20VC Hims' Andrew Dudum on The Scaling Playbook of The Fastest Growing Mens Wellness Brand, How To Be Truly Innovative In Today's World of Online Marketing & Raising at a $200m Valuation within Year 1

In this episode of the 20 minutes VC, host Harry Stebbings interviews Andrew Dudum, co-founder and CEO of Hims, a rapidly growing men's health and wellness brand. Dudum discusses the genesis of Hims, which was inspired by watching friends struggle with common health issues in silence, and the brand's mission to normalize these conditions and provide accessible, affordable treatment. He emphasizes the importance of proprietary marketing channels and the need for diversification beyond digital platforms, sharing insights from his experience with previous startups and his venture builder, Atomic. Dudum stresses the value of small, passionate teams and the power of constraints to drive creativity and execution speed. He also touches on the challenges of scaling operations and customer support while maintaining a lean team. Throughout the conversation, Dudum reflects on personal inflection points, such as dropping out of Wharton to pursue startups, and offers advice to founders on fundraising and dealing with crises.

• Harry Stebbings introduces Andrew Dudum, co-founder and CEO of Hims, a men's health and wellness brand.
• Hims has raised over $45 million in VC funding from notable firms.
• Andrew is also a co-founder and general partner at Atomic, a venture builder.
• He previously led product at Talkbox, which was acquired by Telefónica.

"Therefore, I'm thrilled to welcome Andrew Dudham, cofounder and CEO at hims, the fastest growing men's health and wellness brand that's raised over $45 million in VC funding from some of the very best in the business, including Thrive Capital, four, runner Ventures, IVP Redpoint and SV angel, just to name a few."

The quote highlights Andrew Dudum's role and the success of his company, Hims, in gaining significant venture capital support.

• Andrew did not always envision creating a men's health and wellness brand.
• The idea for Hims came from observing friends struggling with common health issues.
• Hims aims to educate men about the normalcy of these issues and provide cost-effective treatment.

"I think the story of hims really came in the last four and five years as I've essentially watched dozens of friends very close to me struggle with many of the exact same health and medical issues, yet not really have open conversations and proactively take care of them."

This quote explains the personal motivation behind the creation of Hims, which was fueled by the common struggles faced by men in Andrew's social circle.

• Andrew dropped out of Wharton at 19 and has been involved in building startups.
• He has learned from working with various venture funds.
• From his experience with Everalbum, he learned the importance of small team iteration and market testing.

"I've been really fortunate. I dropped out of Wharton at 19 and have been out here building startups and have been able to work with Sequoia and Felicis and Kosla and a whole bunch of funds."

The quote underlines Andrew's entrepreneurial background and the valuable experiences he's gained from working with top-tier VC firms.

• The DTC landscape is crowded, and many channels are marketplace dynamics.
• Hims focused on owning proprietary marketing channels to avoid rising costs and saturation.
• A diversified channel mix from the start is crucial for sustainable growth.

"Our approach was very unique in that we wanted to own as much of our marketing and as many proprietary channels as possible so channels that we could deploy capital into that we knew were very scalable, but that we also knew weren't going to raise in prices as tax would increase in the next six to twelve months."

The quote emphasizes the strategic approach Hims took to marketing by focusing on proprietary channels for scalability and cost-effectiveness.

• Concerns about the sustainability of customer acquisition through major incumbents like Facebook and Instagram.
• Andrew believes in having a diversified set of channels from the beginning rather than relying on migration when costs rise.

"You need to have an incredibly diversified set of channels to begin with. So if you're relying on migrating, once one kind of becomes no longer profitable, I think you're already too late."

This quote stresses the importance of diversification in marketing channels to avoid over-reliance on any single platform, which could become costly and unsustainable.

• The saturation of digital marketing channels necessitates a multi-touchpoint strategy for brand growth.
• Andrew Dudum advocates for creating unique marketing inventory rather than competing in crowded spaces.
• He emphasizes the importance of finding non-traditional and exclusive spaces for advertising to stand out.
• Dudum uses the example of advertising in gym locker rooms and baseball stadium bathrooms as unconventional but effective marketing spaces.

"Getting to the point where they realize the power and the volume and the reach of Facebook and Instagram. But very tactically, if you want to deploy large sums of capital and grow a company, you need to have multiple touch points and it cannot simply be on your iPhone."

This quote highlights the need for diverse marketing strategies beyond just digital platforms like Facebook and Instagram to effectively grow a company.

"Create the inventory, don't bid on it."

Dudum's philosophy is to create unique marketing opportunities rather than compete for existing ones, which can lead to better scalability and exclusivity.

"You'll find us in thousands of gym locker rooms. You'll find us all of the bathrooms at the SF giants."

Examples provided by Dudum demonstrate the application of his marketing strategy in unconventional but strategic locations.

• Andrew Dudum discusses the increasing importance of real-world marketing due to digital saturation.
• He believes customers need to encounter brands in the physical world to establish trust and recognition.
• Dudum suggests that traditional marketing principles are becoming more relevant as digital spaces become overcrowded.

"I think we are moving closer to that, yes."

Dudum agrees that there is a shift back towards real-world marketing channels.

"You need x touch points for your brand to be digested and thus purchase to be made."

He reinforces the traditional marketing concept that multiple exposures to a brand are necessary for consumer engagement and eventual purchase.

• The number of touch points required for customer conversion varies by product and brand.
• Tracking and understanding the customer journey is crucial for effective marketing.
• Dudum emphasizes the need for brands to analyze their customer demographics and conversion points to optimize marketing strategies.

"It's essentially an equation per demographic, per region."

Dudum explains that customer conversion is a calculated process that varies by demographic and region, emphasizing the importance of tailored marketing efforts.

• Incumbents face challenges in adapting to innovative market strategies due to their size and processes.
• Dudum suggests that incumbents should empower small, passionate teams to innovate and respond to market changes.
• The agility and creativity of smaller teams can be an asset in a rapidly evolving marketplace.

"Keep it small, keep it simple, and get the most highly motivated, the most passionate people about whatever product or sku you're working on to get them in a room and kind of own that initiative."

Dudum advises incumbents to leverage small, motivated teams to foster innovation and agility, which can be challenging within large corporate structures.

• Team size is a critical factor in the speed of execution for startups.
• Constraints can lead to increased creativity and prioritization.
• Dudum credits Hims' rapid growth to the intentional maintenance of a small, focused team.

"Constraints breed creativity."

Dudum references Kevin Hartz's advice, suggesting that limitations can inspire innovative solutions and a focused approach to problem-solving.

"It's a very small team, and I think we intentionally keep it small and force ourselves to make very, very tough decisions."

He attributes Hims' success to the deliberate choice to maintain a lean team, which necessitates careful decision-making and prioritization.

• Small teams face operational challenges, especially as a business scales.
• Determining the right time to expand the team is critical for sustained growth.
• Dudum acknowledges the difficulties small teams face but emphasizes the importance of maintaining focus and ownership.

"We are shipping tens of thousands of boxes a day."

This quote illustrates the operational challenges that come with scaling a business with a small team, highlighting the need for strategic growth in team size.

• Importance of customer experience and support in high volume businesses.
• Necessity of scaling processes or people to handle large customer volumes.
• Preference for scaling processes before scaling people.
• Hesitation to "pour fuel on people" as opposed to other business aspects.

"And we need to create exceptional customer experience and exceptional customer support. When you're dealing at huge volumes of scale, whether it's retail or ecom, whatever it might be, people are necessary."

This quote emphasizes the critical need for exceptional customer support in businesses that handle large volumes of customers daily. It suggests that people are essential in achieving this, indicating the importance of scaling in high-volume businesses.

"We always lean, first and foremost, to scale the processes. Let's build technology that can make our few people more effective. But at some point, it's time to scale."

The speaker stresses the initial focus on scaling processes through technology to enhance efficiency before considering scaling the workforce. This approach is aimed at making the existing team more effective.

"I don't know if I believe there is ever a time to pour fuel on people."

This quote conveys skepticism about aggressively expanding the workforce as a solution for growth, suggesting alternative areas for investment, such as marketing or business development.

"I think every hire is very, very slow and considered."

The speaker advocates for a deliberate and thoughtful approach to hiring, indicating that new roles should be well-understood by the company before seeking to fill them.

• Balancing valuation and growth as a fundamental consideration for founders.
• Importance of not raising at a valuation that cannot be met and exceeded.
• Unique business model aspects of hymns, including long-term customer retention and a fundamentally different margin structure.
• The belief that the business is still at "day zero" with significant growth potential.

"You never want to raise a valuation you cannot meet and exceed in the given time period that that capital allows you to execute against."

This quote highlights the importance of setting realistic valuations that align with the company's growth potential and the timeframe for capital utilization.

"This business is really an incredible business. This is a huge business at that current valuation, I actually think we're really at day zero, and the opportunity is orders of magnitude bigger than where we're at."

The speaker expresses confidence in the business's fundamentals and growth prospects, suggesting that the current valuation represents just the beginning of the company's potential.

• The approach to fundraising focusing on investor relationships rather than valuation.
• Importance of the unique value that investors bring to the business.
• Advice to other founders to prioritize investor quality and their ability to accelerate the business.

"My general approach to negotiating fundraising is actually to not focus on valuation."

The speaker advises other founders to prioritize the quality of investors and their contributions to the business over the specific valuation during fundraising.

"Think about the people you're raising capital from."

This quote underscores the importance of considering who the investors are and the unique value they bring to the business when raising capital.

• Atomic's model of building companies from scratch internally.
• The combination of investors and operators within Atomic to ideate and validate new companies.
• The venture builder model as a collaborative space for experienced individuals to create new companies.

"So I founded atomic about five years ago with a couple of great partners and operators. And essentially what Atomic does is builds companies from scratch internally."

The speaker explains the concept of Atomic as a venture builder that ideates and creates companies internally, differentiating it from traditional venture funds.

• The significance of data-driven testing in the ideation process.
• The role of distribution in the success of products.
• Atomic's approach to validating market demand through prototype testing before full product development.

"I think the most obvious, but is taken exceptionally seriously at Atomic, is data driven testing. And specifically within testing, is distribution."

The speaker emphasizes the importance of data-driven testing and distribution in the ideation and validation process of new companies, highlighting Atomic's methodical approach to building successful businesses.

• Atomic focuses on accessing customers in a proprietary fashion.
• They test distribution channels before committing significant capital.
• The goal is to confirm the potential for high returns before building the company and infrastructure.

And so what we do at Atomic is first and foremost think about how we can access customers in a proprietary fashion.

This quote explains Atomic's priority in finding unique ways to reach customers which is crucial before they scale up their investment in a new venture.

• Not 90% but a smaller percentage of projects yield good returns at Atomic.
• Atomic prototypes many companies but only builds a few with outlier opportunities.
• They use growing data sets to identify and differentiate exceptional opportunities.

Well, I would tell you that 90% don't return good returns. Percentage of success is far smaller.

Andrew Dudum clarifies the misconception about success rates, emphasizing that a smaller percentage of projects actually yield good returns.

• Atomic has tested many direct-to-consumer companies.
• They have data on customer acquisition costs, marketing channel costs, margin structures, and LTV projections.
• Comparing new ventures against historical data helps identify outlier opportunities.

We've tested dozens of direct to consumer companies, which means we know cacs, we know marketing channel costs for each of these.

Andrew Dudum discusses the importance of historical data in evaluating the potential success of new companies.

• "Creativity, Inc." is Andrew Dudum's favorite book.
• The book discusses Pixar's organizational structure to foster creativity and minimize bureaucracy.
• It has influenced the structure of Atomic and the teams they build, like Hims.

My favorite book is Creativity, Inc.

Andrew Dudum shares his favorite book and how it has influenced the way he approaches building teams and companies.

• Andrew Dudum appreciates many aspects of Silicon Valley.
• He is critical of the arrogance within the tech community.
• He believes in the importance of humility and supporting each other, especially in a wealth-creating environment.

The one thing that irks me, and I think a lot of people, is the arrogance that the valley has.

This quote reflects Andrew Dudum's perspective on the need for a cultural shift in Silicon Valley, promoting more humility and supportiveness.

• "Keep it simple, stupid" is a motto Andrew Dudum frequently reverts back to.
• He finds that this principle applies to many aspects beyond what he initially thought.

My favorite motto is keep it simple, stupid.

Andrew Dudum shares his guiding principle, emphasizing the importance of simplicity in various endeavors.

• Dropping out of undergrad at Wharton to work on startups was a major inflection point for Andrew Dudum.
• This decision was a commitment to an unproven path and put pressure on him to prove its viability.

A major inflection point for me was when I was 19 and I chose to drop out of undergrad Warden to come back to San Francisco to work on startups.

Andrew Dudum describes a pivotal moment in his life that significantly impacted his career direction and personal growth.

• Andrew Dudum deals with crises by taking a moment to breathe.
• He believes taking a pause allows for better evaluation of options and planning.

You know what? I just breathe, that's all.

This quote highlights Andrew Dudum's approach to managing stressful situations by simply pausing to gain clarity.

• Hims plans to launch new medical and wellness products needed by many men.
• Atomic will continue to test many opportunities but build very few, aiming for impactful businesses.
• They benefit from being repeat founders and learning from past experiences.

Oh, we've got a tremendous amount of things coming out the door.

Andrew Dudum expresses optimism for the future developments at Hims and Atomic, indicating a strategic approach to growth and innovation.