Episode #66 – Alexander Petersen

Do you work in the animal health industry or veterinary profession? Have you ever wondered how people began their careers and how they got to where they are today? Hi everyone. I’m Stacy Pursell, the founder and CEO of The VET Recruiter, the leading executive search and recruiting firm for the animal health industry and veterinary profession. I was the first recruiter to specialize in the animal health industry and veterinary profession in the United States and built the first search firm to serve this unique niche. For the past 25 plus years, I have built relationships with the industry’s top leaders and trailblazers. The People Of Animal Health Podcast highlights incredible individuals I have connected with throughout my career. You will be able to learn more about their lives, careers, and contributions. With our wide range of expert guests, you’ll be sure to learn something new in every episode. Thanks for tuning in and enjoy the episode.

Welcome to The People of Animal Health Podcast. Today’s guest is Alexander Petersen, a global leader in animal health and medical technology. With a career spanning from McKinsey to IDEXX and his own ventures like DanaShift and Wagly, Alexander has driven more than 750 million in transactions and led strategic transformations across North America, Europe, and Asia. As managing director at Corporate Finance Associates, he brings deep expertise in M&A and growth strategy. Passionate about enabling impact therapies for both humans and animals, Alexander is a true force in advancing global veterinary innovation. Alexander, welcome to The People of Animal Health Podcast. I’m so glad to have you here today.

Thank you, Stacy. Thanks for having me on your podcast. I think it’s a humbling opportunity given the backgrounds of some of the amazing people who preceded me, and by the way, many of which are long-time friends in our extended animal health family. I feel like you personally, Stacy, of course, have shaped that family in many ways by bringing some great people into the industry and also helping them find their right next opportunity. So yeah, thank you for the opportunity.

Well, you know I always like to start off at the beginning. So Alexander, let’s start off at the beginning with you. What was your life like growing up and where did you grow up?

So I grew up in a very international setting. My parents are from Sweden and Denmark, and I was born in Sweden on a little island on the west coast of Sweden. My father’s an international lawyer, so we initially lived in Luxembourg where he worked at the European Court of Justice. And when he ended up joining the United Nations a few years later, we moved to Geneva, Switzerland. The UN also took us to Tehran, Iran, Nairobi, Kenya, places like that. I’ll tell you a bit, one part of the story, which was kind of cool, the way I learned English.

So I learned English in one of the most… the weirdest circumstances. The Iran-Iraq war was raging and we found ourselves evacuated to a house up in the Alborz Mountains north of Tehran, together with 30 or so other UN family members, and even a bunch of Russian diplomats who had to sleep in the hallways because the embassy had gotten bombed. And so my sister and I befriended the daughters of one of my father’s colleagues. Unfortunately, they only spoke Greek and Turkish, and so my sister and I spoke French, Danish and Swedish. So we kind of had to all improvise and decided to imitate the adults who all communicated in English, albeit with a great range of accents and intonations, you can imagine Danish and Russian and Turkish and whatever other accents in this big house in the mountains.

Wow. Well, and I’m sure that living at all those different places really helped shape you at an early age. I want to dive more into that too. And so from McKinsey to IDEXX to founding DanaShift, you’ve had a remarkable journey through both human and animal health sectors. What first drew you into the animal health space and how has your passion evolved since 2005?

Thank you for your kind words. After my MBA, I really thought of myself initially more as a generalist, and that’s why I joined McKinsey, a consulting firm that I felt was kind of an extended MBA, an opportunity to touch on multiple areas and businesses. I did the weirdest things, working for telecommunication companies and fast moving consumer goods and so on. But I really loved the work that we did in pharmaceutical and medical products on the human end. I felt that had purpose. I have some family members that have long-term chronic diseases and so on, and I felt like we could in a small way, make a difference to bring innovation to market. So it all started with human and consulting with the likes of Novartis and Johnson & Johnson and Bristol Myers Squibb and people like that. I was an expert in the area of sales force optimization and commercial transformation in the space.

And I guess little did I know that Pfizer had a division focused on the animal health space, which of course we now know as Zoetis. And so I think similar to a bunch of other people, I didn’t grow up thinking I was going to be in the animal health space. I fell into the animal health space and have really enjoyed it since. I spent a few months helping Pfizer’s livestock and companion animal sales teams build tools to target high potential veterinarians. And that was just a first of a whole string of projects in this space.

I think what really struck me was the absence of many of the constraints that I had gotten used to in the human space. HIPAA laws, from a data protection perspective, extreme fair balance limitations, where it’s hard to write an ad that didn’t talk about death and other terrible things, reimbursement that had really become a tool to stymie innovation, a large uninsured population still at the time, which meant that these things, even if they were reimbursed, never made it to many people. And then of course, just a very slow and expensive route to market for FDA approved products.

So I guess my boss later at IDEXX, Jon Ayers used to say, we can do it in animal health the way it should be done in human health. And I still believe that. I feel like animal health is an extraordinary opportunity to innovate, to bring new things that are harder to do in human health. I think a lot of people have thought of human health as a driver of animal health and animal health as a follower. That’s not the way I think about things. I think of our smaller space as a space for innovation and creativity and drive, and I think that’s reflected in the personality of a lot of the people I work with.

So follow up question to that, you talked about the constraints on the human health side as opposed to animal health. During the time that you’ve been involved in animal health since 2005, have you seen any more of those constraints enter the animal health space?

I don’t feel the space is more constrained necessarily. We’re obviously become… I mean, reimbursement, insurance is of course a bigger factor in our space, but we’re still not in a space where we have a complex process on that front. At the end of the day, I think innovation is all about is there a market for it? Will veterinarians, will consumers adopt new ideas, new things? Will they make a difference? In some ways, I think things have, lo and behold over the last 10 plus years, gotten better rather than worse in the sense that pet owners are willing to pay for relevant innovation. They’re committed to extending happy and healthy lives for their pets. I think all in all, the regulatory authorities have been supportive of bringing new innovation to market, and I feel like in many ways, we’re experiencing a rapid expansion of, for example, pharmaceuticals. I think diagnostics continues to innovate at a rapid pace. So no, I actually continue to be very, very bullish about the opportunities for our space and the ability to innovate.

That’s encouraging. Well, you have led more than $750 million in transactions within the animal health and veterinary services. What unique dynamics make mergers and acquisitions in this sector different from traditional healthcare deals?

Yeah. No, I think you’re right, Stacy, the companion animal health space is particular, right? It is truly extraordinary. I’d say it’s been growing first of all very consistently for as long as I can remember. We in our industry get all nervous about we’re growing 4% rather than eight, but we tend to forget that traditional consumer retail can decline by 10, 15% in a year and grow 20% in the next.

So first of all, we have that consistency, we have that growth. I really believe that it’s driven by strong underlying secular trends. As my friend, Marty Becker, who I know also also participated in this show in the past, says there’s the secular trend of the human-animal bond, and he describes it so, so well. And the humanization of veterinary medicine that we’re seeing today, I do not see as a fad. I do not see it as one of these consumer-driven things where people go one direction, go to the next, but rather as the accomplishment of many, many years of innovation and development and how humans and animals support each other. It’s become such a big thing.

I feel like we saw it during COVID how incredible companion animals were to supporting people through all the challenges and stress that that involved. As I said, its space that’s less cyclical, I think, than many consumer-facing businesses. And I think that’s evidenced by how the space performed in the great recession in 2009, or the impact that COVID had more recently. And of course, again, back to the M&A question you were asking, the combination of long-term growth, consistent margins translates into strong valuations.

The space is obviously a lot bigger than it used to be, but it is still fairly… It’s fair to describe it as a bit of a niche. It does tend to attract investors and buyers that really understand it. When we speak to investors that have not previously invested in the space, they’re curious, but the deal usually gets done with someone that has in the past. Whether they’re financial investors such as a private equity firm, a venture capital firm, or maybe a family office, and of course strategic such as manufacturers or corporate veterinary groups and so on.

So one of the things that makes M&A in the space special is that there’s a relatively limited cadre of investors that drive most M&A activity in the space. It’s an interesting challenge as a banker because first and foremost, your value is going to be in building special relationships with all those players and helping see how the puzzle pieces fit together. But you got to be really, really deep about it because at the end of the day, we kind of all know who they are. And so the level of depth required I think is significant. But you also want to be creative. You want to think outside the box. When I started Wagly, as an example, we brought in a private equity firm to fund us that maybe you wouldn’t have thought of at first.

So I think it’s kind of that combination of being opportunistic but really doubling down. And the way I like to say it is we’re trying to build a dedicated professional banking team that really knows something about something. What I mean with that is we’re familiar with the market, the technologies, the players, most important, the people of animal health and keep learning. This isn’t something you achieve and you stop. It’s keep building those relationships. I think it’s an extraordinary… The way you and I have built a relationship, right? Initially you helped me bring tremendous veterinarians into Wagly and now we’re friends and colleagues and members of this extended animal health family. And that’s, I think, how this works.

I find that there’s no throwaway meeting in animal health. If I meet with someone, entrepreneur, investor, executive in animal health, it’s worth my time because I know we will cross paths in the future.

Yeah. Recently I introduced you to my son and you had a conversation with him about his future career prospects and banking and the animal health industry. He was so appreciative, by the way. But that’s what I like so much about this industry, is the relationships. And like you said, there is no throwaway conversation. And I do want to ask, I do want to get to Wagly. I want to ask you a question about IDEXX first, because at IDEXX, you were at the forefront of transitioning to digital diagnostics. What were the most challenging and rewarding aspects of leading innovation in such a traditionally analog industry?

Yeah. I was at IDEXX between 2009 and 2014, roughly. It was a really, really special time. I initially actually joined heading up strategy and M&A working for the CEO, and that was really great because it’s an amazing opportunity to start with a company with a strategic look and saying, “Where are we trying to go as a company?” And as part of that, a couple of the strategic cycles that I led, one of the most important themes we identified was this idea of how do we go from being a diagnostic company to being a diagnostic information company? Our CEO had always had this bug for software. He had had this view that by bringing it all together in the form of a practice management system, you can bring disparate parts of the ecosystem together. So we had that kind of gene pool, but there’s a lot of going on.

So we were already a leader in veterinary software with practice management systems, but the systems we owned were still very traditional, client server applications. Some of them were built decades earlier. Diagnostic results, you probably remember this, but believe it or not, for some of the more new participants to the space, were still delivered via fax machines. So veterinary hospitals, veterinarians loved the fact that every time a diagnostic result was ready, their fax machine provided by IDEXX would start printing. And that was kind of their cue to go take a look at the results and see what they wanted to do next.

And so I was new to software. When my boss said, “You’re going to run the software business here at IDEXX,” I said, “Hey, I just want to make sure you understand that I’ve never run a software business before.” And the comment was kind of a, “You know what, you’ll learn. It’ll be fine.” And what I sought to do in my role was to really infuse as best I could gather it, architecture and tools of the future to try to achieve our goal, which was to go from, again, from a diagnostic company to diagnostic information provider. And that involved, first of all, just hiring some great people. We brought in some really, really strong technology leaders. I was more of a business leader. And then bringing in things like agile development and Scrum in terms of development techniques, software as a service as opposed to client server, cloud-based hosting rather than hosting all of our data out of, I think it was Bangor, Maine, somewhere up in the Northeast and building native IOS and Android apps as opposed to everything being on the laptop.

So these things seem so simple today. It seems obvious. I mean, if you’re going to build software, it’ll be cloud-based and it’s going to have to work on your iPhone, but those things were less than obvious back in the day. I think it was incredible to have that opportunity come into this new role, and IDEXX was ready to try those things. We had some really amazing people by the way, that were already passionate about things like big data, machine learning. And we said, “You know what? If we’re going to retool the business, let’s do it right.”

I’d say the most rewarding project in this whole setting was leading the development of VetConnect PLUS, which as you may know, is a tool that helps veterinarians to see all their results, diagnostic results in one place on their phone or inside their practice management system. Regardless of if they were from the reference lab, if they’re in point of care equipment, whether it’s a digital radiography image, you can all see them in one place.

And for the first time, veterinarians were able to, without pulling out a piece of paper and a pen, trend 10 plus years of medical history for a pet and start seeing the big picture. And of course we were still just scratching the surface. And with the tools that AI affords us today, I think we’re going to see the next revolution in interpretation and follow on action on diagnostic results that really will take us probably from diagnostic information to truly medical decision support. And I’m still excited to see that. I think the diagnostic industry is starting to nibble at the edges of that, but hasn’t quite done it. But again, we can do it in animal health the way it should be done in human health, and I believe that’s going to be a huge driver. A lot of people have looked at the diagnostics companies and asked themselves, well, have they done what they could do? I mean, they have big market share and they’ve increased prices, and is the market still growing enough and blah, blah, blah.

We just saw IDEXX, I think, have a significant increase in their market capitalization because of recent results. But I think that’s a sign that at the end of the day, investors understand that we’re just getting started. We’re at the first inning of innovation in animal health. There’s a lot more to come. I think the challenge that we had back then, and I’m sure it’s no different today at any of these leading companies, was prioritizing all the requirements. Particularly internal, actually. So customers was one thing, what they wanted to see, but each of our businesses, we had all these lines of business and telemedicine and radiology and so forth and so forth, and everyone was hungry to bring in new solutions to their customers and utilize these new technologies that we were starting to build out of the software team where small team with limited resources, but just unlimited hunger for more. And that was hard. We had to make tough choices and pick services that we felt were most important for the customer base.

Well, I love the example that you shared about the software business and how you jumped in and did that even though you hadn’t run a software business before, because sometimes people think that they can’t do things because they haven’t done them before, but here’s an example of you were leading a business and you had not been in that space. So I love that. Then know Wagly is another example. Wagly was an ambitious multi-unit pet services and veterinary group that you founded in 2014. And like you mentioned, I had the opportunity to work with you there as a recruitment partner. What inspired you to build Wagly and what were some of the biggest lessons from that entrepreneurial journey?

Back to your first point, Stacy, like everybody else, I guess I’ve had a few kinks in my career, like changes. Maybe I’ve had a little bit more than others in the sense I’ve touched on multiple spaces, but I think if I were to provide input to someone getting into this space, I would say, you can do new things. You can try new things, but make sure that you’re not changing too many things at once, right? The way I tend to think about it is geography, industry and function, if you want to think about it that way and say… You can go from one industry to another. Let’s say as a talented head of marketing in North America, I wouldn’t go change two or three of these dimensions at once, but you can reinvent yourself, to your point, and you got to make sure you know something about something.

And secondly, I mean just very modestly on my part, but I think it’s true for many people that have been successful in animal health, mentors, coaches are incredibly critical. These transitions were possible because my colleagues at IDEXX were willing to let me learn, let me fail, let me try new things and believe in me. And I was willing to go seek out advice and input and acknowledge that I could do things better. So I definitely think the advice to anyone would be make sure that as you pick an opportunity, don’t just pick it based on the financial opportunity or the career or the title and so on, pick it based on the mentors, pick it based on the level of personal support you will get. And I think that’s equally true for someone who’s joining as a marketing analyst at a large company as it is for a CEO and what support they might get from their board and investors.

Now, back to your question about Wagly. First of all, again, thank you for your support in helping us hire some really talented veterinarians. It’s been very hard in this war for talent environment. The vision that we had at Wagly was this idea of providing everything a pet owner might need under one roof, veterinary care boarding, daycare, grooming. And it really stems from my experiences at IDEXX. First of all, because the favorite part of my job there was visiting our customers. I used to kind of joke that the best way to get out of the office was to go see my customers. And that involved, whether it’s visiting a really thoughtful, advanced, small single doctor practice somewhere in the Midwest who is doing extraordinary things or whether it was spending time with BluePearl or The Animal Medical Center of New York.

And I learned a tremendous lot from these inspiring veterinarians. It’s a tough job. You’re a practitioner, you’re an entrepreneur, you’re a manager of a complicated business. And one of the things I did was work on… I’m actually trying to put some data on this, like what makes these hospitals successful? So we looked for example at what makes a hospital grow faster than another. Very often, they’re in the same geography. They may just be a block away. So it’s not the demographics, it’s not location, location, location as they like to say. It’s something else. And we surveyed, we analyzed, we cut the data. The one thing we found, the one driver, maybe there’s one and a half, the main driver was the answer to the question, what is most important to your success, and when they picked the term client experience.

Hospitals that said that the client experience was most important to their success tended to grow faster and more consistently than hospitals that did not pick that. The other one by the way was have you dedicated someone on a full-time basis to be a true practice manager, that is in a position to really challenge veterinarians and help drive the hospital? Or are you trying to run the hospital on your own as a veterinarian? It’s very interesting, right? So as you specialize, as you have a dedicated practice manager, you grow faster.

So this view back to the point about client experience, we saw pet owners becoming pet parents at the time, and there was this opportunity to serve them in some of the most advanced pet markets. For us, it was Seattle, it was the Bay Area, it was southern California. And so Wagly was able to secure significant private equity funding very early in our life. So we raised 35 million from a PPE firm a few months into the project.

And I wish most of my clients were in a position to do that, so we were very lucky. It allowed us to grow quickly, and within a couple of years we had over 10 units across the West Coast. There’s a mix of acquisitions, de novo builds, and gosh, there’s a ton of lessons from this. First of all, it is just, I think, a real truth across the board that pet parents in North America are incredibly dedicated to their pets, and if you offer them something of value, they will come. But they’re also incredibly demanding. And it’s all about, I think, my view communicating clearly and honestly. It’s not about having the most fancy, extraordinary product, it’s about delivering the product you promised, nothing less.

And I think in terms of the tough lessons, school of hard knocks, I would say doing that at scale in a young, multi-unit retail environment across three major geographic markets is very, very hard. And I think the hardest part of it, Stacy, is how do you infuse a culture of, in our case, pet fanaticism and client focus across hundreds of employees. And many of these employees are entry level, really just looking for a well-paying job, maybe don’t have the history and training in the space. Particularly that I think the difficulty of trying to be both a consumer company on the pet services side and a provider of veterinary services and care, that’s almost two cultures in one company. And so certainly, I think our learning from an entrepreneurship perspective, it’s a good thing to be ambitious. It’s an even better thing to be focused, if that all makes sense.

It does make sense. That’s such an interesting assessment. You talked about the importance of the client experience, having a dedicated practice manager because the veterinarian can’t do it all. They can’t lead the medicine and the business side or many can’t. And then not taking on too much, focusing on one aspect. So now I want to get to leadership because I know that you have done a lot of work with leaders, especially through DanaShift. You worked with leaders to drive growth. What are some of the most common barriers that you see companies face when trying to scale in animal health or medical tech?

So you’re right, there are some common barriers. I mean, the first one, I might go over quickly because it’s so obvious, which is that if you’re a small company, it is very, very hard to get the financing to get to something a bit bigger. And I think particularly in today’s environment, investors value evidence of a client base, evidence of revenue. You may not be profitable yet, but you got to be able to demonstrate that you have the right mousetrap.

And so I think there’s definitely something about just be very, very careful about assuming that a good idea is going to sell your business. You have to proof a concept. You’re not going to go secure $100 million of VC money because you’ve got a tremendous idea. You’re going to secure it because you’ve proven it works even at a small scale. But then scaling from there, I think it’s a few things. Obviously I’m a little bit biased towards technology. I think it is hard for companies to infuse technology when they have a strong legacy platform. And so being willing to constantly reinvent and ask yourself, I know it works, but can it work better from a tech perspective, I think is really important.

I think the second barrier I see, and sometimes people just get too ambitious about it, is international growth. Scale internationally, yes, but do it at the right pace. Get it right first. And as I was trying to express before, I think clarity of thought at DataShift, we definitely try to help our clients stay focused on what they’re really good at. I’m a huge proponent of innovation, but innovate in the spaces that you know. Pick those spaces, understand them and understand your own limitations and weaknesses as much as you want to understand your strengths as you do so. And then lastly, I think that as you know, my background is from more of a commercial background, customer service efficiency in your commercial model are going to be equally important. It takes a lot to drive change in a veterinary hospital. So if you are a company that’s trying to bring medical technology or other services into a hospital, know that veterinarians are some of the most wonderful, loyal, thoughtful customers, but it does take a lot to get them to adopt a new technology.

And I mean, the number of business cases I see that have assumptions that I don’t believe in terms of adoption pace is insane. And it can be really, really tough to sit down with an entrepreneur or with a leader of a scaled business and talk realism around the level of resources it takes to scale a user base. When I think about it from a software perspective, for example, what I see is that our retention rates are higher than in other industries, but the new customers, you’ve got to be very realistic about how many of them you can bring on board on a monthly, weekly, annual basis.

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Well, I want to get back to that international point that you made because you’ve worked across continents, including Europe, North America, and Asia. How do market conditions, regulations and innovation cultures differ in the healthcare and animal health sectors globally?

It’s actually striking how different they still are. Where I have the most experience in animal health is Europe and North America, and I see some really different views first and foremost in how veterinarians in the veterinary community looks at treatments and technologies and diagnostics. The views on, for example, appropriate use are really, really different. I see in Europe a lot of questions about is it truly necessary? What is optional? What’s optimal? What’s simply too much?

I remember conversations with some of the really smart leaders of large hospitals in Europe that talk about diagnostics as an intervention on a pet. You’re going to be poking that pet. Is there a good reason to be doing so? Whereas of course in the US, we’ve had incredible success driving adoption of preventive care as opposed to just coming in to intervene in an ongoing disease, whether chronic or not.

So that would be number one. It’s really trying to understand that culture and positioning your product differently given that context. The story that worked in the US may not be the story that worked in Europe.

Pricing sensitivity remains a key challenge, and it is just important to realize that the economics of the US will not translate word for word, number for number in Europe. There’s tremendous opportunities there. I usually see them as more successful as kind of expanding from the US and taking advantage once you’re already scaled, which goes back to my point, but do it at the right pace. Don’t go too early or you’re going to kind of distract yourself a bit from a financial perspective. And then of course, understand the subtleties of insurance because that can be a great driver. And for example, the UK and the Nordics.

I think the last comment I’ll make is just in terms of the fact that you see innovation in all markets, but the US is extraordinary in terms of its financing ecosystem. The private financing ecosystem between private equity, venture capital, family office, public markets is just unparalleled. There’s no other market in the world where that’s possible the same way, and that’s also true for non-dilutive financing. I think about grants and NIH and there’s just not the same scale available in Europe. We think of Europe as subsidies and so on, but the reality is for true innovation, we’re still extraordinary here in the US.

A different way of putting it is a really good business will get financed in the US. I think at the end of the day, it’s all about kind of knowing your market. I’ve worked for some tremendous animal health clients in France, in Germany, in the UK, and what they have in common is even within Europe, they knew their one national market really, really well and built relationships before expanding. France is not Germany is not the UK kind of thing, and the Europe certainly isn’t the US.

Alexander, you’ve been recognized for your deal-making excellence, including the Healthcare Services Deal of the Year. What made those deals stand out and what defines a truly great transaction in your view?

Well, I hope that what we got recognized for was the same continued focus I’ve had on the client, right? At IDEXX, it was the pet owner and it was the veterinarian. Here, it’s about the entrepreneur, the owner or the investor. What my vision is being is less transactional and more understand what truly their needs and goals are, family, culture, vision, maybe also tax, planning. And let’s say for example, on the sell side, I’m helping sell a large complex veterinary hospital. Let’s do the same for the buyer. Let’s understand their tax, culture, vision, family and all that. And as a banker, as much as you represent your client, you’re really trying to get two parties to marry, a seller and a buyer or an entrepreneur and an investor. And so you really have to recognize, I believe the importance of personal relationship, personal ambitions, fears, anxieties.

That’s really what I try to do differential. My goal, our goal at CFA is to be investment bankers, not be business brokers. It’s not about putting a for sale sign on a business. It’s about really helping them get to the next step. And I think that helps answer your question about what’s a great transaction. A great transaction, one that was built for two parties, not for one, and that sets them up for a partnership in the long run. It’s not about, I got widget A and I want to sell it to you and run. A successful transaction is not the one where the seller got the highest number necessarily. It’s the one where the business succeeded. It expanded. It was positively transformed by the transaction.

And particularly these days, because most transactions, even the simplest ones, tend to involve now some form of rollover or earnouts or other long-term incentives. And so there’s definitely an education and a time to spend time with my clients to help them see that and understand it. It’s also a strong incentive to start early and recognizing that the end of your time with your business is not going to be the day you sell, it’s going to be years after that. You got to get ready now.

And by the way, I think that most sellers, and this is what makes veterinary and animal health so special, they’re not about just the money. They’re about a commitment to their profession, and that’s what I enjoy the most. And I’ve enjoyed a whole range of transactions, whether it’s innovative products like pharmaceuticals or diagnostics, whether it’s technical like software or, of course, complex veterinary hospitals, specialty ER, multi-location. But across all these spaces, they share that commitment to the profession and their love of pets, which is kind of unique.

How do you see the future of veterinary services evolving? Are we heading toward more consolidation, new technology disruptions, or perhaps even new models of care delivery?

I think the last point is… First of all, I mean of course none of us have a perfect view into the future, but what I see today is a lot of diversification in models, a lot of trying new things out. I mean, whether it’s from new players, let’s say de novo players that are opening up new veterinary hospitals here and there, but it’s true also for many of the incumbent groups of hospitals that in these days of high cost of capital and still relatively high multiples for acquisitions, they’re trying de novo. They’re trying to find if they can build a new mousetrap.

I think it’s tremendously exciting. I think it means that we don’t know yet. I don’t think we know whether urgent care is there to stay and how it’s going to look, whether some of these more kind of boutique healthcare models are going to work out, these complex big specialty and emergency hospitals.

What I’m seeing is more choices for veterinarians. I think you’d be crazy to think that the future in 10 years is going to be 42,000 hospitals in North America or one to four doctor practices offering primary care services. I think we’re going to see breaking up that business model and trying things out and innovating. I think the other innovation, I think it’s obvious, but I think AI hasn’t even started hitting the surface of our industry. I really believe that with this, and you’re in the midst of it because you help us solve it, but in this war for talent where it’s hard to get veterinarians, we have to leverage the veterinarian more. We have to give the veterinarian and their staff tools to work faster and work more accurately and deliver more care and better care. And I do believe that AI used well can be that.

As a side note, I’m not necessarily a whiz-bang kind of guide. Like for example, I don’t really believe in telemedicine. I think it’s still about caring for pets and touching the pet and so on, but with the right tools, the right information and the right technology. Being a veterinarian is extraordinarily complex as opposed to any other medical profession. Human doctors don’t have to care about multiple species. Most human doctors don’t have to care about a bunch of different organs and be a surgeon for all sorts of parts of the body, and then the next day be an internist. It’s just extraordinary the scale and scope of what a veterinarian does, and so tools that can help them with that is incredibly important.

The last comment I want to make, this specifically is specialty and emergency care. That I believe goes in the bucket of these long-term trends that I think are going to be with us for quite a while. I believe that there is a demand for highly specialized care. I believe that more and more and more, the kinds of medical advancements that we need to extend the life and the happiness of our pet and the well-being of our pet is going to require more specialized diagnostics, more specialized treatment, more specialized follow up. And so I’m very, very bullish about the specialty in ER segment and how it’s going to grow and evolve. And I see some of my clients just performing extraordinary well in that space. Despite the single-digit growth of our industry, I’m seeing some of my clients growing 20, 30% a year profitably so because they’re able to provide that highly specialized care.

Alexander, for young professionals looking to enter the animal health or healthcare innovation space, what advice would you give them to build a meaningful and impactful career?

First of all, I think it’s a wonderful space. I really do think it’s very fulfilling. It’s I feel incredibly lucky and thankful for all the support and advice. And I think compared to a lot of spaces, it’s less about competing against the next person who could be in your job and more about building networks and building relationships. I think first advice would be maybe just focus, stick with it. You’re going to learn a lot. You don’t think of it as, I need to hold four or five different roles to get to a certain place. Think of it as find that one right place. Candidly, I’ve only had three jobs really, or three or four in animal health over all these years and be very happy with it. But it came down to picking culture and people first.

A little bit, as I was mentioning before, don’t judge your job first and foremost by compensation and benefits and so on. And I think that’s true for veterinarians as well, who it’s become this market where you can ask for more, but culture and people is what’s going to keep you happy. It’s what’s going to keep you engaged. It’s what’s going to give you opportunities to grow and take it to the next level. Some of these founders of large hospitals, veterinarians who’ve been able to go from being single practitioners to being owners and leaders of big hospitals, they did that because they were in the right culture. They had a mentor that really helped them through it. And did they make more money than others in their first five years? I don’t know. Probably not. But today, they’re wealthy from having sold a large business. And so I think culture, people, think hard about who your mentors can be and invest in those mentors. Thank your mentors, give back.

I think one of the things that’s the most underappreciated is how rewarding it is to mentor someone, at least for me, but I think it’s true for most people I know in animal health, there’s nothing more fun, more cool, more exciting than feeling like of the many things you did during the day, you got on the phone with someone who you could help, you could support. And a week, a month, a year, a decade later, they call you and they say, “Thank you for helping me back then, that really made a difference.”

And then when you’re ready, give back, do the same thing, right? Invest in mentoring and coaching. I think that’s going to accelerate your career, and it’s also going to help build our ecosystem and our industry. It goes a long way. If you’re coming from another space like human healthcare or something, forget what you know about that. We are a family. Animal health is a family. You go to a conference, when you and I run into each other, Stacy, we don’t think about what’s the next business opportunity that you and I can work on together. We think about, oh, it’s so great to see each other, what’s up? And I think keep that spirit.

Yeah, that’s so good. And I think going back to your earlier point, you talked about culture. Money’s not the most important thing to this. Veterinarians out there that are changing jobs for more money. This is an old movie, but it reminds me of the movie, The Firm with Tom Cruise. Don’t pick the job for the highest salary because he picked a high salary job, but then you get into it and the culture was terrible. So culture is very important, like you said.

Alexander, what’s been the most surprising thing to you during your career in the animal health and veterinary profession?

I mean, honestly, I think the biggest surprise has been that it went from being a job opportunity to being my life and my career. When I left McKinsey as a junior partner in healthcare, I had this vision. I wanted to be a general manager. I wanted to be to learn how to run businesses and build teams, and I got this opportunity at IDEXX. It seemed interesting, but I didn’t pick it because of it being necessarily related to animals. I picked it because of the people I ran into and I thought it was amazing.

I was totally in the mindset of a few years later, maybe I’ll jump back into a large human company or something. I think the most surprising thing has been how wonderful a space it is and how many opportunities there are. You could be an AI expert, you could be a veterinarian, you could be an accountant, you could be a recruiter. There’s extraordinary opportunities. The veterinary industry and profession are now at a scale where everything is possible. Financing is available. Structure is there. The market size is there. And so again, I think my biggest surprise was just that it became my career. Suddenly, I had thought that the human healthcare space was the end all be all, and yet I can’t think of a happier time in my life than the last 10 years.

What does your crystal ball say about the future of the animal health and veterinary profession?

I believe what I said before around there’s a long-term trend. We are just getting started with bringing care to great care, great technologies and so on. I think the bar’s getting higher. What I see is that successful veterinarians are stronger and stronger technically. It does not go away. That relationship with your client is incredibly important, but the number of things you need to know has increased greatly. And so my crystal ball says you’re going to be more and more specialized. It’s going to start looking more and more like the human space where you’re going to be known for… even if you’re not a board-certified veterinarian, you’re going to be known for a few procedures you’re really good at, you’re going to be known because you’re really… I don’t know, research, ophthalmology and so forth.

And I think veterinarians, I mean compared to 10, 20 years ago, make a ton more money. I think that’s going to continue because you’re going to add more value. And I think you’re just going to question yourself and say, the way I’m going to make more money is not by starting, like we talked about before, to ask for more but more think about adding more value, like how am I special? It’s not enough to just have good grades and make it out of UC Davis, it’s important that you have a vision for what you want to contribute to the veterinary profession and really dig into that interest and build relationship with thought partners in the space.

It could be anything, right? Maybe you’re into pain management or maybe you’re into being really good at understanding ultrasounds. But I think the crystal ball is one of a more specialized, professional, less diversified or rather less kind of generalist-oriented profession towards really smart, technical people who candidly are picking the veterinary space, not because they couldn’t succeed in human or because they were just passionate about pets, but because there’s a really unique opportunity to make a difference.

At the end of the day, the veterinary profession, despite everything we’ve gone through and our concerns about mental health and so forth, is a happy space. Much, much happier than human health where people get beat down with insurance and litigation and all these different things. I think we’re going to be a very vibrant profession 10 years from now, but I think a more specialized and more diverse space than it is today.

What advice would you give the younger version of yourself?

That’s a really hard one. I think be patient. Take the time to really get good at what you’re doing. Again, maybe career progression just happens. These kinks in your career that I described before, they kind of just happen. I didn’t sit down one day and plan out that I was going to get an MBA, and then I was going to be a management consultant in Europe, and then a management consultant in the US, and then I was going to be an executive at the diagnostic company, and then I was going to be an entrepreneur starting a private equity-backed group, and then I was going to be an investment banker.

I think welcome those things. Listen to what the market and the space tells you, but stick with it. I never held a job for six months or a year. I think the shortest period ever was probably six, seven years. Stick with it, take the time to learn.

And maybe the other advice is take the time to figure a balance for your family. Those might be words that are used a bit too frequently, but I know that I wouldn’t be successful the way I am without my wife’s support, and I probably wouldn’t be as happy as I am now without being able to contribute to my two daughters’ growth and development. Those things matter a lot. And sometimes career gets in the way. It’s worth just checking yourself on that.

Some of our guests have said they’ve had a key book that they read that helped them. Do you have a key book that’s impacted you the most?

Yes, actually. So there’s a book called The Trusted Advisor. And The Trusted Advisor I think is probably more written for salespeople or something like that, but it’s an extraordinary book in any position where you think of yourself as advising others, whether that’s as a consultant, as a banker, as a practice manager. It could be as a recruiter. And it’s a very simple book. I don’t read a lot of business books, but that one really struck me.

I think some of the key messages is that some of these ideas were like, you got to know something about something. That expertise is really important to building the trust equation. Bringing a lot of just hard work and ethics into it matters a lot. Investing in the relationship matters a lot, but there are things that destroy trust. And the single most important thing that destroys trust is self-orientation. If at the end of the day it seems like what you’re doing, you’re doing because it helps you, everything else you just built just goes down the toilet. So that was a very interesting book about building… I kind of broaden it to building relationships, professional relationships, not just being an advisor, but just being a trusted colleague and trusted provider of services and just trusted professional.

Sounds like something I learned at home. Put others’ needs before your own.

Exactly.

Well, Alexander, you’ve got the mic. What is one thing that you want to share with our listeners of The People of Animal Health Podcast before you drop the mic?

Maybe just end on this notion of preparing yourself and your business for some eventual change and control. Even the very best businesses one day end up with a new owner, whether that’s your son or daughter, or whether it’s a buyer or a new investor. My advice is even from day one, start thinking about that. Think about and really seek out a deep understanding of what prepares you for that. Don’t build a business that’s dependent on just you and yourself and your skillset, but think about that long enduring impact because, hey, it’s important of course for the value of your own business, but it’s maybe more important from your ability to have that legacy and allow that business to succeed and impact the next generation of leaders inside that business.

And so think about it early. My very best clients as an investment banker are clients that I had informal relationships with for three, four, five years prior to selling, where we really had time to help guide them and think about it. And that’s the way I look at my role, which is not, “Hey, here’s my financials. Can you sell this business next week?” But help you build value and get a real return for the legacy you’ve built.

I think the most rewarding projects that I’ve gotten involved in have been bringing to market businesses that were started sometimes in the ’70s, many years ago, where someone invested their entire professional life in building, let’s say, for example, an extraordinary hospital, a specialty, an emergency hospital. I’m thinking for example, I don’t know, Dr. Peter Glassman, who built Friendship Hospital for Animals in Washington, DC. That’s decades worth of time and investment and entrepreneurship. And it’s such an honor to be able to support that kind of client with turning that time and investment into an enduring legacy. So that was exciting.

Well, it sounds like you’re saying start thinking about the legacy that you want to leave at the beginning when you’re first starting the business.

Yes.

Well, that is such good advice. Well, Alexander, thank you for being here with me today on The People of Animal Health Podcast. I’ve enjoyed our conversation, and I appreciate our friendship.

Thank you very much. I do as well, and good luck with this tremendous podcast.

Thank you.