Confessions of a Successful Entrepreneur: Dan Rodrigues

10 02 2016

Kareo 2The other night I was asked by a colleague who had a question from a reporter at INC Magazine what are some success tips for entrepreneurs and additionally what are some tips when you run into trouble.   I have written about tips for budding entrepreneurs in my blog on The Business of Business in the past and have written on behalf of the TechCoastAngels as well.

Serendipitously, the day after I wrote my comments to the reporter, I had the opportunity to listen to an interview by Andrew Bermudez of Digsy (,, of Dan Rodrigues, CEO and founder of Kareo (   Dan’s company, Kareo, has raised more than $100 million and is the fastest and largest growing company in Orange County, CA.  His company provides a cloud-based platform for independent medical practices and currently has more than 35000 providers served by more than 500 employees.

I want to share Dan’s perspective on how he grew his company and the road he had to travel.  Let’s lay out the journey in three chapters: Genesis and Euphoria; Reality of Funding and Growth: and the Path to Success.   And in each chapter there are lessons to be learned and tips for the entrepreneur.

Genesis and Euphoria

After Dan sold his first company, Scour, he started a software development consulting business.  During this time, he worked on a project for a client in the healthcare space. Through this project, he learned about healthcare IT.  Yet he also applied his knowledge of the consumer, gained from his stints at Vizeo and Real Networks, to the business.   He took the knowledge and the project and built the beginnings of Kareo and the first customer was the company for whom the original project was designed.

Lessons  learned:

  1. An inquisitive mind can yield interesting insights into new ideas. In this case, Dan used an inductive process to define the requirement to serve one customer and used that platform as a base of expansion to other similarly situated companies.  Entrepreneurs can take a custom project and move it to a generalized solution which might give you an immediate customer base.
  2. Integrate different perspectives to develop your business. Dan leveraged his prior experience in a different market space and was able to apply that knowledge to make Kareo different than other software companies in the same space. In a later chapter, Dan directed Kareo to be an online provider of SaaS services to this market.
  3. Build relationships as they will be valuable for funding as well as support and resources. Dan was able to use past relationships built over time to get to VCs on Sand Hill Road and High Net Worth individuals to help provide the initial funding.

Reality of Funding and Growth

Initially, Dan bootstrapped Kareo and now with some funding and the opportunity to gain more, the business seemed off to a solid start. And while you might read about Dan’s story thinking that it was all wine and roses, the truth is that Dan had some tough days early on with Kareo. In 2008, Dan received a difficult call from an investor who was unable to deliver a promised next round of funding. With no time to find another investor and significant bills to pay, Dan made a very tough decision. He reduced the company from 35 employees to 7, and found a new path for Kareo. During the entire year after, Dan did not take a salary as CEO so that others could be paid.  The goal was now survival and the focus was getting customers, reducing product expenditures, and finding more efficient ways to support existing customers to reduce cash burn.

Lessons Learned:

  1. Never take anything for granted. An investor can change his mind and funding may no longer a certainty.  The business environment might change too and entrepreneurs need to be fast, fluid, and flexible.
  2. Spend wisely and carefully. Kareo built a company and moved into expensive office space.  How many of the readers can relate to the euphoria of getting funded and spending lavishly with those funds?  I know I have been in companies that did not spend wisely and had to retrench.
  3. Learn the way to manage the business in the most efficient manner.
    1. Develop good solid cash management and make that a core competency
    2. Build a support infrastructure in synch with the services your company provides and find ways, at least initially for minimizing spending on infrastructure. Try to build a solid online help solution, provide excellent documentation, a good knowledge base.  But also have an additional second layer of support if needed.  Train people to do double duty.
  4. Learn to sell online. Other software in the healthcare market was sold through VARS.  Selling online gave Kareo an edge and reduced the cost of acquisition.

Path to Success

With revenue ramping to $3 million, and cash flow positive, Kareo was on the path to success.  During this phase, the goal was to grow the business through disciplined growth using the lessons learned during the prior chapter.   Over time, Kareo started adding back employees, expanding its product set, and increasing sales.

Lessons Learned:

  1. Maintain the discipline of cash management. Remember the lessons from when growth and cash flow were hard to come by.
  2. Define metrics for success. Share these metrics with your team and manage them religiously. Metrics used by Kareo included cost/customer, payback on margin, return on cost of customer acquisition, churn rate, and lifetime value of a customer.  Note: these are very similar to other SaaS and technical service companies that use subscription services as their business model.
  3. Hire the right talent. It is difficult in some ways for a small company to recruit good technical talent in Orange County vs. in San Jose.  There is frankly more talent there by virtue of the number of companies in the tech space.  Don’t let that be a daunting task.  Dan created a culture in Kareo and a solid reputation of being a progressive company which attracted talented individuals.  On the flip side, retention might be easier in OC and probably is for Kareo given their culture, the fact that the smaller company can provide a solid platform for growth of its employees, and Dan’s vision and leadership style.

According to Dan, when the company had fewer than 50 people it was easy to attract a great talent pool because of the excitement.  When the company had between 50-200 people, Kareo started to compete for talent as employees looked for other exciting opportunities or felt they had the ability to move out on their own.  After growth to 200 employees, Kareo had established its reputation and talented individuals wanted to work there.

Lessons learned:

  1. Recruit a top level executive team. Building the team is critical to any company and is especially true for start-ups and growing companies.  Some of the executives were recruited from outside of Orange County and complemented those from the OC.
  2. Find leaders who know others and can attract talent and capital. This makes it easier to sustain growth.
  3. Change the culture with changes in the business. Dan indicated that culture changes at different stages of growth.  When you have between 1-10 people you are in survival mode.  As his company grew, it felt more like a family.  At a certain point as additional employees were on-boarded and new geographic locations were opened, the culture changed because not everyone knew each other nor worked with each other on continual basis.
  4. The company is a platform for growth for its employees. Reinforce and support educating employees, building their skills, and adding to an employee’s competencies.  I know many executives who don’t want to invest in employees because they are fearful of losing them to competitors.   I personally believe Dan’s approach is the better one and creates a culture and brand that ensures talent will stay with Kareo.

Dan was asked what he would do differently if he could do it over again.   After reflecting Dan accepted that there were mistakes and missed opportunities.  So let’s frame them.

Additional tips and lessons:

  1. Build a business first and a product second. This means don’t normally chase individual customer requests and spend money on unique features and services for different customers.
  2. You need to keep the lights on even if the product stands still for a while.
    1. Under invest in the product and invest in the business side. From my viewpoint, this is a difficult lesson for many engineer-founders.  Therefore make sure you have a good solid business partner as the ying to your yang.
  3. Companies need to be agile and reorganize at transition points and at changing stages of growth.
  4. Companies need the right advisors and investors. While the CEO is focused on growth and getting the product into the market, advisors and investors have the opportunity to look forward and may see minefields ahead.  The CEO needs to heed them.

On behalf of TechCoastAngels, Andrew Bermudez, and Dan Rodrigues, I trust you find this blog and its contents useful for entrepreneurs in their own quest for success.  Please share and forward to others.

Let’s work together to build a strong entrepreneurial eco-system in Orange County.   And if you want to talk further feel free to contact me at  Hope to see you at our March 10 event on celebrating entrepreneurship at the Segerstrom (


The iWATCH is coming! Innovation continues at Apple in a classic way.

12 09 2014

I collect watches and I have a nice selection.  The watches I collect are the “classic” styles.   Among those watches, I have a fondness for an old gold Longines that my father wore when he married my mom in the early 40s, a few Omegas (I like Speedmaster), a Rado, Cyma, and my favorite, a Tutima FX-UTC two time zone.  I liken the watches to jewelry for men and while many younger people have shed their watches because they can tell time (assuming they have to) with their smartphones.

Enter the i-Watch.  Let me say this- I want one.  And unfortunately I have to wait for a few months to get one.   I already told my son that he can buy it for me for my birthday.   I want the stainless steel black with Milanese band.  What I like about it is the simplicity and elegance.  It sort of looks like my Rado watches which I like- simple elegance with functionality.  See the following pictures.




Rado Square

Rado Square

Rado Ceramic

Rado Ceramic









I don’t need edginess per se.  The functionality, the ability to mate it with my IPhone 5s and my iPad make it perfectly suited for me.  I like the fact that I can adjust the face to the persona I have each day.  For example, during the work week I would like to have a face that shows time and next appointments.  On the weekend, when the amateur athlete kicks in, I want to show energy and heart rate as I play tennis, swim, or workout.    And did I mention, it looks good too!!

I am an Apple shareholder and I really like where Apple is going.  What is next for them? I don’t know but I trust that they won’t relax on their laurels and I believe this product will continue to evolve.  Just for kicks, and thinking about the art of the possible, perhaps Apple will come out with a new i-Pen, a fountain pen (my preference since I collect classic fountain pens too) or gel pen that links with your iPad or iPhone or iMac so what you write is transcribed into a document and stored.  All voice commands by the way.   How about an i-Home, a totally home automation system a la NEST with more options?   And with Apple buying Beats, why not a series of i-MEDIA for total entertainment and control in your house?  Google has their car so why not have an Apple i-Car or maybe a manufacturer works with Apple to embed the i-Car concept into their new automobiles?  All this is possible Mr. Cook.  I believe that the smart people at Apple are already thinking about these ideas.  And that bodes well for their stock and for this economy.  Very exciting times indeed.

What’s in a name: Marketing or Branding or Plain Good Sense?

11 07 2014

Over the past weeks I have read several articles about P&Gs change in their organization structure.   The titles of the articles include:

The End of “Marketing” as We Know it at P&G.   (AdAge,  June 30)

Does P&G’s Reorganized Marketing Department Go Far Enough?   (Forbes, July 8)

Why Brand Management will Replace Marketing.   (, July 3)

Let’s step back for a moment and look at the driver of these articles.  As of  a couple of weeks ago, P&G’s marketing directors and associate marketing directors become brand directors and associate brand directors.  The new role houses four functions: brand management, consumer and marketing knowledge, communications and design—thus creating a “single-point responsibility for the strategies, plans and results for the brands…simplifying our structure to free up time for creativity and better execution,”  said a spokesperson for P&G.

I look forward to reading these articles because they stimulate the mind and as we know P&G is world renown for creating the concept of brand management.  So when P&G talks, everyone in marketing and branding listens.   Yet, as a marketing executive (more correctly a business executive), I was somewhat disappointed in the perspectives in these articles in several areas.  

Now maybe I should not be surprised.  As they say, “to a hammer, everything is a nail.”    Most of the authors were from the BRANDING or advertising gurus.    Remember, in 1993 or so, P&G changed titles and responsibilities from Advertising Manager to Marketing Director because they realized there needed to be a broader perspective for the people managing their product line and brand assets. 

As a purist in marketing, I am not sure that P&G should be the final say in the right organization of marketing or branding for all companies.  But let me say up front, that I have to give kudos to P&G to recognize a broader perspective of the role of the individuals who manage the marketing and branding functions of the company and putting the onus of accretion of brand asset value on the shoulders of individuals makes sense to me. 

Here are my thoughts from the perspective of a “Big M” marketing executive and consultant and as a technology executive as well.

First, until we actually see what P&G does in terms of palpable actions, I would be hard pressed to say that P&G abandoning marketing.    Now, let’s also think about where P&G fits into the economy.  They are a CPG company yet the economy is (or has already) switched to a tech based company with the likes of Google, Amazon, Netflix, Apple and Facebook being the vanguard of the “new marketing.”  So even if P&G changes their approach, I believe that would be interesting but not convincing that brand replaces marketing. In short, both exist and which takes precedence within a company depends on the market in which they compete, the stage of growth of the business, and the strategy that the company pursues.

In one of the articles the author points out that marketing is about spending money and that marketing “focuses on activities associated with promotion and distribution of products and services.   Ok.  That is part of it.  But this minimizes the importance of marketing.  In the 1980s, marketing was about the 4Ps: product, place, promotion and pricing.  So let’s not at least forget about the other two elements.   However, in my opinion, the new marketing adds a few other Ps- especially in the tech and service world.   These Ps are product development, people (as the front line sales and support people affect the perception of the brand), and process.     I raise these points because I find that many people still have a narrow perspective on marketing and I felt obligated to set the record straight- at least looking out from my own rose colored glasses.  For many tech marketing executives who come out of the product management function, product management is the tech correlate to brand management in the CPG world.  

Second, while it is true that marketing spends money, the CMOs that I know and who are really good business people, look at that marketing spend as an investment and look at the return of that investment at both the tactical level i.e., marketing program as well as the strategic level i.e. new product revenue, margin and support of the business plan.    And in the tech world in which I am familiar, marketing has the role of brand maven as well so accretion of the brand asset value is also within the domain of the CMO.  Again, perspective and context need to be considered.

 I do believe that there are changes afoot in the marketing and branding world as evidenced by the plethora of articles written lately on the roles and capabilities.  Whether brand takes precedence or marketing takes precedence is not the real issue for CMOs and their bosses.  Will the CEO for example, give the CMO the breadth of responsibilities that are required?   If so, the CMO will be concerned about being the linking pin from the outside world of the customer to the inside world of production of goods and services.   In performing that function, the CMO will have to be an integrative force among the various corporate functions as well as have a full complement of both traditional and digital tools to increase top line revenue, margins, and brand value. That is the real challenge they face and that requires a unique individual.  

What P&G does will, of course, be important because they are thought leaders of the CPG world.  And we should also look at what the leaders of the tech and service sectors do as well because the economy has shifted to a digital and tech economy.  One thing is for certain: marketing and branding will change over the next several years and it will be good for business and open up a new horizon for would be brand directors and marketing executives. 

Identity Envy

17 03 2010

I want to share some thoughts I have on branding and positioning that hit home after I recently attended a trade show.

At the beginning of March, I attended the RSA Conference at the Moscone Center in San Francisco. The show, which focused on the computer security industry, amassed 300 exhibitors that varied in size from the small garage type start-ups to the mega companies like CA and IBM. Narus, the company for which I am Chief Marketing Officer (and strategic consultant), exhibited at the show. It was a truly great show and traffic was substantial.

I had just completed reading the Department of Homeland Security (DHS) Strategic Report. One of DHS’s objectives is to protect the country from cyber attacks— -and that is precisely in the power zone of what Narus does! Narus’ vision is to protect corporations, governments and countries from business risks and cyber threats. It’s a simple vision that guides our choice of markets to serve and the framework in which we develop our products and services for our customers.

It was interesting when a representative of a company, a carrier or a government department stopped by the booth. Some knew what we did while others were not so sure. Visitors from “competitors” stopped by as well. Our signage was pretty clear and we explained what we did. We even placed three of our execs on panels during the show to spread the word on what we do. Yet, I was intrigued by the fact that many people- competitors and otherwise- said that they did precisely the same thing and had the same capabilities. I know that is hardly the truth and it irks me to a point.

Consider the following analogy from the world of football. Jim Sorgi is a pro quarterback who has been the backup to TWO Mannings, Peyton and Eli. If Archie did not have these two sons, perhaps Jim Sorgi would have been the starting quarterback of the Colts and now the Giants. But unfortunately, he will always be relegated to the dubious distinction of backing up the Mannings and never being the main QB. I liken Narus to the Mannings and the other pretenders to being the Jim Sorgi’s of the world. (No offense, Jim. I would yearn to be a quarterback in the pros!!!) They are not at the same caliber or skill set yet play in the same game.

This raises the following question: How can one protect and maintain your position in the market and distinguish yourself against the pretenders? Here are my three prescriptions:

1. Set a clear vision and strategy for your brand and where you fit into the eco-system. This is the point where you figure out where you want to play in your eco-system, what technology you will use, what markets you pursue, and what is your distinguishing characteristic. For Narus, its strengths lie in the metadata, the analytics and the rule sets it uses to help its customers manage business risks and protect against cyber threats. These are truly unique and complex. We are not DPI boxes nor event managers nor merely forensic analyzers.

2. Develop a clear position and make sure it is repeated and repeatable. Think about the company represented by the following terms: “pin drop,” “can you hear me know,” and “there’s an app for that.” These companies are: Sprint, Verizon, and Apple. Not a bad list to associate with!! You have to ask yourself if your company stands out, and more importantly, what customers remember about your company.

3. Walk the talk. If you have a clear vision, strategy, and message, you need to ensure that the entire organization from the employees to the front line resonate with the brand and its positioning. When I was the Chief Marketing Officer for US Cellular, we had a tag line “the way people talk around here.” It was supposed to represent our customer-intimate strategy and all our people, especially the front line in our retail stores and call centers, were taught what that means so they could walk the talk. If a customer came in the store and if we were not helpful or trustworthy, we would belie the tag, our brand, and our positioning. Rather, we wanted to be known as the company who is trustworthy, like a friendly neighbor. And it worked as the financials showed.

The good news is that Narus has a consistent message and those that know us understand the message. For others, we need to do a better job at enlightening potential customers where we fit into the eco-system and what our unique capabilities are. Yet, for others, we will convert them to understand our brand and positioning, one customer at a time.

Comments are gladly appreciated.

David Friedman