Brett Plotzker, Co-founder and Chairman at Anagram, talks about the steps he took to grow Anagram to 3 million ARR quickly and raise 17M in funding

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Episode Outline

[00:59] Failures that helped shape Brett’s success at Anagram

[03:13] What led to Brett founding Anagram

[06:00] When Brett realized he had product market fit and could begin to scale the business

[07:42] Subsequent steps after realizing they had a product that could sell

[10:10] What Brett would have done differently

[11:55] The importance of building out a referral network and advisory board

[13:50] Brett’s advice for startups

[15:50] Where Brett is at in his process of figuring out what’s next for him


Brett’s Inspirations

Dan Kurani

Hari Sundram

Andy Bromberg


Connect with Brett

LinkedIn

Website

Twitter

Elias Rubel: (01:06)
All right, today, I'd like to welcome Brett plot skirt of the show. Brett founded anagram, which was formerly known as patch and got them to 3 million ARR incredibly quickly to let them through. I think it was something like what 17 million in funding that you raised. Yeah, yeah. Anyway, a super great founder operator. Uh, he's now working on his next thing, which we'll talk about more, um, or figuring out that, what that is and that whole process, but Brett, welcome to the show. I'm really excited to have you thank you so much for having me. So, you know, you were a first time founder, correct. When you started patch,

Brett Plotzker: (01:43)
Uh, on paper, it appears that way, but as with anything, uh, I definitely found it a few companies before, but nothing of note.

Elias Rubel: (01:52)
Okay. So I'm, I'd love to start there then, because I feel like sometimes as someone with a similar background, a lot of our, a lot of time, our failures inform our first success. I'm curious if that rings true for you. And if so, are there any stories of like superb failure that you think shaped who you are today and the success that you had with anagram?

Brett Plotzker: (02:13)
Yeah. Money? Um, so I think the first business that I really tried to start was right after college and I don't even count it because I literally had no idea what the hell I was doing. Um, poured a little bit of my own money into it. Uh, sensibly. It was a, um, a birthday reminder application. This was pre-Facebook opening up. They're opening up access was right when Facebook was coming out and the idea was really to help people remember their birthdays, did a few jobs here and there. I won't go too deep into it, but tried to start a company right before going to business school as well. So it was a social gaming company that was trying to do way too much. I was trying to, basically I knew was bobbleheads were cool, but we can make them plush. And then we can take them and do a social game online and sort of act as a virtual and real trading card in real time.

Brett Plotzker: (03:09)
And we were following this trend of what, if you know what Webkinz are. It's a really obscure thing. We were trying to follow that trend. And I founded that with a couple of friends. I learned a lesson that I will never forget, which is choose your folk. Co-founders by complimentary skillsets, not overlapping skillsets and really choose your co-founders by if they are going to match your energy and match your conviction. Um, not to say that anything was wrong with them as people, they just weren't good business. They weren't good people to found a business with. Um, and then did some stuff during business school that was sort of hit or miss. And so it's, it's been a few fits and starts for sure. So what, what led you to this?

Speaker 4: (03:51)
Can I first idea that hit,

Brett Plotzker: (03:54)
Um, with patch? So I'll give you the quick story. So I was doing a post MBA. I was working for a guy out of Israel, probably one of the most brilliant people. He's the most brilliant person I've ever met. He was a, I think the, the lead engineer for the USB drive out of Israel. So he will never say that, but he was, um, and we were struggling with their new product going to market. It was a peer to peer communications platform through a Chrome plugin, and they wanted to do something where they were going to download cool photos and videos. I wanted you to do something a little less sexy with virtual data rooms and encrypted messaging for a HIPAA compliant platforms. So I started to get really interested in the healthcare data space. And as it turned out at the same time, I was going through a really shitty experience with, um, a surgery I'd had where they were trying to basically charge me 10 times what I should have been charged.

Brett Plotzker: (04:52)
And so I ended up having this back and forth between the insurance company and the hospital system and their inefficiencies and friction led to me getting sent to collections. And so I ended up saying, this is, this is completely fucked up. I don't understand what's going on. We used to clear, um, derivatives trades instantaneously and they were complex. I don't understand why something that says I only owe $2,000 maximum, could try to charge me 20,000. And so that was really the impetus for this. The original idea that I had was could you create a survey at exit after you leave the doctor's office to really help sort of weed out there's this huge error and fraud issue that no one knows about in healthcare where it's about call it like three to 400 billion a year in error and fraud. And so I got really interested in that big juicy number and how you could bite into it. And if you could create a survey afterwards that said, Hey, I did get this service. I didn't get this service. You could yellow or red flag it to the insurance, so you could help adjudicate a bill instantaneously. And so that was really what that was the original idea for what patch now anagram is. Um, does that answer your question?

Elias Rubel: (06:08)
It does. Yeah. So, you know, given that the show best and SAS are, our focus is really on post product market fit. How founders and operators and investors think about really beginning to scale the business and the playbooks and the things that have worked, um, in their past or that they discovered very quickly and put into play. Um, what was that moment of inflection for you where you realized you had the, there was there, you had product market fit and you're ready to take steps to begin that growth, growth plan.

Brett Plotzker: (06:41)
So I'll, I'll skip ahead. But basically we started this as a B to C product and quickly realized within about a month that it was much better served as a B2B product or a B to B to C product realization. Like when you get zero traction for a month and your thesis just gets exploded. Um, you start to realize that maybe the point where you thought it was going to where it was going to get uptick, isn't true. And so I think that getting to product market fit is really, it's really hard. Um, but you have to be willing to listen to the market and you can't just, you can't just believe your own bullshit sometimes. And so you gotta be very, very quick to, you know, make those changes. So we, we realized we had product market fit, um, really after probably about the first six months.

Brett Plotzker: (07:35)
And it really had to do with a lot of discovery when we, you know, talking to customers and understanding what do they like, what do they not like? And what were they looking for? And everyone really wanted real time eligibility checking was what we figured out. And that was what people would pay for because they were losing sales. People were walking out the door, people weren't using their healthcare. And that's when we realized, as soon as we built out a scalable eligibility checking tool, the rest of it was like, we would be ready to go scale the product.

Elias Rubel: (08:06)
Got it. And so what were like, you're right. You, you, you have that moment where you realize you're ready to scale and, and the product is right. Like, what were your next steps that led you to rev up to that 3 million in ARR where you left off?

Brett Plotzker: (08:21)
Uh, it was, it was a lot. So once we realized we had a product that could sell, we had to, we had to figure out who could sell it besides me. So I did all the early sales. So probably the first 7,500 clients on the platform made our first sales hire. It was hard. Um, and so we had to learn sales ourselves. So I think there's a lot better resources out there, especially with what's going on. Like Saster is an amazing, um, sort of resource playbook right now, but it didn't really exist when we out there. So we did whatever we could to learn. We hire somebody, we had to end up letting them go. We hired a few more junior people and we just started to build processes out. And so why,

Elias Rubel: (09:07)
Why wasn't it working at first? I'm curious, like what, what was it that

Brett Plotzker: (09:10)
First hire? So it was, I think we got caught in that trap of, we need somebody who's a VP of sales, but we also need somebody who can take some of the responsibilities away from me. Cause I can't spend all my time. I could've spent most of my time if it was an enterprise sale, but we were more of an SMB sale. You were 2000 ACV and it just doesn't work to have me pounding the phones all day when I have to concurrently run a fundraising process. And so it was a, it was a hard look, I don't know, it's this, um, this ACV range is a real thing. So it's very difficult to find the right people in the early days to get your product to market. If you have a low ACV. Um, it's just, uh, I think you just got to get, sometimes you got to get a little bit lucky with your hires and then sometimes you gotta reach out a little bit outside of what your comfort zone is. Hire somebody who's a little bit young and hungry going to hit the phones and learn with you. And I think when you've made a couple of really good hires after our first not so good hire and we're patient with them taught them and, you know, learn with them in a lot of ways. So I wish it was, I wish it was a fast path, but it's not like just with anything in life.

Elias Rubel: (10:32)
Alright. So are on that, like if you were to rewind to that moment of inflection where you're ready to start replacing yourself and building that team out, what would you do differently next time around based on what you learned?

Brett Plotzker: (10:44)
Um, let me think, what do I do different? I would have probably not hired somebody as senior to begin with. Um, I would have hired, uh, probably an extra person to begin with and see like just to give them all sort of their own support system and not like not have them rely necessarily on me to be the support system. And then I probably would have brought in a VP of sales much sooner. We, we didn't bring in a true VP of sales until recently. Um, and that was a huge mistake because I think once you start to get to 500,000, 600,000 in ARR, there's just so many processes that need to go into in place and somebody to think about it more on an everyday basis. And I would think about it for a week and then I'd get pulled into something else. And then I sort of forget about it and that wasn't fair to the business and it wasn't fair to the sales reps, frankly.

Brett Plotzker: (11:44)
So I think once you Jason, Blumkins right, like once you hit a million dollars in ARR, you got, sometimes it's too late to bring in VP of sales. So you just gotta, you gotta be really diligent about that. And it also, it allows you to hire a little bit like it allows you to hire a director level a little bit earlier and give somebody who has some upward mobility, a chance to learn a little bit more slowly and ingratiate themselves into the process. And that's what I wish I did. Interesting. And so what was this primarily a sales motion, like with that low of an ACV, uh, were you able to build much of a marketing muscle to feed those sales calls or was it just pure outbound thing in the phones and

Speaker 5: (12:29)
Like smile and dial?

Brett Plotzker: (12:31)
No, it was mostly inbound to be honest with you. So we, we had, um, a really good sales rep in the early days who they built a, um, a really good engine internally. So we were dealing with small optometrists ophthalmologists eye care clinics and some behavioral health practices. So building a good referral network was something I think they did very naturally. And that was very helpful. We also brought on a phenomenal marketer really early on in lieu of a VP of sales and their work was, was phenomenal as well. So I think some of our sales reps ended up getting a little bit spoiled and as we started to shift to an outbound process, it became, um, a little bit difficult for them. Um, and, and again, outbound, outbound is hard. So we, we did our best to sort of feed the engine. Um, I think one thing we benefited from was we were, we were definitely a need that was vacant in the market.

Brett Plotzker: (13:32)
And so the referrals became a little bit more robust. Um, what I would recommend though, especially in SMBs and they, these sort of micro communities is building out a referral network and building out a, um, if Isley board something we just recently did, but should have done a lot sooner to help spread the word because that really lowers the customer acquisition costs, which is something you need with these low ACV products. So let's dig into that just cause I think it's really a simple tactical air quote, simple tactical way for folks to really leverage their existing customers and turn them into champions. Like what, for someone listening where that would be applicable, a in what, in what situation do you think it's most applicable? Like what would their, what would their kind of ICP look like a deal size look like? And then what would their next immediate steps be just based on how you rolled yours out and what you would either do the same or change next time around.

Brett Plotzker: (14:34)
I don't know how to answer the question, what the ACV would be, but I think there's this gradient between what the risk reward is on somebody and somebody's behalf. So if you think about, if you have a product that costs $2 a month and you're a consumer and you recommend it to a friend and you're like, yeah, sure, I'll try it for two bucks a month, not a big deal, but it's $500 a month and they get locked into a year deal and it's an individual they're going to be like, what the hell? Why would you tell me that product it's sucked? So you have to be very careful of that. Um, the risk of, you know, recommending a product that might not fit somebody's needs. Um, that's just one thing to think about. Um, you know, I think you gotta be, especially in the early days when the product is not, it is going to have some problems. I think being open and honest about that with people and saying, Hey, we're a startup like this. Sometimes it's good. Sometimes it's bad, but like really owning up to your mistakes can also be very powerful. I'm trying to think of how to answer your question at all at this point.

Brett Plotzker: (15:42)
You know, I think, I think there's, I'm just staying in council contact with people and being unafraid to ask for referrals and making it really easy for people to give referrals to their network. I think that's key. Uh, but that's not reinventing the wheel.

Elias Rubel: (16:00)
Sure. I mean sometimes the most impactful things are the fundamentals. Like it's easy to lose sight of those when you're doing, doing a million other things. So in our last couple of minutes, I'd love to go to a place I don't normally go, which we spoke about earlier, um, which is like, you're, you're onto your next thing or figuring out what that is. And I think, um, most founders, at least the founders who have not exited or, or, or done something that was successful and then had to go through the process of figuring out what's next. Probably don't assume that that can be a really like hard process and take a lot of time. And certainly when I sold my first company at like, that was brutal for me, I, I rode a motorcycle for a year trying to figure myself out. And like, it was probably a whole nother year after that, that I even had the energy to start something again. So I'm curious where you are in that process and what that, what that's like for you.

Brett Plotzker: (16:58)
Yeah, I'd say it's more difficult than I expected it to be. Um, I think when you go in and you haven't had any type of real success, you're always a little bit starry-eyed and, and that's why I think you see the biggest success stories and in tech seemed to be first time founders who just got it right the first time. Um, because you just know too many places where it can fail and sometimes talk yourself out of going to certain spaces. Cause you know, how difficult it's going to be. Um, I've said no to a lot at this point, just because I know that, you know, it's going to take five to 10 years to build something meaningful and you know, it's going to be, there's going to be these hiccups that you never foresaw. So you want to make sure that one you're doing business with people that you want to do business with.

Brett Plotzker: (17:48)
Um, and that you're picking projects that, you know, you can stay motivated about through and through. So on retrospection of leaving the business, I started the business wanting to do something a little bit that was touching the consumer a little bit more. And as it started to go deeper and deeper it's that it stopped touching the consumer and started being really just about doctors making more money, which is an important thing, but it stopped revving me up honestly, throughout the day. And so I think I want to make sure that whatever I do doesn't necessarily need to be the thing that I'm most passionate about in the world, but it has to be something that I'm not going to, that I'm going to want to wake up for every single day. Um, and you know, it's, it's hard because part of what, um, you know, you can go to you considering going to the other side of the table a little bit sometimes, but, um, there's, there's a lot of, there's a lot of fun in that too. So I think it's, you know, long winded way of saying, um, I think I know what I'm going to do, but still not exactly sure. And it's a, it's a difficult process.

Elias Rubel: (19:03)
Totally fair. Totally fair. Um, so as we wrap, I always love to ask the question, you know, certainly to get to the point in your career that you have gotten yourself to, um, takes a lot of help from a lot of smart, generous people. And, um, I'm curious who has either been, whether it's a mentor or just someone in the industry that might be a peer that you look up to and think are doing really great work. Um, if there are any folks you'd want to shout out to who

Brett Plotzker: (19:30)
Then influential. So there's a, there's a few there's, um, an early advisor, a guy named Dan Kehlani who really took a leap early on. He's building something really cool in a company called friended right now, which is helping with the loneliness pandemic. Um, I love him. I trust him. He's just phenomenal. Um, there's another guy named Harry Sundaram and Harry's Harry. He founded a pretty large company, which recently had a huge exit. Um, he took a chance on us and it's a funny story for another day, um, but has become a big, you know, friend and mentor. Um, and then there's somebody who's much younger than me, but has been somebody I've trusted is as well in a wise, beyond their years, a guy named Andy Bromberg, who I think he's a president of pointless right now, but I trust his judgment, um, sorta like a grandpa, which is strange. Um, but yeah, I'm sure there's a bunch of other people that I've left out and it always sounds stupid not to think of them on the spot, but there's a, like, this has been a thousand people helping and I'm sure there'll be another thousand that I'll need help. And I hope

Speaker 6: (20:48)
There's other people who rely on me for the same who ask me for help because it's more fun returning the favor than it is getting the favor. Definitely. Well, Brett, I'm very excited to keep an eye and see, uh, see what you're up to next, what the, what the next adventure looks like. So thank you so much for taking the time to be on the show. Appreciate it.