The Forbidden Love Every Founder Feels

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2:43Raj Mehra:And you need something to get you out of bed and say, I'm going to do this. So we needed that original idea, but the parts that matter wasn't the exact thing. It was the market, the impact. and then we had to listen to the people within our market to understand what we really needed to build. Running a business means solving problems. I tell you how the smartest entrepreneurs do it. Hi, I'm Jason Pfeiffer, Editor-in-Chief of Entrepreneur Magazine, and this is Problem Solvers.

3:17In entrepreneurship, there is a forbidden love. People don't tell you about this, the forbidden love. Here is the forbidden love. It is falling in love too hard with your own initial idea, your own initial hypothesis of how this marketplace is going to work out, of how this business should be built. Even as we may encounter all sorts of things that could undercut our premise, we are so in love with the idea that we just ignore it. We say that can't be correct. Maybe you don't even recognize the fact that the thing that you're seeing right in front of your face is just running counter to the thing that you love.

3:59This is the forbidden love. And if you cannot break this forbidden love, if you cannot move away from your own initial hypothesis and actually see the reality of the marketplace for what it is, then guess what? You're dead. So how do we actually do this? How do we break up with this idea that we love so much? Today on Problem Solvers, I've got a guy who's done it, who's going to tell me exactly what he was in love with and what it took to part ways so that he could actually build a successful company. His name is Raj Mehra. He is the CEO and co-founder of Sage. I'm going to let him tell you what Sage is because, you know, Sage changed a little bit along the way.

4:40That's kind of the whole point. Raj, welcome to Problem Solvers.

4:43Raj Mehra:Thanks, Jason. Thanks for having me on. So what I just said there sounds familiar? Absolutely. Every excruciating detail. All right. So Raj, tell me, let's start by you explaining what Sage is today, but then I want to back up and hear about how you entered the marketplace with a very particular idea and what kind of trouble you got into by anchoring too close to it. So first, what is Sage? Yeah, so Sage is a technology platform focused on senior care. So we deploy both hardware and software into communities like senior living facilities, skilled nursing facilities, all across the country to help with triaging care events.

5:32Raj Mehra:So when someone needs support getting out of bed or is having a fall or needs help with mobility, getting to the bathroom, we are the devices that they activate both actively and passively through AI. And we trigger alerts to caregivers who now use our software to do their entire workflow. And that is the foundation of Sage. Great. Okay. Now let us rewind to early Raj, bushy-tailed, bright-eyed Raj, hopelessly optimistic Raj. How did you enter this marketplace and what was the original hypothesis? Yeah, so the original hypothesis was quite different. I had a personal experience with my grandmother in the home, and she had a fall.

6:19Raj Mehra:She didn't get timely attention, and I was convinced that I could build something that could have given her better attention, and my hypothesis was voice at the time. I'll take you back to 2020, when Amazon and Alexa was like the hot new thing. Oh yeah, everything was going to be voice. Our entire world was going to be voice. It was all going to be voice. And I felt that I wanted to build a voice app to give folks help when they needed it. And that could have helped address my grandmother's challenge of having a fall and not getting help in time. And I was obsessed with that concept. I was obsessed with the idea.

7:01Raj Mehra:I went so much to my initial product was dealing with an offshore contracting firm to build a skill in Alexa and in Google Home. Both got rejected because they at the time wanted to do this in-house or whatever. And that was my goal. My goal was I wanted to build a voice app. And let's just examine this particular decision making chain here because this is so common and relatable. You saw a problem, very real problem, very personal problem. And you were thinking about the technology of the time. Everyone was convinced voice was going to be everything. And you saw an opportunity and then you went out and started building the thing.

7:52Was there a moment in between that where you said, let me see if I'm right in some way? Let me try to validate this in some way before building it? Or were you just convinced that this was the answer, so therefore build?

8:07Raj Mehra:Yeah. So what we ended up doing was we went first before building anything to our users and our potential users, people that we thought would one day buy the product. This is back then. Yeah, this was back then, right? And so like when, so ultimately what ended up happening was voice wasn't something we could do on the big platform because they wouldn't allow it. And we ended up building a voice device that ended up being the most expensive paperweight I've ever owned. And in parallel to that, we said, okay, that's interesting. That is something we have conviction in. We want to do, but like we need to build something now, like we're a star, we're going to die.

8:48Raj Mehra:And so instead of just waiting on this expensive paperweight that could take a long time, and it did, we said, let's go to market and understand what users wanted. And what we found is when you start talking to users. Wait, wait, wait, wait, wait, because now you're talking to users. So before we get to this moment, let me just make sure that I understand the situation, which was you had the idea. You decided you just jumped straight into building. And it turns out that building this thing was extremely complicated. So you didn't abandon that project. You were still building the very expensive paperweight.

9:29It's just that something about the very expensive paperweight was starting to tell you that possibly you're on the wrong path. Is that right? Bingo.

9:39Raj Mehra:I knew that this could be the wrong path just because of how expensive it was and how long it was taking. and I knew that we didn't have any real user validation. It was just an instinct I had. Right, right. Got it. Okay, so just to be clear, because when I asked you a minute ago, did you talk to users? The answer was yes, but not yet. You went forward, you spent some money, you're building an expensive paperweight and it was really maybe just, was it like the panic of, I don't have that much money to spend on this thing. I can't possibly see a way in which someone's going to buy this ridiculously expensive clunky device.

10:14So I'm going to start making this clunky device. But in the meantime, I might as well figure out whether or not I actually should continue to make it.

10:21Raj Mehra:That. Yeah. All right. So then was there somebody who said to you, hey, wait a second, why don't you go talk to users? Why did you finally decide to do that? Well, so it was interesting. My co-founders, Ellen and Matt, I still remember it. We officially raised our funding round in Q1 of 2021. and we in earnest all were full-time on this I was already full-time but they had joined me in April of 21 and we were building this paperweight and you know we committed some of our you know seed raise to the paperweight and we said guys like just sitting around waiting for this thing to be manufactured that doesn't seem like the right thing to do and Ellen is a user research expert.

11:11Raj Mehra:Like she's a designer. She's, you know, UXR user experience is her whole world. And Matt is probably one of the best builders. And so we said - Great team. Like it's a good combination of people here. Yeah. It was a great combination of people. And we said, let's go talk to people. Like we know, and I, you know, connected enough operators that were in our, you know, market that we could have conversations so we started talking to people and understanding what did they actually need i had a hypothesis based on my grandmother's experience that i wanted to build this but we then found that hey actually they do need help triaging but actually a lot of the hardware they use today is just bad like we're not even talking about voice like their stuff is like pull cords built in the 80s can we do incremental things to make their experience better and as we started talking to them about voice we quickly realized that a lot of their like voices were faint right of course is you're dealing with the elderly they don't have the strongest voices not always especially if they're ailing that's right and we started like thinking about where these devices would go.

12:27Raj Mehra:And Alexa was like really hyped at this point in time. But we realized the families who gave their loved ones Alexa, when we were in the rooms doing the user research, they weren't actually being able to use them properly. Oh, fascinating. Like they weren't able to connect. And look, now it's a little different voice with AI. Voice is a lot better. But in 2021, it wasn't at the level where older adults could use it, engage it in this way. And to be honest with you, like years later, like a couple years after this, Alexa shut down their, you know, attempt for just senior housing or older adults because, you know, they, they, they found it out the hard way too, that the models weren't there at that time.

13:10I have a friend who like your co-founder is a consumer research expert. And she has always told me that the reason she doesn't get a job is that she talks to the CEO and basically says, hey, I will help you understand your consumers in a way that you don't. And the CEO will say, I do not need that. I already understand the consumer very well. And then the reason that she gets the job is that something bad happens at the company. And then they go back to her and are like, okay, maybe actually there's something that we don't know. And I've always found that shift to be fascinating, that the CEO who's leading the company would, of course, have full conviction that they understand their consumer well enough that there's no reason to talk to the consumer in some new way to have somebody else talk to the consumer.

14:05And so I wonder what your experience was in this moment when you started talking to consumers and started to see that your original hypothesis was not quite correct? Did you feel like you wanted to push back against that? Did you start to feel protective of your original idea? Did you feel embarrassed? What was your state?

14:26Raj Mehra:I felt relief because all of my conviction was tied to this one thing that I had very little control over. And if you remember 2020, 2021, the manufacturing timelines, the R &D, I mean, everything was really challenging. And now I was like, okay, you know, maybe we can do something with off-the-shelf hardware that is actually much better than what they have, but it's more incremental. And isn't this like, you know, snowflake idea that like sounds really cool, but actually we could do a lot more with the tools we already have available to us today. Right. So this is, listen up everybody, a founder speaking from the perspective of what's best for the company, not what's maybe best for the original idea or best for the ego or best for the vision, right yeah and i think in early stage every founder and founding team needs conviction and you need something to get you out of bed and say i'm going to do this so we needed that original idea but the parts that matter wasn't the exact thing it was the market the impact and then we had to listen to the people within our market to understand what we really needed to build yeah what happened after you gathered all of this insight and started to understand a different and more effective way to actually build this product we went really fast i mean matt talks about like we in april we started earnest we had user research from before too but we did a lot of on the ground research and all three were full time we did a working product live at a community all my friends communities and he was he was very nice to let us kind of like tinker on his community but um in july in in three three four months we had a working product community it it needed work but it was deployed and then we got that feedback to really get it into something that could scale right and uh this is probably a sign that you've done something right here which is that the momentum starts to carry.

16:50I've actually, Raj, become a little obsessed with this idea that came out of me talking to a different founder, which was the idea of whether or not you're pushing a boulder up a hill or whether you've pushed a boulder down a hill. Because the thing about business is that unless you are completely wrong, your sheer determination can incrementally move a company forward. You could have made the expensive paperweight and then sold it to some people. You could have done that, I am sure. But it would have been a slow grind and you would have had to work incredibly hard every single day. It's like pushing a boulder up a mountain.

17:32And the problem with that is that the second that you relax, the boulder falls back down. The boulder has no momentum by itself. And so we can't confuse that something is working because we're working really hard on it with something is working because it's carrying its own momentum, which would be the boulder going down the hill. And so here we have this moment where, I mean, you never got to the point of trying to sell the expensive paperweight. But had you had, I think that you probably could have inched your way forward on it. But that is very different from what you're describing, where suddenly we've got a better understanding of the market.

18:08we've got a better understanding of this technology and suddenly everything is moving fast like

18:12Raj Mehra:momentum has just arrived yeah well and you know it's really hard because a lot of times in this journey i was like i didn't want to give up no no founding team wants to give up so i was like i don't want to give up on this paperweight i think there's merit there and the opposite end of the spectrum which was really easy to do because a lot of investors were like guiding us this way was give up on the hardware completely. Don't do hardware. Just do software. Investors love software. Yeah, software only. And that was something that we considered. We're like, can we build a caregiver workflow that doesn't actually need to have hardware?

18:49Raj Mehra:And what we found was actually the idea, this was like this expensive paperweight was too cumbersome, like too much IP. This was not meeting the need. and there was a middle ground which was like off-the-shelf hardware incrementally better you made software made it exceptional that was the right middle ground but it was tough to get to that equilibrium which we ended up doing but it took time yeah what's the quick version of the story from there you know we've been talking about the development of it but what was it like taking it to market and what kind of results did you see yeah so you know um like anything else we started deploying original customers um and these were more proof of concepts right the first three sites we learned a lot um we found that even though the product worked and we had to kind of address caregiver user concerns like a lot of them were like well I don't want to use my personal phone for the software.

19:53Raj Mehra:So we had to then build a mobile fleet that we deployed. We had to build authentication processes so we understand who was on the phones. We had to realize that they weren't going to have a username and login because these folks, some of them don't have the ability to remember those things. So we had to build in things that are common now, like text authentication and things like that. But we had to do all the hard work to make sure that the product got adopted. And then as we built, we realized that this was also a life safety product. So if we had downtime, which our first two implementations did, someone could die.

20:32Raj Mehra:And so we spent a lot of time and Matt like literally went to sites with me and we were looking at like latency of alerts. We're looking at why were things getting hanged up? We had to kind of reverse engineer our architecture of how we were doing. We knew we were on the right track, but now you had the right mousetrap, but you knew the mousetrap wasn't going to scale. So a lot of our work, we're solving the hard technical challenges to get it to scale. And then once we did that, we realized, oh, this is a really hard market to sell into, and they're really margin constrained. So we then had to figure out how do you create return with this product?

21:17Raj Mehra:How do you take the data out of this product to make it so that people can get ROI out of it so they can afford this product in the long term? And so that became a lot of our energy and effort. And so all of these steps in some way require a really close listening to your market. I assume that throughout all of this, you're talking to target users. You're trying to understand now that you've built a thing that is needed and at every step along the way, you're solving more of the problems that you're still trying to understand exactly where this fits. How did you start to do that? What is the process that you guys went through to really understand the market and where the next set of problems were?

22:09Raj Mehra:Yeah, so I'll tell you before I tackle that, like to really address these crossroads at every section, including the initial idea of incremental hardware. One tool, and this was all Ellen's genius, was we, you know, it's kind of documented, but design sprints was something we use quite a bit. We use them today. When we have like a big gnarly problem, we'll lock ourselves in a room for two days. and in that we'll have post-its around all of the things like how might we like get something done to solve an outcome and we'll hash it out we'll talk to people like our end market users around some of our potential solutions and then we'll get to the actual MVP if you will and so we did that the initial product line that we built when we thought the paperweights too much was done through design sprint.

23:05Raj Mehra:Every time we had an ROI problem or we didn't know if it could, you know, sell into the market, we did a design sprint and we validated what we would do in order to solve the problem. And so that was a lot of what we did. And then to your question around like, how did the product evolve? Well, when you're in a market that's deprived of good technology, we found that the ideas came from everywhere. So as we got the initial product working and people excited about it, they had a hundred ideas to give us, right? Have you tried this? It would make a really big difference if we did, you know, an integration with the EHR, if you started involving tasks so people could task each other.

23:49Raj Mehra:Can you communicate from team to team? Like there's so many ideas. And then a lot of it was, how do you prioritize all of that stuff? Yeah. Well, how do you, first of all, even collect it and assess it and then certainly prioritize it? What's the answer to that? Well, I'll talk about priority first. Our priority was, what is our North Star? Our North Star was, does this improve the quality of care for the older adult? And if someone's asking us to build a payments product, that's cool, but it doesn't do that. Then you got mission creep. And 80 % of the ideas got filtered out by that one North Star.

24:36And then the 20 % left, you start to do the same thing, which is to just start to assess, well, okay, what most effectively improves our ability to deliver on the North Star?

24:49Raj Mehra:That. What will make the big moves versus the small incremental things? Yeah. Yeah. Raj, looking back on this, what would you advise an early stage founder who's trying to navigate their way into, let's just say, a complex marketplace and they've got an idea that they feel really confident about? What should they be doing that they're not usually thinking about that you maybe weren't thinking about? two things find a couple people that are in your icp that are potential buyers and sometimes that's demotivating because sometimes they'll tell you it's a bad idea right um but a lot of times if you find the right people and sit down with them you can start understanding their problem sets and you can understand them better than like you trying to build with them in mind versus not really knowing their workflows, their day-to-day, how they're interacting.

25:59Raj Mehra:And I come from the Palantir school of thought where when I was a Palantir, we would deploy against customers for deploy. We would be side-by-side with them. Just spending a day or two, it gave you so much richness of context that would take any initial idea and make it 10x better. By the way, we hadn't mentioned that about Palantir. What did you do with Palantir? So I was, for a number of years, I was on their healthcare side. So our first hospital deployments, our first payer deployments, I led a lot of those. Got it. Cool. All right. So that was thing number one that you would do. Yeah. And thing number two?

26:41Raj Mehra:Thing number two, when you come up with the solution, assess if technology and the availability of technology is at the right level for what the solution is. And so I'll give you an example. Voice at that time wasn't at the level to apply to my use case. It just wasn't. But today, we're actually integrating voice in some of our customers with AI because actually the idea wasn't a terrible idea. But now there's off-the-shelf hardware and there's voice AI that's so good that the level of accuracy is much better than it ever was. And now we can integrate with a product that's already working and that idea has, you know, effectiveness.

27:33Raj Mehra:It's effective, but it's much more effective in this market than it was six years ago. Right. It's the old why now question, which is often like why now? Because something technologically has shifted, something culturally has shifted. And the funny thing is, and this is a great nuance, is that at the time, it seemed like voice was the thing and you weren't wrong. Voice could be really useful here. It's just that the technology wasn't actually ready yet. I mean, if people remember back then, I mean, Alexa could barely tell me the weather. Voice was not anywhere near ripe at that point. Well, it has to do with your boulder going up, right?