Steve Kaplan: Hi, I'm Steve Kaplan and I am the Neubauer Family professor at Chicago Booth. And it is my great pleasure to introduce Jake Crampton, the winner of Chicago Booth's 2021 Distinguished Alumni Award in the Entrepreneurial category. Jake is the founder and CEO of Medspeed. The market leading provider of same day transportation services to the healthcare industry, which he's going to explain to us, and over the past two decades, Medspeed has grown from a Chicago-based startup to a national business with over 140 hub operations in 29 states, a client base, including a quarter of the top hundred health systems in the country and roughly a thousand employees. Now what's great about this award is Medspeed began here at Chicago Booth as a final project for Jim Schrager's New Venture Strategy course with the original seed of the concept coming from Jake's close friend and classmate Everett Truitt.
And then the two of them went on to enter and win the Edward L Kaplan New Venture Challenge the second year we did it, shifting Jake's focus post-graduation to launching the company. And Jake has led the organization ever since through changes and evolution while retaining its spirit and culture. I am really delighted by and proud of this award because Jake was a student with Medspeed in the first class that we ran around the New Venture Challenge and of all the New Venture Challenge teams and winners, Jake and I are pretty sure that Medspeed has created the most jobs. So, Jake, welcome.
Jake Crampton: Steve, thank you very much for being here today, to talk with me and more broadly for Booth’s, really, really lovely recognition of the work that we've been doing in Medspeed.
Steve Kaplan: Terrific. Well, now I'm going to start asking you some questions, so.
Jake Crampton: Bring it on.
Steve Kaplan: What exactly does Medspeed do? And is it what you set out to do?
Jake Crampton: So, Steve, I think you did a great job actually of explaining that in your introduction. We do, if we're going to give sort of the anodyne description, we give, we provide specialized same-day transportation services to healthcare. But to give that a little more color, if you think about all of the things that need to be in the right place at the right time for healthcare to happen, things like specimens getting to labs to be tested, pharmacy getting to either a point of care, a person's home, as the case may be. Supplies, non-digitized radiology, shareable medical equipment, and semi-innumerable other things. We design and then operate the transportation that works to get all those places in those right places at right times. And we really described this as we're the logistics layer that enables the clinical layer of healthcare to do its job.
But if you allow me, when I was first starting the business, I met my wife, and we were on our first date, and she asked what I was doing. And I gave some description, probably not totally dissimilar to the one I just gave him. And she looked at me with a quizzical look and said, "I don't really understand." And I said, "Okay, okay, okay. I'm starting a business to drive around blood and urine." And I still use that one pretty often. So that is part of what we do. And we did, you're right. We got started with three people in Chicago working for a clinical laboratory. And our original business concept was very focused on the laboratory space. A few years later, we branched out and started diversifying the services really to move all those different kinds of things that I described, and now here a short 15 years after that move, we're going in 29 states as you said, with gaining on 3,000 people, we call ourselves [crosstalk 00:04:25].
Steve Kaplan: Three thousand people? Oh, ok, I was way too low.
Jake Crampton: That's okay. You gave me a chance to throw a little surprise out there. That was great. And more importantly, our value propositions evolved. It went from sort of, we're going to try to do a really good service for a fair price to really kind of changing, I think the way that at least I hope our customers are using logistics, which is, it's really an enabler. It's something that can help a health system and really a healthcare ecosystem more broadly, do the job more effectively and more efficiently if you get it worked out right. And that's been our job here for the last 20 years.
Steve Kaplan: That's very cool, because I mean the way I explained it to people is that when you started, you had all these clinical labs, you had all these doctor's offices and they were all sending their own drivers and cars to each other. And so they're all intersecting. You basically said, we're just going to do it for you. So instead of 10 drivers, 10 cars, which were poorly maintained, you have one car or van that's, well-maintained, it's safe, and you do it. So you take out 10 for one and you improve quality and timing. And I guess you're now doing that on a bigger scale.
Jake Crampton: Yeah. It's funny. The same principles hold, although they're different. Everett's original seed of the idea was, imagine a dock office door with a lockbox. And if you've ever noticed things laying around, when you go to the dock, those specimens are put in those at the end of the day so they can be picked up and taken to the lab for testing. And the original seed of the idea, Everett said, "But if you really look closely, you'll see there's more than one of those." And the reason why is if we have the same dock, but maybe a different medical condition, or more likely a different health plan, it'll mean that there's a different lab coming to get our specimen than the other guys. And so you have these multiple people showing up to the same door. Can we make it one person?
As it turns out, our core market today is not the standalone clinical lab, but rather the integrated health system. But interestingly, the same kind of fragmentation dynamics occur even within a single health system, let alone, if you're dealing with many in the same geography where the pharmacy might have a few drivers, the lab might have some, one hospital might have some affiliated clinics that it has a relationship with a messenger service to provide those services. So, the same idea of unifying and then elevating the service. That principle has actually helped.
Steve Kaplan: Very cool. So now let's go back. So you had the idea, you won the New Venture Challenge and then you decided to start, how was it getting funding? Was it easy, hard? How'd you figure out how to do that?
Jake Crampton: Well, these are all very much described as a series of sort of one step taken, which leads to another, which leads to another, I guess, Steve, is the way I describe it. And my plan was not to start a business out of business school. I came to Booth because I thought I needed to get a job. I had founded a business shortly after graduating from college, pretty accidentally, I guess I'd moved to Mexico. I was teaching English, had an idea of how to serve a special group of students. And long story short, I ended up starting a business and living in Mexico for four years. And I decided I loved business. And I thought, maybe I should learn something more about it and was delighted to have the opportunity to do that at what we then called the Graduate School of Business, we now call it Booth, and came there to get a job.
And that's what I'd done. I was really happy guy. I had gotten the internship I’d hoped for, and I was offered a full-time job, which I'd accepted. And then this thing sort of came out of nowhere in Jim Schrager's class, and then with you, in the class for the competition, and over time, it just became, I don't know if clear, but I became convinced that it was worth trying it. And [inaudible 00:08:52] ...out. We were really lucky, a handful of people at s a company that was going to employ me invested. I've always joked that was a small price to pay for not having me on the payroll, and a little friends and family and a little networking. And we were able to raise enough money to get started and take the first steps and raise a little bit more along the way.
And only about a year and a half into operations we’re going out to raise what we thought would be a very, third small round to kind of just get us to the next milestone. And we met the people that have now been our business partners for almost 20 years, and have been not just our capital partner, but our partner in every single respect in building the business. So it was really hard. I mean you spit out 10 sentences and it goes pretty fast, but there were a couple of moments where we were hanging on by a thread before those rounds closed and pulling it together. So, I've tried to block those memories out, Steve, to be honest.
Steve Kaplan: Is there any middle moment or thing where you just made it or that's worth talking about?
Jake Crampton: A life-or-death moment kind of thing? There certainly was, before we formed our last round of funding, or at least that ultimate the finding of our long-term capital partner. However, probably the closest life-and-death moment was not terribly long thereafter. Talk about a way to trial test the new partnership. In 2002, we were operational for just a couple of years. We'd grown nicely, but we had one customer that accounted for 70% of our revenue. And which happens when you're a little business, you can get those distortions. And anyway, they were acquired, and they were acquired by one of the two groups that at that point in time were our absolute top of the pyramid targets if we could scale our business and hit the business plan that we wrote with you in the new venture challenge, basically. And anyway, within the span of a week, we went from having been told that we had not only retained the business that we had with the acquiree, but we were getting the business in Chicago for the acquirer, which was a big deal.
It would have taken us to up to 90% of revenue, but it would also triple the size of the business or something like that. That was Monday. And I'm making up the days here. But Friday, the rug got pulled out from under our feet. Not only were we not getting the new business, but we were losing the business that we had. But I look at that today, again, with the scars mostly healed, and it was a formative experience in a couple of respects. One, we really, our focus went up. Everything we tried to do, we tried to do it better with more urgency, with more intensity, number one. Number two, it, it was a formative experience for this brand new capital partnership we had. And I obviously, I was incredibly fond of the folks already, but it became clear that we were dealing with just the absolute most world class group of people that you could even imagine.
Jake Crampton: And that's been fundamental along the whole path, our business we're like the opposite of an overnight success, took it a long time to get here. And the first 10 years were pretty slow, really. 10 years in, and we were about one 11th of the size that we are now. So what would you call it? The bottom part of the hockey stick was very long. It was a long hockey stick. And I'm rationalizing a little bit, our market needed some time to mature and sort of be nudged along towards the vision, and healthcare started changing a little bit, which was helpful to us. And the patience and the perseverance of those of us that were engaged in running the business was essential. But so too, was it for our capital partners and that early sign that, "Hey, we're in this for the long haul. We're not worried about blips on the road." That was a big deal. Very big deal.
Steve Kaplan: So, now what's next. Are you going to keep going? Are you going to sell? Are you going to go to a spec? I don't know. What is...?
Jake Crampton: You got to go to a spec. I mean, you'd be crazy not to do a spec, right? No, I'll tell you what, it's funny. You have a discussion like this, and your perspective on time is sort of altered. Normally you're living kind of in the moment, but you start talking about something that started more than 20 years ago. And these couple of phases that we were just alluding to. It's good perspective. I will tell you this. If I really distill what we've done in the last couple of decades, we have given ourselves a true, true opportunity to take a swing at the plate, a giant swing, not a little baby swing, a giant swing, around being special. I think we built a good company. I think the word we do is pretty noble, and we have a very good mission, and we really do support the delivery of healthcare. But I find myself in the really funny, and delightful position of feeling incredibly excited about the next phase of the business and dying to do it. So that's my focus.
I think we have a couple, another big steps to take, and that may require some changes in some moves in the way we fund the business and structure it, but I'm a pretty happy camper. And I think we got a lot. We got an unbelievable team and we have a lot of people that are pretty motivated to try to drive this thing forward. So, that's the plan in short.
Steve Kaplan: Very cool. Now let me ask you two questions, which I ask to CEOs in general, and it's sort of a fun thing. What's the hardest part of your job, and the best part of your job?
Jake Crampton: Oh, okay. You could have been nice about this and given me some advance notice, Steve on these challenging questions.
Steve Kaplan: ...much more fun when it [inaudible].
Jake Crampton: No, no I'm teasing. I wouldn't want it any other way. The hardest part of the job is when you see when everybody's doing their best and something's not working and you need to make a hard change. I mean, and sometimes it's a hard change involving people. So those are always hard because when you're—every once in a while, you end up interacting with somebody inside or outside the company, that's not a great actor in some way or another. Those aren't hard. It's when everybody's doing their best and it’s not working and something needs to change and there can be impact. That's the hardest.
The best part? It's the exact other side of that same coin. It's when it, certainly, when you see a team working hard and they get a great result, I'd be maybe a little more granular though. The really, really cool little mini moments that are the best part of the job are when you look at a person or a small group that takes a jump and you see them, and you can just, it's like the whole thing's in slow-mo and you see this person or this small team, all of a sudden evolving, they make a leap. They discover something, they get a great result. They get a promotion, they get a bonus, whatever those things may be. And it's a pretty incredible emotional return when you see that kind of growth.
Steve Kaplan: Very cool. Last one about Medspeed, I think, is what has surprised you over the years, or have you been surprised by anything positively or negatively, or it's like, you've planned all this?
Jake Crampton: No! Steve, if this was going according to the plan, we probably would have been receiving this award about, I don't know, 17 or 18 years ago, and we'd be, I don't know, 40 times bigger than we are. So, you know, you know that I appreciate the levity of the question. Nothing ever goes exactly to plan. So, I don't know if it's a surprise so much as the dominant learning, and it's kind of the same idea. I think when we were getting started with this business, I was 28 years old and fresh out of the Booth education, and incredibly wet behind the ears, even for having had some entrepreneurial experience beforehand. And I had this vision of building a great organization that was probably fairly technocratic in nature. You get the right people, the right structure, the right plan, the right blueprint, you have the right procedures, you have the right reporting mechanisms and you basically turn on the machine and it goes. And I'm being a little dramatic maybe in the language.
And so that was sort of the focal point of the strategy. And it was obvious almost immediately that was dwarfed by the importance of people and culture. And the good thing is, I think the group that was part of getting this started at the beginning, that we were oriented that way, maybe I was thinking technocratically about the vision for building a great company, but we were, I think, decent people. And that tried to treat each other and our customers well. So there were good formative moments there for [inaudible 00:19:58] ...been organic about sort of setting those expectations as the team has grown and attracting not a bunch of like-minded robots, but people that maybe had similar values more or less, and that's been an organic thing that's grown.
So, the dominant learning, and probably by the way, the most important part of my job today is that, that you pay a lot of attention to the health of the team and the health of the culture and you live to it. You don't BS your way through it. That it's pretty awesome. And you get to feel good, I think which, revenue, and profits and all those things are great, but getting to feel good is actually a pretty cool return also.
Steve Kaplan: That is very cool. And you have a lot of people to feel good about as we discuss. So, that is awesome. Now let me shift a little bit to Booth and advice. So when alumni talk about their Booth education, they often say Booth teaches you how to think, not what to think. And the question is, how did Booth help shape what you're doing?
Jake Crampton: Well...
Steve Kaplan: You, as a person [crosstalk 00:21:22]
Jake Crampton: There's probably a whole sub answer, which maybe I'll defer if we have time to get to it about the role of the NVC more specifically, which obviously has this enormous impact on Medspeed. But if I talk maybe a little more globally about Booth the idea about, I think you said on how to think, not what to think, and I would acknowledge, Steve, that I think I got dealt a pretty good hand of cards. I have really great parents, that had liberal arts educations. It's not like we sat around the dinner table talking about it, but it was sort of something that was there, that education is about learning how to think and take things on. By the way, there's technical training. I think it's pretty important for doctors to get very specific training. Don't misunderstand me. But that was something, I did that as an undergrad, and believe that in my bones, by the way, if I was going to editorialize a little bit, migrate—not having kids in high school and getting ready to go to college. What seems to be a drift of education towards more and more job training is something that concerns me a little bit, actually.
So, Booth, I make no bones about it. Booth put me on their wait list. And I called them up and said—I called them up and said, "Listen, if you admit me, I'm coming." It was my choice. I wanted to go there. The University of Chicago, I'm a native Chicagoan, and the awareness that this was “the place.” I felt, a place where sort of, I don't know, ideals like the life of the mind and thinking, and all that really, really matters. And I knew that was part of the business school. And so I was really attracted to that. And, and so, I, again, I'll go back and give credit a little bit to my family, but this has been part of my life.
It’s, I thought about the balance between being able to rationally digest a set of information. If you have a framework, apply it, if you don't have a framework try to figure one out, be prepared when you get enough information based on your judgment to make a call and move. Those things, on my best days, anyway, they drive me, but there's a right brain side of it too, which I think that little bit of left-brain rigor and all that helps a lot. And those are—that's been the dynamic that, like I said, on my best days, I try to live too. And there's no doubt Booth was an essential step in that journey.
Steve Kaplan: Very interesting. So, now let's go about the New Venture Challenge. Did it—how did that help you, or did it help you?
Jake Crampton: Yeah, and I thought about this one a little bit, obviously before we chatted, and I've thought about a lot over the years. If I'm going to say it succinctly in one statement, the New Venture Challenge is responsible for Medspeed existing twice, two ways. The one is kind of obvious, right? We had this—if it'd not been for the new venture challenge, Medspeed would have been a seven-minute presentation in Jim Schrager's class. That would have been the end. That would've been the end. It's not like we were so enamored of it we were going to drop everything and do it. Jim mentioning to me after the presentations, like, that's a really cool idea, there's this new thing, the New Venture Challenge, you might want to try that. And it sounded fun. So we tried it and the rigor of going through the course with you, and there in its brand new state and me and different folks that were involved in the capital process or other entrepreneurs, and having to really refine this and stress test it, that was—it was nice we won the competition. Seriously.
It was the rigor though of having gone through this and felt like there was some solidity to what we'd been working on that made me feel good about saying, "Okay, I know I was planning path A let's try path B instead." So I obviously that was number one here. It was responsible for it being launched. But you've asked me about a couple of the...What have been the harrowing circumstances along the way of capital raising or other near-death experiences? The way it's responsible in the second manner is it gave us, gave me, a real hard head, being able to take some hits along the way, and keep going. And I'll tell you, I developed a little theory on this and on the handful of occasions, including down at Booth and the Polsky Center activities, I've had the chance to proselytize on this.
I think there's kind of a little magic switch of entrepreneurship. I think there's this idea that it's sort of like the bolt of lightning, romantic idea it pops into your brain and it's perfect and everything just kind of unfolds from there. I think that's kind of a dangerous idea. Number one, I think you can sit and come up with ideas. My team in Jim Schrager's class, we came up with 20 of them and we chose this one. And so it doesn't need to be a bolt of lightning and you shouldn't be persuaded by your own self-image of being a genius on having had one good idea. Going through the rigor, treating it dispassionately, really digging in, stress-testing and putting it in front of people, yourself included, that will try to point out its flaws. That's awesome and necessary, but then there's this magic switch that I'm referencing, and that's when you go. And after that, you need to basically not be willing to take no for an answer.
Yes, you want to listen. You want to learn a little bit, you need to do course corrections, but if you're too easily knocked off the course, good things can die that way. And so the New Venture Challenge taught me that. And for anybody that wants cheap advice, I would share it. It's if you have that surety of feeling like you're pursuing something that really makes sense, and you know it really makes sense, you're prepared to not be dissuaded of that very easily.
Steve Kaplan: Very interesting. Well, it’s very good to hear. That first year was like...That was the first year it was a course. It was the second year was an amazing year because we had you and we had two other companies that did well. One was a dotcom that actually Flyswat that actually got sold three years later for a hundred million bucks. And then there was another one that I think got started and got sold for like $20 million or something. So I was sort of shocked that first year at how good the teams were and how the process really worked. And so it's good to hear that however many years, 20, was it 23 years later, you still—
Jake Crampton: I try not to count those, Steve, I prefer that we not do that subtraction audibly to other people.
Steve Kaplan: I mean it is what it is. I joke the only good thing about getting older is your former students get more successful. And that is certainly the case with you. So I'm older, but it has its positives. So, let's go back. So, now any other advice you'd give to current teams in the New Venture Challenge? So the thick skin, that's be...persevere.
Jake Crampton: Well, but really it's to take full advantage. I mean, I think the advice for a participant in the New Venture Challenge and probably good advice for anybody, including you and me Steve, and I'll just emphasize me, because I need to tell it to myself on a routine basis. It's whatever you're taking on, go for it and go for hard. The New Venture Challenge is, particularly if you're doing the coursework with it and therefore you're getting some of the additional experience, and I know it's become even more built out over the years, it's pretty awesome. You take classes at Booth, you pay a market rate, but a fair and high price for an outstanding education.
And you're going to get a great return on doing that with the New Venture Challenge, just for going through the rigor of thinking about this and developing a concept, even if all it ever is, is something you did and it stopped. Starting a businesses is not remotely an essential part out of getting an incredible return from that experience. But there's a chance it'll change your life. There's been a lot of, you had referenced the couple from our vintage, but there've been some pretty awesome companies that have gotten started out of this thing. And therefore, I would say some lives that were pretty positively changed because they jumped in with both feet and gave this a real try. And for whatever reason felt like their ideas should be taken forward and made into real businesses. That's kind of a neat maybe that you might get out of it if you really go for it hard.
Steve Kaplan: So, okay. So, that's the New Venture Challenge. Let's say you don't have an idea or to start something, any other advice you'd give people who want to be in your shoes someday?
Jake Crampton: Yeah, I suppose a couple of things. One there's nothing wrong with having friends and jumping on teams, I'd say. You said in the introduction, I think I referenced at one subsequently, the original seed of this idea came from Everett Truant and…
Steve Kaplan: What’s he doing now that he didn't come do it with you?
Jake Crampton: Everett's a many times over successful CFO and he's done incredible. He's done incredible. And there's a story for another day about the decision-making then. No, no, no, no. There's nothing...It's not that it's private. It's just it wasn’t the right—the things that made sense for the two of us at the time were different, and that was fine, but he's killed it. He's an awesome guy and incredibly able person who's had a great career. So, I don't think anybody got the short end of this stick. I promise you.
Steve Kaplan: Good. So what else would…Any other advice you'd give to the people watching or current students?
Jake Crampton: Oh, well, and I didn't fully answer your questions. You did talk about you don't have an idea. I’d go back to the statement from a moment ago about waiting for the flash of lightning. I am certain, you can sit down in one hour of dedicated thought and come up with five business ideas. And by the way, there's a pretty high likelihood all five will suck, but then you put in another hour and maybe you get five more, and one of them is good. One of my very favorite memories, probably my, in many ways, there were a lot of great ones, but a great memory of sitting in Cox lounge—there’s an oldie, but a goodie—with my three teammates, Everett, Thomas, and Zia, and each of us brought five ideas and we pitched them in one minute and we made a choice, and that was an eye opener. And so I would share that story as something for people, that if you're interested in that idea of creation, don't wait for it. You can actually attack it proactively.
Steve Kaplan: Very interesting. That is great. Well, I've got one more thing I'm going to ask you—before I ask you that is there anything I should've asked you that I haven't asked you yet?
Jake Crampton: Oh, I don't know, Steve. I think you've done a pretty darn good job. You haven't asked me, you haven't asked me who was a better professor of entrepreneurial finance, you or Don Marin.
Steve Kaplan: Yeah. I'm not going to ask that one. So...
Jake Crampton: I'm teasing, obviously.
Steve Kaplan: The last question, which is kind of a nice one. What does receiving the award, the Distinguished Alumni Award, mean to you?
Jake Crampton: Oh, well, I guess first I would say it was a total surprise. I had not even a hint of a clue of an inkling that this was being considered. And an email shows up in my inbox from the Dean asking me if I could respond back, if I would accept. And I said, "Well, let me about this one a little bit." I don't know, three nanoseconds later, I responded. "Well, sure. I'd be delighted." But I will mention, I will say in full candor and openness, I don't remember exactly when, it was probably in the early days. I became aware of the fact there was a recognition for Distinguished Entrepreneurial alum, and the thought crossed my mind said, "Hey, maybe one day Medspeed will be deserving of that." And I have to say Steve, I say Medspeed intentionally, because in my mind, this is really an award to the company. We've had a lot of people, for a long time, be incredibly dedicated to not just building this business, but pursuing our mission, and our mission is about delivering health to our communities.
And let me tell you, that's been never more true than it has been in the last 11 months. We have people every day that are, it's not an exaggeration to say putting their life on the line to support our customers in helping to fight a war against this pandemic. And I'm honored to be part of that team. It is the humbling experience of a lifetime to be part of that team. So, any time I have an opportunity, or anybody does to talk to that team about, hey, we're doing something that matters, we're doing something that's good. We're doing something that maybe made a difference, we're doing something that elevated, maybe beyond the norm. I'm really, really happy about that. And so this is a pretty awesome distinction and recognition for that team. And that makes me feel really, really good.
Steve Kaplan: Well, that is an awesome way to end this. That is great. Congratulations to the team, and to doing all the things you're doing, particularly in the pandemic, and congratulations to you. It is again, as I said, I think over 3,000 employees has got to be the most employees of any team that's gone through the New Venture Challenge. And I hope your vision continues and that grows to a 10, 20 whatever your sights are. And I will look forward to having you as a judge in the New Venture Challenge. That's also exciting.
Jake Crampton: Thank you for that invitation. I can't wait, yeah. [crosstalk 00:38:28] ...judges, is this coming Sunday? Thank you to you, by the way. You've been building something, you put a lot of blood, sweat, and tears into building something and I'm one of, probably, a fairly countless number of beneficiaries. So thank you.
Steve Kaplan: Well, you're very welcome. Thank you for doing this and congratulations again, and look forward to seeing you and watching you for the next 20 something years.
Jake Crampton: Let's make that happen. Thank you, Steve.
Steve Kaplan: Okay. Very good.