In the final video in our series, Capital Rx co-founder and CEO AJ Loiacono and General Catalyst’s Holly Maloney offer up insights that entrepreneurs and startup founders may find helpful in charting a path through 2023! Topics discussed in this ~6 min segment include the transition from “growth at all costs” to “responsible” growth and the importance of trusting your team, hiring your complements, and excelling in your core business right out of the gate.
Watch it below!
Edited lightly for length and clarity.
AJ Loiacono - Capital Rx
One thing we always think about is, oftentimes, when you're so focused on your own business, you may become a bit trapped in your own tunnel vision. You’re just thinking about how my business operates and “Are we making the right decisions?” But I think it's refreshing to hear from the investor side and the advisory side; what do you think is really helpful advice for a new entrepreneur or someone who has a small business that's expanding, be it looking for capital for the first time or maybe just trying to survive some of the current market headwinds? What would you suggest?
Holly Maloney - General Catalyst
Yeah, that's a great question.
And, you know, of course, sometimes the advice can vary depending on the stage of business or the business model. But overall, I mean, as I mentioned before, we were in this phase of growing at all costs, grabbing as much market share as you possibly can in the shortest amount of time as you possibly can, and then figuring the rest out as you go.
And I think as I speak with entrepreneurs today, especially those that are focused on, let's just say, market-by-market expansion, right? Say they start in one state and then plan to expand into other states from a coverage perspective; the advice of yesteryear may have been: enter all simultaneously, and then you can figure out what's working and what's not and pivot from there. And really, the advice that I would give today is: focus on being so excellent in your first market, and then, once you feel as though you're demonstrating that product market fit, think about expansion in a reasonable way. Because that's what you're going to get credit for today. You're going to get credit for demonstrating product market fit and a repeatable business model and a repeatable strategy at an earlier stage than you would have kind of been held to a couple of years ago. And I'm not saying that that's fair because it's not, but that's just the reality of the situation and making sure that you have the team in place that really complements who you are as an entrepreneur.
Because the team is everything and, through hyper-growth, through downturns, through challenges…and that's not new information, but I think it's now more important than ever to make sure you have the right team and have a really transparent relationship with advisors, and that you’re asking for help perhaps earlier than you would have before if it's ever needed.
And I'd love to turn the question to you as a successful repeat entrepreneur. What's the advice you would give founders today?
AJ Loiacono - Capital Rx
Well, I think you'll learn quite a bit over 23 years and counting. And I always say - I call it bumping into the furniture in the middle of the night and remembering where the coffee table is, and you don't want to hit it again. So, I think it's first and foremost: you never stop learning, even from your own mistakes. You hit upon a lot of the principles I've been taught or I've had to learn the hard way.
So, I think some of it is “team is everything.” Let's dig into that a little bit; first, you want a team that has alignment. So, we're thinking big picture; we want to achieve the same mission, but we are individuals, and we solve things in different ways. You don't want to micromanage people. You want to empower people. You want to trust people because that's the only way you scale, but also, you want to hire your complements. You want to hire effectively, and you're interviewing your weaknesses. Hey, be honest with yourself; what are your weaknesses, and whom do you need to hire to shore those up because everyone has them, and it's important to look at.
But I think the other thing that you said that really stuck with me was: to demonstrate core competency in the market you start. For us, that was commercial, self-insured business. Do that at the highest level. Start with 500-life cases and move to 1k,4k, 8k, 16k, and 32k. And one day, you'll wake up and be in a great position where you could serve pretty much any size payer in the country, but you couldn't have done it unless you demonstrated that excellence. And you build that trust score, as I call it, and no one's going to say, “Hey, go service this 100,000 life group tomorrow.” The first question is going to naturally be, “What other 100,000 life group do you have?”
And so, I think for us, it was following that set of instructions you're mentioning, which is: demonstrate and be successful, demonstrate it’s a repeatable business with highly satisfied customers, and then move to something that is complementary. So, our vertical is always payers, someone who's sponsoring or providing a plan, but we wanted to then move into government claim processing -a third of the market that I think is under-serviced.
I think that there's a much better business model, both ethically from a pricing standpoint, as well as just better service and transparency for the patients. And so, for us, it was: “Take everything we learned in the commercial market, and let's apply it to government and provide a better service offering.”
If you'd like to watch any of the prior videos in the series:
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