Pharmpreneur of the week Brian Dawson: ‘I love creating and building.’

SnapshotFounder and CEO of Rx Drug 2015-2019. Grew it to a value of $255 million in under four years and delivered 100% of the growth to achieve the ranking as #1 fastest growing Company in Canada. Served on the board from the company’s inception through to March 2021.Education:M.S., Management (MBA), Massachusetts Institute of Technology (MIT), Sloan School –Boston B. Commerce (Honours) Queen’s University – Kingston, Ontario. What excites you about being an entrepreneur?I love creating and building. Until I started Rx Drug, my whole career had focused on business improvement and turnarounds. These jobs were all about building/improving businesses. I enjoyed finding better ways to meet patient and customer needs, developing capabilities to support that and improving the quality of the teams in those businesses. However, in all these cases we were working to adopt and change what already exists. Part of the challenge is changing peoples’ minds so that we can all learn together what might be a better way to approach things. While it is fun, it took time and lots of effort. When I had the opportunity to start my own business, I was able to start with a blank sheet and design from point zero. I was not constrained by what already existed.What was your key driving force to become an entrepreneur?Before I joined Rexall, the company was acquiring about five stores per year. I had joined to run the M+A function and quickly implemented major improvements in M+A and integration. This accelerated our acquisition rate to 24 stores in the first eight months. The CEO then asked me to commit to acquiring 40 stores per year. However, I realized that there was a major strategic hole in the industry. There are thousands of pharmacy entrepreneurs who had spent years or even decades building their pharmacies. They had built excellent reputations by providing wonderful patient care. And they had no way to retire without risking their legacy and the future quality of care for their patients.I saw an opportunity to build a business focused on patient care that preserved the reputation and goodwill that the pharmacy entrepreneurs had built in their small and mid-sized communities. Instead of acquiring a store then erasing the name, the legacy and the excellent patient care by changing everything, I believed that there was a huge opportunity to acquire the store and not make the changes. I believed that by keeping everything the same, we cherished what the pharmacist had created and kept the value of what that pharmacy provided to its community. With that idea in mind, I went out and raised the capital and founded the Rx Drug Mart (later renamed Neighbourly) in March 2015 and was the CEO until February 2019. I was employee number one. So, I got to wash the coffee cups and be the boss. I still remember the day that I signed the lease for an office. I was standing in the office that had no furniture, no computers, no internet, nothing. And I was really wondering if I had made a MASSIVE life mistake. I developed the strategy for the business, and I grew it using my system to serially acquire and integrate, operate and manage pharmacies. I used Lean Business techniques to develop my acquisition and integration system and it reduced the time to close by 70% without adding risk or sacrificing patient quality. In operations, I developed a Business Intelligence system that in combination with operating capabilities generated material improvements in store EBITDA. When did you start seeing payoff?Things started accelerating pretty quickly. The first pharmacy we acquired was in Boyle, Alberta, and we just kept acquiring and operating pharmacies. Our goal was to treat the pharmacy owners right. After all, they were the ones who were entrusting us with their life’s legacy. To do that we focused on a few important things: “We do what we say, and we say what we do”. We did not play games when we acquired a pharmacy, and we delivered on our commitments. Because of that we developed a strong reputation as an acquiror that could be trusted. “We do it your way”. Just like Burger King, we were flexible. We wanted to meet the needs of the selling pharmacist owner. If a pharmacy entrepreneur wanted to go quickly, we went quickly. If they wanted to go slowly, we went slowly. We sought to understand their unique needs and structure the transaction to meet those needs. We consciously avoided having a formula that everyone had to fit into.“There are no patients or cash registers at head office”. Instead of operating as a traditional top-down company we used a Lean Business approach to empower employees. We also emphasized to head office staff that they were there to support the pharmacies. This allowed everyone to focus on patient care.This approach permitted us to grow dramatically. By June 2018, I was pleased to receive an offer from Bain Capital that valued the business at $255 million. They were so impressed with our strategy and capabilities that they believed that this business would grow to a $1 billion. By early 2019, I was CEO of a business that was generating about $160 million in revenue and had over 700 employees. What are the biggest challenges to being an entrepreneur?The biggest challenge was scaling up. To achieve that I needed to build the capabilities, the right team, the systems and a learning culture to support that growth. At Rexall, I had used my past experience to source deals, complete M+A transactions and integrate businesses. And I was able to accelerate our growth by building those same capabilities again. We quickly built the highest awareness in Canada as an acquiror and we were able to close and integrate acquisitions in as little as 45 days. The whole acquisition process was designed to acquire entrepreneur-owned businesses that filtered out risks (deal, financial, operational) before deal costs were incurred. Lost deal costs were minimized with a 98% success rate from LOI to close and the ability to move from NDA to close in as little as 45 days. We were able to close, and instantly operate as many as eight stores in one weekend, all without sacrificing patient care.Acquiring stores was only the first step. I needed to build an operating approach that allowed us to operate successfully. Using the Lean Business experience gained at Ingersoll Rand/Bobcat, I focused on building operating processes, systems and a culture that would empower store employees to deliver patient care within a KPI framework. We built a business intelligence system that provided daily KPI data by store and focused on patient care, building operating and merchandising capabilities. Most importantly, this was all in an envelope of a continuous improvement culture. With continuous improvement as a central tenet of a Lean Business approach, we were continually examining how we could improve our patient care, performance and the quality of those capabilities. It is important to highlight that implementing these capabilities was not all me. I focused on hiring team leaders with blue-chip operating experience and the adaptability and collaboration skills required for a high growth environment.What advice would you give to colleagues who want to become entrepreneurs?While everybody’s journey is different, here are a few of my personal experiences: Learn and take risks to grow.When I was in college a mentor counselled me to think of my career as two distinct stages. The first 20 years would be all about gaining a broad range of experiences and learning as much as I could. The next 20 years would be all about leveraging that experience to do fun things. So, for the first 20 years I took the risk of trying every opportunity that I could. I focused on learning whether I succeeded or failed at a specific role. I worked in about a dozen different industries and learned about what makes each tick, what was different, and what learnings I could bring from one industry to another. I was lucky enough to work in finance, marketing, operations, strategy and acquisitions. So, I learned how people approach the world in each of those functions. Because entrepreneurship came during the second stage (and later in life), I was able to leverage all of that experience in building Rx Drug Mart. And I can honestly say that I had more fun building Rx Drug Mart than any other thing that I have done. Lastly, the team that worked with me was truly amazing. And based on the number of times they have asked to do another venture they clearly had a lot of fun too. Be Ready: The ups and downs are wild I kept the following diagram on my wall at work because it totally captured the ups and downs of being an entrepreneur. Particularly in the start up phase, the swings can be wild. You get good news, and you are on a high; then comes bad news and it really hits. There were many days when I thought I was a total loser and then hours later I thought things were going to be a great success. It was so different than a regular job where I cared but I did not feel it in my core.Cashflow REALLY matters.When I was running big companies, I never thought about cashflow to make payroll or debt payments. As an entrepreneur it is really different. And I needed to be very much on top of cash because you just can’t miss payroll or a debt payment.

Pharmpreneur of the week Brian Dawson: ‘I love creating and building.’

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