Ro, one of the most valuable privately owned health tech startups, isn’t subtle about its mission to deliver vertically integrated, affordable healthcare with consumers in mind.
And while a patient-centric healthcare system is undoubtedly overdue, Ro is first dealing with a massive challenge: its own inability to monetize meaningfully outside of Roman, its erectile dysfunction vertical. Stagnating ARR, and Ro’s need to grow into its recently-landed $5 billion valuation, has created an environment for employees that paints a picture of a company struggling to find new avenues of growth and integrations of acquisitions.
TechCrunch spoke to ten current and former Ro employees on the condition of anonymity, due to fear of retaliation or of impact on future employment, about the work environment at Ro. These employees detailed a low-morale work environment, due in part to the way that leadership sets frantic strategy and refuses basic feedback. They say tensions have led to employee churn across all teams.
According to LinkedIn, there have been several departures across all departments over the past few months, including high-profile positions like head of data, head of partnerships and head of product management. Eight people out of Ro’s 11-person customer service operations team have quit due to culture, the majority leaving after only being at the company for five months, employees say.
After contacting Ro for comment, TechCrunch obtained a company-wide e-mail that Ro sent to staff about this article, saying that it “aims to paint Ro in a negative light.” The email prompted more staff to reach out to TechCrunch, also on condition of anonymity, to confirm their experience of Ro’s troubling environment.
“Every time I’m stressed out about work, I come back to the same realization: we’re selling dick pills, we’re not curing cancer, we’re not becoming a patient’s first call,” a current employee told TechCrunch. “[Erectile dysfunction] is where we make all our money.”
‘Everything was going towards Roman’
Ro started out by selling erectile dysfunction medication to men. Founder Zachariah Reitano, who goes by Z, launched the company after firsthand dealing with the broken and stigmatized ED patient experience. Four years later, Reitano, along with co-founders Saman Rahmanian and Robert Schutz, have grown the company’s ambitions 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 on generic medications; and more nascent products like Ro Skincare and a health guide to beat WebMD.
Investors have taken notice. The health tech unicorn has raised nearly $900 million in venture capital to date, attracting top-tier venture capital firms, including Dragoneer Investment Group, SignalFire, FirstMark, General Catalyst and Initialized Capital. Ro’s most recent round, a $500 million Series D, triggered an acquisition spree: In less than a year, the company has acquired Workpath, Kit and, most recently, Modern Fertility. It’s even exploring a potential IPO.
While Ro has expanded its product lineup and wooed ready investors, several former and current employees paint a different picture. Roman, Ro’s erectile dysfunction vertical, is the core of Ro’s business, they say, which puts the company in an uncomfortable spot where it is overly reliant on Viagra, an out-of-patent generic drug that is facing race-to-the-bottom competition from other providers. The company’s overall ARR has flattened at a time when much of health tech has skyrocketed in the wake of COVID-19.
In a statement to TechCrunch, Ro denied this, saying that ARR is currently greater at $300 million and has not stagnated, but didn’t give a time frame or further details. Employees, meanwhile, say they were told that the sputtering ARR growth was because of Ro’s investment in acquisitions and hiring, not lack of success — even as other health tech companies touted growing revenue. Hims & Hers, Ro’s closest competitor, said in its Q2 earnings that revenue climbed 69% year over year.
Ro has not yet been able to successfully make meaningful money beyond its erectile dysfunction drug, which accounts for a significant — some say up to half — of Ro’s revenue. No other Ro product has ever come close to that initial success. Ro confirmed that Roman constitutes half of its revenue, but said that non-Roman has grown more than 130% year over year, without specifics.
“If you look at all of the marketing spend, everything was going towards Roman,” said a former employee. Ro denies this, claiming that over 20% of its marketing spend year to date was dedicated to non-Roman brands. Put differently, it confirmed that close to 80% of marketing spend was dedicated to Roman.
This tension trickled down to how Ro prioritized new business verticals, which employees say it knew it needed but simultaneously didn’t put money behind.
“I noticed this pattern of leaders being very hyper focused, very hyper vigilant on a launch, getting a team together, and then not hearing about that launch later,” the employee continued. “But I also took it as, Ro was in telehealth and there are a lot of barriers and hoops that need to happen in order for a launch to be successful.”
‘We want to jack the valuation of this company up ASAP so we can IPO soon’
As Ro has tried to expand beyond its one-hit wonder, a former employee says the resulting “identity crisis” has created a culture of launch fast, fail fast for new product lines, which hurts consumers and employee morale.
“Everything we launched [in 2020] was a complete failure,” a former employee said. “As they started to get these funding rounds, you would burn yourself out for a month, you launch it, and it would do nothing because there’s a fancy article and complete failure.”
One employee said that Ro’s at-home COVID-19 tests, which had a landing page and still has an active waiting list, never officially launched, thanks to pushback from Ro’s medical team. Business Insider wrote about the early efforts. Ro confirmed that no tests have been sold, because they are yet to be approved by the FDA.
Employees say that other projects that have struggled are Ro Pharmacy, a mail order pharmacy for generic medications. Ro has been vocal about a recent push into operating 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’s pharmacy efforts have stopped being reported to the entire staff.
Another vertical that has struggled is Ro Skincare, a prescription dermatology line that was launched in May 2020 but has seen little adoption. Ro’s weight management service, Plenity, hasn’t been shut down, but similarly is struggling to get customers to stick to the product.
Ro denies these struggles, claiming that all three verticals will do “tens of millions of dollars in revenue in 2021” and none have been sunsetted. The company added that Plenity is growing 1,500% year over year, but it’s unclear what metrics or benchmarks are being used since that product’s 2019 launch.
A current employee says that Zero, Ro’s smoking cessation product, has been shut down for two years and has no employees staffed on the project. Ro denied this, saying that Zero is still available on QuitWithZero.com and through Roman and Rory.
Over the past year, rapid acquisitions have only added to the growing chaos.
“Each acquisition felt like it came out of nowhere,” a recently resigned employee interviewed by TechCrunch, said. “We’ve never really integrated with any of our companies that we’ve acquired; so what are we doing this for? The focus [of the company] would shift a lot because of these acquisitions, and, leaders would say ‘this is a growth company, that’s what happens.’”
Some employees started to feel like the deals were just a smokescreen, done for publicity as long-time products within Ro’s suite of services were struggling. Leadership felt focused on marketing the products before they were even integrated into the platform. “Packaging is packaging, are we actually delivering something people want?” the employee continued.
Another employee told TechCrunch that Workpath, which was acquired in December 2020 for its home-based care services, was used for Ro’s in-home vaccination service and then tossed aside.
Some interviewees say that Modern Fertility, a reproductive health company, felt like an acquisition “for optics” than for actual change, given the fact that Rory, Ro’s vertical for women’s healthcare, has been given little to no investment. The acquisition was controversial to begin with, as some noted the pattern of women-focused healthcare companies getting acquired by a male-led company — instead of the opposite.
Another former employee says that Rory always struggled; “because, quite frankly, no one has ever put any time and effort into it because it is not selling dick pills.” Until recently, Rory was led by Rachel Blank. She recently left to start her own company in women’s hormonal health. Ro previously claimed that Rory was growing 300% year over year before the Modern Fertility acquisition. A current employee says that last year Roman was routinely getting 2,000 new members a day, while Rory often got around four.
“If you look at what happened to all of Ro’s brands, why would you want to be acquired by Ro?” a former employee said. “That’s why I worry about the people on Modern Fertility, because they’ve built such a wonderful product and team and they’re now being folded into this weird culture of unrealistic expectations.”
Modern Fertility co-founder Carly Leahy responded to a request for comment by saying “The Ro team has been incredibly welcoming to Modern Fertility and we continue to be energized by what we can do for women’s health together.” She also said that there are no planned departures from Modern Fertility’s executive team.
Employees felt differently. Acquisitions felt like Ro’s leadership was resorting to external reliance on production innovation, rather than investing in newer or pre-existing teams.
“What changed was the focus moved from growing a business to clearly ‘we want to jack the valuation of this company up ASAP so we can IPO soon,’” a former employee said. “It no longer mattered what individual employees were doing or who was there; it just mattered that we set this strategy.”
The ‘Amazon of healthcare’
One employee said that they knew it was time to leave Ro when the co-founders began to circulate a new focus for the company: become the ‘Amazon of healthcare.’ The multinational e-commerce giant is one of the biggest tech companies in the world, but has also long been accused of ruthless treatment of its workers in pursuit of profit.
The comparison is more than a theoretical hope: Senior leadership bought a book written by two former Amazon executives, “Working Backwards,” with the intent of replicating Amazon’s culture and leadership strategies.
Several employees detailed incidents of micro-management that didn’t allow employees to express their opinions, ranging from questioning the efficacy of a new product line to being told to never ask to move their seat. One employee said they weren’t allowed to meet with other managers without asking their own for approval. It wasn’t uncommon for employees to be told they weren’t “Ro-first” if they disagreed with leadership’s vision on a certain sub-brand, they said.
The failures amid integrations and other business verticals weren’t addressed, which many employees say caused they and their co-workers to burn out.
“I think that was the part that was really frustrating for employees,” a former employee told TechCrunch. “I knew if I complained in a Culture Amp [employee satisfaction] survey, my department was going to get a ‘talking to’ — not about how to fix this problem, but more how to make sure there’s not going to be a negative story about this in the press.”
To illustrate its culture, a Ro spokesperson pointed to “extremely high engagement scores” from an internal Culture Amp survey last fall. They also noted the following: Ro was recognized as one of Inc.’s Best Workplaces in 2020 and 2021, Forbes’ list of America’s Best Startup Employers, as well as on Fortune’s Best Workplaces in Healthcare, Best Workplaces in New York, Best Workplaces for Millennials and Best Medium Sized Workplaces lists for 2021.
“We’re proud of the culture, team and the company we have built and the impact we’re having on the lives of our patients,” the spokesperson wrote in a statement. “We are incredibly excited for what’s ahead, including our recent investments in fertility, mental health and in-home care, which will allow us to help more people with more of their healthcare needs.”
While employees say this has created a culture of mass departures and low morale, Ro chalked it up to the “great resignation” happening across industries. The company said that its voluntary turnover is 8% year to date, meaning fewer than 30 employees have left since the beginning of the year — significantly less than macro-trends. An analysis using LinkedIn, and corroboration by former and current employees, suggests that dozens more have left the company. Furthermore, a current employee cast doubt on the percentage, saying that there is a sense within the company that more are leaving. Last week, HR sent managers an email about “the great resignation” across the country and urged leaders to be more supportive of their direct reports.
“There’s just a feeling of every time you turn around, someone is saying ‘Monday is my last day,’” they said. “It’s like we hire one person, and two other people leave.”
Reitano was not made available for further comment. In an email to Ro staff about this article, Reitano wrote that “We want the bar for Ro to be extremely high” and that “Ro isn’t for everyone.” He also urged employees to submit a ticket to the People team if they have feedback or need additional resources.
Of the employees who have recently left, many explained how conflicted it felt to leave a company that had a great mission but fell short in execution.
“Everyone there comes for the right intention, for wanting to save the world and wanting to improve access to healthcare,” a former employee told TechCrunch. “And then you realize, once you’re there, that it’s really just about making sure that you’re first to market with a cheap drug that can be sent to people. It feels icky.”
One employee, who left a few years ago, worked at the company before it became a well-known unicorn. The micromanagement and “paranoid secretiveness” from leadership eventually made them leave. “I always thought it wasn’t Ro. That I was the issue. That maybe I’m being impatient or don’t know how stuff works here or I was not fitting in,” they said.
Ro isn’t claiming to invent breakthrough technology — most of its business is making it easier for consumers to access generic drugs and services — and thus some of its aggressive focus on marketing feels warranted. Ultimately, however, Ro’s issue is its inability to replicate the success of Roman across other verticals, taking a toll on the employees that are working on its staff.
“The first year that I was there, I was like the happiest person on earth,” a recently resigned employee said. “The piece that needs to be recalibrated is what is the end vision? What do you mean when you say a vertically integrated, patient-centered health system? And are the actions moving you toward that? And that’s ultimately why I left, because I didn’t feel like what was being said externally was actually happening internally.”
Current and former Ro employees can contact Natasha Mascarenhas by e-mail at [email protected] or on Signal, a secure encrypted messaging app, at 925 609 4188.
This post first appeared here: https://techcrunch.com/2021/10/27/ro/