Transcript
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Oh, hello and welcome to the
consumer VC. I am your host,
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Mike Gelb, and on this show
we talked about the world of venture capital
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and innovation in both consumer technology and
consumer products. If you're enjoying this content,
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you could subscribe to my newsletter,
the consumer VC DOT sub stack dot
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com, to get each new episode
and more consumer news delivered straight to your
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inbox. Our guest today is Joe
Specter, founder and CEO of Dutch.
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Dutch is the online vet care when
you need it. Previously, Joe is
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one of the founders of hymns and
hers. We discussed the opportunity he saw
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within pet insurance and care, how
his approach to fundraising at Dutch was quite
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different to his approach at Hymn and
hers and why he wants to change the
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incentive structure within the vet industry.
Without further ADO, here's Joe. Joe,
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thank you so much for joining me
here today. How are you?
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I'm doing extremely well. Like I
said, I I feel like I'm running
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like a chicken with its head cut
off, but in a good way.
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I'm a happy chicken. It's my
natural state. As long as you're a
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happy chicken, that is a good
thing. That is a good thing.
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So I wanted to start at the
very beginning. You know, before you
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started Dutch, which obviously we're gonna
spend the majority of our time talking about,
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you were one of the Co founders
of hymns and hers. Why did
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you decide to leave hymns and hers? What did you learn from that experience?
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I learned so much, and I
think the short answers you know,
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I did what I did at hymns
and it was time to be the CEO
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and the bus of my own adventure. But I learned a lot. I
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learned what it's like to fundraise.
I learned what it's like to build a
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team. I learned what it's like
to build a telemedicine business stayed by state
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heavy operations. I learned what it's
like to scale a business, operations wise,
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human capital wise, and on the
marketing side, learned what it's like
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to to be spending millions of dollars
a month. That is a lot of
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learnings right there. So when he
felt like it was your time to go
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and him and start your own thing, what became Dutch? What was that
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experience like and when did you have
the idea for Dutch? What was kind
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of that Aha moment. If there
was an Aha moment, it was we
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got a pandemic puppy. My brother
has had a dog forever and I think
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the combination of that, I literally
had the Saha moment where I felt,
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wait a minute, I just built
a way for our guys to save a
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ton of money and time and yet
here I am spending hundreds of dollars at
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the vet half my day. This
makes no sense. And I looked at
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the landscape and I just saw so
many similarities of what the world was like
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before hymns came on the scene and
I just saw so many similar patterns that
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I felt like position to address them
in the pet market. So what was
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the first step? And I mean
that totally. You know understands on paper
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right, seeing since and Hims and
hers. You build telemedicine business for humans,
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why not build a telemedicine business for
pets? What was the first kind
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of steps you had to take,
though, for Dutch and you know,
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maybe if those were, you know, different to you know, hymns and
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hers. I think one of the
things I really learned coming out of hymns
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is the importance of testing. So
I put up several kind of smoke screen
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tests that started to give me a
really positive indication of the opportunity here,
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and that's kind of something similar we
did at hymns before launch. And then
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it was also, of course,
understanding the competitive landscape, and that was
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also very similar because prior to hymns
there were lots of companies who wanted to
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attack men's wellness, but they wanted
to go the easier out and offer retail
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style products, and hymns made a
decision early on to go do the hard
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thing, which is actually writing prescriptions, and I felt like that's what Dutch
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is gonna do. And I saw
that everyone was also in the pet space,
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dancing around the edges, but no
one was going all out and actually
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building a network that could write a
description and save you time and money from
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going to e at. That's helpful. What were some of the smoke screen
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tests that you did when you were
first kind of formulating and thinking about Dutch?
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It's thinking about like what's the some
of the low hanging fruit that's out
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there, and there's just like hymns
attacked chronic conditions. I put out different
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chronic conditions on the pet side to
see what the uptake was on facebook and
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instagram. That was always kind of
the easier place to go, especially before
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some of the IOS four team changes. That's kind of what we did there,
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and it's easy to put up things
and see how they perform. Got
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It. Got It. So running
tests through facebook ads, instagram ads and
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kind of see this is something that
people were responding to or being receptive.
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As you know, if you were
to build and actually be able to write
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prescriptions online actually be something something that
that people were Keenan. I'd imagine that,
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Um, since you started, you
know, during the pandemic, there
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was probably a lot of excitement from
from people that, hey, like,
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I can't really go anywhere anyway and
I can get so many things directly to
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my doorstep except for, you know, prescriptions for my pet. So I
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can understand why that actually makes sense, why they actually did have maybe some
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buzz or excitement around on this particular
process. When you saw a lot of
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different companies hanging around the edges of
what the real problem is in pain point
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writing prescriptions, how were you able
to tackle that and go through the regulations?
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Obviously you're able to do it with
in the hymns and hers, and
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I'd Imagine Regulation for writing human prescriptions
is different than writing pet prescriptions. I
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would love to kind of just talk
a bit about, you know, comparing
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writing prescriptions of what you did with
hymns and building this business with Dutch and
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as well as why so many companies
avoided solving this pain point. I think,
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at a high level, first of
all, it's a messy endeavor.
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It's a lot easier to sell it
toy or sell something over the counter.
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You can get going and then it's
a classic you know, selling socks,
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model et CETERA. This takes a
lot of effort and it is kind of
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the lessons I learned from him's I
was able to bring in many of the
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lawyers, many of the pharmacies,
many of the lobbyists that I already developed
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relationships. There's not that many even
today, excellent telemedicine lawyers. That's kind
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of a specialized art form and being
able to have someone who's kind of already
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done the work, I think,
certainly gave me a leg up. I
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also think, I mean being an
entrepreneur to begin with requires very thick skin.
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Working with regulators, working with a
new group of folks, veterinarians who
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have never seen telemedicine. You're,
I mean, says to my earlier point
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of running with a chicken like you
know, there's just so many constituencies that
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you have to bring into your corner. It's an S C process and I
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think if you've never done it before, if you don't have that thicked skin,
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it's easy to run away from it
or delay attacking the inevitable. So
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I think for me it was always
like, let's address the real problem,
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which is getting prescriptions in a way
that's cheap effective to saves you time,
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and let's go after that problem.
That's the biggest problem. Let's not waste
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time doing all this other stuff.
Did you also see on the regulation side,
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and you know working with lawyers that
are very specific, have the specific
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skill set um in telemedicine, did
you also see that there was definitely a
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push for this to happen by just
the market in total, given that you
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had covid where, I'd Imagine,
in Hymns and hers, I mean as
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well, you're dealing with human medicine. I'd imagine that that's more complicated than
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pet medicine, on the surface at
least, but him and hers was,
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of course hard way before the pandemic
and there might have been a question of
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is this actually real need, whereas, since it's harding this business right during
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the pandemic, was there kind of
more like a market push for this to
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actually get done and being a company
that would actually be able to provide this
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type of service to pet owners.
There's definitely some differences, I think,
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in many ways, with hymns you're
sort of solving the embarrassing actor of discussing
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these issues with your doctor and kind
of hymns offers you discreetness. There isn't
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as much of a need for discreetness
and pet men's. In fact, people
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are very vocal about all the issues
that their pets have. But the thing
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that we're solving for is making it
way cheaper and more convenient and more affordable,
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and usually the pain point is when
this issue is happening, like your
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pet has an ear infection and it
takes three weeks to get an appointment.
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I think for us the driving force
was not only the massive amount of pets
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adopted but also the declining ratio of
veterinarians two pets. I think the veterinarian
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economics are extremely different. A vet
has to go almost get the same amount
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of schooling as a doctor, but
the average veterinarian makes, if you can
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believe this, fifty hour. The
difference in is just staggering. There's also
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just really different incentives. So there
are very few haves and a lot of
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have not in the veterinary industry.
The haves are the ones who own a
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clinic or run, you know,
corporate rations, and they have not is
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the cent of that's who are working
for the man and they're the ones making
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on average fifty bucks an hour.
However, the veterinarians are making uh significant
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amount of their income from selling drugs, and that is very different than human
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medicine. Can you imagine a human
doctor who made a third of his income
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selling medicine? That's a drug dealer. So like that would just stop in
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a second, whereas somehow, because
maybe it's a smaller market. I think
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it's also because it's much more of
a cash pay market, which is a
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huge structural difference. Most consumers don't
have pet insurance, most humans have human
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insurance, and and so that dynamic
create it's a much bigger incentive for the
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veterinarian who owns the clinic to be
selling medicine and just loading up your basket
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when you check out with a lot
of medication that you have no control over
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really, because they just charge your
card and get out of here. But
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the people who really make that money
is the small concentration of that clinic owners,
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and the vast majority of vets and
the entire set of consumers are the
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ones that bear the brunt of these
unnecessary expenses and costs. That was a
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lot. No, that was a
lot. That was a lot. So
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it seems like, let's park with
your first point, Um, that there
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isn't that much discreetness when it comes
to pet ownership. I think people are
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a lot more comfortable talking about maybe
their pet illnesses than their own illnesses.
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Right. So I'd imagine how that
maybe translates to Dutch. That custom acquisition
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might be easier for you. Then
I would think, oh, for sure.
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And there's just a lot more stuff, right, like the same dog
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will get an ear and eye infection
than they could, three months later,
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get a skin infection. Like there's
just more stuff in a shorter period of
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time that happens to an animal,
right, right, of course, of
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course that makes sense. How did
you approach this from the beginning, when
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you talked about, you know,
your approach to partnerships with that and kind
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of all the kind of constituents within
the value chain? How was your approach
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from the get go to make sure
that Dutch was rightly positioned and be able
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to be successful? It's being super
clear on what we are and what we're
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not, and so we we've always
said that we see brick and mortar evets
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as partners. Our goal is not
to eliminate the brick and mortar evet.
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Like we believe in your pets wellness. We believe even there are services that
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their best position to do so.
We were always up front and we're actually
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gonna be forging relationships to that end
in order to be that front door that
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I talked about. And at the
same time, we're always clear, hey,
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there's these inefficiencies where the consumer is
charged for a visit. That's not
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right. We're gonna cut that and
we're gonna make it cheaper and faster for
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them to get a prescription when they
don't need to unnecessarily go in person.
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Got It. That's helpful, and
were you also align yourself with vets that
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to have them hey like for this
prescription, you know it's your first one.
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That where we may be identified this
illness, then afterwards you don't need
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to come in, you can just
use Dutch. Were you also kind of
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thinking about like that type in terms
of the customerization there, or or is
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it more on like the consumer to
actually be able to find Dutch as an
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option? I think, and this
was maybe a lesson from hymns, but
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the services built around the consumer first. So the consumer and the pet parent
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is at the heart of what we
do and we actually have our own veterinarian
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network, and so that network is
you know, we can ensure that they
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have good bedside manners, we can
ensure that they're available all hours of the
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day as opposed to getting on evenness
in our coverage or even us in our
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communication. But I will say the
one thing we're doing is we're paying veterinarians
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eighty dollars per our, which is, you know, still far less than
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what a doctor makes, but we
feel that's a competitive rate for the average
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veterinarian Um to actually make a living
and pay off their loans. Yeah,
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no, I mean definitely compared to
fifty. So at least that is better.
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How did you go about building?
You know this because it sounds quite
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ambitious as well, building this network
of vets? Well, I did it
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at hymns. I built I built
our network of physicians and I can tell
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you I remember. Yeah, this
is one of those things. You know
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as an entrepreneur, the more muscle
memory you have of stuff, easier it
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is to do it the second third
time around. I remember thinking who in
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the world is gonna, as a
you know, as a doctor, will
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work for this digital startup that's selling
you D medication? But you know what,
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found one, then found the second
one and pretty soon that was ten
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and then a hundred and then three
hundred. Um. So I think same
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thing here. There are many veterinarians
who see the opportunity of tell in medicine.
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There's so many veterinarians, Um,
who are women, who are looking
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for a work life balance. There
are many who are looking for a better
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salary. They're seeing what's happening on
the human side until the medicine adoption.
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So the more you start to do
it, you kind of see, okay,
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there's really a population for whom this
is in demand and they're looking for
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a service to jump onto. That
makes sense. How have you also approached
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given the current fundraised landscape market conditions? We've now seen a few companies that
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have extremely high burn rate, not
much revenue to show for it um having
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to fold because they just weren't able
to they thought that the capital might be
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heap flowing and it just has not. has dried up a little bit.
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I want to say a little bit, because there's still a lot of capital
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still out there. What do you
think about, you know, your burn
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rate, which I know is always
top of mind for entrepreneurs, and,
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of course, revenue. How does
this relate to your approach to hiring in
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this current landscape? Where do you
maybe have a thought that you were going
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to hire maybe a lot more people
prior to, you know, all the
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events that have happened in two and
now, Hey, I want to maybe
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scale back a little bit and maybe
cut my burn per se um or so.
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I just would let to kind of
hear your thoughts around and if you
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had any type of change of heart. What you thought last year when it
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came to growing Dutch, as opposed
to your current perspective? I think that
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it was always top of mind from
a previous experience, but also here,
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that in the early days people have
to be not just good but excellent and
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they actually need to be good at
multiple things and they can't even just necessarily
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be good at one thing. So
I think most people are doing the job
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of one and a half to two
people and they're doing it in a way.
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You know, I think most of
us are Dutch, our pet owners,
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and we're in this business because we're
solving a problem that many of us
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personally have. So I think there's
a lot of passion and excitement for the
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actual product that we're building, but
it's definitely a lean team and it's as
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efficient as it gets. I think
that earlier on, I think, coming
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like in June when we first raised
the seed, I think I thought maybe
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we would just be growing and burning, but I definitely think in this environment
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having to take a step back and
making sure that we're not just growing for
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the sake of growth. We're growing
and acquiring the right users for our service
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and I think we've also made sure
that our service is solving the right problem,
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which is on the prescription side as
opposed to being kind of a general
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pet as PAT health business. Yeah, no, I that makes a lot
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of sense in terms of, you
know, how you think about the market
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conditions, because I'd imagine it's also
very challenging because talent has become extremely expensive,
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really hard to to hire, considering
that there's so many opportunities out there.
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That, you know, kind of
equates to what could be, you
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know, a high burn rate and
not so great. What's also just generally
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speaking, what's your approach to since
you've now, you know, I mean
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obviously you were part of and one
of the founders and scaled hymns and now,
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of course, you're on your own
journey um as CEO here Dutch.
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What's your approach to hiring, especially, I feel like, in this project
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climate, since it's really quite tricky, I'd imagine. So hiring, I
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think, is my secret weapon.
I think, uh, if you say
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so myself, I find a lot
of success on Linkedin. I think my
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other approach is I don't use recruiters. I think that there's a certain type
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of candidate who takes the recruiter phone
call and then there's a far better candidate
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that takes a phone call with the
actual CEO who actually wrote an email and
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being someone on purpose. I think
the other thing is people look at,
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you know, who are the DCS. Again, lots of people can give
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money, but our main investors,
forerunner, eclipse, Ben Lang. I
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think there's some of the best out
there and so people are excited to partner
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with them as well. But yeah, I think doing my own outreach and
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doing it on Linkedin has been quite
star and I also, you know,
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I think the other differences with Dutch
is that there are so many pet parents
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who are dealing with the issue that
we're solving that they're actually passionate about being
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part of that solution and working on
this product, as opposed to joining something,
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you know, some Essoentaric Sass or
some other thing that that may make
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good sense, but isn't something identify
with. Yeah, we always give enterprise
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as a hard time as on this
podcast, as you can imagine. But
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no, I mean that is part
of what I love personally about consumer of
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course you know that that that it
could be a problem or a pain point
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that you're personally solving Um and that, of course, you know, Dutch
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came from as well, a pain
point that you started as a covid dog
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parent, which is Great. How
do you also ensure as we're kind of
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coming out of covid it's maybe tough
to say, but what are maybe initiative
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that you're taking to make sure that
to keep users not maybe churning or,
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you know, leaving Dutch and you
know, still be customers and part of
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what you're building in a post covid
world. Once people are quiet, like
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there were twenty million pets adopted during
covid Um, that's not gonna go away.
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That's a pet you have, like
you said, for the next ten
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years and I think there's always something
in you know now that we're exiting covid,
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but we are seeing the highest rate
of inflation since the early eighties.
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So making sure that we're providing an
affordable solution. That's again, that's the
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new world and that's going to stay
with us for another several years. And
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actually Dutch has lowered. Our prices
were now fifteen dollars a month, like
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cheaper than anything else you'll see in
the market. And we're also super transparent
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on your medication. So there's something
you find more competitive or you want to
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take out of your basket, you
control that as the consumer. So I
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think being affordable and significantly more affordable
and saving you time, I think,
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is the secret weapon. I can
understand customers not wanting to revert back to
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maybe the old way of renewing medicine
and having to go to the bet all
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the time and what have you,
as well as obviously beating them to on
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price. What is kind of the
vision in the future of Dutch as you're
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thinking about here, in the next
next few years per se? I think
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our core competency is the vet network
being able to write prescriptions. We're also
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investing in our own electronic medical records
dashboard, so that's going to continue to
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put the power of your medical history
into the hands of the consumer. You
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know, if you can imagine ever
having to switch vets, are going to
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urgent care and you don't know where
your your medical records are, I think
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that's an immensely powerful tool. And
then, using that Hook Um, I
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think will continue to partner with other
brick and mortar, with other retailers,
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to help facilitate cost effective for descriptions
for their customers as well. It's really
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great. What's one book that's inspired
you personally? In one book that's inspired
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you professionally? Personally, I mean
the book that has is so dear to
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my heart is this book called Exodus
by Leon Uris, and it's, uh,
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the story of the founding of Israel, and my own background is that
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I grew up in the former Soviet
Union and that book was illegal the partially
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because it's a story of fighting for
freedom, and my dad almost went to
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Siberia for for having that book.
And being sort of a fighter is a
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is a character trait that I think
I've developed more and more and that book
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always inspires me. On the professional
side, my favorite book is never split
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the difference. It's by a former
FBI hostage negotiator or and he has some
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really great advice on how to negotiate. I really appreciate you you sharing both
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those books. Exit is. We
haven't heard x is yet featured on this
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show, so I'm really excited to
add that to the book list. And
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that's also a very, very powerful
reason why he chose it. And never's
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with the difference. We've had a
couple of past guests type of that book.
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I mean, I read it.
I think it's fantastic as well.
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My final question for you is,
what's the best piece of advice that you've
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received? I think again, I'm
like, there's probably no professional and personal.
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I think on the professional side it's
making sure that you make the time
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to, you know, to do
the things that make you happy with,
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which for me is right now,
my family and my kids. Um,
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it's so easy, as an entrepreneur
at least for me, to spend an
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additional two hours here, two hours
there, and little by little they Um,
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you know, your kids grow up
and you haven't seen them. So
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I think it's so important to just
make the time and those are the moments
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you you'll probably remember for a long
time. So that's kind of one piece
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of advice, is just to make
the time for yourself or to make it
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for your family. And I think
on the on the professional side, I
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would say, you know, surround
yourself with people who are going to challenge
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you and don't surround yourself with yes
people. Joe, this has been such
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a pleasure. Thank you so much
for your time. Thank you, and
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there you have it. It was
so terrific chatting with Joe. I hope
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you all enjoyed it. If you
enjoyed this episode, I love it if
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you'd write a review on the apple
podcast. You're also welcome to follow me
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00:27:44.640 --> 00:27:48.240
your host, Mike, on twitter
at Mike Gel and also follow for episode
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00:27:48.240 --> 00:28:03.559
announcements at Consumer VC. Thanks for
listening. Everyone to be a good and
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all want to do. I want
to do
