Alloy, Fuzzy Pet Health, and MedCrypt founders offer tips on finding product-market fit
For Alloy, finding product-market fit boiled down to one thing: “Not dying.”
That’s what the startup’s co-founder and chief revenue officer Laura Spiekerman told us at Eniac’s most recent Annual General Meeting, where — in addition to interviewing NYC mayoral candidate Andrew Yang and Attentive co-founder and CEO Brian Long — we hosted a panel focused on that theme.
Along with Spiekerman (whose startup offers an identity operating system for financial services companies), we were joined by Zubin Bhettay (co-founder and CEO at veterinary telehealth startup Fuzzy Pet Health) and Mike Kijewski (co-founder and CEO at MedCrypt, which brings cybersecurity to healthcare devices).
These founders lead three very different companies, but by bringing them together, we got a chance to hear about the process of launching a company, fundraising, and figuring out product-market fit across three industries. Here are a few highlights from the conversation.
Laura Spiekerman on Alloy’s journey: “This is a long haul. We started this in 2015 and we probably didn’t sign a bank until 2017 and we didn’t sign a big bank until 2019. So this stuff just took a really long time. I think product-market fit in our case was about persistence and just not dying. We’ve got Eniac to thank for not dying.”
Zubin Bhettay on pivoting to telehealth: “We pivoted our business at the beginning of 2020. And as luck would have it, we kind of fell out on the lucky end of the spectrum here. COVID was a natural accelerant to our business. I call that lucky guilt in some way. So the last 12 to 18 months has there’s suddenly been a really wild and exciting ride for us.”
Zubin Bhettay on why digital petcare is here to stay: “Don’t get me wrong, there will always be a need for physical care, and there will always be a need for people taking their pets into a vet clinic. You can’t operate on a dog digitally, that’s just not possible. But what we found is the ability for people to get access to information, to care, to triage immediately within 30 seconds kind of is an order of magnitude better than Googling some symptoms, trying to call up your vet clinic, being forced to go into an emergency vet clinic, and then having to [pay] with hundreds if not thousands of dollars.”
Mike Kijewsi on what MedCrypt could have done differently: “I think when we first started back in 2015, we tackled what I now understand to be the hardest aspect of the problem, of actually getting cryptography on these devices themselves. And at the time we’re like, ‘Yeah. That’s the right way to fix the problem. And this is easy, we’ve got it covered.’ There were, in fact, some easier maybe edge cases that we could have started with, where the total addressable market would have been smaller, but we would have been able to better test different theories.”
Mike Kijewsi on how to vet your investors: “I remember reading somewhere, if you want to know what it’s like to work with an investor, find the founder of a company that they invested in that failed and ask them how things went when it failed.”
Laura Spiekerman on raising money from Eniac Ventures: “They are the most founder-friendly firm I’ve ever worked with by far […] I think as a firm, that’s just core. That’s like in their DNA. They just want to kind of be behind the founders, and the founders are their customers.”
You can watch the video of the session (hosted by yours truly, Anthony Ha) above, and read the edited transcript below.
Anthony Ha: Hello, I’m Anthony Ha, and this is the first time I’m saying this publicly: I am the new vice president of content at Eniac Ventures. I am excited to be hosting this panel. We are going to be talking about product-market fit and whatever other fun things come up in talking to these founders about sharing their stories and how they got to where they are now. Why don’t we have each of our panelists introduce themselves? You can tell us who you are and give us one or two sentences, tops, about what your company does. Laura, why don’t we start with you?
Laura Spiekerman: Sure, thanks, Anthony. I’m Laura Spiekerman. I’m a co-founder and chief revenue officer at Alloy. Alloy is an operating system for identity in the financial services space. So we work on KYC risk, AML fraud issues for both fintech companies and banks. And we’ve been around about five years. We’re headquartered in New York city.
Anthony: All right. How about Zubin?
Zubin Bhettay: Hi, I’m Zubin Bhettay, co-founder and CEO at Fuzzy Pet Health. Fuzzy is a pet telemedicine company that offers pharmaceuticals and medications. We’re building the front door for pet health and wellbeing to empower and educate pet parents to help them extend and enrich their pet’s lives. We’re based in San Francisco.
Anthony: And last but not least, Mike.
Mike Kijewski: I’m Mike Kijewski. I’m the co-founder and CEO of MedCrypt. MedCrypt helps healthcare technology companies build cybersecurity features into their products. So they have heard of this episode of its TV show called Homeland, where the vice president’s pacemaker gets hacked. We try to help medical device companies prevent that from happening in the real world.
Anthony: I’m exited to share a little bit more about each of your stories. We can go back to Laura for a second. Laura, why don’t you just tell us where the idea for Alloy came from?
Laura: Sure. So my co-founders and I worked together at another startup before Alloy. About six years ago, we worked together in a very early stage startup doing payments online, where we were [focused on] ACH payments as part of onboarding — so how you get your money into a crypto wallet or online brokerage. And there’s all sorts of user experience issues there. Payments is one of them: I want to get my money into my Robinhood account fast because I want to buy GameStop.
So speed of ACH is really, really important, but the other part that we came across was that identity was really important. If Robinhood or a bank couldn’t properly validate your identity, you as a user were put through this kind of onerous, burdensome KYC, manual KYC, Know Your Customer process. You might have to fax in documents, you might have to scan your driver’s license. And that means you as a customer have a bad experience, it means that that bank or fintech company has kind of a higher risk of losing you or a bigger kind of back office cost to actually serve you and validate you.
And so we realized that there should be an API for that. This is sort of an API-ification of financial services. We’re starting back in 2015 and we kind of hopped on that bandwagon and decided to pursue that. We’re still off the same thing five years later.
Anthony: It sounds like you obviously know a lot about the financial services industry, but how then did you go from an idea to figuring out where the product-market fit was? This is going to be a common question I’m asking all of you, but I feel like in banks in particular — I don’t think of them as being super eager to adopt new technology.
Laura: No, they are not. And we built this product really for fintech companies. We didn’t know anything about banks. None of us came from banks. We very naively came into this thinking banks had this all figured out and we were just going to go after fintech companies. We were going to go after sort of the same type of customer that maybe a Plaid would — so an early stage fintech developer who has a great idea for the next app that they want to create. A savings app, for example, but it doesn’t want to have to build all of these very kind of mundane, but really expensive and critical building blocks like identity, like money movement. We started with those as our primary kind of customers and they were the handful of first customers because they’ll use new technologies, they’re willing to try new things.
Banks on the other hand, as you can imagine, not interested in trying a whole lot of new technologies from a five-person company who has no money and barely knows what they’re doing. A couple of years into it, we did realize that banks didn’t have this down. So we thought, “Okay. We should try to get to them.” We convinced a couple of fintech-friendly banks to work with us, those were community banks that were kind of at a very high level strategically placing themselves alongside fintech companies. They were saying, “Look, branches aren’t the future. I need to figure out how to work with fintech companies, or launch my own digital products, or both.”
Banks like Radius Bank, for example, Cross River Bank, those are these relatively small banks that maybe you’ve never heard of, but are actually behind some of the biggest fintech companies in the country. And so that was our target kind of first set of banks that we actually could start convincing to use our product. They were willing to take a chance on us.
And so we did that for a couple of years. This is a long haul. We started this in 2015 and we probably didn’t sign a bank until 2017, and we didn’t sign a big bank until 2019. So this stuff just took a really long time. I think product-market fit in our case was about persistence and just not dying. We’ve got Eniac to thank for not dying.
Anthony: Well, I do want to get back to all of those themes, but I also want to touch base with some of other panelists as well. People watching can tell we have some very different startups joining us today. So we’re going to jump at least for now from banks and fintechs to telehealth. Obviously here at the beginning of 2021, telehealth seems like a really obvious and necessary idea. I don’t know that it was quite as clear to me a few years ago — how did you decide that telehealth for pets was something that needed to exist?
Zubin: It’s a great question. I also think that within the bubbles that we live in today, I think telehealth does seem like it’s having its moment right now, but for the majority of people, that may not necessarily be the case. And so we actually started our business five years ago and we weren’t focused on telehealth. We started the business because I had an experience getting that care for my dog. And I rushed her into an emergency vet clinic. I spent five hours in a waiting room and eventually after two hours with a vet, I got a bill for $2,500. And it really hit me that the process of getting that care for your pet at a moment that is incredibly stressful and anxiety-ridden is also a really bad user experience and can be incredibly expensive. And what really hit us was there are 200 million dogs and cats in this country — more than 100 million of them don’t have access to any of that care at all.
So our initial business model was focused on membership-based in-home vet care services. Folks would pay us a membership fee and annually, we’d send a couple of vets out to your home a couple of times a year, and they do basic checkups on your pet. Think One Medical for pets, but a little bit in the comfort of your home. And after launching in San Francisco, we expanded to New York. The thing that really hit us was, scaling that business was really operationally complex and having veterinarians based around the country was also pretty cost intensive. So at the end of 2019, we actually made the decision to shut down our in-home care service and pivot our business to telehealth and telehealth-driven commerce.
I think the thing for us that really got us excited was consumer behaviors were shifting. People wanted access to healthcare products and services digitally rather than spending hours in a waiting room. And we’d seen that play out in human healthcare for a couple of years. And we realized that the opportunity for pets was even more amplified. It was even a bigger opportunity and actually had a much better value proposition because anyone that’s had to take your pet to a vet clinic in the last year to two years has had to deal with the friction associated with getting vet care.
We pivoted our business at the beginning of 2020. And as luck would have it, we kind of fell out on the lucky end of the spectrum here. COVID was a natural accelerant to our business. I call that lucky guilt in some way. So the last 12 to 18 months has there’s suddenly been a really wild and exciting ride for us. But what I think that has led to is just an acceleration into digital-driven care. The people that we speak to today and the industry folks that we speak to tell us that they don’t really see us shifting back into a predominantly physical-driven care operating model. Digital is here to stay and it’s actually going to be extended in terms of what its capability is of delivering care to people, human and pets as well.
Anthony: And when you think about that, that idea of the pandemic accelerating a lot of existing trends is one that we hear about quite a bit, but as you’re trying to figure out what your business looks like when the pandemic is over, what were the things that made you feel confident that this is a permanent shift and that in six months, everyone’s not just going back to their regular vets?
Zubin: I think the user experience, the NPS [net promoter score], and the customer feedback, and customer insights that we were receiving, and also the data around when people were using our service, and how they were using it. People tend to use our service on average between six to 12 times per year, on average. We have the super users that have a lot of anxiety, typically first-time pet parents, that are trying to figure out and navigate the journey of being a first-time pet parent, and they’re using it significantly more, but what that compares to is the typical experience of going into a veterinary clinic where people are only using that service once a year.
So people want access to healthcare information and health services more frequently and more accessibly than what they were before. I think the period of kind of forums and people Googling some symptoms and the rabbit hole at that puts people down every time, people felt like that wasn’t really the user experience that they wanted to go to.
The other thing that really hit home for us over the course of the last 12 months is people find that the digital experience is actually more personable in some ways today than what it is taking your pet into a vet clinic. Don’t get me wrong, there will always be a need for physical care, and there will always be a need for people taking their pets into a vet clinic. You can’t operate on a dog digitally, that’s just not possible. But what we found is the ability for people to get access to information, to care, to triage immediately within 30 seconds kind of is an order of magnitude better than Googling some symptoms, trying to call up your vet clinic, being forced to go into an emergency vet clinic, and then having to [pay] with hundreds if not thousands of dollars.
And the more personable aspect is if you take your pet into a vet clinic today, you drive into a parking lot. Someone comes to collect your pet and you’re lucky to get a phone call from the vet once they’ve examined your pet. Whereas digital care allows you to have a more personal relationship where you can see the veterinarian, they can see you, they can advise you on what you do. And what we’re finding with a lot of people today is they want to feel a tighter bond with their pets. Pets are the new kids. So I think 95% of people that have a pet identify with that pet as part of the family. They want to be more involved in how to deliver and administer care and tighten the bond that they have with their pets. And that really kind of all lends itself to how we think about the future of how people care for their pets.
Anthony: We’re going to have another topic shift to — I think it’s kind of related — medical device cybersecurity. Mike, I know you started MedCrypt over concerns about that security. So tell me a little bit about how you went from, “Hey, this is a problem,” to translating that into an actual product.
Mike: So in 2014, I was working for a medical device manufacturer when I started to hear primarily hospitals asking questions about if a cybersecurity vulnerability and a medical device could actually lead to physical harm in a patient. And that wasn’t something that I had considered before. I had considered patient data privacy issues and data loss and getting access to a patient’s social security number, but I hadn’t thought about a patient being physically harmed. My background is in the technology of imaging and radiation oncology, so I’m fairly familiar with how these medical devices work and how they’re built.
Every day when I would drive to the office, I would pass the Nest thermostat office. And one of the interesting things about healthcare is if you want to do something innovative in healthcare, just see what was done in other industries 10 years ago and apply it to healthcare today because it’s just, it’s chronically 10 to 20 years behind when it comes to technology. So I’m like, “All right. Here’s Nest. They’ve got connected thermostats in all of these homes. And you don’t hear a whole lot about these devices being hacked or being vulnerable. In fact, if you go on Hacker News and you look at people who’ve sort of played around with the Nest thermostat, there’s some pretty good security controls in place.” So we just looked at what were the best practices in modern IoT devices and figured out ways to package those same features for a medical device manufacturer.
Anthony: Right. And so when people talk about finding product-market fit, there’s often this emphasis on testing and iterating. I have to imagine this is a field where you don’t necessarily just want to ship an MVP [minimum viable product] to everyone because that could go really badly. So how do you get that testing and experimentation into the process safely?
Mike: Yep. So there are definitely some things that I wish that I had known five years ago when we started on this. To some degree, if you’re making a new drug or you’re making a new medical device, you’re not testing whether or not a neurostimulator is going to get product-market fit as you design it and release it. You know that there’s a problem, you know the right way to fix it, and you build the device. It may take five or 10 years to build that device.
In some ways, our technology looks a lot like a medical device because there’s a sort of long development cycle and we’re going into these products.But on the other hand, I think when we first started back in 2015, we tackled what I now understand to be the hardest aspect of the problem, of actually getting cryptography on these devices themselves. And at the time we’re like, “Yeah. That’s the right way to fix the problem. And this is easy, we’ve got it covered.” There were, in fact, some easier maybe edge cases that we could have started with, where the total addressable market would have been smaller, but we would have been able to better test different theories, where we’re giving medical device manufacturers code that might not actually go into a patient directly, but interfaces with the device that goes into the patient.
So that’s one of the things we’ve done in the last few years, we sort of diversified our product portfolio to include those really in-depth technologically complicated products that go possibly directly on a pacemaker, but also some just web-based tools that device manufacturers can use to assess their security posture, to manage that over time, and those are the sorts of products where you can iterate much more quickly without fear of harming a patient.
Anthony: Great. So I would love to sort of pull back a little bit or actually just kind of maybe go a little bit further into the process. As presumably people have figured out, part of the reason these three founders are here is because they are all backed by Eniac. And I’m curious how, especially as a newcomer, how Eniac has been involved in that process, and if there’s anything you can pull out in terms of a piece of advice or some way that Eniac supported you through this process as you’re trying to figure all of this out. Mike, I’ll put you on the spot first.
Mike: Yeah. I remember after we got a term sheet from Eniac, we were doing some diligence talking to other founders they had backed. I remember reading somewhere, if you want to know what it’s like to work with an investor, find the founder of a company that they invested in that failed and ask them how things went when it failed.
I didn’t quite go to the lengths of finding somebody that meets that criteria, but every time I talked to a founder, I ask them like, “Hey, when things aren’t going great, when you’re having a problem, what is it like to work with the Eniac team?” And universally, I just got great glowing reviews that there are two types of investors. When something goes wrong, there’s a type that you don’t want to call and there’s a kind that you call immediately. And Eniac has been the fund that I will call immediately if there’s some sort of issue. They’ve been always willing to — Tim in particular — always willing to think through things, give me some insight into what other portfolio companies have done, where they’ve encountered similar issues. They’ve been really, really helpful.
Anthony: Well, that’s great to hear. Zubin?
Zubin: Anthony, great question. I think we’ve been working with Eniac team for almost four years now. So it’s been a long journey. When we first connected with the Eniac team, I met with [GP] Nihal [Mehta] and what really stood out to me is just the focus on people and the focus on more than just the company, more than just the idea, but really the commitment to building and developing people and building them and developing leaders. And with me, I was a first-time founder and kind of still wet behind the years and I still am, and I’m still figuring things out, but the commitment from the Eniac team. And when I say the team, I think one of the things that stands out to me is Nihal was definitely my point person or our point person as a company, but I have interfaced and interacted with everyone from [GPs] Hadley [Harris], to Tim [Young], to Nihal, and Vic [Singh].
Anna [Nischke, vp of finance and operations] and the team have always been super supportive. So the commitment from that team to kind of really be supportive, be there through the good times, help kind of figure out and unlock areas of opportunity within the business, unlock areas of opportunity within the team, and then really committing to figuring out how I can be a better leader and how we could invest in other people on our team to be better leaders to. All of those things have been incredibly helpful and invaluable through the four years that we’ve had a relationship. So it speaks to why we continue to have a great relationship now and why Nihal and the Eniac team is still one of the first calls that we make when we’re trying to evaluate what we’re doing as a company and evaluate some tricky decisions to make.
Anthony: Awesome. Laura, what about you?
Laura: This is a tough question because I think no matter who you’d asked me about, my instinct is going to be I’m publicly saying nice things about anyone. So I hope this comes off as authentic. And Nihal was on our board for a long time and led our investment. He is just the best. They are the most founder-friendly firm I’ve ever worked with by far. I can’t even sort of convey how I feel about this. I’ll add, he’s not on our board anymore. We have raised subsequent rounds. And yet the other night it was like 10:00 his time and I called him with something and he was like, “Yeah. I can chat right now. What’s up?” And I think Tim called my co-founder last week at night. They are there for us through thick and thin.
We had a couple of years really where nothing good happened in our business. It was kind of stuck in the mud. I think no investors were interested. He could have walked away, he could have ignored us, he could have written us off, to some extent he was just ultra supportive. I think the biggest thing for me, and this is when we go into subsequent rounds of funding, when we talk to investors about what we want, my co-founder and I have this philosophy that empathy with the journey that we’re going through as founders is the number one quality we care about. I think Eniac has that in leaps and bounds. They know this is tough. They’re not here to shame you on all the mistakes you’ve made because you’re going to make a lot, we’ve made a ton. They’re just sort of along for the ride to kind of have your back. He’s our biggest champion. So there aren’t enough good things I can say there.
I think as a firm, that’s just core. That’s like in their DNA. They just want to kind of be behind the founders, and the founders are their customers, I suppose.