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VIDEO - DUwHF #909 - David Monahan
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AUDIO - DUwHF #909 - David Monahan
Dave Monahan is the CEO of Kleer, a simple and easy to use cloud-based dental care plan that connects patients directly with dentists, eliminating the cost and hassle of a middleman. Kleer enables dentists to transform their practice by creating a larger and more active fee for service patient base while enabling consumers to get the comprehensive dental care they need at an affordable price.
Dave has a passion for creating technology-enabled businesses that improve people’s lives. Prior to joining Kleer, Dave served as the President and CEO of FitLinxx, a leader in the wearables market, where he created simple, affordable and connected wearable devices for the medical and sports markets. FitLinxx devices enabled patients to monitor and manage chronic conditions and athletes to monitor and improve their performance.
Dave is a graduate of the Pennsylvania State University and Loyola University, and resides in the Greater Philadelphia area. Dave is married and has 3 children, ages 12, 14 and 16. When Dave is not coaching his kids’ teams, he finds time to exercise, travel and play any sport or competitive activity that he or his friends can dream up.
Howard: It is just a huge honor for me today to be podcast interviewing Dave Monahan, all the way from Wayne Pennsylvania. He's the CEO of Kleer, which is kleer.com, a simple and easy to use, cloud based dental care plan that connects patients directly with dentists, eliminating the costs and hassle of the middleman. Kleer enables dentists to transform their practice by creating a larger and more active feed for service patient base, while enabling consumers to get the comprehensive dental care they need at an affordable price. Dave has a passion for creating technology enabled businesses, that improve people's lives. Prior to joining Kleer, Dave served as the president and CEO of Fit Links, a leader in the wearable market, where he created simple, affordable and connected wearable devices for the medical and sports markets. Fit Links devices enable patients to monitor and manage chronic conditions and athletes to monitor and improve their performance. Dave is a graduate of the Pennsylvania State University and Loyola University and resides in the greater Philadelphia area. He's married and has three children, ages twelve, fourteen and sixteen. When Dave is not coaching his kids' teams, he finds time to exercise, travel and play any sport or competitive activity that he or his friends can dream up. So how long have you had Kleer? How long has that been going?
Dave: I have been at Kleer for about 12 months now. Actually, Kleer didn't exist when I got here. So I had sold my company, Fit Links, to a medical device company and I was sort of looking for the next thing to do and I heard that about 50% of consumers in the U.S don't see the dentist on an annual basis, which I was really intrigued by. So I sort of dug in, did a lot of market research, which I can share later but the net was, I try to basically develop a passion around, "Can we somehow increase dental care in the U.S.
Howard: And how is that goal going? I'm on your website right now. I'm looking at kleer.com.
Dave: It's going very well. So I've spent a lot of time, about six months actually doing market research in both interviewing dentists and interviewing patients and consumers and we heard a lot from both sides, which basically on the dentists side, they're frustrated by insurers, by the programs, by the limitations. We heard that over and over again and how difficult it was to run a practice based on insurance. On the consumer side what we heard was, a lot of frustration around cost and complexity of dental plans but also just not having access to dental plans. So we heard from consumers that if their employer wasn't offering a dental plan, it was very difficult for them to get access to a dental plan. And then we talked to consumers and there is a huge misnomer and confusion around how much dental care costs and they were very confused about what type of procedures are needed and required around preventative care and also what type of treatment they might need longer term. So the net was, we decided to try to bring the two sides together and figure out how we could reconnect dentists and patients directly together and that's where Kleer came from. We actually launched Kleer officially last week. We're in what we're calling a pilot mode. So we're testing the application, we're testing how everything runs and is it working well for the patients? Is it working well for the dentists? And eventually we're going to launch it more publicly.
Howard: Well I just helped your launch, my homies listening are driving to work right now, so they can't take notes, so they follow me @howardfarran, so I just re-tweeted, you're @kleer_llc and then that's your last tweet, "We're so psyched here at Kleer about today's launch of our pilot program and so .
Dave: Thank you.
Howard: So hopefully that'll get you some leads. So yeah I remember one time I was at the Phoenix Suns game and was about four dentists and basically, I was telling the dentist that, if all your costs for everything, rent, mortgage, equipment, lab, labor, everything, is $1 a month and you do $1 in sales you have a 100% overhead.But if you can get that team to do $2 you're overhead drops 50% and that's why the endodontists have so low overhead because they charge so much for root canal and this guy said, "Well I could never raise my price on a root canal." And I said, "Dude, they endodontist is in the same building as you, it's the same country, same zip code, all the macroeconomics." So then he only goes,"Oh yeah, but it's too much money." So we got up and we walked around the entire stadium with this guy and I asked every single person, "Hey, we're two dentists. We're just curious, we're taking a poll. How much you think a root canal would cost on your front tooth?" And like the cheapest answer was $2500 and this was thirty years ago at the Phoenix Suns game and it was amazing how people were- I mean nobody, I think the guy was charging at that time, 675 and the lowest guess was almost $2000 over that price.
Dave: So Howard we had focus groups, we brought focus groups together and we did a real good job of mixing it up across demographics, across economic status, across whether they had a dental plan or they didn't have a dental plan and we asked them lots of open ended questions. One of the questions we asked, to your point was, "How much would different procedures cost at a dental office?" And just to give you some idea, we would ask, "Okay, how much would a cleaning costs?" And the cost ranged from $150 to $500 for a cleaning. We'd ask them, "How much does a filling cost?" And the filling costs, the estimates were from $300 to $2000. When we got to root canals, they went up to $4000 or $5000. And it was one of our first indications that something just needs to be done here, to try to get more transparency into actual dental care and true dental care costs. And when you would talk to these consumers about, just say a simple, affordable plan, preventative care plan, where you paying 20 or 30 or $40 a month. They didn't think it was possible. They thought that was not something that they could actually get a hold of. So you are absolutely right. We found very very few people who actually understood true pricing in the dental space
Howard: There's another big misconception with insurance because there's no insurance in dentistry. Insurance is an actuarial risk analysis versus moral hazard. Everybody has car insurance but hopefully everybody, like me, pays in a premium and you don't ever make a claim. Everybody has fire insurance on their house. Ever since I've lived in Ahwatukee, I've only seen two houses burn down and Ahwatukee's got eighty thousand people. But with dental insurance, how do you have dental insurance when 100% of the people need a cleaning, exam and x-rays, 112% don't floss, 148% drink Mountain Dew? They even bring Mountain Dew into my office and I always tell them, "Dude, you wouldn't take your bong to church." I don't even want to see that stuff in there and so they think it's insurance and it's only a benefit and it's only a benefit if someone else, like your boss or your country pays for it. So is this a dental insurance, a dental benefit? Did you ask your study group about that?
Dave: Yes we did. So again, you're absolutely right. So we would talk to people with insurance or without insurance and ask them what does insurance cover and they were very confused, they didn't really understand what insurance covered but they expect it to cover a lot of things and then you'd go through it and talk to them and explain it to them and then they would understand it's not really insurance like you're talking about. So we're not insurance, we're basically, I like to call it a dental care plan or a membership plan that the dentist themselves offers directly to their patients. So they get rid of the insurance middleman. So you get rid of all that inefficiency, the cost, the hassle, the complexity and it makes it very easy for a dentist, not only to offer the plan but to offer it in a very affordable way, that actually increases their income and their profit. So let me just go through a typical scenario. The plans that we're currently offering, our dentists are offering on our platform, they'll charge anywhere from $25 to $45 a month for the plan and that plan will include things like cleanings and x-rays and oral screenings and so on, plus discounts on other treatments. Whether somebody needs filling or root canal or a crown and the net to the dentist is, they'll make a lot more and I can talk about a study we did, to get into the exact numbers. They make quite a bit more on profit and revenue through the plan, versus insurance and the thing on the consumer side is, it's actually more affordable for the patient actually to purchase this type of plan versus insurance. So it is a win-win on both sides.
Howard: Have you gone to Dentaltown and done a search for your company, KLEER?
Dave: I have not.
Howard: I just did. They're already talking about you on Dentaltown and I'm telling you, dentists love it, they love it. When the CEO gets on there and say, "This is my company." And it's great marketing for you, it's great FAQs. These are intelligent dentists, these are their questions and I think when you show up on the site and tell them that you're the dog, I think it's great.
Dave: If they want to e-mail me, they can e-mail me anytime at firstname.lastname@example.org
Howard: Dave@kleer.com and I just forward you the link to that thread on Dentaltown.
Dave: Great, thank you.
Howard: [00:09:38] I just forwarded to email@example.com. So patients are far more likely, half the country, the half that has dental benefits, they are something like 75% of all the patients in a practice. The group without dental insurance, doesn't go and so it's something about healthcare. The 20 richest countries in the world, all but America, provide medical for free because people just buy their own house, they buy their own car, they're buying $1000 brand new iPhone's but something in their walnut brain, when it's their own body, they really expect that they have to have someone else paying for it, they got to have insurance, have a plan. But anybody that has a dental care plan or membership plan, they are far more likely to go to the dentist and buy dental services, than if they don't have that card or that piece of paper. So when they sign up for Kleer and you set them up on a plan, do they get a card or ...
Dave: Yes, they do, so yeah and I'd love to dig into some of that data you are talking about and then I can talk about Kleer but to backup some of the things you're saying. When we talk to consumers, they want more dental care. They just don't think they can afford it. They're either afraid of the costs when they initially go, they're afraid they're going to get up-sold to other treatments that are going to cost more money. They're just afraid of cost, if they don't have a current insurance plan, so they don't go. When you talk to them, four out of five of them want more dental care and they actually can afford it. So they are willing to pay 20 30 or $40 a month to get access to dental care plan that includes preventative care and then discounts on other treatment. It was very clear in our market research that that's true but again, they don't believe it exists. So we actually did a study, coming back to the treatment compliance and acceptance. We did a study of six dental practices and we broke the patients into three groups. One was the insurance group. The second was patients with a membership plan and the third one was patients without a membership plan and without insurance. So completely uncovered. What we saw was, the patients inside the membership plan and insurance plan did twice the amount of treatment as the patients without a membership plan or without an insurance plan.
And what was really interesting was the patients in the membership plan did as much treatment as the patients on the insurance plan. But the big difference was, we add up all the treatment they got and the procedures they paid for and the premiums they paid for, about 40 or 50% of all the payments made by the patient in the insurance plan got to the dentist. It's about 50%, a little less than 50% because they're paying premiums that go to the insurer right, they're for the dentist. When they were in the membership plan, we passed about 90% of all those payments over to the dentist. So they were getting about 90% of the total payments made by a patient. So think about that, it's a 40% increase without anything. There's no real cost doing that, they just get 40% more payment out of the patient, doing the same treatment. What the net of it was, like I said, those two groups are doing twice the amount of somebody who is completely uncovered. So what you get within a membership plan is the best of both worlds. You get acceptance of treatment. You also get much higher profitability of revenue from that treatment. So that's really, we when we did that study, it was very much solidified in my mind that this is something that every dentist should be offering and it's very simple to get up and running.
And so we launched Kleer to do that, create a platform that enables the dentist to very easily implement a dental plan offered directly to patients, the patients can pay for it. To come back to the card idea, we have a website, we have a mobile app. The dentist can be up and running within about fifteen minutes. We have a very simple process for them to set themselves up. It's about seven steps, they get to pick and choose from different templates that we offer, different care plan templates. They get to set the subscription price. They can decide it's $20 or $25, $30. They can set the pricing on different types of plans, so if they have a child plan, they can set one price, if an adult plan, they can set another, perio plan, they can set another and then they get to set their fee schedule and we actually use a third party tool, I don't know if you've ever heard of Fair Health, but they provide pricing by zip code for all the procedures in the U.S. It's all C.D.D code level pricing by zip code, which basically provides that pricing that allows.
Howard: Fairhealth.org or...
Dave: Yeah, they're a non-profit but they basically survey all the electronic transactions in the U.S, not just dental but medical as well. And you can get a breakdown by zip code of the fortieth to ninetieth percentile, basically get a curve, a distribution curve for every procedure in the C.D.D code.So basically, come back to our setup, we actually provide that data for each dentist in their zip code and then they can set, basically their discount level off of the Fair Health pricing and why that's important is one, it benchmarks the practice themselves to what type of pricing they should be offering but also, it gives the consumer, it builds trust with the consumer that this pricing is based on a third party, who's independent. So that they trust because when you talk to consumers, they don't trust just retail pricing that they get from the dentist, straight from the dentist, they'd rather see a third party type of pricing tool. So the net is, dentists can go through our set up process very quickly.
Less than fifteen minutes, it's free to implement and they can have a full, some soup to nuts membership plan you offer to patients and then patients can purchase a plan simply, in multiple ways. They can come to the front desk. So we give the front desk a tool, they can sign the patient up, they can go on a mobile device, any mobile device and buy the plan off of a mobile device or a web site, they can go up to their website and do it as well from a PC or desktop. Once they purchase, then the member actually gets a website and a mobile app, where they can see their benefits. They get a plan document. They get a member card, the whole nine yards, all electronic, they can print it out if they want and then on the other side, the dentist gets that members put into their plan. There's a portal we offer to the dentist, the dentist can look up the patient, they can see what they purchased. What plan they have, what benefits they have and they can manage the whole plan from this portal that we provide to the dentists.
Howard: And what's difference between fairhealth.org and youcanplanforthis.org
Dave: I'm not sure what youcanplanforthis.org is
Howard: Yeah. So I went to their Twitter site at Fair Health and they say I can research their healthcare, We Can Plan For This. I wonder what that is
Dave: Yeah, I'm not sure, never heard of that.
Howard: But what a great lead, here I'll look at their, navigating your medical care shouldn't make you sick. You can plan for this, estimate your healthcare expenses, get a 7% (inaudible 00:16:34) costs for 1000%. That's a hell of a great lead. I've never heard of that. God, that was worth the whole show. We can stop now and my gosh, that is so amazingly cool. Yeah, I never heard of that. I never saw anyone talk about that on Dentaltown or whatever. Do you think it's a marketing thing too? Like if this dentist sets up this site and he does it all, do you think it increases his SEO? Do you think people will find his office because of this?
Dave: Well we're going to help him with that. So we actually provide marketing support as part of our platform. So there's a number of things we built into the platform. One is a simple welcome kit when you sign up and then you can put sheets out on your front desk. You can put, we have a tech card and things like that, like you typically see but much more than that. We provide a widget and I use the term widget in a very loose sense but basically it's a piece of code the dentist can put onto their website and from that widget you can advertise the membership plan and then if a patient hits that widget you basically launch into the membership plan and purchase the membership plan straight from the dentist. So it doesn't go to any other site, it just goes to the the dentist, his own site for purchasing their membership plan, you can obviously use that in digital advertising, Google ads, Facebook ads, things like that and promote it and have people buying straight from either Facebook or from a Google ad or things like that. We actually have one dentist already selling on Facebook. We provide digital templates, so e-mail templates, Google ad templates, Facebook ad templates that you can promote your membership plans through. We have a referral program built into the platform. So if a patient joins the membership plan and they want to send it to a friend or family member, they can do that very easily inside our portal and then when that member signs up we actually donate money to America's Tooth Fairy.
I'm not sure you've heard of them but .
Dave: Yeah, so we want to help kids in need, who need dental care. So we donate to them every time somebody shares the referral program and then we're going to be doing marketing campaigns at the dentist as well to target the population near their office and also whatever population they like to promote to. So maybe they have inactive patients, patients haven't been in for a while. I would bet many of those patients don't come back because they're afraid of costs and they're not covered. So we can promote the plan to them. So we do a lot of marketing support and activity with the dentists in the platform to try to get the word out.
Howard: And how much does it cost for them to join?
Dave: It's free to join. So there's no (inaudible 00:19:08) fee. There's no hidden fee. It's funny, I get this question all the time and people don't believe me. No upfront fee, no hidden fee, no monthly fee. The only thing we do is like a lot of apps out there now, is based on how many people are active on your plan, we just charge a monthly fee for the number of active patients on the plan. So we charge between $3 and $5 per month, per patient on the plan and that depends on which plan they bought. So a perio plan, we're going to charge about $5 a month for, where a child's plan, we charge about $3 a month. So it's a very small number compared to everything that sort of comes with the package.
Howard: And is it going to be available in Canada too?
Dave: Right now we're not available in Canada. We've got (inaudible 00:19:49) requests we get very little market and I've gotten requests from eight different countries already. Canada would be the logical next step but we're just not ready. We're going to test in the U.S. Like I said, we're in pilot mode right now. We're bringing dentists on but we're doing it in a very methodical way, making sure everything works properly. Canada or another country could be towards the end of 2018 but we want to focus on the U.S right now.
Howard: So the name Kleer was trying to make it more clear? Is it a play on C.L.E.A.R?
Dave: Yeah, as you would (inaudible 00:20:21) find out, the clear, C.L.E.A.R is well taken and used. So we were just looking for a way to say, the whole idea, the whole brand, it's clear, it's easy, it's simple, we're open, we're transparent. So we're looking for something sort of aligned to that and we came up with the K.L.E.E.R wasn't taken, we actually were able to get the URL and everything.
Howard: Yeah, I don't even like thinking about those terms because I started Dentaltown in 98. Facebook came out in 2004. I was six years before Facebook and at that time, in 1998 you could buy almost every name you could think of in dentistry and all these names and I just sat there and thought, "Why was I so dumb? Why didn't I go buy..." How much are those names on Go Daddy? Fifteen bucks or something and it's like, I should have sat down and spent $1000 buying all these names.
Dave: Yeah, that and their stock, right?. So if either one of us had done that, we wouldn't be on this call right now.
Howard: If we'd have bought the stock. Oh you mean, stock in what?
Dave: If we'd have bought all the URLs.
Howard: Oh my God.
Dave: To all these companies, we'd just be selling URLs.
Howard: Yeah. So it's free. You can sign up, obviously people with a membership plan or an insurance group are far more likely to go to the dentist. It just sounds like what you're doing is a no brainer. You know those studies you talked about, that link I sent you, if you got a bunch of studies in Word documents or PDFs you can upload them there, I think that dentists would find that very interesting. And so the benefits of offering a Kleer dental plan to your patients, transform your practice by creating a larger and more loyal fee for service patient base, customize your own dental care plan and offer it directly to your patients. Create and manage your own fee schedule. Keep 90% of all patient payments, provide comprehensive, affordable care to your uninsured patients. Kleer is free and easy to implement. You can launch your plan in fifteen minutes or less.
By the way, when I do these, these aren't commercials. I contacted Dave, he did not contact me and no money has changed hands. I just think these are just amazing stories and the dentists all naturally want to learn dentistry. It's very unnatural for them to get involved in the business. So I'm always trying to, I'll throw them a root canal bone or bone grafting bone, I throw them all the red juicy meat but I try to get business in there because it's the business that takes the smile off their face. It's the overhead, it's the debt burden and all that stuff and then when you look at those dentists you got $350000 student loans, about a $750000 practice, about $300000 house, has like you, three kids and they have to be better businessmen today.
Dave: So yeah and Howard, it's a perfect fit because I don't know dentistry, as far as the clinical side of dentistry. That's not me. I didn't go to dentist school. I went to business school, I went to technology school. I went to software school. So if you look back in my history, the things I've done in my career, I worked for, initially for Northrop Grumman doing surveillance systems but then I moved into Microsoft and what I was doing was basically figuring out how could we combine Microsoft software with other software and sell it as partnerships. So we would take the baseline, Microsoft software partners worked with things to build things on top of the software and then we would go out and sell with them to businesses and then at Fit Links, you mentioned at the beginning, we were making devices, actually devices that monitor your body and we were creating on the back end of that, a platform that other companies could connect into. So we had healthcare providers. We had fitness companies plugging into the data and then they would use that data on their side and use that to create programs that would help diabetics or help the obese or help people with congestive heart failure and things like that. So my whole career has really been spent taking technology, building platforms connecting it with partners and creating more value across that chain than existed prior to that. So if somebody is going to ask me a clinical question, I'm just going to look at them with a blank face and say, "That's not my thing." But if you're going to ask me things about how do you create technology and software and connect things and create partnerships and build businesses. That's where I come in, that's my expertise.
Howard: I'm reading on your three programs, Kleer Start. Oh, I want to make one comment on that health care deal. The one thing that's very bizarre, living in America, is healthcare is always so controversial. Like Obamacare, when you go to Australia and New Zealand and Canada and Germany and all the Scandinavian, all those countries, it's a non-issue. It's just a non-issue, no one talks about it. In America they're never going to give up their guns. I get that, they think we may be approaching, for the first time in history, that we'll have more guns than people. They're not going to give up their guns and they just don't want the government into health care but it's so bizarre because all the senior citizens are on Medicare. I've never met a senior on Medicare that didn't love it.
Dave:I guess people don't realize, the government pays for 60% of health care already, right? So it's already a government health care.
Howard: Do they really pay 60%?
Dave: 60% yeah, at Fit Links we did a lot with health care providers and we were basically trying to help the sick get better through technology. But we ran into a lot of other information in the background and how you navigate the healthcare system and all that good stuff. So the U.S. government is already paying for most of it. It's only getting worse every year. They're paying for more and more of it, as the boomer population moves over to Medicare or Medicaid. But I lived in Toronto for three years, so I know what that health care system is like and used it and it's funny, it's very easy to get access to it. The quality of care seemed to be on par with the U.S and to your point, nobody argues about it, it just is what it is and they're never going to change it. I just think the U.S. is caught because it's a change. It hasn't been done like that before, it was pushed onto the employers for a long period of time. So basically employers and the US government are paying for it at the end of the day. And now we're trying to shift and it's hard to shift, people totally change. I think that's the core issue. If people went up and lived in Toronto or Canada for a little while, they'd say, "I like that system, that would be a good system implement." But they don't have any experience with it. It's different than what we currently have.
Howard: Yeah, Americans are number one in military, medicine, insurance, banking, finance, music, movies. I get that but they're really number one in self-esteem because they really think they're the greatest country ever. I'll never forget going to Amsterdam and seeing their dikes and then you go look at Houston and Louisiana, they're like dirt hills. Why doesn't the entire government of Louisiana and Florida, why don't they go just spend a weekend in Amsterdam and look at what a real dike is. But anyway, you got three things here on your website. You have Kleer Start, Kleer Complete, Kleer Perio. So Kleer Start is one professional cleaning, one standard exam, one oral screening, x-rays as needed, one emergency exam, fluoride for children, discounts on all other procedures. Kleer Complete, two professional cleanings, two standard exams, two oral screenings, x-rays as needed, one emergency exam, fluoride for children, discounts on all other procedures. Then Kleer Perio, three perio maintenance cleanings, two standard exams, two oral screenings, x-rays as needed, one emergency exam and the base plans can be customized by dentists. Not all features are required. You promise, "Dentists using our platform are licensed and qualified, pricing comparisons that you can trust," that pricing comparison, is that from that other link you talked?
Dave: That's Fair Health, yeah.
Howard: So you show them that pricing data?
Dave: So we show that we show the consumer the eightieth percentile of pricing, which we found lines up very closely to most dentists' office fee schedules.
Howard: Okay, explain the eightieth percentile, explain what that means.
Dave: Okay. So the eightieth percentile, Fair Health basically takes all the electronic data processing around pricing in the dental space and they'll basically create a distribution curve. So on the left hand side, you've got 0% up to a hundred. So at zero, no dentist offers it at this price up towards a hundred. All dentists would offer it, at least at that price, that or greater. So what they do is they give you this curve of zero to 100% and we picked the eightieth percentile. So it's a point where 80% of dentists are below that pricing, 20% are above that pricing and what we found is that most offices are setting their fee schedule right around there. Either they know it or they don't know it but they're setting it there and then the insurers will come in and discount off of that. So what we do is, we use that as the baseline and say, "Offer your discounts from the eightieth percentile." And so with the eightieth percentile, in our zip code, 19087, a cleaning may be $150. So we say, "Okay," we pull that from the Fair Health and then we say, "Okay, what discount would you like to offer off of that." Some dentists will offer 10%, some twenty, some thirty, just depends on how they've structured their fees. And so what the patient sees, is the $150 is the Fair Health pricing at eightieth percentile and your dentist is offering at a hundred and twenty and you got that discount off of that pricing.
Howard: Nice. I just sent you an email and cc'd. My office manager, Robert and Dawn and Laurie and I hope you get that e-mail and do that analysis and send it back.
Dave: I got it.
Howard: Send it back to us. Come on, I've got to be a selfish bastard. I've got to turn this podcast in from helping my homies, to helping me.
Dave: I'll do it.
Howard: I love that stuff.
Dave: I'm sorry, by the way, we have a license with Fair Health, so any dentist that joins Kleer, gets a license to Fair Health as part of the platform.
Howard: Nice. Yeah, I always say your net worth is equal to your network and that's why I'm trying to give these guys, I've given them eight hundred and fifty, one hour long car commutes and it just really helps them and it helps them think more clear, no pun intended.
Dave: So Howard, we just had a dental practice that launched last week, who went through the pricing, whatever, the process. They came back to us and said, "We think Fair Health is too expensive because our discounts or showing at 40%." And my response to them was, "Actually, your discounts are probably too much because Fair Health, I've absolutely got confidence in the Fair Health data." And so they're actually rethinking how they're going to price their procedures. They were giving it away basically.
Howard: Well, in business school pricing is like an incredible science and it's something that, when dentists walk out of college, eight years later and are dentists, they haven't even thought about pricing but it's a massive science, isn't it?
Dave: Do you think Apple spent $1000 on the iPhone X? No, they probably spent $200 making the iPhone X. But it's about everything that they put around it and how they sell it. And also, obviously they come through with a lot of back end support and they're great brand and all kinds of things but the net is, pricing yeah, you don't think pricing is, "let's just cover costs." Think of pricing is a position. It's a marketing strategy.
Howard: So you used to work for Microsoft
Dave: I did, yeah, for about eight years.
Howard: Yeah, so that was two very different strategies. Bill Gates seemed like he always launched all of his software prematurely and didn't have all of the bugs worked out and Steve Jobs was a perfectionist and it was just a completely different strategy, wasn't it?
Dave: Two different markets. So Microsoft went after the mass market. Apple was going after the high end market and that's classic market strategy and then over time they started conflicting because Apple ran out of space in the higher end and it needed to go down. Microsoft ran out of space at the bottom end and needed to go up, which happens all the time. But yeah, Bill Gates was all about partnering and integrating and selling software. His whole strategy in the beginning was Microsoft on every PC, that was his strategy. So what he did he do? He partnered with IBM, HP, whoever, to distribute. Jobs did the exact opposite. Everything had to be direct with Apple and they were going to control the whole experience. So Microsoft didn't have control of the whole experience, that's why he had bugs and issues and things like that. It was harder for them to control the process but they were able to get it out in mass and Apple did the exact opposite. And I don't know if everybody knows this but Microsoft saved Apple. Remember they put in $150 million into Apple when it was about to crash and became a big shareholder of Apple. So in a way, Microsoft actually won the battle and then saved Apple and then Apple came back.
Howard: What did he think through when he got those class action lawsuits from the United States and the EU?
Dave: They fought. It was it was a (inaudible 00:33:50) in there...I was there when that was all happening. So obviously I think it was probably classic recovery curve. Initially it was anger and frustration and lashing out and then eventually understood that the things they had done weren't the right things to do and then they changed, they changed as a company, they changed the way they operated and they put a lot of discipline back into the company, into the process and selling and how they distributed and all that good stuff but it was a it was a process. It took a little while to get through it.
Howard: Do you remember when they, so it was called Wintel, Windows and Intel? Because I live up the street from an Intel plant and who was the other guy?
Dave: Andy Grove.
Howard: Well Andy Grove, that was one of the best books I ever read, Only the Paranoid Survive. Did you read that book?
Dave: Yeah, absolutely, yeah.
Howard: It was just excellent but now I'm trying to think of what the other what was the other, it was.
Dave: [Steve Ballmer?
Howard: No, it was Microsoft, Intel, Dell and what was the fourth one? (inaudible 00:34:50) one of the biggest companies of that time, not Oracle. Oh, Cisco and I personally thought that Andy Grove at Intel and Cisco, what was that guy's name? The CEO of Cisco? But anyway, when they saw a company they liked, they just got out their checkbook and went and bought it and the guy from Cisco, I think it was Steve Chalmers or Paul. But anyway, Cisco, I think bought like 36 different companies and he said, "I;'m not going to run a R and D department because I can't find and hire that freak in his garage that comes up with cool stuff, so my R and Ds is, I just buy the company." And I thought with Microsoft, if he would have bought, what was that web browser in Utah?
Dave: Not Netscape?
Dave: Yeah, it was John Chambers was.
Howard: John Chambers.I thought if he just would have got out his (inaudible 00:35:53) he was the richest man in America. Netscape invented it and they were first and they should have got bought out.
Dave: Yeah, the problem with Microsoft is they're making too much money. So they were shipping, back then when they shipped CDs and DVDs, they would make those for 50 cents.
And they would sell them for $400. So it was beyond cash flow positive, it's hard. I think any company gets it, that's hard. They're so successful, they're making so much money. You don't really want to change at that point. Typically, you're starting to reach your pinnacle. Last thing you want to do is undermine it all. So that Netscape, the whole internet browser, it just was happening but it wasn't making any money back then. So they just moved on with all the money they were making and all the things they were focused on and just kept going. You can't blame them. It was in a way, the right strategy, they just should have been percolating other things like that.
Howard: Yeah, talk about life in the fast lane.
Dave: Oh, it's crazy. I got some stories.
Howard: Yeah and there was another big Microsoft out here, Insight, remember Insight?
Dave: Oh yeah.
Howard: Yeah, they right up the street from me. The owner of that lives right around the corner. So I'm trying to think, God, is there anything else you wanted to cover or there's any more knowledge for the dentists?
Dave: The only other thing from a product standpoint is, compliance is important, HIPPAA compliancy, regulatory compliancy, things like that. We've done a lot of work to build all that in. So we hired multiple law firms to go through all that and just make sure it's all compliant. I know it's a little bit of, a lot of people don't want to talk about it but the net is, we spent a lot of money, a lot of time, a lot of resources to make sure we're compliant.
Howard: Well I think all that HIPPAA thing is a joke. What was the last hacking that got 46% of America's credit card numbers?
Dave: Equifax or whatever. At this point you have to give up on privacy. At this point you know someone's going to get your name, your Social Security number, your e-mail your driver's license number, come on. You have to be living in a bubble to believe that privacy still exists.
Dave: Yeah, I'm with you. You just got to monitor things. If something happens, just cancel your cards.
Howard: Yeah and a lot of the banks though provide insurance coverage on that, don't they?
Dave: They do, yeah. (inaudible 00:38:23) one area I've been a little bit whatever, probably should be spending more time looking at those things but now that Equifax has happened I think, hopefully most people have gotten the message, that you've got to be monitoring all that.
Howard: Yeah, it is crazy. So anything else?
Dave: No, I really appreciate the time and being on your program. I'll follow up on that e-mail and get you that information.
Howard: For my office.
Dave: Yeah, for your office.
Howard: todaysdental.com and then I forward you the link to the guy, he just asked yesterday, only one search came up and he just posted yesterday. He says, "Anybody heard about Kleer, somebody just called my office." And no one's replied. And for you to reply, that'll be kick butt and if you've got any neat stuff, you got any neat studies or any research. They love that stuff. They get too much of it. Dentists are kind of paralysis by over analysis and sometimes I just think, I got dentists that had been talking to me about wanting to buy something for three or four years now and you're just like, "Dude, you could have bought it and if you didn't like it, sold it on the free classified ads on Dentaltown, you could have done that three times, while you're still talking about it." My dad used to always say, "Crap or get off the pot." Make a decision but they need more, if this works, it's amazing because we know Americans, they have to have some type of medical dental plan coverage, insurance or they feel like they can't buy and I get it. I totally get it.
Dave: So yeah, as I say, just encourage them to try it. If they don't want to try Kleer, try something else. Try your own plan, do something. Try to get some control over your business. Take it away from the insurers, it's there. The consumers want it, just a matter of putting it in place, marketing it, promoting it, selling patients on it and it will pay off.
Howard: So those three kids, twelve, fourteen, sixteen, boys, girls? What do you got there
Dave: It's a girl, boy, girl. So sixteen year old girl, to your point, you were talking about before costs and things like that. She's starting to look at colleges, which is getting a little crazy.
Howard: Well, I want to give you some really really bad news. I had four boys in sixty months, my boys are twenty two, twenty four, twenty six and twenty eight. When the oldest was sixteen and they were sixteen, fourteen, twelve, ten, they were so perfect. I literally thought I should write a book on how to raise boys because they were just perfect. And then one by one, each one gets a set of car keys and you are about to enter the crazy zone. I call Dad's like you, you're out there sitting on the beach and you got your glasses on and a nice drink and you think everything's great and there's this teenage car driver, hurricane packing about two hundred mile an hour winds, off the horizon and you're going to wake up to that baby once and then two years later you'll have two. So enjoy the peace and prosperity and realize your whole world is going to be flipped upside down.
Dave: She just started driving. So as I was pulling out of the driveway today and she was coming down the driveway after me and so two things, one is, she went off the driveway as in our front yard, coming back and then I pull out and a car is coming down the street. She doesn't even look. She just keeps going back and thank God the car stopped but she was paying attention to me not to the road. So I got a little taste of it today. She's been driving for like three months.
Howard: Well good luck. Good luck. Remember when the when your twelve year old is twenty two, you'll look as bad as me, just remember that. But hey, thanks for choosing dentistry. Thanks for coming on the show and thanks for helping my office out with this and posting info for my homies on Dentaltown. I think everybody's going to have fun looking at this.
Dave: Thank you. Thanks for having me.
Howard: All right. Have a rocking hot day.