Martin Shkreli Recounts His Rise and Fall in Big Pharma

I think again, when it comes to being a good entrepreneur, if you have, you know, one hand tied behind your back, you fight with the other hand. If you have two hands tied behind your back, you fight with your legs. You know, you have to find a way to win. And if people are giving you money, it's kind of like your sacred oath to defend that money with your life. And I think that what I don't like to see in Silicon Valley is when people sort of fail, which is natural, but they kind of embrace the failure to the point where it's like nonchalant.

Like, Yeah, it's almost flipping and like kind of gross where it's like you had a real job to do.

You know, you can kind of like take the little, you know, about pharma as an average person and say, oh, this is a bad guy. But then I come to the table with an amazing amount of knowledge about pharma. The New York Times said it was an encyclopedia of pharmaceuticals. And, you know, I love this industry and, and you have to sort of understand the vagaries of it to really make sense of what I did. It's kind of like watching, this is really arrogant to say, I have to be really careful here, but When I watch great chess players play, I don't understand what they're doing and why, because I'm not a good chess player. It's hard for me to sort of go to Kasparov and say, hmm, you know, I don't think that was a good move. I would never do that because I know that he knows what he's doing. Now, you could argue that I don't know what I'm doing, but I do know a lot about pharmaceuticals.

Hey everybody. Today I want to share my favorite episode from a podcast called In the Arena, where entrepreneur Jesse Janae and I interview Martin Shkreli. Martin's a former biotech entrepreneur and investor who served time in prison. In this episode, Martin is candid with the story of his rise and his fall, reflecting on his learnings and why he's making a comeback attempt as a software entrepreneur. It's a worthwhile listen, even if you have preconceived notions about Martin. He's fascinating. Let's dive in.

We are very lucky to have a very special guest, Martin Shkreli, the man who needs no introduction. Martin, welcome to the podcast.

Hey, Erik. Hey, Jesse. Thank you for having me.

Yeah, of course. So we're going to drop you into a moment, if you'll bear with us, and I'm guessing it's a very, very difficult one. But if you could take us there, there's a moment where you're running a company and you're like a busy entrepreneur trying to do things out in the world, but then you find out that you are being indicted. And if you will humor us, instead of talking about the bigger implications of that, even though they're just huge implications, if you'll actually try to give us that moment, like, where were you? Literally, were you with friends, not with friends? What'd you do right after? What are some of your thoughts? Just to kind of make it feel real to us, like instead of this abstract concept?

Yeah. So, you know, it was really difficult. It was in December of 2015. I just sort of weathered, I felt like the Daraprim storm of raising the price of Daraprim in the summer of that year to a lot of like controversy and a lot of pushback. You know, we basically decided not to back down, to sort of steel ourselves and say, this is why we did this. We think it's the right thing to do for all stakeholders. And we put our foot down, which was, you know, a very unusual sort of approach. And we had mostly weathered it, you know, the volume of media had dropped pretty dramatically. The revenue of the company was a little less than $100 million a year, which was a pretty good-sized private biotech company. And then we just acquired a publicly traded company. So we had our own publicly traded company that was worth a few hundred million as well. And things were looking really good. You know, it looked like the Daraprim scenario or mess was hopefully going to be in the rearview mirror. And then in December 2015, I just got back from a business trip in San Diego, and at 6:00 AM, I was woken up by federal agents. It was, you know, fairly startling. You know, you don't—

Fairly? Yes. It sounds extraordinarily startling.

Yeah.

That's not what typically happens next day after you come back from San Diego.

Yeah, no, that's crazy. I mean, I've been in a lot of crises and kind of crazy moments in my life, so I feel like there's nothing quite can prepare you for that. But I think that as an entrepreneur, there's sort of a little bit of, you're always on the edge of your seat and you've kind of seen it all from missing payroll to having a vendor sue you or something like that. You know, when things go really south, which can happen sometimes, Um, you know, you have to be able to sort of process it, compartmentalize it, and react. And it's sort of like something as big as that is hard to, pretty hard to do.

Uh, so, so this, so you get woken up at 6 AM. I'm guessing you're woken up and that there's like some jet lag because 6 AM your time is 3 AM. So, so you're like literally just kind of recovering from a, from a business trip time-wise and sleep-wise. Do you understand what's happening at the moment? Like how, uh, Luckily, this exact life situation hasn't happened to me. So I'm just curious, like, how much it actually, how many moments it takes to realize what is happening and how clear or not clear it is, because I can imagine actually just being legit confusing.

Yeah. So, so about a year earlier, maybe 10 months earlier, a Bloomberg reporter who would end up being my girlfriend broke the story that I, I was, uh, yeah.

Figure that.

Um, I just talked to her the other day, uh, broke the story that I was being, uh, quote unquote investigated. And, you know, over time we've come to realize that, you know, basically the prosecutors kind of use the media to, to sort of, you know, leak, uh, you know, information. It's actually a crime, believe it or not, to leak a grand jury, um, uh, testimony and grand jury proceedings. So it's, it's the, the person who charged me with the crime was committing a crime during that.

Yeah.

Process anyway. And it's not a small crime. There have actually been people who have been indicted for doing that. The AG in Pennsylvania, I believe, was sent to jail for doing exactly this, going to media and sort of opening an investigation, which they have wide purview to do, and slipping to the media, hey, you know, do you know Erik's being investigated? You know, Jesse's being investigated. And it's like, well, that's a pretty nasty story to wake up to. And so it puts a lot of pressure on the person who's being investigated. It's basically pretext for indictment as well. And we just saw a pretty big indictment the other day of historic proportions. So, you know, there's no doubt there's some politicization in some of this stuff. And I feel like, you know, so I kind of knew there was something brewing. So it wasn't a total surprise to me in the sense that, you know, it didn't come out of nowhere. You know, I hire lawyers, they spend millions of dollars to try to convince the government. not to bring, you know, any charges or anything like that, how difficult it would be to prove in court that I did something wrong, which it turned out to be very difficult. I did win most of the charges against me where I was acquitted of, and, you know, they still proceeded with it anyway. And I think there was this, you know, you know, we, I think we know the reasons for that to happen, but talking about my perspective, I kind of understood that they were kind of pulling the trigger on this indictment.

Yeah. So at that point, because of the lead-up, you know, that morning it's still shocking, like, but you, but you do actually understand what's happening because of the lead-up. That, that makes sense. That's, that's not context I would've like normally thought through myself. Um, and then, and then I'm curious what it's like for your team, like, and the company that you're running, because again, I think something that is kind of easily lost But not on me thinking about what it's like to run a company is like, you know, you're thinking there's some very real personal ramifications, but you're also like, you have a job and people who rely on you. And there's like an all-hands probably happening like within a week of that. Just if you could help us understand that perspective of like what starts happening at your company, what it's like with your team and things like that too, that would be kind of cool.

Yeah. Yeah. So obviously, you know, the first feeling for me was tremendous guilt. You know, I had, you know, around 300 people or so working for me, 250, that kind of neighborhood. And working at our company, my colleagues, my co-founders. And, you know, I, you know, if you look at sort of the companies I've started, I foster these really close relationships with my coworkers. I really try to sort of, make it clear that, you know, we're a team, we're a family, we're in this together to sort of prove everyone wrong. And the Terraform controversy actually galvanized us even more. I think there were some people that weren't on board with the controversy, but it sort of brought us together as a team that we were going to fight this together and that it was unjust. And again, we had started to feel like we won. So this was like a tremendous disappointment. You know, there's a mix of reactions. I mean, there were some people that were mad at me too, And, you know, there was a lot of sympathy though, as well. I think the biggest problem was we were, we had a publicly traded company, which, you know, is really, really sort of a tough development for a publicly traded company to have their CEO arrested. Fairly unprecedented. And for the privately traded company, I think restructuring, kind of taking steps to sort of make changes is something that you can kind of recover from. I mean, I've always said that a CEO is just one person. Most of the work of the company is done by everyone else. And the CEO's job is to lead and to try to get the team motivated, try to get the most productivity out of them. But the company, especially in biopharma where the assets sort of speak for themselves, it's important to execute on those assets and make sure they are operated the right way. But it's very different from, say, software where there are things to do every single day. In biopharma, you kind of oftentimes are like waiting for the outcome of a trial. And a lot of pharmaceuticals sort of sell on like kind of like an automatic mode, like Daraprim had been used for 50 years. It wasn't about to stop being used, you know, so no matter kind of what you do, as long as it's available, it'll sort of sell. So in pharma, the culture and the environment is quite a bit different from software where you're thinking about business expansion and you're thinking about new features and you're thinking about, you know, customer service and UI/UX and all of these little changes you can make to your company. None of that really exists in pharma where you may be planning the new deal, but that's sort of, it's very much like a bolus, like impacts that come every now and then. So, but if you're publicly traded, it's really tough because there's stockholders that are trading your stock every day. There's long-term stockholders that maybe just invested in your company where we just did a financing. So that was really Uh, frustrating. It was like, are we going to cancel this financing? Are we going to try to give the money back? There was a number of really terrible situations. So it's really like the worst possible thing that could happen to an entrepreneur, right? Like you really could not—

You just dropped in like, yeah, like every bomb. It's like, just like you're imagining on a daily basis, what's the fire I'm going to discover today as an entrepreneur, just on a normal day? Like what's the fire I'm going to uncover? But on this day, it was just like, you open your eyes and it's just fire. Like just everything.

And it's interesting you say that because You know, what I would've liked to have done is been told that I was going to be indicted, because sometimes they'll actually do that. And they won't do it if you are a violent criminal that might flee or something like that. That's not me.

Right.

We had been in close communication with the government many times. So it's really not like, you know, something that, you know, they could have just told us to surrender on Monday. I gladly would've done that. I wouldn't have booked a flight to somewhere. There's no, you know, it's crazy idea. And certainly they could have prepared for even that kind of eventuality. So self-surrendering would've been the fair thing to do because I could have resigned ahead of time, right?

Mm-hmm.

I could have sort of said, let me put some things into place to minimize the damage of this sort of mess. And I think the government in so many ways, You know, actually created 10 times the mess that could have been created, that, you know, could have been preserved. So our publicly traded company, like I said, went from about $200 million eventually to pretty much close to zero. It dropped like 70 or 80% on the day of the arrest. And right then and there, you're talking about, you know, basically creating a several hundred million dollar loss for shareholders that are relatively innocent shareholders that just sort of expected to buy stock and maybe see it go up or see it go down, but not see somebody get arrested. And again, having, you know, resigning or something like that could have softened that blow quite a bit for those folks. And then, you know, again, the same thing for the privately held company. So it was really kind of like, you know, the government being a bull in the china shop, causing huge amounts of damage to all kinds of things, all for an arrest to prove a fraud where nobody lost money, which is like a very, very, you know, nitpicking kind of crime, which, you know, was sort of the outcome of the trial that would take place a few years later. So really kind of like frustrating to sort of see that. But we, as entrepreneurs, we kind of see that all the time. We see regulators make decisions we don't agree with. We see kind of, you know, lawsuits don't go your way or something like that. You know, an employee, ex or current employee wants to be a whistleblower, even though you don't think you're doing anything wrong. Those kinds of things happen to entrepreneurs every day. This kind of stuff doesn't. But, you know, I think that it's one of these things where you could, you know, sort of chalk it up as another kind of unknown, unknown, unexpected development. Is your company resilient to something like that? And I was really proud of the company, the privately held company, which was fairly resilient to that kind of stuff because it had revenue, it had a pipeline. A drug doesn't stop working because the CEO is arrested. So it's a decent question to ask entrepreneurs is, is your company resilient to you being arrested? And I'd say for most people, The answer might be no, but in things like SaaS or pharma for sure, with FDA-approved products, the answer is probably yes. I mean, at the end of the day, could somebody pluck you out of your business? For us, this would be just fine.

Yeah.

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So, you don't have this opportunity to pre-do any actions, which is sad. And I'll bring it to a human level just based off guesswork, but there's plenty of people working at both those companies who are just in entry-level positions or like, you know, who are maybe have stock and are also very hurt by this. You know, just kind of normal people are affected, you know, not just you in a very real way. And of course the shareholders, but because you don't have the time to pre-bake anything, what is the internal comms like? Like, is it, do you, is there like Slack at these companies and is it like blowing up that day? Like, make it real for us, like as though you're inside the company, if you can.

Sure. Yeah. That day I was inside a cell, so I'm not really sure what happened on the Slack, but the— no, the joking aside, it was a traumatic day. I think there were people, we had one executive who was very talented and he ended up starting his own company and doing really well with it. We had actually a number of people who did that and did really well. So I looked at my sort of crew and squad as You know, pretty resilient sort of mini entrepreneurs themselves. I always want to find people that want to be a CEO, want to start their own company. It's a lot better to hire people like that than people who aren't so driven and don't want to do anything really meaningful. So, you know, in biopharma, you know, each specific asset kind of has its own life and bringing executives in who kind of want to champion an asset and push it forward is almost like having their own little company. But to answer the question, I feel like, you know, there were certainly people panicking. There were people who, you know, I think over the course of the day realized that, you know, this is one chapter of their life and they'd find many more. So I was in charge of the, obviously the whole company, but really personally in charge of the business development and mergers and acquisitions and kind of licensing team that sort of looked at opportunities to acquire companies or even acquire stock in companies. And so it was like about a 10-person group that was sort of like a private equity fund in some ways. And virtually every single, I know what every single one of those people have gone on to do. And I'm really proud of every single one of them. Several of them became CEOs of their own startups. One of them sold one or sold 2 startups now, which is even crazier in that time, started and sold 2 different drug companies. I'm really proud of them. And many others are at top hedge funds and things like that. So in private equity, so I'm really happy for every one of those people that's landed really well. So I think that if you have a team of superstars, there have been companies that have had catastrophic failures. I can think of hedge funds, for example, which are kind of in this notoriously difficult to live space where I think the top, I have some database, but of like the top 30 or 40 hedge funds to ever exist, I want to say a good half of them have been shut down for bad reasons. So, you know, or at least have had brushes with law. So in places like that, you know, we're kind of used to that trauma. I also was in hedge funds myself. So, you know, there's this sort of like, you know, expectation that you can just get up and go to another shop, probably not unlike venture, although venture doesn't have quite the same roller coasters of hedge funds. So I was really proud of those people. Certainly we had the capital to sort of survive and shut down in an orderly way. whatever needed to be shut down or reduction in force or whatever. And so the publicly traded company actually kind of got a second life after this. It got another chance at redemption for a COVID-19 drug. It didn't end up working out for them, but the company did a financing and sort of came back. And I didn't think, I don't think many people needed to be let go there. And then certainly in the main drug company that was private, there was a restructuring, but it didn't have to happen that day. So I think I came to the office, I think the day after or a couple days after and explained that, you know, I wasn't going to be the CEO anymore, which was a really tough decision we should talk about as well. I somewhat regret that decision, somewhat don't probably, but I decided that, you know, I wouldn't be the CEO and, you know, I would sort of take some time to focus on the case. And, you know, it was, I got a lot of support, you know, which was really nice. But, you know, I think there was still this this issue where if you're being accused of something, and I think Nancy Pelosi did this the other day with the Trump indictment, you know, you're supposed to be innocent until proven guilty. She said that Trump had a chance to prove his innocence in the court, and Twitter actually corrected the statement with their community notes that said Pelosi misspoke. You know, you're presumed innocent in the court of law until you're proven guilty, not the other way around. Of course, I think we know that's sort of a farce. And the speaker's comments, you know, are pretty clear that that is a farce that, you know, once you're indicted, you have a 97-plus percent chance of being convicted. So, you know, there is no escaping this kind of thing. And, you know, ultimately, you know, I couldn't and didn't blame employees who said, oh, I didn't know Martin was a bad guy. You know, and certainly after the Bear Print controversy, you know, there was already this sort of like, okay, this guy's really taking our company in a weird direction. He's fighting the media. He's fighting, The government. He's fighting all these folks that you're not supposed to fight with. That's the dogma, right? Don't pick a fight with somebody that buys ink by the barrel and don't pick a fight with people that can arrest you. And once I sort of got arrested, you either felt one of two ways. You felt that, oh, this is a person who had been lying, cheating, and kind of been a scumbag all along. And the Daraprim is evidence A and the arrest is evidence B. Or you felt that they were causal, that, okay, you dared to challenge the administration and the authority. And now you find yourself arrested for kind of somewhat spurious claims. So I think, you know, whether you believed in column A or believed in column B, neither of them were particularly good. But I was happy to have some people that were, you know, sort of, you know, by my side and wanted to stand by me. I still think there was a lot of frustration that, you know, you don't sign up for a job where, one, the CEO gets into this massive fight with the world at large, and then two, gets arrested. That's a whole lot to take on as a coworker.

And if you could have gone back, would you have not done that? And maybe say more to the audience who may not be familiar what exactly you did do and what you got charged of. Because, you know, if you listen to very surface level, some of the media was saying, oh, you know, having this flawed narrative of Martin is raising drugs on, you know, drug prices on sick people. So why don't you talk about what is the thing you were actually charged of and what do you think that, you know, you did or didn't do? And maybe reflect on those decisions.

Yeah, I'll try to give as brief of an explanation as I can. Over the course of our careers in pharma, both as a hedge fund/private equity investor, and then as an entrepreneur, we had routinely bought drugs that drug companies didn't want anymore. And we raised, in essence, to just be clear about it, we raised the prices of those drugs. We felt like we were normalizing the prices of those drugs, not that we were like, you know, rapaciously kind of trying to manipulate or extract some rent or something like that. If you look at medicines that cost sort of a normal price in the medicine world for a rare disease drug, it's like a 6-figure price. So we found drugs that were really underpriced. And, you know, it does sound like, you know, there's some, something nefarious going on here, but the problem is that to actually have an FDA-approved medicine on the market, you often need revenue to support having that drug on the market. If you don't have the revenue, The drug won't stay on the market. We've seen this time and again. We actually rescued a drug that was abandoned by big pharma that the big pharma didn't understand that there are actually about 100 people who had an extremely rare condition called cerebrotendinous encephalomatosis, which is fatal, that this drug was actually used for. They didn't know that because they're a big drug company. They got 100 drugs. What do they care? And so they abandoned the drug because the main drug, the main use of the drug was actually for gallstones. And they didn't know that there's this really, really small amount of people who are literally life dependent on this drug. But it was such a small seller that this big European drug company said, you know, it's being discontinued as of this date. And, you know, the amount of people that take this medicine is 60, no joke, 6-0 in the United States. And so we calculated a price where it would make sense for us as a company to field the drug and for patients as well. And we actually would take patients out. It's only 60 patients. We met all the patients and met all the doctors treating those patients because it was a handful of people. And we explained what we were going to do, that this disease is so rare, it's so unknown that having this revenue is sort of a source for our company to be able to not only make the drug in a reliable way, make it in a— because again, it was about to be discontinued. We then would rescue a second drug that was in a manufacturing stockout. So imagine having this terrible disease. In this case, it was kidney stones, recurrent chronic kidney stones due to a genetic malformation. And you can't take your drug because the drug company forgot to like send a shipping order or they're missing a raw ingredient or something like that. And that happens if you also have a low selling drug. If you have a drug company with 20 drugs and drug 18 needs a manufacturing run and you, somebody forgot or something like that or whatever, then, you know, it is what it is. It's not going to crush the company. But if it's your biggest drug, you don't forget, right? If it's your biggest product as a software company, you are on top of it. If it's like a product you haven't looked at in 8 years and it was just kind of legacy then, Yeah. Okay. I didn't know the site was down for 3 days. Oh, well, how about that? And again, when you're dealing with people's lives, the site can't go down. This isn't pager duty. You need to make sure that your drug is available all the time for people who need it. And that needs real money. And I think that there's this fear that a drug shouldn't cost more than X, or that how could somebody afford a several hundred thousand dollar drug? And you get all these misconceptions about healthcare. They go into one big pot and it feels very scary. You know, the rare disease world is my specialty. And in the rare disease world, when you have a drug that has dozens of patients, maybe low hundreds of patients, your price has to be so high to recoup your investment, to recoup just having to do, having an office, having regulatory people to talk to the FDA, having manufacturing, all that stuff's really expensive. And if your company isn't profitable, it's going to be really hard to field the drug. And at Big Pharma, they can subsidize these smaller drugs, but eventually they get sick of doing that. And a lot of these drugs like Daraprim had been passed around 4 different companies who all didn't want it.

I heard you say something about that you can actually be prosecuted for not maximizing profits. Especially, there's situations like you have shareholders, you have responsibility to to people for that. And I think that is, you know, in thinking about running a company, I think that is something that can get lost here is like, who are you serving in this instance where you're running a business? And I don't know, I'd just love to hear you speak to that because as you talk about this subject, you know, like you actually have a job that you're supposed to be doing in this context, whether people like it or not.

Yeah. And I'm getting a little off track too, so I want to make sure that I give you a good answer. But I remember when I was about 19 or 20 years old and I was working at a hedge fund. I worked at a Tiger Cub called Intrepid and still close with the big boss there. And this is in the sort of old days of Tiger when the Tiger Cubs are still relatively new. And I started buying up Our funds started buying up a percentage of this company that sold an antibiotic, and I urged the CEO of the company to raise the price. And he was this sort of French guy, a little bit of an aristocrat, kind of a very hands-off CEO, super nice guy, but not really that dialed into the business. And I said, "Monsieur, you know you have to raise the price of this drug." And he said, "I don't want to price gouge anybody. This is not a good idea," et cetera, et cetera. And I pressed on him over and over again. I said, "It's your duty to do it." One, because I'm a big shareholder and you have this really important asset that is very important to patients in hospitals and you're charging a low price. And he said, so what's the problem with that? And I faxed him back in the day, fax machines. I faxed him a list of every antibiotic that's used in the hospital and their price. And I said, yours is on the bottom, as you can see. And it startled him. And I said, are you telling me that your drug is not valuable, that this isn't an important medicine, that this drug isn't worth what these other drugs are worth. And I pointed out to, you know, other antibiotics. This drug is just as valuable as those drugs. You deserve this revenue. And that is the speech that convinced him to raise the price of the drug. And that company went up to be about a 10x, 20x return after they raised the price of the drug. There was very little, if any, arguments by anybody that it was a bad thing because that exact reasoning applied, right? That we were, they were paying for different IV drugs in the thousands and thousands of dollars. This drug is $60. And I was sitting there saying, you're saving somebody's life and it's $60 and you're a struggling company that had a mountain of debt. You can raise the price to a fair price. It doesn't have to be the several thousand dollars your competitors are charging, but just double the price or triple the price. And that way you can afford to make your payroll, you can afford to do some R&D, you can afford to pay off some of that debt, and you can make me happy as a shareholder. And they finally sort of capitulated and did it. And it was It was honestly the best thing they ever did because they would end up becoming a very successful company. They got bought out for $3 billion. It was a penny stock when we started and they ended up revolutionizing the treatment of another disease called HAE, which may not have happened if it wasn't for me prodding and poking this company to sort of get the most that they could out of this medicine they had. The drug ended up going generic and is back down to even lower than $60. So there's kind of like a long-term benefit there if you're sensitive about the price.

Absolutely.

The market corrects itself in pharma. So for me, raising drug prices wasn't something that was born out of greed. At my second company, I never made a dollar in salary or in dividends. So to this day, that whole exercise has been for $0. The whole Daraprim escapade made me not one penny. And I think that if a drug company has resources, it probably should avoid price increases. But if a drug company doesn't have resources, The VC window could be closed, right? In biopharma VC, the world is not like tech. It is kind of a shit show in biopharma VC, and it's not easy to raise money to do things necessarily. And the stock market's not always cooperative either. So sometimes you have to sort of make your own financing. And I think that this is one way to do it, especially if you're doing it in a fair way where you're bringing in the stakeholders, you're going to do R&D. A lot of these rare diseases, like the ones I mentioned, There's not been R&D in that disease for 20 years. So when we went to the doctors who were like the king KOLs of those diseases, they were thrilled. They were like, oh wow, someone's paying attention to CTX or PKAN or any of these weird illnesses that just, you know, there was one person, one doctor, I'll never forget this, who was in New Jersey who said, I'm afraid to die. And I said, why is that? He said, there's not anybody who knows anything about CTX. He was a very old man. He was about 85. And he said, Really, it was really a touching moment where he said, I don't want to die because I know, you know, I'm 85 and I'm going to die at some point, that who's going to take care of these 60 people that have this disease? Nobody knows about this disease. Nobody cares about it. And it was really touching. And I think it's sort of on us to sort of say, well, let's sort of make this interesting for somebody. Let's give out a grant to learn about this disease and things like that. So, you know, you can kind of like take the little, you know, about pharma as an average person.

Yeah.

And say, oh, this is a bad guy. But then, you know, I come to the table with an amazing amount of knowledge about pharma. The New York Times said it was an encyclopedia of pharmaceuticals. And, you know, I love this industry and, and you have to sort of understand the vagaries of it to really make sense of what I did. It's kind of like watching, this is really arrogant to say, I have to be really careful here, but when I watch great chess players play, I don't understand what they're doing and why, because I'm not a good chess player. It's hard for me to sort of go to Kasparov and say, hmm, I don't think that was a good move. I would never do that because I know that he knows what he's doing. Now, you could argue that I don't know what I'm doing, but I do know a lot about pharmaceuticals.

Yeah. So you raise prices to make it sustainable to run a business, and thus you could get products that previously wouldn't be in people's hands otherwise. I get that.

What's the crime?

That's the theory. And again, we stood fast to it. I don't think there was ever any Bugatti or Lamborghini bought with these kinds of funds. We did spend a lot of money in research though. So years ago I had a hedge fund and in my hedge fund I misrepresented allegedly various things about the fund we raised. It was a very small fund. We raised, I want to say around $8 million and we returned over $20 million to investors. So it was a good return. In fact, one investor testified that there was no harm, no foul, and that He had been a lifelong investor in hedge funds, including Soros and Greenlight, many great funds. And he said it was the second best hedge fund he'd ever invested in return-wise. He said the bookkeeping was very bad. You know, Martin was pretty sloppy about how he managed the fund. He said, but that's what he expected. It was a, he's seen many of these types of mom-and-pop operations, 2 people in a Bloomberg type of hedge fund. And, you know, it was sort of par for the course to some extent. He said, It was, even though it was this maybe the second best hedge fund return he ever got, it was probably the second worst in bookkeeping. And, you know, I, I, you know, that's the—

Second worst. Second worst is pretty good.

Yeah.

I think that, you know, that there's sort of this, you know, there's no doubt that, you know, there was a period of crisis in my fund and there was stuff in it that I wish I'd done differently. But I also felt like ultimately there's something called prosecutorial discretion where The government has to pick crimes that make sense to prosecute.

So they got you on a technicality? Yeah.

I mean, listen, I'm not proud of what I did. I don't think it rose to the level of a crime, but I think that even if it did, you know, it's kind of a, you need to have a victim, you know, in a fraud. I also buy the argument that let's say I was pitching you to invest in my hedge fund and I said, I have a really elaborate quantitative investing fund with 50 computer programmers and all kinds of complex formulas, and you gave me a million bucks and I went to Vegas and flipped a coin on roulette wheel and it came up red and I picked red and I had $2 million and I gave you back the $2 million. You know, technically I defrauded you. I told you this elaborate story to get your money, but all I did was really, you know, go flip a coin.

Yeah.

And is that a crime? Yeah, it's technically definitely a crime, you know, when it comes to the law and statutes. But is this somebody that should be prosecuted? And Bloomberg, not The woman I ended up dating. But another Bloomberg reporter said, if Martin Shkreli didn't lose anyone's money, then it was in their headline, then did he commit a crime? And one reporter, I think it might've been Matt Levine or one of these folks, said that it was basically like a financial joyride. You know, if you stole somebody's car, brought it back with the buffed and oil changed and like, you know, fixed up, you know, that's kind of the crime. And I don't, I wouldn't necessarily dispute that. You know, I was 20-something. I, had a chip on my shoulder. I had been in hedge funds for a little bit. I wanted to start my own fund and be the big man on campus. And investing is really terribly hard. I teach a lot of investing on, and talk about the markets on YouTube. And it's one of these things where you have to be really patient and really careful in being a great investor and being a good hedge fund operator are 2 very different things. You can be a very good investor, but actually not run a hedge fund the proper way, which I think firms like Citadel have shown that operational business excellence can lead to great outcomes and the return matters, but the return is just one part of the product. You want to have a lot of other things. So I didn't care about compliance or accounting or things like that. I just cared about the investments. And most of my clients were relatively satisfied, if not ecstatic. Some of them have come back to me and said, can you manage my money again? And it's sort of like a difficult thing to be labeled a fraudster. Or to go to jail over. But I think that, like I've said earlier, being an entrepreneur is about getting punched, getting kicked, and getting up again. And I, at that point when we started, zoom out a little bit, when we started our first company called Retrophin, which is now called Travere, it's still on NASDAQ. It's a billion and a half or so dollar company. All the assets of Travere were assets that I found and me and my team found and created. We created this company from scratch and we're really proud of how big it's grown and how successful it's been. And when we started it, it was this kind of thing where it was very, really difficult to raise money. We were not marquee VC people. I think it was like 25 when we started the company. And I was known as sort of somebody that knew something about pharma, but no operating experience, nothing special. And Raising that first $4 million was one of the hardest things in the world. We raised $50,000 from a dentist. We raised $100,000 from another friend. And I went to institutions. The reason I did this is I thought that my friends who owned and ran hedge funds would invest with me, and they didn't. So it was like really surprising and difficult to see people who I'd been trading with, shorting stocks together, making money together for years, pass on our deal. And I was just sort of like, you know, this is wild. And I meet people like Peter Thiel who was very supportive and other kind of more entrepreneurs and VC type folks that were interested. But I was really hoping that the hedge fund crowd would subsidize me, especially the people I knew. Over time, that ends up what happens, you know, the hedge funds invested in our company, And we did sort of a reverse merger, which is sort of like a SPAC, but without the cash. And so we did a reverse merger and, you know, you can raise cash afterwards. And that's what we did. And of all people, Vivek Ramaswamy, who's now running for president, was our biggest backer. I didn't know Vivek from a hole in the wall. You know, all of my hedge fund friends passed on our deals. And, you know, we raised not only the first $4 million, That's amazing. At a $20 million valuation, which we just picked out of a hat. We thought that sounded reasonable. And then we, as a publicly traded company, our valuation didn't really change and our stock didn't trade very much, but we found people who were interested in raising and helping us raise $10 million. We raised $10 million, then we raised $20 million, and then we did sort of an IPO.

It's weird. Yep.

Because we were already public, but we IPO'd on NASDAQ with $40 million. And that was a deal that was like, 20x oversubscribed and every hedge fund that passed on us, you know, in Series A at a $20 million valuation really wanted to get in at a $200 or $300 million valuation, which was, you know, always like kind of funny that how that works. But, you know, that was sort of the entrepreneurial story. We found different assets that drug companies didn't want or didn't like anymore in their portfolio. It didn't make sense for them. And what's funny is that these big pharmas like Pfizer or Merck, they'll spend hundreds of millions of dollars on these medicines. or potential medicines and then say, nah, you know what? We're not going to, we're not going to develop this anymore. And that makes sense for that drug company. It doesn't make sense for them to keep putting hundreds of millions of dollars into a drug. So we would often like scoop in, swoop in and try to scoop it up for a million bucks or $2 million.

You were value investors.

Yeah, definitely deep value investors. And, you know, it's kind of amazing because Bristol Myers, a big drug company in New Jersey, gave up on a drug. And we bought it for $2 million and it just got FDA approval a few months ago. So it's kind of like our life's work. When I say us, I mean, it's certainly my life's work, but there are more than just me involved. And it's amazing to see this drug finally got approval. They were trying to get it approved for hypertension. We picked a different disease called focal segmental glomerulosclerosis, which is a very odd kidney disease, but it's actually a big kidney disease, believe it or not. It's one of the leading causes of kidney failure and dialysis. So, it got FDA approval, which like really touched my heart. It was like, uh, very few people in pharma ever get to have the experience of taking a drug from the very beginning to the very end of FDA approval. And now people are writing prescriptions for this medicine that I named, that I, uh, rescued from the Bristol-Myers.

I have, I have a question about the kind of entrepreneurial experience. Just, this will be somewhat general. So, uh, we'll zoom in, but Like, there's many kind of ethos coming out of like Silicon Valley, like move fast, break things. And lots of money actually gets pumped into really young people. Like, that's something I think about a lot. When we raised a Series A at Lumi, I was probably mid or like mid to late 20s. So, but at the time I felt old. Like, a lot of people I was meeting at dinners and stuff were like 22 and they're like, I just raised $10 million. And I would reflect like, wow, like on that, just on that fact, right? Just, there's a lot of moving pieces. And so basically, My question to you is, like, do you feel like some of that ethos coming out of Silicon Valley, like, I would just reference move fast, break things. It's like people say that, but then do they really mean it? Because we're trying these things that don't always work, or we make mistakes and they're like, you're totally allowed to make mistakes, but then you do and they're like, you're going to prison. So, I don't know. I'm just curious your perspective because I always thought, what's the worst that could happen? But you actually have like an actual example of like, well, let me tell you what the worst is.

Yeah. Well, it's funny because, you know, I'm glossing over a lot of the traditional issues. So for example, we had this guy that we hired to be our CEO and we went to raise money and, you know, I felt like, you know, why should I be the CEO? I'll go find somebody to do it. And we found somebody who was like 60 years old, really experienced, and we went to raise money and the person For whatever reason, I guess, couldn't get investors to bite. So the person basically quit and we're like, okay, well, I have to be the CEO now. And then I was able to raise the money and we went forward. And the problem was that this person harbored this, like, I guess, resentment throughout this period that I didn't know about. I would end up learning about it later in emails. And so we mistakenly put this person on our board of directors. And I would end up actually hiring this person as our COO. What I didn't know at the time, a COO is basically a code word for CEO in waiting. And the person in essence did a coup d'état where I lost in essence my job, even though in my employment agreement, I could not be fired for any reason whatsoever. I was still asked to leave by the board. And it was very awkward because we had taken the stock from $3 to $20. And we had taken a company with no drugs to a company with 2 FDA-approved drugs. We took a company with no drugs in clinical pipeline to several, and we took a company with 2 employees to 100 and a NASDAQ listing. We, by all marks, done extremely well, and our shareholders liked me quite a bit. But the person saw this opportunity to become the CEO of a half a billion dollar publicly traded drug company, and they took it. And the older board of directors went with that person, which was really, really crazy because I was the largest stockholder. I own 20% of the company. So it was really like, you have a lot of nerve telling, you know, the founder, CEO, and by far the largest stockholder to step aside when they've done so well.

Yeah.

So it was really like, for me, I thought about fighting it, but I said, you know what, I'll just start another drug company. This is easy for me. I can find drug companies and drug assets at these big pharma companies that have been sort of discarded. And now that's become a very popular trope in in biopharma. Vivek actually took the business model. We kind of, we didn't pioneer it, but we sort of did well with it. And he took it to a huge level and created this great company called Roivant that's done very well. And I've seen a lot of other hedge fund people sort of dip their toes more aggressively into private equity since, and many who have done remarkably well, and I'm happy for all of them. But, you know, this sort of old guard would come back and sort of get upset at our New York team. For example, I promised our New York executives that if they found a drug that made the company hundreds of millions of dollars, that they wouldn't just be getting their salary, right? That we paid them millions of dollars.

Yeah.

If you make our stock go up by a billion dollars, I think the company owes you, you know, kind of a performance bonus that makes sense. You know, at Merck or Pfizer, if you make the company a billion dollars, you maybe get a nice watch, you know, a $20,000 bonus, something like that. And it's really unfair. You know, it shouldn't— the reason hedge funds work so well Or at least I think they do, is this incentive mechanism. And so, you know, I started to pioneer this thing where we actually would give our scientists, our chemists, a 2% or 3% royalty on any drug they invented. And so if you invent a billion-dollar drug, you'll be getting $20 million a year, uh, paycheck, uh, every year for the life of the drug. No drug company does that. And for us, I mean, what's 2%? I mean, it's not a billion dollars we had yesterday. So, you know, it'd be amazing to be able to be a joy to write that check. But drug company CEOs that I met in private would say, Martin, there's a big problem with that. And I said, what's that? They said, then they would be the largest paid company at Merck or whatever company. I shouldn't say Merck. Uh, they'd be the largest paid, uh, highest paid employee at our big drug company. And that's not fair. I'm the highest paid employee at our drug company.

Oh, interesting.

That kind of arrogance is like—

It didn't even occur to me that it, because I, I think often in startups, the CEO is not the highest paid employee. Like, because you realize that in order to get your company value up, you have, like, you have to pay people more than often The company is willing to stomach paying you.

Yeah, I think that's the way it should be too. And I think that, you know, in pharma, it's a lot older industry. There are very, very few people in their 20s who start pharma companies or biotech companies, whatever you want to call them. I'd say you're pretty young in biopharma at 40 to start a company. And it's been a stodgy, slow, kind of, you know, not great business for partially for that reason. It's also a tougher business to get started in. You need a lot more capital. And I think there's kind of a reluctance from investors to start a company off with $50 million that is just an idea. So it's a bit of a different business, but you still have a lot of those, like what happens when you take your little software startup and now you have $100 million in revenue? Well, your board and other people are going to start asking questions if you're the right CEO the second something goes wrong, right? They're going to say, oh, this isn't a problem with our company. This is a problem with this person's youth.

You took a gamble knowing that you were in the right legally, and you didn't end up getting accused of that. They basically found some technicality from your past that they got you on. And perhaps part of the reason why they could do that is because you had kind of a brash persona, and maybe people were sympathetic to taking you down or something like that. Do you regret developing that persona, or was that just kind of bad luck? How do you kind of reflect on your actions, like separate from what they accuse you of?

Yeah, I guess it was to me like a challenge to the governmental system of like, you know, are you really willing to go through with a petty kind of exercise because it will promote you individually as prosecutors? A friend of mine is an attorney, a government attorney, and He saw that one of my prosecuting attorneys at a conference, and the first slide that she put up as her background was the person who prosecuted Marchiavelli. And it's this kind of, you know, and most of the people have from that team have been either they went to a big law firm with a big pay raise or they've gotten promoted within government. And so to me, it's like a very vicious thing that it's almost certain to me that a child sex offender probably didn't get prosecuted because somebody had to get my scalp, right? Think about that for a second.

Correct.

You know, that, you know, there is some crime, you know, the government always says, you know, when you ask them, like, how do you pick which crimes to prosecute? They said, we don't have the resources to prosecute every single crime. We have to sort of pick the ones that, you know, meet the ends of justice the most. And they have literally just stacks of FBI reports to go through and, you know, they decide what to pick, but a person who's on the COVID of every business magazine or every, you know, whatever, that's somebody that, you know, may end up giving you a good career in politics. You know, the Attorney General's office is a good example of basically an elected politician.

Like trophy hunting.

Yeah, it's trophy hunting. And I think that, you know, it's sort of a sad thing to do. And so my challenge was kind of like, well, let's see how corrupt are you? You know, and it was sort of like a stupid thing. Most people wouldn't play that game with their life. And for me, it was, I had done this thing with my hedge fund, whether I liked it or not. And so for me, when it came time for the Deriprim decision, do I cower in fear or do I sort of try to tackle my enemies and try to explain why I'm right? Because actually we did do a price increase years ago that started to get a little controversy and I ended up going on Reddit and saying, listen, I'm here for anybody that thinks this is a problem. Call me, write your questions here, I'll answer them. And we successfully were able to completely turn the tide and help people see that that price increase was a necessary thing to do. And I figured we could do the same thing with Terraform, that after I calmly explained it, everybody should understand. And, you know, that was a little bit foolish because you had, for the first time, people like Hillary Clinton or people like Bernie Sanders interested in using this as mileage. So The challenge was really, again, something that doing it again, it feels like if I knew that I wouldn't have gotten, say, indicted, I probably would have not been so brash. But if I had that uncertainty over again, I think I probably would still do the same thing.

There's the brashness of the decision, but then there's the brashness of just your your media personality in general, which is you have a good sense of humor, you like to have fun, you could be trolling at times, and maybe that was just too much for certain people to take, or it was kind of, you know, yeah.

Yeah.

I mean, I think I somewhat contributed to the demise of sort of the trust in the media because I think when people started to watch me on YouTube or understand who I was as a person, they started to say, oh, this guy's not so bad. You know, they're making him out to be the devil himself. And You know, he's actually, you know, really does care about science and patients and stuff like that. And, you know, I have US patents, very few pharmaceutical CEOs ever have US patents granted to them. I've done actual research and made new drugs. There are very, very few people who can say the same in that CEO level. And it's sort of like a very frustrating thing to sort of have to go through the media picking on, let's say they picked a picture where I was wearing this like Lacoste like a popped collar thing with this funny watch. I was, it was an inside joke, but that happened to be my Twitter picture at the time of this whole scandal. So they called me the Pharma Bro for that reason. And it, the name stuck. And I'm obviously not a frat bro or tech bro or something like that. I'm just some nerd. And I actually started livestreaming to help people understand that. And it's funny, a lot of the livestream comments were, where are the hookers? Where's the blow?

Where's the hook? And I'm like, where's the bro behavior?

Yeah.

You say something, there was a quote from you that I loved from the Breakfast Club interview where you just say, I'm not about to change who I am ever. And I do find that very relatable. I'm not trying to relate myself to you, but it's like I find it very related to my own entrepreneurial career because it's like I started out to do a certain thing. I want to do the thing. And as every bomb keeps kind of coming, and I certainly didn't have the same type of grenades you had, it's just like— You know, I've got a goal, like, don't get in my way. I don't know if that's how you felt, but I did love that quote. And I'm curious if that still resonates with you or do you feel like you got beat down a bit through this process?

Well, I think that this is the problem every founder has. You know, our company went from zero to a billion very quickly. And, you know, most startups don't have that luxury. But if you have that luxury, what ends up happening is there's a lot of pressure to change. Right. And if you look at the CEO of any of the largest companies, they're very, very different from usually who the founder is. And if the CEO is still in place, it's probably because they have voter shares. Like Mark Zuckerberg would have been fired a long time ago at a normal Facebook.

Yeah.

Right. And that, you know, you have some people who are miracles. They can do both. They can be the lying, you know, slick CEO that all of Wall Street likes. Or they can be the curmudgeon founder when they want to be. But most of the time, the curmudgeon founder doesn't survive on Wall Street, right? That person looks one weird way at BlackRock and BlackRock says, no way, we got to get rid of this guy, you know, or this gal. And I think that that's, you know, or, you know, someone like a board of directors member. The average age of the board directors in America of publicly traded companies is like 60-something. And, you know, the idea is that they're retired and they have a lot of wisdom and stuff like that. But, you know, there is some dynamism of youth that is totally, you know, well documented. And, you know, I could easily see a board of directors looking at Mark Zuckerberg for a senior vice president job at a company, a big tech company saying, well, you know, he didn't put in 10 years at Hewlett-Packard or 10 years at IBM.

Yeah.

And, you know, it's just an insane, you know, kind of world that we live in where credentialism is often what What sort of, you know, takes place. So I feel like, you know, that is probably the biggest sort of like challenge I've faced over the years that, you know, people, for example, we did something very different at our drug company where we used a portion of our balance sheet to invest in other companies. And we did this because we felt that one, there was one company that had done this very, very well over the years called Berkshire Hathaway. They have proven that, you know, they, that this isn't such a bad idea. And the problem is that most people in biopharma don't really have a clue as to what the value of a stock is, which is kind of a problem because if your job is to buy other companies, you should kind of be able to sort of discern whether that company is cheap or not, or at least somebody at your company should have that skill. And we've seen deals in biopharma that are pretty embarrassing. Like Merck bought a company for $8 billion that they ended up shutting down or were basically writing off a couple of months later because of a patent expiry that they didn't anticipate.

That's brutal.

And like, I would expect my executives when they buy a company for $100 million that they're doing it because they think we're going to make $2 billion or something like that. And so, you know, the, and part of the reason to do the balance sheet experiment is to give practice to these executives. Okay, well, you know, maybe we don't have $100 million to buy a company, but can we put $2 million in this company and see if you're going to be right? In 2 years, we'll know whether you're going to be right or wrong, and then I can sort of deal with you accordingly. Either promote you and give you a bonus or fire you.

And I think that's— Did you face some pushback for that?

Yeah, I got a huge amount of pushback. So my board said, there isn't, there are no publicly traded companies that invest in other companies as a course of business. And I said, well, Berkshire Hathaway. And they said, well, that's different. And I said, why? Why can't we do this? It's an amazingly productive thing. We've made several million dollars already from our investment portfolio. It'd been a really exciting and encouraging and engaging thing for our Executives. Yeah. There was virtually no risk. I mean, we, we had a balance sheet much, much bigger than a couple million dollars.

Yeah.

And, you know, it was just this kind of thing that was like, you know, a really positive thing around the company. And it was sort of squashed because, oh, it's, you know, we have to do things the traditional way. And this is a time when pharma, you know, by the way, has not had great returns over the last, you know, 10 years. And a lot of pharma stocks have basically been the same price for a long time. So, you know, it was a really innovative new idea. And again, the board, sort of people who didn't have any stock. They never put any money into the company. Meanwhile, you know, I had 20% of the company and they were sort of telling us what to do. So again, I regret not doing sort of a founder share arrangement to some extent because I think that, you know, your vision as an entrepreneur can carry a long way. But I do think that never changing is something that it doesn't work well in the publicly traded world that we exist in today. Like eventually all CEOs tend to capitulate and become Somebody else. Um, they become the PR, you know, consultants, you know, model citizen. They become the, sometimes the woke citizen. They become like this very weird thing because they want to survive all of the blows that could come their way. And the person who renders their opinion is a liability. The person who has individual characteristics that are not the mean is a liability.

I want to fast forward a little bit because you mentioned that you regretted, so fast forward to your indictment, you stepped down. You said you regretted stepping down. A little bit.

Yeah. So, you know, I look back sort of after I left the private drug company, which is called Turing, you know, things didn't, weren't operated exactly the way I wanted. I owned a huge percentage, still own a huge percentage of Turing. And, you know, the business just didn't do great since then. And I feel like I probably could have put it on a little bit better footing and better management. So part of that is this kind of like regret situation more than anything else. You know, we didn't have like a pretty clear or natural successor, so management was kind of bumbled for years afterwards. I do think that if you're ever indicted as a CEO, you know, it's a pretty huge distraction. So I still feel like I did the right thing. which is not to be egotistical about it and just say, you know, defending yourself is something that—

What were you thinking that your life was going to be like after that? So you mentioned 97% get convicted. So I assume you assume you're going to jail. Like, are you like, fuck, these people ruined my life? Are you like, no, I'm going to bounce back and build an even bigger— like, what is your mindset after this?

Yeah. I mean, there's, this is, this is a little hard to talk about because it requires like a huge amount of this optimistic, egotistical kind of perspective. I think that given the success we had with the first company and the success we were having with the second/third company, I felt like we, including, which isn't just me, but the people that I work with, which are as important or more important, we had a special talent and That talent is basically so precious and it can't be taken away by anyone, right? It's something that just can't be killed. When you have that kind of a talent, then there's really, you really have no fear whatsoever. You know, any company could collapse tomorrow and you'd start another one and it'll be successful. And there's just people that have that kind of like never say die, never give up kind of attitude. And it's kind of what makes them successful. I think like that most companies fail, most startups fail because of the pressure, the psychological pressure that crushes the CEO and the rest of the team. Our new software company, we haven't had a payroll in, I want to say 6 or 9 months. And that's really psychologically crushing. We just finally started to raise a lot of money. We had a lot of interest, but we had a a paperwork sort of issue where we had to tear up our whole first offering and do a whole new second offering. That was like a 6-month delay. And, you know, for most people, that'd be, you know, you find another job, right? But for us, we sort of said, all right, let's figure out a way to—

I mean, for you personally, like when you're going to jail, are you ever like, fuck, my life's over, I should kill myself? You know, not actually suicide, but like, when is your lowest?

Like, I met somebody who did kill themselves Not after, just after they indicted, they got indicted. Hedge fund fellow who I used to chat with, he was a pharmaceutical hedge fund trader and he got indicted for insider trading, not convicted, mind you, but indicted. And he unfortunately committed suicide the next day. And it was really tragic. He left behind a very nice family and the psychological stress of that crushed him so much. Like he didn't even wait until he figured out if he was going to be convicted or not, or what the sentence would be.

Right.

Right. Those would be kind of more rational, but In psychology, we don't, we don't think about the rational. We think about the emotion. And, and, uh, certainly it was crushing, Eric. I mean, it, you know, it was devastating, but I think that, you know, you also have to sort of be sober and say, okay, well, Martha Stewart did it, you know, Michael Milken did it, you know, so forth and so forth.

You're just like thinking of Martha, Martha, Martha, Martha.

Yeah, please, Martha.

If she can come out and still teach us all how to bake cookies and we just think she's a fucking gem, then what, what's You know, what's going to happen?

And I think, you know, it also kind of, your upbringing, uh, whether you're from like a hardscrabble kind of background and stuff like that, like, uh, we knew people who'd gone to jail, you know, somebody in our family had been to prison, um, in our, in our sort of distant relationships. And so, in fact, uh, I think half of America knows somebody who was or presently is incarcerated. So we've had an epidemic of kind of this like misprosecution. I hope the prosecution of the president, which is so unprecedented and say what you will about Trump, I don't particularly love. Donald Trump. I don't think he should be president again, but I don't think it's right to arrest a former president for the first time in the 200-year history of our country. It really feels petty and stupid, especially for such a silly crime. So to me, like, you know, we do have an epidemic of criminal justice problems in our country that specifically affects minorities. And it's a tragedy that, you know, has now become an important cause of mine. But ultimately, That aside, I think that the challenges that come with now being a convicted felon, the challenges that now come with this public embarrassment and ridicule, they're real, but they're no different from the challenges other executives face. I have pluses on my balance sheet and I have minuses. I just look at it as assets and liabilities, and I got some new liabilities, but I'm going to try to come up with some new assets. I had been a pharmaceutical person for 20 years, And I followed pharma so closely. I knew that business in and out, but I've also always had this tangential interest in software. And now my challenge is to see if I can learn software the way I learned pharmaceuticals. And it's not easy, but I think that I can burnish the asset side of my balance sheet by showing people that I can be a software expert. I will try to be a software expert.

And because you can't do pharma anymore, right?

So, so, you know, really funny story. I was sued by the Federal Trade Commission. I'm the first person to ever be sued under the monopoly law. So the monopoly law, you probably remember from like high school or college or something, was started in like 1895. It's called the Sherman Act. And the Sherman Act was basically brought to stop one person called John Rockefeller. And he had Standard Oil and Standard Oil was like monopolizing all the oil. It would end up becoming like Exxon basically. But People were really scared of John D. Rockefeller. They called him a robber baron. And this law came out to say, monopolies are now illegal in America. And all told, it's probably a good law. And there have been many monopolies since then. AT&T, IBM, Microsoft were all accused of monopolism. Facebook. The funny thing is though, nobody's ever been personally sued as a monopolist. So this is the first time in American history.

What's the case there? Like what is, so oil, Facebook, I can understand, but For you, if the, what's the, what's the layman's version of that case?

Yeah, the argument is that we, we stopped generic drugs, uh, uh, of, of Daraprim from entering the market. Of course, they entered very quickly, so I'm not sure that we were that effective if we did. But regardless, we were convicted of that. We had a judge that really didn't seem to like me very much at all. And, uh, we lost the case and the penalty was that I'd be banned from pharmaceuticals for life. Which has never, ever happened, uh, to a person. And it's always the company that gets sued because a person does not have monopoly power. A company has monopoly power. You know, Microsoft sells Windows. Bill Gates doesn't sell Windows.

How can you have a monopoly?

So this is the industry that you love, the industry you spent 20 years in, you're banned for life. And oh my God.

How does that feel?

So we can talk about the case, but, but on a personal level, how does that feel?

Because that is—

Do you want revenge?

It feels terrible. You know, it does. So I'm appealing the case. I think we'll win the appeal because it's just blatantly overreaching. Again, Bill Gates was enemy number one in 1994. He was my hero. He was like the most hated man in America. SNL made fun of his haircut. He was the monopolist bad guy that everybody hated. I loved him. And all my hacker friends thought, you know, oh, Microsoft's the worst, et cetera, et cetera. And I was like, I like this evil empire. This guy's cool. And, you know, he spent the rest of his life trying to burnish his image of being this really ruthless business person that was really good at business. And Microsoft, you know, was one of the first trillion-dollar companies. And so anyway, the point is the government did not like Mr. Gates and they still did not charge him personally with monopoly because they knew how vacuous of a charge that would be. It still stuck with me. And again, the appeals court will throw this case out or the Supreme Court, but And I'm relatively confident in that, but I still understand that there's a serious risk that I've been banned from the pharmaceutical industry for life. And again, is that a US ban? Is that a foreign ban? Does that extend to pharmaceutical software? Does that extend to medical devices? It's all very unclear. But I think again, when it comes to being a good entrepreneur, you know, what if you have, you know, one hand tied behind your back, you fight with the other hand. If you have two hands tied behind your back, you fight with your legs. You know, you have to find a way to win. And if people are giving you money, it's kind of like your sacred oath to defend that money with your life. And I think that what I don't like to see in Silicon Valley is when people sort of fail, which is natural, but they kind of embrace the failure to the point where it's like nonchalant.

Like, yeah, it's almost flippant and like kind of gross where it's like you had a real job to do.

Yeah, yeah, exactly. And, and, you know, to be flippant about it or to spend money on parties or like stuff like that, like. You can party when you've raised $100 million and then, you know, you've had a big milestone in revenue. But until then, you know, you have to put your head down and work as hard as humanly possible to get to the next point. And for us at Retrophin, this was like our, you know, we had this like, you know, win or die kind of attitude and it was just work all the time, nonstop. If we feel like we've been successful, go back to work because we can't be too sure. And it was this attitude that would end up creating one of the best drug companies in that sort of era. But for software now, for me, the challenge is the same. Find a way to stay motivated, find a way to stay engaged, work hard. It's a lot harder 20 years later, but get that energy from somewhere. When I was starting Retrophin, I would actually think about the patients. We were working on a treatment for muscular dystrophy. Kids with muscular dystrophy generally die at the age of 20. So for me, I thought about them every time I wanted to go out on a Saturday. I said, I know kids right now. We were friends with one family whose son Charlie is MD, DMD. And I said, Charlie can't go out right now, right? Charlie may not be able to go out in 10 or 20 years because he's going to be dead. I have to work and fix this. And that was the source of motivation. So finding some well that you can draw on to motivate yourself to work hard is like one of the hardest things to do. Because if you're making a software startup that That does, you know, I don't know, you know, uh, you know, you know, kind of some e-commerce thing or something like that. You may not feel the meaning and purpose that, you know, we were able to withdraw. Um, you know, so for, for everyone's startup, it's like very hard to, you know, go find that source of inspiration, that source of material. Just making money isn't enough, obviously.

It's not. Yeah. And, and usually that's not the motivation when you really talk to an entrepreneur. It's not what started them. It's not what keeps them going. Being an entrepreneur is hard in general. What does it feel like being out there post-prison? Like you mentioned, there's positives and negatives, but just to get straight to the point, it's like, you know, I know entrepreneurs who worry about their reputation after doing a layoff. And so I'm just curious.

Both of us.

Yeah.

Yeah.

I've done a layoff and I was like, it kept me up at night. I was like, what are people going to think about me? Because I'm laying off 20 people. So, so you, you enlightened me about the other side. What is it like? The good, the bad.

It's funny. I just did a photo with an entrepreneur, a well-known entrepreneur who posted the photo on Twitter and then deleted it.

And I was like, oh, come on, dude.

You know, you either, yeah, you're happy to be in a picture with me or you're not happy to be in a picture with me. And it's like, you're kind of watching that, like, you know, uh, I think people really liked my livestreams after I got invited or during or before because I showed this like fearlessness that worked for a lot of people's, um, personal kind of brand, if you will, or their personality. I did an Ivy League speaking tour where I got standing ovations because I think that what people don't want in life is to be put in a box. People don't want their personality truncated and crushed by the corporate world. And that's why we become entrepreneurs a lot of the times, right? We don't want to work at bureaucratic company X because it sucks. And you have to watch what you say, you have to watch what you do, and you might get your talents recognized by some poddy manager 10 years from now, That doesn't work for so much of the population. And so people saw me talk about stuff like that. They really found a kindred spirit. And what I'm really lucky about in today, sitting here in March 2023, is that a lot of the people that watched my stuff years ago, some of them are billionaires now. You know, some of them have some of the most successful startups in whatever space they're in. And I'm really, really lucky that, you know, and proud of that community that's been created. One person told me the other day that the entire Goldman Sachs graduating class of analysts, you know, they have a training program every year, were Shkreli fans and different, like, you know, stuff like that. You know, big chunk of Bridgewater had like a Shkreli fan club. You know, it's one of these things that, you know, I'm really proud of. And to the extent I help motivate people and get them excited and interested in achievement at work and to be proud of their achievements and to sort of like try to strive for the best they can be, you know, every Every time I get down or think about like, you know, any of my negative situations, I remember one of my executives, our chief medical officer, who said, I'm so friendly with him. And he said, I tried to fire him like 6 times and he refused to quit. It was very funny. We had this like love-hate relationship. And he was like, Martin's a son of a bitch to work for.

I hate him.

And he said, but I've achieved things that I never thought in my career I could achieve. You know, I made things happen that, you know, I just didn't think I had it in me to do. And we did a lot of amazing things with that company. And again, we're still close friends. You wrote a letter of support to my judge. And, you know, the watching, for me, it was especially minorities and women, watching them take home their first million dollars in a stock grant or something like that was the most exciting, you know, like bring tears to my eyes because I'd be like seeing people that I never thought they—

sorry.

Life-changing. Yeah.

Yeah. To, to, to watch somebody else kind of achieve their goal and their dream, you know, is, is like, it's just so moving to me because, uh, you know, the surprise that people have, like they didn't think they could ever do it or be in a position where they could do it and they thank me. But I said, you know, it's really like, you know, you did this, uh, you just had a chance to do it. And I, and that was, you know, always one of my like great kind of like talking about that well of inspiration. is, can I, can this person become something bigger than they ever thought they could? And I really just love that game. I think in today's day and age, a lot of those people from that world are aware of me in the business world, whether it's finance or software or pharmaceuticals. They sort of understand what happened. As soon as I got out, one very successful hedge fund manager reached out and said, I want to invest a million bucks in whatever you're doing.

Wow.

And, you know, it was very flattering. And there's been dozens of those types of people that have reached out and said, you know, I support you, whatever you're going to do next. I learned this from you, et cetera, et cetera. And I think that the secondary effects of that are those people talk privately amongst others that, you know, I really kind of like that guy. Oh, I do too. I just never thought I could say that. You know, I hear that conversation every day and it's a little frustrating to hear and see, but I think that divide of like the media Where people trust the media at an all-time low, people trust the government at an all-time low. And sometimes I just get some adulation just because I'm sort of ostensibly against those two things. People don't even know what I did or how I did it, but they just like the fact that there's a middle finger to those two things.

It's the Rotten Tomatoes phenomenon of yeah, yeah, the yeah, the media you know might hate it, but other people like it.

I mean, I don't I don't love that because it's kind of why Trump's popular, right? You don't want it to be you don't want it to be senseless.

Like you want people to have an informed. opinion on why to be for or against, basically, because that's easier to respect and understand. But, but still, it does make sense in our environment that some people are just like, I'm glad someone stood up to something a little bit.

Establishment.

Yeah.

That's one of the reasons I did well in prison. Um, I don't talk about this a lot, but like, there, there were a lot of people who, you know, wondered how I'd fare in prison. And, you know, it shocked me that when I went there, I saw people like starting to clap and like, you know, just feel like you're the man. And And I'd be like, well, what's, what's, you know, why? And they said, 'cause you told them all to fuck themselves.

Wow.

And, you know, when you, when you go to 97% of people are found guilty in, in the court of law, but almost all of them plead guilty. And you actually have this humiliating process where you have to, it's called an allocution, where you have to explain what you did and really cut off any arguments for your appeal. You have to waive your appeal rights and you just basically have to prostrate yourself before the court. And every person in jail, almost everybody had to go through this. I went to trial and fought. Usually when you go to trial and fight, they give you like 5 times what you're supposed to get.

You thought you might win? You thought you might win? Is that why you fought?

I didn't. And I win, I won 5 out of 8, which isn't still enough to go to jail, but the, you know, very rare that you win anything. So I was really, really proud of winning 5 out of 8 because some of the worst charges were, were just kind of made up stuff and, and they were thrown out and It's hard to win spaghetti against the wall as well, because like you could defend only so much at any given time. So one of the charges kind of slipped through. I think if I could do those 3 again, I could win those too. But there's just a machination of kind of the court system that's an embarrassment in my opinion. You throw 34 charges at somebody, how are they going to defend every single one of those? A jury's going to think common sense, like, ah, one of these has to be false, right? At least. Yeah. So I feel like, I don't know, I, You have to stay positive and being an entrepreneur at 40, which is old to a lot of Silicon Valley people, but I'm still pretty young in my mind and getting talent hasn't been hard. Some of the great, great people have wanted to join as kind of a mission-based thing. And I think most people don't join startups for the pay, right? I think that's one of the most misunderstood things. Clearly, like the company generally can't afford as much as a bigger company, The benefits, the certainty, all that's not there. You're joining for the mission. And of course you think a little bit about the opportunity, but I think most people who are really good join startups because they think, uh, they believe in the mission and they want to really apply themselves. Same reason that somebody starts one.

Are you like, I lost years of my life, or you took away my third? Like, do you have a sense of revenge almost, or like anger about it? Or are you like, hey, you know, I learned a ton through this experience. I made the most out of my time in prison. What's your kind of mindset?

It's tough. I'd say it's both. I mean, I, unlike most people, I didn't feel like my time in prison was a waste. I read hundreds and hundreds of books and was able to learn a lot. So there are very few times where you can get away from a cell phone in prison. It's illegal to have a cell phone. So you don't have this thing attached to you and you can actually sit and read a book, which is a joy. when you're a CEO or startup founder or whatever, you don't have time to read books. You know, you might read a book a year or something like that. I think Bill Gates says he reads 14 books a week or something like that. I think that's probably BS, but, you know, that's a lot of books. But I really enjoyed sort of catching up on things I didn't know. I got to do a little bit of work in some academic disciplines that I sort of like forgot about a while back. Certainly learned a lot of history of, say, the software industry and other fields. Learned a lot about, you know, things that I always wanted to know about, and it's prepared me for kind of reentry. I also got to learn about human nature. I got to reflect about myself quite a bit. You know, I didn't want to spend 4 and a half years in prison. I would've, you know, much rather spent half the time or none of the time. But, you know, it's the cards you're dealt. I mean, sometimes there are people that I met, people in prison who arguably did nothing wrong and got 25 years. And my amazing girlfriend at the time, Christy, She actually wrote a letter to get one of them out of prison and he got an early release. He got 10 or 15 years off because of her work doing that. So she did these amazing feats and I'm still very close with that guy. It's just such a joy to sort of see people, you know, kind of persevere and get through their struggles. But you also see a lot of the bad side of humanity in prison. And it again gives you a good frame of reference for like who you are as a person and if of where you fit in the sort of world. So yeah, I mean, I certainly have a little bit of anger or resentment towards having had to go through it, but I also feel like this could be an interesting setup for like a really interesting hero's journey of trying to like make things right and make a big comeback.

And you said you reflected on yourself. What did you realize you wanted to change or keep the same?

Yeah. I mean, I think that the, probably the biggest thing that I felt was that as much as I love being an entrepreneur, as much as I love making money, probably the most interesting thing to me is the sort of cutting edge of science and technology, which is always what motivated me as a child. You know, when I was a kid, I had this really good science education. And when I was 16, I was working for Jim Cramer and his hedge fund. I sort of showed that science education off and I basically got started looking at biotechnology stocks at 16 and 17. And it was really, really fun to do, but I also liked all kinds of other things. I was a programmer as a child as well. So what really got me going is that kind of very much bleeding edge science and technology world. And I sort of realized that no matter where I was, whether I was in prison or on a penthouse in Manhattan or wherever, or growing up in Brooklyn as a relatively poor kid, the cutting edge of science and technology was so motivating and so interesting. And you don't need a dollar to explore it, right? Like with the internet now, you can be on the cutting edge of science and technology, which happens to also be a very valuable thing in the economic world and the industrial world. But that's sort of my joy. I always like to say, like, I'd rather have a theorem named after me than have $100 billion. If I could choose tomorrow that I prove the twin prime conjecture or some other famous math, uncertain math proof, unsolved math proof, that then being the richest person in the world, I would take the math proof every day of the week and twice on Sunday because I think that that permanence and that achievement just means more to me than, you know, there are a lot of people who are very wealthy and not very smart. And, you know, I sort of prize that above you know, just sort of like accumulating wealth and compounding wealth, which in many ways is just a task of longevity more than it's anything else, which, hey, I'm not taking away anything from people who've made money and are proud of it. They should be. But for me personally, you know, I realized that my raison d'être, my driving force is sort of this cutting edge of science and technology that I love exploring.

And adding to the sum of kind of human achievement and knowledge, basically, which I do think at the root of most entrepreneurs I really respect, there's that driving them forward more so than the gain. Your stories of resilience and basically just really staying focused on the things that do motivate you or even finding them in those really tough moments resonates a lot with me. And I think with any entrepreneur who's out there basically trying to do something right now.

Yeah.

Just to build on that, I mean, you're the— just to put this in context, you're the son of a janitor. You're, you know, a rags-to-riches story. Also, you know, the amount of knowledge you've accumulated. Um, you've been through the arena, to use the show name, in a number of different ways. You've been fired from your own company.

You've been good at it in the arena.

Yeah.

You've been fired from your own company that you started, that you're the biggest stockholder of. You've had your reputation by the media dragged in the mud, uh, for millions of people listening to that media. You went to prison for 4 and a half years. Oh my God. And through it all, you've bounced back. You, you've been courageous, you've been fearless, and you're, you know, you're set up for the next few decades.

And still trying to build, still trying to build, like actually making effort, which I, which most of us like try to wake up every morning, still trying to find motivation without all that other stuff you just mentioned. So.

Yeah, I wouldn't be thrown in with lions again. I love being in the arena. So, you know, I think, uh, it's, it's, it's such a joy. Like we, uh, our company now is, uh, me and an old friend of mine who had been my partner many times. And a younger kid, he's not a kid really, but he's 27. And we're just going through like some of these first milestones, like getting our first money in, you know, stuff like that. And, you know, he's doing these things a lot for the first time, but we're sort of like, oh yeah, we know this feeling. It's exciting. But, you know, the next milestone's coming too. And, you know, the dream is that, you know, of course, like any other company that we take it public or sell it or something like that. And in the long run, and like, we sort of have, like me and my partner, Marek, we have these like milestones that we've created in our minds, like the first acquisition, right? The first, you know, big vendor agreement, the first big customer, the first, you know, law firm to rip us off on a bill, you know, whatever the case is. Like we've had these embedded experiences 100 times over. We've done it many times, but for like to see our younger partners see it and go through it and do it. It's such a joy. Like I said, our co-founder is a brilliant programmer who is also a bleeding-edge technologist. And there's nothing more than I'd like to see, and this sounds so weird, but I'd like to see him make $50 or $100 million, almost more than me, because it's such a joy to watch people kind of, like I said, take this crazy risk of like, yeah, I'll be a partner with this guy. Or, and that could be anybody. It doesn't have to be me. Just, I'll be a partner with this crazy person that doesn't want to work at this really good job and instead wants to start their own business with no money and no bank account, no investors. And God only knows how we're going to do this. And it's such a crazy thing to want to do. You're the underdog.

Yeah.

And to see that person win is so rewarding that it only makes, it basically makes the whole thing worth it because it's, you get to watch this wild movie and you see the good guy win in the end. And To me, that's what entrepreneurism really means to me. Of course, you win at the end too, if you do it right. You know, the joy is so great. It's worth wrestling with a lion or two in the Colosseum. Let's wrap on that inspiring note. Martin, thanks so much for coming on the podcast. Thank you.

Great talking to you.

Upstream with Erik Torenberg is a show from Turpentine, the podcast network behind Moment of Zen and Cognitive Revolution. If you like the episode, please leave a review in the Apple Store.