Transcript

00:00 First in the tank is what the entrepreneur believes is cutting-edge healthcare for your loved ones. My name is aaron hirschhorn from philadelphia pennsylvania and my company is gallant take. A look at these little puppies aren't they so cute so. I brought one for each shark yay okay damon. That's bear hey bear how you doing that's bunny baby all right. If this guy pees on me. It's over between us. I understand. It's a risk. I'm willing to take that's panda who do. I get bear with me for a second if you were to fast forward just ten short years. Four out of five of these little guys are going to suffer from devastating age-related ailments like arthritis blindness or worse oh who's there oh my god move along move along. You ain't touching fred mine doesn't want to go. I'm sorry buddy. I tried to buy you out but no deal. Panda wanted a royalty. I'm reaper. I'm turning into robert our story begins two years ago when I was finally freed from a decade of chronic back pain with stem cell therapy and at the same time I watched our beloved family dog rocky suffer from arthritis.

01:44 So painful she couldn't even walk and I wondered if the same revolutionary science that helped my back could also be used for pets turns out it can so. I created gallant stem cell banking and regenerative medicine for pets just as you can bank your children's umbilical cord stem cells at birth. You can now save your pets young healthy stem cells during the routine spay or neuter. All you do is sign up on our website and we send our kit to your veterinarian and take care of the rest and I'm so excited about gallant not only because stem cells treat multiple disorders from kidney disease to broken bones in research animals. They've been shown to extend healthy life by as much as 30 percent imagine that that's years more with your best friend so sharks for five hundred thousand dollars. In exchange for two percent of the company you can join our pack of stem cell scientists and bring enduring health and puppy love to millions. This is not going to end well well. You must have fantastic sales I'm guessing so we have two divisions. We have a therapeutics division that's actively developing stem cell medicines and we have a consumer stem cell banking division that launches in three weeks.I know how this is going to end tell us your history absolutely. So in 2009 my wife and I each lost our jobs and we started dog sitting in our house to make extra money and that turned into an online platform for dog sitting. I think airbnb for dogs and we generated over 100 million in sales. In under six years 100 we merged with a competitor two years ago and that's now worth 925 what was the name of the company. Oh my company was called dog vacay and now it's called rover wow what was your background training in college. I was a neuroscience major.

03:37 I was a high school science teacher as my first job. But this is like next level science. I mean what I've done here is. I've hired the top minds in the field of veterinary regenerative medicine to make this a reality. So we have four key patents that essentially lock competitors out of you multi-billion dollar market. What is it cover technique yeah. So if I may just back up and explain a little bit about how stem cells work so just the same way a lizard like regrows its tail. We have stem cells in every tissue of our body and they're responsible for regenerating. Now the problem is as you get older. Your store of stem cells go down dramatically and that's directly related to aging so the idea is you should save these young healthy stem cells so that potentially in later years you can use it as a therapy to avoid expensive surgeries or really to even avoid the onset of disease. So what we've done is patented. The way to isolate the stem cells from the reproductive tissue that they throw in the trash.

04:33 When you get a spay neuter screw the dogs. I'm gonna do this myself. I would recommend you do it. It changed my life completely changed my life. You'd have to be neutered first. I don't like that part. Aaron let's just walk through some of the common sense elements of this. I'm in sports right and so if it was just as simple as stem cell injections you just give a shot everything would grow. Back injuries would never matter correct well. It sounds like a great dream to me yeah. But my point is if it worked anybody with a decent doctor would be doing it. Why do you think that's not happening the reality here is also this is about the dogs. I absolutely believe there's a huge pet market you know people love trying to take care of their dogs as much as you're right. This is not standard of care for humans but there's a whole world that comes where you can actually do research first on animals. I'd like to spend a little time on the reason you're here yes your business regardless on the skepticism.Let's start with the consumer side wonderful how much does it cost me to get the kit. Our goal is to make this accessible. So we charge only 95 a year to store your stem cells so every year. I pay you 95. You hit my card every year correct. I get the kit for free. The kit we send uh to your veterinarian so you don't even have to worry about it. The consumer buys it on our website does that make money that's one channel and the vet is a revenue stream for them. How much are they making. They make about a hundred dollars. You instantly lose money on the initial acquisition because you're paying the vet correct. How much does it cost you to do the extraction. So it costs us including the cost of the kit shipping everything. It's about 275 right now including what you pay the vet uh no plus plus if we pay the vet most 375 right now vets don't even want that they just want to kind of do it for free or what does it cost.

06:13 You operate the business your burn rate. So we're burning about 400 000 a month right. Now most of that on r d are there any other investors so we have raised a total of 10 million dollars. 10 million fund this business okay. I've hired someone who's the last valuation on the round 25 million the same as my house. How much money do you anticipate having to raise at the time you're gonna launch your product because you don't have any marketing money available to you yet yeah. So we will have to raise money again. We'll raise how much we'll raise money again in 2021. Probably 25 million your acquisition costs that's what makes me the most anxious here about what you're doing is that for every sale you have you're losing money yeah.You know you're gonna sink all sharks are still in but anne is concerned about the business model of aaron's stem cell banking company for pets gallant. For every sale. You have you're losing money yeah. You know you're going to sink because you're not going to have the cash flow to support that well. We're we're well capitalized. Now. I have a very good idea. You can't sell anything because I think there's a couple things that concern me. I mean one thing 23 does. We make money on every kit. But it makes me really nervous that you're going to lose money on every single kick going out the door and it's going to be a couple year to recapture well. It takes a little while let me tell you something if anne's nervous you know what it's like to love a pet. I mean how can you not support it listen. I'm on the petco board but you'd be such a great partner if ann's nervous. I'm out thank you I like a lot of aspects of this business. This is an emerging science. The research is going to take years to do but the consumer business which is going to be your foundation for research and for therapeutics and all this coming is a money loser.

08:11 It's a money sync and so unless perhaps in the very short term yeah. But I mean when we're creating a brand. New market give me some kind of hope about how does that 275 go down. Raise prices raise prices to 3.99 which actually is not potentially a bad idea. It's like raise prices here. Your volume is definitely going to go down but at least you're not hemorrhaging on the computer. Our perspective is that because it's a brand new market that nobody knows anything about we're doing everything. We can to lower those barriers to entry in the beginning to create word of mouth to create virality to get the vet on. When 23andme launched. We launched a thousand dollars and in some ways there was a benefit of doing that because you get the early adopters you work out some of those kinks you always want to treat. Those customers then great um but but then take down the price. Perhaps you're right that at that scale there's a better pricing structure yeah all right aaron because I'm so creative.

08:59 I've been listening to you and my juices are flowing. I love the space. I'm in the space. I know and I am mr wonderful. Here's two offers you choose between them. I'll give you the five hundred thousand dollars. I want the two percent plus. I want another two percent in options. So then I'm basically getting into twelve and a half million because of the value. I bring or I'll give you the five hundred thousand dollars. I want one percent equity and ten dollars off every kit in perpetuity that gets me so incentivized to sell these kits for you. You have no idea think about that while everybody else matters in the background that is that is very creative of course. It is I really think that's a clever way of doing it of course. It is and you'd be you'd be a great partner. I mean you know I'd be a great partner. I love it aaron. I'll simplify things look.I believe in stem cells right. I believe in what you're trying to do in terms of the storage. I just don't think you've got to figure out. So for those reasons amounts all right thank you mark good luck thank you so. I think there's a lot of potential in this business thank you. I think with lori. We could actually really do a lot to get this out direct to consumer. Initially. I believe in the long-term potential but we're looking at you know coming in together at 500 000 for eight percent whoa I really believe in this. I know quite a bit about it and I just think that you know down the road. A lot of things will be figured out but you're in the beginning. I think ann is a great partner. So I'm really excited to work with him. I'd love to figure out a way to make this work look. I've got employees that I've given a lot of equity. I've got top scientists who basically took a chance on me.

10:36 I got to protect them too but what I think is important. Too is is them knowing the benefit of having us on your team because we can give you so much help so what are you going to do aaron you've got you've got to make a decision. I know lori ann would you guys do four percent. So I'll give you four percent of the business because I see the value that you bring and we're off to the races yeah would you do five. We got a deal done great yeah. He going to keep the puppy thank you. I'm so shocked you're shocked. No that fred didn't pee on me. I did not expect ann and lori to team up totally surprising. But they're honestly the dream team because anne is a perfect partner. Lori like nobody knows better how to explain things to consumers in the world. This is I mean you can see even fred's happy you.