Intrepid Insights: Diane Omdahl, President & Co-Founder of 65 Incorporated
Diane Omdahl, President & Co-Founder of 65 Incorporated
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Full transcript from video/podcast below:
Derek: Hello everybody. My name is Derek Notman. I'm a financial planner*, Certified Financial Planner™, and founder of Intrepid Wealth Partners. Thanks for joining us today for another edition of Intrepid Insights, where we learn from entrepreneurs from a personal level.
Derek: Today we visit with Diane Omdahl, serial entrepreneur, current CEO and Co-founder of I-65 and 65 Incorporated. Diane, thanks a lot for joining us today, we really appreciate it. I'd like to get started by just learning just a little bit more about your past, who you are, and a little bit more about our business.
Diane: I am a registered nurse by background. I went through a three year diploma school and then after that graduation, I went on to get additional degrees. A bachelors and a masters in health services administration.
Diane: I started my nursing career as a registered nurse in a hospital, and in the hospital I moved into patient education. That's where I found that I have the ability to teach, and I left the hospital, went into long term care.
Diane: I was a Director of Inservice and Long-term care once again teaching staff, teaching patients, doing a lot of writing protocols et cetera. After the long-term care setting I went into home healthcare. I was a Director of Patient Education, and then eventually the Director of Clinical Services. I had some major health issues, could no longer do that job, and I resigned, and my husband said, "You need something to do, so why don't you write this manual of teaching home care nurses how to document?"
Diane: Documentation and home care is the key to success. If you document right, you get paid, if you make a mistake you can be in big trouble. So I spent the summer writing this manual. It turned out to be about 80 page manual, it was called the Beacon Guide to Medicare Documentation in Home Healthcare.
Diane: My husband then said, "Well, you might have business here," and he said, "Let's find out if you do." He registered us to go the National Homecare Association Annual Meeting in Washington DC in October with one product. Our Beacon Guide.
Diane: We sold enough copies of that manual at that show to pay for the trade show, and realized that we did have a business there. The business became Beacon Health, and we did that for 23 years.
Derek: Wow. Wow. You kind of fell into it really. We've talked about this before, but you fell into it. You had this career in the health insurance industry in your home healthcare and what not, and you just fell into it?
Diane: Fell into it. Got dragged into it. I think if you would have told me ... I told you I graduated from a one room school, there were three kids in my graduating class, and 16 in the school.
Diane: Then I went to a small high school, and the nursing school, and had you told me that some day I would be an entrepreneur, I would have said you're crazy. I think it was my husband that always wanted to be an entrepreneur, but by background he was an engineer, and what does an engineer do to start a company? He saw the opportunity with me.
Diane He eventually became part of the company. His company he worked for left the state, and we weren't going to move, so he joined Beacon Health. The day he showed up is when I got my first salary because he needed a salary. He became the marketing person, and the financial wizard.
Derek: And you were the health expert?
Diane: I was the health expert, so that's why we could co-exist for all those years. There were some problems in the beginning though, when he would put forth an idea, and I didn't care for it, and I would tell him that I didn't care for this idea. He would take it personally like I was criticizing him as my husband.
Derek: Not as a business partner?
Diane: Yeah. And he eventually realized it was a business partner at work.
Derek: Got it. I think you touched upon this a little bit, but in the early days of your business, you fell in, dragged in as you said, what was the specific need or problem that you saw you guys were trying to work around or improve?
Diane: In home healthcare, as I had already mentioned, it is such a system that if one nurse makes a major mistake the agency can be in big trouble and eventually, possibly have to close. One nurse can make a bad decision.
Diane: The thing about home care is that the nurses are all over the county, or wherever because they're not in an office, so you need to have systems and things to make sure they make the right decision.
Diane: I think having been the director of the agency, I run into so much misinformation. The rules were hard to find, but once you found the rules, it was a source for what you were to do, but people worked on, "This is the way we've always done it." Or, "This is the way we were told to do it even though it wasn't the right thing."
Diane: The problem we were trying to solve was this basically, nurses need to know what to do. They don't need to know the rules, but they need to know what actions will comply with those rules.
Diane: What we did, the rules were so horribly written. We would translate those rules into procedures, protocols.
Derek: So that they could understand on the ground, so to speak, that they're actually doing that?
Diane: Mm-hmm (affirmative). We would have basically three questions to determine this, or a four step process for that.
Derek: Okay. Was there nothing like this?
Diane: Not when we started, no. There was nothing like that.
Diane: The manual and documentation I wrote was the first of its kind. At the end those products are still being sold.
Derek: Wow. That's fantastic. There was a real need for what you guys came up with?
Diane: Yes. That's why our business lasted for so many years, because we had figured it out.
Derek: You're building this business, you've transitioned from corporate life, your husband joins you. How did that impact your personal life? Your family life. You've got kids. How did that, being a full time entrepreneur now, impact everything else?
Diane: Well, in the days when my husband wasn't yet part of the business in coming home, the evenings would be spent talking, planning business. Beacon Health, Beacon Health. Well, they won't agree to this now, but our daughters got irritated by that. All this talk about Beacon, Beacon, Beacon, right?
Diane: Now they look back on it, because one of my daughters is an entrepreneur, and she looks back on it in a different light, that it was exciting to hear all of this. The impact it had on our lives was basically ... we were always independent people. We didn't have these besties that people have nowadays. It was basically Rich and I.
Diane: We traveled together. If we were going to do seminars, we would go out on Saturday, or Friday night for a Monday workshop. Basically, our life became the business and us, and we were completely satisfied with that.
Derek: The whole went with ... it was a unique-
Diane: We actually did take our daughters to a trade show in Boston when they were a sophomore and junior in high school. We went and got them business suits, they worked the trade show floor.
Derek: What a great experience at an early age. Do you think that influence and seeing what you guys were doing around the clock led to them being more entrepreneurial now?
Diane: I think so. But definitely my youngest daughter.
Derek: Well, she is now involved with your new business. We'll get to it, but she's involved with you here now doing that?
Diane: Yes, she is. She's my partner.
Derek: Beacon Health was the prior business that you ran and started, although you owned it with your husband, you were still a female, you were a founder. Did you have any unique challenges or opportunities because you were female trying to start a company, trying to scale the business?
Diane: I think the nature of the business, we just never were able to get anywhere close to getting an investment because nobody understood home health care. We met with one investor, and they thought that we did home redecorating. Home improvements when we say home care.
Diane: Yes. We self funded the whole thing. We did some bootstrapping self-funding, and we managed to make that work. I think from being a founder of the company back in the 90s, women were not given credit for being able to be smart business people.
Diane: We would go to meetings and Richard was usually the one that would get talked to, and I would be overlooked. I didn't mind at all that much, because he was my partner.
Derek: It sounds like you definitely found your niche with this business, Beacon Health, but I think you had a bad year at one point. What happened? And how did you guys deal with those darker days especially? Because you had a poise at this point too, I think.
Diane: Well, it was a bad three years. October 1st 1997, Congress passed the Bounce Budget Act and in that was a law to control the growth of home healthcare. We couldn't figure out how to control it ourselves, so Congress was going to do it, and the put into place a new payment system.
Diane: Long story short, that payment system was supposed to cut the home healthcare budget by $16 billion over four years, it ended up cutting $64 billion in two and a half. We were losing customers, the customers we kept could not afford to keep the lights on because of payments system.
Diane: Basically, we lost $200,000 in one year. I had to lay off seven people, and we had a warehouse full of products that nobody could afford to buy. It was just very difficult times. It was really tough times.
Derek: How did you get through that?
Diane: We got through it by redesigning our company. When I was looking at a newsletter from the Metropolitan Chamber of Commerce or whatever they call themselves, and they had a thing about ... they now had a video rental library for it's members. And I thought, we had a whole warehouse full of videos that we were not selling, but the agencies needed education.
Diane: I took that into Richard's office and I said, here. We could think about the Beacon Institution now with one of the components being video rentals to members. He right away summoned our customer service representative and our marketing guy and we sat there the rest of the day hammering out what the Beacon Institute would be. We came up with a membership concept, and it would be a membership fee of $398.
Derek: A year?
Diane: A year.
Derek: It's kind of a value add for not a lot of money?
Diane: Yes. They went away and by the next day, we had this whole marketing flier ready to hit the nail.
Derek: That quick?
Diane: Yes. I had basically, one day, to come up with the first issue of Home care Q&A. Okay.
Derek: No pressure.
Diane: My design layout guy had one day to help me design what it would look like, the whole thing.
Derek: It sounds like you had all of this content, these resources just sitting because of something that the government did, you just repurposed it?
Diane: We repurposed it. We went from being a product company to a service company.
Derek: Wow. Just literally overnight basically. Wow.
Diane: I remember our customer service person was like, no way was this going to work. No way was this going to work. Well, direct mail, you don't see a lot of that now, but Richard was a direct mail wizard and he had a system that however many replies you get within X number of hours of the first one hitting you, or the street, we could tell how successful it could be.
Diane: Our customer service person didn't think it would be successful. Well, four days after we mailed it, we got our first one, which is pretty good.
Derek: That is pretty good.
Diane: Then they started coming in and our person admitted she was wrong, because we then ended up turning that into three levels of membership. Premium, regular and basic.
Derek: You doubled down on that service than when you had worked. Starting the business? Scaling the business? How did you and your husband plan around your personal finances, and you've got kids, you've got a mortgage payment, you've got to eat, you got to keep the lights on. What did you guys do?
Diane: Well, it's a good thing that we were frugal by nature. My daughter was getting ready, applying to schools, when Richard joined the company full time, and of course, I had no salary prior. We got salaries, but they were far from huge. She was looking to go to an out of state school, and the first thing we had to do was say, "Can't afford it. Can't afford it."
Diane: She ended up in state, but she now realizes that that was probably the best for her too.
Derek: Wow. That's great.
Diane: To go to an in state school with the opportunities that she got, so it worked out. We were very frugal. Because of the workshops that we did, we had points to fly when we did travel.
Derek: Oh wow. It sounds like you guys actually thought about your finances, and I don't know if that is because you've been in corporate life for a bit, you're parents already, so you had some responsibilities, but it was a conscious decision to say like, "Hey, this is our cash flow, this is what we can and can't do. There's going to be some sacrifices."
Diane: Yes. That was all Richard did.
Derek: He was all on that?
Diane: He was all on that. Yes. We never had a financial planner or business planner in the business, because you spend so much time doing it, and we were just a turn on a dime.
Derek: Sounds like you had to a couple of times too.
Diane: Yeah. We never had whatever that. What we're gonna do in the next year in the marketing budget, we never had any of that, but he would always check on the returns or what we were doing, so he was always making sure what we were doing is working and then changing the next time.
Derek: He was checking the metrics. "All right, we spent this much time or money doing this. Did it actually work?" There was attention to detail there.
Derek: Fast forward to today now. You're doing 65 Incorporated. How is building that business different from Beacon Health?
Diane: I think the biggest different is trying to establish a cash flow. We don't have products to sell like Beacon did. We have a service. We are selling a service that is very unique. Beacon did that. The things Beacon did was very unique, but there was a set market and they could see what they have. Where the service's not like anything that's every been done.
Derek: You started the business from nothing. You scaled it, you sold it, you bought it back, sold it again. Now you're doing it again. What advice would you have for first time entrepreneurs who are maybe a bit younger, they've got a really cool idea? What are some blunt truths that they should know?
Diane: Don't quit your day job. You need something to live on. You need something to be able to carry you. I think the second thing also is to make sure that your really cool idea is something that other people think is cool, and that they will pay for.
Derek: Yeah. It's important, right?
Diane: That is very important. Yes. Yes.
Diane: I know if I look back at what we thought was going to work when we started 65 Incorporated, not at all.
Derek: Really? So you've had to pivot even since?
Diane: We've pivoted. Sometimes I think I'm getting dizzy from pivoting, but yes.
Derek: It sounds like you would say be flexible-
Derek: Open to change? Don't be so in love with your business that you won't change.
Diane: Don't think your idea is so great that you can't change it.
Derek: Okay. We talked a little bit about starting the business, how being an entrepreneur is just so time consuming. It's not a nine to five job and you have a family. What are some things that you would tell other entrepreneurs getting ready to make that transition to still focus on? Should they work 24/7? Or should they make time for themselves, their family, their health?
Diane: We do not work 24/7 because it just would not have cut it. We were always home for dinner with our two daughters, and we would manage to get away on the weekend now, and we would go to our cabin. The trips to and from the cabin would end up being discussions about the business, but that was fine.
Derek: It's still family time, kind of.
Diane: We made sure that we would have all of that time. Your business may not make it, but you have to make sure you still have your family.
Derek: You said that before that the business would come and go. It's some way or another where the family's always gonna be there.
Diane: Yes. An interesting comment to add. When we sold our business, the second time, and I had my employment contract, during the negotiations for those contracts, my first grandson was born. My daughter wanted me to have a relationship with my grandson, like my mother had with her, and as part of this was that once Charlie was six weeks old, I would take care of him on a Thursday afternoon.
Derek: You wrote that into your schedule that this is what you're doing?
Diane: They wanted us so badly that the CEO of the company wrote it into my contract that I would have Thursday afternoons off.
Derek: So family first. At least in part, where you really have to build it in, but that was a conscious decision. It didn't just go head down towards the business. I gotta make time for family still.
Diane: Yes. And I still pick up each grandson after school one day a week ...
Derek: That's cool. That time is precious, I'm sure.
Diane: Yes it is, because pretty soon, my eldest one is going to be starting middle school, so pretty soon there won't be time to do that.
Derek: Sure. More on a personal side, did you rely on a team? Or did you just figure it out on your own? Like you go from a paycheck and a steady stream of income from a business once you've scaled it, to now, "I have no business income, it's gone, but I have this hopefully a lump sum that I'm gonna be getting out of selling my company, exiting my company."
Derek: I think there's two transitions there. One is a financial one because that's a big difference, but also an identity one. How did you deal with both of those?
Diane: Financial transition, we have advisors. Richard, of course, did it, but when he became ill, I found advisors because it's like I'd never done that before.
Diane: On a personal level, going from not having a salary, I don't know if I really gave that much credence.
Derek: How about, because the business is part of who you are, really. You focus out of nothing so from an identity stand point, was it hard to sell it off twice? Was that a difficult identity transition for you?
Diane: The first time selling it off was not that difficult because we were just burning out from the stress in trying to keep it afloat. I think because we did sell it and we continued to run it, it made a difference because we didn't have to pay the bills. That allowed us to just be able to focus on it, and turn it around to become what it did.
Derek: Mm-hmm (affirmative).
Diane:1 The second time selling it, I was resistive.
Diane: Richard kept saying, "We got to sell this," and kept saying, "I wasn't of the age yet that I could totally step away and not do anything." So, I kind of dragged my feet.
Derek: You did?
Diane: I did.
Derek: Well, you created this thing. You put a lot of blood, sweat and tears in it.
Diane: Then in early 2008, somewhere around Valentine's or St. Patrick's, when I finally said, "Okay. If you can find somebody, I'll think about it." Well, it was the Monday after Mother's Day that we're on our way to Boston to talk to the company that wants to buy us. That's how quickly it went once I said okay.
Derek: How did you find somebody to buy your company?
Diane: This was not a competitor, but they did everything that we did in the hospital, physician in long term care market, and they could not figure out how to do home healthcare because it's unique. You have to have done it, and we were that missing piece for them to be very dominant in health care education market.
Derek: Did you approach them?
Diane: No. They had contacted Richard every year since about 2004. They would call. I don't know if it's the marketing guy, or whatever, but he would call Richard once a year, and they'd have a conversation. So when I said okay, he called the guy.
Derek: Yeah. Right. Okay. And that was it?
Diane: That was it.
Derek: You sold your business in 2008?
Diane: Yes. And the contract of my employment ended October 1st of 2010.
Derek: Okay. Two questions. What are you doing now? And why are you doing it now?
Diane: I'll do the 'why am I doing it now' first. The last couple of years that I was doing Beacon Health, when we did our seminars on the road, I would get many questions about things going on from the home care nurses.
Diane: A recurring theme beginning in about 2008/2009 was patients who were having difficulty getting home healthcare services. That is what got me thinking, and I remember a conversation with my son-in-law that I wanted to start a business to help people when Medicare went badly.
Diane: My son-in-law says, " You know, there's with boomers, tender. 12,000 a day are turning 6." Maybe if they understand what they're getting into, they'll understand the choices now, but also understand what happens down the road, how Medicare will work with them.
Derek: Sure. A bad decision now could mean a really big problem down the road, and they won't even know it.
Diane: Yes. They won't even know it. That's what led to 65 Incorporated, to help people understand the decisions they're making.
Derek: It goes back to education which you've been doing for decades?
Derek: It's education.
Diane: Medicare education. I'll tell you that educating people giving into Medicare is complex because of the fact that there are these choices, there's pluses and minuses on both sides.
Diane: I don't have a bias against either type of Medicare, my bias is against lack of complete knowledge. Informed decision making. If there's one thing that 65 Incorporated is doing is educating people not only what it looks right now when you're relatively healthy at 65, but what can happen ten or 15, or 20 years down the road.
Derek: Wow. Now it's how do you get that out there, and that's the game now.
Diane: That's the game now.
Derek: Is there anyone doing that really, else?
Diane: We have lots of competition. We have medicare.gov and Social Security. We have the websites usually that end up selling the insurance, educating people and selling insurance. There are probably less than a handful of people who actually do what we do without insurance.
Derek: Yeah. You don't sell any insurance and these other ones, either they're so complicated people can't read them, or maybe there's an ulterior motive to sell something, but you're not doing that at all.
Diane: From what I think we've determined, the other companies that do a fee based consultation, their primary focus is not medicare. They're into Medicare Disability, or Social Security ... Excuse me, they're into Social Security Disability.
Derek: It's much more specific?
Diane: And Medicare is an off-shoot, from being just focused on Medicare and not selling insurance, we may be one of a kind.
Derek: Thank you. It's been really cool chatting with you today.
Diane: Your welcome.
Derek: I really appreciate it.
Diane: You're welcome.
Derek: One question just to leave the audience with. What's something that they should know about you, about being an entrepreneur, about your business? One of the things you'd like to leave people with?
Diane: I think there's two pieces of advice I can give. Number one, take care of yourself. Number two, don't have any regrets. You make decisions. If they backfire on you, you just turn around and keep going forward.
Derek: You're gonna make mistakes, right?
Diane: You're going to make mistakes, and you can't fret about it, or let it take you down, or worry about it. It happened for a reason, and you may never know that reason, but you keep going forward.
Derek: That's meaningful. Thanks again, Diane. I really appreciate you talking with us today.
Derek: Diane, thank you again for joining us for this edition of Intrepid Insights. To all our
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