In 2004, they "almost bankrupted themselves". In 2024, they hit $500M ARR & a $5B valuation. | Mike Wessinger, Co-Founder of PointClickCare

Mike started selling SaaS before SaaS was a thing. PointClickCare is the Salesforce of healthcare. For the first 7 years, they raised just $600K from friends and family. With that funding, they grew to $50M in ARR. 

Through that time, they went through the 2000 Dotcom crash and nearly went bankrupt in 2004 as they chased too many markets too soon.

Since then, the company has continued to grow at over 20% compounded rate and hit $500M in ARR in 2024 and a $5B valuation. 

Mike shares how they started the company, the go-to-market strategy they used to go from 0 to $10M ARR and some of the most common mistakes he sees in the founders he works with today.

Why you should listen:

• Why you might need to live with your customers to really understand them. 
• Why the first 10% market share is the hardest to achieve.
• How chasing the wrong sales opportunities can lead to customer disappointment.
• Why you need to focus on delighting customers before chasing revenue.
• Why TAM isn't nearly as important as founders are made to think. 

Keywords
product market fit, startup growth, healthcare technology, customer delight, market entry, capital efficiency, company culture, founder advice

Timestamps:
(00:00:00) Intro
(00:01:43) Target Market is as Important as PMF
(00:06:42) The Origin of PointClickCare
(00:10:23) Being a Pioneer in SaaS
(00:20:18) Measuring Customer Delight
(00:28:40) Common Mistakes when Trying to Find PMF
(00:34:32) Entering the US Market
(00:37:57) Surviving Payroll to Payroll
(00:40:13) Losing the Original Ethos of your Company
(00:52:08) Finding Product Market Fit
(00:53:48) One Piece of Advice

Chapters

• 1:43 Target Market is as Important as PMF
• 6:42 The Origin of PointClickCare
• 10:23 Being a Pioneer in SaaS
• 20:18 Measuring Customer Delight
• 28:40 Common Mistakes when Trying to Find PMF
• 34:32 Entering the US Market
• 37:57 Surviving Payroll to Payroll
• 40:13 Losing the Original Ethos of your Company
• 52:08 Finding Product Market Fit
• 53:48 One Piece of Advice

Transcript

Mike Wessinger (00:00)

We almost bankrupted ourselves in, you know, call it 2004, 2005, because we were trying to go after 50 markets simultaneously. And if we hadn't caught ourselves when we did, we wouldn't exist now. We would have run out of money. When you're entering into new market, you have to go live with your customer. I mean, literally live with your customer. Like go wherever they are, go live with them. We started to realize that the first 10 % market share in every new market was like crawling through a ditch with a knife in your teeth, taking them down one at a time, hand-to-hand combat as hard as hard gets. 10 to 25 % market share. We were in the mix. We weren't the default winner, but we were real competitors. 25% plus, we were the default winner. but I watched VC-funded companies that don't have product market fit. And so what do they do? They pull a forecast of thin air. And that forecast is based on nothing, because they don't have product market fit. But now you've got a VC that's holding her feet to the fire on this, on this forecast. And so the motivation is to go and chase sales versus go win a market. So you get one and if you're squinting hard enough and go, yeah, it looks like it fits our target market, but it really doesn't. And then you do it five or six times. The next thing you're fighting on five or six fronts and they start off delighted because you get quick cycle times. But as you enter, you know, grab more and more of these sales that aren't exactly in your target market. All of a sudden you're only mildly delighting them, then to the point of you're disappointing them and then sure, they're gone. 

Pablo Srugo (1:27) 

Welcome to the Product Market Fit Show, brought to you by Mistral, a Seed Stage firm based in Canada. I'm Pablo. I'm a founder turned VC. My goal is to help early stage founders like you find product market fit.

Mike Wessinger (1:43)

Now I've got a lot of strong views on product market fit with the 30 to 40 founders I've coached in the last couple years. I would say product market fit is one of the top two things that I spend time coaching on because it is so misunderstood and so many people get it wrong and it wasn't just early days. I mean we release new products and enter new markets all the time so it's a constant battle to remind yourself of what it means and how to get there. It's not 20 years old in my memory. It's as fresh today as it was back then because you're always finding it.

Pablo Srugo (2:13) 

I'm curious, by the way, what's the other thing that's as important that comes up as often as the product market fit?

Mike Wessinger (2:18)

Target market.

Pablo Srugo (2:19)

Finding the target market.

Mike Wessinger (2:20) 

And they're not unrelated. 

Pablo Srugo (2:21) 

That's right. I was going to say, yeah, two sides of the same coin. 

Mike Wessinger (2:24) 

Well, I think people just don't understand it. Their target is not their market. And they get so caught up in trying to, when they're raising funds, talk about big TAMs. that they feel like they need to chase their entire TAM at once rather than do marketing one-on-one, find your target market and leverage off of there. And you don't need a $5 billion TAM when you've got a million dollars in revenue, right? What you need is a $25 million target, right? And I think those two things, I coach on more than everything else combined.

Pablo Srugo (2:55) 

You know, it's funny you say that and I know we're going on tangents here, but I just had a guy from Constellation Brand speak to our team about their whole process acquiring software companies and they've been doing this for 20 years now and one of the best performing stocks, they know what they're doing. And he's like, our core playbook is we find these companies that, especially when they're venture backed, are spending too much time and money going after like all these other markets because they, you know, they're desperate to grow, desperate to have a story. And literally our playbook is we'll just look at the revenue, realize that 80 % comes from market A, but you're worried about five different markets, cut out all the other stuff and just go after market A and all of a sudden, the business is just so much better on every level. 

Mike Wessinger (3:36) 

Well, I tell you, I coach on that all the time because part of the problem is they don't have product market fit yet, but they pull a forecast out of their ass. And if you don't have product market fit, it's not a real forecast. But they sell the VC on that, they come up with a valuation, talk about a big TAM, and then instead of chasing their target market, They chase every sales opportunity. You want to win markets, not sales opportunities. And they chase those, and then they're fighting on 15 different fronts. And then they start off delighting customers, then not delighting them, and then disappointing them, then churn, and then they've got nowhere. And then what I've seen is they go, all right, I figured out there's actually a better fit in my target market, but they don't abandon the first one, they just layer on. Like, that's not a targeting strategy. I just see this pattern over and over and over again.

Pablo Srugo (4:27)

 But it's hard to do that, right? Because I've seen this firsthand, like you'll have a company that, you know, maybe they're doing half a million, a million in ARR, and they've got this $100,000 enterprise opportunity. That's clearly not sweet-spot ICP. And then you have these crowds are like, do you go after it? Or do you ignore 100K, which is like meaningful revenue, you know, at that stage? 

Mike Wessinger (4:48)

Well, here's the problem, right? Is that they've already sold on this forecast, they pulled out of their ass and the VCs are like, you have to go get the revenue. The reality is you don't have product market fit, the most important metrics are not bookings and revenue. The most important metrics are: are you delighting your customer and all of your customers, do they look the same and do you have a high level of word of mouth and cross referencing and case studies that resonate with everybody. Those are way more important metrics at the early stage before you have product market fit. But once you have a VC that's in there and you've committed to a forecast, you're just gonna go chase revenue and they could be exactly the wrong customer. You're fighting on too many fronts and it's a good way to a quick death.

Pablo Srugo (5:24)

I love that. have the way I think about it. I don't know if you read the book by Victor Frankel completely outside of startups, it's called a search for meaning. Right. He has this quote, how happiness is a by-product. Like you don't go after happiness itself. You get it because your health is good. Your relationships are good. These sort of things. And like revenue similar in the early days, like it's a by-product of delivering value and making your customers happy. And that's going to lead to revenue growth. But if you obsess in the early days when you don't have clear playbooks, clear levers you can even pull on and you're like next quarter we need to be at X. And like you said, you pull it out of your ass and then you're going to do all the wrong things to get there.

Mike Wessinger (5:59)

 A hundred percent. Couldn't agree more.

Pablo Srugo (6:02)

 Well, that was a good way to kind of start. Just welcome to the show, by the way, Mike. It's great to have you here.

Mike Wessinger (6:08)

 Great to be here. 

Pablo Srugo 

So look, I think we're going to tangent off on all these sorts of things because as you said, you founded PointClickCare a couple decades ago, but you've been coaching many founders since and to this day. And so I think there's a lot of things we'll tangent off, but it would be good to just get the PointClickCare story. I mean, today, five billion dollar company doing hundreds of millions of dollars in revenue started in 1995, if I'm not mistaken. So just curious, like what the world was even like back then, how did this idea even start, cause things changed so much over time.

Mike Wessinger (6:44)

Yeah, I mean, if you think about the early days, it was just me and shortly joined by my brother. It was a one man show, then a two man show. And we were just putting tech into long-term care facilities back in the late 90s. It wasn't our tech, but we would go in, we would implement it and get them up. 

Pablo Srugo (7:00) 

And what tech? Walk me through that. Like, 1995, what tech is being put in at that point?

Mike Wessinger (7:04)

Yeah, basic electronic health record software and billing software. Very old client server stuff. But we sort of got to the end of 99. We said, look, this is… This is just not working. The technology's not being adopted. It's too complicated. We said, look, well, why don't we build our own solution, but let's look at the North American market, not just Canada. It's too small. So we look at that market and we said, wow, there's 100 vendors in this place. let's, it must be a hot market. But then we looked and the health of those vendors was all dead down. You're bought by the consolidator of the day. were regional players. They were having the same problems we were implementing tech, wasn't very successful. So like, why is that so bad? There's a huge need here. And we said, if you draw a Venn diagram of zero money, zero technical sophistication and more heavily regulated than nuclear power, it was like the center of that Venn diagram of the worst place to build a business. But we said, well, what if we could solve for that problem? So what if we jam it on one set of servers, deliver it over the internet, charged on, I don't know, subscription cost per patient day basis, the same way they get paid.

We had no idea if we were talking about cloud or SaaS. Nobody could spell SaaS back then. 

Pablo Srugo (8:15) 

Yeah, this is what year now. This is 1995 or later?

Mike Wessinger (8:18) 

2000.

Pablo Srugo (8:18)

2000, okay. So like Salesforce had just come out with their whole like no software thing. But like they're the pioneers. You're the same time as them. 

Mike Wessinger (8:25) 

They weren't a household name. We didn't know who they were. In fact, the first time I stumbled across Salesforce.com, I called my brother and said, hey, this guy, Benioff, out from California is knocking off all our ideas, right? They just blended a different market than we did. But we were just trying to solve for a market problem of no technical sophistication at all, no money. And yet we had a big problem to solve. So we got lucky and caught on to a model that was just in its infancy. I mean, you think about back in 2000, you try to explain to people, we're going to take health records, we're going to put them on the internet, we're going to charge people forever. I mean, it wasn't obvious to anybody that that was a model that was going to stick in any market, let alone in healthcare, where you've got huge privacy regulations. So it took a while to get the story across, but in the early days when you could go talk to a prospect about, you're gonna get all the benefits of this medical records, electronic health records software, medical billing software, you don't have to buy, sell, or maintain any hardware software. They're like, what's the catch? They're like, there's no catch. Like, what if I don't like it? It's like, stop paying us for 30 days. And it out we caught onto the right model, which was the foundation for setting us up for enormous success. was, that was a pivotal moment in the history of the company. 

Pablo Srugo (9:44) 

maybe walk me through with more detail, especially because a lot of the audience will be like my generation. And so they don't, they haven't lived through that. Like they're just born in cloud. They're born with AWS. Like these things just taken for granted these days. if I remember the  story of Salesforce, which I guess in that way is similar, like what's the before and after? mean, these, first of all, these customers you're selling into, q43 they even digitized or were they all still like paper-based mainly and like deciding to digitize? then what's the, you know, how are you telling them the story of cloud versus whatever the alternative is, which I guess is like their own servers and you know, local and all these sort of things.

Mike Wessinger (10:23) 

 Yeah. I mean, the landscape was, they were sort of hybrid. Some of it was, you know, digitized and client server world and a lot of it was still paper. And the reason they hadn't digitized more is because it was just painful. They just didn't have the money or sophistication to be able to do it. So when we first got in, yeah, there's no AWS or Azure or anything like that. I think our first customers were hosted on a desktop-grade Dell PC that was under my brother's desk. I mean, it was that basic. Obviously, we had to change that fairly quickly. But we went in, they were all struggling with tech. And when we could go in with that pitch, the friction and risk level was so low to say, if this doesn't work for you, your alternatives are to spend 100 grand buy hardware and software and cross your fingers and hope it works. We were like, SPO $1,200 a month and if it doesn't work out to 30 days, throw us out. And it forced us to be really good at what we did and get it right. And so we removed all of the friction from trying this new business model, which really allowed us to get our, our foothold in the market. 

Pablo Srugo (11:30) 

I mean, in hindsight, it seems so obvious. So I know that this is kind of wrong, but it's like the problem you're solving is so core that if you find a way to deliver it, like you did, which is lower friction, cheaper, is it a bit of a no brainer? Whereas these days, like everybody that's doing SAS is almost at the edges, like all the core problems are kind of solved and you're trying to find these gaps in the market. Whereas you're like, well, you need to use software for your core operations. And like, why would you want to go and spend you know, a few hundred thousand dollars to do it yourself. Was it that simple or ….. was the problem that obvious, I guess, is the question. 

Mike Wessinger (12:06)

Yeah, I think what it was is they – the landscape that they had such a miserable experience with technology. And they were looking for any kind of a solution that our value proposition really resonated with them. And, and so I know lot of early stage companies, they go out, they try to get customers signed up to five year contracts but we said, look, Nobody knows who we are. We're introducing a business model they've never heard of before. Let's remove the friction. Tell them if they don't like us in 30 days, they can stop paying us. And so, when they looked at the alternative of write a check for hundreds of thousands of dollars and have likely a similar experience to what they had just had, or pay a thousand bucks a month and try this out, and if it doesn't work, I can always go back to plan B. I think we were wise to really remove all of the friction.

And no long-term contracts, nothing complex, and it really allowed them to take that leap of faith. The alternative was not appealing. So I think we walked in at exactly the right time in our market to be able to introduce a model that, quite frankly, was completely foreign to these new customers. 

Pablo Srugo (13:16)

Who was, like at that time, was it just you and your brother, or did you already have a team built where you already funded?

Mike Wessinger (13:21)

 No, we didn't get our first institutional check until 2011. So this is back in 2000. It was maybe half a dozen people on the team, a very, very small team. And we just said, look, I don't know if you could build it. All the tools weren't there to build web-based stuff, but we just figured it out and wanted to deliver it. And we did. And removed the friction, got out there, had early success. But you know. If you go in and say, we're going to put healthcare records in the near, you're going to pay us forever. wasn't the way to pitch it. The way to pitch it was you get all the benefits of electronic medical record software and medical billing software. You don't have to buy and install or any maintain any hardware software. Just fire up your browser. And if you don't love it, stop paying us. And so when they heard that, the response was always that's too good to be true. Question number one, question number two. because healthcare is so regional, it's provincial in Canada and it's state specific in the US. The second question was always, who else in my jurisdiction is getting paid using your software? And so when the answer was, you'll be the first, that was never the right way to go. So we learned the playbook of, you gotta find, know, Jeffrey Moore won one, you gotta find the visionaries first and then the early adopters and then you gotta wait it out and tell everyone else, wreck it, instead of stay at work. And then you go off to the mainstream. so the only money... 

Pablo Srugo (14:51) 

Was that on a market by market basis? Like, did you go state by state to get those narrow-craft facts playing out?

Mike Wessinger (14:56)

 We got through Canada fairly quickly because we got some large providers that operated in multiple provinces. So we got through, you know, getting product markets fit and, you know, across the other five provinces, we were working in Canada fairly quickly. But we made the mistake when we self-reported thinking it was just one market. And when you head to the US, it's 50 markets because, you know...

Well, Medicare is federal. It's administered differently in every state. And Medicaid is different in every state. So we had to provide product market fit in all of those states. And they're not small markets, you New York, California, Ohio, Pennsylvania, Texas, Florida. These are markets that are bigger than Canada. Well, we got it wrong. We went after what we thought was one market and realized it was 50 markets. It almost blew our brains out. And then went back and said, no, no, we're going to start with one state and then go to two states and go to three states and then five states. And because we had to get product market fit in every one of those states before we could move on. And if we tried to do it in 10 simultaneously, we didn't have, even if we had been funded, you could hire more engineers. The reality is executive attention, you can't have on 15 new markets at the same time. So we retrenched, went back and said, no, we're going to get very, very disciplined about getting product market fit in each of these markets to the point where it's always painful. Are we ready to go yet? It's like, no. Is every customer a raving fan? Do they love this stuff? Are they telling all their friends about it? If the answer is no, we're not ready yet. Let's continue to focus on this market. And we got incredibly disciplined at doing that. In fact, we got so disciplined. One of our sales leaders that used to work for my competitor said, I hated how disciplined you were because I lived in Pennsylvania. You would go, he goes, I would get an RFP from Ohio and I wouldn't respond to it. I'm like, why not? He goes, it was a no-fly zone. PointClickCare owned it. There was no way we could possibly win. And he goes, and that was before anyone in California even knew who you were. He goes, and I knew the second you decided to move into a state that you would be relentless about making sure that you had product market fit. But the most important metric in that market for us, a new market, wasn't revenue or bookings. The most important was, do we have customer delight? Are they stark raving fans? Do their case-

Pablo Srugo (17:13)

How did you measure that?

Mike Wessinger (17:15)

So we would, obviously I think it was probably pre-tracking NPS, but we would have other things that we would track with them. The other thing we would measure is with a predictable amount of inputs, can we deliver on our value proposition every time in that new market at scale? And if the answer was no, then we weren't ready. If we got a new customer, it's like, got to take her some more, we'll craft brew stuff, then we knew we weren't ready. It was like. I go in with this many hours of input, I could deliver on my value proposition, and then we could do it over and over and over again at scale. We're like, now we have it. And then it wasn't obvious at the beginning that, you know, not just chasing sales all over the place was the obvious strategy. like, you know, we're basically at friends and family money only. It would have been easy to just chase sales, but it would have distracted us from what we needed to do. We would have been fighting on too many fronts and blown our brains out. And almost did. But when we went back to that strategy of getting product market fit in each target market that we chose and then levered off of that, we started to realize that the first 10 % market share in every new market was like crawling through a ditch with a knife in your teeth, taking them down one at a time, like hand to hand combat, as hard as hard gets. 10 to 25 % market share, was, we were in the mix, we weren't the default winner, but we were real competitors. 25% plus. We were the default winner. Like we would go in, we would have competitors, but we would win more than we didn't. After 50 

Pablo Srugo (18:43)

And that's what? That's like pure word of mouth that's giving you that edge? 

Mike Wessinger (18:46) 

Yeah, I mean, because in our markets and how we define them, like it was a state, so you had all the same state ranks. And after that, the providers were pretty much, all our customers were pretty homogeneous in that state because they were subject to the same regulations, whether they were an independent, 88 bed skilled nursing facility, or they were a chain that had 30 buildings that operate there. Same regs. So they had slightly different enterprise needs, but basically the same stuff. But the other thing was, you know they trade staff all the time. They go to the three, the same trade regs. They go to the same trade shows. So when you hand them over your case study, they don't have to go, this is great, but this is a California case study. They look at it go, that is exactly what I want. Or I just hired four staff from one of my competitors this week and they all rave about the software that they used to use. And then we developed,you know, because when you think about whole products, it's not just your product. What about all the partnerships you have around that product? People who may implement that product, maybe people who may build service around your product. We had accounting firms that would build implementation and service practices around our product. So we were focused on building not just the core technology and getting the technical product market fit, but we would have whole product market fit. And so once you did that, the word, we didn't have big dollars spent on marketing. Word of mouth carried us because these were tight markets where everyone all knew each other and they trade the staff. went to all the same trade shows and read the same stuff, had the same county firms that they worked with. And so that really allowed us with a very, very small marketing budget to really make a big impact quickly in these new markets. 

Pablo Srugo (20:18)

My biggest question, Mike, is how do you really measure and you work with so many different startups, so it's not just a PointClickCare question, but like… How do you think about measuring customer delight and product market fit? Because I find that the thing about revenue and a bunch of other metrics that are easy to measure is they get measured and then they become the focal point. And even things like NPS, like obviously it's relatively easy to measure, but I don't know if it's gamed or not. It just for some reason never has like the level of importance as you up 10 % this month on revenue. And so like, how do you get founders to measure those things, word of mouth, customer delight, and other things that relate to product market fit so they know that they've got a clear KPI that they have to move on a month to month basis besides just revenue and revenue growth. 

Mike Wessinger (21:10) 

Yeah, think NPS is great, but it doesn't tell you a lot of information. When you're entering into new market, you have to go live with your customer. I mean, literally live with their customers. Like go wherever they are, go live with them. In our world, it might be walking around doing a med pass with a nurse, sitting with the medical builder in their office, watching how much friction there is to them doing their job. Do you fit their workflow? Do they have to do a bunch of extra steps? So we would measure all of that stuff, measure how many actual hours of implementation time did it take? Are we…. compared to the one where we know we have product market fit, are we still 50 % more in order to get there? Are we going back and touching code and changing configurations all the time? So you look at all those things and when that noise quiets down and you have customer delight and then you start to see them refer, like we would be so disciplined, we would wait to the point of almost, it's so painful. And believe me, there's a lot of internal friction, go, we're ready, we're ready, we're ready. Cause everyone just wants to go chase sales versus own markets. We're like, no, we're going to own this market first because once we get to north of 25, 35, 40 % market share, this is on autopilot. We win most of our deals. Why don't we not get that one on autopilot? leave it alone and then put all our attention into opening up the next adjacent market and then the next adjacent market. So it's counterintuitive at first because I coach on this, we're VC funded but I watch VC funded companies that don't have product market fit. And so what do they do? They pull a forecast in thin air. And that forecast is based on nothing because they don't have product market fit. But now you've got a VC that's holding her feet to the fire on this forecast and so that the motivation is to go and chase sales versus go win a market. So you get one, and if you're squinting hard enough and go, yeah, it looks like it fits our target market, but it really doesn't. And then you do it five or six times, the next thing you're fighting on five or six fronts, and they start off dilated because you get quick cycle times, but as you enter, you know, grab more and more of these sales that aren't exactly in your target market, all of a sudden, you're only mildly dilating them, then to the point of you're disappointing them, and then sure, they're gone. And so...Even in the early days, you may be able to show that you've got these great bookings or revenue numbers. They'll ultimately churn, right? And the most important metrics, if you don't have product market fit yet, however you measure customer delight, right? Or is there a predictable amount of inputs to deliver on your value proposition? Can you do it frictionlessly at scale? Those are way more important metrics. So I've coached a few founders to go back and educate their VCs. I know I gave you this forecast, I pulled out a thin air, but… I'm retrenching, I'm going after, you know, and I've told you about this big TAM, but you don't go after that TAM by chasing it all at once. I'm starting with a target, and if you're half a million, a million in revenue, you don't need a $5 billion TIN, you get a $25 million target market. And these are the things that are gonna be most important. And if I deliver on these things, I promise you the revenue and the bookings will follow. And when we really nail that, then we're ready to have enough resources and executive attention to go after the next market and do it over and over and over. It seems counterintuitive at first, it seems like you're going slow, but it's the fastest way to go and take down your team.

Pablo Srugo (24:31) 

It's logical. I think a lot of times what ends up happening, and especially talking in the early pre-product market phase stages, is you take best practices of really big, successful companies like let's take Uber or Facebook and… you know, they've got great forecasts and they've got guidance and they hit guidance within plus five, you know, plus or minus 5 % every single quarter. And the problem is like, you try to translate that into like a startup doing, you know, half a million million dollars in ARR that doesn't even really know why this quarter they got this much bookings, but last quarter they got that much bookings. Like the things are just not understood. And so the leavers either don't exist or aren't yet discovered. And all of a sudden you try and forecast out and all you're going to get is a bunch of noise. so I think like anything beyond maybe in a quarter, two quarters is, just frankly a waste of time. And I agree on the customer delight. Like that is really the ingredient that matters the most. Maybe just a follow up question on that. Like how much of that then is just qualitative? Like you mentioned spending time with the customers. It's something I've seen many, many founders of really successful companies do especially, actually some of them do it, find ways to do it even throughout. Like they'll spend one day as a driver if that's the thing they do. They'll spend one day in the office a week or make sure they have X number of customer calls every month just to make sure they stay close to customers. But how much of, know, fundamentally customer delight is really just qualitative. It's like, you know, it because you spend enough time with your customers and you can just feel that they love the product that it's really working for them or that it's not. 

Mike Wessinger (25:59)

Yeah, it's a hard to insight. You definitely want to measure metrics, whether it's NPS or some other customer stats score. And then the measure of, am I getting my value proposition with predictable inputs every time? Am I going back and actually touching code or reconfiguring stuff for this market? And if the answer is yes, then you know you're not there yet. But then a lot of it is just spending time with your customer and understanding it. And I think some of the signs that start to come out is when the referral change just starts to light up. You know you've got it. You're hitting the hard metrics. You're predictable. Predictably implementing this stuff, getting your value proposition, starting to do it at scale. And you find all your customers are talking your story up and the phone, you're not, yeah, the inbound starts to light up. That's a pretty good sign. And then just living with your customers. Like, you know, when you're entering a market, like go live with them, spend time with them, like ask them questions. Did they look happy? Did they have a big smile on their face? Or did they have a big frown on their face? And they're like, yeah, I'm getting it done, but I'm not loving every day I work with your tech. So I think it's a bit of art and science. There's no, hey, here's the exact playbook, measure exactly these things. When it hits this number, then you know. There's a bit of trade craft to it. 

Pablo Srugo (27:11) 

By the way, going back to the PointClickCare narrative, like I'm just thinking 2000, does the kind of dot-com crash impact you at all? Like how did you, and even just related to funding, I know you were bootstrapping, but the challenge with SaaS is you've got this J curve, like at first, you know, you're only getting $1,000 a month here or there. And so it's hard to kind of make that add up to something that can sustain a company. Like how did you manage through that? 

Mike Wessinger (27:35) 

Yeah, it was incredibly hard. You can imagine it, you know, in like 2000, 2001, where we really needed some funding going into the, you know, the VC world and saying we're going to put healthcare records on the internet and people are going to pay us forever. That wasn't obvious to anybody. Like don't let the door hit you in the ass on the way out. Nobody was buying into that story. They just got roasted in the dot-com boom. They're like, that's never happening. And so the only people that we could raise money from were friends and family and hockey coach and,you know, friend from high school. They were the only, you know, people that would write us checks. And so it really impacted, you know, trying to introduce a new model, especially in healthcare where no one had ever seen it before. Yeah, it made it incredibly difficult because of the environment we just, we had just left.

Pablo Srugo (28:22) 

And so maybe just moving forward, like, I mean, we're talking about some of the mistakes that you're seeing some of these founders make, like in the early stages, really around forecasting. What are some of the other common things that you're finding, you know, most founders struggle with when it comes to finding product market fit?

Mike Wessinger (28:40)

 Yeah, I think product market fit and target market are two areas that I probably coach on the most and they're not unrelated. it goes back to that story of they've committed a forecast they fished out of thin air and so they chase sales instead of markets you want to win markets not sales and so finding your target market so that you have to get a million around the $25 million target is plenty enough you don't need to go after your $5 billion TAM today, right? But you've sold some VC on a forecast that you've kind of made up because you don't really have product market fit. But yeah, I've seen people retrench and they get back to legal. I understand the concept of product market fit now. I've seen this happen too many times. I ask somebody I'm coaching, a founder, come back with their target market and a slide hits the screen and it's a matrix. I don't even need to read the words. I'm like, one of those boxes is your target. But they can't. They're chasing it to the front. So when you finally get them to retrench, like, you know what? I've actually figured out the highest propensity for success is in this target here. I'm like, perfect, you've got it. It's right sized, you can nail it. But then they've got five other markets they've already sort of committed to. And instead of a pivot to that being their new target, they layer it on and they don't stop going after the other ones they're already in. And then they haven't really fixed the problem. They may be putting a little more marketing effort into one or maybe a little more product effort.They haven't changed the entire focus of the company to go and own that market. The reality is like stop answering the phone from these other markets or get their names, say we're not ready for you yet. I'll call you in a year whenever we're ready to go after that segment. And they don't. They're too busy just trying to chase revenue. And I think it gets reinforced by their VCs that are looking at this made up forecast going, yeah, but you got to hit these numbers. And they may hit that number the first year and wind up with a pile of customers they shouldn't have. And what they really need to do is measure different things, go and really, you know, create phenomenal customer delight in just their target market without being distracted by these other things that are sales opportunities, not markets. Yeah, great, go win the sale, but if it ultimately is gonna lead to your demise, it's not a good sale. Not all business is good business in the early days. And maybe part of your TAM, and you should go after it later, but if you haven't nailed it in your target yet, what do you do in chasing these four other areas that don't fit squarely within your target market? I've seen that, know, layering on top of what they already do instead of pivoting to their new target too many times.

Pablo Srugo (31:12) 

How do you balance that with the other side, which is you kind of don't really know, like in the first phases, you're really in this explore mode. You don't really know yet what your target market is. do you, are you okay, you think to like be purposefully, let's say unfocused at first until you find signals that tell you “Okay, I think this is actually my ICP. I think this is actually my target.” And then you kind of go all in and focus. Like, how do you think about that balance? 

Mike Wessinger (31:42)

I've seen that work. As long as you have the discipline. I think everybody should try and start with a smaller target. But sometimes you get in and you're like, this is just too hard. Decision cycles are maybe too slow, or your product really…. that wasn't the best opportunity and you recognize, you identify, or you've had too broad of a definition. and you realize that you need this segment that what you thought was your target, and then you find the one that's right. And I've seen this happen where it's like, those who are disciplined, they go, got it. We're not going after this market anymore. This is actually the best segment for us. Let's go after this market. And the ones who abandon the other, which sometimes it's tough, actually sometimes have to fire a customer saying, we're really not ready for you today. And you may never get them back, but you really have to put everything you have behind that new target. And the companies that I've seen who do that and have the discipline to do that, which sometimes means tough conversations, start to see their success really take off. They get in, they really get delighted customers, they start nailing it in their target market. And yeah, they had a few tough conversations, but it gets them to the point where they can start expanding their definition of market to the next adjacent segment, then the next adjacent segment. I've seen that happen quite a bit.

Pablo Srugo (32:59)

Let me ask you something. When you started PointClickCare in those early days, like let's say late 90s, early 2000s, did you think about billion-dollar outcomes getting to multi-hundred million dollars in revenue or were you just really thinking about next quarter, next year, win one more market? Like what was your frame of mind?

Mike Wessinger (33:19)

Yeah, I think we always, our intention was always to become the gorilla in the space. We wanted to be the dominant market player. And which is why we thought, and I think a lot of founders have this. Once we launch into that market, go after the full end market we're going after, everyone being in the market is just gonna identify how great we are and one day we're gonna wake up and everyone's just gonna do business with us. Yeah, like maybe, but I've never, ever, ever, ever, ever seen that happen. And that's what we thought. Yeah, we'll go out there like, these customers are so delighted, let's just go after our whole TAM today and they'll all just magically figure it out. The reality is we didn't have product market fit. We didn't have whole product. We didn't have the consultants and agents around our product that we needed to. We didn't have case studies that would resonate with them. And very quickly, you know, after blowing a lot of money going to events we shouldn't have gone to, spending marketing in areas that we had no business doing business in yet, went back to that targeting strategy and market by market made sure we really nailed product market fit. And that's when we really saw the angle of growth change just started growing rapidly after that. 

Pablo Srugo (34:30)

Do you remember the numbers from back then? Like how quickly got to a million? Where you plateaued and then one thing's like inflected or whatever? 

Mike Wessinger (34:38)

That's a great question. Yeah, I don't know. we would have been in millions in recurring revenue in just a small segment of our own market. probably for us to go after, if you think about: We're North American, sort of five provinces in all 50 states. We started in Canada, which would have been low-digit millions before we went to the US. 

Pablo Srugo (35:07) 

And when did you go to the US? 

Mike Wessinger (35:08) 

2005, 2004, 2005. 

Pablo Srugo (35:10) 

So kind of like four or five years just in Canada?

Mike Wessinger (35:13) 

Yeah. And then we probably didn't go, probably started hitting our last meaningful states a decade after we started. So nobody in California really knew who we were until 2010. Like it was, it took that long for us to get through those 50 markets. having the discipline to go through that, I think really, really helped us. And yeah, you mean, listen, to this day, I mean, we entered new markets all the time. We've got new product categories like care coordination. We have to keep reminding ourselves of the playbook on how to do it because there's so much internal pressure. to just go, I'm gonna hit a number, so I'm just gonna go chase the sale. And then somebody comes back with a slide deck or a briefing note that says, it explains to you exactly how this customer that you're not ready for fits the definition. And we’d fallen for it. And then you get five months into some implementation with some new customer in a new segment, and you go, wait a minute, how do we get in this space? And you gotta go back and go, no. So it's not like you figure it out once and then you follow it. you're going to be entering, you've got new products, you're entering new markets all the time. And the discipline is hard because there's an incredible …, the pressure is internal. Like, yeah, this fits the definition. And you look at it go, I guess it does. Because you know, somebody's got a pretty good slide deck and then you realize a few months in. So you have to get really good at going back going like, prove it to me that this use case is exactly like the other one that we said we're going to go after. because you know, we've been fooled a bunch of times, but at least we know enough once we've realized that. to go back and fix it right away, not just go, well, I guess we're stuck with it. And that has meant, know, leaving some markets, we're not ready for that one yet. This did not fit the definition. And yes, it's a tough call, tough conversation. And hopefully they'll talk to us later when we are ready, but there's always a risk they don't. And so you sort of wish you'd never done it in the first place. So, you know, before you take on that customer, I'd rather tell them no now, and we'll come see you later, than, you know, put them through a bunch of grueling pain only to tell them that you- you're not ready for them. Like those are tough conversations. So if you can avoid them, try it. And if the worst case, you don't have the conversation and you wind up chasing on too many fronts, but you know, it's always better to go back and have that disappointing conversation, then get yourself in a situation where you just can't service all these markets. 

Pablo Srugo (37:38)

And then in those first like 10 years, you know, before you'd raise meaningful like institutional dollars, especially if you had these false starts or these plateau moments where you know, the strategy, let's say wasn’t ideal Did you ever find yourself with like tight runway or were you always profitable and just always had like enough room to maneuver through kind of all these false starts? 

Mike Wessinger (37:59)

No, we had tons of existential threats like tons of days where we thought we're not going to make payroll. We never missed a payroll. But because we didn't have P or VC funding, we had Yeah, I remember there were 36 payrolls a row I remember, you know, or 36 months in a row. So where I figure out how to beg, borrow, steal to make payroll and then you go big, oof , and the next morning you're like, okay, I got two weeks to do it again. Yeah, and that carried on for a long time as a bootstrap company.

Pablo Srugo (38:34)

 That's crazy. And that usually was what? Was it getting the right customer to sign at the right time? Or like, what was the thing that usually, obviously you made it work every single month, every single two weeks.

Mike Wessinger (38:43)

We wanted to hire quicker, but we couldn't. So we had to figure out how we get the cash, try to get some customers that we had built enough confidence with to go, hey, can you pay us in advance ,just a month in advance? And then we got very lucky with 2005, we had landed two of the largest chains in the US, to put them in context. They had more skilled nursing facilities than all of Ontario. So there was like hundreds, huge contracts. But we knew they operated 36 states and we didn't have– we told them here's where we're sort of green, here's where we're yellow, here's where we’re red, we didn’t do anything yet. And so they wanted us to move faster. We said, look, we don't have any VC backing, no private equity backing. Nobody still had bought into the model by 2005. They were starting to get it, but not really. And so I was lucky enough to have two of them agree to work together so that we would knock off the markets they needed knocked off to agree on which ones we go after first, because we couldn't go, you you operate in a lot of the same states, we're not doing these five for you and five for you. Let's do a horse trade, figure that out. And then we got a couple of them to pay in advance, go look, if you will pay me for a two years subscription in advance, I will put every penny behind product and engineering resources to get this done. And we built up enough trust with them that they agreed to do it. So we had our customers help finance us. So we are very, very lucky by having very good partners in the early stages of the organization.

Pablo Srugo (40:13)

Before that 2011 round, how much had been raised in total from friends and family, angels, et cetera? 

Mike Wessinger (40:20) 

Maybe $600,000.

Pablo Srugo (40:21)

 Wow. OK. And by the time you raised that round, how many employees did you have or was revenue at?

Mike Wessinger (40:27)

We were like 28 going on $50 million in revenue. The headcount… Good question might have been, I'm sure it did hundreds anyways, like maybe 250 employees, something like that. 

Pablo Srugo (40:43) 

And that was the JMI round, the 2011 one?

Mike Wessinger (40:45)

 JMI was first institutional money and then in 2011. Yeah.

Pablo Srugo (40:50)

 How big was that round? 

Mike Wessinger (40:52) 

50 million.

Pablo Srugo (40:53)

 So, you know, I ask all that because one of the things that's in the back of my head is like, the world's changed a lot where it's very rare these days to have a company that's growing to tens of millions of dollars in revenue and hasn't raised. just because they're you know the asset class of venture capital P all that is so institutionalized these days. There's money at every single stage and you know, you're talking a lot about what is like focus discipline. Do you find it's almost harder now for founders to have folks in that discipline? Because if they see any signal of anything, you know, they'll raise 3 million, they'll raise 5 million, they'll, they won't be in these situations where you were, where it's like, you're forced to be disciplined. Cause if you're not, you're not making payroll. They've got you know, money in the bank, it allows them to try more markets, hire more people, run more experiments. And the downside is, you know, lack of focus.

Mike Wessinger (41:42)

Yeah, I think it can make you sloppy. mean, know, sleepless nights and having existential threats all the time is not a great place to be. Sure. For sure. But it does breed capital efficiency, like you don't waste money or resources or time or focus on anything other than the thing that's going to get you know, going to get you through the next hurdle. And so not only being capital efficient, but you develop this customer DNA where there's a correlation between delighting your customer and putting gas in your car paying your mortgage. And everybody has it because the only people you get the four other times are true believers. And they're there because they believe in the dream. And so it does build a great foundation into the organization and we experienced this and I think that overfunded companies early who don't develop that capital efficiency and customer DNA and the DNA of looking out for each other as team members, they don't benefit from all of that that carries on. We got to a point where when we were sort of hit that, you know, the early stages, you know, just existential like fight for your life, stay alive. Then you catch success and then you get this tornado and you know, you're bringing in tons of business, you're writing more checks than you can cash, and you just, you sign up for problems and you work your way out of them. And you still have customer DNA, capital efficient, laser laser focused. But then you get to a point where you're emerging as the market leader, you're generating lots of cash, people are joining you, you think customers fall on trees, the offices get fancier. And then you realize something's gone wrong here. Like, people don't solve problems and think anymore. They're like, that's a problem, that's a new hire. let's hire a consultant. let's throw a team at that. 

Pablo Srugo (43:32)

That's the whole complacency, only the paranoid survive sort of mindset. 

Mike Wessinger (43:35) 

Yeah, we had to blow that up. I told the story a number of times. I remember the day when I recognized it was a problem. had a... There's our sales marketing customer success group. A couple hundred people were heading to Vegas. And we hired our sales development reps in classes of 10 or 12. And for this group, I've called it 20… early 20 something year olds, first year, second job out of school. They go to Venetian and it's the quiet side of the year so they all get upgraded. And so I go to one of the mixers and this 22 year old shows up and says, I just checked into my room and I got a pool table and a grand piano. Is that how we roll at PointClickCare? I went, holy shit, like no, Hampton Inn, that's how we roll. And I realized that most of the people that joined the company had never seen the early scrappy days. They didn't have the benefit of really connecting their taking care of the customer with their livelihood. And that's when we had to go reinvent the culture, blow it up and reset the culture and tell the early stories and recondition everyone that this is how we operate at PointClickCare which is we gotta get back to thinking through problems, not throwing money at problems, being capital efficient and disciplined. Otherwise, can you let that carry on for long enough? If you let it carry on for long enough, you become just uncompetitive and you just leave an opportunity for your scrappy competitor coming in and start to eat your lunch. So we necessarily had to blow that up at big expense. Probably a thousand employees at the time flew them all back into headquarters for a two-day cultural reorientation, told the stories. And to this day, we continue to do that for every new hire. We ran all thousands of staff through that program. And then we aligned all our reward, recognitions, promotion, orientation systems to be aligned with the culture that we knew. We needed to be successful at PointClickCare. 

Pablo
Well, Mike, you know, the problem I actually suffer the most, not the one that I necessarily see the most. the thing you see the most is company has an idea, tries to do it. It doesn't end up working, never finds part of it. But like the thing that actually hurts the most is the companies that find some level of product market fit, some level of success, they get to one, two, three, four, five million, 10 million ARR and then growth stalls. And I've just seen this so many times and the challenge is most of these companies because they've had some success have gone on to raise rounds that valued them a 10, 15X ARR. So they got all this money. They beefed up the team. Like to your point, the culture completely changed. And now all of a sudden you got a company like I'm thinking of a company in my head. I'm like 5 million ARR growing, barely growing like 10% a year, 50, 70 employees, right? A company that if it had 25 employees will be profitable and not a bad thing, not a bad asset for the founder and everybody else is now stuck. what can they do? And I just wonder like any thoughts you have around, you know, I guess the sort of things you were doing, like how do you not let that happen? Right? Like how do you keep doing the things you need to do to keep growth going or at the very least be disciplined enough that if you can't find that growth, you have profitability. Like you need to either be profitable or you need to be growing or hopefully both, but at least one of the two.

Mike Wessinger (46:47)

Yeah, I think, know, if you get that early level of success, sometimes it goes to the founder's head like, all right, now we've got, you know, they might have been very good at picking their initial target segment, they got product market fit, and they're like, now I'm going to go raise a big round on evaluation. It was probably unrealistic based on a forecast that they put together. There was also, you know, entirely fiction. And as soon as they do that, there's so much pressure now because you raised it at this valuation that was unrealistic to go and chase it, which means you wind up chasing sales versus markets. and they lose all the discipline they had before and they hire a bunch of people thinking that can help solve the problem, they can do all these things simultaneously. But as an organization, you're always constrained by executive attention. And you're like, all right, well, you'll just go chase all these sales opportunities and we're gonna figure it out for all of them and we're gonna do them at the same time. That's a pretty good way to blow your brains out. And I think if they're gonna raise the money, raise the right amount, don't raise enough that it's really easy to be sloppy and undisciplined with your capital. Because that can, know, listen, I've seen more companies, you know, choked by indigestion than starvation, right? They've just, you know, they try to define their business by their technology versus the markets they want to serve. And that's a pretty difficult way to try and go and win those markets. And you don't want a couple of sales here, a couple of sales there, a couple of sales here that have no link together that you can't scale and rinse and repeat. But you've got this money in this forecast that you need to hit because of this unrealistic valuation you set it on. So one of the things that helped us when we raised our first institutional capital, it was a great board member month. We had some pretty good visibility. We knew how we were entering these markets, how long it would typically take. We put together a forecast and he's like, that's great forecast before we go out and raise capital only take all of those, I don't want you to reduce them by 20 % because even if you did, based on your bookings and growth numbers, just reduce it by 20%, there's still great numbers and you want to get the beat and raise game early. And what was interesting is, you know, we had a few PE companies that had called on us, you know, get published in Deloitte Fast 50 and they start calling. And if you spend time with them, you start to give them numbers and they go, know, for four years, you've been in the beat race game. Like every time you give me a number, you just beat it, just beat it. And interestingly, after we did, had RBC ran our first process to go and raise capital had like 20 minutes of presentations, 13 term sheets, finally picked JMI. Bankers come back three years later and they go, hey, I've got your confidential information memorandum from 2011. Do you remember what the numbers were like roughly? They go, yeah, you've been in the beat race game for a long time, but you beat every single number that you gave those investors. And I go, yeah, I get it. Then he goes, know, often that happens. I'm going, not very often. He goes, no, not very often. goes, never, ever, ever have I seen that. And so I think we developed good reputation with investors that, you know, what we said we're gonna do, we're gonna do. And that changes the dynamic of the relationship. Now, we were far enough along and mature enough that we had pretty good visibility. But rather than throw out that dream number that was unachievable so we could get an evaluation that was unrealistic and then have pressure on us to deliver things that would have been unnatural for the company to do, we set an expectation, a conservative expectation that we'd beat and raise. And the next time we went to go raise capital, it was very, very easy to do that because we had a reputation for doing what we said we were going to do, just under promise overdeliver. 

Pablo Srugo (50:18)

Well, I think sometimes you kind of get lost in what's the goal because it's You kind of said this, but like, just to be clear, if your goal is to raise the most amount of money at the best valuation, you should put up insane numbers. Like the more insane the numbers, the more, you know, as long as you have a credible story around it, the more likely you are to get these huge rounds and these crazy valuations. And maybe you do get that. Maybe you win like that part of the puzzle, but the whole goal here is to build a company that ultimately either goes public or exits, or at least is highly profitable, super successful. And I think your point is like, actually by raising the right amount of money at the right valuations, you set yourself up to be able to do that with a higher probability than if you just get that massive, massive round that now the expectation is like, you know, unicorn or bust sort of thing. And if you don't three X or four X this year, everybody's pissed and all of a sudden you're underwater and employees are like, why would I join this company when you're not worth what, you know, what the strike price is and all these other problems that come out of that.

Mike Wessinger (51:20)

Well,we want to build a durable business for the long term. we knew that if we had tried to do something based on unrealistic expectations, we might wind up with the wrong. We did have some church seats that came in from people who honestly didn't know us that well that were far higher. We needed the right investor where we would set the right expectations so that we weren't feeling the pressure to do things that were unnatural for the long term sustainability and durability of a high growth business that we knew we could grow for decades. If we had had the wrong investors set the wrong expectations, we would have done unnatural things.I promise you. 

Pablo Srugo (51:58)

Perfect. Well, Mike, we'll end it there. I'll ask the two questions that we always end with. The first one is, thinking back to the PointClickCare days, when did you feel like you had true product market fit? 

Mike Wessinger (52:08)

Yeah, it was never a single day because each new market we had to go into. we felt like the war that you know, the legacy for business where through like the ERP runs skilled nursing and assisted living buildings. I would say it was probably 2006, 2007, we had fully implemented two of the largest chains that operated in 36 states in the US and we were doing it, doing it successfully and had raving fans there. That's what we knew for the biggest portion of our market that we had really nailed it. So yeah, we felt like we had  product market fit. can operate in almost all jurisdictions across North America. And that was a great feeling because we knew any time a customer came in from any of these markets that predictably we could implement them and delight them with very few exceptions. We had almost perfect retention rates, which was great. But as we've entered new markets, we've added new products and gotten into new segments like our acute payer business. We have to remind ourselves of those lessons. you're always sort of fighting that battle and figuring it out again. you have to, you know, memories are short. have to, especially when you have a lot of new people that have joined. It's like, no, this is the way it's done. This is the discipline. So it's a cost of battle. It's a cost of battle. But definitely 2007, we really felt like we had, we really nailed the core for sure. 

Pablo Srugo (53:34)

And then the last question is, you know, with all the decades of experience operating PointClickCare and then working with other founders, if you could go back to the early days of PointClickCare with some advice for yourself, what might that be?

Mike Wessinger (53:48)

I think it goes right back to those very first things. I think I would have truly understood what whole product market fit meant and how important it was. And I would have done a way better job of targeting. We almost bankrupted ourselves in, you know, call it 2004,2005 because we were trying to go after 50 markets simultaneously. And if we hadn't caught ourselves, we did, we wouldn't exist now. We would have run out of money. I mean, it may have existed, but it would have been in somebody else's hands, not nearly the level of success. So I would have figured that out a lot earlier and saved ourselves a year, year and a half of brain damage. 

Pablo Srugo (54:30)

Perfect. Well, Mike, it's been a pleasure. Thanks for jumping on the show. 

Mike Wessinger (54:34)

Pleasure's mine. Thank you.

Pablo Srugo (54:36)

If you listen to this episode and the show and you like it, I have a huge favor to ask for you. Well, it's actually a really small favor, but it has a huge impact. But whichever app you're listening to this episode on, take it out, go to a product market fit show and leave a review. Please. It's going to help. It's not just going to help me to be clear. It's going to help other founders discover this show because the algorithms, whether it's Spotify, whether it's Apple, whether it's any other podcast player, one of the big things they look at is frequency of reviews. It's quantity of reviews. And the reality is if all of you listening right now left reviews, we would have thousands of reviews. So please take literally a minute, even if you're just writing like “Great podcast” or “I love this podcast”, whatever it is, just write a few words. Obviously the longer, the better, the more detailed, the better, but write anything, leave five stars and you will be helping me. But most importantly, many other founders just like you discover the show. Thank you.