[00:00:28] Jay: Hi everyone. Welcome to the First Customer Podcast.

My name's Jay Aigner. Today I'm lucky enough to be joined by Dan Goldsmith. He's the co-founder and chairman of Tendo former CEO. He's launching his new business, co-founder of Proofpoint Capital, and the only guy who's been on the show twice with only one video to prove it. Dan. Hello my friend. How are you?

[00:00:46] Dan: Hey Jay. I'm doing great. It's good to talk to you.

[00:00:48] Jay: It's good to talk to you again. I'm

gonna say that I'm gonna get this outta the way. I screwed up. Last time we had the best conversation. he laid out all the things that anybody ever needs to do to be successful in business and I didn't record it. So here we are again, to do this and even, but it's good because now you have even more stuff to talk about.

You're back in startup mode, in Proofpoint Capital. so you know, first of all, where did you grow up and did that have any impact on you being an entrepreneur?

[00:01:11] Dan: Wow. Yeah. so I'm a Philly native. I grew up outside of Philadelphia. And my upbringing absolutely had a big impact on me being an entrepreneur and learning how to start companies in, a couple ways. first and foremost, I've always been someone who's been fascinated with how things work.

breaking them down, building them back up and trying to make them better. And that, so that entrepreneurial spirit, if you will, was, built in early on. I also think grit was a big part of my upbringing. any founder, any entrepreneur as you know, has to have grit and be willing to do things that others are not willing to do and take those risks and leap into the unknown.

look,I sort of looked at life through the lens of I may never be the smartest person in the room, but no one's gonna outwork me. And that started when I was about 13 years old. In my first job, I claim it was a software job 'cause I. Sat in a back room, you know, coughing disk for a production company and shipping 'em out and working in a warehouse, and I've not stopped since.

[00:02:09] Jay: Love that. And when you say grit, I'm curious, you know, where does grit end? And delusion begin, right? Because you see a lot of folks that, that are, you know, they think they have solved, you know, the world's problems, and they find out that nobody actually has that problem, right? And they're just trying to bash this solution that they have into everybody's head.

And they're like, we don't want it. and

you know, you can have all the grit in the world, but if you don't have the right idea and you're kind of delusional about what you're delivering, it's not gonna end well. Where do you differentiate those two things?

[00:02:36] Dan: man. what a good point you're making too. and a good connection because there, there's good ideas. Great ideas are a dime a dozen, to be honest with you. we had this saying at Veeva where we talked about, focus, you know, focus pays off execution matters most. 

so if you're focused on the right things and obsess around the problem, and I think this relates to grit, any entrepreneur, any successful entrepreneur starts with an obsession around an idea, an obsession around a problem, obsession around an opportunity.

And usually the catalyst for that is some personal experience that I've had. I get a bad delivery on my doorstep and I just cannot release from my brain how to make something. Something better. And I think that's where that grit and passion is born out of. But it can also create blinders if you're so overly obsessed with your own I idea.

But you don't listen and you don't explore and you don't vet those idea with others and sort of hold up that mirror, then that obsession can be really misguided and steer to something that's not gonna work. By the way, one quick point. I tell people all the time, if you're an entrepreneur, you're gonna be told, no, you can't do that all the time.

No, it can't be done. I tell entrepreneurs, I said, if you're being told no, something can't be done all the time, you're probably on the right path. So your ability to not necessarily ignore, but have those nos fuel your passion and motivation is a really important element to being successful.

[00:04:02] Jay: Love that. so, you mentioned, you know, the software, quote unquote, job you had,

what was the first, you know, kind of official real business you started?

[00:04:12] Dan: first business I started. I don't know if we hit that question last 

[00:04:15] Jay: I might not. We're gonna, it's a brand new episode, buddy. We're gonna

[00:04:18] Dan: I love it. 

[00:04:19] Jay: sort of new stuff. 

[00:04:20] Dan: the first business I started was, so when I was young, my, sister's boyfriend who was older than me, he was a disc jockey. He was a dj and he was a disc jockey on Swarthmore's radio station. And he did, he would make money by doing like mobile parties and things like that, lugging around speakers and buckets of vinyl,back in the day.

And I sort of wrote his coattails for a bit and. Say learn. Learned the art. Learned the trade. So the first company I started, I was in high school and I started a mobile DJ company. It was called, it was in this area, it was called Advantage DJ Company. And the motto for the company, if you'll allow me to share, was to transform your bland, boring, sit down party into a ality of excitement.

Call us. We plastered the area with posters and those little tear things with my, my, my phone number, which back then was a seven digit, not 10 digit phone number. And, I built a business and I think we did, I mean, in two years of high school, during that time, 'cause I needed my driver's license, I think we probably did over 500 contracts.

And I ended up paying my way through college mostly doing that.

[00:05:31] Jay: What did you learn, from that, that you still apply today?

[00:05:37] Dan: No, no job is beneath you. you're gonna start a company and run a company. You've gotta be prepared to roll up your sleeves and break through barriers in a way, and just be unstoppable. And that does two things for you. One, it gets the work done. You just, you gotta get it done. Two, it, it demonstrates to everybody else and inspires everybody else.

That getting after it and getting things done is the mode and model for the company and emulating that behavior for others. And if you can anchor a culture that way and people have that entrepreneurial spirit combined with passion and intensity, then companies can go really far because ultimately it's a team sport.

[00:06:17] Jay: All right. So, and I wanna get to, that specifically and a little bit because,I can see the fire in your eyes, back in startup mode like we talked about a little bit, with this new venture. But tell me about Tendo. What problem were you guys solving when you guys set out to build Tendo?

[00:06:32] Dan: You know, I've been really fortunate over the years. I've had incredible opportunities, really good mentors, but one thing that's been consistent throughout my career is not just doing things that are good from a business perspective, but how can I be involved and work on things that are important for society?

I've had the privilege of working in life sciences and education. And with Tendo, it was about healthcare. These are very related industries, but these are industries that affect all of us,as patients, as doctors, as students and teachers. it's those communities that are communities that I feel really honored and privileged to be able to serve and try and improve in some way or another.

And so when I wrapped up my role at Instructure, makers of Canvas in the educational space. you know, myself, my co-founders and the small SWAT team we had doing a market analysis, we wanted to first orient around what's an important problem to solve? And it goes back to that personal experience. We recognize that in healthcare, it's something that affects all of us deeply, and we really don't have any agency in our own healthcare.

Arguably, the most important thing in our lives is the thing we have the least information, least. Least control over. That's how Tendo started. We said there's gotta be a better way for patients to be more informed, for doctors to be more, engaged and to break the current model. Healthcare is an archaic industry when it comes to technology and the application of technology.

And for a long time, the industry has almost weaponized the excuses of complexity and regulations not to innovate. that's changing now a lot with ai, but we'll see. See what happens. But we started tendo with the premise of how to put patients back at the center and improve healthcare throughout the value chain of patients and providers and their caregivers.

[00:08:20] Jay: I mean, last time we talked, I made it very clear that the healthcare space was not one that I loved. I walked away from our last call, You know, much more appreciative of, you know, the approach of you will never be able to solve, you know, healthcare universally,

not universal healthcare, which we actually did talk about last time.

But you're not gonna be able to just, it's such a big problem that

like, you know, you can't just, like, so I took our conversation last time and I was talking to other friends and, it, it did kind of just marinate with me that, you know, they're very specific. Concise problems to solve in that, that make huge impact.

And you don't have to solve the full umbrella of everything with healthcare to start to make really big impacts in specific areas to where eventually, you know, if enough people do this we'll attack it and kind of. Break it down into its components and, you know, whether it's, you know, the AI scribe stuff that people are, you know, using for the doctor's office or whether it's, you know, stuff like you guys where you're kind of getting in between the patient provider, all that sort of stuff, is very interesting.

So I walked away with a better appreciation, you know, for how to attack. A massive problem like that instead of just being like, I don't want to even look at that because it's so massive and gross and it's just like I can't even deal with it. So I definitely took that away from last time. what was the first customer, or who was the first customer at Tendo?

Do you remember?

[00:09:35] Dan: Yeah, we work, we actually worked with Jefferson Health in the area here, was one of the first, organizations. And then, rush Outta Chicago, has been, one of our earliest customers from the beginning. They're still a customer today. they've continued to grow the work they're doing with us and they really we're lucky to stand shoulder to shoulder with Rush outta Chicago.

And do some pretty incredible things. so we've had some first customers, Northwestern outta Chicago is also an early, customer, us working us on improving quality of care,initiatives and. Analytics, but you know, Tendo today works with over a, you know, well over a hundred provider organizations, thousands, tens of thousands of providers across the country, creating bundles of care that are much more accessible and affordable and directly contracted between, patients, as well as employers providing healthcare care.

[00:10:23] Jay: Love that. Well, who, and we're gonna get on to, to Proofpoint in a

second, but who is your customer? Who's the customer today of Tendo compared to who it was back then?

Is it the same 

[00:10:33] Dan: so it's mainly the same, but we've evolved a bit. at Tendo, our pri the primary customer and organization we work with are providers. we specifically decided not to work on the payer side of things. We did not wanna try and advantage payers. I think payers have an unfair advantage in this market.

You know, I could talk about a very relevant AI example of that, right now in a minute. But, I have no sympathy for payers. in this world, they economically figure things out. They do very well, but providers struggle every day. providers are struggle with price controls. Providers struggle with margin.

On average, most of the hospitals in this country will be running on less than a 1% margin, and many of them negative margins. hospitals in this country don't have control over pricing. Okay. yet all of their vendors and others can increase pricing. So, you know, how do you actually make the economics of that work?

so providers, it's a really tough environment in this country. So where Tendo has evolved is we still serve mainly providers, with a connection to patients. We want to work with our two main products. We have a quality focused analytics product, and we have a marketplace product. And through those products, we wanna make sure that.

Hospitals and providers can be recognized for the great quality care they're providing, at a broad level and an individualized level. And our marketplace with Nintendo is connecting patients to care in a much more affordable, direct, and accessible way. It reduces the take from the commercial insurers, if you will, so patients can more directly access care.

Employers can more directly pay for that care if you're under employer, benefit model. And all we're doing is providing the marketplace and the packaging of that healthcare and the logical episodes of care. So we effectively take a lot of the middle layers outside of that, which means better complexity, better economics.

Let me give you aspecific specific example. Jay. If I need to go get a, an MRI through my commercial insurance provider, the price that they've quote unquote negotiated might be $2,500 for that. MRI You go into Tendo marketplace, you can do that directly as a patient or you can do that to their employer benefit.

That same exact provider, same MRI might be four or $500. So there's lots of odd. Economical realities and challenges within healthcare, and this is why when you and I talked last time, the physics of healthcare are different than any other market where capitalism and economics will rule.

The physics of healthcare can't just be the logic of dollars. It hasn't to account all of the other steps in the value chain between patients, providers, and payers. We've really tried to create a system, Nintendo that honors the current rails, but creates better connectivity and access for patients in particular.

[00:13:20] Jay: Do you think the system is just too big and baked in from the insurance side to fix it anytime soon? You know, it's just that we're just struck. Angle hold, you know, by the insurance companies. Is that, is it just too many lobbyists, too big too? You know, it's this big amorphous thing. Is that ever gonna go away in our lifetime, you think?

Or is it just gonna be this continual thing where the rich people at these companies, you know, spend the money to

lobby congressmen and we just keep going this loop so nobody can get bills passed? is there any way around that or are we just kind of stuck in this model?

[00:13:50] Dan: So the, okay, so to answer your questions, yes, it is big and it's lumbering, it's complex and there's a lot of headwinds. However, it's an in, I, in my opinion, it's an inevitability that this model will change. And we're already seeing that, by the way, when you have healthcare premiums that are for employers, and I think it will start with, it'll start with the employers and it'll start with government.

it'll probably start with employers and then government will streamline a little, 'cause it'll take longer, but it's gonna start with the employers. Employers are experiencing double digit increases on benefits costs. you know, because the commercial insurers are continuing to increase their premiums and increase their costs.

That is not a realistic model. And the reason why it has been complex in the past is because commercial insurers have sort of hid behind this idea that they have some special network or access to providers. But with what we're doing at, with Tendo, with what many of the other players in the market are starting to do to modernize the rails of access for healthcare.

And now with AI in the mix, well, we're now empowering providers and patients with very different tools, very insight, very different insights. We able to access things directly so that concept of exclusivity in like my in-network providers with payers is very quickly becoming. a non-issue and non-value proposition.

So I believe over the next five to 10 years, the commercial insurers will ha, will either be significantly disadvantaged, or they're gonna have to evolve and change the economics of their business to more of a direct pay model for employers with providers.

[00:15:23] Jay: Let's switch gears a little bit. How do you like working with your sister?

[00:15:27] Dan: You know, my sister and I had chance to work together. It's great. we've worked together for the better part of the last 25 years. we know each other's moves. We know how to agree, we know how to disagree, and, we understand what each of our superpowers are. Jen is a phenomenal leader of people.

She's a phenomenal leader and. Strategists when it comes to product and building products that are both beautiful and can do incredible things. And I focused traditionally more on the go to market side in building the strategy and the value proposition of the organization. So, so yeah, we've worked really well together over that time.

We actually started working together at IBM, years and years ago. We worked together at Veeva, at Instructure in Nintendo.

[00:16:08] Jay: Does it ever bleed into the personal life? Do you guys ever like mad at each other for work and you're just, you can't look at each other over the, you know, the Thanksgiving dinner table? Is that ever, is it, has it ever get like

[00:16:17] Dan: It's more of our family gets irritated. You know, we sort, we've already sort had to institute a policy of like, no work at the Thanksgiving table, no work, talk at the Thanksgiving table. So we, we've learned that pretty, pretty, that the risk and liability is more of the extended family getting really annoyed with us talking about work.

So 

[00:16:35] Jay: Yeah. They're like, just shut up already. You guys talk about this

all, you can't bring your standups to, to, to dinner. Well, all right, well let

[00:16:41] Dan: Having teenagers solve that problem really quickly, so it 

[00:16:45] Jay: Yeah, I like that. all right, well, let's talk about Proofpoint. you and I talked a little bit beforehand. I do feel like, you know, the ones that make it and kind of start to look back or be like, how do we. Kinda rebuild this and you started talking about the startup, you know, kind of feeling that you had, and I definitely feel that kind of energy and juice coming from you, since we've been talking today. And so where did the idea for Proofpoint come from? What is it, you know, what are you guys trying to do with it?

Sure. 

[00:17:13] Dan: So. Let me start a little bit with the origin story, myself and my, my, my partners at Proofpoint are Matt Wallick, who's one of the co-founders of Viva, and Matt and I have worked together for over 25 years now. Our careers grew up together. And then John Brasington, Matt and John are both Philly locals as well.

John is an iconic entrepreneur. He started a company called Liquid Hub, a tech services firm, grew that, to a large scale and then sold it to Capgemini and then ran their digital. practice, but all three of us have had a 30 year career of operating and building, companies, building companies from startup to scale.

we've made mistakes along the way. We've learned from those mistakes and we've become very, empathetic towards that founder's journey and that experience when starting and scaling a company, it's not for the faint of heart. but it's something that's very important. For the last decade we've been investing more as angel investors and even a, I'll call it a super syndicate of angel investors.

we've probably deployed, you know, we're talking about tens of millions of dollars into 40 plus companies and many of them invested, together. the reason why we started doing that, frankly, is both the joy and opportunity. To be connected to many things that are at that origin stage in building, from that early stage, recognizing that given our experience and our journey building some of the most iconic companies in the market today.

Like, like Veeva gives us a distinct advantage and point of view on how to help companies grow and scale during that time. We also recognize things we're not good at. there's certain categories and companies that have not gone well. so, you know, we invested in a social media company that went out of business.

we're not gonna invest in social media companies, but when it comes to vertical SaaS company and enterprise software and things in the life sciences or education or financial services industries. We can really be helpful to entrepreneurs. So first and foremost, it's driven by that desire to want to help others and share the lessons that we've learned to advantage, those companies.

we think we can pick, win and build better than any other investor out there, or at least be one of the best investors in the market. So, Proofpoint an operator led fund. We just announced it, about a little over a month. ago, we're already off to the races and super busy and yeah, I'm in startup mode again.

I'm doing, you know, everything it takes, rolling up my sleeves and with John and Matt, to get things moving. we are working on our first close right now. we have some great investors. our first investors are all entrepreneurs and executives that are joining us. This journey. And I think what is unique is our ability to work with entrepreneurs.

We've already made four investments, by the way, warehouse, those for the fund. and, you know, our unique ability to apply our pattern recognition of those companies is number one. And then number two, a lot of investors talk about having a operator bench or operating advisors. And it typically shows up as pixie dust through the sales process, but it's not really enduring after that.

You know, our operator network is curated from the people that we've worked with in the trenches for the last 30 years. So, if we're gonna help a company and they need help with something specifically around sales, we've got a, a Rolodex, you know, a hundred people plus long that we can tap into companies and really help 'em succeed.

So we wanna tilt the tables towards our investments advantage.

[00:20:34] Jay: What is there, is it, is there anything specific you guys are looking to invest in as far as company type? I mean, I know you're the healthcare guy, then you've got Veeva and the Liquid Hub and more tech services. Is there, what is the sweet spot for you guys?

[00:20:45] Dan: Yeah, so generally we want companies that are post revenue, call it about 250 k to maybe about 5 million in revenue. We're investing primarily in seed and series A. The reason why we picked that stage of company is because. At that stage, we feel like we can have the greatest impact. We can work with companies in the early stage and help them, clear the path and shape their future to success and accelerate that.

So that's the sweet spot for us. And then, like you mentioned, certain industries and models, work well given our experience and pattern. So B2B companies, vertical SaaS, so, so software companies that are industry, specific, enterprise. Software companies, then ai, we're doing a lot of AI stuff out there, man.

they're just AI's everywhere, but there's a lot of fake AI and there's far fewer real ai, right now. So we're wading through that and figuring it out.

[00:21:35] Jay: I think the fir my first favorite fake was the Amazon, stores that were like the people watching the, with video cameras from, overseas or wherever it was. now, while remaining. Nice.

talk to me about the Philadelphia investment and vc and just like that scene. You know, I've heard and been in the space for not nearly as long as you have, but just like I am aware of the, you know, the general perspective of money in the city and even maybe even. The value or the number of companies there are of value to invest in. Right? So

there's like the two sides of it. It's like the people who need the money and the people who have the money. What's your take on kind of the current state, 25 going into 26 for,

you know, those seed companies that are growing?

is it a, is there a lot of 'em or is there a lot of VC funds? Is there people that are looking to invest? Like, what does the market look like in that realm right now?

[00:22:25] Dan: Yeah. Look, I mean, the market itself at large, there's a lot of money in private equity in vc right now. You're talking about an industry that's a $15 trillion industry that's gonna grow to 30 billion or to 30 trillion. Not long from now, and assets under management in this category. So there's still a lot of capital in the market and it's a growing, category and there's a lot of companies looking for capital.

So, while the dynamics of raising money and building companies and capital investments has changed, especially since COVID, there's still a lot there. Now, when it comes to Philadelphia, the way I would describe Philadelphia is a city of missed opportunities.

What I mean by that is if you look at the large technology paradigm shifts, going all the way back to the internet in the nineties, to cloud computing, to mobility, to the internet of things and others, you know, Philly has been a healthcare life sciences, financial services town, and while there's been other metros.

Obviously we all talk about Silicon Valley, but when you look at other metros like Salt Lake City or Austin, New York and others, they've been able to get on the bus and grow and take advantage of that from both a technology entrepreneur, a technology startup, and a capital perspective. Philly has not been able, not being disparaging to anyone out there.

There's a lot of great people here, but they haven't clicked in and been able to board the bus in the same way and get the same returns. There's a lot of work we need to do in Philadelphia. at Proofpoint, we're investing companies across the us, and we have the network to really tap in and do that.

but hopefully in, in our efforts in building, Proofpoint will also inspire, a generation of entrepreneurs and a generation of. Of capital sources to, change the face of Philadelphia and put us more on the map when it comes to the top tier city for, capital resources and technology companies.

So there's an opportunity there. We just haven't been able to take advantage of it to date.

[00:24:13] Jay: What is the. Biggest thing you think would help that? Because I hear that same

thing from everybody. I hear the same thing. Like, we're gonna try to chip away at it and we're gonna, you got the Pittsburghs that have got a lot of, you know, technology and things are coming up there and they go, we're on the East Coast and we're close to 95 in New York.

And like, we should be able to kind of do the same, like why we is the, what is the big thing that if we could get it done would kind of change the view of how it worked in Philly.

[00:24:38] Dan: I mean, to be honest with you, we need a couple, unicorn. We need a couple unicorns that are reputable and recognized and, you know, born and raised out of the Philadelphia community, if you will. you know, we've had a lot of talent leave. you know, leave this city and pursue things in other areas.

And so if we can be helpful in that would be great. we need to obviously be, focused on returns for our investors and working with our founders in a great way. But that's really what Philadelphia is missing. If you look at a lot, even Salt Lake City where I spent some time when I was at instructor, you know, you had Omniture and you had word perfect back in the day, and.

And, and other companies that grew and sort of became iconic and it put that city on the map. So we need a few companies in the modern tech age and maybe there's some AI companies, right? So, so maybe AI is now the paradigm shift that's gonna allow us to get on the bus.

[00:25:28] Jay: I mean, you know, as far as the level of success, you know, you're up there very high when it comes to Philadelphia entrepreneurs. How do you, in this space now where you're kind of. You're in a capital firm, you're gonna be, you know, the man for lack of a better term. When it comes to these companies that are coming to it and you're working with them and stuff, how do you stay humble? You know, and you're just a humble guy, I think

is the answer to this, but how do you stay humble and keep that. Startup perspective and kind of put yourself back in the shoes of the people that you're kind of trying to help, instead of looking at it from your current viewpoint, which is like, not saying you figured it all out, but like you've had a lot of success and like you, you kind of figure out how do you step back into those shoes of being uncertain to kind of, you know, not being able to trust any, you know, the things you hear and like building this business.

how do you keep perspective between the two?

[00:26:16] Dan: Yeah, I mean, I would say. That's actually our differentiator, and that's what we're passionate about. I mean, one of the reasons why we started this firm is to be able to step in the shoes of the entrepreneur, stay true to our roots, and remembering what it was like to grow up in this space. and what it's like to be, you know, the small scrappy startup sort of fighting for recognition, fighting for those first customers.

That's really important that, that's hard to do, but, it, it imprints on you. when I interview salespeople, one of the most important thing is I ask salespeople. I say, what is the most memorable deal you've done as a salesperson? And if they can't answer me of what that is, what company it was, who the buyer was, and all the details of that, I won't hire that person because.

As business leaders, as salespeople, you sort of wear those experiences as a badge of honor. You know, having gone through those experiences, they really imprint on you. And so it's not exactly about staying humble, it's more about staying grounded in the reality of what it's like in that journey.

And I think today, I mean, 30 years ago. I don't remember all my friends in college saying, Hey, let's go start companies. Let's go start companies and jump out of that during college or right after college. Now we have a whole generation of really brilliant young professionals that are motivated to change the world, to innovate, to start things in scale them.

We believe at Proofpoint, if you marry that type of. Of innovative mindset and unrestricted thinking, especially when it comes to technology and AI with seasoned pattern recognition around business. You have the perfect combination, like a AI is changing everything right now, but the fundamental of business and connecting with people have not changed.

So that's what we're hoping to bring together.

[00:28:06] Jay: Love that. All right, well, it's been the second, best interview we've ever had. Or maybe the first best. This was awesome, Dan, you are, you know, like I said. There's maybe we need to Mount Rushmore, of, you know, kind of tech people in Philly. I think you belong up there. you're a very approachable, you know, empathetic guy, and I love it about you.

I think we kind of hit it off when we first talked, and I just, you know, I appreciate the vibe and, you know, everything that you guys have going on there. So, you know, I wanna say thank you for being on and, you know, if people wanna reach out to you about something they heard today, how would they do that?

[00:28:38] Dan: Just my email's, dan@proofpointcapital.com. I'm very accessible. Anyone feel free to reach out. But Jay, I wanna thank you. I love. Chatting with you. I'm glad we're able to do this a second time officially 

[00:28:48] Jay: That's 

[00:28:49] Dan: on the record. Come back and visit any point in time and 

[00:28:54] Jay: Yeah, man. You gotta get all the boys together, we'll get 'em on. So I appreciate it. All right, well, enjoy the holiday season, my brother, and, we'll catch up again soon. Dan, you're awesome. Thank you buddy.

See you man. Thanks. 

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