Scott Pickard didn’t know he was embarking on a 15-year software entrepreneurial journey when he signed on to manage a horse veterinary practice in Calgary, Canada. But they had built some internal software to help them manage their large practice that drastically improved their business results. Soon other horse vets wanted their HVMS software and the Business Infusions software business was created with Scott leading the small team.
Business Infusions grew steadily without big budgets, big funding, or a big team since 2006. Equine (horse) veterinary and hospital practices all over the world heard about their software and lined up to buy it. Now Business Infusions powers over 400 sizable veterinary practices all over the world. The company was acquired for cash by Merit Holdings in 2021 to run as a standalone company to expand its solutions to continue serving its clients.
Scott and his dedicated team weren’t in a glamorous industry with fancy modern technology, SaaS best practices, and big funding. They just served their loyal veterinarian customers and built a reputation in their tight-knit community for dedication, support, and focus on equine vets who have specialized needs.
Best quote from Scott:
“Solve the problems of what your customers need and they’ll pay you. That’s how you’re going to build a growing and sustainable business. It’s not easy to do it, but it’s doable.”
“When you spend too much time trying to get somebody else to fund your idea in the product development and market development phase, it’s just not going to work, especially not here. So focus on revenue and the rest will fall into place.”
Edited Transcript of Practical Founders Podcast interview with Scott Pickard, CEO of Business Infusions
Greg Head: And we’re live with Scott Pickard, the long-time CEO of Business Infusions, coming right out of Calgary, Canada. Hi, Scott. Welcome to the Practical Founders podcast.
Scott Pickard: Great to be here. Look forward to what we’re going to talk about for the next hour or so.
Greg Head: Well, we could talk for days about all this stuff. I’m really curious about every adventure. And Scott, you’ve had an interesting one. You just sold the business last year. But you know, it’s the sexiest of industries. It’s not the sexiest of timeframes in there. Scott, why don’t you just take us through what is Business Infusions, with employees and revenues, and growth? When did it start? And then we’ll go back through the journey and all the trials and tribulations.
Scott Pickard: Yeah, absolutely. So we sell practice management software for equine or horse veterinarians. We’ve been at it for 15 years now. Sold the business last year in June of 2021 and continue to operate in the business now globally, essentially. Where the whole concept of this product started was inside one of the largest mixed animal vet practices in Canada. At the time, they had about 26 veterinarians. They had predominantly the equine focus or the horse focus. They had a surgical facility, and they did ambulatory work, which just means they drive their trucks out and go see horses at farms and stables and so on. They had two separate racetrack practices in different geographic locations, the small animal practice, which is the cats and dogs. And then they also did some work for cows on the bovine side as well, but predominantly on the equine side. And they were looking really to solve a couple of key problems. At the time, the practice had been around for close to 50 years, very profitable.
Greg Head: So this was the veterinary hospital practice?
Scott Pickard: That’s correct. So the CEO at the time who had been a practicing equine vet for about 30 years, had some key problems that they knew they were facing with their kind of distributed work environment. And so they were looking to build something to solve their problems of themselves. And one of those big ones was lost billing because they knew they weren’t capturing all the billings that the vets were doing. Some medical professionals don’t care about the billing side. They were there for the medicine and the treatment of the horses and the client, and so they knew they were leaking there. Another big issue was inventory and inventory management, and they weren’t exactly sure where all of their inventory was in the practice. And typically in a vet practice, your cost of goods and inventory can be the second or third highest expense in the business. And so they just weren’t sure what it was. And then the third part of it was they wanted to pay the vets based on professional services and the value that they brought to clients, not just on driving around in their trucks and doing different procedures and meeting with clients and so on. And so they undertook this project by hiring a developer who is still with us today in this whole long journey.
Greg Head: Oh, my gosh.
Scott Pickard: Yeah. And they took to build a product that would solve those three key problems. Now, of course, there are other things, workflows they want to enhance, and so on. But when they went live after about two years of internal development, their profitability went up a little over 60%. And that’s strictly attributed to what they knew the problems were and how they went and solved them.
Greg Head: Before then, it was just paper and people driving around in trucks with their trailers and the hospital and forms and papers and that era was the early 2000s. I guess.
Scott Pickard: 2004 when they started the internal development, and 2006 is when we went for our first customer.
Greg Head: So they did it for themselves. First is in a classic vertical market fashion, right? And they looked around at the other software. Maybe there was software for these small animal vets, but nothing did just for the large horse veterinary practices, and equine practices.
Scott Pickard: That’s exactly right. And that still holds true today. Companion animal, cats and dogs hospitals, have different challenges than equine practitioners do. So for example, one owner usually owns one cat or one dog with a horse you can in the case of racing, you can have one or two, or 20 people that own a horse. And so you have to be able to allocate funds, billing, medical records, and stuff associated with ownership. And that ownership can change at any particular time. So we have to be able to go back, look at who owned it and make sure invoicing is done, receivables are done, and so on from there. So that’s just one example of some of the differences. But the complexity generally speaking on the equine side is much more than it is on the small animal, small animals.
Greg Head: They’re not making house calls, but equine vets are going out to ranches or stables or racetracks or whatever and practicing.
Scott Pickard: That’s typically the case. Yes.
Greg Head: So this was Windows software in the mid-2000s, something like that. That was the first version.
Scott Pickard: That’s correct. And one of the big considerations we had to look at was when the vets were working ambulatory and they were outside of any Internet, which, you know, even back 15 years ago, the Internet was a challenge, and still is in some cases. But they also needed to have the access to the client information, client records–horse records–so that they could treat appropriately. So not rocket science there, but we had to find a way that they could work disconnected from the hospital, disconnected from any Internet connection, wi-fi or cell service, and still have access to the record. So we built a system online with Microsoft replication, which is still being used today because ironically. Fast forward to 2022. Not every area in Canada, the US, or globally where we work has good Internet or solid Internet. So we still have to have that online or offline capability for our customers as well. And that’s been baked right into the product since 2003, essentially. It’s definitely the system of record for the hospital. So everything from when a client checks in and makes an appointment to how they’re accepted into the hospital, to all the records that get done, the collaboration, the imaging, the lab services that come with the medicine. And then from the receivables and checkout on the back end. So we kind of run everything inside of that practice.
Greg Head: So it is like the electronic health records and the billing and management system in one big system.
Scott Pickard: In in one big hefty system that kind of does all the heavy lifting. So there are integrations we do. Of course, we have about 20 different partners we work with, but generally speaking, we’re kind of the backbone of everything. And then the pipes connect through to what we’re doing and we’re kind of pulling the levers based on workflows and set-up systems within the software.
Greg Head: You were there, I think, right in the early days working on this. What was it that made them say, We need to do this for ourselves and then we need to sell this to other vets? Was it just people saying we want that, too? Or how did that go?
Scott Pickard: What really drove the need for it is the complexity of that particular practice because when they had built it for themselves, there was no intention to make it a commercial product. And so when they saw the results of what it did and at the time the founding CEO and vet, Dr. Andrews, was talking with some of his other colleagues about what they’re doing in their practice here in Canada. The question came, Can we have that software as well? So it got pulled into the market as opposed to the whole product market FIT and ICP discussion and figuring out where you go. All the sexy SaaS stuff now, you know, we never did that stuff because they were just solving problems and then it got pulled in and then we went to one practice and went from Connecticut to Texas and to Oklahoma, and then it just started to get virally through the market because it is a very specific niche and kind of the Who’s Who knows each other. And it was just kind of one install after the other. Once we could prove that we could truly solve the problems of what these veterinarians had had for a long time. There was just no technology 15 years ago that could solve it.
Greg Head: People today are creating software and they go to a dermatology office and say, We’ve got some stuff. There are a dozen dermatology solutions and it’s very competitive. But in the old days in the nineties and the early 2000s, you said we have software to run your practice, and people said, What do you mean? There is software to run my equine hospital practice? I had no idea. It’s the frontier. Where would you say you were the first or you’re the first to do it in this niche?
Scott Pickard: In this niche, Because there were a lot of big players out there which, you know, companies like IDEX, Patterson, Henry Schein, which some are now still around, still under different names and acquisitions over the years, but large billion dollar public companies who had software, but it was largely focused on the companion animal cats and dogs market because that’s where the money was. I mean, if you look at it, the companion animal is 20 to 30 times bigger than the equine market. So if you’re looking at doing a product for the market. TAM (total available market). You go to where the product is, where the money is, right? And then here come these hillbillies from Canada say, No, we’re going to go the opposite way. And it just worked because we were at the end of the day, fundamentally solving problems for what these vets needed.
Greg Head: Well, and it wasn’t like let’s invest a bunch of money and try to turn it into a big thing and make a bunch of money. This was the need to run our practice better and we know a lot of other people who want to make it better. Did it turn into a separate company pretty quickly? Where did you come in, Scott?
Scott Pickard: So I came in right as they were actually. Some of our initial team was leaving to go from Calgary down to Connecticut to do the actual first installation of software outside of the main clinic. And so that’s when I got hired on to be the chief operating officer of the vet clinic and of the software company to see if I could do something with the software. And so I spent about 18 months working with both groups and then afterward the software company took off. So I just moved over to that and kind of the rest is history, as you say.
Greg Head: What was your skill set before that?
Scott Pickard: Well, that’s the biggest secret out there, and only I know the answer to that one. But really it came about in a bit of a weird way because I’d been at that point in tech for about five or six years. So just after Y2K, which most people don’t remember, even now, especially the new folks. I finished my computer science degree in February 2000. And so I did a couple of early-stage startup companies, some of which went bankrupt, some of which were sold off. And then this one I got recruited in by one of the guys I had worked with before, who was our CTO, essentially still is with us today, the original developer. And so they had brought me in for an initial conversation with the CEO just about what was going on with the business and what we could do with the software company and so on. And that turned into a four and one half hour interview with a couple of the vet partners and a recruiter to just have a discussion about what the options were and what we could do.
Scott Pickard: And then the next day I got a call and said, Hey, can you come in? We’d like to make you an offer. And kind of the rest is history, so to speak. So I knew nothing about the veterinary business, nothing at all. At that point, I didn’t even have a dog or a cat as we do now. So it was just kind of brand new and they were looking just for a different pair of eyes on things. And I think the challenge was to see if something could happen with this software company, which obviously did. But it was kind of a varied background before that. So I did paramedicine and I had done some work with pharmaceutical companies, sales, and business development. I had done a bunch of different things and they just kind of all lined up as to why, you know, more than the rest of us, which isn’t very much. And let’s see what we can do. And very fortunate they had the trust in what we laid out as a plan and it just kind of worked out from there.
Greg Head: Was there proof of traction at that point or was it before there was any confirmation of opportunity?
Scott Pickard: Yeah, it worked inside of the hospital where it was built in. So that was it. The rest was on a hope and a prayer. And our team is interesting because even back then when we needed to do software demos, we would fly somebody to go do a demo. So it was like a three-day ordeal to go for an hour-and-a-half demo. Whereas now, of course, in most SAS things, it’s we get our online people to qualify you to see if you’re ready. And then we, you know, we set up the interviews with the demos and the clothes and all that stuff. It’s just a totally different game. So jump on an airplane and do all this stuff. But as we were explaining how the system was built and why it was built and what we thought we could do, that’s when the pull started to come. And then you got a couple of credible veterinary practices on it. And we were running, very early on, some of the largest ones in North America because they just had no other options. And then when we proved what we could do and proved how we solve problems, then it just started growing more virally.
Greg Head: Was it you and a programmer and somebody answering the phone calls for support and you listening to selling something and they say, We need this feature and then your buddy would CTO would code it? And I mean, was it funded by the veterinary practice and the owner there? Or like, how did you get through that early, scrappy, crappy, early days adventure.
Scott Pickard: Yeah. So it’s kind of I hear two questions there. So is the funding initially. So it got paid for by the vet clinic and we were you know, when we first as soon as it went live in that practice, that practice essentially started paying for the software because there were different businesses. So they spun them off, which is the right thing to do. And so early on we had some revenue and then with early customers and they were kind of literally backed up six or eight months. We knew what kind of revenue was coming in, so the vet practice would float us the money, and then we’d pay them back. And then we kind of built that way. And then I see because some of the bigger vet practices like what we’re doing, they did some investment as well because they said, Well, this makes sense. This could probably go somewhere. So let’s see if we can throw in some money too. So we’re not talking significant like all in a half a million dollars is what we got from a group of the veterinarians who were sort of interested in what it could be down the road, but more interested in ensuring that we were funded well enough that we could continue development, which makes sense.
Scott Pickard: Right. And so we had some early funding, but we were, I wouldn’t say profitable within the first couple of years, but pretty close because we ran pretty lean. To the other question of did we answer the phones and do support? Yeah, programmers were on site when we did implementations at that point. They were literally there for a month. Now we can usually do that in either completely virtual or kind of five days as a max for a bigger type of practice. And the programmers would be sitting there programming as the people were doing the implementation and say, Well, do we need this? Do I go program it and then release it and we’d be good to go? So for years, it was the product works. But let’s add what they want, not what we think they need. And even to this day, to a large part, all of our development roadmaps is driven by what our customers are asking for and not what we think they need. And so that worked out really well.
Greg Head: Sometimes when you go sell something and every new customer, especially the big ones, say, I need this. And then you add that. Sometimes it turns into a Frankenstein product, a little bit of it, and it’s not very cohesive and is very hard to maintain. Was that the case for you listening to customers and adding only the features that they kind of banged on the table for? Did it create a unified product that was consistent or did it create a little bit of a mess? Just saying yes to everybody.
Scott Pickard: Yes, to both. And so we you know, initially we put in a lot of stuff that we probably shouldn’t have or that one particular customer needed because they operate a bit differently. But again, that’s what made us successful. So there’s some spaghetti code in the back bandage together that works for the most part. But yeah, that’s how we built the program. And so is it optimal? Absolutely not. But did it work? Absolutely. It’s increased our support costs because of that. There’s no question about it. But it’s what we needed to do in our particular niche. And then if you look at the kind of where we’re at now with the new SaaS product that we’ll probably talk about a little bit, that we’re building completely different because we’ve learned about what to do, what not to do when to say yes, when not to. And now some of the sprint methodologies and stuff are in place. And so we’re a lot more disciplined than we were 15 years ago. But at the end of the day, it worked and it worked well enough that our customers were willing to accept the way that we were, what we were providing for them in the support we’re providing.
Greg Head: Well, and we’re talking about scrappy and messy and startup and everything. But this was serious software for a hospital practice. They ran the business on this. They served every customer on this. This wasn’t like optional software that they used occasionally. This was the software that was on everybody’s screens all day.
Scott Pickard: Absolutely. And we were and still are running some of the largest and most sophisticated practices on the planet. And so the product worked. Is it perfect? Absolutely not. But the core fundamentals of what they needed, it absolutely did. And it served most of their businesses very well and still does over the years.
Greg Head: How many customers do you have?
Scott Pickard: We’re about 400 customers now with the cost of different product lines. We have customers in Canada, the US over in the UK, spread across the Middle East, Australia and we’ve got with some recent acquisitions, we’ve got a whole bunch of other stuff that’s happening as well. But because of the way that this particular industry works is that there are pockets of where the majority of the vets work out of that are our customers because we’re really geared towards the mid and large-size, more complicated practices. So you look at the US in Texas, Florida, New York, along the East Coast, Kentucky, of course, Southern California, and then you go to the UK and Newcastle are big areas that are over there as well. Then you look at the Middle East where there’s a lot of racing. Australia has of course some big practices there, so there’s kind of a few different connection points, about six of them in the world where a lot of the vets know each other, have worked together, have done work together. And so that’s kind of where we kind of spend our time and then everything just kind of spiderwebs out from there.
Greg Head: How long did it take before you had team and profit and some stability and you felt like, okay, we’re up and running a kind of a foundation to build on? I’m sure it was a dead run for a few years, or it could have been longer.
Scott Pickard: It was and one of the key things and takeaways from that I’ve learned out of the last 15 years is our team is what has made this successful. I’ve just been lucky to work with some phenomenal people that really saw the vision and just kind of dug in because working 40 hours a week just didn’t exist for the first four or five years for anybody. There it was just full-on and being able to deal with customers on-site when things weren’t going well or when things were going well, how to massage that into the kind of referrals and testimonials and stuff. So we had early on, we had a team of about six people, kind of really core people that really helped us to get to where we are today, and that’s from development to implementation to support to some of our leadership and then some of our early shareholders as well. So we were, you know, by design maybe lucky. Absolutely. But I think some of the core fundamentals are solving problems for the customers. And I tell this to people all the time, and then a bunch of the other work I do is if you’re not solving their problems, then you’re not going to be sticky, they’re not going to grow with you and they’re going to be less forgiving. So let’s serve them with what they need as long as it kind of fits within our parameters. And to me, that’s how you’re going to grow a successful long-term business.
Scott Pickard: And so we’ve been able to do that. We weren’t profitable for the first three or four years. I’d have to go back and actually look. But we weren’t losing a ton of money because we were into revenue right from the very beginning. And that’s really what allowed us to keep on going as opposed to having a huge gap of $30-$40K-$50K to @200,000 a month and having to take on external funding, which would have completely changed the dynamic of it because we had some opportunities for funding. We we didn’t take some of them, and some of them didn’t take us just because we’re in such a small niche. But we were lucky to find one venture debt group that was willing to roll the dice with us on a royalty payback scheme, which worked out well and we didn’t have to give up equity in order to do that. So it’s just a different way of doing it. And, you know, I’m not a big fan of going in for the big funding because I think most companies blow it anyways. Unless you have the right product-market fit and the right leadership team in place and you have the right market. We didn’t have a bunch of those things or they didn’t exist back then in the true software sense. And so we just did it a very different way. But it worked out fundamentally because we were providing good solutions to our customers.
Greg Head: So the mentality was always, let’s be lean and mean. And I guess you looked at some funding venture debt, which is not it’s not selling a piece of your company. You have to pay it back right out of profits and so forth. But that gave you a little juice and a very practical way.
Scott Pickard: Absolutely correct. And the other lecture we have up here in Canada is there are some grants that are available, and we didn’t take advantage of a lot of those. But there’s a lot up in Canada, especially now. Back then, there was nothing. But now there are a lot of different grants for a lot of different things. But there’s one kind of thing that’s been steady over the last 15 years from a federal government perspective, which is a scientific experimental research and design grant. And they want you to challenge the status quo and experiment with technology to solve business problems. And if you do that, they give you back a certain percentage of developer salaries for that experimental research and design that you’re doing. And so we were able to capture some money on that a few hundred thousand a year, which kind of always just gave us that lifeline at the end to get to profitability, hire some more people, hired more developers. And that’s been really important for us in our growth over the years as well. When you’re profitable, it’s a taxable item up here in Canada, which is fine. I see. So but it’s kind of the pay for it now and you prove that you are doing some experimental design, we’ll give you some money back and then when you’re profitable while you pay tax on that, which nobody loves the taxman, but I think that’s a reasonable approach to doing it.
Scott Pickard: Yeah. And then we didn’t have to take on some of that funding. But the other thing too is when we had originally been approached by some funders, more on the venture capital kind of angel side, high net worth and Angels they looked at our market and the addressable market and then our niche and they just said, well you’re too small, you’ll probably never make it, therefore we’ll never make our money back because the market just isn’t big enough. But holding true to what we were trying to do, we dabbled in the small animal market companion animal market. We got our butts kicked by some competitors, so we pulled back and now we’re just focusing on that equine niche. And now kind of fast forward from where we started is that we’ve acquired some companies with our new private equity group and we’re looking at doing some other ones. So kind of looking at category leaders so that we can now provide best-in-world solutions that connect to different niches within our niche. And so that’s proven quite successful so far. And we’ve got some exciting things that are happening on that side of it. So now we have a bit more leverage, we have a bit more reach and we have some more capital available. But for that first 15 years, it was just pure scrappiness to get us to the point where we sold last year.
Greg Head: What was the difference between those scrappy startup years, maybe the first five years or something like that, and then the next ten years? Was it just adding more customers every year? An employee here and there? A little bit better process. I know there were some big changes in the industry that you’re in and there are big changes and the technologies that are there. But was it just kind of like just growing every year? Was that the ambition and see what happens? Or were there some other inflection points or vision in between?
Scott Pickard: It was to grow steadily and in a controlled way. And so oftentimes and even, you know, up till now, we have a backlog of 4 to 6 months for implementations, but that’s okay. That works for us and works for our model. So you kind of add a customer to a month. Some of them might be smaller practices, and some of them might be bigger, far more complicated, right? So our mandate was always to grow, and provide good support because a lot of equine veterinarians have built their companies by providing great support to their clients. Right? So with our early investors and where we were built in, that was the mentality is served them well. And we’re not we don’t need to have 100% growth a quarter or a month. That’s not what we’re about. And so that’s kind of how we built stuff out. So just over time, as we went, we added more bodies. Our margins, our profit margins became more appealing and it was just a good, solid, profitable business that we just grew always with that focus on the customer.
Greg Head: You are seriously wired into a business, these veterinary hospitals, right? You’re the DNA and the billing system and everything else. Do they ever leave your system?
Scott Pickard: Very infrequently over 15 years, we’ve probably lost eight customers, and some of those were because people retired. Some of the vets closed their businesses because of death, like different things like that. But very, very few have we lost to competitors because we just weren’t providing what they needed. So that’s just happened extremely infrequently. So and that’s one of the things that we’re extremely proud of is that stickiness. And then by adding other services on top of what our core product is, it just makes it harder for them to leave because they’re getting the workflows that they need from inside of the facility.
Greg Head: That’s different than, say, some optional sales and marketing software or social media tool or something like that, right? This is it’s hard to wire into a business, takes training and connections and integrations and all that customization, but then it stays forever. Were you a recurring revenue business even in the early days when it was on-premise Windows software? Or was it sell once you get an upgrade later?
Scott Pickard: No, we were kind of the pioneers of the subscription or monthly subscription revenue in the vet space, and so we were the only ones who did it. People thought we were crazy to ask for that kind of thing way back in 2006. But through some discussions before, just before I joined with some mentors of the organization and then some of the stuff we had done early on that was the model we settled on is that we would charge for implementations as a one-time fee and ironically we charge about half now what we did in 2006. Yeah, but the core of our business and 96% of our revenue comes from monthly recurring services. So most of that is core product stuff. But then there are other add ons we’ve done, like credit card payment processing, integrated payments, just, you know, the add-on things and the value adds that we can bring to customers. But that core where our revenue comes from has always been monthly recurring.
Greg Head: What is an average monthly or annual contract for one of these practices? Maybe you have some really big ones and some average size or what is an average contract?
Scott Pickard: Yet we’re looking at around $1200 a month. There are a few idiosyncrasies in there. But when we look at doing some budgeting, which we’re doing just for next year, you know, around 1200 dollars a little bit more is what we’re charging our average customer.
Greg Head: Do you have sales and marketing in the specialty world? Are you sponsoring the events or putting out content and marketing or building relationships with influencers or the other complimentary products that you integrate with? Or is it really just to serve your customers well, they’ll tell their friends because everybody’s talking to each other.
Scott Pickard: Largely. This is a very viral market, and so we have internal sales folks who manage leads and email sequencing and all the regular kind of marketing stuff that goes on. But we don’t have a sales force. Never have. That’s not true, we have, but we let them go because they didn’t sell anything because they were kind of they were more traditional sales, not solutions providers like we try and do it. So we have a small force, we do a little bit of social posting, which actually only started about a year and a half ago. Before that, we pretty much had nothing. We had what we think is an informative website, but the big thing is the viral marketing, and oftentimes we’ll get calls it’s we’ve heard about your software from these places can we get a demo, Can we get pricing and when can we start? Because there are just so much back door conversations going on that vet to vet about what works and what doesn’t. And this was part of our strategy early on to provide good service and solve their problems, which I repeat over and over and over again because it works for us. And that’s what’s really growing our business. So we don’t have a big outside force, and probably never will. But as we’re moving to the SAS model now for a new offering still within the equine space, we’re doing more of the traditional SEO blogging, that kind of stuff, so that when customers are ready they’ll find us as opposed to us having to pick up the phone. Because one of the other challenges we have is that when the vet is busy being a vet during the day, they’re not answering their phone wanting to talk to software salespeople.
Greg Head: Because browsing social media, reading content, or anything like that.
Scott Pickard: Exactly right. So we just have to be there when the time comes and that’s proven successful for us. Could we do it better? Could we do a bunch more stuff? Absolutely. But for the most part, it’s proven that it’s worked and we stay true to our roots as we go forward.
Greg Head: So in between startup and then your recent acquisition and now you’re expanding out, what were some of the big either challenges or inflection points that helped you grow? I could hear a steady every year and a little bit more of everything, but you know, that ten-year stretch in between, what happened there that was interesting?
Scott Pickard: Well, I think some of the lessons learned, and these are pretty deep for me, is cap tables. Make sure you have a really clean cap table and you understand where you’re at if you’re looking towards an exit. If you’re looking towards funding. If you’re looking for factoring, whatever the case might be, you need to really or somebody really needs to understand when you do something today, what impact does that have? And if you sell, eventually sell your company for $5 million or $10 million or $100 million, a billion, That number is just a good story. But it’s really on the waterfall side of that. Where does all the money go and who’s actually making money at the end of the day, and what are they putting in their pockets? And so whether it’s a finance person, an early investor, you know, the C-suite option holders, whoever else it is, the number at the bottom of that really is what matters, nothing else. And so to really understand what that waterfall looks like for your business is, is a massive key lesson that I’ve learned and something that I work with other early-stage companies on understanding because not all funding is equal. Not all financing is equal. Revenue is your best path to growth. Now there’s a place for funding and there’s a great place for growth capital. There’s no question about that. But at what stage? And to do it strategically in the right way, that’s the real value. And having those.
Greg Head: Conversations to your cap table is the percentage ownership of everybody who’s put in money or was promised a piece of the company and you don’t get any profits along the way. You got maybe there is some profit sharing or something, but it was the promise of someday when we sell, this will divide it amongst each other. The owners on the cap table, the capitalization of the company. What specifically was the lesson there? Was it just kind of messy when these vets came together and shook hands and put chipped in some money or other promises were made and it just gets kind of out of hand as people are using the equity shares of a company like free tickets or something or what was the mess?
Scott Pickard: Yeah, I think that the messy part was is some shares were given away early at the foundation of startup that shouldn’t have been. At the time, it was a great idea and almost always is, but it wasn’t that forward-looking. So when we get to an exit, what does that look like in hindsight? And then, you know, bringing on other investors, and because we’re a Canadian company and we had some US investors, all of a sudden there’s now some complexities around crossing that border and tax. And so we’ve spent a lot of money with big four accounting firms and tier-1 law firms making sure we did it right so that when an eventual exit happened, it would just kind of flow out and it would be clean and we weren’t going to have back problems and stuff like that. So it just gets expensive when you think we’ll take any money to start because we think we need it, which is not the case and whatnot. A lot of early-stage companies who think they need financing the way they do it, money comes in and they’re just salivating and they take it. It’s a mistake. And so things to look at there. Another part of it is the kind of governance and structure. And we had a lot of vets that were involved in the business, which was great. But one of the things that we missed over the course of our business was those outside people who have grown companies to eventually whatever size and what are the things that we need to do that we’re not doing because we don’t know what we don’t know to help us to maximize shareholder value. And look.
Greg Head: This was a relatively small company, with fewer than 20 employees most of the time. Right? And you had a little bit of investment and some ownership from the original veterinary hospital group. But did you have a board and advisors and all this or could you just run around being an independent business infusions company?
Scott Pickard: I had a lot of flexibility, which I was grateful for. We did have a board, but that was a challenge in some ways because there were some conflicts amongst there and just the structure of it, which is pretty typical for early-stage companies. It just wasn’t a properly functioning board and no fault of anybody’s because it seemed like the right thing to do at the time. But then when you look back, there were just some fundamental errors that we collectively made. And it’s not one person’s fault or blames this or that. It just everyone thought it was a good idea at the time, but it was just some significant misses that could have significantly increased the value when we eventually sold ad what we were trying to do.
Greg Head: Were they business strategy issues that we could have taken another decision and that would have improved things?
Scott Pickard: Yeah, So we didn’t have a lot of software strategists in our sphere of influence, we’ll put it that way. But one of the great things we had was vets who knew the industry and collectively been in the business for hundreds of years. And so when we were kind of growing and everyone was eager and excited about what was happening, we had a couple of big things happen, like the recession of 2008. We were okay because we were doing monthly recurring revenue. We’re profitable. But that was a killer for a lot of things. And things slowed down a lot for a year and a half. Then 2014, the same thing happened. And so we were again in a good spot. Some of the things that happened in the industry as a result of this are triggered events like corporate groups and private equity came in and started to buy veterinary practices because over the long term they’re profitable, and they make some money. And so we saw this even over COVID is the number of vets that have sold their practice to corporate groups. Private equity groups have gone through the roof because it’s a good exit strategy for them.
Scott Pickard: So some of the things we saw over 15 years was because we had the vets on our board, is these are trends, these ones we need to worry about, these ones we don’t because they kind of understood the market and the players and so on. So that was really good. But one of the things we didn’t do properly was take advantage of some of those downturns to expand into new markets, expand into new offerings and try different things, parallel things to what we’re doing, but try new things. And we just kind of got stuck in the minutia of not really agreeing to what we’re doing. And so nothing happened. And so we missed some very significant opportunities that it could have really when we sold, you know, 10-20-30X’d to what our eventual value was because we just didn’t have the alignment of what needed to be done. I think we all saw what could happen, but there were a bunch of different opinions on how to get there. And so we just stalled and it just never got done.
Greg Head: Is this a challenge of being, I don’t know what the tech ecosystem is like in Calgary. It’s a big, big city, but was there not a lot of tech mentorship or tech ecosystem that was available? Silicon Valley is the epicenter and there’s a lot of intelligence about how to run a fast-growth software company, for example. But was it just not available too much in Calgary or did you guys just didn’t take advantage of it in the right way?
Scott Pickard: Yeah, largely didn’t exist up here to be very blunt. And I’ve been involved with the tech space here for quite a few years and where Calgary is at now, you know, especially over the last couple of years. It’s phenomenal. And there are some good unicorns that have come out of there that are being built. So it’s a good spot now. But 10, 12 years ago there were a few that had done it, but they were busy doing it again. And you know, the whole community ecosystem, it just wasn’t there.
Greg Head: And if you weren’t in the funding game, on the funding drugs, then that’s a whole part of the ecosystem in itself. I’m serious, right? You know, the steroids speaking of equine medicine, they’re performance-enhancing drugs. So you guys kept growing and growing steadily. It turned into an industry-leading company in this industry. Is there an equine vet that would not know about your software?
Scott Pickard: Yeah, In North America, there probably is, but there wouldn’t be a lot of them just because it’s so viral and.
Greg Head: You know, you’re the leader.
Scott Pickard: We’re Canadians, so we’re a little more bashful. You know, we don’t like to brag about that stuff, but we’ve been told lots of times that we’re the leader. And, you know, it’s interesting, one of the guys that we had built a relationship with over ten or 15 years and I still connect with them now he’s left one of the big as the CTO of one of the big public distribution companies. And he said we used to sit in our meetings and say, well, here’s what we want to do. What do we think HVMS is doing right now? Which is one of our core products, our equine product. And so that was a bit it’s interesting to hear that the big guys we’re talking about you behind closed doors and we were just going about doing our thing and didn’t really have context and now we do a bit more. But early on we just didn’t know what the rumor mill was about, or what we were doing. But we’ve been able to know what people call the gold standard in the market and that’s not going to last forever. There are some competitors that are coming in now because of the private equity money that’s coming into animal health, but we’re still doing our thing and looking after our customers and solving the problems and we hope we can have this position for a long time.
Greg Head: So as you guys were growing and becoming the leader in this industry, did you have offers for funding or acquisition that came in before it was sold in 2021 to Merit Holdings? Was that the first offer that came in, or was there a constant conversation and you said, No, not now? How did that lead up to the actual acquisition of the whole company?
Scott Pickard: Yeah, we had lots of discussions inbound. We’ve never really gone and run a process for different reasons. We can talk through or not talk about today, but because we were well known in the industry, we had numerous offers over the years that just weren’t that interesting when we thought they would get away from kind of the core thing of what we’re doing. And the vets decided as the shareholders that that’s not what they wanted. So This is fine, but it was a great learning experience to go through those discussions, see letters of intent, say yes or no, and negotiate different things. Some of the companies came back numerous times. And then we had the venture capital or more private equity coming in. Especially over COVID, we had like 47 inbound discussions that were happening weekly about the animal health business.
Now verticals are hot. It was really uncool and unsexy for a long time, and now it’s really hot. And you’re the leader, right? And profitable and installed base and these customers never leave.
Scott Pickard: And so it was really good because part of what we were looking for in an acquisition partner is somebody who was going to carry our vision forward. Now, we’re not naive enough to go, nothing’s going to change because it is, but we didn’t want to get into the buy it, increase pricing, cut expenses, and then flip it in the next two or three years. We just had no interest in that. So it was actually really enjoyable.
Greg Head: That’s the private equity game, generally speaking, right? They’ll and they’ll buy it out and clean it up and pump it up and flip it.
Scott Pickard: Yeah. But it was really fun for me to have those conversations. And I got my story down to like under 60 seconds about the history, the current, and where we’re going and what we’re looking for. And it was I almost looked at it like as it was a bit of a game and just to refine what we were doing. And then we went through different things and then a couple of things happened with COVID and we said, You know what? Now it’s probably time to make an exit. We think things will be good for the next two or three years, but we’re not really sure. And then Merit Holdings came along. It was a good long-hold strategy. It made a lot of sense. And so the time was right. And so we pulled the trigger.
Greg Head: So it wasn’t that the owners, 15 years are a long time for employees who have a commitment and owners who put some money in and didn’t see any return. I don’t know if you’re distributing profits to anybody there. So it wasn’t that just the clock had run out and everybody said, it’s time, let’s sell it. It was you guys wanted to find the right partner and it was the market was going to change and there was inflation in the market, right? It was a good time. Prices were up and you found a good home for it. Tell us about generally what happened with Merit Holdings there.
Scott Pickard: It was pretty quick, actually. Well, two phases. The first one is we had they had reached out to us through some connections who said who’s who in the animal health space and our name keeps coming up. So we had an initial call. We had some interest in that. We had an offer in LOI that just wasn’t quite what we needed and so we turned it down.
Greg Head: Isn’t that the great thing about a sustainable, profitable business is you could say No thank you and no harm done and you know you’re not desperate for anything?
Scott Pickard: Yeah. And then about six months went by and COVID was still a little bit of uncertainty on stuff. There was a lot of M&A happening, a lot of private equity money coming in, buying up more practices. Some of our competitors have got bought out and they were multiples bigger than we were. And so we made the decision that it might be time to look again. So because I had talked to so many people, I just went back to the trough, so to speak, pardon the pun, but had some conversations. And then when we went back to Merit, he says, Yeah, let’s try and do something. I think it was about a week later an LOI was in our hands and 90 days later we closed the deal. It was all cash on close and that was that. So it happened very quickly.
Greg Head: So they finally kind of hit your number or were there any other considerations besides the price? You’re still with the organization, It still continues. Your customers are still using the software and the employees are still going. But what other considerations besides the price and the vision came into play?
Scott Pickard: We wanted to do 100% cash on close because we didn’t know post-acquisition what the landscape was going to look like and we didn’t want to be held up. Don’t have control. So that was a big factor for us. The long-term hold strategy was something that was also important to us. Now, obviously, on day one, under new ownership, that story can change, but it hasn’t. And so we’ve been grateful for that side of it. And then part of what we had done before that is we had bought another software company, rolled it into our customers. We had done an investment in another consumer-focused animal health equine software. And so by looking at acquisitions, rather than building it ourselves, we could add accretive revenue, we could look at strategic assets that we could bring in that we knew our customers were looking for. And so part of working with Merit is to continue to build that acquisition strategy as we go forward. And so that’s one of the big things that’s one of their mandates.
Greg Head: To fill out the suite for your existing customer base, right? That’s a common strategy for verticals. If there’s a finite vertical, you don’t go sideways to other verticals, you stack up more things, you can sell them and you increase your share of wallet, right?
Scott Pickard: Exactly. And so that’s part of what our strategy was before the acquisition. And now that’s what we’re working on post-acquisition. But we can just now look at bigger things. And more global things because of the reach that they have as well. So, you know, the part of the initial things that we’re looking at when we’re evaluating companies is can we hold on to this for the next ten or 15 years? If it’s not if it’s a trend that’s happening in the market, we don’t see lasting now they’re not quite as certain revenue or recurring revenue, then it doesn’t kind of fit our mold. But it’s really about kind of now we can expand the what was the vision years ago because we have the right capital partner and the right expertise to do it.
Greg Head: And so you’re still running Business Infusions with the different products and now you’re adding other products. What has changed? Not every founder CEO who’s run it for a long time can live in a new system and isn’t given the keys to keep running it. A lot of things change. What has changed and what hasn’t changed since the acquisition?
Scott Pickard: Largely, we now have a bigger vision, which is always one of the exciting things for me is and I was always fortunate that our board previously gave me that latitude to do some of the things that I wanted to do. They totally agreed or understood it, not as a question. But now we have kind of a shared vision of what we need to do next. And this is something I’ve literally wanted to do for the last ten years. And so now we can plug that in and that becomes actually quite exciting. And so, you know, the transition wasn’t really easy because there was just a lot of things we had to do as an asset sale, not buying the company. And so there are just new things that have to get done. And it took a bit of time to get there. But all that kind of stuff is largely behind us now. We’ve hired some key folks to deal with some more of the admin stuff so we can go forward looking and do some of the things that we need to. And there are some pretty exciting things that are happening and opportunities we’re working on right now. That that’s really what keeps me charged up, is I’ve just wanted this for so long and now we can actually go do it.
Greg Head: And now you’re rolling up the pieces yourself in a strategic long-term way.
Scott Pickard: Exactly. Yeah. And that’s to me, that’s what this game is.
Greg Head: Yeah. Scott, you said an asset sale and not an acquisition of the company. Can you explain what that means for our listeners here?
Scott Pickard: Yeah, for sure. So what, because we were a Canadian company in part and there’s, there are lots of reasons for different factors for this but and liability and so on from there. But by buying the assets essentially Merit started a new company and then all the assets rolled into that. So it’s 100% owned by Merit. We have an operating entity which is Business Infusions and the legal stuff that goes behind it. But all the assets transferred over, including the people under new employment contracts as opposed to just buying the company, paying our shareholders, and keeping everything running exactly like it is. So there are just some nuances from taxes across the border.
Greg Head: Which it was kind of transferred into a new entity, really.
Exactly. Yeah. And because we were cross-border, we had different ownership groups in the US and Canada. For somebody to come in and just take that over was just messy. And so the better that are better route was just an asset sale where they just took the product and the people over and then it’s literally left to me to clean up the other mess on the other side, which we’re just about getting wrapped up now. But it just creates more layers of complexity but makes the most sense for the new ownership group going forward.
Greg Head: And so the folks that created this company did all the work to grow it up and own it and the investors and so forth. Can you give us a sense for the kind of the scale of the exit? It wasn’t you know, a billion dollars and wasn’t small, it wasn’t beer money. Somewhere in between. Was it life-changing for you or other employees who’ve been with it for a long time or the vets who spun this out?
Scott Pickard: No, it wasn’t. I mean, we made a healthy multiple, largely based on revenue. I mean, we were profitable, but that was a factor, but not the biggest one. But most of the vets that were shareholders are quite successful in their practice in the industry as a whole and have numerous other business operations. And so that was partly why they were willing to hold on for so long because it wasn’t just about the money.
Greg Head: It was a rounding error in their income.
Scott Pickard: Yeah, exactly. So it wasn’t you know, it’s not a game changer for anyone. And they’re going to buy a brand new yacht or something. But it had some good value for them. It was the right time, the right kind of phase to move on to next. And they could feel good about who we were selling to and what the strategy was. And it was just a good time. So that’s kind of where things landed on.
Greg Head: So looking back, you can look back at to the previous company, there’s a lot that hasn’t changed. Now there’s a transition and a new vision. And looking back, what is the biggest thing you would say, I couldn’t see it at the time, but now I see it, we should have done this differently. This would have changed the game. You mentioned a couple of things there, but is there something that you can share with our listeners that would be useful for them?
Scott Pickard: Yeah, this one is pretty clear to me: the team that helped build this. Almost all of them, except for one person who just left earlier this year, has been with us almost since day one, and they’re just phenomenal people who shared the vision and work their asses off to be able to make it happen. And so a lot of the stuff that I’m grateful for, for what we’ve done is our team. And when our team has worked well and gets along and is happy with what they’re doing, that translates into those customer conversations and their willingness to go the extra mile for the customers. And so Team First, but customers have helped us grow this up, and a lot of them have become friends over the years on the customer side, which is yeah, And so that core team is a big, important thing. The other big takeaway for me is the kind of cap structure, your cap table, and that board of directors and what are they going to enable or inhibit in order to do this much bigger than we did? And so it was a learning curve for everybody and a lot of ways, which is, okay, Should I do it again, and the chances are probably will, I would take a very different approach to how we build it out, the scale and scope at which we do it. When we take investors who the investors are and kind of what’s our horizon to be able to get to where our end goal is going to be?
Greg Head: And would you do the team any differently or you would say that was in the that worked column?
Scott Pickard: You kind of it worked exceptionally well. It wasn’t perfect, but that was a big driver of this whole company is in our existing team now. They’re just phenomenal
Greg Head: So when you look back at this, you know, 15-plus year journey, right? And all the travel and all of that, what is the most rewarding thing for you? Is that the award on the wall or the check in the bank or what? Can you look back and say that was worth the adventure, the blood, sweat, and tears?
Scott Pickard: I don’t know if there’s one thing, but I think the overarching thing is we did it, you did it together And now we can say we did it and we can tell the story and we can help other people not make the same mistakes and those kinds of things. So the biggest thing for me is that we kind of we went from an idea to getting to market to eventually selling it, and now it’s a global product. And I’ve, you know, had the been very fortunate to travel all over the globe doing this, meeting people, you know, helping out and it’s just been something that I didn’t ever think would happen, to be honest. But it’s just been kind of the whole journey is part of the success. You know, the money at the end of the day is good, but you can keep that, you can lose it. That’s just a tool. But it’s really the ability to say, we built this thing and we did it and it’s having an impact on a bunch of people all around the world. And that’s kind of fun for me.
Greg Head: Yeah, I used to think I wasn’t creative, like the musicians or the artists and the rest, but I realized that I like to create stuff out of nothing and create pave new roads and put new permanent things in the world that weren’t there before. And you’ve certainly done that on a global scale from this idea and this tiny team and tiny company. Congratulations on that journey. And it’s interesting, you’ve got a milestone in there. The acquisition, we did it and you’re still on the way. There’s plenty more to be done. And the work is never done, so a lot of attachment to the industry and those customers as people and their businesses, and these things go on and on. Anything else you’d like to add for practical founders out there, Scott?
Scott Pickard: I think the only thing that we haven’t really talked about is kind of this funding monkey that’s on the back. I do a lot of work in the local ecosystem now as an EIR with a bunch of different accelerators. And there’s so much of a focus on, you know, finding your ideal customer, profile your product market fit and go raise some funding. And I just think that’s such a fundamental error in teaching early-stage entrepreneurs or founders or CEOs the right model to get there because I just don’t think it is. I think you need to get to early revenue, get to some level of sustainability so that when you do go to raise the money, you have a foundation and a trajectory and good use of proceeds of what you’re going to do with it should you need it. And not everybody does. But a lot of companies are going to need some help on that side. But doing it too early is a colossal waste of time. Most times it’s not successful because they’re not even meeting the metrics of what the investors are looking for. And it just takes the focus off of solving the problems of customers and starting to build a stable business. So that’s one of the big things.
Greg Head: And there’s no leverage for entrepreneurs in this game. The founders have the money if you’re desperate. You are setting yourself up for either the wrong journey or it probably won’t work if you’re raising money because you need it, as opposed to I’ve got something going I need to get exactly from here to there and it’s going to pay off for both sides. Why do you think that is? I mean, it exists everywhere in Calgary and London and Sydney, Australia, Silicon Valley, the ecosystems are, all about the funding. Why do you think it is?
Scott Pickard: You know, raising money is easy if you have the right mix to offer investors. Raising money is not difficult, but when you don’t have the right pieces in the formula, it’s extremely difficult and it takes a long time. So I think so much of this is where you are. Silicon Valley is very different up here in Canada. You know, there was an article that was written and I forget the author, but six months ago that a lot of the early stage silicon founders, Silicon Valley companies, that potentially have some potentially don’t, but that cycle is we’re going to raise funding and then that can happen within two or three weeks and there’s enough seed money to get you started. That same process in Canada can take six months.
Greg Head: Of course. Everywhere else.
Scott Pickard: With five-year pro formas and all this stuff that is absolutely meaningless because there’s just not as much here. Now that’s changing. But I think what early stage people need to focus on is whether is it a sustainable business. Can you get to revenue quickly and then you go get the funding to grow it? That’s the that’s not difficult. But when you spend too much time trying to get an idea and get somebody else to pay for your idea in the development and market development, it’s just not going to work, especially not here. So focus on revenue and the rest will fall into place.
Greg Head: That’s awesome advice. And it’s really interesting to see you grow this company. And they say, I need this funding and you say, go get the revenue. And they say, I can’t do that. And of course, you did it over and over yourself.
Scott Pickard: It’s not easy to do it, but it’s doable. I say this many times, and even on this podcast, you solve the problems of what your customers need and they’ll pay you. And that’s how you’re going to build a sustainable business.
Greg Head: Right. Well, Scott, thanks for sharing your insights from your crazy journey here on the Practical Founders podcast. I appreciate you taking the time.
Scott Pickard: Greg, it’s been my pleasure. Hopefully, you can get the message out. I love what you’re doing because it is practical and true for what all early-stage companies should be listening to, what you have to say with the people you’re interviewing because it’s just bang on.
Greg Head: Thank you. Appreciate it, Scott.
In this episode, Scott explains:
- How their popular HVMS software was first created for internal use by a successful horse veterinary practice in Calgary, Canada
- How they grew steadily and efficiently with vet-to-vet referrals by their existing customers
- Challenges with board members who know their industry but weren’t savvy about the software business
- How Business Infusions grew to be the global market leader for large equine veterinary practices around the world
- The process of how they were acquired in 2021 and what happened to the company after that
Workforce.com Company Facts
- Founded: 2006
- Description: Business Infusions delivers a best-in-class veterinary practice management software technology solution to business-savvy veterinarians, practice managers, and hospital administrators.
- Number of Employees: 20
- Funding: Funded from a successful equine (horse) veterinary practice, with a little angel funding, then customer funding with revenue as a profitable business
- Acquisition: Acquired in 2021 by Merit Holdings in an all-cash deal.
- Location: Calgary, Alberta, Canada
- Scott Pickard on LinkedIn
- Business Infusions on LinkedIn
- Business Infusions website
- Merit Holdings website (acquirer)
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