Dr. Abhishek Nagaraj & Dr. Anushka Gaglani: Dentistry on Dentists’ Terms

Craig Castelli (00:04):
Welcome to The Close M&A Podcast with Caber Hill Advisors. I’m your host, Craig Castelli, and today my guests are Dr. Abhishek Nagaraj and Dr. Anushka Gaglani of the Areo Dental Group. Guys, you found an Areo in 2016. What was the idea and why’d you think it would work?
Dr. Anushka Gaglani (00:23):
Well, for me, the idea was I was tired of working for someone else. I’d been an associate for three, four years at that point, [00:00:30] and I appreciate had graduated a year before that and I was done at that point. I think that was just how it started for me. I didn’t know it was going to necessarily become a multi-practice group or that we were going to go in this direction, but I think Abhishek had always had that vision.
Dr. Abhishek Nagaraj (00:47):
For me, similar reasons to, I worked with somebody for about a year. Long story short, we probably founded, I think Anushka had the itch to be on her own and she had the [00:01:00] itch to own a practice, but I was actually making great money as an associate dentist, and for me it was more along the lines of are there going to be partnership opportunities here? And sadly, there weren’t any at the time, which then we decided that we were going to go open our first practice and that’s how we started.
Craig Castelli (01:21):
Yeah, pretty common story. I don’t think you start thinking you’re going to build a big empire. It happens. Maybe it doesn’t happen to you, [00:01:30] but you figure that out as you go. Do you recall the point at which you decided one or two offices is boring or isn’t enough? Let’s build something bigger.
Dr. Abhishek Nagaraj (01:42):
Yes.
Craig Castelli (01:43):
I’m already getting off script.
Dr. Abhishek Nagaraj (01:45):
No, no. We did, I think it’s when we opened our first location, we bought a pretty not up, up-to-date practice. The dentist left. He didn’t transition and we had to put in a decent amount [00:02:00] of money to update the practice. When we bought the practice, it was doing a couple hundred thousand in revenue and we quickly scaled that up to about a million $1.6 million in 12 months and we were two dentists together working together and then we realized, I mean this is getting a little bit boring. We’re probably getting tired of seeing each other every day and there’s two of us, let’s go do this again. That’s kind of how that’s went.
Craig Castelli (02:22):
Yeah, yeah, I like that. That makes sense. So you have several offices now. You’re in multiple states, [00:02:30] you’re still growing. What would you say has been most critical to your success so far?
Dr. Anushka Gaglani (02:37):
That’s a really good question. I think for me, I really truly believe that most people are not natural born leaders. I think it’s a lot of practice, a lot of effort, a lot of experience, and I think it’s developing those leadership skills, whether it’s going out externally, reading books, whatever it was, finding mentors. That’s really, if I can pinpoint what has helped us get to [00:03:00] where we are and continue to grow. One of the things I’ve learned, of course is you’re not going to be able to get people on board if they don’t see your vision, if they don’t understand what it is you’re trying to do and start rowing in the same direction. So if I could pinpoint one thing, I think that would be it for me.
Dr. Abhishek Nagaraj (03:16):
If I can add to that too, there’s a saying that I really like: vision without execution is hallucination. You can have the biggest vision, but if you aren’t executing on it, the people that came onto your business will eventually [00:03:30] leave. Or there will be people who hit a ceiling and you’ll have to exit them out. It’s one or the other, but execution without vision causes confusion. That’s my twist on how I look at that. Right. So you need execution, you need vision, both. And I think at some point we both have a little bit of both. So we’ve been able to hold each other accountable in order to just keep moving forward. Right. In business, you want to keep taking steps forward, [00:04:00] not stop or not go backward at least. At the very least.
Craig Castelli (04:04):
I think every business is a people business at the end of the day, regardless of what you are selling, what service you’re providing, what widget you’re manufacturing, people have to work together. They have to work as a team. It’s easy for us to sit here and say that a little harder to put that into practice, but it really is the key.
Dr. Anushka Gaglani (04:23):
Yeah, it’s so true. One of the things I didn’t realize going into business was how much of it is actually just people, [00:04:30] 95% people.
Craig Castelli (04:34):
Yeah. Do you ever miss just being one-on-one with a patient so you don’t have to deal with all that? No. Shake your head no.
Dr. Anushka Gaglani (04:41):
I love this. I have a great time with this and I think if I can speak for you too, it’s a new challenge and I think we both really love what we’re doing.
Dr. Abhishek Nagaraj (04:49):
Yeah. Leadership is so fun. It can be hugely gratifying, but at the same time it comes with leadership is also suffering and pain and the one that can take on the most suffering [00:05:00] and the most pain eventually ends up becoming the great leaders. I think we would still choose that path because it’s still a lot of introspection, self-reflection, just getting better. You get your butt handed on so many days, but you get back up, show up again. So it’s a lot more fun. Patients are fun too, but our clients fundamentally change. Our clients were patients, our clients are now doctors, so it’s a different type of fun.
Craig Castelli (05:27):
Yeah, that’s a great way to put it. [00:05:30] So talk about growth a little bit. I know you do a lot of M&A. Unpack a little bit your growth strategy.
Dr. Abhishek Nagaraj (05:39):
It’s a combination. We are opportunists. I think that’s kind of how we look at it. It doesn’t matter if it’s Denovo, if it’s acquisition where there’s a great opportunity. I think we generally follow that path and we also generally when everybody says go right, we generally tend to go left [00:06:00] a little bit because again, there’s so much acquisitions going on. Craig, you know better than we do. There’s a lot of buying of profit and EBITDA. That’s generally something we’ve avoided unless we can fundamentally add value to a business, we don’t buy that practice. And sometimes when you hit a total addressable market in certain regions, the only option for us is to actually go open a Denovo because the total addressable markets in some of the areas that we’re located [00:06:30] in is much bigger than if we just went and bought a crappy acquisition. But the TAM is much lower. That’s kind of how we decide. We’ve also created geographical pockets and we’re going to continue to do that so that we can keep growing, but in a sensible way.
Craig Castelli (06:50):
Yeah, it’s a smart way to look at it. I think a lot of people get caught up in the acquisition frenzy, which that’s my business, so I’m only going to criticize that [00:07:00] so much. But the reality is sometimes there is a different path that is logical and buying an office just for the sake of buying the office or buying the EBITDA can end up being a lot more costly. There’s some very large groups right now who are unfortunately learning the painful lesson that if they don’t integrate, if there’s not cohesion, if there’s not a logical strategy that’s being deployed, it becomes harder for them to keep [00:07:30] progressing the business forward.
Dr. Abhishek Nagaraj (07:31):
That’s right.
Dr. Anushka Gaglani (07:33):
Absolutely. Couldn’t agree with that more.
Craig Castelli (07:36):
So in a perfect world, we’ve got a few doctors listening here who want to sell their practices. What is your ideal acquisition target? How does somebody know if they’re listening here that you are who they should call and would be a great partner for going forward?
Dr. Anushka Gaglani (07:54):
I think the first thing honestly is cultural alignment. I know people throw around the word culture all the time, but for us we have core values. [00:08:00] We have to like each other fundamentally. If we don’t like each other and we can’t work through issues together, we’re not going to want to do a deal. So that is fundamental. A, you wanted to say something?
Dr. Abhishek Nagaraj (08:13):
And if we had to get more into the numbers, into the nitty gritty, I think generally dentists that can be humble, hungry and smart, they still have dentistry left in them. When I say smart, not IQ, emotionally smart, they’re [00:08:30] really good with their teams, but can also play that role of a partner. Oftentimes as dentists, we are like, Hey, we’re going solo, right? That’s just how we think. So learning to collaborate with others, somebody who can be collaborative and at that point revenue doesn’t really matter. That could be like a $500K practice or a $2 million practice, but those are qualities that we look for.
Craig Castelli (08:55):
Yeah. How do you actually determine whether [00:09:00] somebody possesses those qualities? You can’t just get that over a single cup of coffee.
Dr. Abhishek Nagaraj (09:05):
It’s hard. I think you could get a feel for who they are, but I think if you generally ask one of our favorite questions we like to ask, it’s the Dan Sullivan question: What needs to happen from now to three years from now? You project them into the future and ask them what has to happen professionally, financially, and personally for you to feel like you’re making progress. We generally look to see if these are people [00:09:30] that are stuck to the present and the past or can they actually fundamentally with a clear objective lens look into their future and see what they want in the future. That’s generally how we segue into a lot of these conversations. From there, it’s just vibe, right? I think if you vibe with someone, do they have similar values? Is this a dentist that values like a lot of material things, which is not bad, but at the same time, how will they work if they’re always trying [00:10:00] to capture lifestyle creep, is that going to be a factor? Those are things we generally look for. I can’t say there’s quite a science behind it. It’s just a feel good vibe and fundamentally are we aligned, right, Anushka?
Dr. Anushka Gaglani (10:14):
Yeah, I would agree with that. I think it’s a gut instinct for sure. And I know like Abhishek said, that’s not very scientific, which you get a feeling about who people are. And the other thing I think that a lot, you mentioned some of the big groups too [00:10:30] in M&A, they’re realizing it’s not exactly what they think it’s going to be. For us, we’re very clear and upfront. One of the things we heard a lot, even when we’ve had groups try to solicit us is, yeah, nothing will change. You’ll keep doing your own thing. For us, I think that leads to a lot of misalignment. We’re very clear that almost everything you do is going to change, and if you’re not okay with that, we understand you can keep doing things the way that you want to do them, but for us, we have to integrate and we have to have all the practices [00:11:00] running the same way.
Dr. Abhishek Nagaraj (11:01):
That’s a great point because when you tell them it’s going to change and they’re still okay with it, that generally makes for a better partner. That’s a really good point.
Craig Castelli (11:08):
Yeah. I mean that is probably the biggest determining factor I would imagine for what works in your model because I won’t even pigeonhole dentists with this. Most people who are at a certain part in their careers, they lack that ability to change or to adapt. And so if you can assess [00:11:30] both the vision for the future and that capacity to adapt to changes in the environment, changes in the business model, by virtue of integrating they they’re going to fit well.
Dr. Anushka Gaglani (11:44):
Absolutely. A hundred percent.
Craig Castelli (11:45):
And that “nothing is going to change” statement is a big lie anyway. I don’t care who’s out there
Dr. Anushka Gaglani (11:50):
Exactly
Craig Castelli (11:50):
Pedaling that. It is a complete fabrication.
Dr. Anushka Gaglani (11:53):
Well, if you’re not changing times change. So if you’re not changing with them, you’re probably not growing and more than likely [00:12:00] your business is dying.
Craig Castelli (12:02):
Right? Exactly. Exactly. So I want to shift gears a little bit because the two of you do some very unique and interesting things beyond just the way that you’re running your practice, at least relative to a lot of the other doctor entrepreneurs that we know. You’ve been members of EO for a very long time, started your own podcast. I heard a rumor that now all of this is not enough. [00:12:30] So you’ve enrolled in the University of Chicago, you’re going to go get your MBA at Booth just because you had too much time on your hands, I’m guessing. So tell me about how each of these makes you a better leader and a better business owner.
Dr. Anushka Gaglani (12:46):
That’s a really good question. Honestly, I think for us, we grow together. That’s the first thing. Fundamentally, we grow together. We see so many personal relationships. Professional relationships fall apart [00:13:00] because people are not growing together. And for us, we made the decision a long time ago that we’re going to do, we joke about it, we do everything together and we’re not actually a joke, but it’s about, I think the way we look at it’s every single thing that we do, we find some sort of value from it. Some things we might get more value, some things we might get less value, but there’s something we gained from it. So as an example, EO when we started that, it was actually in COVID. We joined a month before COVID, [00:13:30] and I’m so glad I had that resource because we had a forum. Each of us had our own forum that we could lean on. It wasn’t the silo. We’re like, oh my God, we’re the only ones on earth whose business was shut down, wasn’t true. So that fundamentally changed how we see that we’re not alone. I think that’s something that we really learned from that. The other thing was strategic coach, Dan Sullivan. Huge, huge, huge fan of him. He is just such a brilliant person and we’ve learned so many tools as well about [00:14:00] mindset above all, I think is the biggest thing that I’ve gained from that personally.
Dr. Abhishek Nagaraj (14:06):
Yeah, I think you hit the nail on the head, Anushka. I think just being a part of peer group, sometimes you’re either, sometimes we’re in our own head, we’re thinking we’re crushing it or we’re not good enough. The imposter syndrome. I think just being in a peer group with other entrepreneurs who are actually doing significantly better and cooler things than you is actually just [00:14:30] being the dumbest person in the room is kind of what we crave a lot, I think. So we’ve done that quite consistently over the last few years. I just know my peer group are a bunch of entrepreneurs who are really crushing it at a high level. So when I go in there, my problems are like, okay, shut up. This isn’t just your problems. We’ve been there, done that, and it’s just so easy for somebody to experience share with us.
(14:54):
So that’s really cool. And I think podcast too. It is just [00:15:00] one of the reasons, probably similar reasons to you, Craig, I think we wanted to meet really cool people through the podcast and talk to really cool people and at the same time just provide more value to dental. And not that a lot of other people aren’t doing that already, but it’s just our way to give back and share whatever we know. And we’ve built, I think, and the MBA just ties in with all of those things. I think the fact is we’ve [00:15:30] done some merger and acquisition, but the reality is we’re still a small group and we know that. And in order for us to go and actualize our goals to be what we want to be and we envisioned to be, I think we wanted some type of structured learning, especially with Booth being very heavy on mergers and acquisitions, entrepreneurial finance. I think those are things that actually are very relevant to what we do on a day-to-day basis.
Craig Castelli (15:55):
Yeah,
Dr. Anushka Gaglani (15:56):
I would agree with that.
Craig Castelli (15:57):
I mean, I want to go back to something you said [00:16:00] a minute or two ago. I find it very hard to believe that you’re ever the dumbest person in any room that you walk into. But I’ll say to your point, when you think the glass is half full, you need somebody to tell you why it’s half empty and vice versa. It’s a very good check of your ego, of your vision, of your mental state at any one point in time. There are people out there who are doing better, there are people there who [00:16:30] may put off appearances if they are and are really struggling. And so surrounding yourself with that broader network who at the same time have very much shared experiences is I find it immensely valuable.
Dr. Anushka Gaglani (16:45):
A hundred percent. And you’re right, it is humbling. And we definitely have both been the dumbest person in the room multiple times over, but I wouldn’t have it any other way. And one of the things is you mentioned that there might be dentists listening to this podcast. [00:17:00] I think finding groups of entrepreneurs or people who are not necessarily dentists or in the dental field, but specifically dentists, is super important. One of the things, actually, my brother just graduated from med school. He already had an MBA and I told him we were doing our pre MBA accounting and I was like, oh my God, I’m going to fail this. What is all of this? Right? It’s like calculus and things we haven’t done in 20 years. And he said, don’t worry, this is easy stuff. Don’t worry about it. You’re going to get through it. [00:17:30] Med school, dental school are way harder. So I feel like getting out of being around other dentists is super crucial in order to see the world in a different way.
Craig Castelli (17:41):
That’s
Dr. Abhishek Nagaraj (17:42):
A solid point.
Craig Castelli (17:43):
It will absolutely change your perspective on things for sure. So normally I ask if you’re thinking at all about your exit, I know you guys have a long runway in front of you, but from knowing you, I also know that there is a goal at some point that you have targets and there will [00:18:00] be an exit eventually. So I want to ask the question differently and understand what you’re doing today, today to position Areo for an exit whenever that time may come.
Dr. Abhishek Nagaraj (18:12):
Yeah, I think that’s such a great question, Craig. And I want to give you a shout out too. We’ve been friends for over five years now. I remember meeting you at the park across from our house and in the middle of Covid, and you just gave so much good advice to us from an investment firm perspective of a [00:18:30] buyer looking or a seller or buyer looking into if we were bought. I think that’s the kind of insight that we needed at the time. And then we realized that we’re always going to build a business in a way that it’s build to sell essentially. That means you’re optimizing every aspect of the business. And you’re right, the right opportunity may come by. I just don’t think it’s now, but I think it has to make sense where it benefits as we do more acquisitions [00:19:00] as doctors, our associate dentists, that it has to benefit all our people at the end of the day. And when it can truly benefit everybody, if the right investor or the right checkbook can actually help us take our business to the next level, then it makes sense for us to take an exit. That’s generally how we look at things. So not opposed to it, but not it’s just got to be. Right. Anything else that you want to add Anushka to that?
Dr. Anushka Gaglani (19:28):
No, I think you absolutely hit the nail on the head, but [00:19:30] I do want to second that, Craig, you’ve been absolutely invaluable to us and we could not appreciate that more.
Dr. Abhishek Nagaraj (19:36):
And so much so that you’re a friend to us now. We look at you less as an investment banker dude and more like our friend, as our friend.
Craig Castelli (19:45):
Well, I am flattered to have graduated to that status, but
(19:51):
No, it is mutual. I mean, we thoroughly enjoy working with you, but it’s even more fun to just hang out and have a cup of tea or go to a Bulls game or anything [00:20:00] else that we’ve done. Definitely. I mean, it’s remarkable the business you’ve built can’t wait to see where it goes in the future. I really do think there’s a lot of potential in what you’re building, and you’ll find if you haven’t noticed it already, that there’s always going to be groups interested in writing you a check. Very few of them will bring everything else to the table, the alignment and the shared vision and the true willingness to really back what you are doing [00:20:30] in a way that is purely creative and not getting in the way. And it’s nice to have the patience and the flexibility and frankly, youth on your side that you can continue to go alone for the foreseeable future.
Dr. Abhishek Nagaraj (20:44):
Yes, right on.
Craig Castelli (20:45):
Appreciate that. So last question here then we’ll wrap up. I would love to hear a piece of advice for any of the business owners who are listening, something that perhaps they’re not going to hear everywhere else.
Dr. Anushka Gaglani (21:00):
[00:21:00] That’s a great question.
Dr. Abhishek Nagaraj (21:03):
I have one, this is one of my favorite things that I ever read, and this actually dilutes down all the things that I know Anushka can speak for you too. All the things we learned in business in the last 10 years down to one line: revenue is vanity, profit is sanity, but cash is king and queen. Because truly, if you’re chasing revenue, that’s fine. It doesn’t matter in the service business, if [00:21:30] you want to ultimately have the exit sell your business, it doesn’t matter how much revenue you have, profit is going to be truly what makes a difference. But even more than that, having cashflow, being solvent, being fluid, free cash flow is really what matters at the end of the day, whether you want to sell your business or not, because those two things will always tie in. So that would be my piece of advice. Not focus too much on the revenue, but focus on optimizing the business so that it’s profitable [00:22:00] and where you have plenty of free cashflow to do whatever the heck you want.
Craig Castelli (22:06):
Yeah, I think that’s a fantastic piece of advice because you’re right, especially in my line of work, we can make EBITDA look like whatever we want it to look like. That doesn’t mean there’s any actual cashflow coming out of the business. Businesses can show great EBITDA on paper and still struggle when you have the cash piece there as well. It really unlocks a lot of doors.
Dr. Abhishek Nagaraj (22:25):
Right?
Dr. Anushka Gaglani (22:27):
Yeah, that’s great. So for me, I probably have two [00:22:30] things that come to mind. One is, if you don’t want to be like most people don’t take advice from most people. I’m on Facebook only because I am a part of these dental groups, and it’s interesting to see dentists commiserate with each other. It’s always like the insurance company, et cetera, et cetera. Totally understand. Listen, I’m a dentist, I’m a clinician and I empathize and I understand, but at the end of the day, your buddy down the street is not going to know any better than you are. [00:23:00] So again, look externally and talk to other people in other industries, I think, and experts in those fields. And then the second thing is what’s my role in my own suffering? There is no magic bullet. Good things take time. It’s patience. And we see this a lot where everyone’s like finger pointing, well, it’s because of that I couldn’t do this or that. The reality is none of us are victims. And actually that’s very freeing. We can alleviate anything, but we have to be willing to put in [00:23:30] the hard work. There is no get rich quick or magic bullet.
Craig Castelli (23:37):
That is an excellent phrase. I mean, you’re right. It is so easy to point fingers and blame others, but at the end of the day, we have more control over our own destiny than anything else. And accepting that is not easy, but it is definitely freeing. Absolutely. Well guys, this has been a lot of fun. I appreciate you joining. [00:24:00] If anybody watching this wants to get ahold of you, where would you direct them?
Dr. Anushka Gaglani (24:06):
You can find us on LinkedIn. It’s just our names and Instagram. I don’t post a whole lot on Instagram anymore, but it’s Dr_Entoothpreneur.
Craig Castelli (24:22):
Like that.
Dr. Abhishek Nagaraj (24:23):
And I’m Dr. DTA Graham. And of course there’s www.areodental.com and there’s a contact us page [00:24:30] there.
Craig Castelli (24:31):
All right, great. Abhishek, Anushka. Thanks a lot and thanks everyone for watching us on The Close.
Dr. Abhishek Nagaraj (24:37):
We appreciate it. Thank you. Thank you for having us.