Andrew: Hey there freedom fighters. My name is Andrew Warner. I’m the founder of Mixergy where I interview entrepreneurs about how they built their businesses. Joining me for a repeat visit is Derek Flanzraich. Last time he was on here, he was running, uh, content site.
It was called greatest. And it was all about health, and I never believed in the content space, but the guy was not just pulling it off, he became like a guru to my friends who were in the content space. He built it up, he sold it, and I kind of lost track of him. Even though, you were accessible because you were doing some advice, consulting, investing after that, right?
Derek: Very accessible. Yeah. You have,
Andrew: accessible.
Derek: yeah. No really good excuses.
Andrew: No, it’s on me. And then I moved to Austin, and at one of the first events that I went to, a friend’s dinner, he and I reconnected. I said, what are you up to? He goes, I’m launching this new credit card. It’s a big swing. It’s called Ness. It’s gonna give people all kinds of benefits, if, health benefits specifically, if they have it. And then he said, I gotta go. I’m now a dad. So he took off and we never got to talk about it. And today we’re going to. I want to find out about what happened at greatest, how big or small, or what happened with that exit. And then I want to find out, what’s going on at Ness? Why is this such a big swing that spending the rest of his, or, The next path, the next, uh, few years of his life on it, we could do it.
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I’ll talk about those later. Derek. I got Chase cards. Like, I literally have, I think, more credit cards than I can keep up with from Chase. Why do I need another credit card for? Why are you jumping into this space?
Derek: Yeah. Great question. So I could sell you the card or I could sell you the bigger vision of the business that we’re building. I’d love to sell you on both. But let’s start with the card. Yeah, so, so our first product, uh, we announced in, uh, public beta, uh, a month ago. Um, and it’s been about a year and a half of building, uh, a completely new consumer credit card company, uh, with the focus being health first, not travel first.
Uh, chase, uh, most of chase cards are focused almost entirely on travel. Uh, maybe you get some cash back, but fundamentally, like, the value to most of the premium sort of chase cards is you earn points when you spend, and you use those points in a travel marketplace to get travel. We believe health and wellness is now the primary lifestyle identity in this, in this country.
We think a younger sort of generation of people now care more about health and wellness. That’s not to say they don’t like travel. It’s to say that health and wellness defines their lifestyle more. They’re engaging more often and spending more on health and wellness in their lives. And if that’s true, uh, which we believe, why does…
The lifestyle primary credit card you use have to reward you with travel points. What if it actually rewarded you many times over with, uh, for doing healthy things with more healthy things? So that’s sort of the, like, fundamental kernel of, um, the, uh, sort of pitch around this card, which is what if… Like your credit cards Rewarded you for like doing healthy things with more healthy things and our first card.
Andrew: what’s a healthy thing that I would do that I’d get rewarded for?
Derek: Yeah, so this first card cost 350 349 a year, so that’s a pretty premium card. I mean the top sort of 10 15 most expensive cards It comes with a 200 healthy spend credit. Now what qualifies as healthy spend? And our definition is very broad. The obvious stuff applies, like healthy food at Sweetgreen, uh, your gym membership, that stuff is kind of obvious.
But, uh, we consider healthy merchants. Groceries, pharmacies, salons and spas, massages, any kind of mental health or therapy, any healthcare or health insurance costs.
Andrew: So I, I buy that on the card up to 200. I get back, right?
Derek: So you immediately get back up to 200, and then,
Andrew: if I’m paying 350, I’m gonna spend 200 on health stuff. I’m
Derek: totally.
Andrew: Okay, then what happens with the other 150? How do I make that back?
Derek: So we have, um, I think over 10 plus benefit partners. The, uh, biggest one that we announced again about a month ago is Sweetgreen. Uh, if you go to Sweetgreen regularly, every fifth or tenth salad is effectively free. Uh, we give 15 back for every 75 you’ve spent, and most salads are like loosely 15.
So, um, basically you could earn up to… 360 on that, probably 180. Let’s say you go five times a month to Sweetgreen, which most of our Target customers do. Um, so that alone covers that fee. And that’s before we talk about our other benefit partners, like Higher Dose, like Seed, like Parsley. Um, like Exhale Spa, um, a company called Find Your Trainer, uh, which, uh, each of these are somewhere between a hundred to three hundred dollars back, um, on using those services.
Um, and, uh, there’s a bunch of other partners too. Percentages Back and other benefits to health and wellness brands most people are already, like, engaging with and using. Um,
Andrew: see magic spoon. For example,
Derek: Magic spoon.
Andrew: cereal.
Derek: Yeah,
Andrew: I get 96 credit there but why do I need to pay 350 to get that aren’t those usually as these clubs were essentially if Like you don’t have to pay for that, right? It’s not coming out of Ness’s wallet. It’s, it’s you’re saying We have all these healthy people.
We want to send them to you. If we send them to you, Would you give them a discount? These companies say sure, just keep promoting us to them. If you’re doing that, It’s essentially free to you. Why am I still paying you 3. 50 for that?
Derek: I mean, it’s an interesting way of seeing it I would see it instead as we are partnering with these You know, we are we are basically creating benefits That offer something you don’t really see elsewhere Um, you’re not regularly getting 100 off seed, um, every single year, you know, towards a membership.
Um, you’re not regularly getting 100 on a higher dose purchase. Um, so these are pretty, pretty unique exclusive benefits. Um, and the real like value beyond making back your annual fee, right, is in the everyday spend. Um, and so I want to like emphasize that. The 5x back we give on healthy merchant spend is effectively like 5% back on every single one of those categories that I mentioned earlier.
Andrew: Wait, do I get 5, 5x back in cash or points that I can use to buy more healthy things?
Derek: Yep, so you get points, so the same way like Chase or Amex give you points and you can use on travel. We work the same, except you’re getting points you can use towards healthy things. And those healthy things, we have a marketplace of about 50 or so rewards partners, um, which include, again, Most of the brands that people who are passionate about health and wellness are using, um, so Sweetgreen, Kava, Chipotle even, um, you know, Solidcore, ClassPass, um, Warby Parker, Spa Finder, and Massage Salute, you know, Partners, and we even have the same, like, Yeah, we have like aspirational also like, uh, things like a Prenuvo full body MRI scan, a three day, you know, Canyon Ranch retreat.
So the idea here is the same way you think about your, um, travel card. I’m earning all these points and I’m going to use all these points towards eventually some kind of trip. I usually, you want, hope it’s for some amazing magical trip and you end up usually using it on a trip to like, you know. Fremont or something and don’t, no offense to Fremont.
Um, but like it doesn’t, the points never seem to add up. Uh, and there’s quite a lot of, and growing sense of dissatisfaction and frustration with the value of those points. Here you can use the points and if you spend on this card, I mean, if you’re putting on the card a few thousands of dollars of spent every single month, um, you are almost certainly going to be able to earn a free bowl at Chipotle or salad, uh, twice a month or three times a month.
You’re going to earn a massage every month. Like, I mean, the, the value racks up pretty meaningfully. And again, in a way that can drive towards kind of like more regular, um, more investing in yourself versus like waiting and sitting on points and never quite turn out to be, uh, what you’d hoped they would be.
Andrew: I have had that, um, big parts of my life where I would earn all these points, uh, for travel and they would expire before I ever
Derek: Oh yeah,
Andrew: to use
Derek: that’s true.
Andrew: Sometimes because
Derek: don’t expire.
Andrew: them. Okay.
Derek: want people to use our points actually, you know, um, because we are not trying to, we want people to get the value. Um, part of the nature of health and wellness, you sort of alluded to it, but the reality is health and wellness does have higher margins than travel or dining.
But because of that we can both build a better business and also drive a ton more value to consumers. And so
Andrew: what, I want to understand how this works. So I’ve had friends who’ve started neo banks
Derek: Mm hmm.
Andrew: I used to think if they were starting a neo bank, they were essentially starting a bank. I didn’t realize it was a neo behind it. And essentially they were using the APIs of a bank. And it’s, it’s more complicated than that, but
Derek: Yeah,
Andrew: don’t need the infrastructure.
Somebody else has it. They create the front end for it. Is it the same thing in the credit card world?
Derek: it can be. It can be. Um, that is a tricky and dangerous, uh, route to take like many neobanks have found to basically depend fully on, uh, an existing sort of software, you know, platform. Um, we are kind of on the spectrum of having done everything from scratch ourselves to having done very little ourselves.
We’re probably somewhere like in the middle. Um, we own, uh, enough of this that we. From end to end, control the customer experience, capture dramatic economic upside, share in the risk, uh, and in the underwriting, um, we are, you know, ultimately playing an immense, uh, a role that is like, took us a year and a half to even get close to, you know, kind of owning.
Um, and, uh, we made all those decisions because the vision is to build a credit card company, right, not just have a credit card. If you’re a company that wants to add a credit card, there are some solutions out there, but if what you’re trying to build ultimately is like a completely new, um, a completely new system around the credit card experience that people understand, that is why we built what we built.
Um, nobody has built a rewards program tied to health and wellness centered on credit card like we have. No one has built a fully owned, like, marketplace of direct relationships with, you know, 50, 60 plus brands. Um, and we think that will, uh, be kind of our, basically, like, our path to eventually building, um, the company that competes with Amex, Chase, and Capital One, and all those, you know, credit card companies that most people are familiar with.
Andrew: And
Derek: Like we want to kick some of their ass, right? And we think that because people care about health and wellness more than travel, this is our window of opportunity. The market itself is, uh, we think, stronger and growing, uh, and the really big vision that, you know, you alluded to is actually to use that relationship with consumers to eventually play a role, not just in their everyday sort of spending lives, But actually to play a role in their health and healthcare.
And so the vision of this business, if you take a big step back, really began with how do you build a long term enough relationship with people, um, that you could actually align incentives in healthcare so that health insurance actually Pays for and reimburses people for eating well, working out, and taking vitamin D.
Like, the vision for the business actually is to build a world where everyone can afford to be healthy. Because, uh, I was frustrated after my last company at how no matter, no matter how friendly you make health and wellness, the reality is it’s just so expensive for most people. And so… The vision for the business is to build, basically, the next great consumer credit card company.
And that credit card company doesn’t just stop at sort of your everyday spend, but it helps you manage your HSA FSA. Uh, it helps you pay your healthcare bills. Um, it helps you maybe manage your existing health plans. It helps you take advantage of those health plan benefits. It helps you maybe sell health plans if you have a choice in the future.
And eventually, maybe actually were the ones. with the health insurance plan, one that actually pays for a lot of the health and wellness things that you really need. And because you’re staying with us long term, we can actually like justify reimbursing for that. And so that’s the kind of really big vision.
Andrew: you start out with a credit card company Then you take on more and more of my health needs and you might start off with recommending Cigna or another insurance
Derek: Sure.
Andrew: eventually maybe you become the insurer and if you see that I am spending on healthy products That I am doing the right thing then you could give me a reduction in In health insurance
Derek: Yeah, or even, even more simply, if I know you’re going to be with me for… Longer than three to four years, which is the average time people spend on health plans because most people get health plans from their employers in the U. S. unlike any other country, basically. And most people switch jobs quick and go to a competitor health plan.
And so today, if I’m a health insurance company, investing in your long term health makes no sense. Because by the time any of it makes a difference, you’re probably going to join a competitor business. I’m literally disincentivized in actually like, paying for your gym membership. Even if I’m well intentioned about it, right?
And so that’s why so much of health insurance is actually focused on acute, very intense care that needs to be handled immediately, or else the costs are going to accelerate. and very little on preventative care. And I think that’s a big mistake. I think that’s the, you know, there’s a lot broken in healthcare.
I think it’s like the most fundamental flaw. It’s basically that we all agree that health and wellness and invest investing in prevention is the best thing for this country. However, who’s paying for it? And the answer is the most obvious partner in that, health insurance, is just not incentivized to do that.
And so, this business started because we were trying to find some way to actually build a health First long term relationship with people and there aren’t a lot of things that people stick with for a long time
Andrew: If you do health insurance, then the customer is going to have to pay you directly for health insurance, even though it might be offered at their work, they would pick health insurance through Ness. And that’s what you’re thinking.
Derek: Yeah, but maybe maybe we’re plugged into their their employer, too Right. So maybe we’re the, actually the ones in the sitting in the middle of this. Um, there’s a lot of people in this country actually who pick, uh, where they get their health insurance. Uh, that, that part is growing meaningfully as more people, you know, do freelance work and, and, um, kind of run their own businesses.
So there’s actually a, an awful lot of people who choose their own health insurance on the Open Exchange. Um, there’s also a growing number of employers that offer what’s called the ICRA and QSERA. So this is like basically giving people an amount of money that they can use towards picking a health plan.
Those are both areas that actually we could pretty easily kind of slot it and say, Hey, we’ll help you choose a better health plan, right? Long term, we think that’s a better way to choose health plans and And maybe we’ll eventually partner with employers. Hmm.
Andrew: Why’d you start with a credit card?
Derek: Other than
Andrew: Um, I don’t know. Reselling insurance or offering a membership into some kind of, I don’t know, points based program or discount based system or online training.
Derek: Yeah. The short answer is Healthcare has, people have been trying to disrupt healthcare for a very long time. And they have tried those two things that you mentioned, right? They’ve tried a sort of more interesting way of selling health plans. They’ve tried, uh, to create wellness programs. Um, and ultimately, has healthcare improved?
No, it has not, right? Uh, and so the belief here is that what’s missing is like this consumer first experience and to kind of own, capture, and build trust in a relationship with consumers over a long period of time. If you could do that in healthcare, that is tremendously, unbelievably valuable because, again, like the long term incentives are aligned.
And so, I’m a consumer guy, right? My last company, um, was, you know, this large health and wellness media company. Thank you. Um, the focus was on reaching a lot of consumers and engaging them and driving them to take healthy actions. Doesn’t that sound consistent? Um, and, uh, but the idea here is like Own the consumer and use that actually as the way to transform health care because no one has really been able to successfully do this.
And by the way, I think the people that are, I think the companies that are really going to be able to transform health care look more like Apple, you know, than they look like Aetna, you know, like Aetna bought CVS to basically have a consumer presence, you know. Um, and so these are the, so we’re kind of taking a different unique place, but it’s because I believe it’s the only way to really disrupt that space.
Andrew: you said that you wanted to own the whole experience and I was wondering if you were more like a neobank You said you’re doing more. I’m trying to understand how much you do because when you start a greatest, I could see you just launch a blog, a platform, probably WordPress, start writing yourself, hire other writers and build it up when you’re trying to create a credit card.
What do you do? I see you’ve got a relationship with bank of Missouri. Do you go to bank of Missouri and say, how do we partner up with you? You have a plan. They have a plan to work with you. You just create the software. They do the backend. Is that what it, what it is?
Derek: Well, um, how long you got? No, uh, yeah, so basically there’s a bunch of like key parts to building a credit card. I knew nothing about FinTech when I started to, uh, when I frankly just got excited about this idea of using kind of credit cards as like a form factor. You know in a business sense, um, and the more I learned the more I realized how hard it was but the more excited I got about the both potential to build a like the the next great credit card company, but also about the the form factor itself about the Ability to like, be a partner to someone’s wallet.
Um, to build a credit card, to answer your question, you have to string together quite a lot of different partners. For one, offering credit in this country is heavily regulated. As it should be. Right? Of course. Like how, I’m glad. You know, like, boy am I glad that it’s like heavily regulated. And to do that, that means you have to work with sort of established partners.
Um, the Bank of Missouri, to your point, they’ve been a tremendous partner. Uh, are one of the many banks we talked to about potentially working with us. Um, and there’s a certain group of banks that work with like kind of earlier stage businesses, uh, in the hopes, obviously, that those businesses turn into big partners long term.
And it was not an easy process to convince any of them to work with a completely, you know, nascent organization that has no members yet. Um, we also had to convince MasterCard or Visa, um, you know, a network, uh, that our card runs on. We chose MasterCard. They’ve been tremendous partners as well. Um, you also have to, uh, choose an issuer processor, uh, which is like partners with the bank to actually get the cards in people’s hands and make it all work.
Um, we chose a company called Galileo. There are many of these. Most of them are total trash. Um, and uh, because what we’re offering is a consumer credit card, uh, and not a debit card, which is relatively actually easy to offer, uh, we also had to use something called a ledger. So, um, because like Effectively, every time you spend money, it goes on the ledger, and then every time you get a reimbursement, or you add a tip on top of it, or you make a payment, um, it like changes, right?
And so, believe it or not, that’s an extraordinary difficult thing when you consider the like, bazillion possible complexities of every single person. And so, that’s another kind of key partner. And that’s before you’ve created your own like, Credit and underwriting process. That’s before you’ve created your own application flow.
That’s before you’ve added all the credit and fraud compliance like issues, like one of the biggest issues is fraud.
Andrew: step away from this. I could,
Derek: Exactly.
Andrew: it’s a big undertaking. And then finally, we move on from this, why did you decide to be more like American Express than say Chase credit cards, where at the end of each billing cycle, people have to pay everything instead of
Derek: Hmm. Yeah, the charge card. So charge card, uh, so we’re, our first card is a charge card, uh, to your point. Um, it is, a charge card is a type of credit card where instead of getting to keep a balance and then being Like, you know, penalized, basically with a big high interest rate. Um, you have to pay it down every single month.
Uh, the reason why we went with that is very simple. We thought it’s better. We think it’s better. Uh, most people should, yeah, most people should be paying down their, their, you know, fee every single month. And especially at this sort of, because our first target with this premium card is a pretty premium customer.
Most of those customers do pay down their balance every month. I will say that in creating this card, um, and what we’ve learned is that perhaps we were a little hoity toity about it, uh, and that in reality, the ability to revolve actually is a feature for many people, uh, not because they are bad credit card users, but actually because the credit card does function ultimately as a way to add a new big bill on it and pay it over time.
And so we’ve kind of come around to this idea that actually moving forward as we work on our second card, which we’ve started working on that will be meaningfully more affordable, um, uh, we’ll, we’ll likely be doing revolving cards moving forward. Honestly, because we thought we knew what customers wanted, and it turns out that consumers want sort of what they’re familiar with.
But, uh, but yes, there are cards like Amex, um, Amex has cards that are charge cards too.
Andrew: Yeah, I I guess I would have thought the same way you did that the customer that you’re going after Is not looking for a high interest
Derek: Yeah.
Andrew: doesn’t even need anything just but I’m constantly surprised by how people deal with credit. All
Derek: Yeah, and, and sorry,
Andrew: uh,
Derek: thing that I think you’ll find interesting, right, is like, what we’re doing is… It’s very different in terms of its focus, right, health and wellness. But fundamentally, our credit card is just the same as everyone else’s. And actually, the more similar it is to what people are familiar with, uh, the easier it is to convince them that, to move their spend over, right?
And I find that the charge card has actually made our, how similar we are to all these other cards, kind of more confusing, uh, because consumers are just unfamiliar with that concept. Even if once we explain it they go, oh, that’s kind of cool. That makes sense. I was planning on paying it every month anyway
Andrew: right
Derek: so reducing the complexity, you know again like the idea here is how do you build a great business and and where I’m constantly learning I learned so much with my first company and even here we’re learning every single day obviously about everything and That is one thing that ultimately in retrospect.
I think we kind of got wrong and ultimately probably change.
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So go to lemon. io slash mixer G when greatest soul, let’s come back to this blog that you created, uh, in the health space. Do you remember the day that it sold? What was that like?
Derek: Yeah, I do Grace had a hard couple last years we For context, um, so we ended up building this enormous health and wellness website. Um, I grew up a really big kid, stronger than my weight, wanted to build a brand that kind of spoke my language and met me where I was at and talked about health in this sort of healthier way.
And it wasn’t just for people who had six pack abs already and went with Paltrow. And we ended up building that brand, science backed, expert proof content, written in the voice of a friend that was a little further along. Uh, and that… And we just ended up being wrong about a lot, but we were very right about the quality of the content and the voice and it resonating with people.
And we built this audience of, you know, so many people reading our content, I think 15… You know, 15 million or so every month, 2 million people on an email list, we email every single day. And I got the startup experience of a lifetime. I mean, I started the company six months out of college, spent eight years building it.
We raised a bunch of venture capital when sort of media companies were very hot. And then everyone in venture capital realized that media companies are not really venture scale typically. And so then we got, it was all a lot less hot and we had to kind of put our heads down and focus on building. Um, a good business and that was an amazing experience to, um, we had a pretty good outcome.
I mean, we got to sell the business at a time when a lot of media companies were selling for Zippo. We got to sell for a meaningful return. All of our investors were happy and, um, I honestly was just glad to kind of like landed in a good place. Um, it wasn’t a life changing outcome for me ultimately, you know, um, but it was a great experience.
I mean, in many ways, it changed my life, but financially, it wasn’t ultimately like this extraordinary outcome. But I was very glad that we could do good for all of our employees, all of our investors. And, um, Healthline, which acquired the company, uh, has, uh, found a tremendous amount of value and invested very heavily in Greatest, which is really cool to see, and it’s still alive and kicking and awesome, uh, which is, uh, Really fulfilling, frankly, with still very much the same mission that the business started with.
Andrew: So what do you think it was that was so challenging towards the end for you beyond raising money? Was it advertising? Was it too much competition?
Derek: Well, one, I think advertising is almost certainly the worst business to be in. Unless you are, uh, at such unbelievable scale, like a Google or a Meta, uh, or a TikTok, um, if not, you’re in the trenches and you’re battling with Uh, for the same ad dollars. Ad dollars which really don’t change very much and are usually looking for like the new sexy thing.
And we were basically a niche publisher at a time when, uh, influencers were starting to rise up and, I’ll be honest, were more connected with their audience. Um, Newman’s Health and Men’s Health have never meant less to anyone, but when I was growing up, those were the big health brands. Um, and, uh, today, the big health brands are probably Melissa Wood Teppenberg and Kayla Tsinis.
And, um, it is, uh, it is influencers, basically, that have won this space because they’re able to talk to people in such a meaningful way and because There are so many more options. And so, the market that we were fighting in was declining, clearly, right? I mean, the total ad dollar available for, like, publishers is going down.
With one of the probably only exceptions being healthcare and pharma ad dollars, uh, which is what our acquiring company actually was very involved in and, you know, built a very good, strong business in. So we were kind of fighting a declining market, but you know what really was the hardest thing? It was that I no longer believed that we were going to build this, like, big impactful business.
I’m very proud of the role that Greatest played. I really think it’s shaped at a key moment, like the narrative around Health for the Healthier, um, which is all I wanted to do, right, when I was starting the business. But I’m like a mission, purpose driven person, and every single day, just trying to like, make sure we had more ad dollars this month than we did the last month was tremendously Though it was an interesting professional challenge, it was a tremendously unfulfilling one for me personally, um, and, uh, I want to build things that change everything, and I realized about two years before we sold Greatest that that was no longer going to happen, um, and that was very, um, very disappointing, and, um, again, I’m very proud of the business that we built, I think, like, I’m I learned a lot in that last two years, and we built a really compelling, strong business.
Um, despite some knocks, but
Andrew: one of your investors was Ramit Sethi. He,
Derek: mm hmm.
Andrew: you could say, is an influencer back before influencer was
Derek: Well, and now especially,
Andrew: Now, yeah, I saw the Netflix
Derek: Netflix show blowing up.
Andrew: The thing is, he never did ads he would add affiliate deals if he thought
Derek: Yeah,
Andrew: an opportunity to do it, but he sold product, content, membership.
Derek: yeah,
Andrew: doing research to see if Greatest ever tried to do that, um, and I can’t see anything. Did you try to, to get away from advertising at one point?
Derek: yeah, we sure did. Uh, we never ended up doing courses and programs. Maybe we should have, um, because I agree. Uh, Ramita’s become a very good friend. I think always been smart about like how to monetize his audience, smarter than your average Frehley influencer, uh, and now he’s being rewarded with an amazing TV show.
I’m so thrilled for him. Uh, and he’s, um, actually partnering with him and his team a little bit, uh, at Ness, which is really cool. Um, but yeah, the, we tried a lot of things, but most of we were focused on very big swings because where our business got trapped, um, was it was a venture backed business. It raised money like a venture scale business, but we ended up having a business that wasn’t, right?
So we, like, if you were to forget all the venture capital funding, Greatest was a killer business, right? It was, like, very impressive. Profitable, growing, like, Everything was clicking, but the expectations for the kind of exit we had were very large. And so instead of doing the smart, reasonable things, like selling supplements in an e commerce store or selling programs or courses, um, what we did was a bunch of really interesting, I think, like swings.
That were like, you know, we tried to build the next Weight Watchers of the future. We tried to big like the next group gathering platform around diets and fitness programs. There were some really cool ideas. But the reality is the, there was like a deep and profound like inertia around like the existing business that we had which wasn’t fundamentally like gonna be that scale that will always kind of I think held us back from those big swings really succeeding.
Maybe I should have done a better job at like swinging. Um, you know, whether it was burning the boats and going all in, uh, I joked at one point that we should, uh, stop working on the website and just double down on our email newsletter. In retrospect, we probably would have, like, built a more profitable, you know, better business if we had done that weirdly.
Um, but you know, at that scale, you’re at 50 to 100 full time people, right? And it is, um,
Andrew: didn’t know.
Derek: and it is tough when it’s your first company. You badly want it to work. Um, You’re very proud of the work that it’s doing. It, it really was very hard for me to say, Look, this has always been a venture backed business, and we’re just going to keep swinging that big swing, when I was losing confidence, basically, that the business we had could do that.
Um, And that really does…
Andrew: the Weight Watchers type business? What was that like and can you take me through what happened with it? I
Derek: Oh, yeah, sure. So the idea was… Honestly, a lot of the early days of Greatest was about how we could figure out, build an audience of people, and ask them what it is they wanted to spend every month for, to get healthier. And, uh, one of the really interesting and exciting things we started to play with was actually around a diet called, um, a sort of diet called Whole30.
Really a 30 day program. And, um, the idea was matching people together who were doing the same program on the same timeline because not everyone knows people who are doing Whole30 the same, at the same time. And so, um, that turned into, that was pretty successful, uh, and we ended up turning that into effectively like a meal.
app, like a meal planning app plus community. So you would both be able to plan your meals, but also do it with other people who are eating keto or paleo or Whole30 like you. And, uh, we were very excited about it, but then we sold the business.
Andrew: see. How burned out were you at the end of that?
Derek: So burned out
Andrew: Yeah.
Derek: and again like a big part of it was not the work day to day It was like the purpose work, you know for me Like I have never been less happy than when I have don’t have sort of the purpose and the meaning behind what I’m doing My dad always kind of taught me that like the greatest happiness in life is working your hardest ultimately at like something you believe in and I think whether that’s I don’t know, somehow he brainwashed me into like believing that, uh, and I think about that a lot every single day and when I reflect back on the last five years, you know, I sold greatest maybe three, four years ago, um, and then spend time advising and consulting and working with a bunch of really cool companies.
Um, the lack of purpose for me, uh, was very, very, very hard, uh, and. put me in like a really tough place, I think. And then, you know, COVID and all that stuff didn’t help. Um,
Andrew: you mean lack of purpose? You’re still, you were still in the health business. you say lack of purpose, was it because you were spending so much time looking for revenue and profitability and dealing with funding and not enough on that?
Derek: yeah, I think it’s because I feel like I have been blessed and privileged with talents and abilities and opportunities and like I need to make the most of them. Um, and I don’t mean that in like an egotistical way. I mean that more like I feel like I’ve been, um, I mean, maybe I mean it a little bit in like an ego driven way.
But it’s more about like, I think I’m here on this planet for a reason. And if I’m not like working towards that reason, um, that feels like I’m wasting my time and wasting those talents. And, uh, and so even when I’m helping other people drive their amazing visions and their purpose, I’ve struggled to feel like I am using, um, you know, Like, basically, like, leveraging myself in the biggest way.
Uh, and again, that’s, that’s, that’s what drives me. Right, what drives me is this, from very early on, I realized, like, I’m here to help make health and wellness more accessible to people, and democratize access to it. Like, I struggled with my health growing up. You know, I ended up, I had this bad injury, ended up with my right arm in a cast for four years, had to like, figure out who I wanted to be, and also drank six Dr.
Peppers a day. Um, and uh, that like, that kind of like, moment really, those moments of isolation, but also of like, focus around concentration around like what it was that I wanted to be and what it is I didn’t want to be is what like crystallized this kind of mission and It is no surprise in some ways that with greatest it was all about how do you make health and wellness more accessible and friendly?
And literally what we’re trying to do with Ness is how do you make it more affordable? And that is what drives me every single day and I get up every morning Profoundly excited despite the trials and tribulations of like being a CEO and like, you know, whatever, the thousands of crazy things that happen every single day.
Uh, that’s what drives me is because I know that I’m like working towards that path and the potential to make that change for the world, for everyone. Uh, and when that sort of aperture of potential impact starts going down, um, I’m less happy than when it’s going up. Up. You know?
Andrew: So I’ve got to ask you. A little bit of a personal question about money.
Derek: Sure.
Andrew: did a blog post on LinkedIn announcing the sale. And at the end you said, I’m a free agent now. So if you need any branding, marketing help in the meantime, give me a holler, made me think, okay, this was not a great exit because you must’ve been burned out at the end of that to
Derek: Yeah.
Andrew: I will take on everybody else’s big marketing issues feels
Derek: Yeah.
Andrew: a need to provide for your family. And then I look at your LinkedIn and suddenly I see. Lake house ventures where you’re, you’re an investor. I see healthy ish, which is a collection of companies that you’ve advised. I can see like Peloton, but also some that you invested in. how do you go from needing to take consulting work to suddenly being an investor?
Derek: Yeah. Well, I’m not sure I would phrase it as I needed to take consulting work. Um, I actually think I just needed to stay busy. I was talking to someone recently, so I think maybe you misinterpreted it, but again, like I’m, I’m like not trying to pretend ever that I like made a ton of money or didn’t make a ton of money.
In my mind it was. Very simply, like, everyone told me that I should spend a year, like, not doing anything, and I did not know how to do that. And I wanted to keep and stay busy. Um, and frankly, again, I had spent two years doing, like, pretty unfulfilling work, hard work, and I wanted to work on cool projects.
And I did. I did end up working with some amazing companies and doing some, like, really fun stuff. And I’d like to think helping them pretty meaningfully.
Andrew: Mm hmm.
Derek: and… My wife turned to me, I want to say, six months after I sold, um, after I sold Greatest, uh, we, right after I sold Greatest, like, left New York, packed up all our bags, and my wife and I went and traveled for, like, six months.
Um, we were actually still traveling, we were in India when, uh,
COVID hit, uh, and had to, like, scramble and find our way back, and, like, all of our stuff was in storage, and it was crazy. Crazy, uh, like crazy times for, and it was for many people, but like six months into, after selling the business, Sarah turned to me and she goes. You were busier than you were when you were working at Greatest, and you’re supposed to be taking like a break now.
And I just like didn’t know how to turn it off, you know? Like it’s such a good example, like at the end of that saying like, Hey, if anyone wants help, let me know. Like, you’re hearing it as like, I need money. I was doing it like, I need to stay busy, you know? Like. And, uh, and I probably, in retrospect, should not have, right?
I should have just said, hey, see you in a year, you know? Um, and, uh, it took me about a year and a half, basically, until I kind of felt like myself again, um, after selling Greatest. And, I stayed really busy most of that time, um, which, you know, probably got in the way of, uh, ultimately me getting over it quicker.
Andrew: Yeah, I would have thought that at the end of that, that you would have taken on a project like Cycling Across America, or doing a
Derek: Right.
Andrew: I don’t know, five month run, or something like
Derek: I should have. That sounds, that, those alphs sounded better, but, uh, I didn’t talk to you afterwards, Andrew. Yeah. I, I just like,
Andrew: to
Derek: you know,
Andrew: Uh huh.
Derek: maybe, maybe, but maybe not, you know, I’m always listening. Um, I think, I think my sense was… They don’t write a lot of, there isn’t a lot of information about what you do after you sell your first business pretty successfully, right?
Um, you know, you understand that if you sell your business for a billion dollars, right, that you can do whatever you want. But if you sell your business, have like a pretty good outcome, and like, it’s not that you’ll never have to work again, but like, you’re good for a little while. Um, there’s not a lot of like, you know, manuals for that, and uh, I’ve been sort of You know, like I still have the chip on my shoulder, but I also like know what success looks like, and this sort of like, for me at least, the experience was I just kind of fell into what I was used to doing, which is not what I would advise, by the way, to be clear, right?
I do think you’re probably right. I should have taken on a Um, you know, I should have cycled across America. That’s pretty cool. I should have like written a book, you know, like about, you know, a fantasy sci fi book completely unrelated to anything.
Andrew: Even a health book, here are the things that I, I’ve learned by, I don’t
Derek: Yeah.
Andrew: this is going back. Let’s go back a little bit further. You said that it was your dad who got you into this belief that you need to live up to the gifts that you’ve been given. What did he do? I
Derek: Yeah.
Andrew: living, how did he express that?
Derek: Yeah. Uh, both my parents are amazing people, um, and again, they’re a part of why I’m so blessed and lucky. Uh, my dad was a penniless son of immigrants in Brownsville, Brooklyn, like truly like one of six kids. Um. You know, like Jewish, um, Polish, Russian immigrant and, um, kind of was, he’s just a genius and he, he has an amazing work ethic and despite being very entrepreneurial, ended up following a pretty traditional path until later in his life, um, and, uh, moved into like kind of the business side from the legal side and has ended up being tremendously successful.
He’s in the pharmaceutical world, um, but he’s very entrepreneurial and basically like. You know, if he were in my shoes, he would have gotten started earlier on, you know, entrepreneurial ventures. Um, and then my mom also, like, moved from Russia, um, was a doctor in Russia, moved to the United States. Learned English and became a doctor in this country at the same time, which is pretty crazy.
And she was an immensely hardworking, creative, and like, persistent, stubborn person. Um, and um, she herself also did like, entrepreneurial things and started ventures. And so, I think in some ways that was like, very baked into me. Um, growing up, and they were always very supportive, which I know most parents are not.
Um, my mom always wondered how I made money at Greatest, which was always a very funny conversation, because she didn’t understand advertising. And in retrospect, maybe she was smarter than I’m giving her credit for around that. Like, maybe she was right, ultimately, that she doesn’t understand why the business is very good.
Um, but, but, uh, you know. For the, for the most part, they were tremendously supportive, and I think very proud that they could like create a world where this was something that was possible for me, and that I could go and sort of grab it and do it.
Andrew: What type of work ethic, how did it express itself when your dad and your mom had it?
Derek: Um, I mean, for my dad, I think, when I, when I think about my dad, I think about him always working, and uh, I think for sure he’s probably on the workaholic spectrum, at least, I would say. Uh, I probably am too, uh, though obviously with young kids, that’s, um, that’s forced me to sort of stay present in like a really welcome way, I would say, uh, and I’ve really enjoyed that, but, like, I really do enjoy…
Like, I saw my dad, like, profoundly enjoy working. Like, I know some people complain about work. I gotta go do work. Um, I’ve never felt that once, and I think if you, like, locked me in a room for a week and said you get to work for a week, I would be, like, ecstatic. Um, and I know there’s a lot of other things to life, but, you know, that’s, like, , I’m just like wired in this weird way and I definitely got that from my dad.
Um, I wake up, uh, I used to wake up much earlier now cuz of the kids like 6:00 AM I spend basically, my days are like bookended. So I spend the first couple days with the kids watching them and then, um, two hours or so before they go to bed. Uh, and then after spending some time connecting with my, with my wife, um, usually I’m back to work.
Um, I try not to do that every night, but still. But I enjoy that, that’s a choice, right? Most of the time. Yeah,
Andrew: just have a hard time after unwinding with my wife going back to
Derek: I know.
Andrew: a Change in the way. I think
Derek: Yeah.
Andrew: how are you
Derek: Well, I used to wake up really early. I mean like there was a period of my time in New York where I was waking up at like 4. 30, 5. 00, working out and then like I would be, I would have like a full day of work basically done before I showed up at the office. And it’s impossible to do now because like I, you know, got to take care of the kiddos.
But it is, uh, Yeah, it’s just funny. That’s probably shifted late, but I actually get like good sleep, too, because I’ve learned that health and wellness is important.
Andrew: How are you doing with friendships here in Austin? Did I just lose you?
Derek: Yeah, I just lost you. What was that?
Andrew: Oh How are you doing with how are you doing with friendships here in Austin?
Derek: Good! Actually, like, better than I had expected.
Andrew: Hmm.
Derek: obviously have a limited amount of time, right, to spend with work. My wife also works and with the, with the kiddos. But one of the main reasons we moved to Austin was because we created a sexy romantic spreadsheet. And, uh, together, and ultimately decided that it was both the best place for us to get our, like, bang for the buck, um, but also had this sort of, like, nascent, uh, founder community.
And we knew a couple couples who were in a similar stage to us that we liked. And it turned out that those people had more friends like them. And we’ve gotten… Really close actually to a lot of like amazing, uh, like ambitious founders who value family But who are also trying to build like big and important things And so there’s a lot of like things in common, which is really cool.
Andrew: Cool. right, the website is it’s Ness. Well, kind of like wellness, but
Derek: Well, can I say one more thing?
Andrew: go ahead. Yeah,
Derek: So I think you in the beginning I feel like you approach some of the like things about what we’re building with the nest card with some skepticism and that’s allowed I don’t mind it. I like it And I actually think a lot of people would approach a new card of any kind with skepticism But suspend that skepticism for a second, and imagine if everything you spend on with your credit card, right, you’re using your credit card, or one of those many credit cards you said that you have, Chase credit cards you have.
Um, basically all day, whether it’s shopping online or whether it’s offline. Imagine if that was also, that like, you know, that trust that you have in this, this tool. Imagine if that was also the way that you interacted with your health and like the health systems. And whenever you made the right decision, whether you spent on something healthy, Or whether you went for a run or went for, we reward people for sleeping and mindfulness and like going for walks, you know, with a little bit of points.
Imagine if everything was like this virtuous cycle, the things that you’re doing good, you get rewards for and you’re incentivized for. And when things don’t go well, you have, you’re in the same place and it’s helping to guide you to the solution. Imagine if. You could have health insurance and have the health care space sort of know who you are Better and actually pay for the things that you want to need that are actually good for you That like idea that the card can be so much more than just like some points that you can use towards a You know, trip to France maybe one day if you’re lucky.
Um, but instead becomes like your health kind of wallet and the, the sort of like, healthcare is the number one thing that people spend on in this country for the most part, outside of like rent and their lodging. Um, the, imagine if your card actually helped make that more affordable, helped drive you to better health outcomes.
That idea I think it’s very very provocative and exciting and
Andrew: but
Derek: you know, if we can convince you we can convince other people
Andrew: I like that. I do want to be healthier I do I do consider what I eat and what I buy and I want more encouragement of my concerns is it’s, it’s a lot of figuring out when I could use the card for this and that and managing points and benefits. One of the advantages of doing it for, for travel is could just set it and forget it.
And it sucks if I lose the miles, but I don’t want to be distracted trying to figure out, well, how many miles do I have? How many salads did I have this week? I’m at Chipotle. I just want to buy a Chipotle, not think about, well, how do I use my points at Chipotle? just want to say. I’m going through my life and then at some point in the future when I feel like it I can go and get Something with my benefits and it might be something I could use like a flight somewhere where I want to go Or maybe it’s something I can’t use, but who cares, I’ll have it like an Apple TV nonsense that I’ve never gotten, but that they offer. the idea of doing it on a regular basis is, is frustrating. I think if I was in a gym and I could keep applying it to the gym, that would, that would work. And I see there’s certain programs that I can keep applying it to. Like, I’m with one medical, but I think you were with, um, there was another plan that, that you offer.
Derek: Parsley, yeah.
Andrew: other? I forget what the other, it’s the one medical competitor where I could apply to that. So if it’s set it and forget it, I like it. But if I keep having to figure out how do I use my benefits, it becomes a distraction from my life and also a sense of guilt. Why didn’t I use it? And now what should I do to be healthier?
Instead of just knowing I handled it one time, it’s taken care of. Does that
Derek: Well, maybe maybe I haven’t convinced you but Maybe I’ll convince your listeners instead I do think that you’re just familiar with this like the travel paradigm for these cards and I wonder if there’s another paradigm which could drive more Effectively like value to you? Um, that’s worth considering.
Um, hopefully not meaningfully more complicated. . That’s true. We don’t want that. Um, yeah.
Andrew: no, I prefer it. I’m not, I don’t need the travel points. You’ll see, I go years and I just don’t even touch it. So I’m not, uh, maybe it’s just because of who I am. I’m not someone who, who’s looking for travel points. do care about my health. I guess I’m trying to figure out how to put this into, into my life. I get the, I get the benefit. I see what you’re going for. I don’t
Derek: Okay. I’ll take that at least.
Andrew: because, because it does come back, um, pretty easily.
Derek: Yeah.
Andrew: Um, and I like that it’s coming from a tech company because I do find that the whole experience that I have with credit cards, once it’s
Derek: Hmm.
Andrew: pay or deal with
Derek: Our brutal,
Andrew: an anything is a pain in the butt. And then I go to the news. The new companies like Mercury and the others, and I go, this is heaven. This
Derek: yeah, it’s amazing.
Andrew: It’s here because it’s coming from a software developer instead of an old bank. And I know that you’ve got the same approach here
Derek: Well, we do these every couple years it seems, you know, every few years. So the next time we do this, you’ll be telling me all about all your Nest cards instead of your chase cards. And, uh, that, that I’m sure of.
Andrew: Okay. All right. Well, thanks. Thanks for being on here. Thanks for being open. Congratulations
Derek: Yeah, you bet.
Andrew: greatest and on Ness. It’s Nesswell.
Derek: Thanks Andrew. So great to chat with you as always.
