574: He's Building a $250M+ Business That Measures Success in Lives Saved | Andrew Lacy

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0:39Just head to omnisend.com forward slash founder without the E to get started. All right, now let's jump back into the show. Hey, founder fam, welcome back to another episode of the founder podcast. In today's episode, it's a masterclass on thinking big, solving meaningful problems, and really building businesses that change lives. So I'm joined by Andrew Lacey, a multi-exit founder who's gone from selling his first startup to Disney to now tackling one of the biggest problems in the world, healthcare. He's the founder of Prenuvo, a fast-growing company using a full MRI scan to catch life-threatening diseases before they happen.

1:18You've probably seen them on social media. And this conversation is packed with takeaways for anyone building a business in a really difficult industry, trying to raise money for a mission-driven company, or just figuring out how to validate their idea. So you're going to hear how Andrew who overcame rejection from investors, how he figured out product market fit in a super tough space, and his exact approach to spot a winning idea without falling into the founder ego trap. So if you wanna hear how to build something that actually makes a dent in the world, this is the episode. All right, let's dive in.

1:50Hear the stories, learn the proven methods, and accelerate your growth and future through entrepreneurship. Welcome to the Founder Podcast with Nathan Chan.

2:03Andrew welcome to the show most people only go to a doctor when something feels wrong but you've built a company on the idea that waiting could cost lives so what first made you believe that healthcare was backwards well like most entrepreneurs it started with you know my own personal journey and I'm excited to share with you today Nathan so you know I'm a serial entrepreneur and I tend to believe that it's the greatest profession in the world but it should come with a warning label you know I would say it's probably just as hazardous to your health of smoking because most entrepreneurs I know and definitely including myself we don't eat very well you know we exercise poorly we sleep badly and we have a lot of stress and that described me six years ago when I had finished one venture and was about to start another.

2:58And I remember quite viscerally just looking in the mirror and saying, you know, I'm just about to like embark on another thing that could, you know, take two or three years, four years, five years, who knows? How do I know I'm going to be around for the fruits of that labor? And it was just a simple question. You'd think there'd be a great answer to it. But as I went out there and tried to get that answer for myself I just found there's a hodgepodge of different tests there was no one that could really give you one comprehensive complete answer so I sought out a radiologist and who was doing these very complicated and at the time very took a lot of time about two hours exams and you know I imaged my entire body and it was pretty unusual Not a lot of people were doing it back then, but I just got such tremendous insights into my own health that it made me realize just how backwards the health system was.

3:53You know, this was the closest thing to Star Trek, you know, or Star Wars or, you know, those science fiction movies that we sort of grew up with where there was a machine that could just tell you everything that was going on inside your body. And I felt like this was that and I wanted to bring it to the rest of the world. Yeah. So a few things I'd love to unpack there. So what was the venture that you were going to start? was it was it pro novo or or like yeah like yeah i so i we sort of gone a little bit backwards through time but um you know six years ago i knew i wanted to run the company and i had had uh a couple of exits before um but i'd worked on the second one was a really big slog and it was an idea i was very passionate about and um and but it was a really bad business idea and so i and so So it took me three years to exit that company and it was a lot of lost hair and a lot of stress.

4:49And I sort of lost faith in my own ability to figure out what company to do, you know, to come up with the idea. So I decided six years ago that I was just going to talk to a bunch of people and say, hey, I'm here. I learned something about building companies. Who has a cool idea that, you know, needs a good problem solver to like help them solve? And I was working on a few different ventures. One was with a team of people in Australia in the field of Alzheimer's diagnostics. Another one was working on an infant genomic company. And then the third one ended up being the company that's now Prenuvo.

5:26So I was working on a few different things. Prenuvo came out of my own experience with healthcare, but I knew I wanted to do something in healthcare. I just didn't want it to be my idea. And you said you had a couple exits previously. Can you talk through the size? scale? Yeah. I mean, the first one was definitely life-changing for me. It was the first iPhone focused company. It was a company called Tapulous. And we started that when the iPhone had just launched and we saw underground hackers that were hacking into their phones to put apps on, to do very innocent things like change the wallpaper on their phone.

6:06And we were one of the first companies to focus in on this space. I bought every underground app there was um uh you know all the ways which were addicted to the iphone now we pioneered some of those in the early days and i ended up selling that to disney so that was my first sale um and it was it was super nice you know obviously and pretty rare that the first company you do is something of a success and um you know of course i attribute a lot of that to just me being freaking great which was a sort of stupid in hindsight it was a lot about just having good timing and then your most recent one before pranoova yeah so that was tabulous we sold that in um in 2011 and then i went to work at the walt disney company building um mobile phone apps bringing disney ip to the mobile device uh during that time i um was managing a clinic uh uh uh what do you call it a studio over in Europe and you know through concentrics to Europe I met my wife um you know on a trip through Paris so I ended up moving to Paris and just wanting to um wanting to learn how to code and ended up turning that into a company that was sort of voice activated natural language search what Siri does badly today I felt like we were doing better 10 years ago uh so that was the second company it was difficult it was very hard to monetize.

7:33I did exit it, but it wasn't a very, think of it more like an acqui hire. And, you know, that's where my hubris, you know, I thought the first success was all about me. And it turned out from the second company that it wasn't, you know, it was timing was really important and just being in the right market at the right time. And, and, and at that moment, I realized, Hey, I want to keep being an entrepreneur for the rest of my life, but I want to see, there's a lot of ideas out there. I want to talk to people and figure out, you know where i can be helpful as opposed to feel like as an entrepreneur i can do everything and when you work with the radiologist what came back uh on myself so you know i expected to hear horrible things to be honest and when i went to do that scan that first scan with that radiologist where they looked at my entire body i remember going out for a nice meal and a glass of wine before because i'm like my life is going to fundamentally change tomorrow you know i'm going to finally, you know, all of the bad decisions I've made in my life, you know, some of them were building companies and not looking out for my body.

8:35Some of them were just, you know, growing up in Australia and, you know, having a bit too much fun as a younger person. It's all always sort of like, it's all going to come home to roost, you know, so let's have a nice meal. But then I, you know, I got out of the scan and sat down with this radiologist and they told me I wasn't dying of anything. That was my biggest fear. And, you know, that there was a lot of wear and tear from the way I'd been living my life, but none of it was irreversible. And so the thing I got out of it was this incredible peace of mind. I never knew what that felt like before to not really have that part of my brain thinking about my health, but either consciously or subconsciously.

9:15And it's such a hard thing to describe because all of us have concerns about our health. Yeah. So you did your MRI, bit of wear and tear. where where did the epiphany come from that this can be a preventative for health yes i i was living in san francisco at the time and this radiologist was in canada so i flew back to san francisco i told my wife hey i got this thing it's really interesting i'm not dying it's fantastic let's go ahead and have another nice meal let's celebrate that um but i couldn't like shake from my head the peace of mind you know it was just it was so profound i felt like i was walking around the streets of San Francisco and I was like seeing the world in color and everyone else was seeing it in black and white it's a weird feeling the closest thing to it I I think it's sort of like going skydiving it's just like adrenaline sort of sticks with you for a few weeks and so I went back on a plane the next week to that clinic and basically stayed there for six months and I sat in 150 consults where 150 other people were told what was going on inside their body and someone being told hey you know you got cancer you need to do something about this so you have an aneurysm you go to the hospital now a lot of people were told they have wear and tear like me someone given a complete bill of health and it didn't matter what people were told whether it was some horrible diagnostic you know outcome or nothing the overwhelming sensation i experienced was just um gratitude that for the first time in their lives people understood the state of their health and they would get up at the end of that thing and they would hug the radiologist and i'd never had hugged a doctor in my entire life never felt the desire the slightest desire so there was something that for me was like the spark it's like there's something here you know like this is connecting to everyone that goes through it in a really special way um and you just kind of know you know as an entrepreneur that there's something that that you know this is an important thread to pull out yeah so so how'd you start building this thing right like so so you realize that you're onto something you you obviously spoke to a lot of customers right you you start to you know do this mvp type test um but like yeah what do you do like at like you know if you find something like if someone has stage one cancer like like how do you you know what do you do like yeah like it's it's this really kind of tricky thing because no one's ever done that before right Well, stage one cancer is obviously worse than not having cancer, but way better than having stage three or stage four cancer.

11:43So some part of it is, you know, the context in which we were finding these conditions was so much earlier that it gave people a lot more hope that they wouldn't have otherwise had. but yeah I mean it's it's probably like the single biggest uh challenge for the company and even in the early days building that company was just you know a lot of people don't want to know about their health they can afford to learn the answers but they may not want to because we've been conditioned to be afraid of our health um so you know I it took me until my 40s to look in the mirror and say, you know what? It's probably better that I should know, you know?

12:21And I tried, I thought about canceling my appointment several times, you know, but I just figured at the end of the day, I should know about it so I can do something about it. And, and that is a huge challenge for this type of business. Preventive health is a really hard space to build a business in for sure. So talk me through your first clinic. How'd you fund it? What happened? How long did it take? Well, it's, it was really, really hard and it still is hard, believe it or not. I mean, And we, so I kind of half moved to Canada to see if I could develop this business from one or two people coming in a day to like 10 people coming in a day.

13:00And we did a pretty good job at it. We built this little business that was maybe doing three or$4 million a year in terms of run rate and was I think even profitable or at least break even. And then we went out to get seed funding. and I mean it is a very rare startup that's doing three or four million dollars and it's profitable that's going to get seed funding you know that should be kind of a walk in the park and I talked to a bunch of investors and we couldn't find a single investor that would do the deal and you know the reason was that most every doctor out there was saying this was a horrible thing and we shouldn't be doing it and it's going to cause more harm than good and every investor had a doctor that they would ask their opinion of or had a doctor on their investment committee and and so it was really difficult we had on the one hand we had this business that was having it was economically cool going well it was having this profound impact on people's you know health you could see it people were really there's real product market fit and yet there was no funding so we ended up having to bootstrap the thing and even like the first clinic like you would have you obviously funded an MRI machine and you're going to have to have like a, you know, a professional clinician there.

14:21Like, like, how'd you get your first few customers to actually pay you? And, and talk me through like, what did the first clinic look like? Where was it? Like, talk me through that. Like, can we go back to those moments? Well, we were lucky because that, that radiologist in Canada had a clinic. So we sort of bought time on that machine. So we didn't have any of the capital in the early days. We were mainly just focused on building that business. And it was me. I think I hired a guy on, I don't know if it was Craigslist, but something like this. In the early days, it's hard to find people who even want to work with you, that believe enough the vision that they're willing to give it a go.

14:59So we had three or four people in the company and we were all just on the phones calling leads, seeing if we could get people to come in for a scan trying to understand what the objections were uh sitting around a kitchen table in the kitchen of this uh this radiologist clinic um and it was just real it was really tough you know a lot of people told us a lot of doctors told us go away a lot of our patients didn't really want to know about their health they would it was a brutal thing we did hundreds of thousands of phone calls just trying to figure out how to, you know, prospect for people. You know, there was a small number of people that really wanted to do it and were coming to us.

15:39But to like build a market of people that aren't aware was a whole different thing we learned. So did you run ads or like you run ads to a landing page and then, you know, yeah. Yeah, exactly. So we put together a little, you know, like a lot of companies do. We had a funnel where we had a landing page where people come to. where we would give away like a guide to whole body screening. It was sort of a 20, 30 page document that I put together, you know, on how great it is and that people should consider it. And in offering that up, we got people's emails and phone numbers. So we did the same on, at the time, Facebook had these like lead ads that were kind of cool because it would automatically fill in the phone number and emails of those people.

16:24So we would then email them and we would call them, you know, incessantly. in order to just get on the phone. And I would say we never were slimy about it. We always were like, if we're going to win a customer, we're going to win by sort of through educational selling. You still had to hustle to get people on the phone, to get past the first couple, two or three seconds where people might otherwise just say, fuck off. But yeah, so we ran this funnels. We gave people things to get their contact details. and then we you know converted maybe one two three four percent of those people it wasn't very high yeah so you eventually opened up in silicon valley during covert how long was that and like how long to to like get to that because yeah there's an interesting story there well it's pretty stressful because I put in a decent amount of money when we couldn't get seed investment.

17:25We got a bank loan from a bank to open that clinic up. We were pretty comfortable that when it opened, we'd be able to build good business there. But the challenge was we didn't anticipate COVID. So, and COVID hit us a couple of ways. It slowed down the construction. So we were still paying for the clinic, but it wasn't opening, so we didn't get the revenue. And then secondly, like most businesses, we weren't prepared for COVID. so we didn't have all this PPE that you needed to do to stay open. And that meant that we couldn't keep imaging people in Canada without the right PPE. But there was one thing that saved us.

18:01Do you want to hear what that was? Yeah, what was it? I got COVID very early on. I was one of the first people in San Francisco to get COVID. And so it turns out there was a lot of Silicon Valley companies back then that were wanting to get the blood of people that had COVID and overcome it in order to build like antibody tests. So I drove up and down Silicon Valley, basically in my car, driving up the back alleys of like biotech companies, rolling down the window while a hazmat guy came out and basically drew my blood. And I didn't ask for anything in return except for masks. And those masks helped us keep the clinics open.

18:41Yeah, wow. That's crazy. so so i you know a lot of entrepreneurs sort of bleed for their ventures i actually at that in that moment in time i was doing a lot of bleeding for the company okay so so yeah so during covid did that like obviously you know there was lockdowns all those kinds of things did people want to do these preventative health scans Well, we started slow, but we still started, you know, we got two, three, four people in a day, and that was enough to sort of break even on these clinics at the time. I mean, we were sort of keeping the cost down. So, and interestingly, if you were worried about cancer back then, you couldn't get any screening at the traditional health systems.

19:30They had shut down all of their screening programs because of COVID. So they weren't doing mammograms, they weren't doing colonoscopies, they weren't doing, you know, anything. So we had a lot of people come to us, grateful that we're open, and that we could sort of give them, you know, some level of peace of mind. So it was just fortuitous that, I mean, when you're a startup, you sort of have to decide to stay open. I mean, there's not you have a lot of options, right? You stay open, or you go out of business. If you're a health system, you know, I guess you have you have a different calculus, you know, for them, it was pretty easy to shut down these programs.

20:04But for us, you know, we had to keep open and we helped a lot of people as a result and i first heard of you guys when kim kardashian shared about you guys and and referred to pernuvo as a life-saving machine and um yeah she had a story about her fiance um so talk me through like how did that happen and what did that look like? And I wanna go deep because people that are watching this always think, wow, that's the ticket. You get a Kardashian or you get a really famous celebrity behind your brand and things are gonna go boom. Talk me through how that came to life and how you did it. Yeah, sure.

20:48I mean, it sort of relates to the way we run the business. When we opened the clinics in the early days, I'd be there in the clinic every day and I would always talk to customers. I wanna understand how they came in. Afterwards, I wanted to understand what the experience was like and so we always from the very beginning were very patient focused so we always hey i want to have the best if you come in if you trust me with your health i want to provide you with the most clinically accurate scan and we invest millions of dollars now doing that tens of millions of dollars and i want to provide you with a really great clinical experience and the philosophy there is very old-fashioned it's just you know if we provide you with a great experience, you can tell other people.

21:28And if you tell other people, we'll get organic acquisition. Now, why is that important when you're building a new category of product? It's important because the acquisition costs otherwise are completely astronomical. You can't make that work. You know, trying to acquire people that don't even know your category exists, don't even know they have a need, is just very, very, very expensive. You don't run Google AdWords because people aren't typing, they're not searching for you. You have to do this very top of funnel marketing, which ends up being expensive. So that was never going to work. So, you know, we always said, let's just focus on providing great service.

22:02Maybe we grow a bit more slowly, but we got the growth we're going to have is going to be very genuine and organic and reliable because we're, you know, because people tell other people about things that for them are really meaningful. And so that was, that's an important context, right? Cause I don't think there's any shortcuts here. I mean, to the extent there are shortcuts with celebrities, they tend to be you know go find some people and pay a lot of money to make that stuff happen you know and uh and most startups don't have access to that um so so so that was always a philosophy now when we open up in la and new york and some of these other locations afterwards we started to get people in that themselves had really big audiences and we didn't really if i'm being honest there's a to the extent that there's a secret i don't know how replicated we is like We just really believe in what we're doing.

22:52We think that what we're doing is saving lives. We see this. There's so many life-saving stories that we get in and we share. People have a great experience and they want to share. We just remind everyone of just how important it is to... If you have a great experience, if you can share it with people, if that's your neighbor, that's great. If that's your Instagram followers, that's awesome too. We just started to get people in that had these really big audiences. they're much more high impact voices and they've just been so kind to us in wanting to share their experience with the world so i don't know you know i think it is replicable i mean i think there's just so many people in the startup world they're looking for some sort of hack that's going to like go from zero to unicorn company overnight and i just sort of believe that the enduring businesses are the ones that really focus on just providing a high quality service and people people talk about it so you know so the Kardashians are great we know them well they're fantastic people a lot of celebrities have talked about us we've like developed personal relationships with um and uh you know and these are not transactional issues like we're there for them they're you know they're you know if they feel so inclined to share things with their audience we're obviously like overjoyed about that um and you know we oftentimes if we're able to we can tell them what the impact is you know because we can sort of track who came in because of a certain celebrity uh you know or high impact voice.

24:15So, you know, it's, it's a pretty genuine approach. It only really works because people believe in what we're doing. I don't think there's a shortcut there. Yeah, I, I, I agree. Like, I think nothing beats building great product when I've built companies, you know, any influencer, celebrity creator that I've worked with, it's come from usually them purchasing the product or the service and then reaching out to them and being like, Hey, would you like to share like that's really cool and you can't look there's certain products that are a little bit easier obviously we're in the health space so we are saving life like our kpi is saving lives so you know it's sort of a kpi a lot of people want to get behind if you know if you're building the you might be building like the best you know tax software the world has ever seen and probably like you know it's a little bit less um exciting to the average person who's a high impact voice.

25:10So I acknowledge that some of it is the type of business that we're building. But I think, you know, there are other businesses that share those attributes, you know, wellness businesses or, you know, businesses that focus around social impact, where I think celebrities really want to, they want to have an impact, and they want to align themselves with brands that are doing good for the world. So, so I would reach out to folks or, you know, just make yourself available if you have any of these folks that experience the product um and create an environment where um people are encouraged to courage but not forced to share their experiences talk to me about i guess um challenges as you've scaled setting up multiple locations around the world even the legal side all of that yeah it's i mean it's uh health care is super regulated uh in fact we operate 22 clinics in the u.s and and canada and every one of those states has a different health system essentially you know the regulation is all at the state level and so um you know we recently opened in in melbourne australia and you would think that that would be a huge step for us but we'd already done, we'd already gone into New York and, you know, Texas and Florida and all of these sort of have differences that, you know, that is no sort of like less important than it is across the world.

26:40So, you know, I have a pretty, in healthcare, one of the challenges is it's really hard to build a business without a certain amount of capital, just because that regulatory hurdles you have to go through are really high. I mean, you have lawyers to set up a bunch of companies, I think Pronuvo has, I don't know, 10 different entities, maybe even more now. I'm constantly signing documents, you know, for, you know, all of these entities that I'm, you know, that my legal team puts in front of me. You know, it's hard to keep track even what they all are. But, you know, that's the machinery that like runs health care, definitely in the US.

27:18So it's challenging and it's sort of not very well regulated. So you can actually do this the wrong way for a long time. But then if you get sued, you know, the company can, you know, can be sued out of existence. So there's not a lot of feedback and guardrails that you're doing it the wrong way until it's too late. So if anyone, any of your listeners are thinking about health care, I think there's tremendous opportunities here. But definitely it starts with getting a good lawyer. yeah and you said as well that um you know it's really hard to raise money and that that the traditional medical industry and doctors uh disagree with what you're doing can you talk me through that a little more why and also why you keep going i used to wonder that myself less so these days um well i think there's a little bit of context that's important i don't know if you know i grew up in australia so i don't really remember this from my youth but at least in the u.s about 25 years ago you could go to a shopping mall and there was a business that would do a whole body screening of you and they weren't using mri which is what we use they were using what's called ct and today you can get low dose ct but back then it wasn't low dose ct so people were going and getting these scans the scan was radiating their bodies and the modality itself wasn't very good it wasn't very precise it would have a lot of false positives and a lot of false negatives and so doctors universally hated it and even the fda they stepped in and sort of like admonished these companies because they were, you know, the claims didn't match the reality of the service.

29:06So it sort of like tainted the whole sort of like medical ecosystem, it tainted their view of screening healthy patients, you know, with imaging. And 25 years later, we still have to overcome that. Like so many physicians today will be like, I wouldn't send anyone to Pernuva because of the radiation. And we're like, or the MRI has radiation. And we're like, well, it doesn't have radiation. It's like very safe. So there's just like a lot of people that don't really understand how the imaging has evolved. And unfortunately, those people have the ear oftentimes of the, you know, of the investors that are making decisions on whether to invest in you or not.

29:49I always, so why did I not give up? Well, it's actually interesting. I, you know, that first mobile company I built also had trouble raising money. When we were raising money for building apps for the iPhone, every investor said, you should be building apps for the Nokia and the Blackberry, you know, because that's 90 % of the market. And I got to be honest, like, I really love proving people wrong. It's a tremendous motivator. So, you know, I have a lot of enjoyment thinking back to those, all those people that, you know, turned us down in the early days of mobile, some of which are now, you know, like a year or two later, after iPhone really took off for like starting iPhone funds at large VC firms and acting like they understood what was going on in the world.

30:39And those are the people that turned us down like a year earlier. So I take a lot of joy in like proving investors wrong. And I sort of felt the same way about this one. It was so obvious this was going to be a big thing. And what was not obvious was how long it was going to take. And every investor that turned us down, I'm like, this is someone else I can prove wrong. And then we eventually found some investors that really believed in us. And we had a lot of traction as a company. And even the views of the medical profession have changed a fair bit in the last six years. But no, it's just tenacity, man.

31:15It's just like not giving up. it's it's wanting to prove some people right you know that's the motivator for the most part um and a lot of entrepreneurs have that yeah and you know you look at it now this whole longevity space you see people like you know brian johnson like really popularizing these concepts around health and longevity you look even at gen z i even look at like Like, you know, there's so many, even in Melbourne, dude, like there's so many of these ice, cold, immersive sauna, you know, magnesium pools therapy. Like all this is opening up everywhere. I read studies now that that is something that the younger generation are preferring to do than go out.

32:05You look at alcohols on the decline massively in the younger generation. like there is a massive movement around health and longevity. You look at it now, but six years ago. I mean, take Brian Johnson as a great example. I mean, probably 50 % of the people then and maybe even now think the guy's crazy. And 50 % of people think he's visionary. So I think the real challenge as an entrepreneur, and I've sort of tried to, I do angel investing. So I try to like remind myself of this when I look at companies. Like it's pretty, how you really make a lot of money investing in startups and as an entrepreneur is you build some sort of transformational generational company.

32:51The challenge is the transformational generational companies, it's really hard to tell them apart from the craziest, dumbest idea you've ever heard. So there's sort of like normal distribution of companies out there. It's easy to tell the good from the bad, but it's really hard to tell the two tales apart. You know, I remember when Uber first, I remember seeing one of Uber's first pictures. And I'm just like, this is crazy. Everyone in California drives. You know, like no one is going to want to take Uber. You know, black cabs it was back then. You know, they were like just doing sort of black cars.

33:25No one's going to do the dumbest idea ever. Well, it turned out to change the world. So, you know, beware the idea that a lot of investors turn down. you know it is possible it was a dumb idea but also it's possible it's transformational so what i like about the signal there is if you believe that this transformational and people are turning you down then that sort of means maybe you're in one of those tails uh that means you have a shot at building something that's really transformational yeah i uh i love that synopsis because a lot of it is you know you said something interesting you said it's more the idea than the founder but it's often you know i i think the founder it's it's that's that's the person you invest in right it's that it's that tenacity right to never give up i never forget the story of one of the founders of uber and apparently he um was playing like we tennis or something and uh it turned out that um with some friends and and it turned out that he was like in the top 10 in the world at Wii Tennis or some sort of crazy game.