Lance Hill’s health tech startup is one of those few companies that appears to have had the incredibly fortunate of enjoying a huge surge in demand thanks to the recent disruptions brought on by the coronavirus and how it has accelerated the use of technology, new needs and hiring changes. His company, Within3 has acquired $100M financing from top-tier investors like Silversmith Capital Partners, Insight Partners, Drummond Road Capital, and Easton Capital.
In this episode you will learn:
- Choosing the best growth financing partner
- How Within3 has been hiring and expanding during COVID
- Lance’s top advice for new entrepreneurs
For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash.
Moreover, I also provided a commentary on a pitch deck from an Uber competitor that has raised over $400 million (see it here).
Remember to unlock for free the pitch deck template that is being used by founders around the world to raise millions below.
About Lance Hill:
Lance Hill joined Within3 as Chief Executive Officer in 2007. Prior to joining the Within3, Lance Hill served as Vice President and General Manager of webMethods’ worldwide Service Oriented Architecture software business. Publicly traded on the NASDAQ until its successful sale to Software AG in 2007, webMethods was a global player in the enterprise software market with total annual revenues exceeding $200 million.
Before joining webMethods, Lance Hill served as the Vice President of Enterprise Engineering and later founded the Fusion Technology Group at National City Corporation – a super regional banking firm with over $140 billion in assets under management. In this capacity, he spearheaded the creation of an internal, end-to-end solution delivery and support organization with responsibilities for business integration, application development, workflow, imaging, business intelligence, and portal technologies.
Lance Hill began his career as an e-Business consultant with IBM Global Services where he served in a number of strategic and consultative roles, including team lead for e-business architecture for the mid-western United States. At IBM, Lance Hill advised key Fortune 500 clients on technology strategy and developed training, methodology and best practices for IBM consulting teams.
Connect with Lance Hill:
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FULL TRANSCRIPTION OF THE INTERVIEW:
Alejandro: Alrighty. Hello everyone, and welcome to the DealMakers show. Today we have a really interesting founder. We’re definitely going to be talking a lot about pivots, about having an office in a risky place, about growth rounds, and you name it. And I don’t want to make our guest wait any longer, so without further ado, Lance Hill, welcome to the show.
Lance Hill: Hi. How are you? Glad to be here.
Alejandro: Born in Massachusetts in a small rural town, so how was life growing up there?
Lance Hill: Life was very, very quiet. I have an older brother, myself, and my parents. We are African American, a small town in Massachusetts – we were the only African American family in our little town and grew up with not a lot of money, to put it lightly. So, it was definitely a quiet experience. It was a safe experience, but it definitely taught me the value of trying to strive for greater than where you’ve come from.
Alejandro: Any lessons there, Lance? Obviously, I’m from Spain, and coming here to the U.S. was quite a challenge. You mentioned to me that you and your brothers were the only ones there, so there was not a lot of diversity. I’m wondering if there were any lessons or anything that was there for you to really capture.
Lance Hill: You know, I think the thing that I learned growing up was accountability for myself. It was nice in a way that it was a very small rural upbringing, and so you really did know everyone. But on the flip side, it was certainly a bit of an isolating feeling when there are not people like you around. So, I think what I learned from a young age is self-reliance from that experience. And also, again, really growing up pretty poor, pretty much on welfare for the first part of my life. The value of rolling up your sleeves and getting things done yourself knowing that no one’s going to come help you – that was the big thing that I learned. I took that into the rest of my life.
Alejandro: Do you think that to a certain degree desensitized your being with uncertainty, which is a big deal as an entrepreneur?
Lance Hill: I think what it maybe gave me, in a way, was a false sense of confidence in that I feel like I can do anything if I put my mind to it, and I kind of have to because no one else is going to help me do it. So I think that’s the big lesson that I took away from my upbringing.
Alejandro: And in terms of your love for computers, how did you come across this love and start developing this skill set around it?
Lance Hill: Yeah. That’s a great question. Actually, as I got older, my mother started going to night school and got a degree and basically became a database administrator. But through that, she would take me to the computer lab, and I would sit in the back of the computer lab while she was at school, and I got sensitized to computers then. Ultimately, I got myself a home computer, an old one, and was able to start programming. I just loved the feeling of being able to build things on my own and write them and figure them out. This was in the ‘80s, so computers were quite different. That’s what got me going. The thing that I really loved about the whole technology space and still do to this day is it fits a lot that I said earlier, which is, it’s all about who you are, what you know, what you can do. It’s not necessarily about what letters come after your name from a degree point of view or where your pedigree is. I think technology, generally, is a really great industry for meritocracy. That appealed to me as well that I could basically create anything I wanted to with a computer if I was just smart enough to figure out how.
Alejandro: How did you end up in Ohio?
Lance Hill: I went to school in Ohio for computer engineering. At the time, the rest of my family all went to school in Massachusetts. My older brother went to a state school in Massachusetts, ultimately. I was going to do that, as well, but I got a scholarship to a university in Toledo, Ohio, to study computer engineering. So, I went to do that and moved up here. This was in the early 90s, so this was a time when the dotcom boom hadn’t really hit yet, but it was still a big, kind of, ramp happening with technology. At the time, the two big cool tech companies were IBM and Microsoft – version one of Microsoft, the MS-DOS part of Microsoft, and early versions of Windows. While at school, I got recruited to join IBM, out of Detroit, and I did that. So, I actually never finished my college degree. I left school. It’s kind of cool to hear about that now with some of the great tech founders – they’ll leave school to start their companies or whatever. I kind of did it in a weird opposite way. I left school to go join a big company and joined IBM. This was when IBM was really transforming itself into a services organization from a legacy hardware company, and they were really, really trying to get smart talent wherever they could. So, I joined IBM in the global services division, which was nascent, at the time, out of Detroit. I think when I joined, there were maybe 40 people in my whole region that did services. When I left five years later, there were 800 to give you a sense of the scale of that. That got me exposure to large companies. What I was doing at IBM was Fortune 500 consulting, where I would go into organizations. This was the early days of the internet, so I was designing internet environments for companies, designing firewalls and security systems, building some of the first online banking networks, and things like that. I remember at that time in my career, it was interesting. First, I was very young, and I kind of have a babyface, and I remember I would always try to wear a thick goatee or a beard so I would look older because I was a consultant billing hundreds of dollars an hour going into people who were older than my parents and trying to tell them what they should do. So, I always thought I needed to try to look as old as I could. Now, of course, I wish I could look younger than I could. But, I was traveling five days a week, six days a week, most weeks, traveling all around to different organizations. I actually got to the point where I considered not even having a house or an apartment, just having a P.O. box for my mail on the weekends because I would fly back from wherever I was, late Friday night, early Saturday morning. Saturday morning, I would drop off my dry cleaning from the week before, pick it up, have one night, and then on Sunday be getting ready to travel out again. So for about four-and-a-half or five years, I was really a road-warrior, and I view that more as my college, if that makes sense, in that I was able to see a lot of different organizations and different industries, healthcare, fintech, finance, government agencies, and things like that, and see how technology could impact their businesses and what they were doing, and how technology even impacted management style and management function as well through process point of view. The cool thing about that job is that I got to reinvent myself every few months when we’d go to the next contractor and implement the next big system. You could start over and take your lessons learned, take the things that didn’t work and leave them behind, and then go forward. That’s something I’ve certainly taken into my entrepreneurial life where things haven’t always gone like I hoped they would, but being able to reset yourself and drive forward with what you’ve learned.
Alejandro: Is there anything there, Lance, perhaps while you were working with all these different companies, patterns that you were able to see from the companies that executed well, from the companies that didn’t?
Lance Hill: Yes. You know, I think companies that did a poor job at that time were companies that got enamored with the technology and lost sight of why they were trying to do it. There was certainly this idea that companies were trying to “modernize” and implement the next cool technology or the next cool fad. Those companies ended up invariably spending and wasting a lot of money and not usually making a lot of change. So, I think what I learned there a little bit is kind of the idea of waste. I remember one time at that point of my career sitting – one of our clients at the time was a school district, and this was during the Al Gore, No Child Left Behind Act, I think it was, where schools could apply to the government for $1,000 or $2,000 per student if they lived in an impoverished neighborhood to purchase technology to connect them to the internet, to try to lower the internet divide. I was working at IBM and consulting for a large school district, and they were going to apply for these funds. And they certainly felt political pressure to apply for all the funds, but they were only allowed to use the funds for the actual infrastructure network and hardware. I remember sitting in a room at that point in my formative years with folks around the table saying, “We have to figure out how to spend 70 million dollars, or whatever it was, of internet technology hardware because we have to apply for all of it because if we don’t apply for all of it, we’ll be on the front page” saying the school didn’t get all the money that was available to them. Yet, they couldn’t actually spend the money on curriculum or anything useful. So we were trying to brainstorm. They were looking at putting in Fortune 500-class servers and network infrastructure that ultimately would not be used very well, and they were doing it more from a technology-first point of view than thinking about it from what the actual impact would be. That’s an example of what not to do. I saw similar things in for-profit environments, as well, where the budget and a high-level plan drove a technology implementation or a technology thought process versus thinking about the business that we’re trying to do and what we’re trying to accomplish. What I fell in love with that part of my career was on the successful side in seeing how technology can really transform businesses when it’s aligned properly, when the goals are set up correctly, and that’s really, really fun, and it’s neat; the turnaround time on it is very fast, relatively speaking to have other industries. I really enjoyed that part when there was alignment, coming in, re-engineering processes, putting technology underneath that, and seeing business functioning tremendously better on the way out.
Alejandro: Got it. After this experience, webMethods was the segue into starting your business. I think that with webMethods, also, you were able to see the full cycle of a company because you were there when the acquisition happened. Tell us about this experience, and then, also, how did you come across the idea of Within3, and how did you go about bringing it to life?
Lance Hill: Yeah. A couple of stops after IBM was webMethods, and it was my progression, both from a large company to a smaller. IBM had 100,000+ employees when I joined. webMethods had about 2,000. In the middle, I worked with a Top 10 bank that had about 35,000 employees and ran a big part of the IT organization there. So my clear path was always toward smaller and smaller companies because I like the turnaround time so much better and the impact. When I joined webMethods, it had become very clear to me that continuing that theme of technology making an impact on business, what I really want to be involved in is the business side of technology. I want to be running a software business or a technology business, and webMethods was a great place for me to learn that part of it. It was a publicly-traded company with about 200 million dollars in revenue at the time and a global organization with a global footprint – a really great experience with me learning the business of software more than just where I started, which was just the technology side of it. Those lessons that I learned there, being involved in a global software organization all the way through. Ultimately, we sold the business to Software AG that I took with me when starting Within3.
Alejandro: Tell us about the early days of Within3 because the business that you guys started is not the business that we know today.
Lance Hill: No, it’s not. It’s interesting. It’s really funny when you think about starting a company literally from scratch and the process that you go through. I think at the time, a lot of entrepreneurs, you read things, and you think, “Oh. I’m going to start a company, and four years from now, I’ll be on the cover of Wire Magazine, smoking a cigar, celebrating my vast success.” I think I had a little bit of that in my head that it was that easy. But what we were doing at the time was, a few others and I were thinking about how we can improve communication and healthcare, and thinking about it from a technology focus point of view. When I was at webMethods and finishing that part of my journey, social media technology was coming into its own, so this was in the 2006, ’07 timeframe. I remember that the largest social media company in the world at that time was Myspace, which was #1. Facebook was coming on strong. They were #2 and coming. I remember LinkedIn was this business social media thing that was interesting, but no one quite knew what to make of it at that time. The prevailing wisdom at the time was that either Facebook or Myspace would win the social media war for consumer social media. And, obviously, Facebook eventually won out. But the thought process was that what would happen next, there would be a Facebook for lawyers, a Facebook for accountants, and a Facebook for doctors, so different professional constituencies. There’d be a predominant social network for each of those. There was a lot of money being poured into that idea. What we were looking at and thinking about was, could we use social media technology to improve communication in healthcare? Can we make it so that if a doctor needs to refer a patient to a specialist that they can find that specialist easier, faster, and better? Can we make it so that if there’s a difficult case that doctors can connect with each other and talk about that case better and faster? Can we make it so that they can do it between institutions? Because, at the time, and it still exists today, you may have two doctors in the same city, but if they work for two different health systems, they may have very limited interaction, and ultimately, that’s bad for patients. So, we were thinking about creating, in essence, a social network for doctors was the original idea of Within3. When we started that, we did it purely bootstrapped, purely angel-backed. There were four or five other companies that were in the same time horizon that were also approaching that problem from different points. All of those companies are tombstones now. They’re all gone. But the idea was that whoever got to “critical mass” first would win. We began a journey trying to build that, trying to take social media technology and apply it to healthcare, and more specifically, try to build a physician network in the late 2000s. Ultimately, that business model was not successful. We saw that coming. We founded Within3, Inc., right at the end of 2018. We worked at it. We built the platform. We started getting users and so forth. But by the time we started getting to 2011, ’12, it was clear that the business model wasn’t going to work, so we had to make the pivot. It was one of those life-and-death experiences where to continue going like we were, we were going to go out of business. We had to make the switch, and we had to approach the market differently.
Alejandro: So what ended up being the business model that we know of Within3 today?
Lance Hill: At the end of 2012, we recapped the business. We contacted all of our shareholders, which were angels, and we said, “We need to do something different.” They retained their trust in me for the most part. I think we had over 80% participation in the recap. What we did, instead, is we said, “The initial idea is correct in that in healthcare, there are still such laws to communication, and even when you look at where we are today with the COVID vaccine and everything else, there still are so many inherent walls to communication. What we did, though, is we said, “Part of the issue was if you are trying to build a network on your own, you need users, you need content, and you need money. Those were three things that were difficult for us to get being capitalized the say that we were. But if we could actually approach it on a B2B SaaS basis, so if we could go to organizations that have constituents and help them solve their communication problems, we could maybe make more of a difference. So, we rebuilt and relaunched Within3 in 2013 as a B2B SaaS company that was focused on working in the life sciences market. We found that over that previous four years that one of the really large places where communication problems hurt everything, time, money, cost, and ultimately lives, in drug development. And that if we could take what we had learned generally and apply it specifically to the communication challenges and drug development, we could help life science companies bring products and therapies through research and into the marketplace faster. We pivoted away from the network-based approach, and instead, said, “We’re going to call on companies individually and show them how we think our technology can help them” do what I just said. We started rebuilding our products for that purpose and then one client at a time, working through and convincing them that there’s a better way to communicate with physicians when you’re developing a drug than eight-hour-long meetings at a hotel in Dallas, as an example.
Alejandro: Absolutely. So then, in this case, obviously, a company like this requires some cash, some capital. So how much capital have you guys raised to date?
Lance Hill: When we did the recaps, we had raised some money before the recap. That was basically all gone, and we raised 2.5 million dollars at the end of 2012 from our existing angel backers, and then some other angels, as well, that came in, and that’s it. We took that and then ran a business. What was interesting is, because we had no capital, I call it our drive-farming stage. We had to be extraordinarily cash-efficient, so we built the business out of cashflow. Every single headcount that we decided to hire and not hire was, to some degree, an existential decision because we didn’t have any sort of buffer to be wrong. We very methodically built a profitable and cashflow positive business over those first years and kept everything. We didn’t have the luxury of doing a big growth round and then spending ahead of where our business was, aiming at a future target. We had to get a very solid, fundamental business built in those first few years when we weren’t even at scale yet in order to survive in the way that we were. So that was the first challenge. Ultimately, obviously, we succeeded.
Alejandro: The last growth round that you guys did was literally 90 days. So, can you tell us about this?
Lance Hill: Yeah. That was over the summer, so fast forward to 2013, starting the company and focusing on how we can help life science companies communicate virtually. We figured it out. From 2013 to 2017, we were gaining initial clients. We were targeting the largest of the large pharmaceutical companies in the world, as an example, and bringing them on board and continuing to serve them as well as we could, and build our solution. Then by 2017 or so, we really had it figured out from a product and a business model point of view. In 2017 is when we started scaling organically. Our actual growth rate began to double year over year from 2017 forward. Before that, we were growing modestly, but much more in an incremental basis. From 2017 forward our product set had expanded. We were able to help our clients do all sorts of virtual work. We were growing. We hired our European team in 2019 and were growing broadly. Then, going into this year, in Q1, we were already growing at triple digits, and then COVID happened. I think for a lot of companies, there’s this “And then COVID happened” sort of phrase, and then what comes after that is either really disastrous for the business or not. For us, we were a company who had spent the last eight years building a business around virtual work and how to do work virtually. When COVID happened, our rate of growth was already extraordinarily high, but like what happened to Zoom toward mid to the end of March, leads for Within3 spiked in our industry because folks went from pursuing alternative ways of communicating as the right thing to do to pursuing it as a must-do because everything live had been canceled. So we looked at a world that said, “Wow! COVID has accelerated our marketplace forward for virtual work and virtual engagement for a number of years. We were already high-growth, high-scale, so we said, “What we need to do at this point is raise a growth round.” The demands on the company in the marketplace were high. We didn’t want to be in a position anymore. We were trying to fund everything out of cashflow. We wanted to step on the gas with product innovation. We wanted to be able to expand globally. So we began a growth round. For us, it was a bit different. Our demand for utilization Within3 just spiked again, very similar to what you read about Zoom. We spent Q2 – we had already hired aggressively in Q1 because we were already growing so quickly. We expanded our hiring in Q2 and then entered a growth round. When we did that, one of the things that was important to me is that we not screw up the business. We were already a profitable cashflow-positive business. You never know when you start a round what you’re going to get and if you’re going to end up being able to accomplish what you hope. What I didn’t want to do is start the process for a growth round and then damage the business because my eye is off the ball and diligence is hard, and you spend so much time going through it that we end up coming out of it deciding not to do a round, but having damaged or delayed the business in the meantime. So we set a goal that we would go out and explore the market and see what the appetite was because we had been heads down for so long, I don’t think we knew what the market value with Within3 would be. But if we were going to do it, the choice was to get it all done before Q4 because, for us, we’re a little bit of a seasonal business, and Q4 is a really important quarter for us. That meant that we had to get the entire process done. We started in May formally and began a formal process at the end of May and started talking with leading SaaS private equity companies and had a closing round within 90 days in the middle of COVID, which is obviously still going on over this past summer. So it was a very intense all-day, all-night, seven day a week sort of experience for most folks in Within3 since about March 15th when travel restriction started all the way to current day.
Alejandro: In this sense, how much did you guys end up raising, Lance?
Lance Hill: We raised over 100 million dollars of growth capital. We ended up partnering with Insight Partners, who we liked very much. We talked to a number of firms through that process. One of the things for us that was really important is because we are a founder-started, founder-led business, most of the folks in our company up until maybe early this year had been with the company for a while, had taken it from very small to what it was. The next size of scale for us was pretty extreme, and we wanted to make sure that we had access to a firm that not only had deep pockets and capital and a tremendous track record in growing scale-up companies successfully, but we also wanted a firm that had some operational expertise on staff that could talk to us about scaling our go-to-market and scaling our client success team and scaling our product groups and implementing systems underneath those and dealing in a global environment like we deal with in our business versus a firm that maybe had capital and had a rolodex of people you could talk to, but didn’t necessarily have direct access to that operational support. We really need that because we started our headcount this year over the course of this year’s tripling, and we’ll continue to have high growth of headcount going forward. So we needed to the point of absolute highest volume for the company, already start implementing processes to scale for Q1 in the coming year. So we thought Insight brought a lot of capability there for us, and we were able to do the deal quickly, which was really important to me. I did not want to be in a position where it’s October, it’s November, and we’re still haggling over term sheets of diligence items or what have you, and the deal’s dragging on and on and on, and my eye’s not on the business. They were able to move quickly with us, which was tremendous.
Alejandro: Ninety days is like no time, so that’s really fantastic, Lance. One thing I wanted to ask you is, especially for the folks that are listening to us now, to get a sense of the size of Within3, is there anything that you can share in terms of maybe numbers of employees or anything?
Lance Hill: Yes. We’re about 140 employees currently. We started the year with just over 45 employees, and we’re still adding pretty much in every single department. From a headcount-wise, that’s where we were. At this point, we have staff in [32:40], Latin America, Europe, Asia, and we are deployed globally, which brings its own interesting set of challenges. It’s been fun and interesting integrating different cultures in different places in the world into the company and doing all of that during COVID when you can’t go see people and meet people. It’s interesting, as a founder-led company – when you’re smaller, you tend to know everyone. You either interviewed them yourself, or you’ve met them very quickly along the way. We went from that feeling – at least I did, from feeling like I could look at everyone on a company call and know them all by name and face to we’re hiring people every single week that you’ve never met. That’s an interesting feeling as well. It’s been different. I think hiring in the COVID era where you’re literally hiring someone off of a Zoom screen with very limited physical interaction with them has been challenging. I know it has been for a lot of companies. Luckily for us, we’re just natively remote anyway. We didn’t have a lot of process change, and that sort of thing to do when COVID affected the world with travel restrictions. But it still is a little bit surreal seeing the headcount of the company grow the way it is at the speed it is.
Alejandro: Here, we’re talking about you being at it since 2008 in Within3. It’s been a wild ride, to say the least, Lance. One of the questions that I ask the folks that come on the show is if you had the opportunity to go back in time – imagine you get into this time machine, and you go back to 2008, that moment when you were thinking about starting your own thing and going at it, what would be that one piece of advice that you would give to yourself before launching a business and why given what you know now, Lance?
Lance Hill: The first thing to come to mind is, pay attention. What I mean by that is, when you’re starting a business, it requires such faith that you’re going to be successful, to take the risk to start a business anyway, especially if you’re doing it with your own money and those of your family and friends that it can blind you to the potential flaws in what you’re doing or make you not notice where you’re actually wrong. I know there’s a school of thought that says, “I have a vision, and my vision is right, and I’m going to pursue my vision no matter what, and the world will get where I am because I know I’m right.” I don’t subscribe to that. I think you have a vision, and then the market kind of smacks you in the face and tells you if your vision is right or wrong or if your vision needs to be modified and implemented differently. I think in the early days, I was so overconfident that what we were doing was so great and innovative and I had been decently successful in my career that it was just destiny almost that we were going to become an amazing company. And it wasn’t until things started to go wrong – it was like a lightbulb went off. So my advice to myself, going back, would be just that: believe you’re going to be successful, but be very paranoid that you’re missing something, and uncover what that is. Especially when you’re a small company, it’s easy to have fatal mistakes. We had in our early days, one company that purchased a lot from us one year, and we thought, “This is it. We’re going to replicate what that company did, and we’ve arrived.” It turned out that was a false positive. So we drunk our own Kool-Aid with not a good amount of real market data and built the company in the wrong direction and ultimately had to reset.
Alejandro: Wow. Very profound, Lance. For the folks that are listening, what is the best way for them to reach out and say hi?
Lance Hill: You can get me via email: email@example.com or via our website: www.within3.com. You can contact us there.
Alejandro: Amazing. Well, Lance, thank you so much for being on the DealMakers show today.
Lance Hill: Thank you so much for having me.
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