Table of Contents
CEO Steven Eidelman shares how private equity rollups destroyed trust in pet care and why his membership-based clinic model prioritizes both veterinarians and pet owners over profit extraction.
Key Takeaways
- Modern Animal operates 29 clinics with 600 employees using a membership model that removes exam fees for $200 annually
- The veterinary industry suffers from private equity consolidation that prioritizes profit extraction over care quality
- Veterinarians face impossible working conditions: multiple species, procedures from wellness to euthanasia, debt burdens, and cost negotiations
- Members visit twice as often as traditional patients, enabling earlier disease detection and better outcomes
- The company built proprietary technology including electronic medical records to eliminate administrative burden
- Eidelman's journey began with Whistle, a pet wearable sold to Mars, providing deep industry insights
- Traditional vet ownership became unattainable due to private equity driving up practice prices beyond veterinarian reach
- Modern Animal's integrated approach requires controlling the entire experience rather than licensing software to existing practices
The Broken Economics of Veterinary Care
Steven Eidelman discovered veterinary medicine's fundamental problems while building Whistle, a pet health monitoring device that connected veterinarians with pet owners through wearable technology. His time inside Mars Pet Care after selling Whistle revealed an industry under siege from private equity firms executing aggressive rollup strategies that prioritized financial extraction over care quality.
The consolidation wave mirrored trends in human healthcare but with devastating consequences for both practitioners and pet owners. Private equity firms targeted veterinary practices because they represented attractive cash-pay businesses with emotionally driven spending from increasingly affluent pet owners. However, their "join us, stay you" approach preserved practice names while systematically optimizing economic models at the expense of care quality and practitioner satisfaction.
This financial engineering destroyed traditional pathways to practice ownership. Where veterinarians once purchased their mentors' practices and built long-term community relationships, private equity money inflated valuations beyond reach for debt-laden new graduates. The industry's consolidation created a vicious cycle where dedicated animal lovers became employees in corporate systems designed to maximize revenue rather than optimize care.
The Human Cost of System Failure
Veterinarians face uniquely challenging working conditions that Eidelman witnessed firsthand during his industry immersion. These medical professionals study multiple species, perform everything from routine wellness visits to emergency surgery, handle euthanasia procedures, and navigate emotionally charged cost negotiations with grieving pet owners—often completing 15-25 such encounters daily.
Unlike human medicine where insurance typically covers portions of care costs, veterinary medicine operates on full cash payment, making every treatment decision a financial negotiation. Pet owners frequently find themselves choosing between optimal care and affordability, creating antagonistic relationships with veterinarians who entered the profession purely to help animals. This dynamic transforms noble caregivers into reluctant financial advisors, fundamentally undermining the trust essential for quality care.
The industry's economic pressures compound these challenges. Veterinary school debt loads have increased dramatically while practice ownership opportunities disappeared. Young veterinarians emerge with substantial financial obligations into a system that offers limited autonomy and increasing administrative burdens. The result is widespread burnout among practitioners and declining trust from pet owners who sense the misalignment between stated values and actual experiences.
Building an Alternative Future
Modern Animal's solution addresses both sides of the broken equation through a membership-based model that realigns incentives around care quality rather than transaction volume. The $200 annual membership eliminates exam fees that typically range from $80-100 per visit, removing the primary barrier preventing regular preventive care. This approach doubles visit frequency among members, enabling earlier disease detection and better health outcomes.
The company's integrated approach extends beyond pricing to encompass every aspect of the care experience. Custom-built clinics averaging 3,000 square feet house six to seven veterinarians serving approximately 5,000 members each. These facilities prioritize both practitioner working conditions and client experience, recognizing that beautiful environments benefit both the professionals spending ten hours daily in difficult work and customers investing hundreds of dollars in their pets' care.
Technology infrastructure represents a strategic advantage built from necessity. The veterinary industry's technology ecosystem suffers from chronic underinvestment, forcing Modern Animal to develop proprietary electronic medical records, booking systems, payment processing, and communication platforms. This technological foundation now enables artificial intelligence applications that automate administrative tasks and synthesize complex medical histories for veterinarians before appointments.
The Whistle Foundation: Learning Through Iteration
Eidelman's entrepreneurial journey began with Whistle, conceived during late-night whiteboard sessions with his Bain colleague and co-founder Ben Jacobs. Their analysis identified the pet care industry as significantly larger than most people realized, with strong emotional connections and a generational shift toward increased spending as millennials treated pets more like family members than outdoor animals.
Whistle's original vision centered on health monitoring devices that would strengthen veterinarian-pet owner relationships through continuous data sharing. However, market reality revealed that pet owners expected broader functionality, particularly location tracking, rather than health-focused features. This pivot toward GPS tracking built a sustainable business but diverted from the health mission that originally excited both founders and industry stakeholders.
The Mars acquisition in 2016 provided Eidelman with unprecedented access to veterinary practices and deep insights into industry dynamics. This inside perspective revealed that providing veterinarians with more data actually worsened their already overwhelming daily challenges rather than improving care delivery. The experience taught him that meaningful industry change required addressing systemic problems rather than adding technological complexity to broken workflows.
Private Equity's Destructive Legacy
The veterinary industry's consolidation created predictable patterns of value extraction that Eidelman observed during his Mars tenure. Private equity firms acquired independent practices with promises of preserving legacies and maintaining operational autonomy. However, these commitments evaporated once founding veterinarians retired, leaving corporate management focused on financial optimization rather than care quality.
This model's fundamental flaw lies in treating veterinary practices as pure financial assets rather than community healthcare institutions. The "opportunistic tourists" who entered the industry lacked deep understanding of the professional relationships and care standards that sustained independent practices. Their focus on economic efficiency systematically eroded the trust and accessibility that made veterinary care effective.
The consolidation's timing coincided with generational changes in pet ownership attitudes and medical advancement in animal health. These positive trends should have created opportunities for improved care delivery and stronger veterinarian-client relationships. Instead, the private equity model captured increased spending while degrading the underlying care experience for both practitioners and pet owners.
Technology as an Enabler, Not a Solution
Modern Animal's technological investments serve strategic purposes beyond operational efficiency. The proprietary technology stack enables rapid iteration and continuous improvement across all clinic locations, creating a mechanism for change that extends from executive leadership to frontline nurses. This capability proves essential for an organization committed to constantly evolving care delivery methods and operational processes.
The company's approach recognizes that software alone cannot transform an intensely human experience like veterinary care. Technology serves as an enabler that removes friction, automates routine tasks, and enhances communication, but the fundamental value derives from human relationships between caring professionals and concerned pet owners. This philosophy guides technology deployment decisions toward supporting rather than replacing human judgment and interaction.
Artificial intelligence applications demonstrate this principle in practice. Rather than attempting to automate diagnostic decisions, Modern Animal's AI systems synthesize complex medical histories and administrative data to provide veterinarians with relevant information before appointments. This approach respects professional expertise while eliminating time-consuming research tasks that reduce available time for direct patient care.
Scaling Through Culture, Not Acquisition
Modern Animal's expansion strategy deliberately avoids the acquisition model that characterizes industry consolidation. Each new clinic is built from scratch with purpose-designed facilities, standardized technology systems, and carefully recruited staff who embrace the company's mission and values. This approach ensures cultural consistency and operational alignment across all locations.
The hiring process emphasizes values alignment over pure technical qualifications, recognizing that cultural fit determines long-term success in challenging work environments. Veterinarians and support staff join Modern Animal specifically to participate in industry transformation rather than simply seeking employment. This shared mission creates cohesion and commitment that enables continuous improvement and adaptation.
However, scaling culture presents significant challenges as the organization grows beyond the point where founders can personally interview every new hire. The company must develop systems and processes that preserve entrepreneurial flexibility while maintaining the values-driven culture that differentiates it from corporate competitors. This balance requires ongoing attention and adaptation as the organization evolves.
Lessons from The Wisdom of Insecurity
Eidelman credits philosopher Alan Watts' 1951 book "The Wisdom of Insecurity" with providing crucial perspective during Whistle's challenging early period. The book's central insight—that anxiety stems from trying to control the journey from point A to point B—offered a framework for managing entrepreneurial uncertainty and embracing growth through struggle.
This philosophical foundation influences Eidelman's approach to leadership and decision-making at Modern Animal. Rather than seeking certainty or attempting to outsource difficult choices through excessive advice-seeking, he emphasizes personal accountability and wisdom-gathering over answer-seeking. This mindset enables more thoughtful decision-making while accepting the inherent uncertainty of entrepreneurial ventures.
The wisdom versus advice distinction proves particularly relevant for entrepreneurs facing complex industry challenges. While external perspectives provide valuable context and insights, leaders must ultimately make decisions based on their unique understanding of their businesses, customers, and markets. This responsibility cannot be delegated or avoided through consensus-seeking or expert opinion-gathering.
Modern Animal's success demonstrates how focusing on fundamental problems rather than surface symptoms can create meaningful industry transformation. By addressing the root causes of veterinary care dysfunction—misaligned incentives, unsustainable economics, and degraded relationships—the company builds a sustainable alternative that serves all stakeholders while proving that purpose-driven businesses can achieve both social impact and financial success.
