 This is Startup Storefront. The veterinary industry is changing right before your eyes, but unless you've been paying close attention, you probably haven't noticed. For years, the vet industry has been defined by small mom-and-pop clinics. However, large investment firms have been buying up practices, yet offering nothing new or innovative. These old practices still keep their patient records on paper, don't offer 24-7 access, and if you're out of town, it's nearly impossible to book an emergency appointment. And this is all while, according to Times, suicide rates among veterinarians is extremely high. And as a matter of fact, women vet suicide rates are three and a half times the national average. Our guest today is changing all of that, from how the clinics are built to waving exam fees for members. Modern animal is redefining what it means to practice veterinary medicine from the ground up. In today's episode, we talk with Steven, the founder of Modern Animal. We discuss how modern animal is working to avoid vet burnout with this new approach, setting up a tattoo parlor at a vet conference, and the nationwide vet shortage and what that means for the pet industry in the coming years. All right, welcome to the podcast on today's show. We're talking to the founder of Modern Animal. Steven, thanks for joining. Thanks for having me. For people who don't know, what does your company do? Modern Animal is a new veterinary hospital group. We're basically reinventing that Medicare, bringing it into the future. It's been stuck in the past for a very long time. And what made you want to start the company, or even, so Whistle's similar in some sense of your former company, but are you just an animal lover? Are you just someone who has a tech mind, had a dog or a cat, and then went into a vet clinic and experienced just friction? What was the thing that you were like, there's an opportunity to solve it, or I just don't like it. I don't want to change it. The origin of it is more of a, I feel like episode out of Silicon Valley. I mean, it was my roommate and I about 11 years ago, had a white board. We were both investors. Really wanted to be entrepreneurs. So you came from the investor side? We came from the investor side. And we had, both of us had always had dogs growing up. And so we put pets up on the board as like one of the potential places to go build a business. It's a horrible way to start a company. Like the sector. You just said pets or the sector. Yeah. And we both were management consultants before. So it was like, that's how it started. We know that's a good industry. What else? And did not really understand how do you, you know, if you're sitting around and you're an investor or, you know, just in general in your earlier career, you don't really know anything that deeply. Yeah. And that's where a lot of really good ideas come from is sort of seeing something up close. So for Whistle, you know, we, we knew that there was broadly speaking, the pet industry was huge and underappreciated. We knew that there wasn't really any great brands in the space and that there wasn't much technology. So that was sort of like 11 years ago, maybe in 12 years ago at this point, sort of like the, the beginning, we were definitely not pet fanatics or anything like that. And actually I had a lot of, I'd say, hesitation going into the, into the category. Why? Because of even the perception of, oh, I'm going, I'm leaving my like pedigreed career to go work in pets. Without a pet. Did you have a pet? At the time, I had my family's pet. This was a big, so I think within like weeks of incorporating a company. So you weren't eating your own dog for per se. Yeah. My co-founder, we drove down LA. We were in the barrier. We drove down. We went to a healthy spot. He rescued a dog within like weeks of us starting the company. And I was like, we're working like 16 hour days, 18 hour days, traveling a bunch. I can't have a dog. So I had my family's dog came up and stayed with me for a while. But no, I mean, there was a lot of, I think early on, I always had loved animals. I mean, the way most Americans love animals. We're not calling you an animal hater. No, no, no. But it's been, you know, I think that there's always this like perception of, you know, why, why did you choose to go into whatever the category is? You have this like deep passion about this like specific surface level category, right? And so whistle was really born out of wanting to be an entrepreneur. That journey was mostly marked by, you know, what is the painful journey of product market fit? And, you know, we were fortunate to raise capital for our initial round. We built our first product, which was initially meant to be a health monitoring device. We spent a lot of that capital building that product. We launched a year later. And I'll never forget the first day we launched. We stayed at our head of engineering's house. All of us slept on the floor. We launched it at like 6 a.m. in the morning. And we saw kind of the initial Google analytics data and it was like, oh, people aren't buying this thing. And for most of our team, they were excited of a celebratory. We had just launched. I drove home that day being like, this is going to be a journey because the data is showing us that people don't want this thing. We missed on product market fit. And that was a really important lesson, I think, in building that business for sure. And hardware, consumer electronics, very hard to iterate on. So I think that there wasn't much more we could have done to really iterate without having built the thing. But there always is more you could have done. So I think for us, that lesson was learned the painful way. We iterated into where we did see a lot of interest, which was more around GPS tracking, which was an obvious thing. 10 million pets get lost a year. So it was sort of, OK, people want this. People actually expected it. 10 million pets get lost a year. Yeah. Most of you get found. Most get found. But there's a period of extreme stress for people. That's hilarious. So iterating and moving more into location tracking, and we built this device that more people wanted, but it was actually completely divergent from the original intent of the business, which was really pet health. So division 10, 11 years ago, which is very relevant for now a modern animal, we saw a very clear opportunity around pet health, both in terms of the market growing and people wanting to invest more in their pet's health. And what year is this now when you're having that understanding? This is like 2013. So we incorporated in 2012. We launched a year later. And so we were iterating 2014, 2015. We iterated more towards the GPS tracking device, which was a much better business, but much less interesting strategically to what I had started to become really interested in, which was this pet health problem of people wanting better access to pet health care for their pets, and pet health care actually improving, yet access being poor, and we'll get more into that, but also kind of how people deliver it being really backwards or just outdated. So that was 2015 or so. We ended up partnering with a big strategic player in the pet space who ended up acquiring us a year later, and that was Mars, Mars Pet Care. Most people think of Mars and they think of confectionaries, candy bars, an incredible business, family owned, 100 year old business. They decided to double down in pet care. So they had already built out a really big CPG pet food business. They decided to double down into veterinary care. So over the course of a few years, they bought us really with an eye towards our original vision, which was pet health, tracking pet health, and then sort of veterinary services. They bought Banfield, which was partially owned by PetSmart. They bought DCA, which is based here in LA as well. So overnight became the largest operator of veterinary hospitals in the world, and we were acquired as part of this bigger vision. And so I ended up at Mars in 2016 and was there for a few years. Did you like it, being there? I learned a ton, and an incredible group of people I think who, I mean really the family. But the Golden Handcuff period is awful, generally. Maybe not, I don't know. Learning it's OK. But yeah, I think for me, the journey of building whistle was a tough journey. So I think for me, it was a welcome reprieve and just an opportunity to recover. Got married. I had my first son. Mental health break, physical health, moved back home to LA. At that point, I was eager to get back on the white board. And it was funny. The white board felt very similar to 2011-2012. It was, again, sort of like words on a white board. And I was really set on like, I don't want to be in the pet space. I don't want to be a pet guy. You know? At this point, now I have a dog. And I'm like, you know, I love my dog. But I don't want to do pets for us in my career. And I was really eager to find something else. And I was kind of back on the white board talking to different people. And I was like, this all feels eerily similar. And I know where this path leads. But you knew the problem. I mean, that's one way to look at it too, right? And so we had Dave Greenfield, this sort of dream pops. And he came from like a management, almost like a finance background and really understood how people eat like ice cream and how there isn't like a good for you ice cream. And so he went from basically New York finance to, oh, there's an opportunity here and just making the same thing like a Bon Bon healthier. And then just creating a marketing campaign that structures that in a way to boost you into success. And that was his background. And obviously for him, it's easy to say he loves ice cream. But I think the truth of it is he just saw the spot. He saw the area that people were neglecting. And when people, I mean like huge brands, which is similar to what you're doing, right? And so there's an opportunity. Ultimately, that's what happened. So I'm doing my earn out, trying to do my best to sort of hand off whistle to other managers who are gonna leave that business. And I got asked to help work on innovation around the veterinary business that they had just acquired. And that's where I started seeing a lot of things much more up close to your point. So while I was in my mind thinking I need to get sort of away from the pet category, what actually was happening in parallel was getting much deeper into it. I was spending a lot of time in veterinary hospitals. I was spending a lot of time thinking about the problems that the veterinary industry was facing. And a lot of these things started to become really obvious to me. And the vision for what is now modern will became very clear. And at some point you ask yourself, well, what is it as an entrepreneur that I'm actually trying to do? I'm trying to solve a problem for as many people as possible, build a great business. And that was actually what I fell in love with. When I say the pet category, that's like this very surface level thing. Well, what is it that the business is, right? And so building whistle, which is a consumer electronics device company, versus building what is now modern animal, which is a veterinary services company, could not be more different. And the fact that they're in the pet category is really just like the corner of the universe that I find myself in now. And so I think in some ways, what I saw was a very clear vision and a very clear problem. And a group of people who had quite frankly just fallen in love with helping. I'd met so many veterinarians over this period of time. At this point I'm now five, six, seven years into this category. All the conferences I'd go to, all of the stories I'd heard, all of the days I had spent thinking about this problem, were now basically my entire sort of surroundings and all of the context of my professional life. And so as I got deeper into it, I started seeing things that other people weren't seeing. And I think ultimately that's as an entrepreneur what you're really seeing. What was the thing? What were the signals that- The problem was that veterinary medicine had never really focused on the people because you think on the pet space. Owners or the vets? Both sides. And so that's where it was really the human experience of veterinary care. In what way, what was- So the pet owner experience, for anyone, do you guys have pets? No. No. Okay, so it's okay. Or just like you. Yeah, it's okay. Well, I'd always had dogs. And so I always knew as a pet owner the experience was really subpar. And you sort of- Walk me through it. So I have a dog, dog gets injured, something doesn't go well. I take it to the vet. You're going to a vet practice that you find in Google or Yelp or your friend tells you about, maybe it's one where your family has gone to for a long time in the neighborhood. Sure. And it's a place that- And do they do like the thing like Fluffy walks in, they go, hey, here's a form, fill out for Fluffy. Form, maybe you can't even get into the first place because especially the last few years, it's been booked up way out in advance. Oh wow, okay. So you're calling, you're on hold. They finally say you can come in. You're waiting in the waiting room for a long time. The reality of veterinary medicine is the people who work in the industry are amazing. And these are people who have committed their careers to serving animals. They're incredibly passionate. And in many ways when I decided to build Modern Emily, it was in recognition of, this is an incredibly noble group of people. They're overcoming incredibly expensive schooling, usually getting paid less as an industry relative to like human healthcare counterparts. They're putting up with way more drama in the day to day of a veterinary practice than you would expect. You think, oh, you must be playing with puppies and kittens all day, right? You're actually dealing with really stressed out frustrated pet owners who are incredibly anxious because veterinary medicine is delivered with a few factors that are important to recognize. One, the animal can't speak, right? So you're, everyone's trying to figure out what's going on with this being that can't communicate. There's now three parties. Instead of when you go to the doctor, it's just you and the doctor, right? There's three parties. It's much more akin to sort of going to the pediatrician with a child. But you have this animal and you have a situation where from a financial sort of backdrop, people are paying all out of pocket for veterinary care. Even if they have pet insurance, that system doesn't actually speak to the veterinary care delivery system. And so you submit your invoices afterwards, hope you get reimbursed. And so it's really expensive. It feels really expensive. And in this moment, you have all this fear and this anxiety. You have this being that you love unconditionally. You have this doctor who you hope has their interests at heart in almost every single veterinary I know does. Yet there's this thing called money that comes in the middle of it. So now all of a sudden you start doubting their intentions. You start maybe acting out of your own emotion. It just makes this whole dynamic incredibly complicated. And so these people themselves are working in these environments that are, we were just talking through the pet owners journey a little bit of like the waiting room and the forms and the whole time. The much worse situation that people don't see is what's happening behind those double doors. And this is what I really got to see when I was what's happening behind the double doors. It's just an afterthought. Like the experience of the people who work there is just an afterthought. The systems to support them, the culture, the training, the overall environment that they are put in to facilitate the number one thing that everyone is there to do, both the pet owner and the practitioner is to deliver high quality medicine. And so modern animal ultimately, when you look at our website you'll think, oh, they have an app, they have this brand, they have these beautiful clinics. But really the whole purpose of the business was to build a system that delivers the highest quality medicine reliably, at scale. And to do that by focusing on human beings, to focus on the member experience, all of our pet owners are members, to focus on the member experience and to focus on the experience of being an employee and are you able to deliver great medicine reliably? That's the whole point of the business. And what we realized was to do that, we had to build it from scratch. And that's really important because the industry is dominated by legacy clinics that have been around for a very long time and they're good businesses. And so like in a lot of other categories, service categories, you've seen a wave of consolidation in recent decades. And so there's just been a massive focus on big financial institutions coming in, buying up, rolling up veterinary hospitals and essentially keeping overhead as low as possible because these things are delivering financial results that make sense for the investors and really not investing in the systems, the tools, the people, the process to improve. You walk into a clinic and it really does feel like it's 20, 30 years sort of stuck in the past. And veterinary medicine has been going through a big crisis. Right now we're experiencing a crisis just running a shortage of veterinarians. And everyone's got a dog now. There's like one in five households in America has a puppy. Well, two thirds of American households have pets. Two thirds. During COVID, 50% of American households added a pet. And actually it used to be more like, I think it was like 60% of American households have pets, but now after COVID, I think it's about two thirds. So it's gone up quite a bit. So walk me through the, like if I was, let's say I was a vet five years before you existed and brought this to market. My experience sounds kind of like an ER doctor to be honest with you based on what you're saying. So then I go, okay, I'm gonna go work for a modern animal. What's my experience, like how is it different? What does the tech enable me to do or enable? What's the thing as a business that you're making easier? And it's worth talking about kind of the experience of the pet owner and sort of what we've designed there as well as the experience of a veterinarian or a technician who we refer to as a nurse working in our practice. And I think let's start with a practitioner. So from a practitioner point of view, it's simply just designing the experience of working there with intentionality from scratch. So when we started, we got a lot of things wrong and we were constantly iterating. And it's the idea of the premise that we're gonna continuously continue to improve bit by bit. So whether it be the software system, we built all our own software. When we initially launched it, it was objectively worse than what had been there before, but we owned it. So we've continued to iterate and build it better. And the whole point of that is to allow the doctor to focus on the medicine. So less time spent writing medical records, less time looking for information. That's not entirely manifested today perfectly, but we're constantly improving on it. And it's things like, you know, we don't have a phone system in the clinic. Doesn't mean that our patterns can't reach us, but in the clinic, we don't have phones that ring all day long. If you work an hour in a veterinary practice, as an outsider, the thing you will not believe is how much the phone is ringing. I mean, just nonstop. And if you're a practitioner, you're trying to focus, it's really hard to focus. And, you know, the amount of noise, the amount of distractions, the amount of appointments getting jammed into the schedule last minute, it's constant chaos. It's an incredibly stressful environment. I mean, veterinarians have been going through, one of the biggest challenges for them has been, there's a huge mental health crisis. Had one of the, if not the highest suicide rates of any profession. And so there's just a lack of focus on this population and how can we support them. And putting aside the mental health issues, which is a separate issue, are you creating an environment that is at least alleviating some of the burden and the stress, whether it be administrative or otherwise, that is actually not serving the objective of that person, which is to deliver medicine. And so for us, it's, how do we support them with better trained staff, everyone being on the same page, a better culture, eliminating the distractions. When you have, the way we think about it is, if we can have our technology eliminate friction in the appointment, the goal is not to make it so much more efficient so we can see a lot more appointments. The goal is to actually just allow that experience to then be focused on. So the doctor is present and focused on you and the conversation they're having. So how do you do that? So you have no phone, so that means if I'm trying to go, I have the app and maybe I request an appointment and then there's somebody, maybe a practitioner, a nurse, that's sort of managing that schedule. And then I imagine the biggest friction point, based on what you said before, is financial. And so then maybe you guys are given an estimate before the people are right. I'll paint the experience of the members' experience with modern animal. Everybody becomes a member. So you sign up, you download our app, you become a member. And it's free to sign up? Membership is $129 today. For a year. For a year. And what that means is you have 24-7 access to our team through the app. What that means is you have access to virtual care. It's like a telehealth. Telehealth and just in general, kind of support staffed by nurses all across the country who all have access to your information because we actually built our own system. I mean, the veterinary industry today is operating primarily on a on-premise software system. So no one can access the medical record outside of the four walls of veterinary practice, which makes doing any of the stuff that we are all coming to expect in the modern age impossible. Especially if you're traveling and your pickets sick while they have no access to any of the previous records. Well, even more on the practitioner side. So if a practitioner is not operating within those four walls, they don't have access to your information so they can't help you. So people got excited about telemedicine. Well, telemedicine doesn't work that well if the person you're talking to has no idea who you are or who your pet is or what their past medical history is. So as a member, you have access to us 24-7 that way and that's all free via chat and video. And we're adding, we actually had to remove phone service for our members because we had so much demand, basically like 80, 90% of our phone calls are people asking to get off the wait list when we first launched. And so we took the phone lines down because you can Google us and go and yell when you call, we're adding it back. So you actually will be able to call it's just not in the clinic. You can call our virtual care team. As a member, you have access to us 24-7 that way and you also don't pay exam fees. So if you set foot in any event in your practice in LA, let's say you're gonna pay $75 for an exam fee. You might pay $100 or $150 for an urgent care or an emergency fee. And so as a member, you have seamless access. And the whole point there was to break down the barriers to access and care. The financial barriers is a separate issue, but the access meaning in that moment of something is wrong with my pet, what I was seeing in the industry over these years that I was in it was there was a lot of hesitation to go to the vet either because you don't trust the vet because it's not transparent, everything's opaque and you always feel like you're getting ripped off or because it's a burden. You're gonna go, you're gonna be in the waiting room for an hour, it's gonna be this negative experience. And so we wanted to make it a more positive experience and eliminate those barriers. So access through the app, access to a network of clinics that actually communicate together. There are no brands in the veterinary space. There's really only a couple and you actually can't seamlessly go from one clinic to another. Most of this industry has been locked in a phase of consolidation meaning these big, financial institutions come in, buy up clinics, they just roll them up and they themselves sell to another one. So most people don't realize but their veterinary practice is probably owned by a private equity firm and they just haven't changed the name on the front door. But the industry has sort of just been- But they're still segmented within that private equity firm. They're completely segmented. Okay, so there's zero communication across them but you wouldn't even think to go to another one because your vet is this one vet and they're either available or they're not available and that's it. And so for us in LA, for example, we have five clinics, we'll have about a dozen by the end of the year. So for you, the play really is probably expand everywhere as fast as humanly possible. That's probably why you have some capital. There's a database you're building to some extent. So I'm just guessing, but if you know that, I don't know, let's say you have 14,000 golden retrievers in your database. At some point, there's some, I would imagine some similarities around, oh, they get this illness, oh, this is the one. And when that happens, you can start to do some sort of regression or some sort of data mining around that. Is that accurate? And then you get sharper as a business, as a whole clinic, essentially. Absolutely, I mean, data, everyone's always excited about data and it's like, what are you gonna do with the data? For us, it's really actionable. I mean, we- Okay, how so? Yeah, how so? Yeah, I mean, there's a lot of- There's a lot of months out there, too, right? Which probably make the data- Yeah, it's not, the data is not so much about, I think there was this thing I saw in the pet industry, there was this interest in this personalization. And I actually am quite bearish on personalization. I don't think most people, even for themselves, want something super personalized. And most people actually want whatever the person next to them that they look up to has. So I think the same is true for pets. I think there was a trend towards, I'm gonna personalize this food, this very specific food. The reality is people just wanna know what's the best. What's the best thing that I can afford in access for my pet or for myself? And so I think for us, it's really just about optimizing the care delivery. And so data for us is really valuable to know are we tracking the outcomes? Are we tracking the inputs to those outcomes? And can we change the inputs better? As like an operator, from like an operator data set. Operator, but as a medical, as a service that delivers medicine, right? So I think for us, we look at, I mean, we have this thing we call the four commitments in our business. So the four commitments for us are medical quality, member experience, employee engagement, and profitable growth. These are the four things that we can never compromise on and they always have to be in balance. So everyone who comes to Modern Animal or some Modern Animal knows we are here to grow. We're not here to build a clinic or a couple clinics. We wanna have an impact at scale on this profession. But everyone also is here because we are committed to delivering the highest quality of medicine. We're committed to delivering a better place for people to work and the best experience for pet owners to access care. So we're not pursuing each of those to infinity, but there's a certain level that we have decided as a team, this is the bar we wanna set for ourselves and we have to keep all these things in balance. And so for us, data comes into play for all of those. I mean, as an operator, it impacts profitable growth. As a service that delivers care to animals, are we able to improve medical quality and medical outcomes? Are we able to minimize what we call adverse events? So negative events that happen at every single veterinary practice. Most people just don't see it, but in our practice, we actually invite you to come to the back. Everything is super transparent. You can see in most of our practices from the street all the way to the back, depending on how they're designed. But the goal is for it to be incredibly transparent. When that's true, you might see things. You'll say, I can't believe you guys made this mistake. And the reality is it happens all over the industry. People just don't realize it, because it's hard. We're constantly trying to strive to eliminate those mistakes, obviously. And on the employee side, how do we use our data to understand what is it that drives engagement? We're constantly surveying our team. We're constantly surveying our members. So data is really valuable from a medical point of view around avoiding things, but also to proactively drive certain outcomes. So how do we support a new doctor, a younger doctor, or a new grad in their development if they have never seen all of these different types of cases? How do you support even a really experienced practitioner to maybe not just rely on their bias from their experience and actually show them, hey, X percentage of pets who've had these symptoms had one of these types of diagnoses. We're not necessarily doing all that today, but all of this is possible because we own our own systems, we own our own data, and it's actionable. And from a pet owner perspective, similarly, how do we surface information for them? They have like a login where they see all the information. Yeah, in the app, you do everything from your book to your appointment, you select your location, you can select a doctor, you can tell us what kind of appointment it is. And Fluffy can go anywhere, any other location. This is fascinating, and so from your perspective, and this might be why you've raised so much capital, it seems like you can acquire all of these clinics that exist today in batches per se, and then you grow super fast, and then implement all the systems that you have in place with some understanding of what's gonna go right and what's wrong. There's a version of Monterey Mill where that maybe was the path we would have taken, which is to buy existing clinics, but I think we have decided we wanna build them all from scratch. Wow. There's just too much stuff you're inheriting. Sure. Whether it be the culture, whether it be the physical layout, the size, we've gotten quite good at sort of, this is what works for us, and it allows us to be consistent so that if you, we have doctors who work at different clinics. So they can rotate around? Yeah. And I think one of our doctors who has been here since the early days, she's worked at maybe three or four of our practices, and when I asked her what that experience was like, she's like, it was so much more seamless than I would have expected, but it makes sense, but I came in, it feels like the same culture. It's all the same tools. It's the same expectations around how the workflow gets done. The members have the same expectations, and so really the idea was, I think brand had become almost a bad word in veterinary medicine because of the consolidators, because of some of the branded players, and the vision for us was really, if you can build this brand umbrella of trust from a pedunary perspective, from a practitioner point of view, it actually is really just seamlessness across the network, and it's not standardization. We're not trying to standardize medicine so that as a doctor you come in and it's like paint by numbers. We're not trying to do that at all. We're really trying to give you as much support as possible, so the data to your question earlier is really to support confidence in what medicine you're practicing, and that's really a longer term play for us, but really it's really, at the end of the day, the experience is to eliminate the friction. I mean that's ultimately what allows for you to practice better medicine. Well with that rewriting everything from the ground up, I know that your business model is very different than traditional veterinary business model where vets are, they kind of make their money on the services that they can upsell in terms of surgeries and treatments and all that stuff, I believe that you offer your vets a set salary and I've read somewhere that you also give them equity in the company. Has there been a noticeable kind of pushback from the established guard, so to speak, in terms of like, well we would rather not have that or has there been like an adoption from both like the people just coming out of vet school and those who've been in the industry for a while? So the prevailing compensation structure in the industry is what people call pro-salary production salary, which is essentially a commission. And it's not so much that the vet is actively trying to upsell you. I have never met a veterinarian who I think is upselling anybody, but the perception, the optics, that that's the case, most people won't even know that veterinarians are compensated like that. If they did, I think they would be... A little more skeptical? Well, and then they already are quite skeptical. Quite a lot more skeptical, yeah. So I think for us as a, you know, building for the future, building from scratch, it felt untenable, sort of the idea that we would compensate based off of production. It doesn't mean that we don't necessarily want to compensate doctors for their work if they were kind of above and beyond and that's sort of something we might evolve over time is sort of how do you align incentives? But purely paying off of a percentage of the revenue that you drive feels a bit at odds. Even though in human medicine, that's how doctors are compensated. Yeah, I was gonna say, yeah. It's obscured for us though, right? By the payer system, by the insurance. It's also in human medicine, if you're a top doctor, you have no incentive to go for the median, right? Because then if your salary is what it is, but you're a top doctor who sees, let's say, 14 patients in a morning versus 14 patients in a day and collects a salary, you wanna be compensated for that. And so it's a tough one. Yeah, it is because if you're an elite vet or doctor, you should get compensated in a different formula. So, and they do, but it's hard. We try to level them. So if you're a really experienced doctor, you're definitely getting compensated more. We're just trying to not drive the incentives in that way. And we also think that pro-sal has had some other negative consequences. Collaboration across a team. I mean, I've seen practices where there was multiple doctors where they're essentially fighting over revenue. Who's gonna do the dental procedure for a client? One doctor goes out on vacation, the other doctor sees that pet for a separate issue. Now they try to sort of get that procedure scheduled with them. I'm not saying that's pervasive, but it's sort of like subconsciously are the unintended consequences of that model. It's such a hard problem to solve. There's so many problems within what you're trying to do. This is not for the faint hearted. But I will say, this going back to kind of the whistle experience, that is what's made this business so much fun as an entrepreneur is that there is such a depth to all of the levers and all of the choices that we have to make as entrepreneurs building this business. And it's incredibly meaningful in that way. And so it's, all this stuff we're talking about, it actually has very little to do with the pet, right? And so for me, individually, when I think about this business, I think about the reason it gives me so much energy and there's so much focus. And I think this is true of a lot of our team is if we can impact the practitioner, if we can build the absolute best place for them to work and practice medicine. I don't just mean like the easiest place to work or anything, it's a hard job. And there's not a lot we can do about that on the margin. We can make it easier. But if it's the best place to practice medicine, that's the best gift we can give to this profession. And then they are the ones who take care of the animals, right? So for us, it's really about building the best system for them and operate with it. And that's a really fun problem. And it is complex and there's a lot of hard choices and choosing to build all of our own clinics from scratch. I wanted to dig in on that. So most entrepreneurs specifically that come from a tech background, they really don't understand design in any real capacity as it relates to like architecture, right? It's almost like you basically might as well speak a different language to them. I'm a coder, I'm a hustler, what do we talk? You slept on the floor. You mentioned the whistle story, all the guys in one room. I guarantee you that place was not nice, probably smelled right, right? You're with me, yeah? It was pretty nice. It was nice? Okay. But you see my point, right? Most tech SF loft, you know. But for you to really invest in like a design experience where there's an elevated experience, was that a no brainer to you? Was that something that you had to figure out? It was, but just as a consumer, right? I mean, I think at that point. But you understood the investment. Like people always say, what's the ROI of this funeral as an example? And it's like you're answering the wrong, it's the wrong question. Yeah, I mean, it's a great question. Like I think that design for sure in the veterinary industry is completely underappreciated. I mean, I think a lot of people would focus on designing for the animal in some ways. I would see pitches around people trying to design spaces or features of different products or services designed for the animal. And I think the reality is the veterinary experience is predominantly human experience and that the pet owners there, they're there for a really long time. You're spending hundreds if not thousands of dollars of your own money. The experience I used to always say is like, the experience of going to like a coffee shop can be so much more pleasant if you're paying four or five dollars for a latte. Why is it that I'm going to a veterinarian and I'm paying four or five hundred dollars and it's so much more inferior? And so I think it was more just for me, like the bar has to be higher. And I don't think actually good design costs so much more. I mean, we're not, we're not trying to over design our clinics. They definitely cost a little bit more, but they actually cost a heck of a lot less than buying an existing clinic. I mean, veterinary clinics today, and this is like now in 2023, well, I don't know what 2023 data would show, but at least 2022 is already off of the peak that we have been living in the last few years. You can buy a good independent hospital for like 10 times EBITDA, let's just say. Maybe a little less, a little bit more. Price has got up to 20 times EBITDA for clinics, small groups of clinics in 2019, 2020. So if that's what people were willing to pay for a hospital, I mean, you're buying a pretty old hospital that's doing a whole bunch of things backwards, but they're making money for a lot of money. And we can build a clinic for a lot cheaper than that. Fill it, because we built a great experience for people to access care pretty quickly. And then the question is, can we hire the best doctors? Can we hire the best nurses to staff it? And that's where there's a massive shortage right now of veterinary talent. And it's a crisis for this country. We have, and there's like 18 job postings for every veterinarian in the U.S. right now. And we're gonna be short tens of thousands of veterinarians by 2030. I mean, it's a huge problem. Wow, how do you solve it? I don't even, we moderately can solve it. You know, I think that there's an industry-wide sort of problem. Yeah, that's interesting. What do you find that it stems from? Is it people don't wanna get into the industry anymore because of X, Y, and Z? Yeah, there's a bunch of issues. America's just lazy. I mean, the pandemic, I don't think, helped people. Veterinary school is one of them, it's incredibly competitive. I mean, it's more competitive than human medical school. So are there not enough of them? There's not enough schools. The class sizes are too small. We don't have like a mid-level practitioner. So you think about in human healthcare, we now have nurse practitioners. We don't have that in veterinary medicine. Are you trying to attack that in some way? We're too early in our development to be able to allocate resources towards that. But I think over time, we absolutely need to help drive that. There's some really passionate people in the industry. That's hilarious that that becomes sort of, like for you as a business, becomes a problem. That's the bottom. Yeah, that's the bottom. It's really, really hard enough, and it's a huge problem because what my greatest fear, I think, is that veterinary medicine will become inaccessible for most people in this country. Because of price? Because of price. Right. Because what's the outcome? Supply and demand. Supply and demand equation like that, right? So we have to raise our prices when we have to pay our doctors more. I want to pay our doctors as much as I can, but at some point, we have to make the business work, and that's why it's one of our commitments, profitable growth. We have to be profitable or else the business doesn't get to continue building. And everybody on our team knows that. But so we try to pay as competitively as we can, while still building a good business, but in this incredibly tight labor market, and this is true of so many industries right now, this is why we're dealing with kind of the macro climate. We're dealing with inflation and everything, but it's good for labor across the United States, across all these different categories, but it also then results in higher prices for people. And I think veterinary medicine is just one of these things where it's really tough. Investors love the category because it's all cash pay, it's a good business, it's fairly recession resistant, but on the flip side, it's incredibly expensive for people to get care. And this is why it's really important for us to be really transparent going back to how we compensate doctors. It's very powerful for me to be able to get on the phone with one of our members who's frustrated and to say, look, I know you think this doctor was trying to rip you off, but there's literally zero incentive for anybody in that building to charge you more or to give you services. You have that call? I do. Wow. As you think about this year, so we're here January 2023, what are the big things, you know, the big milestones you're trying to hit this year? I think for a lot of companies, this year is gonna feel really different. And I think for us, it's really about focus, focusing in on a few really key priorities. We're not gonna be able to do everything we wanna do. Yeah, I think for us, it's organized by commitments. So across each of those four commitments that I was describing, there's something that we absolutely need to get done. And, you know, the general theme for us is we're scaling up this year. We're gonna end the year with close to 20 clinics across California and Texas. We announced we're opening in Austin. And that's gonna strain the team. You know, we're gonna triple our clinic count. Probably quadruple revenue. We'll probably double to triple the size of our team, you know, mostly in our clinics. So there's a strain that's gonna come from that and how focused and diligent are we operationally in executing on that. There's still a whole bunch of things when you do, like I was talking about, you know, adding back our phone lines, not in the clinics again, but to serve our members. There's things around ensuring availability for urgent care issues, same day. There's things around sort of how do we unlock hiring? We have an awareness problem still for veterinarians. You know, if you're a veterinarian who's getting paying, well, every veterinarian is getting paying right now by dozens of companies trying to hire them. How do we differentiate ourselves and stand out from the noise? And, you know, I think these are things that will help modern animal scale. While in parallel, I think we're really interested in helping push along some of the things we were talking about, you know, at an industry-wide level. Because this, we can't just sit back while sort of the industry faces this crisis around a shortage of labor. How do we build our own capacity to train and develop people? The industry has done a really poor job of developing leaders. You know, if you're a medical director of a veterinary hospital in the United States, you've probably never had formal training as a leader. And so we really would like to build that capacity to have really strong leaders, because that's ultimately what determines how great of a place is it for most people in that practice to work, no matter what we do centrally. And so how do we empower great leaders locally? How do we invest in our training? How do we continue to evolve our software system to be more intelligent along the lines of some of the things we were talking about? There's a lot of exciting technology that's coming out right now around generative AI that is actually super relevant for us. How so? Everything from ingesting the conversation with a client and making sure we capture all the intent. If you like our pet, are you coming to talk? Yeah, if you come and talk to us about five, six different things in the exam room, how do we make sure we didn't miss any of those things? You know, in the chaos of the veterinary clinic environment, how do we streamline the creation of the medical record so that you, as a veterinarian, are spending even less time writing medical records? I mean, no veterinarian became a veterinarian to have set in a computer and write medical records. So our goal is to have that be as little of what you do as possible. That's really intelligent. The generative AI piece, that's interesting. I think it's gonna be transformed for a lot of companies. I totally agree. I use it now to write because I don't consider myself someone who's like very good in the written word at all, but now I can just type in three words. I can say witty, I can say sound like Bill Burr and it's so much better and it's amazing. And then I edit it on my own a little bit afterwards. Which is interesting, but to think like, it'll revolutionize everything. It can revolutionize in the New York Times. You can even make it sound like the New York Times article. You could do so much interesting things, but automation and support is interesting. Yeah, and we don't wanna overinvest in that, but I think as a built from the ground up technology first company, I mean, you know our first employee, Keith, our head of engineering. Shout out to Keith, thanks, Keith. Yeah, I mean, I think the first day we started, we incorporated the business, Keith and I got to a WeWork and he started coding. So there's no other veterinary company in history that has ever started that way. And that allows us to continue to compound sort of what we're able to do. The question is, you know, what do we focus on and do we have the right priorities? And I think to the point of, you know, really this year is being really focused and while we have raised a lot of capital, we certainly don't wanna squander that. Most of it goes towards building clinics, but we have invested heavily in building the capabilities that I've been talking through. And so making sure we continue to invest really only where we need to and just making sure we execute at scale. Because we're gonna end this year with tens of thousands more members. We already have probably 20,000 members in our network that we're serving every day. That's hundreds, if not, you know, getting close to probably a thousand outbound inquiries from our members every day through virtual care. That's hundreds of appointments every day across our system and we're just getting started. So in order to be able to do this at scale to deliver that high quality medicine, we cannot compromise on the medicine. Such an interesting problem. I mean, it's really like you're a clinic, you're a tech-enabled clinic. I have a lot of friends as doctors in the medical field who have sold their clinics. And so as you're going through it, it's like there's a lot of similarities to the acquisitions that acquire in the medical space. You're doing it people first, not patient first, which makes sense, because the patient can't talk, which is the right move. And then ideally, like you said, like the tech compounds to become a game changer for either growing quickly, acquiring, or just telling you what your blind spots might be. It's really fascinating. It's hard. And kudos to you, because that's a super... The heart is good. I mean, heart is like a five dimensional problem. It's only fun to build this type of business, I think, because it's hard. I mean, otherwise, it's not hard in terms of what's hard about whistle. Whistle is hard because the struggle for product market fit is not fun. People want this service and people want to work at Modern Animal and people want to build Modern Animal. And so that part's really fun. The hard part is, how do you make the right choice? And every entrepreneur is making thousands of decisions with very little data. And so how do we continue to capture more and more data to make more informed decisions and hopefully get better and better at making decisions? But that part's really fun. And I think it's a business that it's very easy to see how it has longevity and it's very inspiring. You know, I already sold a business sort of a few years into building one. I have very little interest in doing that again. The goal of this business is very much to be a generational business that completely changes how this industry operates. We're only gonna be able to do that at some level of scale. And my hope is that it's hundreds of clinics, maybe thousands of clinics one day, but there's 30,000 veterinary clinics in the United States alone, not to mention internationally. And I can't tell you how many entrepreneurs have reached out to be international. That seems like a low number. Of clinics? Yeah. I mean, I have no reference point, but it sounds low. There's also wide ranges of size. I mean, there's clinics that are one or two doctors and there's clinics that have 50 plus doctors. So there's a wide range of size. From a marketing perspective, we can wrap on this. Anything exciting you're working on in 2023, I'm just thinking out loud. I know Uber at one time had like a health, like Uber health was the thing that they worked on. And so I don't know if like Uber or Pet Health is the thing and initiative that gets interesting and fun or just it's a complete tangent. You mean like partnering with others? Yeah, in sort of, you mentioned the ecosystem and it sounds like it's pretty good. We have had a hard time partnering with other pet companies. When I say hard, I just mean it hasn't felt terribly aligned. I think we will... Are people scared? Are they like, oh, what are they gonna do with my data? Like is it antiquated from that? No, it's more just that it doesn't stack up kind of to the bar that we're setting for the experience. You know, I think a lot of pet companies are focused on the pet. Not incorrectly, it just depends. But what we do every day is really the human being is the integral part. And so I think for us, well, who do we partner with to expand either care delivery for the veterinarian or access to care and we have our own telemedicine. So partnering with the telemedicine company would make sense. Doing mobile veterinary care, well, you just can't do that much. I would love to partner with more. I don't wanna build everything. You know, I think we would love to not build all of our own software, but there is not a good ecosystem around that. So I think, I mean, from a marketing point of view, for us, it's just sharpening our message, continuously getting smarter at what are we, who are we, what our value is, starting to tell our story more ourselves. And I think brand has been really important for us. And I think at times it's been important because of the consumer, the pet owner and sort of making sure that it aligns with sort of the ethos that the customer we're going after shares. Increasingly, it's really about our employer brand. Do we build a brand that really resonates with this profession, this group of people? I mean, we've done some crazy stuff. One of the most fun things we did last year was we actually did a tattoo parlor at a conference. We noticed that like in restaurants, like the veterinary industry, veterinary technicians, there's a huge subculture around tattoos. And so we went to a conference. We wanted to get attention from technicians. And so we offered tattoos not in the conference hall. We weren't allowed to do that. So we joked we had water bottle tattoos. Other were stickers, but then you could sign up to get tattoos across the street. And we had, I think it was like 60 plus people get tattoos. And so we're doing that again in a much bigger way. And this time we're doing it actually in the conference hall at our next big conference. I mean, there's a lot of really fun aspects to the veterinary culture. It's a subculture and one that we want to celebrate. Did you or anyone else in your team get modern animal tattoo? No, yeah, no modern animal tattoo yet. I did ask one of our designers to design a tattoo for me. So we'll see. Right on. Nice. I think she's gonna deliver. So the question is why. Yeah, right. Well, thanks, Steve. Thanks for coming on the podcast. Thanks for having us. Appreciate it. 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