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June 4, 2024 23 mins
Eric Kinariwala CEO of Capsule| CEOs You Should Know
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(00:00):
This is Steve Dallas and I'm joinedby Eric Kiranawala, the CEO and founder
of Capsule Pharmacy. Thanks for beingwith us today, Eric, Thanks for
having me. Steve. I'm reallyexcited to dive in today. I've had
a lot of opportunity to dive intoa little bit about Capsule and about the
company you started and how it wasfounded. So I'd love to start there
and really take a look back onyour journey. Sure, the origin of

(00:22):
Capsule is in some ways just anoutgrowth of my own personal experience. And
so I was living on the Lowereast Side of New York and I woke
up one morning with this terrible headache, okay, you know, headpounding,
and called my doctor and he askedme a series of questions and at the
end said, hey, you've gotto sign this infection. I'll call a

(00:44):
prescription and you know, go getit. And I was like perfect,
And so I put my coat onand I went down, you know,
the flight of stairs and out onthe snowy January morning on the Lower east
Side, and I walked to achain pharmacy at Delancey and Orchard, which
is still there. And when Igot there. Literally everything you can think
about going wrong with the pharmacy wentwrong for me. I'm, you know,

(01:06):
in this store, and I actuallyam walking past aisles of like tissues
and toilet paper and cigarettes, andI actually don't even see where the pharmacy
is. And so finally I asksomebody and like, it's in the basement.
And so I kind of get tothe back of the store. I
walk down this broken escalator. Iget to this dark, dingy basement.
There's you know, thirty people online ahead of me, and my cell

(01:27):
phone doesn't have signal in the basement, and so I finally, you know,
I wait an hour. I getto the counter and I asked the
pharmacism like, hey, my doctorcalled on a prescription, do you have
it? And she's friendly but totallyoverworked, and so she goes back into
the stock room and rummages around andcomes back with this really despondent look on
her face like I'm really sorry,you know, I don't we don't have

(01:47):
this in stock And I'm kind oflike, how do you not have a
z pac in January in the winter? As I don't worry about it.
I'll just call my doctor and havehim call on him somewhere else, And
as I pull my cell phone outto do this, of course my cell
phone has died searching for sick inthe basement. So I went home,
you know, no medication in hand. I went to bed, and I
woke up the next morning, andI think I had one of those moments
that a lot of entrepreneurs have,which is just like, what the f

(02:09):
is going on? Yep? AndI just started unpacking on that thread,
these really basic questions like how doesthe pharmacy work, Why are there so
money? Why do you sell cigarettesand insulin in the same place? And
pretty quickly, as I was doingthat, I realized how it connected to

(02:31):
a couple of themes that I'd beenexcited about an investor. And I spent
the early part of my career asan investor investing in retail, healthcare and
technology companies, and so as Ikind of really understood the mechanics and all
these like very five year old typeof questions about the pharmacy, really understood
two things. One, it turnsout the pharmacy, which probably none of

(02:53):
us ever think about, is thismassive industry. It's seventy thousand stores,
like almost twice as money as thereare our grocery stores. It's four hundred
billion dollars, the second largest categoryof retail. And maybe more interestingly,
it's on the healthcare side. It'sthe law. It's the most frequent interaction

(03:14):
that any of us will ever havein you know, in pharmacy. The
average person goes to the pharmacy liketen times more often than their doctor.
And so you kind of have thisreally interesting thing. It's sort of the
intersection of retail and healthcare and bothof those things. At that time,
we're undergoing massive shift retail in termsof everything that you do now is living

(03:35):
on your phone, and healthcare ismoving slowly to this world where it's not
going to be the more often yougo to your doctor, the more money
your doctor makes. It's going tobe a world where your doctor just gets
paid to take care of you.And if they do a great job,
great, and if they do abad job, like fuff luck, you
should get better. Yep. Andthe pharmacy sits at the perfect intersection these
two massive themes. So that's theirorigin story and and sort of got very

(04:00):
excited about it and kind of didthe research and kind of understood, like
how would you make this better?Yeah, and that's kind of the start
of the journey. Yeah, I'msure everybody's going to google those cross streets
and see see where the pharmacy was. But I'm sure everybody that's listening has
that same exact experience. I know, I could think of different times and
I'm into the pharmacy, like I'mso sick, I'm waiting in this hour
line and get to the front line, they're like, oh, we actually
can find your prescription. Can youhave your doctor recall it in get to

(04:23):
the back end line, have towait all over again. So completely,
there's completely could relate to that basementstory. It's such a it's such a
shared truth, like everyone really canempathize with that, whether it's for themselves
or their family members. Totally.You know, seventy percent of American adults
go to the pharmacy least once amonth. I mean, it's truly impacts,
Yeah, everybody, And so there'sa big opportunity to it better.

(04:46):
It sounds like it's much needed inthe space too. So yourself, you've
spoken on various high profile conferences likeShop Talk, Tech Crunch. What are
some key messages that you like torelay when you're at these speaking engagements,
and how did they align and wouldcapsule in the mission values of the company.
Sure, So the when we startedthe business, we spent a lot
of time really honing in on themission and the values and the culture of

(05:12):
the company and started very first principlesactually with a really basic question of what
is culture, which not a lotof people actually sit down and think,
think back and ask, right,I think there's just a common perception and
a startup like culture is if everyone'shaving a good time and you know,
getting beers after work and you know, playing pool, like, you have
a great culture, And I thinkthere's something much much more substantive behind that.

(05:33):
And so after sort of a lotof conversations with other successful executives and
entrepreneurs, a lot of reading aboutcultures not only in companies but across the
board, sort of formulated my ownperspective on like what is culture? And
the way I would define it isthat every organization has a culture, whether

(05:53):
it's your family, your friend group, your coworkers, your church group,
your sports team. You know,and that culture sure can be either intentionally
designed or unintentionally formed. But culturefor us is really nothing more and nothing
less than what are the behaviors thatthe group accepts and rewards, and what
are the behaviors that the group rejectsand punishes. And so it can be

(06:15):
everything as simple as maybe when youwere growing up, when you put your
elbows on the dinner table, yourmom gave you a little smack. That's
culture, yeah. Or you know, if you got up from the dinner
table you had to put your dishin the dishwasher. Not every family was
like that, and so they hada different culture, and companies are the
same way. There's a set ofthings that you want to reward and promote,

(06:36):
and there's a set of things thatyou want to make sure people aren't
doing. And with that as aframework, what we realized is that different
companies can have different cultures and beequally successful. However you define success,
whether that's financial success or impact onthe world. Where Google and Amazon two

(06:56):
very big companies, to very differentcompanies very different cultures. And so what
I came to appreciate is that theculture of your company has to be aligned
with the mission and objectives and theindustry that you operate in. And so
for us, we try to keepit very simple and kept the culture to
basically two values. And value oneis everybody needs some looking after sometimes,

(07:20):
and value two is winning together andeverybody needs some looking after sometimes. Is
the idea that the best companies inthe world are internally in externally line,
the promise you make to your customersis the same promise that you make to
the team, and so for us, the promise to our customers, whether
you're a consumer or a doctor orany other kind of person we serve,

(07:42):
is we're always going to have yourback. We're in your corner, and
we're going to make your life easyso you can go and live and do
the things that you want to do. We're going to enable you to live
your best life. And the waythat translates internally is that we believe that
everyone on the team's job is toenable everyone else to be their best,
say els, and so that's sortof value one and then value two.

(08:03):
Winning together is pretty straightforward. It'sreally how we hire we want people.
Winning is defined as accomplishing ambitious objectives, and together is doing that in a
way that uplifts the people that arearound you. And so we want folks
that not only can get really hardand complicated things done, but that they
do that in a way that inspiresthe people around them, Yeah, to

(08:26):
shoot higher. So lots of peoplecan get things done, but they're terrible
to be around, and there's lotsof people that are super funder to be
around and they never get anything done. We want people that can do both.
But those are the core values ofthe company. And then the mission
of the company is to build apharmacy system that works for everyone. And
that's not only consumers, but it'sthe way the pharmacy set up today is

(08:50):
really subpar for doctors and hospitals,and insurance companies and drug companies, and
so to build something that really worksfor all of those people. It gives
them the peace of mind with havingsomebody in their corner all the time looking
after their health care. That's awesome. I couldn't agree more. I think
culture and mission are to the mostimportant things for any company. So as
you guys are expanding, what aresome things that you're doing as CEO to

(09:11):
keep that mission, keep that culturetop of mind, and keep it living
with all your employees. I wishI had this sort of a magic bullet
answer. I think, honestly it'sa lot of repetition, and it's weaving
it in through all of the differentprocesses and rituals of the company. And
so it's when we're recruiting and interviewingpeople, we're very upfront about these are

(09:33):
what our values and culture are andyou should explicitly opt into them. If
you want to work in this environmentand you think you can thrive in this
environment, is this type of culturegoing to enable you to do the best
work of your career? That's ourgoal everyone comes in. We want you
to do the best work of yourcareer and create the conditions that can do
that. We do it as partof onboarding. We have, you know,

(09:56):
I spend time with all of thenew hires and talk about what is
the culture and how does it comeand how does it impact our customers and
hows to it impact our team,And then we do that, you know,
along the entire life cycle. Weincorporate into how we do performance reviews
in compensation and constantly sort of reinforcingthe words. And it's a lot of

(10:18):
Honestly, it's a lot of repetitionand weaving it in through different parts of
how people interact. I'm sure oneof the biggest roles of CEO is your
people, right, and it's helpingthem grow and develop the future leaders of
the company. What are some thingsthat you guys do internally to expand people's
leadership skills and help them grow withincapsule. So one of the things that

(10:39):
one of the things I really believein terms of how people's careers progress and
how we think about managing, youknow, people's career helping them manage their
own careers. I don't know thatwe believe in the company managing people's careers.
And maybe it's a little bit differentfrom other companies, but I think
that a manager's job is fundamentally intoin terms of career development, is to

(11:01):
do a couple of things. Oneis to understand what does the company need
at this moment in time. Andtwo is, everyone that comes in to
a company comes in with a setof experiences they had to date, and
they come in with some idea ofwhere they want to go, and there's
usually a gap between where they aretoday and where they want to go.

(11:24):
Yep. And when those two thingsstay aligned, the skills that I want
to get are aligned with the thingsthe company needs. Everything is everyone's happy
yep. And so the job ofthe manager is to make sure on some
not every day, but at somecadence every six months, every twelve months,
to make sure those two things arestaying in sync, that what the

(11:48):
company needs and what the team memberis trying to develop in their career,
those things are staying in sync becausewhen they get out because when they get
out of sync, either either wherethe company needs the team member doesn't want
to do or can't do, orwhat the team member wants to do the
company doesn't need, then there's aconversation about how do we help you go

(12:09):
find somewhere else that is you know, going to get you to the place
that you want to go that's morealigned with maybe what some other organization needs.
But by and large, we foundthat as our company grows, the
types of people that we asked tojoin the team are very motivated by solving
hard problems, and there's no shortageof solving heart problems. It's an extraordinarily

(12:31):
complex industry, and that people areable to continue gaining more and more skills
in the way that you know,in the way that they want to do
in their careers. That's awesome.Speaking of the industry. How do you
see Capsule really influencing the healthcare landscapeand really when it comes to like patient
care and the industry standards moving forward, We've built we've built the very best

(12:54):
experience that you can have in pharmacy. It is so simple to use and
both the consumer and the doctor.And what I think is what I get
really motivated by, is there's alot of companies that have done a good
job building great consumer experiences and makingyour life easier with things that are frustrating,
whether that's getting a ride, whetherthat's ordering food, whether that's getting

(13:16):
your groceries with booking a flight,whatever. The most exciting thing for me
is that when people use Capsule,they're fifty percent more likely to actually get
their medications. And so it's byreducing the friction of doing something, something
great is happening for people's health careoutcomes and the healthcare system, and that,
to me is kind of the motivatingthing. Is that the better we

(13:39):
can make the consumer experience, thebetter we can help you understand your medications.
Why'd your doctor prescribe it? Whyis this the price? Can we
bring the price down for you?We can bring it right to your door.
We remind you when you need refills. If you run out of refills,
we call your doctor. We geta new prescription. You can text
or chat with a pharmacist, anexpert pharmacist whenever you want. If you

(14:00):
don't understand what a deductible is oranything what the healthcare system which I'm still
figuring out, you know, eightyears in, there's somebody that's got your
back there in your corner helping youdo that, and that's in your pocket
at all times. And I thinkthat's the impact that you want and that
we want to have in the healthcaresystems, that people in some ways don't
have to think about their healthcare,that there's somebody else that's engaging on that

(14:22):
and just kind of in the backgroundmaking sure that the things that need to
get done get done so you cango and do the things that you want
to do because you're healthy. Yeah, no, that makes sutal sense.
It's such a nice compliment to people'sconsumer journeys, right. It helps them
on the emotional side be able totake away some of those stress that you
just mentioned that you guys are offering. And it's a very stressful thing in

(14:43):
different ways, and it doesn't alwayshave to be this grand story of you
know, it's grandma and she's ina fifth four walk up and she can't
get to the pharmacy. And bythe way, that does happen, and
we are an amazing solution to supportthose folks, And that's a part of

(15:05):
our customer base. But it canalso be a busy mom who's running out
of a lunch hour and her toddlerhas, you know, a crazy ear
infection and is just in this likereally bad situation where it's like, I
don't know if my insurance covers,I don't know if you have it in
stock. My kid is crying.That's a high stress situation also, yeah,
and everything in between that, andso I think stress can come in

(15:28):
different different forms. Life happens,and a lot of times people prioritize their
health on the bottom of it becausethey have all these other things to do.
So to your point about like thereminders on the refills and making it
so easy for them, it's areally good resource for so many consumers.
How are people finding out about Capsule? The initial way so we launched the
business in twenty sixteen in New York, and the initial way that people found

(15:50):
out about Capsule was word of mouth. We launched it to a small group
of our friends and family, andthey had a great experience with it,
and so they told other peop people, and they told other people. And
one of the really interesting things thathappened way back then was that some of
those friends and family were doctors,and doctors started saying yeah, Doctors started

(16:15):
saying gosh, like, if youthink the pharmacy is bad for you as
a consumer, you only go onceor twice a month, Like I'm interacting
with the pharmacy twenty times a day. And and so we've actually, over
time now built a bunch of toolsto help doctors with all of the things
that go wrong with the pharmacy,because what ultimately happens is when you're at

(16:36):
the pharmacy counter and something goes wrong, the first thing you do, like
I try to do, is youpick out, you take out your phone,
and you call your doctor. Andyour doctor and her staff are ill
equipped to deal with that. Sowe've done to that. So that's kind
of one big piece, and thenthe other piece, if you you know,
live in New York or Chicago orAustin or any other you know,
La or any other big city wherewe operate. We do we do marketing

(16:56):
to create awareness and trust and credibilitywith our consumer base. And that's you
know, pretty multi channel that canbe outdoor advertising like billboards and taxis,
streaming, TV radio, you knowkind of all of those things. And
then the third place people find outabout it is through partnerships that we have.
A good example would be we havea partnership with teledoca and we're integrated

(17:18):
right into telec Yeah, we're integratedright into teledox flow. And so you're
firing up a visit with teledoc andit presents you with the option of using
Capsule and having your medication deliver ry. Why am I able to see a
doctor at home, but then Igot to go out to the pharmacy.
Doesn't make sense. So bring thosetwo things together. But those are the
three three kind of ways that peoplefind out about it. Awesome speaking of

(17:38):
teledoc and obviously your services, Iwould imagine technology is such a crucial part
of the business model, right,How does technology play such a pivotal role
in Capsule success? Technology is everythingand one of the things when I was
trying to understand why is the pharmacyso high friction. A lot of it
comes down to having really archaic technology, and so the big pharmacy chains are

(18:06):
using technology that we're built in thenineteen eighties and isn't digitally native, isn't
built purpose built, and so we'veinvested hundreds of millions of dollars to rebuild
every part of the technology stack thatpowers a pharmacy. So it's not just
the super super simple app that youcan download and manage your medications and your
family's medications and you've got price transparencyand you can do all the things in

(18:29):
the app that you'd want to do. It's all of the things under behind
the scenes that are powering everything wedo, whether that's delivery, whether it's
how we manage inventory, whether that'show we manage your insurance. You know,
all of those things we've built out. It's all the tools that we've
built for doctors, you know,the kind of the whole whole set of

(18:51):
things. Technology is the backbone ofeverything we do, and it's a really
important differentiator that's let us build thisvery delightful experience, and this experience that
is driving you know, people tobe more likely to fill their medications.
All that's powered by the technology thatwe've built. Yeah, it sounds like
you're completely transforming the farming the experiencefor every consumer. We've rebuilt. We've
rebuilt every part of the pharmacy fromliterally the ground up, including the physical

(19:15):
pharmacy, but most importantly, allof the technology that goes into powering it
YEP makes that task a lot moreeasier for the consumers. Growth is really
important, obviously for any company,but growth could also pose a challenge,
right, what are some of thekey insights and the challenges that you guys
are facing in a growth period andhow is CAPS going to overcome those?

(19:37):
It's interesting. One of the thingsthat a mentor of mind told me early
on when as you're the business isthat every time you triple and tenex the
business, you need to rebuild yourprocesses. And we've had a lot of
triples and a lot of ten x'sover the time that I've been building the
business, But I think it's wrongtrue for me that every time the business
kind of hits one of those inflectionpoints, you need to rethink the processes

(20:02):
and how the company works. Andso it could be everything from the way
you were doing recruiting when you hadfifty people is different from the way you
need your recruiting when you're one hundredand fifty people, as different from the
way you need to recruiting when you'refive hundred people. That can be with
onboarding, that can be with howyou do expenses, you know, kind
of the whole set of things.And I think that's been one thing that's

(20:25):
kind of rung true is making surethat as the business continues to grow,
that we're kind of updating the tape, so to say, yeah, and
making sure that we're keeping pace withthe growth and making sure that our systems
and our processes and the way wework and candidly the people on the team
are appropriate for that next stage ofthe business undred percent and in that growth

(20:49):
mindset, right, Like, I'msure there's different aspirations and milestones that you
want to hit in the near future, like what is next for Capsule,
Like what are some of the shortterm and long term goals that you have
for the company. Long term,our ambition is that everyone uses Capsule.
Every doctor in America, every consumerin America has the opportunity to experience Capsule
because it's it's just better it's betterfor your doctor, it's better for you,

(21:12):
it's better for your family. That'sthe long term ambition is that everyone
everyone has the opportunity to use ituh and and loves using it. And
then between here and there, there'syou know, there's a there's a lot
of things to get done between hereand there. But that's the north star
is that this is the this isthe first thing that you think about when

(21:32):
you think about your health care,and that we have the ability to serve
a very big breath of what youneed to do in healthcare, not just
the pharmacy, but other things thatyou may want to do that are adjacent
with that. And we won't buildall those things out. Healthcare is very
complicated to go tolone, we'll partnerwith other companies that are you know,
that do what we do as wellas we do in pharmacy. We'll partner

(21:55):
with other folks like teledoct that's youknow, amazing at telemedicine, and there's
so many other things to be ableto be able to do. But our
goal is to be able to bethe place that consumers that think about you
know, think about when they thinkabout what our healthcare needs are. That's
awesome. What's the easiest way forour listeners to first use Capsule? The

(22:17):
easiest way to use Capsule, there'stwo ways to use Capsule. One go
to the website at www dot capsuledot com or in the app store download
the app. You can put insix pieces of information your name, your
birthdate, what your old pharmacy is, what your medications are, and then
Capsule becomes your pharmacy and you cankind of go through the flow and gets
free same day delivery your medications andtext with text to chat with a pharmacist.

(22:38):
The other way, believe it ornot, is even easier, which
is you can simply tell your doctorthe next time you're at the doctor that
Capsule is your pharmacy. Your doctorwill look it up in their system and
then the prescription will come to usand we'll send you a text message and
then you'll be on your way.So it's very easy to get started.
Takes less than thirty seconds to getstarted, and you can do that in

(22:59):
two ways, either at the websiteor the app, or right at your
doctor's office. That's awesome. Well, I'm sold. I can't wait to
use it myself. Eric, Thankyou for coming in today. Really impressive
journey, really awesome mission and visionthat created this company, and I'm really
excited to see where you and Capsulego. Thanks for having me awesome.
Well, thank you guys for tuningin. Stay tuned for the next week's
edition of CEOs. You should know
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