As part of my series about the “Five Things You Need To Be A Highly Effective Leader During Turbulent Times,” I had the pleasure of interviewing Patrick Spain, CEO of First Stop Health, which offers Telemedicine and Virtual Mental Health as an employee benefit. COVID-19 has both created new opportunities for and threats to the company that Spain is addressing.
Spain is also Chairman of Newser, a news curation and summarization service with an audience of millions of monthly readers.
Spain serves as board chairman of Owler, a service that uses crowdsourcing and AI to revolutionize business data collection, quality and delivery. He also serves on the board of Occasion, a Chicago-based calendaring and payment platform for merchants.
As co-founder and CEO of Hoover’s, Inc., Spain transformed a small, unprofitable business book publisher into a profitable, publicly traded service that became the preeminent web publisher of company information before selling it to Dun & Bradstreet.
Spain was also the founded HighBeam Research in 2002, which was a turnaround of a failed dotcom business, which he sold to Cengage in 2008.
Spain is an active alum of the University of Chicago and is on the Board of Governors of microlender Opportunity International.
He has a BA from the University of Chicago in Ancient Roman History and a JD from Boston University. Spain resides in Austin, TX.
Thank you so much for your time! I know that you are a very busy person. Our readers would love to “get to know you” a bit better. Can you tell us a bit about your ‘backstory’ and how you got started?
I grew up in Washington, DC and overseas. The son of a diplomat (dad) and an editor of CIA documents (mom), I was exposed to a larger world from a very early age. Most of my close relatives have worked for the government, the United Nations or not for profit organizations. I have not. And I may be the only member of my family in a thousand generations (to borrow from Joe Biden who, infamously, borrowed the phrase from Neil Kinnock) to become an entrepreneur.
I like the satisfaction that comes from the much more measurable world of business. And it’s just as satisfying to “do good” in the business world by creating well-paying jobs and the opportunity to experience joy in the workplace than in the other worlds to which my family devoted their efforts. I started three different companies before I graduated college, “apprenticed” for a number of years at larger companies (consulting and technology) and along with three others started a business information company called Hoover’s in 1990. Over 12 years we funded it, built it, took it public and had a successful exit.
I started two more companies after that — one quite successful and one less so before thinking about how I might start a company whose purpose was to create more good in the world. Healthcare seemed a good place to start, as the bloated and inefficient U.S. healthcare system was not serving the needs of the patients it was ostensibly helping. My business partner, Dr. Mark Friedman, and I eventually looked at telehealth and because it was not a central part of the healthcare system when we were looking in 2011, we liked our prospects to improve patients’ experiences.
Can you share a story about the funniest mistake you made when you were first starting? Can you tell us what lessons or ‘take aways’ you learned from that?
Two years in from the creation of Hoover’s, I became CEO and we had to go and raise more money — something I would do 12 more times during my time there. In consultation with outside counsel, we determined that we could raise $1 million and still be inside a “safe harbor” set by the SEC for private companies raising money from accredited investors.
To my amazement I was able to get commitments for $1.2 million. But our counsel said I could only take $1 million. Frustrated, I asked what would happen if we were not inside the safe harbor. I asked if I could tell bigger lies. “No lies,” he said. Would I go to jail for longer for misdeeds? “Nope, the same amount of time in jail,” he said. I asked several more questions designed to get at what greater risk I was taking by going outside the safe harbor. Now counsel was frustrated but eventually agreed that there was no more appreciable risk. He ended by saying, “Take the $1.2 million.”
While more initial naivete than mistake on my part, I learned that there is a lot of “knowledge” out there that fails the classical test of being justified, true and believed. In this case, it simply wasn’t true.
None of us are able to achieve success without some help along the way. Is there a particular person who you are grateful towards who helped get you to where you are? Can you share a story?
I hate to make mistakes but I can also be lazy. Always a pretty decent writer, I ran into Mr.
Moody in 2nd year high school English class. My first term paper came back with an F — for two misspellings. My next term paper came back with a C — for one misspelling. After that, until the invention of spell checkers, I checked all my work meticulously for misspellings. And I still do, even with more advanced grammar checkers, etc. And when I do, I almost always find something I want to improve. Thank you Mr. Moody.
Extensive research suggests that “purpose driven businesses” are more successful in many areas. When your company started, what was its vision, what was its purpose?
Our mission was to increase accessibility and decrease the cost of healthcare. We selected one small corner (now several blocks after COVID) of healthcare — telemedicine — to improve. Our vision was that by doing so we would deliver the most delightful (high quality, fast, convenient, less expensive/free) patient experience possible.
Thank you for all that. Let’s now turn to the main focus of our discussion. Can you share with our readers a story from your own experience about how you lead your team during uncertain or difficult times?
Fortunately for us the current public health situation and the challenges it brings with it has not adversely affected our business. In fact, telemedicine has boomed as never before.
When I started my first company, Hoover’s, it was much harder to raise money. There were fewer institutional investors, far fewer angels, and much more caution. We were always skating close to the line and one disastrous early year, revenues fell far short of expectations. Rather than lay off any of our small staff, I asked them all to take a 40% wage cut until we were able to raise money. I took a 100% cut in salary. I was able to raise enough money within a couple of months for us to continue with our operations. Leaders need to sacrifice more and lead by example.
Did you ever consider giving up? Where did you get the motivation to continue through your challenges? What sustains your drive?
The key characteristic of any entrepreneur is persistence. Don’t start a company if you don’t have it. I have always believed in the line from the movie (close to the original, line spoken by Apollo 13 flight director, and made more dramatic by the film director) flight director that “Failure is not an option.” I would add that wild success may not be an option either. Sometimes you have the right idea at the wrong time and sometimes you have the wrong implementation of the right idea at the right time. We owe our customers, employees, vendors and investors a satisfactory outcome. I work hard so as to achieve that at a minimum.
What would you say is the most critical role of a leader during challenging times?
When the future seems so uncertain, what is the best way to boost morale? What can a leader do to inspire, motivate and engage their team?
First Stop Health’s core values are Caring, Unrelenting, Trust, and Transparency. If leaders exhibit all of these, the team is with you.
What is the best way to communicate difficult news to one’s team and customers?
Factually, matter factly and with a plan for solving the problems caused by the challenge.
How can a leader make plans when the future is so unpredictable?
The future is always unpredictable. You make plans by identifying the likely options, thinking about the unlikely ones and proceeding with a flexible mindset.
Is there a “number one principle” that can help guide a company through the ups and downs of turbulent times?
“Keep your eyes on the prize.” See #15 below for more on that.
Can you share 3 or 4 of the most common mistakes you have seen other businesses make during difficult times? What should one keep in mind to avoid that?
Pivoting because times are difficult is silly. Pivoting because your idea needs another implementation is brilliant.
Thinking that success is all about the money. Money is a measuring tool, not the end.
Being too rigid in the execution of your idea/mission.
Generating new business, increasing your profits, or at least maintaining your financial stability can be challenging during good times, even more so during turbulent times. Can you share some of the strategies you use to keep forging ahead and not lose growth traction during a difficult economy?
During the dotcom crash of the early 2000s, many companies, their employees and their investors became dispirited. The company I was leading had stock swings from $34 to $0.67 in less than a year. Neither was a real measure of our value. The companies that were in it for the stock value, failed because the apparent losses were so staggering they felt they could not go on. Or in some cases, there was no there, there. We knew that we were creating something of lasting value and we kept doing what we said we would do during our IPO. We moved from heavy losses to cash flow positive to net income positive during that devastating period by continuing to pursue the vision we had set forth.
Here is the primary question of our discussion. Based on your experience and success, what are the five most important things a business leader should do to lead effectively during uncertain and turbulent times? Please share a story or an example for each.
Persistence — See item 5 above for a story about me
Caring — See the link below for how CEOs should act. https://www.espn.com/nba/story/_/id/29997795/dallas-mavericks-owner-mark-cuban-reaches-help-former-nba-player-delonte-west
Flexibility — See time 5 above relating to my first fundraising for the importance of flexibility.
Remain Steadfast in your mission — First Stop Health provides telemedicine to employees of our clients. We have had a number of employers who didn’t care if we engaged their employees to use this money-saving benefit. They just wanted a checkbox benefit that no one used. We did not do business with those companies.
Be Transparent — In all my companies in good times and bad, I have always shared our monthly results with the people in the company.
Can you please give us your favorite “Life Lesson Quote”? Can you share how that was relevant to you in your life?
“Keep your Eyes on the Prize.” Whether you are fighting for justice or otherwise changing the world. The name of this old folk song says it all — remaining true to your mission in business, life and spirit is the key to success and happiness.