Tech Trends: What's Right for Your Business?

0:00Just focus on the mission and the value prop and finding that product market fit. the money will come. You may have to be more creative, be a bit more resilient, but good money and smart money finds good companies.

0:34his ideas, helping launch one of the first internet companies called Zip2 way back when with longtime friends, Kimball and Elon Musk. Now he's building the transformative platform League, a leading health operating system, helping people understand and benefit from their healthcare offerings. Michael, I'm looking forward to diving into all this today with you. Thanks so much for joining me. Thank you. Let's start back when you were in grade nine. I believe in grade nine and I think grade 10, you went a number of science projects. Is this the genesis of your entrepreneurial career, would you say?

1:12For sure. It was the beginning of me being passionate about building things and solving hard problems. you know the idea that you can take a crack at doing something really tough and get rewarded for it was was really exciting and I saw that people could get also really excited about the same thing that I was excited about you know building some new thing some new innovation and so for sure that was the genesis. And it frankly opened the doors to my work at Microsoft during college. And then later, the big decision to move to Silicon Valley. So let's talk about that. So you go to Queens, right, for engineering.

2:01This is undergrad. Did you have any side hustles at the time during your studies? I did. I had a side hustle, which was, you know, coding for money, essentially. And I I worked on a video game called Gone Fishing, and I was using genetic algorithms and neural networks. So like, I guess, you know, today we would just use the term AI to to code where fish would go in this fish in this fishing game. And I remember that was worth at the time 10 ,000 bucks for, I don't know, six, seven, eight hours of work. And I thought, hey, this is pretty cool. I could keep doing this.

2:54That's a lot of pub money for undergrad. In those days, that was like an incredible, I was buying rounds. Yeah. So let's talk about Microsoft. So fall, I think it's your senior year, you get an offer from Microsoft to go there post-grad. But as you say, you take a different path. Why did you choose to go the startup route? And my second part to this question is, what did your parents think about this decision? Yeah, so I had had that experience at Queens. All joking aside, the gone fishing side hustle was really part of a bigger thing, which I was doing for Microsoft. And I had that gig lined up post-school.

3:39I didn't go to any of the job fairs and any of the things that some friends of mine were doing. I just thought I kind of had that in the bag. And one day I got a call from Kimball Musk, who I met in my freshman year. And Kimball was like, hey, my brother and I were doing this business. It's on the internet. It's amazing. You should come and join us. All your work at Microsoft, you could be a huge asset to the team. And I already knew what I was going to be making at Microsoft. And Microsoft at the time was, I mean, still is today hugely reputable. But at the time, it was still in its exponential growth phase.

4:18It was exciting. I had the opportunity to meet Bill Gates and Nathan Merivold. So I had access. And Kimball, on the other hand, had a company he was doing with his brother. It didn't really have a name. It didn't really have a product. And it actually didn't really have any funding. And it was the promise of options, which I didn't really totally understand. And we didn't cover a lot of stock options in engineering physics. And I don't know, it just sounded exciting to go to California and to go to Silicon Valley. And I got some great advice at the time from my mentor, who was actually my boss at Microsoft, a guy by the name of Ken Nickerson, who said, listen, there will always be jobs.

5:09You need to decide based on what you think you could work hard at, have fun at, and really be passionate about. And the money will come. Don't worry about the money. And so that was enough of a push to take the job and move to Palo Alto with Kimball and Elon. You take some gone fishing savings with you. Did you have free rent? What was the scenario? To be clear, I burned through the gone fishing money in a few weekends, maybe more than a few, maybe a month of buying rounds. But they offered up an apartment where a bunch of us lived. Kimball and Elon's cousin, Peter Rive, later went on to build SolarCity with his brother, Lyndon.

6:01And so me, Peter, another Canadian, we all lived together in Mountain View and we were fed. So that was a plus too. And then eventually we did start getting paid a little bit. We might have missed the connective tissue, but I believe you and Kimball were in the same residence at Queens, were you? Yeah, so we were in the same residence. We met in my first week at Queens because he was my floor supervisor, the guy that's supposed to supervise and make sure guys like me don't take down 92 smoke and fire alarms. And hypothetically, of course, there was never any proof, you know, put anybody in danger.

6:45But yeah, that's when we met. Got it. Okay. So you take this job with Zip2. You go to Silicon Valley. How do you explain this to your parents? How do you explain what Zip2 was as a company? Well, I mean, I couldn't explain it because I didn't know what it was.

7:12It was a company on the internet and like the registered incorporated name was Global Linking Information Network. But I hadn't... This rolls off the tongue. Yeah, exactly. Not a lot of marketing expertise there in the early days. But I just didn't know. So I couldn't explain that. All I could say was the Microsoft job was still there if I wanted to go back. And I was going to go to California. It's the heart of technology, innovation in Silicon Valley. And I was going to build something and be a part of building something on the Internet.

7:52That did not land. What made it worse was when I first flew to San Francisco from Toronto, my dad dropped me off. I had all my worldly possessions with me in a couple suitcases. And that day I got rejected by the customs or border agent. And I had to call from a payphone, tail between my legs, call my parents. My dad had not gotten home yet. There was no cell phones. I had to call. My mom picked up the phone. She was incredibly worried. And I had to call and get a ride back home. And so that turned out to be a bump in the road. I later got my visa and it worked out a couple of days later. But yeah, they were not confident.

8:37Okay. So you become a part of this first initial team at Zip. In 99, the company is sold for around 300 million to Alta Vista. you've said in the past that quote building companies is a team sport and quote what else do you think are core principles of a successful startup so i think it starts with this greatly overused word uh vision um and to me what it means is you need to have a very strong and and powerful imagination, imagining the future of the world that you want or you want to create. And, you know, you are constantly filling in the blanks, coloring it in, trying to make it happen. And so if you don't have that sort of powerful version of the future that you are aiming to create.

9:35I'd say, you know, it's a, it's going to be an exercise in futility. The second is really, you know, the mission, another really overused word, but over the years, it's come to hold, frankly, a lot of meaning for me around, you know, who your customer is, what value and, you know, what does that actually mean? What value will you actually bring to them in a way that is unique and differentiated. And then lastly, how will you do it? And the third very overused word, which in those days, it was a big learning, but I kind of thought was a lot of BS, culture and values. It's not the what or the why, it's the how you do things, how you play on the field of competitive play.

10:31You know, I think those three ingredients are pretty essential and were learnings that I took out of those formative years at Zip2 and then later at DocSpace. Do you think for founders that are listening to this and asking themselves whether or not it's easier to raise money with a vision, mission, and the how articulated versus, say, finding early product market fit and generating revenue, what would you say? I mean, certainly some revenue is always good, but I've seen examples of companies that show early revenue and even some form of cash flow profitability, but never make it past first base.

11:15You don't ever hear of them past year one or year two. The scope and the size of the vision, it does matter. it connects to the total addressable market or the TAM and the opportunity in front of you. The mission, and in particular that piece of the mission, who's your customer and what value do you uniquely bring to them? If you can't articulate that, but you have a bit of revenue, uh i i think that revenue will be short-lived um so of course product market fit is uh important getting to some revenue and some repeatability all that's great but if you don't have those strong fundamentals uh i think you know i think you're going to run into some trouble so you mentioned dockspace mike you get busy on dockspace right after you leave zip 2 this is circa 1997, I believe.

12:15You later sell to Critical Path in around 2000 and you stick around and work with Critical Path post-exit. How do you look back on your time there and what would you say to founders who have some sort of earn out that requires them to stay around post-acquisition? So for me, I look back at Critical Path as my business education. In those years, frankly, everything went wrong. The bubble burst. We sold into primarily telecom and large enterprise. They stopped buying technology, or at least they slowed down considerably. We were a public company in Critical Path. We ended up having misstated earnings.

13:03That turned into an SEC investigation, NASDAQ delisting. We ended up shutting down of 77 offices, the majority of them, and rationalizing products from like 100 products down to three product lines. It was a pretty massive trial by fire MBA. So I share that and provide that as context because really, the big takeaway that I got from that experience was I learned a ton. And I don't know that I could put a dollar value on that learning because frankly, it's immeasurable. And really, it allowed me to do all the things that I did next. That's the positive story coming out of my experience there. I do look back on it and entrepreneurs, I think, regularly do this.

13:56You're always rewinding the tape and maybe evaluating old decisions and simulating, would I do it again? Would I do it again in these different contexts? Because those years were the years that Facebook and a whole new generation of companies were created coming out of the fallout of the bubble bursting and the kind of mini recession that occurred after that. So, you know, was that a missed opportunity? Yeah, probably. But was my value out of all that time in the earn out incredible? Yeah, of course. Would I have done the earn out a little differently? Yes. But if I hadn't had that experience, I wouldn't have known to do that the next time around at Kobo when I did the earn out much differently.

14:46Okay, we'll talk about that in a moment. So I want to take a moment and thank you, the listener, for tuning into our conversation today. Go ahead and give Shopify Masters a follow wherever you're listening and leave a review with your thoughts on the show so we can keep making episodes you love. Mike, let's talk about markets for a moment because you mentioned sort of rewinding the tape and you've been through a few bubbles. Let's say the first being 2000, 2001 with the tech bubble bursting, financial crisis of 08 and 09. and where we are now, given what's happened post-pandemic with inflation where it's at and interest rates where they are, are you concerned that the worst is yet to come?

15:30What's your outlook here? So I don't know that you could be an entrepreneur without being incredibly optimistic. I am the eternal optimist. And you're right, I've been through a bunch of these other bubbles. and inevitably I always see the good in what comes out of them. Based on the experience that I've had, bubbles and times of disruption and dislocation present opportunities for change and accelerating those changes, perhaps with technology that's been around for a while but hasn't had its moment or perhaps with business models that just no longer work and are ripe for disruption. So I'd say a challenge of being on my fourth company today is I almost know too much.

16:22And I wasn't tracking inflation or tracking elements of the market back when I was just getting going with DocSpace. Whereas today, I do pay attention to that. And there's a part of me that's like, we do live in this, and you've heard this term, VUCA, volatility, uncertainty, complexity, and ambiguity. I feel like the world is just constantly changing and there's just new challenges all the time. And the successful entrepreneurs of today have to be even more resilient and more adaptable to the change that's in front of them, recognizing that these are the moments where the biggest opportunities present themselves.

17:12So opportunities for change, disruption, these business models that you see as potentially innovative, under the backdrop of sort of the VUCA acronym, which industries do you feel like are most ripe for disruption? Well, I do spend a lot of time in healthcare for a reason. And it's just, it's incredible. I mean, I've been at it with League for a little over eight years. And it's even more clear to me today, now that I actually know quite a bit about healthcare, just how ripe for disruption it is. I think the last 18 to 24 months have only exacerbated some of the problems in healthcare. We do not have the number of doctors we need.

18:02The cost of care has gotten significantly higher. and all the trends around chronic disease, diabetes, heart disease are just as relevant and pressing as they were five years ago, if not more so. I was talking with someone this morning that shared, this is a partner of ours that shared upon testing thousands of people off the street, about a quarter of them are out of band in critical measures blood pressure blood sugar and they need intervention right away and a surprisingly big percentage of those people had no doctor and they present a ticking time bomb whether it's for their own pocketbook for insurance, for the government, and for society.

18:59You've said, and I've heard you say this before, that healthcare should and will look a lot more like Netflix and less like cable TV in the future. So when you talk about League, how do you describe the problem that League is solving? The fact is that as a healthcare consumer, navigating and using consuming healthcare is quite complex. It's fragmented. It's hard to know where to go or where to go when. And the initial investments made in technology to make this better have really only made it worse. So in the last decade, we've seen an explosion, a virtual explosion of point solutions, the first wave of innovations that all help solve or improve pieces of the healthcare experience, which has just made things more complicated for the end consumer.

19:59The end consumer needs a better way. And so what League does with our platform, we help accelerate that better way to become reality. So we are a platform, and eventually Allpoint Solutions and every other industry give way to platforms. We're a platform that helps accelerate that digital transformation and, frankly, a more consumer-centric transformation of healthcare. And like Netflix, people expect, consumers expect services they use to be personalized to them, leveraging their data to deliver a personalized experience. I don't want a one-size-fits-all healthcare experience. I want one that is unique to me.

20:47and is going to help me. And so that is a key part of the value proposition of the league platform is we're going to help you get there faster, accelerate that transformation, and we're going to deliver an experience that is a 10x improvement, leveraging data to drive personalized experiences for everyone. To my knowledge, you're post-Series B, post-75 million raised thus far. You have hundreds of thousands of consumers across the US, Canada, and the UK using this platform or using platforms that are powered by League. Is this a pure play B2B company? Is there a B2C offer here on the horizon? So it's interesting.

21:32So today we are a couple hundred million raised and now close to tens of millions being on the platform. So like the, thank you. So it's really been an incredible, few years for us. The platform has really taken off. And recognize when we started, we actually started by saying, okay, we're going to start building this platform, but we got to get people using it first. Let's offer it to consumers. And so we had that direct to consumer experience early days. And we thought, okay, how do we get more scale faster? Because people trust brands for their healthcare and we're not one of them. We're early, we're new, or a bunch of people that don't know anything about healthcare.

22:12We're tech people. Let's go through their employer. And we offered a B2B kind of application sold through employers. And then we thought, okay, these employers, it would really be great to get more of them faster. How do we do that? And how do we get just more people? How do we touch more people faster? I know. Let's go to the healthcare brands that people know and trust, that millions of people know and trust, your local pharmacy, your insurance company or your health plan, your hospital system, your health provider network. Let's be the platform that they use. And so that's really the part of the journey we're on right now.

22:56Could we offer a direct-to-consumer service at some point? We could have and we did along the way, but the brand here matters. Trust matters and you cannot deliver just technology.

23:18There are some big themes related to B2C companies, also B2B companies, of course, but a lot of operators thinking about, you know, how best to customize, how best to personalize, how best to build trust with their consumers. given the direction that you've gone through these other local pharmacies, local brands that have brand equity that people trust already. Do you feel like there is a bit of personalization or trust that's been lost in the process of using intermediaries to reach end consumers? So it's a great point, you know, on the trust piece. I mean, we are leveraging the brand equity and the trust that consumers have for the brands we partner with, for sure.

24:04That requires, because they require it, a much higher bar on us for our approach to security, trust, and privacy. I remember saying this way back many years ago, that the amount that League spends on security, privacy, compliance, compared to any other company that I've built is just astronomical on a percentage basis. We've had to, on that dimension, play at a much higher level, let's say a lot sooner than I think we would have as a direct-to-consumer company. Not saying that all direct-to-consumer companies fly by the seat of their pants, but generally that stuff would have been pushed off until they had to.

24:57We didn't have that choice. On personalization and leveraging data to create that kind of experience that we believe people want and that they expect and that they get, frankly, from all other sectors of the economy, I'd say that's a challenge because the data that's most important comes directly from the consumer. And while we may get the new data, the old data may sit with our partners. And generally in legacy systems, generally not in the cloud, and generally the work that's required to get that data liberated and useful and put into the next best action or recommendation engine AI, that just takes time.

25:47And so I'd say the promise of greater scale and leveraging brand equity and trust to get that scale requires playing a longer game. And that's what we've signed up for. Has the trajectory of AI benefited league in the past two, three years? Yeah, for sure. I'd say, you know, I've been on this AI train for a long time. Back when I did my master's degree, honestly, nobody cared. And, you know, even when we started the Vector Institute, I'd say there was interest among corporates, but not the kind of interest we're seeing today, really. I mean, this is part of every dinner conversation I've had, I feel like in the last year.

26:40League has leveraged AI. And as we've kind of evolved into this platform model, the volume of data, I mean, talking about hundreds of billions of data points that we're recording and leveraging to deliver a personalized experience really is based on AI and recommendation models or machine learning models, which, frankly, we continue to stack as there's no one supermodel. And we're seeing that now as large language models become more commonplace in commercial use. We will be stacking those as well. And I think this is only accelerating the adoption of AI and, frankly, the positioning of league um i want to switch gears for a moment so you've raised 200 plus million so far for league by 2012 though you had three multi 100 million dollar exits under your belt listeners would say you know of course very easy for mike and his team to raise capital i'm on my first startup i'm launching something for the very first time and i'm bootstrapping I've never gone out and raised capital before and they're looking at the venture landscape and they're saying to themselves hey there's a lot of money simply sitting on the sidelines and unless I'm an AI company I'm gonna have a really hard time raising my seed round so what advice would you give that entrepreneur so the first thing I would say is I've raised a lot of money and it's never unfortunately for me uh felt easy um it's always hard every fundraising round and you know the conditions each time i've had to go through it have been challenging in different ways um i'd say um we're in another you know unique set of circumstances today i think it generally has caused late stage or growth stage companies access to capital to dry up.

28:51Like there's just not many deals being done. I can tell you firsthand. There's a lot of investors that nod their heads and say nice things, but do nothing, which is very frustrating, especially, you know, especially if your company is doing great, it makes no sense, feels upside down compared to, let's say, a few years ago or the last 15 years. Um, early stage though, early stage checks are being written and not just to AI companies. We're seeing checks getting written. I don't know that we're back up to, uh, kind of peak levels yet. Well, I know we're not, but we're, we're not at zero checks are being written.

29:33And of course, yes, it, if your company named dot LLM or dot AI or gen AI, it seems like Like those stupid checks are getting written again, but every cycle has them. And I would say really just focus on the mission and the value prop and finding that product market fit. The money will come. You may have to be more creative. It may have to endure a bit longer, be a bit more resilient. But good money and smart money finds good companies. It's always been true. And I think despite this air pocket, it'll be true again. That seems to be a truism that good money finds good companies. What about on the founder side?

30:20What do folks look for? And you've done some angel investing yourself. So you can answer this question directly, I'm sure. But what do investors look for from the founder in terms of personality type, character traits, et cetera? You know, I would say on this one, and maybe it's just a reflection of what I've focused on and maybe what me and my core team have kind of been through, we are relentless. And there is no shitstorm that we haven't seen that we aren't willing to adapt to. and in my experience investing you know as an angel investor i have seen i'll put people into two buckets and this is a grand oversimplification it's probably not fair but i've seen people that just give up in the face of it getting hard and i've seen people that you'd be shocked at how hard it is for them, yet they dig in and they work the problem and they figure it out.

31:27They are relentless. And so I think in the early stages, early to mid even, that is a quality that I look for and I'm pretty sure most investors look for. Are these people, is this founding team going to adapt? Are they going to be resilient? Are they going to work with a beginner's mind? I've grown. I don't know what the eight-year CAGR is. Let's say it's about 160, 170%, something like that over eight years. So that's growing at on average double or better year on year for eight years. Pretty awesome. I have missed almost every single plan that I've ever put together. So you want to find entrepreneurs that stick with it in the face of danger, tough times.

32:27They dig in and they figure it out versus turtle. Just to clarify for listeners, CAGR is compound annual growth rate. Right. Mike, assuming that founders agree with what you're saying, but they think to themselves, look, I'm pitching into a Zoom call with investors around the table that I have 20 minutes with. How can I showcase, you know, grit or resilience, or how can I display confidence in that way in just 20 minutes? Yeah, you know, I think the art of storytelling is what it comes down to, right? I mean, I think if you're getting through a pitch deck and 15 minutes and you got a couple of questions.