Lee Shapiro is an entrepreneur and accomplished health technology executive. He is currently Managing Partner at 7wireVentures, one of the country’s leading venture capital firms investing in early-stage digital health companies supporting an “Informed Connected Health Consumer” – the epicenter of a consumer-first, tech-enabled convergence of the health and care markets. He has served as CFO at Livongo Health and President of Allscripts. In Part One of this two-part series, Lee talks about growth, sales, and the importance of leadership.
Q: Lee, many startup health tech companies founded by a visionary now face growth challenges. How can they balance the vision part with the need to operate?
A: I’ve said that vision without execution is an illusion. Especially with early-stage companies, it’s not enough to have the vision of what can be without understanding how to make it happen. An entrepreneur needs to have the introspection and insight to be able to make changes when the path they’ve chosen isn’t achieving their vision. Sometimes entrepreneurs need to partner with a great co-founder or COO to work along-side of them and to help the company pivot when needed.
Q: Many CEOs who fill the role of chief salesperson want to transition out of that role and hire a lead salesperson. What do you tell someone thinking of making that change?
A: As a CEO, you should never step away from sales. Every person’s job at the company is to sell – from the administrative team to customer service reps – everybody sells. It’s critical to embed that idea into the culture so that the entire team understands how important it is to serve the customer. The best CEOs we have in our portfolio are those that are able to build the relationships necessary to move the company forward and who have built a team that is not a clone of themselves.
Q: Great companies usually hold sales in high esteem and deliver great results. What makes for a great sales culture?
A: Some companies are sales-led and some companies are product-led. I think the reason sales-led cultures succeed, especially in an early-stage company, is because great salespeople are great listeners and great connecters. Understanding customer desires and using that knowledge to inform the way you bring a product to market is critical to being successful. Operating in a sales-oriented-culture doesn’t mean always giving the client everything they want. If you do that, you end up being a custom job shop.
Being customer-oriented is more about distilling and understanding customer needs and being able to translate them back to the rest of the organization. This ensures your team is building something that meets those common denominators that are going to resonate with the market and are doing so in a way that helps customers achieve their objectives.
Q: Looking at the health tech companies you’ve been involved with, what are the key qualities and behaviors that are most important for a leadership team?
A: There are certain skills across leadership teams that are vital. At 7wireVentures, we are Seed and Series A investors who invest because of the founding team, not necessarily because we are enamored with the company’s five-year projections (that always seem to slope up and to the right 😊). Projections are less important because so much is going to change from where the company is when we invest at that early stage to where the company is going to be longer term. We look for founders who are self-aware, humble and with the vision of what impact they want to have to benefit the market they have chosen to operate in. They need to have a growth mindset and demonstrate how they’re thinking about scaling the business. They must be resilient and persistent because they are going to get knocked down, stand up and do it all over again.
Leaders need to be open to coaching and willing to learn (even if they’ve led other companies, or have prior experience as an entrepreneur) because they may not have experience with the specific set of problems they are about to face. They need to be personally accountable and hold their teams accountable for what they set out to do.
In the healthcare context, there is a certain level of market knowledge that the leaders need to have. So often we see founders of companies who say, “We have this new model and doctors will just use it because it’s the right thing to do and the right way to take care of patients.” That may be absolutely correct, but unless they understand what’s happening in a provider office, what those providers spend their time doing, and how they get paid, it’s going to be really challenging for the founders to get the provider to adopt their solution.
At Allscripts we weren’t really in the software business, we were in the change management business.
One of our leaders at the time coined the phrase “If Docs don’t use it, nothing else matters.” You can say the same thing about nurses and other professional staff. If you can’t translate how your product is going to help them and make their lives better, then you’re going to have a difficult time gaining adoption.
Q: What are your thoughts on the key compensation levers of equity, base, and bonus for the leadership team?
A: Because healthcare is such a specialized market, we tend to overweight on the equity side and less on base and bonus. We want people to be aligned towards longer term objectives to help grow the company. When hiring for Livongo in Mountain View, California, literally blocks from Google’s campus, we had people who could have made far more money working at Google. But they joined Livongo because they believed in our mission to help individuals with chronic conditions lead healthier and better lives.
We are in a very challenging job market and the Great Resignation/Relocation has seen people moving into different roles/areas. It’s about lifestyle. It’s about mission. It’s about a sense of purpose. So people who want to make a bigger difference are gravitating towards our sector. That’s good news. We aren’t going to be able to compete based on salaries and cash compensation with some other industries, so we have to attract people who are willing to accept that health tech is a longer-term play.
Q: When you think about the leadership teams that you’ve invested in, what resonates for you when you think about the best ones?
A: The teams that have had the most success are the ones that have achieved the delicate balance between strategy and execution, along with the ability to communicate and collaborate. They have that emotional agility that allows them to be able to take the lessons they’ve learned and grow from them – there are going to be peaks and valleys that teams will go through. When you get to a certain point in a company’s development, the CEO will come to recognize that she/he has to spend time on people development and recruitment as well as time with customers and the board. The leaders who have been able to dedicate most of their time developing their team and bringing on new people are the ones that I think have been probably the most successful because they’re leveraging their whole team. That’s where scaling comes from.
Q: Speaking specifically on great collaborations, I know there must be some interesting background to how you and Glen Tullman (Managing Partner at 7wireVentures and long-time colleague) got together as your partnership has been very impressive to watch over the years.
A: We were friends for a long time before we actually started doing business together. I had emerged from a law practice and went into business with a client that was an entrepreneur. Glen had joined an entrepreneurial company that was early stage, and we discovered we both really enjoyed building companies. And that’s how we found our way towards meeting other entrepreneurs and making small investments and getting involved in helping them grow their businesses.
In the second, and final post in the series, Lee will discuss understanding the health tech market, charitable giving, and learning from regret.