$80 Million Lessons



00:00 Today on the show, I’m happy to have Kristian Marquez. He’s the CEO of FinStrat Management. They provide accounting, finance, and CFO reporting services. Previous to this, you were actually part of a multi-billion dollar IPO. Chad, thank you for having me on. Happy to share. By way of trade, my background is accounting and finance. For those of your listeners who are familiar with the space, next year will mark two decades as a CFA charter holder. So charter financial analyst charter holder. And back in 2004, I was hired as a financial analyst for a small consulting shop.
00:32 And our CEO was a go-getter. Needless to say, very sharp individual. Ivy League undergrad, Harvard Medical School, Johns Hopkins residency, but had his sights set on business. And about two years into the stint with the company, he recognized a significant opportunity in healthcare IT. Effectively, the way the government was reimbursing insurers who were providing Medicare Advantage insurance coverage to seniors changed.
01:05 That was coupled with, for most people know, Obamacare, changes to the way that health insurance is provided to Americans throughout the country. And so I, as a financial analyst, but working in a small company, was asked to put on product management, which I hadn’t done before. And so that started my career in healthcare IT, which culminated in the last two years of working with the company where I was tasked with taking advantage of effectively, they were calling rebates, but really Obamacare, which held premiums from insurers unless they were deemed a high-quality plant.
01:45 So we were already operating in space at the time. I’ve come to be known as somewhat of a subject matter expert in quality measurement and improvement, given my role as a general manager and VP over the group. But effectively, we built a business from zero to $80 million in under two years by combining a combination of predictive analytics and clinical interventions. So I had a team of about 120 people in the department, some of the most amazing, sharpest people I’ve had the privilege of working with.
02:12 But you can imagine going from debits and credits, financial statements, analysis to being asked to learn healthcare IT, but then to succeed to the degree that we did, it was just, it was a phenomenal experience. And there were so many great lessons along the way. What were some of those lessons? Number one, there’s tremendous value in a degree. And this is no particular order.
02:38 But I think my sense is that a lot of times we’ll perhaps undersell our own abilities to learn. So I was self-taught, rolled up my sleeves, put my head down, buried myself in the subject. And it’s not to say I figured everything out. I had the courage and the humility to ask people around me when I didn’t know the answer to something. So you really start to understand better who we are, if not in the pursuit of who we’d like to be.
03:08 Also learned that there is tremendous value in focusing on delivering great service. And that really, while money is something almost the majority of stakeholders are focused on, it generally is only a way to keep score. And so we invested a lot into the service. So I’ll give you a little in the weeds, but it’ll drive home the point. The government, CMS, was using a whole menu of quality measures to assess performance of health plans.
03:40 And the majority of the measures were clinical-based, but they were a handful that were operational-based. And we knew that if we were going to come to the market with a solution that we could genuinely sell to health insurance. And we worked with the gamut. We worked with small regional firms, Blues plans, some of the largest in the country, as well as national insurers like Aetna and United Healthcare. And so our client base was representative. We had about a fifth of all of the privately insured Medicare patients in the country enrolled in our Quality Improvement Plan.
04:12 And it also ran the gamut, Puerto Rico to Hawaii, and rural and metropolitan areas in between. But our firm wasn’t necessarily known for its operational measures. And so we had a decision to make. Are we going to focus on our core competencies, which are analytics, clinical interventions? Or are we really going to seek to solve our clients’ problems and make investments in staff who could bring healthcare operational expertise?
04:39 And so after a little debate, we elected to offer our clients a full solution. So we made investments in the staff. And from my perspective, it was the right decision. It enabled us to go not only during the sales process, to back up that we genuinely were covering the full gamut of the program. But we saw firsthand when we were going on site and working with our clients that we were genuinely positioning them to do well by their members. And so that was very strategic.
05:09 And you think that was a big result in the long-term success of that company? I do. I think the time frame is really important. I’ve been switching gears a little bit, but you mentioned today I serve as the CEO of FinStrat Management. As you also mentioned, we provide accounting, finance, and reporting services to early stage businesses. Predominantly companies selling business-to-business software. We also work with investors, both angels.
05:35 But one of the things, one of the things that we learned is that understanding the decisions you make today are going to be influenced by where you want to go. And so generally speaking, we’ll work backwards. We’ll ask our founders, CEOs, “What’s your end goal?” Most of them will tell you, “We want to sell this company for a lot of money and fill in the blank X amount of years.” And so knowing the answer to that question, we’re able to create financial models where we can work backwards to say, where are you today and what needs to take place in order to achieve your objective?
06:06 I’m oversimplifying it. There are a whole host of variables that can go into that. Today’s interest rate environment is a great example where companies are not getting the same multiples that they were before the Fed started raising rates. But when you understand that it is possible to achieve your objectives with a plan, just the same as if you’re going to build a house, you hire an architect to draft a set of blueprints. Then you can start answering, what are the things that need to take place?
06:33 And invariably, it’s going to be top line growth, especially in B2B SaaS. And so if you think about it, buyers have always had choices, with rare exceptions. And so what are the things that motivate them? In simplest terms, clients solve problems. That’s interesting. Clients solve problems. And to me, that translates into how do you invest in your product or your service? Because at the end of the day, people want to do business with competent professionals who are going to solve their problems.
07:06 And so by understanding your space, investing in it, it starts to set towards future sales because by definition, people will find you if you’re doing a great job. So if our listeners wanted to get in touch with you about the current service offerings, how could they do it? Yeah, our website is Finn Strat. MGMT.com. So that’s Finn short for financial strat short for strategy. MGMT.com. You’ll see there’s a kind of tech page there. They can also find me on LinkedIn.
07:35 And if they want to shoot me a message and mention that they’ve heard the podcast, I’ll happily accept it, get on a call, and make myself available. Even though today I’m the CEO, given my background, I have served as a fractional CFO. I love entrepreneurs. I love serving them. I share their desire for innovation and just making the world a better place. And it just so happens that I love the dollars part of it as well. And if anything, proper prior planning, putting together a budget and a monthly forecast where you can take stock of how your company’s performance is not only valuable, but it’s a lot of fun.
08:09 Definitely is. So thank you, Kristian, for coming on the show and everybody for listening to another episode of Failing Success. If you like the show, make sure to give us a five-star review. I’m your host, Chad Colecki, and we’ll see you next time.