Paul Johnson, a successful entrepreneur with a passion for transforming traditional industries with technology, shares his remarkable journey just crystallized on a $400 million acquisition in a recent interview for the DealMakers podcast. His venture, Lemonaid Health, has attracted funding from top-tier investors like Sierra Ventures, Health Velocity Capital, Correlation Ventures, and Hikma Ventures.
In this episode, you will learn:
- Paul’s transatlantic journey from the UK to the Netherlands, and eventually Silicon Valley
- His early entrepreneurship experience selling sports and computer equipment
- The conception and development of Lemonaid Health
- His approach to blending technology and business, disrupting traditional industries
- The future of personalized healthcare following the integration of Lemonaid Health into 23andMe
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.
The Ultimate Guide To Pitch Decks
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 Paul Johnson:
Paul is the co-founder and former CEO of Lemonaid Health, now the General Manager of the wider 23andMe consumer business, which includes Lemonaid. Paul moved from the UK to the US in 2014 on a mission to bring about more convenient and affordable healthcare for everyone in America.
In the UK, Paul’s entrepreneurial career started aged 17 when he founded his first company from the garage of his family home. Later Paul ran the UK’s largest online pet retailer and became Head of Online for one of the largest drugstore chains.
Paul is a serious pickleball player regularly competing in professional tournaments and usually not doing very well!
See How I Can Help You With Your Fundraising Or Acquisition Efforts
- Fundraising or Acquisition Process: get guidance from A to Z.
- Materials: our team creates epic pitch decks and financial models.
- Investor and Buyer Access: connect with the right investors or buyers for your business and close them.
Connect with Paul Johnson:
Read the Full Transcription of the Interview:
Alejandro Cremades: Um, already hello everyone and welcome to the dealmakerr show. So today. We have a very exciting founder. You know founder that has the experience that shops you know he’s built scale finance everything that you can think of and we’re going to be learning quite a bit you know with what he has done. His journey is quite remarkable and very inspiring, especially for. Other european entrepreneurs like myself you know so I think that without further ado. Let’s welcome our guest today Paul Johnson welcome to the show. So originally born in the u k.
Paul Johnson: Thank you so much for having me on.
Alejandro Cremades: So Paul I know that there was quite a fair bit of a traveling you know, growing up but give us a walk through memory lane. How was life growing up.
Paul Johnson: Sure? Well I was born in Luton which is about an hour hour and a half outside of london and um I lived there until the age of 8 when as a family we moved to the netherlands and i. Was lucky to go to the british school in the netherlands and have friends from countries all around the world and so studied through middle school and high school in the netherlands up until the age of 16 when I moved back to england after that to worcestershire little countryside village in worcestershire.
Alejandro Cremades: Um, so so how was that like you know for you like moving from 1 place to the next you know I’m sure that making new friends changing schools. You know I’m sure that that was full of uncertainty and I’m sure that that has shaped who you are today.
Paul Johnson: I think it probably had an influence I think one of the things I realize now on reflection was how much I enjoyed living in a different country other than england as well like england will always be my home and I have so many happy memories growing up in England but. Time that we had as a family in Holland was really exciting. We were all having to learn a new place together learn a new language none of us spoke a word of Dutch when we got there I have a younger Sister 4 years younger than me and and my mom and dad we we were we were really sort of learning things together I I got the opportunity to play a lot of tennis. And really found a love for playing tennis while I was in Holland um, some fantastic tennis clubs and got to play in some some tennis teams and and just a wonderful place to grow up as ah as a kid very safe. We would cycle to and from school every day whether it was sunny raining snowy icy.
Alejandro Cremades: Are.
Paul Johnson: With our group of friends and yeah, just a ah wonderful place to grow up.
Alejandro Cremades: Um, would you say that the that competitiveness in you you discovered it during that time play tennis.
Paul Johnson: I think so and increasingly as I’ve met other founders through my career I realize there’s often a correlation between founders and people who’ve played competitive sports at some point in their life and I think I can see that for me that was tennis. Growing up and I played it to quite a competitive level in in Holland and then again back in England and a little while back I stopped playing tennis I now play competitive pickleball which is the fastest growing sport in the us and a lot of fun. If you haven’t tried it and I think yes, that’s my new competitive outlet.
Alejandro Cremades: Well hey I think that that competitiveness you know, definitely you know, planted the seed for you in the world of entrepreneur Entrepreneurship. You know you started selling tennis equipment you know with your I guess technological skills that you had acquired. So. How was that you know moment where you realize hey I can actually make money for my for my passion.
Paul Johnson: It all started I think from playing tennis. So. My first realization was that when people play tennis particularly at a higher level. You break your strings a lot and um for me that was a pain because I had to then take my tennis racket somewhere and get it restrung. So um I was fortunate to persuade my parents to buy us a restringing machine so I could restring the rackets on my own at home and and that certainly saved us some money and I realized that I could actually start doing this for other people as well and make a little bit of money out of that and then I realized wow. What if I created a website and started selling other sports equipment and ultimately other things including computer equipment I started selling online so I taught myself how to how to code in php and this was when I was um, sixteen seventeen while I was finishing up high school and I’d rush home. From high school at lunchtime to take the orders to the post office and I and I realized that I had a real energy a real excitement from building websites building digital experiences figuring out how to get people to come to the website how to turn them into a paying customer. To great. Give them a great experience so they keep coming back time and time again and and I think as I now reflect a little bit later on in my career. It almost doesn’t matter whether you’re selling a tennis racket or a computer or.
Paul Johnson: Ah, Health care service as I have been doing more recently many of those concepts are still the same um of course nuance. But but that was the start of my entrepreneurial journey.
Alejandro Cremades: Now 1 thing that is really interesting here is that you know I’ve met a lot of people that were geeky and went to computers and then you know eventually later on in live you know they got into. Tennis and they were really amazing in tennis and I have some friends that are like absolutely ridiculous. You would think that they went to like you know tennis, you know, but called college tennis now your case is very unique because you were able to blend the geeky side with the athletic side very early on you know as ah ah so as an individual. So that’s quite unique I got to tell you.
Paul Johnson: Well I I I was lucky my my parents encouraged us or kind of supported us in playing whatever sports we enjoyed and I really enjoyed tennis and for me it was a lot of fun and I didn’t. Probably think about it like this at the time it was great exercise as well and and and it was definitely great from a social aspect I found that when I was a a char growing up I was playing in tennis teams and we’d every weekend we go and play tennis matches against other teams. But I also realize now the importance of. Learning a sport when you’re younger because later in life you can use those skills to start to build New Communities new friends and and have activities you can enjoy later on in Life. So I’m certainly grateful for my parents for encouraging us to do that.
Alejandro Cremades: Now after you um, finish up your studies. You know you did you know your your studies there in in europe basically computer science and and business management. 1 thing that stands out here for me is. That you chose more the business side you know over perhaps the technical side and especially as you were going. You know from 1 job to the next now how does that lead into you one day saying I think I want to build a business.
Paul Johnson: You know I think the way that I thought about it was there was a little There’s a little bit between the technology and the business that that at that point was sort of ecommerce was sort of digital experiences. Where where you were really trying to get consumers to interact with a website or ah, eventually a mobile app and and for me that that seemed to fit well with my what I found exciting and and what I felt my strengths were so so as I sort of came out of. University and and went through a series of jobs I think the the thing that was a constant was where I was able to bring some business skills and experiences but typically where the business was trying to use technology to innovate perhaps a more traditional industry. So I think an example of that would be. Zoopus where I was my job was to found the Uk um of an online pet supply e retailer so selling rabbit hutches dog food um dog Kenels online. So really using technology to create an experience that was new and different relative to. Traditional workflow which was typically local pet pet stores and then after that we got the opportunity to go and work at Lloyd’s Pharmacy which was the largest community drugstore chain in the Uk and again trying to bring digital innovation to an industry that’s more traditional in its foundations. In this case.
Alejandro Cremades: Can.
Paul Johnson: Pharmacy industry and I think that’s where 2 things came together or maybe 3 things. The first was I always had a childhood dream of moving to silicon valley I I had no knowledge of what Silicon Valley really was I had no never been to California but but but as a. As a sort of young bodding entrepreneur I I always heard that that was the place to be and that’s where you could raise lots of money and you can build great businesses that that have an impact on people’s lives and I think the second thing that happened was my father was diagnosed with cancer by chance he was um.
Alejandro Cremades: Um.
Paul Johnson: The ordering physician accidentally checked the wrong box on a paper form and with that kind of background of using technology to innovate in industries that were more traditional or old-fashioned that really stood out to me and it it almost made me angry. That we were still ordering lab tests ticking boxes on paper forms that just seemed so wrong to me because it was so open to error you accidentally you know the doctors ah have got a lot to do and they’re accidentally you know, ticking the wrong box and and then maybe someone does or does not get diagnosed with something they should have got. Diagnosed with so in my case, my dad’s case we were fortunate because he was accidentally diagnosed with cancer. It meant that he could get treatment sooner and he recovered but that sort of drove this this passion for me that I’ve had ever since which is a desire to use some of my experiences of building. Technology in more traditional industries to bring about change for better for those consumers or in this case, patients. So so about nine years ago I moved from the little countryside village in England that I lived in to San Francisco to go about building lemonade health.
Alejandro Cremades: So then how you know what happened next you know you moved to San Francisco unbelievable you know the innovation. Perhaps you know the the access now that you gain to the community of talent of investments of really everything not to to build this thing up. What were the early days like
Paul Johnson: I remember the very first day that I lived there I went to Starbucks and grabbed a drink and on the table next to me there were people talking about setting up a business to to create um flying cars and i. In that moment I realized wow like this is a cool place to be There’s lots of people doing amazingly cool things. Um, so the the business idea that that we had that my co-founder Ian moved from the Uk as well to set lemonade up with me the business idea that we had was to create. An online doctor or digital doctor experience. That’s more like booking a hotel than it is going to see a doctor in person. So um I reflected on the health care system and I realized that there’s not many of us. Go to see a doctor or go to the hospital and leave saying wow that was an amazing experience. I want to leave 5 stars but we do that in other walks of life but we just never do that in healthcare care because the experiences of in healthcare care are generally poor. Um, and and we wanted to go about building a health care experience that where patients. Used our service and left saying wow that was amazing. They really went above and beyond and they gave me a great experience and that was the driver and um, we had 8 years of of building and running lemonade I was so naive in so many ways I took going back to this sort of childhood dream of wanting to move to Silicon Valley
Paul Johnson: I assumed I’d go to sandhill road and knock on the doors of all of the investors and tell them this great idea that I had and they would give me lots of money and we create this amazing business and help millions of patients and it was ah the ultimate rollercoster ride for me. We ah we ran out of money twice. We had to stop paying. Our employees a couple of times we had investors who told us that that this business was unlikely to succeed so we should think about shutting it down we we we really had we really learned so much but during those 8 years we were fortunate to have raised money from Fantastic investors. We were fortunate to have helped millions of patients. We had a fantastic team of about 170 people when we ultimately got acquired and it was just an amazing learning experience and I feel lucky that we were able to create something that that that really helped a lot of people.
Alejandro Cremades: So for the people that are listening to get it when ended up being the business model of lemonade. How are you guys making money there.
Paul Johnson: So we the business model pivoted a few times like like many startups. Do we? We started by building a technology that we thought we could sell to healthcare providers to help them see patients more efficiently. So when we were looking at the market in the us we saw the first wave of telemedicine companies really putting doctors and patients on Skype and saying do what you do in person but just do it on video and that would be a little bit like if Expedia was skype with a travel agent or. Um, online banking was Skype with a bank Teller but I believed with that technology background that technology can play a much more important role than just being the communication channel in healthcare so we built a technology platform that that took in structured data from patients. And was able to digest that data and present recommendations to doctors as to how to manage a patient even before the doctor has seen that patient and and that was that was very novel and new in the us and our plan originally was to sell that to the health care system. We would go to the healthcare systems and we’d say. Hey, we’ve got something that allows you to see more patients per doctor hour provide better quality care more standardized, consistent care and the experience for patients will be better as well. Um, but it was a tough sell the sales cycles selling into health care systems are very long. Um and in the end we pivoted to.
Paul Johnson: Become our own healthcare system in a way we use that technology to power our own direct-consumer healthcare experience to allow patients to get access to care called Lemonate Health we built websites and mobile apps and patients would self-pay and use our service to get access for a variety of primary care.
Alejandro Cremades: Um, so in this case, you know like not only you’re dealing with building a business from the grown up but then also as an uncertainty there that is very hard but then also you have the fact that you’re dealing with a very very heavily regulated you know segment. So.
Paul Johnson: Healthcare needs.
Alejandro Cremades: How was that balance you know between both.
Paul Johnson: It was really tough actually and tough in a few ways. The first way was that health care in the us is mostly regulated on a state by state basis and again one of the many things I didn’t know before moving to the us I was assuming I was moving to one. Regulatory framework but actually every single state had slightly nuanced regulations as it relates to healthcare and what’s even more complicated for us trying to provide healthcare through a mobile app was that these regulations were mostly written before mobile phones even existed. So they were written with that mindset of healthcare can only be provided when a patient comes to a doctor’s office and that interaction is in person so having to navigate those was really difficult and at times we’d have challenges from the. State medical boards or The State Pharmacy Boards who’d be concerned about what we were doing and our approach was was that this is innovative and actually we can show you that we’re providing better quality care. But but but often um, the regulators would have a different view. So so that was that was tricky and hard for us to navigate in that. Also then related to our ability to fundraise as well. We certainly are ah not an example of a company that found fundraising very easy. We found it very difficult and one of the reasons for that was when we were fundraising in our series a round about six years ago now
Paul Johnson: Was really difficult for us to persuade investors that direct to consumer healthcare care might be something that might work out in the future and I think now we look back on that and there’s lots of successful direct to consumer healthcare companies but we were really doing it for the first time and we weren’t doing a good job persuading investors that this could really become a thing. And 1 of the reasons why the investors thought that it might not become as big as as we believed, it could was was because of the regulations. So so the regulations resisting innovation in many ways certainly presented a lot of challenges for us.
Alejandro Cremades: Um, so I mean in this case for you guys? Um, you know the company ended up being acquired by 23000000 and we’re going to talk about that in just in just a little bit I want to ask you Here. You know you are alluding to on the investment side of things. How much capital did the company raise prior to the acquisition and what was that journey like.
Paul Johnson: We ended up raising about $60000000 and the journey was a journey for sure. It was um, ah you you get such fantastic highs when you’ve raised a financing round particularly when you’ve raised money for the first time. But that high doesn’t last that long in my experience because then you’ve got to figure out gotch. Well, how can we now grow into these valuations but it was ah it was ah ah a great experience. It was a great learning experience for me. We raised an initial seed round from angel investors from the founders and. Extended angel investors. We were lucky to raise a series a round which took us a long time to raise and I think I mentioned earlier we ran out of money while we were going through that process but we were fortunate to to get that money in and that was a. Was our first round with real sort of institutional investors well- establishlished investors and and we had a couple of great strategic investors nevartis venture fund Hickma pharmaceuticals and quest diagnostics invested as strategic investors in that round then we were lucky to raise a series b round from olive tree ventures and had some more. Traditional silicon valley investors like Sierra Ventures um in that round and and then after that series b investment oh coinciding with that series b investment was was the pandemic so we actually raised that series b round without meeting any of those investors in person because um, this was at the start of ah the covid pandemic.
Paul Johnson: Which also for us as a business was a real accelerant so we were really fortunate in many ways that that the that the pandemic um, accelerated adoption for for telehealth and and we were positioned fortunately, at that point to to be able to absorb that growth. And that presented us with a few options. 1 option was to raise another financing round to really try and realize this ongoing growth so we started looking at raising a series c round and and had some a good amount of interest at that point then the ah the other 2 options were we were ah we were considering going public via a spank. Because in 2021 there were a lot of spacs and digital healthcare companies were in high demand and we were exploring that. In fact I met with quite a few sps and got close to to looking at options there and all the third option that came about because I think there were. Larger organizations that were really seeing the benefit of telehealth during covid third option that came about was we we could potentially be acquired and one of the companies that reached out to us was 23 andme.
Alejandro Cremades: Um, so make us an insider there. You know how was that process like what cut through it.
Paul Johnson: So the first interaction with 23 andme came out through came about through an investment bank who was supporting 23 and me who I’d had a relationship with they called me. And they said Paul 23 and me wants to buy a tallyhealth company and the only one we’ve suggested they consider is lemonade would you take a meeting with them and I was really excited to do that to be honest I was uncertain as to the strategic fit at that point. So i. Thought of and saw 23 in me as this genetics testing company that gives you some insight on your ancestry and a little bit of health insight. But I didn’t really see them as ah as a health care company but I was intrigued so I I got the opportunity to meet and founder and Ceo of 23 and me. At her house and and it was a meeting that lasted much longer than we had scheduled it for and and I immediately saw the exciting strategic fit when you combine genetics and the provision of healthcare you can create a personalized healthcare experience. That’s completely different to traditional healthcare. So one of my frustrations with traditional healthcare is we treat everyone as the mean of the average so alejandro your blood pressure should be one twenty over eighty
Paul Johnson: Mine should be one twenty over eighty because that’s the the mean of the us population. But of course that’s not that’s not true. Your blood pressure target should be something different based on your family history your lifestyle choices and most importantly, your genetics. So if you can surface your genetics and combine that with healthcare for the first time. You can start to get truly personalized advice and health care targets so traditionally in the Us when you turn 40 you should go and get these certain tests 40 is of course just the average of the whole of the Us population. Some people should be doing that when they turn 35 and some people don’t need to worry about that particular test but they should be worried about something else instead and your genetics play such an important role. So Adam and I spent a lot of time talking about this idea of combining genetics and healthcare and creating a really personalized healthcare experience and and that was the first of of a series of meetings. And and and I think a little bit like perhaps dating in the early days you’re sort of you’re both sort of thinking about how we might be a sort of fit for for an acquisition but neither of you really wants to talk about it and and it took a few meetings before we sort of got to the point of really saying hey maybe this maybe you know this is. There’s so much here. Maybe it makes sense for lemonade to become part of 23 andme.
Alejandro Cremades: So obviously the acquisition ended up be happening 400000000 so phenomenal. Outcome. You know for everyone especially given the amount that you guys are had raised for for those investments I’m sure they were really happy. So. Once the acquisition happens. Um you know and this happened a couple of years ago you know doing more precise around November of 2021. You know what what? Typically that’s one of those integrations look like you know what are some of the safeguards that you’ve seen on an acquisition. You know to try to optimize and to push. For making the so the the acquisition you know as success because most acquisitions unfortunately they failed.
Paul Johnson: Yeah, and acquisitions are really tough and I think I’ve always known that integrations always take longer than you think they’re going to take but where there is such a strategic fit I think you can you can make it working. You can realize the benefit of both both perspectives. So. And important thing for us and and um this this was an important thing from our investor’s perspective as well during the negotiations in the deal was that we we didn’t want. Any of the deal price to be contingent on hitting future milestones that might be a little bit out of our control and I and I see that happen quite often in deal structures and I think that that can be difficult particularly for the founders who start to lose control of the ability to execute in their business. So. So although um, my co-founder and I had um a partial earnout associated with the acquisition cost. It wasn’t contingent on hitting um financial mars having said that I’ve um, been at 23 and me since the acquisition November Twenty Twenty one and been making sure that we fully integrate lemonade into 23 m mate me and make sure it’s really core to the future product that’s being built and the 23 meet team is doing a fantastic job of realizing the lemonade assets but it’s definitely an experience that you know I think I think all of us who’ve experienced it.
Paul Johnson: It’s It’s hard to integrate a new business in ah particularly a smaller business into a larger business.
Alejandro Cremades: So imagine if I was to put you into a time machine and I bring you back in time to that moment where you know you were maybe you know thinking about doing something of your own. Maybe even you know like selling you know that tennis equipment. Yeah, you know your skillets you know with computers. But let’s say you had the opportunity of having a chat with a younger paul. And having the opportunity of giving that younger poll 1 piece of advice for launching a business. What would that be and why given what you know now.
Paul Johnson: I think the one piece of advice is that you you really have to have determination and and and a lot of grit to actually do it. So so I think it’s it’s almost. Easy to come up with reasons as to why you shouldn’t do something when you’re setting your own business up. It’s almost easy for people to tell you why something shouldn’t work or couldn’t work or can’t work and and we would get told many times that you you can’t do this in healthcare you can’t do that in healthcare. And and so I just think you have to have a huge amount of of passion and confidence and belief in in your ability to do something particularly if you’re doing something completely new for the first time there’s not a mold to replicate or or take and improve a little bit if you’re really doing something completely. New. So. So I think my advice back to me would be like be a little bit more confident than you were I think we could have perhaps launched lemonade a little bit sooner if we were a little bit more confident. Um, and and I think you know believe in Europe believe in believe in what you’re doing I think I think the. Thing that that we always try to focus on was that we were creating something that was really superior from a patient’s perspective so we were really doing something that created that that that improved healthcare ultimately and that was that was really important to us.
Alejandro Cremades: I Love it so poor for the people that are listening. Where’s the best way for them to reach out and say hi.
Paul Johnson: I would love to connect with anyone who’s listening I think probably the best way is to connect with me on Linkedin and yeah, love to chat to you there.
Alejandro Cremades: Amazing! Well is he know ah Paul thank you so much for being on the deal maker show. It has been an honor to have you with us today.
Paul Johnson: Not Alejandra I really appreciate you having me on. Thank you so much.
If you like the show, make sure that you hit that subscribe button. If you can leave a review as well, that would be fantastic. And if you got any value either from this episode or from the show itself, share it with a friend. Perhaps they will also appreciate it. Also, remember, if you need any help, whether it is with your fundraising efforts or with selling your business, you can reach me at [email protected]