20VC The Core Lessons From Building a 150 Startup Angel Portfolio, Why Founders Who Angel Invest Have Such Strong Advantages and Why The Lean Startup Makes Less and Less Sense Today with Adrian Aoun, Founder & CEO @ Forward

In this extensive conversation on "The 20 Minute VC," host Harry Stebbings interviews Adrian Aoun, founder and CEO of Forward, a revolutionary healthcare system. Aoun delves into his journey from a self-taught software developer to a serial entrepreneur and angel investor. He discusses the importance of focusing on problems rather than solutions, hiring smart people, and learning quickly to succeed in startups. Aoun also shares his insights on the healthcare industry, emphasizing the need for innovation and the potential to create new markets. He underlines the significance of building companies with a mission beyond profit, ensuring teams are motivated by more than just money, especially during challenging times. Additionally, Aoun offers his perspective on the evolving landscape of consumer brands and the impact of regulations on startups, arguing that regulations are often less daunting than perceived. Finally, he reflects on the benefits of angel investing, both as a way to give back to the startup community and as a means to gain invaluable knowledge and experience.

• Harry Stebbings is the host of the 20 Minute VC podcast.
• The episode features Adrian Aoun, founder and CEO of Forward, a healthcare system.
• Adrian Aoun has a history of successful ventures and is an active angel investor.
• The episode exceeded the usual 20-minute length due to the quality of content.
• Adrian has raised funding from notable investors and has been recognized by Time Magazine.
• Adrian’s background includes working at Google and founding an AI company.
• The episode is supported by Movidium and Wonder Capital.

So I named the show the 20 minutes VC. But episodes like this one today make me rue that decision. So this is the 20 minutes VC with me, Harry Stebbings at H stepbings 90 96 on Instagram.

Harry Stebbings introduces the show and expresses that some episodes, due to their quality, warrant an extension beyond the typical 20-minute format.

With that in mind, I'm thrilled to welcome Adrian Ayoon, founder and CEO at Forward, a healthcare system combining worldclass doctors with advanced technology to empower patients to take control of their health.

Harry introduces Adrian Aoun, highlighting the innovative approach of Forward in the healthcare industry.

• Adrian began programming and creating software at an early age.
• He started his first company at 13 and sold it at 22.
• The sale of his first company introduced him to the world of startups.
• He emphasizes the importance of focusing on problems over solutions.

Yeah, so it's kind of interesting. I started in the world of startups almost accidentally, right?

Adrian describes his unintentional entry into the startup world, which began with a passion for computers and software development.

• Focus on identifying and understanding problems rather than jumping to solutions.
• The solution may change multiple times; the problem remains constant.
• Hire intelligent people who can contribute to finding solutions.
• Learn quickly and adapt; increase the rate of learning to improve products and services.
• Forward opened a full doctor's office within 90 days to learn and iterate rapidly.

And one of the first is to always pick problems over solutions.

Adrian emphasizes the significance of concentrating on problems, as this approach guides entrepreneurs towards sustainable and adaptable solutions.

• Market size can be misleading; focus on the value creation potential.
• Healthcare is a massive industry, but the market for doctors' offices is smaller.
• Forward views the doctor's office as a gateway to a new healthcare system, representing a growing market.
• Evaluate the potential to create value in both the short and long term.

Yeah. So one of the problems of just focusing on the market is that oftentimes you don't know what the market size is.

Adrian discusses the challenge of market sizing and suggests focusing on the inherent value of the problem being addressed rather than the current market size.

• Ideas for startups can be strategically thought out rather than purely inspiration-based.
• A structured, analytical approach can map out an entire space of problems.
• The MECE (Mutually Exclusive, Collectively Exhaustive) framework helps in systematically identifying opportunities.

Speaking of that kind of idea creation process and kind of identifying that problem, we had Marco Thumbtack on the show recently who said that too much criticism is placed on founders who strategically think about the right company to start.

Harry mentions a previous guest's perspective on strategic idea generation for startups, leading to a discussion on the process-based approach to founding companies.## Data-Informed Approach vs. Data-Driven Approach

• Adrian Aoun emphasizes the importance of being data-informed rather than data-driven.
• Data should be used in conjunction with intuition and first principles reasoning.
• The data-informed approach helps in understanding complex systems like healthcare.

"I don't want to be data driven, I want to be data informed, which means I want to take the data at hand and I want to use it to combine into this notion of intuition that I have and kind of first principles reasoning."

The quote outlines Adrian's preference for a data-informed approach, which involves using data to enhance intuition and first principles reasoning, rather than letting data solely dictate decisions.

• Adrian started Forward by analyzing the healthcare market after personal experiences with its shortcomings.
• He utilized a methodical approach to understand industry trends, incentive alignment problems, and technological issues.
• The analysis led to the conclusion that solving primary care could significantly reduce downstream healthcare costs.

"So we did the kind of me see approach, right? You start to understand. You read a lot of books, you talk to a lot of people, and you start to map out where is the industry going?"

Adrian describes his comprehensive approach to understanding the healthcare industry, which involved extensive research and discussions to map out industry trends and issues.

• Adrian's background as a consumer product expert informed his intuition about designing the doctor's office experience.
• He believes in the interplay between data-informed strategies and consumer intuition.
• The business model for Forward was shaped by the misalignment of incentives in the healthcare industry, leading to a direct-to-consumer approach.

"I'm a consumer product guy. I'm a consumer at my core. So I've got some intuition as to what should that doctor's office look like, how should it feel, how should it act?"

The quote reflects Adrian's confidence in his consumer intuition, which guided the design and feel of the doctor's office experience at Forward.

• The Internet has increased consumer leverage and is democratizing various industries.
• Consumers can increasingly bypass traditional intermediaries, such as buying directly from manufacturers or voting on legislation online.
• The growing power of consumers has made the concept of a consumer brand more important and influential.

"The Internet is a democratizing force, and it allows us to kind of be in charge a little more of the world that we live in."

Adrian discusses the impact of the Internet on consumer empowerment and the resulting importance of consumer brands in today's market.

• Adrian Aoun views the lean startup methodology as suitable for some companies but not all, especially in complex industries.
• The methodology is less applicable in highly regulated and systems-oriented markets like healthcare.
• Forward required a vertically integrated approach from the outset to address systemic problems.

"You can't go after systems problems until your mvp, your minimum viable product, is a version of the whole system."

Adrian argues that for complex systems problems, like in healthcare, a comprehensive MVP that represents the whole system is necessary, which deviates from the lean startup methodology.

• Adrian initially perceived regulation as a barrier but discovered it was manageable upon closer inspection.
• Regulation can be categorized into three types: outdated but manageable, reasonable and necessary, and overly burdensome.
• In Silicon Valley, there is often a knee-jerk reaction against any regulation, but most regulations are not as inhibitive as they seem.

"There's tons of mom and pop doctors offices. If they can do it, why can't we? What am I missing here?"

Adrian's realization that small-scale operations can navigate healthcare regulations suggests that larger, innovative companies like Forward can also manage regulatory challenges.## Adaptation of Regulation

• Regulation is not as prohibitive for startups as commonly perceived.
• There's a need to adapt regulation more quickly, but not eliminate it completely.
• Startups can still thrive despite regulatory environments.

"ve to figure out better ways to adapt regulation more quickly, but I don't think that means we need it to be entirely gone."

This quote emphasizes the importance of adapting regulation to changing times without suggesting a complete removal is necessary. It suggests a balanced approach to regulation that allows for innovation and startup growth.

• Investors may be wary of startups dependent on external regulatory bodies.
• Regulated industries tend to progress more slowly, impacting growth curves.
• Long-term investments in regulated industries can yield high returns despite slower growth.
• Patience and a larger portfolio can mitigate risks associated with regulatory dependence.

"I'm always extremely nervous investing in companies where there's this external dependence on this kind of meta body outside of your control and Ford's control."

Harry Stebbings expresses concern about investing in companies that rely heavily on external regulatory bodies, which can be unpredictable and out of an investor's control.

"But I wouldn't think about it merely from this notion of regulation versus not. I would just think about it from this notion of how long term is the bet that I'm making, how long term is the investment that I'm making."

Adrian Aoun suggests that investors should consider the time horizon of their investments in regulated industries, rather than focusing solely on the aspect of regulation.

• Angel investing is seen as a way to pay it forward within the entrepreneurial community.
• Angel investors often invest to support and mentor new founders, rather than for financial returns.
• The knowledge gained from a diverse portfolio of startups is invaluable for making business decisions.

"The truth is that the reason I, angel invest, is twofold. The first is to pay it forward."

Adrian Aoun explains that his primary motivation for angel investing is to support other entrepreneurs, as others have supported him in the past.

"Knowledge is power, right? And so every kind of issue that I face on a daily basis at forward, should we actually give this person a signing bonus or not? Should we structure this deal in this way or not?"

Adrian Aoun discusses the practical benefits of angel investing, which include gaining insights and knowledge that can be applied to his own business challenges.

• Predicting successful startups is challenging, and investment decisions should be based on the founder and the problem being addressed.
• A power law distribution exists in startup outcomes, with a few successes driving the majority of returns.
• Portfolio construction involves deploying capital into the most promising startups without overly focusing on formal investment mechanics like prorata rights.

"The first thing that I've noticed is that I'm incredibly bad at predicting which companies are going to do extremely well."

Adrian Aoun admits the difficulty in predicting startup success and suggests that investment decisions should be based on the founder's capabilities and the significance of the problem they are solving.

"The second thing that I learned since looking back upon my portfolio is that there's a massive power law distribution of outcomes, right?"

Adrian Aoun highlights the power law distribution in startup investing, where a small number of investments can generate outsized returns, influencing his approach to portfolio construction.

• Being an angel investor provides a unique perspective on the behavior of VCs during good and bad times.
• The true character of a VC is revealed in how they act when a company faces challenges.
• Good investors support and don't exploit companies during tough times.

"Absolutely. So one of my favorite parts of getting this kind of information advantage of being inside, being an investor in all these portfolio companies, is that you actually get to see how vcs act in the good times and in the bad."

Adrian Aoun discusses the insights gained from angel investing, which includes observing the conduct of VCs in various situations, providing valuable lessons on choosing the right investors for one's own ventures.## Angel Investors and VC Dynamics

• Angel investors provide a united front to protect founders from potential exploitation by bad actors in the VC industry.
• The VC industry has seen a decline in bad actors over the last decade.
• VCs have diverse investment criteria, including depth of technology, percentage ownership, and unit economics.

"One of the nice things that angel investors can do to help founders is to kind of give them almost a little more of a united front. It's kind of just a little check and balance on maybe a bad vc to say, hey, you can do that."

This quote highlights the role of angel investors in creating a support system for founders against potentially exploitative venture capitalists.

"Now, the other thing to understand is that there's not a one size fits all in terms of what vcs are looking for."

This quote emphasizes the diversity of VC interests and the importance of finding the right VC-investor fit for a company's specific needs.

• Reading "Sapiens" can provide insight into what makes humans unique, such as our ability to believe in abstract concepts.
• Abstract beliefs form the foundation of economies, societies, and advancements like blockchain and Bitcoin.

"Sapiens [...] does a fantastic job reminding us about what makes us as humans unique, which is our ability to collect around and believe in abstract concepts."

This quote summarizes the key idea from the book "Sapiens" that human uniqueness is rooted in our collective belief in abstract concepts, which has enabled the formation of complex societies.

• Society excels at short-term thinking but struggles to envision a distant future.
• Embracing visionary thinking can lead to a more optimistic and ambitious approach to the future.

"To dream, imagine, or believe in concepts further than our eyes can see, right."

This quote encourages thinking beyond the immediate and obvious, to envision possibilities that are not yet within our sight or current understanding.

• Paying for talent should involve providing opportunities, a positive work environment, and alignment with the company's mission, rather than just financial compensation.
• Companies that overemphasize monetary compensation may struggle during challenging times, as employees may lack commitment to the mission.

"I think that it's fine to pay up for talent in almost every way but money."

This quote suggests that non-monetary aspects of a job are more critical in attracting and retaining talent who are genuinely invested in the company's mission and values.

• Startups face daily challenges, and the likelihood of positive outcomes is often less than 50%.
• Embracing the messiness of innovation and staying humble are key to navigating startup challenges.
• Belief in the core mission can help persevere through difficult times.

"The shit hit the fan moments occur almost every day in a startup."

This quote candidly describes the frequent and inevitable challenges faced by startups, reinforcing the need for resilience and adaptability.

• The goal is to build a scalable healthcare system that can reach billions of people.
• Healthcare needs to leverage technology, expand services, and utilize AI to become more accessible and affordable globally.
• The next five years will focus on expanding the reach and accessibility of healthcare services.

"My goal is to build the first at scale healthcare system."

This quote lays out the ambitious vision for the future of healthcare, aiming for a system that can operate at a global scale and serve billions.

• Adrian Aoun has provided personal guidance and support to Harry Stebbings.
• The podcast encourages following both individuals on social media for further insights.

"First, a huge thanks to Adrian. Such a fantastic show. But also on the personal side, he's provided a huge amount of guidance and support to me."

This quote expresses gratitude for the professional and personal support received, highlighting the importance of mentorship and guidance in professional growth.

• Brands are seeking smarter, faster ways to create and distribute digital content.
• Movidium and Wonder Capital are platforms that facilitate these needs for brands and creatives.

"Brands are now turning to smarter ways of creating video and digital content to fit new distribution channels, looking for faster turnarounds while maintaining or improving the quality."

This quote points to the evolving landscape of content creation and distribution, where efficiency and quality are paramount.