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Martin Shkreli Reveals How He Made His First $100 Million | My First Million

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updated 26 Jul 2023

Martin Shkreli Reveals How He Made His First $100 Million

Working with Jim Cramer

In this part of the My First Million podcast conversation with Martin Shkreli, the discussion revolves around his early experiences working with Jim Cramer and his involvement in the hedge fund industry. Martin explains that hedge funds were a small asset class back then, with only a few significant firms, such as Galleon Group and SAC Capital. He considers Warren Buffett and others to have had hedge funds as well.

Martin describes his unique educational background, where he attended a special school called Hunter and fulfilled his degree requirements early. He was in a strange state of being both a high school dropout and a high school graduate while continuing his education. He also shares that he had a rebellious nature in high school and wasn't afraid to challenge authority figures.

The conversation shifts to Martin's confrontational style and his tendency to break down the fourth wall. Examples are given, such as Martin challenging a CEO during a meeting and questioning why he didn't own stock in his own company. Martin explains that he believes people take themselves and authority too seriously and mentions his fearlessness, which he acknowledges landed him in prison.

The discussion then moves on to Martin's financial journey. He clarifies that he didn't make much money in hedge funds, as he wasn't focused on fund management and had other costs associated with running a small fund. However, he states that his investors did well overall. Martin goes on to talk about his transition to the pharmaceutical industry, where he founded his first drug company called Retrophin (now called Travere). He mentions his deep knowledge and passion for pharmaceuticals, which made private equity-style investing a better fit for him.

Martin discusses the challenges of being a fund manager and the psychological battles that come with it. He admits to struggling with discipline and the impulse to double down on investments when things don't go as planned. He reflects on the difficulties of being a trader and the importance of acknowledging when you're wrong. Martin also highlights the hazards of the hedge fund industry, including the short lifespan of many hedge funds and the regulatory risks involved.

Finally, the conversation touches on Martin's successful drug company, which went public and received FDA approval for a drug. He expresses pride in this achievement and emphasizes the importance of understanding the industry you're investing in. Martin concludes by cautioning against entering the hedge fund industry solely for the potential financial gains, stating that genuine interest and passion are necessary to succeed.

How He Turned $2M into $1B in the Pharma Space

In this part of the conversation, Martin discusses how he turned $2 million into $1 billion in the pharmaceutical industry. He started a pharmaceutical company because he was passionate about a specific asset and had a different approach to finance compared to his friend Cara, who started a water company based on her personal experience with bad skin. Martin's company acquired the license for a drug that Bristol Myers had abandoned and decided to focus on a rare kidney disease called focal segmental glomerulosclerosis. Despite skepticism from Wall Street, Martin believed in the potential of the drug and convinced investors to support the company. They went public and conducted clinical trials, eventually gaining FDA approval for the drug named Sparcentan. Martin faced challenges in accessing his wealth due to illiquidity, but his ownership in the company increased its value. However, a dispute with the board led to his departure and subsequent prosecution, which he was ultimately acquitted of.

Why He Jacked up the Price of the Drugs

In this part of the conversation with Martin Shkreli, he explains his perspective on why he raised the price of the drugs and addresses the criticism he received. He states that he wanted to make big money and advancements in the pharmaceutical industry. He emphasizes that setting the price of a product is the right of the company and its management team, not politicians or the media. He discusses the theories of pricing in the pharmaceutical industry, such as the value theory and utility theory. He argues that the alternative cost of not having the drug justifies its price. He also mentions that no one lost access to the drug due to the price increase. The conversation then touches upon the importance of healthcare and the emotional connection people have with it. They discuss the perception of Martin's personality and the impact it had on public opinion. Finally, the conversation shifts to Martin's financial status after his release from prison.

What Martin is doing with his Money

In this part of the conversation, Martin Shkreli discusses what he is doing with his money and his current financial situation. He mentions that he was able to pay off his criminal fines relatively easily, thanks to an interesting litigation. He sold the Wu-Tang album as an NFT and profited from it. However, he is currently facing litigation with the Federal Trade Commission (FTC) and is personally sued for monopolistic practices. He is appealing the ruling but is unsure about the outcome. Until the litigation is resolved, he is not actively trading or investing. Martin expresses confidence in his entrepreneurial abilities and believes that even if he were to start from zero, he would be able to build wealth again. He enjoys the challenges and risks associated with entrepreneurship and mentions Elon Musk as an example of someone who seeks out difficult ventures. Martin shares his perspective on being wealthy and successful, stating that he values the process and work more than the actual money. He refers to a quote by Naval Ravikant about being a person who gets rich, meaning that he has the skills to rebuild his wealth if necessary. He mentions the enjoyment of a comeback story and expresses a disdain for corporate CEOs and the constraints of conventional entrepreneurship.

The Fun Strikes Back

In this part of the conversation, the topic shifts to the "Fun Strikes Back" movement at Stanford University. The movement arose during the student body election, with a group of students advocating for preserving fun and individuality on campus. They express frustration at the university's attempts to limit activities like athletics, fraternities, and parties. They highlight past events, such as building an island with sand and hosting a popular party, which have now been restricted or shut down due to various reasons, including environmental concerns. The conversation delves into the broader issue of stifling personality and expression in academia and society as a whole. They discuss the fear of offending others and the pressure to conform to certain narratives, which inhibits genuine expression. The conversation then transitions to discussing writing and predictions about AI. Martin reflects on the difficulty of finding time to write as an entrepreneur and how it was easier during his time in prison. He mentions making predictions about AI, including concepts like inter-species marriage with AI and AI fundamental rights, which he believes will reshape society in the future. The conversation acknowledges the significance of artificial general intelligence (AGI) and its potential impact on humanity. Martin mentions John Carmack and his company, Keen Technologies, as a noteworthy player in the race to develop AGI. He emphasizes the profound implications of AGI and the need to pay attention to its development. The conversation concludes with a discussion about Martin's upcoming AI-related project and its imminent release, which they plan to share with media outlets like TechCrunch.

Introducing Martin's New Company: Dr. Gupta AI

In this part of the conversation with Martin, he introduces his new company called Dr. Gupta AI, which aims to provide an AI physician that can drastically reduce healthcare costs and improve healthcare quality. He believes that AI can handle many healthcare decisions currently made by physicians, leading to significant savings in the industry. Martin criticizes Mark Cuban's approach to healthcare and discusses the potential of AI to revolutionize the field. He also talks about the features of Dr. Gupta AI, such as the ability to provide medical information and advice for free, and the potential impact on healthcare accessibility globally. Martin expresses his ambition to make Dr. Gupta AI a massive company and highlights the importance of having talented individuals to execute the company's plans. The conversation also touches on Martin's previous experiences and media portrayal, with a reference to a controversial photo that contributed to his negative public image. Martin reflects on his choices and emphasizes the importance of staying true to oneself despite societal pressures.

Martin's Heros

In this part of the conversation, Martin discusses his heroes and people he admires. He mentions Vince McMahon, the owner of WWE, and how he embraced being the bad guy in his wrestling persona. Martin also admires Bill Gates for his success with Microsoft and his unapologetic pursuit of wealth. He mentions other business figures like Henry Nicholas, George Soros, and Robert Smith, who have achieved success against all odds. The conversation also touches on a humorous moment involving Bill Gates jumping over a chair in an interview. Martin talks about his banned social media accounts, including Twitter and Tinder, and expresses his desire to be unbanned from Twitter. He shares his frustrations with cancel culture and selective bias in online censorship. The hosts appreciate Martin's presence and express their interest in continuing the conversation with him.