The Pebble story
Pebble was started to fix a problem I had with my own business small business.
Back in 2004 I was running a chain of medical clinics that I had started with a relative who was a physician. We had some success and we grew rapidly from a single part-time location to 4 locations in Utah, and later an additional 3 locations were added outside the state.
As a business we did extremely well in a hyper-competitive market, but we were faced with the same problems that every local business has; high overhead and time-based inventory that was completely lost if it wasn’t filled.
The fact that we had multiple locations with multiple physicians and expensive technology served to magnify that those losses. Our break-even cost per location could be as high as $70,000 per month.
So, when we had a short term cancellation or a blank space on the schedule it was all hands on deck to get it filled since every unfilled appointment would cost us between $250 and $500 in direct costs and even more in opportunity cost and productivity. The front desk would spend a good chunk of the day calling patients to try to move them forward and make sure we didn’t have physicians and staff just sitting around.
It’s a big problem for every medical practice. In fact, the average single physician medical practice loses up to $150,000 a year just to missed and cancelled appointments. (Not gonna lie – pretty painful) With 4 clinics we may be losing as much as $600,000 a year to both direct and indirect costs that came directly from our top line profitability.
We did what every other medical clinic does when they have a cancellation or schedule change in 2 hours – we got on the phone until it was filled. It was slow, tedious, and wasted everyone’s time. Worse, we weren’t always successful.
What we were really trying to do was to match supply (our unfilled time) with demand (patients) who actually wanted to get in.
The following graph shows both how the potential value of your time-based inventory begins dropping towards zero at the same time that your business needs to fill or sell that inventory increases.
The value of your inventory drops to zero as your need to fill that inventory increases.
The goal was simple but there weren’t any tools that worked in this environment. There were 3 fundamental problems that any solution needed to address:
Speed - I needed something that worked in almost real-time, so that I could get a response and have the appointment filled in the next 5 minutes.
On-demand - I needed something that I could use multiple times a day with out spamming patients.
Control - I needed to be able to control who the recipients were and what they did. I wanted to send just to the people on my ‘next available’ list at any one time and to track their activity so that both the clinic and the recipients could see the current status and availability of the appointment.
Unfortunately, there weren’t any solutions that worked.
Email doesn’t work – it’s too slow, and there’s no way to manage the responses or let clients know once the appointment was taken.
Trying to text messaging patients one at at time is even worse since you end up in a conversation with each recipient and have to explain where you are in the process. It’s a mess.
Phone calling was really the only available option that fit the control criteria but it’s slow and expensive and doesn’t always work. (The$150,000 loss for the average physician mentioned above includes using the phone.)
It was keeping me awake at night.
To get what I wanted, I was going to have to build it.
I knew what the problem was and what the solution I wanted should look like, but I couldn’t find it. If I wanted to have it, I was going to have to build it.
So I did.
I called up a business friend of mine and invited him to have pancakes at IHOP one morning and laid out my plan to solve this problem and we started working.
I strung together an MVP using RSS, email and some shopping cart software that gave a local business owner a simple way to create an offer and send it out to customers. It wasn’t real-time but it worked pretty well and we started gaining some traction. Some businesses used it better than others and we grew to a few dozen businesses and a few thousand dollars a day in sales.
Our customers loved us, and they loved the product.
18 months later we threw in the towel.
We had 2 big problems.
We didn’t close down because the solution didn’t work – it worked really well and users loved it – but for 2 other reasons:
We were too early. When we started in 2004 it was before the iPhone or text messages, there was no app store or Google Maps and email was only really being used by local businesses.
I made every rookie startup mistake there was, to the point of being cliche.
In 2004 when we would walk in to a local business and explain the product, that they could have a button they could push in real time that would get them sales, they loved the idea. But at the time most businesses didn’t have either a business website, or an email. So we spent most of our time trying to get local business owners to understand why they should be using the internet, and then how to get set up. It would take weeks to get a new customer set up where they could use the system.
It was really painful and after more than a year we decided that it was going to be too slow to get to a place where we could support everyone on the team. It was time to shut it down and work on something else.
It was a real bummer.
I had spent some significant money, time and energy building something that I really believed in and knew would work, and had nothing to show for it other than some very hard learned lessons.
But those lessons I took to heart.
I was going to have to build it, again.
I spent the next 14 years working and building technology startups. I invested in a few, and I helped many others. Some of them crashed and burned, others were huge successes. (My LinkedIn profile if you’d like to take a look.)
All the time I thought that someone was going to fix this problem – but it never happened. So I decided that I was going to fix it, again.
Of course this time it’s a little different; we have the iPhone and apps, there is SMS and text messaging, and local small businesses are now incredibly familiar with technology and it’s benefits.
So this time I’m betting everything I have on a different outcome.
P.S. I’m asked often how Pebble is different. Here’s a matrix which touches on some of the ways that Pebble is different from group deal sites like Groupon or other marketing and advertising services.