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Feb. 15, 2022

Eric Kinariwala (Capsule) - How one visit to pick up his prescription led him to create a new type of pharmacy

Eric Kinariwala (Capsule) - How one visit to pick up his prescription led him to create a new type of pharmacy

Our guest today is Eric Kinariwala, founder and CEO of Capsule. Capsule is the pharmacy that delivers your prescriptions, the same day, for free. We discuss the pharmacy visit that led to his aha moment of founding Capsule, his approach to integrating technology with picking up your prescriptions, and how he approached expansion and scale.

Here are some of the questions I ask Eric:

  1. You started your career as an investor. Was your goal always to become an entrepreneur.
  2. Why did you decide to start Capsule?
  3. How did you figure out this was a service other people might also like to have? Did you do any market research?Why was it so badWhat’s the role of the pharmacist?How could you go solve the problemThe first thing was to build a pharmacy?How do you deliver the highest quality experience?Why did doctors, consumers love it at the early days?
  4. When you were thinking of starting this business, what were the first steps and the first questions you had to ask to see if this was viable?
  5. Did you have to first establish relationships with the doctors so they can send the prescription to you all, what was the process from sending in a note to delivering the medication?
  6. Winning together
  7. Everybody needs some looking after sometimes
  8. How were you able to sell prescriptions online? Was there any regulations you had to jump through?
  9. What were some of your early challenges?
  10. What were specific medications you first looked at when it came to selling? How did you think about your wedge into the market?
  11. What was your process of raising capital?What was the biggest reason why an investor passed?
  12. What was the process of finding drivers and building out the delivery business?
  13. How do you think about the future of DTC healthcare?
  14. How did you approach customer acquisition in the early days?
  15. You started in New York, how do you approach market expansion?
  16. What’s one book that inspired you personally and one book that inspired you professionally?On the wings of eagles - Ross PerotThe checklist manifesto
  17. What’s one piece of advice you have for founders?
Transcript
WEBVTT 1 00:00:12.429 --> 00:00:17.030 Hello and welcome to the consumer VC. I am your host, Michael but 2 00:00:17.109 --> 00:00:20.829 and on this show we talked about the world of venture capital and innovation in 3 00:00:20.989 --> 00:00:25.460 both consumer technology and consumer products. If you're enjoying this content, you could 4 00:00:25.460 --> 00:00:30.420 subscribe to my newsletter, the consumer VC DOT sub stackcom, to get each 5 00:00:30.460 --> 00:00:34.700 new episode and more consumer news delivered straight to your inbox. Our guest today 6 00:00:34.820 --> 00:00:40.009 is Eric Cannery Wallah, founder and CEO of capsule. Capsule is a pharmacy 7 00:00:40.090 --> 00:00:44.729 that delivers your prescriptions the same day for free. We discussed the pharmacy visit 8 00:00:44.850 --> 00:00:50.640 changed his life and became the Aha moment to founding capsule, how he built 9 00:00:50.799 --> 00:00:55.600 conviction in understand that this was a real opportunity and one that he could execute 10 00:00:55.679 --> 00:01:00.600 on, how he thinks about the integration of technology and pharmacy, as well 11 00:01:00.679 --> 00:01:04.310 as his approach to expansion and scale. Without further ADO, here's Eric. 12 00:01:15.510 --> 00:01:18.780 Eric, thank you so much for joining me here today. How are you? 13 00:01:19.260 --> 00:01:21.659 Hey, Mike, I'm great. Thanks for having me. Oh, 14 00:01:21.739 --> 00:01:25.019 it's an absolute pleasure. Thanks so much for taking the time. So you 15 00:01:25.219 --> 00:01:30.579 started off your career in finance and as an investor. Was the goal always 16 00:01:30.819 --> 00:01:36.290 to become an entrepreneur? Or what kind of was your attraction to entrepreneurship? 17 00:01:36.329 --> 00:01:38.049 Yeah, it's I spent the early part of my career as an investor and 18 00:01:38.129 --> 00:01:41.769 I was investing. It's kind of funny. I was investing in retail companies 19 00:01:41.810 --> 00:01:45.730 and healthcare companies and tech companies and that combination of things, like when I 20 00:01:45.849 --> 00:01:48.680 was twenty five, didn't make any sense in the world and now that that 21 00:01:48.840 --> 00:01:52.239 look back and connect the dots, that was maybe the perfect set of things 22 00:01:52.319 --> 00:01:57.159 to start my career doing. But you I've always had a the entrepreneurial spirit. 23 00:01:57.280 --> 00:02:00.519 I grew up my mom's an entrepreneur and so I grew up sort of 24 00:02:00.560 --> 00:02:02.510 seeing her build her business and so, you know, I didn't know. 25 00:02:04.310 --> 00:02:06.390 You know, I think there's a lot of different forms entrepreneurs can take, 26 00:02:06.430 --> 00:02:08.710 whether it's starting your own company or building a new division of a company out. 27 00:02:08.710 --> 00:02:12.590 So I'd always had sort of the bug of you know, all of 28 00:02:12.710 --> 00:02:15.780 the things that entrepreneurship offers. Didn't know what format that would take and didn't 29 00:02:15.819 --> 00:02:21.060 candily know what industry that would take, and so there wasn't sort of this 30 00:02:21.580 --> 00:02:24.180 grand master plan, you know, on this day and this year I'm going 31 00:02:24.259 --> 00:02:29.659 to go start a company. I think my framework that I've learned in retrospect 32 00:02:29.740 --> 00:02:31.530 is sort of in this is what happened to me. But I think, 33 00:02:31.650 --> 00:02:35.409 like I think you're having, your heart have to line up for you to 34 00:02:35.530 --> 00:02:39.490 really get like the conviction to take the jump, and it's a jump for 35 00:02:39.530 --> 00:02:43.849 everybody. Was a jump for me too, and so for me it was 36 00:02:44.439 --> 00:02:46.439 you know, I had this terrible trip at to the drug store that I 37 00:02:46.479 --> 00:02:50.599 thought was the world's worst trip to the drug store ever and learned that it 38 00:02:50.719 --> 00:02:53.360 was pretty part for the course. But then I also started to kind of 39 00:02:53.400 --> 00:02:59.349 unpack the industry and really understood the mechanics of it, the industry dynamics, 40 00:02:59.389 --> 00:03:01.389 and kind of harness my background as an investor. And so when those two 41 00:03:01.389 --> 00:03:05.270 things lined up for me, kind of my head part, I I understand 42 00:03:05.310 --> 00:03:07.949 this industry in the heart part of like I viscerally understand this friction point, 43 00:03:08.229 --> 00:03:13.340 I got super excited and maybe those are the things that let me overcome kind 44 00:03:13.340 --> 00:03:16.699 of the inevitable fear of doing the unknown. So no grand master planned, 45 00:03:16.740 --> 00:03:19.860 but that was a little bit of the path. Now that's cool. That's 46 00:03:19.939 --> 00:03:23.259 cool. Walk me through why that trip to the drug store was just so 47 00:03:23.460 --> 00:03:28.689 horrible and how that spurred on capsule, literally everything you can think about going 48 00:03:28.770 --> 00:03:31.169 wrong on war for me. But I woke up one morning in two thousand 49 00:03:31.210 --> 00:03:36.490 and fifteen with this throbbing headache and I called my doctor and he asked me 50 00:03:36.490 --> 00:03:38.610 to serious of questions. He's like, I don't worry about it, you've 51 00:03:38.610 --> 00:03:40.169 got a SIGIS infection. I will call a prescription and go get it. 52 00:03:40.210 --> 00:03:45.520 And I was like perfect, and I went out on this snowy January day 53 00:03:45.719 --> 00:03:49.360 to this chain pharmacy around the corner from my house on Laur side of New 54 00:03:49.360 --> 00:03:51.680 York, where I used to live, and I walk into the drug store 55 00:03:51.719 --> 00:03:54.360 and I'm kind of like walking past aisles of greeting cards and candy bars and 56 00:03:54.439 --> 00:04:00.669 cigarettes and cleaning supplies and I can't actually even find the the pharmacy part of 57 00:04:00.750 --> 00:04:02.349 this drug store. And so finally somebody comes up and it's like can I 58 00:04:02.430 --> 00:04:04.949 help you and I'm like yes, I'm looking for your pharmacy and they're like 59 00:04:04.990 --> 00:04:08.590 Oh, it's in the basement. I'm like got it and like that's odd, 60 00:04:08.669 --> 00:04:10.699 and so I walk back, you know, walk to the back of 61 00:04:10.780 --> 00:04:14.379 this store and I get to this escalator which is of course broken, and 62 00:04:14.500 --> 00:04:17.180 so I walk down this like broken escalator and I get to this dark, 63 00:04:17.220 --> 00:04:21.660 dingy basement and there's like thirty or forty people in line ahead of me and 64 00:04:21.980 --> 00:04:25.810 my cell phones not getting signal in the basement and I end up waiting in 65 00:04:25.889 --> 00:04:28.730 line for an hour and and finally get to the counter and I asked the 66 00:04:28.730 --> 00:04:30.170 pharmacism like hey, my doctor called them zpack. Can I get it? 67 00:04:30.410 --> 00:04:33.730 And so she goes and is trying to find the prescription and she comes back 68 00:04:33.889 --> 00:04:36.529 and is like hey, I'm really sorry, we're out of stock. I'm 69 00:04:36.529 --> 00:04:39.800 like how are we out of stock? It's January, it's a z pack, 70 00:04:40.120 --> 00:04:42.560 and so I end up trying to call my doctor and having them read 71 00:04:42.600 --> 00:04:45.199 it somewhere else, but of course as I pull my cell phone out to 72 00:04:45.319 --> 00:04:47.000 do this, my cell phone is died searching for signal in the basement. 73 00:04:47.079 --> 00:04:50.240 So I end up just going home and went to bad no medication in hand, 74 00:04:50.279 --> 00:04:54.430 and I woke up the next morning and just started unpacking that experience. 75 00:04:54.550 --> 00:04:56.829 You know, it's just like how does this work? Why is it so 76 00:04:56.949 --> 00:05:00.029 bad? Like is this the case for everybody? But that was sort of 77 00:05:00.069 --> 00:05:03.470 the the spark for me to start kind of pulling on the thread. That's 78 00:05:03.470 --> 00:05:08.540 awesome. What about that experience, because it sounds dreadful through and through. 79 00:05:09.019 --> 00:05:13.300 Did you want to like change the most? That really was like the one 80 00:05:13.540 --> 00:05:16.100 kind of insight that like spurred for capsule. It's a great question, and 81 00:05:16.220 --> 00:05:19.220 actually I get asked this question all the time, which is what's the magic 82 00:05:19.259 --> 00:05:23.529 sauce of capsule, like what's the secret sauce? Like why do people love 83 00:05:23.569 --> 00:05:27.370 it? Like, why are people on social media being like, I love 84 00:05:27.449 --> 00:05:30.649 a pharmacy, because that's kind of like a bizarre thing if you really think 85 00:05:30.689 --> 00:05:33.250 about it. In the true answer is that there is no one thing and 86 00:05:33.449 --> 00:05:38.720 that actually the secret is that you have to get a lot of different things 87 00:05:38.879 --> 00:05:41.920 that are high friction and you have to solve all of them so that the 88 00:05:42.079 --> 00:05:46.000 end to end experience is frictionless. So it's not just I don't know the 89 00:05:46.079 --> 00:05:49.550 price of my medication until I pay for it. It's not just the average 90 00:05:49.550 --> 00:05:54.269 waytime at chaing pharmacies an hour, and it's not just that forty percent of 91 00:05:54.350 --> 00:05:57.350 time people go to the pharmacy there medications out of stock. And it's not 92 00:05:57.550 --> 00:06:00.149 just that I don't want to ask a question with half of New York City 93 00:06:00.149 --> 00:06:02.990 hearing all my personal medical details in line behind me. It's all of those 94 00:06:03.029 --> 00:06:10.259 things in aggregate together that create all of the frustration and the friction that exists 95 00:06:10.379 --> 00:06:15.339 with with the pharmacy, and so systematically understanding one what are all of these 96 00:06:15.379 --> 00:06:17.970 friction points, and there's more than the ones I mentioned, and then systematically 97 00:06:18.410 --> 00:06:23.850 how to use solve them, using design and technology to create something that's simple, 98 00:06:23.889 --> 00:06:28.129 easy and delightful. No, totally, and I appreciate you unpacking all 99 00:06:28.170 --> 00:06:30.370 those friction points that eventually came to capsule. Was it also a moment, 100 00:06:30.569 --> 00:06:34.240 since it seems like this was quite a Eureka moment for you, and just 101 00:06:34.639 --> 00:06:40.600 figuring out there's so much friction here just going and quite simply what you should 102 00:06:40.600 --> 00:06:42.800 be able to do quite simply ase, go pick up a z pack. 103 00:06:43.240 --> 00:06:46.279 Was this like Hey, I'm going to quit my job the next day and 104 00:06:46.399 --> 00:06:49.990 start this, or what was or was it kind of like a slow process 105 00:06:50.110 --> 00:06:55.990 to kind of realize and to kind of build like confidence into actually creating what 106 00:06:56.069 --> 00:07:00.230 eventually became capsule? I think the journey is you know, had this. 107 00:07:00.389 --> 00:07:02.220 I had this experience. It's stuck with me that I was so terrible. 108 00:07:02.259 --> 00:07:10.100 I was fascinated to learn more about why it was so bad, just really 109 00:07:10.139 --> 00:07:14.420 as a just as a sort of a naturally curious person. And as I 110 00:07:14.540 --> 00:07:17.129 started unpacking that, I was like, Oh, this interesting, and every 111 00:07:17.209 --> 00:07:19.490 threat I pulled I was like, oh, that's really interesting. Like there's 112 00:07:19.529 --> 00:07:23.250 Seventy Tho pharmacis in America, like Oh, why are there so many? 113 00:07:23.930 --> 00:07:26.490 And then you're like wait, this is really weird, like why does the 114 00:07:26.569 --> 00:07:30.279 same place sell you like things that can make your blood pressure go up and 115 00:07:30.480 --> 00:07:32.439 medicine to make your blood pressure go down? And that's odd, like how 116 00:07:32.519 --> 00:07:35.959 did that evolve? Like why? Why is there a Boudagan a pharmacy together? 117 00:07:36.040 --> 00:07:39.600 And what's the role of the pharmacist? And, Oh my God, 118 00:07:39.600 --> 00:07:42.439 I didn't know pharmacist went to school for six years and doctors go to school 119 00:07:42.480 --> 00:07:45.949 for eight years. That's really interesting. And I just started kind of understanding 120 00:07:45.990 --> 00:07:49.629 all these things and then started formulating a view on okay, well, if 121 00:07:49.670 --> 00:07:54.870 you were to start this from scratch today, what would the ideal experience look 122 00:07:54.910 --> 00:07:58.230 like? And started mapping that out and once I had a kind of a 123 00:07:58.269 --> 00:08:01.459 view in my head about, okay, this is what I think great looks 124 00:08:01.540 --> 00:08:05.980 like, and that's through a combination of talking to consumers and talking to doctors 125 00:08:05.100 --> 00:08:09.459 and understanding like the broader healthcare system. But once I had a view around, 126 00:08:09.459 --> 00:08:13.410 okay, this is how I think you could solve this problem in a 127 00:08:13.490 --> 00:08:16.490 way that's ten times better than what exist today, then I started try to 128 00:08:16.529 --> 00:08:20.170 figure out, like, okay, this is sort of like the end state. 129 00:08:20.329 --> 00:08:22.290 Can you do this and how would you go about doing it, like 130 00:08:22.689 --> 00:08:26.689 is it legal? What are the regulatory requirements? How much money would you 131 00:08:26.730 --> 00:08:28.879 need? What kind of team would you need? And once I started wrapping 132 00:08:28.879 --> 00:08:33.559 my head around those things, I felt really confident that this was something that 133 00:08:33.639 --> 00:08:35.799 I wanted to spend, you know, the next ten or twenty years my 134 00:08:35.840 --> 00:08:39.279 life solving. And I think it kind of goes back to that head and 135 00:08:39.360 --> 00:08:41.830 heart piece. The heart piece is very visceral in the moment, like you 136 00:08:41.950 --> 00:08:45.909 know this exists and it's a problem because you've faced it. And then the 137 00:08:46.070 --> 00:08:48.190 rest of it is, you know, can you make a business out of 138 00:08:48.230 --> 00:08:52.549 it and can you make a big and impactful company out of it? And 139 00:08:52.669 --> 00:08:54.629 so it would see, was pretty short order. It wasn't putting me putting 140 00:08:54.629 --> 00:08:58.340 my job in the next day and it wasn't me spending you know, a 141 00:08:58.419 --> 00:09:03.179 year kind of gaining conviction on it. So, once you did gain conviction, 142 00:09:03.220 --> 00:09:07.059 as you're talking to consumers and really just educating yourself about, as you 143 00:09:07.139 --> 00:09:11.049 mentioned, the role of the pharmacist, how pharmacies has evolved, or maybe 144 00:09:11.129 --> 00:09:13.929 haven't evolved, and that's the reason why capsule came into the picture. When 145 00:09:15.009 --> 00:09:18.570 you did decide to eventually take the leap, what were the first steps that 146 00:09:18.730 --> 00:09:22.090 you had to do? So one of the things that's really interesting in this 147 00:09:22.210 --> 00:09:26.720 business is a little bit unique in that, at least the solution that I 148 00:09:26.840 --> 00:09:31.200 had devised up front that I thought solved the problems or the setup problems. 149 00:09:31.639 --> 00:09:35.519 You know, it's different from something that's purely digital, because in that case 150 00:09:35.559 --> 00:09:37.399 I probably would have done less market research. I would have just built something 151 00:09:37.590 --> 00:09:41.830 and put it out in the world and let consumers guide the feedback and just 152 00:09:41.990 --> 00:09:46.269 iterate from there. Here, the first thing that, you know, I 153 00:09:46.389 --> 00:09:48.429 decided that we need to do was to build an actual pharmacy, and so 154 00:09:48.629 --> 00:09:52.220 to do that you need money. You money as a lease and so once 155 00:09:52.659 --> 00:09:56.340 and you need a pharmacist, and so those were some of the first things 156 00:09:56.379 --> 00:09:58.659 that I said out to was to go find, you know, a an 157 00:09:58.659 --> 00:10:03.620 amazing pharmacist who was entrepreneurial and who had, you know, who kind of 158 00:10:03.860 --> 00:10:07.490 represented the brand that I thought would land in the market and that, with 159 00:10:07.649 --> 00:10:11.450 the chain, should be in the industry. And then also to go, 160 00:10:11.009 --> 00:10:13.370 you know, get some early capital to go build a pharmacy, to build 161 00:10:13.370 --> 00:10:16.570 a technology and build a team out, and so those were the first two 162 00:10:16.610 --> 00:10:18.850 things that I did. Got It. That sounds pretty overwhelmed. I mean 163 00:10:18.889 --> 00:10:24.279 going out and actually building a pharmacy and and managing actual physical real estate. 164 00:10:24.639 --> 00:10:28.360 What we're maybe some of the challenges when you were actually building capsule, the 165 00:10:28.399 --> 00:10:31.759 pharmacy, and why did you also choose, and was it regular reasons, 166 00:10:31.799 --> 00:10:37.149 that you didn't choose to maybe build capsule first online and then build a pharmacy 167 00:10:37.190 --> 00:10:41.029 later? I think a couple things. One in terms of like why we 168 00:10:41.149 --> 00:10:43.669 decided to build our own pharmacy, and now we obviously have, you know, 169 00:10:43.750 --> 00:10:46.590 many, many, many pharmacies across the US, but I think that 170 00:10:46.870 --> 00:10:52.299 fundamentally, because there's so many friction points that exist from the time your doctor 171 00:10:52.340 --> 00:10:54.580 writes a prescription to the time it gets in your hands, the ability to 172 00:10:54.740 --> 00:11:00.379 control every one of those elements and to shape them and design them, the 173 00:11:00.539 --> 00:11:03.570 way that the consumer should be able to experience them was really important. So 174 00:11:03.809 --> 00:11:07.610 a lot of it was around just how do we control the entire experience end 175 00:11:07.649 --> 00:11:11.730 to end, and made the decision that by owning the pharmacy, that was 176 00:11:11.809 --> 00:11:16.330 the best way of delivering the highest quality experience to doing that. And so, 177 00:11:16.769 --> 00:11:20.559 you know, the problem to solve wasn't delivery. The problem to solve 178 00:11:20.639 --> 00:11:24.159 is that the end and experience is high friction and I think if I had 179 00:11:24.200 --> 00:11:28.240 thought that the problem to solve was delivery, that I probably wouldn't have built 180 00:11:28.240 --> 00:11:31.399 a pharmacy out. We would have used other people's pharmacies, but it turns 181 00:11:31.440 --> 00:11:35.230 out other people's pharmacies are not very good. And so to really to really 182 00:11:35.269 --> 00:11:39.669 nail that consumer experience and a nail the experience for doctors and the rest of 183 00:11:39.669 --> 00:11:43.830 the healthcare system, we relieve fundamentally that you need to own the pharmacy and 184 00:11:43.909 --> 00:11:46.820 build that in a way that is modern and what modern consumers demand. And 185 00:11:46.899 --> 00:11:50.100 then, you know, building the pharmacy out. Sonya, who is the 186 00:11:50.179 --> 00:11:54.019 first person that joined the team. She's are chief Farmmacist, is an amazing 187 00:11:54.059 --> 00:11:58.259 pharmacist. Represents the brand and the warmth and caring and trust that you want 188 00:11:58.259 --> 00:12:03.450 from a pharmacist. She built, she built a pharmacy out and she figured 189 00:12:03.450 --> 00:12:07.169 it out, and that's the amazing thing about starting in companies. You get 190 00:12:07.169 --> 00:12:09.370 to do all of these things that you've never done before and and you got 191 00:12:09.450 --> 00:12:13.409 to do it pretty fast. And so she figured out how to find general 192 00:12:13.450 --> 00:12:16.200 contractors and like word of pharmacy permits and you know, all of the things 193 00:12:16.240 --> 00:12:20.320 that you got to do to to kind of get a pharmacy from an empty 194 00:12:20.360 --> 00:12:24.039 store to a place you can dispense medications out of. We did start digital 195 00:12:24.200 --> 00:12:31.269 first. So we have a physical pharmacy because that's where we dispense and store 196 00:12:31.389 --> 00:12:35.070 all of our medications from. But you know, the early days it wasn't 197 00:12:35.070 --> 00:12:37.710 people coming into that location. That was our where we keep in store the 198 00:12:37.750 --> 00:12:41.950 drugs and to spend them. But we also built out, for you know, 199 00:12:41.029 --> 00:12:45.059 the second step, as we started getting the pharmacy, build that going, 200 00:12:45.100 --> 00:12:48.259 as we started building all the technology out to the consumer experience, the 201 00:12:48.419 --> 00:12:50.860 APP, all the back end technology that powers of pharmacy. And that was 202 00:12:50.980 --> 00:12:54.980 the second person that you know, after Sony, that joined the team, 203 00:12:54.059 --> 00:12:58.730 was our head of engineering. And so we started investing in you know all 204 00:12:58.769 --> 00:13:01.210 of that, and so you know from day one it's been digital first got 205 00:13:01.289 --> 00:13:05.169 it. So then, how did you also think about the customer Experience Online, 206 00:13:05.169 --> 00:13:09.809 since obviously you can buy all sorts of things online, but how did 207 00:13:09.850 --> 00:13:13.480 you develop like that consumer trust early on? How did you kind of think 208 00:13:13.480 --> 00:13:18.519 about approaching that? Of that makes sense, super important. I think consumer 209 00:13:18.639 --> 00:13:22.080 trust and healthcare is is paramount, and part of that's you have to have 210 00:13:22.120 --> 00:13:26.399 a brand and a consumer experience and a user experience that Conveys Trust, and 211 00:13:26.480 --> 00:13:28.750 I think that's a lot of it. And I think the other way you 212 00:13:28.830 --> 00:13:31.509 canvey trust is that you actually deliver on the promise that you say you're going 213 00:13:31.509 --> 00:13:35.470 to deliver on. So if that's we're going to make sure that we answer 214 00:13:35.509 --> 00:13:39.070 your question in a really thoughtful and informative way, if that means we're going 215 00:13:39.070 --> 00:13:41.259 to deliver on time, if that means we're going to pick up the phone 216 00:13:41.259 --> 00:13:43.179 when we say we're going to pick up a phone, right, it's all 217 00:13:43.220 --> 00:13:48.940 of those positive, repeat interactions that build trust with the consumer and just making 218 00:13:48.940 --> 00:13:50.340 sure things are seamless and they work really well, and I think there's a 219 00:13:50.340 --> 00:13:54.580 higher bar and healthcare. To get started, I think it's hard to put 220 00:13:54.620 --> 00:13:56.570 out sort of a, you know, a half baked product and get and 221 00:13:56.690 --> 00:14:01.090 get a real read, because people do that higher bar for things they are 222 00:14:01.169 --> 00:14:05.929 engaging with with their healthcare. How did you explain the big opportunity where you 223 00:14:05.129 --> 00:14:09.649 yet have any sales? It was still a very, very early on, 224 00:14:09.809 --> 00:14:11.799 and so I just would love the kind of hear like, well, like 225 00:14:11.919 --> 00:14:15.320 the early innings. One of the Nice things, but one of the fortunate 226 00:14:15.440 --> 00:14:18.159 things, is that if you go into a room of people and you ask 227 00:14:18.240 --> 00:14:20.000 them how many of you have been to the pharmacy recently to get a prescription, 228 00:14:20.399 --> 00:14:24.080 you know sixty, seventy percent of the people will raise their hands. 229 00:14:24.309 --> 00:14:26.870 And then you say how many of you enjoyed that experience? You couldn't pay 230 00:14:26.909 --> 00:14:31.070 people to raise their hands, you know, and in that moment. And 231 00:14:31.190 --> 00:14:37.389 so I think it's a problem that everyone intuitively has experience and it's a frustration 232 00:14:37.750 --> 00:14:39.980 that everyone has experienced at some point in their life. So that, I 233 00:14:41.100 --> 00:14:43.779 think, is is sort of good and that it's a it's a pain point 234 00:14:43.899 --> 00:14:46.980 and a friction point that many, many, many people can relate to. 235 00:14:48.700 --> 00:14:54.049 And then I think the the work was and remains and is in explaining how 236 00:14:54.169 --> 00:15:00.009 this like crazy, complicated, archaic, Opaque Industry Works and how do you 237 00:15:00.090 --> 00:15:03.970 actually go about solving it? But I think the you know, I think 238 00:15:03.970 --> 00:15:07.159 in the early days, you know, I think most investors are looking for, 239 00:15:07.840 --> 00:15:11.120 you know, a handful of things like are you solving a real problem? 240 00:15:11.440 --> 00:15:13.679 Is the market you're going after or is a market that you're going to 241 00:15:13.799 --> 00:15:16.039 be building? You know, large, you know, as you are, 242 00:15:16.279 --> 00:15:20.840 you as the entrepreneur. Do you have a great team or can you build 243 00:15:20.840 --> 00:15:24.309 a great team? And I think at the various early as days, I 244 00:15:24.350 --> 00:15:26.590 think that's what folks are are really betting on because, as you know, 245 00:15:26.830 --> 00:15:30.389 you know, you don't have a product, you don't have revenue, you 246 00:15:30.549 --> 00:15:33.909 don't have you don't have a whole lot of proof points, and so I 247 00:15:33.990 --> 00:15:39.500 think our early team was was really kick ass. It's a huge market and 248 00:15:39.779 --> 00:15:43.539 it's a it's a frustration point that everyone can relate to. Well, be 249 00:15:43.580 --> 00:15:46.940 through a little bit of like the industry and what you had to do when 250 00:15:46.940 --> 00:15:50.649 it came to relationship building, whether it's with doctors, insurance agencies, like, 251 00:15:52.090 --> 00:15:54.970 what did you have to do in order, for to make sure that 252 00:15:56.169 --> 00:16:00.169 you pass through the regulatory requirements and and and also how you went about building 253 00:16:00.210 --> 00:16:04.919 relationship with with doctors. So one of the really interesting things about the pharmacies 254 00:16:04.960 --> 00:16:11.120 that it sits at the very middle of the healthcare system. So consumers engage 255 00:16:11.159 --> 00:16:14.960 with the pharmacy, doctors right prescriptions to the pharmacy and engage and rely on 256 00:16:15.039 --> 00:16:18.029 pharmacists for their advice. Around you know what medications to prescribe and dosing. 257 00:16:18.629 --> 00:16:22.350 Insurance companies pay for all the medic Atians, drug companies make all of medications, 258 00:16:22.429 --> 00:16:26.389 and so the pharmacy really sits at the intersection of all of these things 259 00:16:26.470 --> 00:16:30.549 and all of those stakeholders are important in terms of how they sort of come 260 00:16:30.629 --> 00:16:34.500 together, with the pharmacy at the center of it. And so we went 261 00:16:34.580 --> 00:16:38.700 out in the early days and built relationships with doctors to understand how they know, 262 00:16:38.779 --> 00:16:44.419 what their experiences are with pharmacies and what their frustrations are. met with 263 00:16:44.500 --> 00:16:48.769 a number of insurance companies and understood sort of what they were looking for and 264 00:16:48.889 --> 00:16:52.129 what their frustrations were with the current system, and we met with a bunch 265 00:16:52.129 --> 00:16:55.330 of folks that make drugs and and try to understand those things. And then 266 00:16:55.809 --> 00:16:59.370 the businesses is fairly regulated. Is regulated a local level of state level and 267 00:16:59.450 --> 00:17:02.679 a federal level, and so we were able to navigate all of those things 268 00:17:02.720 --> 00:17:04.680 to make sure all the things are we're doing. Were were, you know, 269 00:17:04.880 --> 00:17:10.319 on the up and up. How did you also approach growth the early 270 00:17:10.319 --> 00:17:12.279 days? Obviously you started out in New York City, but how did you 271 00:17:12.359 --> 00:17:17.829 think about expanding into different areas the very early days? And I suspect, 272 00:17:17.869 --> 00:17:21.589 like a lot of businesses, the very early days were were purely organic. 273 00:17:21.950 --> 00:17:25.269 It was our friends, it was our family, and then, you know, 274 00:17:25.349 --> 00:17:29.670 that started to kind of spiral outwards in terms of people really loving the 275 00:17:29.750 --> 00:17:33.140 experience and then raving about it to their you know, to their friends and 276 00:17:33.220 --> 00:17:36.420 family, and then those people would sign up and use it. And then 277 00:17:36.579 --> 00:17:38.259 an interesting thing happened, which is, along the way, you know, 278 00:17:38.380 --> 00:17:41.779 some of those friends and family and referrals of those friends and family were doctors, 279 00:17:42.259 --> 00:17:45.690 and doctors started using it for themselves, and then the doctor sort of 280 00:17:45.769 --> 00:17:48.890 thing, wow, this is really wonderful, I should probably start recommending this 281 00:17:48.970 --> 00:17:52.890 to my patients. And we're like, oh, that's really interesting, and 282 00:17:52.009 --> 00:17:56.809 so we started basically understanding, you know, why doctors wanted to recommend it 283 00:17:56.849 --> 00:18:00.559 to their patients and then started basically, you know, scaling that behavior through 284 00:18:00.559 --> 00:18:03.720 a sales team. But those were the early days. Was a lot of 285 00:18:03.839 --> 00:18:08.599 word of mouth from both consumers and doctors and then we started doing, you 286 00:18:08.680 --> 00:18:12.430 know, brand advertising and then we built out a we built out a sales 287 00:18:12.470 --> 00:18:18.549 team to go help educate doctors and their staff about why and how capsule solves 288 00:18:18.630 --> 00:18:21.869 not only the consumers pain points but also the doctors pain points. And then 289 00:18:21.869 --> 00:18:26.349 we were pretty discipline, which is probably rare for any sort of tech, 290 00:18:26.430 --> 00:18:29.660 back VC, back start up, you know, operating and you know, 291 00:18:29.819 --> 00:18:33.059 two thousand and fifteen to two thousand and twenty one. But we kept the 292 00:18:33.140 --> 00:18:37.940 business in New York for about four years and we're really discipline about making sure 293 00:18:37.980 --> 00:18:42.930 we just perfected the consumer experience, we perfected the experience for doctors, we 294 00:18:44.009 --> 00:18:47.930 got the unit economics to the business right and once we felt like we kind 295 00:18:47.930 --> 00:18:52.170 of had nailed those things, we decided it was time to very aggressively scale 296 00:18:52.250 --> 00:18:56.400 the business across the country, which is basically what we're doing now. In 297 00:18:56.559 --> 00:19:00.240 the early days, what was it most about your products? Mean, obviously 298 00:19:00.279 --> 00:19:04.160 we've typed a lot about a pain boys, but why did doctors love your 299 00:19:04.160 --> 00:19:07.880 products so much in the very early days. I think it's two things. 300 00:19:07.960 --> 00:19:11.869 I think one is that doctors love it because their patients love it. That's 301 00:19:11.950 --> 00:19:17.309 one right. Like people become doctors to help other people, and so any 302 00:19:17.390 --> 00:19:21.109 time that a doctor can do something that helps, you know, her patient, 303 00:19:21.349 --> 00:19:25.099 it's very gratifying for that doctor. And then the second is that we'd 304 00:19:25.140 --> 00:19:27.980 built out and continue to build out a set of tools that are embedded in 305 00:19:29.019 --> 00:19:32.140 all of our internal systems that help reduce a lot of the friction with, 306 00:19:32.420 --> 00:19:33.420 you know, with the pharmacy for the doctor. And so one of the 307 00:19:33.500 --> 00:19:37.259 first conversation I remember having with the doctor was like hey, tell me about 308 00:19:37.259 --> 00:19:40.730 your experience with the pharmacy, and the doctor was like look, think about 309 00:19:40.730 --> 00:19:42.329 it. For you as a consumer, maybe you go to the pharmacy once 310 00:19:42.369 --> 00:19:47.769 or twice a month and that is frustrating. My staff and I are interacting 311 00:19:47.809 --> 00:19:49.849 the pharmacy like twenty or thirty times a day, and so if you can 312 00:19:49.890 --> 00:19:55.279 help us streamline those things, that would be, you know, much appreciated. 313 00:19:55.440 --> 00:19:56.720 And so we, you know, we spend time on the product and 314 00:19:56.759 --> 00:20:02.279 engineering side investing in and things that can help the doctor experience, you know, 315 00:20:02.519 --> 00:20:04.079 as seamless of an experience to consumer. Can with, you know, 316 00:20:04.200 --> 00:20:07.670 with that, you know with all the things at the pharmacists and the pharmacy 317 00:20:07.670 --> 00:20:10.470 interacts with, you know, on the doctor's side. So think about my 318 00:20:10.509 --> 00:20:12.349 own experience, right. So I'm in line at this pharmacy and think of 319 00:20:12.509 --> 00:20:15.710 my if my cell phone hadn't died. So I'm in line of this pharmacy. 320 00:20:15.750 --> 00:20:19.390 I've kind of stepped out of line. I'm calling my doctor and I'm 321 00:20:19.470 --> 00:20:23.059 like Hey, doc, you know what's up. It's like seeing a patient. 322 00:20:23.099 --> 00:20:25.859 I'm like, okay, cool, don't care. I'm in line at 323 00:20:25.859 --> 00:20:27.700 the pharmacy. Can you help me find another pharmacy that has my medication in 324 00:20:27.859 --> 00:20:32.740 stock? And and the Docs like no, I'm not really well equipped to 325 00:20:32.900 --> 00:20:36.250 call around pharmacies for you to help you find something that's in thick. Well, 326 00:20:36.289 --> 00:20:37.890 it's like, well, how am I going to find a pharmacy in 327 00:20:37.930 --> 00:20:40.730 stock? I'm in this basement without cell phone service, and you gotta call 328 00:20:40.769 --> 00:20:42.569 a new prescription in somewhere. Right. So that would be one example of 329 00:20:42.690 --> 00:20:45.289 that, but it could be everything from like, doc, my insurances and 330 00:20:45.369 --> 00:20:48.849 cover this to this is really expensive to you know, I don't understand how 331 00:20:48.890 --> 00:20:52.519 to take this to I need refills, like there's all of these things that 332 00:20:52.640 --> 00:20:56.799 happen in this triangle between the doctor, the consumer and the pharmacy, and 333 00:20:56.119 --> 00:21:00.839 a lot of it is anything it goes wrong at the at the pharmacy counter, 334 00:21:00.200 --> 00:21:04.670 for the consumer at some point ends up back in the doctor's lap and 335 00:21:04.789 --> 00:21:07.789 the doctor, not because they don't want to help, but the doctors just 336 00:21:07.869 --> 00:21:12.190 not at well equipped to answer these questions. And really the pharmacy should be 337 00:21:12.390 --> 00:21:17.230 should be quarterbacking those things and making sure that things that the consumer needs to 338 00:21:17.230 --> 00:21:18.660 do or getting done and things of the doctor needs to get done or getting 339 00:21:18.660 --> 00:21:22.339 done, and and really be managing that process and making it easy for both 340 00:21:22.380 --> 00:21:29.579 the consumer and the doctor. Did you have any surprising customer feedback, positive 341 00:21:29.579 --> 00:21:33.569 or negative, that maybe you're even solving like a pain point that maybe you 342 00:21:33.650 --> 00:21:37.529 didn't even think about, that you were solving? One of the earliest pieces 343 00:21:37.569 --> 00:21:41.250 of feedback that I remember customer sharing that, I think, really gave us 344 00:21:41.289 --> 00:21:45.130 the confidence that we had built something that was high trust. Maybe to your 345 00:21:45.170 --> 00:21:49.000 earlier question, but I remember being in the pharmacy with Sonia, you know, 346 00:21:49.119 --> 00:21:53.480 in the evening one day sort of right after we launched, and this 347 00:21:53.759 --> 00:22:00.160 woman texted in a question chatted in this question, which was sort of like 348 00:22:00.640 --> 00:22:04.309 hey, Sonya, can I take iron supplements while I'm pregnant? And then 349 00:22:04.349 --> 00:22:07.589 there was this dot, dot dot. By the way, my husband doesn't 350 00:22:07.589 --> 00:22:11.150 even know I'm pregnant yet you're the first person I'm telling and it was this 351 00:22:11.269 --> 00:22:15.980 incredible moment where you're like, Oh my God, we've built this consumer experience 352 00:22:15.299 --> 00:22:22.019 that has engendered this such a degree of trust where people are really comfortable asking 353 00:22:22.220 --> 00:22:25.740 really important questions about their life. And so that was like an anecdote that 354 00:22:25.779 --> 00:22:27.900 I think was really important in terms of like, okay, this makes a 355 00:22:27.940 --> 00:22:33.049 lot of sense, in terms of people really like engaging with their healthcare with 356 00:22:33.210 --> 00:22:36.690 a human but in a private and secure and discrete way where they have control 357 00:22:37.329 --> 00:22:41.690 over that experience. That's just an amazing, amazing story. I guess zooming 358 00:22:41.809 --> 00:22:45.400 out, you know there's that been a lot of DDC healthcare companies that have 359 00:22:45.440 --> 00:22:49.039 kind of come into play of the past few years. What do you think 360 00:22:49.079 --> 00:22:55.119 about just on a macro level, like the future of healthcare? That's a 361 00:22:55.200 --> 00:22:57.910 big question. Look, I think healthcare is so broad it's hard to totally 362 00:22:59.029 --> 00:23:03.190 generalize, but I think a couple things that I'm really excited about. I'm 363 00:23:03.269 --> 00:23:08.509 excited about healthcare becoming simpler, simpler for people to understand, simple for people 364 00:23:08.549 --> 00:23:11.980 to engage with and get the care they need, and simpler to pay for. 365 00:23:12.460 --> 00:23:15.339 I think those are kind of three things that have been really complex and 366 00:23:15.460 --> 00:23:19.859 convoluted. Getting good advice and information from a place you trust is hard. 367 00:23:21.700 --> 00:23:26.099 I think having a trusted partner over time in your healthcare is really hard. 368 00:23:26.529 --> 00:23:32.730 You don't always have a healthcare need at every given moment. So who's there 369 00:23:32.809 --> 00:23:37.490 when you do have it, and can you trust that individual to be helpful 370 00:23:37.569 --> 00:23:40.009 in that moment? And is that going to be simple and easy? Because 371 00:23:40.009 --> 00:23:45.359 usually when you have a healthcare need you're in some format of like being nervous 372 00:23:45.400 --> 00:23:51.079 or vulnerable or frustrated, and the last thing you need is the person that 373 00:23:51.160 --> 00:23:55.000 you're trying to get advice or help from to kind of create more barriers in 374 00:23:55.079 --> 00:23:56.150 complexity for you. So I think all of that should be simple. So 375 00:23:56.190 --> 00:24:00.509 I'm really excited about that. I'm excited about the fact that healthcare is finally 376 00:24:00.549 --> 00:24:04.470 digitizing as one way of making things simpler, and I think that's happening a 377 00:24:04.549 --> 00:24:10.819 lot of different parts of healthcare. That's really promising. I think there's some 378 00:24:10.980 --> 00:24:15.059 really cool innovations going on around how healthcare gets compensated and I think this idea 379 00:24:15.180 --> 00:24:19.059 that if you go to your doctor ten times a year versus once a year, 380 00:24:19.099 --> 00:24:22.099 your doctor make ten times more money. I think that that that model 381 00:24:22.259 --> 00:24:26.650 is starting to move away from from just the more you go, the more 382 00:24:26.849 --> 00:24:30.849 everyone makes, to the people that are the best at taking care of people 383 00:24:30.849 --> 00:24:33.289 are the ones that earn the most money. I think that's a really powerful 384 00:24:33.289 --> 00:24:37.210 incentive structure. That will happen and I think there's some really cool things going 385 00:24:37.250 --> 00:24:41.960 on, you know, on the hard science side of things, in genomics 386 00:24:41.720 --> 00:24:45.200 and some other and some other places, in terms of just really understanding, 387 00:24:45.799 --> 00:24:49.440 you know, on a very personalized individual level, how I'm different from your 388 00:24:49.480 --> 00:24:55.029 different and how, you know how that flows through through drug development and treatment 389 00:24:55.109 --> 00:24:57.230 plans and and all of those things. And so I think capsule sitting at 390 00:24:57.349 --> 00:25:00.029 you know, a lot of the the intersection of a lot of different themes 391 00:25:00.109 --> 00:25:04.150 and so hopefully creates, you know, a lot of opportunity for us to 392 00:25:06.069 --> 00:25:11.900 continue innovating. What's one book that Asparty personally and one book that disparity professionally? 393 00:25:12.619 --> 00:25:15.059 There might be the same but but I give you two book recommendations. 394 00:25:15.460 --> 00:25:18.220 The there's a book that we give everybody that starts a capsule. It's called 395 00:25:18.819 --> 00:25:25.609 on the wings of Eagles. It's this amazing true story about Ross Perrot and 396 00:25:25.970 --> 00:25:30.930 when he was running his company and and the Iran hostage crisis and how just 397 00:25:30.170 --> 00:25:34.609 his commitment to his team and as loyalty to his team. And so I 398 00:25:34.690 --> 00:25:38.039 won't give away the book, but it's just an amazing one. Is just 399 00:25:38.039 --> 00:25:41.359 an amazing story. It's an amazing adventure story, but to it's just an 400 00:25:41.359 --> 00:25:48.640 awesome, awesome example of what an amazing leader, an amazing company culture like. 401 00:25:48.119 --> 00:25:52.150 You know, people talk about having their teammates backs, like this is 402 00:25:52.269 --> 00:25:56.470 the ultimate version of that. So that's a book that's really inspiring that we 403 00:25:56.750 --> 00:25:59.630 share with everybody, both because it's just a great read and it's fun, 404 00:26:00.069 --> 00:26:03.710 but also because I think aspirationally, as a culture, it's a good place 405 00:26:03.869 --> 00:26:06.819 to think about. You know, can you build a culture that would that 406 00:26:06.900 --> 00:26:10.140 would do that, where people would do that for one another? That's one. 407 00:26:10.539 --> 00:26:14.460 And then the other book that I really like is the checklist manifesto, 408 00:26:14.940 --> 00:26:18.569 which started out as a healthcare book written by a, you know, a 409 00:26:18.650 --> 00:26:22.289 clinician but I just think it's the simplicity of the book in terms of just 410 00:26:22.569 --> 00:26:26.569 how important and simple something like a checklist can be in terms of saving lives, 411 00:26:26.809 --> 00:26:32.089 whether that's airline pilots that religiously use checklist to make sure that you know 412 00:26:32.250 --> 00:26:36.880 things that are supposed to happen or happening, or surgeons that use them to 413 00:26:37.000 --> 00:26:38.920 make sure that they're doing all the right things. I just think something back 414 00:26:40.000 --> 00:26:42.799 to kind of sometimes a simplest tool is the best tool. Those are those 415 00:26:42.799 --> 00:26:47.269 are two books that really resonate with me. I love that. I'm really 416 00:26:47.309 --> 00:26:51.230 excited to also add these two our booklest I don't think any guests before has 417 00:26:51.269 --> 00:26:52.710 brought up these two books, so you're very original here. Eric. My 418 00:26:52.829 --> 00:26:57.390 bottle question for you is maybe what's one piece of advice you have for founders 419 00:26:57.470 --> 00:27:02.259 that who are currently building? I think the biggest the biggest advice is just 420 00:27:02.380 --> 00:27:03.900 to go back to that source. You know what's the heart. You know, 421 00:27:03.900 --> 00:27:07.619 if you believe that had an art, have to align to build something 422 00:27:07.819 --> 00:27:14.619 big over time. It's just like when things get tough, which they will, 423 00:27:15.730 --> 00:27:19.009 go back to that original source of inspiration that you, and only you 424 00:27:19.210 --> 00:27:23.130 know is. Is just you know, factually true in the world and use 425 00:27:23.250 --> 00:27:26.250 that to to power through, you know, all of those moments. That's 426 00:27:26.250 --> 00:27:30.519 probably the big it's probably the best advice I have. That love that. 427 00:27:30.799 --> 00:27:33.000 Eric, thank you so much for coming on this show. I was great 428 00:27:33.000 --> 00:27:36.759 chatting with you. Likewise, thanks for having me. And there you have 429 00:27:36.880 --> 00:27:38.799 it. It was amazing Chattie with Eric. I hope you all enjoyed it. 430 00:27:38.960 --> 00:27:41.680 If you enjoyed this episode, I love it if you'd write a review 431 00:27:41.759 --> 00:27:45.150 on the apple podcast. You're also welcome to follow me your host Mike, 432 00:27:45.390 --> 00:27:49.750 on twitter at my guelb and also follow for episode announcements at Consumer VC. 433 00:27:51.109 --> 00:27:52.230 Thanks for listening, everyone,