This Week in Startups - E980: The Next Unicorns: Alto Pharmacy CEO & Co-founder Mattieu Gamache-Asselin is working to fix the broken US pharmacy system by removing friction & aligning incentives among patients, doctors & insurers, shares insights on trading short-term profits for long-term success, combating the opioid cri

Episode Date: September 25, 2019

0:51 Jason intros Mattieu Gamache-Asselin 2:52 Changing from ScriptDash to Alto Pharmacy 4:19 Meeting and working with Twitch founder Justin Kan in the early days of Alto 6:51 Message to HBO’s Silicon Valley writing room 7:26 Working out of Justin Kan’s house 8:15 Why are pharmacies broken? How is Alto fixing them? 14:25 How did Alto’s team architect a 1.0 version of their pharmacy? 21:44 US Healthcare is broken due to bad incentive structures 28:23 Does Alto compare to Hims and Roman? 32:24 What are Alto’s profit margins? 35:00 This Week in Cinema: It’s a Wonderful Life 39:07 Maintaining balance between being scrappy/aggressive while also abiding by all medical regulations 39:54 How has Alto scaled so far? 45:55 Who is responsible for the opioid crisis? 51:24 What is Alto building to combat the crisis? 53:27 Trading short-term gain for long-term gain 56:56 How Alto was initially received among investors 1:01:03 This Week in Cinema: The Mission 1:04:30 What skill does Matt think many founders lack? 1:07:02 Operational excellence in former Amazon executives 1:13:49 #1 Lesson that Matt has learned since becoming a founder

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Welcome back to this week in startups. It's our Sunicorn, our next Unicorn series. When we meet founders who are building companies. that are starting to hit scale, like serious scale, like tens of millions of dollars in revenue a year, and that are being rewarded with valuations that hit a billion. Now, is that important to have a billion dollar valuation? No, of course it's not important. But it is an indicator that Silicon Valley looks at for companies that are the breakouts. That's all it means. A unicorn is a fun name for a company that's hit, which what represents, I would say, one percent of funded

startups or less. So if you were to raise a Series A, the number that go on to become worth over a billion dollars, it's got to be less than 1%. It doesn't happen that often. And for investors, like me, hitting a unicorn is a giant sense of pride. It's sort of like winning a championship depending on when you invest it. Some people invests late stage, so they might invest in companies worth 500 million. Well, you really don't get too much credit for investing in unicorns if you invest in the series D. But if you invest in the seed or Angel Round or the series A, yeah, you get credit. Maybe Series B you get credit. Nah, Series B, I don't get any credit. I've officially determined that you only get credit for your Unicorn Investments, Series A and below. And our next founder

is working in the pharmacy space, which a lot of people have tried to do. And he actually made it work. His company has now raised, let's take a look here, well the last round was 28 million, total funding of 100 million plus. And his name is

Matt Goumash Aslin. Close enough? Close enough. You pronounce it. Matsu Gammash Aslan. Matt Rough. Gumash Aslin. Yeah. Okay. I got it.

You got it. And your company's Alto Pharmacy, but you had a different name before that, right? We did, yes, script dash, which you can blame me for. Yeah. Script dash. So a fast script. But you didn't like it, you changed it?

We changed it. Actually, at the time, I hated it. We all hated it. But you got the dot com. We got the dot com, yeah. Justin was, I think, the only one that liked to Jessica who wrote us to the company. And we spent so many hours just arguing over names. And then we just, you know what, forget it.

We'll change it later. Right. It's actually quite hard to change it later, though. Is it? Yeah. So you made the decision for Scriptash based on being able to get the dot-com name. Correct. Which is a terrible reason to pick the name.

Absolutely. Yeah. It's aspirational to go buy the dot-com, sure. But to limit your naming to the dot-com is a rookie mistake. Rookie. Was it your first company? First company. Okay.

So that's a rookie mistake. It's like a turnover. Live and learn. Yeah. In the fourth quarter or something like a game. You're not supposed to do it. You wouldn't do it again. But there's a better strategy, right?

What's the strategy today if you can't get the dot com? I mean, you can name it. Put any prefix suffix. You can get the dot code. Depending on the company, it might be nice to have a dot com anyway. Right. Just for trust. But you could say get.

Get script dash. Get script dash. Or go script dash. Go script dash. Any of that. Go alto. Yeah. But now you're Alto pharmacy.

You changed it. You've been around for four or five years now? Four years. Four years. Now you met Justin Kahn, who's been on the podcast. He started Justin TV, which became Twitch, and he sold it. And now he's doing a legal startup. That is the craziest thing ever to go from a video game startup to a legal startup.

I mean, he went from like having a ton of fun to doing the most boring thing you could ever do. I don't know. I don't get it. But he's really smart. How did you meet Justin Kahn? And what was your pitch to him? Yeah. Oh, my pitch of Justin.

Wow. I honestly got very lucky. Justin is such a nice human being. Agreed. And, you know, I left Facebook with my now co-founder, Jamie, and both of us were looking to really do something we felt would have more social impact. Okay. And one of the founders of Parse, which was a little start by was that that got acquired by Facebook, introduced me to Justin saying, oh, well, he can probably help you in some way. Yeah. And he gave me the code to his door, to his house. And so I just started showing up Justin's house. Wait, wait, wait, hold on a second. All right, we got to roll back here. So you were working at a startup called Parse, which was developer tools, if I remember correctly.

That got bought by the Facebook. You did two years there, three years there? Two. Did two years, you got your own out? You know, as much as I could bear. As much as you could bear. You have to work with Zuckerberg at all? No, no, unfortunately not.

That would be careful. Did you ever meet him? I met him once, yeah. Met him once in two years. What's the like to work there? What's the good? What's the weird? You know, I think as far as, you know, working for a big company, like, it's pretty great. It just depends what your goals are in life, what you're looking for.

And it's actually quite chill. Like, they do a lot for you. The perks are amazing. All the things you would know in big tech companies. What's the greatest perk? What's the most ridiculous perk that when you saw it, you went, wow. Really? You're going to pick up my dry cleaning?

That one. Actually, now, there wasn't this when I was there, is a cobbler. On-site cobbler. Not to make cobbler, but to cobble your shoes. Yeah, yeah, true. Just so we're clear for people who don't know what a cobbler is. Correct. But everybody wears sneakers.

So why do you need a cobbler? You can't bring sneakers to a cobbler. That's the end of the cobbler where it's a sneaker. I can't tell you the reason. But there's an on-site cobbler. That was pretty crazy. So if you happen to wear dress shoes, you can get your heels fixed. Exactly.

That is the most ridiculous thing I've ever heard. I mean, it's literally Silicon Valley, the HBO show, writes itself. Oh, it really does. It does. I hope that's on the next one. That would be great. This is a message to the producers for the writing room. If the writing room at Silicon Valley really wants to be legit, I need you to drop.

Just in passing, walking by Huli, the Gavin, whoever the guy is, Gavin from Hulley, just walks by the cobbler, takes off his shoes. and hands it to them and says fix it. Perfect. That's it. And that's it. And no explanation of what that is. Perfect. And it just says the huli cobbler.

Love it. And there's a line. It's perfect. So you get introduced to Justin. And Justin lets founders work out of his apartment or his townhouse. Whatever it is. It was us. He was working on the drop at the time.

Oh, and his brother was working. His brother Damien was working on Shogun, which was a CRM-type business. And so, you know, we just started showing up. And honestly, I'm kind of surprised he didn't kick me out. Yeah. Because he really knew me. Right. And as we were building a company, he would start asking questions.

I never actually formally pitched him. He would just ask questions. He were working on this stuff. And he got more and more interested. And, you know, back then a week was a year. And within a few weeks, we're like, you know what, if we're going to do this right, we're fascinated by the space, first of all, just, you know, from the outside to your point, right? People have tried it before.

Why hasn't it work? It seems so obvious how to fix it. So clearly. People understand what Alto Pharmacy does is you deliver scripts. Yeah. Well, you know, at its core, Alto is a pharmacy. Yeah. We do things extremely differently from your traditional retail store.

But our goal is to be an amazing pharmacy. And we can talk about the differences there. But, but yeah, we're working on this. So, you know, if we're actually going to understand why others have failed, we need to know how pharmacies work. Got it. And so. And you have no experience in pharmacies. Is your dad a pharmacist, your mom a pharmacist, your uncle a pharmacist?

No, I studied biomed and software engineering, but... So that's nothing to do with running a pharmacy? Great. So you're totally unqualified. Totally unqualified. You're in somebody's house who you don't know, and you decide you're going to compete in the pharmacy business with a better product. How does one compete in a market where they know nothing about it other than what any other consumer would be? I'm assuming you've had a prescription before or gone to a pharmacy.

Well, the fun part is I'm Canadian, and so I had never actually gone to an American pharmacy. We'll eat Canadian one. Awesome. And this folks is how Silicon Valley works. Pick anything because everyone in the world is so incompetent that everything can be improved. That's how easy it is to be a founder. Everybody is lazy in the existing economy. And if you just go do something that's 30% better, you win the day.

What was the 30% better that you saw immediately? What was the low-hanging fruit of pharmacies? I suppose a line. That sucks. Yeah. I mean, from the outside, that's pretty obvious, right? CVS is the biggest pharmacy in the U.S. They have a negative 10 in PS.

I think most people don't know NPS goes negative. It's negative. Yeah, of course it can. Yes. If you have enough detractors saying they rate you six or below on the score of how likely are you to refer a friend to CVS pharmacy, it's literally negative. That means the majority of people are doing six or below. Exactly. That is, that takes work.

dedication. So you look at the output, right? And it's, well, that's clearly broken. The long lines, you know, there's always that nice sticker shock when you get to the pharmacy. Weirdly enough, when you're in line, right, like the person in front of you might have a coal and the person behind you might be going through, you know, a cancer treatment. And yet you're using the exact same service and staff, right? There's no difference between the experience. Oh, that's an interesting observation. Yeah. And actually, we've actually stood in pharmacies and just watching for a while. And you notice most people end up having some issue and a lot of them end up just leaving without the meds. And a lot of them just don't even come back to get them because

they can't navigate this crazy system. And this crazy system should be very simple. Your doctor gave your prescription, you go and pick it up. What I've never understood is why are their pharmacies and not, why not the doctors just have the basic meds in their offices? Why is that? Yeah, a lot of that has to do with fraud, right? It's important to disentangle the financial incentive of dispensing medication from treating a patient, right? So that's why they separated. That's actually very stark laws in the U.S.

You really can't do both. You can't do both. Yeah. Ah, that's interesting. So there's laws for you. So you can't do both. So doctors don't load up on prescriptions and then do nefarious things. Correct.

So it's a check and balance. There's a bit of a gray area in the middle there, but broadly speaking. All right. When we get back from this quick break, I want to know when you're going into a field where you have no knowledge and you do some studying, how do you conceive of a 1.0 product? Because there's so much you probably could do to improve an archaic experience, but you're in a market that's super regulated. So how does one do an MVP, a 1.0 in a crazy, deep, regulated vertical like running a pharmacy? We'll make it back on this week in startups. I want to tell you about business insurance. It's super important and you may not even have it right now and you need it because you may have already agreed with your investors to have it for your startup. And you just haven't gotten it to it yet, right?

You need to have things like cyber insurance in case you get hacked. D&O. You've heard a D&O probably. Directors and Officers Insurance. That's if somebody on your team does something dumb and you get sued. All the people on the board of directors, all the officers of the company, senior people, do not get sued as well. And if they do, you got that insurance to cover it. Inbroker's startup program is essentially free business insurance. How could it be free you say? Well, I'm guessing you use Amazon Web Services. Well, in Broker, EMBR, O KER, is partnering with Amazon Web Services to give you $5,000 in free credits when you get your company insured. So think about that. You sign up digitally at imbroker.com slash twist and zip, zip, zip in minutes, not weeks. You're going to get what you need. And they're expert brokers

specialize in high growth companies like yours. And mine, I want you to go instantly build your custom insurance program for your startup and get those $5,000 in AWS credits by going to imbroker.com slash twist. That's right, inbroker.com slash twist. And while you're there, you'll get 10% If you use the offer code Twist 10, the offer gets better and better. It's a great company. I met the founder. He's brilliant. Make sure that you cover your beep.

You want a C-Y-A in this case. Get that. Cyber insurance, get the D&O, get the E-N-O, by going toembroker.com slash twist and use the promo code Twist 10 so they know that your uncle Jason sent you. Okay, let's get back to this amazing episode. Hey, everybody, welcome back to this week in startup. My guest, Matt, is the CEO and co-founder of Alto Pharmacy, A-L-T-O Pharmacy.com. Or you're out. Just alto.com.

Oh, so you got a four-letter domain name. Four-letter domain name. Okay, so you started with a terrible one that everybody hated. Then you got a four-letter domain one. That usually costs $3,000, $500,000. Lower end of that, a little bit less. Okay. Just so people know, you fake it until you make it.

When you can afford it, you get a nice domain name. A-L-T-O.com. Super easy on mobile to type in. Uh-huh. Very nice. Inside.com. Not a bad one, huh? Uh, so you decide you're going to go into a space.

that you know nothing about, and that's highly regulated. How did you architect a 1.0 in this? And what was it? Yeah, good question. So what really we wanted to start was be a pharmacy. Just buy one and learn everything you can about it. So that's really where Justin was extremely helpful was buying us a pharmacy. So as good friends do, he bought us this old mom and pop shop in the mission.

Okay. So this is why Silicon Valley wins so often. So, a Canadian who knows nothing about pharmacy, has the last name nobody can pronounce, buys a shitty domain name, and then ask somebody they don't know, hangs out in their house and says, please, sir, can you buy me a pharmacy? So you, how does one go about finding a, I mean, I can, we all know how you found a pharmacy. How do you convince the mom and pop to sell you their pharmacy? How did that go down? Yeah, so, you know, I would drive around to all the farm. I mapped them all on Google Maps.

I drove to all of them, and I would walk in and say, hey, can I buy this pharmacy? And mostly they just looked at me weird and they were like, what? I was like, yeah, this is like what we're thinking of doing and this was why and we'd love to partner with you and do this. And all of them said no. I think most of them just thought it was like a scam. Sounds like a scam, yeah. Or a mentally ill person who's coming in for some, you know, you know, really serious psychoactive meds.

Like, this is a great way to get yourself clonopin and a prescription. Like, I'd like to buy the pharmacy. They're like, yeah, no, I think instead you should take this because you clearly are suffering from some mania. Well, thankfully, they can't prescribe it. So they get. That's true. Yeah.

But we found one Vivian who didn't immediately turn us away and she just asked us questions and she didn't want to sell yet. And it took us a couple weeks of just talking to her about why and what our dreams were and what we're trying to create and why this was. important. And what was the dream? The dream was, as explained to Vivian, as explained to Vivian, was, you know, all of these patients who in the U.S. are having such a difficult time accessing meds, and you've seen this in use today, right, with diabetes, this is kind of a hot topic right now, of just medication access. And a stat we were fascinating by was that one and two medications

aren't picked up or taken properly. So 50% of meds aren't taken or picked up. And the downstream impact of that is you go to the hospital, your condition gets worse. You end up wasting as a country $300 billion in just medical spend that's unnecessary. And there's over 120,000 lives lost every year because of it, which is four times more than car accidents, right? That's crazy. So over 100,000 people die because they didn't bother to go pick up the meds or take them that the doctor told them to. Yeah, and a lot of the pick up, right, is like, well, I couldn't afford it. There was some issue with the I couldn't get to the pharmacy. It's something very tactical.

Right. And that is the long wait that everybody faces is because they're looking up if you actually have the insurance or if the doctor actually got it. What is that, why is that line so long? Right. Why does it take so long? Because they're all sitting there with the medicine.

There's eight people behind the counter and none of them are actually working and there's bags back there and I watch them rifle through them and they don't find your meds. Yeah. And you're like, I'm here for a Z-pack. When I put a Z-pack in France, I said, I have a call. The guy said, oh, you need a Z-Pack?

I was like, yes. He said, handed it to me. Over the counter in France. He's like, you look sick. Here, boom. But in America, oh, contrary, more fraire. O contraire. Yeah.

That's actually one of the most fascinating parts of what we learn by buying this pharmacy. That's what we wanted to understand, right? It's like, you're in the pharmacy. It's like, it's right there. Just give it to me. What's your problem? Yes. And as a customer, as a patient, you feel that.

But when you're behind the counter, you're like, oh, my God, this is. insane. It's because, really, this is the crux of the difference in our approach and why we think that the prior tries haven't worked.

Pharmacy isn't a store. In the U.S., the role of the pharmacy isn't to sell you stuff. Okay. You know, the front end of Walgreens, sure, right, but that thing in the back

where the Ph.D. Pharmacist works, it's on a store. What is it? The role is take this thing the doctor prescribed, take your insurance is going to pay for and take you the customer

and just get people to agree on something. What is best for the patient? And how do I get all these people to be aligned with that? So you're building consensus amongst the three parties. Exactly. The doctor, the pharmacist, and the patient. Insurance.

Oh, sorry, doctor. Patient insurance. Right. The pharmacist is not responsible. What is the pharmacist's actual responsibility in all this then? Yeah. Well, so then it's our role, one, to corner all this together. And also to be this front line defense, right?

Is this fraudulent? Is this dangerous? Doctors don't actually know if you have three other doctors who prescribed you other medications that might be duplicative, that might be interacting together, maybe they didn't check your allergies. So being the referee is the role of the pharmacist. So your doctor gave you medicine X. They can look up in the system that you have Y and Z and then tell you if there's going to be some interaction. But doctors don't do that?

They don't have the data. There's just such disparate data silos in the system that causes most difficult. to do that. And so how did you solve that problem? Yeah, well, so you ask yourself, like, why is that hard to do? Yeah. Right? And most of this, you know, most of this, you know, people not getting their meds stems from that. And it's all comes down to coronation. And you're using phone calls and faxes to do it. You're calling doctors, faxing them, faxing the insurance. You're trying to get these people to agree with these really archaic tools. Ah. So the weight is confirming that the doctor sent it? It's trying to build the insurance, right? It usually takes about 15 minutes to build

one prescription and you're just hitting your hand against all these POS systems. Wait a say. I just had a revelation. Whenever it takes a long time to cancel a subscription and they put in that friction, I understand what they're doing. It's like the cable operators, like you call and it's like, yeah, we're going to totally help you. And then you say, yeah, I want to cancel. And they're like, okay, let me put you on hold for 20 minutes and see if you give up and I get one more month out of you. or the Wall Street Journal with their goddamn subscriptions where they'll take your money on the way in, but they won't let you cancel or pause on the web.

This archaic system of causing pain to reduce people unsubscribe or in this case even taking it. Is that what's happening? Is the insurance companies, I mean, a cynic would say the insurance companies are making it slow so that they can see if you, if there's friction, you maybe don't get the thing and they don't have to pay for it?

Oh, it's a can of worms. Yeah. There's a variety of factors. But that definitely is one where increasing access, increases spend, the insurance is separated between pharmacy and medical. And so you're incentivized on the pharmacy side as an insurance company, it's just lower access. And that can be a huge problem. So unlike Uber, which has an incentive to make it easier for you to get a cab.

Correct. An insurance company who makes it easier for you to get your prescription, a cynic might say, there's no incentive them to do that, therefore they're not going to do it. In fact, if you look at the whole healthcare system and say, why is it, quote, unquote, broken, which actually thinks is an unhelpful way to look at it, but it never, it's ever, you know, people that are mean, it's incentives. It's bad incentive structures. Got it. So the incentive for the pharmacist, the pharmacist only gets paid if they give you the drug, right? Right, which is another bad incentive, right? We want to give you drugs, which shouldn't be the case. We

should want you to be healthier. But they get paid per prescription out the door. Correct. It's retail, it's a retail business at core. The doctor do doctors make money every time you get a prescription? Not legally. Not legally. There shouldn't. There's some old cases of pharma and, you know, Purdue, et cetera, but in general, that is illegal. That is illegal.

But if you sold a certain amount of Viagra, would you get a trip to the Bahamas? That is all illegal today. That's illegal? Yeah, thankfully. It used to be illegal. Correct. They used to be a big problem, you last. When did that change?

It was years ago. Yeah. Sunshine Act. school. Oh, really? So they used to pay doctors spiffs or, you know, like little incentives, like junkets to go learn about Viagra if you sold a certain amount of Viagra. That's mostly cleaned up to you think. Oh, that's good. So the doctors don't make anything if they give your prescription. No. So doctors don't make out if they give your prescription. That's good. The pharmacists do. So the pharmacist actually has an incentive to get that line done before people

believe, but the only person in that who doesn't have an incentive is the insurance company. And that's who has to green light it. Why are they greenlighting it at the pharmacy and not at the doctor point? That's what I don't understand. When the doctor gives a prescription, they don't check with your insurance. That gets checked by the pharmacist, which then creates the queue. Why do they wait for you to get there to check it? Why don't they check it before you get there?

That comes out to a systems problem, right? There's just not how the systems are architected. And you actually have worse problem caused by that where you might have four drugs that are all kind of similar. It could do the same thing. There's a doctor. You don't know which one's covered. You realize that at the pharmacy, but you can't change it at the pharmacy because you're not prescribing. And so you call the doctor, you try to pay phone tax for a day.

You change it. You bill it. That's why there's a cue. Got it. So the doctor might give you prescription A, but your insurance only pays for the generic or the B. You have to get your doctor on the phone. Ha, ha. Good luck.

So then you have to wait and make another trip to Walgreens. Correct. What a disaster. So that's really the problem we first tackle, saying, well, what if we took, and you know, often this is just not done, right? They just don't call the doctor and she says, $400 to deal with it. And so what we wanted to do was say, we'll take ownership of that coordination. We're going to be the best in the world of that.

And obviously you can't monetize that by itself. So we said, well, we'll be a pharmacy and we'll monetize as a pharmacy does. Yeah. So let's do all of that within the bounds of the economics that exist. using software automation and changing the operational model. Got it. And what was the big unlock and how is the experience different if I go to Alto versus CVS? Yeah.

Maybe the three core things I would say one, because we completely rebuilt from ground up, the operational model, right? We have the centralized facilities, the centralized care center will deliver it to you for free. And then these sort of care centers run on this software we've built that relies it. And that really allows us to build these tools. and as a patient, you see this very familiar e-commerce experience. And that was the key for us. Why doesn't that exist, right? And it's caused by that lack of underlying system.

So you built the system for people to just go online and order it. Do they take a picture of their prescription? How do you get the scribe? It's all electronic from the doctors. It's all electronic from the doctors. You tell your doctor go to Alto and they do it from there. Or do you build relationships with the doctors and they say, just use Alto. Both.

So patients can transfer in. We'll take care of them. We can swap it from a wall green. Can you pay a doctor for using Alto or no? Cannot. It cannot. It be very illegal. But what we do is tell doctors, hey, if you send patients, it'll be awesome for them. If you care, that'd be great.

And what we can do is start partnering with them so that as a patient, you essentially feel like we're an extension of the clinic, right, because we're so tightly integrated. And we can communicate really quickly. We also built a bunch of tools to help doctors, been interact with us. I mean, these clinics spend like 20 hours a week just dealing with pharmacies per doctor in an office. Okay. Certain amount of time.

When we get back from this quick commercial break, always in the second break for people who have a long time fans of the show, they know I ask the most difficult question. So there are companies that are unicorns right now. Hymns and Get Roman. They came years after you suffered through Alto. And they're worth triple, quadruple, what you're worth. Did you actually miss that innovation? And if so, how does that make you feel as a fact?

founder that they hit double unicorn status before you've even hit unicorn status. Does that mean you have to go pivot because you missed the big wave at the beach when we get back on this week at startups? Hey, everybody. I'm here with my friend Jason Maynard, who works at NetSuite. Tell everybody, what do you do, Jason? I do many things here at NetSuite, but I run the field operations for the business unit. And field operations means what?

Sales, marketing, business development, all the stuff in terms of how we acquire customers, take care of them, service them, make sure they're happy. What companies can thrive in chaos, can thrive in turbulent times? We use these words internally. First, we want to get visibility, right? Once you have visibility, then you can establish the controls. Once you have controls, then you can be agile. So that would be your anti-fragile, which is once you have control over how your business operates,

then if something bad happens or if something good happens, you can be fast enough to change. You take a little more risk if you got that strong foundation. Yes. You can do the no look pass if you're good at free throws. You play good defense. You set good screens. Yes. You earn the right to do the no look pass once in a while.

You just got to build off that pyramid of degree of difficulty, right? But you've got to be able to execute the bounce pass before the no look. Yeah. You want to get those fundamentals nice and tight. All right. Right now, Netsuite is offering you valuable insights with a free guide, the seven key strategies to grow your profits. So go to netsuite.com slash twist, netsuite.com slash twist. and get that free guide.

Seven key strategies to grow your profits. We appreciate the work you're doing in the startup community. It's great stuff. Thanks, pal. All right. We'll be back one more. All right, everybody, welcome back to this week. And start us, my guest, Matt, is the CEO and co-founder of Alto Pharmacy.

When I left our hero, that's you, Matt. I was asking you, hey, listen, this has become pharmacy and combining a pharmacy with a doctor and an evaluation like Roman and Hems does. We can go online, answer a survey. and then all of a sudden you've got your Viagra, whatever, propitia, whatever, like you can order other medicine. It seems like embarrassing medicine is the category. Did you not see that opportunity when you did your first review of the pharmacy business? Or is it that they saw what you did and then built on top of you? And then how does it make you feel when you see them race out with just, hey, we're going to just pick one drug or two drugs and just make decisions?

and just make this even more vertical experience was your goal as well. Yeah, so I actually think they're fairly unrelated other than like there's pills involved, I guess. Okay. Ham's Roman, there's a bunch more of these. Actually, there was a great idea, right? It's an amazing experience when you want this one drug.

Right. And it works really well for something like propitia, right, or birth control. And like that's great. The model word, the problem we're trying to solve is very different. We're not actually trying to increase access to prescriptions. We're not trying to be the doctor.

What we're trying to do is really fundamentally, if you take this chunk of patients that are suffering, the lives lost isn't from lack of access to propitia. Got it. You wouldn't self-subscribe to get, you know, autoimmune drug like Humera. Got it. Says the guy with a beautiful head of hair.

Yeah. I mean, give it another 10 years, Matt. and then you might consider propitia a life-saving drug. But still, this idea of verticalizing it is a clever idea. Yeah, absolutely. And really, to me, the problem said that's most interesting is how do you fundamentally change the pharmacy experience? Not how do you take these kind of verticals that are cash pay, can kind of skip the insurance side, kind of skip the doctor's side to create this nice, smooth experience? So in order to make that work, it has to be cash pay, right?

Yeah, correct. And a lot of political reasons why that is. Yeah, why is that? The first is just, it's very difficult to build the infrastructure to build the insurance in a consistent way. And even if you do, then your margins, you know, you're not, Viagra today is worth 40 cents for 30 pills. It's very cheap. And so you can create this model. Wait, it's 40 cents for 30 pills?

Oh, that's their cost. I got you. Yeah. Yeah, there's a cost to buy Viagra. Oh, really? Yeah, it's very cheap to buy Viagra. I mean, one generic about a bit over a year ago. Oh, right.

So that's why it's cheap. Got it. And so you can create this kind of margin on top of that that can get to pay for all your services. If you build insurance, I mean, they're going to pay you $7. Got it. Right? Not 70. Ah.

So because people are paying cash, you unlock that great secret. And like you're paying for a great service, right? I'm not trying to say, like, it's not worth it. Those companies have become wildly successful. Are they inducing people? to take those drugs or are they stealing people who are already doing those drugs? I'm definitely stealing people that are taking the drugs. I think a lot of those products, I mean, they're over the counter in other countries. You know, birth control as an example,

like that should be over the counter. Why isn't it? U.S. regulatory takes a while. In a nation fact, for birth control, you can actually go to a pharmacy and a pharmacist can prescribe it now in California. Really? So there's sort of inklings of that starting. What can a pharmacist prescribe that a doctor can't? Is that like a whole bunch of drugs or is that just a small category? Pharmacists can do depending on the state, travel meds, birth control. Probably the only two. Really?

Yeah. Ah, that's interesting. And in Europe, it's much more available. You can just order more over the counter? Depends on the country, of course. Yeah. In France. I believe U.K., Viagra is over the counter.

Huh. Fascinating. What's the margin in the business? How do you guys make money? Or how do you guys make money? make money, I guess, is the other question. Yeah, it's a good question. Actually, a lot of people ask us that. The ad

courts are retail business, so a pharmacy will take a margin between the wholesale cost and whatever you get paid by the insurance and the co-bay. Okay. So walk me, what is that on average? What does a CVS make when somebody comes there to get, I know it depends on the drug, but let's just say

it's a drug that costs $20 a pill. Of a $20 pill, that's an expensive drug? That'd be pricing, yeah. Okay, $10. I don't know I don't know what anything costs anymore. Because I made money. This is what happens when you make money. I made money.

I just realized I don't know what a gallon of milk costs anymore. I used to know. It used to be $3.25 for a gallon of milk. What is a gallon of milk cost now? $5.50. What? It's $5 for a gallon of milk? Are you ordering like the good eggs milk or something?

Like the organic stuff, I guess. Oh, the organic stuff is five? Is it five? The average economics will look like, you know, $60 or so dollars in top line, about 25, 20% margin if you're CVS or Walgreens. So that's about what you're taking out. 25% margin?

Yeah. So on an average prescription is 50 bucks. 15. 15. 15. Yeah. 15 in margin. Okay, I got it.

So they make 15 bucks every time somebody's in line. And then they service, what, 100 people a day, 50 people a day? What is a pharmacy service? Your average pharmacy will do 150, 200 scripts per day, five days a week. so these might not correlate directly to patients. So they can make 30, 40, 50 grand a mom and pop pharmacy a month. Is that ballpark? Yeah, it's ballpark.

Most of these retail pharmacies, you'll see, there's obviously a variability there. You know, a few million a year. Walgreens will be a bit bigger and a dependent will be a bit smaller. A few million a year. In top line. And then they make whatever 15% of that in profits or something. Oh, no, 25% of that. So a pharmacist, what does a pharmacist make a year?

Is that a good job? job to have? So obviously, very easily. It'll be in the 150 range. Oh, okay. 120 to 180, depending on this. Does that work a lot? Is it like 12 hours a day on your feet?

I mean, if you think about it, it's kind of crazy. It's the only, like, PhD job that's in retail. Right? You're sitting in the back of a store. You have a PhD. It's a long process. Do they really have PhDs? It's a, you know.

How many years are they, is it take to become a pharmacist? Three to four years after college. Really? Yeah, yeah. And they only get paid $100. 150. We'll go up, you know, me 200 at the top? Wow.

Especially for your front line retail. You ever see this movie, It's a Wonderful Life? Yeah. Mr. Gower? Years ago. Mr. Gower, don't hit my ear. You don't remember the premise of It's Wonderful Life and why he has the bad ear? So he works for the pharmacist.

Okay. Mr. Gower, I believe is his name. Mr. Gower, and Mr. Gower is really old. And he's putting the pills for the O'Ladian, and he picks the wrong pill. picks the wrong pills and he picks like the arsenic, which makes no sense because there's no arsenic pills in the thing. But anyway, he picks some wrong pill. And the kid, who is later becomes Jimmy Stewart, he, uh, he says, Mr. Gower and Mr. Gowell liked to drink, I think also. So Mr. Gower may have had a couple of drinks and it's before Christmas. And he says, Mr. Gower, you put

the wrong pills in there. Mr. Gower, he, Mr. Gower was drunk and he just starts smacking the kid in the ear and he burst his eardrums. Oh, yeah, Mr. Gower's son had died. Mr. Gower was feeling really bad. He was drinking. He then puts the wrong pills in. The kid, oh, yeah, he became an alcoholic. The kid then goes and solves Mr. Gower's.

He tells Mr. Gower that he put the wrong pills and he didn't deliver them on purpose because he knows the wrong pills. And he hits him in the ear, burst his ear drum. He gets blood coming out of his ear. Pretty brutal. I was like 12 when I saw that move. I don't know any of this. And the kid's like eight or nine or ten.

And he almost gets his other kid cyanide or whatever. It's a really dark thing. Oh, yeah, you know why? Because he's making the pills. Oh, yeah, this old school. It's old school. So he's making the pills and he takes the cyanide jar because he's drunk because his son had died. And he, I remember it like yesterday when he hits the kid.

And then finally he looks and he sees his cyanide and he goes to grab the kid to give him a hug and thank him. And the kid cowered. And he says, no, no, it's okay. it's okay. You did the right thing. I'm sorry, I'm sorry. But then later in the movie, Jimmy Sturterk says,

oh, I'm sorry, that's my bad ear there. That's my bad air. And he has the bad ear throughout the movie. But the premise of It's a Wonderful Life is what would happen to this person's average life if he had never existed? And the scene here, here you go, the telegram comes in,

your son has died of influenza. And there he comes in here and he says, why didn't you deliver it? And he smacks him in the ear. Why didn't you deliver it? Why don't you listen? And he says, no, Mr. Cowher, you got it wrong. You put the wrong things in those pills. And you can see here Mr. Gower is drunk. And he's wobbly.

And he's explaining to him, oh, you put the wrong things in. That Mr. Gawa comes and he looks at the pills and he opens it up and he tastes it. And he opens it up and he puts a little on his tongue. I remember it when I was yesterday at this scene. And he goes, oh, no. and he looks. Oh, and see, they kick cowards and feel it. Don't hit me again.

Oh. You know. Such a great scene, right, Jackie. Wow. Jackie's crying. Jackie, don't cry. You're making me cry. It's such a great movie and scene.

So go ahead, comment on if it's a wonderful life. Well, you know, what actually this is perfectly summarizing is, yeah. Don't cry. I mean, Water Ring producer, Jackie. God, now you got me going. I can't see her. Thankfully. Yeah.

I'm looking at her. She's in tears and you're going to make me cry. It's such a powerful scene, right, Jackie? Have you ever seen a producer, Nick, or no? Okay. It's one of the most powerful scenes that any movie you've ever seen. If you had been born at a time when people appreciated cinema, it's a wonderful life. It's the seminal film that is shown every Christmas. And what happens is he gets taught what happens if he was never born? And what happens if he was never born is Mr. Gower gives those pills and goes to jail because he

killed somebody, spoiler alert. You were going to comment on how this relates to your business. Well, the thing I think is most important from that is, you know, in Stram, you kind of talked about this at the beginning. It's like, you know, you want to do things in a scrappy way. You want to be aggressive. You want to try things, experiment. And this is, I think, something that I'm so happy Vivian, so Vivian, the owner of this

whole pharmacy, she actually invest in the company too. Really? She just drew this. She's like Mr. Gower. Yeah, she's your Mr. Gower. Yeah. Without the cyanide pills and alcoholism. Yes, I agree.

Exactly. And like we're not, you know, dealing with, you know, data that's photos. We're not dealing with a product that's, you know, food. It's an industry that's regulated, but for a reason. And it's extremely important that even if we're a startup want to be scrappy and exciting, you have to keep that in mind, right? Because we can actually do damage. How big is the company now?

How many prescriptions are you filling? How many people do you have? And did you go buy up a bunch of other pharmacies? How did you scale this thing? So we never bought another pharmacy. It's quite difficult to integrate all that. So we've all scaled just in-house since then. We're about a bit over 300 people now.

Wow. And what areas do you serve? This purely in San Francisco and Los Angeles, Southern California, L.A. So two cities, 300 people. So you have so much growth in front of you. Oh, yeah, absolutely. How do you deploy this in, you've done two huge markets in four years? How does one do what Uber and Airbnb did and get to a thousand markets?

How do you get to 500 cities? Or is that the plan? Well, of course, it is to scale nationally. But just the barriers, 12 billion of revenue in pharmacy, right? It's an absurdly large market. It's 500 billion nationwide. Wow. And what we wanted to do before we scaled everywhere.

And there's a graveyard of startups to learn from that made the mistake of going too quickly. We had to nail the economics. We had to nail the growth model. So we've actually been very deliberate about growth. And we're well into the nine figures down revenue. Wow. It's still just from these two cities. And so as we've done this, when we're ready, we're just going to turn it on,

go into every city, and, you know, you can quickly, quickly scale up. You have to get the model. $500 billion in prescriptions a year. So that's $1,400 per American. But that includes kids and everything. And maybe half Americans don't even take medicine. So the people who do are probably taking three. Wow.

that's a lot of prescriptions. We take a lot of medicine. Am we taking too much medicine? Are people overprescribed, do you think? It's such a hard question because it's absolutely and not at all. Like, there's cases where, of course, and there's cases where, like, it's literally just people can get access. Okay.

I want to ask you a tough question because we're in the home stretch now. You come around third base. You've got to sing for your supper a little bit on this podcast. What is the responsibility? And I want you to answer this when we get back. What is the responsibility of pharmacists in the opioid crisis in America? And what role did they play? Because I understand that many people were doctor shopping going to many different doctors,

including Corey Haim, who died, I think, of an overdose. And he had gone to multiple doctors, got to multiple prescriptions. And they just doctor shop and pharmacy shopped. So where is this responsibility lie? on the pharmacist, the doctor, or the people who created OxyContin when we get back on this weekend starters. Hiring isn't about putting a want ad in a newspaper anymore, posting to some Fugasey job board and waiting to see what knuckleheads apply. No, you need serious talent, right? You're growing your business.

You need to reach the right candidates, the people who are going to fit in with your team and be A players, right? Well, where are you going to find the A players? You know where to find them. It's LinkedIn, of course. members of LinkedIn are there to make connections. They love to go learn. And they like to grow as professionals and discover new job opportunities. Maybe they're not looking for a job, but they'll opportunistically take a little perusky. Maybe find something interesting and that interesting company might be yours. In fact, a hire is made every eight seconds on LinkedIn. That's it.

One, two, three, four, five, six, seven, eight. Somebody got hired on LinkedIn. That's how LinkedIn gets your job post. They get right to the people who have the skills, hard and soft to solve the problems you need in whatever role you're trying to fill. I know this because we filled a number of important positions here at our company by using LinkedIn. And I'm going to give you 50 bucks to use towards your first credit in just a moment. Here you see CMO Presh posting for our new client service manager position in our Toronto office. You know, we have this growing podcast and we need someone to maintain the client relationships and help us with growth and marketing and all that good stuff. So we write in the skills we need. We write the description. We add some additional screening

questions. These are critical. Great hack. Screening question. Why do you want the job? What podcast do you listen to? You know, things that people who don't care about the job will skip. And it's all done within a couple of minutes. He sets his daily budgets and he's on his way to finding a qualified candidate. So I want you to go to LinkedIn.com slash unicorn. Unicor. And I'm going to give you 50 bucks. 50 for me and our friends at LinkedIn for your first job posting. That's it. Go to LinkedIn.com slash unicorn and get $50. LinkedIn.com slash unicorn, which is what your company will be when you fill those next two or three positions with that $50 I'm giving you right now. Go to LinkedIn.com slash unicorn and get that 50.

All right. Let's get back to this amazing episode. Welcome back to Setsuman in cinema. Did I get a close enough? It was close. It should pal a petit. When we left our hero, Matt, from Alto Pharmacy, which you can use if you're in Los Angeles or you're in San Francisco. Go to Alto.

Check it out. Alto.com. They got 300 people that raised over 100 million from Justin Kahn's living room. He's not riding that motorcycle anymore, is he? Justin? Yeah. I had a long talk with him about this. I was like, Justin, stop with the motorcycle. You're too valuable to start.

This is a message to Justin Kahn. Get off that goddamn motorcycle. You know what I'm talking about? No, I mean, if Justin Kahn lose it. This is a great bike. It's a great bike. I love motorcycles. I haven't been on one since I was 19.

And the reason is when I left, my mom was on the stoop in Bay Ridge, Brooklyn. I was 20 years old. Your aunt, your, your grandma, Master Nick, would wait on the stoop. When I left, I came back two hours later on the motorcycle. She was still on the stoop. And I was like, Mom, have you been on the stoop? She's, yeah, she's crying. I don't want you on a motorcycle.

I was like, all right, I stopped riding. Made the right move. That's the message for you, Justin. All right, listen, this oxycontin thing is just out of control, opioid crisis. And I guess that company went out of business now. They filed for bankruptcy. Those people knew what they were doing, apparently. And pharmacies were letting these things fly out of the back.

And doctors, apparently, were prescribing it a wee bit too much. who's responsible? Give me a percentage ownership outside of obviously the consumer who may have been an active participant in that. When we look, take the consumer out of it, who's responsible? Because this seems like unbelievable lack of either morals, ethics, or judgment? Maybe not. There's no real percentage because it's everyone in the supply chain at the end of the day. Because everyone could have stopped it. Everyone could have. Of course. The manufacturer didn't need to make something this powerful and market it.

The marketing, I think, making it oxycodone is helpful, right? We have patients going through cancer and it's amazing help for the quality of life. Yes. If you're dying for pain, it is unbelievable. unbelievably good. But when you're lying about the drug or when you're doing illegal things in advertising, then absolutely. And then the doctor, you know, illegally prescribing the medications, the pharmacies often knowing, and we can tell, right, it's very often clear what's going on when you look at the prescriptions. And it's our duty to say no. And you have to say no,

despite making a lot of money off it. Right. And we actually run into this already where we said, you know what, we're going to stop working with these doctors. We're going to stop working with these patients because we're not comfortable with the dosages, the amounts, the quantity. You have to say we will take ownership of this being a problem. Wow. So you look at your own data, and without talking about you specifically, a pharmacist, let's make it really easy for you to discuss this. A pharmacist, not you, could very easily look at the data and see that a person was getting a drug that they didn't need or in quantities that were exceeding the use case and that maybe

one doctor was giving an awful lot of them. So you see one doctor's giving 50 times a number of prescriptions, I don't know, 10 times the number of prescriptions of anybody else in this category and for very large amounts. And you've got to think something's fishy here. Yeah, more than that, I'll be, I'm happy to talk about us. It's like you see all the prescriptions and it's literally the law that a pharmacist verifies every single prescription that goes out the door. What does that mean? Verify. Look at all of the data and you say, this is the patient, this is the prescription.

Are we okay with this? And based on the system, it'll depend on what you see. But you have to review it. And if a person came in and they said they were suffering from pain and needed pain relief, would a pharmacist ever go, I'm going to disagree with the doctor? Absolutely. So if a patient comes in, you know, patient sends a prescription and it's for a very large quantity. and we actually look up into databases every single dispense opioid in the state.

And this is a California, many states have this service, is we can look up every single opioid and say, you've gone four in the last two months. Like, this is clearly... Well, this is a central registry now? Exactly. So back when Corey Haim died, I believe he was the doctor shopping of the two Cori, who died of an overdose.

Look it up for me, I remember Chris and Jackie, if you don't mind. But my understanding was he went to multiple doctors. There was no central database back then, right? That's a new thing. the state as well. In California, this was in California. How long is that central database existed? It's at least, it's about a decade of a call. So this was over a decade that he died. It's heard of the way before that. So before that, you could doctor shop, go to different pharmacies, and the pharmacies didn't have a central database. Correct. But I actually think most of the,

a lot of the problem comes from something a lot less malicious. You know, you'll see 20 pills of oxy post-surgery being prescribed. And you don't need 20 pills of oxy. You need, two maybe, right? Ideally, two days after. Exactly. You've got two or three days of pain. Why are they giving 20? Because they don't want you coming back asking for more, right? At least it'll be enough, but then you take three, you put in your shelf, and then, you know, maybe you decide to take another day.

Maybe your kids get into it, right? We had this actually happen. I went through our pills, and my wife had two pregnancies, and she had Vicodin and this and that, and I had knee surgery. And I was like, oh my God, we have like Vicodins, oxies, all this stuff. I flushed it down the toilet. Absolutely. I mean, they were out of date anyway, but I was like, I don't want this stuff sitting around my house. God forbid somebody gets their hands on this.

Yeah, well, ideally, you mix it with coffee grind and throw it out. Oh, really? Why? The coffee grinds, or you dispose of the pharmacy, you don't even the water supply. Oh. Well, sorry to the town of Hillsborough, if you all got high, if you felt no pain. It's filtered out, but. Oh, that's true.

Right. When they go into the water now, we see that, like, even our own water has trace amounts of antidepressants or whatever in it. So we're over prescribing. The farmers can see that. But some pharmacists were like, the doctor said it's okay. I'm not going to get in any trouble. The doctor said 20. If a doctor gave 20 and they only needed three or four, is that something where somebody's going to get in trouble or no?

No, and it's back to incentives, right? Like you have four patients in the queue. You have a hundred things to fill. Like, you're not going to slow it down. Exactly. And so you just go and you do it. And so something we're building now and really excited for, really specifically for this problem, is if you get a prescription for opioid, we alert you and say, this is really addictive. Can we give you less?

In fact, can we switch it to Tylenol 3? Can we give you something for free? Just don't take it. So you could make a quick 25 bucks on the oxies and you make nothing on Tylenol or de minimis amount. Or actually, you probably don't sell that, right? That's over the counter. We sell it to you. You sell it to?

Okay. So anyway, we're going to give away our $15 in gain here just for the good of the world. And why not? Right? Well, capitalism. You don't want all of your revenue from this anyway. It's not going to take the business, but it's doing something positive for people's quality of life. See, I think this is really good because if you just think about our industry right now in 2019.

How long you've been in the industry now? 10 years? 15. Oh, 10. About 10. Eight in the industry. In tech. I'm talking about in tech in general.

Yeah, eight years. Eight years. So you remember when you joined, it was like we were heroes in this town. People loved us. Oh, Facebook's awesome. And you actually got to witness Facebook become, you know, hated in your tenure, actually. I don't think it had anything to do with you being there, by the way. I just want to make that clear. But we need to do more of this as an industry. Absolutely. We need to look at a situation and say, what's the most money we can make? And then we have to say, what's the most money we should make? So you understand what the most money you can make is. But what's the most money you can make is? But what's the most money? money we should make. And if you look at Apple, underpaying people in the Apple store or Bezos underpaying factory workers, they were optimizing for the most money they could make and optimizing for the best user experience without thinking about the best experience for humanity, not for the next quarter. But it's also like, it's not realistic to assume if you ask Mark, hey, just like make sure

you always do this. You know, ask Jeff. Like always make sure you do this. you have to create an architecture as a company in your culture to keep even you as CEO accountable. You have to make it impossible not to do this. And I think you're having a lot of startups right now that have this more mission-driven approach to creating a company culture. And hopefully that's what we see come out of that. That's actually the case at all.

I have an even better way to phrase it, I think. Don't trade short-term greed for long-term greed. even if you just want to look at capitalism, because if you think about people like Bezos and Zuckerberg, Bezos is successful because he was the optimizer, and Zuckerberg was successful because he was the move fast and break things. And just moving fast is another form of optimization. They're part of a different generation. But if you look at the short-term thinking that Zuck had, I think, in a lot of his product decisions that got him the first $20 million fine, now the $5 billion fine, those fines are not going to kill the company. but they are indicative in the scale of them.

$20 million set a record. Now $5 billion. He said another record in terms of fines. It's indicative of a philosophy that must change course if you don't want to get dragged to D.C. And if you look at OxyContin, that company and that family, I mean, are they going to go to jail? Or are they being sued personally, right? They're being sued across the board. There's massive class action lawsuits.

They're taking their names off the buildings they donated with their, you know, ill-gotten games. We kind of really think holistically. See, this is where the millennials and the Gen Zs with their philosophy of mission-driven, which I think you fall into, and the Gen Xers in the optimization, just because we're doing technology, it's inherently good, there needs to be a middle ground here of long-term profits, not short-term. Yeah. And I struggle with expressing it in a way where you're taking a haircut on profit

because it's so core to the industry. and if VCs will fund the things with the most profit, you'll never get there, right? And actually, I should heard the podcast with, I forget his name with the Grove Collective. Yeah, yeah. And I thought that that was a good way to frame it, right? There's a lot of opportunities where you can just focus on doing stew.

The right thing, and that will actually help your profits, right? At least in the long term. Yeah. Focus on that. And don't focus so much on, make the most money, so many investors are happy. Yeah. And I actually think the investment community needs to also take a step back and say, well, are we okay funding things that might not be the best for the world?

Right. Why are we even here? Is it just pure returns if this is the stuff it causes down the road? Yes. I'm joking. No. No, of course not. You know, like, listen, it's not fun when you're an investor in a company and people hate the company.

And then even as an investor, you get that blowback. So when Uber had some problems that needed to be fixed, people were like, okay, Mitch Kapor and Freda and Jason and Sian, you're responsible. And it was like, we own 10 basis points of this company. We own 25 basis points. We're really responsible. Like our names are not at the front door of the building. We can't even walk in the building just like you.

Like we have zero influence. We don't have seats at the tables. Only the people on the board who have a seat at the table. And even then they don't have control. I mean, look at we work of like for the biggest example of, malfeasance, I mean, after Theranos, I guess. It's crazy. How did you manage the investor class in this regard?

And did people, were people scared of what you were doing in terms of touching drugs? Yeah, absolutely. I think that's like the first question I always got, especially in the early days. This isn't like super regulated. Is that a problem? This is scary? I think, this is my philosophy on fundraising in general, you can't build a business around fundraising.

And you have this feeling when you start that that's the game. It's the C, the A, the B. And at some point in that journey, you're like, oh, I was supposed to build a business, not fundraise. Yes. And you reverse your thinking to, I fundraise to build a business, not build a business to fundraise. Right. That's easy to say when you get the big rounds. It's harder to say when you are having to slum it in Justin's living room.

And, you know, I don't think many companies, just you don't admit it because I don't, you know, it's dangerous to, I suppose. But you never have an easy time fundraising. Right? It's a lot of know. It's very few companies. Brutal. Just always have all the money. And that brutal experience is like, well, it's brutal for everyone. And it's not because you didn't perfectly optimize squeezing every dollar out. It's going to be about what are you building and why?

And can you emotionally get people interested in your vision for the future? Ah. And how do you do that? How did you get people emotionally attached to running a modern pharmacy, which seems like the most boring business I can think of. I mean, you could have sold paint, but it's up there with as boring as paint. If I did paint, it would be white, not 1,500 whites.

Yes, exactly. You know, I'm an engineer. I'm introverted. I'm not a salesperson. I'm not a great salesman. And I always thought that held me back, and I made the story in my own head. I know you're investing in common.

I'm a huge fan of the sort of meditative approach, but what I had to realize was all I have to do is tell this person what I want to do and why I want to do it and show them how excited and passion I am about it. Yeah. And that's contagious. I think too often we get stuck in like the advice, well, it's like a turn rate, the LTV, and the Cag and the chart is here, the team is at the end. And like, sure, you should follow those for us.

That's fine. That's not the point, right? People will want to invest in you, especially in the early days. if they believe in you. And people say that. And I heard that. I just never believed it. It's like, no, that's BS.

When did you realize it was true? What made you realize that people invest in people? Was there a moment? I think it was very, very recently. Despite Justin, I think just like telling me for years that was the case. And for me, I had to feel, you had to see it. Hearing it doesn't help. Right.

Because you're like, oh, sure, thanks. Like, you'd try fundraising. And it's when I saw it happen. Yeah. I'm like, oh, like, that's what resonates with people. Right. I said the same thing, right? But it's the way I said it brought them confidence that I would be able to do this.

Right. Because they see their numbers. That's fine. Can you do this, Matt? Right? Yeah. Are you the one to do this? Yeah.

And do you want to do it? Are you going to give up or not? Because at the end of the day, there's going to be any good business, it's going to have many people try it. and then the numbers, you know, there might be some differences on the margins, but it's who's going to not give up is really, I think about that a lot. When I'm talking to someone and when it comes a great example, I was talking to Alex, I was like, he's not going to give up. Even if this thing doesn't ever make money, he's probably just going to suffer through it for a decade because it's so important to him. And you can't fake it, right?

You can't fake it being important to you. That's where that advantage of being so mission-driven with a purpose. and not just squeezing money can drive the point home because you are actually emotionally so attached to the outcome you want, right, to get there and you won't give up, even though it gets harder than I think the word hard describes. Yeah, but always remember, mission without execution is delusion. Like, even if you're just a missionary, but you have no skills,

you're just not going to climb the falls. You ever see the movie The Mission? No. You've never seen the mission, okay. So, since we're doing this week in cinema, they're going to wind up pulling up this clip as well. Setsamino Cinema. The mission is a famous scene where Robert De Niro, this is a film you have not seen with Jeremy Irons. I've never even heard of it.

Robert De Niro and Liam Nelson with a score by Inio Morricone, the most famous Italian spaghetti western. A composer. The greatest composer of cinema ever after like maybe John Williams, like right up there with the guy who did Star Wars, right? And anyway, in this scene, Robert De Niro plays a Spaniard who goes and goes to the South America and captures natives, indigenous people, to make them slaves. And then he decides he needs to convert. He has an event, I won't spoil it, but he wants to be a missionary. And then he has to climb the falls. And he climbs the falls with the armor on his back.

Cue the film. You'll see this scene and it'll blow your mind. Basically, you'll just type in the mission, De Niro climbing the falls. And you'll find this scene of him climbing the falls in the mission. And it's great to be a missionary, but the missionaries must climb the falls. They have to be able to climb the falls. And here is the scene of Robert De Niro with all his armor when he, He was a conquistador.

And he's trying to climb the falls. And there's Jeremy Irons. This is a seminal film of my life, by the one. Blade Runner, the mission. And there's Liam Nelson who looks like he's 12. He's 12. And it was probably one of his first films. And here's De Niro trying to get up the mountain and he can't.

And Liam Nelson can't take watching this. Quigon Jim. Liam Neeson. Just use the force. And Liam Neeson says, enough. And he cuts the armor off of, in the bag, he's dragging it, throws it down the falls. And Jeremy Aron, who plays the sage priest, the sage missionary, looks at Liam Nelson and says, you can't do that.

And Robert De Niro climbs back down the falls to tie the armor back up and start his journey again. Because it is his cross to bear. He must climb. the mission. He must climb and get to the mission and beg forgiveness for what he's done as a slave trader. And this is really, when I think about startups and how hard it is here, De Niro is that founder. And he has that insurmountable mission, right? But you have to be able to climb the falls. It's not enough to want to help. It's not enough to want to succeed. You have to be able to actually, on a tactical basis, be able to do it, right? Let me disagree a little bit. Okay, go ahead.

No analogy is perfect here, but it is the perfect film. I'll have to watch it. Also, he doesn't look like DeNear at all. I can't even recognize him. Yeah. You know, it's... Welcome to The Swigin Cinema. It definitely is, you know, you have to not give up, right?

And he's climbing the falls. He's not giving up and he has to be able to go up. But what I think lacks a lot in founders, especially as you get product market to fit and start scaling, it's just admitting how bad you are on most things. Oh, yeah. And just very quickly, hiring you. people because your goal as founder, right? It's not to be the best at X, Y, and Z. It's to continue to build a culture, motivate people, and get them excited about the vision that you have.

The mission. About the mission. And so I think there's too much focus on, you know, the execution in a way because you need to execute, but you as the founder don't need to. You need to find very good people to do it and find a way to convince them to join you. That's really hard. One of the great pleasures as a founder is when you have enough capital and resources to find somebody to do something you've been doing better than you. Especially things you don't like. Oh, that's the greatest.

That's like a double win. I got it off my plate. I got off my plate something I hate. You know what mine was? It's just like reviewing legal documents. I was like, oh, my God, my entire life is reviewing legal documents and trying to summarize them. And I was like, you know what, Ashley?

you've got a new job and responsibility. You do every, one of our managing directors I said, just do all these legal documents and summarize them for me. I never want to think about this again.

It's like the reason I don't want to go to work today is to pile through legal documents. But there's so many founders, and I've went through this, where you don't believe that. You feel like it's your job because people kind of tell you,

Matt, why aren't you doing these things? And it takes a level of just belief that it's okay. Yeah, maturity. I'm not supposed to do everything. Yeah. What is the thing that you

gave away in the last year or two that was hard to give away and easy to give away. Yeah. You know, I am not an organized person and I hate systematic things. I hate going through a list and tracking numbers and operational stuff. Exactly. Yeah, not me neither. We have, we have three executives from Amazon. They're very senior. And I found myself still doing a lot of this work. And I realized my team had been telling me for a year to stop. and annoyed. And I was the one in the way. I never actually understood that was the case. I thought I have to because you guys aren't doing it. But I was holding on to it and to see it. They'll respect me wanting to do it, even they'll push back. And I had to say, you know what, I'm out. This is

your responsibility. Do whatever you want. I'm going to trust you. And we're going to work together to make sure, you know. What makes those Amazon executives special? Because I do hear about those Amazon executives going into organizations and really taking them to another level. You recruited three of them, did you do that on purpose? And what makes them special? I think Amazon as a company is misunderstood in Silicon Valley, maybe changing a little bit now, but it's a phenomenally disciplined organization. And they've created a management system that I think is almost unparalleled. I think this comes from a little bit of the arrogance of Silicon Valley, but I found in general older companies, IBM, GE, they're very, very well-managed companies. And you should learn from

them over Google, Facebook, and tech companies. Really? I found that it would be much more better manage, especially if you have a big operational component. Right. If you're just building software, you know, it might not. Why is that, do you think? Because the margins are so thin, you have to.

You can't be sloppy. You have to be extremely good because you operate with, you know, 4% operating margin. Because you're in a mature market with mature competitors, and if you don't have operational excellence making the 10 millionth car or the billionth light bulb, your competitor will.

Exactly. Yeah, I just, it clicked for me. If you're Google, it's like, well, who are you competing against in a search engine? It's a monopoly. You can totally screw up. If you're Facebook, you've got Facebook, Instagram, WhatsApp. It's like, is Twitter going to just siphon away users

because they make a better Prius or a better hybrid car? No. There are different experiences, right? They have monopolies. And actually, interestingly enough, you're seeing so many more very operational tech companies come about that are trying to merge the tech and kind of Adam's world. Who else is a good example of that in your mind? Who do you look at? If you take just Uber and Lyft, two prime examples of this.

Even Airbnb to an extent a little bit less, but still like, still dealing with a lot of this crazy housing. Airbnb doesn't have hardcore competitors. They have some home away. But when you look at the Uber Lyft, Rively, especially with the global grab and DD, Angela, look at Uber Eats versus DoorDash, that kind of competition and those kind of margins lead to operational excellence. Exactly. Can you imagine if Google had operational excellence, what their profits would be?

But I think in a way, I don't know if it would be helpful because it would kill that culture. Well, they're just trying to get all of the engineers so you can't compete with them. It's such a, I mean, it's amazing that you make that observation because when I make that observation, people, they don't grok it, but they basically created a talent war. It would be like somebody creating their own NBA with one team and saying, I'm going to pay everybody five times as much to come play in my league that you can't even see the game. And we're just going to take them off the market for six, seven, eight years. And by the way, we're going to take them off the market during their prime years.

And they're going to make so much money that they're not going to go back to work in tech. Therefore, they're not going to work for your startup. It was such a brilliant blocker strategy for so long, so long. And it still works because they have so much cash. They can inflate those numbers, right? And then you see the results of that in these high, these huge rounds in fundraising, the rents being really high, but it all propagates down. Yeah.

Yeah. And you see some of the packages they give people. You're like, why did they give Andy Rubin 90 million on the way out? No offense to Andy Rubin. I mean, it's a little creepy, some of the stuff that came out, allegedly, whatever. But even still, giving anybody $90 million on the way out, like, that means they had to give him a $90 million exit package to just get him off the market. he wouldn't go work other places.

So they just gave all these like entrepreneurial people 10, 20, 30 million dollar packages so they wouldn't go anywhere. You don't compete against that. What do you do when somebody comes to you and they have that Google offer? You just tell them Mazel Tov. I guess I'll go back to sort of the advantage you can have through a very mission-driven culture. But you can find the people that are like, yeah, I actually want to do more. I want to do something different. I don't just want to hang out at Google.

I want to make a difference in the world. And that's the people you hire. Yeah, they're probably bored it out of their minds at Google. Can you imagine you worked in search and they're just like, can you optimize this 0.07% in the next four years? And you're like, okay, so the next four years of my life, 25 to 29 is going to be optimizing the Google Flights ads, tricking people into clicking on an ad that they don't know is an ad. Really? That's my life for four fucking years. They'll generate one extra couple billions. And it's going to generate, yeah, it's going to generate 700 million and we're going to give you 15.

So come burn five years of your prime years. This is a message to Google engineers. If you're doing that, I salute you for taking that 20 million, but you need to go start a company afterwards. All right, listen, Matt, great guest. I was looking at this. When I look at the show notes, I'm like, I got to figure out how to make a pharmacy company interesting,

but little did I know that you're fascinating. Thank you for coming on the podcast. I appreciate that. You're a great guest. I think one of the great things about the Sunicorn series we did is that we're meeting a bunch of founders who we missed who are great guests because you don't get to $250 or $500 million by accident

and you do learn a hell of a lot, didn't you? You learned a lot. I actually think if you want to grow personally, start a company and just don't stop. You'll change it. I'm a completely different human being because of it. Really? What do you think is the number one change?

What are your parents or your friends tell you is the number one change before and after the startup, alto? A-L-T-O-com. Go to eat your pharmacies and Los Angeles. Angeles and San Francisco used a promo code Jason for 20% off your Oxycontin. That's not a true. That's not a true code.

Coupon will not work. Buy 10. Buy 20 OxyContin, get 20 oxycod. It's our gift to get. We don't do that at Alto. We do not do that at Alto. It's our give to get program from OxyContin. OxyContin, give 10 to your dealer.

So you don't ad person for Purdue. Exactly. Hey everybody, it's Jason Calcutta for OxyCodin. You know, that's probably kind of what they did, though, which is the most terrifying part of this. The gift to get, yeah. They're like, give a prescription and we'll give you $25. I wonder, I mean, can you imagine what's going to come out of discovery when they start getting the emails and the SMSes and then somehow somebody didn't turn off messaging in their WhatsApp and they got the whole trail. They'll be well deserved.

they're going to make a great, great documentary in like 10 years about this moment in time. That's going to be like, like, remember O.J. Simpson? And we're going to do like the people versus O.J. Simpson, like, incredible. People versus Purdue. It's going to be the people versus Purdue in like 30 years. I mean, do it now. I mean, that really should be the next true. What was the thing that you learned?

Have you changed? No, I think to cope with the amount of stress and anxiety you experience, you have, you have to change as a person. Or you've experienced it before and you've already gone through that journey. I found it through meditation and mindfulness. And just Justin and I talk a lot about this. And I love that he's promoting that more.

Yes. Conscious leadership as an approach at this whole vein. I honestly don't think I would have been able to power through without it. It's definitely a very acute phenomenon when you are in a rocket ship like you are or any company that's fast growth, the amount of stress that builds because of the amount of responsibility.

You started with two people and somebody else's living room. Now obviously you got 300 miles to feed. You got to make sure people get their prescriptions. They're relying on them. This stuff just layers and layers. And even if you're not conscious of it, it's burning in your back burner. And if you're unconscious, if you're not meditating or working out or you're not grounded already, this is why people commit suicide very sadly.

This way people abuse drugs. This is why people flip the car, you know. It's a lot of pressure. People don't get how much pressure it is to be the pilot of these companies. Absolutely. And I think the worst is people say now a lot. It's hard. Like everyone goes through it.

And it's not enough to intellectually know it. You have to feel it. You have to see that. Yeah. Oh, me and Justin, right, he went through this journey because he felt it. And as I saw him go through it and I was going through challenges, just luckily enough around the same time, it gave me the comfort. Like, oh, even Justin's going through this.

Yeah. It's okay that I'm feeling this. It's normal. Yeah. It's completely normal. And, you know, you see it in these, there's a generation of entrepreneurs from the 2000 period who are now investors. Myself, Justin, Alexis, and Gary in their company. This is a bunch of folks who kind of grew up building startups and now are writing the checks.

And they're all preaching that same message, which is, let's run the marathon. If you're under stress, you need to take a break. And it is back to that long-term greed and that long-term incentive. It doesn't do anybody any good if the founder kills themselves tragically or has a nervous breakdown or is taking some kind of stimulant to increase their performance like a lot of kids were doing, like taking too many stimulants and trying to stay awake. There was a whole Mondafil-Craise, the provigial that swept through a lot of accelerators

here and the things where people are just staying up for three days writing code because are trying to compete. Like, you won't compete like that. Like, you won't win, right? That's not what you're going to win on. You'll win the day and you'll lose the week. Like, literally, it'll be Friday and you will be crashing and you'll wonder why you're crashing.

It's like, not even medium. Like, you don't even have to be long-term thinking here. It's short-term thinking. Yeah. If you want to win, that's not how you'll do it. The focus on sleep, I think, is one of the best things that ever occurred. I give Ariana Huffington a lot of credit for bringing it up because I was part of the no sleep group for a long time.

Just because I was just naturally didn't need a lot of sleep. And then I was like, I got older and I was like, I kind of need more sleep. I kind of feel foggy in the mornings. So I just tried to get seven hours of sleep, eight hours of sleep. I tried to force myself. I still can't get to eight. But when I get seven, oh, my performance goes way up. And it's only one or two more hours than I was.

So like, does it actually make a difference if you sleep five, six, seven or eight hours at the end of the day? No. Yeah. So just get the extra hour of sleep. the point though I do get frustrated with like there's a balance there where it's not about start a company you're going to work really hard right I still to this day work 60 60 70 70 70 yeah um and like like real hours right and like people love saying big numbers but right yeah 70 hours

a week is a lot think about right that's 12 hours a day for six days yeah and then there's more yeah and so think about like all right what is sustainable for me and find that number right and find that Yeah. And then do as much as you get? 29. 29. So it's fine at that age. And you don't have kids, I assume.

So you have kids to the mix. You add another 10 years. Your body gets a little tired. You're not running on adrenaline as much. You just need a little more sleep. But yeah, people have this inflation of the hours because they get to work at whatever, and they stay until eight every day. And they think they're putting working.

But then they're taking these three-hour breaks and playing football. It's like, you know what? I'd rather see you do eight hard hours or seven hard hours and get the fuck out of here and then go do something on your own. All right, listen, Matt. You've been a great guest. Continued success. You're hiring.

We're hiring like crazy. Okay, well, I'm going to guess you're mad at alto.com. If you're an amazing developer, marketer, operational person from Amazon who wants to get on a rocket ship. You know who to call. Pharmacist technician, too. I don't know if they listen to the podcast. Oh, really? Pharmacist technicians.

Yeah, they don't listen to this podcast. Maybe they do. Operational workers, sales, anything. Anything. Literally. Any. Just need a body. If you have a pulse.

If you have skills and you're great. If you're an A player. Yeah, a player. Whatever that means in this day. Whatever that means. Whatever that means. Ninja, whatever. Concierge, whatever you are.

We got a spot for you. Samurai, Ronan, whatever. Yo Jimbo. We'll see you all next time. On this week's service. Bye-bye.