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Moth Minds
Justin Mares: Serial Entrepreneur & Investor

Justin Mares: Serial Entrepreneur & Investor

MM.03 Increasing entrepreneurship and the US health crisis
I talk to people and record it! Some call this sort of thing a podcast. I call mine Moth Minds and the premise is “interviews with high-agency humans."

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  • In order to increase entrepreneurship, it’s easiest to expand a person’s ambition at the start of their career. This could take the form of giving small sums of money and/or creating more tracked paths that make entrepreneurship (not necessarily at a venture scale!) legible as an option to those that might not be exposed to it.

  • At the start of your career, focusing on building a real business that makes money can give you the financial freedom and confidence to take bigger, more ambitious swings in the future (both the Collisons and Zuckerberg did this).

  • The biggest problem the US is facing health-wise is that the market isn’t flowing freely. In contrast to Silicon Valley where software gives us permissionless innovation with huge outcomes, the health sector is not designed to financially reward those that solve the sector’s most pressing problems adequately to their impact. Ceasing to give crop subsidies would be a good first step in allowing the market to self-correct.

MM: Hi everybody. Today I’m joined by Justin Mares, a serial entrepreneur and investor who founded startups like TrueMed and health brands like Kettle & Fire, Surely, and Perfect Keto.

Our conversation covered strategies to increase entrepreneurship, the ingredients and misconceptions around success as a founder, and the US health crisis. I hope you enjoy.

Broth Is Not the Same As Soup! The Mistake That Cost My Company a Year of  Growth | Entrepreneur

MM: Hey Justin, and welcome to the podcast.

JM: Thanks for having me. Excited to be here.

MM: Amazing. For my first question: what would you say is the moonshot of your career?

JM: Well, I hope that the moonshot of my career hasn't yet been taken on.

MM: Hasn't been shot yet.

JM: Yeah, exactly, exactly. I always think that when I started my first company, my moonshot was a personal financial goal and then as I've achieved certain things or the companies have grown and my career has gone on, I think that I've increased the scope of my ambitions and so I just hope that that continues to happen to be totally honest.

MM: Yeah, that's a great answer. Expanding the altitude and the magnitude as well.

JM: Yeah, exactly.

MM: What do you think are the threads you've kept pulling throughout your entire career?

JM: I think one of the threads that I maybe unintentionally stumbled on or got into was just what I think is one of the craziest things in the US, which I end up talking a lot about, but I think the just core thing is if you roll the clock back 50 years, our parents and grandparents would basically, chronic disease was basically a sixth of what it is right now. Obesity, overweight was closer to an eighth of what it is right now. Spending on healthcare as a percentage of GDP was 15% of what it's today.

And all of this during a time when people were working out less, and smoking more, you would ask your grandparents or parents, "How do you think about health and wellness and diet and all these sorts of things?" And they'd mostly just be like, "I don't know, I just buy shit at the grocery store that I think tastes good."

And so just in my opinion, I think it is so wild that we have accepted somewhat implicitly that we have a food system and a food environment that makes almost everyone sick, unhappy, unhealthy, all these things. And I think that very, very few people are interested or trying to fix what, in my mind, is this core obvious massive, screaming problem that is almost everyone that is suffering from some sort of metabolic disease, any number of these things.

And so that is the common thread that I feel is the through line through a lot of what I've done is just what are the root causes that are leading to all of this, all of these health and other issues and what are the companies or other solutions that I can try and start to get involved in that hopefully solve some aspect of that problem.

MM: Do you have any sense of what part of your personality is the right fit for this problem? It seems like so many people are passing it on. What about you makes you uniquely suited to try to help solve it?

JM: It's a good question. I don't know. In some ways, I don't know that I am uniquely suited to it. It just sort of is a thing that I feel compelled by and others don't. And so in some ways that's its own thing. But I think that I do have maybe somewhat of an optimizer personality type. And so when I first came across this idea or that what you put in your body actually drives certain health outcomes... It may sound silly, but when I was in college I didn't have the mental model of food and things that you put in your body determine how you feel, how you act, how you look, all these sorts of things, which is like food is I'm hungry and it's fuel.

And I backed the Soylent Kickstarter campaign. I didn't think of it any more than that. And I think that as I understood more deeply the relationship between what you're putting in your body and your physical health, your mental health, your happiness, performance, all these sorts of things, longevity, everything. I just wanted to optimize this thing more and more and more. And as I got more into that, I just kind of realized that there are, in my opinion, shockingly few people that care about this stuff or is interested in this stuff as I am. And I don't really know why that is, honestly. It just seems to be the case.

MM: I like that. Who most inspired you growing up?

JM: It's a good question. I think that there are different people that inspired me in different ways. So my grandfather is probably one of the most inspiring people that I've met from a super high-integrity gentleman, amazing father, amazing parent, amazing husband, just like 10 across the board. When people would talk about gentlemen, my grandfather is like that guy actually and just such a morally good person and I respect the hell out of him for that.

And so he was a real role model in that way. He and my grandma went to prom together, and are happily married 60 years later now. That was a role model in that sense. And then locally, I feel like for whatever reason, I feel like my ambition didn't get triggered for quite a while until I was in college. And so I had some people that were role models. My then girlfriend's dad was the first entrepreneur I ever met and he had total time freedom, which I thought was awesome. And so he was definitely a role model in that sense too.

MM: Cool. That's neat. Was there anyone that bet on you early that elevated your ambition?

JM: Yeah, I mean, certainly. One of the kindest things that someone did for me and why I started this program, which you and I have chatted about called Inflection Grants, is when I was in college I had this opportunity basically, or this sort of crossroads where I was starting a company, it wasn't working and I had very little runway left. I was paying myself $1,000 a month and I had three months of runway with that.

And so, one of my mentors and one of the guys that I got to know when I was in college, I was kind of telling him this and I was just saying, "I don't know if I should just jump ship and not do the startup, go get a job somewhere normal," normal kid graduating college in Pittsburgh meant PNC Bank or Dick's Sporting Goods, not like a cool San Francisco tech startup. A very, very normal corporate thing.

And I was just kind of walking him through, "I don't think this is working. I maybe should just go get a job. Maybe this is not a thing that I'm cut out for." And he made an incredibly kind offer and was like, "You should keep doing the startup thing. You should try and stay in startups and if it doesn't work, I will basically cover six months of your burn or just hire you if what I'm telling you to do doesn't work." And that would've cost him, it was not a crazy amount to him. It was probably like 25 grand given my spending at that time or something like that, maybe less. But for me, that offer, which I never took him up on just was enough where I was like, I can keep going down this weird nebulous, very illegible path and know that I had some sort of security if I really needed to call him up and take him up on that offer. It was wild what that did for my ambition and sort of made me feel okay really going forward from a career standpoint at that point.

“That offer was enough to make me feel like I could keep going down this weird, nebulous, and very illegible path and know that I had some sort of security if I really needed to take him up on it. It was wild what that did for my ambition.”

MM: That's amazing. It's such a psychological trip to create a new baseline.

JM: Totally.

MM: It's almost like baking in what's already baked into a job package too.

JM: Completely, or having great parents or something like that.

MM: Yeah, exactly.

JM: Which I didn't have, but in a way I think that that offer is such a high-leverage thing. It literally cost him $0 and it did unbelievable things for me, which is just so cool.

MM: It's amazing. To that point, I'm curious, what high-leverage initiatives do you want to see happen to empower, especially early career entrepreneurs?

JM: Good question. I think that something like that, the offer that I got is actually pretty compelling. Maybe that should exist maybe in a more informal way or more formal way. I don't know. One of the things that I want to see exist, which I'm sort of working on the side, we're both doing somewhat similar things, although you much more intensely and thoughtfully than I am is started this Inflection Grants program, which is a pretty similar idea of for people who are very earlier in their career, I think that small amounts of money can make a huge difference in unlocking someone's potential.

I often think that if you want to take a 35-year-old with three kids who maybe would be an incredible entrepreneur or should be in Silicon Valley or in some tech hub, it's so expensive to take that person out of the middle of Pennsylvania and bring them to San Francisco, Silicon Valley, transition them into working at Stripe or whatever it is. With an 18-year-old or 16 to 20-year-old, that is so not true. $2,000 can literally change the course of someone's life.

“If you want to take a 35-year-old with three kids who maybe would be an incredible entrepreneur, it's so expensive to take that person out of the middle of Pennsylvania and bring them to San Francisco. With an 18-year-old or 16 to 20-year-old, that is so not true. $2,000 can literally change the course of someone's life.”

And so the leverage you get there I just think is so incredible. I've seen it in my own life. The program that I started called Inflection Grants, we've given almost 40 grants to kids. I don't know if... kids too low, early 22 people, I don't know what you want to call them.

MM: They’re still kids.

JM: But yeah, we've given all those grants and I think that that is a really interesting leverage point. The other thing I would say is in terms of early career entrepreneurs, I think that I've seen a fair number of people, I was probably one of these people myself who knew that I wanted to be an entrepreneur but didn't necessarily have a good idea, network, career experience, anything like that. And "the path to starting something" is so illegible that I think as an ecosystem adding legibility to that or even a more formalized... I don't know if it's a, "Hey, I'm an entrepreneur, come work with me as chief of staff, and then go start your own thing in two years."

I don't know if it's formal incubation programs where you have successful founders that partner with early career entrepreneurs and say, "I'm going to put in my time and own part of this company. You're the guy or girl running it, but you get all this mentorship and advice and deep insight into a market." I don't know if it's something like that. It does feel like there are so many people that want to start things and so many people that take the leap starting something dumb and it feels like there are probably way better pathways towards building things that then exist today.

MM: It feels just not well organized. It just seems like the supply and demand, but it's all over the place. And then there are more credentialed paths like YC that kind of give you some of that curriculum and network and those effects, but the more credentialed they become, the more they attract perhaps a lesser quality of the entrepreneur. Just like there are tradeoffs to everything.

JM: Totally.

MM: I think that there is definitely just a coordination problem in matching these people.

JM: What would you do?

MM: That's a good question. I think some paths should become more legible. The one of chief of staff to founding something, that seems like it would be highly attractive to a lot of people if more people knew about it. That's something that I didn't realize was a pretty common path until I just saw people doing it. And I think that story should be told and actually shaped into a program or something of the like.

But I do think that it's hard to not start selecting for people that are looking for tracked paths once you start making something legible. And so that's a trade-off that I don't know how to balance except for spitting up a lot of different programs that are new and attract the right people at the start and then destroying them quickly and building a new one. That's my working solution is just a minimum viable engine to attract all the nerds and avoid the sociopaths and the mops.

JM: That's interesting.

MM: The David Chapman reference.

JM: Maybe I'm overestimating this just this is sort of my path, but I do think that even if you have a tracked program that starts attracting credentialed people, for someone like me who didn't come from money knew, no one who was in entrepreneurship, didn't even know Silicon Valley was a thing, just getting in the game opened my eyes to a whole world that I didn't realize existed.

MM: Totally.

JM: And I think that having that as, even if it's a little bit of a tracked thing where you get some funnel of people that are sort of clueless and then can learn, oh, this is a game that I can try and learn, do, self-actualize through, I think is probably still underrated. That's my opinion.

MM: Still very much net good, having more people.

JM: Totally.

MM: These things in general. What do you think, other than the 35-year-old who is kind of stuck in a job and now has a lot of obligations, what do you think are the other bottlenecks to entrepreneurship?

JM: That's a good question. I mean there are certain societal ones probably on the margin more people would start a company if there were healthcare things, or there's some sorts of things where for an individual, the risk trade-off of entrepreneurship doesn't make that much sense. I think that's gotten a lot better though with just how many seed and pre-seed funds exist. I think that you can raise a small amount of money, pay yourself for one to two years and get healthcare as part of that. I don't think it's this crazy barrier as much anymore.

I actually think that one of the things that I'm interested in is I think that right now Silicon Valley has done an amazing job exporting the operating system of a Silicon Valley startup and sort of owning the idea of entrepreneurship equals starting or running a venture-backed company. And I think that there's way more opportunity and there should be way more entrepreneurs outside of Silicon Valley starting companies that are maybe not necessarily going to be the next Stripe, but that create jobs and reflect the desires of their local market and industries much better than some massive national chain or whatever.

So I want to see way more. One of the companies I think is so cool is I want to see more companies like Shopify that enable 20,000, 200,000, two million entrepreneurs that can start something at a local level because they have these amazing set of tools. We have one Shopify, but it's enabled hundreds of thousands to millions of entrepreneurs, and that kind of thing is really cool. And I think that I want to see way more tools like that that just enable long-tail entrepreneurship as opposed to just how we get more Silicon Valley-style outcomes, which I'm very less certain of, honestly.

“We have one Shopify, but it's enabled hundreds of thousands to millions of entrepreneurs, and I think that I want to see way more tools like that that enable long-tail entrepreneurship as opposed to just focusing on how we get more Silicon Valley-style outcomes, which I'm very less certain of.”

MM: Skeptical. It's very oversaturated. It's like building platforms that raise the baseline for entrepreneurship of any type or scale.

JM: Totally. I don't know, I'd actually be curious about your thoughts too, but I don't think that we are oversaturated with entrepreneurs in Silicon Valley, but certainly, I meet people that are way smarter than me in Silicon Valley startup world. And I have met way smarter people running B2B SaaS businesses, running businesses that aren't working, running all sorts of things. And I'm like, yes, there's so much more innovation that could be happening, but also this shit is just really hard and we already have a ton of talent running at different venture-backed startup things and most of these things are not going to work. If we 10X that, do we get 10X better outcome? Do we 10X the number of outcomes? I'm not sure. I don't think so.

MM: I mean, we'll see.

JM: Yeah, totally.

MM: It does seem there's something weird about saying that anything less than a multi-generational business is a failure of interest standards. That seems wrong. I mean, it's not wrong for the business model of venture, but the fact that we're so constrained that we only really have that one for a sector that has entrepreneurship of all different scales. There are a lot of medium-sized software businesses that aren't going to be multi-generational Stripe-like companies.

JM: Totally.

MM: But what do we do with them? How do we fund them in a portfolio for a VC firm? They're going to be deemed as a failure. They're going to be like, "Oh, it's the bottom of the curve. Nothing going on there. It's not going to return our whole fund."

JM: Exactly.

MM: Yeah. It's a shame. Have you looked at SEAL notes (Shared Earnings Agreement)? Those are the ones where they're venture investments if you reach a certain threshold.

JM: Oh, yeah.

MM: Then they're a revenue share if you reach a certain threshold.

JM: Yeah, this is the Calm Capital guys thing, right?

MM: Exactly.

JM: Yeah, exactly.

MM: That seems good. That seems like the incentives are actually correctly aligned.

JM: I totally agree. And Bryce Roberts from Indie VC, he's bringing Indie back, which I think is going to be awesome.

MM: Yeah, exactly. Extremely cool.

JM: So I'm super bullish on that type of model as an investor. I'm very bullish on maybe long tail entrepreneurship is what you could call it. I'm also bullish on Silicon Valley. I just don't know the core assumption for me, which is if we 10X the money and 10X the talent in the Silicon Valley ecosystem, do we get 10X the returns? Or 10 times more Uber open AI, whatever. For some reason, I can't totally place a finger on it. I don't think the answer is yes.

MM: Yeah, that sounds right to me too, without a clear reason why. I'm just curious when you're evaluating the entrepreneurs that I agree are pretty plentiful around here, what do you look for in them? What are the qualities that you think make someone successful and how has your thinking on this also evolved as you've grown up?

JM: That's a good question. I think that a lot of... Let me think about this. I think that one thing that I've started to think a lot about is when I was in my early 20s, I feel like it was much harder to evaluate friends that were also in their early 20s who were starting companies because you don't necessarily know what excellence looks like and you're just, for me, was watching a bunch of my peers take random shots because they thought something was a good idea and it hit or it didn't and there was a massive skew in outcomes.

There were certainly people that were smart and worked hard, but I also had friends that were super smart and worked hard and things didn't necessarily work as well. It feels like a much more random game to bet on young people who are figuring themselves out while also trying to figure out what they're working on at the same time.

I feel like now I'm in a position at 33 where I see a bunch of my friends that are also in their late 20s to early 30s working on starting their next thing. And the friends that I've seen do the best and that I get most excited about and that I'm proud to be involved in their companies as an investor or something like that, are almost entirely the friends that are extremely mission-oriented and mission-driven, where you're just like my friend Dylan from Mind Bloom, he started Mind Bloom, first psychedelic therapy company, in 2018. And you talk to that guy and he has an incredible story. He had mental illness on both sides of his family. Went to Penn on a full scholarship, just a really amazing thing. And personally saw his life transform by using psychedelics in an intentional therapeutic way.

“The friends that I've seen do the best and that I'm proud to be involved in are almost entirely the friends that are extremely mission-oriented and mission-driven.”

And so you talk to him and he's just like, "This is going to be a fun thing for 20 years, I believe in the 20-year vision of what psychedelics can do for people." And I have friends that are like that, that are much more mission-oriented toward solving one problem are the ones that are the most interesting to me. And I would be like, I will back and support the first company if that fails, the second company, you just know that they're going to be operating in the same space trying to solve the same problem for probably the rest of their career.

MM: They get closer every time.

JM: Exactly. The people that feel like they're doing their life's work are absolutely my favorite people.

MM: And they're just inspiring to be around too.

JM: Totally. Yeah, it's way more fun.

MM: It's infectious. It's like, damn, I want to be more like that.

JM: Totally. Exactly.

MM: Yeah, that's cool.

JM: How do you evaluate talent at this stage?

MM: How do I evaluate talent? I think I do a lot of pattern matching from the founders that I've worked with that I know to be exceptional and have seen exceptional excellence in action. And so I look for precursor qualities to that. And what that usually boils down to is just are they obsessed with the thing or do they have the capacity to be obsessed with a thing and demonstrated track record of sticking to something for a long time?

A lot of the people that I evaluate are in their early 20s. So it's really like that is the first fork in the road is like, can they stick to something? Because very few can, yet, and that's fine. But I think I like to keep tracking the people that are still exploring, but they're just not clear bets yet. I just don't have enough signal, I think.

But other than that, I think I really like people that are more T-shaped, so they're generally competent and have some background that lends them to interesting insights. Maybe it's an unconventional multidisciplinary thing, but then they also have a core competency. Maybe it's coding, maybe it's business stuff, maybe it's design, whatever it might be. But they have a real reason to be confident and they attract people.

And I just think that competence is like, it's the core unit of respect, and if you don't have it's going to be hard to lead something, especially getting it off the ground. So I look for that too. It's especially rare in young people. And then I was just like, do I like them? That also seems important, especially when you're stuck with them from an investing standpoint for technically 10 years.

JM: Completely. That's really smart.

MM: Okay, another question. I'm just curious, what advice do you give to young budding entrepreneurs that are just beginning to get their first shots and goals? So these people that perhaps are still exploring the idea maze?

JM: Yeah. I have a lot of thoughts here.

MM: Amazing.

JM: One of the things that I think is very true is what you just said about competence is the core unit of respect and being able to recruit people, being able to self-actualize in the world. I think that Silicon Valley, a lot of the advice that Silicon Valley gives around finding a big market, do something you're passionate about. The missionary stuff that I was just talking about, I basically don't think that should apply to people under the age of 26.

MM: Interesting.

JM: If you're an exception, you'll know. If you're a Zuckerberg or Collison, you'll know. But I think for the vast majority of people, and speaking personally, this was certainly true for me. I knew I wanted to be an entrepreneur and I knew that part of the reason I wanted to be an entrepreneur was just to achieve financial freedom and everything.

Everyone you talk to in Silicon Valley is, "No, you should go after X, Y, Z, big ambitious thing. Trying to make a couple of million dollars and having that in the bank account. Horrible idea. How could you not be so ambitious?" I actually think that for most young people that want to be entrepreneurs by far the better path is just trying to make one to five million dollars and get that in a bank account because doing that is fucking hard.

It's like practicing. It's like you have to level up your competence and you can... One to five million dollars, there's a massive, massive number of businesses that you can start by, participate in, do whatever to try and get that number. And by doing that, you will learn so much because in the game. And where I see a lot of, I think young entrepreneurs burnout or struggle is they sort of just spin their wheels on 30 different ambitious ideas that don't go anywhere and then they end up getting a job somewhere. And I think that that is the failure mode that I see among young, super ambitious, talented, wannabe entrepreneurs way more than young people that they've started a business, it's working and they're like, "Oh, I'm trapped in this business forever." I don't think that's a real thing necessarily. Or you can opt out of it at some point.

MM: Totally. And it seems like if you're aiming for something reasonable-ish like that too, it actually gives you real feedback loops on developing a competency. Are you actually doing the thing? And then once you have that as a baseline of knowing you have that cushion, then you can make bigger swings. But the first one has to actually have a loop.

JM: Totally. And exactly. If you are starting a thing that is so hard, it is so unlikely to work, it is almost impossible to develop self-respect and confidence and the learnings if you're doing a thing that doesn't have any positive feedback loops in it, because it's just so hard.

I know that I would like to continue doing ambitious things in my career. Some of the things, like the thing I'm doing now in my new company, there is zero chance that I could have started running or operating this company when I was 22. It would already be dead. We've been around for a year and it just would've been dead already. And I think that I just haven't heard that many people talk about this idea, which I think is true, which is that it is okay and probably good for young, talented, hungry people to just focus on building a business, making a couple of million dollars and then starting their big ambitious thing. And the Collisons actually did this. They sold a company before Stripe.

“I haven't heard that many people talk about this idea, which is that it is okay and probably good for young, talented, hungry people to focus on building a business, making a couple of million dollars, and then starting their big ambitious thing.”

MM: Yeah, that's one of my favorite fun facts.

JM: Yeah, Zuck sold a company before he started Facebook. They just did this when they were 16 and then started the big thing of 20 or whatever. But I do think that this competence cycle and feedback loop, as you're saying, is so important to kick off.

MM: I really like that answer. That's really good. Does that imply perhaps a don't raise venture for your first thing?

JM: It can. I mean, I don't know that I would be that prescriptive about it. I think that for some people it can, but also for some people, one of the best things about Silicon Valley is that wealthy people will give an incredible amount of money, like amounts that would befuddle my parents to 21-year-olds that have no track record, no anything.

And so I think that that in general is a beautiful thing. I do think though, that if you can raise money, it probably also makes a lot of sense to not buy into your own hype, believe the thing. But if you're raising money and you can maybe hire a really talented executive team around you faster and invest in a coach. There are ways that you can work it. I just think the broad thing is I wish that I was more okay with just wanting to make a couple of million dollars when I was just starting my career and not always feeling bad because I wasn't starting X big thing.

MM: 100%. No, I think it's much more attainable and also it makes it harder for you to bullshit yourself into being like, this is a 10-year project type thing… “I don't know if it's working. I have a grand ambition.” But you don't know if anything's working. You're too young to be making those big, huge swings that you’re basically blind on how to do.

JM: Totally. And I think your point is you just don't have feedback loops in many cases when you're doing a 10-year project, you have no feedback loops that entire time for the way that many of these young people are operating these things.

MM: Completely. What do you think are other feedback loops that you can build in for yourself other than trying to build a business at the start of your career with a more realistic scale?

JM: I actually think that working with people that have built or are building businesses that are doing well, that they have experience. I lived and worked with a guy for basically a year who was 38, sold six businesses, and had just done incredibly well. And watching how he operated versus how I would operate, I was just like, "Man, there's such a gap here. I have to learn, and I can learn so much from this guy." And that was really useful.

“I lived and worked with a guy for basically a year who was 38, sold six businesses, and had done incredibly well. Watching how he operated versus how I operated, I was like, ‘Man, there's such a gap here. I have to learn.“

So having a very tight-knit feedback loop, often this is chief of staff or where something like that can come into play. Other things, like one of the things that I did with one of the first companies I started is I was 25, didn't know the industry that I was moving into and decided very intentionally to give a huge advisory grant basically, to one of my first mentors, advisors in this space.

And in return for that, I had breakfast with this guy every week for a year and a half and had this feedback loop of me, a clueless 25-year-old running this company, but had this 41-year-old. I would just bring a bunch of problems to him every Friday. We would chat through it and then I was making decisions the way a 41-year-old seasoned CEO would just in my 25-year-old best attempt at doing that. So I think advisors can be an incredible feedback loop for a lot of this. Those are at least two that really worked well for me.

MM: How did you approach it? Did you just ask him, "Hey, can you, in exchange for this advisory, meet with me on a weekly basis?"

JM: Yeah, I got introduced to him and we had a couple meetings, coffees. I really liked the way he thought. I thought we had a good relationship. There was good chemistry there. And basically I was like, "Hey, will you be an advisor at the company? Would love to have you." And he said, which is true, "Advisory is never worth it." It's almost always true. It's like a big time commitment for a quarter point in the company or something like that.

And so I was like, "Hey, what if I actually make it worth it for you?" And so I gave him, I think it was like 4% of the company and on investing and all these sorts of things, but that 4% was so worthwhile for me.

MM: That's amazing.

JM: Because I just had this crazy feedback loop and it was like getting his CEO brain on my company for a very small slice of the whole thing. It was great.

MM: That's amazing. It also reminds me too of the tacit knowledge of just being with somebody who has done the thing really well and you're picking up on their mannerisms and how they conduct themselves and you're like, that's what excellence looks like. It's a pattern-matching thing.

JM: Yeah, totally. We had him negotiate a contract, a $800,000 contract for us, and got him on the phone.

MM: Really?

JM: He did the whole thing as an advisor.

MM: Oh, that's amazing.

JM: I got to listen in and I was like, "Cool. This is great."

MM: Noted. Noted.

JM: Yeah, exactly.

MM: That's really cool. Shifting a little more to your actual career and the things that you're building, I'm curious about your interest area of health, what do you think is the number one issue of our time health-wise, and how are you working on it?

JM: Good question. I think the underlying issue is that around why the US is getting so unhealthy, why the average person is sick and all these sorts of things, is that the incentives in our food system and in our food environment are such that it is driving unhealthy outcomes. You will have people in healthcare, people in politics, whatever, say I can't believe the amount of chronic disease and obesity, overweight that we're having in the country. Childhood diabetes is at a record level and going up. This is crazy.

Everyone's sort of baffled by it. And then you look at the incentives and you go, okay, corn, soy, wheat are by far the most subsidized crops in the entire food system, which means that where we used to have fruits, vegetables, fresh things, now we have highly subsidized products that make their way into things that they should never be in, like soybean oil that counts for almost like, I think it's 15% of American caloric intake today.

Sugar in the form of high fructose corn syrup has gone up like crazy. Why? Because corn is basically a free input, which means that all of these big food companies are using it. Gluten intolerance and gluten allergies have never been higher. This is because wheat has made its way into everything and in its most processed, broken-down component form. And so you see that and you go, these crop inputs are hyper-subsidized and they're making their way into everything.

You look at the food system as a whole and you walk down the aisles of a supermarket, and it is very true that the products that are worse for you are also the cheapest. And the ones that are good for you are also the most expensive. So there's a financial incentive to eat unhealthy.

And then we operate in a healthcare system that basically makes it so that there are no incentives to preventative care, like 99%. It's literally 99% of all money in healthcare goes towards treating people after they're sick. Less than 1% is towards prevention. And so you just look at this system and it's like there's no incentives for prevention. People that want to be healthy have to come out of pocket. They have to drive to Whole Foods, they have to go to farmer's markets, they have to do all these things. They have to do all this research. If you're a student in a school that wants to be healthy, you literally can't. Most school lunches are just bad for you and there are no other fucking options. It's crazy.

And so, one of the things that blows my mind, I know I'm kind of ranting here, is that school lunches are literally a risk factor for childhood diabetes.

MM: Really?

JM: Yeah.

MM: Oh man.

JM: Yeah. Just growing up in a household where you're suffering from child abuse is a risk factor for trauma later in life, eating fucking school lunches-

MM: The default.

JM: Yeah, the default thing is a risk factor for childhood diabetes, obesity, overweight, all this stuff. And so I just think that not only are the incentives so skewed in the direction of making everyone sick and unhealthy, but our default environment is so bad from a health standpoint that you have to be rich, have time, have money, have the space to think about this stuff in order to escape the average outcome. And today the average outcome is six in 10 Americans have at least one chronic disease, and we have 72% of the country is obese or overweight. That sucks. That's crazy.

MM: That's awful. Designed to fail.

JM: Yeah, exactly. And I think that is structural because we have, and I'll get back to what I'm doing now, but I think that is structural because the incentives are to orient people towards making choices that are bad for them and put them in an environment that outputs bad health as opposed to wellbeing.

And so the company that I'm starting now is called TrueMed. What we're doing basically is there's a category of things called HSA and FSA funds, health savings accounts, flexible spending accounts that are tax-free funds that you can put into that can be spent on health and wellness basically. Traditionally, that's meant health as in pharmaceuticals, it's meant health as in surgeries, pills, prescriptions, and things like this. What we're doing is if you look at the body of evidence, there is way better evidence for exercise, treating certain conditions than there is any known pharmaceutical.

There's way better evidence for changing your diet, meditating, and doing any number of things that we call wellness interventions for driving health outcomes than there is for many classes of drugs and pharmaceuticals. And so what we're doing is we're making it so that health and wellness brands, like the ones I've started, Kettle and Fire, Perfect Keto, some of these Peloton Athletic Greens, a bunch of them can accept HSA and FSA funds and consumers can use these tax-free funds to invest in their wellbeing, not just pay for treatment once they're sick.

So as a consumer, you get to save 30 to 45% by using tax-free funds. As a brand, you get to tap into a new source of consumer funds and actually even the playing field by you spend more money to make an incredibly high-quality healthy product, but you have to charge premium for it. Now by using tax refunds, we're hoping that we can level that playing field a little bit.

MM: That's super cool. It strikes me as a really interesting way to expand a market.

JM: Yeah, totally.

MM: How did you stumble across this problem?

JM: Yeah, so my co-founder and I, one of our investors, advisors is this guy Mark Hyman, who is one of the big early doctors of functional medicine and the like. And so he has been a big proponent and been writing, basically issuing what's called a letter of medical necessity. It's a doctor-issued note that allows someone like you to spend HSA, FSA funds on things that can help treat, alleviate, or prevent a specific disease. And so he's been issuing these letters of medical necessity as they're called to help people get nicer mattresses, buy an exercise bike, spend on supplements, whatever, for many years at his clinic.

And so we basically just, he turned us onto the idea and we were like, oh, you can probably build a payments and telehealth platform on top of this insight, issue these notes at scale once you have consumer information integration and the like. And so we started working on this almost a year ago now.

MM: That's amazing. Such a cool mission. If you could change any one thing about how the food world works, what would it be? And maybe broader than food world — health world in general.

JM: Yeah. I think that kind of back to what we were talking about at the beginning, how our parents and grandparents never thought about this and were healthy by default. That's not really true today. And so I think the thing that has changed and the highest leverage intervention that you could make in this system is not educating people. It's not anything but fixing their environment towards one that structurally outputs healthy people rather than sick people of the default.

And so the things that I would do to fix if I could wave a magic wand I would remove crop subsidies for sure. I think that they’re a huge drain and that they mess up almost everything in the food system.

“If I could wave a magic wand I would remove crop subsidies for sure. I think that they’re a huge drain and that they mess up almost everything in the food system.”

The second thing I would do is probably remove, this is getting very granular, but crop insurance is another thing that basically only benefits big farms. It creates structural incentives for farmers to become bigger and to only grow one type of crop. And when you do that, you basically kill the long tail of small farms that have crop diversity, different diversity of inputs.

And I think that we right now live in a food system that is almost entirely driven and dictated by industrial agriculture, and I think that that is one of the biggest problems that we have in our food system today.

MM: Where would you like to shift the power back to? Is it more like the small farms?

JM: Totally, yeah.

MM: The people, the consumers as well, maybe?

JM: Yeah. I mean, think that unfortunately... I think that consumers ultimately have the power. They're just operating in a system that is against them basically. And I think if you look at, to go deep into the food system, if you look a conventionally grown mono-crop output, let's take a tomato grown in an industrial agriculture farm today, that tomato is going to be somewhere between 60 and 80% less nutrient dense than one that was grown 50 to 60 years ago on a small farm without the use of mostly chemical fertilizers.

I think that the nutrient density in our crops is going way down as a function of how farmers have been incentivized to plant, harvest, and do all this sort of stuff on an industrial scale that is heavily reliant on chemical inputs and fertilizers. And I basically think that orienting our food system towards that model of agriculture was one of the biggest mistakes that we've made as a society from a health and nutrition food standpoint.

And I would like to, again, if I could wave a magic wand, it would be reversing back to the older system we had that has much more diversity, many more small farms, much higher nutrient density, and much less reliance on chemical fertilizers and other sort of petrochemical inputs.

MM: Nice. Yeah, it's like incentive design tweaks too.

JM: Totally.

MM: Yeah. I'm still looking for good books and anything on that, but it can be so heavy when you talk about it in theory. I kind of understand why it doesn't exist. Cool. How do you think that we can get more ambitious people working on the most pressing health problems? Why are they not now?

JM: Good question. I think that one of the great things, and one of the reasons I think Silicon Valley has worked in the last 30 years, 20 years call it, is that the most ambitious people in many ways have been pulled towards playing Silicon Valley, like giant outcomes game because they get richly rewarded at the end of that, whether it's in power, money, both, whatever.

“I think that one of the biggest problems in healthcare and health in general right now is that we fundamentally don't have a market that is free, which means that no one makes a bunch of money solving the problem of health or wellness.”

I think that one of the biggest problems in healthcare and health in general right now is that we fundamentally don't have a market that is free, which means that no one makes a bunch of money solving the problem of health or wellness. And because of that, let's say you wanted to solve any of the food problems that I was just talking about, there's no massive pot of gold at the end of solving the small farmer problem right now.

And I think that one of the fundamental reasons why, and I think that you see this in a lot of domains is whenever you have the consumer that is experiencing the service, not be the one that's also paying for that service, you break how markets work. And I think if you look at healthcare, I can get sick and I get a treatment, but this other nebulous sort of entity will pay from that treatment often through a PRB. And there's just all these different layers, which means that... In my opinion, the feedback mechanism in that market is totally broken, which means that it's really hard for that market to self-correct. And so if you introduce something that is health into the system of today's healthcare, let's say that you had a pill that kept someone healthy forever today and it existed, how would you monetize that thing?

Consumers would have to pay out of pocket for that pill, but that's not how most healthcare spend is allocated right now. Most of it goes through insurers. Most of it goes through this cluster fuck of a healthcare system we have. And so I think that that mechanism being broken means that you keep the most talented people out of that space because the reward mechanisms are very unclear.

And then you just have, and this is probably true in education, you ultimately just have a space that's super broken where the best people are just unwilling or unable to operate in that space because it's not that rewarding. And I think that's the really hard thing.

And something Silicon Valley gets so right, is we have in software permissionless innovation with huge outcomes. And because you have huge outcomes, it attracts more people into it who think, oh, I want that huge outcome, and it's this kind of self-reinforcing cycle.

“Something Silicon Valley gets right is we have permissionless innovation in software with huge outcomes. Because you have huge outcomes, it attracts more people who want that huge outcome and it's a self-reinforcing cycle.”

MM: What would you tweak in the health world and the food world to make this better?

JM: I'm definitely a believer in markets in many ways, and I think that the thing that I would try and fix is to remove this sort of weird insurer-payer provider trilemma that I think creates really bad outcomes. Certainly, again, if I could wave a magic wand, the thing that I think is so crazy that we have in the US today is we have... you basically have someone that we know if you were to take someone who is pre-diabetic or going to likely develop diabetes and put them on a ketogenic diet, help them exercise, fix some stuff about their lifestyle, they will probably save the healthcare system, and insurers one to $4 million over the course of their life. And yet, if you want to give that person 100 to $500 a month stipend to eat better food or whatever, there's not really mechanisms by which you can do that today.

Literally, as an insurer, you cannot do that. I think that that is the thing that is just so wildly messed up is there's no mechanism by which this healthcare system can actually pay for people or give people incentives to do things that are better for them. And then we are left footing these massive bills that come when someone is actually sick. And I just think that that market mechanism or that market is just so broken that there's no self-correcting way that information can pass from, oh, if I do X, if I eat better, if I exercise, whatever, that leads to better health outcomes, which means I'm not spending this pool of money, which means that I'm in a better spot going forward.

MM: It's like the loop has been subverted somewhere along the line.

JM: Completely. Yeah, totally. It's super messed up.

MM: Okay. My last question for you. This has been wonderful. I'm just curious, what has been a book or a movie or something that completely changed how you see the world that you recommend?

JM: I don't know if this is trite or not, but when I was in college, reading The Four-Hour Work Week was the first book where I was like, "Whoa, there's so many different ways that you can do this life thing." On my radar was graduate college and work in corporate finance somewhere, or don't, and go get another job at some other large corporation.

I literally didn't have any other conception of ways to do life beyond that. And that was one of the first books where I was like, "Wow, you could travel. You could start an online business. You could do any number of these things." And so that was one of the very first books that massively opened the aperture of my ambition and thinking of what kind of life I could build.

MM: I love that. I feel like my equivalent was #GIRLBOSS by Sophia Amoruso.

JM: Nice.

MM: Similar kind of thing of just opening my eyes to a completely different lifestyle. And also, it's interesting too that you learn about the person too when they're talking about how they approach and think about things. And there's something about, again, it's kind of like the tacit knowledge of their mindset that gets imported.

JM: Totally.

MM: Well, thank you so much for coming on the podcast, Justin. It's been a delight.

JM: Thank you for having me on.

Special shoutout to Pebblebed’s audio booth, folding chairs, and Justin sticking it out through some seriously stuffy SF-converted-warehouse-office heat

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