WCI #281: Physician Entrepreneurism and Venture Capital With Dr. John Shufeldt

This is the White Coat Investor Podcast where we help those who wear the white coat get a fair shake on Wall Street. We've been helping doctors and other high income professionals stop doing dumb things with their money since 2011.

This is White Coat Investor podcast number 281, entrepreneurism and venture capital with Dr. John Shufeld. If you're like most doctors, nobody taught you anything about personal finance or investing during your undergrad, professional school or residency. Even though your family and perhaps even your business rely on you to be the Chief Financial Officer, you have never been given the tools to succeed. Enroll in WCI Financial Bootcamp, a free educational email series, and learn to convert your high income to wealth. You will learn the basics of investing, saving, insurance and more. Your high income alone will not lead to financial success, but as always, we want to help you on your financial journey. Go to whitecoatinvestor.com financialbootcamp to sign up today. You can do this and the White Coat Investor can help. Our quote of the day today comes from Henry David Thoreau who said, I know of no more encouraging fact than the unquestionable ability of man to elevate his life by conscious endeavor. And I think that is the truth. All right, today, as this podcast drops, it is September 22nd. Don't forget that our new real estate course, which is awesome, is on sale at $400 off, but only until September 26th at midnight. Okay, it's 1799. This is a course that's four times as long as fire your financial advisor. We know it's expensive, but it's only two and a half times the price of fire your financial advisor. If you've been interested in real estate, whether that's publicly traded REITs, whether that is private funds or syndications, whether that is long term rentals, short term rentals, fix and flip, whatever it might be that you are interested in real estate, this is the course for you. You will develop the vocabulary of real estate. You will develop a framework on which you can hang future information that you learn about real estate investing. And it will give you the background information you need to know to be competent while investing in this space. We call it no hype Real estate investing. I've never been a big fan of hype or salesiness, sometimes even described as sleaziness in the real estate space. So we've tried to put together a course that is just the facts, ma'.

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I'm really honored to be here. Thank you, Jim.

Before we get into the real reason we have you on here, I want people to get to know you a little bit better. So let's start at the beginning. Tell us about your upbringing and what it taught you about money.

So I was raised in Chicago, suburb of Chicago. I was adopted an early age out of an orphanage. And my parents were both World War II veterans and incredibly conservative in all things, but particularly in how they spent money. And so we grew up very middle class. And, you know, I learned early if you wanted to have extra money, you had to earn it. So I got allowance by doing work around the house. And I also shoveled snow, mowed lawns, made candles and sold them, all sorts of things the kids do growing up to earn a few extra dollars. So I definitely learned, you know, hard work pays off if you want to earn extra income.

Awesome. So at Some point you decided that you weren't going to sell candles and mow lawns anymore, you were going to go to medical school. So tell us about your education and training and your medical career.

So I went to school, always went to college, always thinking I wanted to be a physician since I was about five years old. And despite the fact that it did very poorly in high school, I got into one college at Drake in the, in the Midwest. They said I was a Harvard of the Midwest until they let me in. Then they, then it slipped quite a bit, obviously. But I kind of found my footing in college was an RA and a hall director. So I got some tuition support that way, took out loans and got some tuition support that way as well, and then worked on an ambulance as an EMT while I was in college in Des Moines. Finally did well enough in school, took the MCAT and got into Chicago Medical School. You know, kind of a crazy circumstances. I got into Chicago Medical School and then went through that and loved it and started into an emergency medicine residency at Christ Hospital on the south side of Chicago.

And then what'd you do? What kind of jobs did you take after you got out?

So I stayed there and worked as an attending and I also got a full time job at a hospital in Naperville called Edward Hospital. And then a year later we moved. My wife's an internist. We moved to Phoenix because her family was out here. I took a job as a medical director for a kind of a small little regional hospital halfway between Tucson and Phoenix. And I stayed there for 10 years as their ED medical director. I had ultimately got the contract for the emergency department, expanded to three other emergency departments, and then also started an urgent care in 1993 called Next Care. And Next Care grew to about 60 urgent cares, about 100 million in revenue over 17 years.

Are you still practicing now?

I do, yeah. So I have a business called Tribal Health that we staff about 30 different facilities all on indigenous lands across the country. And so I'll go out, I'll fly out to the different reservations if we have a staffing shortage or if someone is ill. And you know, as you guys know with COVID that's happened a lot recently. And then I still practice at St. Joe's which is a big tertiary care center in Phoenix, where I was one of the co founders of a group there. So there we have four hospitals, two freestanding two hospitals and about 40 physicians. So I'm their business manager and I still practice there occasionally as well.

So you've walked the Walk. You've talked the talk, but you've also done something very different, very unique with your career. So tell us about your non medical career. You've already alluded to a few of the things you've done, but I want to hear about some of these entrepreneurial things you've done.

So I went back and counted. I think I've started 15 businesses and had I think 12 exits in three decades. And so it's ranged from everything from hot dog stands. Growing up in Chicago, hot dog stands were a big part of my diet and so I brought them to Phoenix. And it took me a while to realize that people didn't eat hot dogs when it's 120 degrees outside, but in the winter they did. Well, I also had a business called Private Autopsy where we would do private autopsies. I hired a bunch of pathologists to go around and if someone needed an autopsy or their loved one needed an autopsy, we would do that. Had a business called SlideSmart where we had about 12,000 medical images. This is pre Google days. And if you were a medical student or resident and you needed images of anything pathology related, anatomic or microscopic, we probably had a slide for it. And they could download the slide, this is in the early 90s, or we'd send them a 35 millimeter slide and sold that business. And then, you know, kind of the real big first one was Next Care and that was in 93, starting urgent care in Phoenix area in a suburb outside of Phoenix. And then grew that over really 17 years. Brought in private equity in 2008 and grew that to about 60 centers. About 100 million in revenue left in September of 2010. And then in October, I started a company called me MD, which was a virtual medicine company that we sold to Walmart a year ago. And then I've had a myriad of other businesses along the way also.

That's a lot of different businesses. Yeah, obviously every one of them's unique, just like every child's unique. But try to give us the general trends here. Tell us about the life cycle of a startup business.

So, so the general trends of the business I started were like, probably everybody who listens to your podcast, it's, you're in the business, you see something in healthcare, they thought, God, I wonder, you know, I wonder why this is the way it is. I mean, somebody must have thought of this already. And then you realize, well, God, no one seems to have thought about it. No one's really doing it at scale. And then I can't help myself. And I go, well, maybe I could do it at scale. And so that's how the urgent care started. I was, you know, working in an emergency department in Chicago was when I kind of got the first mindset. There were. There were some spotted urgent cares around, but they weren't really very prevalent in late 80s, early 90s. And somebody came in and said their chief complaint was, I was almost stung by a bee. And I thought someone was, you know, jerking me around. I go, wait, you didn't get stung? And he goes, no, I was almost stung. And I used to work on a bee farm growing up, so I hate those little bastards. And so I had some empathy for him, but then I realized he didn't really get stung. And I finally said to him, I go, wait, why are you here? You didn't actually get stung. He goes, but I almost got stung. What do I do if I come in? What do I do if I really get stung? I said, well, maybe then you should come in. So anyway, so I had this idea like, there has to be a better place for people who are almost stung by a bee. And that was kind of the urgent care world for me. So I started that thing. And then I was over in Moscow, and I wanted to start an expat clinic in Moscow, but I went into McDonald's, and the food was the exact same as it was in the US So then I thought, you know, I wonder why no one's franchised healthcare. So I started franchising these urgent cares and franchise six of them between 95 and 96. So again, I saw this way to expand without a lot of capital because I didn't have a lot of capital. And so we started franchising urgent cares. I later on went on to my doctor's Express, which was a real urgent care franchise, in about 2012, and sold that off after a couple years. That's about 18 months, actually. But to answer your question specifically, I see what I perceived as a need. Lack of images for people trying to do medical presentations, lack of availability of a pathologist if someone needed an autopsy on their loved one. Too many people going to the emergency department for complaints that I did not need that level of care. I mean, I trained on the south side of Chicago as a knife and gun club. That's what I liked. But the almost stung by AB guys is not so much. And then telemedicine was the same. You know, it just made sense to me that I didn't know many people or anybody doing it in 2010, although I learned Afterwards that there were a few. Like, half the people I see in the urgent care are like, wait, I don't even actually need to touch you to figure out what's wrong. I just need a decent history and to talk to you like this. And I can probably come up pretty good idea what's going on with you. And most of that I can treat virtually. And that was the start of that.

So the first thing is you identify a problem. You have a solution to the problem. What comes next?

First off, you want to identify a problem that's large, that happens frequently, and that everybody experiences it. So that's the first thing. Then you think, okay, well, maybe I have a solution to a problem. So then what I counsel people do now is come up with an mvp. Maybe that's the first urgent care. Maybe it's using your iPhone to do a FaceTime visit back in the early virtual medicine days. So it's coming up with a solution and then beta testing that solution. Like, for me, I describe myself as a constant state of beta. Like, I'm not quite there yet. I'm a work in progress. And that's what most of these businesses are like. When you start, they always say, if you're not embarrassed by your mvp, by your early product, you started too late. And so I would do things that would embarrass the crap out of myself in the sense that probably starting this too early, it's not really working. But I get a lot of feedback from people who say, you know, John, you're an idiot, like we all know, or wow, this is kind of a good idea, but it's going to need a hell of a lot of work. And so that's the next iteration, that's the next step.

Tell us about that work step as you improve the product. I mean, you're trying to sell it at the same time you're trying to improve it. How do you balance that?

So it's a constant iteration. And the people that you get early are the, you know, the early adopters. And you want them to be hypercritical and so you want feedback from them. So you have to go out and solicit the feedback. And sometimes the feedback's phenomenal and you're like, I can't believe I didn't think of that. I'm embarrassed. Or, well, that's great feedback, but probably not appropriate for what I'm trying to do. And then you really narrow your use case early on. Like Jeff Bezos with Amazon, he started with books. Very narrow use case compared to what they do today. So then you expand your use case as you tackle, as you solve one problem after another for whoever your user group is, and you can expand it that way. But you know, for most businesses and you know, for the urgent carers, we were constantly iterating about services to offer everything from services to offer to hours to ehr. You know, we were very early in the EHR world and changed that probably daily for three or four years to make it as streamlined as possible. But I think emergency medicine physicians, I think physicians in general, and really emergency medicine physicians in particular, we are all born entrepreneurs because if you think of what makes physicians physicians, we all have resilience, we all have a degree of intelligence, we all understand work ethic. None of us are quitters because you'd never get through medical school and residency in college for that matter, if you were. So we all have the tools integral to start a business. And you know, really thanks to you, you know, a lot of us have had the moniker in the past of oh, you know, physicians are bad business people. That's basically crap. I mean, God knows I'm sure we've all made bad business decisions like everybody else has. But I think out of every other group I can think of, physicians are born entrepreneurs because we've had to be.

Okay, so what about when you get into this part of the cycle where you realize I'm putting a lot of work into this way, more work than maybe I should, considering the financial returns I'm seeing from it right now. There's some promise down there. I think this may still take off, but I'm in this work hard stage on it, and my time would be more valuable seeing patients or doing something else. How do you determine whether you stick with it at that point or quit and do something else?

It's a great question. And I had people over there say to me, you know, if you would just stop all this craziness and just see patients, you'd probably do a lot better in the end. Well, you know, knock on wood. Fortunately, that did not turn out to be true. But what I realized early is that for most of us, most physicians, if we're not working, we're not making money. If we're not seeing patients, we're not making money. And I always thought, how can I make money when I sleep? What A better way to make money is when you're not actually there doing anything. So that for me was starting something that could scale, that brought in income above and beyond what I could do practicing medicine now I was Fortunate because I always was able to practice medicine. I'd gone back to school a number of times to try to learn things that were kind of on a pragmatic basis that I needed, but it was always basically doing both. And so when you're in this process, there are going to be times when you think this is not as easy. I thought it was going to be. But I learned if it was easy, somebody would have done it already or everybody would be doing it. So you want it to be hard. You know, there's this great Sigmund Freud quote that someday in retrospect, this year is a struggle you'll look back on as the most beautiful. And repeatedly now I have been in the midst of something. This just sucks. I mean this is just dragging and, and I am killing myself here. But when I look back at it one, three, five years later, those are times I remember and laugh and long for and say, God, that was a lot of fun. I mean we just, man, it was tough, but we just crushed it in the end. Or it failed miserably. But because that failed miserably, I was able to pivot and do this other thing that had that not failed, I would not be where I am today. And where I am today is pretty damn exciting. And so I think if you can approach it that way, like no matter what happens, if you have this perspective of you're in constant state of beta, you'll come out on top because you will have learned something, you'll have had a lot of fun and you may be able to apply it to something else in the future. And for me also, it really has prevented burnout in medicine because I've always had other things to do. And so when I go back to the emergency department, I actually look to forward, forward to it. And you know, I'm now down to six, eight, just a month. But I look forward to it because it's different. I mean I miss the patient interaction.

Yeah, I can relate to that for sure. All right, so you've now, let's say you've now built one of whatever this is, it's successful, you know, urgent care, whatever it is. And now it's time to scale. Tell us about the scaling phase for a business.

So I'll tell you the mistakes I made is probably what best highlights. So when in the urgent care stage and when the urgent care days we were self funded for 15 years, we brought in private equity and closed the deal. On the Friday before the Monday the Lehman Brothers failed and it was 25 million in debt, 25 million in equity. And the whole time our investment banker was like, come on, come on, come on, dude, what's. I mean, we're going to get this done. Why are you rushing so much? And he goes, I've always learned to keep your foot on the gas. So fortunately he was right. Cause we would not have closed the next week. I mean, once Lehman Brothers failed, you know, it was 2008 and everything imploded. So after you get your MVP done, you know, for me it was friends and family, my own money, triple mortgage the house, some friends and family money, and then just grew by cat with cash flow. So I'd open one, it would start cash flowing. I started planning the second one. I'd opened the second one, it was our cash flowing. I'd planned the third and fourth. And I grew organically like that. Not the smartest way to scale with me. MD didn't take any private equity or venture capital. It was all friends and family. The virtual medicine business, I think to do it if you want to, you want to hold off on venture capital as long as you possibly can, because you want to build as much value for your value creation for yourself and the other people in your ecosphere before you bring in venture capital. Now I'm saying that and I started the venture capital company about eight months ago. And so we're now, we're out funding businesses. But I advise people, you know, as long as you can hold off and then when you really need to scale, bring in outside capital. But everybody's money is green. So bringing capital that can add more than money. Bringing capital can add expertise, can, can open doors for you that has already been there, done that. Not just a check.

Okay, so at this point, we've, we've found something successful, we built it, we've scaled it. Now we're starting to look at the exit stage. Tell us a little bit about that.

Well, you know, the theory is you'd always plan the exit at the beginning. Of course, I never did that. But I think it's smart to do because a lot of your business structure that you set up initially will help you determine the exit. And so for example, do you use, do you set up as an llc? Do you set up as a C corp? You know, those are business and tax decisions which, and you can change them, but you know, if you set it up right at the get go, it'll make a life a lot easier. And you know, the, the exits really are a couple. One is sell to sell to a VC or pe. Sell all of it or part of it already sell to a strategic someone who's in your same space, who may want to knock you out of competition or assume the assets that you have and intellectual property you have. And then the final one is, you know, go public. And then there's various ways to go public. I think SPACs have fallen pretty far out of favor right now. And so it's kind of back to traditional ipo, but that process takes a solid year, if not longer. I mean IPO is over a year, but when we were acquired by Walmart, it was about an eight month process and we had the biggest company in the world buying nearly the smallest company in the world. And so the due diligence was excessive, but, but fair and appropriate.

So looking at that whole cycle from idea to exit to you, what's the best part and what's the worst part of that cycle?

In many respects, the worst part's the exit. So for me personally, I like creating things. I'm great at the startup phase, the operational phase, the day to day, grind it out phase. That's not my strong suit. So I've always tried to hire people who have a different skill set than I do and replace myself. And so I'll take board seats or I'll be standing as an advisor, but after a period of time I don't want to be the CEO. I'm a startup guy. And so like for example, NextCare was probably the CEO too long with me MD, I hired a CEO after about seven years and then just was chairman of the board after that. So I guess the worst part personally is once it's up and running, once you're starting to scale, just the day to day grind of blocking and tackling, that's not my strong suit. So I think figuring out what your strong suit is hiring around it, we all make the mistake of, wow, you think like I do, you look like I do. You have the same training I do, so therefore we should be partners in this wrong thing to do. You want to find people who have very different diversity in all aspects helps.

All right, you mentioned earlier that you think doctors are the perfect people to be entrepreneurs. Do you really think that, that all doctors are cut out to be entrepreneurs? Or if not, what percentage of doctors do you think could be successful in some entrepreneurial pursuit?

You know, I have met physicians from literally now every specialty who are entrepreneurs. Everything from psychiatry, because you want to think psychiatrists, they're probably not going to be the risk taking entrepreneurs, killing it to neurosurgeons. Who probably have zero time to be entrepreneurs and they come up with a device or something and they're crushing it. So I think we all have it within us if we so choose. Now the challenge, of course, is time and resources, and so some specialties have very little time to do it and maybe some have very little resources. Emergency medicine, you know, we were fortunate. We have both or we can have both.

You know, when you look at the percentage of these, you know, physician led startups, what percentage of them do you think fail, meaning they never make a significant profit justifying the entrepreneur's time?

You know, I don't know. I mean, the common rule I've heard is that 80% of all startups fail within five years. And I've certainly had a couple that have failed in five years and I'm not at the 80% range, but you know, my home runs, I've had a couple home runs, but a lot of them have just been, you know, a double. But again, I've had a couple of failures that failed within two years. One was called Healthy bid. Healthy bid was a reverse auction for diagnostic procedures and outpatient surgery. So I need my gallbladder out, it's not emergent. And I've got a high self pay, high deductible plan. Well, I'm going to get the best price and the best surgeon. So we set up a reverse auction where I put my records out there. Surgeons and surgical centers could look at and say, you know what, we've got a space next Tuesday. If we can just cover our costs, it's a win for us. You'll pay 40% of what you would normally pay. Let's do. Didn't work. It was probably a little early, but it failed in 18 months.

So it does happen, obviously.

Oh my gosh. Yeah. Well, it certainly happens to me a lot. But I mean, I would say 30, 40% of them never really get off the ground, or a lot of them get off the ground and just kind of peter along for a while. And the person says, yeah, I can make a little money doing this, but I make more money just practicing. But I do think with the right temperament and the proclivity for taking some risks, I think most physicians have the intellectual capacity and the resilience to be great entrepreneurs. And that's really, I mean, the resilience is what it takes.

So what can doctors and others do to reduce the likelihood of failure of their startup business?

I think a couple things. One is find people who think differently than you. You know, Henry Ford has that Famous quote, if two people are thinking the same way at the boardroom, one of them doesn't need to be there. So I think if you can find people who have, who bring in different talents and have, have a diversity in your startup, in your, you know, founders, that's one thing. Number two is make sure you have enough capital. And whether, again, it's your money, friends or family doesn't matter. I always like to start out with when it's just me until I prove it, but a lot of folks just run out of, run out of Runway and then by the time they're out looking for money, their backs are literally against the wall. And you know, I've made those mistakes. And they said, you know, we had our house was triple mortgaged and, and you know, I made every startup mistake in the book. So lack of funding is another one. And then not vetting your idea amongst the population, who are going to be the likely users, you know, if you tell your friends, hey, we got this great idea, what do you think? Most of your friends will say, yeah, that's really cool. But if you say it to a group, who your user group is, and say, what can I do to make this better? Does this solve a problem? Is this problem pervasive? Is it costly? Is it recurrent? And the answer is yeah, yeah, and yeah, okay, you may have something here. And so I think if you really vetted out early, build your mvp, don't spend a ton of time or money on it, and then iterate as you go. You know, if you look at Instagram, I think Instagram was a photo sharing app before it really became Instagram, or almost like a meetup app. And so Airbnb was only for events and Uber was only for limousines. And so if you look at a lot of these companies, where they are today was not how they started. So you want to make sure you retain this ability to be nimble and react to the market and not just to what you think the market should be. So those are the four.

I like that. Costly, pervasive, and persistent. That's a good rule of thumb for the problems you're looking for to solve, because those are the ones that a business can be successful by solving.

Right. I get a lot of business pitches that are great pitches and great ideas, but I just can't figure out how they'd ever scale it. Or the, or the market's dense with the same sort of people, dense with people trying to do the same thing, but the ability to scale, to really grow it and that for me, the virtual medicine in 2010 was that wide open, kind of that blue ocean of, wow, this could really impact a lot of people. And I started it for behavioral health because, you know, as well, you see a ton of people in burns power with behavioral health issues, and there's nowhere for them to go. And plus, there's a stigma around going anywhere. No one was ready for behavioral health virtually in 2010. So I pivoted to urgent care, which I had some knowledge about, and that got some traction. And then we finally added behavioral health probably about 2018.

Yeah. Which is the, which is the obvious use, you know, I mean, because the physical exam matters so little in so many of those patients. All right, So I think a lot of people, especially people that have, that are in a successful business, wonder about how do they, how do, how are they going to know when it's time to sell?

So it's a great question. And you know, it's hard to sell your baby because you've, you've watched it grow up, you've been there for it, and many of us think, you know, if I'm out, this business is going to fail because it all revolves around me. I was able to miss that logic train because I'd always try to replace myself at some point in it. So I've always learned that one, it's easier to sell a promise than a trailing 12. And so if you can find a way that you're selling on the uptick, you're not trying to time the market perfectly that you sell on the way up, that, to me, was always the perfect time. Now, you may not get the most money you could have gotten for it, but she'll get out before the marker crashes, before Lehman Brothers exits and doesn't get bailed out. And so selling as it's climbing, where you're selling the story as well as the trailing twelve was always seemed to be the right time for me. And again, I probably sold too early in some respects, but I did not want to sell too late.

Is there a growth percentage when you're growing at 80%, you shouldn't sell, but when you're only growing at 20%, you ought to consider it. Do you think there's any rule of thumb that's useful?

There's no. I think it depends on how big of an exit you're looking for, really. I mean, if you're looking at going public, you know, having these huge year over year and even month over month increases certainly helps, helps tell the story. I never wanted to be A CEO of a publicly traded company. So again for me that was, you know, and we really didn't have a company that was going to go public. I mean me, md, Walmart's obviously publicly traded, but that's as close as I wanted to come to the public markets.

You know, tell us a little bit about raising money. When you run out of your own capital and you know, friends and family won't give you any more. A lot of people talk about A, B, C and D rounds. Tell us about that process.

So I mean for most entrepreneurs you start off with what's called a seed round or some even pre seed. And you know, with pre seed rounds you can go to angel networks and there's a number of online angel networks. One's called angel networks but there's a number of them out there right now. And that's a great way to raise money. Venture capital is another way. And venture capital, my venture capital firm does seed and Series A. So we do, you know, it's considered higher risk in the sense because it's not fully vetted but it's higher stakes. So the venture capitals for higher return on investments, they're looking for the proverbial unicorn and they know they're going to get about a 20% to 30% fail rate in the groups of companies they're funding. And then as it starts, company starts cash flowing and being successful. Now you need more money to scale. Now the rounds become much bigger. The percent ownership goes down less because the company has more value and the risk is less because now the company's already been well vetted, now the risk isn't zero. I mean look at Softbank investing in Uber. I mean they took a bath on a number of things lately and they're generally late stage investor or they were a late stage investor.

So you hear about angel investors, you hear about venture capital and you hear about private equity. Do you think these sorts of investments are worthy investments for a typical investor? Why or why not? And if so, what percentage of a portfolio should it comprise?

So I do think there, so I think this should be part of your overall asset strategy. They fit in their own bucket. And the buckets, you know, it's, it's time specific so late in your life probably, probably a much lower percentage earlier in your life when you're 30s and 40s and, and are willing to take more risk. Absolutely. You know I would say 8 to 14% is probably a reasonable bandwidth for private equity and VC. They're generally lumped together. They have a longer term Horizon. You know, Most funds run 10 years. You know, you get, you can get, depending on how it's called a European waterfall versus an American waterfall when you get your money out. But they do have, if you're with the right VC fund, they, you do have a decent chance for a great return on your investment. You know, 20 to 30% IRR internal rate of return on your investment. And, you know, you may get the proverbial unicorn. Peter Thiel famously put half a million dollars into Facebook, and as I recall, it was about a $2 billion return on that money.

Yeah, I think you had it all in a Roth ira, which worked out very well for him.

Yeah.

So assuming somebody wants to add this to their portfolio, they want to invest in venture capital, what do you think's the best way to do it?

Venture capital is often hard to get into. So first off, you have to qualify on the net worth, so you have to be an accredited investor. And I think most of us probably can qualify for that just on our income potential and our assets. And then it's finding a venture capital fund who is constructed and invests in things that you have an interest in. So, you know, one of my mantras was never invest in something that I don't really understand. And so when I didn't understand it, I would try to go back to school and understand it. So for physicians who know health tech, I mean, I would, you know, I purposely stuck in health tech because that's what I have some background on.

So you, you've decided, you mentioned eight months ago that you started a physician VC fund. Why did you do that? What do you hope to accomplish there?

So like I said, I, you know, I've made every mistake in the startup book, and so I probably have something I can share with founders, so they have less gray hair and less wrinkles than I do and make less mistakes. So really it was to work, because I really like working with entrepreneurs, imparting whatever wisdom I can impart. So again, so they don't make the same mistakes. And I want to make Steve Jobs set a dent in the universe. So doing it through health tech, things we know about, makes a lot of sense to me. And so in many respects, it was a way to give back. And in many respects, it was kind of the next, you know, again, I'm in a constant state of beta. It was the next evolution for me to move from working on a single project to working with a number of great founders on multiple projects.

So when you're looking for a founder to work with or you're looking with a business to partner with? What are you looking for? You mentioned angel round or a seed round and series A. What are you really looking for when you're out there combing through businesses?

So have they done it before? What was the outcome? And in some respects I don't care if it was, if it was a huge success rate, I mean, it portends that they'll be successful again. But if it was a failure, I'm okay with that because God knows I made them. And you learn as much from failures you do from the successes. So that's number one. Number two, do they have resilience, kind of the personal qualities? And then is their business scalable then like we talked about, Is it, does it solve a need that's repeatable, expensive to solve and recurrent and is not going away? So do they really have a zero to one idea? And you know this is a, from the book 0 to 1. Is it something that's never been done before and it's going to dent in the universe or is it a one to end? Is it another urgent care like God knows we've got enough of them. So that's something excite me too much. But if someone comes up with something new, very excited about it.

What do you look for when you're looking for investors?

Probably patience and a willingness to help. So you know, if we have, for example, you know, we've raised about 25 million of 100 million. We'll have our first close here end of October. I love having investors who I can pick up the phone and say, hey, we've got this, we've got this company we're looking at. It's dermatology related. It's using AI to diagnose rashes. I'm just making this up. What do you think about that? You're a dermatologist. Can I send you the app and see what you think? So having physicians as LPs limited partners is awesome because now we have this pool for those who want to be in it, of literal experts who can say, yeah, no, it doesn't make a lot of sense or wow, that's really bad. This is something that I think we should invest in if everything else makes sense.

You've been inspired by one of my favorite quotes that I refer to frequently when I've been hearing a lot of criticism of, of my business or me personally. It's also a favorite of Jack Bogle's. It comes from a Teddy Roosevelt speech given in Paris, as I recall, and often referred to as the man in the arena. Let me read it here. It is not the critic who counts, not the man who points out how the strong man stumbles, or where the doer of deeds could have done them better. Their credit belongs to the man who's actually in the arena, whose face is marred by dust and sweat and blood, who strives valiantly, who errs, who comes short again and again because there is no effort without error or shortcoming, but who does actually strive to do the deeds, who knows great enthusiasms, the great devotions, who spends himself in a worthy cause, who at the best knows in the end the triumph of high achievement, and who at the worst, if he fails, at least fails while daring greatly, so that his place shall never be with those cold and timid souls who neither know victory nor defeat. What about that quote inspires you Everything.

So. So this will. You'll be able to relate to this. So, a long time ago, I was. I was in residency still. I took care of this guy, and he was dying, and he knew he was dying. He was on hospice. It was literally his last day on earth. And he had this look on his face. And I. And I was kind of watching him from, you know, across this Ed. And I looked at his face, I got, man, that guy is going, if only. That's the if only look. If only I had fill in the blank. And I go, I will be damned if I'm on my deathbed with that look on my face. So then I saw this quote by Hunter Thompson about life is not to arrive at the grave and a well preserved body, but to slide in sideways, totally worn out, yelling, holy, what a ride. I'm like, it's kind of the Teddy Roosevelt quote in a nutshell. Depending on what you believe, we're only going around once. And I'm going to lay on my deathbed and go, what a ride. I want to be the man in the arena. I don't care if it's with my own blood and sweat and dust. I don't want to have the if only look like I saw in that guy's face. That was it for me.

Now our time's short, but what have we not talked about today that you think our audience of 30 to 40,000 high income professionals ought to know?

First off, thanks for all the work you've done. Covid's been difficult for all specialties, so I applaud you for doing the great work you've done. Number two is, you know, as a physician, we are in the perf. We have the perfect opportunity to have multiple streams of income, which I know is what, what White Coat Investor is all about. And you're, you're way ahead of the game simply by listening to your podcast. Because I see so many physicians now. I'm working with a couple who are in their 60s who are like, I can't stop working. I, I, I, that don't have enough for retirement. So the fact that you have 30 to 40,000 people who know and are already thinking about this is super impressive. But my take home point for them is, look, if I can do it, anybody can do it, you can certainly do it. And so be the man in the arena. Don't lay on your deathbed saying, if only take a little risk, whether it's your own personal startup or whether you're investing in one of your colleagues startups through an angel network, through a venture capital fund. But be the man in the arena. Don't have the if only look on your face.

All right, John Shufelt, it's been great to have you on here. If people want to learn more about you or get more information about the fund you've started, where can they go to find that?

Accelerantventures.com so it's Xcell is the way it starts. Accelerantventures.com they can check me out on LinkedIn when they can frankly, just email me. It's jschufeltcelleradventures.com awesome.

Well, thanks for being on the show and for sharing your wisdom.

Thank you. Appreciate it.

All right. I hope you enjoyed that interview as much as I did. It's always fun to see docs out there doing it and killing it. John's had a lot of successes. He's had lots of failures. And I think that's the story of entrepreneurship here at wci. We throw a lot of things against the walls to see if they'll stick. Some things do some things don't. Some turn out to be smashing successes. Some are reasonably successful, maybe worth the time we put into it. And lots of things we've done have been total failures. And that's just kind of the way entrepreneurism goes. Obviously any sort of private investment, like a venture capital fund, a private equity fund, angel investments, even private real estate investments, all of those have a certain level of, of risk. So even if you qualify for them by virtue of your income, if you're an accredited investor, because you make $200,000 the last couple years, you need to make sure you're truly an accredited investor before you invest in them. And what I mean by that is that you're able to lose your entire investment without it affecting you financially, number one, and number two, that you are capable of evaluating the investment without the assistance of another financial professional. If those aren't true, you don't belong in any sort of investment that requires you to be an accredited investor. If you're like most doctors, nobody taught you anything about personal finance or investing during your undergrad, professional school or residency. Even though your family and perhaps even your business rely on you to be the chief financial officer, you have never been given the tools to succeed. Enroll in WCI Financial Boot Camp, a free educational email series, and learn to convert your high income to wealth. You will learn the basics of investing, saving, insurance and more. Your high income alone will not lead to financial success, but as always, we want to help you on your financial journey. Go to whitecoatinvestor.com financialbootcamp to sign up today. You can do this and the White Coat Investor can help. All right, those of you who are also not aware, especially if you're listening to this after it's dropped, please. PIMDCON 22 is going on right now. Okay, it's September 23rd through 25th. By the time you hear this, it's probably too late for you to be coming in person, but you can still come virtually. The virtual Last call is 597. Okay, you can buy that through the end of the conference on September 25th. The link to buy that is whitecoatinvestor.com PIMDCON22 this is the conference put on by Peter Kim. I'll be speaking there as well, as well as all the big names in the physician real estate space. So if you're interested in seeing that conference, check it out. Whitecoatinvestor.com pimdcon22 thanks. For those of you who've been telling your friends and family about the podcast, it really does help spread the word. It also helps if you leave 5 star reviews, so I thank those who do that. Our most recent one came in from jmilly110 who said life changing. I picked up Dr. Dali's the white coat Investor book in med school and devoured it as my first real intro to anything to do with personal finance. It sparked a joy for the hobby of investing and personal finance still running strong now a couple years into practice. I've since read and audible several books and spent a good deal of time on his blog posts, reaching back to these routinely for every new financial task my family encounters as a pediatrician, I find my colleagues tend to be even less financially interested than other groups of docs. What can I say? We didn't go into it for the money. So I spent time teaching about personal finance and funneling more docs his way as a resident, Chief Resident, and now with office partners. This podcast helps me get my fix when I'm getting ready or driving to work in the morning, and I credit it for keeping the spark of teaching alive, handing out White Coat Investor books to students who come through our office. Anyway, thank you Dr. Dali. What a kind review. Thank you for that. And thanks for the work you do as a pediatrician. The rest of you, keep your head up, shoulders back. You've got this and we can help. We'll see you next time on the White Coat Investor Podcast.

The hosts of the White Coat Investor Podcast are not licensed accountants, attorneys or financial advisors. This podcast is free entertainment and information only. It should not be considered professional or personalized financial advice. You should consult the appropriate professional for specific advice relating to your situation.