Russ: This is The BusinessMakers Show, heard here and seen online at TheBusinessMakers.com coming to you today from the headquarters of eCardio where my guest is Larry Lawson, founder and CEO of eCardio. Larry, thanks for having me and welcome to The BusinessMakers Show.

Larry: Well thank you Russ. It's good to be with you.

Russ: You bet. Well let's start here. You tell us about eCardio.

Larry: Well eCardio is an arrhythmia monitoring company. What is arrhythmia monitoring? Arrhythmia monitoring is your heart has arrhythmias, your heart beats and we monitor the beating of patients' hearts. We collect that data through devices that we develop here at eCardio that specifically detect atrial fibrillation and we work with cardiologists and electrophysiologists throughout America and in Europe.

Russ: Cool. Real cool. Now what would one use if they wanted to be monitored before eCardio came along?

Larry: Well before eCardio came along there were other companies in the marketplace that monitored patients but they sure didn't do it as well as we do it and as effectively as we do it. Cardiac event monitors were developed about 20 years ago and they have slowly progressed in technology but over the last five years technology has really taken off and that's where we have done very well.

Russ: Now I assume that there was some point in time when you actually had to go to the doctor's office to get monitored, right?

Larry: Oh yes. Prior to cardiac event monitoring whenever a patient had a problem - let's say there are certain symptoms that indicate that there are problems with your arrhythmia, certain symptoms such as shortness of breath, perhaps you were dizzy, having dizzy spells or maybe palpitations and so forth. Well a patient would go to a doctor and a doctor after asking a few questions would determine if that patient needed to be monitored. Then they would put a Holter Monitor on. That's the old technology. A Holter Monitor would be worn for about 24 hours. But Holter's were developed back in the 1950s by a Dr. Holter.

The problem with Holter's is that if you have a problem with your heart it may not show up within a 24 hour period. So many patients would wear a Holter, come back to their doctor and their doctor would say, "Well your heart looks normal. We don't see any indications of any arrhythmia problems," and you might walk right out his door and have a heart attack. That's because during that 24 hour period the arrhythmia or the rhythmic problem was not detected. Cardiac event monitors were developed to be worn on a patient for up to 30 days. The essence of that is clearly within 30 days if you have an arrhythmia problem it's going to be detected.

Russ: It's going to show up.

Larry: It's going to show up. That's right.

Russ: Okay, now the Holter device that you wore for 24 hours is - that wasn't the device that was communicating with the computer. Was it - or was it? Was it a device you took off and they went and read the results?

Larry: That's exactly right. You'd put on - you'd wear the Holter. You'd go back to the doctor the next day or the day after, deliver the device. They - and those devices at that time had cassettes in them just like a cassette recorder. They would take the cassette, send it off in mail to some reader service. It would come back. It might take two weeks. Let me tell you, if you've got a heart problem and you've got an arrhythmia problem you don't want to wait two weeks for a result.

Russ: Absolutely. Absolutely. Okay, so when eCardio came around there were already companies that were offering the service similarly that could monitor the heart for 30 days at a time and were kind of doing it on a real time basis. Is that accurate?

Larry: That's - not on a real time, near real time basis. Yes, that was accurate but the problem with most of these companies when I got into the business they were unprofessional. They lacked very little technology, things like once they read the information they would send it to the doctor via fax. Well you and I know sometimes you get a fax, sometimes you don't. We knew there had to be a better way with technology to deliver that information to the doctor, how he wanted it, when he wanted it and what format he wanted it.

Russ: Okay, so was that perhaps the first big step that you presented to the patient and doctor base for this service was, "Hey, we're going to be connected directly in delivering it somehow other than fax machines"?

Larry: That's exactly right. We developed the technology here to deliver that information to the doctor right directly to his computer, right to his homepage or we could deliver it directly to his PDA, to his phone, however he wanted it. We set up independent doctors as well as clinics as well as large cardiology groups and hospitals we'll set them up with their own Website to where they will go into their Website and they will see every one of their patients right there and they can click on and read any one of their reports. They can archive the reports. They can click on another button to show it's been read or unread. We've done a pretty remarkable job in delivering the information to the physicians.

Russ: Okay. Now I'm sort of getting the picture painted now of what triggered the idea for you to launch this company. You apparently were in the business. You saw the shortcomings and said, "Hey, I can do this better." Is that kind of right?

Larry: Pretty much. It's an interesting story. I had been in the cardiology business for about 25 to 30 years and during that period of time I knew what cardiac monitoring was or I had heard of it. A friend of mine told me about a company that he was working with down in Florida, a little lab and he said, "You know you might want to get involved." Well I said, "Well let's go see what it's about." So I did get involved.

I invested in the company, a small investment. I'm not a sophisticated investor but I learned shortly after I did an investment in this company that they needed a whole lot more than investment dollars. They needed someone who understood cardiology. So I got involved with them and within about six months time I tripled their business because I understood the business. But the problem was the owners of this company they didn't have quite the level of efficacy that I had in this business. Basically they didn't want to look at technology. They didn't want to look at anything having to deal with the doctors.

I was - I told them, "You need to communicate with these doctors if you want to get far." Well the long and short of it is that we parted ways. I spent about a year determining if I wanted to do this. I knew I wanted to but I just needed to understand how I would go about it. Well in 2004, September, August, September timeframe of 2004 I made a commitment to go ahead and start this company.

Well I went out and found a building that I knew would accommodate what we needed. I began hiring people, billing people, lab people. But we didn't take on any business until January of 2005. I spent three months training these people how to answer the phone, how to talk to patients, how to talk to doctors because we knew that that was a critical point, having that personal touch with the patients and with the doctors. In 2005 we brought on our first doctor with our first patient and the company has grown immensely since then.

Russ: Real cool story. I'm real curious though the company in Florida that you worked with are they still in business?

Larry: No. They went out of business less than a year after I departed.

Russ: Okay. All right. Talking with Larry Lawson, founder and CEO of eCardio. We'll be back with more with him after this. You're listening to The BusinessMakers Show heard here and seen online at TheBusinessMakers.com. This is The BusinessMakers Show, heard here and seen online at TheBusinessMakers.com. Continuing on with Larry Lawson, founder and CEO of eCardio. So there you were now captured your first customer. Was that kind of a big event? In my lifetime that first order is always huge.

Larry: Yeah. We framed our first check, our reimbursement check that we got that year. As a matter of fact I think it was our maximum reimbursement that we bill which is unusual to get and we received maximum reimbursement. So it was really interesting.

Russ: Maximum reimbursement from the insurance company?

Larry: From the insurance, yeah. That's correct.

Russ: Okay. Very, very interesting. Now you decided to do this and that was a huge step, right? I mean I assume you had employment going into it and you said, "Wait, I'm going to do this on my own"?

Larry: No, I didn't have employment going into it. When I had departed from the company in Florida - I wasn't working for them. I was an independent contractor. I was doing nothing but figuring out what I needed to do. But I think what's interesting is that when I started the company and I started hiring these lab people and these billing people we had no business. They did think I was nuts because I was paying them salaries. We were paying rental on a building there in the woodlands and -

Russ: Did you raise money to do this? How did you do this?

Larry: I did it out of my own pocket.

Russ: Whoa.

Larry: I have done pretty well in the business and I invested just under $2 million of my own capital to start the company.

Russ: Why is that? That can be pretty risky to do, right, even if you have a lot of money? Right?

Larry: Certainly it's risky to do but you know, I knew enough about my business. I had enough confidence in what I could do to know that it would work. I think most importantly I knew what the doctors around the country wanted and needed. Matter of fact, in our first Website that we developed part of our Website on the splash page it stated something to effect of, "We've listened to physicians all over the country and they've told us what they wanted and needed most in a cardiac monitoring facility. We listened, we built it and they came." That's literally how it worked.

Russ: Okay. So you go out and you actually I guess mainly convince doctors and physicians to use your service. You don't go directly to patients necessarily, do you?

Larry: No we don't. We go to the doctors because it's the doctors who make the decision of what monitoring company they want to use. The success of eCardio has everything to do with not only our service capability but how we deliver the information to the physicians and the format and so forth. We've developed software programs. We are as much an IT company as we are an arrhythmia monitoring company because everything we do is on the backend. We've developed an IT department here that's stronger or as strong as a lot of companies.

Russ: How many employees do you have today?

Larry: We have somewhere around 400 employees.

Russ: Okay. My goodness.

Larry: We grew from - I started the company with three of us and we grew very quickly.

Russ: Okay. Now a patient goes in and they see their doctor and they say, "Look, we need to monitor you." I assume the patient then is given some sort of device that's maybe not too different than the health clinic monitors that just straps onto their chest and feels their heartbeat. Is that correct or am I _______ _______?

Larry: They're a little different. They're a little different than that. When a patient goes to a doctor and the patient has these symptoms the doctor will say, "Well I think we probably need to monitor your heart." The doctor will give the patient something like this monitor here. This is one of our eVolution monitors that we developed. The patient will wear this monitor. It automatically detects, automatically records and automatically has cell technology built into it, transmits the information to our lab here no matter where you are in the world.

Russ: When you say they wear it they put it in their pocket or something and there's a cable that goes close to their heart or can it pick up their heartbeat?

Larry: Yes. Well no. This is connected to the patient. The patient will wear this much like a Blackberry. They'll put it in their little holster right there and wear it. The monitor is connected to the patient by two electrodes. We apply electrode here and an electrode here. They're just paste, sticky electrodes. That's connected to the monitor. It monitors the electrical activity of the heart. It's a one channel monitor. It does a remarkable job. Physicians love this monitor.

Russ: Now you talk all the time about measuring arrhythmia. What if a person wearing it suddenly went into cardiac arrest and had a heart attack? Would it pick that up, too?

Larry: Oh absolutely.

Russ: Is it alarming the doctor?

Larry: It's alarming us. The information comes here first and immediately we alert the doctor.

Russ: Have you had that happen a few times?

Larry: Oh absolutely, many times. Sure. Maybe not going into a heart attack but going into arrhythmia problems or flutter, atrial flutter or something like that. We'll pick it up and we'll notify the doctor and then the doctor will have the patient either go directly to the emergency room or come into his office or if it's not life threatening he may suggest some lifestyle changes for that patient, maybe an exercise program.

Russ: Real interesting. Real interesting. Now you made a big deal awhile ago about talking about that first one that you sold and you got total reimbursement meaning that the health insurance company said, "Yeah, this is a fair price and we reimburse it." This crazy healthcare business world we live in today does that still happen or is it always sort of a negotiation that's going on?

Larry: Oh it's a whole lot more negotiation going on right now. That's right. That has a lot to do with - roughly 30 percent of our business is Medicare and we all know what's going on with Obama Care and so forth. It's hurt us quite a bit. I mean in terms of we're having to fight more to get our reimbursements than we ever have in the past. All these insurance companies whether you're talking about Medicare or whether you're talking about Blue Cross, Aetna, United Healthcare, any of the big ones out there you have to understand they're looking for every reason in the world not to pay you than they are to pay you. We have to do an awful good job on our end documenting what we do and how we do it, providing medical records to these payers in order for us to get what we get. Right now the average reimbursement of what we bill today is about 50 percent of what we bill.

Russ: My goodness. It seems like something's wrong with that business. Do you have individuals say sometimes, "I don't care; I want it; I need it and I'll pay for it"?

Larry: We have a number of patients each and every day that don't have healthcare insurance and we monitor them and they pay cash. But let me make this clear. For these patients we work with them.

Russ: You don't take advantage of them since they don't have somebody negotiating for them?

Larry: That's right. Also we are very social conscious here at this company in that if there are patients out there that have hardships with no insurance we'll take care of them. We're not going to walk away from these patients. We'll take care of them and make sure their doctor, their physician has the information he needs to care for that patient.

Russ: Okay, talking with Larry Lawson, founder and CEO of eCardio. We'll be back with more with Larry after this. You're listening to The BusinessMakers Show, heard here and seen online at TheBusinessMakers.com. This is The BusinessMakers Show, heard here and seen online at TheBusinessMakers.com. Continuing on with Larry Lawson, founder and CEO of eCardio. Now the growth here that I understand took place, Larry, is awesome. I mean it almost sounds like this was an easy business to start and grow. Is that right?

Larry: Well no. I had a tremendous amount of help. I've been very blessed, very fortunate to have made some very good hires with this company, brought in some individuals that have become partners with this company. They managed the growth of this company a whole more than I ever did.

Russ: Okay. Well I'm also curious. You started it out of your own pocket. It's still privately held. Do you ever see that changing? Is there some sort of long term exit strategy planned that you'd like to see evolve?

Larry: Sure. I think everyone that starts a company is always thinking about the exit strategy. During the course of our growth we've attracted the venture capital community very strongly and a couple of years ago we entered into an agreement with one of the most well-known, worldwide well-known VC groups around called Sequoia Capital. Sequoia is now a financial partner with us and has helped us with our growth and - but our exit strategy is not necessarily an IPO. Our exit strategy is either to be acquired or do acquisitions ourselves.

Russ: Well speaking of that, are there plans in place to add incremental products? I mean you have this technology thing going real well. There seems to be a lot more things eventually that are going to need to be monitored remotely from the body. Do you see yourself getting into any of those?

Larry: Oh yeah. We are evaluating those opportunities on a daily basis. For example now, as far as heart monitors we're continually developing new technology in our heart monitoring program. We have a new monitor that we will be releasing in about 90 days. It will be the state of the art. Yeah. Can't wait.

Russ: Cool. Real cool. Well I'm curious. What are you looking at even outside of heart monitoring?

Larry: Outside of heart monitoring we're looking at sleep monitoring. We're looking at SPO2 monitoring. We're looking at blood pressure, ambulatory blood pressure. There are tremendous parameters out there for patient monitoring. We know that there's opportunities to tie these various aspects of patient monitoring in with our cardiac monitoring. We're working on these now but we don't want to enter into something too fast and too hasty before we know that we've got it locked down the way the physicians want it locked down.

Russ: Right. It seems like in the very beginning of eCardio you had that locked down and what the physicians wanted and needed that wasn't being offered.

Larry: Well that's right because I had spent two or three years watching this other company and literally watching how they weren't doing things as much as how they were doing things right. I picked up from that that there's a better way to do this, a more professional way to do this. As I told them when I started in the medical business some 40 years ago I started my career with Johnson and Johnson. Johnson and Johnson put you through a fantastic training program. What's interesting is that there's a lot of companies out there that are in the healthcare business that they just don't have the ethical, professional approach to the industry like I learned when I was in my 20s. I knew that if you applied that in this business it would work.

Russ: Wow. Okay, so before I let you go - speaking of being in your 20s, let's say we have a young aspiring business person tuned in right now, totally excited about what you've accomplished. What kind of advice would you give them if they want to do their own thing? Would you say, "Hey go find the Johnson and Johnson of this area, work there a few years and figure it out"? What would you say?

Larry: Well I would encourage anyone to become educated, number one, and become educated in their field. But once you decide and I believe to go out on your own to start a company I believe it's, number one, follow your heart. Follow your gut instincts. But in addition to that, it would be really nice if you had legal help, legal consultation as well as financial consultation. So a good lawyer, a good CPA will never hurt any young entrepreneur.

Russ: All right. Larry I really appreciate you sharing your story with us and telling us all about eCardio.

Larry: Well thank you so much, Russ. It's been my pleasure.

Russ: You bet. That's Larry Lawson, founder and CEO of eCardio. You're listening to The BusinessMakers Show, heard here and seen online at TheBusinessMakers.com.