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AUDIO - DUwHF #714 - Scott Drucker
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Dr. Scott Drucker attended the University of Pennsylvania for both a Bachelors degree in Biology and a DMD. He graduated from dental school in 2013. Dr. Drucker then completed his residency in Periodontics with a Master of Science in Oral Sciences at the University of Illinois at Chicago in 2016. He is currently a member of the American Dental Association, Illinois State Dental Society, Chicago Dental Society, American Academy of Periodontics, and Academy of Osseointegration. In the summer of 2014, he founded Supply Clinic, the online marketplace for dental supplies. As an entrepreneurial clinician, Dr. Drucker has a unique perspective to improve the dental supply market with dentists in mind. His goal is to improve the transparency and efficiency of the healthcare supply market, and optimize operational workflow in the clinical realm.
www.SupplyClinic.com
Howard Farran: It is just a huge honor today to be podcast interviewing Doctor Scott Drucker, all the way from Chicago, Illinois, the Bears. Doctor Scott Drucker attended the University of Pennsylvania for both a bachelor's degree in biology and a DMD. He graduated from dental school in 2013. Doctor Drucker then completed his residency in periodontics with a Master of Science in Oral Sciences at the University of Illinois, Chicago 2016. He is currently a member of the ADA, Illinois State Dental Society, Chicago Dental Society, American Academy of Periodontics and Academy of Osseointegration.
In the summer of 2014, he founded supplyclinic, the online marketplace for dental supplies. As an entrepreneurial clinician, Doctor Drucker has a unique perspective to improve the dental supply market with dentists in mind. His goal is to improve the transparency and efficiency of the health care supply market and optimize operational work flow. My question to you is, my God, what was more fun, living in Philly or Chicago?
Dr. S. Drucker: I don't know. I loved Philly and Penn has a special place in my heart for sure, but Chicago is an unbelievable city. I don't want to pick favorites but they're both great cities.
Howard Farran: I love where the Liberty Bell is.
Dr. S. Drucker: Mm-hmm (affirmative), yeah.
Howard Farran: Then right across from the Liberty Bell is that Norman Rockwell Museum. Those covers, have you been in there?
Dr. S. Drucker: Yeah, of course.
Howard Farran: That's like a walk through history of America without any words. You don't have to read any plaques, those covers are still ... My favorite is the Thanksgiving dinner picture-
Dr. S. Drucker: Okay.
Howard Farran: ... and the little boy at the doctor's office looking at the doctor's degree, while the doctor's giving him a shot. Ah, I love Norman Rockwell. And your name, Drucker. When I got my MBA at Arizona State University, Peter Drucker was one of my all time mentors and my God, if he ... he's probably rolling in his grave looking at dentistry today. It's still one of the last institutes to implement anything Drucker's had.
I mean, these dentists don't have any of their numbers and don't have any of their data, they can't make any ... I mean, they sell something that they don't know what it cost to make, for 12 different prices on 12 different PVO ... It hasn't even dawned on them yet that maybe Dentrix should be hooked up to QuickBooks online, so you at least know what the hell your costs are and what you're selling them for.
How did you go from periodontist extraordinaire into a supply clinic and tell my homies, what is the supply clinic, it's supplyclinic.com?
Dr. S. Drucker: Yes. So, supplyclinic.com, it's an online marketplace for dental supplies. Basically you log in, and you can either browse a catalog style, by category or just type in whatever you're looking for. On any given item page, if we have multiple sellers or vendors that sell the same item, so say you type in Cavi Wipes, you pull out the Cavi Wipes page and you'll see 10 or 15 different sellers that sell that item. You transparently see the prices that they sell it for, on the right hand side and can add the least expensive to your cart, shop the next item, create a cart and check out in one checkout. Very basic fundamentals of online shopping, brought into the dental world, essentially.
Howard Farran: Talk us through your journey. You were reading something at midnight about streptococcus mutans or was it P. Gingivalis and then you-
Dr. S. Drucker: I got hungry and the supplyclinic idea came to mind. No, it was actually in the transition from dental school to residency. I had to buy a whole bunch of supplies. Some were provided but some I had to purchase myself and I reached out in Philly to a couple local reps of big distributors and they said, "Oh, you know, of course so happy to have you, we have a 20% new dentist discount." and I said, "Oh, that's wonderful, here is a list of items that I need", I got my spreadsheets back at their 20% discount in price and so I just sort of started browsing around online and found every single item, for substantially less than the quoted 20% discount.
So, I ended up purchasing from say eight or ten different places, getting lower costs than what was quoted at the discount but sort of realized, it's not super practical for a typical office, with the work flow of a typical office, to shop around at all these places. The idea is, why not house all of these different suppliers on one site, where you can browse them all at the same time, create a cart and check out all in one go.
Howard Farran: Well, I just ... see, my homies are driving right now, so they're not ... it's hard for them to take notes. What I do is I always retweet the person. So you're @supplyclinic, I just retweeted two of your posts on my 20,000 followers on Twitter and you got some really nice tweets. I like that one from the AAE that said, "Our AAE members are saving a bundle." Let me read this one. Really good.
But anyway, so the AAE. I mean, that's impressive. They retweeted, "It's root canal awareness week, watch to learn why endodontists are superheros of saving teeth on YouTube". Nice, nice, nice, nice.
Dr. S. Drucker: [crosstalk 00:05:38] right?
Howard Farran: What's that?
Dr. S. Drucker: I said, "Coming from a periodontist, right?"
Howard Farran: Yeah, I mean that is amazing. Now, I want to ask a very uncomfortable question for you, a very inappropriate question. Does it concern you at the greater New York meeting, everybody was stunned, Amazon had a booth there. Are they getting into this space too?
Dr. S. Drucker: Sure, that's the elephant in the room that I appreciate you addressing right off the bat. They would like to. They've been trying to for about five years now. They have a couple challenges that they're facing, which are not necessarily unique to dental or even unique to health care in general. Of course, the health care supply market is much bigger than just strictly dental.
One issue that they're facing, that has yet to be worked out, is sort of quality control. And so grim market is obviously a big issue and so we go through pains to make sure that any patient census and materials that could negatively impact patients, are sourced from proper sources. And we'll track back up to manufacturer level.
Amazon has quite a hurdle to tackle on that. It currently hosts a lot of gray market material and so it's from the dentist, from a practitioner perspective, it's a concern, obviously you worry. You don't want to be purchasing-
Howard Farran: Okay, I get it, I gotta stop you. Sorry to interrupt you. A lot of my homies listening to you right now, have no idea what gray market is.
Dr. S. Drucker: Oh, good question. Gray market, it's sort of a broad catchall phrase. It can mean one of a couple different things. Gray market can either mean a product that is identical to what's sold in the States is tagged, is intended for foreign market, so say a South American market or an Asian market, is shipped out and the price points in these foreign markets are oftentimes much lower than the price points in the States. If product X is $100 in the States and $50 in South America, someone may buy it at the South American price and ship it back to be sold for a price in between those two prices. And you know, of course make the profit on the difference in margin.
The issue is that there are a lot of supplies that we use in dental, that need to be shipped and handled properly. They may be temperature sensitive, you know, just need special care in shipping and there is no guarantee, gray is ... it's not black market but it's a question. You don't know whether that was shipped properly, so the quality of the product is questionable. It can be that or it can be, say a cement sold by the same name, in the South American market is actually a different product, different chemical compound because the legal standards for a cement, may be different in a South American country, than it is here in the States. That product, which doesn't actually meet legal qualification, is turned around and sent back to the States and sold. Therein lies the issue.
Amazon currently lists a number and sells a number of ... Well, I don't know if they sell them but they certainly list them. But it's not just dental, it's not just medical, they have the same thing in say the fashion industry, right? Amazon is now tackling the challenge of counterfeits. They're looking at high end fashion brands, so their Gucci and Armani and there is a ton of counterfeit of those products on Amazon. It's this obstacle that has to be overcome, which is certainly a more serious issue when patient care is at stake.
Howard Farran: See, I actually love that because my ex wife still has never figured out that her diamond ring is cubic zirconia and that her Gucci purse was made in China.
Dr. S. Drucker: Yeah, yeah.
Howard Farran: That reminds me, so basically the internet is just changing everything because classic economics in the United States says that there's ... The Supreme Courts says there's three degrees of price ... What is it? Three degrees of price discrimination. First degree price discrimination is, I charge Bill Gates $1,000 for a Coke and Howard Farran $1 because Bill's [inaudible 00:10:04] and the Supreme Court says that's illegal. Number two, price discrimination is volume. Okay, they sell me a Barbie doll for $20, but they'll sell it to Walmart for $1 because they buy a million of them. That is legal, but the Supreme Court says you have to show your math, just so they can see the math. Third degree price discrimination's what's up side down, is geographic. It is legal to sell Viagra for $10 a pill in the United States and 50 cents a pill in China. So Walmart started going to Hong Kong, buying all these prescriptions there, and then sending them back to the United States. Then George Bush passed a law, that that was illegal, because he got raised 6 million dollars from the pharmaceutical industry. Now with the internet, you can probably find those 50 cent Viagra's somewhere and have it ordered, but you wouldn't know if it was really the real deal, right? You just don't know what-
Dr. S. Drucker: I suppose you'd find out, but yeah.
Howard Farran: You suppose you'd find out? How long has your supplyclinic.com been up and running?
Dr. S. Drucker: Yeah, so we incorporated, we founded, it'll be three years come July. That said, the site has been up for about two years now. Obviously we needed time to build the site and then grow our product offering. At the moment, we have about 35,000 SKUs or items listed and we're constantly growing and adding product line.
Howard Farran: Have you gotten any fun phone calls from Patterson or Schein or Burkhart or Benco? Do they say, "Hey, you're my new best friend." Have you heard from those guys?
Dr. S. Drucker: I wish. No, I haven't heard from any of the above that you've listed. I've heard plenty on social media from their sales reps though. Those are sometimes not so pleasant or exciting messages.
Howard Farran: Is there any of those guys, any of those CEOs that you'd like to meet? I mean, would you like to meet Stan Bergman at Henry Schein, or-
Dr. S. Drucker: Sure. I have utmost respect for Stan Bergman and what he's built and what he's accomplished.
Howard Farran: I know one thing. I know Stan Bergman at Henry Schein and I know Chuck and Rick Cohen at Benco. Those two people never think in fear and scarcity. They think in hope, growth and abundancy. I guarantee, if you ever want to meet them, email me, howard@dentaltown.com. I'll CC and I'll say, "Hey, talk to my buddy." They just love life, they love competition. They think it's the American way. The reason I brought that question up is because, are you aware of that big incident in Texas, where somebody's selling supplies online, opened a booth and Schein, Patterson, Benco, others said, "No, we're not going to rent all these big booths, when you're having that bastard there." The Texas Dental Association said, "Screw you." They didn't show up and then they went to the Attorney General and it got real ugly. Did you hear about any of that?
Dr. S. Drucker: I not only heard about it, but I've read through pretty much every legal document that's come out and continues to come out about the case.
Howard Farran: Why don't you start a thread on dentaltown and post all those legal documents.
Dr. S. Drucker: Sure, be happy to.
Howard Farran: The bottom line is people ... I get these mean emails all the time or like ... I posted on dentaltown and social media about the dentist with the hidden camera in the bathroom and three months before that, there was another one. They say, "Why do you post this, you're hurting your reputation." I said, "Dude, I believe in transparency. First of all, those were in newspapers, with a million circulation and you're mad at me for posting it on my little Facebook page?" I believe in transparency. I don't think it's a dig against anyone, I just think my homies need to know what's going on in their supply chain.
Dr. S. Drucker: That turned into ... I guess what's going on now is, it's sort of transformed into a major class action lawsuit, that's been spearheaded by dentists. Yes, there was that whole case in Texas and since then, what's evolved is a class action lawsuit for violation of the Sherman Act or Antitrust Law violation, where several of the biggest distributors and [inaudible 00:14:38] being called to task for-
Howard Farran: Who's getting called in? Is it just three, or is there more than three? Is it more than Benco-
Dr. S. Drucker: Yes, Schein, Patterson, Benco. Burkhart was then added and since motioned to be removed from the case. That's still pending, so they may be part of it, maybe not. Basically, the largest of the distributors in the country are being sued by dentists for price fixing, for collusion and for what, this is the most amazing legal term I've ever heard, for injurious overcharging. Essentially, should the dentists win in the case, those three distributors, or maybe four distributors would be on the hook for paying out a lot of money to dentists.
Howard Farran: It's sad that these solo practitioners built all those companies and then they give amazing, fabulous pricing to corporate. It's like, "Really? So, we built your company and I have to pay retail, but if you have 50 locations across the United States, you're paying less than I am?" I mean, I understand volume discounts, I get it, but it is kind of injuriously insulting to the mom-and-pop dental offices across the United States, that built all those great companies.
Dr. S. Drucker: One hundred percent, yeah. That's ongoing, I can post the latest for the greater-
Howard Farran: Yeah, post the thread because it's kind of a soap opera and it's interesting. I always tell dentists that they're crazy not to buy a share of stock, of every dental company publicly traded, because then by law, they have to mail their 10Q quarterly and their 10K and your report. Now 10Q quarterly, they can kind of make optimistic, sellsie like stuff, but the 10K has got to be all provable in the court of law. When you read these 10K's, you know that they have no idea that any dentist will be reading them. I mean, they'll talk about their equipment and what it cost them to buy this and what they sell it for and what their margin is. I mean, you can learn so much by reading 10Q's and 10K's. I personally only like 10K's, I don't really want to read something about your company four times a year, but ... Especially with hyping it, but the 10K, I think every dentist ...
In fact, that'd be a great thread on dentaltown, where everybody just keeps posting different 10K's of all the publicly traded dental companies. My friend for that is ... Who's my friend for that, the Dental Fax Weekly? Who does the Dental Fax Weekly? My gosh, I need to get him on the show. He lives here in town, but he does the Dental Fax Weekly and I need to get him on here for that. Anyways, can I run my ... Mostly who you're talking to is general dentists. Can I run my entire general dentist office supplies from supplyclinic.com now? You said you got 35,000 SKUs. What does that mean when the rubber hits the road?
Dr. S. Drucker: Right, that means that the-
Howard Farran: Jim Ferrell. Jim Ferrell has the Dental Fax Weekly. Jim Ferrell.
Dr. S. Drucker: What it translates to, is the majority of items, yes. Are we at 100%? The short answer is no. We're working on a couple of the biggest heavy hitter companies right now and with support from all the listeners, we can perhaps move them faster in that direction. For example, Dentsply. We'd love to have the Dentsply product line up on the site. It is currently not up on the site. Dentsply is becoming more and more restrictive with which distributors can carry and sell their products. I think several years ago they had, I don't know, several dozen, maybe close to 100 and now the list is down to 20 or 25.
Howard Farran: Why is that? Why would they want to work with less people?
Dr. S. Drucker: That's a great question and I can speculate a number of reasons why that may be the case. I don't know for certain. What's interesting is the tier of manufacturers. So, your Dentsply, your 3M, your Kerr, etc, etc, are actually ... don't have power of setting price point. What they do is, they'll sell pallets of 10,000 or whatever it is, of a specific item to major distributors, to then distribute to the country. There's massive margin that's involved there, but I get the impression that the manufacturers don't actually have much leverage in terms of price point, in the market.
Howard Farran: The big dog, there's basically four ... It's be Dentsply, Sirona, 3M ESPE, Danaher, which owns Kerr and all that and Ivoclar.
Dr. S. Drucker: Yep.
Howard Farran: Do any of those four list their stuff on the supplyclinic?
Dr. S. Drucker: Those four, no. Despite it, we have our 35,000 items or so, but recently we listed the entire GC America product line, Kuraray's entire product line, Premiers. We just loaded all ETHICON's sutures up onto the site.
Howard Farran: ETHICON sutures?
Dr. S. Drucker: Sutures, yeah. I guess you're speaking to a periodontist, but yeah, it's a brand of medical suture.
Howard Farran: Yeah, this is a tough chess game with Dentsply, Sirona, 3M ESPE, Danaher and Ivoclar because the longer they stay with their distributors, all the people that sell direct, or going to sell through you, are going to gain market share.
Dr. S. Drucker: Correct.
Howard Farran: Everybody always speculates that, as soon as one person breaks the deal and says, "Okay I'll list mine with you," then all the dominoes will fall the next day. Do you believe that? Do you think that's the end game?
Dr. S. Drucker: Yeah, I think there's some truth to that, you know, nobody moves until everybody moves. I think there's absolutely truth to that.
Howard Farran: Well, it'll be yelling, "Fire." In the movie theater. When one of the big guys do it, they'll all run out of the room and do it.
Dr. S. Drucker: Yeah, I think that's-
Howard Farran: But do you think they will or do you think it's just such a legacy distribution system, that it just won't happen?
Dr. S. Drucker: I am honestly surprised at how slow the dental world has been to adapt to a number of technologies that dentists and everybody else in the dental office uses in other aspects of their life. That would clearly, logically apply to the dental space.
Howard Farran: Okay. My beef with my homie is that you know, they don't want to spend three to five to seven percent advertising, to get half of America, that doesn't have dental insurance. They don't want to do that, that's a pain in the ass. You send them a contract for a PPO, where everything's 40% off, they'll sign every one you mail to them. Everyone in the bigger urban America, it's not the rural, we have two separate America's; urban and rural. Two thirds of the dentists in the 114 big urban markets, they're averaging 4-12 PPO plans. They sign these PPO plan that has 40% off, because that was easier for them, than to spend 3%-5% on marketing and getting new patients, but if you're going to do something 40% off, well, how are you going to lower your costs 40%?
If American Airlines just lowered all their fees to the same as Southwest Airlines, they'd be bankrupt because they would run out of cash. Southwest Airlines has massively lower cost structures than United and all that and that's why they're the number one market share of 27%.
My question to you is, if I switched to supplyclinic, how much savings do you think it'd be? What percent are you? Five percent cheaper? If I was currently going through Pattersen, Schein, Benco, Burkhart, what would I save? Five, ten? What would I save?
Dr. S. Drucker: Yeah, so the immediate question I have is, how big are you? It's obviously sort of ... The larger the clinic you are, or say, you have your own mini DSO of 10 clinics, you've probably negotiated slightly better rates. But for the typical, the average office or practice of one to two, maybe three offices, I would say anywhere from 20%-40%, from catalog list prices of those that you just mentioned.
Howard Farran: Twenty to forty percent? The other problem I think you're going to face is that when dentists think of their cost, they always think labor's their number one cost, when actually their number one cost, that didn't even show up on their balance sheet's a 42% reduction price for a PPO. Their adjusted production is their number one cost, it's about 40%. Number two is labor, at 28%. Number three is lab bill, at 10%. Number four is supplies at 6%. You're kind of low down on the totem pole, so they kind of see this big labor cost and this big lab bill, how do you get them interested ... I don't know what I paid for any of my impression materials or any of that. Jan's been doing that for me for 30 years. How do you get dentists interested in such a small item of their overhead?
Dr. S. Drucker: Sure. I can sort of flip the script a little bit and say, "Well, the average office spends $50,000 to maybe $65,000 a year on supplies and if you're looking at 30%, give or take savings, that's back in the envelope maybe $15,000 to $20,000 for buying identical supplies from another source. I guess framing it in that light, if you can simply change behavior and do something that is equally as easy and seamless and maybe even easier for a lot of ... I would argue it's in most cases, not the dentist that's actually placing the order, but someone who's on staff with the office. Whether it be an office manager, an assistant, or a hygienist, all offices work slightly differently, or there's several different models you can say. If supplyclinic is built out, such that it looks and it feels like all the other online shopping sites that those, you can call them an order placer uses, then it's a seamless transition to save a significant chunk of change.
Howard Farran: Where were you born and raised?
Dr. S. Drucker: I was actually born in Chicago, Illinois. My parents were medical residents at the time. I was raised in South Florida, so Hollywood, Florida.
Howard Farran: Your mom and dad are both M.D.'s?
Dr. S. Drucker: They're both M.D.'s, yes.
Howard Farran: What does your mama say to you on Mother's Day when her son, the doctor, quit doctoring around and is now an entrepreneur? Is she pointing her finger at you and say, "You go back in there and treat patients."? What is your mom's comfort zone on Mother's Day, with her boy going periodontist to entrepreneur?
Dr. S. Drucker: I would say her comfort zone on Mother's Day is a little bit more cushie because I've just done something really nice. All other days of the year, yeah, there's definitely that you know, "You worked this hard to get this far and now you're not ..." I'm in a clinic about three days a month, so pretty seldom, keep skill set sharp and just enough to keep things fresh. I spend the vast majority of time working on supplyclinic related material. Whatever it is, 70, 80 hours a week. She supports me to get back to your question. She's an unbelievable mom.
Howard Farran: When I started dentaltown in 1998, my dad and my sister, Shelly, stood in my kitchen and literally cried the whole day. The entire day, trying to talk me out of this. Everyone thought I had lost my mind, because back in '98, you were probably in grammar school. How old were you in 1998?
Dr. S. Drucker: Yeah, I would have been like, 10.
Howard Farran: Yeah, 10 and the internet was this AOL dial-up crap and everybody just thought it was this stupid crazy thing that's going nowhere. I want to make one point, because you're a periodontist, that dentists don't realize that for you to be a periodontist and then start this supply clinic, you had to cut down to three days a month. The thing that they don't realize is that every dentist in America, who owns more than 50 offices, hasn't seen a patients in 20 years.
Dr. S. Drucker: It's your full time job. You can't fool yourself.
Howard Farran: What they do, is they work fixing teeth, five days a week, so they're exhausted every night, then they recuperate on the weekends and that's why they never work on their business. Then they say crazy things to you like, "Well, in all this chaos, well now I'm going to learn sleep apnea." It's like, "Oh really, that's your solution? So you're a foul up five days a week on fillings, root canals and crowns and now you're going to add sleep apnea?" And then I say, "Well, if you really wanted to learn ... " Like say you, a periodontist, you place implants. They say, "Well, I want to learn how to place implants." I always say, "Then what are you going to give up?" Because if you're going to be an expert on placing implants and bone grafting and restoring. Oh, and you're going to be an expert endo, oh and you're going to Invisalign, oh and you're going to do sleep apnea, oh and you're going to do ... I mean, are you out of your mind?
What I'm proud of you the most, is that you were a periodontist and you cut back to three days a month. That's how much you believe in this. The EMIS spelled that out, that if you're going to work 40 hours a week making hamburger, fry and a coke, your restaurant's going bankrupt. I'm just proud of you that you could scale back so you could ... You have to give something up, if you add something. I mean, if I pour another glass of coffee in my coffee cup, there's going to be a lot of coffee on the table. They need to scale back clinical, so they have time to work on their business.
Dr. S. Drucker: I can give you a little anecdote that speaks to this. Is early on, we were raising our round of capital from traditional investors, angel investors and a couple of them said ... this was towards the end of my residency. They said, "Well listen. I like you ..." By the way, this is on the Mother's Day note, my co-founder and partner's my brother, so we're ... I not only am doing this myself, but I dragged him in. They said to me, "I like you, I like your brother, I love the concept. You guys have something, you've built something thus far, but to invest in you, I have to know, are you on the bus or are you off the bus? Are you doing this, or are you not doing this?" From their perspective, it's not a viable business, if I'm not doing it.
Howard Farran: That's why I want dentists ... I mean, I get it. I love dentistry. I'd rather pull wisdom teeth than golf. I can't think of anything I'd rather do for an hour, than pull four wisdom teeth. It's the most fun thing I do, but these are simple questions that you'd have to get right on Shark Tank. I wish every one of my homies would watch Shark Tank. No shark would invest in you if you're going to be a full time periodontist and do this on the side. If you just stick down and let ... In fact, that'd be a great thread. We need to google, what are the 10 most common questions asked on Shark Tank, because the most common questions you ask. Like, what is your patient acquisition cost? So, if you go up to any dentist, "What is your patient acquisition cost?" "What?" "How much money does it cost you to spend to get a new head in your office?" "What?" "What is your overhead?" "What?" "What is your return asset?" "What?" We need to do that. What are the most common questions on Shark Tank?
Dr. S. Drucker: All right, I'll work with you on that. I'll jot it down here.
Howard Farran: Have you ever watched Shark Tank?
Dr. S. Drucker: I've watched it plenty.
Howard Farran: Who's your favorite shark?
Dr. S. Drucker: I don't know. I feel like it's almost unfair to say Mark Cuban, but it's Mark Cuban.
Howard Farran: Same here man. Same here, he's the guy. I love Mr. Wonderful because he's so damn brutal, that he just nicknames himself, Mr. Wonderful because he knows deep down in his heart, he is the most brutal person. It's even weirder that he's Canadian.
Dr. S. Drucker: I know, that throws me-
Howard Farran: They're all polite up there.
Dr. S. Drucker: He's such a no BS guy, that you get some guys on the show that'll come on and you know, they'll take a deal with anybody but Mr. Wonderful, but that's ludicrous. He's so blunt and so ... You know what he's thinking. There's no beating around the bush. I don't know. I'd have to pick Mark Cuban.
Howard Farran: Well, there was no reason to diss my favorite rap artist, Ludacris. Why did you throw him under the bridge.
Dr. S. Drucker: Oh, come on.
Howard Farran: My God, you just got to quit saying, "That was ludicrous." As if that was a bad thing. You want to talk more about supplyclinic? Do you want to go on to ... What else could you educate my homies on?
Dr. S. Drucker: Yeah, sure. We can go a number of different routes. We can talk about supplyclinic, we can talk about start up life, if you will.
Howard Farran: I want to talk more on ... These guys, when I talked to Dennis, they're number one stress if overhead. When I got out of school 30 years ago, the average overhead is 50%, now it's 64%, 20% of dentists are over 80%. I want to say one thing to defend the reps for Patterson and Dentsply and all that stuff. When you talk to them and dentists complain about their high overhead, one of the things they say is, "Well, if you pick only Mercedes Benz stuff on the aisle, how can I save you more money?" Another thing they get upset is, is there'll be two doctors and two hygienists and they order four different kinds of gloves. Talk about the bread and butter ways they can save. Is it switching from big brands to no name brands? Is it gloves? Also, of that supply bill, they might be thinking their bonding agent is the most expensive thing. That stuff is more per gram than heroine. Only clear fill heroine and whatever, goes for that amount of money. What is the 80/20? What is the volume sales? How can they save money on supplies?
Dr. S. Drucker: Yeah, I guess I'll take a little bit of a different perspective on the question. That is, some of the biggest supply purchase mistakes I see, are not being ... Well, first they're [inaudible 00:34:37], so emergency orders that happen all the time. Those are incredibly costly. Anytime you have an emergency order, you're eating it in shipping. From wherever you're ordering, the shipping and handling can be ... the whole order is double the cost of the item. That aside, I feel that most offices don't have good regular stock of supplies in their office and end up ordering incredibly irregularly and way more frequently than they should. Items are much, much more expensive as a whole when that happens. Just keeping better track, taking inventory and I know most dentists wouldn't want to be pained with going to a supply closet and looking at what they have on a regular basis. Just looking at taking an overall rate of spend or volume of a certain supply that you go through and map out a little more to where you're ordering once a month, or once every two weeks, or whatever the case is and stick to that routine.
Dentists end up paying much, much more when they don't and when they run into emergencies. Of course, it's not just an issue of paying more for the supply, but you may not be able to do the procedure, if you don't have your supplies. That's something I would recommend. I would also say on a number of the items, that it doesn't matter where ... They're disposables, your bibs, your gauze, obviously there are different ply's and dentists can be sensitive to that, but be open to switching the brand and not just sticking with the same thing you've used for 30 years. Or at least request a sample. Try it out. Look at the price and try it out because with doing very, very little work, you stand to save a tremendous amount.
Howard Farran: I know in dental school, we were at University of Missouri Kansas city and we were all poor dental students, you know. There was this one case of beer and it was called Wheatermans. It was like $2 for a case. It was a fourth of the price, but after the first one was down, it was all good. You just had to get ... What about composites and bonding agents?
Dr. S. Drucker: Yeah, so-
Howard Farran: Let me back up. Again, what is the most ... the highest spend on your supplies? Is it disposable gloves, or is it actually bonding agents? What is the most expensive category percentage of your total supply bill?
Dr. S. Drucker: Those are two questions, kind of bundled into one I think. Question number one, could be what are sort of the highest ticket items on the site? Number two is, what do we actually see most volume from on the site? Sure, we do have a whole variety of bonding agent and that's certainly expensive, definitively on a per milliliter or per gram basis. I think on our site, just because we're still in start up mode, we're still young, most dentists still may not be aware of our presence and what we offer, is that most dentists, when they start on supplyclinic, they'll start with something that they're used to. That's a disposable, that's something well within their comfort zone, that they don't need a rep from a company to come and show them how to put on a glove, or whatever the case is. They ease into our product, which is a new product for them, through that. I would say, I think our volume is probably highest of that type of supply, but certainly there are much higher ticket items.
At the moment, we don't sell any equipment that's larger than a hand piece. Anything that can be mailed back to be refurbished or whatever the case is, we can sell. At the moment and we certainly have plans looking forward to scale out, with different companies that may be able to install and to repair, need be and to fulfill, or abide by warranty.
Howard Farran: Are there any big lists? There's so many independent installers. There's even franchise. What is that? Mr. Dental Fix It, or ...
Dr. S. Drucker: Yeah, we're-
Howard Farran: What's that one called?
Dr. S. Drucker: Dental Fix, I think. Don't quote me on that. I honestly haven't done my homework on that yet, because it's premature for us too. There're many, many other things I have to do-
Howard Farran: What does your brother do?
Dr. S. Drucker: The way that my brother and I structure, loosely speaking, is he is internal operations and I am outward facing. I'm actually right now, not in Chicago, but I'm in Chambersburg, Pennsylvania. I'll be talking at a Cumberland Valley Dental Society meeting tonight, run by a friend of mine from dental school, who's here in the area. I meet with dentists, we sponsor dental society meetings, we'll sponsor study clubs. So, I interact with dentists, I interact with industry, with different distributors, manufacturers. I am point person and for, I guess, customers, they're not just dentists, but officer manager, assistant, hygienists, that sort of thing. My brother, Jacob, tackles legal, he tackles accounting, he tackles day-to-day operation in the-
Howard Farran: What's his background? Was he a M.D. like your mom and dad? Was he a dentist?
Dr. S. Drucker: No, he's smart. He has a bachelors in Econ and a Masters in statistics. He's-
Howard Farran: Damn.
Dr. S. Drucker: ... he's much more business-
Howard Farran: Statistics was my favorite class of all time. I loved it in undergrad, I loved it in high school, I loved in MBA program. You raise money?
Dr. S. Drucker: Yes.
Howard Farran: Does that mean you have to have liquidity play in five years? Does that mean you got to go public? How are the investors going to get their money back?
Dr. S. Drucker: It's a great question. It doesn't mean any of the above, at the moment. We are a venture and nature, so the investment is a venture investment. We haven't raised an institutional round, so we haven't raised from venture capital groups at the moment. We've just recently rounded out our seed round, with a bunch of angel investors. Both dentists and more conventional angel investors. Liquidity, so how does an investor make money, is essentially at either an exit, so a sale of supplyclinic, or an IPO.
Howard Farran: Which do you think it'll be?
Dr. S. Drucker: TBD.
Howard Farran: You're three years on this journey, the website's been up two years, is that what you said?
Dr. S. Drucker: About that, yeah.
Howard Farran: Three years into this journey, are you still optimistic?
Dr. S. Drucker: More so now than ever.
Howard Farran: More so now than ever?
Dr. S. Drucker: Yep.
Howard Farran: That is amazing. That's funny, the IPO, off topic question, why do you think that none of the dental corporate chains could do an IPO? I mean, they couldn't. Most of them wouldn't take any of them public.
Dr. S. Drucker: What was it? It was like the ortho company that-
Howard Farran: Orthodontic Centers of America?
Dr. S. Drucker: Yeah, that didn't do too hot.
Howard Farran: Yeah, it was the only one that made it on the New York Stock Exchange that rose to a billion dollar evaluation and then famously imploded, as Lazarus, the CEO and founder out of New Orleans said, "Herding and managing orthodontists is like herding cats." None of them could go public, but the Patterson's and the Scheins could.
Dr. S. Drucker: Right, exactly. It's a different, I guess the nature-
Howard Farran: I think it's funny how they're so optimistic. These dental corporate chains they're so optimistic about themselves, yet Wall Street would never take them public.
Dr. S. Drucker: Right.
Howard Farran: Then you go into their offices, nobody in the corporate or the private can keep associates.
Dr. S. Drucker: Right.
Howard Farran: The associates all want to have their own place.
Dr. S. Drucker: Yeah, I'm fascinated by the whole trend, the shift over. I'm kind of excited to see is what ... Every DSO has a time bench mark, where they know to bring a dentist on, they need the dentist to last and be productive a certain amount of time, for that investment and bringing the dentist on, to pay off. What I'm fascinate by, is the turn over rate of young dentists. They come out of school, it's an option, it's an easy spot to go work. They don't have to worry about being a business owner, etc., etc. or they can't whatever. They go into the DSO, how long are they staying there? Many of them, at least that I talked to and that is my cohort. My demographic are guys that are young, either out of school or out of residency and everybody that I've talked to, that has gone to work for a DSO, intends to stay there only for some limited period of time. I'm kind of curious to see how all this will play out. As that churn catches up with-
Howard Farran: I'll tell you how it'll play out.
Dr. S. Drucker: How's that?
Howard Farran: I'll tell you how it'll play out. Instead of trying to predict the future, turn around and look at Homo sapiens in the last 2 million years. All that stuff ain't going to change. Sapien don't want to work for you. He wants his own cave, his own house, his own farm, his own ranch and if five other sapiens walk up to the cave and say, "Hey, we want to move in with you and want to have a group practice living home." They'd pick up a club and beat you to death. Sapien don't play well in the sandbox. They don't like cheques and balances, they don't like big government, they like their own deal. Sapien is usually ... And all these people on Facebook that post this big persona that they're out dancing and salsa dancing and they're living this jet set lifestyle ... 99% of them are homebodies.
Dr. S. Drucker: Right.
Howard Farran: You know? They just want to give this perception that they're the Rolling Stones, but they're homebodies. They don't want to work for you. I want to ask you another question. Since you are a periodontist, one of the very highest tickets items out there, is dental implants and there's now over 400 different types of dental implants and they go from Porsche to Mercedes, all the way down to Chevy, Cadillac, Yugo and the public bus. What would you tell somebody, since you're trained in periodontics, about implants? Do you sell implants on your site?
Dr. S. Drucker: At the moment, we don't. We're a little bit premature, but have actually been approached by a number of implant companies, to start listing. There's a little big of legal work we have to go through, because implants are medical devices. They're implanted, so we need to fortify ourselves to do so. Certainly is something we're talking about down the road.
In terms of implant selection, I don't want to misdirect anyone here, but my recommendation would be, find an established company that you don't think is going to disappear after a while. It doesn't have to be the crème de la crème. You don't have to have the most expensive one, or two or five implants in the market, but a relatively big company with rep support. With someone who can come and help and bail you out, need be, that's not going to disappear overnight. That, maybe may get bought out by an even bigger company, but yeah, I know there ... I have yet to go to these conferences, but I've heard there are conferences where there's sort of like the ... One implant company is low balling the next, right in the booth next door. One has a $79 sign and one has a $50 sign. I don't know, I would be a little ... I am a little bit leary of that and want somebody who I can call to ... I need to know I have support placing the implant.
Howard Farran: You're a smart man. You are. You're only 27, but you got an old soul, because that number one, you're right. Everything you said is right. You have to pick a company that's not going to disappear. I mean, I've been in this game 30 years and it's a really bad deal when you own something and the company goes away. Number two is, if you buy it from overseas, all those dentists never get a ... You have to do something once a week to reach critical mass and profitability. Would you want to have a tumor removed by a guy who does it once a month? Or a guy who does it once a week? Or a guy who does it every day?
Dr. S. Drucker: The guy who does it in his sleep.
Howard Farran: Yeah and the cutoff between, you're no good and you're good and profitable, is the bare minimum is once a week. If you get into something ... Say you start doing a bunch of Invisalign training and you're doing one case a month, it's cheaper to quit doing it, because you don't reach critical mass. Same thing with implants. You got to do one a week, 50 a year, or you're not good. Number three is, I don't know anybody who hit critical at one a week, who doesn't have a human in their geography that they can talk to. If anything, just for networking. Anything to just ... And can get me and this other guy to have lunch at Subway. You have to have a monkey in the field, or you're never going to hit critical mass. You'll always be missing something. You'll always be short.
So, the company's not going to go away. The company has a rep in the field and what would be your short list of companies that aren't going to go away?
Dr. S. Drucker: Oh my God. Realistically companies that aren't going to go away. I mean, I can run through. They're all going to be the crème de la crème brands. I mean, you can start out your Nobels, your Dentsply ASTRA's, your Biohorizons, your Blue Sky Bio, your I don't know.
Howard Farran: MegaGen?
Dr. S. Drucker: Your Implant Direct, I think is actually a very interesting play and here to stay, if not to sell, to be consumed by somebody bigger.
Howard Farran: Would you say Straumann and MegaGen?
Dr. S. Drucker: Yeah, I threw Straumann out there, sure.
Howard Farran: What about MegaGen?
Dr. S. Drucker: I haven't used them.
Howard Farran: What about the biggest monster in Brazil? What is that, Neodent?
Dr. S. Drucker: Oh, is it Neodent? I don't remember the name and there are several locals. Brazil has a massive implant market. Israel actually has a number of and like a burgeoning of-
Howard Farran: What are the implants out of Brazil? I mean Israel? Is it MDI or MID?
Dr. S. Drucker: There's MIS-
Howard Farran: MIS.
Dr. S. Drucker: ... I think that's what you were thinking of. There are a whole host of them and a lot of them are itching to break into the U.S. market.
Howard Farran: You know who makes the point is Implants Direct, started by Gerry Niznick who, sorry, what was his first one? Started with a C. Back in the day he sold to [inaudible 00:50:22] Comcast, com ...
Dr. S. Drucker: It probably wasn't Comcast. It was probably before my time.
Howard Farran: Yeah, it was before your time. Anyway, Implants Direct was just going to be a mail order.
Dr. S. Drucker: Yeah.
Howard Farran: I loved the way that they saw the mark and realized, "No, we got to have reps in the field." When they started rolling out reps, I guess, well how is it Implants Direct if you got a human in the field and that overhead and all that stuff. Even Gerry Niznick realized you're just not going to be ... You're not going to place once implant a week, buying them all online.
What about gloves? Where does gloves fit on the volume of the typical dentist supply? In fact, let me also ask you, what is the average supply cost overhead in a dental office? You always see 4%-6%, do you agree with that or disagree with that?
Dr. S. Drucker: Yeah, I think the average is probably closer to 6% and everybody would benefit from dropping that down to 4%. The average dental office, I think this is according to a study that the Levin Group put out, is about 50,000 to 65,000 a year.
Howard Farran: Roger Levin.
Dr. S. Drucker: Yep.
Howard Farran: He just opened up an institute here in Phoenix. He's from Maryland, but he put a west coast [inaudible 00:51:42]. Of that $55,000 a year, do you have any category chunks? What's the biggest chunk? Is it five grand, would that be gloves, would that be ten grand would be bonding agent? Do you have data like that?
Dr. S. Drucker: I don't at the moment, off the top of my head. I can certainly delve into our data that we do have, but it's going to vary by clinic, right? By type of clinic. If you look at a pedo clinic, I would think they would be spending the majority, the biggest chunk of their supplies on sealants and composites and that sort of material, but they do go through-
Howard Farran: I think it would be vodka and Valium for being a pedodontist. I think I would just-
Dr. S. Drucker: For the dentis or for the kids?
Howard Farran: For the dentist. If I was a pediatric dentist, I'd just be drinking vodka and popping the Xanax all day. Is that not the worst profession in the world?
Dr. S. Drucker: I couldn't do it.
Howard Farran: Oh my God. I love my pediatric dentist because the fact that they take that off our hands. What's that?
Dr. S. Drucker: I said, "God bless them but-"
Howard Farran: I know. It depends on the practice. What percent are you general dentist versus specialist, of your existing customer rates?
Dr. S. Drucker: Yeah, we're probably an 80/20 split, which is reflective of the-
Howard Farran: Market.
Dr. S. Drucker: ... dental market, yeah. I would say interestingly, of the specialists, we have an oddly high percentage of ortho offices and I'm not sure why?
Howard Farran: I know why. I own Orthotown too. Orthodontics is getting massively competitive. You go back 10 years ago ... I mean, right now, what's not competitive really, is endodontist and oral surgeon. They're all making $350,000 to $450,000. General dentists can't pull out the wisdom teeth. They can't do these molar endos, they can't do the retrieves. I mean, there's so much stuff general dentists can't do. I can't do the crying, screaming child that needs a pulpotomy and needs to be taken to the hospital. The orthodontists, there's a lot of dentists saying, "I can do that and I can do Invisalign." Right now, the average orthodontist practice has gone to about 20% Invisalign and a lot of general dentists say, "I can do that.", so they're experiencing competition.
Dr. S. Drucker: I would love to have a full other hour long discussion about the macro trend of the ortho industry. It's fascinating. I mean-
Howard Farran: Well, rant about it. Rant it out.
Dr. S. Drucker: It's just so interesting the model of sort of flipping the script, right? Which is essentially what Invisalign has done. Instead of selling their treatment modality to dentists, they're selling direct to customers. It's a B to C model and they market and they market well and they spend a ton of money doing it. It's brilliant.
I don't know if you've been on Invisalign.com, but if you type in Invisalign into Google, of course their ads are the first to come up and on, I think it's their home page, they're like, "Take a smile assessment." So, oh, okay, sure, I'll take my smile assessment. It's brilliant, Howard. Basically you open up this so called smile assessment and what is it? You enter all your biographical data and then you click to see if you qualify for treatment, or whatever it is. They've just collected your information and then they'll call you and immediately get you into one of their preferred providers. If that provider, if that orthodontist thought, "You know, you're not the best for an Invisalign case." You know, they'll call you back and make sure that you know that there's another dentist who might even be more comfortable with the case. I mean, it's-
Howard Farran: Dude, they're going straight to the consumer now of sending you an impression kit.
Dr. S. Drucker: Yeah, Howard, I can't imagine trying to take an impression of myself and I'm a dentist for crying out loud. Can you imagine some random guy off the street trying to take an impression of his own mouth, sending it back, what those trays are going to look like? I don't know, it's a bit absurd. Then you have some followers, right? You have your SmileDirectClub and you will have others. They lose their ... Invisalign's patent expires in October.
Howard Farran: Didn't the guy who invented all that, wasn't he a Pakistani guy and then they kind of got rid of him? Like Apple got rid of Steve Jobs, then they went to Texas and started their major competitor?
Dr. S. Drucker: I wish I knew more. I'll look into-
Howard Farran: Yeah, I think that's the story. That the guy who invented it was a Pakistani guy and then when it got to be a big company, they got rid of him and then he went to Texas and ... What is it? Not ClearChoice, that's the implants-
Dr. S. Drucker: Clear Correct?
Howard Farran: I think it's Clear Correct. I think he's the guy doing Clear Correct.
Dr. S. Drucker: Interesting. I don't know his story in particular, but-
Howard Farran: That's what I hear. I tried to reach out to him, but if he's listening to this, I'd love to talk to him. That's the story I have heard from multiple sources.
Dr. S. Drucker: It's fascinating and I know there are a number of others. As soon as that patent expires, you know somebody's going to jump into the space. Who is that somebody? Is it going to Dentsply, that already has very solid footing in the printing world, in the stereolithic guide world? Is it going to be Ormco that decides to step up? Is 3M going to say, "Hey, you know what, this dental, this ortho market is super ripe for entry. Maybe ..." I don't know.
Howard Farran: You just said Ormco and earlier you said Kerr, those are all owned by Danaher. Now that Dentsply merged with Sirona, who's bigger, Dentsply, Sirona or Danaher? Because, a lot of Danaher's portfolio is non dental.
Dr. S. Drucker: For most of it.
Howard Farran: What do you think is bigger? The Dentsply, Sirona, which is all dental, or the dental division of Danaher, out of Washington, DC?
Dr. S. Drucker: I could be wrong and I'll look it up just after, but I think Danaher is a much more massive company, of which their dental piece of their portfolio is a small piece. I have to look into it-
Howard Farran: Do you think the small piece of Danaher that's dental, do you think that's bigger or smaller than the Dentsply, Sirona that's all dental?
Dr. S. Drucker: Just the dental ... I would guess that Dentsply is bigger than Danaher's dental piece, but I don't know.
Howard Farran: I guess that too. Who do you think would be next? Ivoclar or 3M ESPE?
Dr. S. Drucker: Oh, 3M is a massive, massive entity. I think-
Howard Farran: Yeah, but again, I'm only talking about [crosstalk 00:58:33]-
Dr. S. Drucker: About their dental, their-
Howard Farran: Just their dental division for the 3M ESPE.
Dr. S. Drucker: Yeah, their ESPE division is again, a small piece of that pie. I don't know. I don't know-
Howard Farran: Of those four, which one do you think will be the first one that goes with you? If you had to pick, who do you think would be the first one to say, "You know, I'm going to go through an online."
Dr. S. Drucker: If I had to guess, I would say Danaher.
Howard Farran: Really? Now, have you gone to Washington, DC and talked to that guy?
Dr. S. Drucker: Nope, but I would love an intro.
Howard Farran: Dude, you just got to start at the top and work your way down.
Dr. S. Drucker: There you go.
Howard Farran: In fact, I'll end it on the story of Mr. Armand Hammer. You know when you read his entire autobiography, you know what the take away lesson is?
Dr. S. Drucker: Nope, what is it?
Howard Farran: He was a Russian and he was living in New York and he graduated from pharmacy school and all of his Russian friends kept telling him how ... You know when the sun comes up in Moscow, it's going down on the Bearing Straight. I mean, we have four time zones, they have twelve. It's one of the biggest countries ever. Everyone knew they had more oil and gas than anybody. Here's this little [inaudible 00:59:42] Armand Hammer, so why don't they do anything? Everybody was dealing with the ministry of the interior and they were incompetent and nobody returned letters or phone calls or whatever.
So you know what Armand Hammer did? He went over to Berlin and chartered a plane and said, "Screw it, I'm just flying to Moscow." And he did his homework on Stalin and there was only two things Stalin loved about America. It was Hershey's chocolate bars and Marlboro red cigarettes. He got this big old case, half Marlboro red, half Hershey's, starts flying to Moscow. In no time, Soviet MiG's were right on his butt saying, "What the hell are you doing?" And he said, "I got a meeting with Joseph Stalin." The pilot's like, "I don't want to shoot down a guy who has a meeting with Joseph Stalin."
They guided him into Moscow, they arrested him when he got off the plane. They took him and his box and delivered him right to Joseph Stalin. He said, "Well, I want to do an oil and gas deal," which eventually became Oxidil and petroleum made him a billionaire. He said, "But I can't get a return phone call from anybody in your ministry. I can't get anything done and you could be making millions of dollars." Joseph Stalin took down a piece of paper and he wrote down, "If you say, "No." to this man, I will kill you." And gave it back to him.
The classic lesson that Armand Hammer was saying is that you start with the top and work your way down. You don't start at the bottom and work your way up. If I was you, I'd go to Washington, DC, I'd walk in Danaher. Can I tell you my other story about the founder of Southwest Airlines?
Dr. S. Drucker: Absolutely.
Howard Farran: What's his name? God, I'm so old and senile. Who's-
Dr. S. Drucker: Is it Kelly?
Howard Farran: Kelleher.
Dr. S. Drucker: Kelly or something like that.
Howard Farran: Herb Kelleher, Southwest Airlines. I had a four hour layover, took a cab, I was at Love, where their headquarters is, went over to Southwest, walked in there, looked around, walked up, went up to his office and actually walked to his office and the reception said, "How may I help you?" I said, "I want to see Herb Kelleher." She's looking at me funny, she said, "What is this regarding?" I said, "Dude, he's my idol. I'm a dentist in Phoenix. All I want to do is shake his hand." She smiled ear to ear, walked me right in there and I shook his hand.
But my first one, my first love, was when I was growing up in Wichita, Kansas, the big legend of Wichita was Dan Carney, the founder of Pizza Hut. Everybody talked about this guy. He had 2,800 ... He was the biggest fish in the world and you are in Wichita, Kansas. Me and my best friend, Jim Bell. You know Jim Bell. Jim Bell and I were 14 and his older brother, Mike, had a car. We didn't have driver's license, but we asked his brother if we could drive his car.
Me and Jim skipped out at lunch, drove over to Pizza Hut at 14 and without a driver's license, we walked in, the same thing, walked right into Pizza Hut and the lady said, "How may I help you?" I said, "Well, we just want to meet Dan Carney. I mean, he's the founder of Pizza Hut." She goes, "Well, what's it regarding?" We said, "We just want to meet ... We just want to shake his hand." She busts out laughing, walked two little Kansas punk ass boys into Dan Carney's office and my God, he sat us down and treated us as if we were intelligent, older people. We talked business for about an hour and then he kept saying, "Well, don't you guys need to go back to school?" He was a Catholic boy and he knew we were Bishop Carroll High school and he's like, "Well, don't you kids need to get back to school." Then I finally realized, oh, he's saying that.
The rest of my life, I probably went back in there and repeated that with him every couple of years. My point being is this-
Dr. S. Drucker: Top down.
Howard Farran: ... successful people make a religion out of availability and then I got to go one more story. It was Peter Lynch's book, "Beating the Street." Did you ever read that book?
Dr. S. Drucker: I have not.
Howard Farran: It's the same take away. He was sitting there in Manhattan and everybody was in these Wall Street offices, reading the same 10Q's, the same 10K's, looking at the same financial data and Peter Lynch said, "You know what? This is bullshit. I'm going to sit there every Monday. I'm going to drive out of Manhattan and I'm going to come home Friday night and I'm going to be a dude ... I'm actually going to walk in there. I'm going to walk in there unannounced." And he says, "When I get there, I'm going to see, is it clean and orderly? Were people happy? When I walked in and said, can I see the president of the company, was he there? Was he gone?" He said, "I could smell in five minutes, whether this was a company to invest in there. Clean and friendly and organized and the CEO was there and engaged and pumped up. Or it was messy and it was unorganized, they don't know where he's at. They don't know when he'll be back."
He started throwing away all the 10Q's and all the Wall Street stuff, just like Warren Buffet stayed living in Omaha, because he didn't want to get caught up in all that garbage stuff. Warren Buffet said, "You know, I remember when Boston Market was rolling out." He said to some guy at his yearly end of convention, he says, "If you want to know how Boston Market's doing, go to the Boston Market in your town. Go there. Is it busy? Eat the food yourself, do you like it? Ask the guy in front of you in line and behind you in line, "Hey, have you ever eaten here before? Is this food any good?"" He said, "That's how you analyze stocks. Do your homies like it? Do they love it? Are they coming back for more? Don't read all the flyers from Wall Street, because they get it wrong, more than they get it right."
That Danaher is so damn successful, I bet if you went to DC and walked in there, I bet he'd shake your hand.
Dr. S. Drucker: I'll let you know how it goes.
Howard Farran: All right, on that note, thank you so much for coming on my show and talking to my homies about supplies. How can they get a hold of you, if they got a specific question?
Dr. S. Drucker: Specific question, they can email me at, this is complicated, scott@supplyclinic.com.
Howard Farran: Scott@supplyclinic.com? With that, go to supplyclinic.com and Scott Drucker, tell your mom and dad that they raised a fine man.
Dr. S. Drucker: I'll let them know.
Howard Farran: All right buddy, have a great day.