From Nerd Olympics to Tech Entrepreneurship: Mike Serbinis' Story

Honestly, my way of doing things as a result of that time was hugely influenced by both the successes and the failures of being in that crucible. And there's a certain hardness to it, there's a certain speed and edge to it, and there's certainly a great deal of hope in it and an optimism. And all of those things honestly resonate with the raw material that was me at the time. And I think it helped definitely form the kind of founder and CEO that I am, for sure.

Welcome to the Startup CEO Show. I'm your host, Mark McLeod. In this episode, I sit down with Prolific founder and CEO Mike Cerbinis, who is currently co founder and CEO of League. Mike has over 1 billion of exits under his belt. In this episode we explore his journey from engineer to winning what he calls the Nerd Olympics, becoming CTO and then eventually CEO of his various businesses. We talk about competing against Amazon, and he's now 10 years into his journey with League and a really important mission in the healthcare space. And he has over 20 million users on his platform. This conversation could have been at least twice as long. So many great stories here and so many great lessons for CEOs. I really hope you enjoy the episode. Mike, welcome to the Startup CEO Show. It's a true to true pleasure to have you here. How are you doing today?

Thanks Mark. Great to be with you. And today's a good day. It's hump day. We almost through the week and I've got some exciting stuff lined up. So happy to be here.

So I've wanted to have you on the podcast for some time. You know, I don't. There's no official stats on this, but I feel like you're one of the more prolific tech founders. Over a billion of exits under your belt in completely different industries, which means it can't just be luck. And. And now of course, League, which we're going to spend a bunch of time on, just got it. It's just had its 10th anniversary and I was reading some of your retrospective posts on the 10th anniversary and your reflection and something you wrote in the year one post maybe reinforced sort of why I wanted to have you on the show, which was just the expectation that everyone investing was just like, oh, this is going to be easy money. Mike knows what he's doing. Like this is going to be an easy win. Let's just start there and like how you dealt with that other than maybe, you know, you chose a super challenging industry so people had reality beat into them. How did you handle the fact that everyone Just assumed this is going to be easy because Mike's done it twice already.

Yeah, I mean I, look, I love what I do and I've been doing it a couple decades plus now and you know, the idea of taking on a new problem and coming up with a way, a system, a product, a technology, a kind of value proposition to go about and solving it for me is really exciting. And you know, I learned that early days in Bay Area from some, some now infamous people. But I, I thought, okay, I have done this a few times. I seem to have a way of, you know, being successful and you know, there's culture and team and all sorts of stuff to unpack there. Healthcare just feels like such a giant opportunity filled with lagging experiences for people, patients, consumers, health insurance, customers. And, and this has gotta be, gotta be not only a huge opportunity, it's gotta be pretty easy. And I literally said that to my co founding team.

Famous last words.

Oh God, honestly, they will never let me forget that I said that because they were like, all right, we're going to do this again. It was a war last time, you know, going up against Amazon and it's global and yeah, but like, is it going to be a war again? Like, I don't know if I had that in me. And I, I was like, look, we can do this. This is going to be easy. We'll be, we'll be in. I might have even said we'll be out in like a few years. And obviously that has not been the case. And it has been both a much bigger opportunity than we ever could have conceived at the time. It's also been much harder than any other company I've built and any other CEO gig or founder gig that I've ever had.

Wow, that's saying something. I have to assume Kobo was difficult. Competing against Amazon sounds non trivial. So that as a relative statement, your statement is a big one.

Yeah, that, you know, that's a business. And we had this, we had this kind of early insight that, okay, they have more money, more brand and more customers than almost any other, you know, technology company that serves consumers in, in a way, in any way. And so if anything that we come up with that is core to our way, our strategy, our approach to winning in this market. We come up with any way, any set of tactics or strategies that with more money could beat us, with more customers could beat us, or with more kind of brand awareness could beat us. We can't do it because that's what they'll do and they will beat Us So it's actually a pretty hard problem to, to solve and yet with an understanding of the problem from first principles, you know, we did, you know, David did what Goliath couldn't do. You know, we, we kind of used a lot of that, that story and the metaphor there in our strategy. And it was hard, but we were able to succeed.

Let's take a step back. You know, as many folks listening or watching who like you either are engineers or once were engineers and maybe just if you go on the way back machine, at one point you were an engineer and then you became a CTO and now you're a CEO. Like how did you transform yourself particularly I guess in the business side, I understand the technical foundation, but other than just putting in the reps in and screwing up, how did you develop mastery over these, I guess non techno, non technical aspects in order to become, you know, a, a CEO?

Yeah, you're right. I started as an engineer, worked on building a local search engine and then you know, as a CTO building a, one of the first cloud storage companies. And I was, I guess that was my first founder, co founder gig. And, and both of those examples, you know, I had some interesting, you know, interesting people to observe. One of them was Elon Musk and the other, I've heard of him. Yeah, you've heard of him. And the other was my co founder Evan Krapko at Doc Space. And so there was definitely learnings from, from both of them. And you know, early days you're wearing many hats and any startup and certainly anyone that, that succeeds, you just kind of keep wearing different hats. And when we sold Doc Space we, we got, we're acquired by a company called Critical Path that was a NASDAQ darling, you know, front page of every paper and you know, cover of Forbes and Fortune and you know, all the industry standard, the magazines that mattered at.

The industry standard, I remember that used to be like this thick.

Yeah, yeah. And then it wasn't and, and you know, I, so I had some good examples and all of a sudden I'm part of this experience at Critical Path. And we were still flying seven days later post the acquisition closing. The NASDAQ peaked, the bubble burst and the market began to tank. However, our stock went up six times a multiple of six in the next six months. So by summer, you know, NASDAQ was off. I can't remember the exact numbers, but NASDAQ was like fell off a cliff and we were up 6x. Like the deal we did was at $19 a share and by summer I think we were at 120 and. And then the wheels started to fall off the bus. Know, Enron happened. We, we misstated earnings in one of our quarters that year. But to give you a sense like this was 1 to 2% of revenue kind of misstatement. We caught it. Fortunately we caught it like only a few days after earnings and, but the market did not like it. T. We, we started tanking. We had an SEC investigation, we put these executives on leave. All of a sudden we were looking at revenue being a real problem. Sales dried up, customers were pulling away. We had to cut significantly cut about a thousand people. It's 77 offices that we went down to initially 20 offices. So I went to a lot of those offices and like a FedEx box would meet me there and literally would hand out packages. Um, and you know, 9, 11 happened that year. And in that sort of post tragedy aftermath, the FBI was doing their work and we ran hundreds of millions of email accounts. So guess what, you know, we, we cooperated with the FBI and, and so between FBI and like NASDAQ and delisting and SEC and like refactoring the company like the, that experience beyond the learning how to build and write some code, build a product versus just some code and learning how to build, you know, a company. In my first experience doing that as cto, but co founder, all of a sudden I was faced with like any one of those things could, could have been like the know, a, a big life experience over a decade or over a career. I had them all in about a two to three year period and then had to figure out how to put Humpty Dumpty back together again and, and come out of it. And so I had some great examples in those years of great sales leaders, of great finance leaders of decision making in crisis, you know, re rebirth and you know, a phoenix kind of arising from the ashes and, and kind of made it through to the other side. And we exited that company to General Atlantic. And so I look at that experience and I'd say, you know, in my beyond the foundational things of, you know, obviously knowing how to build technology and Bell technology, I learned all of the other bits or a lot of the other bits through that experience. And at that point I was just, I was kind of itching to start something new and, and only be the CEO.

Good for you. I gotta tell you, some people might go through that and just crawl under a rock or be like, you know what? I'm gonna be a computer science professor. Screw this operating bullshit. So I love that you had the opposite reaction. I, you know, I operated for a long time in startups, but the reason why I never started a company is I deeply believed that to start a startup you should be technical or be a product person. I always joke like, you know, accountants don't start law firms. Now you are deeply technical. How in retrospect, how important has that been to your success as a CEO?

Yeah. In fact today I had breakfast with the dean of engineering at my alma mater and you know, I talked about this with him and, and actually later the more in the morning I was, I did a zoom with one of my daughter's friends who's an engineer at the same school and I, I shared with her and with him the same thing that, you know, I studied engineering physics. I had a kind of a unique experience and high school experience doing some work for NASA Jet Propulsion Lab. So I was highly.

So you're literally a rocket scientist?

Yeah, I'm highly technical. I mean one of the other hats I wear today is chair of the Perimeter Institute for Theoretical Physics. So like I, I was very technical and, but more important than that, I, I guess in the Crucible. And you know, most of my friends, you know, we're in engineering. Not all of them were in engineering physics. You know, we were doing 40 to 50 hours of class a week and the work on top of that, you know, one term I had I think 10 courses and two labs. You know, all my other friends were doing about half of that. But you learn, you learn how to handle the pressure of being in the Crucible and you learn how to under that pressure solve, just solve really any kind of problem and you kind of, after a while, you know, there's a bit of pattern recognition, there's a bit of ego or confidence at least that you can solve any kind of problem. And so that foundation for me and really this idea of a beginner's mind, I can solve anything from first principles or at least could take a crack at it and maybe with some of my sports, you know, love and, and athletics from growing up, I played a lot of team sports knowing and believing that you can solve a problem from first, first principles. Plus the idea that it takes a team. I mean that, that really has been my, my formula. And of course it still helps to be technical, but it's more specifically the know how of solving hard problems.

I love reading about your reference to the Nerd Olympics.

Yeah, yeah. I mean I, I, I used to describe the International Science and Engineering Fair. It's hard to really gather what it is unless you've been there. Unless you understood that the National Science foundation in the US in conjunction with Defense Intelligence of the, you know, Pentagon, decided to put on this event to really capture the attention and, you know, get some of the, you know, most talented kids from around the world. I think the years that I did did it. I. It was probably five or six hundred kids a year. Two to three hundred were from the US and the rest were from everywhere else. I think Canada got to send two a year. And so, yeah, I. And then you go, by the way, you go there and it's like, it's not like you're seeing any volcanoes. You're seeing leveraging the technology and the methodology for flight from a Dragonfly applied to a next generation variant of the F22 with full military funding. And a kid that, you know, unlike me, a kid that went to like a school, a charter school focused on engineering. That's what it was. And the money and the people there, money was incredible. Like, I. The year that I won, I mean, I was a student from, you know, Steel Town in Canada, and it was tens of thousands of dollars, it was a scholarship from Boeing and Rockwell to go anywhere I wanted on their dime. It was computers for my school and, you know, sponsorship by intel for the city and school school board that I, you know, I went to school in.

A lot of pressure riding on your shoulders.

Yeah, I mean, was incredible. And so, yeah, I affectionately refer to it as the Nerd Olympics Global. Some of the smartest kids around and, you know, just a real incredible community around it. So that for me was pretty formative.

You talked about meeting Andy Grove pretty early on. And for the young folks listening, Andy Grove was a legendary CEO of Intel. And I always ask my CEOs what books they read or have read that influence them. And like, literally every one of them has read High Output Management. And I'm just wondering, was that an influential text for you? And how did Andy influence you as a leader?

I knew about Andy before I was surprised that day when I won the gold medal before I won the Nerd Olympics. And all of a sudden he's on stage and. And I'm both in awe and then also like observing, wow, he's quite a bit shorter than I thought he was. You know, he was a real, he was, I'm like 6162 almost. And he was a much smaller guy and, but like tough looking. He's Hungarian. I know, you know, some of my, my best friends and actually Family are in Hungary and they're tough people. And Andy was an immigrant to the U.S. you know, he was really core to the, the birth of the semiconductor industry, not only intel. And, and so I see him on stage, I'm like, okay, he's shorter than I thought. And then like just the energy around him. I've met a few people in my life that I thought like literally were glowing. And Andy had that, he had that sort of charm, the energy, like he was like a million volts, a handshake, like all of it, and with a, with the warmth of like the gooey center of like a lava cake. You know, he's just such a warm guy.

Very descriptive.

And, and, and he, you know, and I, eventually I would have read because I, I would not have looked for high output management at the time, you know, being a super physics nerd. But only the paranoid survive is the one that really, really stuck with me. And honestly, it's a, it's a blessing and a curse that I feel that way all the time. It's a key to why my companies have grown and, and been hyper, hyper growth companies and have ultimately been successful. It's also, you know, at times, at times what keeps me up at night because I'm always thinking, you know, I'm, I'm climbing the hill. I'm not quite on the mountain. There must be a different way or another way or someone's coming, something is coming that I should be thinking about and getting ahead of. So that was, that was definitely one of, one of the gifts from, from Andy.

In retrospect, you know, there's a decent number of Canadian listeners here. In retrospect, how important was it for you to have early experience at Silicon Valley?

Pretty critical, no question. One of my friends that's Canadian, who's an investor, probably, probably will listen to this at some point. You know, made it to Silicon Valley around the same time as me. He's a bit older than me, but started a company in that same era, kind of late 90s, and came back to Canada for a bit before going. He had a pretty significant role at Facebook, was an investor in one of the sort of storied firms. Anyways, he describes it and we're both football fans. He's like, it's, it's hard to get excited about the CFL when you're, you're busy playing in the NFL and you're, you're, you're in it, you're in, you know, or the, you've heard other metaphors like the big leagues. Like, there's just something different about it. The level of competition, the level of urgency. And, you know, Silicon Valley has now a pretty incredible brand. There's not many parts of the globe where people would not know what Silicon Valley is. It's synonymous with, you know, innovation and technology and just incredible competitiveness and, you know, resil, resiliency, and speed. And in my time, at least, I've got to see, like, creative destruction over and over and over again and companies coming out of nowhere and being an example of stratospheric growth faster than anything else has ever grown. And it just kind of keeps happening.

It's.

It's in the, you know, it's in the water, it's in the culture. And for me, it was. It was all of that. I saw my own eyes, just kind of how it worked. I joke. I joke to some friends of mine or whenever I talk to, you know, students or young entrepreneurs, I'm like, it's for me, it's when I discovered that you could do a job that you love to create something out of nothing, and people will give you money for that. And if somehow you completely screw it up, in most cases, you. You don't have to get the money back, and you're not going to jail. It's like, I. I never got that memo in high school. Like, I was unaware, you know, going to a public high school in Hamilton, Ontario. You know, my parents were immigrants to Canada. They worked in factories, and eventually my dad had a business. But, like, I must have missed the memoir of being a tech entrepreneur. And honestly, it was a gift to land down there and to have that experience, even though, like, my initial experience, I would say, did not stay long, because in part, I thought I could do this myself and own, you know, 50% or 30%.

Is that why you came back to Canada?

Well, initially, I. I came back because I had a girlfriend.

That's a great week.

And. But it didn't take long to go back. So it was a. Honestly, it was a short stint. And then Doc Space was officially a del. Delaware company headquartered in Menlo Park. And, you know, we built that company as if we, you know, had always been in Silicon Valley and operated at a very high level of urgency and competitive drive and with an idea which, honestly, I would not have been good at articulating it back then. But, you know, I kind of think of every one of these opportunities having something in common with the Olympics. You know, it's always a global competition. It comes around every so often. Right. Obviously, Olympics would Be four years and you know, new sectors, new categories are on probably a bit of a longer cycle, maybe aligned to the business cycle. And nobody, there's always three people on the podium, you know, gold, silver, bronze. But I challenge you. I don't think anyone has ever remembered, you know, a bronze medalist. And certainly in business, you know, I can name the number one smartphone company in the world. I couldn't name number three laptop, keyboard, you know, garage door opener. Like whatever you want. It just doesn't exist. People soon forget it's Coke and Pepsi and nothing else really matters. And so yeah, that pattern I got to see over and over again, but the first time I really got to see it was in Silicon Valley. And I guess the realization was if you are going to spend the energy and the time and endure the crucible of it, why do it for eighth place? Figure out what first place looks like and do everything in your power and your team's power to get there.

That's huge. And I want to bring that, I want to pick up on that. But one last question about Silicon Valley. You know, geography matters a little less now than it did did then, that Silicon Valley remains special and unique. What's your advice to early stage founders today in terms of leveraging that?

I think you have to be connected to it. I don't know that you can be totally appreciative of it and the dynamics of it, and I use that word on purpose, like the movement of it, unless you're, unless you're really in it. And it's possible, I think to accomplish a certain, certain level of that not being there and going regularly. But I think if you, this is what you love and this is what you want to do, I think you have to have a stronger taste of it, be there for a bit, be there for, you know, a good time. I mean, ultimately I was there, you know, with some on and off, but over about a 10 year period.

Oh, that's a long stretch.

Honestly, my way of doing things as a result of that time was, was hugely influenced by both the successes and the failures of being in that crucible. And there's a certain hardness to it, there's a certain speed and edge to it and, and there's certainly a great deal of hope in it and, and optimism and all of those things honestly resonate with, with at least the raw material that was me at the time. And you know, I think it helped definitely form the, the kind of founder and, and CEO that I am for sure.

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So going for gold. I could have done the research beforehand to figure out whether Kindle was in market before you launched Kobo. I feel like it was so like did you feel like gold was in sight for you? Like tell me about your mindset deciding to compete against a a large line of business for Amazon.

Yeah, the, the timing, the timing in my life is also an important part of the story. Like I had moved back to Canada, you know I met my wife now my now wife and we tried living in San Francisco, try living in New York and did a spreadsheet and you know kids and family were important. So we decided Toronto kept winning in the spreadsheet no matter how we changed the weightings and honestly for a while I thought I was going to do nothing and you know, be a stay at home dad because my in my last company at Critical Path I was traveling every week internationally in long haul. It was intense and I just wanted to change. I got to meet, got to meet Heather Eastman of Indigo. We had a great chat about what happens when books go digital. You know Heather built great business innovative approach to honestly selling, selling books and, and fast forward a few years. You know most of the biggest booksellers in the world were my partners at Kobo. And I would say then that she just, she stood out like head and shoulders above pretty much everybody I met as a real innovator, frankly an entrepreneur at heart, a true entrepreneur. So anyways back to that. So we got going and the premise was books were going digital. It's massive market, it would happen globally, it would follow a pattern, probably faster but similar to music and video tv other content forms that already had started to go digital and that would harm the existing Book business and, but it would probably not go as fast because the content form, you know, there was some, some variety to it that would slow down certain parts of it, would speed up other parts of it. And so we felt, we felt there could be a pure play and where Amazon Kindle was already out, they were absolutely closed play and they were going to ride on Amazon Rails. We could build an open play, connect with libraries, connect with the open format that had been really got some traction at the time which was Epub, which is essentially an XML based format. And, and we could be, we could help the empire strike back. We can help the existing bookstore leaders around the world with an Andy Grove reference Intel inside. You know, Kobo could be inside and that that model would beat Amazon in most, most countries. In most countries online sales of books were, they were nowhere with the exception of the US and to a lesser degree the UK everywhere else, I mean online sales were like sub 7%, 6%. So where did the best book buyers go? They went to the physical bookstore that was the leader. They were card carrying loyalty members. And so we thought we can be a pure play, the tech platform, content and devices and apps and the global infrastructure underpinning it all. And we could go around the world and whisper in the ear of the CEOs of those bookseller companies, Amazon is coming and they're gonna, they're gonna hurt your business. And but with us you will deliver a competitive offering that your customers will love and you get to hold on to those customers. And more importantly the data, the data around what those customers are doing will help you cross the chasm and transition to the other side and decide which, which categories of books don't need space in stores anymore. Like computer books. I remember, I remember going to Barnes and Noble in Redmond when I was at Microsoft during college or, or chapters in Indigo in Canada to buy computer books like how to do whatever in Java or XML or Nobody does that anymore. And we could see that early in the data. And so that was, that was also part of the value prop. Anyhow, we, we had a different approach and back to my test, if Amazon could outspend us on whatever the strategy was, wasn't going to work. If they could out brand us, it was not going to work. They could out customer us, it wasn't going to work. So this approach competing with Amazon showing up typically later than us in an international market. So we had first mover advantage even though we did not come up with the Kobo first device before Kindle. I mean it was probably, probably a year plus later. We caught up quickly on the hardware which was surprising because we didn't know anything about making hardware. And there's a great story there about Mike Lazaritis, the co founder of BlackBerry or Research in Motion and how he helped us, how he helped me in particular. But we all of a sudden were winning the, you know, Wired and Wall Street Journal, Walt Mossberg kind of device, Consumer Reports, you name it, we are winning on best device we had. Took us a while but we caught up on content really fast. But internationally we were first mover and we were with the customer or the partner rather that the best loyalty card holding book buyers, not just readers. Readers also go to the library, don't actually buy as much but book buyers went to and all of a sudden I had $0 customer acquisition and I was impervious to Amazon coming in and usually early November and dominating the airwaves and plastering Kindle ads everywhere. Didn't matter because I had a built in captive customer base in these comp and these companies that became my partners and I had distribution already locked up. That was actually highly targeted distribution and I had great deals with these companies and so I had a strategy that was essentially not defeatable by the Amazon model of selling Kindle a closed experience only on the Amazon website and paying for those customers with mostly over the air, you know, TV ads, magazines and bus stops. Really expensive. They would spend a hundred million just to get started in the market. In advertising we spent zero on the content side.

Is it a land grab? Is it like each of you is trying to get the J.K. rowling novel first or can she license to both of you?

You know, in the beginning the publishers were very weary of giving any sort of unique access to Amazon so they kept their options open. It, it actually helped when Google got in the market even though they never were significant, significant market share player. And it is, it even helped when, when Apple got in the market. Although Apple, you know, ended up getting caught in a Department of justice, you know, lawsuit essentially with the publishers on price fixing. But it helped because all of a sudden it wasn't just us, the pure play. There was other people that wanted the books digitally as well. And so publishers had to level up their ability to distribute and distribute evenly and at the same time to all of us and, and something that actually Amazon started doing first and we, we were a fast follower on this. The others didn't really follow Apple and Google is self publishing. So we became a publisher and honestly in the beginning we did it because people were calling our customer service lines and having these really long calls with our CS agents on how to get their books on Kobo. And so we did a self publishing portal, self publishing program really just to reduce customer care costs. And, and you know, here's a stat for you at. At the time, any one publisher was 9 to 10% of the market in a particular country. Self publishing grew to be about 35%. So we were the biggest publishers in a market before long. And, and you know, some of these books are books that, you know, only the author and their mom or dad would ever buy. There's a long tail of those. But some of them became, you know, like 50 shades of gray or other, you know, other examples that really broke out. And the really big books like J.K. rowling, they had really special treatment. And to get those books, we needed to play by their, let's say, special rules. J.K. rowling actually was the digital distributor of her books. So we had to have this like, special, yeah, special connection with this entity that was wholly owned by J.K. rowling. And of course she partnered with publishers on it too. But it was, was unique. So yeah, no, eventually content was a level playing field, but it took a while, took at least probably a couple years to get up to that standard. I mean, Amazon had just built an infrastructure of people in country that worked with publishers, like a sales team effectively that we needed to also we do needed to create a version of it. And it took a couple years to get the countries that mattered.

So you have this, you know, largely, to use your word, undefeatable business, large, fragmented, evergreen international market. Now, theoretically you could go for a long time, talk me through the decision to sell.

Yeah, so when we started like week one of turning the service on, I think we sold a few books, like less than 10 in the first day. By the time, you know, we even had an offer around selling the business we were doing at peak period, something like a million books a day, maybe even more like millions a day at peak peak times around like Christmas morning, like a million an hour. So pretty crazy. And we went from like zero countries to every country, like over 190, from one language to north of 90 languages. And so, I mean, we had a good clock speed, you know, the business was humming. And we realized something really important which was, and this is something that Amazon, I think knew from the start. It took us a while to learn it, that the device, the E readers, which we became very good at building. And like I mentioned, we won all these Awards, we generally beat them in most, most awards or reviews by the end of the second year, let's say pretty incredible for a company that never built a device before or people that never built a device before. But that device was the driver of content acquisition, of content purchasing. So in short, people that download the app, they also had other apps, they were promiscuous. They might buy from you, they might not. There was no subscription model in those days, so you had to, like, reacquire them all the time. So those users were actually quite expensive and not that productive. And they were not what drove revenues. And I remember, I remember this point about devices. And obviously, you know, smartphones were always already in the market, iPads became common or tablets came into the market. My board said, like, why are we investing so much in these devices? And we would say, because they are the single best driver of content sales and retention and, you know, customer acquisition. You get loyal customers that buy from you not once a year, but like several times a month, and there's just no replacing that kind of customer. And they said, well, what if we got. What if we got like, the best OEM deal, you know, where we could be embedded on the home screen of one of the big guys, one of the big smartphone manufacturers? And I said, okay, well, we're not going to get Apple. Because by then they had already launched ibooks and they just had a policy which has been challenged in the courts of late, that, you know, if you were in their business, even though they started their business later, they weren't going to play nice. I said, which one would you like me to get? And they said, well, I don't know, maybe Samsung, Motorola, like, it went down a list. We went and got all of them, every single one, including and most importantly Samsung. And we're embedded in that home screen. And Samsung and all of these other smartphones where we got these embed deals or OEM deals, never amounted to more than 5% of sales. So the device was critical. The E Reader was critical. However, as we started to get scale, as we started to distribute in Walmarts and Best Buys and Tesco's and Targets and other large chains around the world. We couldn't play this game of, hey, you're my partner. And So I need 50% of, you know, the cash for this order upon order, another 20, another 25 before, you know, six weeks before, couldn't play that game at all. I would get the order and then I would deliver the product. And at some point later, I mean, for walmart, could be 120 days, I would get paid and even then they wouldn't pay a hundred percent. It was always painful. So the device was critical. The working capital demands were enormous. Right. We went from zero to a hundred million of sales in the first year of devices and that doubled the next year and it doubled again the next year. So you can see where I'm going. The working capital needs were massive. There's no venture capital money that in those days that would do that deal. Most banks would not do that deal because from their standpoint they're like, Amazon could drop like a new device in between one of your gigantic orders or drop the price of an existing device and then you'd be screwed. So no thanks. So we had this moment in August of 2011 and that moment was we just raised a series C super fast, 50 million bucks, um, which in those days was a big number. And forecasts were coming in for the number of readers I needed for the holiday season. And they were more than double what I told investors, more than double the working capital that we had. I didn't know how to, didn't really know how to I was going to fund it. We went to talk to banks, was a no go. No one was willing to give us, you know, big line or term debt or anything like that. And we thought maybe we can go public. And we, so we explored that but we're like, that's not, that's not enough time. We can't go public in the next six weeks. So literally right around that time we had this random call from ebay. I believe it's John Donahoe was the CEO at the time, I think just stepped down from Nike. And within days we heard from the head CEO of Buy.com. buy.com. I knew of them, but honestly I'd kind of forgotten about them. They were owned by Rakuten, large Japanese.

Internet e commerce player.

And, and then within days we also had talked to Russ Grandinetti who's running.

The Kindle program for Amazon. You're in play.

We were in play. And it happened very fast. Like literally private jets showed up in Toronto and like, like small armies of people and, and it looked like, you know, this was a real option and we did not want to sell. We did not think, you know, it was the right time to sell. But this working capital problem and how we were going to fund the business, we even went to some of the giant pension funds in the country and some of the other venture funds. We knew strategics. There was no path and Whether or not we got through that holiday, holiday season and, you know, I had a belief that you're not going forward, you're going backwards. So that, that was a mental block to begin with. But let's say we, we could get through that holiday season, buy some time, maybe not sell as many devices, and then, you know, figure out the funding for the year ahead. Honestly, I just felt like we, we would fall too far behind. And so the option of selling started to look very real. And we literally made the decision to sell while in a hotel room at the Jor, sank the Four Seasons in Paris with my lead investor and chairman. And it was a hard decision, no question about it. I, I never got into any of these companies to sell them and monetize. Believe it or not, you know, my engineering mindset, you know, nerd Olympics winner ethos was to build something great and solve, solve big problems. And eventually I really fell in love with building teams and culture. And we were so on a high at that moment that selling was the last thing on my mind. But it seemed like it was the only way to enable the company to keep staying in the game and still grow.

I haven't followed it since. Is it still around?

Yeah. So one of my, my exec team members is the CEO, has been CEO for, I think, the last seven or eight years. Michael Tamlin is amazing, amazing CEO and leader there, doing great. The new devices are selling and selling almost as much as ever. The content, more of it, different kinds. They have a subscription model, they sell around the world, and they're part of a bigger family. I mean, part of my thesis at the time. And I always ask this question in those moments, like, what's the future model here look like? Does this thing really stand alone or does it belong somewhere else? Like, does it belong in an app store? Which was the model that I eventually kind of bought into and believed, you know, the other alternative would be that it belongs inside, you know, a publisher, a giant publisher, which felt like the wrong thing. I felt like it was a no, no win scenario or, you know, kill the company scenario. So it's either like you're shooting for the stars to be the Netflix of the category, but unfortunately you just needed a ton of capital, at least for the next little while, and that capital was impossible to get, or you were going to become a part of an app store. Selling to Amazon would have been really eventually giving up the brand and becoming a part of their Kindle brand and the international, you know, we would boost them internationally because we were number One or number two in every market we were in, we ended up buying the Sony business. They were actually first. Sony was first. We bought that Sony business for a dollar. Kobo did. So, yeah, in the end we made, we made the call and it was not an easy decision. And it was based on the premise that books was not TV or movies. It was a much smaller category. It would get tucked in to a bigger app store. Ebay didn't make any sense. Amazon felt like giving up and honestly, it felt like screwing all of my core partners around the world with someone who is their enemy. Rakuten felt global and you know, Mickey is a real entrepreneur. The founder of Rakuten was still running it, it's founder and CEO. And it just seemed like the right fit.

That's amazing. I love it. So, first of all, I appreciate you taking me through all this history. Let's talk about you, what you've been actually been doing for the last 10 years. Let's spend some time there. Right? So League, you're 10 years in, you got 20 million users. Maybe just take one second and tell folks what League is.

Yeah. So the thesis at the start was very simple. Healthcare is arguably one of the most important, if not the most important industry. We all need it. Unfortunately, most of us can't get enough of it or can't get it when we need it. And it's generally a one size fits all. My bet was that health care would catch up in terms of its digital transformation. It would go through a digital transformation that would come with a business transformation where it would be more about the end consumer and data. Data, my healthcare data, your healthcare data would increasingly be vital in delivering a personalized healthcare experience for everybody. So our mission was it's about the consumer. We want to empower the consumer every day with our health. And we're going to build a technology platform that is going to create this magical experience that everyone's going to want to use or their health care to get their meds, book appointments with doctors, see their results, pay with their insurance or with their credit card, follow a healthcare program, maybe a chronic condition management program, and on and on and on and on. Any job that you can do for your health. We wanted to make available in our platform. We started with an idea, which is I'm going to put all this platform stuff together into an app and sell that app as a software, as a service model to employers for their employees. And the value prop to them was we're going to bring all of your benefits and health into one Place to go. One app called the League app where you can go to access, navigate and pay. And so we did that. And to be honest, like commercially we were slower to get going with this company with League than we were with Kobo. At the end of year two, we started to get real, some real traction and we thought, okay, this employer thing is it, let's sell to small to medium sized businesses. We did that throughout year three. We doubled or actually more than doubled. You know the old mantra of triple, triple, double, double, double.

Yeah, yeah. But Jason Lincoln, best in class SaaS special.

Yeah, so we, we were beating the triple, triple. You know, we did the first triple from a million in ARR in six months and did the next triple in about eight months and, and then kind of double doubled from there. And we did so by moving up market. So we sold to ever larger businesses and we became the place that all of their employees would go all the time to access, navigate and pay for healthcare. And their insurance was kind of embedded. Like we, we acted almost as an overlay on the various insurance companies or benefits offerings they had. And, but that's really not what the company is today. That drove an exponential triple, triple, double, double, double curve. And then something happened. It was an out of left field conversation and it was a question really, could we build on your platform so there's not only just the League app but there's other apps. And it was from a large Canadian healthcare leader retailer, Shoppers Drug Mart. It's part of Loblaw. They wanted to create a digital front door to healthcare and they wanted to shift their business model, which, you know, has pharmacy and beauty and grocery to offer more care. And seeing that there is a shortage of primary care, it's hard to get care. They could be the front door to healthcare for Canadians. And so all of a sudden we had a deal that was, was almost bigger than the entire company after the triple, triple, double, double, double. And you know, my board thought, well, this looks like it could be a distraction.

Revenue concentration, risk, new line of business. Yeah, yeah.

So we had that debate and we were unanimous that it's something we should try. And all of a sudden the pandemic happened and the deal still went forward, which was, you know, uncertain at best. We delivered and all of a sudden we went from you know, winning hundreds or single digit thousands of people at a time by winning their employer to winning tens and hundreds of thousands and millions at a time. And it was a real, you know, real scale shift step, massive step function that happened over the course of six months.

I guess your platform was well built.

Very good point. It was, you know, we can handle the scale from a performance, performance standpoint. And all of a sudden we, we had multiple apps running on League and we thought, I wonder if we could do this again. Was this a one off or could we do it again? So we're going through all the details, I'll just share. We have done that over and over and over again. And so essentially what we are today is a platform that helps you build any kind of healthcare experience that is going to give you the highest engagement with your end consumer, your end user. And that engagement, high engagement with a healthcare experience can turn into real dollar cost savings. So better economics, but more importantly, better outcomes for the individual. And so we work with the largest insurance companies in the world, the largest healthcare systems and healthcare providers in the world. We just won our first international, you know, big system deal in Australia. It's not even counted in our 20, 25 million number because they would have about 10 million Australians on that. We just won our first government deal, which we haven't announced yet. Another 5,5 million people in a state. So we are a large scale provider of, of healthcare software to create the best customer experiences in healthcare.

That's amazing. So much more than I thought it was, which is really cool. I initially thought, especially going into the pandemic. Oh man, Mike's selling to hr. They're gonna have their budgets cut. This is gonna be a shit show. So I love that there's more to it. I'm curious, are you able to prove efficacy, like close the loop and show that engagement leads to these outcomes and therefore leads. Basically the thing sells itself because the ROI is there.

Yeah, so it's a great question. When I think of roi, I think of layers of roi. The first layer is really, you know, around cost and speed. So most of our customers have IT departments, most of them have existing websites and applications and most of them are not very good. To be quite candid, or at least across the measure of engagement or nps. They're not, they're not really used. And we offer a way to move, you know, cheaper, faster, better launch in a matter of a few months versus a few years launch with a SaaS or platform as service model that scales with users and starts lower versus spending, I don't know, 10, 30, 100 million of capital with your favorite consulting shop and your IT team. And we've proven time and time again that we can 10x the engagement at least that you already have. So it Starts with a straight like arb on labor or TCO story. Why would you do this? To reinvent the wheel yourself. You should just build on us. And that alone provides a ton of value. And we see it like our customers end up shutting down, you know, 10, 15, $20 million worth of legacy systems that nobody uses anymore and end up saving dollars right away. And then they, then they get this crazy engagement curve which allows them to also self serve customers. So call center costs can go down, but where you are going is what I think of as the third layer and that's around efficacy. And that takes time from a launch. Right. It doesn't happen in one year. You see it though, over two, three, four years, depending on the conditions you are looking for. You know, I had a customer of mine come to my board meeting actually at the beginning of last week and he shared this is a large insurer. He shared how he has a dashboard that shows him what his population looks like now, thanks to League, in terms of health data and health risks stratified, quantified and how those risks are changing. And with that data, he and his team can make investments on where he wants to move the needle and get an roi. But there's a whole other dimension which I honestly, even to this day, I'm surprised I didn't totally understand it. They make capital reserve decisions at the end of every period, every, every month. Like, okay, we've got these many potential people that are on claim and might be on claim for diabetes. 80 million. We have this many people that, you know, have children and those children that may have early childhood development issues, autism, et cetera, you know, 30 million. Well, those decisions can now be made with real time data and, and you can make incredibly efficient capital reserve and capital optimization decisions based on that. So more of this will show up in time. I can tell you across various disease states that our users on a lean powered platform, you know, follow programs and those programs yield results. Lower incidence, higher adherence, you know, greater preventative measures taken. Like a very simple example I use all the time is it costs like a thousand to $2,000 to get a colonoscopy. Colon cancer costs, you know, half a million to a million dollars. You know, and as a, as a unhappy recipient of this letter that showed up in my house last year when I turned 50 that I need to.

Do the poop test. Yeah, I've been there. Yeah.

Yeah, so, so, you know, we and most of my friends toss that thing in the garbage. We show that we can get more people to respond to Preventative measures. So a ton of roi. But these are big populations, big platforms and across disease states, some disease states, it just takes longer to see the roi. Some we already see it and it's powerful.

I love it. Well, what you're doing is super important, right? We have a, you're, you're international obviously, but I just think of North America in particular the U.S. right? Aging population, the standard American diet doesn't work, right. Like what is the rate of chronic disease health care costs? I mean it's a mess.

Yeah, this is, this is a problem globally and, and some countries have it much worse, believe it or not. But certainly the US and Canada are both in models, even though we have different systems models that are unsustainable. And unfortunately we will, we will see, I live in Toronto and we will see this in Canada, that services will be cut, it's the only way. Because no Canadian that I know is going to be happy with a 60% or 65%, you know, total tax on income. We're already seeing, you know, capital gains tax go up to make up revenue shortfalls. That is not a sustainable direction either. So, so you gotta solve the system from a first principles problem. Technology can give leverage, prevention and some of the other, you know, things that we enable self service, they do lower costs, they do provide more care in the palm of people's hands. They don't need doctors for everything. They can go to pharmacists and go to technology, you know, through a lead powered app. So I see this as a massive, massive opportunity. We've just really begun 10 years in with about 25 million people. You know, in the next 10 years we want to get to about 250 million people and you know, we're well on our way.

As we wrap up, I know we're in overtime. I want to hit you with just a couple of rapid fire things. I spent lunch today reading your reflections from the first five years because you haven't posted all 10. And there were just a few things that stood out for me. One is, you know you, you talked about this culture of winning that you saw with Microsoft ethos with the Navy SEALs of all in all the time. You have this motto of kind of life after all is about living and living your best life as a core value. Are these concepts at odds for you? Like I don't see you often. I think the last time I saw you was 2019. But every time I see you, you have a smile on your face. You strike me as a happy person. You've been through all of these challenges, you haven't burnt out, so I feel like you're having some fun along the way. So are you, are you able to kind of thread the needle and have that Navy SEAL intensity but still have a great life? And if so, how.

Yeah, it's a choice. Is the, is the way I would answer that. And I choose to live my best life. It's a core value at League. There's a core value back when I first worked with Elon and Kimble and it's probably an area where we, we disagreed a little bit. You know, I valued family and I valued team perhaps in a different way than they did at the time. And for me that's only grown even more important and richer. And you know, I'm very protective of, of weekends. It's not that I don't work on weekends. I mean, it's hard to like, it is hard when you are the founder, co, founder, CEO to ever shut it off. I do think about it a lot, but I enjoy it. And I do exercise and find new challenges like half marathons and triathlons and stuff like that to go after. Like it provides, it provides release and distraction. And as Joe Rogan I think once said, like, it's hard to be very stressed or feel anxiety if there's a hundred pound weight, you know, balancing over your head, you know. So yeah, I do, I do prioritize living my best life and yes, absolutely, it is at odds with all in all the time. And I just try to thread the needle. And I think, you know, I think a lot of founders, you know, hear about things like balance, you know, maybe from one, the angel on their shoulder is like, yeah, like should have balance. And the other side, it's like you've got to be like working 22 hour days and going for it. I, I don't know that balance is a real thing. I just try to, I just try to slot all the good things that I really want and sometimes those are more about the company than, than not, and sometimes they're more about my family than not. But priority management and constant prioritization is something that you've got to do well as a CEO. So I try to do it and I try to thread the needle. I'm not always great at it. And honestly, I will say this to anyone that's listening. It's been a hard five years to be a founder or CEO of anything. So threading the needle through a once in a hundred year pandemic, the absolute swing and inflation and you know, Liquidity in the market and fun. Like, it's been very hard. So threading the needle in the last five years, I felt harder than maybe at any other point in my. In my lifetime. But I choose to have the smile on my face and I choose to hold those values even though they conflict. I think that's okay.

I love it. Maybe last one for you, Mike. Um, I Talk with my CEOs all the time about how as your company gets bigger, your role really becomes a communications role. Right. So you're just getting people aligned and going in the right direction. And I would love it if you could tell folks about the week ahead memo that you wrote every week and the role that played in, you know, fulfilling your communications responsibilities as CEO.

Yeah, so chief storyteller is absolutely part of the gig. And it never stops. And, you know, so you find different avenues, different channels, different mediums to tell your story. And one that I have found and has been very useful for me. I did a version of it at Kobo, different and certainly more pronounced here at League. And it starts on Sunday night. And I start to think about what's important, what to share from a sort of achievement celebration, screw up, you know, relevant news story, market story, context from my week prior, and use that to try to focus the team on what matters in the week ahead. And I write it on Sunday night, sometimes I finish it Monday morning. I. I aim for 52 weeks a year. I probably have averaged about 48, and I've done that for 10 years. It's rare that I give up the pen, so to speak. I did to a co. My co founder, Dan, this past week, and I had actually some great material that I wanted to use, but I decided I had to hold it. But I do that as a way to reach all my people all the time. Um, I don't expect that everyone's gonna read it every week. I don't. But we also do town halls at Thursday at 4 o'. Clock, like clockwork, since the beginning. And there's other every week. Um, and so there are a number of vehicles where, you know, I hope to catch some people multiple times in a week. I hope to catch some people at least once. Everyone at least once. And the TWA, which I now have a collection of nearly 500 of, have served not only as a great way to communicate, but also a great way to reflect. Because at the end of every year, we have a year in review, Town hall, which has turned into, like, a lot of fun, to be totally honest. But I just go back to the Twas. And I always include this section of the year in review, Town hall, where I start with the time machine, which in my pop culture brain is a DeLorean. And so we go. We go through a trip in the time machine. And I. I use the Twas as a key way to kind of, you know, reflect on what's important in that story to cap off the year. And frankly, I've used it for the 10 stories of 10 years to reflect on the last decade. And it's been. It's been a great journey. I'm not done yet. I just wrote Year six a few days ago. I'm working on year seven, and, you know, when I'm done, I'll do an epilogue for, you know, the next decade. But my goal is to get it into a book by the end of this year and get it in the hands of every employee, investor, friend, anyone that cares to read it.

That's amazing. I truly love it. And, you know, you brought up a really key word, right? And what you're doing there, which is giving context. You have all the context, and it's important for every individual contributor to have it so they can connect the dots between their work, the bigger pictures. So important, everybody.

At the end of the day, it's. Look, it's work, and it's a place where you can come and do that work and get paid for it. But we're all. We all need meaning for what we're doing and, you know, restating, you know, the vision and the mission and what we're about and doing that regularly is a part of that. But, you know, these stories that show up in TWA and Town hall and Urine Review and these reflections, these are the. These are the threads that weave together to form the meaning, you know, that matters for people. So I. It's important to me. I think it's important to a lot of people here. And regardless, I'm gonna keep doing it because I like it and I think it. I think it works.

Well, Mike, this has been a real pleasure. So many great stories here. I've really enjoyed hearing them. I. I wish we were sitting by a fire, drinking a single malt, and you could just keep sharing stories. But maybe. Maybe another time.

Another time. Single malt sounds wonderful. I appreciate you inviting me and look forward to chatting again, maybe with that single mall.

Sounds good. All right, you. Well, thank you. Hey, thanks for listening to the Startup CEO show.

We'll see you next time.