Redox

Nico Skavarsky spent years in corporate roles before going to graduate school for economics and then joining Epic, the large electronic medical record company. He went to Epic to get access to health data, hoping to find ways to use it to improve care. What he found was that the data was not in the cloud. It sat in basements and data centers that health systems managed around the country. Meanwhile, co-founder James had been helping startups connect to health systems and repeating the same integration project each time. The two saw the opportunity to build one engine that could do this at scale.

The founders spent their first year without revenue. They worked out of a co-working space they had helped start, lived on savings and consulting work, and eventually committed to the scalable interface engine idea. They raised a small seed round of $350,000 at the end of 2014, hired their first developers, and paid all founders and early staff the same salary of about $35,000 per year. Nico said the pitch to investors was about potential rather than traction. Redox was selling the idea of being the infrastructure that developers would use to sell into hospitals.

It took about a year from late 2014 to go live with the first site. The first live integration connected an iPad app that measures blood loss in the operating room with Hackensack University Medical Center, sending C-section blood loss data into the electronic medical record through Redox. That first live customer, along with a few hundred developers who had signed up to build on the APIs, helped the company raise a $3.5 million Series A at the end of 2015 when monthly recurring revenue was only about $1,000 to $2,000.

Redox's main early strategy was to win developers first. Nico described it as selling pickaxes to the developers fighting to innovate in healthcare. Those developers would then bring Redox into health systems as they sold their products. Redox avoided adding an extra contract to the sales cycle. Instead, it became a subcontracted layer in the developer's stack, with pricing per health system connection at roughly $1,000 each.

The pricing model worked because usage-based billing was impractical. Health systems send huge volumes of messages, so Redox charged per connection instead. Retention also held up: only two of about 200 live connections were lost, both when a health system chose not to extend a pilot. Growth stayed largely inbound.

The gap was in measuring acquisition. Nico admitted Redox had not done the math on customer acquisition cost, including the hours spent on content and onboarding. Much of the capital went to headcount, not marketing, with most of the team working on engineering, DevOps, and documentation.

By the interview, Redox had raised about $14 million including a $9 million Series B and a strategic investment from Intermountain Health System. It had around 35 employees, about two-thirds in Wisconsin, with others spread across Portland, Austin, and Chicago. Roughly 200 applications were live across about 100 health systems, and the host estimated monthly recurring revenue at about $400,000. Nico said the focus was on getting into more health systems faster. He also said Redox would not sell to large pharmaceutical acquirers because it did not believe they could solve the problem as quickly.