Xconomist of the Week: Appature’s Kabir Shahani Eyes Culture as Company Expands
When it’s time for a scrappy tech startup with a bootstrapped culture to expand its footprint, the conventional thinking might go something like this: Hire young, hungry people who won’t blow through too much of your coin, and hold onto that staff until you absolutely have to take the plunge into grown-up salaries and benefits.
Seattle-based Appature didn’t go the conventional route. When it became clear that maintaining big accounts with drug and medical device clients required more hands-on staff attention, the medical-marketing startup decided to go for very experienced people.
“We believe that the right people for our business, for the long term, are going to be the ones that are coming to our company to build a business. Because we’re going to be in ‘building a business’ mode for a really long time,” CEO Kabir Shahani says. “And we’re the sort of people that are really never done—the same way software’s never done, building a great business is never done.”
That’s just one of the lessons for a growing business I was able to glean from a recent chat with Shahani at Appature’s downtown Seattle headquarters. The company is at one of those pivotal moments in its lifespan: After bootstrapping its way to profitability and taking its first outside financing in late 2009, Appature now has its first remote offices, is looking for more headquarters space in Seattle, and has seen its pipeline of deals swell to 10 times the size it was a year ago.
That’s a nice place to be if you’re an entrepreneur. But it’s also potentially perilous for a startup—how do you maintain the culture and values that the founders have put so much time into developing now that you’re a farther-flung, growing operation?
Shahani jumps up to the whiteboard to illustrate this task. Most companies, when you smooth out all the wrinkles, want to grow in a pretty straight upward line. But in reality, you often run into something that looks more like a series of stairs—and Shahani says Appature is in the middle of taking another one of those steps up right now.
“These [moments] are like getting your foot up off one stair and onto the other, and because you have more people and you have a lot more weight when you’re trying to do that, it’s a pain in the ass,” he says with a laugh. “It’s really exciting, and it’s super schizophrenic.”
To rewind a bit on the basics: Appature was founded in early 2007 by Shahani and technical chief Chris Hahn, who met while at the former social networking startup Blue Dot. The company sells cloud-based software services that help pharmaceutical and medical device companies market their products, both to doctors and to consumers, through targeted advertising.
On the physician side, that represents a major change in the way that drug and device marketing had been done for years. Think former cheerleaders making office visits, pens and prescription pads and samples and swag, speaking gigs, rounds of golf, and so on.
But with insurance reimbursement rates sliding, doctors are having to cram in more patients to make the same money—leaving very little time for sales calls.
“To the point where now, you’ve got a majority of physicians’ offices have limited their hours in terms of, ‘We’ll only see reps one day a week, or the first Tuesday of every month,’” Shahani says. “You’ve got 14 percent of physicians’ offices that have gone no-show—they literally have said, ‘We’ll never see a sales rep, ever.’”
The magnitude of that change for a broader industry means that, even though it’s been a small operation that drives efficiency through software, Appature eventually needed to have its own sales and accounts people on the ground in key areas, both to serve its existing clients and take on new business. Those relatively new remote offices are in New Jersey, Philadelphia, Chicago, San Diego, and the San Francisco Bay area, with no more than a couple of people in each spot—but there are plans to grow.
That’s where the experience factor comes into play: Shahani says Appature’s hires in the field offices have an average of 12-15 years experience in the industry.
“These are highly skilled, highly experienced folks that are sitting with customers at major pharma, major device brands,” he says, “helping them understand how technology can help them go through this business transformation in a very smooth way.”
As for holding that small-company culture together amid stair-step growth periods, Shahani says a lot of credit goes to a strong core team. Since Apple co-founder Steve Jobs’s death was fresh on everyone’s mind, Shahani recalled something Jobs told “60 Minutes” some years ago, when he said his model for business was The Beatles: “They were four guys who kept each other’s negative tendencies in check; they balanced each other,” Jobs said. “And the total was greater than the sum of the parts.”
At Appature, Shahani says, the core roles are filled out by product strategy director Matt Hallett and development VP Derek Slager, who joined co-founders Hahn and Shahani a few months after Appature got rolling.
“You’ve got four guys that, kind of at a foundational level, are able to work together, coach each other, and grow together,” he says. (Unfortunately, I didn’t ask which members of the team were John, Paul, George, and Ringo.)
Shahani also says Seattle’s entrepreneurial community gets a lot of credit for helping Appature navigate this phase, as does the company’s board, which includes Richard Fade of Ignition Partners and Tim Porter of Madrona Venture Group.
“Those guys have done such a phenomenal job of supporting us, and not being dictatorial about how we build the business,” Shahani says. “It truly is, ‘Here’s how we’ve seen this movie play out, and here’s where the happy endings were, and here’s where the not-so-happy endings were.’ And those are things that really help, those stories and perspectives really help guide us.”
For himself as an executive, Shahani says it’s also been important to make sure that he’s taking time to celebrate successes—and let the rest of the company celebrate too. The tenfold increase in sales bookings is a great example of that, he says.
“I mean, that’s insane. When you think about that, I should be drinking champagne right now, with my feet up on the desk, telling you how awesome everything is because we are at 10x the sales bookings for this year,” Shahani says with a laugh. “The reality is, I want to be at 100x. I want to be at 1,000x. You want to keep pushing forward. And so, the hard part when you are going through this growth is you want to be sure that you celebrate the success, and you enjoy the milestones.”
Those milestones mean that Appature is set for another growth spurt. The company is looking to have an additional 15 jobs ready to offer by the end of the first quarter, with “well over half” in Seattle, Shahani says. He also thinks the tenfold sales-pipeline increase could repeat itself next year, as well. And the company feels poised, he says, to make those changes with the strong footprint it has in place.
“These first 30 folks, these key pillars—it’s really important,” he says.