While Silicon Valley is often hailed as the holy grail for tech startups, my story proves there’s a vibrant world of entrepreneurial success thriving outside of the typical startup hubs. Building our Birmingham-based healthcare tech company, TheraNest, into a $1.25 billion exit wasn’t a walk in the park, but by overcoming the unique challenges of non-traditional ecosystems, we laid the groundwork for an incredible journey.
When I decided to embark on the journey of building a startup, I chose an unconventional path by staying in Birmingham, Alabama. A decision that raised eyebrows, especially among those who believed Silicon Valley was the only place you could succeed. I was met with skepticism and chances are you will too, but here’s how I overcame the common objections.
What I Heard
1. “It Takes Longer to Raise Money”:
One of the first pieces of advice I received was that building a company outside Silicon Valley would make fundraising an uphill battle. And they were right. Back then, 10 years ago, I found myself in Birmingham, a city not known for being a startup hotspot. It took me over 8 months to raise a mere $250,000. I was facing financial struggles on a personal and professional level, resorting to credit card debt and even dipping into my 401k, not an ideal situation for any entrepreneur. But I was committed to building something meaningful in the place I found myself, so I had to find a way to make it work.
2. “Decreases Odds on Exit”:
Another cautionary tale revolved around the diminished chances of a successful exit strategy when building a company outside Silicon Valley. Again, this wasn’t wrong. In 2013, exits in Birmingham were as rare as they come. While there were a handful of inspiring entrepreneurs who had found success, they were exceptions rather than the norm. The lack of knowledge density in building SaaS companies, coupled with a scarcity of talent and capital density, seemed like insurmountable challenges.
3. “Decreases Odds of Success”:
The most ominous warning was that building a startup outside Silicon Valley significantly decreases the odds of success. It was a stark reality check. Birmingham lacked the ecosystem that many considered vital for startup triumphs. The challenges of knowledge, talent, and capital density were glaring, making the uphill battle seem steeper.
But as I navigated the difficulties, I realized a fundamental truth – the core foundations for startup success are location agnostic. Success isn’t confined to a specific geographic area; it’s about knowing what you don’t know and being relentless in your pursuit of knowledge.
Here are the key pillars that powered our success despite those limitations: :
What We Did
A critical factor in our success was our l culture. What is culture? Culture is the output of what you consistently do and reward over time. It’s what you punish, what you incentivize, and the rituals you practice.
At TheraNest, we were committed to developing a learning culture, and this was key to our success. We curated knowledge and focused on building density of knowledge on the team, with multiple brains working towards success versus me being the smartest person in the room.
We rewarded knowledge: we had book stipends and learning stipends. We also shared knowledge. When I read a book, everybody read it. When somebody found a great book, everyone on the team read the book, and you shared what you learned. And it was pretty clear to everybody on the team that knowledge was very important to success for us.
The thing you get in places like Silicon Valley is know-how. But know-how also exists in books, it exists in podcasts, and all kinds of stuff. Many times leaders don’t want the team to know what they know because they want to be the smartest person in the room. That’s typically going to lead to disaster. I believe that the distance between where you are and where you want to be, many times, can be shortened by the right knowledge. So we were particular about knowledge sharing.
Balancing Growth Mindset and Discipline
We embraced a balanced approach to growth, combining a VC growth mindset with private equity discipline. What did that mean? In the early days, we did not grow at all costs. We needed to be disciplined because we didn’t have a lot of capital. We were pretty particular about experimenting until something worked. Then, we prioritized growth and poured gas on it. If we could not get it to work, we didn’t do it. For example, we didn’t do trade shows because we couldn’t get it to work, and we couldn’t hire the people that could make it work. There were many things like that, that we just opted out of in the early days. We were very growth-oriented, but we’re very disciplined in terms of how we executed.
Making quick decisions was vital for TheraNest’s success. We operated on the “Thinking, Fast and Slow” Type 1/Type 2 decisions framework and empowered our team to handle easily reversible decisions like customer service issues or minor product tweaks on their own. This meant we moved really quickly and pushed decisions as close to the customer as possible. Instead of waiting for my approval on every small decision, our customer service rep could swiftly offer a refund or resolve a query, leading to happy customers and quicker problem-solving. For bigger, “hard-to-reverse” decisions, like launching a new product, we took our time and gathered broad input. But for the day-to-day stuff, we trusted our team to make smart choices quickly, and it paid off. This allowed us to adapt and learn like a cheetah, constantly adjusting our approach based on real-time market feedback. Of course, this meant we also made mistakes quickly, but our pace meant we could embrace them as learning opportunities and pivot the course instantly. The key was, we didn’t let slow decision-making hold us back.
We weren’t afraid to innovate with our product, and it paid off. For example, we saw automation based on digital content as an opportunity. So we were one of the first to digitize and automate therapy notes and treatment plan documentation, long before today’s AI-assisted approach.
We were quick to bring new features like telehealth and therapist-patient chat to market even when they were still nascent concepts.
It was rare for a company at our stage to start thinking about company acquisition as a growth strategy but we were willing to take the risk and saw it as a strategic opportunity that would enable our hypergrowth. Our culture of disciplined growth and capital efficiency allowed us to leverage private equity strategically because we weren’t desperate for the money. Instead, we could take the risk of embarking on acquisitions with confidence.
By embracing calculated risks like these, we empowered our team, enabled hypergrowth, and brought innovation to our whole industry.
Team, People, and Systems
While everyone says “people are everything,” I, as CEO, know it’s more than just hiring superstars. It’s about building a team where everyone shines. We thought of ourselves as a family, but with a sports team mentality – we were a “sports family.”.. Just like winning teams need strong systems and a few MVPs, we focused on the highest-risk areas of the business, recruiting stellar players there, while nurturing a capable backup bench. Birmingham wasn’t exactly brimming with “A-players,” and we accepted that. The law of averages told us that no one company could hire all of the superstars. We invested in clever systems: precise ratios guiding decisions, transparent engineering metrics, and fair rewards. These systems turned average players into MVPs, proving that smart structures create champions.
But talent knows no borders. We challenged geography, even when remote work was less common than it is today. A global perspective helped us counter the limitations of our location in a capital efficient way.
Hiring champions for critical areas sets the bar high, influencing the entire team. And to keep everyone growing, we nurtured a learning culture. It was a beautiful symbiosis: great talent brought fresh perspectives, and the learning culture turned everyone into stars. This self-perpetuating cycle ensured we weren’t just building a team, we were forging champions.
They say the leader sets the pace, and I couldn’t agree more. But it’s not just about speed; it’s about compressing time. Belief is contagious, and I knew that setting audacious goals wouldn’t just light a fire under me, it would ignite the whole team. We weren’t here for mediocrity; we were raising the bar every single day.
But leadership isn’t a solo show. Ego, my own or anyone else’s, was the enemy. We vigorously avoided empire builders. We wanted more doers, less talkers. We fostered a culture of collaboration, where everyone felt empowered to contribute, to challenge, to grow. Ideas, not titles, drove decisions. Because at the end of the day, strategy is important, yes, but it’s static. Execution is the engine that makes it all happen. We obsessed over flawless execution, knowing that’s where true innovation and success emerged.
Imagine scaling a mountain. Strategy is the map, pointing the way. But it’s the relentless, focused climbing – the execution – that gets you to the summit. And in that relentless climb, the map itself evolves adapts to the terrain, and becomes even sharper. That’s the magic of execution – it takes your vision and makes it real, while simultaneously refining it, making it even better.
These weren’t just principles; they were the lifeblood of TheraNest. We weren’t just building a company; we were building a team of passionate climbers, scaling uncharted peaks together.
Forget “Silicon Valley or bust.” Our Birmingham-born story proves that building a thriving startup isn’t about location, but about executing on key principles. So to recap, what was our winning formula?
1. A Learning Culture Rooted in Customer Focus: We weren’t just learning machines; we were customer-obsessed. Every innovation and every decision started with understanding their needs and obsessing over their satisfaction. At the end of the day, it was the customer that mattered the most.
2. Capable People Empowered by Systems: Building a great team isn’t just about finding A-players; it’s about nurturing talent, investing in systems that elevate everyone, and creating a space where potential explodes. We challenged geographical limitations, embraced global talent, and rewarded execution over empty titles.
3. Calculated Risks and Prudent Investments: We weren’t risk-averse, but we didn’t make stupid gambles, either. We took calculated risks, like digitizing healthcare notes and pioneering telehealth, fueled by meticulous analysis and strategic decisions when necessary. And when it came to capital, we were laser-focused, using it to amplify our thriving organic growth.
4. Thoughtful Leadership and Relentless Execution: My role wasn’t to micromanage; it was to set audacious goals, ignite passion, and empower action. Although very important, we didn’t worship strategy over execution. Our goal was the relentless pursuit of excellence in execution.
These weren’t Silicon Valley secrets; they were universal truths. We built TheraNest and Therapy Brands in Birmingham, but this blueprint for success can be replicated anywhere, by anyone with the hunger, the heart, and the audacity to chase their dreams.
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