20VC Hims Founder Andrew Dudum on Hims Going Public, The Reasoning and Benefits of SPACs, The Biggest Misconceptions of Successful Company Building & Wall St's Changing Perceptions Towards Growth and Profitability

In this episode of "20 Minutes VC," host Harry Stebbings interviews Andrew Dudum, founder and CEO of hims & hers, a health and wellness brand that recently went public via SPAC. Dudum, also a co-founder of venture fund Atomic, discusses his journey from dropping out of Wharton to join a Sequoia-backed company, to selling a company to Telefonica, and eventually falling in love with healthcare's potential for modernization. He shares insights on building a lean yet specialized team, the importance of ego management, and the strategy behind hiring people smarter than oneself. Dudum also touches on the decision to go public, the benefits of a SPAC over a traditional IPO, and the company's focus on customer experience despite rapid growth and operational challenges. The conversation delves into time management, the influence of impending fatherhood on leadership, and Dudum's perspective on wealth, with plans to give most of it away. Notable mentions include venture capitalists Ron Conway, Jack Abraham, and celebrity partners Snoop Dogg, Jennifer Lopez, and Alex Rodriguez.

• Hims & Hers is a company offering a modern approach to health and wellness.
• Andrew Dudum is the founder and CEO of Hims & Hers.
• Prior to going public, Hims raised over $158 million from notable investors.
• Andrew is also a co-founder of Atomic, a venture fund and company builder.
• He has a history in product management and entrepreneurship, leading to the sale of Talkbox to Telefónica in 2012.

"Prior to their going public on Tuesday this week, hims raised over $158,000,000 from some of the best, including Thrive, Forerunner, Founders Fund, IVP, Redpoint and more."

The quote highlights the significant funding raised by Hims & Hers before going public, emphasizing the support from prominent venture capital firms.

• Hims & Hers is one of the fastest companies to reach a $1 billion valuation and IPO from founding.
• The company recently went public through a SPAC (Special Purpose Acquisition Company).

"They are one of the fastest companies to go from founding to $1 billion, and they're also one of the fastest companies to go from founding to IPO."

This quote emphasizes the exceptional speed at which Hims & Hers achieved significant financial milestones, setting it apart in the startup world.

• Andrew started building companies as an undergrad at Wharton, dropping out to join a Sequoia Capital-backed company.
• He co-founded Atomic Labs in San Francisco, partnering with investors like Peter Thiel and Mark Andreessen.
• His passion for healthcare and technology led to the founding of Hims & Hers.

"It was a couple of years ago that I really fell in love with the healthcare space, fell in love with the opportunity to help a lot of people, but also to digitize, I think, probably the last multitrillion dollar industry in the US that really hasn't been touched by technology."

Andrew describes his motivation for founding Hims & Hers as a blend of a desire to help people and to innovate in the healthcare industry, which he saw as ripe for technological disruption.

• Andrew believes in the importance of small, high-quality teams with autonomy and specialization.
• He emphasizes ego management, requiring managers to hire people who are more skilled than themselves.
• A smaller team size has contributed to the company's ability to scale quickly and efficiently.

"It is a requirement at hims and hers for every single person we hire for them to be better at the job we're hiring them for than we ourselves could do."

This quote underlines Andrew's approach to building a team where each new hire is expected to be more capable in their role than the hiring manager, promoting a culture of excellence and humility.

• Andrew challenges the common startup notion that early teams should consist of generalists.
• He advocates for specialization immediately after achieving product-market fit.
• Specialization drives efficiency in areas like customer experience, engineering, and supply chain.

"The moment you have that moment where people are willing to pay for your offering, that's where I believe the specialization is really beneficial."

Andrew explains his belief that once customers are willing to pay for a product, it's time to focus on specialization to refine and improve various aspects of the business.

• Andrew discusses the ongoing learning process of attracting top talent.
• He offers opportunities for talented specialists to take on larger roles and prove their capabilities.
• The company culture at Hims & Hers encourages striving and provides room for growth.
• Passion and vision are key to attracting veteran talent looking for energy in their work.

"People who are type A and highly motivated to succeed always want to prove it to themselves that they can do so."

The quote reflects on Andrew's strategy for recruiting ambitious individuals by offering them a platform to challenge themselves and expand their professional horizons.

• Andrew Dudum emphasizes the significance of a founder's involvement in the recruitment process, especially for senior candidates.
• He believes sharing his passion and vision for the company is crucial for attracting talent with successful careers.
• Andrew highlights that for experienced individuals, the appeal of a job is not just about money or title, but also about the potential for a fulfilling life experience.
• The founder story and vision are key selling points for attracting top talent.

"I spent a ton of time today actually still interviewing just about every major senior candidate that comes through the organization. And a big part of that is actually for them to hear from me why I'm so passionate about this company, right."

This quote illustrates Andrew's personal commitment to the recruitment process and his strategy to inspire candidates by sharing his enthusiasm and vision for the company.

• Andrew Dudum acknowledges that during the company's hypergrowth, many aspects of the business broke, including supply chain, website, and analytics.
• Despite these challenges, the focus remained on customer satisfaction, with issues being resolved behind the scenes.
• Andrew notes that as the company grew, they became more in tune with their customers, understanding them better and tailoring the experience to their needs.
• An insights team was established to quantify customer success and improve management of customer relationships as the company scaled.

"I think we did a lot of things terribly, to be honest. Everything broke. The supply chain broke, the website broke, the analytics stack that we had built broke."

This quote candidly reflects on the difficulties faced during rapid expansion, highlighting the struggles with infrastructure and the need for continual improvement.

• Andrew describes the immediate and obvious signs of failure during launch, such as the inability to ship packages and website checkout malfunctions.
• He emphasizes the importance of quickly recognizing and addressing these issues.
• Andrew believes that most companies experience breakage in a similar, visible manner, and the key is to fix problems swiftly and then develop systems to prevent recurrence.

"Well, quite literally, we couldn't ship packages. The first signs of breakage were really phone calls at six in the morning on the day of launch."

This quote highlights the urgent and clear nature of operational issues that can arise during a company's early stages, underscoring the necessity for prompt action.

• Andrew Dudum feels he manages crisis situations well, focusing on keeping the team energized and empowered to resolve issues without adding emotional pressure.
• He recognizes that during crises, team members may feel scared and guilty, and that constructive support is more effective than emotional reactions.
• Andrew promotes a problem-solving approach during crises, followed by retrospective analysis once stability is restored.

"Everybody is scared for themselves because they don't know if they were directly responsible. They're scared for the business."

This quote explains the emotional state of team members during crises and the importance of leadership that minimizes pressure and encourages focus on solutions.

• Andrew Dudum shares that the decision to take the company public was partly emotional and instinctive, driven by the lack of similar investment opportunities in the public market.
• He believes that hims & hers offers a unique combination of rapid growth, improving efficiency, and high margins in a transformative healthcare industry.
• Andrew criticizes the tendency of companies to remain private for extended periods, arguing that the public markets are starved of innovative, high-growth opportunities.
• He suggests that integrating the discipline required by public markets into the company's DNA from an early stage can be advantageous for long-term success.

"I think from the beginning of launching this business... we saw that we had unlocked a tremendous amount of passion from people."

This quote reflects on the company's early success and the strategic decision to go public to capitalize on the market's demand for growth and innovation.

• Andrew Dudum describes the board of hims & hers as traditional venture capitalists and entrepreneurs from Silicon Valley, familiar with the traditional IPO process.
• The board, including Andrew, had limited knowledge of the Special Purpose Acquisition Company (SPAC) process prior to considering it for going public.

"The board at hims and hers and the founders, we're all fairly traditional venture capitalists, right?"

This quote indicates the board's initial inexperience with the SPAC process and their background in traditional venture capital, setting the stage for their exploration of alternative routes to going public.

• SPACs (Special Purpose Acquisition Companies) are an alternative to traditional IPOs for taking a company public.
• SPACs offer greater efficiency, taking approximately six months compared to 12-18 months for an IPO.
• They minimize management distraction, allowing focus on the business rather than external processes.
• SPACs enable pricing with long-term public market investors from the start, reducing the risk of mispricing.
• The traditional IPO process has remained largely unchanged for decades, while SPACs present a new modality with several benefits.

"We had been expecting and preparing in the last 18 months to take the company public through a traditional IPO process."

This quote explains that the company was initially preparing for a traditional IPO before considering a SPAC.

"A process that allows for greater efficiency, right? A process that can take six months versus maybe twelve or 18 months."

This quote highlights the time efficiency of SPACs compared to traditional IPOs.

"You're pricing it on the front end with real public market investors."

The quote emphasizes the advantage of SPACs in terms of pricing the deal with the involvement of public market investors early in the process.

• The 'pop' refers to the immediate increase in stock price on the first day of trading post-IPO.
• While the pop creates excitement, it indicates a significant underpricing and results in costly dilution for the company.
• The pop's impact on long-term success is negligible; consistent performance and business expansion are more critical.
• For companies with a long-term vision, the immediate pop is less important than the fundamentals of the business.

"The pop creates energy and an excitement. It's a very expensive moment of energy."

This quote explains that while the pop generates excitement, it comes at a high cost to the company.

"I don't think there's any correlation between that first day pop and long term success of the business..."

The quote suggests that first-day stock performance is not indicative of the long-term success of a company.

• Wall Street's preference for growth versus value fluctuates frequently.
• A sustainable business model requires a balance between growth and profitability.
• Businesses with robust margins, like those selling pharmaceuticals and subscriptions, have an advantage in maintaining healthy profits.
• Regular strategic discussions on capital allocation and margin improvement are essential for long-term success.

"You cannot grow endlessly and burn money at an increasing pace. It's not a good business."

This quote stresses the importance of balancing growth with financial sustainability.

"90% of business is recurring revenue."

The quote highlights the stability and predictability provided by a subscription-based revenue model.

• Traditional units of time measurement can unintentionally slow down progress.
• Breaking down tasks into smaller time units can increase productivity and efficiency.
• Immediate action on manageable tasks avoids unnecessary delays and maximizes time utilization.
• Challenging the norm of scheduling and pushing for swifter action can lead to significant time savings.

"What I try to do with our team and what I try to do with myself is break things down into the smallest unit of time..."

This quote underscores the speaker's approach to time management by focusing on the smallest units to enhance efficiency.

"I try really hard to really be tough on my team and say, we don't need to talk about that next week."

The quote reflects the speaker's proactive stance on addressing issues promptly rather than postponing them.

• Early career stages often focus on achieving financial stability and covering necessities.
• The relationship to money evolves from necessity to achieving comfort, then to strategic financial planning.
• Personal wealth can be a byproduct of passion-driven work and successful business ventures.

"I think in the beginning years of my career... it was all about necessity."

This quote reflects the initial focus on financial necessity early in one's career.

"I realized I could get paid for doing what I love to do."

The quote captures the speaker's realization that passion and profession can align, leading to financial rewards.

• Andrew Dudum discusses his early career motivations, driven by the high cost of living and the fear of not achieving traditional life milestones.
• He expresses an old-soul mentality, worrying about financial security to support a future family.
• His current fear of money is rooted in the potential for it to negatively change personal relationships and life dynamics.
• Andrew and his wife, Lea, plan to give away their wealth to preserve their values and help others.

"And it was necessity, necessity, necessity. And there was fear of not being able to hit that milestone right and not being able to have the ability in my life to have kids and buy a house and get married." "Money still scares me, to be honest. But it's for very, very different reasons."

The first quote reflects Andrew's early career concerns about financial stability and achieving life goals. The second quote indicates a shift in his fear of money from personal financial security to its potential impact on his personal life and relationships.

• Andrew Dudum anticipates becoming a father will make him more conscious of his leadership style.
• He believes it will add an emotional dimension to his actions and decisions.
• Andrew hopes to improve his empathy, patience, and reactions, knowing his child will observe and learn from him.

"I think the biggest thing that pops up for me is how my son is going to react to how I lead the things I say, the way I lead, the types of reactions I have to people, the amount of empathy I use with people, the patience I maintain with my team..."

This quote highlights Andrew's expectation that fatherhood will make him more reflective and conscientious about his behavior as a leader and role model.

• Andrew Dudum's favorite book is "The Planet Remade" by Oliver Morton.
• He is interested in geoengineering and its potential to counteract climate change.

"My most recent favorite book is a book called the Planet Remade. It's by Oliver Morton. And this book is about essentially geoengineering and how geoengineering and essentially Earth hacking could really change the world and particularly counterbalance a lot of the effects of climate change."

The quote explains Andrew's interest in the book's subject matter, highlighting his concern for the environment and interest in innovative solutions to global challenges.

• Andrew Dudum explains how he got Snoop Dogg involved with his business through a casual meeting facilitated by Ron Conway.
• He discusses the involvement of Jennifer Lopez and Alex Rodriguez in his business, emphasizing their interest in accessible healthcare for underserved populations.

"Ron Conway introduced me to Snoop. We smoked weed, ate Popeyes, and ate our vitamin gummies. And he loved the vitamin gummies and decided to get signed up." "The thing that really got Jennifer and Alex excited was how do you get access to amazing healthcare products to people that really need them in underserved populations?"

The first quote describes the informal and personal way Snoop Dogg was introduced to Andrew's business. The second quote reveals the motivations behind Jennifer Lopez and Alex Rodriguez's interest in supporting healthcare accessibility through their involvement in his company.

• Andrew Dudum hopes his child will be kind above all else.
• He looks up to Bill Gates and Melinda Gates for their post-Microsoft philanthropic work.

"The one trait, and maybe I'll say it three times, is I want my kid to be kind, kind, kind, kind. I think more than anything else." "I look up to Bill Gates and Melinda quite a bit."

The first quote emphasizes the importance Andrew places on kindness as a core value for his future child. The second quote reflects his admiration for the Gates' philanthropic efforts and impact on global issues.

• Andrew Dudum is passionate about his business and its potential to transform healthcare access.
• He envisions the company expanding its reach and services in the coming years.

"I think for me in the business, I'm going to continue to run this business because I'm incredibly passionate about where we're at."

This quote conveys Andrew's commitment to his business and his belief in its long-term potential to improve healthcare accessibility through technology.

• Andrew Dudum values non-linear thinking in a board member, praising his co-founder Jack Abraham for this trait.
• He expresses a strong personal and professional relationship with Harry Stebings, who reciprocates admiration.

"I think my favorite board member that I had the privilege of being on a lot of boards with is my co-founder at Atomic, which is Jack Abraham." "I have to say, I just love Andrew. If you didn't know, hearing that, Andrew's been an incredible friend, supporter, and advisor to me."

The first quote highlights the importance of innovative thinking in business leadership as exemplified by Jack Abraham. The second quote illustrates the mutual respect and friendship between Andrew Dudum and Harry Stebings.