Matt Hulett Transcript

Clint Betts

Welcome to the CEO.com show. My name is Clint Betts. Today's guest is unbelievable. He's the CEO of PetMeds. His name is Matt Hulett. He's a seasoned technology executive leading world-class public and private companies, and working closely with boards and investors and organizations that include Rosetta Stone, real Networks, Expedia, and many more.

He has had multiple turnaround successes as a public company president as well as a private company CEO. He has a proven track record raising venture capital from blue chip firms like Sequoia Capital, Draper Fisher Jurvetson, Allen & Company, Intel Capital with multiple liquidity events. He is regularly featured in technology and business podcasts and media outlets such as Recode, Forbes, entrepreneur and others. So excited to have him. Let's podcast.

Matt, thanks so much for being on the show. Really appreciate it.

Matt Hulett

Thanks for having me.

Clint Betts

Of course. Thank you so much for joining. Hey, you've done a lot in your career.

Matt Hulett

I've certainly worked at lots of different places, but that'll be up to you to decide if I've done a lot.

Clint Betts

Well, let's start with the various companies that led to you being the CEO of PetMed. What was kind of the first introduction into technology for you?

Matt Hulett

Yeah, in fact, I've always been in the technology sector, even when I was in college. I did an internship at a software company and started out as a product manager intern. So I've basically been in technology since I've been in my 20s, and I was always fascinated with the transformative effects of technology and kind of saw the rise of every new thing imaginable, Web 1.0, Web 2.0, now Web 3.0 and it all started in college.

Clint Betts

Oh, that's incredible. What was your first job out of college?

Matt Hulett

I actually got a position at that company. It was a software company called WRQ. It sounds like a law firm, it wasn't, but it was basically a technology that would connect the desktop to mainframes, so green screen, old technology that you'd need another terminal to actually access other than your desktop. So tied together this old school system to the new school system, and we had Fortune 500 companies.

I learned a lot about networking and technology and the underpinnings of how these systems work, which was really important as I grew my career into new verticals. That underpinning was my undergraduate degree in technology, but yeah, it started out this little company that was growing really, really fast. When I started, it was like $10 million in revenue. By the time I left it was $100 million, and it was a great place to start my career out here in Seattle.

Clint Betts

How did you get to PetMed Express?

Matt Hulett

Serendipity. I actually was just coming off my last turnaround. I've been doing a lot of turnarounds in my career. I guess they're called transformations now. There's a new euphemism.

Clint Betts

Yeah, didn't Mitt Romney write a book called Turnaround?

Matt Hulett

Yes.

Clint Betts

Is that why it's called transformation?

Matt Hulett

I don't know. Hey, I like Mitt Romney. I'll go and say that.

Clint Betts

Listen, you're talking to a Utahan. He's my senator.

Matt Hulett

I know. But to answer your question, yeah, I was just coming off the turnaround or transformation of Rosetta Stone, a language learning company that was not doing well, and we actually turned it around, quadrupled the value, and I was on the tail end of that. We'd sold it and then the acquirer was doing what acquirers do, and so my time was over and I got a call from a headhunter friend of mine about a couple opportunities, and then I actually thought it was him who texted me.

It was somebody else, a random recruiter I'd never met, and I thought it was spam because I thought it was my friend, and he said, "Hey, do you want to be a CEO of a public company?" I thought, this is odd spam. So I called this recruiter up and he had seen the work I did at Rosetta Stone, so it was very much serendipitous and I actually wouldn't have responded to the text because I literally thought it was my other friend who was a headhunter.

Clint Betts

That's hilarious.

Matt Hulett

I would've just deleted it.

Clint Betts

Well, what about the opportunity got you excited and it got you to say yes to that?

Matt Hulett

I like puzzles in my career. I'm typically not a big company guy, but I'm also not a startup guy anymore. I did a lot of startups earlier in my career and I like puzzles, so I like smaller companies. PetMeds had some of the same components to other businesses that I've helped turn around that I enjoyed and I enjoy, and one is I think most companies that can be turned around or are doing well have some kind of secret. There's some kind of secret that they have, not literally a secret, but literally some kind of position, capability, something that they have that may not be apparently obvious to everybody else.

So with PetMeds, well-known brand, had been around for 27 years, but had this kind of core prescription business for pets that wasn't really growing, was struggling, and we're in the process of turning it around, but I thought was really interesting and it felt like the eyeglass prescription market where the vets in this space, the veterinarians actually prescribe most of the medication that your pets take and our business is to do prescription refills, very much like how eyeglasses kind of went direct to consumer.

I thought, oh, that's a really interesting business, really hard to build that, really good brand and had a lot of capital, a lot of cash, no debt, and it felt like something I could work with to kind of transform it, get it oriented in the right place, right strategy, bring in people, but it felt familiar to me, and I also love pets. I have a little French bulldog.

I love being associated with a business where I'm actually passionate about the subject matter. Such a cool opportunity, it intrigued me. I aligned with the mission and vision very quickly, and I kind of saw through an area where I think we could lean into, which we're in the process of doing right now.

Clint Betts

Do you have a blueprint for when you walk into a company that you want to transform or turn around or whatever the terminology is where, hey, the first 30 to 90 days, here's what we're going to do, and is it usually the same type of thing?

Matt Hulett

Yeah, it is. I'm not here to plug a book. Last year I wrote a book called Unlock: Five Questions to Unlock Your Company's Hidden Power, and some of that's in there, but for the 30, 60, 90, yeah, I'm pretty robotic.

I've got it down to a framework. It's the same every time, but it's basically people, process, strategy, and sometimes capital, if the company's running out of money and I have these little swim lanes and these little dates, it's all in a Google sheet that I have used consistently, and I share that with the board or in some cases, if it's private, the investor or investors, but yeah, it's the same blueprint every time.

Clint Betts

By the way, I highly recommend people check out your book. Again, it's Unlock: Five Questions to Unleash Your Company's Hidden Power. Can you go a little bit deeper on what these five questions are? I imagine this is relevant for all companies?

Matt Hulett

Yeah, I can. The premise for the book was I get a lot of questions, they all start with, "Do you have 15 minutes?" I'm sure you get those on LinkedIn. Everyone gets them, do you have 15 minutes? No one has 15 minutes. I'm relatively long-winded, which now you're thinking to yourself I’m maybe not the best podcast guest right now.

Clint Betts

No, I'm not actually. I'm actually thinking that's a great podcast.

Matt Hulett

So my friends encouraged me to start writing, and I was like, "I don't have any time for this. How do I outsource and scale some knowledge? I should write a book."

Then of course everyone was saying no one ever finishes a book when they start it, so that was a challenge accepted. What I was trying to do with the premise of the book is take everything in my brain that I learned through primarily turnarounds or startups and apply an equation to that, and I came up with this idea of this FICO score. Everyone knows what a FICO score is, your credit rating. I thought, what if I can do a FICO score for your business and make it really easy for someone to kind of follow along in a book, have materials and score their own company and then come out with an answer.

Really the journey of asking the questions and scoring yourself is really to put a mirror in front of you and your team as to where you are in the journey of being a growth company or not, a market share company or not, and the five questions are total addressable market, so you're TAM.

Your Timing, so are you going after a small but growing market, and there's a bunch of ways to score that, and I'll tell you in a second. Three is Track Record. So are you kind of growing at or above market share? How are you doing in the market? The fourth is Plan. Do you have a reasonable plan to continue to grow and build a strategy that's defensible? Then the last one is Momentum, and that's made up of both capital and team.

So the acronym is T3PM, which is the insight score. You add the first four variables up, one, two or three, add those up, and then you multiply that sum by one, two, or three, which is momentum. I have a little survey on my site Startup Whisperer that people can do for free, but I found that that was the simplest way to explain to somebody what are the five things you need to look at to make sure your small or big company can unlock value, because the answer sometimes is no, and it's hard.

Clint Betts

That's what I was going to ask you. What do you do when the answer is no?

Matt Hulett

Well, I mean it depends on the business. If the answer is no, in some cases, if you're a big company and you can't grow, you sell it, you harvest it, so you try to get more profit in the business or you take those profits and that cash flow and you put it into another business. If you kind of run into the brick wall of your business and it's profitable, you do things with that capital.

If you're a startup and you've been, for instance, working at it for five years and can't pay yourself, it might be a good signal that you're going down the wrong road as well, and so it depends on the size of the business, but generally I think the answer is typically if you've been trying for so long, like the definition of insanity, Einstein quote, and things aren't working, you're not growing, you're not paying yourself, then you're going to have to either stop or allocate that capital somewhere else.

Clint Betts

Yeah, that's super. Have you walked into companies where the answer has been no, or every time you walk into the company you've vetted it pretty solidly to the point where you're like, no, we got something here?

Matt Hulett

Yeah, I think sometimes the answer is clear and no one wants to hear the answer. It's kind of a different way to answer your question because founders in particular are insane, and I mean that affectionately, I'm not a founder. My wife Ashley founded a beverage company. And they were insane.

Clint Betts

Oh really? What company?

Matt Hulett

It's called Rock Race. It's a non-alcoholic wine alternative.

Clint Betts

Oh, I've actually heard of that. Very cool.

Matt Hulett

Oh, cool, thank you.

Clint Betts

There's not a lot of non-alcoholic wine companies.

Matt Hulett

Yeah, she's been at it for a long time, and when you talk to founders, it's like they're children, right? They're obsessed with it and they have to be. Great companies have obsessive founders, but sometimes you go into a company and people want to will the thing, the business, the product, whatever it is to be successful, and unfortunately/fortunately, I'm usually the wet blanket if the answer is no.

Now obviously I want the answer to be yes, but if I walk through it mathematically, the answer's typically clear, and then the emotional component of that is a whole other discussion. But yeah, I've been in businesses before that really wanted to grow, and if the answer is no, the investor and/or the founder has sometimes an issue with that.

I think the process of this book and putting down my thoughts, I've tried to make it as kind of not banal, but almost as simple as possible to give an answer, but yeah, I've been in that situation before — I've found somebody who really, really wants something to happen, maybe has a lot invested in it, maybe has a lot of emotion invested in it, or their personal egos invested in it, they have a real hard time with the answer being no.

Clint Betts

Yeah. What have you learned about leadership in that process as you walk into those types of companies? What makes a great leader in your mind?

Matt Hulett

That's a great question. I think there's a lot of great answers out there. I think for me, leadership is inevitably how you get a team or set of teams to an outcome that's beneficial to your stakeholders, and that's investors, your employees, and your customers, and you're trying to build a strategy with that team to get that outcome. I think what I've learned is big and small and my management style is pretty much the same. I've been at larger companies like Expedia and I've been at startups with 10 people. There's a discipline around a framework, a strategic framework like a coach and a playbook.

I like to have a discipline playbook where we monitor it, we break it into quarters, we break it into months, we break it into weeks, not just financials, but also how are the employees doing? What are the big initiatives we need to launch and the dates? You kind of boil that down to a playbook and you are really disciplined on that, but you enable the team to be empowered to play within that playbook.

I think the mistake that small and big companies make in terms of that transition of growth and scale is they typically can't make that jump from being disciplined while keeping the entrepreneurial spirit. So for me, again, it's a disciplined playbook, and empowerment of the team within that playbook and within that system.

Clint Betts

What's the difference between leading a public company and a private company?

Matt Hulett

It's similar in some ways, but the biggest difference is you have a quarterly report called Call your Earnings. For private company experience, and some of my friends who've never done it before, especially startup CEOs, they're like, "I don't know how you do it, in the process of a turnaround in particular, your numbers are going to be bad for a while. How do you do it?"

For me, I like the discipline of it. I actually enjoy the board meetings. I enjoy the conversations around strategy. I don't necessarily enjoy every quarter if it is a troubling quarter, but I like the discipline of it because it keeps us as a team accountable.

So I have over time adopted a similar style to public company earnings within private companies, but the difference is it's like I have a friend who was a professional, he's retired now, professional NFL quarterback, and I remember asking him, “What's that like?" He's like, "Imagine every Sunday everyone can watch you do your job and have a comment about it," and it's an amount of intensity that you don't get as a private company. I think that's the big difference.

Clint Betts

Is it interesting or odd or in any way strange to you that what happens, what Jerome Powell does for example, matters to you now as a public company interest? I guess it does too as a private company, but you kind of know what I'm saying, where macroeconomic trends and news both domestic and international matter to your business. In terms of your stock price and things like that, is that a new thing for you at all? Even if it's not a new thing, I just wonder what it's like to have to keep your eye on that type of stuff while also running a business?

Matt Hulett

It's not a new thing for me, and actually one of the reasons why I started out doing turnarounds is I got a remedial schooling on changes of interest rates in economy with the Web 1.0 bubble burst when you had all these very successful on paper internet companies with no real viable business model going public, and obviously companies are much healthier now, but what's that like?

Well, look, I think for a younger CEO operator leader, it's probably going to be hard and it has been hard to raise capital. The cost of capital is just different. It's been accommodated for the last 15 odd years, and it's been growth at all costs because capital is basically cheap and/or free. I think the shift mentally to an inflationary environment and a high interest rate environment just has fundamental impacts for many different businesses.

So if you're in the real estate business, like my friends at Zillow and you're a marketplace, you're in it for a hard slog for a while, and then you have some businesses that are doing chip manufacturing for generative AI like Nvidia, they're feeling pretty good about the future.

I guess in a long-winded way, is if you haven't seen the story before, it is hard as an operator, but if you've seen the story before, then you've probably thought a little bit about these scenarios already. So you build a cushion for cash, you've put plans in place and triggers if your model starts to suffer due to a weakening economy or inflation.

I think most businesses that are run well can have a path through, but the young operator very much has a hard time, especially startup entrepreneurial founders have a very hard time changing the mentality of growth, growth, growth, growth, growth at all costs and capital's always available to me to actually getting your business profitable and getting your unit economics right.

For me, I can't control the macro. I can only control how I respond to the macro and it's always my job, CEOs define their jobs differently, but my job inevitably is two things, get money and don't run out of money. There's other things with the job too, but inevitably my team does not want me to run out of money and they want me to get more money. So it's a long-winded answer to the prepared leader can't control the macro, but you can control how you respond to it.

Clint Betts

Yeah, when you boil it down to my job is to get money and not run out of money, that brings some clarity, just that right there.

Matt Hulett

Yeah, I mean there's other things. There's nuances to strategy, there's deals, but hiring is a big part of it. I spent a lot of time on the science of hiring, and human resources, I guess would be what you call it, but inevitably you're making decisions with people and products and infrastructure and you're allocating capital across the board and you're trying to get the highest return for your investors and then the highest return for your people. They want to be paid, they want to grow their careers, but it does come down to “don't lose money and get more money.”

Clint Betts

What do you think about recruiting? How do you recruit the best people? You said you thought a lot about the science of it. I mean recruiting is very difficult and that's got to be one of your top jobs as well, is recruiting talent.

Matt Hulett

Yeah, I don't outsource it. Sometimes I've used recruiters in and outside of the company. We've done that at PetMeds, I've done it at other companies, and I don't necessarily take the same group that I've worked with before and bring them to the new thing because it's a little bit like the old school Mission Impossible movie where they had different folks for different jobs, like the person that could crack the safe versus the person who could blow up a door. You don't want to bring up the guy to blow up the door when you really need a ninja.

So the composition of the team always changes and the size of the company dictates some of that too. I try to break it down to what are the core vectors that you need for that job? So mainly the ones that always kind of float to the top are attitude, aptitude, tangibles, and scale appropriateness.

There are other things as well. I don't typically hire on knowledge. I did well in this company. I'm going to hire that same person to do something different for the new company because they're knowledgeable around that subject matter. I haven't had a lot of success with that, so I try to dial it back to what are the four vectors of what we need with capital, and then the other access is then what are the values that you want to hire against and how does that map?

Then lastly, I try to get a composition of team members that are mentally diverse as well as just diverse in general. So it's this kind of cocktail that you put together, and my wife actually asked me this question last week, and then she said, "So basically you're using intuition?" I said, "Well, at the end of the day I try to put everything into a framework, but there's a lot of intuition with it as well."

I find the hardest thing to do with talent is finding the right person at the right time. I think there's a lot of people that talk about best hiring practices and onboarding, that's all great. You can read lots of blog posts about that, but I think the hardest thing to do is hire the right person at the right time, big company person, a small company, that's sometimes very hard.

Sometimes it works. Small company person, startup person, big company. Sometimes that's really hard. So you have to understand a little bit about the company, but it comes down to I think understanding what you want, understanding what kind of person you want, and then how does that person fit into your playbook as you build your team.

Clint Betts

As you think about culture and once they get inside the company, I wonder how you've thought about even the remote work versus all in the office and that whole debate and how you've maintained your culture inside of that thing, which every company is grappling with.

Matt Hulett

Yeah, the meme now is everyone comes back, and I'm not a subscriber to that. In this background, I'm talking to you from Seattle. My headquarters is in Delray Beach, Florida, and we also acquired a business in Long Island, New York. So I have this triangle of travel where I'm constantly on the road, but I'll tell you this, businesses that can figure out remote work, and we can discuss how remote it is because there is maybe an asterisk to that, are going to have a fundamental advantage on talent acquisition.

Companies that want to pull people back I think have a kind of an old school legacy mentality around the role of middle management, which I think overall middle management over time probably diminishes and a lot more of the tasks of middle management become more automated.

So yeah, I'm a big fan of remote work, but the flip side is, and I always talk to my management team about this because we're more remote first, we have to be intentional about two things. We have to be intentional about more communication because your banking, depending on where you live from the office, let's call it two hours either way, or in my case, six hours of flying plus some commute on either end, so you're getting a credit in terms of where you spend your time because you can get up, walk downstairs or wherever your office is and do your work. So you have kind of two or three hours of not traveling time. So I always say add that back in as a credit for communication time. You need to be communicating more than you think.

Then the second is you have to be intentional about the ceremonies, let's call it ceremonies, I don't want to say meetings or parties, the ceremonies you put in place to bring people into the office on a somewhat regular basis. So the way I calculate it is two things. You have to be asking your team how they're doing.

You have to be sending out ESAT surveys, employee satisfaction surveys. That will come back very clear how you're doing. That's a trailing indicator. Then the other indicator from a budget perspective is calculate your travel and expenses with and without remote work and then bank some of that in your budget to make sure that you're allocating some of that to a ceremony.

For example, so in my old company, Rosetta Stone, every quarter the entire product development team would fly out to Harrisonburg, Virginia, which isn't easy to get to by the way. It's like two hours from every major airport. We go to this small town, it's really cool, a really cool town. Then there were the planning sessions for the next quarter, but also the social events at night. That's an example, or at PetMeds, this year we're going to do a community service event onsite, so packing boxes for the homeless, for instance, and then having a little party after that with a raffle.

That's an intentional thing and a tradition and a ceremony that you build to get the cobwebs out and to make sure that everyone has trust and respect and has some ability to have some affinity towards someone in real life. So again, it's tracking that with ESAT, being intentional with your communication and being intentional that you budget for those ceremonies in person. That's how I think about it.

Clint Betts

You said something really interesting in there that I want to double click on real quick, and that is that a lot of middle management will be automated, and we're talking specifically at a time where artificial intelligence is blowing up, AI startups, AI companies are blowing up. I have two questions along with that.

One, how long do you think it takes until that happens, and two, what would you recommend to those whose jobs that will affect? I'm not asking if you're right because I know you are and I think everybody knows that you are, but I wonder how long until that prediction becomes right, and if you're a middle manager watching this right now, what advice would you have for them?

Matt Hulett

Yeah, I'll sound kind of like I'm consulting, and then I'll get folksy and colloquial really quick. So we were an agrarian society in the early 1900s, right? I don't know what the exact stat is, but it was high, 90%ish we were farmers. Industrial Revolution, fast-forward, lots of stuff happened. This is the most truncated version of history in the United States ever, and then you get to the 70s and then we outsource manufacturing basically outside the United States to the decimation of many communities in the United States.

So the blue collar worker and the manufacturing worker really suffered, and I actually think it's going to be the same, and that happened over many, many years. So I think it's the same, and now we have a white collar issue because of AI. So I think that's knownism. I think there's the McKinsey report that half the jobs are going away.

I don't know, I don't know about that, but if I look at anyone that's doing work that requires framing or analysis, anything with digits that can be replicated in well-known patterns, so think accountants, data analysts, lawyers, I would call the FP&A kind of roles, maybe coders to some degree, you'll need less of them.

Where there's patterns in the work and the work can be replicated and actually scored and improved through algorithms, they're going to be less of them over time. I think what the advice would be is whatever you decide to do, make sure you're elite at it, you're the best at it. It doesn't mean that accountants are going away, but you better be the best accountant for that function that can actually take the AI output and understand it and check it because we know that, I don't know if you've used ChatGPT in a while, it can't do basic math that well.

Clint Betts

Isn't that interesting?

Matt Hulett

Yeah.

Clint Betts

Why would that be true? Not to cut you off there, but why is it not good at computing, which we figured out. I mean we've figured out the computing. Why would AI not be good at that, but it'd be so good or as good as it currently is, which is crazy, on the creative side of things?

Matt Hulett

Well, some of these models, and I'm a heavy user of ChatGPT because I communicate a lot and I always start out with an email or a document, first with me. I'm always kind of like a human first guy and then I slap it in the ChatGPT, and then I use Grammarly AI to look at what ChatGPT did and I scan it, but my productivity for communications soared. I am, I don't want to say 50% more productive, but it is high.

So the reason why is you have all these models. These models are basically closed, so you don't know where, for example, ChatGPT and Bard and others are actually crawling, they don't' know their data sources, and so I think, I'm not like a computer scientist, but over time you got to think that it's kind of iterative and it's kind of like genetics that don't get recycled well.

So if you're crawling and building models using natural language processing and then the content itself is getting updated with those models, you're kind of recursively getting stupider over time, so it's the same output. So I think that's the reason over time, and there's going to have to be models. I think some models need to be open.

The Ai2 Institute was founded by the late Paul Allen, founder of Microsoft. They're talking about an open model, so you better understand them. I think inevitably it's the data management of what the model is doing is going to be an important piece because it becomes recursively stupid.

I think that's the core reason on the generative AI for creativity, I don't know if this is true or not, but I was listening to a podcast, I can't remember which one, where it was the lead singer, artist of Black Eyed Peas, Will.i.am, and he said a lot of their music, they broke down some of the best hits in history and came up with kind of a pattern, and I don't know if this is true, but this is what he was saying. I was like, well that's interesting. So what if AI could actually just pick up the patterns in which pop, country, whatever genre are the most successful for whatever reason, and maybe it's wired into our brains that melodies and lyrics speak to us and that some of that can be replaced.

There's a pattern to music. A lot of my friends are mathematicians and musicians, so I wouldn't be surprised if the first turn or two of a song, a movie, whatever it is, starts with generative AI and then is finished with a human. Again to that theme of being an elite at what you do, but there's probably fewer people around the production of that thing. I think that's why, if you think about it's all math, it's all math and patterns, and if there are patterns to stories, which we know there are, then of course AI is going to be able to pick up on those patterns.

Clint Betts

Yeah, that's way interesting. I have to ask you too, just by the way, did we answer the middle manager question? Because I want to make sure if you have any advice there, I don't want to gloss over that.

Matt Hulett

Yeah, I just say be a lead at what you do. I think the rule of thumb is you shouldn't have, what do HR folks call it? Span and scope. How much are you managing and what's the scope of what you're managing? I think the span and scope for a middle manager becomes much broader because the inputs that you're getting from the organization can be managed more effectively through scale, through scale products. Let's break down the most obvious thing that no one's ever nailed.

I actually tried to build some software to do this, one-on-one. Everyone says meet with your employees for an hour every week, yet there is no template for that. There are products that kind of do that for you, but there's been no kind of cadence of that.

That's data collection and there are inputs and outputs of what we do as workers for a company, but we don't automate some of these tasks that can be automated. Now the things you can't automate is how was your weekend, knowing a little bit more about the employee, their motivations, their drivers, but a lot of it can.

So I think over time, that the span and scope of the managers increases, the elite managers grow and they're really good at looking at data and then having really good EQ with their teams. So the span and scope of managers over time probably increases and the number of managers probably decreases and that would be my guess.

Clint Betts

Yeah. Yeah, that makes sense. You've mentioned kind of how AI has already improved for you, potentially even like 50% on the communication front. How else are you integrating it within PetMeds? Are you integrating it with any product, customer interaction, things like that, and what do you think the future of it is within your company itself?

Matt Hulett

Yeah, I think for us, well there's kind of two types of AI companies. One is are you intrinsically AI or are you AI empowered? So intrinsically AI is a company that is just founded on top of a model or a set of technologies that is using AI to do something new, new workflow, solve a new problem, and I don't think there's that many companies out there doing that.

I think there's a lot of companies that are a feature on top of an existing set of technologies, but those are, I would would say, AI native, and then I'll get to what PetMeds is doing. Then there's a lot of companies that are leveraging AI, intrinsically using that through the current tool set, and so companies like Adobe have done a good job of integrating AI into their products, Microsoft. The next version of Microsoft Office, I cannot wait as I'll be able to throw Excel files into a safe place versus the open ChatGPT model and say, what are some interesting data insights from Excel? It comes out with an answer, I'll be like, "That's awesome."

So that's what I call Current Workflow. For us, we use Salesforce's e-commerce stack that has AI built into it and we've been using it for quite a while and then actually using it more as we start expanding beyond medication in our marketing groups, we're certainly using it for data attribution and modeling and also copywriting and creative and things like that.

It's enabled us to keep our team size pretty small as we started to rescale the business. I think that's the theme for PetMeds and how we've used technology is how we can use resources, resource light in terms of G&A, but more scale as we grow? That's some of how we've been using it. How do you not add more headcount, more people, more team members as you start to scale the business to provide more leverage in our model?

I think maybe that's the theme for what we've been talking about the last five, 10 minutes, is I think the companies that are starting to think that way, they're going to have less developers over time. They're going to have better ones that know how to check the copilot work that's being done in AI. I think the companies that are really light on people but can scale through tech are going to have an advantage over time.

We've had to do that because this is a turnaround and we're kind of in a second chapter of a three chapter turnaround, but I am very much focused on making sure that for each incremental team member, they're providing more than a multiple of outcomes for the business. The only way you can do that is through technology, and the only way we've been able to do that is using more AI machine learning and NLP.

So that's a long-winded answer to say our revenue per employee, if you look at some of our competitors, we're well over $1 million revenue per employee, and most of my competitors couldn't say that. That's how I think about it. How can I have this business be asset people light, the best people we can find for whatever they're doing, but leverage technology so that both the team members, the customers, and the stakeholders being investors win along the way.

Clint Betts

What do you think this does economically on the macro front? Does it democratize entrepreneurship? Are we going to see a lot more entrepreneurs and small teams, small startups? What does this do?

Matt Hulett

That's a really good question. Well, I think there's some good news, bad news here. I think the good news is that there are so many ways to automate, let's call it company construction. So many. Actually, I'm sure you're the same way, but I subscribe to AI newsletters and I watch different things on YouTube and I took the Google AI classes and all that stuff and I'm loving it. The good news is company formation is easier and the tools required to do the work require less people, so less capital. That's the good news. It's still very hard to get noticed. It's still very hard to build a business, but I think there's no excuses any more for not understanding things or the tool's not available to you.

So I think there'll probably be more entrepreneurism, but I would call them maybe gig entrepreneurs versus substantially large companies because the bad news is think about these language models and the big AI investments like building silicon chips. It is heavy, heavy upfront capital expenditures.

Then when you make that investment, you can put capital on top of it and amateurize it like a chip. You spend all this time with a new chip design, you get the foundry, you make the chip, and then you just start pumping them out and then you have high gross margins. I think that the disadvantage here is the companies that are going to be really, really successful are the companies that are really, really successful right now.

You have with open AI, which is basically now Microsoft, then you have Google's Bard, other technologies, Facebook's open source, their LLaMA models for a variety of different reasons because it gets people to build on their platform, but I think it comes back to the big folks who can spend the money really with the engineering and the compute power, because GPUs are very expensive, are the ones that inevitably win.

So I think it's actually harder to build a really, really big company, and then we do become more reliant on those bigger companies. That's the bad news, I think, for the everyday entrepreneur that doesn't want to build something that's substantial, there's no excuse to not have your side gig or something that you're doing.

It could range from affiliate marketing to small business services. I think that's good news. I think there would be more entrepreneurs, but I think the bad news, I think the big players get bigger because they have more money and more scale.

Clint Betts

Yeah. Yeah, that's interesting. Matt, I can't thank you enough for coming on. We end every interview with the same question, and that is at CEO.com, we believe the chances we give are just as important as the chances we take. So I wonder who gave you a chance? When I say that, what comes to mind and who comes to mind?

Matt Hulett

Yeah, it's funny, I knew this was your question and I changed my answer as soon as you said that, who comes first to mind? Yeah, I'd say Rich Barton. He's the founder of Expedia. Now he's the CEO of Zillow and he's been a very successful entrepreneur and scaled CEO and investor, and Rich took a chance on me. I was leaving a failing startup and gave me a big job, and inevitably I ran a division of Expedia and he saw something in me and gave me a shot, and I'd say Rich Barton. Couldn't thank him enough for that opportunity.

Clint Betts

Matt, that's incredible. Thank you again so much. Congrats on everything. The turnaround with PetMeds is already looking super successful and incredible. Again, I do want to plug your book. I know you don't want to, but I want to plug the book and check out, Unlock: Five Questions to Unleash Your Company's Hidden Power. I assume they could buy it wherever they buy books these days, right?

Matt Hulett

Right. I'm plugging you a little bit. The whole wall's full of it.

Clint Betts

Well, I didn't want to say it. I mean, there are like 20 copies behind you. No, I'm just kidding. Matt, thanks so much. Really appreciate it.

Matt Hulett

Thank you.

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