American investor and former pharmaceutical executive (Turing Pharmaceuticals); convicted of securities fraud.
Shkreli spent ~10 years in hedge funds without making money, using it to master pharma. His first wealth came when his drug company Retrophin went public in 2012 - he made about $25 million all at once rather than compounding gradually.
“So I never made money at hedge funds. I never really made a dollar.”
Shkreli licensed a hypertension drug that Bristol-Myers had spent ~$50M on then abandoned, paying a struggling public company $2M for it. Repositioned for a rare kidney disease, it became the foundation of a company now worth ~$1.5B. His biggest early investor was Vivek Ramaswamy, who later supersized the model.
“it's basically a story about how we went to this company with $2 million and turned it into over a billion, you know, which is kind of remarkable, but people do this in pharma every day. And my friend, And at the time it was actually my biggest investor, Vivek Ramaswamy. He's now running for president.”
Shkreli's edge in pharma was reading PubMed, the government database of all biomedical literature, to find drug assets and disease applications everyone else missed. He claims the patience to sift it is rare enough to make someone a billionaire.
“PubMed is the government database of all scholastic biomedical literature. So 36 million papers. If you sit there long enough and you have the passion, you can become a billionaire. It's just a matter of sitting there and sifting and sifting and sifting, which most people don't have the patience desire or willpower to do, but every single biomedical innovation is logged in on PubMed.”
Steal thisPick an information-dense public database in your industry and out-read everyone to surface overlooked opportunities.
Shkreli relays a Buffett idea: the best businesses (Amex, Coca-Cola) are ones consumers evaluate with the emotional, not rational, part of their mind. Healthcare sits in that same protected mental category, which is why people feel entitled to it regardless of cost.
“a friend of mine worked at Amex and got to talk to Buffett about this, where he said Buffett likes businesses where consumers think about the brand with a different part of their mind.”
Steal thisBuild or position a product so customers judge it emotionally, not by cost-to-make math.
Shkreli's pricing logic: don't price on cost-plus or break-even; price against the 'but-for' alternative - the hundreds of thousands an insurer would otherwise spend on hospitalizations. A drug that saves $500K in care is a bargain at $100K, and the windfall margin is the reward for the risk that the drug fails.
“So for a lot of rare diseases, it's like, well, but for this drug, you would be spending hundreds of thousands of dollars a year. So it's kind of a bargain at say $100,000, because otherwise the insurance is going to spend half a million on you, you know, going to the hospital every week”
Steal thisPrice against the cost of the problem you eliminate, not the cost to produce.
Shkreli predicts healthcare will go from ~20% of US GDP today to 50% over time, driven by demand: once basic Maslowian needs are met, people will pay nearly infinitely for marginal health and longevity.
“And that's why we've spent, we've gone from spending 5% of our GDP on healthcare to 20%. And I think that's going to go to 50% over time because our basic goods and needs, our Maslowian kind of needs are met.”
Shkreli predicts healthcare will go from ~20% of US GDP today to 50% over time, driven by demand: once basic Maslowian needs are met, people will pay nearly infinitely for marginal health and longevity.
“And that's why we've spent, we've gone from spending 5% of our GDP on healthcare to 20%. And I think that's going to go to 50% over time because our basic goods and needs, our Maslowian kind of needs are met.”
To pay ~$8M in criminal fines, Shkreli sold his one-of-a-kind Wu-Tang Clan album during the NFT/crypto bubble. He had marked it down ~75% on his books but timed the bubble well enough to turn a profit.
“I decided to sell the Wu-Tang album, which is a funny thing because there's this NFT bubble. And I basically said, oh, like if I turn this into an NFT or sell it to a crypto bro, like I might even get my money back on this thing because it was basically just a lark and I didn't think I'd— I marked it as down like 75%, but I was able to actually turn a profit on it. So I was happy to time that bubble well.”
Shkreli unveils Dr. Gupta (a play on Dr. GPT), pitched as the first-of-its-kind AI physician - a free synthetic doctor you can have a natural conversation with to get medical information, aimed at drastically reducing healthcare costs and improving access.
“It's called Dr. Gupta. It's a, the first of its kind AI physician. It's basically going to be what I hope something that could drastically reduce healthcare costs and drastically improve healthcare quality by providing an AI physician mimic basically.”
Steal thisWrap GPT-4 in a domain persona that delivers expert advice free and 24/7 in a field gated by licensed scarcity.
Shkreli notes GPT-4 scores ~90% on the USMLE medical licensing exam, higher than most human doctors, making it an 'ace doctor' on medical knowledge available free at any hour.
“GPT-4 scores 90% on the USMLE. It's a 90% performing— most doctors don't score 90% on the boards. GPT is an ace doctor when it comes to medical knowledge.”
Shkreli argues compute and storage costs have fallen by many nines while healthcare hasn't budged, because the AMA artificially constrains the number of med schools and doctors. A million more doctors would make medical prices drop like a rock - which is why AI replacing physician work matters.
“The AMA restricts the amount of people who can become doctors. The supply is constrained. You cannot just graduate a million more doctors tomorrow. If we could do that, what would happen? The price of medical services would drop like a rock.”
Shkreli's recruiting edge is selling the world-changing vision instead of the dry deliverable. A 'diagnostic tools' pitch sounds like shit; pitching that there's no such thing as a doctor in 30 years and every prescription costs 10 cents pumps up engineers to join.
“if you, do it the right way and you explain to the engineer that there's, if we do our jobs right, there's no such thing as a doctor in 30 years, that every operation, every prescription, every piece of medical advice you ever get from now on comes from a machine and it costs 10 cents. That changes the world.”
Steal thisPitch the legacy-scale outcome, not the feature, when recruiting top engineers.
Shkreli and two colleagues spent day and night researching Vital Therapies, wrote a 40-page short report that dropped the stock ~40%, and made $20 million in his personal account when the liver dialysis device failed and the stock fell ~90%.
“We made $20 million shorting— this stock called Vital Therapies.”
Shaan recounts how the banned-from-Twitch Martin Shkreli became Blab's biggest user, bringing in hundreds of thousands of people a month, streaming up to 10 hours a day, fighting haters in the morning and doing live stock-picking 'educational' streams in the afternoon.
“So he starts bringing on hundreds of thousands of people per month just through his channel, which like we had like Tony Robbins came on, the Jonas Brothers came on, ESPN was using us. Nobody could drive numbers like this guy. And not just that he drove people to come check it out, like come check out the car crash, but he actually used us like 10 hours a day. Like in the morning he would log on, he would start the room, his like kind of fans and haters would come in.”
Shaan names 'troll marketing,' the tactic he saw Shkreli and Trump use in 2016: say or announce something outrageous (offer $10M for a statue, buy the $2M Wu-Tang album) to generate headlines, whether or not you ever follow through.
“I noticed that both of them were doing the same thing, which I just started calling troll marketing, which is basically he would do something like, let's say, uh, I remember once there was some monument or statue that was like for sale in Times Square And he was like, he just goes in public and announces like, I will buy the statue for $10 million. But what he wanted to do was he wanted to own this little thing and then be able to erect like a trolly, like kind of statue of himself in Times Square. And he didn't ever even have to go through with it, but he was like, say a thing, bang, headlines.”
Steal thisMake an outrageous public announcement to capture free press; you often don't even need to follow through.
Sam predicts Martin Shkreli will be released within a few months and, given his mix of being smart, driven, and a troll, will resurface in the news and cause trouble soon.
“I think he's going to get out in a few months. He's going to get out in a short amount of time. I have a feeling this is, uh, we're going to hear a lot more from this guy. Yeah, he's going to do something. And, and this guy, even though he's creepy, I, I don't— I'm not anti-Martin, but I like— I don't want to be friends with him. Um, he is capable enough that he's gonna mess some stuff up soon. That's my prediction.”