Finding success in a culture of excess: the story of XS Supply
April 15, 2019
Tyler Berger didn’t think he’d ever get involved in the medical industry. “I was 19 and working a job that paid $10 an hour,” he says, reminiscing. “When my now-wife and I realized we were expecting a baby, I knew I had to change my life.”
Spurred on by this urge to improve his situation before the birth of his first child, Tyler got a job with a company that sold medical supplies. Once there, he made it a point to learn as much as he could about the industry. “I gained personal connections and knowledge about the healthcare field. I even went to school to learn how to better manage businesses like these.”
Then, Tyler walked away from the field for a while. He worked for an insurance company as an accountant, a profession he says he “just picked up and learned.” But after nearly a year, he was ready to leave the accounting world behind to start his own enterprise. “My business partner, Jon Bird, and I used to work for that same medical supply company years ago,” he says. “After going into different fields, we suddenly reconnected. We decided we wanted to get into this business, only bigger and better.”
The creation of XS Supply
In 2015, Tyler, Jon, and their partner, Ivan Rodimushkin, started XS Supply to buy and sell medical supplies from facilities across the US. They haven’t looked back since.
“Now, I’m the CFO of XS Supply,” Tyler says. “We purchase slow-moving, single-use surgical supplies on the healthcare market and currently have a nationwide presence with our headquarters located in Florida.”
The field of medical supplies is probably one that most people don’t think much about. But surprisingly, it can be one of the reasons why hospitals may charge exorbitant fees for treatment.
“It’s very common for hospitals to have excess supplies,” Tyler says. “Hospitals are usually the ones who make the decisions about what supplies to purchase. So when doctors put in a request to change their supplies for any reason, they find they have to get rid of their inventory one way or the other.”
As most of these supplies are single-use items with expiration dates, hospitals risk massive losses if they’re unable to sell them. This is where XS Supply steps in, to buy their inventory for resale.
In other cases, surgical centers may be forced to purchase multiple sets of a product and only end up using one. When this happens, it’s difficult for them to sell an open box even though the other items are sealed and sterile.
“Some centers only need one item for a surgery which, for instance, is sold in a case of six,” Tyler says, “We sell them in single units so the centers don’t have to waste money buying the entire pack. In this way, you’re saving money even if the items are sold at the same price. Instead of paying for six items which you know you’re not going to use, you can buy a single unit from us.”
Combating waste in healthcare
Much like in the tech, clothing, and food industries, waste continues to be a big issue in healthcare. To combat this, XS Supply operates much like a vintage clothing store would. But much more sterile, of course.
“It’s a very replicable model. We knew we could apply it to help fight healthcare waste,” Tyler says. “In some stores in the US, you bring in your old clothes and are paid for the value of what you’ve brought.” The major difference, of course, is that XS Supply only purchases items that are in their original, sterile, OEM packaging.
After a facility makes contact with Tyler and his team, they are asked to provide XS Supply with information on the manufacturer, reference number, expiration date, quantity, and unit of measure. This is to ensure that the items are unopened, and sterile, and that there is a demand for the product in the marketplace. After receiving this information, the company runs it through a database and, depending on its value, makes an offer to the facility.
“In the same vein, we’re trying to put money back into hospital budgets. It’s one way through which we differentiate ourselves from others in this marketplace,” Tyler says. “Through our work, hospitals can reduce the cost of patient care. Surgical supplies that used to cost, say, $500, now cost $300.”
XS Supply also finds that this works to reduce waste. “Helping the environment wasn’t our main mission but it’s become a wonderful byproduct of what we do,” he says. “If we don’t purchase these disposable supplies they get thrown into the landfill where they pollute the environment. Thus, we’re very proud of this as a byproduct. But our main mission is, and has always been, to help medical facilities save money and make healthcare less complicated for doctors, patients, and everyone in between.”
Bumps in the road
Tyler speaks of the challenges they faced during the early stages of XS Supply. “Like any small business, we were growing exponentially, gaining lots of customers and developing supply lines. But the hardest challenge we had was with cash flow.”
The company’s struggles were as a result of its unique business model. “We would book receivables like it was going out of style,” Tyler says. “But while hospitals often take 30-45 days to pay, we have to pay our suppliers immediately. It presented a big challenge in the beginning.”
“One other challenge was how to organize payables and receivables,” he continues. “Similar to vendors, hospitals have several methods of paying and different schedules they stick to. Because of this, it was extremely difficult to have a consolidated workflow.”
Overcoming challenges with Veem
To prevent further losses through unreliable payment methods, the company realized they had to find a solution.
“I found Veem and was impressed with it,” Tyler explains. “It had a consolidated dashboard that was very easy to use. Even better, it was possible to just give one of our employees our login info and instruct them to pay our vendors.”
Since signing up for a Veem account, XS Supply now processes nearly all their payments through the platform. “Using Veem is a rule I try to enforce with all our clients,” Tyler says. “It’s our preferred method of payment because it saves a substantial amount of money.”
“The foreign exchange rates are fantastic,” he continues. “But the best part of it is how easy it is to use. For XS Supply, the real savings earned through Veem are the labor costs.”
He expands on his point. “For instance, until I go to my bank, I can’t send a same day wire. But with Veem, I get to send out the funds and give my vendors confirmation, something that isn’t possible with my bank. It cuts down on vendor management as well as labor. It takes me a third of the time to send a Veem transfer and even that’s a conservative guess.”
The time saved with Veem enables Tyler to free up parts of his day for some much needed relaxation. “It allows me to take a break in the morning which I didn’t previously have. I’m able to catch up on news and also check in with people I work with. I guess you could say it gives me more time to run the business instead of working for the business.”
Thanks to the hard work of its three partners, XS Supply is a successful surplus medical device resale company. With Veem regulating its payment process, Tyler, Jon, and Ivan can concentrate on taking the company to even greater heights.
“We’re currently nationwide,” Tyler says. “But we’re excited to announce that we’re soon moving to Germany and Canada in a big way. We firmly believe in going big or going home, so we’re expanding our operations throughout the two countries. In five years, XS Supply should be making no less than $40 million in revenue, with about a third of which coming from Germany, Canada, and the rest of the world. We’re currently on track to make this happen”
But that’s not all for the people-oriented CFO. “I want to create a workplace where people can retire,” he says. “I currently feel like I have a core team at XS Supply that I want to keep forever. I want to retire here and create the type of place where people can work here forever, if they like.”
With such an inspiring journey of developing his successful business, Tyler has some simple advice for would-be entrepreneurs.
“Close every deal. Sell it, figure it out later. That’s how we grew. We sold the impossible and we made it happen.”