Amazon agreed to buy PillPack, an online pharmacy that manages its customers' prescription medications by packaging, organizing and delivering them, June 28 — an announcement that wiped $12.8 billion from the collective market value of Walgreens Boots Alliance, CVS Health and Rite Aid.
In the wake of the announcement, early PillPack investor David Frankel, managing partner at Founders Collective, reflected on what made the company such an attractive buy in a Medium post. Here are Mr. Frankel's 5 lessons from PillPack's sale to Amazon:
1. Founders with expertise in their market drive success. The company was co-founded by Elliot Cohen, a computer scientist who loves poetry, and TJ Parker, a second generation pharmacist with a knack for design. "The pair fits seamlessly," Mr. Frankel writes. "TJ cherishes beautiful design but has the bearing of a doctor. Elliot combines the soul of a poet with a knack for code. The combination proved to be the prescription for an ailing pharmacy business."
2. The best products take on "boring foundations." PillPack wasn't afraid to tackle the boring side of its business — it gained pharmacy accreditation in 50 states — but it also paid attention to the smallest details affecting every customer touchpoint.
3. Experienced leadership teams are key. Mr. Parker and Mr. Cohen surrounded themselves with a diverse team of experienced leaders — such as former Gymboree COO Yvonne Hao — while managing teams of salespeople, coders and pharmacists dispersed across the U.S. "Scaling any of these unique cultures is difficult. Doing all three in concert is nearly impossible," Mr. Frankel writes. "It's a credit to the team that they were able to turn a volatile mix into a cure for some of the most persistent problems in the healthcare delivery."
4. Raising capital isn't everything. PillPack suffered a few early setbacks — such as losing its ability to air ads on Facebook and being threatened out of Express Scripts' network — but "PillPack never struggled to raise money. Their vision and progress made for a compelling pitch. It would have been reasonably easy to keep growing independently by raising more money. But as with drugs, the size of the dose really matters," Mr. Frankel writes.
5. Have the right mission. Although PillPack is an e-commerce company, its employees know their service helps elderly patients live more independently and other patients manage their chronic conditions more easily. "It's the kind of product that allows TJ and Elliot to convince key people to leave plum jobs to join their robotic apothecary," Mr. Frankel writes.
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