This year, I spent a few weeks working on a deal with a subsidiary of a multi-billion dollar corporation in the US. They recently had acquired a company in Germany, aiming to expand their flourishing local business with clinics all over Europe starting in 2022.
Since the healthcare system on this side of the pond is vastly different from what they were used to, a local solution to managing clinics and patients was needed. After approaching us in Summer 2021, we spent tried to figure out how this cooperation could look like from a legal and workflow perspective. Besides the financial aspect of such a deal, it could have also opened up our business for the European market overnight.
We were days away from signing the contract, but ultimately both parties decided not to move forward with the deal. A few weeks have passed since then, and I wanted to share our thinking on why we ultimately backed out of this opportunity.
The legal challenges.
Since they were operating in a relatively new area of healthcare, we would have had a ton of hoops to jump through to be compliant with the strict certification procedures - especially in Germany.
In addition to that, the certification authority was not even ready to deal with cloud-based SaaS businesses. The entire process was tailored to on-premise solutions, further increasing the risk for all parties involved. (Sidenote: As far as I’m aware, they found a partner willing to jump those hoops now and has already dealt with the certification process before.)
We’d need to grow our team faster than we were comfortable with.
Right now, we are in a great place between growth and stability. Revenue is steadily increasing while we continue automating many aspects of the business. This avoids the need for taking on new people and enables us to grow our revenue without the additional headaches of managing a larger team.
We want to keep our independence.
Adding a client that size would’ve made us vulnerable to losing our independence.
Most of our customers pay us around 60€ per month for our services. This deal, however, would have been significantly higher, which also means they naturally would have enjoyed a much higher priority than most of our existing customer base. While this might not matter in the short term, it could have led to higher churn and many unhappy doctors and therapists down the road, resulting in a hit to our reputation as a company that actually cares about them. We worked very hard for that reputation, and it’s probably one of our most important assets.
Loss of focus.
Unsurprisingly we would have had many new features to add to our product. While most of them aligned pretty well with our roadmap anyway, there were also a lot of items on the list of requirements that would not necessarily have been useful for our main target group or existing customers.
Avoiding feature bloat is hard enough already, and adding a big player with a lot of influence over our decisions would have made it even harder.
Whether thousands of customers pay you a small fee versus a few customers sending you a giant cheque every month, we will always choose the former.
Relying on only a handful of people is a considerable risk we are not willing to take, even if it means leaving a big bag of money on the table. A customer, or two, or even ten canceling their contract doesn’t matter to us from a financial and stability point of view. This fact alone makes appointmed a very resilient business.
While this was - and still is - truly an incredible validation of what we have built over the last few years, we decided it is not the right move for us at this point. We will continue on the path we are currently on, trying to keep running a calm business and avoid the risk of a deal like that.
Have you ever been in a situation like that? Did you turn it down or go for it? I’d love to hear your stories!
Saying “no” doesn’t mean doing less. It doesn’t mean you are negative. It doesn’t mean you lack an abundance mentality. On the contrary, saying “no” to good things means you can say “yes” to better things. Saying “no” may be negative in a limited sense, but it’s positive from an overall perspective.
— Josh Steimle