Kurt Green is the President and CEO of Vetsource. Headquartered in Portland, Oregon, Vetsource develops and delivers innovative technology, pharmacy, and business solutions for the veterinary industry.
Episode Transcript
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00:08 Matt Waller: Hi, I'm Matt Waller, Dean of the Sam M. Walton College of Business. Welcome to Be Epic, the podcast where we explore excellence, professionalism, innovation, and collegiality, and what those values mean in business education and your life today. So I have with me today Kurt Green, President and CEO of Vetsource. He is in Portland, Oregon, and he's been the CEO for nine years. Thanks for joining me, Kurt.
00:41 Kurt Green: Thank you, Dean Waller. I appreciate the opportunity to sit down with you today.
00:46 Matt Waller: So Kurt, tell me just briefly what what does Vetsource do?
00:51 Kurt Green: So Vetsource is a healthcare IT company. We're a technology company focused on veterinarians. We're a 50-state licensed pharmacy and we ship pet medications and therapeutic diets on behalf of our veterinary customers all around the country.
01:10 Matt Waller: It sounds like a great idea and you wind up having your inventory centralized, I suppose, is that right?
01:18 Kurt Green: Yes, we buy from all the large drug companies. And as a 50-state licensed pharmacy, there's a lot of regulation that we have to adopt to and make sure that we have the safety standards just like any human pharmacy. The Boards of Pharmacy don't make any distinction between pet medications and ours. But we buy all the inventory and then when a customer of a veterinary hospital, that's one of our customers, goes to an e-commerce site that we actually stand up and manage for them and wants to buy some pet medications, that gets routed to the doctor for approval. Once that's approved, and it gets routed to us, and we then fulfill that. We're a business-to-business to consumer company, so our customers are the veterinary hospitals or clinics out there. And the pet parent or the consumer is doing business with their veterinarian, so we manage that transaction as a sale between the veterinarian and their customer, the pet parent.
02:18 Matt Waller: So how did you come up with the idea for this business?
02:23 Kurt Green: Yeah, so I started a technology business back in 1999, that was doing a lot of consulting work. And consulting, we'd have eight or 10 people on a project for a year or two and they'd come off that job and be sitting on the bench and I'd funded that business myself and the lumpiness of the revenue stream was kinda painful. So we were looking for more of a re-occurring revenue model and we had built lots of websites for lots of different companies and industries and landed on veterinarian as a very interesting marketplace. There's 26,000 veterinarians out there. They're small businesses typically. They're trained as doctors and medical professionals and aren't necessarily trained as good business people. And we just saw this as an opportunity to really help them solve a need they had, which is to provide shipping of things to home in ways they just couldn't do on their own.
03:16 Matt Waller: Well, from an efficiency perspective, this seems... It's certainly more efficient to have a central distributor and order fulfillment company than to have all of these different players holding the inventory. Was that part of the sale or?
03:35 Kurt Green: Yeah, there's really benefits on multiple levels, but another aspect that a lot of people don't realize is that the adherence to doctor's recommendations and pet medications is not very good. If you have a dog that needs to be on heartworm year-round or on pain medication year-round, out of the hospital average doses of a monthly medication are only like five or six because pet owners either just don't come back to buy it as often, or they buy a six-pack and it sits in the draw and they forget to give it. As a pharmacy, we can repackage those medications. We put many of those into a single, monthly dose. Get the pet parents set up on an auto-ship program that just shows up when it's time to give it. It kind of fragments the cost and makes it easier for them to pay for it. And by doing that, we've increased the adherence to the doctor's recommendations up to over 11 doses on average for pets. So not only are we kinda helping on the cost side of the business, but we're really growing the revenue side of the business, which is good for lots of people in the... The big drug companies love it. The veterinarians appreciate it because it's good medicine. It's convenient for the pet parents. And so we're kinda hitting both sides of the equation.
04:46 Matt Waller: How many employees did you have in 2010?
04:49 Kurt Green: Probably about 30 or so.
04:52 Matt Waller: And how many do you have now?
04:54 Kurt Green: About 375.
04:56 Matt Waller: That is a huge amount of growth and I know that kind of scaling is difficult because you've gotta have people, not just people, you've gotta have the right people, you've gotta have the right processes, you gotta have the right technology. That's one of the most challenging parts of business is scaling. Was it challenging?
05:20 Kurt Green: Of course. [chuckle] One of my good friends that we ran the business together, had said that growth... Hot, fast growth is hard. Hyper-growth is hyper-hard. And I think we've just had to lean in to embracing change and be innovative. And as any business goes through the different stages, this is actually the fourth business I've had a chance to kinda be a part of or run from no revenue to growth, and you go through these different phases. Where in the early days, everybody knows everyone and the culture is easy to maintain, and you don't have a lot of processes 'cause you just walk down the hall and talk to somebody.
06:05 Kurt Green: But as the business gets bigger, you have to think about hiring practices, you have to think about pushing your culture down through the rest of the organization. You have to do some things, like some policies and a little bit of bureaucracy, 'cause the business just needs it but you fight hard to have it not be something that gets in the way of what's helped the business be successful from the early days. And so it's a constant kinda challenge in the tension between staying nimble and entrepreneurial, but putting the right processes in place and the right disciplines in place, that as the business grows and scales that you've got your arms around it.
06:44 Matt Waller: Of course, companies come up with ideas. They have to morph a lot, especially early on, to finally get customer traction. And then you've gotta come up with a good business model, and then you scale. Would you mind talking a little bit about maybe a story or some example of the kinda morphing you did early on, pivoting?
07:07 Kurt Green: In the very early days, we thought this business was gonna be easier than it turned out to be, which I think is generally always the case [chuckle] in most businesses. But the thesis was that if we signed a veterinarian up, that they would communicate to all their pet owners. And the average veterinarian has about 3,000 active pet owners or pet parents in their practice. And like a lot of business models do and I'm always cautious of this, it's like, "Boy, if we could just get 10% penetrated, and look how big this business could be?" And what we found out is that the business had two selling events. One selling event was just to get a veterinary hospital to say, "Yes, I wanna do this with you."
07:53 Kurt Green: The second selling event, and maybe the more difficult one, was once an owner of a hospital, which is usually a veterinarian or his wife, once they say, "Yes, let's do that," you have to get the staff to understand it, you have to get the staff to talk about it, you have to get the staff to understand the workflow. And that last mile of uptake has been extremely difficult. It really, I wouldn't call it a pivot in the business model, but certainly a redirection of our effort and focus and what problem we really needed to solve, because signing up a hospital or a clinic doesn't do anything for us. It's just another logo. But if they don't actually embrace the solution and drive uptake than it's not helping them, and it's not helping us, and it's not helping the manufacturers.
08:42 Matt Waller: I went to your website and I noticed that you have a lot of good material on your website, blogs and all kinds of really interesting information that goes way beyond what I would expect, given what you're doing. How did that happen?
09:00 Kurt Green: Well, we've over time as the business has grown, we've got good marketing people. And I think that while no one comes to our site to buy anything, we're managing over 8,000 individual veterinary e-commerce sites. Our site's important in terms of just establishing the brand in the marketplace for our customers, as well as just a recruiting and retention tool for us. The business is growing rapidly. In 2018, we hired a little over 100 people. Not quite as many in 2019, but as this business scales, we've got people all over the country and we need to have a place that represents not only what we do, but who we are because hiring and retaining great people has a lot to do with having a good business that's growing and exciting, but also has a lot to do with just the kinda values and cultures. And is this a place I want to invest my time? And we work very hard that Vetsource is a place people want to and the website is one element to get that message out.
10:04 Matt Waller: So I noticed too that it seemed like you had some material there that would be helpful to someone that was a vet or ran a clinic. Is that part of what the target is?
10:14 Kurt Green: Yeah, so there's a lot of educational content that's important, both for the pet parents and for the hospitals. We have two different call centers in our business that... One just for veterinarians to call with questions. One of the things in human medicine is there's this triad of care really between the doctor and the patient and the pharmacist and that really doesn't exist in veterinary medicine. And so our pharmacists are trained on pet medications, and most pharmacists aren't, and veterinarians could use some help on that. And so we have a lot of content on the website, but also have a call center where a veterinarian can talk to one of our pharmacists and just ask about any drug-on-drug interactions that they may not be aware before they write a prescription. Just a variety of just information that we think just helps veterinarians be more knowledgeable about medications and diets.
11:13 Matt Waller: I know that there's a number of industries right now that are growing. I mean, we're in a growth mode. How is the overall pet market? Is it growing or stagnating? What's it doing?
11:27 Kurt Green: So the pet market is unbelievable. It's growing at about a 6% year-over-year. And it's about a $90 billion market here in the US and so it's a big industry. It's certainly not recession-proof, but it's definitely recession-resistant. People will spend money on their pets when they might not spend money on themselves. I grew up on a farm in Indiana, and we had a dog that we loved, but the dog slept outside in the dog house. And what we've seen in my lifetime is the dog has moved from the backyard, to the back porch, to the house, to the bedroom, to the bed. And actually, 50% of all dogs sleep on or in the bed with their owners. So this whole humanization of pets is something that has been a phenomenon that is obviously good for our business, but it's a trend that makes being in the pet industry really enjoyable.
12:30 Matt Waller: Right now, for this level of scaling that you're doing currently, which is more challenging: Raising funds, finding the right people, developing better processes, improving the technology? What do you see is the most challenging, at this point?
12:47 Kurt Green: Yeah, there's two that I would say. It's not funds. There's a lot of people who wanna put money into the pet industry. But clearly, hiring the right people as the business scales and managing our technology roadmap, because we've got about 40 or so engineers in our business, probably about 65 or so people in the technology group, and really deeply understanding our product roadmap. What do our customers need and applying what's a limited set of resources. Anybody who runs an engineering team or technology team, they'll all tell you that there's never enough of them and because the demand is always great on those teams. And so being able to hire great people is so critical throughout the whole business, but looking at the investment we're making around our engineering and technology group and making the tough choices about where do you invest and where do you say no, I think is at this stage in the business one of the most important things we need to do.
13:49 Matt Waller: Well, and when you scale up from a technology perspective, especially in your business, you would have to pay a lot of attention to the customer journey. How do you manage that?
14:01 Kurt Green: We have engineers that generally really understand what is going on. We like to get them out in hospitals from time to time. But importantly, we have a product management team that lives inside of the technology team. And it's their job to spend time with pet parents, to spend time in hospitals, to spend time with our sales reps, to just understand, What's the market telling us? What are the pain points? What are the areas that we can really help? We don't wanna over-engineer a solution out of the block. Let's see what's working and what's not. Let's course correct and then we'll scale our solutions once we have 'em right.
14:40 Matt Waller: We created something called the McMullen Innovation Studio. It's in the business school, but over less than half of the students are from the business school. They're from all different schools on campus, in particular, engineering. It is running. So students are working on projects all the time in cross-functional teams. They have to do... They have to understand the problem. They learn how to reframe problems, how to do customer empathy mapping, the whole thing. But this capability you just described in product management is kind of hard to find right now, at least that's what we have been told. And the students that are going through this McMullen Studio as they go through college really have a lot of opportunity when they get out 'cause there's so much demand. Do you see that?
15:34 Kurt Green: Oh completely, yeah. I mean, for years, anyone who could kind of bridge the gap between talking to customers and then talking to the engineering or technology team has been valuable. But I think in the last few years, we're seeing it really get institutionalized. The unique thing about our business, and I think about this a lot, is that nobody's gonna know more about the pet parent or the owner of the pet than Amazon, but no one will know more about the pet than the veterinarian. And we're spending a lot of time and energy around data-driven solutions that only the veterinarian knows. I think consumers today want to be interacted with in a very personalized, targeted-based communication. And so what you see in so many e-commerce environments is 25% off on your first auto ship or $10 off on this next order. And I think a way that our profession can differentiate itself is to say, "Hey Kurt, I know Eli, one of your dogs actually has got arthritis. He's taking this medication, and here's a diet that actually might help supplement that," and it really makes the veterinarian much more engaging with their pet owner.
16:53 Matt Waller: Now, I know Greg Colvin is involved, and he is an alumnus of the Walton College. Colvin has told me that you have built a outstanding culture in Vetsource. Would you mind talking about why you put so much effort into that, and how you did it?
17:11 Kurt Green: We think deeply about culture. In the early days, the culture is often a reflection of the leaders and there's just a handful of people and you're all kinda together all the time. But as a business grows, having a strong culture really unites a business in ways that I think doesn't happen automatically. So we have cut kinda five key values. They're pretty simple. One's just do the right thing every time. Our second one is treat others the way they wanna be treated. It sounds really simple. I get to sit down with all the new hires once a quarter, and what I tell 'em is that you'll never be fired for making a mistake in our business. We're growing. There's lots of stuff that's happening. But you will be fired for being a jerk and so we just have a no jerks aloud rule. Our third one is embrace change and be innovative. You can't grow a business rapidly and do the same thing you did two years ago today. And we certainly can't do the same thing two years from now that we're doing today. And change isn't always easy and I think we need our people to just mentally lean in to change, to just embrace it as something that this is a part of what we do. And if you can accept that and recognize it's a little uncomfortable but lean in to change, we believe it'll really help us be innovative and do the things we need to do.
18:29 Kurt Green: The last two pretty simple. One, is to get things done. We have to achieve our goals, everybody in the organization. We can be a really great company, but if we don't achieve our goals, we won't be successful so we have to hit our numbers. And the last one is just work hard, have fun. We spend way too much time at work not to enjoy what we do. Largely, I certainly don't like everything about my job every day, but I really enjoy my job and feel that most of our people do. I've always believed that if people trust and respect their manager and they generally like their co-workers, then for the most part, they're gonna look forward to coming to work. So we work very hard at hiring great managers that develop a trusting environment for people, that it separates us from a place where we can hire and retain great people, which is one of the biggest challenges of scaling any business.
19:23 Matt Waller: Kurt, thank you so much. This has been very interesting. And congratulations on the innovative company that you have built.
19:32 Kurt Green: Well, thank you, and really an honor to be with you today and it's exciting to hear the neat things you're doing as the dean of an innovative school, helping students graduate, and get out there and make great things happen.
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19:50 Matt Waller: Thanks for listening to today's episode of the Be EPIC podcast from the Walton College. You can find us on Google, SoundCloud, iTunes, or look for us wherever you find your podcast. Be sure to subscribe and rate us. You can find current and past episodes by searching BeEPIC podcast, one word, that's B-E-E-P-I-C podcast. And now, be epic.
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Matthew A. Waller is dean emeritus of the Sam M. Walton College of Business and professor of supply
chain management. His work as a professor, researcher, and consultant is synergistic,
blending academic research with practical insights from industry experience. This
continuous cycle of learning and application makes his work more effective, relevant,
and impactful.His goals include contributing to academia through high-quality research and publications,
cultivating the next generation of professionals through excellent teaching, and creating
value for the organizations he consults by optimizing their strategy and investments.
