 Welcome to Start Up the Storefront, presented by Aurobora. All right, welcome to the podcast. We are back today with Modern Animal. Thanks for coming back. Last time we did this, we had a video called Viral about the veterinary industry, the needs. We had 1,600 comments on one video, which is crazy. And I was mentioning this to you before. It's one thing to have a successful podcast episode. It's an opportunity to feel completely helpless. And you guys wanted to come back. We're obviously super happy to have you. Last time you were here you had six locations, now you're at 16. I don't want to get into what keeps you up at night just yet. And we're joined by Dr. Christy Long also, so thank you for coming. But where's the company today? What can you tell people about where we're at today, which is almost a little over a year ago that we first sat down? Yeah. Thanks for having us back. It was great to have a chance to chat about a lot of the issues that I think people aren't aware of. And for those who are aware, those who are in the industry, I think they don't have a chance to have sort of their story told. So thank you for giving us that opportunity. I'm excited to have Dr. Long with me today. Christy joined us when we first started the company. And recently we named her Chief Medical Officer. As we are now approaching getting close to 100 doctors, at the end of the day, everything we do is medicine. It was important to have her voice sort of at the center, at the table with us as we continue to build. And yeah, you're right. We had a big year of growth. We've almost tripled our clinic count. We're almost 500 employees now. We fixed a bunch of stuff. We broke a bunch of new stuff. So I think we continue on this journey of really trying to build and change this industry. And a lot of learnings along the way. And excited to share some of those and some of the things that I think we're also seeing changing at the macro industry level. I think it's been a lot of stuff is changing for a lot of industries, whether it be interest rates being high and cost of capital going up and what that means for growth and focus on profitability. Whether that be AI, thinking about the veterinary industry, maybe not think AI has a huge impact. But it actually could have a huge impact on our industry. And so a lot of things interesting in a year have changed. And that's why it's exciting to be ultimately a startup in an industry that has not changed much. And so how many locations do you have now in California? Say 16 months. 16 months. Minus how many? We have 14. And you've expanded to Texas and where else? Just Texas so far. Just Texas, okay. So we have Tuperaxis in Dallas and one currently in Austin and another one opening in just a couple of weeks. So we'll have four there. A whole another landscape. 20 a year, totally. Yeah. The thing that when we last met that struck a nerve it seemed like was the need for vets and the complete lack thereof in the marketplace. And then also the other part that struck me in the comments was how much vets have to deal with. There was a real outpouring of support for them in terms of I went to vet school and I couldn't do it. I couldn't finish or my brother's a vet and the unbelievable amount of pressure they deal with on a daily basis is just. It's depressing. And so we talked about the mental health issue. Where do we view this today? What's going on in the industry today? Is there anything changing? Do you want to talk about the legislation? Yeah. Where can we go? Let's talk about all of it. I mean, you're right. Every veterinarian has a story about, you know, multiple cases that didn't go the way they wanted to. And the mental kind of scars, if you will, that leaves on you. You know, we're so different from our human counterparts and that almost no one who we see comes in with insurance. So really everybody's paying out of pocket. So unfortunately it's a highly emotionally charged transaction, but it's a transaction. You know, it's a financial transaction. Is it hard to get insurance today? No, it's not hard at all. It's just, you know, it's just not another thing that people don't really think they're going to need. Sure. You know, people like my dog needs to be fed, needs to shots. We're good. Right. And then and then there's an emergency. I mean, we're very lucky at Modern Animal. We have a much higher percentage than average of pet owners that have insurance, but in general, most people don't. And how much is insurance? What is it annually? It depends on the breed, right? It depends on the age of the pet. You're looking at probably between 40 and 50, 60 bucks a month. Oh, not pet. Coverage. Yeah. And, you know, that's not going to cover the routine stuff, but your dog, you know, eats a tennis ball and has to go have surgery to get it out. You're going to be in really good shape. So yeah. Okay. So that's not too bad. And so people listening, get insurance for your pets. I've had these conversations a while. Get insurance for your pets. I mean, we're real estate development, my architect, our lead architect has a dog just passed away, but it was sick for a while. And so his issue was no insurance. And it was, I think it might, it may be like five to 10 grand or something. And so it becomes a lot of, it's a lot of money. That's expensive to, it's a lot of money. Yeah. And if you think about the other side of that coin, right? A lot of times as a veterinarian, you may have a solution, right? You have a life-saving solution that you know will, will save the animals life, but it's costly for the owner and they can't do it. I mean, that's another thing that kind of takes its toll on you as a practitioner. And there's just so much, I mean, there's so much that we've done ourselves to build a model that is just not conducive to sustainability. You know, in your life, right? I mean, when I practiced and I practiced for seven years as a small animal practitioner and, you know, I'd have a full appointment book and that they would book appointments for me over lunchtime. I had people coming in at the end of the day to see me because we just never said no to anyone. And we never really had an alternative for them in a way to, to get in and have their pet seen. So everybody had my email address. A lot of people have my cell phone number, did a lot of work on my days off, because that's what everybody had always done. You know, that is just how the veterinarian industry defined itself. And so I think, you know, one of the reasons Steve and I hit it off so quickly is because I had never spoken to a business person who saw the same problems that I had seen, you know, firsthand as a practitioner and then really had some ideas about how to change that. Yeah. That's what got me during the interview. I learned so much about the vet industry as a whole. One, it's like you have the shortage of doctors too. There's a tech component to that here that really makes things interesting from, if I put my like tech founder hat on, it's really interesting. It's unique. It's a cool story. It makes a lot of sense. Also, you have this industry that's maybe fragmented and so technology plays a role in defragmenting that in some way. But it was like, wow, but the challenges to this are crazy. Like I think I remember telling you, I'm like, you must not sleep because the problems to this feel endless. And the macro right is so crazy and out of your control. Well, you hit on the doctor shortage that we talked about last time. And I think the thing that came out in the comments that we didn't really hit on is when I was talking about veterinarians or vets, I say that because that's what everybody knows, but what I really refer into is everyone who provides care in our clinics and in the clinics everywhere in the country. So we're talking about veterinary technicians who are licensed, unlicensed veterinary technicians or assistants, what we call hosts or folks who work in the front desk. And there's just, you know, all these other folks who play these support roles helping doctors actually get the care done. And the job is just as hard and at times even harder for them because, you know, everything from things we saw compensation to just the sheer amount of work that is asked of them and how physical that work is and sort of how do you make that a long-term career? So there are a lot of things that I think we hit on last time and just sort of scratch the surface of. And these are all issues that have existed for a long time. And I think we're hitting ahead. And the shortage of not just doctors, but the shortage of all talent needed to run veterinary practices is still severe. I think the thing that has changed since we last spoke is the pressure valve has been released a little bit on demand, meaning we're out of COVID fully. And we were when we last spoke, but it has settled down to the point where, you know, most practices have availability. There's still plenty of cities in the United States where you can't get an appointment quickly. But the shortage of doctors still feels very real. And I think that it's because the industry, all of those existential problems that it's facing, the shortage of talent across all roles is there. And that puts a lot of pressure. And I think the thing that's added now to the mix, the new ingredient is the macro environment. You have a lot less growth. The Fed is trying to slow everything down. We had this crazy rampant inflation, which made prices even higher for pet owners. And then wages had to keep up. And there's a lot of pressure on wages because everyone who works in a practice isn't experiencing inflation themselves. So now prices, it's just kind of, it was interesting going through this whole crazy inflation surge as a veterinary practice owner. I felt like I was front row seat to sort of the economy, because we were feeling of this. We were getting higher prices. Yeah, we're getting higher prices from our vendors for diagnostics. We're getting pressure from our team to pay them more than we want to. But then we got to raise prices for our customers or customers are starting to complain about prices going up. But what do we do? And so what's happened now is that all this has put a lot of pressure on practices to start to focus on profitability because they can't keep taking price, but they need to keep raising wages for folks. And I think that the big theme that we had talked about last time was consolidation. So you had a lot of people, the word got out that the veterinary industry is a good business. And so you had a lot of private equity firms who came in to start buying up these things. And that was a large part of what I was seeing five, six, seven years ago. So this is not going to work for customers. It's not going to work for the people practicing veterinary medicine in the clinics. And so we got started now almost exactly five years ago. And that continued for the first few years of what we've been building. And I think with the shift in the economy, interest rates going up and everybody focusing on profitability and sort of growth, growth, growth, kind of not being the mantra. We're at a point now where people have had to revisit that business model. And so what we're seeing is the game of sort of let's go buy a bunch of practices. You know, you and me get together. We go buy a bunch of practices. We'll flip it to, you know, Dr. Long has her consolidate her group and we flip it to her. Like that that game is over because that was just basically multiples going up. That's good. Yeah. And you could buy a bunch of stuff, not do anything, hand it off to the next guy. And it was a great way for a practice owner who may be a veterinarian who owned his practice or her practice for 20 years to sell it, make money, retire. Great. But it was leaving everybody else holding the bag. And now that game is over. So what happens? So you have all these consolidators who are now starting to focus on we got to squeeze more profit out because we bought all these clinics at a higher price that now isn't justified upside down. Right. We're upside down on debt. We got to refinance our debt. We can't refinance the debt. It's too expensive. So some of them are going out of business. They're still good underlying businesses. So now they're someone else. Maybe we'll take them over. Solidation of the consolidators. So you have consolidation of consolidators and sort of that whole game is over. And you have some consolidators who are actually looking at what we're doing and not just us. Others like us and saying, oh, we should go build new practices because buying these things at some multiple and betting on the multiple to you know, to sell it at a higher multiple is not going to work. And so you have people starting to build new. And the question with all of those is going to be, are they actually going to build something new or are they just building a new facility with a fresh coat of paint and it's going to be the same sort of hands off strategy because I think the problems that we're facing. And this is maybe the sentiment you felt last time of like this helplessness, the hands off strategy is obviously not going to solve it. You know, this isn't like people showing up to work and just let's just fix it. There are structural problems. And so we've continued, you know, since we were together last time, investing in that we spent a lot of this year rightsizing our business like a lot of companies and we've been, you know, very transparent with our team on that where we had to focus on profitability. We started like a lot of startups with our dream and we started to throw everything out to sort of let's let's build this, let's build that, let's innovate here, let's innovate there. And at some point to say, OK, what's working, what's not rationalize it and figure out how do you make the business model sustainable. So I think we made a lot of progress on that. It was a little painful. Yeah, what things did you do specifically? We started to focus on, you know, the other day our business relies on you have a certain number of people in the clinic and they can see a certain number of patients and the owners who bring those patients in are paying a certain amount of money. So trying to make each appointment as valuable as possible, getting our pricing right, getting what we were calling comprehensive care. So meaning all the care that that patient needs, getting it done in that appointment. One unintended consequence of our membership model was that we had people sort of our team as well as our members saying, well, I'll come back and do this like next week. You know, I'll come back in a couple of weeks. Well, that's not really that convenient for the pet owner and it's not great for our business and it's not great for the patient because maybe they don't come back. So we just had to let's just make sure we're being comprehensive. That was a big part of it. Making sure that our labor model and sort of how we deployed our team, which is our most valuable resource, into the clinics correctly. There was just a lot of time being spent incorrectly. The wrong concept, like we had certain appointments that we had, we weren't getting filled up and other appointments where there was a long list of people who wanted them. And so a lot of work went into sort of how we set up a schedule, a lot of fine-tuning. Forecasting, yeah. And the thing that I think we saw on the flip side of that was we took our eye off the ball and sort of continuing to really progress on building the absolute best place for people to work. And that requires, again, to your kind of feeling from last time. It requires a lot of effort and energy and a lot of resources. And so we're excited to sort of shift back to that. And that shift is being, I think, powered by, we just have a lot more people who have had a lot more opportunities to do the work with us and build trust together with us where we can now say, OK, well, what are the problems? And what are the things that we need to fix? And what are we in what order? I don't know. How would you think about it care delivery and sort of how we've evolved as we've grown in terms of where we what have we accomplished over the last year in your eyes? And where do you see the majority of the work going forward? I mean, I think it's exactly what you said. And I think another big piece of it that we've really been working on this year is how we implement change, like just change management because you sign up for this kind of crazy ride with this new startup veterinary company and things are going to be different, right? And they're going to continue to evolve. And I think one of the things as a practitioner that can make you feel very unsettled in that environment is at the end of the day, you're trying to provide a great medical experience for all of your patients or a great surgical experience for your patients and their owners, right? So the idea that we're going to be, hey, today, the software is changing and this new thing is get these new features coming in or we're tweaking the workflow just a little bit. Get ready. We have to be extremely thoughtful and extremely intentional about that, right? Such as that they are. They have been hearing about it for four weeks before it happens. They are ready for it. They've had training on it. They know what's going to happen. You know, we've come a long away from the days of Steve Rye would get on Slack and say, hey guys, you know, be ready. This new feature is dropping at 2 PM or whatever, right? We have to get people ready so that they can continue to thrive in that environment. It's so interesting. So in my business, what I've learned, I think particularly after COVID and now with this inflationary period is it's like communication has become like the most important thing in the world. And I think for some reason, I don't know if the world took it for granted at some point, but at least I did, it seemed like. And so it's like I took my off the ball on communication and now that's the most important thing. And it's crazy. And I don't know what's driving it, but it's almost like the ability to one, check in to get your elbows dirty like that. Getting back in the engine has never been so necessary than today. And so there's like communication and then just like getting your hands dirty. Those two things for some reason are happening now for my business in every way. And it's like check in, check in, overly check in, overly communicate. Well, we're feeling that for sure. And I think doing it at scale, at larger scale, it's a different kind of challenge. So that's a lot of work facing. I do think that our ability to manage change is not to say like a unique differentiator, but it's sort of like a core requirement for anyone who wants to innovate in this industry. Because it is very hard to do it well. You think again about the landscape of all these fragmented practices, even once a consultant or consolidates them, they don't actually control the operations in the practice. And when you don't control the operations in the practice, how do you drive change? So if you say, hey, we've identified a solution to something that everybody's facing and you run a group of 50 disparate hospitals, good luck rolling that out. So I think now there's even less appetite for that change when it's not, you know, we're going to buy 15 more hospitals and sell it. So we're going to be stuck with these things for a while. We got to figure out how to make them more profitable. All of a sudden like any hope for change. So not to deflate you even more. But I think that in some ways I think we're going to be hitting rock bottom for this consolidation strategy soon. And I think that people are going to have to start voting. Veterinarians, technicians will have to start voting with where they go work. Pederners will start to have to vote with where they go get care. When we started, nobody was doing anything different. I think that we have inspired change in the sense that you have people building new practices all over the country. And while that makes it maybe harder for us as we think about scaling, on the other hand, I think that was in large part what I wanted to see when I started the company. And at the end of the day, we still aspire as any good competitor in a marketplace to be the best. And that's very motivating for us. I think that's kind of the path ahead is how do we continue to focus and re-shift our focus back to how do we be the absolute best employer? And that has everything to do with compensation, training, upskilling, getting really clear on what is the career path for everybody across every single role in our practice and going back to our discussion on technicians, which we didn't really hit on as much last time, but I think it's really the heart and soul of a veterinary practice. I mean this is if you ask a doctor what major day great or terrible, sure the horrible maybe client that came in and ruined your day, it happens. And that we saw in the comments right last time. But even more so on a day to day basis is like, did you have the support you needed from the team? And what's the culture in the practice? The other side of the client. The technicians and the veterinary assistants that you work with and rely on, could they help you get the job done? And so for us, like making sure that everyone has the skills that they need and a clear path for growth is a big area of focus for us. And that's just not something that the industry is appreciating. So this is where I go back to get people out to start voting. And I think that in some ways when you hit a certain low point, that's where change really starts to happen. Has like illuminating this light to you, your business or even your board been easy? I'm incredibly transparent with our board. I usually kick off. Because I can imagine that being very difficult. There are things that are wrong with us. Yeah, it is hard. I mean like for any founder I think when like the story you were telling and believing starts to have data that suggests otherwise. Yeah. And so for sure, my instinct which is somewhat normal, the hard part is I think listening and then getting others to listen with you. Yes, exactly. Yeah. Well, it is hard to have that awareness and let things go. I think I would say I started to see a lot more folks starting to build what we call de novo practices. My initial reaction was we have to go faster. We have to acquire somebody. And at the end of the day, the real answer, the hard answer is we just have to be better, which is why competition is so valuable in what makes this country so special in terms of allowing for free market capitalism to allow for competition. And this industry has in some ways not had that because customers weren't demanding it. Right. Let's talk about the legislation. Yeah. So this year, I guess early this year, a bill was put in front of the California legislature to legalize this idea of a virtual VCPR. And VCPR is a long acronym that stands for Veterinary and Client Patient Relationship, which is basically the legal relationships that exist between the three of us, me, the owner, the pet, right? That allows me to practice veterinary medicine, which which allows the veterinary medical board to describe the rules under which I practice and also, therefore, the ways I can be sanctioned or sued, you know, whatever that means. So it's basically a legal construct. Yeah, OK. Yeah. And so, you know, veterinary medicine is 10 to 15 years, probably closer to 15 years, behind human medicine in terms of telemedicine. I mean, I'm sure you've had experiences. I've had telemedicine experiences where I've never even talked to a doctor, right? You know, I've just been able to get what I need. The veterinarians, you know, we tend to be, Steve has illuminated a little bit, right? Slow to adopt technology, slow to change in general. And the push to add anything like this to veterinary medicine has been met with a lot of resistance, probably because it was considered to be, you know, somewhat of a competitive threat, right? Give us give us both sides of it. So what was the thing driving it? Maybe just catching up to the medical industry is that. And then what was the what's the voice against? So the thing that's been driving it most successfully is this idea coming out of the pandemic that we just don't have enough veterinarians to see the pets that need care. I mean, you know, look at the large animal side of things. If you want to swing away from pets, right? You know, you've got one vet in the middle of nowhere, Texas, who's got a 500 mile radius around him, that he's got to go see patients. And it's just you just can't do it. You can't sustain it. And the pandemic showed us that we could get close to that with small animals as well, right? So, you know, what drove it is the animal welfare organizations like Best Friends, ASPCA, the San Diego Humane Society was really involved, standing up and saying, if we don't have a way to offer care like this to people who can't come in because they don't have a car, don't have money to put gas in their car, right? Are disabled in some way. And yet we also recognize the benefit that pets bring to the human lives, right? We are doing people a disservice right by not providing that. So that spot on in the way that we can, right? It doesn't always work. You can't always treat an animal over video. But the bill, AB 1399, which was passed and signed by Governor Newsom, I guess maybe six weeks ago, allows the veterinarian to establish that relationship, that VCPR over video and then prescribe and diagnose if they feel like it's appropriate. And that's what I really like about it is it allows the veterinarian to make the decision. OK, so there's some judgment involved. Absolutely. And the Veterinary Medical Board actually allowed us to operate similarly to this during the pandemic because they quickly realized, rightly so, right? That like we needed to find ways to distance people from each other. So they said, if it's your patient, you've already seen this patient, you can do this kind of telemedicine. And we were very hopeful because we were very successful using this at Modern Animal with our patients. You know, a dog has maybe a cough that's otherwise, you know, the dog is otherwise feeling fine. Many instances, behavioral problems, right? Great use of telemedicine because animals, you know, a lot of them are very anxious in the vet hospital. We were very hopeful that the Veterinary Medical Board was going to continue that. And then after the pandemic, they actually went further the other way to limit us in doing that. So when these organizations came forward, got this legislation passed, they've also done it successfully in Arizona as well. OK, it was a real game changer. And what were some of the voices against it? Like why why the not, you know, is that the risk, the liability, maybe you diagnosed wrong. What are some of the dissenters? The American Veterinary Medical Association is the number one dissenter of this type of legislation. A couple of big suppliers of veterinary products also on that bandwagon, presumably so. And I'm just presuming, right? I don't know for sure. But because they, you know, are in they want to continue that relationship with the AVMA. But the stop sign that veterinarians have traditionally put up on this is I have to have my hands on the animal to do a physical exam because the animal can't talk to me and tell me what's wrong with it. And I think human telemedicine has just shown us that that's just not true, right? I can learn in many cases as much or more about what's going on with the animal by just having a conversation with the owner over video and seeing maybe, you know, what is set up in the home, how the animal is fed, maybe where the litter box is, if it's a cat. Again, it's not appropriate in every situation, but there are a lot of cases where it can be a very helpful tool to use. This is just me thinking out loud. Is it limited to certain animals? No, it's any animal that a veterinarian can treat, right, which with the California Veterinary License, I can treat pretty much any species. You know, it's up to me to have the appropriate training to do that. But my license allows me to do that. So there are some guardrails put with it. I can't prescribe control drugs, which makes total sense. I can't prescribe antibiotics for longer than two weeks because we don't want to contribute to antibiotic resistance, right? And again, it has to we have to establish that relationship over video and the client has to understand that they have a right to go in and seek care in person if they need to. So OK. And then I have to have a place to send them if they need to go in, which obviously we have. So then I take this information six weeks ago, this happens. And I put my tech hat on and I go, OK. So this is kind of like a green light in some way to a lot of innovation. Yes and no. OK. So walk me through it. There's been a lot of work done in veterinary medicine for many years. And I think the reason this is powerful is because I think it provides a path to access to care. But it does not necessarily replace care. And I think that the challenge for standalone telemedicine services is a lot of times the answer is you go to the vet. And then the other question is when you say a lot of the time, if you were to give me like a 70, 80 percent of the time, I think it's 60. You know, before modern animal was part of one of these kinds of companies where we were able to just provide general advice. And yeah, I think we looked at it and it was around 60 percent. That's pretty high. They need to go in. Yeah, more often than not. Yeah, you can provide a lot of information in that setting that's very helpful to the pet owner. But at the end of the day, maybe you don't need to go today, but you need to go two weeks from now or month or an hour, whatever it is. But with your platform, is there like a almost like it's almost like a funnel in some way where now they when they get there, I imagine there's a lot of data. There's a little bit more understanding. So they're starting on maybe second base. For us, I mean, the way we do is very integrated, right? So when we say go to the vet, we're not saying go to a vet that is not us, right? You're coming to us. Everyone's sharing the information of access to all the same, you know, medical records. And so I think it's quite a different experience in our integrated setting. I think as a standalone offering, I think in human healthcare we saw it just doesn't really work that well as a standalone offering. So like doctors on demand, for example, was I think ultimately acquired by a human healthcare payer. It's a very valuable tool as part of a more comprehensive approach to care. And as a standalone offering, I think the biggest challenge a lot of these companies have faced is just people paying for it. What is that visit worth? You know, you think about there is the time to go in to the veterinary practice, but there's also just the cost of it. And so, you know, if it's priced the same, would you do a telemedicine visit when 60% of the time you don't have to go in anyways? There's a lot of innovation that has been brewing. I do think this changes things. It's important to say one of the big reasons why folks in the industry, some were opposed to it, is that I think it's actually opening the door to either the appropriate amount or potentially too much of prescription via digital means in terms of pharmacy businesses selling after an initial, the elephant in the room is chewy, right? So, chewy disrupted the pet care industry dramatically some years ago and they've been inching their way into the veterinary industry to the point where they're actually building de novo practices like us or they're starting to, they haven't built one yet, I don't think. But the fear in the industry was that this is gonna be a blank check for the chewys of the world and there's other businesses, 1-800 pet meds is another one that years ago people were afraid of if they got their hands on the legal right to just prescribe without an actual veterinarian having hands on the animal, they would just start prescribing left and right and it would erode that part of the business for veterinary practices and that is true because chewy has done that. That's crazy. It has eroded the amount of revenue and profit that veterinary practices make from what traditionally was a meaningful part of their revenue stream. So, that's just the way I think it is. This is why I think you don't sleep. This is why. Because it's like now I have to deal with that. Yeah, well we can deal with that since we started and I think that's just, at the end of the day, the bar then for us is can we deliver a better experience than chewy? Sure. And I think today we don't, either on price or on speed or on just seamlessness. And so I think chewy- Just with respect to prescriptions. Prescriptions. Of course. Yeah, so I think that's a very clear north star for us of like, okay, well, can we be better? For sure we can be better. With the exception that of course you can walk out today with the medication that your pet needs as opposed to going home, getting on chewy, ordering it. It shows up three or four days later, right? Oh, God. Are there like vultures in the space? I mean, it sounds like it's prime pickings. The fear was if we make this legislative change that you will invite a bunch of people who are just really quickly and easily sort of writing these prescriptions and maybe going beyond. Now the argument I think in favor of is do we trust veterinarians? You know, at the end of the day the most simple argument in support of it is a veterinarian, do you trust them when the animal is there to do the right thing? Okay. If so is there a reason you don't trust them to do the same thing via digital means? So I think the biggest fear is probably like the big corporate, you know, vulture sort of pushes a bunch of veterinarians to do the wrong thing. But at the end of the day, this is what people want and we have an access to care problem. I mean, the access to care problem will only be solved through technology. Either technology is making things more efficient, allowing certain practices to see more patients. We don't do that. We sort of commit to a certain level of experience that is requiring it of a certain amount of time. But there are practices that say we are going to serve with the aim of providing low cost care. And what that means is maybe we're not focusing on the absolute highest quality experience, making sure every one of your questions is answered, but we are going to offer you lower prices. Well, the way you do that is higher volume at lower prices, right? And that for a certain customer segment is going to be really critical for us to be able to serve the volume of pets that need care. In other ways, it will be efficiency through, you know, whether it's telemedicine or AI facilitating better answers online. Let's be honest, every pet owner is Googling stuff, right? But the quality of those answers, I think we'll get better with AI now. The quality of the answers that we are going to be able to provide as modern animal in terms of consistency across touch points and making sure we don't miss anything. I think technology is going to help our doctor's practice, not better medicine because it's replacing them, but better medicine because it's going to make their day easier. So for us, technology, by making things easier. When you do that, I think it will just allow for us to not necessarily provide more care, but to make it easier so that more doctors want to practice in our practices and in the industry, so we don't have this shortage long term. It lessens the friction a little bit. When you think about it, do you think about like a place, a hub somewhere where these doctors are and all they're doing all day is doing these visits online, and then that way they're feeding into the, is that how you view it? How many of you think they want to work at home? Right? Right, so there's that. So it kind of plays nicely into it. They can do that. Right? And it can be anywhere. Yep, license of California. You can be anywhere and do it. And again, I think Steve mentioned the integrative nature of it is, right? That doctor has to, I think, it works best when that doctor has a relationship with the ones who are in person in the clinic, right? And they can talk over whatever technology and make a plan for the animal together. And they're looking at the same medical record, right? And the same set of experiences and they can draw from that together, so. That's so wild to think about. So I just thought about the oxy documentary where it's like, are we gonna see all these people and these sales reps going to the vet clinics to try to get them to prescribe certain drugs to Fluffy? Are we gonna do? That would be a big change for sure. Wouldn't that be crazy? Yeah, the drug reps have never really done that in veterinary medicine for sure. Oh my God. But of course, as I said, you know, you can't prescribe controlled substances over this medium and we have a limitation on the antibiotics we can prescribe, which again, I think are both correct. Yeah, I don't think we'll go that direction. No. I do think what you'll start seeing though in telemedicine start to pop up in other settings. So Walmart struck a deal with a telemedicine provider so that if you were a Walmart, I forget what their subscription plan is or the sort of membership plan is, but you now have access to telemedicine. So I think that that's, you're gonna see it as a, it's a value added service that for sure provides value to pet owners. And do I need to get in the car and drive 60 miles if I live in a more rural area to go to the veterinarian? Do I need to go and spend the 50, $600 on the exam fee just for walking in the veterinary practice? If I could like wait and see is this life critical saving sort of care I need tonight drop everything or can I come tomorrow or in a couple of days that today has been guarded by legacy veterinary practices as like you have to come in, you call the friend desk, it just tell you to come in. They want everybody to come in. That's not a good customer experience. It's not helping us solve this problem. It's not a good use of the veterinarian's time. I mean, they have other patients that need to be seen probably more urgently. I remember talking to someone, you know when I was four modern animal with one of the, you know, with the veterinary telemedicine company and telling them they needed to go and see a vet. And they said, you know, I'm in Alaska. I don't have to get on a plane to go see a vet. I cannot go to a vet, right? So there are plenty, there are people out there like that that need this kind of care. I mean, I think one of the statistics that we talked about during the legislation, you know, being in front of the legislature was that, you know, there are as many as like one third of all pets in California that are never seeing a veterinarian in their entire lives. Like not even for a rabies vaccine, right? So the idea that they could have access and their owner could start to form a relationship with a veterinarian, right? Is probably going to increase the possibility or the probability that pet's gonna be seen in person at some point in time and start to address those preventive care needs. And that's better for human health as well, right? When you guys think about your business two years from now, do you see a large percentage of the initial appointments coming from sort of the tele you know, the telehealth, telemedicine world or no? I don't know how you think about that. I'll tell you how I think about it. I think about probably no. I think that the big value for telemedicine, at least for us right now, and you did ask about two years in the future. So maybe you can address that, but- Because I know the future. You can predict the future. Yeah, it's one of those two powers. Is, we spend a lot of time, our telemedicine appointments right now, we spend a lot of time talking about chronically ill animals that we've already been seeing. Maybe once or twice the 18-year-old cat that's already in kidney failure. The last thing the cat wants is to get in a box and go to the vet, right? So how can we have an exchange with the owner over video that helps us get some information and give them some information that helps the animal? Clarifying, you know, you had a battery of test run. They showed a lot of things. Let's have a conversation over video about what that means for your pet. So I think that long-term management of cases, behavioral cases, just a really great use of this medium. We still, at the end of the day, we see the majority of our patients in person. And you can say. Yeah, I think that we will still almost always see patients virtually and physically. But for us, what we call virtual care is a, is an opportunity to have many more touch points. Which, if you just think about it from like a supply and demand, we have a lot of demand for those additional touch points which means that the need is not met in the market. And I don't think that standalone telemedicine necessarily provides all those additional touch points. But it goes a certain amount of the way there. I do think that the interesting thing to kind of you step back and you think about all the macro stuff we talked about, we are in a more consolidated state than we were 10 years ago in the industry. And so the question will be what do the largest consolidators who are maybe starting to build new practices and are having to take a really hard look at their existing consolidated set of practices, what are they gonna do to meet that unmet need? And so it's not as easy as just plug in some third-party software, right? They don't have access to the medical record. Even if they did, can they legally provide care that way? And I think there's gonna be a lot of that that's gonna be worked through and it's not gonna happen quickly. And I don't think that California legislation changing is gonna all of a sudden, you're gonna start seeing every one of these groups start integrating telemedicine. I think a lot of people would say that the verdict is still out on telemedicine from a purely financially minded owner of a veterinary practice or group of practices, is it more efficient or not? I would say that in the context of modern animal, it is probably added cost in the near term, but we believe long-term it drives more stickiness, higher value visits and all these things. And we're starting to see that and we've started to see that for a while now. But it required a lot of investment. So it's not a plug and play solution. Right, right. But I think it's hard for us to sort of turn back from where the reality is, which is just people want these additional touch points. It allows us to provide more comprehensive care. It allows for pet owners to have more of their needs met in terms of peace of mind and certainty around the actions that they're taking. And at the end of the day, that's what every pet owner wants. They don't wanna be guessing. Is there any other legislation that you're working on or that if you could wave a wand and the ideal piece of legislation that might be close or is coming, is there anything you're working on in that capacity? For me, this limitation was really the big limitation in California. There are some groups working to create what's known as a mid-level practitioner in veterinary medicine. So something that can do like a nurse practitioner or a physician's assistant. We actually got a lot of comments on that. Yeah. Yeah. Are we close there? No, we're not close there. Nothing is going on in California to my knowledge. And there are some changes that are being considered around what a registered veterinary technician can do, whether they could administer vaccinations without a veterinarian on the premises. So I think that's probably, that's got a lot of support actually through the California Veterinary Medical Association. I think that probably will pass. Chrissy, can you talk a little bit? I just, I think for quite frankly, it's been educational for me, but I think because it did come up last time. And I think when I would talk about mid-level practitioners, it was sort of like this panacea solution to some of the staffing problems. But the reality is, and I think people called us out a little bit in the comments last time, it isn't this sort of one size fits all, let's get this mid-level practitioner in and it'll solve all the problems. That's not really the problem. It was an idea. But maybe just like how you think about the problem on the technician and sort of support staff side, what the benefits of a mid-level practitioner might be, what the trade-offs, why maybe that's not the right path, like how should we think about it as an industry? Well, California has done a lot of things that other states haven't done in terms of really kind of elevating the role of license veterinary technicians. So they put their money where their mouth is, right? Like not only are you taking that extra step to get licensed, right? Which is additional schooling, it's passing a test, it used to be two tests, California had its own. So they're creating additional hurdles in order for this person to receive this licensing. And so, you know, but what has been happening and what is true, I think veterinarians in general is that we don't utilize those people to the full extent of their license. We had a veterinarian join Modern Animal about a year ago and she was astounded on her first day at work that she never touched a syringe because she was so used to in her practice maybe not having many of those people, maybe just not utilizing them properly. She was doing all that work herself, which is not work that a veterinarian needs to do, right? I don't need to give vaccines, I don't need to draw blood. A lot of veterinarians enjoy it, but it isn't something, isn't the highest use of my skills, right? So the first step I think that a lot of people in the industry are calling out is like mid-level practitioner, let's get there when we are actually utilizing our licensed technicians and those that aren't licensed, like really creating a way for them to get there as well to the top of their license as well. And so, Steve mentioned earlier, doctors their day is driven by the amount of support that they have and that doesn't necessarily mean like number of people, it means capabilities of those people, so how are you teaching those people, training them, getting them in roles, getting them the expectations behind what you want them to do in their job so that they are really and truly like the right hand of the doctor and doing the things that the doctor is doing the things that only the doctor can do. One learning for me this last year since we last spoke was I think our happiest clinics and our happiest employees are where the clinic is busy and everyone is doing work that is to the way that Christie framed it at the top of their license. That's where everyone gets the most fulfillment and I think that's not happening across the industry and so I think this idea of a mid-level practitioner was like a convenient way to say let's get another title in there, we can pay them more but because they have some fancy title we can now charge for it. I think pedeners are fed up with all the price increases across practices across the country and we're guilty that too, we had to for all the reasons we described earlier. So I think now it's about how can practices work smarter and this is a really big piece of it and I think that this will actually be a path for veterinary technicians and support staff to get paid more because they're gonna drive more value and that value has to be created in this environment. It's also a great answer, sorry, in shelter medicine, right, where there already is a shortage of veterinarians there is a definite shortage of veterinarians who want to work in shelters so if you had this role and they had additional abilities to prescribe and diagnose, they could work in shelters and do a lot of the stuff that they just can't hire veterinarians to do so it's interesting from that standpoint. Why the expansion to Texas? What did you see in the market there? Steve looks great in a cowboy hat, that's why. That's a boots, nice. Very, very, not true. It's a good question, I think for us, when we had to make the decision about where we'd expand, it takes about, real estate takes about a couple years from when you first decide and start looking somewhere. So fun, yeah. So we had one clinic in 2020 and by the time we really learned anything, it was already 2021 so and we had to decide then and we still had one clinic and ultimately what we saw in Texas was there was a certain amount of the population that looked a lot like our population of customers here in California or specifically in LA and then the other half looked more like the rest of the country and so that's how we decided. Interesting, okay. I think the things that have been really tricky to try to dial in are, well how fast do you expand in a new market? We are in a stage of where we have overwhelming demand still in LA even with however many practices we have. We think eight, yeah. I can't count above seven but in newer markets, people don't know who we are. So there's a little bit of this, well we want to go everywhere but we have all this demand in LA and we're starting to see that in the Bay Area where we expanded only about a year ago but we now have five practices there. So that's this interesting push and pull for a business like ours with brick and mortar where you have to place your bets, you're placing those bets far ahead of when you may know. So like even recently we've learned for us it probably makes more sense to open somewhere and have some breathing room to build awareness before we start to more fully penetrate that market but we're still learning all that and I think every business, every retail business has made different decisions. Other businesses have said we're going to go to LA then we're going to New York or others have said even in our category broadly around pet care, big retail chain that has never left California is a huge business. So hard to say what's right or wrong but that was at least how we made the decision. And where did you land in Texas? What city? We opened first in Dallas. Then we opened our first in Austin. We just opened our second in Dallas and we're about to open our second in Austin and we also announced probably a month or two ago that we are expanding to Houston, Phoenix, Denver and Atlanta next year as well in Orange County. That's huge, that's awesome. When it comes to like recruiting challenges are they the same no matter what market you're in or are they a little bit different, bigger problems maybe or similar? I think it's been really interesting and I guess I would segment it the discussion by saying I think doctors, I mean everybody's got the thing they're looking for right that's going to make the job perfect for them but I feel like we have a pretty good understanding at this point. Doctors want a good schedule that they can reasonably work with their private life. They want to be able to practice good quality of medicine, be supported by a good team. I think the support staff has been interesting and it is probably more directly tied to state licensing laws. In Texas for example, you don't have to be licensed to be called a veterinary technician. In California you do. So again, going back to that idea that that title is really kind of the crown jewel if you will. So there are many, many fewer licensed technicians in Texas so hiring for us has been different in that market than it ever was in California. Easier I imagine. It has been a little bit easier. It's been easier with respect to veterinarians I think at least because we're new to that market and we haven't talked to everybody yet if you will. So Will I think that those are where some of the differences are. I'm curious to know how you look at it. I mean I would say one interesting dynamic that our business has is we're kind of a bunch of mini marketplaces. So LA is its own marketplace, Dallas is its own marketplace and I think when we first arrive somewhere there's enough awareness in what is a much smaller market which is veterinarians let's say or overall veterinary talent. And so there's some amount of people who already know who we are. Whereas on the pet owner or consumer side in Dallas I don't think they knew who we were. Sure there's maybe a handful of people but they don't know who we are. And that's I think the nature of each of these those are their own marketplaces. You know the veterinary marketplace and then sort of the pet owner marketplace. So I think it's easier for us to get somewhere and have an initial wave of people who want to work with us. And these are people who are entrepreneurial excited about seeing the change in the industry that we want to see and they've been sort of waiting for us to get there so they can help us do that in their community. I think in an existing market we have been making noise in LA let's say for a long time. We've also grown a lot. And because the word of mouth on the consumer side compounds at such a high rate because we've delivered such a great experience not perfect still have a lot of stuff we got to fix but we've built a pretty unique experience for pet owners. That word of mouth we have a hard time keeping up with. And so we have sort of these different supply and demand dynamics in each market. Bay Area somewhere in the middle it's sort of ramping up and it's in LA we just we do need more staff. We need more doctors we need more staff across all roles because the demand is so high. I mean what's Hollywood is still on a wait list for three and a half years. It's been on and off the wait list at different points in time. We're about to open a clinic like eight minutes away on La Brea because the demand's been so high there. And we opened Glendale, downtown LA two new markets on the same day first time we ever did that. And we had had hundreds of people on wait lists for both clinics for a long time we opened them they were full and we had kind of overstaffed at least one of those clinics it was still full like booked out a couple weeks. Yeah by the second week. Yeah these dynamics are just really interesting to observe and I think at the end of the day the thing that's still hardest for us I think is for sure hiring doctors at the rate that we want to and that is a existential problem I think for everyone in the industry I think we believe we've built something really different. I think if you ask our doctors they would say the same thing but how do we sort of tell people that where when they're getting pinged by I don't know how many I'm gonna get my phone out I'm sure I've gotten some since you've been sitting here. Not to take away from how cool and how popular you are. Right, forget about that. But there's you know it's an overwhelming amount of you know inbound outreach you're gonna get from veterinary recruiters if you're a veterinarian anywhere. Yeah you just don't listen. So how do you how do you know when everyone's promising the same thing or saying the same thing because it's easy talk is cheap how do you differentiate and how do you know how do you discern as the veterinarian the tattoos. That's a big one. It's the tattoos. This is the best marketing hack ever. I mean it's a hook. It's a hook right. It gets people in the booth and talking to us and you know I think to the point of when we went to Texas and what kind of mind share we already had you know a lot of those people had seen us at a conference or started following us on social media or had a friend who had seen us at a conference because yeah we were giving tattoos on the conference floor and that was a big attention grabber but at the end of the day we have to provide a better experience for veterinarians and veterinary staffers and you know I think it's an interesting dynamic talking to veterinarians there's like there's a slope right and you got to be like just frustrated enough with the industry that you see how it can be different but once you start to go over that hill and you start to be kind of on that burnout side of it and you're just done and so you know coming to work for a new company that's got new ideas and like we've already talked about it's changing a lot of things all the time and it may not be the right move so. When you guys come back a year from now what will we be talking about? What'll have changed? You'll be in several markets it sounds like and so a lot of data, a lot more data. I think we'll have 30 clinics in a year, right? So yeah we're gonna. New markets, yeah. We'll double. I think, I am curious to see how AI plays out for us, for the industry. It's a real opportunity. It is a real opportunity. It's very interesting from medical record keeping standpoint from my opinion. I mean like how can you leverage that to create an experience for doctors where the medical record is just constructed in a way that they're happy with, they feel it's complete, tells a full picture of the patient for the next doctor that comes along behind them and required minimal effort, right? I would probably say there's two things. I think there's the things that we build to make the promise that we have set for ourselves, the things that we build to make that real around actually making this very difficult job a hell of a lot easier for people. I think as we've grown each stage of growth you compound more stuff. You kind of carry the things with you that you can't focus on, build some other stuff on top of it. It starts to sort of each stage you have to sort of stop and say okay what can we get rid of? What's not serving us? What can we streamline and simplify? So I think that's gonna be a big focus for us this year. Because the magnitude of complexity from six to 16 was significant. I think that I don't know yet what the complexity sort of increase will be with where we are today any year from now but we see enough opportunity our team is telling us with a lot of clarity sort of where they want us to focus. And I think we've built a much stronger foundation. So I think we're in a position to actually execute on that. And the way I think about the journey of the company was we first started on the customer need you have to otherwise no one's coming to our clinics. I think we did that. We still have opportunity there. We then built a bunch of stuff for our team. How do you get the right number of appointments for a veterinarian to be able to have the appropriate amount of time with the pet owner where that pet owner feels heard. Their needs are being met. The patient's getting great care and the doctor can go home on time. We did a lot of work to get that in place. Some of that we took a step back on as we added other things. So we have to kind of get back to that. But fundamentally the things that we have set out to do have done well at points in time and then sort of now want to double down on our it has to be a place that somebody can come learn the skills they need have a clear path for growth get the job done during the day and practice great medicine and deliver great experience for their clients. And what's really special to see in our clinics is how much our team is committed to that even when we have made it harder for them unintentionally obviously. It goes back to what we talked about the first time is just like the type of people who work in this industry the kind of nobility that they have of doing this work for no ulterior motive and then to do it in the way that we at Modern Animal want to do it sort of added on top of that just says a lot about the quality of human beings that I think do the work and that want to come work with us because they are committed to doing the best across all these different things that we've sort of committed to even when there's other obstacles getting in front of them and all the other obstacles that already exist. So I mean for us it's a really clear our mission is really clear we have to build a better place and we've done that but we still a lot of work to do and there's always a way to make it better. And I think that a year from now I think we'll just seem more focused from us on this. You'll double down on things that work you'll know what works. Yeah we just have a lot more people get it now and it's not just us sitting in a room it's a bunch of people doing the work every day in our clinics who are really aligned and bought in on what we're trying to build and are patient enough to sort of work with us to solve it and we're just really committed to doing it. I mean since we last met too you know the world has changed and sort of we've had to double down with our investors on you know are we all aligned and we're still building towards this and it was an unequivocal yes from everybody. So everyone is aligned on sort of the mission and now it's about us actually finding new ways to work with what is a much larger team now to extract that feedback and it can't be through people submitting tickets through our software to tell us you know build this build that it's through going to the source really watching the work get done and working hand in hand with our teams to figure out what work in what order and really the belief for us is that technology is a unique tool that you can leverage to drive that change at a much faster pace than is otherwise possible in these kinds of businesses for sure. Yeah well thank you guys for coming back. I mean what I love about the business is to me in some way you're at the heartbeat of America right? It's like the pet and the pet owner and it's so real and then there's this technology play and there's this like almost like a restaurant quality to how you have to run it. You have your chef, you have your sous chef, things have to be, there's prep, things have to work really well and it's gotta be like this fine tune machine that services not to feed people in the sense of like brings them joy via food but to service the thing that they love the most, the heartbeat of America. Yes they're feeding their soul. And it's so hard and beautiful right? And tech plays a nice bridge into easing the function of that but it's still a difficult function. I just love it. I just love it. I'm a big modern animal support. I'm a big fan obviously. Well thank you. And I think people get it. It happens to be such a noble profession too that's so worth improving. Thanks for coming. Steven thank you. Dr. Long thank you. Thank you. Appreciate it. Thanks guys. Yeah enjoy it. Thank you. Thank you for tuning in. If you enjoyed this episode share with your friends, your family or anyone you might think might benefit from the conversation we've had today. 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