20VC: The Largest Venture Backed D2C Consumer Exit; PillPack: $0-$300M Revenues in 5 Years & The Biggest Lessons Scaling the B2B Business to $300M in 2.5 Years with TJ Parker, Co-Founder @ PillPack

22:08I think one of the most difficult things as a founder is finding the balance between doing things that don't scale and having less experience folks just cranking away and figuring things out versus when it's time to bring in some adults and when it's time to bring in kind of real operators. And I think we messed up that balance and bringing in ahead of finance, bringing in ahead of ops at the right time and it was incredibly painful. We're a deeply operational business and we probably waited nine months to a year longer than we should have to bring in a real operator. Well, when you say a real operator, is that an exact team or is that a CFO?

22:40What do you mean by that? And what would your advice found is having had that experience in bad decisions? Tactically, we started the business. We had a head of ops that I had known for a long time, but was young, hungry, and knew the business super well. And was actually the first person I hired. And he scaled that thing to four or five hundred people, like zero humans to five hundred people or something in operations. And was more dedicated to the business and the customer than anyone I've probably ever met. I bet he slept in the pharmacy 40 days in one year and was just able to figure anything out.

23:11And that was amazing. That's like the perfect archetype of an early operational leader is that it deeply know the domain. Their happy place is not like going and building unnecessary process. Their happy place is that's just go figure this thing out. But at some point that approach breaks, right? At some point you just get too big. It doesn't work anymore. Like you have to have the right systems and the right process and all that stuff. And I think he was so good. Like we just went too far with that approach. It's a funny story actually. Probably the worst board meeting we ever had was the board meeting before of Onjoin.

23:41Everything was breaking, but at that board meeting it was like, oh no, everything is like really breaking. But the problem was that we had hired Ivonne, but she hadn't started yet. So she came to the board meeting. And so it was this hilarious dance between the investors and me in Ivonne where everyone knew it was broken and the investors were pissed, But they didn't want to freak out a van because if a van didn't show up, we were way more screwed. So it was just like this hilarious emotional dance of how do we say all the things we need to say in a way that makes a van excited to fix all these problems and not so scared that she runs away.

24:14But for sure that was the most operationally painful moment in the business. I love it when you have a multi -stage van on the board early and you want them to do the next round. And so you're like, I know it looks bad, but I see this as an opportunity. Speaking of Ivone and the timing that, when you think about exact teams, what should we front load first? Why? And how do you think about that? I always think about each round for a classic venture -backed company is trying to be super crisp about the thing you're trying to prove on that round of financing, right? But what is the bet your investors are making and do you have the right team to achieve like that single bet, right?

24:48Like, you kind of have to put blinders on and be really thoughtful about what that is. So for us, we raised the first run of financing. Like it was taken on face value that like, I knew how to open a pharmacy. I knew roughly what the economics were because we weren't a similar business before. I knew how to build a product ish because we had Elliot on the team and he had built products before. The flyer everyone was taking is, can you acquire consumers online for this company? And so the only thing that mattered post that first run of financing was, can we actually acquire customers online for a pharmacy, which we jumped back to 2013.

25:18Like starting a pharmacy is not what's starting a pharmacy is today, right? There's row and hymns and Pillpack and capsule and TruPo. Like, this all is great activity in pharmacy. In 2013, there were not pharmacy startups, right? So that was a weird thing to begin with. And so I think that was the bet we were making. It's to come back to your question. At that moment in time, it would have been weird for us to go higher, like a really killer CFO and like a really amazing head of ops. That would be like awesome to build that exact team. It was like, we can ignore that stuff actually. Let's go find the best folks to help us figure out customer acquisition.

25:48And I think you have this journey in any startup, right? So like you get customer acquisition working and then all of a sudden Obserimploting and now you got to go find a really killer operator And I think you to some extent have to be in reactive mode and less about we're gonna go find like Amazing exec and they're gonna build all this process in this function and be comfortable Or this is the only thing I care about for right now. We'll figure that stuff out later I totally agree with you there I think the hard thing is when you come to the selection Who do we decide to have on that team to help us and you said before I love this be very selfish about who on the exact team.

26:22What did you mean by be selfish about it? And how do you advise founders on that? So I think it's less about being selfish in the sense of who you're recruiting. It's more, be selfish, who shows up in that weekly meeting that you spend three hours going through the business because a good role of thumb is if you bring your head of HR and your head of legal and your head of finance and your head of, uh, and if you bring every one of the kind of leaders on the team into that room, you should take the three hours you have and divided by the number of humans in that room and assume each one of them gets that amount of time to talk.

26:53And so do you really want to spend a seventh of your meetings talking about promotions and leveling and HR stuff? Being really thoughtful about who's in that room will determine what are you spending your time in that sort of most critical moment debating? So for us, and this honestly wasn't intentional, it was just, it was a byproduct of who was on the team. But by the time we sold the company, we've got a thousand people, we're doing a few hundred million in top line, And the entirety of that meeting was me, Avon, who was COO, CFO, LegalHR, and all those functions, Elliot, who was Productant Tech, Jeff, who was BD in Growth, and Colin, who was Marketing and Design.

27:30There was five of us in that meeting. And if you look at who the five were, like you're gonna spend 85 to 90 % of your time talking about Productant Growth. The combination of HR, Legal, Ops, like all the tertiary functions, get 10 to 20 % of the time in the meeting. And it just made us focus on the things that are ultimately going to drive a start -up success. But a start -up is about product and growth. That is the only thing that matters. And who on that team shows up, I think, determines what you're focused on as an entire organization. You mentioned the functional leads there, and you've tweeted before about the difference between an org with functional leadership versus an org with GM leadership.

28:07For those that don't know, what's the difference between functional leadership or functional org versus GM org? What's the difference that first? Yeah, so a functional log is roughly what I described, right? So if you look at the CEO and their exact team, each leader on that team is going to have a function. You have a head of engineering, you have a head of design, you have a head of product, you have a head of operations, you have a head of finance, it's very functional. It's like the most simplistic straightforward or design that's where most companies are going to start. A GM focused org is where most big companies end up, right?

28:38So a GM focused org is where you've got single threaded leaders that in theory own a P &L, and under that leader, they have a head of finance, a head of ops, a head of product, a head of tech. And so you end up having like hundreds of these GMs that manage a single P &L and have pockets of each of these functions inside of their business. Maybe somewhat controversially, I think the second you go to a GM focused or you're not a startup anymore, like you are a big company, almost all of the downsides of a big company that people bemoan, the amount of HR, the amount of overhead and decision making, like the all the over -processness, I think it's all byproduct of that single decision.

29:15You could not have built a company like Amazon or another large company without doing that, but it has all sorts of negative repercussions, and I think if you're a startup, like you're so far on the other side of that extreme, that I think it's more of an unnecessarily intellectual exercise, I think about going to GM than it is about, then it is actually going to do any good for you, and you can build huge companies that are functional. Apple is like a functional org. Yeah, that's my question, but I've interviewed functional leaders from Snap and LinkedIn in the last two days. These are big companies and public companies.

29:46How should founders determine whether they should run a functional versus a GM that org? What's right for me? Yeah, I'm far on this extreme, but I think stick with functional until it's so obvious that it can't possibly work, that maybe there's an excuse to go to a GM focused org. And certainly if you've got like a manageable number of product lines, I wouldn't even have the conversation. It's just not worth a debate. It is going to make your business worse and it might not do it right away But it is definitely going to do it on the long term. Yeah, if you think about all the extra process that that creates right So if you have a GM focused org like you now have to do all this work to make sure that all of your Enges twos are leveled at the same level because ones in this team and ones in that team And then don't talk at all and they have no idea what the other team's doing And so if they transfer from this team to that team you have to make sure that they're both as competent And you have to make sure that the one's compensation is identical across 15 different businesses for the same level It is what creates like an enormous amount of HR work, an enormous amount of like overhead because you're trying to do all these weird back flips to make sure that there's consistency in the business instead of just having a whole org of engineers and a whole org of designers without stuff just comes in kind.

30:50I also feel like you're creating this kind of dysfunctional decision making because you have CEOs on top of CEOs. Your GM who runs that segment isn't actually the ultimate decision maker. They can still get overridden by the CEO up top or the CPO who's ahead of them And so you create this very strange Casm between power ultimately and you just don't have your best people on every product right if you've got your Head of product and your head of engine your head of design working on every product They're going to be better just like de facto going to be better products My new mentioned comp is one of the reasons like it can be challenging What are some of your biggest lessons on comp and equity and how could it can be used most effectively by founders?

31:29I didn't appreciate this nearly as much as I probably should have at the time, but incentivizing your team as much as possible on equity ends up being like the biggest lever you have from a cultural standpoint. But if you take kind of Pillback pre -acquisition versus Pillback as part of a big organization, Pillback pre -acquisition, like I don't think I ever once had a conversation about leveling someone or promoting someone in a meaningful way that was going to dramatically change their comp. Like we bet on people, we get in the big equity package the day they started and we expected them to deliver on that equity package.

31:59And so like everyone either one is a team or we lost as a team. There was no point in trying to go carve out some way for you as an individual on that team to win in a way that mattered. And so everything falls out of that. We're going to win or we're going to lose. We're all aligned like from an economic standpoint. You get to be a big enough company, even if it's technically equity and it's it's stock. It is rational to care far more about like your own career pathing and the next promotion and all of those things and it is to care about winning or losing. And so it is like the biggest lever a startup has culturally.

32:31You agree with that in a macro turn though and what I mean by that is like bluntly what I see now today in particular people on cash. When times get tougher they want the cash equity not so much. I see that in Europe as well. Do you think that's fair? They should go market a big company then. That's fine. That's not the game we're playing. Startups are about like pulling something off that's incredibly difficult and everyone doing incredibly well if you pull it off and that's not cash. So it's just a different game. Yeah. I want to dive into a couple of elements of the story, which I think are really important.

33:03As we said before, it's very easy to look at Pillpack and think, oh, all up into the right, billion dollar sale. Life is good. There's always early hiccups. What were the single biggest early hiccups? You really remember and stick out, Chi. Yeah, I talked a little bit about to that sort of first bet, right? We started the company. We raised about $4 million between two quick rounds right out of the gate. And the bad people we're making is that we can acquire customers. Everyone assumed we'll start a pharmacy. They assume we'll get in and network with payers. Like, oh, that stuff was a given. So if you jump forward, we started the company in 2013.

33:34We raised that round in the middle of 2013. And we launched the product in early 2014. And for folks that were around at that time, the way you acquire customers was buying Facebook ads. Like, point blank. But that's how every DTC company was scaling. But so we assume we're going to do the same thing. We're going to buy Facebook ads. And hopefully the economics work. And hopefully we can acquire customers in this category. and we launched, we got our ads turned on, and they were working, right? Like we were requiring customers at a number that was lower than we promised them. We're like, oh my god, it's working.

34:01This is great. And out of nowhere, our account got shut off. We got suspended from Facebook ads. And we're like, oh, that's not good. And they're wonderful customer service was very helpful, as you can imagine. And they told us at the time, like, actually, you can't advertise pharmacies on Facebook. Sorry, like you can't do that. It's a picture of this, right? Like you're a new e -commerce pharmacy. Like we're gonna build an amazing digital experience and you lose the single digital channel that every company is building their business on the back of at that point. And we had all this back and forth and finally we got them to agree that if we got this thing called Vips, which was this accreditation for online pharmacies that then we could advertise on Facebook, which is great news, it's now, I don't know, March 2014 or something.

34:43And we go, we contact Vips and we're like, hey, we get this accreditation and accuse who we are. And it's like, cool, yeah, here's the process and they sent this this long, like overview of all the things we had to do to get the accreditation. And I don't know how average it takes about 12 months to get this accreditation. They're like, oh god, we don't have 12 months to figure this out. From a financing standpoint, we got incredibly lucky because, and this is not usually a lucky turn of events, but Fred at the time had been at a complice, which was a funding Boston and loved the series A from there.

35:10Fred left to complice and went to Excel. And he knew the company super well, obviously, he liked the business and he just knew that this was going to work. When he took a flyer and he made a bet on, on Pillpack back in September of 2014, before we had any road customer acquisition working, like we were hacking our way to get some customers and the product was working. He then led the round in 2014, in the kind of back after 2014. We also let in the folks from slow ventures into that round to our early Facebook folks for this reason. We got Vips, probably September, October of 2014, so a bit faster than normal, but it still took six or eight months or something like that.

35:43Once you got it, was Facebook as impactful as you thought it would be, the customer acquisition. So we raised that $9 million around in September, adds on in the product October or something like that. And I'd say within three weeks, it was a whole different situation. We turned the account on, custoders were signing up at a CAC that we were happy with, and we just started turning the knob and the business started growing. I get was that straightforward. And from the back half of 14 through the mid 15, it was just scaling and we raised a $50 million around six months later or something. It's nicely, but like $9 million when you didn't really have any customer acquisition going.

36:16Did you get an absolutely torrid, like, stretch to that deal? Like dilution wise. I think the practical answer to your question is we raised like a nine on 30 post or something. So no stretch here, but you gotta do what you gotta do. Yeah, I think that was market -ish. This was not 2018, 2019. But it was fine. Like, I've never once looked back and they go, oh my god, I got so diluted, like I could have so much more money right now. That's just silly. It worked out great. We raised the round and we moved on, and then we raised around a couple hundred pre -9 months later. And so that one was probably way too frothy.

36:48And the one before was low maybe. But like at the aggregate, it was fine. I have to touch on the element he said earlier being kind of incumbent responses. Incomments responding varying ways. I hear this an interesting story here. How did incumbents respond to you and things started to hum? And take me to that story. So I think the place we were, woefully naive at POP Act, we found out the company was this, right? We didn't really understand why there were more e -commerce pharmacies. There's all these big winners in pharmacy. There's basically there was no e -commerce player before Pillback. Like, they didn't exist, right?

37:20CVS and Walgreens, there's PBM on Demailer pharmacies. There's no e -commerce business. Well, that's weird. We should just build this. It'll be great. We're a build a great customer experience and it's going to be awesome. And there are things called PBMs, which stand for pharmacy benefit managers. And they are companies like Express Groups, CVS CareMark, OptamarX. And there was the equivalent of insurance companies, but only for your prescription drugs. Historically, they were in two different businesses. One was managing your benefits. So how much is your copay, which pharmacies can you use, how much is your out of pocket, which medications are covered, like all the things an insurance company does.

37:53And then the other half of their business was owning and operating mail order pharmacies, so they did home delivery for consumers. And so obviously, they weren't particularly thrilled about other companies competing with them in that second category. right? They had a captive market on doing home delivery in pharmacy. Are new thoughts? Because if they're the ones who are saying, hey, we'll own the transaction mechanism where the insurers of these prescriptions. And we're not going to give a pill pack, like, are new facts? Yes, you are fucked. This is why I say you would have never started this company if you knew how the industry dynamics work.

38:26It's why I know how the investor would have invested in this company. This is idiotic. There's no way. But I'm a tech investor and respectfully. That's side, call and engage because it cannibalizes their own business. Oh, yeah, I was horribly confident that this would be a non -ish. I've run pharmacies before you decide you fill out the paperwork, you get in network with the insurance companies, like, it's fine. And that's actually what we did. Like we started a pharmacy and we got in network with all the insurance companies. And it was totally fine. So like 2013, 14 first half of 2015, like we were in network as a small, little independent pharmacy, like any other independent pharmacy.

39:01And they didn't care. Right? Like why would they care? We're doing like very small amounts of volume. They didn't even know who we were, frankly. We filled out like very administrative paperwork to get a network. And then we got our Facebook ads turned on, and the company started scaling and started growing really quickly. And of course, they see every transaction that you process because they are the transaction processor. And then things change quickly, right? Like we get to the middle of 2015, we went from $10 million to $70 million to $70 million to run rate in six months, nine months, and like that.

39:28Then they started to really carry, right? And so now, like everyone knows who pull back is. And we got very lucky. He got this guy Jim Messina, who was Obama's Deputy Chief of Staff, joined our board, and he joined our board, especially to help us navigate regulatory and incumbent issues like this, and he's very good at this. Through 2015, we got termination notices from all of the major PBMs, very obviously. And I would say every one of them buttocks, press groups we worked through in a very kind of private, professional way with them. And then net, we maintained access, we maintained coverage, mostly because we were already serving their customers and their customers, like the product and it would have been very painful for them to take it away.

40:07It was the sort of base of that. Do you know what have been more aggressive and just taken vertical ownership and done the payment processing yourself too and then actually really? Like literally impossible. Yeah. Why? It's not just payment processing. They're cool enough. You can think about a PBM or honestly a payer in general as like the demand aggregator in healthcare. They own that demand. They own the employer relationships. They have the Medicare relationships. As a startup you could not have built what they had built, unless you're building an entirely different company. You can't do it when we're building the equivalent of a retailer, like literally impossible.

40:37So what happened then? It's early 2016, Express Scripts, a centrist determination notice. Honestly, it looks the same as all the other termination notices we had received, and we had managed quietly and figured out. And we reached out to them the same way we did with the others and tried to get a meeting and try to help figure it out. We had two weeks, right? It's a termination notice state. It's like in two weeks, you can no longer serve Express Scripts customers, like you can't process transactions. For context, they're the largest PBM, so this was like 40 % of our revenue. And as far as we knew in two weeks, that revenue goes to zero.

41:07But we spent a week just trying to get in touch with somebody and they were just a radio silent, would not even engage with us. And so we made the pretty aggressive decision to start a public war. And so Colin Rainey, who had started like three days before, designed a full explainer video that had talked about what a PBM is, what they do, what this matters. And that we filmed a customer testimony of one of our customers. and I think within two days had 1 ,400 or 1 ,500, like customer testimonials. And these were like, oh, like it'd be so sad to lose Pillpack, I love the packaging. It was like, if we lose Pillpack, like I'm not to put my mom into a home and we don't really know actually what we're gonna do.

41:43And it was 1 ,500 of these, right? And so we built a whole website, fixfarmacy .com, had all the customer testimonials on it, had the explainer video, the customer video, and then we had all this wonky stuff for regulators if they wanted to drill into what was going on. and then we just did a massive PR blitz. So we launched the site. I think we had 40 articles in two hours and we leaned super heavy on this. Actually, it's gonna be really bad for these customers. This isn't like a David and Goliath, like hopefully one of the businesses wins and one loses. This is gonna be super bad for the customers that are using this service.

42:14And then we ran a regulatory process and tried to do what we could do. But I think within 24 hours, Express, which was at the table. And then it gets even crazier. So we're not like, let's five days later, we've got two days to get this contract fixed. Now it is a business negotiation. I'm trying to find a path forward with express grips. I don't think anyone's heard this story ever. But Ellie and I are sitting in a conference room with Colin. Up to me on my laptop, we're like the war room, right? We've got all the site design in the walls. It's just like a classic war room. I get an email from like the equivalent of our GPO from all of the other PBMs.

42:43Like you have a like a GPOE type thing that sits between you. And they're like, hey, like we saw this express grips. This seems bad. Like actually we're We're gonna kick you out too. And so we were 48 hours from going from, I don't know what it was, a hundred million in revenue to zero. Like zero. We have to now both, I have to go figure out how to fix the express scripts thing. And we gotta go figure out how to like fix all of the other contracts like at the exact same time. And so I'm sitting there, I get the email, like I don't say anything, I just turn the computer around to Elliot, who looks at it.

43:11We say nothing for probably three minutes and call him saying like, Hey guys, like what's going on? The two of us walk out and I'm like, Elliot, you gotta figure out this GPU. I don't know how we're gonna deal with that, but you gotta figure it out. And I was like, all figure out express scripts and we'll figure it out. And by Friday night, that was the end for both. Elliot had found a new GPO, done all the tech work and administrative work to flip into it, and I had signed a new contract with ExpressGrips. And we had not lost a single contract, and we had solidified ourselves, like publicly, as a company that was going to exist in the space, like in perpetuity.

43:40So it was as liver dies you're ever gonna see, and yeah, that was what, that sort of make it moment for the business. Are you panicking at that point? That is a holy shit moment. How do you keep your cooler like TJ? I have a personality that when things get really intense, like I get calm, I don't, the opposite doesn't tend to happen. So it was incredibly stressful, but I also felt like I was in my element. There was like an enjoyment. It's a battle and we're gonna figure it out and we're like, we're playing a chess match here and certainly was stressed, certainly was not sleeping well. But at the same time, like there was like an enjoyment to it, and when we obviously, when we pulled it off, like, it solidified the business in a way that we couldn't have done in any other way.

44:19And similarly, this is one of those decisions that I think if you were a little too anxious and you wanna make the decision, you wouldn't want it to get ahead of this one, like you would want it to like, we should go do some BDD with them. Like, let's figure this out. And I was like, no, none of that felt right. It's not gonna work. Let's just play this out and see how it plays out. And I don't think there was any other path to pulling this off than the one we took. But you could have also never like, architected this path. It was just, though they something great for customers and when it mattered, those customers came and defended the access that they had.

44:47TJ, why on earth did they relent? What made them pull back? There was no excuse from a customer standpoint, right? Like, it was all in fighting between businesses. You mentioned Amazon now, I have to ask. In 2018, Amazon reportedly attempted to acquire and successfully do for a very large number. Talked me about the decision -making process there. That comes in, what's the decision -making and how did you get to the deal? Yeah, so if you zoom back to that moment, And I think it was like mid 2017, early 2017 probably. We had just finished overhauling like all the software that powered the pharmacy.

45:21So when we started the company, we just bought everything off the shelf right and over time, we've ripping components out and ripping components out. But by early 2017, we had rebuilt and ripped out all of the underlying tech and that powered the pharmacy. We had this moment where we like picked our heads up and we're like, what should we do now that we've done that right? Almost all our resources have been focused on that for the longest time. And we had this idea that could we offer infrastructure up to other participants, right? So it could be another startup that needs to launch a pharmacy experience, actually we're launched on our infrastructure.

45:49And as part of that, we were meeting with all the large retailers and other potential customers to build on top of that, right? And one of those large retailers won from a very commercial conversation to an acquisitive conversation like relatively quickly. How do you know when it's going to an acquisition from a partnership and a normal conversation? Yeah, usually when they call and say, hey, could we just buy the company? It's pretty clear and moved from like a commercial thing to an acquisitive thing. I wasn't reading the T -leaves at the same time, but it was pretty explicit at that point. And I think we looked at where we were and a couple things had happened.

46:21One, like we were now like a version of scale, right? Like a couple hundred million and run rate or something like that. And we had very good sense of what our economics were and what it was going to take to build it. We really wanted to build. And from that standpoint, like it was going to be pretty capably intensive to scale this thing to the extent that we wanted to, right? Like, it was doable. Like, we could have definitely built an independent company, but it was going to be capital intensive. And then probably more importantly, like, when we started to pull back, it was a very simple vision, which was just made as easy as possible for consumers.

46:49And I think as we started pulling on that string over the years, like, we had all these incumbent issues and everything else, we were more ambitious, right? Like, we wanted to fix the supply chain. We wanted to fix a bunch of other stuff in the industry. And we had gotten convinced that the best way to do that was to make pharmacy a shoppable, like, e -commerce experience and a bunch of stuff falls out of that ultimately reshapes the dynamics. And so the combination of those two things, like the best place to do that is at a large retailer that already exists. And so it was pretty straightforward.

47:16And we made the decision assuming that the terms came to a place that made sense that we would probably sell the company in like the back half of 2017. Okay, so you decide that you're going to sell a company in the back half of 2017 and it needs a lot of cash to get it to the scale that you think it can be. There's a process to run. How do you think about running that process? You mentioned that the early interest, I'm sure there was many other key interested parties. How did you run that process and what was that decision making on Ultimate Acquire? That same initial kind of retailer that had finally wanted by the company got to terms that we were comfortable with and we spent some time with other acquires but it was clear that they were the lead horse and it was probably the right fit and the best option.

47:52And so this is early 2018 and we had I don't know six months of runway in the bank or something and so normally that's when I would have raised around, right? like, raise 18 months, you'd then probably raise when you've got six months of runway left, something like that. And so we had started a fundraising process in January of 18, and then within a few weeks of that going, we got to terms with a potential acquirer, and we assumed we were going to sell the company to that acquirer. And we shut down the fundraising process, we sort of full steam ahead on getting the deal done. Honestly, we were days, like, not weeks from being done, like announcing, like, this thing is done, like definitive agreement done.

48:27And it hits a snitch, it hits a snag and it's gonna get delayed. The whole board thinks we're selling the company in three days, I think we're selling the company in three days. And now it's not gonna be three days, it's gonna be some unknown amount of time. And now instead of having six months of money in the bank, I've got two months maybe, because we're selling the company in three days. Like I had two months of money, it's great. You've perfectly timed it. I had to tell the board, obviously, I was like at a phone call Thursday night, I'd tell the board on a Friday morning. I'd pick back up the fundraise, like I'm flying to San Francisco Monday morning, I'm going to New York on Wednesday and then maybe I'll go see if I can get a meeting in Seattle with some other potential Acquire by the end of the week.

49:00And that's what I didn't. So I got into plane and I went back and met with all the potential funders not acquires and Told them what happened. I thankfully like we'd shared all our numbers in December January and we'd beat all those numbers And like April or whatever this was and that's better than if we had missed them for sure And it was kind of like we're up for anything. We'll figure something out here But we don't have a ton of time. So let's just be creative Then I had the meeting with the company in Seattle and it was definitely the best pitch in my life and at that point I knew where I saw the company to Amazon like all of our Vision around what to do with pharmacy and how to make it shoppable and all those things We were just super aligned and at that point I knew we were gonna sell the company to Amazon and ultimately we did and it was a great I'm how do you come to a price?

49:38What does that look like in terms of that negotiation process? Yeah, that's a dance by the end. Yeah, I sat on the phone and said I want a billion that's definitely what happened But getting to the first deal was a dance and it was about where other companies valued, where the investors, positions, what's an economic outcome that's good for everybody. And if we can't get there, we're just not going to do a deal. It's not like we had to sell the company. We could have raised another round and kept going. And so that was more of a dance. But the time I got to doing the deal with Amazon, like ultimately it was a phone call that was like, if you hit a billion, we're done.

50:07And the hit a billion and we were done. When you have a deal like that, and you can tell me if I'm offering many questions, is it like a billion and you get a cash? Is it like a billion and an ounce? How did deals got structured? So we had three potential buyers. Each structure was different. Whether they bought the whole thing or most of the thing or whether it was all upfront or there was some earn out. And they were varying degrees of those things. But I would say by and large, every deal is gonna have some of the money upfront and some earn out. And so I think we now just in June, no money then, because like you haven't closed yet.

50:37There's this whole like regulatory process and everything that takes some time. So I would say like fraud entrepreneurs that moment from announcement to close It's a relatively stressful period of time. It's also weird, though, because your friend, you're loaded and you're like, no, no, I don't actually have any money. Yeah, you're definitely not loaded yet. There's plenty of deals that blow up in enclosing, not typically for diligence or more for government oversight reasons. But then we close the September. Then yes, like a lot of money hits your bank account. Is it your bank account in one go?

51:05And can you just take me to the moment when you saw your bank account? Like we end a garden with the kids, where were you when you saw it hit? For me, the moment that was more like, endearing was like, was telling the team, which is the same exact time, right? No, that isn't the same time, let's later. Okay. So we told the team, that was better. My dad was there. My mom was there, like, all of the companies that traded in pharmacy in the public markets dropped by 15 % in three minutes. So it was the very, that moment was honestly for me was like, was better than when the money hit my account. It was just like, such a moment.

51:35When the money hit my account, it was just a lot of refreshing. Like, is any time lots of money hit your account? Where were you? Were you at home? Were you in the office? Were you with your wife? I actually don't even remember. I don't remember crazily. I certainly remember I was when we announced the deal But I don't know where I was when we won the money at the account I've heard quite a few people say Bizarre you're a weird bloke T .J. I'd be like I would here. I remember my heart rate my temperature But that's why I'm a VC At that point it was like such a give -in. It was gonna happen. I don't remember.

52:04I love that can I ask, I've heard people say like it's kind of a shame. Like TJ's once in a generation founder, the company could have been 20, 30 billion reinventing healthcare on its own. Do you have any regrets about selling? No, I really don't. That might be true. I'm not saying that's not possible. But when we said out to start pullback, like we just wanted to make pharmacy better. That was the ambition. And when we sold the company to Amazon, like I deeply wanted to build like a shoppable pharmacy experience. And we did that. The thing we built and the work we did at Amazon, it's the only big tech company that's actually providing healthcare and doing real things in healthcare And so that's a legacy that I'm super proud of and really happy about and economically like I don't ever look back and wish I'd kept going And it all could have been so much bigger and so much better just super happy with the outcome two things We always hear money doesn't make you happy money doesn't make you happy does money make you happy to you day time makes me really happy and money provides you a lot of extra time.

52:59So I'm pretty happy. It's hard to parse like when I started the company, I had no family, no kids, none of that. And now I've got three little kids and an amazing family and super happy with what we live. So I'm super happy. I don't know how much of it's the money or the time or neither. And it's just the family, but I'm quite happy at the moment. No regrets for me. Because I was, he was been the most lavish but she's since TJ. I ended up expensive days, but I'm not going to go through a laundry list of things I bought. Probably the most technically the most lavish as we bought this, we bought like a 12 acre farm in the middle of Park City, which we're building.

53:28My wife is building like an amazing farm here. We're gonna have a bunch of animals and a bunch of fresh produce in the back yard. And it's a practical, but quite lavish purchase and one that I'm excited to build. When you look at your Twitter, it seems like Amazon maybe wasn't what it seemed. Is that an unfair response? And do you think your negativity online fairly reflects these bearings? I think the negativity is probably a little overstated. When we saw the company to Amazon, my goal was to build a launch farmacian .com and make all those like very non -data driven like nuanced decisions like intuitive decisions to get that thing Off the ground and then hand it off to an Amazonian Then knows how to turn the crank and really build like a scaled business in a way that I honestly just don't I don't think Amazon is any worse than any other big company But it is a big company and it comes with all the trappings of a big company And I think for me given like the very beginning of our conversation where it was like do you like stability and Are you comfortable with authority and do you like predictableness or not?

54:23I am so far on this extreme that honestly, like, I don't think I would be super successful at any big company. I'm a startup guy. And so no, like, functionally, throttle will be built. And Amazon is a big company. So quit fire round, following what we just said there. What's the single best thing about being an Amazon? Exactly. I'm happy it's made me to now not be at Amazon. I love that one. Listen, that is fun. What the others not know is that you're to be true. But I think that customers are ultimately going to shop healthcare like they shop everything else and that until that happens, like healthcare I was going to remain as fucked up as it is right now.

54:57What was the biggest advice on effective board management? I think speed and normal human create normal relationships with your investors and your board members. Text them, call them and things are good and bad, get breakfast, make David Tish buy you sushi, like do all the things that you do and great relationships in the rest of your life with your investors and your board members and it'll probably be fine. What was the strongest belief you had which turned out to be wrong? I used to think that people could float between different types of companies and jobs pretty seamlessly and it would be fine I'm personally some of the earlier conversations I think that like you should really optimize for what your personality is best at I like that you're both really successful and really happy in a huge company and then also really successful and Really happy and to start up is unlikely and so I think I've changed that my tune on that one Who's the single most impactful angel of the pill pat journey?

55:43I think you got to give it to the first person that ever met on you, which for us is Katie Reins and Chiu. And Katie was the one that was running tech stars and we got to the tech stars. Like, she met on us before anybody else. And so it's hard for me to not give that to that kudos to Katie. What would you like to change about the world of venture? I'd really like for 20 somethings that have never built a business to stop, like, pontificating on how to build a business. Just kidding. What do you do, my friend? My son's name is Harry. He's named after you. I love you. I'm just kidding. I love it.

56:11This is what people think about me. and I'm like, do you know what I teach it? And it is the most frustrating thing for me, which is like people who think that, which I totally understand from the outside. But it's like, you don't see two 10 million year revenue businesses with 80 % margins. I bought it to 100. I don't know. I bought a really terrible business with 20 % margins, so you're better than me. Yeah, I'm not saying that, but it's perception and reality. And tell me my friend, you can have one board member who's the best and why them. I gotta get that one to Elliot Cohen. He was definitely my best board member.

56:42We were always perfectly aligned. What about another bull member that's not a founder? Right. This is rapid fire. There's not time for to go deep on any of these questions here. They tell me what's your great team on the marathon fire. Oh, I love it. Again, you know what? I'm going to let you off on that. We're going to do TJ in 2033. Hopefully get the opportunity to keep being involved in building things and make people's lives better. I think it was super rewarding to build bill back. I'm still young. I've got a lot more in me. So hopefully still building and helping build things that make people's lives better.

57:11T .J. I love this. You sass master. That was brilliant. Honestly, I love doing this. I'm so touched that you chose to do this as your first thing speaking publicly. Seriously, it really meant a lot to me. And so thank you so much, my friend. Of course, it was my pleasure. I mean, the sass at the end there. Can you believe the cheek? I absolutely love that with T .J. What a fantastic guest I've on the show. She's science to him for joining. What was his first interview in many years? If you want to see more from us behind the scenes, of course you can. on YouTube by searching for 20VC, but before we leave you today, this episode is brought to you by TIGAS, the go -to research destination for bold investing.

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59:36That's Deal .com ford slash 20VC to book your demo today. As always, I so appreciate your support. And they cannot wait for you in incredible 20 sales episode on Wednesday with Rich Liu at Everlaw.