20VC Most Downloaded Founder Episode of 2018 Andrew Dudum, Founder & CEO @ Hims

Abstract

Abstract

In a year-end wrap-up on the 20 Minutes VC podcast, host Harry Stebbings celebrates the show's success, with over 100,000 new subscribers and 20 million downloads. He introduces Andrew Dudum, founder and CEO of Hims, a rapidly growing men's health and wellness brand that has raised over $97 million in VC funding from prominent investors like Thrive, Founders Fund, and Redpoint. Dudum shares insights into Hims' marketing strategy, which focuses on creating proprietary channels to avoid the competitive and costly landscape of platforms like Facebook and Instagram. He emphasizes the importance of a diversified marketing mix and the return to real-world customer acquisition. Dudum also reflects on his journey as a serial entrepreneur, the lessons learned from his previous ventures, and the value of keeping a small, focused team to maintain agility and creativity. The episode also touches on the role of Atomic, a venture builder co-founded by Dudum, which ideates and tests numerous companies, selectively building a few with outlier potential. Throughout the conversation, the significance of strategic hiring, data-driven decision-making, and the balance of valuation in fundraising are discussed.

Summary Notes

20 Minutes VC Podcast's 2018 Achievements

  • The podcast gained over a hundred thousand new subscribers in 2018.
  • There were more than 20 million downloads across over a hundred episodes.
  • Behind-the-scenes content was shared on Instagram.

"2018 and what a year it has been here at the 20 minutes VC, we had over a hundred thousand new subscribers to the show. We had over 20 million downloads across more than a hundred episodes."

This quote summarizes the podcast's significant growth and reach in 2018, highlighting the number of new subscribers and downloads.

Andrew Dudum's Introduction

  • Andrew Dudum is the most downloaded founder guest of 2018 on the podcast.
  • Dudum is the founder and CEO of Hims, a rapidly growing men's health and wellness brand.
  • Hims has raised over $97 million in VC funding from notable investors.
  • Andrew Dudum has a history of entrepreneurship, including a successful exit with Talkbox.

"I'm absolutely thrilled to say it is an individual that's become a dear friend since our episode in the form of Andrew Dudham, founder and CEO at hims, one of the fastest growing consumer brands of our time and the fastest growing men's health and wellness brand."

The quote introduces Andrew Dudum as a significant guest on the podcast, emphasizing his role as the founder and CEO of a successful and fast-growing brand.

Venture Building and Investment

  • Atomic, a venture builder where Andrew Dudum works closely, has announced a $150 million fund.
  • Atomic is backed by high-profile investors including Peter Thiel and Mark Andreessen.

"Andrew also works closely with Atomic, a venture builder backed by Peter Thiel, Mark Andreessen, and many of the world's best investors who recently announced their new $150,000,000 fund to start companies solving the world's problems."

This quote details Andrew Dudum's involvement with Atomic and the substantial new fund aimed at launching companies to address global issues.

Acknowledgement of Collaboration

  • Harry Stebbings expresses gratitude to Miles Grimshaw from Thrive for introducing him to Andrew Dudum.

"I'd also want to say a huge thank you once again to Miles Grimshaw at Thrive for the intro to Andrew today."

The quote acknowledges the role of networking and introductions in the venture capital industry, specifically thanking Miles Grimshaw for connecting the host with Andrew Dudum.

Fund Administration Partner: Carter

  • Carter offers modern fund administration software and services for VCs.
  • Features include a real-time dashboard, secure information sharing, and capital call issuance.

"With Carter's new modern fund admin software and services, you get a real-time dashboard of your general ledger. You can securely share info with your lps and issue capital calls, all from the same platform."

The quote describes the capabilities of Carter's software and services, highlighting the benefits for venture capitalists managing their funds.

Corporate Card for Startups: Brex

  • Brex provides a corporate card specifically designed for startups.
  • Founders of Brex experienced challenges obtaining a corporate card and created a solution.
  • Brex offers instant online signup, no founder liability, and high credit limits.

"Brex founders Henry, gay and Pedro built a payments business in Brazil, but found themselves rejected for a corporate card when they were in Y combinator. They decided to build Brex with instant online signup, no founder liability required and limits ten to 20 times higher than standard cards."

The quote tells the story of Brex's origin, addressing a common problem faced by startup founders and the innovative features of the Brex corporate card.

Equity Crowdfunding: Startengine

  • Startengine is a leading equity crowdfunding site in the US.
  • It enables investments as low as $100 in private companies.
  • Over 367 companies have raised capital from more than 41,000 investors through Startengine.

"Startengine is the leading and largest equity crowdfunding site in the US. On start engine you can invest as little as $100 in private companies."

This quote introduces Startengine as a platform that democratizes investment in private companies, allowing for low minimum investments.

Andrew Dudum's Childhood Vision

  • Andrew Dudum did not always envision creating a men's health and wellness brand.
  • The idea for Hims came from observing friends' struggles with common health issues.

"I would like to believe that when I was a little boy that I had this incredible vision. And I've been working towards it for the last 20 years, but that's not quite the case."

The quote reflects on Andrew Dudum's journey and the fact that his vision for Hims was not a lifelong dream but rather developed from personal observations.

Hims' Mission and Approach

  • Hims aims to educate men about common health issues and provide effective, affordable treatment.
  • The brand addresses the need for open conversations about men's health.

"So everything from erectile dysfunction to hair loss to acne, these are all things that statistically all of us men as an entire gender struggle from, but the paths forward to actually take care of them are a little bit more fragmented."

Andrew Dudum explains the common health issues Hims focuses on and the fragmented paths to treatment that the brand seeks to improve.

Serial Entrepreneurship and Learnings

  • Andrew Dudum shares his experience as a serial entrepreneur with previous ventures like Everalbum.
  • He emphasizes the importance of small team iteration and market testing.

"I think with everalm specifically, one of the areas that we really got good at with that company was small team iteration and market testing."

The quote highlights the key learning from Everalbum, which is the value of agility and constant testing in the market, a practice that has influenced his approach with Hims.

Marketing in a Crowded DTC Space

  • Andrew Dudum discusses the challenges of marketing in the direct-to-consumer (DTC) space.
  • Hims focuses on owning proprietary marketing channels to avoid rising costs in competitive marketplaces.

"I think with hims, our approach was very unique in that we wanted to own as much of our marketing and as many proprietary channels as possible."

This quote outlines Hims' strategic approach to marketing, which is to control as many channels as possible to maintain scalability and cost-effectiveness.

Diversification of Marketing Channels

  • Reliance on a single channel for customer acquisition is risky, and diversification is necessary from the start.
  • Building brands solely on platforms like Instagram is no longer viable.
  • Marketers should create their own inventory in unique, unmonetized spaces to achieve exclusivity and better costs.
  • Hims utilizes common channels but also unconventional ones like gym locker rooms and stadium bathrooms.
  • The approach requires first principles thinking about where the target audience is and how to engage them effectively.

"You need to have an incredibly diversified set of channels to begin with... create your own inventory, don't bid on it."

This quote emphasizes the importance of having multiple marketing channels and creating unique advertising spaces rather than competing for existing ones.

Real World Marketing

  • Digital brand saturation necessitates a return to real-world customer acquisition strategies.
  • Traditional marketing principles are becoming more relevant due to the ease of digital brand creation.
  • Customers need to encounter brands in trusted, real-world environments to enhance credibility and facilitate conversions.
  • The number of touchpoints and their nature are critical for brand recognition and conversion in a cluttered digital landscape.

"I think we are moving closer to that, yes. The reality is it is so easy to create a brand digitally today that your customers need to see you."

Andrew Dudum suggests that despite the digital ease of brand creation, real-world visibility is vital for customer acquisition and brand trust.

Touchpoints and Conversion

  • The number of touchpoints before conversion varies by brand and is influenced by demographics and regions.
  • Understanding the optimal touchpoints for conversion is a science that requires meticulous tracking and analysis.
  • Marketing strategies must be tailored to the brand's audience and conversion patterns.

"It's essentially an equation per demographic, per region... really tracking that is actually exceptionally important for you to have true clarity and transparency on the effectiveness of your marketing."

Andrew Dudum highlights the importance of understanding and tracking the specific touchpoints that lead to conversions for different demographics and regions.

Incumbent Companies vs. New Brands

  • Incumbents face challenges due to their size and established processes, making it difficult to innovate quickly.
  • To innovate effectively, incumbents should empower small, passionate teams with the freedom to test and iterate rapidly.
  • The agility of smaller teams can be a significant advantage in responding to market changes and customer needs.

"But I would kind of start with the basics, which is get a very small group of people who are exceptionally passionate about whatever product or brand or initiative they're working on and give them the freedom and the flexibility to test and iterate and get things into market and see how customers respond."

Andrew Dudum advises incumbents to adopt a startup mentality with small, focused teams to innovate and respond to the market more effectively.

Speed of Execution

  • Team size is a critical factor in achieving rapid execution.
  • Constraints can foster creativity and force prioritization of tasks.
  • A small, focused team can execute quickly by concentrating on the most critical tasks.
  • The success of Hims is partly attributed to maintaining a lean team with high ownership and clear focus.

"Constraints breed creativity... You are actually forced to prioritize every single thing you do every single day."

Andrew Dudum credits the concept of constraints leading to creativity as a driving force behind the fast-paced growth and execution at Hims.

Challenges of a Small Team

  • A small team may face difficulties in scaling and executing multiple initiatives simultaneously.
  • There is a balance to be found between maintaining a lean team and scaling the team size at the right time.
  • The decision to expand the team should be based on the company's needs and strategic goals.

"It's actually incredibly difficult. It's incredibly frustrating because we want to do so much. But by creating those constraints, you're forcing yourself to focus on the one thing that matters today and making sure that gets done."

This quote reflects the challenges and discipline required to maintain a small, focused team while resisting the urge to expand prematurely.

Operational Scaling and Customer Experience

  • Companies shipping large volumes need to scale processes or people to maintain exceptional customer experience.
  • Scaling processes through technology is preferred to make existing staff more effective.
  • Hiring is slow and considered; companies should internalize roles until it becomes unmanageable before hiring for them.
  • There's skepticism about "pouring fuel on people" as opposed to marketing, business development, or partnerships.

"We always lean first and foremost to scale the processes. Let's build technology that can make our few people more effective."

This quote explains the preference for scaling operations by enhancing processes through technology rather than immediately increasing staff numbers.

"But we know exactly what that person needs to do because we ourselves have been doing it for so long, and then we can go find the right person to fill that role."

This quote emphasizes the importance of understanding the role deeply before hiring someone to fill it, ensuring the hire is precise and necessary.

The Impact of Inflated Headcount

  • Inflated headcount is a significant challenge for companies that have raised substantial capital.

"No, I do agree. I think inflated headcount obviously is some of the biggest challenges that companies who raise a lot face."

This quote agrees with the notion that managing a large number of employees can be problematic for growing companies.

Valuation and Growth Balance

  • Raising capital at a valuation that the company can meet and exceed is crucial.
  • The unique nature of the business, like long-term retention and different margin structures, justifies the valuation.
  • The focus should not be solely on valuation but on the fundamentals and growth potential of the business.

"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 stresses the importance of setting a realistic valuation that aligns with the company's growth trajectory and capabilities.

"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."

This quote reflects confidence in the business's fundamentals and its potential for significant growth beyond the current valuation.

Fundraising and Investor Relations

  • The focus during fundraising should be on the investors' value add rather than the valuation.
  • Partnering with experienced investors who can accelerate the business is more beneficial than optimizing for a higher valuation.
  • Minor dilutive trade-offs in valuation are less significant compared to the benefits brought by the right investors.

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

This quote advises founders to prioritize the quality and value-add of investors over the numerical valuation during fundraising negotiations.

Atomic: A Venture Builder Model

  • Atomic builds companies from scratch internally, functioning like a venture fund.
  • The ideation, testing, prototyping, and market validation processes are all conducted internally.
  • Atomic combines the expertise of investors with the operational experience of operators to create companies.

"Essentially what atomic does is builds companies from scratch internally."

This quote defines Atomic as a venture builder that creates companies in-house, from ideation to execution.

Ideation and Testing Framework

  • Data-driven testing, especially in distribution, is critical for ideation and validation.
  • Testing distribution channels before fully building a brand helps ensure market reach and customer acquisition.
  • Atomic's approach involves validating the customer reach and business model before scaling the company.

"The first thing we did was actually test that we could reach customers with a value prop in a price point that made sense."

This quote highlights the importance of validating the market and customer acquisition strategy before fully committing to building out the company.

Company Building and Investment Outcomes

  • Atomic prototypes 20-25 companies per year but only builds 3-4.
  • Most projects do not return good returns; selection is based on identifying outlier opportunities.
  • Atomic uses growing data sets from testing dozens of direct-to-consumer companies to inform decisions.
  • Data includes customer acquisition costs, marketing channel costs, margin structures, and LTV projections.
  • When numbers indicate an outlier opportunity, such as with hymns, it becomes quite obvious compared to other data sets.

Well, I would tell you that 90% don't return good returns. That is far smaller. We traditionally at atomic will prototype anywhere from 20 to 25 companies per year and we'll build three to four.

This quote explains the rigorous selection process in company building at Atomic, highlighting that most prototyped ideas do not yield strong returns, and only a few are chosen to be fully developed.

Inspiration and Company Culture

  • Andrew Dudum's favorite book is "Creativity, Inc." by Ed Catmull, the co-founder of Pixar.
  • The book has influenced the structure of Atomic and the teams they build, aiming to maximize creativity and minimize bureaucracy.
  • They focus on ownership, team size, fast movement, and testing.

My favorite book is creativity, Inc. It's a phenomenal book about the way in which Pixar structures its organization, its teams, to enable as much inspiration, as much creativity as possible, and essentially to destruct any bureaucracy and processes that might get in the way of it.

This quote reflects the influence of Pixar's creative and organizational principles on how Atomic operates and structures its teams, emphasizing a culture that fosters innovation.

Perception of Silicon Valley

  • Andrew Dudum believes Silicon Valley has a lot of amazing aspects but is often marred by arrogance.
  • He suggests that the tech community needs to recognize its impact on the world while remaining humble and supportive of one another.

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

This quote highlights Andrew Dudum's critical view of the arrogance prevalent in Silicon Valley, suggesting a need for more humility and collaboration.

Personal Mottos and Mindset

  • Andrew Dudum frequently reverts to the motto "Keep it simple, stupid."
  • This principle has been a guiding philosophy from his father and applies to many areas of life and work.

My favorite motto is keep it simple, stupid.

The quote encapsulates a fundamental approach to problem-solving and decision-making that Andrew Dudum values, emphasizing simplicity as key to effectiveness.

Life-Changing Decisions

  • Dropping out of undergrad Wharton at age 19 to work on startups in San Francisco was a major inflection point for Andrew Dudum.
  • The decision represented a commitment to an unproven path and a personal challenge to succeed outside traditional career trajectories.

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

This quote describes a pivotal moment in Andrew Dudum's life that set him on the entrepreneurial path, demonstrating the impact of taking risks and pursuing passion over convention.

Handling Stressful Situations

  • Andrew Dudum's advice for dealing with stressful moments is to simply breathe.
  • Taking a moment to breathe allows the brain to evaluate options and plan the next course of action.

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

The quote provides a practical tip for managing stress, highlighting the importance of pausing and calming oneself to think clearly during challenging times.

Future Plans for Hims and Atomic

  • Hims is set to launch new medical and wellness products needed by a vast majority of men.
  • Atomic will continue to test many opportunities but build very few, aiming for impactful big businesses.
  • The iterative process of building companies allows Atomic to learn and improve with each new venture.

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

This quote indicates the ambitious plans for Hims and Atomic, with a focus on launching valuable products and selectively building impactful companies.

Personal and Professional Relationships

  • Andrew Dudum has become a great friend to Harry Stebbings since their episode together.
  • The relationship exemplifies the personal connections that can form within the professional sphere.

What an incredible founder. And I do want to say a huge thank you personally to Andrew. He's done a huge amount for me since our episode and really become a great friend.

The quote reflects the appreciation for the personal and professional support received from Andrew Dudum, showcasing the importance of building strong relationships in business.

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