Becoming an Entrepreneur with Hitha Palepu
Continuing my entrepreneurs theme of the month, today I’m introducing you to an entrepreneur who is my woman crush in every way imaginable. You’ll hear more about why later in the show, but I can’t think of a better woman to round out this month than Hitha Palepu, Entrepreneur, Angel Investor, Author and Consummate Multi-hyphenate as she says. Hitha joins me today to share her personal entrepreneur journey through three businesses and why she loves investing in other founders.
As a side note, I’m apologizing in advance for my sound quality. We recorded the entire episode only to find out my mic wasn’t captured. So for my sound snobs, I apologize in advance. The good news is that Hitha does most of the talking and she sounds great!
What Are We Drinking?
Hitha — Water and Coffee
Shannon — Black Cherry Schweppes
- Hitha’s entrepreneurial journey was very winding, as most are.
- Right out of college, she joined Cisco Systems in their sales associates program. Her first accounts were some of the biggest, global pharmaceutical companies in the world.
- She graduated with a degree in biochemistry and history. Her dad has worked in pharma his entire career and she knew it was just a matter of time before she joined the industry too, she just didn’t know how.
- Cisco was an incredible training ground. It gave her the discipline and cultivated her hustle. Natural born sales leaders need that little bit of training, that little bit of coaching to convert that hustle into productive hustle and Cisco was amazing for that.
- By the end of her three years there, Hitha was tired of selling technology solutions and she wanted to be in the industry developing the drugs themselves.
- At that point, her father’s company, which was just him and his co-founder Joe, was growing. They had a product hit the market and they were generating significant revenue and were ready to grow the team and operations.
- Hitha was the first non-founding employee and she did everything that her father and Joe didn’t do. This was everything from getting caught up on the programs they were developing, learning about pharmaceutical development for the first time in a really technical and detailed way, booking travel and hotels, and doing whatever she needed to do.
- Hitha works really well with her father and they are on their second company now. He has always been a mentor to her and he always took the time to explain what he was doing in a calm, productive manner. When she misbehaved as a kid, her punishment was to write a report on ten related medical words.
- Hitha’s mom had the same hustle and she was in a million different job roles when Hitha was growing up, from being a small business owner to project manager at a telecom company to working in retail. She is not someone who sits still.
- Seeing her work so hard for the joy of working really inspired Hitha to see working as fun, and she couldn’t wait to work and do different things.
- Hitha knew she could take a risk and try something new, as long as she had a good plan around it.
- Women who work teach their kids different lessons. It is not a bad thing.
- When you are talking to your child and you flip it to say “you get to go to school” and “I get to go to work”, it shifts everything and makes us more grateful, allowing us to throw ourselves into what we are doing with more gusto and passion, and it is a way to rev yourself up when you are feeling low.
- All of the products that were developed at her father’s business will be earning royalties for a long time, so it is now a holding company for future earnings, but is no longer operational.
- Hitha started a philanthropy tech startup after that, because she needed a break from pharma and things taking years to develop and get traction.
- It was not a successful exit and they ended up shutting down the business. They didn’t establish product market fit and they didn’t have a clear communication strategy. There are so many things she could have done differently, but she is grateful for that experience, because it taught her to be a leader, it taught her what it is like to fundraise, and it taught her what she needs to establish early on.
- She would not be as successful of a CEO with Rhoshan Pharmaceuticals without that experience.
- Hitha couldn’t do anything else but invest, advise, and write. There is no going back to another company, working in and building a company, that wasn’t her own.
- Her dad was tinkering around with an injectable presentation of one of the most common drugs in the world and no one has been able to develop an injectable for it. Her dad lives with her half the time and they talk about work a lot. He said he figured out the formulation and she asked him about patents. He went and got the patent and she asked him what the FDA said. At that point he gave her a giant piece of equity of the new company and let her decide what she wanted to do.
- At that point she had just launched her book, she wound down her company, and she was thinking about what her next step would be. The idea of jumping back in and bringing this product to approval with her father excited and challenged her. They would be running the company together, not her working for him and a partner.
- They assembled a wonderful team of individuals who have done their jobs longer than Hitha has been alive.
- Hitha is close with her parents and she is lucky to have the relationship she has with them. To spend this kind of time with her father is really special and she doesn’t take it for granted.
- With pharmaceuticals, there is a long lead time before you know if you have a viable product. Because they were working with an existing drug, it took from 2016 to now to scale it up to half of what a full production will be. They did the clinical trial last year and they have some tweaking to do before the next one. It is a lot of work and is very expensive.
- They need to manage cash flow and raise capital. They will be lucky if they get the product approved by the FDA with $25 million in total capital raised.
- With most drugs, when you are developing the drug substance as well as the formulation, it could cost up to $1 billion to develop, and this changes your valuation.
- You can make your numbers work any way you want, but if you can’t defend it to a potential investor, what’s the point? There is a constant retooling of their model, of their commercial strategy, of what is going on with the manufacturer and Hitha is constantly updating certain documents every single day.
- You could potentially need to say that you have a $300 million company with no product. It is not an easy sell.
- A few years back, Hitha started angel investing.
- Hitha was one of M.M.LaFleur’s very first customers. They launched in a PureWow newsletter and at the time, Hitha was working for her dad’s first company, traveling almost every single week in very conservative environments, but she didn’t want to sacrifice her style.
- She would wear Ann Taylor and J. Crew, but she had to dig to find pieces that would be appropriate that she liked, that were comfortable, and that she wasn’t tugging on hem lines and necklines to make them appropriate
- M.M.LaFleur spoke to her immediately and she put in an order the second she got the email. She still has some of the dresses from her first order.
- She sent them an email explaining how happy she was about their business and asked to meet them. She wanted to work with them. She became friends with their founder and CEO.
- She had been one of their first ambassadors, she featured them on her blog, and they did some events together. After a couple of years went by, Hitha and the CEO were talking about how they approach negotiations and Hitha found out M.M.LaFleur was raising their first round of capital.
- Hitha loved the company so much that she wanted to invest. It was a lightbulb moment for her. She wanted to help further the M.M. mission. She and her husband got the green light from their money manager and they invested.
- From that point on, Hitha took a much keener interest in her and her husband’s personal finances, how they were budgeting and saving, because she wanted to do more investing.
- To be an accredited investor, you need to have either over $1 million in assets or make over $250,000 a year in income for more than two years in a row. You also need to have the cash to invest.
- If you are going to do this as part of your investment portfolio, Shannon says, from a financial planning standpoint, you shouldn’t have any more than five percent of your investable assets in one particular holding, but that is a decision you need to make.
- You have to be willing to never see that money again, because 90 percent of startups fail.
- Hitha and her husband have made about 13 angel investments to date. All of them are still active and 12 of them have female founders. The one male founder started a company that will disproportionately benefit women.
- They do review male founded deals and she has passed on every single one, because the standard they hold their founders to is very high. This is especially true when it comes to communications, community, and marketing.
- Hitha prefers quality and value. To her, 100 “sticky” clients is always going to make more sense than 1,000 sign ups.
- If you want to start a business, know that you are going to work harder than you ever will. You have to have a growth mindset where everything is a learning opportunity, you have to roll with the punches, and you need to look at the big picture when something goes wrong and work with your team to chart a path forward. You need to be an aggressive communicator, have relentless follow up, ask for help, and you need to be ready for anything.
- You need to be coachable. You will get a lot of advice, and you need to be able to filter the good from the bad.
- If you want to be an angel investor, work really hard to qualify for investor status. You are not going to be a successful angel investor until you have the financial security to be willing to write a $10,000 or $25,000 check and say I’ll be okay if I never see this again. You also have to be really quick to make a decision, because you won’t have a lot of time when the opportunity arises.
- Figure out what is important to you. When you write a check to a company that is serving a much larger mission, you need to be connected to that mission. Be a support and a cheerleading squad for the companies you are investing in.
TAKEAWAY: My biggest takeaway is that if you want to become an entrepreneur, the growth mindset and aggressive communication skills are truly two keys to success. If you can’t identify with these, the entrepreneurial rollercoaster may not be the one for you.
Random Three Questions
- What is your favorite book?
- What is a food you hated as a kid and do you like it as an adult?
- What do you do to relax?
Connect with Hitha
LinkedIn (in the bio): Hitha Palepu
Website: (Coming Soon!) Five Smart Reads
If you’d like to talk to my team at the Financial Gym to help you prepare, at least financially, to start a business or help run yours better, I hope you’ll reach out to us at the Financial Gym. The number one employer at the Gym is “self employed”, so it’s certainly an area we’re comfortable working in. The great news is that Martinis and Your Money listeners get 15% off Financial Gym services. So head over to, or send friends to, financialgym.com to get signed up today.