Ep 542 The 15X Multiple That Let Him Walk Away in 12 Months

**Colin Morgan** (0:07)
Hi there, and welcome back to another edition of Built to Sell Radio, the podcast designed to help you punch above your weight and a negotiation to sell your company. I'm the executive producer, Colin Morgan. Now, at some point, every founder has to answer a simple question.
Is it better to own a big slice of a small pie or a smaller slice of a bigger pie?
Simon Lorenz chose the bigger pie. He founded Klara, a patient communication platform for medical practices and raised roughly 32 million across six rounds of outside capital. The path was brutal. Every round came down to a single term sheet. Take it or leave it. Because an early valuation had set an equity story Simon spent years trying to grow into.
Then an unsolicited email arrived from the CEO of ModMed. Simon almost ignored it. What happened next turned into the sale at 15 times forward revenue, a founder-friendly structure, and a single clause in the contract that let Simon walk away with everything vested just 12 months after closing. Without further ado, here is Simon Lorenz. Enjoy.

**John Warrillow** (1:17)
Simon Lorenz, welcome to Built to Sell Radio.

**Simon Lorenz** (1:19)
Thank you, thank you for having me.

**John Warrillow** (1:22)
Tell me a little bit about Klara. What was the origin story here? You and Simon got together and tried to figure out what, what was the problem you were trying to solve?

**Simon Lorenz** (1:31)
Well, first, we launched and we founded in Germany, actually, so it's a little bit of a longer story. And at first, Simon and I, he came from, he was a founder already, and I came from medical experience and consulting, and just did my PhD in medical management or hospital management at the Technical University of Munich. And then we realized that the biggest lever in helping healthcare or moving healthcare forward was to put your bet on technology.
And then we analyzed the market and thought what is the biggest pain points, and the first product we actually built was a teledermatology D2C app called GoDerma. And that's how we launched. We launched this in Germany and then in other countries, and had a lot of learnings from that. And then we realized that Germany is not the right country.
I moved to the US. We then only continued operations in the US. Then once we were in the US, we then, and that's the short version that I'm giving you obviously here, then we realized that, or we saw that users were not using it to like as a D to C, direct the teledermatology application, but they wanted to use it for the existing patients, and not just for teledermatology, but to communicate with them just asynchronously. And that's then completely pivoted the product, and then built a patient communication platform that you could like for private practices and in clinics, it was something like an intercom or Zendesk, but obviously totally integrated into their EHRs and patient management systems, and also like on the workflows that a medical practice has. And yeah, and for the, and then a lot of automations, and then for the patient was just like a secure messaging application. It was obviously HIPAA compliant.

**John Warrillow** (3:57)
Okay, so in the old days, you know, if your doctor was even digital at all, he or she might email you the results of your, you know, scan or whatever. And that's obviously not very modern. You were solving for that.
Doctors and clinics wanted to communicate with their patients, but they wanted to do it in a more secure fashion, one that was connected to the rest of their patient records.

**Simon Lorenz** (4:25)
Yeah, that's right. I mean, like the biggest problem is, and still is, is the phone, because it's synchronous. We still have to use the phone a lot to communicate with doctors' offices, right? And we wanted to solve for that, and we successfully did that because our biggest KPI was that anything that you do over the phone, you can do via messaging. And then once we had it on message, then we could automate it because we integrated into their CRM system, if you want, or like, which is an EHR. And because we started as a direct to consumer brand in the beginning, we nailed the patient experience, right? So much that our, and that was the KPI, adoption rate of patients or the response rate of patients was at 85%.
So translate this into a value proposition is 85 You could avoid 85% of the cost and move them into messaging. And that's kind of was, you know, efficiency for the doctors, but also like more revenue, less cost, less hours wasted on playing phone tech.