Paul Johnson,
And just over 10 years ago, Paul moved to San Francisco to set up a company called Lemonade Health. Lemonade Health was one of the first direct-to-consumer telehealth companies in the US providing healthcare services based on product and technology at its core.
Paul shares that he/Lemonade was fortunate to raise about $65 million from not just good VCs,
but great VCs, including Health Velocity Capital, who Paul shares that Marty Felsenthal, Partner at Health Velocity was on Planetary Health First Mars Next a couple of episodes ago.
Paul shares that they were lucky to help millions of patients get access to better quality, more affordable healthcare in the US.
Lemonade launched back in the UK with Walgreens Boots Alliance. And when we sold, we had a team of about 200 amazing, amazing people. Yes we were fortunate to sell to 23andMe for a $400 million exit. Paul spent two years at 23andMe running in a couple of different roles,
including running their consumer business, which was a $270 million P&L.
And since leaving, He has been advising venture funds, healthcare startups, He has
spent a lot of my time coaching first time founder CEOs. He Loves doing it.
Kevin Brittleberger.
He is co-founder of Dispatch Health, which is a tech-enabled platform delivering high-acuity care in people's homes. And over the course of the last 10 years, they have built really a system of care focused on high-acuity intervention in the home. Removing folks from an expensive emergency department, helping transition patients safely from the hospital to the home,
delivering hospital-level care and SNF-level care in the home, providing last-mile services in the imaging space, digital x-ray as well as ultrasound in the home. Dispatch and Kevin have had a great run over the last 10 years, served over a million patients, operated in 50 markets in 30 states, raised over $700 million from amazing VCs and strategics on our board.
Ravi Komatireddy, Internal medicine physician by training, luckily in San Diego,
where he was one of Eric Topol first hires at Scripps Translational Science Institute,
doing a research role with digital health, and also ended up co-founding chief medical officer of two startups, one called Lumiata, which was one of the early forays of machine learning and digital health. Ravi ended up creating one of the largest graph databases that was kind of, some of that data was consumed by Google. So if you look up symptoms and Gemini gives you the wrong answer, please do not be mad at Ravi if your diagnosis is wrong or you do not like it.
He also went on to found a company called Reflection Health, which was one of the first motion tracks that enabled digital physical therapy, a virtual solution. So it was like, our thought was, His hypothesis was: Why couldn't we bring physical therapy to you with technology?
He also was responsible for bringing low cost digital health clinics and setting them up in Africa and then work with NASA for a while on some other projects. Now He is off doing another health startup, Daytona Health. He is no longer focusing on health care anymore but Health Span.
His company simplifies the path to people's health, performance, and longevity.
Daytona does that through combining both the precision medicine, personalized medicine piece with the precision lifestyle coaching, because most healthspan is lifestyle, not just meds. It's just so hard to do it yourself. So they use a combination of psychology and medical science to do that.
Jerry Logan.
He is an investment principal at a company called Niterra Group. Niterra Group is a Japanese-based tier one mobility supplier. He is part of the innovation arm.
They have a venture lab and then also an investment program. We've got a $100 million CVC fund where we deploy capital into startups across the world.
His background is within the mobility space. He has spent 15 years in various accounting and financial positions on the operations side of the business. He joined Nittera Group about two years ago. Nittera focuses on med tech, climate tech and also mobility investments.
Paul shares:
What makes a great VC / investor?
The first I would say is just someone who's able to be a partner and supporter for you.
And certainly my experience of running Lemonade for eight years, is that after an exit, we talk about it being this sort of beautiful, easy, linear path, and everything was planned out. But the reality, of course, was almost the opposite. And we're constantly having to navigate challenges,
Issues: whether it's regulatory issues, whether it's go-to-market issues, whether it's product market fit challenges, partnership challenges.
He was fortunate enough to get good advice and know that he had the right investors around the table at Lemonade
2 categories of investors:
Operators who become investors
The others are investors who exclusively have an investing background.
And what I found valuable was having a mix of the two as investors and board directors at Lemonade.
Gerry agrees and adds:
We've got a mix of investors with operational experience, such as myself, as well as investors who have just been in the investing space their whole careers. We're very strategic when we work with our startups. If any of them call me, I'm always picking up the phone. We regularly work together on projects to help brainstorm. And with a goal of specifically giving our portfolio companies, an unfair advantage in the market. A good investor is going to be close to his startup and help him along the way.
Kevin shares:
It depends at what stage of investment.
When the VC is coming in is not just where the hockey puck is currently, but are you aligned on where the hockey puck is going to be in the future? And being able to grow the business in synergy together as you start to scale is key to be aligned around the future and the future direction of the organization, using different analytical skills, being able to understand the industry itself that you operate in, and having true domain expertise that you can lean on each other with, and to be able to position the organization for success moving forward.
Some Challenges:
Ravi: When it's wireless medicine, it's gone through a different iteration. So we've all been here for a long time and there's nothing in healthcare that I've seen as a startup in the startup world that happens in less than five years. It takes time, and you have to be really lucky If you get an exit before five years in a digital health company, trying to get the right team and the market's changing, and the product market fit. So it's like 10 years is normal, right to be around before something takes off. It's challenging to find the investors who are up for that time horizon.
Are we thinking really big with a big idea? Let's go help a billion people. But that's going to take a level of patience and risk that someone wants to take. And that's hard to find.
Takeaways from podcasts
The first or second meeting we had, there was just this feeling of camaraderie. There was a feeling that we could get along and we could help one another.
Paul likes the vetting of the VC/board members to ask some questions on the behavioral and situational, especially to understand how they might respond if something does not go right from the perspective to get support.
How might they reactive if he/she makes a mistake.
Getting advice in the perspective of support and not feeling or being judged
The magic of being in a partnership.
Sometimes entrepreneurs actually fear calling their investors or board members if they've messed up.
How do you do your diligence on those VCs?
Really dig into what their investment thesis has been over time.
Does it align with you?
Being able to meet the broader team,
Not just that individual that's leading the investment but the broader team within that venture capital firm,
It is critical to take the time to make sure you are bringing on the right VCs that can make your company grow and be successful.
The founder’s Dilemma = to Pivot or Not? And how to Communicate, the Why or When to your Investors
These conversations are not easy to have with your VCs. Like when your company needs to make a pivot or we find out that our ideal customers are actually asking for or are different than we first started out with or a piece of technology that we started out with is going to be obsolete in two years. We just found that out, for example. That example would be Reflection Health when we were using the Microsoft Kinect camera to do the motion tracking, which was a consumer device. It was hooked onto the Xbox video game system. And no one ever really brought a consumer device like that to become an FDA cleared device. So several yelling matches later with the FDA. I'm sure you guys had those. You know what those are like.
It all worked out. We need to be a company that's better about using just motion tracking
technology in general as we go forward. We don't want to be tied to this device.
I'm seeing these landmines that I don't want to step on. Yes I know we have spent $10 Million on the technology.
The Elephant in the Room
Helping entrepreneurs…Conflict between I need money and I want investors who are going to be helpful.
Learn what is the difference between Investors that are Helpful and Supportive
You need to find investors who are more than just the money.
You don't think you need to find everything in an investor for them to be helpful.
Who are the right advisors to put around you and those advisors don't need to be your investors those advisors could be people who are just operators and have had a full career operating and then you can worry less about the investors being really helpful
helping you negotiate certain deals or introducing you to certain customers.
But what you want to optimize for is investors who are going to be supportive, not helpful.
And that's sometimes seen as a little bit controversial, particularly when working with the VCs
The who?, And it's almost when you're building your executive leadership team, you want to make sure that you're not building all from the same DNA, but you're able to really develop the right team.
You need to develop the right team relative to the board and your investors.
And that could be individuals that are individual contributors from an investment standpoint.
It could be from strategics, it can be from VCs.
How do those individuals balance each other relative to strength and weaknesses to
ultimately make the company more successful?
That could be unique for your individual company. And so it's important to make sure you have the right mix because those individuals need to work together well and be synergistic and be able to push each other and push you as a founder too.
The right network, informal advisors, mix between what’s on the board, who’s passive and who is active, etc.
It sounds like you really want to work hard at developing those informal advisors
Question to ask when seeking the right VC
Has the VC sold or how many of their portfolio companies have they sold or exited?
Good VC’s sell - their portfolio companies
Does this VC have experience with being acquired or going public? How many times
Can I talk to a few of the entrepreneurs who they've helped through that process?
And how do they support their portfolio companies when they're raising their next financing round?
The strength of their network is critical, to leverage each round, series A, B, C
How are those relationships with partnerships and business development
Also thought leadership, are they thought leader and going to be adding strategic value for product market fit? Are they an industry leader moving ahead of everyone else?
What makes a good entrepreneur?
How can you be more coachable? Seems like that could be a really important fact to really make things work between the VC and entrepreneurs.
Gerry Logan
You know, I meet with hundreds of startups. And I think one of the best things that they can provide an investor is a very clear story about their company and how they believe it's going to move through the market. So that's one thing is just having a very simple story to follow. And then the second thing, once we decide that we want to move on to the next step, digging into their information, going into their data room, And having that data room being very robust and filled with all the information that I need to see is extremely helpful, The more information, the better, because a lot of times we'll come back and we'll ask for more and more and more. So having that initial data in the room and available is very helpful.
All CEOs should have a coach, Paul
The one single thing for me is that every single CEO should have a CEO coach. And actually only a small percentage of CEOs have CEO coaches. And for people that like data, if you're a CEO and you have a CEO coach, you are 3.5 times more likely to have a successful exit, IPO or M&A. 3.5 times more likely. But yet a very small portion of CEOs have CEO coaches.
As you pointed out, Michael, I'm really into sport, especially pickleball, previously other sports. As a competitive sports player, I would always have a coach. And I think CEOs are the analogy between a CEO and a competitive sports player, which I think is pretty strong. And you could not imagine a professional tennis player not having a coach or a number of coaches.
But yet we have CEOs who don't have coaches. It's really difficult for me to understand.
So get a CEO coach.
The Mindset of a Founder / No Jedi Mind Tricks here:
CEO / Founders need to know their numbers.
You should also be knowing those numbers during those conversations with your board and with your VC.
They should not have to wait a week or two for those numbers.
Be one step ahead of your VC / board as much as possible.
And that's really about knowing the industry,
being an avid reader,
continuous learning
You never know enough about what's happening out in the market
So continuing to educate yourself around this, that's gonna be super helpful
What about the mythical like Founder of the Likes of Steve Jobs
Sometimes there are those founders that just they've got a certain charisma and something
to them that makes you want to makes you want to follow them it makes you want to
be a part of what they're doing and so I think there's definitely something to the personality of an entrepreneur that that draws an investor in. I think that's part of the storytelling what you were talking about.
Steve jobs did an amazing job telling stories and about why there should be a product market fit and where things are headed and why I need to have you know this device in my hand you know at all time so if you're able to tell you know a compelling story on your product and your vision
This can make VCs a little anxious if you're not showing product market fit immediately.
Mic Drop on the Power of Holistic Health & Coaching for Founders.
How they're dealing with their stress
Sleep
Physical health
Personal fitness
What they ate
the fight with their wife or their spouse or the partner.
They're feeling guilty about leaving the kids behind and not spending enough time.
And it's like a holistic way of treating that physical and mental and professional
how to say no to things in priorities and work-life balance and also keeping your health in order as well I think is such a key piece and everybody is it's very hard
Be a better person in front of your organization during good times and bad times,
probably more importantly during tougher times.
And you have to roll with the punches.
This is not a sprint, but it's rather a marathon and continued focus, continued dedication.
I love to think about the Atomic Habits book from James Clear, 1% improvement every day.
Making sure that you're executing on sprints.
And when those sprints start to add up with continued execution, looking too far forward or too far back on, you know, making mistakes, then it's really difficult to continue to….fail fast and continue to grind forward…..
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Ep 104 What makes a Good or Bad Venture Capitalist?