- Duration: 25 min
- Platform: zoom
- Source: Read.ai 01JC3Y14KQNTV172TP76X9YYG0 (https://app.read.ai/analytics/meetings/01JC3Y14KQNTV172TP76X9YYG0)
Transcript
[Michael Houck]: Hey, Alfarouk, how are you, man? Oh, is your volume working? Can you hear me? I can hear you. Can you hear me? [Alfarouk Saleh]: Now I can hear you. [Michael Houck]: Yeah. Now you’re there. [Alfarouk Saleh]: How’s your day? Good, man. [Michael Houck]: How are you? It’s going well. [Alfarouk Saleh]: It’s going well. I was just like watching some of your podcasts with Zaid. It just came to me on LinkedIn. [Michael Houck]: I was watching. Yeah, he’s great. We’ve known each other a long time. And we invested in his company a while ago, so it’s been cool to kind of follow his journey and now kind of get to feature him on the pod. [Alfarouk Saleh]: Yeah, Zane is a good friend. He is a sharp founder, to be honest. [Michael Houck]: Yeah, he’s a sharp guy. It’s one of those cases where we invested around the same time Jeff did. And it was like, we just knew with him, we were like, he’s going to figure it out. He’s going to figure it out. That’s all we need to know. [Alfarouk Saleh]: And that’s what I like at Anther, they’re choosing the founders and they trust that the founders are going to figure it out. [Michael Houck]: Yeah, because anything else at the super early stage, it’s like, you’re sort of just guessing how the market’s going to play out. It’s like, you just got to trust the people’s instincts and get to know them. That’s really the number one thing. [Alfarouk Saleh]: Exactly, exactly, exactly. So are you based in New York or are you based there? [Michael Houck]: I’m in New York, I’m in Williamsburg. Okay, interesting. [Alfarouk Saleh]: What about you? I’m here in the Antler office in New Square. Jeff’s been trying to get me to come down for a day, maybe I should. [Michael Houck]: Yeah, you should come, you should come. [Alfarouk Saleh]: The interesting vibes in here, like I feel it’s my home. We had like, yesterday we had the birthday of Jeff in here in the office and the vibes really good in here in the office. [Michael Houck]: That’s awesome. Okay. Now you’re convincing me. [Alfarouk Saleh]: Maybe I should come down. Yes. And when you meet here, the founders, like I’m meeting the founders from the new cohort, like I’m seeing what people are working on, like in different sectors. [Michael Houck]: So that’s interesting. What’s the most interesting thing you’ve seen? [Alfarouk Saleh]: Most interesting, like there’s something that’s not related to AI, but like they’re doing streaming. Like basically if you’re like a singer or a songwriter famous one and then you have like a stream and then people are like joining the stream like showing you their songs that they’re writing and then they can pay money to feature these songs and then they’re like the the singer it’s like a new streaming thing but like I like the idea overall. That’s cool yeah I’m an idea stage in here so like for this cohort like our cohort like started going to the market like they go to market but this cohort is still like the ideation stage. [Michael Houck]: Yeah, yeah, they’re still figuring it out. Well, yeah, look, I’m excited to chat and kind of learn more about you, about PARP. And just, yeah, I guess just, would it help if I give some context first? [Alfarouk Saleh]: Sure, yeah, it should be helpful. So I’m Michael. [Michael Houck]: I have been in startups for a while. I was first in big tech. I was part of the early team at Uber Eats, helped grow that business. And then I jumped over to Airbnb where I was a product manager for Airbnb Plus. And Airbnb Plus got shut down and laid off during COVID. So I was off on my own, decided to go back to being a founder because I had an agency business earlier in my career. Decided to come back to being a founder, this time go for a venture shot. Ended up raising $15 million, including a Series A from Andreessen Horowitz, and then actually raised a venture fund as well. Because we were having a lot of founders come through our, the programs that we were doing. And so we made like, we raised like 10 million for a fund, invested in about 50 deals through that. And some of those have been great. We have some really, really good success stories coming out of that. So for the last like year and a half, I’ve been building up a holding company. I have some media assets, I have some agencies, I have a SaaS business. Just sort of doing the whole bootstrapped fun vibe And so I wanted to get my toe back into the investing side of things. So Ryan Hoover from Weekend Fund is a good friend. And we just started talking about deals and he was like, hey, what are you seeing? Let’s see if we could partner up on some. And so that’s sort of how this has come about. I’m helping them out through Weekend Fund, which is their fund. So it’s like 200 to 400K checks, pretty high conviction. We move fast. And yeah, that’s pretty much it. Yeah. Interesting. Interesting. [Alfarouk Saleh]: So is it like, are you deploying for the fund or is it like the fund that’s deploying the capital? Yeah. I mean, you’d meet with Ryan and then he would make the final call. [Michael Houck]: Okay. Okay. Seems good. So I’ll give you a brief context about myself. [Alfarouk Saleh]: So basically I’m El Farouk. Initially in my life, I went to dental school, dropped out of dental school, did computer science, the masters of computer science at NYU. I started my first company, like it was a B2B startup. When you mentioned Uber Eats, I’m like, we were in the mobility and transportation tech market. So I’m a big fan of Uber, in the Middle East, Kareem, and here in Lyft. So I’m a big fan of that market. We started our company, we raised some funds, we scaled it, and then we got acquired by a Series B startup. I joined the Series B acquirer, we scaled the operations to more than five markets, and now I’m starting PARP. So I’m starting PARP from a pain that I got like here in the US from dealing with the healthcare sector. Like last year, I went to the primary care. They had to call me multiple times to confirm my appointments. I had to call them for prescription refills. I was like, this shouldn’t be done in this way. And then earlier this year, I went to my dentist to get the cleaning session. After he’s done, I asked him, do I have to pay anything out of pocket? And he’s like, no, everything is covered by the insurance. So I’m always curious. I asked him to go to the back office and then he was generous enough to invite me to go there. I went there, I saw the most amount of inefficiencies you can ever see. Phone calls going back and forth with the patients, with the insurance companies, faxes going back and forth. I’ve never seen a fax before, I saw it in a back office, so it’s like tons of inefficiency. So as a dental dropout having a technical background and being an entrepreneur, I saw a lot of room of automation in there, especially with the revolution of LLMs and the high quality of AI calling agents right now. So I teamed up with my friend and co-founder, Yusuf, he did a Master’s of Computer Engineering at Cornell Tech, and he built AI software at the CRC Health Tech startup. And we started PARP, we joined Antler around April. We got early funding from them, like in probably four or five weeks into the cohort. We went to the market, we landed like a couple of design partners, and we started building AI agents for the back office tasks and healthcare practices, with a focus on dental, physiotherapy, and primary care practices. We launched our first AI voice agent, Kate, early October. It’s doing really well. Over the past four weeks, we closed around 50K of ARR and we have a pipeline of around 50 or 60 and another K of ARR we’re closing by like in probably in four or five weeks. So our aim is to close like 2024, crossing 100K ARR of revenue. And I can walk you through like the scenarios, what we automate and how we automate it, but like feel free if you have any questions to let me know. Yeah, I guess like, yeah, I guess just walk me through and then we’ll go deeper Yeah, so basically like in the back office, they have like multiple ways of communication, like multiple admin tasks they have to handle. One way is like with the patients, one way with the insurance companies. So we started, we built Kate, our AI agent for handling the communication with the patients. So Kate can handle three main scenarios. First one is like clinics having high frequency of visits from the patients, they have to call them every, like before every visit to confirm that they’re coming for their appointment. So for clinics, physiotherapy, primary care, they have thousands of patients they have to call, be on the phone just to confirm their appointments. So Kate can handle these thousands of patients at the same time, calling them, whoever wants to confirm is confirmed, whoever wants to reschedule, she reschedules them. That’s one case Kate is handling. Another case is patients who have overdue appointments. So basically as a primary care, as a dental, like in physiotherapy, you have one evaluation or one session covered by the insurance company for free each year. So maybe it’s once, maybe it’s twice. So if you don’t come and take it, you lose it. So basically clinics have to call the patients to check in on their health and ask them if they want to come to take this session. So basically because they’re short staffed, they don’t do that. So basically the patient is losing a session. The clinic is losing that revenue on their schedule. So basically with CAID, they have the capacity to call thousands of patients every month to get the patients to get their check-in appointments. That are using Kate are seeing ROI of around 10X. They’re getting 6% to 8% conversion rates from Kate calling their patients. So that was completely lost revenue that they’re not getting. And right now they’re getting through Kate. Because it’s a numbers game. You call thousands of patients, you get 40, 50 patients or 60 patients from that. So that’s the second thing. Third thing is for prescription refills. So you have to call the clinic to get a prescription refill. An agent has to be with you on the phone to ask you about your name, date of birth, for prescription you have to handle. And for like some cases as primary care, they have 30 or 40% of the inbound calls as prescription refill phone calls. So that’s a huge capacity. So Kate can take that inbound phone calls from their patients. They call it, she asks about the prescriptions they need to refill, and then she gathers all of these thousands of requests into the clinic so they can handle them at their own time. They don’t have to be on the phone. So these are the three main scenarios that are covered by Kate. Primary care, they’re using two or three scenarios of CAIT, for physiotherapy and pain management, they’re using two scenarios, for dental, they’re using two scenarios of CAIT as well. So that’s our AI agent that we launched early October and we closed, as I told you, 50 KRR from over the past four weeks. [Michael Houck]: I don’t know that much about the regulatory side of this with AI specifically getting involved here. What does that environment look like, How do you see that evolving over the next four years? What does that look like, [Alfarouk Saleh]: Yeah, so basically we’re like HEPA compliant. We’re working with one of the top providers in the U.S. Called Thoroughpass for the HEPA compliance. That’s all what you need to do because you’re not calling other patients to sell them anything. You’re just calling the clinic’s patients. Right, right. [Michael Houck]: And you’re not selling them anything. [Alfarouk Saleh]: You’re telling them, hey, you have a covered session by the insurance. So are you OK? And then patients start like, hey, I’m feeling pain. I would make use of a pain management session. Like, hey, I need a physiotherapy session. Like, hey, I’ll need the dental session. They just need the motivation to book that appointment. That’s it. Got it. UNKNOWN_SPEAKER: OK. [Alfarouk Saleh]: And yeah. And for the confirmation, the prescription refills, like patients like Kate waiting time. So if I’m calling for prescription refill and I have to wait for five or 10 minutes just to tell them that I need a prescription refill, like that’s not a good experience. But for now, Kate can handle all of the requests at the same time. So there’s no hold time. The clinic can be saving like three or 4,000 calls being on the phone for a day. [Michael Houck]: If this were to fail, what would be the reason that it would fail? What do you mean by fail? [Alfarouk Saleh]: The call or the overall? No, no, the business, the business. [Michael Houck]: If we run into some roadblock that caps us out at some point, what would that be? [Alfarouk Saleh]: What’s the number one reason that would be? So complete failure. Like, I don’t know what may happen, but I don’t see a complete failure, but one risk that can be like five or 10% that current players in the healthcare can be adding that to their systems, but that takes you into the innovative dilemma that they don’t want to get into there, so they would partner with companies like us to get integrated into their systems and then we would play together. Yeah, that makes sense. Right now, because I’ve been in the past wave of software, I built my company, it got acquired, I’ve seen everything. We were adding value to the customers, but we weren’t replacing human beings. Right now, with this wave, we’re replacing human beings. I’m not talking about human beings in the US, I’m talking about offshore hiring. Offshore hiring is a huge pain for clinics. They’re not completely HIPAA compliant, they have low retention rate, they’re leaving the practices and they have to hire more people. Because you don’t If you’re hiring random people from any country or offshore, how do you know what they’re doing? How do you know the best practice they’re doing? They’re having some accent problems. They’re having a lot of problems. One of our clients, he’s like, please get me Kate. We closed him in like 30 minutes. That was because of the pain he’s having. UNKNOWN_SPEAKER: Yeah. [Michael Houck]: And what’s the strategy to grow it? What are your thoughts on that? [Alfarouk Saleh]: So basically for the growth, in the healthcare sector initially, they trust each other. So we have four or five advisors from the healthcare sector, and that opens a lot of doors for us. We’re partnering up with consultants for these clinics. So basically clinics right now target getting acquired. So they’re working with consultants to prepare the clinic to get acquired by PE firms or larger groups. So they’re working with them to improve their margins. So one of the things to improve their margins is to utilize AI to reduce costs and increase So that’s like, these customers are like customers that are in high need to our product. And then after that, we have like, in the next like steps is going to be reaching them in like medical exhibitions. There are like two or three ones in the US, famous ones in the US, reaching them through that. But initially, everything is coming to us inbound. We still like from our network of network. [Michael Houck]: That’s great. The consultant strategy is really smart. I didn’t even know that that existed. Like this type of consultant for these healthcare practices. [Alfarouk Saleh]: It exists and they’re paying them a lot. They’re paying them between four to five K a month. UNKNOWN_SPEAKER: Wow. [Michael Houck]: Healthcare pays. [Alfarouk Saleh]: Because they’re seeing the value. They’re paying a consultant that helps them improve the margins and look appealing to private equity firms. And they see that value at par. [Michael Houck]: And also the consultants have relationships with the PE firms too, right? Yeah. That makes sense. [Alfarouk Saleh]: Cool. Okay. [Michael Houck]: I mean, on the product side, where do you see it going? Right? I think the initial sort of use case, super clear, obvious value add to both sides of the call. Where does it go? [Alfarouk Saleh]: So basically we have two AI agents we’re working on. The second one is handling the calls to the insurance companies. So like they have to call the insurance companies to check the eligibility of the patients. Every new patient comes to the door, they have to handle 30 to 40 minutes on the phone to check their eligibility. So we’re building our AI agent to handle these phone calls to the insurance companies and get them their information. This is in a pilot right now with one paying customer, but we’re still keeping it on a pilot. And then a third AI agent, which is after they get paid from the insurance company, they receive a document called the UB, Explanational Benefits, which says for this patient, the insurance company paid that amount for this procedure. So the clinic needs to spend 15 to 20 minutes for each patient, taking the information manually from that document and entering it to the patient management system. So our AI agent with all of these EUBs extract the information in a structured way. And right now, the power of OCR using AI right now is super strong. Before that, it wasn’t that strong. So right now you can rely on it. You take all of this information, enter it automatically to the patient management system, saving between 15 to 20 minutes for each patient. And that helps the clinic manage their finances. Is like seeing how much they got paid for that procedure under that physician. So that helps them in managing their finances. So that’s the roadmap. And like when you’re adding the communication with the patients, communicating with insurance companies, posting the EOPs, you sort of have like an operating system for the private practices. You’re not just a problem. [Michael Houck]: See, that’s what I was thinking because you guys are at a very high leverage point, the point of data collection and like confirmation and things like that. That gives you guys some interesting long-term opportunities to build a very compliant system of record that maybe also helps these practices grow faster than other options. So that’s pretty interesting. [Alfarouk Saleh]: And they’re seeing a high ROI and they’re seeing that right now, the AI-agentic space is doing work that human beings are doing. So it’s not just a B2B SaaS that they’re using that’s saving one or two hours. It’s doing actual work on the phone or like doing actual entering data. So that’s why they’re super excited about it. That’s why they’re like the customers that emailing us like, Hey, did you roll this feature? When are you getting this feature? When are you adding multiple languages? When are you adding all of that? So they want more and more and more. And that allows you to sell them more and more and more. [Michael Houck]: I really like it, man. I think it makes a lot of sense. It’s very intuitive, very easy to grasp for both like for the practice this is for sure. Yeah. Okay. So where, where’s the, where are you at fundraising wise right now? So basically we, we only raised like 250K from Antler. [Alfarouk Saleh]: We didn’t do any fundraising after that. Since launching Kate, we’re receiving like high, like a lot of like inbound from the customers. As I told you over the past four weeks, we closed 50K and we have another 50 or 60K in the pipeline. So we have to build a lot. So we’re not doing a full fundraise. We’re raising like 750K over like two or three weeks. We have like Jeff and We’re committed to 250K from that. So we have like another 500K available from that. Cool. [Michael Houck]: Well, as I mentioned, we do two to 400K and yeah, can move pretty quickly. So I will look, I think it’s great. I really like it. I think you clearly understand the market really well. You’re not trying to do too much. You’re trying to be super focused too, which is good. And the regulatory side sounds like it’s not as crazy as I was worried that it would be. [Alfarouk Saleh]: As long as they are your patients, like you’re not reaching to other people, random people, like you don’t have any restrictions, as long as you have a compliant. [Michael Houck]: Right. Because you’re not soliciting, you’re just engaging with existing patients. Exactly. Exactly. Cool. Yeah. Look, man, I’ll pass it along. I’ll send over a note. I think, Ryan, it’s early for sure, but the interest you guys are seeing in the potential is super clear. So I hope he sees that too. Then I’m sure we’ll follow up and you guys will hop on a call. But yeah, I really, really like it. So I don’t think you sent over a deck before. Can you send it over to me so I can get it in front of him? [Alfarouk Saleh]: Yeah, sure. I will be sharing it with you. So when shall I hear back from you? [Michael Houck]: I’m going to send it to him tonight or whenever I get the deck from you, basically. So I would expect by Tuesday we’ll be able to get back to you. And can go from there. So, yeah, that’s what I would expect. Okay, seems good, Michael. Did you have any questions for me too? [Alfarouk Saleh]: Yeah, I would like to know, I wanted to know the timeline, I would like to know, is the process only another meeting and that’s it? Because we’re taking 750 pretty fast, because it’s not like we want to get that fast and then do the proper pre-seed fundraising starting January or February. [Michael Houck]: Yeah, I think one more meeting should be sufficient. Not a, it’s not gonna be a super drawn out process or anything like that. [Alfarouk Saleh]: Okay. Okay. So that’s all for me. Cool. All right, man. Well, hey, good to meet. [Michael Houck]: I love it. And we’ll talk more soon. I’ll keep an eye out for that. [Alfarouk Saleh]: And if you pass by the Antler office, like we’d love to, to like maybe drink coffee and chat. [Michael Houck]: Yeah. Now that you’re telling me they have a, they’re celebrating Jeff’s birthday, like it’s a good vibe. [Alfarouk Saleh]: So I. Yeah, we have some great vibes in here. [Michael Houck]: Yeah, I’ll probably get back soon. UNKNOWN_SPEAKER: Amazing.