
Brett
What kind of value have you gotten from them and what are they doing just at a high level so we can kind of unpack the marketing strategy?
Joshua Miller
Yeah, so I mean, they do a lot of like work on image, to be honest. Like I can sometimes, and I know this about myself, present is rough around the edges. I don’t come across as like beard. It’s the beard which folks are not going to see on this podcast. But I do have beard. Thank you, I appreciate it. And so there’s something to be said for look, especially in the world of medicine, you do need to come across as very polished, right? It’s a formal industry in a lot of ways, so they’ve been very good at cultivating that for us. I think additionally product launches and things like that.
Joshua Miller
The guy who is our main contact there is ex air force and so he kind of whips us all into line from a pr perspective and he’s kind of not afraid to tell us when we’re goofing up. So I don’t know. I mean the guy’s name is James Hansel. I almost think of him as a Co-Founder. Thats how close we are to this marketing firm and how impactful he has been and his wife, its a two person firm, have been on our success.
Brett
From a marketing perspective. What are those top priorities for 2024 for us?
Joshua Miller
We did just launch our self service platform. Its been in beta for quite a time now. I think its okay to have products and stealth. I dont think its a good idea to have companies and stealth. Im realizing, Im contradicting myself and saying that, but it was installed for a while. We’ve now got over 130 users on this self service platform, ordering and getting data from us, which happened in the course of 30 days and it kind of sucked up a lot of the market, which has been cool and really good for us.
Brett
Is self service common in the medical world? Obviously that’s big in a developer world. I think it’s starting to become big in cybersecurity. But what about in healthcare and medical? Is that common?
Joshua Miller
Its not common in healthcare, but again, the way our venture capital market kind of functions is most folks are going to expect you to have a SaaS product where people are signing up and they’re paying a monthly fee and theyre paying on the number of seats. Kind of every VC out there wants to see Sase revenue as wed call it. And so in some ways, whether the market wants it or not, most startups go after a self service platform for that reason, to dive a little bit.
Brett
Deeper into my questions around category. So here’s a way that we like to think about it, and it’s about the line item. So are your customers currently in market? They already have a line item established and they’re like, I just need to go out and find a vendor that can fulfill this? Or is it more like the line item doesn’t even exist because this problem is so new, and they don’t even know how to articulate it, let alone have a line item.
Joshua Miller
Yeah, I mean, so they would definitely have a line item. And that line item will say is like, oh, I’m going to spend a million dollars to run a full clinical trial across four different sites at different hospitals, and its going to take me a year. And then they come to Пradient, and its one 10th of that cost 100 grand, and we get it done for them in two weeks to a month, if not a shorter timeline, depending on what they’re working on. And so its not just replacing a line item, but its a fundamental paradigm shift for these folks that we work with.
Brett
Who hates you? Someone has to be getting disrupted here at some point in that cycle or some point in that ecosystem. There must be someone sitting there saying, I don’t like this Josh guy. He’s coming in, he’s got a beer, and he’s taking away 90% of our revenue.
Joshua Miller
All of my haters, man. No. So it’s a new problem, right? There was an old solution to it, but it was never kind of like what hospitals wanted to be doing. Hospitals want to work on caring for patients, right? They don’t want to be provisioning data and worrying about the identification and things like that. And so I would like to say that no one hates me. I would like to say that I can’t think of anyone that does. It’s a new enough problem that is rapidly becoming such a large problem that no one is eating anyone’s lunch. Right. It’s all just more lunch is getting made, if that makes sense from a.
Brett
Regulatory perspective, do you anticipate there’s any changes coming, or is there any big regulation that’s coming soon?
Joshua Miller
Probably not in the US, definitely abroad. Privacy is super important to us. Is it to our customers and our partners? I think what people have seen is that the value of anonymized medical data brings a lot of value to humanity, right. If you’re able to build a robot radiologist, all of a sudden you can provide free patient care as a need. Where I think I would like to see the space go from a regulatory perspective is I would like to see eventually patients get compensated when their data is used in research. Compensated directly. That would be kind of my vision is like, look, I go get an ultrasound. It’s a $1,000. If I can get $100 off that ultrasound by saying, look, you can use my data and research, I think that’s a perfect and beautiful world.
Brett
Is that how you think it would work? It would be like a yes no form.
Joshua Miller
That would be great, right? There’s a lot of barriers to getting there, especially in rare disease research. But I mean, what’s the point of starting a startup if you can’t train, right?
Brett
As I mentioned there in the intro, you’ve raised about $6 million so far. What have you learned about fundraising throughout this journey?
Joshua Miller
I have always had a really good connection to my board. Right. So I wouldn’t say weve made any mistakes in fundraising. If anything, the fact that i’ve got a board that I can go to and be like, look, we’ve got problems, heres whats going wrong. Heres whats troubling me. Heres what im anxious about. And I don’t get beat up as a CEO. I get helped is huge, right. And so I think a lot of founders optimize for valuation, but at the end of the day, its like whoever you let on your cap table, you’re going to be stuck with them for a while. And so i’ve never tried to optimize purely for valuation, but instead by like, am I going to enjoy working for this person? Because in a lot of ways you’re working for your shareholders. Yeah, thats what I would say.
Joshua Miller
Raising money is a very emotional thing. Like you get told no a hundred times until you get a yes. And so I think if theres one thing that I pulled away, its like to have a thicker skin when it comes to venture capital, right. I used to kind of think you get knocked down ten times and you should give up, but really it’s like you don’t give up until you get knocked down a thousand times. When it comes to racing around, if.
Brett
You look ahead at the next round of fundraising that you’ll raise, what are the top like? Doesn’t big metrics. But what do you need to hit? What do you need to achieve and do to raise that next round and be happy with it?
Joshua Miller
We’ve got to probably get to a few million in ARR or coming up on that, right? Probably got to have, I would say, path to $100 million company. When you take vendor Capital, you’re expected to give a ten x return and you have to have clear line of sight and a vision to that. And so I think those are the two things that I’m thinking about right now. And then on top of that, we’ve seen this really interesting market dynamic where a lot of folks are building foundation models now, like chat GBT, but for radiology, where they need huge amounts of data, right, which all of a sudden bumped up our total addressable market in the last few months. So I think it’s finding a little, a few more proof points of that. Those would be the three things I’m looking out for.
Brett
Was that all part of the master plan? Like, did you know that things like chat, GPT were going to come out and you were going to be able to kind of service that booming ecosystem and that booming market, or did you get lucky?
Joshua Miller
I don’t know how it works for other founders, but I never have a master plan. I know what I’m doing for the next six months or a year, and I think you should have a seven year vision, but be flexible in its execution, meaning you should have a long term vision, but you should always expect that something unexpected will come when you’re starting a company, and you’ll need to respond to that in some big way. And so this would be a classical example of it, right? If you asked me six months ago, could you build a company in a large company in imaging alone, I probably would have said no.
Joshua Miller
But now that we start to see people build these ultra large scale models imaging, I would make the argument that now you can build a company that works on imaging alone in this space.
Brett
That’s a great segue into our final question before we wrap up. And that question is, what is that vision?
Joshua Miller
That vision is for anyone who is trying to do something good for humanity with medical AI gets the data they need within 24 hours for reasonable.
Brett
Nice and easy. All right, Josh, we’re going to wrap here. Before we do, if there’s founders that are listening in, they want to follow along with your journey. Where should they go?
Joshua Miller
Hit up my LinkedIn. And if you shoot me a message and say something nice, that might give you my email address.
Brett
Awesome, Josh. Thanks a lot. This has been a lot of fun.
Joshua Miller
Awesome. Thanks, Brett.
Brett
This episode of Category Visionaries is brought to you by Front Lines Media, Silicon Valley’s leading podcast production studio. If you’re a B2B Founder looking for help launching and growing your own podcast, visit frontlines.io podcast. And for the latest episode, search for Category Visionaries on your podcast platform of choice. Thanks for listening, and we’ll catch you on the next episode.
Twitter
facebook
linkedin