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Interview with Tommy McGloin, DoctorsDirect.com

Tommy McGloin is founder of DoctorsDirect.com (www.doctorsdirect.com), a startup that is developing a service that connects patients to doctors. Tommy is former SVP and GM of MapQuest, and was also head of AOL Moviefone and Digital City. I caught up with Tommy to hear about his new venture, and also get his insight into the transition from a big company to his own startup.

Ben Kuo: Briefly, tell me a bit about what DoctorsDirect is, and what it offers consumers?

Tommy McGloin: DoctorsDirect.com is a site where you can book a doctor's appointment, and in many instances pay for it up front. We're trying to bring the norms of e-commerce -- 24/7 availability and price transparency--to an enormous vertical, healthcare services. It's something that doesn't exist today for a number of reasons.

Ben Kuo: Let's talk a bit about your background at AOL--what did you do there?

Tommy McGloin: I've been in direct marketing and the Internet now for 15 years. Before I started at AOL ten years ago, I worked for magazines and newspapers in direct marketing. I started at AOL at Digital City, which is a network of city guides. Then, I was put in charge of Moviefone after that was acquired. Lastly, I ran MapQuest, taking it from 10m uniques to 50m uniques in the US. What ties that experience together with DoctorsDirect.com is that most of those relate to finding something on the web and getting services locally. When you're running an ecommerce business, there is a strong direct marketing experience, where you look for ways to acquire customers more efficiently. Also, a lot of my background is to build a team, which helps me with this business.

Ben Kuo: How did you end up in LA, and starting DoctorsDirect.com?

Tommy McGloin: I've lived in LA for 14 years, and was AOL's first employees in LA 10 years ago. One of my goals with DoctorsDirect.com was to recenter in Los Angeles. I live in Santa Monica, and there's so much going on here. The business idea came to me when I was leaving AOL, and had to spend the balance in my flexible spending account. A flexible spending account is an account for employees of bigger employees--where you can fund that account with pretax dollars for a whole list of medical expenses. Those funds can be used to pay for expenses not otherwise reimbursed by your insurance company--things like eyeglasses and things like that. I needed to spend it, among with taking care of other things after leaving a company after ten years. I was frustrated that I couldn't do it on the web--for things like executive physical, or having a shoulder checked by an orthopedist. I had to spend that money, but had no way to do it on the web. That was the source of the business idea. What reinforced that idea is that when my daughter hurt her knee, someone told me that you have to see this orthopedist--he's the best--and couldn't get an appointment for six weeks. I though that there must be a way to get these appointments booked faster.

Ben Kuo: How long has the company been around?

Tommy McGloin: We incorporated the day right after the Super Bowl. That was the day I bought the domain name. I had been looking at other opportunities, but also dreamed of starting my own company. I arbitrarily picked the day of the Super Bowl as the day to make a decision. ON the first day of business, I had a domain name and incorporated the company, and had my first three employees within the month. I also signed up with a local company, CoreObjects, to do software development for me.

Ben Kuo: How are you funding the business?

Tommy McGloin: I'm seed funding the venture. The employees are following a traditional route, which is they're taking much lower cash than they would command for their skills in their market in terms of receiving founder's stock. Part of the advice I got was to use restricted stock with founders, instead of options. The thinking was this is a much more significant level of risk, let's get them into a form of stock -- the way is they buy it at very low price, and I over time lose the right to buy it back at that price (repurchase right). As months go by, they own more and more of the stock. In turn, when they take possession of stock, they are establishing a basis of ownership. While it's very low, if we're successful, and the stock is worth lots of money, that's a capital gain. It's different from options taxed as ordinary income.

Ben Kuo: Why did you decide to do a startup now?

Tommy McGloin: Number one, I think people will accept that there is an abiding dream in everyone to start a company. Things have to set up in a way to take risk -- that's both a function of life situation and whether you think you have a good idea. Number two, was my rational analysis of all opportunities that had come in front of me. I found that there's a really substantial founder's premium--if you are the one who can go from the white board to the market with a product. I had met all of these founders, who were recruiting me to help build their businesses, and they were offering me quite a small piece of equity, even though lots of the value of the business was in front of it. The VCs, search executives, and others I worked with said that this was the way it should be--it was the market reality. I'd been through that before--for example, at MapQuest--where it had a very low asset value in the dot com winter, to staggering value today. I can't talk about what it's worth now, and it's not broken out by AOL Time Warner, but it's in the billions. I said, gee, I want to have a piece of that action if I do it again, since it's a lot of work. If you can take the risk, take it to the level of being a founder.

Ben Kuo: How has it been going from a big company to a startup?

Tommy McGloin: I've struggled sometimes to convince people how entrepreneurial my own career experience has been. I was never stationed at AOL headquarters in ten years. The business units I ran -- Digital City, Moviefone, Mapquest -- are destination web properties, which AOL is just now getting around deciding that's what they want to be. I had to be very entrepreneurial to lead these businesses.

The major difference is cash flow. I don't have a direct deposit coming into my bank account twice a month, and the money that is going tout to pay for the cost of the business happens to be my money. Yet, you'd be amazed at how abstract that can become. It just feels that that's what's budgeted to be a business. I'm very clearly focused on the prize. Personally, I'm doubly motivated, because of my distaste for the wasteful perks that go on in big companies. It's like a fuel additive--I love being an entrepreneur. Personally, I felt in the wrong place in a big company with the status consciousness and the defensive posture people generally have.

On the other hand, I'm amazed at the incredible efficiency of a small company. To make decisions so nimbly, to go right to market, to not talk to a committee. We talk to doctors, then get things built. Everything is a fair fight in the marketplace. Eightly percent of the time in a big company is spent internally--it's not spent on the product. With DoctorsDirect, it's product-product-product, doctors-doctors-doctors, customers-customers-customers. It's very pure.

Ben Kuo: Thanks, and good luck on the startup!


 

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