We’ve seen this before.

How can one man create a billion-dollar business on his own?

That’s what the New York Times wanted to know about a little-known company called Medvi. The story has it all. AI. Fast growth. And the best part is an opaque business model that’s shady if not fraudulent.

The article is a great example of how to create a story that gets clicks while missing out on the more interesting story underneath.

Medvi is a great business today. But it’s probably unsustainable and may end up in a lot of legal hot water.

It’s worth looking at what’s disruptive and what’s not about the Medvi story.

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I write a lot about aggregation and platforms, which are business model concepts known to be successful in technology.

What Medvi did was white-label telehealth services from companies like CareValidate and OpenLoop.

This is a telehealth company that…doesn’t do telehealth.

This reminds me of my first business venture, Two Face Poker, where I made poker chips and sold them online. This was 2006, and the infrastructure we know today didn’t exist, but there was a functioning drop shipping business.

Drop shipping allowed me to put products on my website that I could sell, and the order would literally flow to the dropshipper, who handled the inventory and shipment of products. I was nothing more than a sales rep for them.

Medvi is similar.

The business isn’t doing telehealth; it’s a customer acquisition game, and that’s it!

What Medvi does is acquire customers for their telehealth suppliers. This can be a good business and is scalable to be a $1 billion+ business if done right.

But here’s where you have to ask whether Medvi is doing things the right way.

Sheel highlighted below that Medvi built hundreds of AI doctors to make advertising look real. If you’ve ever seen a short video or an ad for a GLP-1, it’s possible it was from Medvi.

It appears this was Medvi’s superpower. They were very efficient in acquiring customers and converting sales. But they may have gone too far…

FDA letters aren’t the end of the world for a company. Hims & Hers has gotten them. But we’re talking about a company operating in a very grey area already, and now they have the FDA and FTC’s attention. The crackdown on non-FDA-approved GLP-1s is a direct threat that could send revenue toward zero very quickly.

Medvi’s business model isn’t new. What’s new is the scale the company can reach with relative ease using AI. But that doesn’t make the model and more sustainable or disruptive than similar businesses we’ve seen in the past.

What’s wild reading about Medvi was how quickly I became uncomfortable with the business.

The New York Times itself highlighted how questionable the marketing tactics were.

I don’t know if the FDA and other regulators would consider these actions fraudulent, but I don’t consider them highly ethical. That doesn’t mean all companies are ethical, but it shows how successful someone can be when they’re willing to bend the rules to grow. And I saw people analyze Hims & Hers ads, finding they’re using real doctors, not AI doctors, so Medvi’s tactics aren’t widely accepted.

Medvi and its partners are also pushing the limits of compounding. If regulators crack down or suppliers stop working with their white-label partners, it’s over for Medvi.

But if Medvi can come out of nowhere and flood the zone with ads, attracting hundreds of thousands of patients, where is there a moat in telehealth? And is this kind of disruption from a single, hard-working founder coming for everyone?

During my freshman year in college in 2000, I downloaded more music and movies than I could watch in a lifetime. Napster, Limewire, Kazaa, and others were easy ways to share all kinds of media.

A decade later, those file-sharing companies were gone, and Apple and Spotify dominated the streaming and downloadable music business.

What those early companies didn’t build was trust. I would download a dozen versions of the same song, hoping one would be high quality.

I’m also sure I downloaded a virus or two.

The industry’s suppliers — record labels — were eventually hostile to the file-sharing companies too. And it was their supply that companies ultimately needed.

I think we’ll see trust play a similar role in healthcare disruption and probably other industries.

The FDA and Big Pharma are already cracking down on compounding GLP-1 companies. Maybe Congress is the next to act, restricting the telehealth space even more. There’s a lot at stake.

I wrote recently about how peptides could be a big market for Hims & Hers.

But peptides may be even more fraught than GLP-1s (which are peptides) because they’ll be prone to these similar marketing shops like Medvi.

How do you stand out and build a sustainable business long-term?

Trust.

My thesis (and it’s a thesis today, not a fact) is that Hims & Hers will be one of the companies to provide resources and prescriptions that people can trust. Medvi may sell some vials or pills because it is really good at the customer acquisition game. But that could be a short-term business like Napster.

But in a world where everyone is trying to sell a peptide for everything, who do you trust? Who is the Spotify of the telehealth industry?

If Hims & Hers can’t build that kind of trust and loses customers to Medvi, it doesn’t deserve to be an Asymmetric Portfolio stock.

In the 1990s, we didn’t know who to trust with our credit cards on the internet. Amazon built trust. So did PayPal. Those were early success stories on the internet, and they’re massive businesses today.

In the case of Medvi, to me, the company looks extremely shady, and I wouldn’t be surprised if the FDA or FTC shut it down in the next few months. It may already be in decline after the lockdown of compounded GLP-1s.

But the customers who found Medvi may still want to lose weight or get ED meds, and who do they trust?

Some will say, “No one.”

Others will seek out the most reputable brands in telehealth.

Hims & Hers and Ro are the two that come to mind. They’ve built a level of trust.

I think they’ll come out of this moment stronger because they’re not a 1-man shop bending the rules as far as they can (they’re bending them, just not as far). They’re building systems and relationships with Big Pharma and integrating vertically, which is more sustainable.

A 1-man business is a great dream in a world of AI. But I don’t think it will be as disruptive as this article suggests, especially in telehealth. The meteoric rise could have a similarly rapid fall if regulators crack down.

The other lesson here may be that we should all be more diligent about whom we trust. It may be an AI on the other end or your call, and it’s almost certainly an AI trying to sell you things on social media.

For better or worst, that’s the future we’re living in.