Bringing Up Tech-Baby | James Armijo from Smartcare

DISCLAIMER: Below is an AI generated transcript. There could be a few typos but it should be at least 90% accurate. Watch video or listen to the podcast for the full experience!

Alexander Ferguson 0:00
Millennials are having children and putting them in daycare. And to best serve a population raised in the digital age. Daycare centers need to modernize, or so says SmartCare, a technology company hoping to inspire daycare centers to dust off that PC in the corner and use it to build customers, track children, and even monitor diaper changes. On this installment of UpTech Report, I interviewed James SmartCare, his co founder and CEO who talks about the challenges of bringing high tech solutions to a low tech sector, and how he looks for innovation by swiveling his chair to the people behind them and the businesses across the street. Thanks so much, James, for joining us. I’m excited to learn more about smart care how got started the problem that you guys are solving and how you personally innovate. So to start us off, what year did this concept begin? And how did it begin?

James Armijo 0:49
Sure. So SmartCare was founded in 2014. But the underlying trend kind of precedes that by a few years. Basically, what’s happening is there’s a massive demographic shift happening in the country. It has to do with millennials being the largest generation in the country numerically. So there are more millennials than there are any other generation. And when it comes to having kids, millennials have some demographic characteristics that are different than prior generations. So the first is, is that millennials have had children later in life than prior generations. So the average age is about 28 versus 24. For prior generations, they also had to have a much higher propensity to have two working parents in a household. So about two thirds of millennial households have to work in parents, versus probably close to 40% for prior generations, and even lower than that. And so when you put these two things together, later, having children later in life and having two working parents in a household much more frequently, and millennials being the largest generation in the country, what’s happening is we’re just getting into the early years of millennials having kids and when those millennials are having kids, they’re more likely to put them in childcare, because both parents are working. So the net effect is that the increase the demand for childcare is increasing substantially faster than it has in the past. And then you add on top of that a change in kind of what economists would call consumer preferences. So millennials are generally digital natives or close to it. They like to interact with their service providers in a digital way. And they expect real time updates, they expect convenience, they expect all those things that we’ve been conditioned to expect from Amazon, and all the other kind of digital companies that we interact with, on a day to day basis. And so what we saw was really interesting opportunity. A lot of kids are having a lot of kids are now demanding childcare that weren’t demanding childcare before. Their parents expect to have a very seamless, digitally native kind of experience. And yet, the providers of childcare didn’t have a technology platform that enabled them to meet that increasing demand, and to meet the the consumer preferences that their parents wanted. And so the really the core of our focus was we want to be that technology platform, we want to be the technology platform that connects millennial parents with the providers of childcare enables those providers of childcare to run their business more efficiently. And therefore take care of all the new kids that are coming into the system, and hopefully create a great ecosystem along the way.

Alexander Ferguson 3:07
Where are you guys headquartered?

James Armijo 3:09
So we have two primary offices. Our technology and executive team is based in Salt Lake City, Utah, and our customer service and back office team is based in Las Vegas, Nevada.

Alexander Ferguson 3:20
Nice now, are you bootstrapped or VC funded?

James Armijo 3:23
We’ve raised just under $20 million in just tensional funding over two rounds over the course of the company.

Alexander Ferguson 3:29
Gotcha. How big is the team right now?

Unknown Speaker 3:31
We are just under 50 employees.

Alexander Ferguson 3:35
Nice. And as you move forward, knowing with great clarity this industry, you see this huge opportunity and itself, the industry is going and I appreciate the connection to millennial ism as myself with two kids, I get this concept and I need to put my kids somewhere and I want to stay connected with them. I see that the pain point. Tell me how how did you then continue to Zirin? Did you right away find that it was a product market fit when you started reaching out to I guess it’s the childcare providers.

James Armijo 4:01
At least in my experience, nothing is fast and nothing is linear, you always kind of miss a few things along the way. And yeah, there’s a very circuitous route to get to where you’re at. Product Market Fit, you know, is interesting, we’re really serving three or four different kind of N constituents. We have the center owners and directors who are running the business day to day and trying to keep their parents happy, trying to be compliant with regulations and do a variety of other things. We have teachers who are taking care of kids, and they have their own set of needs. We have parents who are dropping their kids off, and they have their own set of needs. And ultimately, of course, most importantly, we have kids and they need to have great care and get educated along the way. And so trying to find where we can solve all the needs of these different stakeholders can often be a challenge.

Alexander Ferguson 4:41
Obviously, with this demand, there’s probably some competitors are out there. So tell me more about your technology, your approach and the way you guys are solving this problem. Sure.

James Armijo 4:51
So when I think about competition in the marketplace, I really kind of think about three big groups. There are a handful of what I would consider kind have legacy desktop software applications that are really focused on the financial transaction. So they’re trying to figure out how do we help centers get money from parents. And while that’s a really important workflow and something that we address, I think it kind of misses the broader point, which is how do we create this great experience that’s really built around delivering great care to your kid. There are also kind of competitors that are focused primarily just on the education side of early education and childcare. So how do we help with lesson planning curriculum, things that that are important to educating children, and I see their solution as being very complementary to what we do, but not necessarily directly competitive. And then I think there are the true kind of SAS entrants, the people who have a vision of the market and the end product that are very similar to ours. When I think about differentiation, for me, it really boils down to three things. So the first is we have to know our customers and and know what we’re doing to make their lives better. So that involves me and every person on the, in the Getting out understanding our market. And like you said, I’m a millennial parent, I am our market in many ways. But I’m also not a center director, I need to be able to understand what a center director is, and walk a day in many days in their shoes. And so I tried to do that as everybody else. gathering that information is really important and delivering solutions, we are doing something pretty important, which is we’re keeping kids safe. And we’re making sure that they’re set up for success later in their life. And we can’t ever kind of forget that that is at the core of what we do. We don’t get the opportunity like many of our customers do to actually take care of kids every day. But we have to realize that we’re an integral part of that ecosystem. And really live and breathe that mission throughout the whole aspect of what we do and kind of never forget it and use that to create a sense of urgency and a sense of accuracy around what we do every day.

Alexander Ferguson 6:49
I appreciate the focus on the missions as technology is meant to help assist in something but the the platform itself doesn’t mean anything unless you know why you’re doing it. Let’s think now is the time to dig into the technology itself. And I appreciate the delineation that you’re using technology out there. You don’t necessarily have to create it from scratch. I’m curious, okay, dive in a bit more what existing, like my Microsoft is yours that you’re utilizing as is versus what you guys built in house in order to bridge the gaps or to be different in an area. So as

James Armijo 7:21
I think back, you know, a lot of early software was really just digitizing a paper process. Now, what we’re really trying to figure out is how do we re engineer the process and utilize technology to actually take steps out? So not just how can I make bytes instead of paper move from point A to B, but how can I make getting from A to B less time consuming, more efficient, more accurate, whatever the value proposition is to the end customer. So that’s what we do. So we utilize tools like like Microsoft joueur, and other development frameworks, open source libraries, and things like that, that help us kind of get the market quicker. But what we really focus on is those individual processes. So as an example, building parents is critical, we it needs to be accurate, if you don’t build your parent accurately, have a very upset parent. But as a business, if you don’t collect your revenue, you’re not going to be able to remain financially feasible. So we’ve built an automatic platform that allows you to say, here are the types of things that I charge parents for assigning Joe to this type of group. And now Joe is going to get billed every month, I have the opportunity to maybe make some exceptions if I need to, because it could just sit out for a little bit of time for vacation. But if not, if it’s just the normal week, then it all happens automatically just think it’s debited, and nobody has spent any time parents happy. You got billed accurately centers happy, they have the cash flow, and they’re meeting payroll and doing the other things that they need to do. And in the interim, we freed up a bunch of time to spend that with kids doing what we shouldn’t doing what we’re hoping our mission is aligned with our mission to do which is provide great care.

Alexander Ferguson 8:44
You mentioned payment, obviously, that’s a great use case. Are you using something like Stripe or something as your back into connector? Yeah.

James Armijo 8:51
So So I think Stripe is a great platform. And especially as an entry point into learning how to do integrated payments as part of a software application. I think it’s a great place to start, we use a company called WorldPay, which provides an API based solution for payment processing transaction. That’s one way where it absolutely makes sense. We use it for things like delivering email with company like SendGrid. We use it for delivering SMS messages with Twilio. There’s a variety of applications. But generally speaking, the way I think about it is we don’t want to create core expertise, that building structure. That’s why we use Azure. And frankly, I think AWS or Google, they’re very similar platforms. There’s maybe micro differences, but but in the aggregate the platform’s themselves as a trend makes sense. What

Alexander Ferguson 9:38
made you decide to go with Microsoft versus the other?

James Armijo 9:41
Yeah. Great. So we were a primarily dotnet development shop, which means we we developed in a Microsoft framework. There are some on the margin. There’s some tools that help our developers be a little bit more productive by being in a fully Microsoft environment. But again, I wouldn’t say that you know, that that puts AWS So Google at a disadvantage, and certainly depending on your technology, those might be better choices.

Alexander Ferguson 10:04
Gotcha. As you’ve developed this over, over over the years, what kind of difficulties have you had to face and overcome that another business owner entrepreneur could could learn from?

James Armijo 10:17
Yeah, interesting. So, you know, when I think back to when I started my career in tech, which, you know, wasn’t that long ago, but it was in the mid 2000s. We technology in many cases was the barrier, can we build the software? Can we build the infrastructure, I mean, I literally remember it was at a company called eight by eight, we were adding 1000s of customers. And we had to send guys you know, like fries and Best Buy to go try to buy servers, the senator, the data, were, you know, to the to the data warehouse and like, get internet lines connected. And like that was a big challenge. It’s not a challenge anymore, we just say it gives me another virtual machine on Azure. And frankly, actually, there’s machines that are asking for more virtual machines. So we don’t really worry about that anymore. What I worry about in our industry is creating market awareness. So I think that you go back to that big thing we were talking about. Millennial parents are putting their kids in daycare and knowing that they want a certain experience, but not knowing exactly what to ask for. And childcare providers want to provide great care, but don’t know exactly how to do that. We have probably single digit percentage market share, as do many of our competitors. Most of our market doesn’t use a technology solution to to enable what they do on a day to day basis. And we have a big barrier and kind of talking about what our message is and why that’s important. That’s our biggest challenge is how do we get that message out? And that’s what we focus on a lot on a day to day basis.

Alexander Ferguson 11:36
You’ve got things moving, things are making progress. You’ve got adoption, people are coming on. Let me ask you, where do you see yourself in five years from now?

James Armijo 11:44
Sure, we’ve got a crystal clear vision, which is we want to build the tech leading technology company in child care. I think what that means is that we will need to expand the suite of solutions that we offer beyond kind of the core functionality that we offer today to encompass things like education, I was talking earlier about education technology, companies that I think are very complementary to what we do, I think we need to eventually offer solutions that help our customers find their customers, which isn’t really part of their business. But ultimately, I think, regardless is I would love for daycare center to look at SmartCare as the technology platform upon which they build their business. So we’re a technology company, I look at Azura as the platform upon which we build our solution. And I’d like for them to look at us as as the value added component, those kind of business workflow automation tools that help them run their business better as well,

Alexander Ferguson 12:34
in order to then realize this, this vision of the leader in this marketplace. We’ve already talked about a little bit, but what other hurdles, do you see that you’re going to need to overcome in order to Yeah, leader?

James Armijo 12:47
Well, you nailed it. For us the next five years is about getting those that early majority, right, we’ve gotten the early adopters, our market percentage would indicate that that’s true. Now we need to get to the early majority. And what that means if you think about it in academic senses, we need to prove the ROI of our solution. Why are you better off having it versus not? We need to take testimonials from our early happy customers and make those available to everybody else. And ultimately, we need to build a great go to market organization that gets in front of prospective customers builds that brand awareness builds that the interest. And then when customers experience a pain point for which we’re a great solution that we’re available. And we’ve created a really easy way for them to onboard and use our technology. That’s what we’re doing today. So we’re making key hires and marketing and customer support and sales and other functions. We’re figuring out all you know how we take friction out of the onboarding process, how we make our content available. We’re running a series called Smart care University, which educates the market about how best best practices and running daycare centers. And of course, you know, how smart care is aligned with with achieving those. And we’re ultimately just really focused on figuring out how we make that that early majority ultimately raving fans of SmartCare

Alexander Ferguson 13:55
I love the clarity that you have for both the were you planning on being an RD the roadmap and the clarity around the problems that you need to overcome? Obviously, as you move forward, there’s innovation needs to happen. There’s those new components you’re constantly bringing in. How do you personally innovate? Where do you look for for the latest new ideas?

James Armijo 14:16
Yeah, absolutely. So I, you know, any number of podcasts, I think are available conferences. I think some of the platform companies do a good job, the platform companies being the issuers in the AWS of the world, do a good job at making new technology available. But to be honest, the the area that I really look for are early stage companies. You know, we’re a very early stage company, but in Super micro view, there’s even companies that are earlier stage than us. I look at what they’re doing in other industries and I constantly ask myself, could we do the same thing? It’s funny we work in kind of a downtown office space and nearby there’s a robotics company that has a like a robot dolly machine that helps you move material from one place to the other And I thought, Well, geez, you know, childcare centers have a big issue. They have to, they have to move things from one place to the other. Another example is, and I do this in, you know, my daily life, but we’ve got a daughter in diapers, and we have to worry about diapers. And I thought, Well, geez, we’ve got 160,000 kids on our platform. Many of them, probably a third of them are in diapers, they have to worry about diapers do we actually know when they need diapers? We’re tracking every time they have a diaper change, it gets tracked in smart care. I know how many diapers are in a box? Wouldn’t it be better if rather than you know, my wife, say, hey, you need to pick up diapers on the way home from work today. I can get a message two days in advance and say, Hey, your kid’s gonna be out of diapers in two days. You know, we know how many times he needs a new diaper, we know him near love. Maybe you can pick up those diapers today? Or maybe you could just click a button and have the diapers delivered. Those are the kinds of things where we’re just constantly trying to think how can we bring technology in from different places? How can we take that, you know, remind me button and put it in make it part of SmartCare? How can we make delivery part of our application and in constantly thinking about those things, and frankly, engaging the entire company and this is the last point I’ll make. I think it’s really about everybody in the company. It’s not just me, it’s not just our you know, technology team, but it’s it’s all the the customer facing folks on our team. It’s our finance people, everybody has something that they interact with on a daily basis that’s applicable to what we do nine times out of 10, the the idea might be great, but not immediately implement and implementable. But one times out of 10, it could really be a game changer.

Alexander Ferguson 16:30
Speaking of the diaper concept, and the fact that you’re tracking all this information, it means you have a lot of data, have you thought about utilizing incorporating machine learning of some sort into developed new solutions?

James Armijo 16:44
Absolutely. And that is something that we do internally on a really regular basis. So I’ll give you one great example of one of the things that that a lot of our customers really struggle with is what they should charge for their services. Nobody wants to make the providing their services. So prohibitively expensive, that it’s not available to two parents. At the same time, they’ve got staff and expenses, and they have to run is profitable, you know, financially feasible businesses. And so there’s there’s a middle ground there. But then there’s the third dimension, which is what are my competitors doing right? What’s interesting is we have a lot of data to be able to say what’s a fair rate in any particular geography. And to provide that in a consultative way to our customers and say, Hey, in your geography in your zip code, the you know, price for a two year old for full time care should probably be in this range. And that helps them benchmark what they do as a day to day business and ultimately run a better business that’s fair to parents and fair to their employees and fair to their bottom line. One of the things we’re not doing yet, but I’m really excited that that we’re working on working the kinks out, is a way to help teachers reduce the amount of time that they have teachers and directors that they have to do in administrative tasks. So using the billing example, I said earlier, in general, I probably for two year olds getting full time care as a daycare center operator, I probably charge about the same amount. But today in SmartCare, even though we’ve automated that you only have to configure it once you still have to configure it right, you still have to go in and you have to pick some things. I think AI would allow us to transform that from a user based, you know, user input system into a much more streamlined way. So wouldn’t it be awesome as a director, if I could say, Hey, I charge my two year olds $300 a week, I charge them on Tuesday payments due on Friday, set that up. And for us to use AI to actually create the structure data set behind the scenes, as opposed to requiring the center director to go in and plug in all this information into the screen. And then wouldn’t it be super cool if James shows up with a two year old? And I say, Hey, James just enrolled, his daughter Rose as a two in two year old program given the standard two year old billing. And that means next Tuesday, I’m going to get billed, you know, $300 For the week, and on Friday, it’s going to get auto debited from my account because the payment was due on Friday. We’re not there yet. But that’s something that we’re really striving to get to and I don’t think we’re very far away from

Alexander Ferguson 19:09
I love the direction and excited for that implementation. Removing the no man needs to do data data man manual entry anymore computers. Yeah, exactly. So you mentioned earlier about you there’s lots of podcasts and books out there are any current podcasts or books or audio books that you are listening or reading to right now. Yeah.

James Armijo 19:31
So you know, interestingly, I find some of the ones that are most influential aren’t technology specific, but they really have to do with with human behavior. Because ultimately, if you if you kind of go back to where we’re at, I said what application providers really do in today’s world is they automate human behavior, and they streamline it. So I love hidden brain. It’s an NPR podcast. It talks about how decision making gets made and a variety of other kind of human behavioral things. It helps us understand how we can better integrate and help decision making at the local center. I think that’s a great one. Another one that I like it’s another kind of similar podcast is I love the Freakonomics podcast helps me kind of think about how our market and how we get help. So you know, what is it that you’re actually delivering value or actually delivering as a, as a childcare provider? And how can we be part of that? So those are two that I like to listen to on a regular basis.

Alexander Ferguson 20:24
Awesome. Where can people go to learn more information about you guys, and what’s a good first step for them to take? Sure,

James Armijo 20:31
great first step is to go to our website, which is smartcare.com. Feel free to request a demo, we’d be happy to walk you through, and kind of talk about what our solution does and how it might be a fit. But you know, before that, and more importantly, just kind of learn a little bit if your child care center, learn a little bit about your business and, and what it might be. And if you’re not a childcare center, we’re still happy to do that. In addition, if you go to smartcare.com, and navigate down to the bottom, you can see the link to smart cure University, which is our educational series about running a childcare operation, and what that might mean and it’ll have a lot of very relevant specific topics that kind of get into a deeper dive on that. So

Alexander Ferguson 21:09
that concludes the audio version of this episode. To see the original and more visit our UpTech Report YouTube channel. If you know a tech company, we should interview you can nominate them at UpTech report.com. Or if you just prefer to listen, make sure you’re subscribed to this series on Apple podcasts, Spotify or your favorite podcasting app.