Sean Heberling: Ronak, I'm gonna start with asking you, how do I correctly pronounce your name?
Ronak Vyas: You did a good job. Yeah, it's Ronak.
Sean Heberling: Okay. And your last name?
Ronak Vyas: Vyas.
Sean Heberling: Okay. So, with me today is Ronak Vyas. Ronak is the founder and CEO of MedCoShare, a company that's local to Philadelphia, one of its locations is in the suburbs. They've got other locations around the Philadelphia MSA as well. This is episode 10 of the Marion Street Capital podcast beyond the inflection point. So thank you again to our audience for tuning in to yet another exciting business story. Ronak, why don't we start with how did you wind up in the seat? What in your life conspired to start the company MedCoShare?
Ronak Vyas: Yeah. Yeah, thanks for thanks for asking. So, you know, we got to go back 10 years and I was completing my MBA at Temple University and I was also a commercial real estate broker. And in my broker role, I was representing tenants. Sometimes it'd be medical tenants looking for space. And what I noticed is there was a major discrepancy between what landlords wanted and what these smaller private practices wanted. Right? So, these landlords, they want long-term leases. Oftentimes, they want large security deposits or for you to contribute to the fidel cost., they also want you to lease a larger amount of space than a private practice typically needs. So, you know, you look on the other side and for these practices, they don't want any of that. So, what we felt was- we meaning me and my partners- is there was a problem here that could be solved. So, we could sign the long-term leases with landlords and, you know, basically furnish it and get a turnkey,, make it ready for the docs and then provide it in a medical co-working model where they're able to rent, you know, exam rooms part-time. If they want to rent rooms full-time, that's also an option. And we have a third option of a virtual address. So, if you're only, let's say you're 100% pure telehealth and you just want an address, that's fine, too. You know, we can we offer that,
Sean Heberling: right? Who else is trying to do what you guys are doing?
Ronak Vyas: Not too many people., you know, I think nationwide there's say about 20 companies that are doing it., when we first started researching this and coming up with a business plan,, at that time there was less than five and we're going back in 2018 2019, so it's growing in size, but there's still no national player., I believe even the largest player right now only has five locations.
Sean Heberling: Okay. Why do you think it is? I mean, I I'm sure you hate the comparison, you know, that you've probably heard it a thousand times, oh, you're the we work, but for the medical space, there were plenty of competitors in the WeWork space. WeWork just put the most capital to work the fastest prior to going public via a spa acquisition and then ultimately going bankrupt unfortunately. Why do you think so many fewer players have tried to address the medical space as opposed to traditional office space?
Ronak Vyas: Sure. So it's a unique combination of skills because you need to understand how clinics operate. You have to understand, you know, the healthcare industry and the regulations. And then you also have to understand real estate and whether you're leasing an office or you're buying a building, you really need to get the numbers correct because the cost of going in will determine your margins and what you can charge to the private practices. So if you overpay or you do a bad deal, it can have pretty bad consequences, right? So you have to marry those two skill sets which I think not too many people have.
Sean Heberling: No doubt. So essentially it's a lot harder to do this in your space than the kind of commodity office space.
Ronak Vyas: Yeah. Because you know with general co-working it's not as regulated, right? you can get away with the large open floor plan. You know you provide some amenities like free coffee and maybe a game room and things like that to entice people to join, but in the medical world, it's not about, you know, an open floor plan and just giving people free beer during the day, you know, which is what WeWork did, right? So, it's very different. I think it's harder than people think it is.
Sean Heberling: Maybe you guys can give people free Ozempic or something. So tell me about the team and the type of expertise that you had to put together to get this ball rolling.
Ronak Vyas: Yeah. So, myself and three of my friends, we co-founded the company and we opened our first location in 2020. The background is- again I'm in commercial real estate. One of my partners is an engineer with a real estate background as well. Another one is in healthcare management and we actually started a business together prior to going to and launching MedCoShare. My fourth partner, he's a doctor and also a classmate of mine at Temple and that's where we met and you know I have a great relationship with him and he really helps me sort of understand from a medical perspective you know what to do and what to look for.
Sean Heberling: By the way, a quick plug for Philadelphia entrepreneurs. I've interviewed a number of entrepreneurs in the Philadelphia area out of Temple, Drexel. I'm out of Villanova. So kudos to all the Philadelphia institutions of higher education for giving people the skills and the courage to pursue entrepreneurialism.
Ronak Vyas: Absolutely. And I think a lot has to be said for the city as well. I think it's a fantastic city to launch a business in. Obviously there are challenges like there are in any other part of the country. But overall you know when you just see access to other entrepreneurs, other businesses access to health care as well as just like the ecosystem that the city provides. It's really a great place to launch a business but then also for other people to want to work there, right? You can attract top talent as well. So I think it makes a lot of sense. It's not as expensive as New York or San Fran or these other cities. So I think also from a cost perspective, Philly is a great place to start.
Sean Heberling: I'm glad you feel that way. So take me through the progression of the business. What came first? Did you present the business plan and get money? Did you find a location and start building that out yourselves? Did you find the tenants first? How did you get all the pieces put together?
Ronak Vyas: Yeah. Great question. So when we started, you know, back in 2019, it was really just about putting some money together and then just coming up with a strategy. And in parallel, we were also looking for space. And the funny thing is we were turned down by a lot of landlords because they were like, we don't understand this model. Why wouldn't, you know, a doctor just buy their own building or lease their own space? We don't understand why this needs to exist. So we had a lot of doors, you know, shut on us in the beginning., 2020 we had a landlord who was willing to work with us. We kind of paid a premium and just to secure the space and we signed the lease in January of 2020 and then as everyone knows COVID hit and basically the world shuts down in the US starting in March, everyone's work from home. So we essentially couldn't operate for the rest of the year. So even though we're like we were really excited about being able to start and open a location and to test our theory out, we were shut down for almost a year. So it became really difficult. In 2021, We had some hard decisions to make. But fortunately everything, you know, panned out and we just kept going.
Sean Heberling: Okay. So this was your first location. Is this the King of Prussia location?
Ronak Vyas: This is the Philadelphia location.
Sean Heberling: Philadelphia location. Okay., all right. So, what did you do next? Did you get more money? Did you get another- get your first tenant or more tenants? How'd it go from there?
Ronak Vyas: Yeah., so we initially raised a little bit of money between the founders and a few investors and that was money for us to open the first location. From that we were able to get a few members, not too many but you know enough to you know just test and prove our strategy that this actually works. In 2021, we saw a big uptick in physicians that were either furloughed or burned out. So they you know they joined us and then we said okay there is actually something here and we think it's going to continue. So we decided to fundraise again on WeFunder and then also secure and look for our second location which is in Marlton, New Jersey. So we were just growing organically. We didn't raise a ton of money because we felt like we need to really master the execution and the strategy behind this before we go out and raise a lot of money. So going back to WeWork, one of the reasons why they failed is they just got too much money. They didn't really have a business that made sense that was profitable, right? They were always bleeding money., and yeah, they were just giving too much and without a clear vision. I mean, just opening more locations isn't the answer.
Sean Heberling: Right? So, you got the second location open, you started getting it filled.. What triggered the third location beyond that?
Ronak Vyas: The second location in Maltton, at the time it was our largest and it still is actually, it's 5,400 square feet and that filled up pretty quickly. So it took eight months for us to break even there and that was fantastic because with the first location it took a year and a half you know a year being mostly COVID the pandemic. So, I think just having the demand and then obviously the revenue to help support growth, that really helped us, you know, secure our third location in King of Prussia and then our fourth location. and now we're in talks for our fifth location. So just slow and steady. And that's kind of where fundraising comes in at this point is now we have a thing that we really feel like we can scale up.
Sean Heberling: Yep. Okay. Great. I love hearing this sort of approach because I see the WeWork style of approach far too often. Granted, it's gotten much harder in the current age for most types of businesses, maybe not AI or robotics types companies. But for your company, most sounds like it's been mostly bootstrapped to this point. What gives you the confidence that you guys have kind of mastered the business model at this point?
Ronak Vyas: Yeah. So I mean our cost of acquisition has gone way down. You know before when we started it was hovering around 2,000. Now it's less than 200. So basically our economics have completely shifted from year one to year now. and that's really helped us with kind of understanding the metrics and what we need to do from an economic perspective but then also the demand. You know, we can test the demand and we see the demand, right? So, we can put a feeler out there for like, hey, we're opening in this county. Are you interested in joining the wait list? And so, we can see, okay, is this going to be a good good place or not? So, with our in just internal marketing strategies, we're able to like test demand and so we feel more confident that this will kind of continue to grow based on, you know, a few different things. And obviously demand is one. understanding, you know, economically what to do is another one. But then also where is the healthcare industry going in general and where are private practice going in general? And we're pretty bullish that there's going to be more and more docs that want to open their own clinic, especially with everything that's going on. You know, being an employed physician nowadays, it's a lot harder. It's more stress, more burnout. and for a lot of them, it's just not worth it.
Sean Heberling: Okay. So, it sounds like you've got a product that the market wants. How sticky are the tenants?
Ronak Vyas: It's pretty sticky because I mean, you can imagine like once patients start coming to an office and if you say, "Hey, we're moving." A lot of them are not happy with that, you know, and they'll either find a new doc, sometimes they continue coming to the old location, right? And so like not only is it added cost and complexity and time when you shift locations, but it also hurts the patients. So we've had really good retention and it's actually worked out really well for not just the docs but for the patients as well.
Sean Heberling: I would imagine too some of these practitioners have some pretty cumbersome pieces of equipment in there that would be pretty difficult to move.
Ronak Vyas: Yeah, and you know, the equipment isn't so much the issue. Obviously, you know, it's always hard to move, you know, anywhere from a house or an office or anything, but it's just, is it really worth the headache, right? If you're generating revenue, if your practice is growing, if you have less headache of maintaining the space, if it's a flexible model where you have the option to to leave, whether it's a month-to-month or one year membership, you know, it just makes more sense.
Sean Heberling: Yep. How much visibility do you get into your tenants' financial viability?
Ronak Vyas: Not much. Or any, I mean, we don't check their, you know, their financial sort of viability. Obviously, we want to make sure they're licensed and we have insurance requirements. But we basically just try to support these practices no matter what it is. And the real estate is one way but the other way is through services. So we offer services to help their practice grow. So whether that's marketing, billing and scheduling or just even handing, you know, letting them know who we partner with in terms of credentialing or other companies that can help them get started and grow and just continuously try to improve.
Sean Heberling: Okay. Yeah. So, you reminded me that when you and I first spoke, you mentioned that offering common services to your tenants could be part of the next phase of your growth. How are you guys thinking about that?
Ronak Vyas: So, right now, you know, it's two different businesses, right? So, you have the real estate, which we know what to do there. and then you have the services that we know that this is in the long term a great offering financially for us then also for our members. because now you know it could be a one-stop shop and we're vertically integrated. But because it's a new business, there's always challenges, right? And so we feel like we have to invest a little bit more into this side of things so we can get that expertise. We can hire the you know the right people and top talent to grow the division. So you know we you want to fill the gaps that you might have a weakness in right and I think for us we're very aware of what we're capable of and what we're not and what we're not it capable like you know what we're not experts in we just want to make sure that we hire the right person for that role.
Sean Heberling: Yep. That makes perfect sense. Okay. So, you guys are out raising right now, right?
Ronak Vyas: We are. Yep.
Sean Heberling: How much are you raising? What's the security instrument you're using? What types of investors are you looking for? Give us the rundown there.
Ronak Vyas: Sure. Sure. so, we're raising on WeFunder right now. So, it's a crowdfunding platform. The goal is 1.235 million. raised a little over 200,000 so far. It's still an active campaign so investors can find us there. That's done through a safe. We're also negotiating term sheets with other larger investors who may want to do things differently. You know, if they don't want to safe and they want to invest a little bit more money, we're open to that conversation. So that's like that's ongoing., but if that doesn't happen, you know, approaching angels in the crowdfunding route is basically our go-to strategy for now. But we are entertaining conversations with larger you know, angels and and larger kinds of funds.
Sean Heberling: Yep. Okay. Fantastic. By the way, we'll definitely include a link to the Wefunder campaign when this podcast gets published. Absolutely. We were happy to support local entrepreneurs and honestly any entrepreneur any way we can.
Ronak Vyas: Yeah.
Sean Heberling: Ronak, outside of capital, what would you say is the company's biggest challenge at the moment?
Ronak Vyas: Scaling real estate is always a challenge, right? It's not something you want to rush. So you want to find the right spot. You want to negotiate a good deal. You know, you want to fit it out properly. You want to make sure you set it up properly. So, that can't really be rushed. So, you know, you have to have multiple locations that you're negotiating with. and that way, you know, you can do more than one location per year. And that's the goal is to open multiple locations per year. And there's different ways of doing that, but we're very aware that, you know, real estate in general is just hard to scale at a high level. A lot of times when people try to do that, a lot of mistakes are made. they overpay. They grow too fast and the members don't come fast enough. So they're always operating a loss. And that's kind of what happened with WeWork and a few other co-working companies. So that's one challenge. The second challenge is that this is still really new. So even though that poses an opportunity for investors to get into, you know, an industry that's really early, the challenge is you still have to educate the doctors and the general public that this is something that's really beneficial in healthcare.
Sean Heberling: Okay. How do you generally structure the leases with your tenants?
Ronak Vyas: Typically they're month to month. Okay. And yeah, and I wouldn't even say they're leases. I mean it's similar to a gym membership.
Sean Heberling: Ah.
Ronak Vyas: So you sign a membership.
Sean Heberling: That's why you keep saying members. I keep saying to the tenants. You keep saying members. I have to change my lingo here.
Ronak Vyas: Yeah. Yeah. No worries. So, you know, when you go to the gym,, basically typically you're paying month-to-month, and you're paying for a right to utilize that space. You know, it gives you access to use the space, but you don't run it. You don't own anything., it's just you go in and you do your workout and you leave. Very similar for our members is they are given basically the access- the right to access and utilize the space right and they don't have any headaches on top of that it's month to month if some people want to lock in a a good price they might want to do a one-year or two-year agreement but the majority of our memberships are month to month.
Sean Heberling: Okay that's super interesting. I can see how that would be really appealing for a number of different types of health care practitioners especially in an environment where you know margins are always getting squeezed for these folks. What types of practitioners aka members have you attracted to your properties?
Ronak Vyas: Yeah No that's a great question. So when we first started we mostly thought it was going to be primary care or maybe just sort of like entry level you know services. So like a phlebotomist, for example. We've been pleasantly surprised that the need has run a wide range of specialties. So we have everything from ENTs, dermatologists, cardiologists, we've had chiropractors, acupuncturists, massage therapists, you know and everything in between. And some of these docs are surgeons and they do pre and post care at the offices. They do small surgical procedures at the offices so that was, you know, fun to see but yeah it was pretty just mind-blowing as to what we could really host in our locations.
Sean Heberling: That's super interesting. Okay. Talk to me a little bit about going to market. How are you guys finding these folks and sharing your message with them?
Ronak Vyas: Yeah so we've had active like marketing campaigns but word of mouth is is really powerful. And then also having a great website that can basically- is a lead magnet. So you know we emphasize internally that we need to focus on SEO and design and being able to just show up in search results. And so and then when people find us being engaging enough really having them take that next step to booking a call with us and reaching out because that's you know where we can really educate them as to our whole process. You know it's not a simple thing that you're selling and so once we get them, we get a meeting the tour you know doing a physical tour is the best way for us to basically help them understand that this is could be a very viable model for them and then once they're in or even even before they're in they start telling their colleagues about it because it's something new something that can be, you know, beneficial to to them their colleagues and so we incentivize the word of mouth marketing as well through you know just a referral program so that's like our you know main main ways of of attracting new people but then also we'll like testing new markets by putting feelers out there right? You know, trying to create a wait list. We're just asking our internal members right now, hey where do you want to go next? You know where there is like a big gap that you see is not being served right? So a lot of different things but really much more refined than we had it in 2020.
Sean Heberling: Okay Makes a lot of sense I mean you're doing what a good entrepreneur is supposed to do right? Figure it out kind of as you go and as you learn and know more you take advantage of that.
Ronak Vyas: Yeah and always ask the customer.
Sean Heberling: Yep.
Ronak Vyas: Right.
Sean Heberling: Absolutely They're always the most knowledgeable in the space right. Talk to me about the space itself If an empty or vacant medical office property were to come up for sale, what makes a good one for your model?
Ronak Vyas: So there's quite a few things that go into it. So there's no scientific method that you know the best one to go after and it will definitely succeed. There's nothing like that but there's a few things where you can kind of piece together and kind of make an educated decision on so number one, you know, where where it is? You know what's the quality of the neighborhood? What's the quality of the demographic surrounding that location You know what's the household income? How many people have private insurance? How many people use Medicare Medicaid or maybe they don't have insurance. All those things matter, the quality of the construction itself matters because you don't want to be, you know, in a class D building and offer class A services right. So the building you know the looks and feel of it also have to match with what you're offering. So that's important and then also for the doctors, you know what's the right mix of doctors in that location So if there's too many let's just say primary care docs you know within a five mile region do you really want to open another one and compete with all of them? Right? So then we kind of do like an over/under study of like okay what is actually the health care in the area? Like what are the services? What are the docs? Like what's everything you know within the 5-10 mile radius because for the most part patients will go to where they're close to like in terms of where they live or where they work you know. Unless you really need to. Nobody likes to drive an hour for medical care right? And so you know we take all that into account and then just try to determine you know based on that data, you know, is this a viable project right? And if so, how long do you think it would take for us to get to that occupancy that we need where we're generating cash flow?
Sean Heberling: That's very interesting, too. How are you guys getting your deal flow in terms of properties to evaluate?
Ronak Vyas: I mean, that's where I come in.
Sean Heberling: Yeah.
Ronak Vyas: That's my background, right? So, you know, along with being the CEO, I'm the in-house real estate agent.
Sean Heberling: Yeah.
Ronak Vyas: Right.
Sean Heberling: Right.
Ronak Vyas: So, fortunately, I have a lot of relationships with landlords in the area in the Philadelphia region. But we also use the services of JLL. So they're the largest healthcare advisory firm in the world and so we work with a great team over there and typically they're like- do our first layer of okay these are all the offices that are available. What do you want to tour? And then after that, we can start, you know, basically drilling down and say, "Okay, well, we like this and we think this one's better." And then kind of just start negotiations with landlords that way. We're looking to partner with REITs or large landlords who have multiple buildings in different locations., because it would make sense like if we're able to open in let's say five locations with one landlord, it makes it a lot easier than doing five different leases.
Sean Heberling: That makes perfect sense. Okay, great., Ronak, we're approaching time., I'm going to ask you, what is the one thing or what is one thing that our audience could do to benefit you and or MedCoShare besides going to WeFunder and popping in a credit card?
Ronak Vyas: Sure. Sure. So, I'm going to be a little bit greedy if you don't you know don't if you don't mind. There's there's two things. So,
Sean Heberling: Okay. Awesome.
Ronak Vyas: Number one is if you are a doc or a nurse or a PA and you're looking for space please reach out to us or if you know of someone that's looking for space you know any of your peers we would love to chat with them. And then number two is obviously WeFunder or if it's not the right investment for you but you know someone who thinks that this would be a good fit for them and their portfolio we would love to chat with them as well.
Sean Heberling: Fantastic. Totally totally logical requests and I'm sure our audience would be happy to put some people forward on all accounts.
Ronak Vyas: Thank you.
Sean Heberling: So Ronak I really appreciate your time today., I also want to thank the audience for making time to tune in to yet another episode of Beyond the Inflection Point and we'll be back with you soon.
Ronak Vyas: Yeah. And I appreciate that. And you wore a jacket. I didn't get the memo. I should have dressed a little bit better.
Sean Heberling: No, Ronak, we're very casual here. I only happen to have one on today because it tends to be very cold in my office on warm days, which it obviously is today. and then I'm attending an event tonight where a jacket is probably the most appropriate attire. So definitely don't. I'm usually very casual.
Ronak Vyas: All right. Very good. Thank you, Sean.
