Demetri Karagas is the cofounder and CEO of Thirty Madison which offers direct-to-consumer healthcare and wellness products. The company has raised over $70 million from top tier investors which include First Round Capital, Greycroft, Polaris Partners, and Maveron to name a few.
In this episode you will learn:
- Why it’s an advantage to come into an industry as the outsiders
- How Thirty Madison works
- Demetri’s top advice for other entrepreneurs
For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash.
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About Demetri Karagas:
Demetri Karagas is the cofounder of Thirty Madison which runs three healthcare brands that make it easier to manage chronic conditions.
Prior to this, Demetri Karagas worked at Google as a result of the acquisition of a startup he was working at which coincidentally acquired as well his previous venture.
Demetri Karagas graduated from NYU with a degree in Finance and History.
Connect with Demetri Karagas:
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FULL TRANSCRIPTION OF THE INTERVIEW:
Alejandro: Alrighty. Hello everyone, and welcome to the DealMakers show. With today’s entrepreneur and guest, Demetri Karagas, definitely we’re going to be learning quite a bit of jumping from industry to industry. We’ve seen people like that, like Elon Musk doing the knowledge transfer, where they are able to apply certain concepts that they learn in one area and then apply it to the next, and it definitely gives you an edge. So without further ado, I’d like to welcome our guest today, Demetri Karagas. Welcome to the show.
Demetri Karagas: Absolutely. Thank you for having me. I’m looking forward to chatting.
Alejandro: So born in Texas. How was life growing up there?
Demetri Karagas: It was very different than, I guess, my current life in New York City. Although interestingly enough, we’re all living through quite a year in 2020, so I’m back in Texas right now. But it was good. I grew up in Corpus Christi, Texas, a smaller town in South Texas, and lived there my whole life until I went to school in New York City. I had only been to New York for three days before deciding to go to college there. It was a great place to grow up.
Alejandro: Anyone in the family, Demetri, that was in building businesses, or the entrepreneurial thing, or would you develop that later? How did that happen?
Demetri Karagas: Even from an early age, like when I was in high school, I would buy and sell things here and there. I actually created a surf company for a while when I was in high school. I did that. My father is a physician, so I knew pretty early that I probably wasn’t going to become a doctor due to I don’t like blood and things like that. But interestingly enough, I’ve ended up in the healthcare space myself. So, I’m not a doctor, but in some ways, I’m following in those footsteps.
Alejandro: In your case, you definitely followed the path, and that path took you to New York City, and you studied there, finance and history at NYU. Why combine those two?
Demetri Karagas: You know, it’s interesting. I went to NYU because I had seen that Stern was a great business school. Coming from South Texas, I was not familiar with things like investment banking and stuff like that. But when I got to NYU, I learned that if you go to NYU Stern, you major in finance. So I said, “Okay. That’s what I’m going to do.” While that was interesting, I found that things that I also enjoyed and being able to see and do some of the other things while being at a college like NYU where it is such a broad spectrum of things. I ended up taking a lot of different classes. What I ended up turning it into, like a second concentration, was history. I think you can learn a lot from the past, so I decided that would be a good balance to the finance work that I did at Stern.
Alejandro: And in your case, it took no time. You saw a little bit of corporate America; you did a little bit of the 9:00 to 5:00, but then decided that perhaps there was something else for you. Tell us about that process.
Demetri Karagas: Yeah. It was interesting. Even while I had – Steve, my co-founder, and I like to refer to the period of having real jobs, we were actually already moonlighting on our first company. I think we started doing that toward the tail-end of our time at school. We started thinking about ideas and started playing around with things. Then, when we started the first company, coming out of school, we had jobs and a way we needed to fund it. We used our salaries to do that for a while. What caused us to take the leap was – this was years ago, and accelerators and stuff like that were just getting started, but we were actually in the very first class of an accelerator called The Entrepreneurs Roundtable Accelerator in New York City. When we got in there, part of the condition was like, “Hey, guys. You’ve got to do this full-time.” So we left our real jobs, so to speak, and dove right in.
Alejandro: In this case, what was that process of diving right in because you were used to corporate America, the 9:00 to 5:00. You turn the lights off, you go sleep at night, and everything is good. In this case, you turn the lights, and everything is coming back with you. So was it a tough journey – first, to make that leap, and then understanding what the product or the service would look like?
Demetri Karagas: Lucky, for us, I guess you could say, was that since we had been kind of moonlighting on the company anyway, we knew the work that was going to be involved. But look; we were young. We didn’t have a lot of experience. We made a lot of those mistakes that people often make early on, but we learned a lot, and there’s no way to learn more quickly than building a company. Right? The education that you get there is just immense in terms of, you have to learn quickly. You have to figure out how to get to product/market fit, how to build a team, how to get customers, and all these things, and it’s never straightforward or never a straight line and always up and to the right, despite what you may see in pitch decks. But it’s a great experience, and we learned a lot very quickly. I would say, probably in that first year after going full-on, I think I probably learned more than in my entire time at Stern. Nothing against my time at Stern. It was a great education, but it’s nothing like building a company.
Alejandro: Absolutely. In this case, you guys went at it, started the company, which at the time was called Sitesimon. That evolved into a pivot with a rebrand that was Get Maid. So, can you walk us through that process of putting it on the market, then understanding that maybe you had to give it a different approach, and then what led into a pivot that ended up building the company that you guys ended up going with?
Demetri Karagas: I would say pivot is a very kind word for what we did when we moved from Sitesimon to Get Maid. To be honest, I think the idea of Sitesimon was a social-based content recommendation system. And quite frankly, it wasn’t the right time, and we weren’t the right team to do that. We took a hard look at it, and we went back. We had raised some funding; we still had cash in the bank; we had runway, and we said, “How can we actually do something where we are the right team. We can have an advantage going in here and execute and build an experience that customers are going to love. We went through a series of exercised there, and that’s where the idea of Get Maid came about, which was an on-demand home cleaning service that we launched in New York City. We presented it to our investors and the team and got people on board, and we said, “Okay. How fast can we get an MVP out there?” We were able to do it, and it was remarkable, really, that once we had aligned on a concept that we were uniquely suited to execute on, the progress that we could make in a very short amount of time was extraordinary. I think it goes to show how important it is that you find when you’re working on something that it’s an idea. Not only is it an idea, but are you the right person to work on it? I think when I take away one of the most valuable lessons from our initial endeavor with Sitesimon is that we weren’t. But we went through that; we learned; we had the realization as we went through that by focusing on something – we’re both operationally-minded, kind of product-experience minded, and we were able to build something that was unique in the marketplace and was able to grow quite quickly, despite the fact that we weren’t spending a lot on marketing. We weren’t able to do that, but it grew by word of mouth because we delivered an amazing experience.
Alejandro: How do you know that or come to terms with the fact that you may not be the one to execute?
Demetri Karagas: Well, when you finally realize that, it can be painful at first, but there’s a realization, and you understand that “Look. This isn’t working.” Then we took that, and we put our energy into figuring out something that would work. Then that’s when we were able to get really excited and move toward it. But I think it’s something where, generally, when you’re building a company, you have to be honest with yourself. You have to think about what’s working, what’s not working, and how can we improve? Sometimes, the answer is, what we’re working on is not the right thing. I think as I was saying, it was amazing to think about, we had spent a long time working toward one thing, but then when we switched, the amount of progress we were able to make in six weeks – it took us six weeks when we decided to do it. We said, “We want to launch something in six weeks, the initial beta. We were able to do that, and then it was off to the races from there. It takes some time to come to terms with it, but it’s about where you put your energy thereafter.
Alejandro: What ended up being the business model of Get Maid?
Demetri Karagas: Get Maid was launched back. It was right in the very early days of companies like Uber, where there was this concept of on-demand. So we actually created an on-demand home cleaning service, where it was a more premium-based service, where you didn’t have to schedule in advance or anything like that. You could go onto your phone, hit a button, and someone would be at your house within two hours to do a clean. We did that in New York City. It was built for that kind of dense urban area. You would do that. You would pay a fixed rate by the hour, so it was very simple, straightforward pricing, a simple, straightforward product experience. We tried to take something that previously was a confusing experience of trying to find places to get a home cleaner or go through a series of different sites, and stuff like that, and call, and do things by phone, where we made it very easy to just do from your phone.
Alejandro: In this case, did you guys raise any money, or what was the process of capitalizing the business?
Demetri Karagas: We had gone to an accelerator, and we had raised an angel round at that time. Then the rest of it was funded from that. Then we built a business that had real revenue from day one, and we were able to continue reinvesting that into the business to keep growing it.
Alejandro: What ended up being the outcome, because there was an acquisition that happened?
Demetri Karagas: Yeah, that’s right. We were at the point where we were starting to reach a pretty good scale in New York City, and we had that decision point of whether we raised outside capital and continue scaling it. Or we had met a couple of other companies in the space that had recently raised large amounts of capital, and we decided that the path that would enable us to continue executing on our vision the most was to join a company called Homejoy, which was a larger company based out of San Francisco in this space. We ended up selling the company and joining the Homejoy team.
Alejandro: What was that process for you because here, at this point, you have full visibility into what the full cycle of building, financing, scaling, and exiting a business looks like. I think that when you get that level of access, that exposure, and that visibility, it’s like everything is out there. Now, you know how it’s done. How was that for you?
Demetri Karagas: Yeah, it was interesting. It was, obviously, our first time thinking about that sort of deal and that structure, and the fact that we would be selling the company, and then no longer running the company, but working as part of a larger organization. So it was something to go through those stages, and then think about how – what excited us about Homejoy was, we believed that we had this exceptional, amazing experience, both for the providers, as well for the customers. Homejoy had scale, and we thought we could bring a lot of what we did from the experience side to that business, but just do it at a larger scale. We went through that entire cycle in the grand scheme of things relatively quickly, and then we were able to focus on scale, which then, as we went beyond that even further. It was an important part of our growth as operators.
Alejandro: This allowed you guys to be part of Google because Homejoy ended up getting acquired by Google, and then in Google, you were for a couple of years. I’m sure that now you were exposed to the startup, you were exposed to the hypergrowth with Homejoy, and now, you were exposed to one of the biggest giants in the tech space. So what did you get from the time at Google?
Demetri Karagas: Yeah. It’s a great question. I think it was a pretty unique experience to see. At the end of the day, we were solving the same consumer problem of helping home services make that process easier, and we did, like you said, from our own startup, a hypergrowth company like Homejoy, and then the behemoth of Google. It’s interesting how there are certain things about each of those stages that are advantageous, and there are certain things that are not. I think, at Google, what’s exceptional is that the scale and the resources that are at the disposal of the teams allow you to have impact that can be extraordinary, but at the same time because you are a part of a much larger organization, there are certain things that can only move so quickly. We were working on the search page, which – I’m not sure for certain, but I imagine it’s probably one of the most profitable web pages ever created. So there are certain things where types of experimentation that you should not do on a page like that. So, there are eliminating factors there. I think another thing that was valuable was seeing how large organizations work and how there are certain things that sometimes we think of, in the startup world, as process and things that can slow down and make you less agile. And there are certain cases where that’s true in large organizations, but there’s also a reason why a lot of times large organizations can be successful because sometimes process can help when you have larger teams to make sure information is being shared effectively and make sure people can understand prioritization. I was able to learn quite a bit on those topics during my time at Google.
Alejandro: And this was the segue to your latest baby, to Thirty Madison. It’s interesting because here you are – they call it like the Harvard. It’s tough to get into Harvard in terms of becoming an employee in Google, and here you are at one of the best places to be working, to get all the knowledge, with all the good people, super-smart folks working there. Why and at what point do you decide, “It’s time for me to go at it again?”
Demetri Karagas: Google is an amazing place, but I think for me – it was probably about a week in where I knew that I was going to enjoy my time there; it was going to be really interesting; I would learn a lot, but I wouldn’t be there forever. I knew I wanted to get out and build something again. Despite all the amazing things at Google, it is a massive corporation. It’s not something where an individual is going to have the level of impact that you would just at any startup. That was something that we started thinking about, but had a lot of work to do there and had helped to launch an amazing product at Google. But we started thinking about what could potentially come next once we had completed our time there. There were a lot of ideas that Steve and I had because we knew we wanted to build something together again, none of which were what became Thirty Madison, and many of which were not even in healthcare. But what ended up happening, just like we had seen in the previous companies we had started that came out of a personal experience and an understanding of a consumer need. It started with realizing that the experience for getting treatment for hair loss was not a great experience for people today. What happened was that Steve started losing his hair and went through this process of seeing snake oil products, going down the Google rabbit hole of researching things and not knowing what it could be. He delayed it until he got really fortunate that a family friend was one of the world-leading experts in hair loss and restoration at NYU. While, obviously, that’s pretty much a lot of overkill for a guy in his late 20s losing his hair, it was an exceptional experience to go to someone who could answer any question, could set the expectations, could tell you how to think about things, and what you should be looking at over the coming months as you started looking to treat it, and left feeling really great. I think as we started talking, we realized that the vast majority of people are never going to have that sort of experience because there are simply not enough specialists like that doctor that could provide that best-in-class world-class experience. Obviously, we also saw that that’s not something that was an issue in hair loss. It was a more systemic problem in healthcare. When you think about product conditions and you think about specialized care, there’s a shortage of specialists in this country, and most people don’t ever have that opportunity. If you don’t live in a major city, or even if you do, sometimes the wait times can be months to see a specialist. We figured that there had to be a better way. That’s when we started looking into it. As we went deeper and deeper, we started understanding that what we needed to build was this ability to create these experiences where end-to-end, we could help someone manage a particular chronic condition. That’s what got us really excited. We decided this is what we wanted to work on, and this was what we wanted to – we left Google in March of 2017 to start Thirty Madison.
Alejandro: When you’re getting into a new industry, there’s a steep learning curve. In healthcare, there are a lot of regulatory hurdles around it, so was it a tough and steep learning curve for you guys to get into a completely new and space that you hadn’t experience before as operators?
Demetri Karagas: It was, and there was a lot that we had to learn early on, and we had to learn quickly. It was one of those things where we emersed ourselves in it and tried to meet with as many people that were experts in the space. We met with physicians; we met with people in the pharmaceutical space; we met with regulatory folks; we met with lawyers; we met with people to understand. Early on, to become experts, we got textbooks in things like hair loss and other medical bills. We read the textbooks, and we tried to become experts in the field, but also realized and recognized that there was value to us being outsiders and not knowing how things were done before because the system is broken in a lot of ways. I think bringing this perspective of saying – not trying to just say, “Let’s improve how it works today, but let’s reimagine it and let’s create the way these chronic conditions should be treated to drive a superior outcome and do it as cost-effectively as possible in a way that can be – we like to use the word that we create enjoyable healthcare experiences. I don’t think enjoyable is a word that’s hardly ever associated with healthcare, so it’s that combination of becoming an expert on the things that we need to understand but also bringing that outside perspective that I think has enabled us to create the unique experiences that we have at Thirty Madison.
Alejandro: And here, you’ve actually created – obviously, you have the company, Thirty Madison, but it’s really a platform where there are different business units and units’ teams. So how does that work? Because it’s not the typical thing that you would think of when it comes to a startup.
Demetri Karagas: That’s right. I think it is a fairly unique structure. What we saw is that when we look at these chronic conditions, what we needed to do is create an experience that’s end-to-end. We have a specialist-level telemedicine; we have personalized treatment delivery; we have ongoing condition management. We wrap those in a brand that is designed to be relatable to the person experiencing a particular condition. We saw that the way that we could provide the best experience, the way that we could drive the most superior outcomes was by focusing on a single condition at a time. That was where the idea of these unique business units – we have [22:20] that focuses on hair loss; we have [22:22] that focuses on migraines, and we have [22:24] that focuses on GI issues. You know, what’s the right structure. But behind that, and what Thirty Madison has built, is this platform that enables the delivery of this care model. It’s this condition agnostic infrastructure that underpins the different businesses that we launch, and it provides the core experience, whereas our business units are able to focus on – again like I said, we see ourselves as the specialists, so we’re able to focus on the nuance of the condition and the building of the brand and deliver that best-in-class experience. It is certainly a unique structure. Something about startups is you always have to be looking at your structure, and you also have to be thinking about it when you’re growing rapidly. Sometimes, a structure that you may have at one point, six months later, doesn’t work anymore, and that’s okay. I think it’s a positive thing, actually, that if you look at that, and you evolve. What we found is that this structure of having focus teams that are on the business are what allow us to deliver as amazing an experience as we can to our customers, and then we also continue to build up the platform capabilities that let all of our businesses benefit from scale, benefit from best practices, and benefit from new capabilities that we’re able to invest in.
Alejandro: How do you come up with the ultimate products that you’re going to be launching?
Demetri Karagas: It goes back to the original condition we looked at in hair loss. We look at the market, and we try to look at where the current experience of treating a condition is just very self-optimal. If you think about healthcare today, there are often times where it’s certainly not enjoyable, and often it can even be dehumanizing. We look for conditions where we believe that when you apply our care model, we can make a difference. We can drive impact, and we can improve the way that people are able to treat these conditions. There’s no shortage of conditions that we want to go into, so it comes down to prioritizing. That’s where we look at certain things around market opportunities, certain things around potential partners that we can work with, certain things around net new capabilities that we want to build, and that’s how we build out a roadmap. We have these three businesses today. You’ll see us launch many more over the coming years. We hope that we can continue to drive change throughout the system and transform the way that people treat a lot of these conditions.
Alejandro: Ultimately, the way that you guys make money and the business model, what’s that, so that the people listening get it?
Demetri Karagas: As I said, in our care model, we have three parts: 1) specialist telemedicine, 2) ongoing condition management, and 3) personalized treatment delivery. It’s across those pieces that we monetize. So, when people come in, depending on the treatments that they may be taking, they pay some kind of form of monthly or quarterly subscription fee based on the treatment that they’re getting, and that’s what we’re able to monetize. So, depending on the condition, there are different points across the care model that we’re able to monetize, but we have the goal of delivering a superior outcome and doing it as cost-effectively as possible for the patient. That’s where we create value that we’re then able to monetize.
Alejandro: In terms of capitalizing the business, obviously here, you guys have raised quite a bit. How much capital have you guys raised to date?
Demetri Karagas: We’ve raised about 70 million dollars to date through a couple of rounds of funding.
Alejandro: Why did you decide to choose the investors that you end up choosing? Because this is your second rodeo. You’ve been in this journey before, so you probably knew the fact that it’s not about the money; it’s about who is giving you the money. So why did you think that those people that you chose were the right ones?
Demetri Karagas: It’s a great question, and it’s so important as you think about bringing people on board that will be your partners as you build the business. I think we’ve been fortunate to have an amazing group of backers throughout the rounds, from our first round in our early round to Maveron and Northzone, who backed us in A, and then with Polaris, who led our Series B. What we’ve thought about is when we think about the company that we’re building – we’re a healthcare company. Thirty Madison is a healthcare company that is looking to transform the way that people treat chronic conditions. But we’re also a consumer company. We think we build consumer experiences; we build great brands, so we thought about people that – for investors that understood the vision that we were building and why it was important that while we’re building a healthcare company that brand and consumer experience are really important. People have understood that vision and also saw the potential of the business that there is a lot to do. We’re in the early days of what we want to accomplish, and people wanted to work with us on that for the long run. We’ve been extremely fortunate to have amazing investors that are aligned on the vision and excited to work with us to continue building it.
Alejandro: In this case, for you guys, in terms of size, so that people listening get an idea, is there anything that you can share in terms of numbers of employees or anything else?
Demetri Karagas: Like we said at the beginning of our conversation, 2020 has been an unusual year for so many reasons, and I think one thing though, despite how tragic COVID has been globally, I think if you want to look for some sort of silver lining, you can think about the fact that it is changing healthcare in a lot of ways. Millions of people, out of necessity, have experienced the power of things like telemedicine and remote care. That’s something that’s going to be great for patients in the long run, and it’s something that’s also been an accelerant to our business. We’ve more than doubled the size of our employee base since the start of the year. We’re a little over 100 employees right now. Our business has more than 3X where we’re around a nine-figure run rate today and growing rapidly. We expect 2021 will be continued growth both within our existing businesses as well as new ones that will launch.
Alejandro: Where do you see your segment; where do you see your space going as a whole. Obviously, you were pointing to COVID. Before, we never saw nurses and doctors on the covers of magazines and newspapers, and now on a day-to-day basis, we’re getting used to that. Where do you see things going?
Demetri Karagas: Obviously, if anything, again, like you said, the fact that healthcare providers, of which I am not one, and we work with many, are so exceptional in terms of the work that they do both during COVID, but also on the day-to-day in terms of providing amazing care to patients. I think something that we’re going to see is continued innovation and this paradigm shift that we have seen for some time, and we have been big believers that there is a paradigm shift, that there will be more remote care. It is a way that you can provide really high-quality care at scale, and I think if anything, COVID has accelerated that by what we believe as three to five years. This is a paradigm shift that was happening, and it’s only going to happen more. Obviously, at Thirty Madison, we believe we’re doing great work in this space, but more broadly, you’ll continue to see opportunities for people to get more access to this high-quality care, and that hopefully will drive positive health outcomes while helping to control cost in the healthcare space more broadly.
Alejandro: One of the questions that I typically ask the guests that come on the show is if you had the opportunity to go back in time – here, you are on your second rodeo. You’ve seen the good, the bad, and the ugly of entrepreneurship. Obviously, building and scaling is not a straight line, so you’ve been exposed to it. I’m sure that there’s a ton of lessons learned along the way. If you had the opportunity to go back in the time machine and have a chat with your younger self, that younger self that was thinking about launching a business while doing the 9:00 to 5:00; if you had the opportunity to go to that moment and give yourself one piece of advice before launching a business, what would that be and why knowing what you know now, Demetri?
Demetri Karagas: That’s a really good question, and I think looking back, and as I was just saying and as you just said, it’s not a straight line. You’re going to make mistakes. Nothing is going to go perfectly, and certainly, nothing is going to go at all how you planned it. I can say that for certain, but that’s part of how you grow as an entrepreneur; that’s how you grow as an operator and as a leader. One thing I’ve realized over time is that things will go wrong. You will make mistakes, but it’s important about how you learn from that and how you continue to improve and continue to move forward because there can be things that sometimes in the moment seem like, “How can we possibly get past this?” Those will come up many, many times, and you’ll keep getting past them. What I would say to my younger self is that you’re not going to get everything right, but you use that as a learning experience, and you move forward, and it only makes you better as an entrepreneur and as a leader and as a founder each time you go through those experiences. Don’t sweat it so much; learn from it and make sure that you improve. Just keep moving forward and enjoy it.
Alejandro: I love it. Demetri, for the people that are listening, what is the best way for them to reach out and say hi?
Demetri Karagas: I’m always happy to chat with anyone that’s interested in starting a company in healthcare, telemedicine, entrepreneurship in general. My email is [email protected]. I look forward to chatting with anyone.
Alejandro: Amazing. Well, Demetri, thank you so much for being on the DealMakers show today.
Demetri Karagas: Absolutely. Thank you so much, as well.
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