Latest / Exit Algorithms / Why a Bootstrapped Sale Beat a Billion-Dollar IPO | Tony Medrano, LongevityPlan.AI (#111)
Transcript
- Pete Vera, Exit Algorithms: Welcome to Exit Algorithms, the podcast where we decode what it really takes to unlock growth, streamline operations, and prepare your business for a high value exit. I'm your host, Pete Vera, and today I'm honored to be joined by Tony Medrano. Tony is a serial operator behind two major exits, including helping drive a public company to a Goldman Sachs led IPO and selling an earlier software company to a strategic buyer. At a premium multiple, after raising over $25 million from top-tier Silicon Valley venture venture capital firms. Now, Tony is the CEO and co-founder of longevityplan.ai, a longevity-focused AI health platform. Tony, great to have you here. Welcome to the podcast. Tony Medrano: Yeah, it's great to be here, Pete. Thanks for having me. Pete Vera, Exit Algorithms: Absolutely. Yeah, Tony, I know we were talking a bit on the on the pre show here, but you mind giving us maybe some a high level a little bit about your background and and career journey. Tony Medrano: Yeah. well I've been On an entrepreneurial journey for about 30 years now. I started at Stanford after after military service when I was a grad student there. Started my first company out of my dorm room and really never looked back. I've always been in technology, more recently moved to health tech and you know, molecular diagnostics to artificial intelligence and peptides. But I've had a couple successes and a couple failures, and you know, bootstrapped companies and as well as venture capital funded companies. So, you know, one that was acquired by a strategic partner that we bootstrapped, and another that was a glamorous IPO that didn't make as much money as the unglamorous bootstrapped company that we, you know, gridded through for years. So all kinds of war stories, good and bad. Pete Vera, Exit Algorithms: Yeah. yeah. Do you mind starting and and telling us a little bit about that that journey? we can start off maybe with the, you know, the IPO first and any any lessons, you know, learned from that experience and and that that first exit. Tony Medrano: Yeah, absolutely. So the the IP I c I joined a company in in twenty twenty. that had a great molecular diagnostics solution in zero in revenue. It was 100 scientists in the lab. the investors I worked with at my previous company, they were on my advisory board and board of directors, and they said, Hey, this company has a great solution. They need somebody with your experience, kind of a mini CEO, to take over sales and just figure out how to sell to the enterprise. Because my my expertise has always been enterprise sales. I'm not a business to consumer type of person. I like working with with other businesses and solving the business problems and having steady revenue that a business can provide. and Been able to do that across industries. So with this company, I jumped in and immediately started landing customers in the sports area. NFL, NBA, Olympic team, the FBI for first responders, the Iditarod race in Alaska. Google, Netflix, all of their employees used our solution. So built the revenue up, you know, $500 million in ARR that was myself and then a small team that I built to delegate some of the account management to. The founders it was their first company they had founded. They'd been working at it for 10 years in a lab, developed a great solution, and had their eyes fixed on a glamorous IPO. I frankly advised against it because I'd been around the block a couple of times. and knew that the dangers of drinking your own Kool-Aid a little too much and thinking that your solution was gonna be everything, you know, to everybody, as opposed to a more niche solution that you could drive, be profitable, bank the money, and reduce risk. they, you know, they and the investors and the board that they assembled were all people that were drinking that business to consumer type of Kool-Aid. So they wanted to spend more money on marketing like Super Bowl ads and those kind of things. When you know, when a founder gets his ego involved, it's hard to get him away from that. You're Pete Vera, Exit Algorithms: Yeah. Tony Medrano: and they Decided on the IPO path. We went through an IPO, had you know Goldman Sachs, Morgan Stanley lead, it was a few billion dollars in market cap, and then the market crashed. The FDA Came down negatively with the follow-on solutions because they were more complex than the original solution. And the manufacturing plants were owned by the company and were frankly just too large, were dependent upon a high amount of volume that was no longer there. And when you own the plants, you gotta keep them busy. There's a lot of rent, you know, a lot of capex there. so the the company, you know, quickly crashed. Employees weren't able to sell as soon as the investors are because with IPOs, you're locked up for six months. Investors, well, investors aren't. So they can see the writing on the wall, sell. Employees are stuck holding the bag with narrow windows to sell even after the six months. so it wasn't as great of an exit, although it was glamorous for a time, as the company before, where I was CEO of a a small bootstrapped 10-person mobile app platform company that I came in as as CEO to grow the company and look for a strategic buyer. there were only 10 of us employees at the time. and I was very you know I still am very very gritty and you know hands-on that company I was not only the CEO, but the head of marketing, the head of sales, the head of finance. Pete Vera, Exit Algorithms: Mm. Tony Medrano: It was a it was a pretty hectic job. but it was super fun. You know, we did have a lot of customers. So we had good revenue and what we needed to do was get bigger customers. I put that because of my enterprise sales background, I thought I knew how to do that. And it turned out that I did. I was able to land British Petroleum as our first enterprise customer, which was a feat that nobody would have believed had I told that to them. But, you know, I I had a plan. I I knew that we needed to establish credibility early. I mean, it took about a year, you know, establishing some credibility Pete Vera, Exit Algorithms: Yeah. Tony Medrano: in the market even before British Petroleum saw us. Then came in. This wasn't an outward cold call. This was good SEO, good content distribution. making sure people knew my expertise and I developed expertise in this area, and then effectively waiting for a prospect with budget and a need to come to us. and it worked perfectly, exactly like like I had planned. I had no idea it would be British petroleum or even the oil industry, but I did think oil and gas and pharma were the two big things that needed our solution. So we laid the trap for them that way with good content Pete Vera, Exit Algorithms: Gotcha. Tony Medrano: marketing. And And when they came in, I did what really what I've always done since I started my entrepreneurial career, which was then call an advisor, get somebody with expertise in that industry. senior executive and put them on my board of advisors and ha you know, learn as much from them as quickly as possible about how to get something that monumental done. luckily I knew the former chief information officer at Chevron. and we were talking to BP. so I was able to get some of his time and expertise. And I learned everything about the oil industry as fast as I could and impressed the hell out of the B BP folks. They they signed Pete Vera, Exit Algorithms: Thank you. Tony Medrano: a multi year agreement with us for, you know, well over six figures and I mean, it was our first enterprise deal. It was our first deal in that industry. And it was extremely successful. I'm still friends with the the British petroleum executives that I worked with with there because we delivered for them. And I think that's the a great lesson for entrepreneurs too. You have to deliver, right? So we d do all these things to get the client, but make sure some of them are so you can keep the client too. Pete Vera, Exit Algorithms: Yeah, absolutely. yeah, so you did a IPO first time around, then sold to a strategic buyer the second. Was was there any reason you you chose to, you know, to sell to a strategic instead of go for another public offering on on your second second time around? Tony Medrano: Yeah, the well the chronological order is different. The the strategic sale was earlier. That was about two thousand twelve. And the IPO is two thousand twenty-two. so I my my entrepreneurial experience starts first in two thousand with a company that I started out of my dorm room, raised venture capital for at Stanford, raised venture capital for from soft bank venture capital. both a series A and a series B. We'll call it the traditional Silicon Valley you know workflow. that company, where I was president and co-founder, we grew it to 120 people, dozens of customers, were the darling of Silicon Valley, and then the market crashed. And We went out of business. We couldn't raise a third round. We were a large platform play. We were nowhere close to being profitable. So my experience was colored by that failure at the beginning of my career. after that, I went through the strategic acquisition. and that was a company that where that was the best option. The The 10-person company had no chance at growing to be a hundred million dollars in revenue to be worthy of IPO scale. it really wasn't even right for outside investors. So it was fortunate that there was no pressure from the the founders to raise outside capital or or go that big, because that wouldn't have made sense at all. And that's one of the first things I I work with a lot of founders over the years, you know, as an advisor, board member, and one of the first things that can be a turnoff is if a founder is unrealistic and just has no sense of self-awareness. So for a company that small in a small market, it's bootstrapped its way to profitable, has a great solution. To be unrealistic about their potential exits is in immediate turnoff from somebody to somebody with experience. but but this company, where the founders brought me in as as CEO, was close to Clashfield positive and I was able to grow it knowing that there would be exit to a strategic partner would be the best and really only outcome. W the other alternative would be to run it forever and milk the the cash out of it. It to be a cash cow. But that wasn't as appealing of a solution because there wasn't that much cash. It was a technology company. So my thought was, you know, we could get a good multiple by selling it to a strategic partner that needed a solid technology in this area. And that turned out to be exactly, exactly true, and exactly who how we sold it. Pete Vera, Exit Algorithms: Yeah. awesome. And and you mentioned a a board of advisors. how did you select those those advisors? And yeah, has that had a big impact on you know, in terms of t timing and and the terms of your exits? Tony Medrano: Yeah, absolutely. So I've done this consistently from day one at my first company. There's always select a board of advisors that adds credibility to the company, that is a pleasure to work with, that is aligned with the values of the company, and that really is a team of rock stars that I can call once in a while and ask their advice on. you know, I don't waste their time, I don't put them to to work doing unnecessary things. They're they're there one for credibility to show. people that I as the CEO can get a Rockstar Board of Advisors like the you know CIO of Chevron, right? and it's it's worked. I did that for the the the first company in 2000. largely from classmates at Stanford and Harvard. I I went to Harvard undergrad on a military scholarship as we talked about before the episode. And then afterward Stanford. you know, had some great leadership skills in the military, but needed to learn about business. Because I I knew how to how to run a division on a on a ship, manage engineering operations, but not how to do a spreadsheet. So In all of those endeavors, even the military service, I developed a great network. So You know, the power of your network, wherever you develop it. I mean, my CIO of Chevron was a random high school friend's father who was a scientist, and there were there was probably the only scientist in my high school because it was wasn't full of scientists. It was in sort of east of East LA blue-collar neighborhood. but y this early childhood friend happened to be the CIO of Chevron, and I had just developed good relationships throughout my years. So a lesson for entrepreneurs, develop those relationships, put those key people on your advisor. Don't put schmucks there. That's embarrassing. You want to put people with great resumes and people that know you and will help you, not people that want to charge you money and do things like that. and it it's worked in every single exit because not only can they give advice but they have networks and they develop friendships there deeper too. My my current board of advisors is filled with you know 50-year-old Harvard and Stanford MDs and PhDs that I I knew throughout my my time there. And now they're they're practicing doctors and scientists and are perfect for my endeavors of helping people down a a peptide and health optimization journey. Right? They give me great scientific advice. Pete Vera, Exit Algorithms: Yeah. that's great advice. Yeah. Looking back now, how do you recommend business owners prepare for for an exit? No, maybe what are the top two or three things they can do to get their get their business exit ready? Tony Medrano: Yeah, great, great question. you know, it starts early and I do this going in from from day one. Prepare for an exit by having everything in order so that somebody can do it when you're not there. Making sure everything makes sense and it is repeatable, the processes are outlined, and it is something that can scale. It's not all dependent on you. So you know, build it to scale. Then also make sure you're aligned and in the right market that You have to map out the market with strategic buyers like I did at the the small company where I was acquired by a strategic partner. I I mapped out an ecosystem of five or six potential buyers that could want our software solution to plug into their portfolio. You know, if if If you're selling tires, you want to look at who's building cars because that's who's probably gonna be interested in you. You know, and it really is kind of that simple. But you have to map map it out and not just think somebody's gonna buy you because you're great. No, somebody's gonna buy you because they need tires for their cars that they're manufacturing, and you make tires, and the tires you make are different from other companies because X, Y, and Z, and that aligns with the kind of tires they they make. They make You they make jeeps, you make tires for snow and mud. Great. That's a great alignment. Now you want to run the business in a way that'll add to them by increasing profit margins, by having strategic deals that they didn't get that they could use. So they're gonna buy not just the company, but they're gonna buy the deals that you have. some people look at it as to surface level when it comes to that aspect. It's gonna be a lot they're gonna look very deep at everything in the company and want more than just your brand and logo. That's almost useless. It's really what revenue streams are coming in, what technology and what advantages are they buying along with it. Because all the people may leave and they're probably gonna s you know let the brand fade away in favor of theirs. Pete Vera, Exit Algorithms: Yeah. That makes sense. Yeah. And and I love the idea, you know, starting with the the end in mind, knowing who you're gonna sell to. what did you how did you approach growing the company, you know, to to scale and to eliminate yourself as as the bottleneck, you know, as you as you got grew bigger and bigger. Tony Medrano: Yeah, there's a lot of ways to do this operationally. And you know, I've run large and small teams. one of the first things I I do and I'll use the company that I sold to the strategic partner, the ten person mobile app platform company, where landed British petroleum. We had about four thousand customers when when when I joined as CEO. processes were really important and getting bigger customers was really important. So I focused right away on creating processes for account management and growth. So we could show that average revenue per customer was going up. So we weren't just acquiring new customers. In in some franchise business, they look at same store sales growth, right? Is that store actually growing or are they just adding new stores that sort of mask other other troubles? So if you get same store growth, you know that something's going right in the stores with the product. I made sure we had that by giving more of a focus on account management, retention, growth, upsell, increasing prices, increasing value, and focusing on bigger clients, being able to land those. And to land those, you have to be better and be bigger and and do more. So it's a lot, it's a lot of work. I'm also made some team changes. I I replaced some mediocre team members with some some better team members that could scale and land bigger clients and handle bigger clients. So that's always challenging. you know, when people know the product really well or know the company really well, but they're maybe not polished enough or not skilled enough to learn fast enough about a new market. there were, yeah, some changes there that needed to be made. People with great expertise that were great people, but just did Have the enterprise grade skills. and then you just gotta work at it every day, it doesn't happen quick, it takes years, so you just repeat, repeat, repeat, and for years, and then I I've always viewed it as opposed to trying to sell the company, like cold calling people, asking people to buy, which is a big turnoff, that'll almost tank your company. I viewed it as more like a beauty contest. What I was doing was making the company pretty because somebody was going to be watching. I don't know who, and I don't want to turn them off by, you know, being Mr. Sales guy and trying to sell them the company, which is a you know terrible signaling to give. But I Pete Vera, Exit Algorithms: Mm. Tony Medrano: knew that if I did things right and put all the things in place that I wanted that. somebody would be interested in buying. And in fact multiple people were at the same time. Pete Vera, Exit Algorithms: Yeah. that's that's excellent advice. yeah, as a you know a sales expert, deep industry experience in sales, especially enterprise sales, what is your best sales advice? Tony Medrano: Best sales advice would be always add value from From day one of the first conversation, if you're adding value and helping the other person out in any way possible, helping them with their life, with their career, with their job, with their evaluation process, you'll gain respect and they'll start listening to you. If you try to sell or start pitching a product and talking about features and benefits and technology, and you're gonna turn them off. so don't sell too hard. it's you know, it depends on what you're selling. If you're at a street market and you're selling a commodity, It's a little bit different, but that's something I wouldn't want to sell. And I I you know so what you're selling should be valuable and you should be valuable. So if when in doubt, make yourself more valuable. Pete Vera, Exit Algorithms: Yeah. that's great advice. That you could have gone in a lot of directions. I that was really good, really succinct. yeah, yeah, you know, an another major theme, Tony, of this podcast is AI. I'd love love to hear your your perspective on it. How how are you personally using AI and and how do you see it affecting the industries you're in the most? Tony Medrano: Yeah, I use AI all day, every day. I mean I I in fact started a AI company out of my living room in twenty sixteen before Chat GPT, right? we optimized conversations for the health and wellness industry brands to their customers via chat. It was even in chat API. This is before large language models, before the invention of the Transformer, that really kicked off the AI boom. so AI now, from a consumer perspective, most people think of AI as like it's chat GPT or it's these tools that are AI enabled. That's really just the consumer version of it. AI goes much deeper than that. There's there's robots, AI, there's imaging AI, there's all kinds of AI. Today I I use AI because it's extremely accurate, extremely fast, and inexpensive. And I can do research that would have taken me months and tens of thousands of dollars I can do in in an afternoon myself. and it saves me a tremendous amount of time. So I have had to learn a lot of AI dashboards. For personal use and for business use as the CEO of Longevity Plan. Now, Longevity Plan is an AI company. So we have created a digital twin out of AI that coaches and individuals can use to biohack themselves. To to, you know, we base this off of what I experienced when I work for the NFL, who has made digital twins of each of its players in order to optimize their health, prevent injury. You know, optimize performance. And it's really the same principle. We allow our users to upload their wearable technology. They can upload their lab reports, a genetic test that we offer, their VO2max, their peptide protocols, and then ask their digital twin what. peptides would work best for them. And based on their genetic analysis and some of their other, you know, health biomarkers they've uploaded, the digital twin can tell them. So it saves them money. They don't have to treat they don't have to do a physical experiment on themselves. They can experiment digitally. And and that's the goal is to allow people to biohack, but safer and cheaper than than they would before. And you know, we offer them peptides. We we don't we don't want to sell them anything that's not effective. We want to help them in that journey. To bipeptides that are most effective for them based on their their genomic profile and their lab work. Pete Vera, Exit Algorithms: Hmm. Wow. Yeah, that that's a fascinating use case. I haven't haven't heard of that before. That's awesome. yeah. And you Tony Medrano: Yeah, it's lot of fun. Pete Vera, Exit Algorithms: know, as how did you develop the develop the the company and you mentioned you have a board of advisors. It was it who who came up with the the idea? How did you yeah, how did it grow into what is today? Tony Medrano: Yeah, the the idea really it it it came to me as a combination of my my personal my personal hobby, which is running Iron Man triathlons. I've s started doing that in twenty nineteen and I was forty eight years old. just a great hobby, but pretty difficult to learn how to run, swim and bike so long. I mean I knew how to run, but I l barely knew how to swim and cycle. So I had to learn those and then to do at great distances. We're talking a sixteen hour race of a hundred and forty miles. Right. The swimming is 2.4 miles in the ocean, and that's just like 10% of the race. Then you have to bike 112 miles and run a marathon all in the same day. And for Olympic athletes, that's fine. You know, they can do that. For regular people, it's pretty tough. So you gotta think about it before and plan. And AI is a great tool. And you know, down my because of my fitness journey starting then in 2019, friends, classmates, peers were asking me, like. Lots of fitness questions. you know, how can I lose some weight? How can I train for my first triathlon? I have this injury. How do I recover? you know, I'm interested in this healthcare solution or peptides. How can I how can I optimize it? What should I do? So it was getting giving all kinds of advice. I frankly just wanted to combine all that into a business. I'd started an AI company before, talking with health and health and wellness brands. And you know, Stanford Business School asked me to speak at one of their events about this topic. I was like, Yeah, well, everybody's asking me to start this company that I've been. Thinking about. So it's time to start it. And so it was a real easy, natural company to start building solutions that I am using myself, right? So everything that we're offering, I'm utilizing on a daily basis. So I know exactly what it does, why it does it, and I'm there talking with our customers and the coaches, people wanting transformations. I'm able to give it to them, but not just through advice. I'm able to help the coaches with their clients by supplying peptides and by supplying AI that solves their problems and makes their life easier. So it's really just a natural evolution of what I was doing. And I'd say those are the best companies. When you get pulled into something that you're right there already. You know, it's not an idea for a better mousetrap and you really don't know about the mousetrap industry. But when you're right there on the front lines you can you can see it and it's a easy step. Pete Vera, Exit Algorithms: Yeah. Definitely. incredible. Yeah. As a a longevity health expert, how do you how do you structure your day, you know, to maybe to get the most amount of productive hours over the long term, you know, without without burning out. Tony Medrano: Yeah, great, great question. well, right now I'm training for an Ironman triathlon in November in Cozumel, Mexico. this morning is a normal day. I mean I got up before 4 a.m. I I put in four hours of workout time, one hour in the weight room, three hours of cardio, you know, including a little time in the pool swimming. And then jumped into work. And it gives me more energy. You know, because I've been doing it for a couple months, I'm used to that much workout before. It gives me more energy through the day. I mean, I'm psyched and I'm, you know, flying and getting extremely productive. And then about three or four o'clock in the afternoon, because I've been up for, you know, more than twelve hours by then, I start to fade a little bit. And, you know, luckily I'm West Coast time, so my meetings and traffic sort of naturally fade out in the evenings and I can do some personal things before I get to bed real early to recover from my workouts and try to get, you know, enough sleep to to do it again. And then I try to do that consistently, eating really clean and normal, you know, fresh meats and vegetables, and Peptides have reduced my drinking by about 99%. I used to like beer, but it doesn't taste good anymore, which is a unexpected and very fortunate thing for my not only my weight loss, because I've lost 40 pounds since I started started peptides and have been able to bounce back and recover from my four hour workouts quicker than ever. And I'm fifty-five years old. it's It's spectacular. So all of those things have really helped my longevity journey. It's a it's a tool that should not be neglected or it is getting bigger for a reason because peptides work for a lot of people. There are a lot of different kinds, not all of them work. they do different things and have different safety profiles and scientific you know data behind them. But many of them are extremely powerful and solid and safe and they worked for me. So that that has really helped fuel my longevity journey because I'm not looking for a short term fix or an an Adderall like solution. I wanna run Iron Man triathlons into my sixties and seventies. So we I I need something that a lifestyle that is good and healthy. Pete Vera, Exit Algorithms: Yeah. that's awesome. Yeah, you're you're a poster child, you know, example of of how how well how well these work. D do you find it gives you more energy throughout the day? Tony Medrano: yeah, for sure. I mean I get up before my alarm clock. I did this morning, half hour before my alarm clock, and it's set at four AM, you know. I pop out of bed excited about what I'm gonna do, my workout, get that done well, my Peptides for mental acuity are not I don't drink coffee anymore because I don't need to. It's a wonderful. I have a nice even energy throughout the whole day. No crash, no stomach, you know, hurting because of coffee, no you know, panic or anxiety. It's wonderful. Pete Vera, Exit Algorithms: Man. Yeah. you're you're making me wanna wanna give it a a shot here. That's that's awesome. Tony Medrano: Yeah, we we have we have an affiliate program where coaches, podcasters, anybody will Get 20% of revenues for anybody they refer, and the affiliates, once they sign up, get 50% off their first peptide purchase. So feel free to sign up and tell your listeners to sign up as affiliates to get 50% off their purchase, and then they can refer it to friends and collect 20% per life on any peptide purchases. We we believe in the product, and I've tried all of the peptides we offer on our site myself. Pete Vera, Exit Algorithms: Yeah. Tony Medrano: I wanted to only recommend things that I, you know, can vouch for. Pete Vera, Exit Algorithms: Yeah. awesome. I'll happy to leave a link in the show notes. That's that's great. amazing, Tony. it's been a incredible episode. We probably could keep talking for a long time, but I'll I'll try to keep it tight here. la last question for you. And you touched on this quite a bit, but if you had to leave listeners with one practical tip for preparing for their business for a high value exit, what would that be? Tony Medrano: Would be build a great ecosystem. And that can be partners. Customers, advisors, I think all those three areas we've we've touched on. Those are the major three buckets of the ecosystem, in my view. And you do that on a daily basis. It's not something that happens overnight or all at once. And there can be big partners, customers, or advisors, but it's a a daily ground game. and that will get you not only to an exit, but to profitability. to success, to fun, to long term benefits, even if the company doesn't go well. If you've taken care of customers, partners, advisors, you'll have something of value forever. Pete Vera, Exit Algorithms: Yeah. great great advice. You give some amazing tips and and strategies this episode, Tony. So glad to have you on. Where's the best place listeners can find you, learn more about you and your in your business? Tony Medrano: Yeah, you can find me on LinkedIn. I'm the Tony Madrano with triathlon gear on. And and you can find me on our website, longevityplan.ai. Pete Vera, Exit Algorithms: Awesome. I'll leave that in the show notes. Thank you so much for coming on today, Tony. It was a great conversation. Tony Medrano: Yeah, great to chat with you, Pete. Thank you.