Entrepreneurship is a marathon, not a sprint, usually! Persistence pays, as Henry’s story beautifully illustrates!
Sramana Mitra: Let’s start at the very beginning of your story. Where were you born, raised, and in what kind of circumstances? What is the backstory to the Limeade story?
Henry Albrecht: I was born and raised in Seattle, Washington. I’m the youngest of four boys. I think that probably says a lot about my personality, competitiveness, and desire to be heard. I had two wonderful parents who embodied the Midwestern work ethic. My dad was raised on a farm in Iowa. He was the man of the family at age 10 when his father passed away. He was driving a tractor before he could reach the pedals. He brought that into the way that we were raised, which was to work hard and be successful. As the youngest, I was always trying to beat my older brothers even though they beat me a lot more often than I beat them.
Sramana Mitra: What did you go on to do in terms of college? What did you decide to study?
Henry Albrecht: I lived in Seattle till I was 18, then I went to college. I went to Rice University in my freshman year. I loved Rice. I really enjoyed the academic rigor. I was into English Literature. I love stories, but I also wanted to play basketball. I ended up transferring to a smaller school called Claremont College in Los Angeles where I combined a lot of the things I was passionate about, which are team sports, English Literature, and Business and Economics.
I have a dual major in English Literature and Economics. My thoughts at that time were of either being a novelist, English professor, or getting a job in Economics. Luckily, I had one year to think about it because I was hired to play basketball in Portugal for a year after college. That gave me some time to play basketball and think about what my future should be.
Sramana Mitra: What did you come up with?
Henry Albrecht: After coming back from Europe, I decided to move to the Bay Area. I have this dual academic interest. One is English and storytelling and the other is data, statistics, and insights into data. I took the path towards the latter. I joined a firm called Law and Economics Consulting Group as an Econometric Consultant, which meant we helped big companies analyze Big Data before Big Data was cool. This was in the early ’90s. We did litigation consulting and a lot of stock fraud investigation. I actually did a really interesting pricing project where we looked at multi-product companies and helped them optimize their pricing in all the markets they’re in.
I loved the analytics and statistics of that but I really didn’t love the consulting model, which isn’t about building cooler things faster and being as efficient as you can. Ultimately, it’s about billing hours. I didn’t find that mission-driven. I found myself jaded because of that model.
Sramana Mitra: What did you do after that?
Henry Albrecht: So, I was quite jaded by the world of business. I wanted something with more meaning. Luckily, I was admitted to Northwestern University’s Kellogg Graduate School. Frankly, I wasn’t even sure I wanted an MBA or to be in business at all, but I don’t have the temperament or patience to be a novelist or any of the other things I thought I wanted to do when I was young. Mentally, I was well-equipped to be in business, but I wasn’t committed until I went to business school. I fell in love with marketing, technology, and human capital. I liked thinking about teams and people in business the same way I think about teams in sports. How do you get people all aligned and going in the same direction?
This was the dot-com era, so there was so much electric energy pouring into innovation and technology. To me, marketing was revolutionized by the Internet and applying a lot of interesting economic models to how new technologies were being adopted in the marketplace. I totally fell in love with it. I knew I had to work in Silicon Valley and at a great company that, not only has technology, but also has the power of a brand and team.
Sramana Mitra: What timeframe are we talking?
Henry Albrecht: I went to school in 1997. I finished in 1999.
Sramana Mitra: You’re landing in Silicon Valley right in the middle of the bubble.
Henry Albrecht: I was. I was really glad I chose to go for a bigger company.
Sramana Mitra: Where did you go to?
Henry Albrecht: I joined Intuit. The founder of Intuit was Scott Cook. I’m not a big hero believer but if I had a business hero, it would be Scott Cook because of the company he built and because of how intentional he was about building a great company. That’s what I wanted to learn. I wanted to be a great product manager and ultimately beyond all that, build something lasting and great.
Sramana Mitra: What function did you work in at Intuit?
Henry Albrecht: I started as a product manager. Then I expanded in other management roles where they had to take a lot of consumer packages and think about not just the product and technology but the brand around it and how people feel about it when they use it.
Sramana Mitra: Intuit is one of the few companies from the earlier era that is successfully selling into the small business market. Very few companies of that generation have been successful in doing that. Now, it’s changing. There are a lot more companies that are using all these online marketing techniques like Google PPC to sell into small businesses.
Henry Albrecht: I remember that. There were aren’t a lot who really knew how to get into the small businesses. More than anybody else who tried to attack their market, Microsoft went after them many times. They weren’t as obsessed about the customer as Intuit was. That was another great lesson I learned there. Not just to think about it as a brand and technology but be obsessed about the user and understand not just what they’re buying and doing but what they’re thinking when they’re clicking on something and how they feel when they’re walking in the retail store looking at your product.
Sramana Mitra: How long did you stay at Intuit?
Henry Albrecht: I was at Intuit for about four and a half years. I left in the Fall of 2003.
Sramana Mitra: What did you do next?
Henry Albrecht: That was the time when my family and I moved back to Seattle. After moving away at 18, I moved back at age 35 and I took a job. I was the VP of Product Management at a venture-backed enterprise software company called Bocada. That helped me see some interesting contrasts. It helped me re-ignite the idea that I had while at Intuit. If Intuit can build a system that helps you measurably improve your financial well-being, what if there’s a software system that can measurably improve your overall well-being?
At this job, I was arguing with my wife more than necessary. I was not loving every aspect of my work. Then this idea came to me. What if you took your passion for marketing, analytics, self-improvement, and evidence-based approaches and you build a company around this idea that you can measurably improve well-being in the world. It sounded really crazy. It sounded a little absurd to my Iowa farm boy father but I managed with enough cash and curiosity to eventually get him to be one of the first investors of the business. I quit my job and started working on the problem.
Sramana Mitra: What year was that?
Henry Albrecht: I quit my job at the end of 2005 and founded the company at the beginning of 2006.
Sramana Mitra: This is Limeade, yes?
Henry Albrecht: Yes.
Sramana Mitra: You have a product management background. Walk me through the product management process that you came up with in turning this nebulous concept into a startup?
Henry Albrecht: Measuring and improving are the two anchors of the system. I felt we needed an assessment and we had to be able to assess well-being. I partnered with Laura Hammer who had a Ph.D. in Organizational Psychology but who was at Microsoft at that time developing all of their organizational models. I said, “Let’s build the world’s first well-being assessment.” We also needed improvement. How do people improve? I did some research on how people improve. I studied psychology, sociology, and medicine.
We basically built a set of user stories. At that time, we called them market requirements and functional requirements. Around those stories, we built a series of iterative paper and wireframe prototypes that transformed these evidence-based comprehensive assessments into personalized recommendations to a smaller set of recommended goals. Behavioral science would suggest that one is better than two, two is better than three if you’re trying to get people to improve. Peer support was a core element of it because we had learned that people need other people to help them stick to their commitment. We had a system of giving people periodic nudges and rewards, whether they be monetary or social.
That early concept has been through nine years of iteration. For the most part, our core philosophy has ultimately remained the same, which is that health and well-being and your performance in life and work are closely related things. If you put all those in the context of a culture that supports improvement, not only will that individual improve, but the company will benefit from that. The company will show they care about people, which helps them in terms of attracting and retaining talent.
Sramana Mitra: You decided to frame this whole thing in the context of organizational well-being?
Henry Albrecht: Yes.
Sramana Mitra: Your clients were enterprise customers?
Henry Albrecht: That is correct. There is a reason for that. The reason is, companies have such a unique and powerful role to play in people’s improvement. I saw that first-hand in Intuit. First of all, nowadays, people at companies are spending 8 to 12 hours a day. I think in terms of touch points, most of a human being’s touch point with other people occur at work as well. That’s where peer support can happen. You’re seeing, in many offices, 50 people with 100 different touch points. You have all this time but you also have meaningful touch points. You have long meetings and you have time together. The next thing was financial rewards and/or penalties. Having the ability to have some control of things in the form of mandates and rewards is really a powerful thing as well.
Sramana Mitra: Basically, these are forcing functions that are in the hands of corporations or enterprises that if you were trying to do it directly with individuals, you wouldn’t have access to.
Henry Albrecht: Yes. Most importantly, work is where most people get the real meaning in their lives. Work is a core part of life. What you do in your work and what you decide to do should be very aligned with what you are about as a human being.
Sramana Mitra: It should be aligned with your values otherwise, you’re never happy.
Henry Albrecht: The best companies get this and they actually recruit and attract people who are fundamentally drawn to the core mission of their role or of the company. Companies that don’t get it tend to hire people who are there for a paycheck. The ultimate success of those companies depends on how more aligned they are on that culture. I had seen the way Intuit had done that and I was always blown away by that. I didn’t know that companies could be like that. I know I wanted to build something as intentional as Intuit.
Sramana Mitra: Just to complete the product discussion, can you give us a couple of examples of these stories that you built just to illustrate the kinds of things that you were trying to address.
Henry Albrecht: The first was our well-being assessment. In doing the research, we found that it’s not just physical health or stress that drive well-being. It was also these interesting concepts that were coming out like optimism, resilience, sense of team, and the psychological concept of self-efficacy, which means belief in your abilities. We had a professional rigorous assessment designed. We built these questions into an online quiz. At the end, you get a personalized dashboard of your well-being. What are your top three strengths that you can leverage or improve and what are the top three areas that the system that can then be improved? We have this assessment with a personal recommendation engine that gives you this.
Another example is social support. We developed what we call challenges. Challenges can be from the company to everyone such as when you have a meeting, do a walking meeting. Take 10,000 steps a day, or be trained on company values. They can also be tailored to just one department or region. It can also be just a challenge for women over 50 to have a mammogram or it could be for software developers. Then there’s personal challenges where I can challenge a few of my friends to improve our diet. We have this concept that peer support works on multiple different levels. We have top-down challenges, targeted challenges, peer-to-peer challenges, team versus team challenges, and a whole array of things that we built and other elements that help people connect with their colleagues.
Sramana Mitra: How long did it take you to come up with something with which you could go to market?
Henry Albrecht: We probably had an alpha product after a full year because it was a new idea. Now, the concept of improving well-being is a very popular corporate theme. There were no responses in 2006. It took another year to go through the beta phase and have paying customers.
Sramana Mitra: While you were developing the alpha, were there customers in the loop?
Henry Albrecht: We brought on a product manager and a chief technical officer. We were iterating.
Sramana Mitra: Were there customers involved?
Henry Albrecht: Yes, we were doing usability research. We were running these by actual users. We would go to coffee shops and pay people in coffee or a $25 gift card to spend an hour doing usability research.
Sramana Mitra: Were there people from HR at enterprises who would eventually be the buyers of this system?
Henry Albrecht: Yes. That started when we were beta ready. That was late in 2007 and early 2008.
Sramana Mitra: How did you finance the alpha and beta phases?
Henry Albrecht: The first funding came from my life savings of which I put in every dime. Next came friends, family, and mostly Seattle-based angel investors. In 2008 and 2009, we started to accumulate real customers. We started as a 30-person employer. Then, 100 on to 1,500. We charge a per-employee per-month fee for a couple of dollars. Even if you have a core team of five people working on this, we’re still moving a lot of money.
Sramana Mitra: How much did you put in of your own savings?
Henry Albrecht: $250,000.
Sramana Mitra: How much did you raise from friends and family?
Henry Albrecht: Over the whole span of those couple of years, we were constantly raising money. The total amount we raised was $3 million. We closed that round in January of 2010.
Sramana Mitra: You were raising from friends and family along the way before angels came in. I imagine you had to have some customer traction before angels paid attention to you.
Henry Albrecht: Yes, we had customer traction. We started having customer traction in 2008. It wasn’t until late 2009 when we signed up our first customers. That allowed us to raise the rest of our angel money and close that round in January of 2010.
Sramana Mitra: Essentially, it was more than three years before you could close that angel round.
Henry Albrecht: Yes, that’s correct. It was almost four years total.
Sramana Mitra: When you were raising from friends and family, was that in convertible debt? How were you structuring that money?
Henry Albrecht: It was all convertible debt. When we closed the angel round, it was on a $5 million pre-money valuation.
Sramana Mitra: That’s not bad. That’s pretty good. So in 2010, you had some angel money. There were paying customers in the loop. What happens next?
Henry Albrecht: That’s when I would use the fish metaphor. We went from selling shrimps and herrings to salmons. Then, we got a couple of whales. We signed up our first 10,000 plus employer customers.
Sramana Mitra: Who was that?
Henry Albrecht: One of our first big customers was REI, the retailer.
Sramana Mitra: How did you get to that large account?
Henry Albrecht: We did a lot of cold-calling. We did a lot of showing up on people’s doorsteps. We did everything you could imagine to make sure that we wiggle our way into meetings. We had a really interesting idea that was well-aligned with REI who invested in their people as assets.
Sramana Mitra: So in 2010, you got a couple of mid-sized customers. What kind of revenue were you able to get to in 2010? How did that correlate with your burn rate?
Henry Albrecht: We were still burning fast. We got past the million dollar mark in 2011. I think we went about a million in 2010. We raised our first institutional round in the fall of 2012. Our run rate was in the $4 million to $5 million range.
Sramana Mitra: About six years from inception, you raised your first institutional round?
Henry Albrecht: That’s correct.
Sramana Mitra: Who did you raise your institutional funding from?
Henry Albrecht: From a San Diego-based enterprise SaaS venture fund called TVC Capital.
Sramana Mitra: Why them?
Henry Albrecht: They had a very specific thesis about the types of companies they like to invest in. They like to invest in companies who had proven product market fit and that had reached a certain level of traction. They only invested in SaaS companies that were B2B. Frankly, a lot of this is personal. Who do you want on your board and who do you think will provide value once they’ve invested? Their partner Steve Hammerslag has been CEO of a couple of public companies. Having been told ‘No’ by at least 50 venture investors and 400 angels in the last several years, I really valued having an operator and not a risk-averse venture investor on the board.
Sramana Mitra: What’s the next major milestone?
Henry Albrecht: Form a financing perspective, two years later, we raised our Series C round, which was a $25 million round including another $5 million from GVC and $20 million from Oak HC/FT. First of all, it’s the largest woman-run venture capital firm in the United States. Secondly, I think it’s the premier health technology investment company. Lastly, they had the exact same thing that GVC brought, which was real people who were extremely well-respected.
Sramana Mitra: What were some of the key strategic moves in terms of operations, go-to market, and product between the two rounds?
Henry Albrecht: In 2012, we started realizing that there was a big difference between having the most innovative and cool technology and delighting a very large Fortune 500 enterprise. I think we really doubled down in the 2012 time frame on true enterprise class customer service and success. That was an investment that we were really happy to make. We had to just make that positive and real investment so we could commit to serving the top Fortune firms. It’s a great strength of ours in the market.
Sramana Mitra: Specifically, what was that all about? What did you need to change in your style of operations?
Henry Albrecht: Since our product is about bringing culture to life and helping every employee improve, it has to be adopted at a pretty high level within the company to be successful. We needed the Chief Human Resources Officer, CEO, CFO, and others to be champions of the program. Are we hiring people who have the wherewithal and skills to get to that level? We have a Chief Operating Officer. That was a big step for us. We have a VP – Customer Success who came out of HR with 18 years’ experience. Those were just large executive, process, and technology investments.
Sramana Mitra: What else in the process of building the company is worth discussing or something that you learned that failed?
Henry Albrecht: We learned that you can’t make every customer happy. We’ve done very well at qualifying customers where we can surely be successful. If you have a horrendous culture and you’re not willing to take it seriously and then you put a well-being improvement program, it’s like putting a band-aid on a gaping wound. It’s not going to stop the bleeding. You’ll have a really unhappy customer interaction. The thing that people don’t realize about that is that saying ‘No’ to 80% of customers might be the best way for you to succeed. The side effect of that is employee morale is extremely high. I think there is a connection there.
The other thing is we drink our own Limeade. Being in the business of employee well-being, we better be the best at this. I don’t know for the best or not, but I know that there’s no company that’s more intentional about their culture and how they bring their values to life than at Limeade. That focus, effort, and authenticity shines through when we show up for customers.
Sramana Mitra: What are you reading these days? You said you have a passion for literature?
Henry Albrecht: I’m reading psychology. Because I’m a self-improvement nut, I’ve been reading a lot about the stages of learning and development and how to interact with people. As we grow and scale our company, I’m focused a lot on being mindful of my own emotions and how I interact with people. Ultimately, I think all of those things make me a better dad, husband, and leader.
Sramana Mitra: No literature. It’s all self-improvement.
Henry Albrecht: I read a lot of novels as well, but your time for reading novels gets a little lighter when you have three children and a growing company to manage.