Sami Inkinen (00:00:00):
Most companies are for-profit machines disguised as a mission-driven thing. So for-profit machines disguised as a mission. We are a mission disguised as a for-profit entity. That's what we are. We use capitalistic system, but it's just a tool. But I think it's the most effective tool to affect change in the world today.

Eric Ries (00:00:24):
Welcome to the Eric Ries Show. I'm very excited to be launching this passion project with you. Today's show is all about the power of first principles, thinking. It's a strange thing in entrepreneurship. You sometimes see entrepreneurs come from a totally different background, seemingly completely unqualified and disrupt an entire industry. Why do they have an advantage? It's because they don't have the preconceptions that people who've been working in that industry are mired with and have been for many years.

(00:00:52):
Today we're going to see two incredible examples of first principles thinking in action through the remarkable journey of Sami Inkinen. Sami co-founded Trulia, a real estate tech firm, which if you've bought a house in the United States, you've probably used. He took it public in 2012 and it later merged with Zillow. At the time, Sami knew nothing about American real estate. He was an immigrant. He had never bought a house in this country, and yet he was able to see the ways in which the Internet would disrupt that entire industry and help make it a reality.

(00:01:26):
And after taking some time off from his success at Trulia, he was thinking even bigger. He's an extreme athlete. He actually once rode from California to Hawaii unassisted with his wife. Yeah, I know. And yet, despite being in tremendously good health, he was nonetheless diagnosed as being pre-diabetic. This shook him to his core, as you're going to hear, and it led to him creating a company called Virta Health. Virta Health is a non-pharmaceutical intervention that can actually reverse Type 2 diabetes. He's actually described it as an off-ramp from GLP-I drugs like Ozempic. It's a company with a tremendous mission and long-term ambition, and yet Sami had very little experience in healthcare before starting the company. At last reports, Virta Health is worth now more than $2 billion. Sami's been able to use first principles thinking to create tremendous impact in the world, not once, but twice, and we're going to talk about how we did it.

(00:02:22):
Virta Health is on a mission to reverse Type 2 diabetes in a hundred million people. We're talking about a company whose customers literally have the logo tattooed on their skin. That's loyalty, that's love. In our cynical times, it can be strange to think about customers that love a company. And yet as you'll hear, that's very much part of what makes the company successful. In this wide-ranging conversation, we talk about GLP-I drugs, we talk about how companies can align their mission and business model, how to do hiring at a startup, especially in the early days when you have very little to show for it, the process of taking a company public and so much more. I think you're going to get a lot out of this conversation with Sami Inkinen.

(00:03:06):
I've started a lot of companies and I've helped a lot more people start companies too, and therefore I've had a lot of banks and a lot of bank accounts. And so I'm really delighted that this episode is brought to you by Mercury, the company I trust for startup banking. Every time someone on my team uses their MercuryLink debit card, I get an email with the details. And just that little bit of financial intelligence always in my inbox gives me a much clearer understanding of what we're spending. That's what Mercury is like through all its financial workflows. They're all powered by the bank account. Everything's automatic.

(00:03:39):
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(00:04:19):
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(00:05:11):
All right, Sami, thank you very much for making time to do this conversation.

Sami Inkinen (00:05:15):
Well, Eric, thanks for having me.

Eric Ries (00:05:17):
Okay, just to start, tell me what it was like doing truly as IPO.

Sami Inkinen (00:05:23):
Oh my God. So truly it was my previous company and we went public on New York Stock Exchange 2012. And actually I have two strong memories. One is I was there with our team and my wife, my spouse, Meredith. And the one part of it is it was very exciting, particularly as a first time entrepreneur taking a company public, it is this special emotional moment that we've made it, we've done it. Spoiler alert, afterwards you realize it means nothing. You just have more responsibilities and more investors. So that was one part of it.

(00:06:11):
And then a second part of it, and I'm a little afraid to share this, but you told me to be very open, so I will share. I honestly felt a little bit like getting married in Las Vegas where you're asked, "Okay, do you want Elvis to marry you or Santa Claus? You run, you drive through this, do you want the two-minute version or the 20-minute version?" So there is a lot of that sort of IPO day and the motions is made up circus, which I had no idea that that's how it works. So you can pick the elements of experiences you want to have. And I was like, "Wait a second. So most of this is made up." So that's the other memory that I have. But yeah, I would gladly do it again.

Eric Ries (00:07:00):
You're not the only one who's had that experience. And I'll tell you one funny story. It's kind of sad actually. I was sitting in the Nasdaq for a meeting and I happened to be sitting in a conference room that was overlooking one of their several IPO studios where they do the broadcasts, not even just one. It's like an amusement park ride where they have multiple ones.

(00:07:20):
And so as I'm having this meeting, a team is being ushered in to ring the bell to have the experience and the guy's pumping them up and getting them ready to be on camera and whatever and do the thing. And so he is like, okay, "3, 2, 1." They shoot their little video, pretend that it's the opening of the thing. It's not actually the opening, it's the middle of the day. And then it was over and they ushered them to the reception and ushered in the next group. It was like the whole thing was so fake and I could see the look. Everyone else is having a good time, but I was watching the CEO and he had that same look on his face you're just describing. It was like, "Wait a minute, what am I doing here exactly?"

Sami Inkinen (00:07:57):
Wait a second. Elvis married me and my spouse and 36 seconds later, there's the next one being married [inaudible 00:08:03].

Eric Ries (00:08:02):
It has that factory farm quality to it, which I think is too bad. I think companies deserve a lot better. Okay. Sami Inkinen, founder of Virta, founder Trulia, really one of the exceptional entrepreneurs of our age. Tell me how you first got into entrepreneurship.

Sami Inkinen (00:08:19):
Yeah, well thanks for the kind words. And I should add, I am a co-founder of both of those two companies, Trulia and Virta. So-

Eric Ries (00:08:27):
I should have said, yeah, I should have-

Sami Inkinen (00:08:28):
[inaudible 00:08:29] co-founders, so don't want to take credit in that sense. How do I get to entrepreneurship? The first, ooh, it almost depends on the definition, but I feel like the first transformative experience where I felt like I was truly creating something out of scratch for other people to use and get value out of it. And I felt like, I don't know, I just got bitten by the bug. I was in my teens when I put together and ran a BBS, a bulletin board system.

Eric Ries (00:09:01):
Oh, yeah.

Sami Inkinen (00:09:02):
Those of the listeners who aren't old enough, this is pre-Internet. And so grew up on a farm and I got a Commodore 64 and then Amiga 500. So I was running a BBS and an Amiga 500-

Eric Ries (00:09:17):
Amiga 500, yeah.

Sami Inkinen (00:09:19):
[inaudible 00:09:20] phone line for nighttime access and then I took another second phone line for 24 hour access for people to dial in. And I had some sort of a premium tier that you could pay to be a member, but most people would use it for free. So I didn't have a LLC behind it, but I would say that was probably the first experience where I got the giggles and the warm fuzzies and I was just... It was transformative. Like, "Hey, I created something from scratch. People are using, getting value out of, this is awesome. More of this, please."

Eric Ries (00:09:57):
I remember that feeling well. Was it 2,400 BOD Modem?

Sami Inkinen (00:10:00):
2,400 BBS. Then I had US Robot Robotics, 1400, 400, then 57.6. It was more slow very quickly.

Eric Ries (00:10:12):
Yes, I remember having the 57.6 Envy in those days.

Sami Inkinen (00:10:17):
Yeah, that's very cool.

Eric Ries (00:10:19):
Yeah, that was my first experience of online communities too. It was the BBS scene. So I guess we're both dating ourselves a bit, but I think that mean a lot of us had that experience at that time building something for other people, having that sense that the thing you make matters to other people the first time you experience it, it's such a rush.

Sami Inkinen (00:10:36):
Yeah, and I think this is even a mental health advice. I always tell people, the sooner you stop navel-gazing and serving others, the sooner you'll just feel awesome about everything. And I think I accidentally stumbled on that through the BBS experience that obviously I was tinkering in itself was fun, this semi-technical stuff to put things together. But the fact that somebody else was getting something out of it was the true reward, I would say, for the process.

Eric Ries (00:11:11):
So I don't know. As I was thinking about this episode, I was trying to figure out, I was going to say, I think most people still know you primarily for Trulia, although I think maybe not anymore. Virta's had such success. I'm not sure where even to begin. But I think if you don't mind going chronologically, maybe just tell us the Trulia a founding story and how do you get from BBS is to real estate and that rocket ship? What was it like?

Sami Inkinen (00:11:36):
Yeah. Well, there's quite a few fill in the blanks, but I'll try to be reasonably brief. So the BBS was literally running from my bedroom as a, I don't know, 14, 15, 16, 17-year-old southeastern Finland. So this was high school time. And then from there I went to Helsinki to study physics, did my master's in physics. And I would say that was the first time, so this was very, very late nineties. And I could experience the Silicon Valley dream through the printed pages of Fast Company and all these business 2.0 magazines and so forth.

(00:12:18):
And I got lucky that given my interest in software and computers and some of the skills that I had developed over the years, I was hired as one of the first employees of a tech startup in Finland. So I think I was literally employee number two or something like that. It was sort of the E-Trade of Finland called EQI. And so I was part of the team, but a very, very, very junior employee. And I could experience how this small team build something from scraps literally to an IPO, and I'm going to get the numbers wrong, but let's say in 18 months.

Eric Ries (00:12:55):
Wow.

Sami Inkinen (00:12:56):
And that was just a very, very captivating experience to me. And so the BBS experience years and years before of creating something for someone and then having that a true quote unquote "business success" that's creating value and accompany from scratch, this gets a lot of attention and users.

(00:13:13):
And I think those combined to me was just a roadmap. And I thought, "Wait a second. That's what I want to be doing at least professionally." And like hockey players from Europe want to come to NHL, as an entrepreneur, what's the NHL? It's the Silicon Valley. And so through [inaudible 00:13:36] worked at McKinsey a little bit then here and there. I ended up in Silicon Valley 2003. And the way I got in legally just to call on record that I got into US legally was by way of Stanford Business School. But I tell all that background because the reason for wanting to come to America and Silicon Valley wasn't, "Oh, I want to go to grad school, second grad school." It was about, "How do I get to Silicon Valley legally and build something, anything? Because that is the fix that I want and that is the cool thing or thing that I want to be chasing."

(00:14:13):
And so I got very lucky in that one of my central classmates, Pete Flint, funny enough, also a physicist by training as I had physics background, also European. So he was from UK, I was from Finland and then both were at Stanford. So two European physicists for various reasons, got interested in starting an online real estate company in the US which here, 2024 may be like, "Well, real estate's out pouring and why consumer Internet?" But this was 2004 plus minus some months.

(00:14:54):
And we had moved from a portal focused world to search focused Google World. And then different vertical categories were transformed we had. You could search for cars to buy, you could find your soulmate on Match.com and so forth. But the category that had not been transformed was residence or real estate. You might go to Craigslist, look at listings, but it's a very non-consumer centric experience. And it was pretty clear for both of us, 2004 that what the Expedia, hotels.com, cars.com and so forth had done for those categories, meaning consumer centric Internet destination to buy that thing would happen in real estate. And we thought, "Wait a second, it could be us. It could be our company, it could be our service. And then we were off to races." And so that was my journey from the farmhouse to Silicon Valley 2003 and co- founding Trulia, knowing nothing about nothing pretty much.

Eric Ries (00:16:05):
The best. Probably if you'd known too much, you would've been talked yourself out of it.

Sami Inkinen (00:16:09):
Yeah, I think you are absolutely right. And obviously now I'm in healthcare, which we can probably talk about in a few minutes. It's the same story. In the case of Trulia, I was an immigrant fresh off the boat, so I didn't know the American business environment. My co-founder Pete, the same thing. I knew nothing about real estate, never bought a home, wasn't a real estate broker. My parents weren't into real estate, I think same for Pete. So it was a completely new industry. And-

Eric Ries (00:16:39):
What did your Stanford classmates think about it when you were telling them that you were going to do this?

Sami Inkinen (00:16:45):
Well, it's interesting in that the kids, and I say kid now 20 plus years later, myself as well, and particularly business school kids, so to speak, they dream and talk about starting a company. They talk about starting a company and I don't know, third of the class talk about starting a company. Then comes May and early June of their graduation. And then it's like, "Okay, McKinsey 150, $200,000 a year versus nobody trying to tinker something together and then 95% go from talk to doing nothing. And very few actually start.

(00:17:24):
So I think there was a lot of like, "Oh, everybody's starting a company. I'm going to start a company," whatever sort of excitement. But then when the rubber hits the road and it's like, "Okay, well it's the first Monday. There's no school, there's no income, there's no nothing." Very, very, very few people go and start something. And this was 2005 when we really got going, which wasn't the sexiest time to start a company. Not a lot of money available after the dot com boom crashed. And so the excitement wasn't there where, I don't know maybe, I don't know the statistics, but maybe 10 out of 330 classmates actually went and started something. So it was perhaps an unconventional path at the time, which sounds crazy like a bunch of Stanford kids coming out of school, everybody sells the company. It's actually not the case statistically.

Eric Ries (00:18:18):
How well I know it. Yeah, I know that crowd pretty well.

Sami Inkinen (00:18:20):
Yeah.

Eric Ries (00:18:21):
I want to give credit to the right [inaudible 00:18:24]. I'm pretty sure this is, I got this from a conversation with Sam Altman. He said that during the boom time everything gets more expensive except cost of capital. And during a recession, during a drawback or where there's a pullback from startup investing, everything is the reverse. So actually apart from cost of capital, everything, all the other inputs you need to build the startup get cheaper. And therefore it's actually like when there's going to be some kind of correction or when everyone's panicked and deciding startup's not sexy anymore, that's actually a great time to start a company. Did you find that was true starting Trulia at that time?

Sami Inkinen (00:18:56):
A hundred percent. And I would also say the fact that capital is expensive is counter intuitively is actually a positive thing. I can explain my take in a second. But in terms of everything being cheaper, no, it's absolutely true. And one example is just talent. Obviously almost tech companies are like 99%.

(00:19:18):
Obviously you want to be in the right market and get the product marketed, but it's 99% talent, literally hiring a person, two people, five people, 10 people. And so access to talent is obviously cheaper when not everybody's hiring and drawing cash and equity left and right. So there's a cost element, but also just finding people who might be interested in it, it is easier. And some people say there's more noise in a downturn. I actually found there was less noise because it wasn't like everybody was moving to Silicon Valley. It was the true believers, if you will. So that's one part of it. Yes, it's cheaper, but also finding those amazingly talented people who want to join a start-up, well, let's face it's all promises and there's no, and certainly me and Pete, we had no American track record. We had no entrepreneurship track record as founders. So finding those people who are willing to join and certainly don't get paid much anything.

Eric Ries (00:20:25):
There's got to be some people listening to this conversation who are like, "How on earth did you convince them to join? This sounds like the most improbable story. You have nothing going for you." And you and I, we've been around this, we've seen how being an outsider and really tackling a problem from first principles, and obviously we're going to get to that in healthcare in a second, it's been very much your pattern. It can be such an advantage. But for people who been through that experience, how did you convince the first couple of people to join when you really had no reason to believe? Entrepreneurship was not sexy at that time. You had no credibility, you got no market knowledge, you got nothing. How'd you convince people to join.

Sami Inkinen (00:20:58):
Yeah, honestly, I'm going to start from a high level vague and then go to nitty-gritty details. It's like grit and perseverance is such a huge part of everything. Literally you need to turn a lot of rocks to find the diamond or kiss a lot of frogs to find your prince or princess. I do remember spending minimal of 80% of my time in the first, let's just say six months recruiting. It is absolutely grit. And to some extent, like a numbers game, you will find the amazing person or the fool. And I say that with tongue in cheek, who wants to join you. It is incredibly hard. And I'll do the nitty-gritty nuts and bolts. I literally went everywhere. And this is 2004, 2005. I used Craigslist, I used Dice, I used Stanford Networks, Basis, which is the business association of [inaudible 00:21:58].

Eric Ries (00:21:57):
Anyone will talk to you. Yeah, exactly.

Sami Inkinen (00:21:59):
Our very first team member was a software engineer, was someone who was actually Louis Eisenberg, give credit to Louis who they went to Facebook and them went to start a couple of companies, phenomenal guy. He was just finishing his master's degree in computer science from Stanford.

(00:22:14):
But it is literally hitting the road and being everywhere online and in person. And it was not easy. You have no track record, you have no nothing, and you're trying to convince. And then through a friend and friend of a friend, and that's what it takes. It just absolutely takes that. And by the way, that's like everything. How do you get the first check? How do you get the first fundraiser? We could talk about that. That's what it just takes. How do you get the first customer? You have to make impossible possible. And everything's a chicken and egg problem. Well, you have no money, you can't hire a person. You can't hire a person, you can't build a product. You don't have a product, you can't raise money. Everything's a chicken and egg. That is one of the magic that entrepreneurs who get somewhere, they break these chicken and egg cycles and they make impossible possible.

(00:23:07):
And let me just quickly go back. It's in my head this cost of capital thing. So for Trulia, just to give you a little bit context, because I'm old enough seeing all sides of the coin. For Trulia, we raised 33 million of equity from zero to IPO. For Virta now I've raised 360 million of equity. We are not yet public. Now, I'm proud to say nine figures is still in the bank, so we haven't burned it all. But this is mentioned that I've raised pure amount of capital-

Eric Ries (00:23:36):
No, it's such a different time, yeah.

Sami Inkinen (00:23:39):
As a founder. I've also raised it around 2008, 2009 when Neiman Brothers collapsed and all that. I've also raised in 2001. This is recently when zero interest rate and all that craziness and I've raised... So I've raised in all kinds of markets and multiples.

Eric Ries (00:23:57):
Yeah, 2021 you mean.

Sami Inkinen (00:24:00):
And so when the cost of capital is high...

Sami Inkinen (00:24:03):
... And so when the cost of capital is high, the benefit of that is you think about spending and investing differently.

Eric Ries (00:24:10):
Totally.

Sami Inkinen (00:24:10):
You just absolutely think about it differently-

Eric Ries (00:24:12):
And your team thinks about it differently.

Sami Inkinen (00:24:14):
[inaudible 00:24:14] money is wonderful, but you just spend it way more liberally. And, embarrassingly, I will mention this. There's just a different... If you do a series A today and you sell one third of a company to get 10 million, you'll use it very differently than raising 25 million at a hundred pre, because you're like, oh my God, we are lumped in and we are worth a hundred million, I get 25 million bucks. Sure, we can hire an AI chief who gets paid half a million in cash a year. No problem. So yeah, so I find that, I guess net is downturn. I find it is a better time to sell a company, quieter. Cost of capital is higher, I think it's actually a good thing. You focus on basics. There's less noise, less BS. So that's my take.

Eric Ries (00:25:07):
Yeah. Well, and there's some people who are going through it right now because in certain industries, definitely outside of AI boys, it is rough out there at the moment, and I think it's so helpful for founders to just remember the big picture that this is actually, in the long-term it's an advantage.

(00:25:21):
I want to go back to what you were saying. I thought you put iy really well about the connection. To me, this is the definition of startup momentum. Does your startup have momentum or not? You have momentum when the progress you make in hiring or in product or in fundraising affects the other two. And the founders that I know who have been doing the hardest, hardest stuff, they have to really content themselves with going around that cycle lots and lots and lots of times, sometimes making the tiniest little baby steps, but they don't allow time to elapse without turning. You can't go months with no progress or everyone feels like, "Oh, I guess this thing isn't going anywhere." You have to really keep making progress. You have to invent progress if you can't make it another the way. So do you have a memory of something you had to do to get that sense of momentum going in the early days?

Sami Inkinen (00:26:09):
Many, and first I have to reflect back and being honest and truthful and authentic I think is very, very important. To me, as a human being, I think that is very important. That's it. I will add and say that as a leader, your job is also to manage people's energy and motivation and big, big huge part of that is narratives and storytelling. Let's face it, that objective, objective truth, there's very little of that, early days, literally. It's all relative narratives and stories. And that is the founders' or the founder's job? Absolutely completely. Well, you have one client, that's an absolute fact. Is one a good thing or should it be a hundred? If you have zero clients? So that's a fact. All these things, it's very relative. So back to your question, I do find that you have to be a storyteller, ground your words and stories in truth and facts, but then think about how does this affect the people's belief in a company and where you're going. So let's just give you an example. Let's just say Virta, a healthcare tech company. We did something very unconventional by tech company standards, if you will, in that we just did our seed funding. We started a clinical trial, prospective clinical trial. So helping people reverse their type two diabetes, lose weight through our telemedicine platform and behavior change.

(00:27:59):
One net effect of that is we weren't even hoping to sell anything to anyone. So we had zero revenues, we had zero clients. We really didn't have market proof points other than the users. So hiring engineers and people on a business development and commercial side maybe who came from an organization where it's a traditional month over month growth rates, users, a month over month revenue growth. And then here we are recruiting patients into a clinical trial. That's a five year trial. Now the plan was to launch the company sooner.

(00:28:32):
So that's an example where I had to very carefully engineer metrics and targets and progress where obviously we would focus on the right thing, but people will also feel like, "Hey, we're making progress." Whether that's recruiting patients into the clinical trial, seeing their metrics, weight loss and glycemic control and medications coming down, taking us forward. So that's an example from the early days. And then of course you have the process there, the rate of improvement, how frequently do we ship code or make improvements? But it's constant game, honestly. Maybe when the company is just in a business of printing P&Ls and profits. And that becomes a huge focus and it's an objective way to say, well, what's your next brochure on this and that? There's I guess more traditional for profit objectivity. But before that, I think that's actually a very good question. And for leaders, it's a huge part of managing the psychology of your employees, maybe even your partners. Certainly your investors, your board. It's a lot of storytelling grounded in reality.

Eric Ries (00:29:45):
I really appreciate your emphasis on the truthfulness of that and the authenticity because I think a lot of people either don't become entrepreneurs because they're worried about being deceptive. And obviously we know some people who've taken that too far, and you basically are being pure sociopaths just lying to people left and right. That's ultimately self-defeating, and yet if you never start, that's also self-defeating. So there's this middle path you have to get quite right where you have to learn. And a lot of people say, "Well, I don't have the natural gift for it." But I don't know. I know a lot of founders who've had to just learn it through trial and error and having the determination to learn, how do you tell this story in a way that people can feel inspired by it? And how do you paint a picture of where we're headed over the long term that inspires people to go on that mission with you?

Sami Inkinen (00:30:31):
Yeah.

Eric Ries (00:30:32):
Truly, there really aren't that many people who founded a company, taken it public. I mean, that's actually still a pretty rare accomplishment in the entrepreneurial world. So I'm really curious, as you got this team together, as you had this incredible growth, and as ultimately you were vindicated of course, that real estate now, I mean everyone takes for granted that we will have, it'll be transacted primarily on the internet with the in-person part being a minor part. What do you remember the key differences in the company before and after taking it public, for example?

Sami Inkinen (00:31:02):
Yeah. Well, first of all, there's two caveats there. Literally, I think I was burning myself and my candle from so many ends that I've almost blacked out so many memories. And I have a funny story, when I started dating my now wife, she's like, "I sometimes found you from the kitchen floor at our apartment at 6:00 PM, not late, and you were sleeping." And so this was her way of reminding me that I was completely not taking care of myself and my [inaudible 00:31:32], that's unfortunately very common too, which is not a good thing to do and that is not how you succeed. I would say we succeeded, I succeeded not because of, but despite not being super smart. So that's one caveat.

(00:31:49):
Then the other caveat was that I actually left my operational role right before we went public and I stayed on the board. So there may be just difference in how I observed some things right before and right after. But so I would say a couple of things. One, actually we tried, we as in the whole team and with Pete, my co-founder, we were very conscious before going public that while the celebration of the day of going public, it might be special and should be special, we have to see through it. It's like kicking a soccer ball, and I don't play golf, but you always have to see through, you can't stare at the ball, and we have to see through.

(00:32:36):
So we actually did a lot of things to make sure that we don't stumble on our toes after we go public, but we have product roadmaps way after, we are focused on the key metrics and the users and the customers. And so we psychologically and practically try to make sure that the entire team understands that this IPO is a springboard and a stepping stone, or whichever analogy you want to use, a road trip where we stop on a gas station and take some more gas. But the point is not the gas station, it is the journey, the road trip. And so we did do a lot of those kinds of things to ensure that it would not be that different.

(00:33:19):
Now, what practically ended up, and I think may end up being more different, one is just how you have to limit information. Suddenly some things are super confidential and what we see in the future, and it becomes less of a free for all, download the spreadsheet from the shared drive or whatnot then you can see how every margin and this and that. So there's a little bit of who gets access to what. The second thing is, I think it is definitely harder to make aggressive decisions, changing directions or huge bets, because if it's anything that might be visible on your P&L or something, you have to share it with a large group of people.

(00:34:08):
And then you have this whole, how do you manage your largest investor's expectations? How do you communicate that? So you have a much bigger filter or more filters before you make that like, "Sure, let's just bet the whole company and we'll see how it goes. Or sure, let's throw 20% of this year's budget into that. If it goes sideways, then be it. But that's the cost of staying at the leading edge." Much harder to make those decisions when you're public.

(00:34:39):
And then predictability of the business becomes almost like oxygen that you breathe, particularly right after you go public. You more or less have to have six quarters in the back because you're in a dog house by your new investors if you say something and then in the first four or five quarters you miss anything. So there's those kinds of things. So that's all boo-boo, negative kind of things, but obviously you go public and suddenly lots of free PR, you're on CNBC and you're real and you've made it, and this company's here to stay. And you get that free brand tailwind, hopefully positive, and you have capital to acquire companies. And so obviously companies go public for a good reason. And so net net it's usually positive, but it changes the dynamics.

(00:35:27):
And then I guess I could just keep rambling, but there is this, well, maybe I'll mention this one final thing, which is there's definitely, you end up having a little bit of a change of guard in that there's certain type of personality of a person who wants to work in a pre IPO company. And it isn't like, "Oh, I want to cash out my stock options." In fact, you can make way more money in a company oftentimes, for another conversation, but it's more risk-averse people become excited about your company. Obviously people with experience running and being in a public company, you want to hire some of those people, but they also want to join.

(00:36:09):
And then psychologically, the early employees are like, "Okay, well this zero to IPO is done, the next one." And so there's a little bit of a discontinuity, I would say, more of a discontinuity for those reasons. And there's some equity how the logistics of stock options, the equity works that practically becomes easier for people to change jobs and so forth. So there's definitely that discontinuity with your team.

Eric Ries (00:36:38):
A lot of founders have complained to me about just the inevitable gravitational pull of short-term thinking after you become public, the pressure to give guidance quarter to quarter, and the loss of control, the inability to stay on mission. Did you experience that?

Sami Inkinen (00:36:53):
Yeah, I think yes. The reason I'm hesitating is it's not, now that Trulia is part of Zillow now? So two years after we went public, those two companies merged, or however you want to look at it, Zillow acquired us, but was almost like mergers of equals. And so if you think about and look at what they've done, they've stayed the course, and you think of residential real estate, it's Zillow/Trulia, Trulia/Zillow. That is where people go. And that's 2014, the companies sign an agreement to merge us, 10 years ago. So in some ways I would say, well, it's not a bad thing. The strategy is the same, the mission is the same, and maybe they haven't pulled as many rabbits out of the hat that private companies would have. So maybe, yeah, short-term focus, but , I mean, kudos to the teams and leadership who are running still. They've done a pretty good job. And Trulia/Zillow are the Expedia, Hotels.com, Booking.com of residential real estate, I would say.

Eric Ries (00:37:58):
Yeah. So we teased this, but I feel like we've got to dive into it because this first principle of thinking, the advantage of being an outsider, the willingness to look at a big and difficult market without that context. Real estate's hard, but healthcare is really hard. So just walk us through the decision to take that on, to start Virta, and maybe first just talk about what it is and how you came to create it, and then we can talk a little bit about how you took the lessons from Trulia and brought them into this new super hard domain.

Sami Inkinen (00:38:30):
Yeah, yeah. So much to share, but maybe it's useful to start. So Virta Health, let me just start eye level, what are we and who are we? And then also how did I [inaudible 00:38:43] the company? But on a high level, I think it's objectively true that the biggest health challenge of our generation today is metabolic health. And that's specifically led by type two diabetes and obesity. And more than half of American adults are suffering from those things. And globally, the percentages, especially in developed nations, are repeating the same kinds of numbers. So there's multiple billions of people globally suffering from type two diabetes and obesity and hundreds of millions in America. It's insane. And most of our healthcare dollars go there.

(00:39:15):
So that's the problem. But then there's a second problem to that, which is the best that humanity has had to offer to these diseases, type two diabetes and obesity. Before Virta, [inaudible 00:39:30] and will sponsor pharmaceutical companies selling drugs, may I say, very successfully, to treat symptoms of these diseases such as diabetes, drugs for high blood sugar blood, but that is not making these metabolic diseases going away. In fact, we just have more people having them. We're spending more money on them, and the outcomes aren't improving. So that's the second order problem. We have a a solution, but it's a patch.

(00:39:57):
And so what we are doing at Virta is fundamentally taking type two diabetes and obesity and reversing the diseases using technology and nutrition. So we use telemedicine and lifestyle treatment through nutrition to I guess do the unthinkable that most people said would be impossible, which is to reverse type two diabetes, get people off insulin, help them lose weight, and then sustain that weight for many years. And so that's what we do.

(00:40:32):
But let me go back to why and how I ended up starting Virta because I'm equally unlikely founder to Virta as I was for Trulia. So for two reasons, one is once I was done, quote unquote done, with Trulia, I was like, "Whoa, that's a decade of craziness. Do I really want to do that again?" Because it's hard. It is. If you are successful founding a company, guess what? It's actually harder because it could be 10, 20, 30 years of your life and it never gets easier. Never. You've never made it when you're running a company, it always gets harder.

Eric Ries (00:41:13):
I always try to explain to young entrepreneurs, it's like you play on those old video games where the boss of one level is now the goomba in the next level.

Sami Inkinen (00:41:21):
Yep.

Eric Ries (00:41:22):
You ever feel like that? Where it's just now you routinely faced problems that last year would've been the hardest problem you ever faced in your life.

Sami Inkinen (00:41:29):
Yeah, I like to say it's a pie eating contest and the winner gets more pie to eat when you get forwards.

Eric Ries (00:41:35):
Oh, that's so true. Oh, my god.

Sami Inkinen (00:41:38):
Unintended for a company that's reversing type two diabetes. So anyway, that's one part of it. And by the way, if you fail, it's the easiest thing because it's 12 months and then it's over. But anyways, so that was one part of it. So I was not planning or looking, "Oh my God, I want to jumped into another 25 year journey." That's the one reason. The second reason is if you had asked me around when I was leaving Trulia, how about solving type two diabetes and obesity, I literally would have laughed at you and rolled my eyes. And the reason is I thought, like many people still think, obesity and type two diabetes, metabolic disease, it's a personal choice. You're lazy, you don't have willpower. In fact, you don't have my willpower. And I'm still pretty high performing endurance athlete, but I won the world championships in triathlon in my age group as an amateur. I was very, very, very fit.

(00:42:35):
And my thinking was, "Well, it's not me. I have willpower." And all that changed when I discovered that I was on my way to type two diabetes myself, and I was already pre-diabetic. And I thought, what the F? Seriously, I'm not one of those middle of America lazy people. I'm doing all the right things. And that started me down and pulled me down this rabbit hole, meeting with lots of scientists and clinicians and reading and understanding. Wait a second. And obviously I pretty quickly discovered that one, I was wrong. It's not a personal choice. If a fit triathlete can develop type two diabetes, maybe I'm doing the wrong thing, I'm told the wrong thing or something's going on, but it's clearly not willpower. And then the second thing that I discovered through the scientists who then became my Virta co-founders was that actually there's a way to reverse these conditions.

(00:43:33):
All this stuff that we are told, oh, type two diabetes is a chronic, progressive, irreversible and take insulin and we can slow down the progression, but eventually it's amputations and blindness and death. Honestly, that's BS. This is a condition that's reversible through nutrition. Doesn't require willpower if you manipulate the nutrition right way, eliminate hunger, we eliminate cravings. We can take you from insulin dependent type two diabetic and get you down, your blood sugar goes down and get you off for insulin. When I became convinced about that, I was like, "Wait a second. This is insane." We literally have nearly 40 million Americans now suffering from type two diabetes, losing eyes, losing limbs. It is a horrific death. You lose your couple of toes, then you lose your leg, you lose your arm, you lose your eyesight, and then you get a heart attack or dialysis. It is insane.

(00:44:31):
And this condition is reversible. And so I became convinced it's possible with technology and telemedicine. And the second thing was, I tell this to wannabe founders. I say, "Yeah, I worked at McKinsey, but forget the spreadsheet analysis." That is not how you should choose what to work on. You have to unquestionably fall in love with the thing that you want to do. You can't explain or unexplainably fall in love.

(00:45:04):
It's like you go for on a first date with someone, you don't need a spreadsheet to know if you want to have a second date. You may not be able to explain it, but you know it. You want to have a second and a third date. And that's how I felt with Virta, I was like, "Okay, I don't care if it's going to take 40 years, 30 years, 20 years, whatever. I don't care how hard it is. I've got to go with a team to make this happen, and it's going to be fun, hard, hopefully and likely gratifying if we can take this quote-unquote miracle solution to the millions. And that was 2014, 2015 when we really got a call. But here I am again trying to make something happen out of nothing.

Eric Ries (00:45:48):
I really appreciate you being honest about the fact that love is the foundation of this whole thing because we're supposed to be having serious business conversation. But that really is the motivation, that's the reason people do it. And that's the only motivation that can possibly keep a team together over such a long period of time and over such immense odds. And I can remember the first time you pitched this to me, it has to be more than five years ago now.

Sami Inkinen (00:46:14):
It would.

Eric Ries (00:46:15):
It's been quite a while. And I remember you were first getting started and I thought to myself, this can't possibly be true. It seemed so wildly implausible but you believed it. And I thought, well, to me, that's the ultimate startup bet. It's like, I don't need to understand. It doesn't really matter if I believe if it can be done. I can do the analysis. I can say, well, if what he's saying is true, this is a huge and monumental opportunity. Obviously the impact it'll have on people's lives is something to get excited about.

(00:46:50):
And I think people get really confused about whose job is it to decide if it can be done. When something's impossible? Nobody knows if it can be done. So that's actually not the most relevant question. The question is does somebody have the conviction? Do they have that feeling you're describing that they want to dedicate their life to trying to make it happen? And is it worthwhile if they succeed? There's plenty of companies out there that are pure exploitation, and even if they succeed, it's nothing to be proud of. You're just stealing money for one group, putting in another, who cares about that? But here we're talking about something with really dramatically positive potential impact. So I'm of extremely minor investor, full disclosure, in this company, but I remember being like, well, I don't need to know that it's going to work. I just have to see that there's this belief.

(00:47:32):
And it's such a worthy mission. Of course, I'm willing to go for it. And I am curious if you've had this experience. This really shocked me, especially building LTSC, I had this a lot, where people who have backed you quite extensively, even people who've written quite significant checks into the company, when something good happens and you finally start to show that it's working, they never say... When you do something really hard, people don't ever say, oh yeah, I knew it all along. Of course you did it. They always act surprised. They're happy. Of course, they're like, they're pleased. But they have that note of surprise like, "Oh, I can't believe it actually worked."

Eric Ries (00:48:03):
They have that note of surprise. Like, oh, I can't believe it actually worked, that's how I feel a little bit about this company, like it almost seems too good to be true, and it's just such a delight that it did work. If you had that experience with investors, where they invested anyway in spite of not really knowing if it was going to work.

Sami Inkinen (00:48:16):
I'm not going to call anyone out, but-

Eric Ries (00:48:18):
No, none of us are going to name any names, but you've had that experience?

Sami Inkinen (00:48:21):
Yeah. Yeah, obviously oftentimes people try to compliment and don't directly say that I thought you were absolutely F'ing insane, but yes. And so I can share because I have also made quite a few angel investments, and given the Trulia experience and the Virta experience, a lot of people in those domains approached me, like real estate tech and then healthcare.

(00:48:49):
And so having now been on both sides, what you described there is I sort of fully subscribed to. And what I mean by that is when somebody comes and explains to me a real estate tech startup or something, having gone through that 10 years and realizing how freaking impossible and unlikely it is, and I always tell either to the investor who comes to me asking about this deal or the founder directly, this is what I say up front, I say, "First of all, I can immediately see, I'm going to tell you 10 reasons why this is going to fail because I'm o jaded, I've been in this space for so long, I know how hard it is." So what you're going to hear from me for the next 15 minutes is all the reasons why this is going to fail.

(00:49:35):
That said, I am a founder myself and I know for a fact that somebody is going to break through and figure this thing out and you can't a prior explain logically why it's not going to happen. And so I have this humility or whatever it is, humility to say that. What I can intellectually think now that I've gone through it is all the reasons why it's going to fail. But the one reason how you could get through, whether that's the love for the mission or your grit or perseverance, I can't explain that. And so it's always possible.

(00:50:14):
And same now in healthcare, when people come to me and say, "Well, we have this healthcare tech thing and we're going to sell to employers." I'm always like, "No, let me list you why you shouldn't start the company." And then I'm going to finish by saying, "Look, this industry needs more innovators like you and it's always possible and nothing, nothing would make me personally more excited and happier than seeing you 5, 6, 7 years down the road, you freaking figured it out. And somebody will."

(00:50:42):
And so I do think there is that because let's be honest, if things are obvious, of course, guess what: somebody else has done it already or there's already 50 companies doing it or it actually doesn't make any sense. It is just this paradox of the classic, the crazy entrepreneur has to be contrarian, but they also have to be right. And that's a very kind of a small percentage of ideas.

(00:51:12):
And then I'll say one more thing. Almost all successful companies that sort of transform industry beyond just, I don't know, opening a restaurant in a corner, they are in the darkness for many years. They're in this kind of trying to find through the dark forest for the first 1, 2, 3, 4, 5, 6 years, because that is the time when nobody else has done it. Most people don't believe, people don't take them seriously, and somehow you just get through the forest. And then at some point it's the obvious. Isn't that the story for almost all successful companies, right?

Eric Ries (00:51:52):
A hundred percent. Everyone always knew that it was possible.

Sami Inkinen (00:51:55):
Yeah, possible but very unlikely. And then you have to find that one potential path somehow. Either you get lucky or else you need a lot of things to come together.

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Eric Ries (00:53:13):
One of the themes that's come up a lot in the conversations I've been having is this idea that harder is easier. So yes, obviously if you choose something really ambitious, something very difficult, you could have taken this in many more extractive directions where you just solve a little piece of the problem and maybe you sold it to a drug company or sold it [inaudible 00:53:32]. You could easily have done the easier, simpler thing. And when you pitched like, "No, we're going to really solve this problem in a root cause way," people react the same way I did. It was like, "Oh my God, that sounds so painful and difficult if it's even possible at all."

(00:53:46):
And yet when you do that, there are these counterintuitive things that become easier. You can attract way better talent because people feel like they have that connection we were talking about before to the mission. Fundraising is totally different if people believe, if the scale, things are positive, and even customers and partners, and you create this gravity well of your own where people are attracted to the idea of finally, finally, finally fixing a problem in this root cause way. I'm curious if you relate to that harder is easier idea with something like this.

Sami Inkinen (00:54:16):
Certainly related point is sort of defining a massively transformative mission and that is very, very hard and seems unlikely and oh, crazy. I found it's incredibly helpful for us at Virta. It's reverse diabetes in a hundred million people, reverse diabetes in hundred million people.

Eric Ries (00:54:36):
You don't lack for ambition, that's for sure.

Sami Inkinen (00:54:39):
And then, by the way, as a footnote, we didn't really have a mission that truly, and probably one of the reasons why right before going public, I was like, "I think my job's done." We've got a team of whatever, 500,000, and companies scale and profitable and tens of millions of people using it. It was like my Silicon Valley dream was done. We built a product that was useful for people and there was an economic engine behind that was working, company going public, but to this date, I wouldn't be able to kind of tell you what was truly its mission, like crisply. Obviously we were helping people access information, but that was kind of missing.

(00:55:18):
So I actually took a little note for myself when I was starting Virta. I was like, we are going to define a mission that is so simple that my now six and eight- year-old daughters could understand. So simple but also so hard and ambitious that it would get me excited as a founder and the people I'm hiring, potential investors, and obviously it self-selects the team members and investors who are like, "Well, that's crazy enough, but maybe it's possible and it's big enough that it's interesting."

(00:55:49):
And so in that sense, I'd say harder is easier. Now obviously there's under the hood, like do how you build a thing harder? But this is one of the huge learnings I had between Trulia and Virta, which sounds very fluffy mission and why do you need a mission statement? No, absolutely. Actually it's very critical. If you don't get product market fit and get funding, company goes nowhere. But having that north star mission, I cannot tell you how useful it has been, even for myself, motivation, prioritization, reminding me on a tough day when I'm dealing with a spreadsheet, somebody's, I don't know, compensation plans or something, well, I'm not doing this company for the spreadsheet. I'm doing this company to reverse diabetes, a hundred million people. Recruiting people. We can go all the mumbo jumbo, AI, this and the LLMs and this and that detail. But, okay, let me just remind you, this is why we're here: reverse diabetes, a hundred million people. Whatever piece of that puzzle you're doing, you are reversing diabetes a hundred million people. And we can talk about our patients who've tattooed this company logo, is the real story, in their bodies when we reversed their diabetes. And all those conversations with investors, who are like, "What do you guys do?" Oh yeah, reverse diabetes, a hundred-

Eric Ries (00:57:04):
Talk about the customer part of it because I think people who've never had a product that customers truly love, have never experienced what that's like and what a competitive advantage. It sounds so fluffy, mission, purpose, vision. But here you have a company where you're like, "Look, I need you to trust me with your body, with your health." It's one of the most ... you're not physically making a surgery into their body, so it's not as invasive as that, but it's a very close second to that in terms of how much the customer puts their life in your hands, especially if they come to believe that you can help cure them. How devastating it can be. Any of us who have been taken in by a snake oil salesman in the past, how devastating it is.

(00:57:41):
So to the trust relationship is not just, oh, it sounds nice, kumbaya, whatever. This is a very serious part of your competitive advantage. It's why customers ... So talk a little bit about the advantage that comes from being a trustworthy counterparty and that real experience of what it's like to have customers that genuinely love your product.

Sami Inkinen (00:57:59):
Yeah. And first, as we say, we do have two types of customers. So in many ways we have ridiculously complex go-to market and business model. So fancy MBA term or business term would be B2B2C. So we sell to businesses who pay for healthcare costs and now we have 530 clients, up from 20 when COVID hit. So it's been a nice last couple of years. So these are self-insured employers, like UPS or U-Haul, Papa John's. And so clients ... insurance companies like [inaudible 00:58:33] of California, and some government entities like the Veterans Administration. So we serve those business clients who then pay for the treatment. And then to see the consumer parties ... At the end of the day, we exist to make individuals healthy, real humans, real users, real patients.

(00:58:53):
So going into this trust, there's sort of two steps to it for us to build that trust and even get going. And I can then talk about the details. First element is how do we even get people in? How do we establish the initial trust? And it's not trivial because, yes, we have people's lives in our fingertips and the main reason we have their lives in fingertips isn't that our treatment or protocol is dangerous. It's not. It's like irrefutably proven to be safe and it makes you healthier. But these are very, very sick individuals.

(00:59:31):
And so, for example, managing the insulin dose ... insulin is a life-saving drug for most people. But if you take a tiny bit of too much of it, particularly if your blood sugars are coming down through nutrition, you take a little bit too much insulin, you're going to have hypoglycemia where you can pass out or die.

Eric Ries (00:59:47):
[inaudible 00:59:48]-

Sami Inkinen (00:59:48):
So there's the first element is: how do we convince people this is real? And then also when you address metabolic health, and this kind of goes to the human psychology, but practically all of our incoming patients suffering from type two diabetes, obesity, they have failed to make themselves healthy despite their best efforts. Not once, not twice, not three times, but dozen times. So they've tried every single diet on planet earth three times. So they have a huge ... like psychologically this idea that, "Can I trust this random entity online even though they tell the medical provider, but what if I failed this one as well? It's going to hurt me." It's kind of like you break a relationship with your loved one, like breaking a relationship, it hurts and then you're like, "Oh, do I want to start another relationship because breaking hurts, right?" So that's the first piece of establishing trust is not trivial.

(01:00:48):
Virta is not like, "Come to your website, I saw an Instagram influencer say, 'Click here to get green pills that make you smarter in two seconds.'" Right? So most of which obviously isn't true anyway. So there's that element.

(01:01:03):
And then so we have to convince them with facts and different ways and the actual real human connection, talking to our providers even, doctors, medical doctors. We're real, this is how we do it. We explain. So there's that element. And then there's the care part, obviously making people healthy and improving their metabolic health.

(01:01:22):
But once we've done those two steps, get someone in, and pretty quickly they start seeing results they did not think were possible. They can't believe that this progressive one-way street where the light at the end of the tunnel is train called type two diabetes is improving. The level of trust and connectedness that happens with Virta, their care team, and our brand I might say, it's kind of incredible. I did not believe it's sort of possible. Literally this example that I shared patient [inaudible 01:01:57] our company logo as a tattoo. We don't have one of them, we don't have two of them, we don't have three of them. I know of at least four personally who've done that. And that sort of still blows my mind away like, "Wait a second, we have a website and we have people virtually interacting with people and making them healthy." Yeah, that sounds fun.

(01:02:17):
But the words we hear from our patients is like, "You saved my life. You gave my life back. I can't believe I can see my grandchildren get married." That's the kind of stuff we hear. And by the way, we hear this every Monday completely because the whole company tunes into an [inaudible 01:02:32] and we have one of our patients always [inaudible 01:02:34] including today's Monday, and tells their story. And it's crazy, but it's very special. I think also helps us all kind of center our work and focus and it's a good reminder at least once a week to all of us: why do we do this work?

Eric Ries (01:02:52):
It's such an important practice. And it's a practice that only companies that truly have that connection with customers can do. Because if people hate your product, you can't have them ... can't tune in every week and hear them berate you about your product-

Sami Inkinen (01:03:06):
You can't fake it. You can't fake it. Honestly, I-

Eric Ries (01:03:07):
Yeah. If it's real, it's real.

Sami Inkinen (01:03:09):
Yeah. So I like to say this, that every for-profit company has a mission and sometimes it's more hand-waving and sometimes even more hand-waving to try to convince that we are here to do good when in reality, I don't know, it's a bit arbitrage, day trading, or something. So what I often say is most companies are for-profit machines disguised as a mission-driven thing. So for-profit machines disguised as a mission. We are a mission disguised as a for-profit entity. That's what we are. We use capitalistic system, but it's just a tool. But I think it's the most effective tool to affect change in the world today, to have a capitalistic system be able to raise capital, incentivize employees with equity, incentivize investors with equity, and then have a for-profit model that fuels and feeds the mission.

(01:04:09):
And I truly mean it, that we are a mission disguised as a for-profit machine. I want our investors look and say, "Wow, I can't really believe the return on investment. I can create a lot of equity value, create a lot of value for my LPs or myself." That would be my dream. And then as a side product, or the most important thing for us inside the company at least, is we are solving a massive, massive health crisis. So that's kind of how I think about it.

Eric Ries (01:04:37):
No, I really appreciate you sharing that. My personal view, and I'm curious if this resonates with you, is that we ought to redefine what it means to be a for-profit company to be a company that maximizes human flourishing. So you create net new value, you create more value than you capture. That's what it means to make a profit. And these extractive businesses, they make money, but they don't create profit.

Sami Inkinen (01:04:59):
Yeah.

Eric Ries (01:04:59):
And they're at a competitive disadvantage because every time they act in an exploitative way, that's creating a liability, that's a weakness that companies like yours, you have that advantage.

Sami Inkinen (01:05:10):
Yeah, no, I actually very much like that. I've just taken the shortcut where I think, okay, well I probably won't be able to change the way people see companies and how they value. So I am just going to ruthlessly use the existing rules of the capitalistic system to do something good. Completely ruthlessly. Like help people make as much money as they can so we can do as much good as possible.

(01:05:34):
But I agree with what you said. I'd love that be the case. And I hopefully Reid Hoffman is okay with me saying this quote, because I heard him say this a couple of weeks ago on an event where I was ... so I guess it was off the record, but this is pretty funny quote. But he said, somebody was asking about LinkedIns, like how valuable it is and how we [inaudible 01:05:58], and he just said, " I think market cap is a really, really bad scoreboard. The market cap over company is a really bad scoreboard. The scoreboard should be something else, like how far you get on your mission that's trying to do something good in the world." I'm paraphrasing, but it's basically the same that you're saying, and I could not agree more.

Eric Ries (01:06:20):
Totally.

Sami Inkinen (01:06:21):
And [inaudible 01:06:21] on a market cap being the value of you as a founder or your team or whatnot. It's just ridiculous to me. That is the only focus.

Eric Ries (01:06:31):
A hundred percent. And in fact, I was just talking to a founder about this who was getting really racked up in the axle because they wanted to create a for-profit company and they said, look ... they described it in very similar terms to you. They want to use the tools of the capitalistic system to do good. And they said, "So our goal is to make as much money as possible in order to serve our mission." I said, "Well, you need to be careful what you say there because you say you want to make as much money as possible, but I can prove to you that that's not right.

Sami Inkinen (01:06:53):
Yeah.

Eric Ries (01:06:54):
"That's not what you believe." He said, "Oh, yeah?" I said, "Yeah, because you want to serve as many customers as possible and then make as much money as possible through that action because that's what creates the good. I know for a fact you don't want to create as much money as possible because if someone said, 'Listen, will you kill one of your customers for a dollar?' You won't do it even if that would help you make as much money as possible." He's like, "Well, obviously, of course. So I was like, "Well, so let's be more clear about what we mean."

(01:07:16):
The furtherance of the mission ... That's why I think having maximization is still such an important part of these companies. We want to serve as many people as possible. You've set this hundred million ambitious mission. I predict there will come a day where you'll have to reevaluate that mission after you accomplish it. You're on that trajectory. You're going to be like Microsoft when they famously used to say, "A computer on every desk in every home," and they had that real famous like now what moment and go, "No. We caught the car, we did the thing."

(01:07:44):
But I think that should be what entrepreneurs aspire to do, to build an economic engine that when the mission works, all the stakeholders are rewarded, everyone walks away happy, and that allows us to fuel it with more resources. But that's not the same as saying, "We'll do anything possible to make a dollar." Because of course you have pretty strong values about what you're willing to do and not do.

Sami Inkinen (01:08:03):
Yeah, and there was actually an element that you didn't even notice, but you implicitly called me out, which was a good thing because I forgot to mention one thing. That is, I have built in a sort of protective system so that the mission and the capitalistic outcome is aligned. And I get this question internally sometimes, people ask me, "Are you worried that maybe sometimes the people you hire, and then we kind of gear off the mission."

Eric Ries (01:08:33):
Yeah, yeah, yeah.

Sami Inkinen (01:08:34):
And so I said, "Well, I can't promise or guarantee anything. And I don't know, hopefully I won't, but at some point I will be hit by a bus or so something happens eventually. We don't live forever. The best protection that I have been able to figure out, and I think there are other ways, but the best that I have today inside Virta is I set the business model in such a way that the more people we treat and the more people we treat successfully, only then we get paid."

(01:09:04):
And so we basically have an economic model where we have to make somebody healthy to get paid. And so even if the whole company is replaced by ruthless dollar, optimizing MBAs, full disclosure, I did an MBA as well, nothing not against that.

Eric Ries (01:09:21):
Yeah. Some of my best friends are MBAs.

Sami Inkinen (01:09:25):
Then they have to deliver good, which then translates into economic value. So we had that business model. And I do have to say that particularly in healthcare, unfortunately, there's a lot of cautionary tales where-

Eric Ries (01:09:36):
If people don't have that ... without that alignment, without what we call the coherence of the model-

Sami Inkinen (01:09:42):
... investors are purely financially driven, the company's purely financially driven. There is no business model where you do more good and then you get paid for that. But it's more like selling drugs online kind of business model. There's already been cautionary tales, so I'm not going to mention company names, but [inaudible 01:09:56]-

Eric Ries (01:09:56):
No, we all know what you're talking about because we've all experienced it as a customer, let alone as an investor, as just a bystander watching in horror what's happened in our healthcare system. Do you have a separate care delivery company? Is Virta actually separate legal entities for the care and the technology?

Sami Inkinen (01:10:12):
Yes. So Virta is two different companies. So we have the Delaware corporation that's doing the technology and a lot of the business side. And then it's not even a choice. If you employ providers, medical doctors, there's a corporate practice, a medicine doctrine that says that limited liability companies, for example, cannot deliver on care. So we have two separate entities, no different from Kaiser Permanente.

(01:10:39):
There's the professional corporation, PC, as we call it, that employs doctors who provide care. And every individual medical doctor makes independent decisions about care and it is their individual license under which they can practice, not some corporate entity or whatnot. And so that's the structure we have too. And so it's no different from Kaiser Permanente in that sense.

Eric Ries (01:11:07):
Yeah, I call it a constellation of entities that make up a company. How did you set up the intercompany agreement? How did you prevent civil war between the entities? How did you think about each other, the role of the two entities and governance with each other? I'm just curious how you thought about that.

Sami Inkinen (01:11:20):
Honestly, this could be a one-hour conversation. I think there's elements on many levels, but two main levels. One is there are a lot of positive roles and regulations. What is possible, what's not possible, which means there isn't that much flexibility in terms of how do you actually set them up and what the agreements are between these two companies, and even how providers are compensated.

(01:11:50):
And what I can say about what's happening in a professional corporation, which is practically zero, and this is true. So that's kind of one part of it. It's pretty well regulated what can be done and-

Sami Inkinen (01:12:03):
... part of it. It's pretty well regulated what can be done. And oftentimes people are, "Regulation is bad." I tell you, a lot of regulation in healthcare is actually very good. That's one of the reasons for the most part in America, if you go to a medical doctor, for the most part, not 100%, you can be like, 'He or she has my best interest in mind, and they are only going to do something that's going to try to make me healthy." Again, it's not 100%, 100%, but we can be pretty sure that this is not some sort of a wonky money-making scheme, fortunately.

(01:12:35):
So the regulation is one part, and then there is this sort of, how do you structure what kind of people you hire, what is the culture? Did those elements, just intangibles, come to play? And so we have a chief medical officer who's, medical doctor, who is not reporting to somewhere down the organization, but he, Dr. Wolfberg at Alberta, reports to me. He also practice the medicine himself. He has some patients under his personal care, just so he has his mind and fingertips in that.

(01:13:11):
Then, but I do think this sort of, the mission, what's the business model of the company? The values and the culture of a company, they indirectly affect how the company is run. Again, don't know how the permanent is inner workings, but I'm sure there's like, how much are the physicians heard? How are the decisions made? Why does the entity exist? You can have all the regulation in the world, but if the intentions are pure and the mindset is cut corners at any cost, you can kind of comply with the letter of the law, but bad things start happening again.

Eric Ries (01:13:51):
Another recurrent theme in these conversations is the regulations only say what you can do, but we still have to have an intention that says what we should do. What do we want to do, if you don't want to make people well?

Sami Inkinen (01:14:05):
Exactly. Exactly.

Eric Ries (01:14:07):
Nothing else can help you. Did you take any other steps to protect the company's mission structurally? Do founders control chairs or board control anything unusual from a structure point of view, that you feel comfortable talking about?

Sami Inkinen (01:14:21):
We used to have founder super voting, but we decided to eliminate it to have good balance the power. This would be how the conversation, so we did have that early. Anyways, the short version of it is, my feeling was that Virta was such a crazy moon shot. Given the clinical and biological science of it, and given we were straddling two worlds, software and tech, [inaudible 01:14:54] and then this gentle little flower that could be squashed and killed accidentally, the science and the clinical side of things, it was important to have complete final control for almost a decade that we can see that the flower comes up strongly.

Eric Ries (01:15:13):
Yeah. It's much more important in the early days than it is later, yeah.

Sami Inkinen (01:15:15):
Then we reached the point where I felt like we need better balance, and so we did have that. So that was one, a structural thing. Then I would say the business model that I already explained, that we're only doing good when we're doing good, was the other one how I sit. Then I just repeating the mission.

(01:15:37):
Then I would say the last one is probably again, well, it's intangible, but it's kind of a soft thing. But at the end of the day it all comes down to people. What types of people do you hire? What are their intentions? What are their values somewhere else? People are like, "Oh, business contracts, and you got to protect this and that." You listen to the most successful business people in the world. I don't know, take Warren Buffett. His contracts are so simple, and I don't know him personally, but it's like a handshake. I just want to do people with not assholes. It's not like he's writing a 500-page contract to protect his interest. It's like, "I trust this person. It's a brief contract with a big owner."

(01:16:23):
So I think having those kinds of investors, and I've been fortunate to have many of those kinds of investors. One example who's still on the board is Venrock. I knew it's super high integrity. It's all about the data, it all about integrity. So having investors like that, they understand healthcare, they understand technology, having board members who understand the industry, and obviously executives and people inside the company. Then if people cross the line, then you just have to get rid of them or compassionately depart ways, but you can't have a house full of crazy people who are not aligned with the mission.

Eric Ries (01:17:02):
Yeah, alignment is everything here and trust is everything. I wanted to talk to you about GLP-1, because, obviously, people are calling that the super drug. Ozempic, not only is it causing weight loss, but it's fixing addiction and fixing this and that, and I have this innate skepticism of these super drugs. Not that it's not good, but that how many times we have to have this happen before we learn our lesson that these drugs are not, there's not there's no side effects. These haven't been studied for long-term effects and we don't know exactly what we're getting into. And of course, even in the best case scenario, we're contemplating having people be on this drug for their whole life if that's the solution to their problem. They hope that that will be okay. It seems like a bit of a risk.

(01:17:46):
One thing that really caught my attention is you gave an interview where you referred to Virta as the GLP-1 off-ramp. The off-ramp, that really caught my attention. I remember seeing it, I wanted to ask you about it. Explain to me how this could be the off-ramp for people for whom that drug has had transformative effect, but maybe have the fear of what it means for the long term.

Sami Inkinen (01:18:08):
Yeah, absolutely. So GLP off-ramp, happy to talk about that. Do you also want me to give a little bit of a context of GLP-1s? How do I see them in the obesity?

Eric Ries (01:18:16):
Yeah, yeah, yeah.

Sami Inkinen (01:18:17):
That's helpful? So very, very briefly. First this GLP-1 class of drugs, of which Ozempic is one, they were actually approved for the treatment of type two diabetes, 2005 by FDA. So we've had these drugs around for 20 years. However, when they came into the mainstream consumer zeitgeist was when the first one was approved for treating obesity, which was only like two years. But this was basically the same drug as Ozempic, but for weight loss.

(01:18:47):
So this is not a new drug, it's a class. GLP-1 class of drugs. What turns out we, at Virta, we have nearly 10 years of experience prescribing, de-prescribing, managing and optimizing the use of GLP-1s for our patients using telemedicine. So we have 10 years of data and history using these drugs. Based on that data, we can make pretty reasonably strong and conclusive statements.

(01:19:20):
Now I'll say a couple of things. First, I would say I'm a huge believer in the science, and all kinds of tools are needed to address type two diabetes and obesity. In no way are we anti these drugs. I do think these GLP-1 drugs not just for type two diabetes as it's been for 20 years, but also for obesity, it will be one tool in a toolkit for addressing obesity.

(01:19:43):
At the same time, I think we are very convinced that absolutely these drugs will not be the magic injection that's going to solve obesity. In no way. They will be one tool in a toolkit, but the real magic pill, if there is one, is nutrition through behavior change. That is the foundational way to solve our obesity epidemic, and I'll share the reasons why.

(01:20:11):
To your question about off-ramp, what do we mean by that? Well, first of all, most people, there's now data that shows, by Prime Therapeutics, one of the PBMs, that more than 2/3 of people who start on these GLP-1 drugs, they come off of them for one reason or another in less than a year.

Eric Ries (01:20:30):
Really?

Sami Inkinen (01:20:31):
So they don't stay. There's side effects, they don't like them. Some of it is cost. And the moment you come off, all the data shows that your appetite comes back in spades. So you gain back your weight, and oftentimes you've lost muscle and you gain back fat. So it's this massive bounce back. So then they're thinking, well, you should be on this drug forever because it's a chronic disease drug, but people can't or don't want to.

(01:21:00):
So this idea that we suddenly have 100 million Americans on the GLP-1 drug forever, it is not going to materialize. People have side effects, they lose lean body mass. The economic costs we wouldn't be able to afford. But even if this drug was free, in light of all the evidence we are seeing, it is just unrealistic that people would be on these drugs forever. Again, it doesn't mean that we never use these drugs. They might be a useful tool.

(01:21:26):
So what is this off-ramp thing? Well, we analyzed our last nearly 10 years of data, and what we were able to show among our Virta patients was when we pulled people off of Ozempic completely and other GLP-1 drugs, we were able to sustain this weight loss, which was about 10% average body weight, for more than a year. Purely nutritional, which is ridiculously exciting.

(01:21:54):
It's the data nobody else had been able to show. That we can, with our approach to nutrition, take people who are on these GLP-1 drugs, completely eliminate the drugs and then maintain the weight loss in a healthy way through nutrition. This is remarkable because what this shows is that if somebody needs to be on these drugs for a period of time, whether it's three months, six months, whatever time, there's a light at the end of the tunnel. You can actually maintain and sustain this weight loss.

(01:22:23):
So you don't have to deal with the side effects that we know. You don't have to deal with the side effects that we may not know. You don't have to be losing mean body mass. Seems like people are losing, which is horrible because you become fragile and [inaudible 01:22:37] goes down. And then also the economic effects. There's no way we can afford $1000 a month, $10,000 a year a patient. That's insane. Average healthcare cost is about $10,000 or so over a year. These drugs alone are the same as all the healthcare costs. This is insane.

(01:22:51):
So that's what the off-ramp means, and this is not some little pilot. This is 10 years' worth of data, well analyzed, now published and peer reviewed. So it is real that it is possible to sustain that weight loss after these GLP-1s, and I don't think anyone else has published that kind of data anywhere in a rigorous way.

Eric Ries (01:23:13):
There's probably some people listening to this that are not familiar with the science on metabolic health, and maybe don't know how to evaluate these claims now trying to think about their own health. Is there a resource? And I'll just say, having looked into the science of this, if you don't know about the science you really should for your own health. Please, please, please go read. We'll put some links in the show notes. Do you have a favorite book or resource for people who want to learn more about the science of metabolic health? Where would you point them?

Sami Inkinen (01:23:34):
Well, this may sound crazy self-serving, but we have lots of free articles and videos. You can go to YouTube, search for the health, or come to our website. We have a comprehensive blog where we explain a lot about metabolic health and you don't have to pay anything. It's free access fee, everything. Yeah, that's honestly the first thing that comes to mind. Then spend 5 minutes or 50 minutes or 5 hours, I think you'll learn a lot. So yeah, that would be my choice too.

Eric Ries (01:24:08):
Okay. I want to do just a quick lightning round, just because one of my favorite things researching these episodes is I get to just see all these cool quotes and interviews you've given elsewhere. I just want to ask you a couple of things you've said and have you react to them. We'll do it lightning round style. Does that sound good?

Sami Inkinen (01:24:20):
Yes, that's good.

Eric Ries (01:24:21):
Okay, here's a great one. You said that in leadership, inclusivity isn't just a choice, it's the cornerstone of genuine impact.

Sami Inkinen (01:24:28):
Sorry, lightning round is to say yes or no, or yeah?

Eric Ries (01:24:32):
Well, you said that. What did you mean? How did you put that into practice at Virta? Tell me a little bit about what that means. I think inclusivity is such an overused word, and yet I think people sometimes think it's just to make people feel heard. What else? What is it? But it seems to me you've incorporated into your leadership in a way that's more meaningful than that.

Sami Inkinen (01:24:50):
Yeah. Well, maybe I'll say two very practical things that we do. So every single one of our weekly executive leadership meetings, we start with the question of the week, which is about the humanity and us as human beings. So it's things like, I'll give you silly examples. "When did you cry last time? What it was learn from your grandparents?" "What's your one biggest regret in your life?" So every single one of our executive meetings, first 20, 25 minutes, we do a round where one of us that sets up the question and then everybody answers it. So that's an example of pulling something out of everyone. We all equals, we share, and then that creates connective tissue and trust between us. Then we can talk about some left brain, how do we, I don't know, lower CAC and improve LTV or something like that. So that's just one practical example. Way too many companies, you jump into a meeting and first thing you're trying to solve some business problem as if all we had were brains with computers.

Eric Ries (01:25:54):
I love that. That's great. What a great practice, too. I'm sure that just recognizing the humanity of all the people on your team must mean a lot to them too.

Sami Inkinen (01:26:01):
Yeah.

Eric Ries (01:26:03):
Okay, here's another great one. "The global job market tilts its axis towards regions rich in untapped human capital." What does that mean?

Sami Inkinen (01:26:12):
Well, actually, repeat again so I react exactly, because-

Eric Ries (01:26:17):
It was just about basically the idea that the global job market, that there's this opportunity in the regions that are rich in untapped human capital.

Sami Inkinen (01:26:27):
Did I say that, or-

Eric Ries (01:26:29):
Yeah, I thought so. Okay, I might've gotten it wrong. No, no. I don't want you to make something up. If you don't remember saying it then we'll let it go. I just thought that was such a great way of putting it.

Sami Inkinen (01:26:37):
Yeah, yeah. Now I remember. Well, first of all, I think having grown up in Finland, I have one appreciation or many appreciations of what Finland does very well, which is I think they maximize human capital very, very well, because of the education and the healthcare system that literally pulls anyone and everyone, gives them an opportunity no matter which family you were born to. And I think from a country of about 5 million people, Linux came from there. MySQL came from there. I don't know, I always left the country, but. And we have no natural resources there. There's no gas, there's no oil. We have some trees. Come on, there's trees everywhere. We have no natural resources. What do we have? 5 million people, one of the highest GDPs in the world, the happiest country in the world seven years in the running.

(01:27:28):
So why is that? And I'm sure there's a number of things that you could list, but one thing we do very well in Finland, we maximize the human capital and the potential there. Just 5 million people, and so I think it's an untapped opportunity. I think there's some systems get more out of the human capital than others. Some systems do better, but there's a lot of corners in the world where I think there's a lot of capacity that's untapped. I think that's a huge, huge, huge opportunity.

Eric Ries (01:28:01):
Talking about AI, obviously AI is on everybody's mind these days, and I thought this was very well said. You said, "True intelligence isn't born of magic, but rather meticulous human calibration and oversight."

Sami Inkinen (01:28:12):
Well, I guess maybe I'm romantic still, but I think for the time being, we humans have through our consciousness and ability to feel, we have this magical capacity to not just come up with new ideas, but know what's right or wrong, or what's better or what might be worse, which I believe to a large extent at the very bleeding edge is a subjective decision. We humans are the only creatures who can make those kinds of subjective decisions, and one of my worries is that if we think that they are objective decisions, we might outsource too much about human subjectivity to machines or algorithms.

Eric Ries (01:29:14):
I have to look up the quote. Someone says, it's like, a machine can never be held accountable for a decision, so a machine can never make a decision with consequence.

Sami Inkinen (01:29:22):
Yeah.

Eric Ries (01:29:23):
I'll have to get that quote and I make sure we attribute it to the right person. That always stuck with me. All right, you got time for two more?

Sami Inkinen (01:29:29):
Yeah, yeah, let's do it.

Eric Ries (01:29:31):
This is just, again, I like the lyrical quality of some of these quotes. "In the symphony of technology, each note is vital, especially the silent yet resonant pauses of caution."

Sami Inkinen (01:29:42):
Oh my god, this is so awesome. I can't believe I've said this, but if I have been. I don't know if I can respond to all of these things with words. Yeah, it's like the thing, I feel emotions when I listen to this. I'm like, I normally have words to describe. Yeah, I don't have words to describe or respond to.

Eric Ries (01:30:10):
All right. Last one. You talked a lot about, and you mentioned this briefly in passing, that you've done a lot of endurance challenges and athletic feats that the rest of us would find probably too painful to even attempt. And you were giving an interview where you said that a critical part of it was becoming one with the pain. I think at the time you were talking about extreme sports, but I was like, "Boy, as an entrepreneur, that also sounds familiar." I'm curious, just talk a little bit about what that's like in the context of physical pain of it, and then do you resonate with that, that there's a certain just pain tolerance required when you try to do something really difficult?

Sami Inkinen (01:30:49):
Yeah, absolutely. I may have said that in the context of rowing across the Pacific with my wife from California, Hawaii. It was about 1 million oar strokes each, and those were 1 million painful oar strokes. There wasn't any, it didn't feel good. It was painful, 1 million times painful. I realized sort of viscerally at one point, maybe it was 200,000 in and 800,000 more to go, that constantly thinking about, "Oh my god, this is uncomfortable. What am I going to do? I can't wait to get off of this. What am I going to eat when we get off in Hawaii in two months' time? Am I going to have a hot shower? What's the soaps going to smell? And I can't wait to," it is a way to just do what it is to increase the pain. It is increase the pain. The ultimate solution is to embrace and accept the pain and be one with it.

(01:31:52):
The longer you explain to yourself how hard it is and how to get out of it, and have this sort of, almost a secondary pain. I think this is a Buddhist saying where there's two arrows, one arrow hits you and it hurts you. And then the second arrow is that you start explaining, "Oh, why did they shoot me, and why did that happen?" And that was when you become one with the pain and you accept it, you become one with it, you can tolerate anything and you stop explaining it. I think that's what was behind it. That honestly helped me. Not just helped get through the row, but it became enjoyable, which is a really crazy thing to say that you are like, "This is it. There's no way out of this. This just is it," and then become curious about even the pain. It actually became a wonderful feeling, which just sounds insane.

(01:32:50):
I think there's a lot of things in entrepreneurship as well where if you are always beating yourself and trying to explain, "Oh my god, why me? Again, seriously me?" Friday evening and you're resigning or whatever, you're just going to make it harder for yourself. You have to immerse yourself, embrace and become one with the experience, the good or the bad. It's part of it. It's absolutely part of it. There's beauty in that experience and you can find it, but you have to find by embracing it, both good and bad.

Eric Ries (01:33:28):
The ancient Greeks called it Metis.

Sami Inkinen (01:33:30):
Yeah.

Eric Ries (01:33:31):
It's an ancient wisdom teaching, and now we'll make sure we have a link to the Buddhist parable of the arrow, and where it came from. I hadn't thought about that in the context of business, but it's so true. If you can't accept that what is happening is happening, it's just going to be that much more painful.

Sami Inkinen (01:33:50):
In sports, you get to experience those all the time. If you do on a bike or running, you do intervals where you taste blood in your mouth, literally, and lactic acid. It's just painful. Then you have a choice at that point, assuming you don't quit. It's like, mentally you have a choice. You can either like, "Oh my god, why me? How many more seconds? Why this?" Or, it just is. And obviously this physical, at some point your body just gives up. You can't go. But mentally you can just embrace and go like, "Okay, wow, that's interesting. I haven't felt this before," and I find it is liberating on many levels.

Eric Ries (01:34:32):
Boy, as a metaphor for entrepreneurship, the 1 million painful strokes. I think that's a new one I'm going to add to my vocabulary, but it's so true. Sami, I really appreciate everything you're doing to help so many people in the world, have built this engine of world positive effects. Shout out to our friend James who coined that phrase. I wanted to say thank you for coming on and sharing your story, and I hope inspiring a lot of other people to walk in your footsteps and endure the pain, but for the sake of creating something great. So thank you.

Sami Inkinen (01:35:05):
Thank you.

Eric Ries (01:35:06):
You've been listening to The Eric Ries Show. Special thanks to the sponsors for this episode, DigitalOcean, Mercury, and Neo4j. The Eric Ries show is produced by Jordan Bornstein and Kiki Garthwaite. Research by Tom White and Melanie Rehaq. Visual design by Reform Collective. Title theme by DP Music. I'm your host, Eric Ries. Thanks for listening and watching. See you next time.