Dialogue’s CEO, Cherif Habib, was recently interviewed on The Growth Effect podcast, hosted by startup founder, author, and speaker Sarah Stockdale. The conversation revolved around the challenges and triumphs of entrepreneurship, with a particular focus on growing business during the unprecedented circumstances we face in 2020.
Check out the transcribed interview conversation below about the ups and downs that come with the entrepreneurial pursuit, strategies on leading teams through periods of uncertainty, how Cherif Habib guided Dialogue to scale business 10x during a global pandemic, and more.
Sarah Stockdale: Cherif Habib was 16 when he started his first business. I don't know about you, but I definitely didn't start a business in high school. I was too busy mopping the floors of a grocery store to even consider starting a lemonade stand.
Cherif Habib: All four of my grandparents were entrepreneurs back in Egypt. My grandfather was an agronomist who grew fruits, vegetables, and was a big producer of flowers. And my grandmother had a flower business. So this is just really what I grew up with. I never thought about doing anything else.
SS: Now he runs Dialogue, a booming telehealth company. But Cherif is humble. He isn't trying to impress anyone. When you talk to him, it's clear that he's an entrepreneur simply because he can't imagine doing anything else. He loves running businesses and leading people – and well, he's just really good at it. And then COVID happened.
When it comes to growth, things don’t grow much faster than Dialogue. They surpassed all expectations this year, making them the seventh fastest growing company in Canada. A big part of that was due to COVID and how it shifted the way we do everything, including taking care of our own health when we can't necessarily go into a doctor's office. It accelerated Dialogue’s business plan by years. They scaled up to 10 times their previous size in just four weeks during the early days of the pandemic, welcoming 600 employees in 100 days. That's six new team members a day for more than three months straight!
But this scale-up wasn't without risk: Dialogue’s coverage is usually an employee benefit, so they were also exposed to economic downturns. Navigating rapid growth during challenging times requires an experienced hand at the wheel, and Cherif was the man for the job.
CH: I think if you reflect back on where I started from to where I am today, you can clearly see how every experience was built on the one that came before it. However, the choices that I made in the sequence that I made them never made sense at the time. But the world has a funny way connecting the dots; you just don’t realize it as it's happening. It's a lesson that you can never teach anyone because it sounds like a made up, New Agey thing. But you have to live through it yourself in order to recognize that it's true.
SS: What do you remember about the early days of starting businesses, and what did you learn from it?
CH: Because I didn't know anything else and I didn't know any better, I never thought about starting my own businesses as being hard and I never considered it as a risk. I was very lucky because back while I was finishing up high school and heading into college, I was living with my parents. I had full support. I was never going to be on the street if it didn't work out. So, it makes me uncomfortable when people say “you took so many risks.” That’s not exactly true because I was in such a supportive family; my parents were there and had my back. Although they didn't financially invest in the businesses, I always had a roof over my head and the reality is that not everybody has that privilege. I recognize that I was very lucky, and maybe if I didn't have that, then I would have chased much more secure opportunities.
Some people say that being born in Canada or the US is like winning the lottery because we have these amazing opportunities available to us here. I wasn't born in Canada, but my parents came here when I was very young. I benefited from many aspects of education and local communities that are really comparable to winning the lottery, so I feel really lucky in that way.
SS: I love that you recognize that privilege, because oftentimes when you take a look at just the shiny parts of entrepreneurial success stories you might think, “okay, maybe this person had a different advantage than I did, or they were able to de-risk starting a business in a different way.” I think there's a bit of haziness around all of the different pieces that have to come together to make an entrepreneur successful.
So, before Dialogue, you’d founded a company called FreshMint that was acquired in 2018. You built that company from nothing, sold it, and then pretty much very quickly afterwards co-founded Dialogue. Can you tell me a little bit about the roller coaster of building something, nurturing it for five years, selling it, and then pivoting into something very different, very quickly?
CH: Sure. FreshMint is a tech-enabled food delivery company that’s custom-built and vertically-integrated, so at the click of a button a fresh, healthy meal would be delivered to your door within 25 minutes. FreshMint came before the DoorDashes and UberEats’ of the world, so I'm really proud of that business idea. It intersected with the previous business that I had, which was a medical device company which we also ended up selling. It’s a little bit sad when you're signing those papers – no matter how good the financial outcome is – because you experience a little bit of nostalgia once an adventure comes to an end. But at the same time, you’re excited to kickstart your next project, and the cycle continues.
SS: You mentioned that the medical device company that you founded before FreshMint... Could you tell me a little bit about that experience?
CH: My uncle is a world renowned liver surgeon based in London, UK, and he had some ideas and patented technologies that had been developed. When I finished business school, I joined him and ran the business side of the company. After a few years, I took on the role of CEO to allow him to focus on what he was really good at and passionate about: the science and the medical side of the business. It was a very powerful partnership because we very rarely stepped on each other's toes. But more importantly, we had 100% trust between the two of us. People always say that you should never work with your friends or family, but we trusted each other entirely. So even when we disagreed – and to be truthful, we disagreed often – on day-to-day stuff, we knew the trust was there and we knew that we would never let each other down. Now that we've sold that business and it was a great exit for both of us, we're still super close. So, I've never believed in “don't go into business with friends and family because it ruins the relationship”. I've done the exact opposite, and I would do it again.
SS: You've gotten this right a few times, and most people get it wrong almost every time. What is your advice for folks who are trying to figure out who to start a business with? What did you do to make this work?
CH: What often happens is that people go into business with a clone of themselves. For example, two people with accounting backgrounds go into business. Then comes the question: what are you guys going to do with two identical skill sets? It's not that my uncle and I never had an argument or that we haven't had days, weeks, or even months where we were sick of each other. It's just that at the end, we came out of it even stronger than how we came in because we trusted each other, we were complimentary. Trust is super important and it’s not something that you can hack or accelerate. There's all this talk around things like founders dating or that you're supposed to find a founder at a conference, but I don't really believe in that. Of course, never say never, because sometimes it can work out. But it takes a long time to build trust.
SS: On this podcast, we talk a lot about how hard it is to start a company and how many dark days there are going to be if you don't trust your co-founder. It's like having a bad romantic partner; you're checking their phone and trying to figure out what they're doing because you don't know if they're actually doing the work, or what they're doing with the money. In my opinion, I think it's very much another version of a marriage and that you shouldn't marry someone after going on one date at a conference.
CH: One hundred percent.
SS: I want to shift into what you're working on right now at Dialogue and what you're building in the healthcare space in 2020. How is it going?
CH: It's going really well. Particularly during the first few weeks of the pandemic, I couldn't help but feel really lucky to be where we are, which made me kind of feel a little bit guilty. There was part of me that felt a little bit bad; there were a lot of people suffering while our business was taking off. It just felt a little bit unfair. But that changed when I came across a definition of luck that I found really interesting: “Luck is when opportunity meets preparation.” We've been working extremely hard for the last four and a half years, and we've been preparing for this moment for a long time. Nobody could have predicted the events in 2020 to happen as they did, but it's not like we didn't put in the work to be able to deliver on the opportunity. We have such a positive impact on the lives of millions of Canadians. Our service really makes a difference and when you remember that fact during a tough day, it makes everything okay. We've now reached a moment where we have almost 10% of the Canadian population on our platform. It makes us work hard and it makes us really appreciate every minute we put into this.
SS: 10% – that's incredible. I always like to talk about March 18th: the day when the NBA shut down, Tom Hanks announced that he had COVID-19. This was the moment when we were starting to realize that this wasn't going to be two weeks in lockdown filled with hoarding toilet paper, but that this might actually be a bigger problem. Take me inside one of your leadership meetings. What did you talk about? What were you worried about? Did you see the opportunity at that time, or were you focused on different things?
CH: So if you allow me, I'll go back to December 2019. We were doing a comprehensive strategic exercise to take a look at the next couple of years. We thought it would take another three to five years for telemedicine or virtual care to really become mainstream in Canada. However, less than 90 days later, the pandemic was moving at full force and we saw an acceleration of growth that we thought would take three to five years to achieve. By mid-February, we began sensing that something was off; being in the healthcare field, we were a little bit more exposed to the reality of the situation and were probably around 10 days in advance of the general provincial health guidelines.
During the executive team conversations that we had at the time, we thought that the economy was about to implode and that a black swan event was about to hit. We started thinking about what the business would look like with zero revenue, or with 80% less revenue. We started to have conversations around what costs we could cut and how much money we had in the bank. We had to ask ourselves, ‘How do we survive this?’ Obviously, the hypothetical solutions we came up with in response to those questions were luckily never applicable. However, the exercise of preparing for the worst case scenario was extremely useful, and it's something that I had never done in the past but that I would encourage other business owners to consider trying. Ask yourself, “what does our situation look like if we lost 20, 50, 80 or 100% percent of our revenue overnight? What’s our cost structure, how much cash do we have, how do we survive? What's the plan?” Just write a one-pager, put it in the safe, and hopefully never think about it again – but just to go through that mental exercise itself is really useful.
SS: I want to talk about what might have been a hard part and one of the things that comes with growing rapidly. I read that you hired 600 new healthcare professionals in 100 days.
SS: My question is just: What?!
CH: Yeah, that was insane. Essentially not only was our core business growing extremely fast, but we had also signed a landmark deal with Sun Life. Essentially within six weeks, we had to onboard two million lives, and we were not set up to onboard that many members so we basically had all hands on deck. We had 27 full time recruiters on the job and it was a very fast scale-up, but we did it. I'm very proud of the fact that usually in those very fast scale-ups, there comes a point when something's got to give. But our service levels actually improved, our wait times were better, the quality of the service we were giving became better (which is a very tough thing to do), so I'm really proud of what the team did. They pulled a miracle out of their hats, which is pretty amazing.
SS: The 600 healthcare professionals that you brought on – are those employees of Dialogue? How does that relationship work with those folks?
CH: I would say about half of them are full-time Dialogue employees. The rest are highly engaged, independent contractors, who are not like the Uber-model contractors where they can just log in for a shift on their phone, be available for half an hour, and then log off. We don't believe in this because we really wanted our providers to develop relationships with our patients, and we wanted to be in a situation where if you spoke to Dr. Stockdale today, you knew that Dr. Stockdale will also be on shift next Wednesday afternoon and that you can be booked with them again during that time. We impose a minimum number of hours and regular shifts to get this sense of continuity. We believe that healthcare is different than other marketplace models where you can have a different view on liquidity and staffing.
SS: Did you ever have to defend that decision to investors? Was that ever something that you push back on?
CH: Oh, one hundred percent. There are so many articles that say, “the largest hotel chain in the world does not own a single hotel: Airbnb”. “The largest transportation company in the world does not own a car: Uber.” We can be a multi-billion dollar company in an asset and capital light, and while that's great and it works for certain industries, we just believe that healthcare is different. It's not a transactional situation where if you don't like the experience, you give the professional one star and then move on with your life. Right? The consequences and what is at stake are quite significant. We've always believed very strongly in, quote unquote, “owning the supply”. I don't like that term, but I think you know what I mean. There is value in having a patient-healthcare professional relationship, even if it costs more. Even if there's overhead. Even when you consider all of the downsides. We still think it's worth it.
SS: The service that you provide isn't transactional, and isn't in any way something that someone can take lightly. I think that although your approach may not be the favorite of the hardcore Silicon Valley model, it makes a lot more sense that these interactions have to be treated as relationships, especially when people are going through the hard health stuff, which is happening a lot more now. What were some of the hardest things that surprised you most throughout COVID?
CH: Although COVID was obviously a good tailwind for our business, our clients are also other businesses. A big Montreal-based entertainment company is a client of ours, and obviously we read in the newspapers that they're not doing well, and so our employees are thinking, “well okay, that's a major client,” and become concerned. We also have a lot of clients in the retail industry. A lot of our clients were heavily affected by this, so we didn't really know how this was going to play out. We were wondering, “Are we going to get paid?”
Early on, there was this view that virtual care is a luxury, and that it was going to be one of the first things that businesses cut. Back in March 2020, that was a reasonable hypothesis. We were wondering whether we were going to have to do layoffs, and even if we didn't, maybe our employees’ partners or families were going through tough situations. We were all in it together, but as a leader, you always wonder whether you should protect people from the worrisome information. Do you shield people from the bad news, or do you tell it like it is? And then there’s the worry that you might depress your team by being too open and vulnerable. So as a leadership team, navigating that was a big challenge for us.
SS: I’m always curious to hear what leaders think about those discussions because I've been in companies that have seen massive growth and then massive layoffs. Sometimes as an employee, it feels like that happens on a dime. You don't see past the boardrooms and you don't have a lot of transparency into those conversations. Around COVID, investors were advising all startups to lay off 20% of staff, regardless of industry. So, employees hear that, but then their leaders also sometimes provide them with this really sunny, confident, version, saying that everything is going to be alright. What do you think about striking that balance and what tone did you take with your team?
CH: I think that there's a delta between how you feel and what you say. People will always pick up on that. Even if you think you're the best actor in the world and even if you think you can fool people, people are smart and can tell if you're not being open, transparent, and genuine. My personal policy is to be as genuine as possible.
Sometimes we hesitated between taking the company in one of two directions. I’d tell the team that we were hesitating between options A and B, and that we chose B. We knew that the choice might not be obvious to everyone, so we’d explain the reasons behind why we chose option B. We’d also be honest and say that it might be the wrong decision, and that we hope it's not, but this is why we did it this way.
I also think that because together as a team, we’ve gone through lots of ups and downs, great things and less great things, so I had earned the trust of my team. Everybody else on the leadership team had earned the trust of their teams. It’s because of earned trust that we were able to have these open discussions where employees would feel comfortable to ask really tough questions and sometimes, we wouldn’t have the answers. And that was okay, too.
SS: I remember that was one of the best leadership lessons that I learned. When I took on a role as a people leader, my boss said to me at one point, “you don't have to have an answer for every question.” For some reason, I thought that because I was the director of this group of people and they were coming to me with questions, I had to have all the answers. My boss gave me permission to say, “I'm going to get back to you. I don't have all the answers right now.” That was one of my favorite leadership lessons: that people are okay if you don’t know everything; you're human, too.
So, you've figured out this entrepreneurship thing and you've done it well quite a few times, but right now there are a lot of entrepreneurs and small business owners who are experiencing a dark time in their business. Whether that’s because of COVID and because they don't have control over their outcomes, or because they're just trying to start something and it's really hard, things are tough for small businesses right now. From your experience, what advice would you offer them? What would you say to them?
CH: When we were raising our Series B, at some point, the round wasn't going so well. At some point, we were in a rut targeting the wrong type of investors with the wrong story. We weren’t getting the traction that we would have liked. We were seeing our runway decrease every day, and it was starting to get a bit worrisome. During that time, I was reading Shoe Dog by Phil Knight, the founder of Nike. Knight overcame very difficult challenges at many points throughout Nike’s journey where he very honestly and genuinely thought it was the end of his company. What it made me realize is that there's an arc to every entrepreneurial story where you have to push through a wall or through very dark moments to emerge stronger on the other side. You’ve got to believe that everything happens for a reason and that it’s all going to work out in the end.
Want to listen to Cherif Habib’s interview on The Growth Effect podcast? Check it out here to get the full experience.