Justin Mares - The US Health Crisis - [Invest Like the Best, EP.333]

0:00 I know firsthand how complex the tech stack is for asset management firms. And seemingly every new tool and data source makes the problem even worse, adding more complexity, more headcount, and more risk. Ridge line offers a better way forward, one unified platform that automates away the complexity across portfolio accounting. Reconciliation, reporting, trading, compliance, and more, all at scale. Ridge line is revolutionizing investment management, helping ambitious firms scale faster.

0:25 Operate smarter and stay ahead of the curve. See what Ridgeline can unlock for your firm. Schedule a demo at ridgeline.ai. Hello and welcome, everyone. I'm Patrick O'Shaughnessy, and this is Invest Like the Best. This show is an open ended exploration of markets, ideas, stories, and strategies that will help you better invest both your time and your money. Invest like the best is part of the Colossus family of podcasts, and you can access all our podcasts, including edited transcripts, show notes, and other resources to keep learning at joincolossis.com

1:00 Patrick O'Shaughnessy is the CEO and founding partner of Positive Sum and the CEO of O'Shaughnessy Asset Management. All opinions expressed by Patrick and podcast guests are solely their own opinions and do not reflect the opinion of Positive Sum or O'Shaughnessy Asset Management. This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions. Clients of Positive Sum or O'Shaughnessy Asset Management may maintain positions in the securities discussed in this podcast. My guest this week is Justin Meares.

1:35 Justin has built three consumer health focused brands over the past decade. Every time I speak with him, he makes me reflect on my own health and the state of our health more broadly. This conversation is no different. As Justin puts it, we're in a health crisis that could ultimately bankrupt our country. We talk about the inputs, incentives, and potential solutions related to that crisis, and then move into his experiences building and investing in consumer brands. We finish with a fascinating discussion on why it's more common to see repeat founders these days.

2:03 Please enjoy my great conversation with Justin Mares. I know we're gonna talk a lot about the US health system. Maybe the right thing is a framing because we all live in this system and probably haven't thought too much about it or take it for granted. And I think there's some huge underlying problems that trace back maybe fifty, sixty years. Could you begin by just giving what you think is the cleanest frame of the overall problem as you see it, having built multiple businesses kind of in and around this space?

2:32 I think the core underlying thing that is A massive problem is just that If you look back fifty, sixty years ago. Chronic disease was basically like Not a thing.

2:42 And It existed in small ways, but it was not twenty percent of GDP Kids, forty to fifty percent of them are diabetic or pre diabetic. It was not like the explosion in chronic illness that we see today across Cancer.

2:55 Obesity, infertility, mental depression, all that sort of thing. So to me I think the biggest question I think exists in the US right now is what is going on with the health of our population and how Over the last fifty years. Has it taken

3:07 such a nosedive and gotten to such a toxic place that I think is literally gonna threaten the competitiveness of the country. How would that last piece come to fruition, like Yeah. dystopian situation, what would it take for health outcomes or

3:21 Average health. status of Americans to be so bad that it actually affected our competitiveness. That seems pretty intense. I think it's happening right now, but if you look at healthcare costs, they're outpacing inflation by like two hundred percent. And so you don't have to Fast forward for too long.

3:36 to get a sense of health care costs are almost already at twenty percent of GDP. How much longer can healthcare costs continue increasing at this pace? Before it like literally bankrupt the country.

3:47 And that's not even talking about The human capital issue, which is just If you think about it. The average child being Obese overweight.

3:55 six and ten adults have at least one chronic illness. Something like seventeen medications are prescribed. On average per adult every year. From a Health standpoint. We all know

4:07 I mean If you don't feel your best from a health standpoint, there's no way that you're doing your best Most productive work. You're not your happiest version. You're not killing it at work. You're not doing almost anything.

4:18 With the vigor and energy. That Probably we want people to do it. to bring to their jobs, bring their relationships, bring to everything.

4:25 The other thing I think that's just crazy too is I spend so much fucking time reading labels on food. looking at ingredients, understanding like Sourcing. It's insane. The amount of mental overhead that I put in to understanding sourcing ingredients, what went into this, oh, does this kitchen use seed oils?

4:44 Where are they buying their stuff from? Is this produce seasonal? Cause that impacts nutrient density. Is an unbelievable amount of mental overhead that goes into this stuff. And if you were wine, like if I ask my grandparents or parents How did you think about making food and health choices for your kids? It was basically like We just bought whatever was at the store. Yeah, totally. What are you talking about? Yeah, totally.

5:04 I mean you look at old photos of people on the beach in the sixties and seventies in old TV shows and all these sorts of things. You just don't have to look back that far. To Reach a place where

5:15 People were just For the most part. Healthy by default. And Almost never thought

5:20 about their food as much as I think about food and consumer products and stuff like that today. And they were still healthy. What about the evidence that we have from the rest of the world concurrently. So like the snapshot of the average health status today.

5:36 Is there any lessons that we can learn from certain regions or specific countries And what that data might teach us about what's gone wrong here in the US. I think that the Thing that you can see very clearly.

5:48 Is that We're exporting a Western diet to other countries and they are starting to feel And see The exact same metabolic and health issues that we see here in the US.

5:59 rates of diabetes have gone up something like ten thousand percent in China in the last fifty years. As a Western diet has come To mainland China. You see similar things across A lot of the Middle East.

6:10 many parts of Africa, many parts of South America. Even Europe, which many people, myself included, think do a much better job from a food system standpoint than the US does, is still seeing a huge increase. in metabolic disease. other chronic diseases and the like. Obviously this is like an incredibly

6:28 challenging problem. because of its impact, but also it's really challenging to understand. We can't say for sure it is X, Y, or Z that's causing this. And if you go and do thoughtful research You can kind of pick your explanation and you'll find great evidence for and against.

6:45 the thing, whatever it is, seed oils or Whatever it is, the ratio of macronutrients in your diet. as the causal factor for this problem. The problem seems undeniable. Like the data's just really bad. Maybe you can trace for us how you think about

7:01 answering that question'cause everyone's like, Okay, it's bad. We would love to do something about it. But no one can seem to agree on the reason that this is happening. And there's all sorts of Answer factors like

7:12 Business interests and other things that I want to talk about too. But how do you personally, I mean, attack this problem, like this knowledge problem? an epistemology problem. Like how do you know What might actually be true. One of the issues that I would take, even with the framing as you approach it, is like you can find all these studies and whatnot.

7:29 is I think that our sense making apparatus, especially as it comes to nutrition, which is a highly multi-factorial complex thing. is completely broken and it's broken intentionally. by big food companies, pharma companies that Basically our funding. Thousands and thousands of studies.

7:47 to make us confused as to Are almonds bad? Is chocolate bad for you? Are ultra processed foods good or not? If you look There have been fifty thousand nutrition studies in the last two years.

7:58 That have come out. Fifty thousand. Many of these are funded by like big food and big food related companies. The NIH spends one dollar for every eleven dollars that big food spends funding nutrition research.

8:09 And so My takeaway from this, and I'll answer your question in a sec. But My takeaway from this is that basically we are operating as a society. In a space where

8:19 R tools for sense making. research studies the scientific method and the like. are being weaponized and like used against us to just muddle and create confusion and make it nearly impossible for one person, one person who like makes the USDA guidelines that go into kids' lunches, for example.

8:37 to clearly point to causality and go, this is bad and we're gonna fix it. And I think that right now Big Food is basically doing And pulling out the playbook that cigarette companies pulled out. Forty, fifty years ago.

8:48 of let's fund Every possible study that makes it unclear. whether or not cigarettes are harmful, or whether or not there's a link to lung cancer there. And they're doing the same thing with food today. And so what I think about is For me, the core Problem is that

9:04 Fifty years ago. fifty six years ago. There is far lower incidence of chronic disease, obesity, overweight, diabetes, and the like. In the last fifty years.

9:12 That has completely changed. Americans are sicker, fatter, more depressed, and fertile, all these sorts of things. Worse than we ever have been before. And the kids that are growing up today. are in the worst position of any generation of American kids have ever been from a health standpoint. So for me I think you look at that and you have to go

9:28 What changed? The biggest thing is The amount of processed foods that we eat in our diet today has massively changed. The amount of environmental toxins that we're exposed to.

9:38 Have hugely enormously changed. And I think that You have to start with this. We have a massive health crisis going on right now. That's the core thing that you have to start from. And if you just go back

9:50 to nineteen seventy and say, Let's eat like we were eating in nineteen seventy, which is Far more whole foods. Stuff that is not quite as processed. stuff that has far fewer pesticides that are sprayed on it, less glyphosate, less environmental toxins and the like. That

10:04 That is probably a really good place to start. If we were to draw a timeline. And we can pick a starting date. Let's say it's roughly nineteen sixty or something like that. What do you think are the most important changes that have happened, whether that's regulatory changes, whether that's business changes, whether that's research changes, whatever you think are the important things.

10:23 Because In nineteen fifty, let's say, when this wasn't a problem. They're big food companies, big companies of every type. What are the important things on that timeline.

10:32 That might help us understand how this awful change has come to be. One thing I think that was a big change was Foodies straight up. If you look

10:41 Since nineteen ninety five. The US has spent almost two hundred and ten billion on subsidies primarily that go towards three things corn, soy and wheat. Because the US is hugely subsidizing these three crops. It artificially brings the price down.

10:55 at which farmers and big food manufacturers are getting these inputs. Yeah, totally. What you see is around the nineteen seventies, nineteen eighties. Many of these big food manufacturers go from Using

11:06 Real sugar. to using high fructose corn syrup. McDonald's used to fry all their French fries and beef tallow. All of a sudden. soybean oil and canola oil become far less expensive because of

11:16 subsidies and a bunch of other things. And you start seeing them using vegetable oils and everything. In nineteen sixty. Basically zero percent of the average American's calories came from soybean oil.

11:26 Now that's approaching twenty percent. Where the average American is getting twenty percent of their diet from these In my opinion, toxic soybean oils that has not existed in the human diet. In history today.

11:39 Until now. What is the source of the subsidies themselves? Like I wanna keep digging into the causal chain here. I get that, and that sounds really bad. Like I don't want my kids eating twenty percent soybean oil. But why were the subsidies there? In the first place.

11:53 And are they intractable? Like is there any way out of this problem? A lot of these subsidies came about. in relation to Or as an after effect of World War Two. Basically the government is like, We need to guarantee a food supply. We need to make sure that it's shelf stable.

12:06 So that we can ship it overseas and it can stay for long periods of time and stuff like that. And so One of the things that the government did and Nixon made a push around this. is specifically to make it so that These big food companies.

12:18 We're Okay in using and testing out a bunch of these different chemical stabilizers. There's this big push towards shelf stability. And then the government was like, we need to guarantee our own food supply. Corn soy wheat are relatively stable. grains that we can ship overseas, we can do a bunch of stuff with. And so like let's put money behind this to make sure that America guarantees it's never like an evil start, is it? No, totally. Honestly, I don't think that With some exceptions.

12:42 We're gonna talk a lot about the food and healthcare system today. I think that most of the players in the food system and in the healthcare system are like Good people trying to do the right thing. I just think that the system itself has incentives that are so warped that they're creating

12:56 really bad outcomes and are like killing Hundreds of thousands of Americans. On the topic of subsidies, here's a good example. Where I just talked about how almost two hundred and ten billion dollars are spent.

13:07 since nineteen ninety five on subsidies. for corn soy wheat. If you look into the subsidies that are happening today. Cigarettes. Tobacco.

13:16 gets four times more government subsidies about two percent. than all fruits and vegetable crops combined. So if you just look at that incentive alone. The USDA It's saying that

13:26 About fifty percent of American calories. should come from fruits and vegetables. Yet if you look at how the USDA is allocating funds. Eighty plus percent of all of their subsidy dollars are going towards corn soy wheat. And

13:37 Something like point four five percent. Are going towards fruits and vegetables. And then we look around as a country and we go like Why is everyone so sick? Why is everyone eating corn syrup all the time? Gluten allergies are through the roof. Wheat's and everything. Soybean oil is twenty percent of American calories. How is this happening?

13:52 And you just go. Oh. That's why. What other system settings, I guess would be the right term. It could be incentives, could be just something else.

14:01 In addition to the subsidies do you think have most contributed to this problem? I think that our food has also been Weaponized. Against us. If you think about

14:11 I realise I maybe sound like a conspiracy theorist or something here, but I think that If you look at A book. called the Dorito effect or something like that. There's another book called Salt Sugar Fat. Where if you look

14:23 These big food companies, similar to Facebook, that's getting a bunch of blowback and TikTok and others. Have spent hundreds of millions of dollars to try and engineer the perfect palatable thing that you want to keep going back for. And so

14:36 Not only do we have subsidies, which mean that cheap inputs go into everything. Most of those Products are controlled by six to seven big food companies that are just mammoth companies that control almost all of our food supply, especially in package form. But as these big food companies start to

14:51 Swap out. real whole ingredients and whole foods for a processed sort of fake version of that thing. Their profit margins go up. And so all of a sudden they have more money to pour into

15:02 Marketing. More money to pour into R and D cycle, yeah. Yeah, it's a cycle. And more money to figure out How do we make the Dorito? The most addicting possible thing. That one could put in their mouth.

15:12 In this book they talk about how scientists Have engineered it so that You have this carby nice crunch and then you have this little oil taste that leaves you wanting more, but it kind of dissipates on the back of the tongue. And so you're always like, Oh, I'm like so close. They've basically weaponized our evolutionary senses to want more and more and more of these toxic, addictive foodstuffs. And just like

15:34 I don't blame a who get sucked into TikTok or an iPad or whatever. for falling prey to their base evolutionary senses that Bunch of people in

15:44 Silicon Valley I've taken advantage of. I also don't blame people for getting addicted to these hyper processed, hyper palatable Ultra processed foods. One of the reactions that we tend to have to problems like this is engineered

15:57 Just like the problems are engineered like engineered solutions. What do you think of something like Ozempek? I think Ozempek is super concerning. One of the things that generally I would say that we've done Over the last fifty years.

16:10 Is We've seen Heart disease go up. And we've never prescribed more statins than we do today. Heart disease is still going up.

16:16 You see depression going up. We've never prescribed more SSRIs than we do today. Still going up. You basically see all of these issues crop up. And there's a pharmaceutical solution that is proffered.

16:29 In response to this problem. And yet The core metrics on which we measure health and vitality of our population. Those things continue to go up. I think that it was MPIC is

16:38 On the one hand, set to probably be The most profitable drug or a class of drugs, this like class of GLP one agonists. I think it's likely to be one of the most profitable drugs that Pharma has ever invented.

16:51 I think that For two reasons. One, you're seeing a push. Towards Right now the way it works is it's weekly injections.

16:59 that you are on for the rest of your life. And if you get off of it. You gain all of the way back. You're also seeing An incredible push like this one woman good business model. Yeah, it's incredible business model. Exactly. Which is why I think you're starting to see a push to prescribe it to overweight.

17:16 twelve year olds. They'll be on it for literally the rest of their life. We are extremely early in understanding the side effects of something like Osempic. And

17:25 One of the most concerning things to me. is not only do you gain all the way back After you get off it. But In the early studies that we've seen, which is all that we have, we have no longitudinal studies for this massive biological intervention that

17:38 all of a sudden we're suggesting kids as young as twelve get on for literally the rest of their life. But in these early studies. What you're seeing is that Thirty or forty percent.

17:47 of the weight loss. Benefits. Come in the form of muscle mass loss and bone density loss. And now why that is concerning

17:55 If you think about Why is it that A super strong fit person can often out exercise their diet or occasionally can. For at least a period of time.

18:03 In many ways, it's because They have muscles that act as glucose sinks. And so if you're eating a bad diet, your glucose is spiking. those muscles can basically like soak up and absorb that energy.

18:15 I get really concerned that we're gonna see a future where a bunch of people go on a Zempic. And Either they become weaker, their bones become less dense, and that creates a class of health problems on its own. Or they try and get off and they are literally less able.

18:28 To withstand. the glucose impacts of their existing diet. unless able to actually Work through and correct. Any of these things.

18:36 The second thing I'll quickly say is that If you believe, which I do, and I think that the evidence is very strongly in favor of this that Obesity is a symptom. Of metabolic dysfunction.

18:48 Using a drug that you have to take for the rest of your life. to address a symptom of metabolic dysfunction. is not going to do anything. About The massive issues that we see.

18:57 from a a chronic disease standpoint. It's not gonna do anything about inflammation and mental health, infertility, and all these other issues that we see that are related to The toxic food that's in our food system. How do you think about those categories that you just mentioned and the relationship to the core problem.

19:15 Let's assume the conclusion is right that The principal change is things in the environment and things in that we're putting into and onto our bodies. Why is that relating to things like mental health to infertility, to reproduction problems. Like it does seem like all these things

19:32 the data says are up and to the right. I someone told me recently, like I can't remember what the number was, but the percent of Americans on SSRIs They told me I couldn't bel maybe you know it, I could not believe it. Like it was very scary. And there's From what I understand, like pretty much deaden your consciousness.

19:48 Are these things also from the same source problem? Like is this a food problem, is it a toxin problem? Do we have any clue? Mental health is extremely Extremely tightly coupled with

19:58 Physical health. I think that it is basically impossible. Or much, much, much harder. To be in the Really horrendous physical health.

20:05 Well also have the mental health of super healthy like twenty five year old or something. It just doesn't happen. You can look at a couple of stats, male sperm count is down fifty percent over the last fifty years. Really? Yeah. You don't have to do the math to be like, Oh yeah, I can see that has an impact on fertility. Today, twenty six percent of women

20:21 have PCOS, which is the leading cause of infertility. PCOS is polycytic ovarian syndrome. It's you get cysts on your ovaries. And so it's one of the leading causes of infertility and it's now hugely where again practically didn't exist in the seventies. You look at in the past ten years

20:37 The number of miscarriages has gone up. Ten percent. There's even weird things happening around women and teenagers are getting their periods. And hitting puberty like one to two years earlier.

20:46 Historically. And so I think that You just look at all of these. You look at the mental health

20:53 the state of mental health for the average American teenager, there's incredibly strong correlations between diabetes and depression. you look at that, you look at the stats, the direction these things are going. You also look at The fact that we know that the majority of one serotonin is actually produced in the gut. there's a a massive connection between the brain and the gut over something called the vagus nerve.

21:12 And I think that you have to conclude That The health of your body. is your mental health. These are the exact same things.

21:19 My doctor who's I think incredibly thoughtful and progressive in Both his demand for data. to reach certain conclusions, but also like certain realities. Not everything can be jammed into an R C T. He's made me very interested in this gut brain thing.

21:34 How do we know that that's true? I've heard very smart people start to talk about this. What is the best evidence that we have that this actually matters because it seems like people completely disregard the health of their gut.

21:47 If there's is that connection, like that's obviously a bad idea. So how do we know that there is that connection? This is where I would say that I'm not a doctor, I'm not anything like this. We're very early in the study and understanding of the gut and the microbiome.

21:59 I do think that There are a lot of early but suggestive studies around The impact. of gut health on

22:07 Depression and mental health. There's one Lit review that came out. It was like a year or two ago. where effectively they ran a test and they said, Okay, they took

22:14 People with treatment resistant depression, very depressed people. And One group did a talk therapy intervention. And the other did a purely nutritional intervention. just geared towards fixing the diet and fixing and changing like the composition of microbes in one's gut.

22:28 And the people that did just the nutritional intervention. Basically like had much better results from a curing depression standpoint than those that just did talk therapy. We're very early in understanding the gut brain axis and understanding What does a good microbiome look like? This is just

22:45 Super early cutting edge stuff. But if I had to guess, and I'm willing to be wrong on this, this is like a speculative hypothesis. The way that I am thinking about mental health and physical health right now. Is that You can think about physical health as a landscape

22:59 Or a football field or something. Maybe like a seesaw would be a better example. Where if it's tilted certain directions, if you're unhealthy. That is just going to skew. Your ability to feel

23:10 Amazing to have like really strong, robust mental health. Just a little bit. It's going to make your emotions slightly more negative. It's going to make feedback loops that are negative maybe slightly easier to fall into. I think the opposite is true. When you sort of feel good and you feel healthy.

23:24 that kicks off a positive feedback loop in your emotions and your mental health. And I think that we're Very, very early in understanding that sort of thing. But I do think it's one of those factors that's going to be incredibly important. How did you get personally so interested and invested in this?

23:39 Or half Howard and we haven't talked at all about things that you've built, which we're gonna spend plenty of time on. What was the origin point for you? discovering the problem and developing a deep care for the problem. I started this business called Kettle and Fire. When I was twenty six.

23:53 Kettle and Fire Now is the number one bone broth brand in the country for whatever that's worth. And When I started the company I'll be honest, I was like into health. I was reading about it a little bit. But it wasn't this hair on fire thing that I gone super deep on just yet.

24:07 As I was getting more into the bone broth space and starting this company, looking at marketing points, talking to influencers, talking to people in the health and food world, I kept coming back to what I said at the beginning of the show, which is just I think the greatest Mystery. That

24:21 People are not talking about The Peter Thiel esque secret. Is that Fift ago. We had so many fewer people, resources, everything to think about health.

24:31 And people were healthier. And now at a time when Science has progressed. people are talking about health all the time. There's diet tribes everywhere. The average American.

24:39 Is like Overweight. Unhealthy. And has multiple chronic diseases. It's crazy.

24:44 And so As I got more into understanding Oh, we're selling a health product. Let me understand like the needs of my consumer. I just started talking to more and more customers, meeting more and more people. And

24:55 I felt like almost no one was actually looking at this and going. This is wildly fucked up. Sort of everyone is just Okay, maybe with the average outcome of health in the US. Being

25:08 Really bad. I was like obsessed with this question of Why is it? And what don't we know? about what is causing chronic disease, obesity and overweight.

25:17 And seventy three percent of the population today. I just became more and more obsessed with that question. That led me into food. Launching Kettle on Fire, I saw

25:26 More and more how Doing a brand like We basically launch with Super high quality ingredients, organic ingredients, grass fed, grass fetish bones, all these sorts of things. And as I dug more and more into The food in the food system.

25:38 I was just blown away. by all of the trade offs that you're nudged to make. as an up and coming health food brand. And I was blown away by the number of things that In my opinion.

25:48 were messed up in the food system and the structural systematic incentives that nudge people in one direction, which is towards consuming things that are really bad for their health. What's a good example of that that you encountered building Kettle and Fire? Something that you tried to do that you got nudged a different direction.

26:04 One really easy thing. And we talked about corn, soy and wheat being the most subsidized crops in the US. What that means is if you are a farmer or rancher. All of a sudden If you want to have your cows eating grass, something that they've been eating.

26:17 For millions of years. Or if you want to feed them corn, soy and Grains. One of those is Much, much cheaper to do than the other.

26:25 And so you have a huge shift over the last fifty years. Towards farmers feeding their animals. what I would call like ancestrally not appropriate diets. Cows did not Evolve to eat.

26:36 corn soy wheat, they've all to eat grasses and other things like that. So That was one area where When we started out. We could have bought bones from grain fed cattle.

26:45 For basically free. Like we had people just being like, Oh, you're gonna Take the bones. Spoil these. Yeah, like take'em from us. Thank God. Trying to find like grass fed. And trying to find different ranchers that were doing things the right way.

26:56 We had to pay a huge premium to do that. Because we had to compete with these Fake. Cheap. crops because they've been hyper subsidized.

27:03 by all these crop subsidies. What did you learn about the nature of demand for a product like this. Like I have no idea how big the bone broth market is, but I don't know a lot of people that consume bone broth regularly. Why did you pick that? Product.

27:16 What have you learned in general, not just through that company about Consumer Preferences. If you became an investor that could only invest in food companies. What kind of lessons would you bring to bear?

27:27 with that responsibility. learned a couple things. One, that people are actually looking for solutions. to their health issues. One of the reasons that I find bone broth is interesting. is because it's something that

27:40 Fifty years ago. Bone broth was like In every soup. The reason that your Jewish grandma would be like, Oh, you're sick. eat chicken noodle soup is because that is made with real bones, bone broth and like the collagen amino acids that come in that product.

27:53 I think that today I were a food investor. I would look at products that Are solving a real nutritional and health need. And where the existing products have not been innovated on for forty, fifty years.

28:03 Kettle and Fire competes against Campbell's for the most part. Those guys haven't really changed their product for a very long time. And so I think that's kind of an interesting dimension. I think that Probably a lot of big food companies have

28:15 underestimated the power of these food tribes and sort of food movements, whether that's paleo, whole thirty, keto, Any number of these things. I think that tying yourself to an early trend. And saying, Okay. This diet tribe has something

28:29 That is Important saying something real, there's this return to the way that our food system used to be through this product, I think is important. And then the last thing I think too is It is important to go where

28:40 Your competition. Can't go. One of the unfortunate realities is I don't think that investing in food companies is a great thing. Like I've built three consumer product brands and I've made three food or consumer investments in my entire career while making

28:54 forty plus others in other spaces. And I think the reason is that The deck is stacked against small brands that are trying to build a better food system or build the right thing. because you are paying more for inputs

29:06 you have fewer marketing dollars, you're generally a lower margin business because you're not using all of these highly processed additives and the like. And you're competing for shelf space. With some of the biggest consumer companies out there that can just bleed you to death.

29:19 And so I think the only opportunities that are interesting or worth going after. If you're building or investing in a new health food brand. Is

29:28 The sorts of opportunities where The brand or company. can move in a direction that strategically a big food company couldn't move. One of the things that we did at Kettle and Fire is we were the first bone broth company to get certified glyphosate free. What is glyphosate? Glyphosate is like round up.

29:44 hundreds of millions of pounds that are sprayed on American crops every year. It's basically on gonna be banned in Europe by next year. The US has no such bands. So Kettle and Fire became the first bone broth brand that was doing glyphosate free. Certified glyphosate free.

29:58 Glyphosate is in water, it's straight on every crop. It's like fed to these animals everywhere. And Because of how prevalent this stuff is. A big food company to compete with us. If that is a dimension consumers care about is like, Oh, I don't want glyphosate in my body.

30:12 Then A big food company would have to completely change their supply chain. The way they manufacture, the way they source, the way they like buy their inputs to try and match us from a glyphosate free standpoint. And even then

30:25 You're Campbell's you're doing. I don't know how much in revenue, like eight billion dollars a year or something. It's like are we really gonna go after this tiny portion of consumers that care about being glyphosate free and rejigger our entire supply chain to do so? Like of course not. It's bad capital allocation if they were to do that. However, I think those are the areas and

30:44 In my opinion, the only areas. That small upstart health and wellness food brands. can actually out compete the big guys. Why has nobody built

30:53 some sort of supply chain service or like sourcing service. that the whole goal is to like create scale economies to then sell to entrepreneurs who want to build a consumer brand because It seems like

31:06 a bigger to entry here. You just said it yourself. your position to pick all the best companies here. You've only done three. It just seems like the most talented people get attracted to places where their ambition can be most fulfilled and they have the most leverage. And basically what you're saying is the business model inherently is bad.

31:23 And so talent doesn't get attracted to the space. And part of that is the margin of Problem. And part of that is the cost of goods, and there's no scale player. So why isn't someone build the scale player? Because I think it's incredibly expensive and it takes forever.

31:38 One of the challenges about this is These are not technology businesses. If I said right now I wanna build the largest supply chain of regeneratively grown beef

31:48 In the US. Or I wanted to have a certified glyphosate free supply chain. That was also organic. I would have to acquire the supply. you would have to turn over every single crop input that you had for at least three years for something to get certified organic. You would go through multiple years of having your yields be lower.

32:06 while your fields transitioned from relying on chemically intensive monocropping sort of agriculture to a more regenerative approach. Like the yields catch up, but it takes a couple years. You would basically have to wean an entire herd of animals off of corn soy wheat that you've probably been feeding them, acquire a bunch more land to put them on grasslands, feed them that way for two to three years so that they can be certified grass fed, grass finished. And only then.

32:31 Think about the amount of capital that you have to outlay to make that happen. And only then Do you have the raw materials ready to go? We're not even talking about One of the big issues in the sort of meat supply chain at least.

32:43 Is that You get such incredible economies of scale when you're processing meat at a very, very high level. As opposed to a lone one. And so Small Bison.

32:52 Beef, cattle ranchers and the like. are often paying like two to three times. What a massive meat conglomerate is paying to get each one of their cattle processed. Oftentimes they're not even able to make the same like grass fed claims or they're taking animals that have been

33:07 very humanely raised just on grass and pasture and sending them into a processing with a bunch of other people that are just grain fed and all of a sudden they can't make the claim that this is like grass fed grass finished animal. So I would love to see it happen. I think the truth is that It would be such an intensive capital outlay to get something like this going. And at the end of the road.

33:28 You have a slightly Better raw materials supply chain resource. If you look at how a lot of these businesses trade. The biggest.

33:37 meat processor sort of trade at, it's like not great. If you're a hyper ambitious person This is not a good business in general to go into. I mean that's a huge problem. Market capital is a system.

33:50 thrives when there's a match between the profit motive and the outcomes, I guess, that you achieve for people. And it sounds like what you've described so far is this is Broken. Maybe you could argue that like What's broken is the regulatory side. And if we didn't have the subsidies and we didn't have these non market

34:08 Forces. in there like everything would be fine. I guess what are you doing? What other companies have you built? Maybe tell us a little bit about each of the companies. I'll address something you said first and then I'll talk about the company. So

34:19 One of the things that I think Is true. is there is a massive, massive negative externality that's created here by big food companies that they don't pay for. Kind of similar to how companies in the sixties and seventies were polluting rivers. They weren't paying for it.

34:34 then we introduced regulation that made them pay for sort of the negative externalities that they created from a pollution standpoint and like the pollution problem got better. I basically think that big food companies, Coca Cola and the like are creating Huge. Hugely negative health externalities.

34:49 that are not priced into their products, that they're not getting fined for, that they're not Paying the cost at all. Of feeding people stuff that is making them sick. The ability for a coke

34:59 to be cheaper than water in many parts of the US is purely because Coke externalizes the negative health outcomes of that Coca-Cola onto the US taxpayer via the healthcare system. And I think that's super fucked up. What I'm doing now. So I started

35:14 These food companies started Cettle and Fire, which is a bone broth company. Perfect keto, which is food and supplements for people on a keto diet, and then a non alcoholic wine brand called Shirley. And All of these were in the realm of how do we make people Healthier.

35:27 From a food and sort of consumer product standpoint. What I'm working on now. is trying to Level up. and look at the system a little more holistically and try and fix the incentives that are endemic in the system.

35:39 and fix these incentives that are making everyone fat sick. Infertile, depressed, unhappy, all these things. What we're doing now. Is basically started a company called TrueMed.

35:49 At True Med, we sort of believe that food is medicine. lifestyle is medicine, sleep is medicine, exercise medicine, like all of these things. There's this idea of if exercise was a pill, everyone would get prescribed it. What we're doing is we're trying to create A financial product or financial tool.

36:04 That allows people to spend tax free HSA and FSA funds on the things that keep them healthy, things that treat or alleviate specific disease conditions, which almost everyone has right now. Whether that's metabolic dysfunction, not sleeping properly, eating a bad diet, lacking certain nutrients, not getting exercise, whatever. And so As a consumer today, walking the aisles of a grocery store.

36:25 When you go to buy Kettle and Firebone Broth versus an off the shelf kind of store brand. you're gonna pay a premium to buy kettle and fire. It's hard and it's expensive to be healthy. And so we started TrueMed to make it

36:36 slightly easier, slightly more affordable. for the average person to invest in their health. by using tax free HSA and FSA funds to Buy things like bone broth, healthy food product supplements, eight sleep. Pelleton.

36:49 all of these sorts of things. And so that's what I'm working on now. Who decides that An each sleep mattress you can buy tax free and whatever the other mattress companies are called. Is not. You can sleep on that other thing too. Like how come I can't fit for that tax free, like

37:03 Where do you encounter regulators and People who have to set rules that you have to live within. So the HSA and FSA are IRS created accounts. They're tax advantage accounts that the IRS regulates. What the IRS says is that at the discretion of a medical practitioner.

37:18 You answer a couple of questions or tell us. What's your family history? What are the risk factors? How are you feeling? Whatever it is. And A medical practitioner can look at how you answer those questions, your risk factors, your family history of disease, all these sorts of things, and decide to write what's called a letter of medical necessity that enables you to fully compliantly spend your HSA FSA tax free dollars.

37:39 On A food. supplement, fitness, wellness, sleep product that is going to help treat or alleviate one of the conditions that you struggle with. So I'm going to give you a sense, The standard of care today Is

37:51 If you walk into a doctor's office and say I have a family history of high cholesterol or even just I'm worried about my cholesterol. They don't have to take any tests. They don't have to do any measurement. They can just prescribe you a statin right there. We basically think If you look at thousands and thousands of studies

38:05 That point towards lifestyle interventions, sleeping better, supplementing with X. eating a whole foods diet, cutting out processed food, exercising for a hundred fifty minutes a week. All of these things work better. To treat

38:17 the chronic conditions that are crippling Americans than almost any pharmaceutical that is on the market today. And therefore, people should be able to use their tax free HSA and FSA funds on this class of lifestyle treatments. But you're not relying on a change. This is already true. This is already true. Yeah, yeah. So what it takes right now is It sounds like what you're facilitating is the ease of payment. Yeah, we're facilitating the ease of payment.

38:40 The ability for a medical practitioner. to write what's called a letter of medical necessity. Which may sound trivial, it's not. Eighty percent of medical schools in the country have zero nutrition classes, even though nutrition is the thing underlying eight of the ten most common killers of Americans today.

38:56 And so we've sort of assembled a team and a group of functional medicine and other practitioners that understand Food is medicine, lifestyle is medicine. and can look at and decide to issue A letter of medical necessity.

39:09 that allows some of our customers to buy Food. supplements, exercise equipment like using tax free HSA and FSA funds. So how do you go to market with this? What is the chain of people you need to sort of convince of X, Y, and Z, and what do you supply each of them with? The way that we're going to market is

39:25 very naturally for me as someone who started a couple of consumer health brands. We're basically partnering with brands that are selling health and wellness products and giving them the ability to offer their customers a way to use HSA FSA funds to buy whatever they're selling. Just like you'd use like PayPal or something. Exactly. Yeah, like a firm or Klarna, PayPal. Right now if you go on Kettle and Fire dot com.

39:44 You'll see the ability to Check out using TrueMed. And basically use your HSA and FSA funds to pay for bone broth, which is Highly nutritious, high in protein, has a bunch of amino acids that the average person needs, assuming you qualify for a letter of medical necessity. So it's very much like a firm. Like you go to the website.

40:01 Answer a couple questions about Your health. Issues, history, concerns, family history and the like. Then you basically complete the checkout. And you'll receive or not a letter of medical necessity.

40:11 via email in the next like couple of days, and TrueMed basically helps you submit that receipt and that purchase for reimbursement to your HSA or FSA administrator. The lowest friction version of this would be I'm a consumer and I have an HSA account. Come back to that in a second. by default. Like when I'm buying something healthy, I just

40:28 Do it that way. brands are your partners, obviously they're incentivized to have Low friction ways for customers to pay them more. That part's probably pretty easy. What about the HSA side? And the FSA side. How old are those things? How big are they? How many people have them? What direction are they heading? Like obviously that's a key part of this.

40:45 Tens of millions of Americans have HSA or FSA accounts. There's about$150 billion in HSA and FSA accounts, even though, in my opinion, Ninety one percent of HSA accounts of the hundred billion that are in there are just Sitting in cash, basically unutilized. Things are Hugely underutilized.

41:01 Accounts. And so there's tens of millions of people using hundred fifty billion dollars in these accounts. And One of the aspects that I really like about HSA and FSA. Is that

41:11 It is one of the only places, possibly the only place, in the entire Healthcare system. Where The consumer who is receiving a service.

41:21 whether that's healthcare or merchants we partnered with. where they're actually receiving a service that they pay for. Money comes out of their HSA FSA account. they receive the service directly and there's no weird network of like payers and intermediaries. All of this sort of

41:34 mess that has created the incredible rise in healthcare costs that we've seen over the last fifty years. And so I'm really excited about the potential for HSA and FSA accounts in general. The IRS is starting next year. going to be increasing the size of these HSA and FSA accounts.

41:51 By about thirty percent. Because they recognize too. That Paying for healthcare has become Obscenely expensive.

41:57 And The IRS says we're trying to make it easy so that people can use these tax free dollars to and buy and keep their health. Before they lose it. One thing w I forgot to ask about earlier is water. Something you and I have talked about offline quite a bit. Something we all take for granted and

42:12 Consume every day. What do you think is interesting about the world of water? Maybe explain the history of Water to us. Whatever you think is relevant.

42:20 This is not something I had ever really thought about and now have thought about it a decent amount as a result of our conversations. Maybe give people a window into that. One of the things that I think is highly concerning and that if I had to place a bet I would place on a health trend that is gonna be increasingly important over the next decade.

42:37 I would place a bet on the fact that Environmental toxins, like endocrine disrupting chemicals. phthalates a class of chemicals called P fast. Polyphoral alcohol substances.

42:48 effectively we are going to find have huge, huge, huge linkages and are causal to cancer, infertility, neurological conditions, and a bunch of other things that We don't like. And so unfortunately These compounds. You'll see them in the media referred to as forever chemicals. You just can't get rid of them, basically.

43:04 Quick side note. one of the concerning data points to me is if you look at Places where these compounds accumulate in the body. Prostate, testes, breasts, stuff like that. They're also the body parts that tend to have the highest rates of cancer over the last twenty to thirty years.

43:19 And so I think that we are Just on the precipice of understanding. How bad these things are for you.

43:25 And they're everywhere. They're in like almost everything that you put on your skin. Where they're in all of your water. Ninety three percent of

43:34 streams. It's in their drinking water. It's in the water that you're showering with. using on a daily basis. And The concerning thing is we talked a little bit about

43:43 the differences between Europe and the US. earlier from a health standpoint. The concerning thing to me is that These substances, P fast. Glyphosate is another one.

43:53 Really like tolerated in the US in a way that they're not in Europe. And I think that is going to drive A huge, huge number of different health outcomes over the next decade. To give you a sense

44:04 There's twenty eight countries in the world that have ban the use of glyphosate entirely. And the EU has limited the exposure. to glyphosate to very minuscule amounts and is banning. Glad to say in the next couple of years. The acceptable levels of glyphosate in the water in the US

44:18 Yes. How much more tolerant the US is of glyphosate in the water. From an order of magnitude standpoint. Fifty times. Seven thousand times. So seven thousand times.

44:28 So The U S basically says that There's a seven hundred parts per billion permitted is the permitted level for glyphosate in US tap water. I'm just gonna like quickly run through some studies. Different studies run by the Detox Project, which is an incredible group that's doing

44:43 glyphosate advocacy work. The Detox Project found that Point one part per billion. amounts of glyphosate in the water. altered the gene function and created severe organ damage in rats. Point one part per billion.

44:54 is also the permitted level for glyphosate in European tap water. Ten parts per billion. created toxic effects on the livers of fish. And the stuff is in like ninety one percent of streams. It's almost certainly in almost all the seafood that we eat. And then seven hundred parts per billion. is the permitted level for glyphosate that is in

45:10 US tap water. Where the government goes, Yep, that's fine. Beyond that. There was a recent study That showed that

45:17 One hundred percent of cereals in the center aisle of a grocery store. Tested for above Tap water levels of glyphosate. One hundred percent of cereals. have massive amounts of glyphosate.

45:29 round the order of one thousand one hundred twenty five were found in almost every sample of cheerios that was Done for this study. So We are just Loading ourselves with these toxins and chemicals that

45:40 We Don't understand. the long term impacts of them, but our early studies point towards really not being good. These things certainly bioaccumulate. Meaning it's really hard for the body to get rid of them once they're in.

45:51 And Even scary to me is we don't understand any interaction effects that are going on. Between these chemicals. you take a drug if you have a pharmaceutical You take a drug and they're like oh

46:02 Are you also on any of these drugs because it causes side effects when mixed with X, Y, or Z? We're basically running that experiment of like, what do all of these toxins and chemicals and things do when interacting with one another? What sort of negative health outcomes do they create? when working in conjunction or compounding or anything like that. How hard is it On a scale of let's say one to ten.

46:23 In your opinion. I know you've tried. To live A life. Where you mostly avoid this stuff.

46:30 Can actually say one quick thing on water. this stuff is in everyone's waters. There are very few sorts of filters that make good use of this. And I think that if someone were to create a PFAS free or like Microplastic free water brand. They would. Absolutely.

46:45 How hard is this stuff to avoid? Unfortunately, it's incredibly. There's no regulatory bodies that really in the US at least, take a hard look at this stuff.

46:54 In Europe, their approach to novel chemicals is basically like Hey, we are going to assume that these novel compounds that you're introducing into our population. are potentially concerning until proven otherwise. So guilty until proven as exactly. Yeah. Or the opposite. Yeah, exactly. And that's how we regulate.

47:12 We do a bunch of stuff where it's like, Hey, you have to show that this thing is safe before we can use it on our entire population. The US takes the opposite approach. Not only do we say. chemical is mostly good, you can use it in small quantities or whatever until we find something is unsafe. But additionally

47:28 The way that the EPA and the FDA rely on food and cosmetic and other manufacturers to do this is via self reported safety studies. And so if you're a company, a cosmetics company, a water company, whatever it is, packaging company. It's basically on you to run a quick dirty thing. To show oh this is safe.

47:47 And then you can put it. Pretty much in as many products as you want. And so as a result These chemicals are fucking everywhere. This is why this stuff is so hard to avoid.

47:57 They're in water. They're probably on The clothing of almost every brand of stuff that you wear, especially a lot of the athleisure stuff. Unfortunately. They're in almost every like soap.

48:07 Shampoo. Food packaging. plastic container that you're using, lining of uh cups that you're drinking coffee out of. There was a study that showed Something like

48:17 Ten trillion. microplastic particles were released when you pour like hot coffee or hot tea into one of those paper cups that are lined with these different plastic liners. So they're really everywhere. And it's incredibly to avoid these things. I'm gonna make up three levels, okay. Level one is

48:32 ambivalence, you just live with what the world gives you. That's probably what most people do. Level two is like I care and When I have the capacity to make a choice in one direction that's good, I do it. Like so like if I'm at Whole Foods, I buy organic.

48:46 I'm still just going to Whole Foods. Or wherever, Shop Right, doesn't matter. And then level three is like really strict about what goes in and on in your body. What are the best things to do?

48:56 to get towards level three. That seems to be the hardest switch, going from two to three. is Really difficult. most people don't have the time or energy to like do the research you've done.

49:07 Is there an eighty twenty rule, like you do these twenty percent of things and you get eighty percent of the benefit? Yeah, definitely. I mean I also don't want to like overstate the problem. I think that this stuff is really important. I think it's going to become increasingly important and known over the next decade. But The body is also relatively resilient. This is not the type of thing dropping dead. Yeah, totally. I mean, you can look around and you go like, Okay, these things have been in our food and water and whatnot.

49:29 And like, yeah, health outcomes are really bad. There's also a bunch of people that Are seemingly healthy and fine ish that Are probably getting massive amounts of these toxins exposed to them at all times. It's not cyanide. Yeah, right, exactly, exactly.

49:41 The key things I think to do. Or Look at products that you're using on a daily basis. Shampoo, hand soaps, lotions, face cream, stuff like this. And try and make sure that there's no like P FAS or other sorts of things. Just use

49:53 clean ingredient, skincare, shampoo, soaps, things like that. I would also look at The Pots pan stuff that you're cooking with in your house. Make sure that you're using non toxic versions, a lot of ceramic or stainless steel are pretty good options. And then spend a lot of time looking at a water filtration, especially if you're in a

50:10 high toxin residue area. You can look this is publicly available information. You just look at like the EPAs. database and you can see like what's the score, what are some of the things that are present in high concentrations in your water. And if you use Reverse osmosis.

50:25 with mineralization or remineralization. System. You're probably gonna get almost all of these things sort of out of your water. You can set up a whole house filtration system if you want to like get really crazy. But I think basically you look at

50:37 How am I getting exposed to this stuff? And you take steps to remove it. And then on the other side, you look at how do I get this stuff out of my body? And that's generally Sana Sweating. drinking a lot of water that's from a clean source that helps pass and get some of that stuff out. Maybe supplementation.

50:51 Stuff like that. How do you Stepping a little bit aside from the pure play health stuff. How would you describe the way in which you search for and decide on business opportunities.

51:03 What is your like model for navigating You're an ambitious guy. You've started a bunch of companies. Probably we'll keep doing that. What is the sort of method that you've developed for searching and deciding? on a given opportunity.

51:16 I definitely have a process where I test ideas. I wrote a blog post about how I validated my idea for Kettle and Fire. I basically Put up a landing page. Said we were selling bone broth. It was at an incrazy price point where I was like

51:29 twenty dollars a box, like we can definitely make money doing that. And then I bought a bunch of Google ads. About a thousand dollars worth. Just to see what are our cost per click, what's our cost per acquisition? And when people land on this fake website selling a fake product.

51:43 Do they click buy? And basically the numbers that I was testing On all of that. We had a bunch of people place orders, after which I emailed literally all of them and said, Hey I'm the founder. I'm working on this.

51:54 What are some characteristics of a bone broth that you're looking for? Like what are the attributes that are important to you? And by the way. This is not gonna be ready for six months. Which if you want to wait. I'll give you like Fifty percent off your order?

52:05 If you don't, here's like a full refund, fine, thanks for the conversation and like the time. But I basically just wanted to validate. Is this something that people care about? And then will they actually take out their wallets to pay me? If I were to spend my life energy building this product. And

52:19 that's kind of the approach that I've done from a validation standpoint for all of the brands that I've started. I think a lot about this idea of a Kelian esque secret. And for me When I was working on just had the idea for Kettle and Fire.

52:33 One of the things I like to reflect on is is there a reason that I would have this idea or I would think this is a good idea where other people would not? because they're not as in it. They're not as passionate about it. They don't know as many people. My friend and I have this concept of living in edge city, which is basically like if you're on the edge of a given area like domain like health or nutrition or exercise or longevity or whatever. It stands to reason that

52:56 If you live in Edge City. you are probably gonna get experience to stuff that other people around you are gonna be interested in five, ten. Whatever years from now. And so

53:07 When I was living in San Francisco. I spent My time, like Reading health blogs on the internet.

53:14 I was going to CrossFit at San Francisco CrossFit. I was talking to other athletes and stuff there about what they're doing from a nutrition standpoint, how are they doing recovery? They were talking about gut health in like twenty fourteen and stuff. And it was there at San Francisco CrossFit that one of the people told me about how he was incorporating bone broth into his diet. And so That was a big criteria for me. Is like twenty fourteen, San Francisco.

53:37 CrossFit box is like Among the top point oh oh one percent of most forward thinking people in the health arena in around twenty fourteen, twenty fifteen. For me, that was good validation or a factor I think about. of is it likely that I am one of the only people in the world That

53:54 is exposed to this problem and thinks this might be an interesting idea or solution to solve it. What are some markers of Edge City? Really interesting concept. probably exists for everyone. Like probably everyone could say like

54:06 Do I live there or not? Every curious person. How do I know like what my equivalent of CrossFit twenty fourteen San Francisco bone broth guy is. How would you

54:15 advise that people find their way to their edge city. One of the best markers is basically If your friends, people you know are asking you a lot of questions about a given topic. And when you sort of return the favor, Oh, what do you think about

54:28 For you it might be investing or something. When you ask the average person about investing You're probably bored. They just haven't thought as deeply about it. I think that that is a really good way to figure out what are the areas in which you're living on Edge City.

54:39 Where you quickly are in conversations with people where they're asking you a lot of questions and things about things you know and believe and think about in a given domain. But where You find very, very few people.

54:52 In your life. That you are like, wow, that was a really interesting insight in this domain that I care about. The other thing I think about Is

55:00 I often find that It's a good signal. that you are living on the edge of something. When you meet someone who is hyper successful or really interesting or somewhat famous, and you're not talking about the thing that they're famous for, but you end up talking about a thing that you've just gone super deep on.

55:16 If you were to talk to a movie star or someone, I would imagine They could ask you questions about investing and you guys would connect and you'd be like the high status person in that conversation. And I think that's very true. Where does your status outstrip.

55:28 what normal social rank or social status. Which friend of yours was this that You came up with this idea with? Came up with it with my friend Dylan Bynan. Who started the first

55:38 ketamine assisted therapy company in the country called Mindblow. Talk about Edge City. Yeah, exactly. What do you make of that whole world? I think psychedelic therapy is one of the most Important. and profound potential treatment that we have.

55:52 to address. a bunch of issues that we have in the US. We truly have a mental health crisis in the US. And if you look at The efficacy

56:00 uh psychedelic assisted therapy for PTSD Treatment resist in depression. Anxiety. addiction.

56:07 Substance abuse disorders and the like. The evidence is incredibly clear. that these sorts of substances and treatments Or Extremely effective. Better than SSRs, better than almost anything that we have to offer.

56:19 Someone today who struggles with mental health. I think that they are going to over the next decade. become an increasingly large part of the toolkit that we use to treat people that struggle with these different Mental health and other disorders. If you think about it.

56:33 If you walk into a doctor And you have a broken leg. Basically they're like, Oh yeah, yeah, we know what to do with this. We'll look at the leg, we'll take some x rays, we'll give you a cast, like there's a treatment plan that In ninety nine point whatever percent of cases.

56:45 Results in Patrick has a leg that is like pull and working mostly almost as well as it was before. If you look at The average person that is depressed and walks into a therapist or has a mental health issue. The medical world does not look like that at all.

56:59 SSRIs sort of a corn flip if they work or not. Talk therapy statistically is like also a coin flip, doesn't really work for most people. We don't have anything even resembling. A model of what works well to take someone from A place of

57:13 depression and unhappiness and anxiety and whatever to Oh, this human is like fully functioning and in a really good place again. I think that psychedelics right now Are the best tool. and the most powerful tool that we have.

57:25 That somewhat resembles the Acute medical sort of treatment analogue. Uh This person has an issue, we're going to run this treatment or intervention on them. And it will almost with a high degree of certainty result in a better outcome for this person.

57:39 What are the personality traits that you found of people that feel most at home in Edge City? Other than curiosity. I think that it is A

57:48 Extreme openness to being wrong. Literally I would say one hundred percent of the things that I've said on this podcast. I am open to changing my mind on in the next ten years. There's a chance that it is true. that ultra processed food and

58:01 vegetable oils and all these sorts of things. Are actually like fine. Fine. And that it's like some crazy environmental chemical that is just Reaking havoc on the average American.

58:11 Oh, glyphosate and it just happens to be more in like corn, soy, and wheat, which means that it's in more processed foods. And so when you look and you go processed foods, vegetable oils probably bad, it was actually just like no glyphosate's in every processed food, and it's just destroying people. I would say there's a chance that that is true. Do I think it is probable? No, but I think there's a chance.

58:30 And so I think that there's a Openness to new ideas. Two. And a Curiosity and sort of like a

58:37 Low. Ego willingness to be wrong sort of Search. For the truth and Willingness to like

58:44 Talk to people. have my ideas change, push them on their ideas that It's very fun and I think those are like the main characteristics of people that tend to live on Edge City and that are people that I tend to really enjoy being around.

58:56 Who is the most out there friend of yours? And what is his or her Main idea. I have a friend Mike Johnson. Who is probably my most out there friend. Who is

59:08 The sweetest. deepest thinker I have ever met in my entire life. across multiple domains and it's not even close. He started a consciousness nonprofit. and a research institute.

59:18 That As he said Is trying to do to consciousness. what like chemistry did to alchemy. Alchemy, we basically were like

59:27 throwing shit at the wall, oh, I think this works, I think this doesn't. There were no underlying principles that made alchemy In the words of Carl Popper falsifiable. predictive science or way of thinking. Chemistry change that.

59:39 Right now. Consciousness and the experience of qualia, the experience of being conscious. has a very similar thing. It's very similar to the mental health thing. Where We don't understand the underlying

59:50 what's going on from a mental health standpoint. And because we don't understand it. We basically throw treatments at the wall that are not predictively working. We have a really good model of How bones break. how they regrow, how tissues heal around that. And we can use that knowledge to actually fix.

1:00:07 leg breaks and stuff like that in a very like certain predictive way that's extremely effective. The same does not exist of consciousness, the same does not exist to mental health, the same does not exist of any of these things. And so Has been working on a theory of consciousness that is incredibly dense and very interesting.

1:00:24 That is unlike. anyone I've ever come across. It brings to mind a question about talent. We were talking a little bit before we hit record about the value of the teal fellowship. Just as an example of

1:00:35 Incredibly high signal. Of the chance of being a really interesting person. There's studies out there that if you just invest in the index of Teal Fellows mostly because of Figma and Ethereum, still that's the whole game. You gotta hit like the outside winners. That's right. You'd have a sick incredible outcome. But there's tons more from that group as well. What have you learned about

1:00:56 talent networks, clusters talent, finding talent. Any strategies there'cause you definitely based on mutual people we know traffic in out there talented people. A large part of this is kind of what we were talking about of

1:01:08 Oftentimes talent and the most ambitious talented people Cluster in Edge City. They sort of end up at the frontier of ideas that are interesting to them. Because

1:01:18 They've been bored by everything else. If someone else has already mastered a domain or Google has already figured out search or whatever. Is a super ambitious person gonna go like

1:01:29 operate in a domain that Humans already broadly understand? No. They get attracted to areas. That are illegible, that are untractable, that are hard.

1:01:38 That reward. Original thinking. where an existing player has not already exploited the search space or the trade off space of A new idea. And

1:01:46 As more and more people cluster in these domains. Turns out that these weird, curious people like Being around one another. And like spending time in these sorts of domains. And so

1:01:56 I would say that I don't have a talent source well, I have one talent sourcing strategy, which I'll talk about in a sec, but For the most part Mike Johnson is a good example. I was not sourcing him as a talented person.

1:02:09 I read his blog. Which was on The symmetry theory of valence, which is a new theory of consciousness that Mike Johnson is writing about. That's like a 40 minute read on this blog, opentheory.net. I don't know how I found, but it's certainly not in the New York Times. And

1:02:23 I emailed him after reading that post. But you said this. Well, what about this? My model of the world is different here. And When we met up for the first time, he was like I've gotten like two emails all year from this thing that I've put thirty hours of writing and thinking time into

1:02:36 Well, writing time, probably way more from a thinking state. Thousands of hours of thinking. Thousands, totally. I think that people don't appreciate how the extent to which If you're a curious person Who is trying to understand what's going on in the world in a domain that's not fully mapped yet.

1:02:51 If you just go in and start asking questions of these people, everyone's like, oh, thank God. Like I would love to talk to more people about this weird out there idea that almost no one understands and that you're putting in the effort to actually understand. And I often find That so many times you will find someone who is an interesting thinker in one domain.

1:03:09 who is open and like thinking at the edge of X space, who also has really interesting ideas in like six other domains. And I think that is fascinating. And so if you just find the areas or the frontiers of like a couple things that you're interested in or find Exciting and plausible.

1:03:26 Or that you're curious about. It's amazing the extent to which these people will also have Heterodox ideas. In other domains. Back to health.

1:03:34 What have been things, ideas or theories you've encountered recently, you know, last couple of years. that you think are maybe crazy and out there. But at the least a little bit intriguing to you. There's a couple. I would say that this glyphosate theory

1:03:48 Is a pretty interesting one. There's people out there that Zach Bush is one of these people that talks about how Glyphosate. He thinks. pulls apart and creates a lot of opportunity for gut.

1:03:58 Dysfunction. And gut dysfunction is the underlying driver of a lot of these chronic inflammation illness. a lot of food allergies, things like these that I think are pretty interesting. There is something called terrain theory that I found out about a couple of weeks ago over lunch where someone was saying that they don't believe in the germ theory of disease. They basically think that

1:04:16 The terrain theory says It was apparently. A competing theory. by another Frenchman at the time of like Pastor who came up with germ theory. That

1:04:25 There are small particles in your cells, basically. That create The terrain. to which bacteria and viruses are attracted. And that terrain

1:04:34 It's sort of the thing that causes disease, not bacteria and viruses themselves. Meaning there's bacteria and viruses no matter what, we can't avoid that. Exactly. It's the susceptibility It's basically like if you were to break your ankle and go to the doctor's office, germ theory says We think that this break is what's causing the swelling and is the thing that we need to fix. Whereas terrain theory would say we think the swelling is what caused the break and we need to address the swelling.

1:04:58 they kind of look at the environment and try to say that is what's causing the issue. versus the actual Thing. Seems crazy. Which I think seems crazy, but the other thing I try and keep an open mind about is it may be that that specific instantiation of the way that Beckham.

1:05:13 the guy who came up with terrain theory, it may be that his instantiation, knowing what he knew in whatever it was, like eighteen something or the early nineteen hundreds. What he knew about Disease and whatnot wasn't accurate then. But he may be on to something. It may be true that a more and it probably is true that a more inflamed person

1:05:30 Is also more susceptible to disease. Is that a bacterial thing, or is does that have to do with the terrain of the organisms and the cells and all these sorts of things? I don't know. And I'm open to Being wrong on that. Like I'm pretty sure that Terrain theory as it's

1:05:43 Presented today is wrong. But I'm also open to changing that. We haven't talked at all about the childhood nutrition aspect of all of this. Everyone cares about their kids. But as someone who has kids.

1:05:55 The work burden. Uh Making sure your kids eat the right way, let's say. is actually that much harder than even it is for yourself. Most people don't do it for themselves.

1:06:05 And so it's really frickin' hard. I'm in the some top percentile by like knowing and caring about this stuff. My kids still eat the occasional pop tart and And like all the things you mentioned earlier. It's just frickin' hard.

1:06:17 So what do we know about that world and the impact that Not caring or not acting is having. What can we do to change that? First off I'd say is as far as kids' nutrition, one of the saddest

1:06:27 statistics in the US, I think. Is the fact that Today. If you rely on school lunches as a main source of nutrition and calories That is a risk factor for childhood diabetes.

1:06:39 The same as being born to a parent with diabetes. Or any of these things. Crazy. What that means is that our school lunches And the school lunch program that feeds tens of millions of kids in the country is literally poison.

1:06:51 I think that That is wildly concerning to me. If you think about so much of a human's cognitive development happens before the age of five. So much of one's immune system development and gut function and all these sorts of things happen.

1:07:06 before the age of five or six. If you look at studies that Show that Parents. Who eat a bunch of junk food. They're children. are more addicted and more likely to get addicted to junk food. They have a higher tolerance for it. They need to eat or feel a craving to eat more of it than kids that were raised off of junk food. I think that

1:07:24 Then you combine that with looking at How many children are now diabetic, pre diabetic, have fatty liver disease, things like this that Twenty five percent of kids have pre diabetes, forty five percent of kids are obese or overweight. We are

1:07:37 Stacking the deck against our kids. By feeding them. Toxic food that is making them sick. And we're doing that at a societal level. to the almost majority of children that are growing up in the US today.

1:07:48 And I think that is incredibly concerning. Is there anything else about the health landscape that we haven't talked about that you think is consequential, that has your attention, your curiosity? talked about obviously a ton of different areas that things have gone wrong and could be improved. Anything we haven't talked about? The core thing that I would say. Every player in the healthcare and food system today.

1:08:10 makes more money. When a consumer is sick. If you think about structurally. How much money is the healthcare system making on

1:08:19 you as a healthy guy probably rarely interacts with the system, just pays your insurance premiums and moves on. versus someone that's on seventeen medications, kept alive, goes in for a couple of surgeries a year and the like. the healthcare system just makes way more money treating people that are chronically ill than they do healthy people. This is why I think you basically see Almost no money, like less than three percent, is spent on prevention.

1:08:39 Ninety seven percent of all healthcare dollars are spent to treat someone after they're actually sick. And that Leads to People treating symptoms. Not treating underlying conditions.

1:08:49 And Millions of people getting Treatment after treatment. pharmaceutical prescription after pharmaceutical prescription and the whole country gets sicker at the same time. I

1:08:58 Basically think. Yeah. This health issue. If I had to choose.

1:09:02 This is the most likely issue to end the American experiment or like cause real structural problems where the US becomes non competitive. I'm sick. We cannot have a healthy society made up of sick people that can't function our

1:09:17 Overweight. mentally ill on eighteen prescriptions, all that sorts of thing. I think that this is truly like a crisis that the US should be gear up to solve and take it seriously as it has

1:09:29 defense over the last fifty years or any number of things that the US has kind of approached head on and tried to fix. The last thing I'll say on that. Is that I think that this is truly like a national issue. Until like the nineteen seventies, health was basically

1:09:43 You were born with health. It was like your God given right. And that is no longer true. So many kids are being born without this thing that our grandparents, great grandparents, all these people just took for granted. I think that it is up to us to properly

1:09:56 Understand and account for. the externalities that are being created by our toxic food system. And for the US or some organization.

1:10:05 TrueMet is a small part of this. But I think it's vitally important. To the success of our country. that we have a food system. that makes people healthier and not sicker when they engage with it.

1:10:15 And that is not what's happening today. You mentioned earlier that Yeah. only been able to invest in three of these companies that Only chosen to invest. Only chosen to invest. You've seen a lot.

1:10:25 But that also like bad business, hard business, fewer ambitious people are drawn to it. You and I have also talked a lot about different models for Capital allocation to create new businesses, incubators, studios, investment firms, serial entrepreneurship. There's lots of different ways to attack this problem.

1:10:43 Based on all those conversations that you've had. And you probably met even more people than I have in that area. What conclusions have you reached about the different models for capital formation and allocation? To start create new businesses in like a systematic way.

1:10:57 I actually think that the question of like capital allocation of formation. around starting new businesses. Looks a lot like it. has for the last several years around investing in people and investing in great founders. I basically think that

1:11:10 It is true across domains that the easier something becomes, the more often people will do it. If we can make it easier to spend HSA FSA funds, hopefully more people will use those funds to like invest in their health. As it becomes easier for The average person to start a company. to build software, to launch a consumer product, a consumer brand, whatever, you're gonna see way more people do it.

1:11:29 And I basically think that the Barrier to entry has never been lower. Where I think for the first time now you are going to be able to see, especially with the rise of like GPT and a bunch of these other productivity tools that make building software or other things easier. I think that you are gonna see

1:11:44 the rise of the like multi company founder become a much, much more common thing. And I basically think That people talk about power laws and company outcomes. I think that there are power laws in people that exist to a crazy degree. And I think we all implicitly agree with this, and almost no one like explicitly states it. And I think that it is going to be way more true That

1:12:04 Someone like Elon Musk is way more likely to start five massively important companies. Which he has. Which he has. I think we are going to get used to and see more Elon's that are starting multiple companies in an important domain. Then we are going to see like five discrete people who all arrive at the same viewpoint and then start these sort of one off careerist founder types. What are the variables that drive

1:12:27 That power law, do you think? It's easy to say with Elon, obviously he's hyper intelligent. He's incredibly disagreeable. You see where I'm getting out. What do you think are

1:12:36 the traits of the kind of person that can do that. Is it vision? Is it Tenacity is it? Intelligence is it all those things. I think it's all those things and I think that kinda similar to The Edge City comment.

1:12:48 People tend to cluster and have heterodox ideas in multiple domains. I think the same thing is true of founders. Maybe this isn't true in B2B SaaS or something like that. But in some of these frontier tech things or companies where you have these hardcore technologists that are trying to build things that don't exist. It's kind of weird when you step back and think about it. that Jack Dorsey has the idea for Twitter and also has the idea for Square, and also is like an early Bitcoin adopter.

1:13:13 Why is it that we have some of these figures that have all of these overlapping frontier sort of interests. And I think that that Combination of Curiosity, intelligence, network, getting exposed. Once you're doing a thing that is a new and interesting idea in a space, you just get exposed to way more new and interesting ideas and people in that space. And

1:13:32 I think that we are at a phase right now where And Two thousand eight. Even earlier than that. uh software was just starting to become a thing.

1:13:41 If you knew how to code. you had a better chance of building a valuable company in a space that you didn't understand. Then someone who deeply understood a space. But didn't understand how to code because software was such an incredible tool. I think today

1:13:54 that has sort of flipped where I think that Deep domain expertise. the huge outcomes that are driving a lot of startup returns today are often being created by people that have deep domain expertise and know how to wield software as a tool. And so

1:14:09 I'm kind of bullish on People like Elon or people like Orion Peterson or Jack Dorsey or some of these types. Sam Altman. Sam Altman, exactly. Who like have deep domain expertise. Have vision.

1:14:22 And then have the ability to like pull together capital and bet on people in their network and be like Hey, whereas fifteen years ago Maybe Sam goes can't remember his name, but the guy who's working on the longevity company with him. I'm gonna fund you and you run at this thing.

1:14:36 Here's five million dollars. Now he can be like, I'm gonna co found this thing. We're gonna raise 150 million dollars and I'm gonna put my network, my brand, my like reputation, my capital on the line with you. empower you to run it this thing with me as this enabling chairman, co founder, sort of Master apprentice role. I think stuff like that is gonna become much, much more common.

1:14:55 Really interesting perspective. Especially because it's it runs very counter to something you hear a lot. The returns come to focus. Each of those people you just listed are pretty clear at least counterexamples or exceptions to the rule.

1:15:08 that are doing several things. Does that then mean that what we should think about not as like how do we mechanize or systematize a process like an incubator might. We studied seeing the same companies that are trying to effectively like print

1:15:21 companies. in a systematic way out of a central hub. And instead we should focus on Building tools. I'm talking about writ large here. We should instead focusing on building tools that enable the next Elon.

1:15:33 Focus more on the person, less on the System. That's my view. I basically think that the more mechanized you make something If you have a machine that can do the thing.

1:15:42 If someone else Can build the same machine, they're gonna compete you to death. I kind of think that the returns to focus the advice of focus, you know, all the returns. It may be true that it may be

1:15:53 the right advice for the vast majority of people. But also not at all apply. to these like Lalapalooza outside returns that you see. Jack Dorsey and Elon Musk and Sam Altman and all these types kind of driving.

1:16:06 I think that It's probably pretty cool. to run Vista private equity or like fractal software or one of these things that's just Executing on a strategy like hey, we buy or build a B2B SaaS business, we raise the prices, we hire salespeople.

1:16:20 We make money. It's like a cool cash generating machine and I think it's awesome. I also think that The type of person that builds Vista. It's probably Not at all the type of person.

1:16:30 that is like a Sam Altman or an Elon or someone that If they had more resources and infrastructure. would just continue spinning up companies that no one else has the vision, thought, or ability to start. I basically think that there is a class of company

1:16:45 That the average person can't start because it's too ambitious or requires too much capital. Or they don't have the vision for it. Who are some people that aren't yet in that class of name? That everyone recognizes and sort of proven your point.

1:16:57 You have yet to prove your point. But might. Who does that bring to mind? Interestingly enough, you see this a lot in biotech. It hasn't come to the technology world yet.

1:17:06 Or like the software tech world yet. A lot of these venture studios or incubators like a flagship pioneering or something in biotech. Have had some of the best returns of any investment vehicle ever over the last like twenty years. And they just create

1:17:18 Moderna, they create. Indigo bio. They just create all of these companies over and over again, seemingly. That's because I think they take A fundamental.

1:17:26 Insight. build a system or infrastructure that allows them to turn insights into companies. I think that as more already successful founders. can tap into infrastructure that allows them to systematically turn their insight in other companies.

1:17:40 You're gonna see Way more examples of this. And I think People that are doing an interesting job of this. who are starting multiple things.

1:17:48 Atomic is probably a really good example. Like they've spun up fifty plus companies that seem to work relatively well. Brian Armstrong is already doing this. He's like starting a longevity company while also running Coinbase. Brian Peterson has done this, incubated. previously while starting and running Flex port. Yeah, I think that this is something it was one of those things that

1:18:06 It's not obvious yet that a lot of people are doing this. But they're starting to. I'll throw in an example'cause it's someone I think so highly of and know pretty well which is the founder of Spotify is running a early screening healthcare company in Stockholm. Couldn't be more different from Spotify.

1:18:21 He's also running Primo Materia, which is tackling like incredibly hard Science. material science and other similar problems. And I think your insight, which I've never Encountered

1:18:31 Or thought about until now. Is right. You earn something through the process of building something really distinctive and big. That you cannot Be taught?

1:18:40 through a book or through a podcast or any other means. And that the leverage now exists to be A repeat. Serial. Entrepreneur.

1:18:49 In a way that just wasn't possible historically. Pretty cool to think about. I think that's kind of an interesting place to wind down the conversation. Every time I talk to you, I'm like fuck, you know, I need to I need to reform. Which is always like my favorite kind of person. It just like gets me thinking about

1:19:04 vectors of improvement. And so I always just so appreciate the time together. I think you know my traditional closing question, what is the kindest thing that anyone's ever done for you? When I was in college I was starting my first company. I was twenty two. And it wasn't working.

1:19:18 And I was paying myself six hundred dollars a month. I'd raise like twenty five grand from basically a sympathetic local accelerator that was going to give money to like anyone that said they would build a company in Pittsburgh. And one of my mentors, I was on a run with him, And I was like this just isn't working. Should I get a job? And

1:19:36 He said two things then. He was like one. You should continue going with startup entrepreneurial stuff. And secondly

1:19:45 If it turns out that this fails, see it through to the end. And I will just Either hire you. And pay you more than you will get in a job out of college right now. Or I will cut you.

1:19:54 A twenty five thousand dollar check. That you can just use to coast until you figure out what's next for you. And Although I never took'em up on either of those offers.

1:20:02 Just that vote of confidence and the ability to know. 'Cause I knew he meant it. That If things went badly for me, if I was really flailing and needed to get a job, needed to like

1:20:12 pay rent for a couple months while I apply to different places. That Alone, that guarantee alone. gave me the confidence to keep trying to do my own thing. And I think kept me on an entrepreneurial path that had I fallen off at the age of twenty two or whatever I was.

1:20:27 I think would have been really hard for me to get back on. Justin, thanks so much for your time. Thank you. If you enjoyed this episode, check out Join Colossus.com. There you'll find every episode of this podcast complete with transcripts, show notes, and resources to keep learning.

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