Blake Marggraff (CEO at CareSignal)
A pre-COVID-19, in-person(!) conversation with the CEO of a leading remote patient monitoring and engagement platform
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Interview Guest: Blake Marggraff
Role: CEO at CareSignal (previously Epharmix)
What is CareSignal?: “CareSignal Deviceless Remote Patient Monitoring keeps the toughest, most expensive 20% of patients and members in touch with their care teams at risk-bearing healthcare organizations. Over two dozen condition-specific programs, covering diseases from diabetes and heart failure to substance use and postpartum depression, deliver evidence-based improvements and operational, clinical, and financial returns.”
Final Note: Blake, Roshan Chandna (Co-founder at The Takeoff), and Michael Spiro (Founder at The Takeoff) met in-person to record this interview prior to COVID-19. Since the interview, CareSignal went through a name change (from Epharmix to CareSignal) and has experienced significant growth. Keep the pre-COVID nature of the conversation in mind while reading.
Hope you enjoy!
Our favorite quotes from the interview:
On what CareSignal does: “Our technology helps keep medically underserved patients and patients with chronic conditions in touch with their care / case management teams so that the case management teams can use real-time insight to better manage those patients.”
On founding a company while in school: “While I was a student, I started a company called Betabox out of connections that I made through WashU's University Innovation Fellows chapter. I met some folks at one of the conferences at Stanford, we hit it off, and pretty quickly we had a revenue-generating, in fact, profitable small business running, which we later scaled up.”
On culture, team, and management: “I also credit our team's focus on all the boring-sounding stuff, like SMART goals, basic team management, and attention to communication dynamics.”
On St. Louis: “St. Louis has the three things that I think most startups need, especially startups in the health tech space: capital, talent, and customers.”
On finding the right investors: “Sometimes just money is great, but in complex industries and for young teams that have less experience, smart, savvy, even connected money can be much cheaper…If you're going to get the most bang for your buck, look for investors that give you more than just money.”
On culture: “If you don't have a culture of openness and transparency where folks always trust that everyone else on the team is acting with your best interest, then it is like trying to drag a car sideways instead of just rolling.”
On goal-setting: “Something that I think young teams don't understand is that goal-setting should always be a high friction negotiation. “
“Essentially, run your life like a series of ongoing, overlapping experiments.”
“Bottom line: work with people who don't have a victim mindset, sleep, exercise as much as you can, and expect to make sacrifices.”
On mental models: “During the interview process for CareSignal, we ask folks what mental models they use most frequently. Most people don't really think about that on a regular basis.”
Michael: What exactly is CareSignal? How did you come to start the company?
Blake: CareSignal is a digital health startup that is now four years old. We focus on creating technology for the healthcare sector, specifically for providers and payers for health systems and insurance companies. Our technology helps keep medically underserved patients and patients with chronic conditions in touch with their care / case management teams so that the case management teams can use real-time insight to better manage those patients. That leads to two key outcomes. One is improved clinical outcomes for patients. The other is improved financial outcomes, or return on investment, for the providers or payers that are financially responsible for those populations.
Michael: Before starting CareSignal, did you know that you wanted to be a founder? Or did you first come up with this idea and think, maybe I should go ahead and start a business?
Blake: Not at all. I was always pretty confident that I wanted to go into medicine, at least as I was starting college. I think the pre-med curriculum at WashU (Washington University in St. Louis) is extremely thoughtful and really, really enjoyable. However, as I went through that process, my personal philosophy became, what’s the best way to have the greatest impact?
For me, it was helping people live better lives or longer lives. If you want to do that at any reasonable scale, technology is a given. That's where the first kernels for CareSignal arose.
Michael: I know that you are from the San Francisco Bay Area. How do you think that played a role in your interest in health tech and in starting a company?
Blake: I wasn't really that connected with the startup scene in the Bay Area when I grew up there. I didn't fully appreciate it until after college. But, I was really fortunate to have started forming a network through WashU programs that included the Bay Area. While I was a student, I started a company called Betabox out of connections that I made through WashU's University Innovation Fellows chapter. I met some folks at one of the conferences at Stanford, we hit it off, and pretty quickly we had a revenue-generating, in fact, profitable small business running, which we later scaled up.
Michael: Wow, awesome! On the topic of Betabox, what was it like actually running a business as an undergraduate student? How exactly did you manage running this cash flow positive business while also having to worry about academics?
Blake: I certainly wasn't the very best student. I had a rule that as long as I wasn't traveling for business, I would never miss a class. That said, I worked on the business pretty much every hour outside of classes and exams. I also credit our team's focus on all the boring-sounding stuff, like SMART goals, basic team management, and attention to communication dynamics. It was really the original Hewlett-Packard approach to culture, team, and management. We leaned heavily on those pillars of management and operations because the team was dispersed across the U.S. We learned as much as we could and tried to implement these learnings.
Michael: What exactly has the path looked like so far for CareSignal? What has the growth looked like, and how large is the team now? Also, something else I'm interested in is, why St. Louis for the headquarters?
Blake: Well, I’ll answer the second question first. St. Louis has the three things that I think most startups need, especially startups in the health tech space: capital, talent, and customers. The capital here is enough to get going and attract capital from other markets as well. The talent here is excellent. A combination of Launch Code, Washington University in St. Louis, other universities, and many large companies such as Boeing, BJC, Centene, and Express Scripts, provides a strong pool of talent. You have a lot of rapidly growing and / or Fortune 500 companies here in St. Louis.
Next, the story of CareSignal. The company was born out of a research project. My co-founders and I started a series of randomized controlled trials on technology that we hacked up in pretty short order. Once we were showing substantial preliminary clinical outcomes, we decided, let's go for it and start the business. I promised the team that if we could get solid outcomes, I could raise the money and hire the core five- or six-person group that we needed to get rolling. And, we got the outcomes. We’ve now published ten peer-reviewed articles about CareSignal technology and raised money from funds, both from investors here in St. Louis, such as BioGenerator, and from venture funds across the country.
Michael: I recently read your article discussing the importance of having value-add investors. How exactly do you find those truly value-adding investors for your company? How difficult is it to choose between different investors when you know, maybe one firm is willing to give you a higher valuation or has a bigger brand name, but you see another firm that you think can actually add more value to your business? How do you make the best decision in terms of which investor(s) to bring on board?
Blake: You have to know what you want and what you need. Every startup needs some amount of capital. That might just be capital from customers, if you're bootstrapping. More often than not, for a high growth company, at some point, it will be venture capital or something similar. Sometimes just money is great, but in complex industries and for young teams that have less experience, smart, savvy, even connected money can be much cheaper. If you give away one commensurate unit of equity for one unit of cash you get, that’s expensive. If you're going to get the most bang for your buck, look for investors that give you more than just money. Sure, money gets them involved, but then they bring to bear all of their experience in the industry, their connections, their access to additional capital, and things like that.
Michael: That’s a great insight. How exactly do you manage employee productivity at CareSignal? Do you use any products like Slack, Notion, or Airtable to help manage employee productivity and keep track of what you have to do?
Blake: Absolutely. We’ve tried a bunch of different stuff. Slack and Airtable are staples. ClickUp is the project management software that we've gravitated toward. We also, of course, use Google Drive. Then we have essentially like an internal wiki for knowledge management and skill management. We’re growing and adding and trying out new stuff all the time. A lot of it is culture, too.
If you don't have a culture of openness and transparency where folks always trust that everyone else on the team is acting with your best interest, then it is like trying to drag a car sideways instead of just rolling. It's a completely different kind of friction that is higher by orders of magnitude. So, we pay close attention to that.
On the other side of management is making sure that at any given time, everyone understands what the next couple of key milestones are, what the quantitative goals are, and how they tie together. Milestones can be multi-quarter, goals are generally quarterly or every two quarters. Something that I think young teams don't understand is that goal-setting should always be a high friction negotiation.
If The Takeoff says, "Hey, we want to acquire this many users.” Michael, let’s say you say that. Then, Roshan might say, "Well, I need $X to do so." Michael would respond by saying, "Well, we don't have that many dollars allocated for this. What can you do for this amount of dollars and what else can we contribute?" Then you land at some combination of resources and goals where you're like, “Here we go. I think we can do this.” Then, you start executing.
I think young teams also tend to suffer from fundamental misattribution bias, where successes are all because of you and failures are all because of the rest of the world. This is very dangerous because you will never learn from your mistakes or successes. In that vein, when we're setting a goal, it has to be more than specific, measurable, achievable, realistic, and timely. It has to be more than integrated with the larger vision and path toward execution. We also break down the elements that are in our control and out of our control, because the ones in your control are usually around 10X easier. A goal that seems really trivial but has a lot of exogenous dependencies can be one of the fatal goals of a quarter.
Michael: Many of our followers are college students, so I’d love to transition over to a few questions geared toward them. Given that you started and ran a company while still in school, do you have any advice for students who may have an idea or project they want to pursue, but aren't completely comfortable doing so while still in college because of academics?
Blake: Yes. First, I'd say, if I can speak directly to WashU students, it's very unlikely that you will pick a bad path, especially if you were actively and intentionally pursuing something. I think that's really important. If you're sitting around waiting for stuff to come, or if you're doing what the millennial and Gen Z generations often do and "planting seeds," I think that's complete BS. I think you should be executing very intentionally towards something, but that you should also be cognizant of whether or not that execution is working as you expected. Essentially, run your life like a series of ongoing, overlapping experiments.
I have a running challenge for any WashU student who is interested, which is: Introduce yourself to me and ask me to get coffee or a bite to eat. The coffee is on me. Then, every week for 52 weeks, tell me what your goal is for the next week. The next week, tell me how you performed on that goal and then what the goal is for the next week. It has to be a SMART goal, but it can be something like: talk with three people about my idea and gather feedback on whether they'd pay $5 for it. That's a goal. Then the next week, talk to two people... Miss the goal or hit it, I don't care. You just have to report on it. I take a lot of time every week to provide feedback, and I try to put in as much time as they did in crafting those goals. I take it very seriously because when I was a student, I would have benefitted a whole lot from something like that. Nobody has ever gotten further than 26 weeks, but I have had some really productive emails at the end where they're like: I realized because of this reason, this reason, and that reason that this doesn't make sense to pursue. I learned this and that, and I feel like I'm better prepared to pursue the next thing, which is this. That's awesome. That's a successful failure. But, a lot of college businesses never make it that far because they don't treat it like an experiment. Long answer to a short question.
Michael: I hope some of our subscribers take advantage of that challenge. Something I'm very focused on is how founders manage their physical and mental health while operating a business. I’d love to learn a bit more about how you manage these things while running CareSignal.
Blake: Fantastic question. As a founder, you're making sacrifices, right? Hopefully, you're making the right sacrifices. It’s like a cost-benefit thing, because you're passionate about this, this motivates you, and it also aligns with your own philosophy and vision for yourself and for the world. Short version: Sleep enough, as often as you can, and exercise a lot. Also, surround yourself with a team that doesn't have a victim mindset. Do you know what I mean by “victim mindset”?
There are plenty of people who are always going to complain about stuff and view themselves as having a harder time than everyone else. That's a recipe for disaster at a startup, especially for the early team. A recipe for disaster!
You're looking for people that you know will work hard and fight through adversity. When we were getting the company started, my co-founder and I went on a hike that was supposed to be a 13-mile hike, but accidentally turned into a 26-mile hike. We had to jog to the end because the sun was going down, and we were about to get locked into the parking lot in the park. Not a single complaint. It was freezing, our boots were soaked because we were stepping in deep puddles, and there wasn’t a single complaint. Bottom line: work with people who don't have a victim mindset, sleep, exercise as much as you can, and expect to make sacrifices.
Michael: Going off of what you said about early employees and talent, how difficult was it for you to make early hires?
Blake: Really difficult. Hiring is really hard. Generally, we’ve been really lucky on our team, but we're still learning a whole lot. I would say, if I could tell myself one thing, it's to lean even more heavily on mentors and investors for feedback on hiring. You tend to believe that you'll get lucky, but statistically speaking, some types of hires are really, really hard.
Michael: In terms of mentors, how important have mentors been to your early success, especially as such a young founder and CEO?
Blake: Mentors have been important. I would say that there's another kind of mentor that's almost an accidental mentor. If you're really lucky, some of your early customers will be accidental mentors and will take a shine to you and your product and really help coach you. When it comes to picking a mentor, individuals’ CVs and background are good places to start, but my leading indicator is someone who, when you meet with them, makes you want to tell them about stuff you've learned recently. I actually want to write up a blog post about this.
Do you know what I mean? Do you know how when you sit down with some friends you just find yourself spewing cool stuff that you've learned recently? With others, you may have great conversation and learn from them, but it's not quite the same vibe? Seek out people who essentially bring out the best in you from an intellectual perspective. They're great mentors.
Roshan: One last question, what did you study in undergrad?
Blake: Biology on a pre-med track. I also took a number of writing courses, which were some of the most valuable and memorable courses I took, and some of the only courses from which I still reference the textbooks.
Michael: Did you take any undergraduate business courses?
Blake: I took the intro course and maybe a few others. I found the mental models from science courses to be really valuable. During the interview process for CareSignal, we ask folks what mental models they use most frequently. Most people don't really think about that on a regular basis. Most people aren't weird enough to think about how they think. I'll give some examples.
The scientific method is the easiest, right? Hypothesis, experiment, results, analysis, repeat. Very broad. Another mental model is local versus total maxima or minima. In asking these questions, I'm curious to see if people can dig in to understand how or why they think about certain things in certain ways.
Thanks for reading! We hope you learned a lot from Blake.
**Please note that our interviews may be edited for length, content, and clarity **
Moderators: Michael Spiro (Founder at The Takeoff. Junior at Washington University in St. Louis. Summer Analyst at JMI Equity.). Roshan Chandna (Co-founder at The Takeoff. Sophomore at Washington University in St. Louis. Incoming Summer Analyst at Octahedron Capital)