#1 - Transforming the Future of Medicine with Venture Capital: Tommy Martin, Founder of Mammoth & Vestia
Summary:
How do you make money but still take care of your investors and founders?
Tommy Martin helped launch Mammoth because he realized there was a unique opportunity to bring venture funding to the startups that are transforming the future of health science and technology.
In this episode, Tommy discusses the inspiration behind Mammoth and explains how investing in the right companies can create a win-win situation for the founders, the VC firm, and his investors. Tommy also talks about the values he prioritizes as he’s working to build a world-class team, and he shares some of the biggest lessons he’s learned about maintaining a healthy family dynamic, working with ADD, and more.
Links and Resources Mentioned:
Transcript:
Tommy Martin: One of the things that really stood out to me is that even the experts get it wrong about 75 % of the time. Out of venture backed companies, about 75 % of the time, you're going to lose money in making that investment in that company. So you look and say, Wow, the experts have about a 75 % failure rate. I really can't call it anything different than that. We can say we're learning things along the way, whatever. But if their core competency job is to pick the companies that are going to break out and actually make money, the experts get it wrong about 75 % of the time. What we started saying is, Why is that? And what I fundamentally believe the root causes, it turns out they're not really great at assessing product market fit.
Tim Sweetman: Hey, folks, thanks so much for listening to the Tension podcast. I'm so incredibly grateful today to have as my guest, Tommy Martin. Prior to launching Mammoth, the company he now leads, Tommy was CEO of a nationwide wealth management firm that specialized in providing a broad range of consulting, financial, and investment services to physicians. As CEO, Tommy oversaw a team of 200 plus employees and advisors. Under his leadership, the firm grew assets under advisement to 1.5 billion before Tommy exited from the business. As an entrepreneur at heart, Tommy has been a partial owner and angel investor in more than 35 privately held companies, ranging across life sciences, fintech, real estate, professional services, and more. Tommy is an alumnus of Harvard Business School and Indiana University. He completed further professional executive training at the Wharton School and at the Booth School of Business. He authored the book Doctors' Eyes, only exclusive financial strategies for today's doctors and dentists, and has authored numerous other financial and medical publications. In addition to his role at Mammoth, Tommy is a board manager and CEO of Vestia Personal Wealth Advisors and its affiliated entities. You're listening to part one of a two Part Interview. Tune in next week for part two. Hope you enjoy this conversation with Tommy Martin.
Tim Sweetman: What I'd love to do is just jump right in if that works for you. For those who don't know your story, the funniest thing that I could ask, I feel like to start this off, is simply how do you go from youth ministry into venture capital? How does that even happen?
Tommy Martin: Well, yeah, there's a 22 year journey between those two points, Tim. But at the end of the day, youth ministry is all about serving people, serving kids. And venture capital, the way we want to do it, it's all about serving people. And so there's not a far cry in that. In the 22 years in between those things for me, it was all about serving people. So that's the common thread. But ultimately I did. I started out, I was actually a triple major as a freshman. It was a youth ministry, Bible, and music. And it turns out I'm not really very good at any of those. Someday I'd like to say I'm good at my Bible, but I was working with 150 middle schoolers I was responsible for, and I just got burned out pretty simply. And so then I needed a job and sure enough, somebody that I knew needed an intern. I started interning and about three months into my internship, I realized I'm working at a financial firm and that launched me onto this financial pathway, I fell in love with initially the retail side of financial advising and supporting clients, helping them achieve their financial dreams, helping them understand money as a tool, not as so much an end all to their happiness because it's simply not.
Tommy Martin: One of the things you learn, the higher the net worth you work with from a client standpoint in the financial industry, you realize very quickly it's the same problems that everybody else has. It's just a different decimal point, but it's the same problems. And then a lot of those problems get compounded because it turns out when we don't have money, there's a lot of stupid things we don't do. So spent about 20 years in financial services working with clients helped to build some nationwide financial firms and one of those financial firms I had the honor to help build was a firm that specialized in serving doctors. Again, back to the common theme, we're serving people and we built this firm. We started out of our basements and garages. Before we knew it, we'd built this company nationwide, had almost $1.6 billion under management, and we're just one of the industry's success stories. So it was really fun to be a part of that and to really launch that thing from the ground up and see it turn into this powerhouse of a company. It's still active and operating today. They're doing a tremendous job. I was able to exit and really gave me the opportunity to pursue my passion of helping bring the future of medicine to the world.
That's on the venture capital side, we're laser focused in health care. Ultimately, it set me up where my goal at this point is I still have a lot of life, Lord willing, still have a lot of life to live. And if my life agency can be to help create a million jobs and help save 10 million lives through the health care advancements we help bring to the world, that would be awesome. I'd be really honored if that's what I get to spend my life doing.
Tim Sweetman: Yeah, it's incredible. So Why health care? You found yourself wanting to do financial planning at some point or fell into this at some point. I have a few follow up questions into that. But why health care in particular on the financial planning side, and obviously that translated and that's a big part of the follow up question of the origin story of Mammoth. But why health care?
Tommy Martin: Yeah, it really started as a business decision, Tim. I wish it was something more altruistic than that. It wasn't. You're now sitting in a room with some other young guys in the industry and we're putting our heads together, we're saying, Okay, where can we work where we have scalable growth potential in this industry? And if you look at it, the most successful firms in our industry by far, their common client is a successful business owner because the business owner, they build up this really valuable company. At some point, they sell it, and then they're sitting on this pile of cash for an advisor to manage, and it can be a really big pile of cash. So that's when we were getting started in the industry, every single training you would go to, every marketing event, everybody's talking about how do you get more business owners? How do you get more business owners? And for us, we were looking at it saying, Gosh, every firm we know of in the industry that's actually working with business owners has been around for at least 30 years because they started working with these business owners prior to them having their big exit event.
Tommy Martin: So then when that exit happened, a lot of times they'd already had a relationship for 20 years. And we're like, Well, we've been in the industry for three years. We don't really have that luxury. So we stepped back and said, Okay, if it's not going to be business owners, if we don't want to sit around and wait for 20 years for an exit event to occur, where could we work where there's a pretty consistent stream of higher net worth individuals that need a lot of financial help? And that's where we turned and looked and said, Gosh, that's where doctors are. They need a lot of help. They do have pretty high incomes relative to the rest of the population, and it's very consistent and repeatable. We don't have to wait 20 years for an exit. That's just how we got our feet wet and got started. The rest is history as we blew up one of the fastest growing financial firms in the country for almost a decade straight.
Tim Sweetman: Where did this come from? I mean, did you grow up in a place where you had similar life experiences where you knew, like, okay, I've been around money, or where do you learn this? Where do you gather all this information to be that way and even just to be that intentional or strategic to think that way?
Tommy Martin: Tim, nobody's ever asked me that, but I know the answer and I think I've secretly been glad no one has asked it, but I will tell you, growing up, I grew up on the very lower end of middle class. My mom was a single teacher. She did an incredible job providing for me. I never had to worry about what I was going to eat or if I was going to have clothes where I was going to sleep. But for vacation, friends went to Florida or Disney World. Where did we go? We went south two hours from where I grew up in Michigan. We went to this town called Fort Wayne, Indiana for vacation. And we stayed at a Holodome because they had ping pong and pizza and putt putt. And for me, that was the greatest spring break ever. As I got into high school, the most popular family in our school is a family of four boys, all just incredible humans. They really became my best friends, even though they were all in different grades. But their dad was a surgeon and their house was a mansion. They had a car that was reliable that wouldn't break down in the middle of the highway the way that mine did 19 times during high school.
Tommy Martin: There was this part of me that always looked at them and jealousy may be too strong of a word, but certainly there was this, I want that type of mindset of, Wow. They were incredibly generous, such a generous family doing lots and lots of cool things in the community for our school. And so they were a family that wasn't just hoarding their wealth or anything like that. I really looked up to that side of the generosity, looked at them as some of the people I really admired. And when we started working with doctors, they were always my anchor of how can we help other families get to that point of generosity, get to that point where they feel like their kids can go to college wherever they want to go. But yeah, it really went back to that family that I looked at and said, Oh, my gosh, I can't even imagine what it means to live this way.
Tim Sweetman: It's awesome. It sounds like from the mammoth origin story, this also came from a doctor. That's how it was birthed as well. Talk a little bit about that. Talk about that story where I think you're in the financial investing side and a doctor came to you with a crazy idea. That's my understanding. That's the way this all started for you.
Tommy Martin: Yeah. So, Tim, after I sold out of that nationwide financial firm I helped to build, I specialized with doctors, a group of people came to me and said, Hey, would you help launch a new one? T hey were just wanting to do things differently. I loved the vision that they had for what they wanted to build. Signed up, but we didn't want to go just directly compete with the business I'd already built. And so we knocked on their door, we said, Hey, we'd love to buy out a portion of this. And it all worked out that we could do that. So we were able to launch day one in that company with about $300 million under management, which is a pretty nice start for a financial firm. Boy, about six months in, I realized very quickly, Wow, this team is just first rate. They can grow this thing. They don't need me in the day to day, every single moment. It really created this question in my spirit of like, what's my next chapter? What do I need to do to move to the next stage? What am I supposed to be doing? And what's my calling at this point.
Tommy Martin: About that time, one of our clients called me and he said, I want to take half of my money and put it into this one investment. And my immediately red flags went up. I'm like, That's a terrible idea. Don't do it. T his was a friend just as much as it was a client. And by the way, it's one of the leading specialists in his field in the world. Not a dumb guy. Historically, we worked on a lot of different potential deals together. He's one of the most business savvy doctors I knew. Him saying, I want to put half of my money into this one company is eye opening for me. I got on the phone with that business really just out of care for my friend more than anything just to do due diligence. In that, what I found out was this company had actually developed a new super alloy for the human body to replace titanium. And for your listeners that don't know a lot about medicine, if we go back historically, I'll do this as non boring as I can, but years and years and years, decades and decades ago, somebody figured out that cobalt was a metal that could go into the body and would work really well for things like heart stents.
Tommy Martin: They started making things out of cobalt. To this day, there's still things made out of cobalt. Well, decades after that, this guy named Dane Miller figured out, we could do things with titanium, things that need to attach to the bone, orthopedic type things that we just can't do with cobalt. And initially, the FDA didn't want to let him do it. And so he actually implanted this stuff in his own arm. At least this is how I've heard the story goes. He implanted it in his own arm to prove it was safe. But that was about 40 years ago, and nobody had really had any major advancements in the metals we use in our body since then. And cobalt has limitations, titanium has limitations. And so this medical team, one of their patients had actually been the leading scientist for NASA for developing their nuclear rocket engine. And a lot of people don't know this, but NASA actually has a working nuclear rocket engine. They've never actually deployed it to take a rocket into space, but they do have it. And it required these really advanced alloy composition s. This leading doctor is sitting down with a patient who was that scientist with NASA and said, If you could have the perfect metal for the human body, what would that be?
Tommy Martin: This scientist went back with his team for a few years and then reported back and said, Here it is. This is what I would do. And the composition doesn't really matter. But the idea is in every measurable medical property that I'm aware of, it's superior to titanium and cobalt based metals. Like lower infection rate in the body, you can get about half the size of titanium with about twice the strength. It's actually more meldable. And so if you think about surgery where you're trying to have as small of an incision as possible, well, that means the stuff that that goes inside the body has to be as small as possible. And if we can get half the size on pretty much anything that's going into the body, that's a big deal. And so I realized really quickly, Wow, I've turned down a lot of medical investment opportunities over the years, and I actually called this company back and I said, Okay, we're going to tell our client we think this is fine to invest. And by the way, how much of my money would you let me invest? They actually called back and it was a question that changed my life, Tim, but they called back and said, Actually, we are wanting someone to run investor relations for our business.
Tommy Martin: We're growing at light speed. We're already on a great path to success, and you actually know how to do that. Would you be willing to run investor relations for our company? And I immediately said, Yes, absolutely. And so that became my start into venture capital. We ended up raising, oh, man, I think it's somewhere in the neighborhood of $35 million for this company. They're continuing to do exceedingly well, finding more and more applications to use these new metals for the body. One of the most exciting is a heart valve that I can finally talk about publicly because it's out on our website now. But if you can get half the size of other things with twice the strength, that means even in places like the heart where they're trying to deploy heart valves that run through arteries in the leg or the shoulder, if we can get half the size, we can actually help a lot of patients that right now they still have to crack their chest open because they can't fit these things through their arteries. But if we can get about half the size, all of a sudden we can now fit things through these arteries, even with patients who have smaller arteries.
Tommy Martin: And that starts to become really, really exciting what we can do to move medicine forward and have, think of little children or seniors that they're having to go in and get their chest completely cracked open. If we can eliminate that, that's really exciting. Then obviously, the use cases with a super metal for the body go way beyond this. And the thing the team did that we were so impressed by is before they commercialized it, they actually went out and got global fundamental patent protection that you can't use these metals in the body without going through this company. And that is part of the difference in their value proposition that other medical players just haven't done in the past. So, man, that was a long answer to say I really got into health care venture capital because I saw this just incredible opportunity to change the way fundamentally we do metals in the human body. Had a great opportunity there, continued to work with that team regularly. But that really launched this excitement and drive in me to, Gosh, we got to do more of this.
Tim Sweetman: You looking for new ways to navigate the many tensions in your life? Do you want to learn how to embrace these tensions to create innovative solutions you never thought possible? Then you're going to want to check out the Tension Newsletter dedicated to exploring all of the many, many tensions we encounter in life. Each week, we delve into topics like work life balance, profit versus people, profit versus purpose, the political and social tensions that all impact us. Our contributors, including myself, will offer insights and practical advice on how to embrace these tensions and create solutions and innovations that can transform your life. So if you're ready to take your life to the next level and learn how to harness the power of tension to drive innovation and growth, I ask you to sign up for our newsletter today. You won't want to miss out on this incredible opportunity to explore the tensions that shape our lives and discover new ways to thrive as human beings directly to your inbox. All right, back to the show.
Tim Sweetman: When did Mammoth come about? Obviously, you have an amazing team at the top that you've got this combination of individuals and people that's really incredible. When did that get formed and how did that collection of superstars gather together to do this thing?
Tommy Martin: Well, it really started back in 2019 when we launched what in the investment world we call a special purpose vehicle. It's just all that really means is a fancy way to say we set up a fund to invest in one company. So we call that a special purpose vehicle. But we started that first one back in 2019 and continued to grow our involvement in that space. Then in 2021, it really made sense to formally launch an actual fund where we're not just investing in one company at a time, but where we are actually investing in lots of companies under the hood of one fund. And that's the difference between a venture fund versus a special purpose vehicle. It's just we're investing in lots of companies, not just one. And so that started in 2021. And then the team, I have just been so blessed throughout my life, Tim. The right people come into my world at the right time. It just happens that way. And I've stopped fighting it. I've stopped trying to understand it. It's just the way it works. I'll give you an example. I was flying to Florida with my family one day, and of course, we're on an airplane.
Tommy Martin: It only has three seats and we needed four. Then the other two seats are on the other side of the aisle. I see this guy sitting down and he has an iPad. It was the first day I had gotten my original iPad. I sit down next to this guy on the airplane and we end up talking nonstop for two hours straight. And by the time we get to the end of that flight, I knew I was going to bring this guy on in our business to help open up our Southeast region from scratch. It was just one of those times. And he's gone out now he's president of that financial firm that I previously cashed out of. And he's doing an incredible job there. That's just one example of about a dozen where the right people just happened to be next to me at the right moment. And that's how Mammoth ultimately came about. We just had other connections that were ready for their next opportunity as the right people at the right time. My partner, Judd McGril, his wife, Kim McGril, they had sold their business but have this incredible connection in the financial world.
Tommy Martin: My partners, Jay Yadav and Matt McGirt, two of the leading specialists in their fields, Jay in Cardiology and Matt in Neurosurgery and Spine, these two were just really looking for a way for how do we make an even bigger impact in medicine and ultimately in public health. They were wanting to move into the venture capital side of the world anyway. And so to pair up their clinical and global health know-how with the financial know-how of a Jud and Kim mcroll and a little bit of background on my part. And then our other team members just came again, very much through relationships, the right people at the right time.
Tim Sweetman: It's incredible. And what you're doing sounds like a perfect combination of your desire to serve people. So many times I think when you think of venture capital, there are sharks in the water type of thing. But what you guys are doing is really unique. Maybe you can expand further for those of us who are not as familiar, but it sounds like there's a lot of tech and a lot of advances in medicine that just get stuck in red tape or are never brought to the forefront because they don't have a partner that can do that. And it sounds like that's really what you guys do. So maybe you could flush that a little bit. Hopefully that explains what's so unique about what Mammoth scientific is doing.
Tommy Martin: Yeah, I'd love to tell you how we're rethinking venture capital as a whole. Let me back up for your listeners real quick. And those that may not be familiar with venture capital as much, think of venture capital as anytime you want to bring a new concept or a disruptive technology to the world, you need your idea people, but a lot of times your idea people don't have a lot of money. And it turns out you need both. It's like the idea is the fire, but the money is the oxygen for the fire. When you pair up a great idea with some capital and some know-how, it turns out you can help really drive these incredible businesses. So anytime somebody's starting a company, we can classify it either as it's a venture backed company, meaning they've got an outside partner bringing some money to the table, or it's not venture backed. And this might be a startup food truck where they come up with their own money or they get a loan from their bank or their parents or whoever it may be. And here's the big difference in a company that's likely to be venture backed versus one who's not.
Tommy Martin: A venture backed business is one that people look from the outside and say, Wow, this could grow really, really big. Because you don't want to go invest your money if you can't see this massive growth potential because there's a lot of risk. This is the highest level of risk in investments because if this idea takes off and goes really, really well, you might take your money and completely explode it. And if this business doesn't take off and go really well, you're going to lose every single penny. So it's not like... I think of the slow and steady, the public markets, they're not always slow, not always steady. But compared to something where it's either you're going to make a lot of money or you're going to lose every penny, that's a whole different level of risk. So it's not for the faint of heart by any means. But if you understand venture capital at a fundamental level, that your whole idea is to put money into these companies to help them accelerate their growth potential, then it's all about how can you be the best partner for these companies? And, Tim, you mentioned sharks in the water.
Tommy Martin: It's certainly in the venture world. Sometimes people call it vulture capital because it's people swooping in. They're only trying to get the maximum return for themselves and their investors, and they don't care about the founders. I would tell you, the limited time I've spent in the venture direct space over the last five years or so, most of the firms I've gotten to work with and encounter, it's pretty incredible people. They're not out there to just take advantage of founders. They're really just trying to make a reasonable business decision on how they support their investors. And that's who they're responsible to, ultimately, and how they support these founders to hopefully deliver the best results for everyone. From a standpoint of wanting to serve people and having a heart for people, I don't experience that that's unique just to our venture firm. I know there are some great venture firms out there that treat it that way. But where we are very different is the normal venture capital firm is typically structured where they're really relying on the wisdom of an expert, somebody that's just an expert in technology, maybe they have an advisory committee of people who are experts in technology or a certain part of health care, or you can go really across the spectrum.
Tommy Martin: One of the things that really stood out to me is that even the experts get it wrong about 75 % of the time. And what do I mean by that? Out of venture backed companies, about 75 % of the time, you're going to lose money in making that investment in that company. You might not lose all of your money, but you're going to lose some money. About 75 % of the companies that venture firms invest in, they are going to lose some money. So you look and say, Wow, the experts have about a 75 % failure rate. I really can't call it anything different than that. We can say we're learning things along the way, whatever. But if their core competency job is to pick the companies that are going to break out and actually make money, the experts get it wrong about 75 % of the time. What we started saying is, why is that? Let's try to get to the root causes. And what I fundamentally believe, the root causes, it turns out they're not really great at assessing product market fit. What do I mean by that? For some of your listeners is, is the way you're thinking about this product actually the way it needs to be structured to solve big problems?
Tommy Martin: And if it is, then great, it's going to work. But if my idea of how to solve that big problem is not the crowd's need for solving that big problem, then it doesn't matter how great of an expert I was, that product may not go anywhere. And so there's a product market fit issue. The second issue is turns out about 60 % of these companies end up failing, so a little more than half because the team just doesn't work out. You understand this. Anybody listening out there, they probably don't love working with every single one of their colleagues. Maybe, I hope some of them have it. But there are team dynamics. When you're in a startup environment, you're starting a company from scratch, a lot of people are putting their livelihoods on the line. They're taking a pause off of earning a paycheck to go try to start a company. You've got varying commitment levels and you've got some people that can make it last for a year. Other people only have three weeks. And if it doesn't work after three weeks, they got to go back to work. One of your biggest risk areas is can this team actually succeed?
Tommy Martin: In health care, we get this incredible advantage. And here's where we've really rethought venture capital. We said, we know a lot of doctors, we know a lot of hospital administrators, we know a lot of medical manufacturing companies. What if our lead investors weren't family offices that sold some completely unrelated business for a few billion dollars or pension plans that really aren't connected at the ground level of what we do. What if our lead investors were actually people deeply embedded throughout health care? Hospital executives, leading doctors in lots of communities and specialties and manufacturing executives in these larger companies that have to go actually bring these products to the world. We just realized pretty quickly, if we could rely on the wisdom of that deeply embedded crowd, we think the outcomes in our success rate could go way up. And this is the thesis we're still proving out. So I'm not sitting here today saying, Tim, it worked. We're never going to have a company that doesn't make it. So far, we have you haven't had a company that didn't make it. I really attribute that success to conceptually, if we're going to invest in a company, it's because we have hundreds of people behind us that are going to help make that company be successful.
Tommy Martin: By having a full ecosystem of medical professionals that are deeply embedded in the medical world that we serve, we believe it gives us the opportunity to have better access to deal flow, better access to due diligence, and make sure it's good product market fit before we ever invest. And then, maybe most important, better access to distribution for that underlying company that we can help them get out to the market so much faster. When we t urbocharge that business, our hope in doing that is always that we can help them accelerate and launch far quicker than they ever could without us. You asked about technology, that's the next step of what we realized really quickly because my ultimate goal is I would like to have 10,000 deeply embedded medical investors that are the core investors supporting Mammoth. If we had 10,000 deeply embedded investors that we could activate them whenever we need to. For example, let's say somebody brought us this new cancer treatment and we could take that out to oncologists that are deeply connected to us very quickly and get real eyes on something, I think we could do due diligence a lot faster and more efficiently.
Tommy Martin: I think we could get the due diligence right a lot more often because we'd have a crowd involved, not just experts or a few experts. And then last but not least, when that company is ready, we would be able to take them out and activate them throughout this deeply embedded medical network. Well, all that sounds great, but to make that workable, you got to have some technology under the hood that allows that to even be possible. And so that's where we actually started in a way that I don't think most other venture firms have thought about because most firms launched with this idea of I only want four to five big investors. And we launched with this idea of no, we want to get two thousands. It's part of our strategy. So by launching that way from day one, we knew we had to build some plumbing, and we went out to find it off the shelf. It just didn't exist. And so our team just built it. And so now we have that underlying proprietary technology that allows us to work with already hundreds of medical investors. And eventually that will be thousands, then activate them to actually help bring these companies to the world when the time is right.
Tommy Martin: And if we can do that efficiently, I really believe we can take that success rate and shoot it to the moon compared to a 75 % failure rate. Because if you have enough medical people you can take this out to immediately, and they've already blessed the opportunity as being fantastic and great for patients, then why wouldn't these companies succeed?
Tim Sweetman: Hey, folks, thanks so much for listening to this episode of the Tension Podcast. This was part one of a two part interview I was able to do. I hope you tune in next week for part two of this conversation. It would be fantastic if you would take just a couple of moments to leave a review or rate us on Apple podcast or wherever you get your podcasts. It really does help the show. Thanks so much for listening. To find out more about the Tension podcast, visit www. Tensionpod.Com, or you can find me on Twitter @TimSweetman.