Employees detail rising tensions at Ro as healthcare unicorn struggles to grow beyond first win – TechCrunch


Story by: Natasha Mascarenhas TechCrunch » Startup

Ro, one of the most valuable private health technology startups, is not subtle in its mission to provide vertically integrated, affordable health care with the consumer in mind.

And while a patient-centered healthcare system is undoubtedly overdue, Ro is facing a massive challenge first: his own inability to make meaningful money outside of Roman, his vertical erectile dysfunction. The stagnant ARR and Ro's need to grow into its recent $ 5 billion valuation has created an environment for employees that paints the picture of a company striving to find new ways to grow and integrate acquisitions to be found.

TechCrunch spoke to ten current and former Ro employees about the work environment at Ro on condition of anonymity, fear of retaliation or repercussions on future employment. These employees described a work environment with low morals, in part due to Art and ways in which leadership sets frantic strategies and rejects basic feedback. They say that tensions have led to employee turnover in all teams.

According to LinkedIn, there have been several departures in all departments in the past few months, including high-profile positions such as Head of Data, Head of Partnerships and Head of Product Management. Eight employees from Ro & # 39; s 11-person customer service team have resigned for cultural reasons, most of them after only five months with the company, say employees.

After soliciting Ro for a comment, TechCrunch received a company-wide email that Ro sent to staff about the article, stating that it "should put Ro in a negative light." The email prompted more employees to contact TechCrunch, also on condition of anonymity, to confirm their experience with Ro & # 39; s "toxic" environment.

"Every time I'm stressed out from work, I come back to the same insight: we sell cock pills, we don't cure cancer, we won't be the first call from a patient," a current associate told TechCrunch. "[Erectile dysfunction] is where we make all our money."

"Everything went towards the novel"

Ro started selling erectile dysfunction drugs to men. Founder Zachariah Reitano, denoted Z, started the company after studying firsthand the broken and stigmatized ED patient experience. Four years later, Reitano, together with co-founders Saman Rahmanian and Robert Schutz, allowed the company's ambitions to grow rapidly.

Over the years, Ro has launched a number of different services, including Rory, a digital health clinic for women; Zero, a smoking cessation treatment service; Ro Pharmacy, which offers low prices for generic drugs; and more emerging products like Ro Skincare and a Health Guide to Beat WebMD.

Investors noticed that. The health technology unicorn has raised nearly $ 900 million in venture capital to date, attracting high-profile venture capital firms including Dragoneer Investment Group, SignalFire, FirstMark, General Catalyst and Initialized Capital. The most recent round of Ro, a $ 500 million Series D, sparked an acquisition frenzy: in less than a year, the company acquired Workpath, Kit, and most recently Modern Fertility. It is even examining a possible IPO.

While Ro has expanded its product range and wooed ready investors, some former and current employees paint a different picture. Roman, Ro & # 39; s Vertical for Erectile Dysfunction, is at the core of Ro & # 39; s business, they say, which puts the company in an awkward position of being overly dependent on Viagra, an unpatented generic drug that facing a race for the rest. Lowest competition from other providers. The company's overall ARR has flattened at a time when much of health technology has skyrocketed in the wake of COVID-19.

In a statement to TechCrunch, Ro denied this, saying that the ARR is currently higher at $ 300 million and not stagnating, but did not provide a timeframe or further details. Employees, meanwhile, say they were told the stuttering ARR growth was due to Ros investing in acquisitions and hiring, not a lack of success – even as other health technology companies announced rising revenues. Hims & Hers, Ro's closest competitor, said in its Q2 results that sales were up 69% year over year.

Ro has not yet been able to make significant money on top of his erectile dysfunction drug, which accounts for a substantial – some say up to half – of Ro & # 39; s revenues. No other Ro product has ever achieved this initial success. Ro confirmed that Roman accounts for half of its sales, but said non-Roman grew more than 130% year over year, with no details.

"If you look at all the marketing expenses, everything went in the direction of a novel," said a former employee. Ro denies this, claiming that more than 20% of its marketing spend in the year to date has been on non-Roman brands. In other words, it confirmed that nearly 80% of marketing spending was for Roman.

This tension led to the way Ro prioritized new business verticals that employees say they knew they needed but were not putting money back at the same time.

"I've noticed this pattern of executives who are very hyper-focused, very vigilant at a start, put together a team, and then don't hear about that start later," the agent continued. "But I also understood it to mean that Ro was active in telemedicine and that there are many obstacles and hurdles that have to pass in order for a start to be successful."

"We want to increase the valuation of this company as soon as possible so that we can go public soon"

When Ro tried to expand beyond its one-hit wonder, a former employee says that the resulting "identity crisis" created a culture of quick adoption and quick failure for new product lines that consumers and the morale of the employees violated.

"Everything we [in 2020] put on the market was a complete failure," said a former employee. "When they started getting these rounds of funding, you'd burn yourself out for a month, you started it, and it wouldn't do anything because there was a fancy item and a complete failure."

A staff member said that Ro & # 39; s Covid-19 tests at home, which had a landing page and still have an active waiting list, never officially started thanks to the setback from Ro & # 39; s medical team. Business Insider wrote about the early effort. Ro confirmed that no tests were sold as they have yet to be approved by the FDA.

Staff say other projects that are having problems are Ro Pharmacy, a mail order generic pharmacy. Ro has spoken loudly about the recent push to run its own pharmacies. In a previous interview, Reitano told TechCrunch that the company will have 10 pharmacies by the end of 2021 and 15 by the end of 2022. Internally, the growth metrics for Ro & # 39; s pharmacy efforts are no longer reported to all staff.

Another industry that has struggled is Ro Skincare, a prescription dermatology line that launched in May 2020 but received little acceptance. Ro's weight management service, Plenity, has not closed, but is also struggling to get customers to hold onto the product.

Ro denies these battles, claiming that all three verticals will have tens of millions of dollars in sales by 2021, and none have been hired. The company added that Plenity is growing 1,500% year over year, but it is unclear what metrics or benchmarks have been used since this product was launched in 2019.

A current contributor says Zero, Ro's smoking cessation product, has been out of service for two years and has no employees on the project. Ro denied this, saying that Zero was still available on QuitWithZero.com and through Roman and Rory.

In the past year, rapid acquisitions have only exacerbated the growing chaos.

"Every acquisition felt like it came out of nowhere," said a recently-quit employee interviewed by TechCrunch. “We have never really integrated into any of our acquired companies; so what are we doing this for? The focus [of the company] would shift a lot as a result of these acquisitions and executives would say, "This is a growth company that is happening." "

Some employees felt that the deals were just a curtain of fog made for advertising as longstanding products within Ro & # 39; s service suite struggled. The leadership focused on marketing the products before they were even integrated into the platform. "Packaging is packaging, are we actually delivering something that people want?" The clerk continued.

Another associate told TechCrunch that Workpath, which was purchased for its home care services in December 2020, was used for Ros' home vaccination service and then dumped.

Some respondents say Modern Fertility, a reproductive health company, felt more like an acquisition "for optics" than an actual change, given Rory, Ro's vertical for women's health, little to nothing has not made any investments. The acquisition was controversial at first as some saw the pattern of women-centric healthcare companies being acquired by a man-run company – rather than the other way around.

Another former employee says Rory always fought; "because, frankly, no one has ever put the time and effort into not selling cock pills." Until recently, Rory was run by Rachel Blank. She recently left the company to start her own women's hormonal health business. Ro previously claimed that before acquiring Modern Fertility, Rory grew 300% year over year. A current contributor says that last year Roman routinely got 2,000 new members a day, while Rory often got around four.

"If you look at what has happened to all of Ro's brands, why would you want to be acquired by Ro?" said a former employee. "That's why I'm worried about the people at Modern Fertility, because they built such a wonderful product and team and are now caught up in this strange culture of unrealistic expectations."

Modern Fertility co-founder Carly Leahy responded to a request for comment by saying, "The Ro team has made Modern Fertility an incredible welcome and we remain motivated by what we have together for women's health can do." She also said there were no planned departures from the Modern Fertility executive team.

Employees felt different. Takeovers felt as if Ro & # 39; s leadership were drawing on outside production innovations instead of investing in newer or existing teams.

"What has changed was that the focus from growing a company to the clear" We want to increase the valuation of this company as soon as possible so that we can go public soon " has been relocated, ”said a former employee. “It no longer mattered what individual employees were doing or who was there; it was only important that we define this strategy. "

The "Amazon of the Health System"

A staff member said he knew it was time to leave Ro when the co-founders began to spread a new focus for the company: becoming the "Amazon of Healthcare" company of the world, rather than becoming also long accused of the ruthless treatment of his workers in greed for profit.

The comparison is more than a theoretical hope: management bought a book written by two former Amazon executives, Working Backwards, with the intention of replicating Amazon's culture and leadership strategies.

Several employees reported incidents of micromanagement that prevented employees from expressing their opinions, from asking about the effectiveness of a new line of products to being asked never to move their seat. One employee said he was not allowed to meet with other managers without asking their own consent. It is not uncommon for employees to be told that they are not "ro-first" when they disagree with the leadership's vision for a particular sub-brand, they said.

The errors in integrations and other lines of business were not addressed, which, in the opinion of many employees, resulted in them and their colleagues being burned out.

"I think that was the part that was really frustrating for the employees," one former employee told TechCrunch. “I knew if I complained in a Culture Amp survey [employee satisfaction] my department would get a 'talk' – not about how to fix this problem, but more about how to make sure it wasn't There is a negative story about it in the press. "

To illustrate his culture, a Ro spokesman pointed to "extremely high engagement values" from an internal survey by Culture Amp last fall. They also noted: Ro was named one of Inc.'s Best Places to Work in 2020 and 2021, On Forbes' Best Startup Employers List in America, as well as Fortune's Best Healthcare Jobs, New York and Best Places to Work honored as best jobs for millennials and the list of the best medium-sized jobs for 2021.

"We are proud of the culture, the team and the company we have built and the impact we have on the lives of our patients," the spokesman wrote in a statement. "We are incredibly excited to see what lies ahead, including our recent investments in fertility, mental health, and home care that will enable us to serve more people with their health needs."

While staff say this created a culture of mass exits and low morals, Ro attributed this to the "great resignation" in all industries. The company stated that its voluntary turnover rate since the beginning of the year is 8%, which means that fewer than 30 employees have left since the beginning of the year – significantly fewer than in the macro trend. Analysis with LinkedIn and confirmation from past and current employees suggests dozens more have left the company. Additionally, a current employee doubted the percentage, saying there was a feeling within the company that more were leaving. Last week, Human Resources emailed managers about the "big resignation" across the country, urging executives to do more to support their direct reports.

"There is just the feeling that every time you turn around, someone says, 'Monday is my last day," "they said. "It's like hiring one person and leaving two others."

Reitano was not made available for further comments. In an email to Ro staff about this article, Reitano wrote: "We want the bar for Ro to be extremely high" and that "Ro is not for everyone". He also urged employees to submit a ticket to the People team if they have any feedback or need additional resources.

Achievement counts

Of those who recently left, many commented how inconsistent it felt to leave a company that had a great mission but was not executing.

"Everyone comes with the right intentions to save the world and improve access to health care," a former employee told TechCrunch. “And then you realize, when you're there, that it's really just about making sure you're the first to get a cheap drug on the market that can be sent to the people. It feels disgusting. "

An employee who left a few years ago worked for the company before it became a well-known unicorn. The micromanagement and "paranoid secrecy" of the leadership eventually let go. “I always thought it wasn't Ro. That it was me. That maybe I'm impatient or that I don't know how this is going or that I don't fit in, ”they said.

Ro does not claim to invent breakthrough technologies – most of its business makes it easier for consumers to access generics and services – and so some of its aggressive focus on marketing seems warranted. Ultimately, however, Ro's problem is that it is unable to replicate Roman's success in other industries, which puts a strain on the employees who work on its staff.

"In the first year that I was there, I was like the happiest person on earth," said a recently resigned employee. “The part that needs to be recalibrated is the final vision? What do you mean by a vertically integrated, patient-centered healthcare system? And do you induce the measures to do so? And that's why I finally left because I didn't have the feeling that what was said on the outside actually happened on the inside. "

Current and former Ro employees can contact Natasha Mascarenhas via email at natasha.m@techcrunch.com or via Signal, a secure encrypted messaging app, on 925 609 4188.


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Source References: TechCrunch » Startup