The $1B One-Person Company, China’s Pork Crisis, America’s New Weapon | Diet TBPN

How was your weekend, Jordy?

Good. I saw Hail Mary. Oh, you did?

Yeah, I did. I finally saw it.

Did you see the trailer?

I did not see it. How was it?

Ben, you saw it, right? What was your review?

It was great. I was telling you, I think it was fresh. It was fun.

People put it on their posts.

Will DePugh did not like it.

Yeah, he didn't like it. He said it was Interstellar for chuds, right? Isn't that what he said? He said something like that.

You liked it, right?

I thought it was great. It was a very enjoyable watch. I don't know.

Should I see it?

Yes, I think you should see it.

In theater?

In theater, for sure.

Okay.

It's definitely a good thing.

That's a high bar.

It's not too long. It's like 2.5 hours. But it's an Andy Weir. Have you seen The Martian? Brutal. It's basically just like endless stream of problems and then like quick solutions. So there's some sort of problem, they need to figure it out. Problem, they need to figure it out. All of it's, I don't know, like loosely like hard sci-fi, like somewhat believable. It does have aliens in it and stuff, but it's a fun time. Anyway.

Well, speaking of real space, what's going on with Artemis II?

Artemis II is live streaming right now to almost a million people on YouTube on the NASA YouTube channel. I believe it's also on Netflix. The stream title is just "We Are About to Fly Around the Moon" with authority from NASA. We can actually pull this up and see. I would love to hear what is going on right now because I think it's happening like as we speak.

One minute ago NASA posted that the crew are now the farthest any human has ever traveled. 250,000 miles from the Earth.

Anyway, Matthew Gallagher, he's the founder of MedVie, and we were supposed to have him on the show today. He unfortunately cannot make it. We do have John Slotkin coming on, the chief medical officer from Geisinger, to talk about claims around oral GLP-1 drugs. We read the New York Times story on Thursday, and then over the weekend there was a whole a whole bunch more analysis about the company. And there were layers of—

It's so interesting because you would think that someone else would write the one person, $1 billion company.

Totally.

And then the New York Times would take it down.

Yep.

But in this case, it happened in reverse.

So last week, the New York Times broke down the story of MedVie, a telehealth provider of GLP-1 weight loss drugs. And the framing was basically that this was the first time in history a single person had built, quote, a billion-dollar company. And that's what went viral. Digging in, there were some small caveats and some big caveats. The small caveats were that the founder, Matthew Gallagher, had hired his younger brother. So technically, it was a two-person startup. Most people were like, yeah, OK, we'll count that. It doesn't matter. It's a family member. And then also, the other one question was—

It's only twice as many people as the— Original challenge.

But they had almost twice the revenue, $1.8 billion. So, but the question was the valuation. So the headline stat in the article was that they are on track to do $1.8 billion in sales this year. And that the on track is doing a lot of work, of course, because that's clearly an ARR number that's extrapolated out and the GLP-1 market's moving very quickly. It's not like Ro and Hims and all the other providers are going to be just sitting down and letting this company run away with whatever secret sauce they've discovered around customer acquisition, although they might not go into this, which we'll go into. And it was insane scale, but companies don't unilaterally trade at 1x revenue. Like that's sort of a given in this article. It's sort of presupposed that if you're doing $1.8 billion in revenue, you would trade above $1 billion. And so this counts as a billion-dollar company. I always thought that the billion-dollar company would be on market cap, not on—

Yeah, valuation. Not on revenue? Yeah.

Because you could do, if you're going to say, OK, just try and say the biggest number, you would want to set up some sort of payment network where basically you could report GMV really, really high, and you actually have a very, very small business because you're taking like 1% as your true net revenue. So there was always a question about the margins, and then also revenue durability matters. The ongoing question around building these one-person high-growth companies is, is there durability? Because if you can do it and then I can do it and then Tyler can do it and then anyone with access to a coding model can build it very quickly, we're going to erode each other's markets and trade market cap very quickly. And I think any VC that would look at this, they might get to a point where they're like, yeah, this is a unicorn company. Look at the growth. I think there's something here, but at the same time, you could see someone like a private equity valuing this and saying, well, I need to see—

a lot of risk.

I need to see durability.

There's some lawsuits.

Exactly. And we'll get into that. So Medby uses two companies, CareValidate and Open Loop Health, to handle the doctors, pharmacies, shipping, and compliance. And we'll get into the compliance thing. But that's a lot of outsourcing. And of course, that outsourcing takes a toll on margin because You have to pay the doctors, you have to pay the pharmacies, you have to pay the shipping, you have to pay the compliance. And they're paying CareValidate and OpenLoop Health to flow that value through to those individual stakeholders. So it's still— it's still—

yeah, I started asking, what does this company actually do itself?

Just marketing. And maybe they're too aggressive about it. We'll get into it. So these GLP-1 drugs also aren't cheap. And when you sell them even when you sell them legally, even as a telehealth wrapper, a lot of the value is going to accrue to the pharmaceutical companies that own the intellectual property. At least that's how it should flow when things are functioning properly. So, you can effectively build a telehealth company on top of a pharmaceutical company like Novo, where you are taking a thin margin on top. You can get to big numbers, but the The pharmaceutical companies are gonna wanna be paid because they did all of the expensive FDA trials, all the expensive R&D, and they need to recoup that. So then the other question is you add in the CAC from digital ads. They were apparently spending a lot on Facebook to acquire customers, and you quickly wind up an estimate of pretty thin margins. I think the estimate Shiel shared, Shiel Monat shared, was like 15% or something like that. It's totally possible to get to a, valuation that's lower than a billion dollars, depending on how everything flows through.

At the same time though, if they're outsourcing all of the kind of key areas of the business to these other players, Open Loop, etc., it's possible that of that, those very thin margins, right, the 15-ish percent, the margins on that are very, very extreme, right?

Sure, yeah.

So you could still get to a number that was in the hundreds of millions of dollars of of EBITDA. Yeah.

Yeah. I mean, the 15% margin looks like $150 million, maybe $200 million in like basically profit. That is crazy. But we'll see what the FDA has to say long term about that, whether there will be lawsuits or settlements. There was already a warning letter and this turned into a big drama about the company. The drama—

was there any mention of this in the original story?

I don't think so. And so there were a lot of people that were— and I believe I pulled up the New York Times piece and there was no like correction or anything yet. Maybe there will be more follow-on. I feel like the, the founder does need to, you know, respond and have their opportunity to kind of correct the record because these things can kind of run away in either direction. Even with all the drama, there were a ton of, you know, super legitimate questions about how valuable the company really is and how long they'll be able to continue their current business model without pretty serious changes. And that's around the marketing stuff. So MedV received an FDA warning letter. Just 2 months ago for misbranding violations. So warning letter, if you're not familiar with the FDA's language, it can be pretty wide-ranging. Like sometimes it requires just a small change to marketing materials to remain compliant. And sometimes it's basically like a shut down the company moment. This happened a lot with the nicotine category, with illegal vape, vapor products. And sometimes like the warning letter would be, you are warned in that if you continue to sell these, like, we will put you out of business. And some of them are, okay, we're warning you about this particular claim on your website. You need to change this language. And it's pretty minimal. I went through this 10 years ago. We started Lucy 2016. And while I was there, we were extremely nervous about warning letters because if we got a warning letter, we thought it would mess up the FDA applications that we had in progress. It would mess up distributors. Like anyone who you're partnering with would say, Well, I don't want to work with somebody that has a warning letter. Have you dealt with this? We were able to avoid all this, but one kind of concrete example is that we— like, Lucy cannot make quit claims about the nicotine gum product. So even though most people think, oh, this is like Nicorette, it's actually regulated in a different category. It's regulated as tobacco product, not as a pharmaceutical product. And so you can't run a digital ad that says, like, hey, you're a smoker. Quit smoking with Lucy. That's a violation because it's not regulated as a pharmaceutical, as a smoking cessation aid is the term.

And so in the nicotine category, you would have companies create a product. Usually there would be no founder associated with said products because more people didn't want to put their face on it.

Yeah.

And they would do a lot of things that would, that would make sales grow incredibly quickly.

Yeah.

Like, you know, making marketing claims, just where and how they decided to sell.

Yep.

Et cetera, et cetera, the ad channels that they used. And so they would go from zero to hundreds of millions or billions of revenue very, very quickly, but the enterprise value of the company would be near zero, right? Because nobody would wanna buy a company that had all that kind of baggage. And so if you were gonna value it, it'd be like, what is the very, very, very near-term sort of like revenue opportunity?

Yeah, I mean, the famous comparison is Juul versus Puff Bar. So Juul went, you know, raised a bunch of money, got very big, put in FDA applications, got those applications denied, marketing denial orders, then got them stayed in the courts. They set up a, I think their whole headquarters was in DC. They were working very closely with the FDA, truly engaging to sort of clean up all of the problems around marketing and sales and formulation, just really try and get to a clean bill of health with regard to the government relations. They were successful, and they got approved, not as a smoking cessation aid, so they still can't make the claim that Juul will help you quit smoking, but they did get approved as a tobacco product, which I think the FDA says it has to be suitable for the protection of public health, which is a very vague way of saying like it's a net benefit, net good, that it's on the market, which is, you know, people can debate that. But back in the Juul days, they also could not say, "Quit smoking with Juul." They wanted to put, say, they wanted, like a lot of people that were, you know, were smoking cigarettes did switch to Juul, and they were pushing for that. But they couldn't actually make quit claims. So they used the word switch. They said, "Switch to Juul," instead of, "Quit with Juul." And that seemed fine for a long time. I think they eventually trademarked it, and then I think they had to pull away from it various points in time. But there's clearly like this gray area in your marketing. Can you say you want smokers to upgrade to nicotine gum? You know, all of these things need to be sort of litigated with the FDA.

And what has MedVie been up to?

We wound up playing it very safe, and that probably kept us from mooning in revenue to $1.8 billion overnight. But I still think it was the right decision for Lucy. Now, MedVie appears to have taken a much more aggressive approach. They are apparently running 800 fake doctor accounts on Facebook. To sell compounded GLP-1s. Shilmonot verified that the accounts are not actually doctors. Some even have cartoonishly fake names like Dr.

Tucker Carlzin, M.D.

If you like, I feel this is one of those things where I feel bad for someone who clicked on an ad that was deceptive.

Dr. Tucker Carlzin, M.D.

But if you're getting your GLP-1s from Dr. Carl Tuckerzin, You probably are in on the joke to some extent. I don't know. It's clearly not above board and they have to clean this up and deal with this. They were also sued in a class action lawsuit last month for violating California's anti-spam law. That stuff can be crazy expensive because a lot of the fines are on like a per-instance basis. So it'll be like, okay, yeah, $10 fine for every text message you sent. And it could be like you sent like, you know, 50 million text messages. Or something. So you could have some massive, massive liability. Of course, that will be litigated in the court of law. And there might be a settlement. And they can figure out what the right damage is, if they are even guilty. They're still early in the process. And so the end result is more of a story of pushing over-aggressive marketing tactics.

[Speaker:JOHN COOGAN] Yeah, I mean, so pull up the actual picture of Scheele's post. Because I think that you can just see how confusing This would be to somebody maybe a little bit older.

You want to zoom in on one of those?

Yeah, zoom in. You can just see, you see somebody that looks like a doctor.

Oh yeah, they got the stethoscope on.

And if you're 70 years old on Facebook, you're not necessarily putting it together. It's Dr. Tucker Carlson, MD.

So my co-founder at Lucy is, he has a PhD from Caltech, but it's in biophysics. And so he's not a medical doctor, but he is a doctor of, science from Caltech. Like, he has a really good, you know, background, but he's not a medical doctor. And I would always joke with him, like, we got to put you in a stethoscope. We got to take some photos of you in a stethoscope. Like, the aura is so high. And he was like, no, that's like such bad practice. Like, we can't do that. Like, doctor is associated with medical doctor, even if you have a doctorate in something. It's like the famous, like, I'm dying, does anyone have a doctorate? It's like, yeah, I have a doctor in jurist doctor or whatever.

The other interesting thing, MedV uses the.org domain.

What? Isn't that for nonprofits typically?

I would think so. I don't know if it's technically illegal to use it as for-profit, but certainly when you add that to all the other things. Yeah, because you land on that site and then you think, oh, a doctor advertised this to me and now I'm on a nonprofit medical website.

Yeah, in general, I think the story is pushing overaggressive marketing tactics to the limit more than AI allowing low headcount scaling. And this has happened for a long time. Back in the old days, I wanna say like 2014 Facebook era, but the early days of online marketing, there were countless stories of questionable supplement sales or telehealth operations scaling on the back of insane ads. The classic formula for like mega scale was if you could get an ad approved if you could get it like sort of like whitelisted or through the approval process, it wouldn't automatically get reviewed that often. So once you were approved, you could spend $1,000 or you could spend $50 million and there wasn't— early on there wasn't a natural trigger to like re-fact-check. It was like if you could get approved for a small ad, you could scale it up. And so people would do all these crazy things to try and get the ads approved. There were all these tricky things where they would route to one website and then after the ad was approved, they changed the website. And then, you know, all the ad platforms had to eventually figure out like, okay, we need to be scraping a layer deeper, like consistently or like every day. But the canonical example of the health supplement or telehealth operation that would always go viral and always just print was if you could get an ad approved that had Harvard scientists brain pill, and Johnny Depp all in one call to action. I'm not kidding about this. This is real. So it was like always this picture of Johnny Depp coming out of the ocean. That was the one that was like really scroll stopping.

Like Pirates of the Caribbean?

No, no. It was like a paparazzi photo, which they didn't have the rights to use. They would not partner with Johnny Depp. They should not be running that ad at all. And then something about brain boosting or like making like limitless pill, make you a genius. That type of marketing would like it's very general, like who doesn't want to be smarter? So everyone would click on that. And then like Harvard scientists would like lend its credibility because, oh, if it's from Harvard, like it's good. And so if you could get those 3 terms approved, there were a whole bunch of like sketchy operations that would get ads approved and then just pump like $100 million of sales behind them. And it seems like maybe there's a little bit of that going on here where a lot of these, a lot of these ads should not have been approved. Maybe there needs to be a validation. I know that a lot of companies that partner with doctors, even just to sell like skincare supplements, sunscreens, really anything, the rate to advertise with an influencer who's a, who actually has some sort of medical credential is like way higher.

Yeah, 'cause it's way more effective.

And that, yeah, it's way more effective. But if you can just like fake that, then you're basically arbitraging that, but you shouldn't be, so.

We have 2 employees, but 800 fake doctors on Facebook.

Not great.

Yeah, maybe I wanna be the one person, $1 billion company, but I wanna win more. So if adding incremental people helps me build a better company, why would I not add at least a handful of people, right?

Yeah, totally. So yeah, I mean, I think software is an interesting category, especially if it's open source software somehow, where there was some sort of flywheel where you could verify what was actually built, and then you could verify what the sales were, because it was done on some sort of open platform or some sort of thing where the actual reporting and the analytics— I mean, apparently the New York Times did verify the run rate that they used. So their money was flowing through the business. But having a much cleaner representation of what the financial picture is, I think, would help. I was personally excited about the prospect of a video game and just more video game developers. Seeing breakout success. So a couple years ago, in the olden days when I had free time, I got woefully addicted to a poker-themed roguelike deck-building game called Balatro, which I don't think anyone here has played. But this game is amazing. So much fun. So it's— you're basically playing poker, but there's no financial stakes. There's no money. There's no microtransactions at all. Interestingly, the game actually got banned I think in Japan or some other country for being like poker and being banned for being anti-gambling. No, no, for— no, no, banned for, for being like gambling aesthetics because you are playing with cards. There's no real money. You pay like $10, $15 for the game and then you can just play unlimited. But it's done extremely well. So sold over 5 million units. I saw some reporting that it might be 7 million and maybe even more now because they've gone multi-platform. Platform. And I think at $15, $20 a download, that might be close to $100 million in revenue. And it was made by a solo developer who goes by Local Thunk. Over a 2.5-year period, he originally wanted the game to be a side project that he could put on his resume, but it wound up being a massive success. And so depending on your valuation methodology, you could probably underwrite Balatro close to $1 billion if it's generated $100 million of basically free cash flow. You know, there's obviously 2.5 years of R&D, but that was just this developers' time, the future revenue streams, the offshoots, the merch, like, you get to a number that's close. And you have to imagine that his 2.5-year development, like, life cycle would have been pulled forward by the help of AI. So he basically developed the game entirely in the pre-AI period. So it came out—

Does it still have momentum?

I think it's probably trailed off a little bit because people sort of— you get to the end of the game after I don't know, 10, 20, 50 hours or something. And then there are some people on YouTube that will do like tons and tons of like try and break the game because you can get really, really crazy with like combinations of different things. But at a certain point, like you do kind of finish the game and then you're like, okay, I'm moving on. Yeah.

I mean, some of the stuff that I've seen internally at 2PM, it's like going to blow.

Already vague posting. Are you the vague post gang? Have you stared into the abyss? Have you been to the abyss yet? 'Cause everyone talks about at the AI labs, they all have abysses. And I feel like Abyss 101 is like, "Do not stare into it." Yeah. Like maybe glance.

It's like a first day at onboarding.

Yeah.

Where's the abyss?

I think a glance is okay. Or maybe like saddling up to the abyss and just kind of peeking your head in is fine. But I would not stare into it. I think that's something you need to—

Let's go over to the App Store. Yeah. The App Store saw an 85% increase in new apps. This past quarter. Let's pour one out, pour one out for the App Store review team. Most recent quarter's new app count has grown less than 10%. So it was just ticking up quarter over quarter and then jumped massively. No surprises here. Everybody that I know outside of tech has an app now. They're unconstrained.

They have an app, but at the same time, I have yet to find an app that's on my home screen that was solo developer vibe-coded, something like that. So I'm waiting for the Flappy Bird moment or the Bellator moment, this like solo thing. Even if it's like a productivity tool, there's clearly more apps, but actually going viral, like what is the Harry Potter Balenciaga moment? What is the viral moment that breaks through and actually makes it to the top of the app charts. Because right now it just feels like the long tail of the App Store is getting potentially fatter because there's more single-use apps. There's more small apps. But will we see one of those break out and become fantastically successful? That's sort of like the next critical moment that I'm eagerly awaiting. But we'll see.

What's going on in China, John?

The pork industry is a victim of its own success. This story is incredible. They got swine scrapers over there, skyscrapers filled with swine. I'm not kidding about this. So this is from The Economist, and I read this yesterday and really enjoyed it. Pork holds a unique place in the Chinese diet. It was once a symbol of the good life. The Chinese character for home is a pictogram of a pig under a roof. It is so important that the government has a strategic Frozen Pork Reserve. And the news media are always full of the ups and downs of the pork industry. It's like they got to cover it like it's a horse race, like what's going on?

Yeah, the pork race.

No, it's serious. TBPN for the pork industry in China, that's the real opportunity. There have been plenty of peaks and troughs in the past decade. The trough is active over there, literally. In 2018 to 2019, when African swine fever ravaged pig herds, Many smaller backyard farms were wiped out. Prices went through the roof. Before long, the industry came trotting back. The big worry now is that it is doing too well. More efficient farming methods producing ever more pork are colliding with slow consumption of the meat. Now all the news is about overcapacity. She who sells cuts of pork at a market in Beijing says she only got to eat the meat on special occasions with a child. These days, she says, it's so cheap people can have it whenever they fancy. The oversupply pushed live pig prices to a 15-year low in March. Some farmers are losing over $40 per animal. Part of the problem is that some pig farmers have been aggressively expand— have aggressively expanded production in an attempt to gain a bigger share of a shrinking market. On top of that, big companies saved their bacon in the downturn by concentrating their pigs into mechanized modern facilities where they could be kept isolated from the swine fever. Modern farms are a marvel at industrial agriculture, though not of animal welfare. Tens of thousands of pigs are packed into multistory concrete buildings. One in Hubei Province has 26 floors. It's a swine scraper. It's 26 floors of pigs.

Do we know why consumption is declining?

Just oversupply. So they got hit with this, they got hit with the swine flu and they were worried about all the pigs getting sick and dying. And so they, instead of having them cross-pollinate in like open fields, they push them into these literal skyscrapers that are 26 floors tall.

But I would assume over, over, Overproduction, you have oversupply, prices come down. But they're saying that just overall consumption is dropping too.

Well, yes. So people are moving to chicken and seafood increasingly. Middle class, the middle class Chinese see pork as less healthy than chicken and seafood. But it's really like a supply, a supply side story that may be more pork than even China can eat. The average Chinese person guzzled 28 kilograms of it in 2024. But that was 2 kilograms less than in 2023. To boost prices, officials have slashed subsidies, ordered farms to cull droves, and told the pork reserve to buy more meat to little effect. Some big firms are looking elsewhere.

That is wild.

China's biggest pig producer hopes to export its business model instead. Last year, it said it would bring the first high-rise— it would build the first high-rise in Vietnam capable of rearing 1.6 million swine a year. 'Pig farms are going vertical as profits flatline.' And so they are moving the pigs inside, which is winding up with increased yields because the pigs aren't getting sick. America's best new weapon in Iran is a drone inspired by Iran. You had asked about this on one interview we did with someone.

Yeah, I forget who it was with, but I was You know, I was surprised to see the US copying the Shahed because it feels like—

You were surprised to see them copying it or not copying it?

No, it feels like entirely the smart move. It's battle-tested. They're cheap. We have a good understanding of their capability because American allies have faced off against them. So there's a lot of reasons that it makes sense. But I feel like America had to swallow its pride to some degree to copy something that the enemy made. So—

Yeah, they're calling it the Toyota Corolla of drones. The powerful, low-cost attack drone the US is using in its war with Iran doesn't come from one of America's more than 400 venture-backed drone startups, and it isn't the product of Silicon Valley ingenuity. Instead, the drone having its moment in the Middle East conflict was designed by the US military itself. Using reverse-engineered Iranian technology. From the earliest days of the war, the FLM-136, or LUCAS as it is known, has been wiping out Iranian military targets while better-funded hardware systems and drones from defense startups have had little involvement. It is a victory for the US military, which went from blueprint to battle-ready drone in less than 2 years, jettisoning its tradition of slowly buying very expensive equipment. "The creation of LUCAS is an early proof point." That's a narrative violation. "A new strategy of making cheap drones quickly and a sign that the Pentagon can change the way it does business to better prepare for modern conflict." So I want to know so much more about like, so they're not subcontracting this at all? Is this all like, is the entire supply chain, the US military itself, are they milling the parts in factories?

Yeah. So during the Biden administration, a small group in the Defense Department seized on the idea of America building its own version of the Iranian Shahed, a fearsome attack drone that militaries and proxy militias across the globe have sought to duplicate. Russia, which is lobbing about 4,000 modified Shaheds at Ukraine every month according to Ukrainian government data, did more than any other country to demonstrate the drone's capabilities. A small team in the U.S. military's research and engineering office put together plans to build an attack drone based on deconstructing a Shahed the military had recovered from Ukraine. It was the first known occasion in around half a century that the U.S. had reverse engineered another country's military technology for for its own use. The last time it was a Soviet-made pontoon bridge. That's interesting. A former senior defense official described LUCAS, which stands for Low-Cost Unmanned Combat Attack System, as the Toyota Corolla of drones. It may not have all the features or top-end components, but it was built to be affordable and plentiful. The cost of LUCAS ranges from $10,000 to $55,000. Uh, that's a big range according to a Pentagon spokesman.

There's also still a worrisome lack of cheap US counter-drone technology, which has allowed Iranian-backed militias to continue using small drones to menace US military bases in the Middle East. The small number of unmanned surface vessels in the region are still years away from being the autonomous fighting machines their manufacturers have promised. Citrine analyst number 3 got picked up by the CID, the Gulf CIA, because of the tweets about him. So I think everyone needs to be careful talking about Citrini Analyst Number 3 based 16Z says Hunter S. Citrini Number 3.

Last post from Francis. He says, I think the next LinkedIn post I read about the TVPN acquisition might finally reveal the future of media. Just need to find one more.

It's true. There was one more post that was good. There were so many good posts. It was a lot of fun.

And Nate, you with an absolute banger and a place that we will end it. He says, hear me out, TVPN for sports. There very well could be something here.

And I liked it and I got screenshotted because it's official. There very well could be something there. Well, get out there, build something. Maybe go treat yourself to the largest buzz ball that has ever been built. It weighs 3,000 pounds. It opens up as a lemonade stand capable of holding 17,000 drinks. Which will be served around the United States. That's a good way to—

TVPN, the only place you can get technology coverage and buzzball coverage. Hard to hit buzzball in the lore analysis.

Anyway, thank you so much for watching. Leave us 5 stars on Apple Podcasts and Spotify. Sign up for the newsletter at TVPN.com and we'll see you tomorrow at 11 a.m. Goodbye.