E110: Mark Bakken, Founder and Managing Partner at HealthX Ventures – Interview

May 9, 2017


This is a great interview with Mark Bakken. Mark is the founder and managing partner of HealthX Ventures. HealthX invests in early stage health IT companies. Some of their portfolio companies include Redox, Pacifica, HealthiPass and ensodata.

Mark has a knack for understanding the future.

Before starting HealthX in 2015, Mark started Nordic Consulting Partners, which he turned into the largest Epic-focused consulting firm. Earlier in his career Mark started and sold Goliath Networks.

He’s located in Madison so this interview was in person.

Here are some other things we talked about:

-How did you know it was the right time to start Goliath and Nordic?
-When you started Nordic, there were a lot of competitors, how did Mark grow Nordic so quickly?
-Hear the details of Nordic’s HealthiPass investment.
-How do you screen all the potential companies that approach you?
-Yes, Mark has hit a hole-in-one in golf.

Dave Kruse: Hey everyone. Welcome to another episode of Flyover Labs and today we got Mark Bakken with us. And Mark is the Founder and Managing Partner of HealthX Ventures, which was started in 2015 and HealthX invested in an early stage health IT companies, which is quite a hot and interesting area and it seems like Mark has a knack for understanding the future.

Mark also started in Nordic Consulting Partners, which is an Epic consulting firm which grew quite quickly and earlier in his career Mark started and sold Goliath Networks. So Mark is pretty good. It seems like he can see the future, so I’m curious a little bit how, what he is excited about now and kind of how he thinks and he is also located here in Madison which is awesome, so this is an in-person interview and so let’s get into it.

So Mark, thanks for joining us today.

Mark Bakken: Yeah Dave, I’m happy to be here.

Dave Kruse: All right. So I kind of told people a little bit about background. But maybe you can kind of walk us through before…

Mark Bakken: Sure. I was born and raised my entire life in Wisconsin, one of those wonderful Flyover States so.

Dave Kruse: Awesome.

Mark Bakken: Went to school at UW-Madison, a Computer Science Grad and since then worked for the University for a little while after I graduate in the Department of Information Technology and then started my first company which you mentioned, Goliath Networks back in 1993 and then sold that in 2001 and then started another one in 2004 called Bedrock Managed Services & Consulting and sold that in 2008.

Dave Kruse: I missed that. So what did Goliath and Bedrock do?

Mark Bakken: So they were mostly infrastructure consulting. So think of Microsoft, back then Novell, Cisco, Sun Microsystems helping. Goliath was more focused on big companies like Harley-Davidson and Coles and Kraft Foods and North Western Mutual Life that needed help kind of deploying PCs as they were looking to replace their mainframes and their proprietary mid-range systems. So it was kind of on the range as Microsoft was starting to take off. We were the largest Microsoft and Novell partner back then. So I was on Bill Gates very first partner advisory council. I was Eric Schmidt very first Partner and Advisory Council and I was at Novell before Google and so that company grew very fast. We were the fastest growing company in Wisconsin over a five year period; grew to about $25 million in sales a year. But mostly just filling our time to customers to help them figure out how to deploy PCs and deploy applications in all those PCs and manage those PCs and things like that, and servers obviously.

Dave Kruse: Interesting, okay. Right keep going.

Mark Bakken: So the second company Bedrock, it was similar, but it for small and medium sized businesses. Instead of charging hourly, we charged per device per month. So think of the cloud today, but people still had servers in their own environment, but now you could remotely manage them. So instead of them having to hire you know and expect that was a web programmer or a SQL server or an email expert, they would just use us, so on an adhoc basic. So it was more per device per month. Basically like a 1000 bucks a month for a small business, which was way more affordable and it could work, because the internet was finally you know affordable for those small businesses and reliable and predictable and all those things.

Dave Kruse: So how did you – it sounds like its hard getting the companies and their services. How did you get in? How did you start getting some of these larger companies early on or yeah – I know you have to go back you know ways, but I’m just you know…

Mark Bakken: So early on there weren’t a lot of people that knew this technology and I had networks like most people and new people. Back then IBM was a huge influencer and the people at IBM eventually knew that I was good at this and they would refer me personally and I would do the work and eventually that led to Mark do you know anybody else, do you know anybody else, and you just grow through word of mouth basically and it happened to be a really good timing where everybody, everything was taken up and there wasn’t enough people that understood how to make these PCs work reliably.

Dave Kruse: Got you, okay. All right and then, I think now we are almost to Nordic 2010, is that?

Mark Bakken: Yeah, so in 2010 I started Nordic Consulting. Yeah, so Nordic today is the world’s largest Epic only Consulting Firm. So basically bill people out to mostly hospitals and clients around the country to help them configure, implement, optimize Epic software and Epic, think of Epic like Microsoft or most. So hospitals they own roughly 54%, you know they have roughly 54% market share out there. So them and Cerner are pretty much of the two big ones out there and Epic being based in Madison has really put Madison on the map for at least healthcare IT because of that, so they have customers in every state and 10,000 employees strong now, about $3 billion in revenue and I just thought there were a lot of parallels to it.

When I was doing my first companies, I was doing Microsoft consulting. I knew customers spent $7 on consulting for every dollar they spent on Microsoft software. So I figured it was probably something similar in the Epic world and I also figured that you know being in Madison here, we have an advantage. Actually like companies in Seattle did with Microsoft, where Epic makes all their customers fly here for their annual user group meeting while they say, ‘hey, come here we’ll give you the world map. We’ll tell you what’s coming next, so you can plan for it’ and then they also have their best customers come here for advisory councils to say, ‘hey, here’s all the features everybody wants. Which ones do you think are the highest priority?’

So having the access to those customers when they are in town, I could you know buy them a cup of coffee, go to lunch with them, build a relationship and say ‘hey, do you need help implementing that software. We’ve got some of the best and brightest consultants’ and for me I was just going to hire former Epic employees. Epic makes all their employees live in Madison. They hire you know the sharpest people from around the country, they do extreme betting, profiling basically, that’s all – everybody right there.

So anyway – end of timing once again was great. It was just right before the Affordable Care Act was rolling out. Everyone, the government was giving all these hospitals money to implement electronic medical record system and there just wasn’t enough talent around. So what I was trying to do is say ‘hey, before you leave Madison, you know try this consulting thing for a while since you got a skill set that’s high in demand. You can make a lot of money and it might lead to your next thing. You might end up working for a hospital. It’s a good way to kick the tires for both you and them’ and thankfully it worked out well.

Dave Kruse: And so how did you start? Did you go out and partner with, because you didn’t know Epic and you didn’t know anybody there, like know people.

Mark Bakken: No.

Dave Kruse: That’s hard like to break into that world. They have their own little thing going on over there.

Mark Bakken: They do, yeah. So thankfully I had to find out a Co-Founder that had worked in Epic who had left Epic for whatever reason. He had done the consulting thing for a while and kind of knew what the competition was like and then I explained my thought around it was being a different business model, basically being an agent for all these consultants and saying, ‘hey, I’ll be completely transparent. You will get two-thirds of what we charge. The other third will cover overheads. It will cover employer taxes and proper benefits and it will leave a little leftover for the company to make sure it’s around 10 years from now,’ which it is, so…

Dave Kruse: You did well. I guess it is almost – it’s been a while and so how. Yeah, multiple times you kind of – you know good times. Sometimes its luck, but you have done it like multiple times, so maybe not as much luck and so you know how – what did you see with. When you started Goliath did you see the future and what it was like, you were really interested in Microsoft products and Novell and like what’s good at this, let’s just do it and same as Nordic. Like did you – it sounds like in Nordic you had a sense that this is going to be needed and it would be big, but…

Mark Bakken: So with Nordic I knew that timing was everything and this wouldn’t last forever. So there was a deadline, people had to get something like that implemented by 2014. So it was going to be a mad rush for people. So I had to find a way to finance the growth of the company that didn’t rely on traditional methods; like didn’t go to a bank for a line of credit or a loan.

So one of the keys was using something called factoring. So think of like payday loans almost for a business. So extremely expansive, but the benefit was we didn’t have get investors, we didn’t have to work with a bank, we could grow exponentially. I built it into the business model where the cost was maybe 1% of the billable rate, but that would allow me to seize every opportunity out there, because typically you hire someone. They do work, they expect to be paid you know in two weeks but it might take 60 to 90 days to get paid. So if you don’t manage that cash flow it can cause problems for our business. So for me I knew I could grow infinitely as fast as opportunities were out there and all I had to do was make sure you know we delivered what we said we were doing.

Dave Kruse: Interesting. So as much a cash flow issue is a demand issue; it’s a problem to have.

Mark Bakken: It’s a great problem to have.

Dave Kruse: Everyone is looking for that problem.

Mark Bakken: So yeah. So I mean we grow $1.3 million in sales in the first year and then $13 million in the second year and then $38 million in the third year and then $80 million and then $120 million it just snowballed very, very fast.

Dave Kruse: Were there other, any other Epic consulting firms out when you started?

Mark Bakken: Yeah. Oh yeah, there was tons of them, because…

Dave Kruse: Back when you started.

Mark Bakken: Back when I started, absolutely. Yeah, there were plenty out there, but none of them paid like we did. They all paid basically what they could get away with. So they would say how much were you making. We’ll give you 15%, 20% raise for base salary and then we need you to just bill many hours as you can and depending on how much you bill I’ll give you a bonus.

So what I did was basically aligned incentives and said the customer needs you to work you know 40 hours a week, and if you work 40 hours a week you can get two-thirds of the what the market is willing to pay and you know today the market still pays about $150 bucks an hour. So most of these people were making a $100 bucks an hour, 40 hours a week, plus they are getting all their expenses paid. They are getting all their flights paid, they are getting their hotels, they are getting points, frequent flyer points, they are getting all kinds of stuff.

So they really like that model, because they tended to make more and they could focus on making sure they did a good job and the customer was happy, because the customer needed the projects to get done in a timely fashion, which typically happens if someone is working salary and they are like you know, I’m late to getting to work because I had to drop my kid off or do this or do that, and then they have to leave early for some reason. It’s usually always good reasons, but then also then its only 30 hours or billable time instead of 40 and now the customer is like the project is behind and you know this way you know everybody just – their expectations are set appropriately and they are financially reward for the value they are creating.

Dave Kruse: Interesting, yeah. So yeah, I’m quite curious how you kind of took over. Who once were going to be a later comer, it felt like you would be behind and it would be tough to do it. So it’s mainly the transparently thing and the cash flow management.

Mark Bakken: It’s both those, those two things. Yeah.

Dave Kruse: The demand, trying to get new customers that’s seems like there is lots of demand. So that was not as big an issue.

Mark Bakken: There was, but you still needed to be transparent with them and you needed to be hyper responsive. Because its – there is tons of competition. So you have to basically move on their timeframe. So when they are like, ‘hey do you have someone?’ Either you do or you don’t, you know don’t sugar coat it. You know we would, we would have plenty of people that wanted to work for us, but we would just say, ‘hey, it comes down to the customer’. And it was a little bit of a Darwinian thing there built in where the customer would get three or four you know candidates that we through were good. But ultimately the customer would decided and they would usually pick the person with the most relevant experience that match their environment, whether it was a children’s hospital or academic hospital or an IDN or you know whatever module that they were looking forward, whether it was pharmacy or emergency room or whatever lab type stuff.

Dave Kruse: All right. Well, let’s talk about what you are doing now with HealthX and once again it seems like you really picked an interesting industry, maybe I see a trend, but yeah, so why do you start HealthX instead of another. Well obviously you know what you are doing with the services back and looking forward, so which is a little different but yeah, why did you start?

Mark Bakken: So HealthX just quick back. So it was a $21 million venture fund focused on investing in seed early stage digital health companies, people that make software for the healthcare industry. So very, very specific niche and usually the first institutionally money for some of these companies, where they may have already had a minimum viable product, they got a core team of founders that you know one is the sales marketing person, one is a great operations process person, customer success person and then one might be just really good technically and understands how to solve the problem and build the product around that, but they are looking for capital and people with connection.

So in Nordic thankfully I got to work with some of the largest health systems around the country. I met a lot of CIOs and Chief Medical Information offices that are looking for innovative solutions to use technology software to make things more efficient in healthcare. We all know healthcare is way too expensive, so those ways to use software to learn from each other, to help doctors and nurses hone in on a cure, you know learn off of what other people are doing basically. Which is the core of what Epic does, but there is lots of other niches. Healthcare is – almost $0.20 of every dollar spent in America is spent in Healthcare. So its huge, trillions of dollars a year unfortunately. So even a small niche is you know a billion dollar opportunity.

Dave Kruse: And what type of size investments do you make typically in company. Like in the first one, did you do a follow on round, but maybe I’m going too far, but you started in 2015. You have been around a couple of year.

Mark Bakken: We closed our first round in October of 2015, made our first investment back then. So we have made eight investments in them. We typically invest anywhere from $250,000 to $500,000 out of the gates and then we will save cash for follow on rounds where we want to make sure that we don’t get diluted. But you know if they are showing progress and some other big PC comes in, then we want to make sure we have a seat at the table and we can still help them.

Dave Kruse: And did you put – you don’t have to say how much, but did you put a chunk of your money in?

Mark Bakken: Yeah, I did myself.

Dave Kruse: Yes I’m sure that investors like that.

Mark Bakken: They feel more confident if you are willing to put some of your own money in, yeah.

Dave Kruse: All right and so, yeah can you tell us about the team a little bit.

Mark Bakken: Yeah. So as most people know it all comes down to the team. You know I’m a good talker, but you need people to actually do the real work as well people that know me say, and with that I’ve got a great team. So I started with some of them understood the legal side of things. So from term sheets and how things are structured and he also happens to be a former Epic person that worked at Epic as a lawyer, who understood Epic, but also digital health and worked a lot with starts along the way and great experience out in New York and other places.

And then another great guy who worked at Epic as well did some of the implementations for Stanford and other things on the Rev Cycle side, but he also grew up kind of doing investments. His family did a lot of angel investments. He ran a Wisconsin Angle Network. He knew a lot of high network people, so most of the investors and HealthX of about 83 investors, so quite a bit. The average investment was $275,000.

So anyways is not like you know those people are out there everywhere and you know so – it helped to having someone that kind of at least know who they were and you could take to them and give your value prop and thankfully a lot of them believed in network and we were able to find some great companies that helped put Madison more on the map around digital heath at least and get a great return. And then the two other gentlemen full time. So we were pretty big team for a small fund.

I actually don’t pay myself because there is the money doesn’t work basically. But hopefully you know I’ll be more than compensative once these companies sell some day and get my share of the return.

Dave Kruse: And you are probably having a little bit of fun.

Mark Bakken: I’m having a ton of fun. Yeah, its – I don’t know, the way I feel like I won the lottery with Nordic and now this is kind of a way to share a lot of the lessons learned, some things so I can help people avoid some of the mistakes I made along the way, leverage my connections, you know focus on healthcare and trying to make it more affordable and you know thankfully the healthcare industry almost everybody is a phenomenal person. You know they are all good hearted, they are all well intentioned and so it’s a lot of fun just to work in that industry.

Dave Kruse: Do you help your portfolio companies with sales and. I mean because you have such a good background in services. I mean I know they are not sales companies, but they are all with some services on top of their product and you would probably be a pretty good selling board.

Mark Bakken: Definitely. Almost all of them do next to no services though. It’s mostly around software, but the piece that we can help them with, which is a lot is there is sales and marketing. Most of them aren’t the best at marketing, it doesn’t come natural to most people. But there is a way to market and sell to the enterprise customer that I have learnt over 20 some years, but then also just basics with accounting; recognize your revenue, how to track things; what key metrics should you focus on; you can get distracted. You can waste a lot of time as a startup, it’s a big experiment basically.

So you are constantly learning and adapting. Its helping them stay focused. Its helping them figure out who their next hire should be and how to align their incentives, you know to say okay, how can you look for this type of person. If you can find this type of person and pay them in this range, then it works for you and obviously it needs to work for them too. So it’s just a lot of that coaching, because we sit on the board of every company we invest and we are there to kind of give them advice and help them you know grow as fast as they can without breaking the organization.

Dave Kruse: And can you give us an idea. Well maybe talk about – you have eight investments, but talk about like maybe one, maybe one or two. Maybe not Redox, but – we’re actually launching Nico’s podcast. If people want to know about Redox, go back to Nico’s. But I don’t know if there is another one that you – and that one is doing well. So if you want to talk about that one.

Mark Bakken: Redox, it was our first investment. They are going great, which is wonderful, that helps with our credibility and with them I kind of knew them all along. I individually invested early on in the angel round. So it was a very safe first batch, it’s because we didn’t have to do a lot of due diligence just because we knew who the people were and felt very comfortable with the problem they were solving and the way they were going to solve it and things like that.

Another one that is great is HealthiPASS in Chicago. So they iPASS like, we all know too well that’s gone to Illinois and paid tolls, but what they do is they help clinics basically with collections. So as everyone knows, everyone is out of pocket, expenses are going way up and the co-pays are going way up and a lot of these originations, especially the smaller ones in our hospitals don’t have an easy way to collect that.

They typically say okay, what plan are you on and you could be on a million different insurance plans and you go in for services and then you know they get your information and then it takes them a long time to figure out how much you actually own and nobody really know, it’s so condiluted; you get this is not a bill, this is a bill. So they found a very easy way to figure out how much you have left on your copay and how much you are supposed to pay up front, what your eligibility is, what the services you are coming in for are going to cost. So you know upfront as a consumer that okay, this is what it is.

Then they ask obviously for a form of payment just like you would for a hotel or anything else or a car rental. You put it on file whether it’s a benefits card or an HAS or just a credit card. But now you kind of made it for the click to not have to deal with all these collections. Typically these clinics only collect $0.65 on every dollar. So they are doing a lot of work and then they can’t track people done because people don’t have home phones anymore, they only have cell phones. They don’t have staff because they are like okay, can you send in this bill and people are busy. They are like Oh! I’ll get around to it, but I don’t have any checks. You know it’s just – there is a lot of good reasons, but it’s just a lot of wasted time and lots of wasted cost for the health system.

So they are growing exponentially. It costs these health systems nothing. Basically they give them a kiosk, an iPad. People check in with it and then they collect the payments. So basically it streamlines everything to get a small percentage of the transition and they take them from $0.65 on ever dollar to 90% plus on average.

Dave Kruse: So they must be bringing in date in from the payer and provider.

Mark Bakken: Yeah

Dave Kruse: Wow! That’s…

Mark Bakken: Yeah

Dave Kruse: That’s interesting! That’s a lot of figure out and to – especially politically, right.

Mark Bakken: Yeah. So thankfully they figured out how to do that efficiently and find a way to leverage all the networks that are out there and bring it down to a small, you know I think of a small orthopedic surgery group or allergist or even a dentist or anybody else that’s like I don’t know how to connect all these networks . I can connect to human or a signal or all these other ones out there basically, so.

Dave Kruse: And so kind of kind of walk us through your through process like, take us like when did you first talk to HealthiPASS and was your initial impression like ‘oh! This is awesome,’ or it was like ‘oh! This is okay.’ You know like I’m just curious like how – and how long does it take to close a deal and what were your main concerns and due diligence, just as a follow up. But I’m just kind of curious to think through like how do you make this happen.

Mark Bakken: So we get – I mean we get over 600 companies pitching us a year.

Dave Kruse: Really? Are they pitching like today, like materials or the actual prophets.

Mark Bakken: Just from referrals to accelerators to incubators, those are all inbound. Those are people that know of us, because there’s not many VCs that will invest this early around the country, so the few that do get a lot of inbound. So we get a lot of people saying ‘hey, we’d love to talk to you about what we are doing and see if it’s of interest to you basically.’

So my team – I then talk with the rest of the team, two other guys. One is former Epic as well, but he ran vendor relations at Epic for six years. So he worked with all the product managers at Epic, so when they would get approached by customers and say ‘hey, do you have a solution where we can collect upfront?’ Epic were like, we don’t do that, but you know HealthiPASS could do that. So he learned a ton about this whole ecosystem and all these huge strategics out there that did stuff that were additive to what Epic and Epics competitors are doing. So you know not everything we invest in you know has to work with Epic. It’s just kind of alongside of it and you can replace Epic with one of Epic’s competitors.

So that’s another gentleman on the team and then the last gentleman came from Texas Medical Center, which is the largest collection of health systems in the country; it’s about 25. It’s down in Houston and its everywhere from MD Anderson, the cancer place to Texas Children’s hospital to a bunch of different ones down there and they have basically an accelerator or more of an incubator. So they don’t take any equity or anything else like that, but they help a lot of these start ups flush out their business models and bank in their business models. So he has a lot of experience working with these companies. He was also pre-med, so he understands kind of any of these great relationships with a lot of the academic health organizations around the country.

So anyway, so they take usually the first pass where they look at it and they kind of know what we’re looking for. Where we’re saying ‘hey, we’d love to invest in a company that’s doing something about security and healthcare, you know so let’s look for solutions around that, let’s find some ground payment systems, so we did that. Let’s look for interoperability, so that was Redox’ you know. So they know kind of big picture what we’re looking for and then you know they’ll basically take the first pass and say hey, does this business model makes sense. This is an awesome team that has all the raw ingredients that we’d look for in a team and then is it something that we can help. You know we have a lot of connections with the health system, so is it health systems focused versus pharmacy focused, versus medical device focused or payers or you know stuff like that.

So anyways, back to HealthiPASS, I think that actually came in through matter, some matter down in Chicago. They have a lot of – it’s a great place for start-ups to go around healthcare and they got a great ecosystem there and they came in and we met with the Founder and CEO and explained kind of the business model and for me it just seemed to make a lot of sense and…

Dave Kruse: Right away like…

Mark Bakken: Yeah, and the CEO is like a three time CEO. So he had been – he had done this before, he had learned a lot of lessons, you know that type of thing.

Dave Kruse: Do they – what type of product do they have when they talked to you?

Mark Bakken: They still had a – you know they had it all baked out, but they were still pretty early. So they were like 20,000 a month in revenue, which is pretty good, pretty good. But you know today, over 100,000 a month you know seven months later or something, so growing fast.

Dave Kruse: How much did they raise at that point?

Mark Bakken: Gees…

Dave Kruse: Do you remember?

Mark Bakken: I don’t remember exactly. It was a couple of million, yeah.

Dave Kruse: That’s impressive. And yeah, and how does it typically take to close a deal and what type of due diligence do you do?

Mark Bakken: Sure. So yeah, it might take 60 days to close a deal. It could be faster, yeah depending on you know how much work has been done, how much baggage there is, how old the company is, that type of thing. So if someone did all the legal stuff, the way we like to see it, you know where it’s a C Corp already; a lot of times it’s not. It’s an LLC or an S Corp and you got to move it into that structure in order for an institutional investor to invest and then it’s you know all the things like going through their current customers talking to them and seeing what they have to say about them. It’s you know understanding the legal risks of any investment. How to mitigate that risk if there is any; sometimes there is, sometimes there isn’t. And it’s you know evaluating more the team and references and you know punching the numbers to see if all adds up basically.

Dave Kruse: Got you okay. Because well you probably can’t say. Let’s go and take a hypothetical – if you invest $500,000 and let’s say the post money you know is that like $10 million or something because they maybe raise $2 million. What do they need to exit that in order for you to be happy.

Mark Bakken: So ideally we like to you know go in with everyone thinking we could get a 10 times return on investment. Knowing that on an average unfortunately that one of eight might hopefully they all do something, where we can get a 3X or 4X or 5X. So you have to kind of do the math. So for us you know we have to get in early, we have to get enough of a chunk where it’s worth our time basically. We spend a lot of time, like every day I’ll be probably taking to one of our portfolio companies, yeah which is just.

Dave Kruse: Hands on.

Mark Bakken: Yeah little things, but that’s what’s fun about it. So

Dave Kruse: Interesting and when – so like with the HealthiPASS or another one, are they – do you usually have to kind of push your way in, not push but sell yourself in or is it more that they are, they are very egger. Like if the deal is really hot, do you every have to like try to convince somebody or is that. I mean you are still early and that maybe you don’t run into that yet because…

Mark Bakken: Not yet thankfully. So it’s, I mean some of them they are, but we are usually at the top of their list. So a long as the numbers work for us and for them, then its good. We might have to convince them why we think the valuation should be slightly lower and they may choose not to, they may say hey you know, I love you guys but I am going to go…

Dave Kruse: They say…

Mark Bakken: Yeah one or two, yeah one or two and its typically because Angles might come in and say yeah, this team seems great, we’ve go in and invest it twice or…

Dave Kruse: And at your stage the valuation it’s all difference right, because if you said $20 million like, you have 10 times, 10X there, like $100 million versus $200 million like that’s big, that’s a big exist yeah.

Mark Bakken: It’s a big exist, yeah. Most of the exists we are going to look for in the you know $50 million or a $100 million range. So that means we have to get in when its $3 million to $5 million, pre money.

Dave Kruse: Oh! That’s good. Well that means then you are not really having to compete with the, you know the big BCs of course, and some of them are not coming down to lower amounts, but yeah interesting, okay. And what about geographically, do you guys invest anywhere or you guys…

Mark Bakken: Yeah, we will. So we’ll invest pretty much anywhere. We have two in Madison which is great. We’d love to have more, but we need some kind of accelerator for digital health here or something like that, that would help to encourage people, help them understand the process and what it’s like to start a company from nothing and make sure there is enough capital to get it off the ground and get the new viable product going. But then we have you know Chicago, St Louse, California, Boston yeah.

Dave Kruse: So you are going, okay. I mean do you guys make the rounds. Do you guys travel anywhere else?

Mark Bakken: We do, yeah. Yeah, right.

Dave Kruse: And we are getting close to the end. This is a little longer, which is fine. I hope it’s okay and so I was curious. I think that the biggest X factor is the team and then how do you, what do you look for in a team like. You are going to talk to them a lot, so you kind of have to like to the product to a point they can’t be very – well maybe, but and then they have some experience and they just seem transparent or what do you…

Mark Bakken: Yeah, the main thing is they need to be very passionate. You know because passion sells and then you really, really believe. Because if you believe you can convince somebody else basically in what they are doing and what they are doing makes a difference and how that can help somebody solve a problem or do something more efficiently or save some money along the way. So there needs to be part of that core team, the one person that’s willing to be that head of sales for quite a while. I recommend until they are cash flow positive. Don’t ever give up on that.

A lot of people are like I’m going to hire a head of sales and that will solve all my problems. No, if it’s your passion you should be able to be the head of sales and convince people to do it and along the way customers will tell you how to make your product better, how to price it better what your value prop is, how you compare or stack up against the competition, so that will help you with how to market it and how to present it. And then you know obviously the operations side too, once again is having someone that is like minded with that sales marketing person that can basically is really good at just creating a list and getting the stuff done you know fast.

And then technically obviously you need to do that as well and ideally if they are all physically in the same spot, that is best, because you can do that iteration really clearly if you are all physically in the same spot. Not necessarily most of our companies have developers all over the place. They know how to work remotely today and with technology, but early on it helps to have some density there.

Dave Kruse: Okay. All right, so now on the personal front, you seem to have like good energy. So how do you get away from – all right maybe not – I mean now it seems like you are a pretty sweet guy. But now or maybe in the past, like how do you get away from work mode or how do you unwind and yeah, you seem to enjoy work a lot, but yeah what will you do?

Mark Bakken: So for me, I do enjoy running actually. So I do like to get out and it allows me to just think and you know get ready for what’s ahead in the day. So early on in the day I do take off and try to go skiing out west at least once a year. I just got back from golfing in Phoenix with my parents.

Dave Kruse: Cool. I do see on your desk that you’re a Hole-In-One person straight, that’s very sweet. I’ve never had a Hole-In-One, so a little jealous here. Actually that’s awesome. Have you had a Hole-In-One since?

Mark Bakken: No.

[Cross Talk]

Mark Bakken: That was first and maybe the only time. I’m just glad I achieved that. That was one of my like goals.

Dave Kruse: Oh! All right so I’m running in golf. And what do you do throughout the day to like make your day a little more enjoyable. Like do you have any like habits or anything that make you happy or…

Mark Bakken: I drink a lot of redbull. I’m a candy addict, so I eat candy, but I just like talking to people. You know talking to a lot of the start-ups. I’ve personally invested in a lot of companies outside of HealthX. So being able to talk to them and get energized by their excitement and then hopefully give them some advice that makes sense that’s timely and well run.

Dave Kruse: What do you do? Who do you talk to when you are a start up portfolio? Do you say, hey what’s going on or do you say hey, I’ve got this. You know let’s talk about this specific issue or…

Mark Bakken: I usually reach out saying hey, can I get a few minutes of your time on this, this, this or this basically and other times its me just checking in, like hey, how is it going? How are you doing, like that basically.

Dave Kruse: Well, you’ve made a good point, because with technology it’s so easy to like chat and email and not talk to people and so like when we talk to people it definitely gives like you know good energy and I don’t know, you get kind of a little buzz from it and that these days are hard to do that and pick up the phone. Yeah, that’s a good lesson.

All right, well I think that just about does it then. Yeah, this was awesome, so I appreciate Mark your time.

Mark Bakken: Yeah, thanks for your time as well.

Dave Kruse: And it’s good to hear your story and I know I know you for years. Like even when it was back in Nordic, but I never really knew your whole story. So this is – I appreciate it and I think I learned a lot, so I hope everyone else did too.

Mark Bakken: Great. Thanks for the time and thanks for letting me be a part of it.

Dave Kruse: Definitely. Thanks everyone for listening to another episode of Flyover Labs. As always I greatly appreciate it. We’ll see you next time. Thanks everyone.