Howard: It is just a huge honour for me today to be podcasting and reviewing Kent Miller with Dentagraphics. Thanks so much for coming on the show. Kent is president of Dentagraphics, a market analysis company specialising in dental practices. Prior to Dentagraphics, he worked in the economic development sector in Columbus Ohio where he led a non-profit urban revitalisation firm, he holds a Master’s in Science and City and Regional Planning from The Ohio State University. The only University where you have to say, “The”, before you say it. My gosh, and you are in Austin Texas now, right?
Kent: I am in Austin Texas.
Howard: So, what was more fun, living in Columbus or Austin?
Kent: I am going to be a home bird on this one, I’m a Columbus guy through and through. I love Austin but Columbus is home for me.
Howard: I love Columbus. And you have a Master’s in Science and City and Regional Planning, I bet that’s an unbelievable degree to have in Dentagraphics. The thing I like most about Columbus is my parents were very, very Catholic and Columbus, some smart genius, you know, a lot of churches eventually just closed down, you know, the area dental or not dental, demographically collapsed and the next thing the church just closed down. And somebody bought, remember that restaurant, the Refractory? Somebody bought a bankrupt, closed down Catholic church and turned it into the most rocking, hot, amazing steak house and it was just really cool. I mean, I just thought it was an amazing theme and, man, it was packed every time I’ve been there; every time I lecture in Columbus, I always eat there. But you know what I tell these dentists, I tell them over and over and over that the most important decision they ever going to make in their entire life is what you do. So, what do 99% of them do, oh, they just skip it, they don’t think demographics matters, I say, okay, well, if it doesn’t matter, go to the Congo, go set up in Afghanistan, in fact, why set up in Austin Texas, just move down south of the border of New Mexico. Practice there for a few years then call me back, demographics is the king and the franchises perfected, you know, Chick-fil-A, McDonalds, I mean, Starbucks, they put more effort into this and the dentists skip it, and they just think that, you know, they say, well, if you build it, they will come. I’m like, dude, that was a fiction Disney movie, it’s not even real, and so why do, what percent of dentists do you think actually get a demographic report before they set up their own de novo or buy an existing?
Kent: Sure, sure, my off the cuff estimation is about 10 to 20% and most of them feel comfortable, now we certainly do speak with a lot of doctors who do see the importance of the demographic analysis, and the important thing that we do is there is a big focus on competition analysis as well, so if you’re Starbucks, there is already a Cariboo and a Cup A Joe and 5 other coffee shops right there, maybe there is another neighbourhood down the street where there aren’t any coffee shops. So, yeah, I think you hit the nail on the head there, and a very strong endorsement, I appreciate that.
Howard: I mean, and another thing, you have got to know your competition so if someone says, well, in this town, okay, so you are buying 2 practices, this small town of 4000 has 4 dentists and this town of 5000 has 4 dentists. Your competitors are not even female, I will give you an example, there is a chain of Laundromats around Phoenix, and one of them decided their best idea was to put one across the street from the drycleaner I use. Well, that drycleaner is owned by two Korean immigrants, Byeoung and Yeoung, and those guys work 07:00 to 19:00 Monday through Saturday the last decade without blinking. Now do you really think you’re going to have a franchise and hire a bunch of employees, what are they going to work 09:00 to 17:00 Monday through Friday, maybe early, I mean, when you’re going against 2 people who are willing to work 12-hour days, 6-days a week until they drop dead, I mean, you don’t compete against that, I mean, you can’t compete against those guys. And sometimes they will say, well, there’s the dentist population, right, so is this, yeah, but half of them are 60 to 65, they’re winding down, they are working 2-days a week, they don’t have a website, they don’t do direct mail, they’re just falling off the cliff. Whereas another competitor might be some rocking hot, high energy 30-year-old bouncing off the walls who’s in all the parades and going into the schools and churches, you know, so I like the way that you actually call and verify the competing dental offices, don’t you?
Kent: We do, and part of the reports, as you mentioned, is we’re also looking at the character of competition, so, as you mentioned, we’ll look at the 20 nearest practices to a proposed location. So, if a doctor wants to start up or even purchase a practice, we analyse those 20 nearest practices, do they have a website, do they have reviews online, are they spending on Google Adwords or are they small time practices, when you call, nobody answers the phone and half of them, like I said, don’t have websites. And as you said, they are slowing down, so we provide that analysis, and I think it’s a really important piece as well, as you were discussing, are there 10 doctors there or is there 1 doctor there. What do we think about who these competitors are?
Howard: Those winding down selling practices, I mean, the SMP500, one of the biggest [unclear 05:45.3] that’s held the health of the economy is, you’ve got a healthy amount of merges and acquisitions going on. And every time I’ve ever met a dental office that does 2, 3, 4 million a year, every 5, 6, 7, 8 years, whenever the old 5 miles up the road closing shop or puts his practice up for sale, they would buy the practice and roll it into theirs. And you get the third person endorsement, like if I buy Doctor Kent Miller’s practice, he sends a letter to everyone, says, you know what, I’m retiring, and the best guy up the street is Howard and he is going to take over all my patients. So, they all come in thinking, oh, well, I love Doctor Miller and I went there forever and now he wants you to take care of us, and then I take the purchase price of that practice and divide it by the number of active patients that came and became patients, and usually that number is under $150 dollars a head. Then you go and look at their acquisition costs of new customers with Google ads and Facebook ads and direct mail and all that stuff, they might be paying 175 or 200 and still there’s a big difference, because if I buy, acquire you at 200 a head and you don’t know me from Adam, you buy $1 dollar out of 3. But if someone comes in with trust, they buy $3 dollars, so if you come in off the street and I tell you, you have 4 cavities, and you don’t know me from Adam, you’re more likely to say, well, I just want to get my teeth cleaned. I don’t have any problems, let me think about it, but if you come in and you were referred by your sister who says she loves this practise, been going there 10-years, they are great people, and I tell you, you have 4 cavities you are like, dang, you know, I need to get that done. So, the mergers and acquisition activity, in fact, if I was looking at demographics, I’d want to know, hell, I think everyone should just have a demographic report just to see what the state of their area is and always let the practice brokers know that you’re edumacated on MNA activity and will always be open to hearing a deal for anybody retiring. So, you’ve been doing this for a long time, what should you look for in a market?
Kent: Yes, so there is a few pieces of information that we’re looking for, primary considerations, one I think is, is fairly obvious, and that is the level of competition, now the level of competition, though we are going to adjust based off of who lives in the area. So, if there is stronger demand in an area, well, then we can tolerate more saturation. But, not everybody wants to work in a cosmetic environment necessarily, there’s a lot of practice strategies that are perhaps medically focused or maybe just more general PPO focused. So, what we’re looking for, those 3 big variables are a match with a doctors practise strategy and target patient base, the level of competition in the market adjusted to the level of demand, and then lastly, local consideration. So, if you’re in Manhattan or San Francisco, those are probably going to be very competitive markets and I’m not saying that you can’t start a successful practice in those markets, but you’re probably not going to expect that we’re going to find 4000 residents per competitor in those markets, like we might find in new growth markets near Houston, or in smaller towns across the country. So, we do adjust to local areas as well, and I think that it is important to have that local context, as you were talking about with brokers. Well, what is a practice in Los Angeles cost versus what does a practice in Indianapolis cost, those may be two very different figures. And it is important to have that piece of information as well.
Howard: When dentists call you, do they usually say, I don’t care what’s going on, I’m from Dallas, I’m going back to Dallas, that’s where my mama lives, my sister lives, do they usually do that? Or are they more open minded when calling you saying, look, I’ve got half a million dollars in debt, I need to go where I’m needed, where should I go, what’s the breakdown?
Kent: About 80% of them are set on a market that they have ties to, it may be 1 market, it may be 2 markets, maybe they sell, well, I’m from Dallas but my wife is from San Antonio and we’re interested in either market and that category of doctor probably fits about 80% of our clientele. Then 20% will say, you know, I want to be anywhere where it’s the most opportune market, I might have a few other considerations, maybe I want to be near the mountains or maybe I want to be in a city of at least 500 000 people. But yeah, about 20% or so are really wide open and 80% are relatively fixed.
Howard: That’s interesting, and what if someone said to you, they call and say, dude, I am desperate, I’m half a million dollars in debt, I’ll go to Timbuctoo if that’s what I need to do. Is there any areas of the country, I mean, it’s hard to, I mean, I can’t stand the term the United States of America because it makes no sense in economics, you know, no one talks about the EU market, I mean, no one compares Germany to Greece. No one compares Italy to Denmark, so the United States is like 10 different countries flying under one flag. What, where is it, right now a sellers’ market where you put up a dental office for sale and that day you’ll get 3 bids and 1 of the bids will be over the listed price? And where are the markets where practices are more e-liquid assets and can sit around for a long time?
Kent: So, the practice, the areas that we see that are very demographically, competitively opportune are typically high growth markets. So the first level of development is residential development, so you might take a green, what is called green field development, you’ll have a field, a farm field or perhaps some nature that’s developed into residential. But nobody is going to, no commercial brokers or developers are going to invest in that area until they might have tenants, well, if they’re not going to have tenants until there are potential patients or customers for those commercial tenants. So we see the strongest opportunity in areas that report really strong population growth that can be, generally those are in the sub-bell, so Texas, North Carolina, Georgia, Florida, but we do hear a lot from doctors all across the country, that they’ve been trying to purchase a practice for the last 2 years or 3 years and there’s just not much on the market. So that’s a common finding everywhere for us, it seems to be a tight market.
Howard: Yeah, Texas, I mean, that’s a number 1 economy in the state right now, I also think a hidden jewel of Texas, they don’t have any zoning laws?
Kent: Not a lot, Houston in particular.
Howard: It’s the least regulated in zoning, isn’t it?
Kent: It’s, yeah, localities vary, but Houston in particular does not have a lot of zoning laws, they may not even have a planning department, I’m not sure, I know that they were the last major city to hold out on that front but I’m not sure.
Howard: Well, you hold a master’s in Science, City and Regional Planning from The Ohio State University, what do you think of the strategy of laws, they fair unregulated Houston almost no zoning versus a city like, especially when you get up in Connecticut and New Hampshire and Vermont, I mean, these dentists will spend 5-years with lawyers and zoning councils just to put a little monument sign next to the street so that their customers driving by can see it’s a dental office. I mean, asking them to put a monument sign by the road, you’d think you were trying to legalise gambling and prostitution and bring in a casino. I mean, really, it is really tough in those old north east areas to get anything approved.
Kent: Yeah, and I think, and not to put the north east or the rust belt down too far, I’m from Ohio myself, as we’ve mentioned a few times, but in a lot of those markets and in addition to those zoning laws, there’s just not a lot of population growth. So, the patients that are there, they’re getting older, they may not be having kids in the future to replace themselves 10 or 20 years down the line. So, there’s a number of problems we see scattered across those markets but to get back to zoning, by illuminating zoning laws, there’s pros and cons to that, by loosening zoning laws, in my opinion, there’s pros and cons to it. The big pros are that there’s a more perfect spacing of commercial uses and residential uses. So, dental practices aren’t stuck with the 2 mile square area that the central city government decided they could open their practice or the ice-cream shop could open, and with looser laws, and you’re seeing this more now in form based codes which, rather than dictate the youth that this is commercial or residential, what form based code does it says, and typically this is more progressive planning developments, they say this is what the building needs to look like or be this density but here’s some physical restrictions, but we don’t care what you do inside, as long as you’re not running a slaughter house or something like that, but that does allow a more perfect spacing of these uses, you know that you don’t have all the dental practices within a 10 mile radius just clustered in one little area. And you can have more neighbourhood or regional scale practices sort of scattered throughout the area.
Howard: So, you’re, so, your first advice to these young kids is the Sun Belt is better than the north?
Kent: In general, you know, as you said, the United States, or even an individual state, Texas, for instance, that’s a huge area. Not every site in Texas is great and not every site in Connecticut is bad, but generally, if you said I’m going to throw a dart and this dart board, where do I want to aim for, typically the Sun Belt.
Howard: Okay, now same question, urban or rural?
Kent: Well, I think there’s a couple of pieces that go into that, some doctors, for them it’s going to be practice strategy and who they like work with, for a lot of doctors they grew up in either an urban environment or a rural environment and that’s where they want to practice. And I’m not going to say that if you are a country guy, that you need to move to Manhattan to open your practice because that’s the only area of opportunity, but a lot of times we see stronger opportunity in suburban and small town markets, and ex-urban markets may be an hour or so from the city which I think works pretty well for most doctors, because they do want to be near a city, an airport, near major amenities but they don’t necessarily need to open the practice right in the middle, right in the thick of it.
Howard: So, you call that exurban?
Kent: Exurban, yes.
Howard: Spell that.
Kent: E x u r b a n.
Howard: I’ve never heard that term, so, yeah, I mean, I always thought it was silly because I know so many people who live in the suburbs, and they get up in the morning and they probably, they wake up and probably where there is a dentist for every 1800 people, and then they commute an hour into downtown Phoenix where there’s a dentist for every 350 people and don’t do well and if they had woke up that morning and drove that same commute out of town, they would have come to these smaller towns of 17000, 5000, 9000, like Florence, Alloy, and those guys down there are getting 100 new patients a month and just crushing it. So it seems to me that all the people I know with a long commute are commuting the wrong way to work?
Kent: Yeah, and I will say, one thing is, population density is certainly a consideration there, so if you’re in that market of 5000 or 10 000 people and a new practice opens up, that’s going to take a big hit on the level of competition in that market. Whereas if you’re in a more dentistry populated market, maybe it’s just a suburban community or maybe it is the downtown or near downtown market when a new practice opens up, it’s not quite as big of a deal because you’ve got 60 or 100 000 patients to around or amongst you rather than 5000 or 10 000.
Howard: Yeah, when you talk about, yeah, the Deans, for years they kept thinking if they increase class size, that will push more people out into the un-med areas, I mean, some of these states like Kansas, Nebraska, I mean, some of them, you know, they averaged 10% of them are small towns, they don’t even have one dentist. And now what they have found that, what you just said, if you accept a dental school student from Manhattan, he sure as hell ain’t going to go to Beaumont Texas. And so the real answer to rural is not dental therapists and a bigger supply of dentist, the real answer is that the Deans start hiring people and accepting people from small town rural America. And if they would just sit there and other countries have figured this out, too, you want people to go to urban, I mean, to rural outreach you’ve got to, then it’s got to be your dental students. And they should just ask you, you know, the first question, you know, do you like Rolling Stones or Garth Brookes, and if they say Rolling Stones, you’re vetoed, you’re out, get out of here. And I mean, you see a bunch of country western good old boys from small towns of 5000 out where, I mean, if you accepted a dental student from every damn rural town in America that didn’t have a dentist, if you did that for 4 or 5-years, problem solved. Because you’re not going to get the city boy to go turn into a country boy, just like the country boy doesn’t want to live in Scottsdale. I mean, I found it very hard, I grew up in Kansas and I moved to Phoenix, and to me, it was a culture shock that the police would get made when, I had 4 boys, when my 8 year old was riding his mini bike down the street and, you know, and the other one shooting a 22, I mean, this is kid’s stuff, I mean, what kid doesn’t ride around on a mini bike and shoot with a 22. I mean, but in Phoenix we were just bat shit crazy and, you know, the whole neighbourhood was like, what the hell is going on in that house down there. So, they just need to go country boy, and a lot of that is who you marry, and a lot of dentists, the only ones that come out of school that I know, that I see were, year one they’ll do a million and take home 350, they’re always the only guy in a town of like 3000 or less and the only ones that do it is LDS. Because they come out of school with already 2 kids walking, 1 in the oven, they might have 5, 600 000 thousand dollars in debt and they don’t need the big city because their party is the family, they don’t care where they go, they’ve got the whole, the whole fun and games all wrapped up in the family. They’ll go someplace where they’re absolutely needed and just crash it.
Kent: Yeah, you know, actually, I wish I had the commenter's name but it was a comment on Dentaltown actually, there was a thread about, should I look, you know, everywhere seems kind of saturated, I thought about San Francisco, I thought about Denver, what should I do and there was a really, I thought insightful comment from a doctor, somebody who I don’t think was a demographer who said, well, you know, do you want to live next to a major airport, and next to the ocean and next to the mountains,well, so do a lot of other people. And especially dentists who can afford to do so, but if you’re willing to live in a town that is maybe not quite as much of a party, you might be able to find quite a bit less competition.
Howard: Yeah, and what I’ve seen, you know, everybody wants to build a dental office that looks into the Pacific Ocean from San Diego all the way to LA, Monterey, San Fran and they just die, I mean, almost nobody is successful in doing that. And then you’ll find other people who’ll go an hour inland or all the way to Bakersfield and work 4 to 10 hour days Monday through Thursday, and then get in their aeroplane or their Porsche and fly into LAX and then have a million dollar condo looking over the ocean Friday, Saturday and Sunday. Those are the people, I mean, if you want to live in Aspen, well, then go find some little town in Colorado without a dentist, do 4, 10’s and then spend a 3 day weekend in Aspen, you know, but I’m pretty sure Aspen doesn’t need dentists. So, if someone says to you, what’s the perfect location, is there such a thing as the perfect location?
Kent: We don’t think so, and I think part of our role is to set expectations as to what you might find in the real world. So, the market is imperfect, there’s not a 100% correlation between supply and demand or population density and supply, and you do find hidden gems. But we do work with, especially a lot of earlier phase doctors, uhm, who want to find that location that has 10 000 alone saturation and medium household income is $150 000 dollars a year, and they’ve got the property on the corner, and by the way, the property is cheap. So, there are typically trade-offs, you know, 95% or maybe even 100% of the practices that we look at, we can say there is some trade-off here, and if you want to be in an area with strong demand, well, other doctors probably figured there was strong demand there and they opened up. So, there isn’t, typically there isn’t really a perfect location, there’s not one specific thing we’re looking for, it varies from doctor to doctor, but often, or should I say, almost always there is some kind of trade-off, and I think that that’s a big role that we serve in those early phases.
Howard: Yeah, to me the rules of thumbs are up, if you’re 2 hours from a major airport, you almost don’t need demographics. Some of these kids who are smart as hell, I was talking to one kid the other day, he found a county that had no dentists, with 7000 people in it, 2500 were in the town, 7500 in the county, no dentist. I mean, he just won’t, I mean, he won’t have to take a PPO so everyone else charges $1 dollar for a crown, but they sign up for all these PPO’s, so $1000 dollar crown, they have to adjust it off to 600 and their overhead on that crown might be 400, and then they go into a small town, they won’t charge $1000 for a crown, they’ll charge $1200 for a crown and they won’t have to adjust at all for a PPO price, I mean, they’ll go into a county like that, they won’t take no medic aid or medic care, no PPO’s, nothing, and they’ll sit there and the first or second or third year out of school, in that one year they will show the IRS, what their entire student loan and debt was. I mean, they could walk out with $350 000 student loans and in year 1, 2 or 3 they made that much money. And if they live below their means and just stay in an apartment or whatever, and sock away cash, I mean, that is just, that’s, well, like you say, 80% don’t want to do that. So, when you say you’ve got to match the practice strategy, what is, some kids are listening to you in dental school right now or they’re working an associate, do you see any types of strategies more successful than the other, for instance, does everybody want to be a cosmetic dentist and no one wants to do medic aid? Or I mean, is there any business strategies that you think are in more demand and more successful than others?
Kent: Well, I think to go along with the theme that we’ve been talking about a lot so far is, and this will be an appropriate practice strategy in many cases, would be bread and butter dentistry. So, if you’re willing to live, you know, an hour or so from the city in those exurban markets where you’re a general family dentist, but there’s not a lot of competition or maybe no competition, that’s a really clear way. I think probably the most predictable way to do fairly well, whereas if you want to open a cosmetic practice and buck outside of Atlanta or uptown Dallas, it’s going to be a much more competitive market and there’s going to be a lot more information to filter through, even after you’ve done your demographic study. You’re going to, over the course of a few years, you’re going to get to know who the other practices are in the area and how they’re positioning themselves within the market. There’s a lot less of that information to filter through when you open a general family dental office an hour outside of a major city.
Howard: You know there’s some, also amazing practices, you’re down there in Texas where the Texas dental association, the branch of the American Dental Association, some boy down there was saying he was specialising in implants, so they sued him because the ADA only has their 9 specialities and that is not one of them, there are oral surgeons and periodontists and they don’t like this guy saying that. So, they went to the court and Texas court said, ADA, you’re a club, you’re a membership club, you’re not a, gosh, darn government agency, we don’t care what you say. And furthermore, this guy does specialise in implants, they’re even lying to the consumer and so now that specialties, you know, there’s no state board of dental examiners that cares about your membership club specialty. But I’ve found a lot of dentists who say they’re 10 years out of school and they just love endo, or they love perio or whatever, but I’ve seen they’re mostly Endodontists, so they’re married, they’ve got kids, they can’t really, they don’t really want to go back to Endo school. But then they’ll go find a small town, 50 000 people, and there’s 10 dentists in there and he’ll just walk around there and press and say, look, I’ll move here and set up, and my practice will be limited to Endo, and I swear I’m not going to do the crown, I’m not going to hire hydro’s, I’m going to act just like the Endodontists in the big city, practice limited to Endo and you would not believe how many people that, even general dentists refer Endo do, that think that Endo guy is an Endodontist who never even went to Endo school and they just practice limited to Endodontists. And of course, way back in the day, like when, I mean, way back when Ben Johnston who started [unclear 28:40] they didn’t have the Endo speciality so they were grandfathered. And John McSpadden who made the McSpadden Condenser, I mean, you know, they were grandfathered in, and most dentists think that those are 2 of the greatest Endodontists that ever lived. So, that’s another demographic mine, if you’re sitting listening to this and you’re saying, my God, I wish I could just do Endo, or I wish I could just do perio, or I wish, you know, whatever, that’s another demographic play because you actually call the competition. This guy said I’m looking at Nevada Masury, you actually call them?
Kent: Yeah.
Howard: In fact, tell me what do you, there’s basically only 3 people I know that do this in dentistry which is kind of weird since there’s 211 000 Americans who have licenses to practice dentistry. What does dentagraphics.com do differently? And by the way, I love that YouTube video you have on there, and I was going to ask you if I could put that into the Podcast?
Kent: Yeah, yeah, absolutely. So, Dentagraphics, I think there’s a few things that we do really well and the first one that I always like to emphasise is that the reports the backbone of the reports is the data that goes into it. So, it’s extremely important that both the demographic data and the competition data is accurate. There are databases out there, when you register your business, you tell, I forget who you’re registering with but there’s what’s called the North America Industry Classification System, NAICS code, and you say I’m a dental office. But those businesses aren’t always registered or the business isn’t always registered at the physical actual location of that practice, so we go those lists and we found significant errors in them. Not to mention they didn’t say really who was practicing at those locations, so we developed a method that actually involves a research team going through the combination of a few databases and calling those practices and making sure that they’re at the address that we have on file, and that they’re within the specialty that we have on file. So, if I’m working with a doctor that says, hey, Kent, I opened up your report here and I see there are 7 practices within a 7-mile radius, can you tell me who those 7 practices are? Absolutely, we can tell you who they are, where they’re located, if they’ve got a website, their phone number, so we’re going the extra length that the data in the report is accurate. Secondly, I think that we had a really strong graphic design team help us out in the beginning, and it’s really made the reports easy to read the way that everything is laid out and I know that one of the things that a lot of doctors say is that, hey, I went to school to be a dentist, not necessarily to run a business like this. So, help me figure out what do all these numbers mean? So, I think we do really well with laying out the reports, and lastly, we include a complimentary consultation call with every report where you’re on the phone with the person who wrote your report to talk about the findings, any questions you have, hey, how does my site, here you said it looks pretty good but, you know, I’m looking into Kansas, I grew up in LA, what if I thought about LA, what does that market look like, how might this site compare to a typical site in LA, and we can provide that info. So, yeah, those are the 3 things that we do differently, and to get back to competition we actually, even in our single site study report which is the very last report when you found a specific location, we list out the 20 nearest competitors, the name of the practice, the address, website, phone number, Google reviews, Facebook likes, Yelp reviews, Google ad spend, and really talk about who they are and how we think that might affect the level of competition that’s reported. Because not all practices are created equal necessarily.
Howard: For my guests, is the drive to work right now, so if you follow me on Twitter, I’m @howardfarran, and I just retweeted, you’re @dentagraphic, you’re on episode 4 of the delusion dentist?
Kent: Yes.
Howard: Was that a fun Podcast?
Kent: Yeah, that was King Burgers, he was fun to work with and I like his title there, the delusion dentist, and it’s not all sunshine and roses and you don’t just get to wake up and make half a million bucks, if you want it, you’ve got to put some work in. That was a fun conversation, and actually, you mentioned earlier that doctor, that 30-year-old doctor who’s bouncing off the walls in the morning and I immediately thought of him, I talked to him earlier in the morning and he’d already gone to workout, and he had some music blasting when I first called him and I was impressed.
Howard: That is so amazing, and he lists the show on the Dentaltown apps, so if you listen to this on iTunes, there’s a quarter of a million dentists on Dentaltown, and to think you’ve got a quarter of a million dentists in your iPhone, in your pocket to ask any questions. But we started that genre 2-years ago and now we have 39 dentists posting Podcasts and Delusional Dentist is one of them, some of these Podcasts on Dentaltown, crazy high number of views. There’s, let’s say this guy has a how to open a dental office, he has posted 115 Podcasts and so far, he has 675 128 views, that’s crazy, and most people find the Podcast first on the Dentaltown app and then they subscribe to it on iTunes, so we’re talking about, he’s got 675 000 views, I bet his iTunes views blow that off the charts, you know what I mean? I mean, crazy. But the other one I retweeted was the fastest growing suburban markets according to realtor.com and you talk about, your top 10 was Northeast Denver Colorado, Wylie Texas, Dublin California, Daffy Texas, Palm River-Clair Mel Florida, Vista East Florida, Cutler Bay Florida, [unclear 34:57] Williamsburg Tennessee, Apex North California, and I thought that was just so interesting, I’ve never heard of one of those cities, never even heard of one. So just because you’re in dental school, you know, the biggest error in human thinking is they always know what they know but they never know what they don’t know. And you just gave me a list of 10 towns that I’ve never even heard of, I’m just wondering on that Wylie Texas is that where they film that Wylie Coyote and the chasing, the Road Runner is that the home spot of the Road Runner, that’s amazing. Another demographic thing that’s amazing is, I think one of the craziest things is that metrics we use and the value like the SNP500, it doesn’t, you know, when you go get a report from a realtor about it, well, here’s a practice for sale and here’s its estimate of what it’s worth. And they don’t even mention the employees, there’s no HR, there’s no human capital and we sell a service. Like what if there were two identical practices for sale and one the average staff member had been there 15 years, and the other one, the average staff member has been there 2-years, it doesn’t show up in any of the metrics. What if you were going to pick an airline stock, say you want to verify the airlines and 4 or 5 different sectors, and you couldn’t pick between 2 companies and oil and gas, and one had, the average employee had been there 15-years and the other one had an average employee had been there 7-years. Well, if you have a PHD in economics, you know, that’s going to affect the bottom line. And another thing they don’t do on the practice evaluations is they don’t give you, they just tell you what the office produces and collects, they don’t tell you the value of what the doctor refers, so a lot of times, I’ve seen some tragedy train wrecks in my back yard where some guy buys an office for a lot of money, and the guy was placing a lot of implants and doing a lot of bone grafting, and that kid didn’t do that and didn’t want to do that and wanted a referral, and it’s like, well, you paid for a million dollar practice and 300 grand of that was implants, and now you’ve bought a million dollar practice and referred 300 000, you know, total mismatch. And the biggest deal is when you go in there and you buy some old man’s practice who referred out most all of his Endo, if you do your own Endo. Or he referred out all of his extractions, if you do your extractions, the biggest one I ever saw which was crazy, crazy, crazy, crazy was in Palmdale, this old man only did amalgam, I mean, he patched everything with amalgam and, I mean, for 45-years all he did was MOD amalgams and when they would break, he would do it. And then the guy who bought the practice doesn’t do amalgam and he has a little 3 tire practice that he bought for about 350, and about 3 times a day with no insurance, one of those MOD amalgams would break in half and he would come in and he’d just prepare for crowns. He was doing 3 or 4 crowns a day out of the gate, so there is so much more and that’s why my favourite stock investors like Warren Buffett, he’s the number one investor of all time, he stays in Omaha, he doesn’t even want to go to Wall Street, he doesn’t want to get caught up in that stuff. And the other one, Peter Lynch, competing the street, he said all the other brokers want to stay in Manhattan and read all these sheets and reports, he says, what I would do is I’d just, every Monday I would leave town and I would drive a big circle and when I got to that place, I wanted to see was it clean, when I walked in there was I greeted, when I said, hey, can I see Kent Miller, and they said, oh, he’s not here. And I was like, oh, can I look around, oh, we’d rather not, and he was like, this place is crazy, and then he’d walk into another place it was clean, he was greeted and he said, yeah, I’m a stock analyst in Wall Street for a company, and they’d say, oh, well, let me introduce you to Kent Miller. And he’d walk back there and you guys would chat and the guy would show off and show him the energy, and then he’d get back in his car and he’d say, I don’t care what the reports say, that’s the guy you backing. So, understanding all this stuff is just so important, and as far as those millennials, so many of them think they’re going to work 9 to 5 Monday through Thursday and be a millionaire. The 9 to 5, that’s true, you can be successful 9 to 5, but 9 to 5 means 95 hours a week, it’s a lifestyle and the people who come out of dental school, and they’re humble and hungry and they do that 9 to 5, 95 hours a week for a decade. You do that for a decade you will live like no one else for several decades till you drop dead, so, do your 95 hours a week and just crush it, so what else do you think my homies need to know?
Kent: Yeah, so, I think one of the things that you were mentioning purchasing a practice and we work both with start-ups and acquisitions, the majority are sort of inherently start-ups but we absolutely do work with acquisitions as well and as you’ve been talking that, well, let’s look at the details beyond just the top line numbers of what this practice brought in last year, and thus it is worth this much. What sort of service mix is being offered and how does my own mix and services match with that mix. Beyond that, maybe it was a doctor who had sort of being winding down for more than just 2 years, maybe he’d been winding down for 10 years and really, he is in a really opportune market without a lot of competition but he just hasn’t put in the work for a while. So, I think that that can help reveal the level of competition as well or maybe he was just somebody who was just killing it in the most competitive market, and the average new doctor may not be able to walk in and put up the same kind of numbers. So, I think that’s sort of the medium to long term perspective that we provide for a lot of acquisitions.
Howard: Now, and so I am wanting to change gears completely, this is June 22, and 2 or 3 weeks ago you saw 6000 kids walk out of dental school and they think they know all the secrets to the university because they got A’s in calculus, physics, geometry, and algebra, and it’s going to take him a few years to realise that everything they learned, almost 90% of it was just useless bullshit, especially the history philosophy, algebra, and if you know the difference between geometry or trig, all that means is you have a lot of student loan debt, it’s never going to help you. What advice would you give those kids?
Kent: Yeah, so, I think, and we’ve touched on this a little bit as well, but really do your research when you’re starting out. And don’t just say, hey, yeah, I got A’s all throughout dental school and all through college and I’m going to open up in uptown Dallas and I’m going to kill it. Really, do your market research, and figure out what’s going on in that area, and of course I’m saying that because that’s what we specialise in. But I think there’s a lot of importance to it, our reports cost, all of them are less than $1000 dollars, and if you see a few new patients every year because you’re in an area that is significantly less competitive, you made your money back so quick.
Howard: So, what if she was going to buy a practice and she talks to a practice broker and they say this, and she says, I want, I want dentagraphics to analyse this location, I want to buy an office there. The average office, you know, the hotspot of the market, the highly liquid dental practice is 750, by the time that practice gets over a million and half to 4 million, you pretty much can only sell to Hartland or some big major DSO, it’s really no liquid asset but if she was going to buy a practice for 750, how many times can the buyer say I want a dentagraphics.com report before I buy this, do you get many practice transition consultants getting a demographic report from you to attach to the packet of information?
Kent: We do, both transitions and commercial real estate brokers focusing on start-ups, and what that provides for their clients is an unbiased opinion about these locations because brokers, whether they’re doing start-up real estate or they’re doing a practice transition, are being paid when the deal closes. And for them to be transparent with their clients and say, hey, we’re going to have this other company come and have a look at this site, and they’re going to tell you what they think about it. Now we’re not the end all be all because you’re in a competitive location, that doesn’t mean you can’t succeed based off of other factors that you’re, other factors in the market or how you run your business. But we provide that level of unbiased opinion, and as a result, we do have relationships with brokerages, practice brokerages as well as commercial, real estate firms who are looking out for their clients, and if clients, if the doctor is referred to me from a real estate agent, I’m not hesitant to say, if I feel think the location sucks, that it sucks. The real estate agents, for the most part are pretty understanding of that and they realise that they’ve got a little more work to do.
Howard: Yeah, and on Dentaltown, what are the most common questions about demographics that you see on Dentaltown? What are homies usually confused about, talking about? What section is that under on Dentaltown, do you know?
Kent: I believe you have a demographics section on there, or demographics and practice research, but I think they fall into 2 types, the first are the really early on doctors, they might even still be in dental school and they say, hey, I grew up all over the country, I have no ties to any city, where should I practice? And as I mentioned earlier, we generally recommend the Sun Belt, exurban communities and you went through that list earlier of the top 10 growing markets in the country, they’re all in California, or south of the Mason Dixon line, you didn’t hear of anything in Connecticut or Ohio or Michigan, and that is where new patients are going and that’s where new practices, there’s room for new practices.
Howard: Actually, the entire globe is moving from the poles to the equator, I mean, the entire 7 500 billion herd of humans has been migrating towards the equator for as long as they’ve been walking around the earth.
Kent: Air conditioning has done wonders for that as well, the prevalence of air conditioning.
Howard: Yeah.
Kent: So, yeah, we get that question a lot and we’re always happy to talk to a doctor about their specific needs or specific scenario, as well maybe somebody says I’m open to anywhere except for Florida, I hate Florida. And we can help with that, or maybe they say I’m open to anywhere, tell me just where are the best markets and we can help narrow that search down as well with some considerations, well, do you want to be near the coast, do you want a small town, a big town, a medium town? And then the other one that I see on there a lot is, here’s my current situation, I’m looking at a practice, there’s 2200 residents per dentist here, medium household income is $65 000 dollars a year, what are your guys thoughts on this? And that, you know, we can help with that when we see all the numbers and we’ve got our formula plugged in, and we’re always happy to provide info. But I think those are the two common questions right at the beginning and right at the end of the process.
Howard: You know, what do you, I think there’s a, whenever there’s a change in demographics, there’s a change in the business, and I think, like when the birth rate falls down, you know, that changed things. You know, when dental school went from almost all males to almost all females, most people said, well, something’s got to change there, I mean, it’s too big of a huge hitch. I think these driverless cars is going to be the game changer because what I see in the driverless car is that most people will tell you that when they work at a big company like Intel, and they’re in their cubicle, you know, 30% of their day is interrupted by some idiot coming by and saying, hey, what did you do last night, hey, did you see Game of Thrones, and all this, and they just aren’t left alone. So, they say, well, if I work from home, I’m so much more productive but then the people who work from home have spouse, kids, you know, all that noise. And to me, the driverless car is really going to push the suburbs out further because imagine you’re at home, you can’t really get anything done and you get in your, just a box and it’s just a desk and your computer and you’re just a 2-hour commute from, 2-hours from downtown and for 2-hours uninterrupted nobody is talking to you, just hammer out all your reports, and email and excel. Then you go into work, you do all your meeting, bullshit, as soon as that’s done, you go back and you finish your notes on a 2-hour commute home. I think driverless cars could change the complete thinking about location, location demographics for the whole entire country.
Kent: Transportation changes everything in real estate, prior to cars, where did people live? Cities were super dense, there weren’t a bunch of parking lots downtown because people were walking, people were taking carriages and then after a while you saw you, what were called streetcar suburbs and that allowed, and this was prior to the popularisation of individual cars and that allowed a little bit further development out, those are typically the older suburbs and most cities. And then you saw the car come along and then things really started spreading out in those locations that used to be out in the middle of nowhere when Ohio State became a school, and it’s only about 2-miles from downtown Columbus, it was a rural area. Which is shocking to me because you can see the downtown from Ohio State, now you can see the skyline and it’s a very urban setting, and the potential to change that with driverless cars, it allowed people to live 2-hours from town or even further, and especially with the way that jobs are moving towards working remote and working from home and allowing people to live where they want to live. Absolutely reducing the necessity to live near where you work, will change real estate, it will change residential real estate and that will have a huge effect on commercial real estate as well.
Howard: I’m very impressed with your analysis, I mean, you deal with the master’s science city and regional planning so I’m going to have you weigh in on this. Half my patients that ever mentioned the historical society, half of them love it and they’re protecting some building out here that was made by somebody they named a street after, what’s that guy’s name, and what’s the big famous guy, the designer Frank Lloyd Wright Boulevard, and you know, he made some little hole in the wall restaurant so nobody wants to tear it down. And then the developers call the historical society, the hysterical society and say, if those guys were dictators, we’d all be living in cattle towns with saloons and places to park your carriage and tie your horse up. What’s your assessment? Do you think they’re more the historical society, or the hysterical society?
Kent: Well, I think there are good historical societies and there are probably some hysterical societies, as well. What creates value in places that people love, it’s the uniqueness of that place, why do people love Manhattan or Boston? Or a lot of cities have an area or two that people just love and it’s touristy or it’s a very popular residential area, and the strength of that place and its uniqueness is what preserves that value. But the same point in time, you can’t have a historical society hysterically start blocking new development to the point that everything stalls out, and you see this, it’s a big issue right now in California, particularly in the Bay area. Where rent for everybody has just gone through the roof, and part of that is everybody makes $10 million dollars a year out there or there’s a lot of them who do. But part of that is the really strict control on the supply of buildings and there’s these two-story buildings right in the middle of San Francisco, we can’t knock them down, they’re so old. Well, that means everybody else has got to start driving from 2-hours away because there’s no new supply in that market, and now who can afford to live in those houses? Maybe it’s somebody who’s local and who’s high up at one of the tech firms, or maybe it’s a Chinese investor who doesn’t even live there and they want to buy it just for the value of the real estate, so, I think there’s two sides to it, and historical societies, they do serve a good purpose but they can’t get out of control.
Howard: Yeah, so when you said to me somebody says they hate Florida, they don’t want to practice in Florida, and it’s so funny because if you understand demographics, you really know Florida. I mean, Florida is several different countries, I mean, Miami is the heart of Latin America and then north of Miami, all the way to Boca Raton, every single person that lives there is from New Jersey and New York. By the time you get up to, you know, up to Gainesville, you’re in Southern Georgia. I mean, it’s all country music and country folk people, and I think that Florida is at least 3 different states, you know.
Kent: Yeah, absolutely.
Howard: So, yeah, there’s a lot of stuff in there and but, yeah, I really do think the electric car is going to change everything, and it’s amazing that we’re sitting here talking when the guy at the forefront of that Uber, the CEO has been fired and stepped down, what do you think of that move?
Kent: You know, I think there’s been a lot of hype about Uber and a lot of the media opinion recently has been about Uber is Silicon Valley out of control, and I think Uber, or maybe it’s not Uber, maybe it’s Uber’s replacement in the future, maybe Google masters it first, has, Uber might have been stealing some of their technology, I do think the driverless car is going to get there, I don’t know who’s going to do it. But I think it’s going to get there both from a personal use and I think from a commercial perspective as well, and that’s where the big money is going to be immediately. All of a sudden you don’t need nearly as many truck drivers anymore and that will have huge effects on the economy as well, which will ultimately have effects on dentistry. So, it will be really interesting and it’ll be tumultuous times and hopefully in a good way.
Howard: Yeah, I’ve already sat down for that intellectual property, I’ve a big feeling that guy is so aggressive, he probably hired a guy from Google that brought a lot of their knowhow with him. That’s my guess based on nothing. But he just seems like that type of guy, but I think it’s another on the demographics, like you said, like when you’re in San Francisco where the government is trying to preserve yesterday and won’t let you tear anything down and knock it down. When I was in New York, I was lecturing up in, I forgot where were we in Buffalo when I lectured in New York. And they banned Uber, it’s like, really, dude, your best idea, your best idea is to block the new technology to preserve a cab driver’s job, really? But when everything about demographics, I always think back when Hong Kong was handed back over from Britain to China, and a lot of the richest Chinese all move to Vancouver because Vancouver is the shortest distance from Hong Kong, it’s like on for a ship and then when you go to like Seattle, that boat is going to have to sail another couple of hours, you know, all the way down. And those Chinese millionaires were coming and buying the biggest and nicest homes in Vancouver and then levelling them because they were Feng Shui or whatever they wanted. These people were outraged because here’s this beautiful neighbourhood and they’re just levelling, you know, these historic homes and I thought it was the coolest thing in the world, and I’m like, this is great, you should be so lucky. They could have gone to any country in the world and they decided to knock down the house next door to you, that’s a good thing. But hey, I just want to tell you that, Ryan, let’s push out his YouTube video, I’m going to push out your YouTube video today on all my social media and then do this Podcast because, again, it’s the most important thing that a dentist can do, is just get the damn demographics right. And they know, they know it’s true, they know no one is talking at dental school that, I think I’m going to go to Iraq, I think I’m going to go to Syria, Syria is my best idea. It seems to be in the news, everybody is focused on it, yeah, going to Syria would be your worst idea, so, you know, you won’t go to Syria, you know, you won’t go to the Congo, Afghanistan, and when you look at a market like Texas or Florida or the Sun Belt. Like, just within Florida, just like I said, I mean, there’s everything from Brazil to Mexico City, to New Jersey and Newark, to country music. I mean, there’s so many diamonds in the rough and you’ve got to be smart about this, how do my homies, what if they just want to talk to you? How do they get a hold of you?
Kent: Yeah, so, certainly, they can call the company line and sometimes I answer that phone and sometimes somebody else.
Howard: What’s the company line?
Kent: We’re 888 715 1044, it’s right on the website as well.
Howard: 888 715 1044?
Kent: That’s right.
Howard: The website is dentagraphics.com?
Kent: Correct.
Howard: What if they’re emailers?
Kent: They can email me at Kent, k-e-n-t@dentagraphics.com and certainly, if they call and I don’t answer the phone and they say, hey, I want to talk to Kent about something, I’d be happy to talk to them.
Howard: You know, you’re from Ohio, where’s Kent State?
Kent: Kent State?
Howard: Yeah?
Kent: It’s North East Ohio, closer to the Cleveland area, Kent Ohio, actually.
Howard: Oh, it’s in, Kent Ohio is Kent’s State?
Kent: Yes.
Howard: So, were you born in Ohio?
Kent: I was actually born in Connecticut.
Howard: Okay, I just wanted to know if you were named after Kent State, I figured your dad went to Kent State and was a big Miller Brewing fan and he just drank a lot Miller beer at Kent State and named his son Kent Miller?
Kent: Can’t comment on the Miller topic, but we’re all Bud guys in my family.
Howard: Alright, well, hey, seriously, thank you for all that you do for dentistry, thank you for all that you do on Dentaltown, and you’ve just got to beat it into these kids, you know, hopefully this Podcast gets out to a lot of people in dental school, they’re never going to teach you any of this stuff and it’s the most important stuff. And if you, and saying that you’re going to Florida is all that, I am 100% Irish, that’s like saying all Irish are alcoholics when it’s only 38% of us, you know. You can’t label an entire state as a yay or nay for dentistry and even going into San Fran where they have way too many dentists, the Asians, the dentists that were born in Asia, they will analyse San Fran and say, okay, well, all the dentists born in America, they all work Monday through Thursday 9 to 5 and then they’ll find an area that’s 5-miles by 5-miles where not one dentist is open on Saturday or Sunday, and they’ll go in there and they’ll do 5 to 10 emergency patients on Saturday and Sunday, almost all of them in a nice neighbourhood getting a $3000 dollar root canal, build up and crown and they’ll do $30 000 dollars on Saturday and $30 000 dollars on Sunday. And then all the dentists born in America say, well, I’d never go there because there’s 20 dentists on that corner. Yeah, but if they’re 20 American born dentists, they’re lazy as hell, I mean, they are, dentists are lazy. I mean, you go into a dentist’s office, they work Monday through Thursday 9 to 5 and your 11:00 cancels, the staff will sit there for an hour and at 11:30 someone will call and say, yeah, I broke a tooth, can I come down? And they look in the afternoon and say, well, we don’t have an opening. Like, well, you’ve been sitting here for an hour, why don’t you have them come down right now and work through lunch and they go, oh, no, we’re not working through lunch, we’re 10-year teachers with the school district, where we work at the department of motor vehicles, they can almost not even break, even for the day and close at 17:00, and at 16:30 someone calls and says, hey, I’m in severe pain, can I come down? I’m sorry, we all work for the dental government association and we’re all entitled to leave at 17:00, no one here hustles, stays late unless they’re a dentist not born in the United States. And every practice management consultant will tell you that privately at a table, but they won’t say it publicly because they think it’s politically incorrect, and I view politically incorrect as, I’ll tell you because if I love, adore, honour and respect you, I’d want to tell you the truth. And the truth is all the practice management consultants will tell you that the dentists in America who weren’t born in America, they hustle, they hustle, they work harder, they work extended hours, they work weekends. I’m in Phoenix Arizona and if you had a toothache in Phoenix Arizona, you’re completely out of luck but if you’re in a car wreck and broke your leg, hell, an ambulance would pick you up in 5-minutes and take you to a dozen different hospitals, and they’re full staffed so there’s a lot about demographics. And you really got to analyse your strategy, your competition and, again, like when you’re my age, when you’re 54, what’s the difference between a Saturday and a Sunday. By the time you get really old and smart, would you rather go to the mall, be off on the weekend and go to the Mall on a Saturday and Sunday when every yahoo’s there? Or would you rather go Monday morning, park right by the front door, walk right in, the lady helps you, you get what you need, you’re out in 10-minutes.
Kent: Yeah.
Howard: Hell, by the time you’re 50, you hate the weekend is when you bury yourself in the house and bar the front door because that’s when all the crazy, same thing on the streets. I mean, by, I talk to my police officers, they say in Phoenix Arizona, they randomly pull over people at 08:00 in the morning, 10% get a DUI, by the time it’s 09:00PM, it’s like 20%, by the time it’s 11:00PM, it’s like half, and by the time it’s 01:00 in the morning on Friday’s and Saturday’s, it’s 90%. So, when you’re 54, you know, you pretty much don’t want to go out after dark.
Kent: Well, I mean, you know, my thought on that, and I love working hard and I think the other thing though is the drive for, the eventual laziness is the mother of all ingenuity and all inventions, and the guy that invented the nail or whatever, he did it because he realised this is going to make my job a lot easier. So, I think working smart goes a long way, as well, rather than sitting there banging your head on the wall, get a hammer and knock it down. So, I think we fit nicely into that demographics and a lot of other perspectives on the business side of dentistry, as well, don’t make decisions out of your head that make you have to work 1000-hours a week when you could’ve made a smarter decision that would let you work 60-hours a week and produce the same.
Howard: Yeah. Alright, well, again, thanks for all you do, Kent Miller, and on that note, I’m going to go and have me a Miller Beer and you say your name was German Miller? Which means the Miller, which means the Miller hops and grains, and that would have been wheat and barley, and all that. My last name Farran in Arabic means Baker, Smith was a blacksmith, I love name origination, there’s a lot of, when you go back to the old world, a lot of these names all meant an occupation and a lot of kids grew up in America and they don’t realise because the guy, 80% of the people that came through Ellis Island couldn’t read or write. On that note, thank you so much for coming on the show.
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