In 2015, after a miserable drugstore experience, Eric Kinariwala founded Capsule, an app-based pharmacy that does same-day delivery of medications throughout the city. A former investor for Bain Capital and Perry Capital, the CEO said he applied his knowledge of the retail, health care and technology sectors to the role. Capsule has seen staggering growth in just four years. In 2018 revenue more than tripled, as did the number of customers, now totaling 60,000. The firm raised $ 200 million in a series C venture capital funding round in September, bringing total fundraising to $ 270 million.
Why did you start Capsule?
I woke up one morning with a throbbing sinus headache. My doctor prescribed a Z-Pak. On a snowy day, I went to a chain pharmacy near my apartment on the Lower East Side. In a dark, dingy basement, I found 40 people in line. I waited an hour. Finally the friendly but overworked pharmacist said Z-Paks were out of stock. The next morning I had a founder moment. I dug in to understand why I had a terrible experience and how I could fix it.
What issues did you set out to solve?
Seventy percent of American adults go to the pharmacy monthly, and their medication is out of stock 40% of the time. The average wait time is 60 minutes. There are many frustrations: “Why don’t I know the price before I go?” “I have a question, but I don’t want to ask it in front of 10 people.” “What does my insurance cover?” There are 70,000 pharmacies in America. It’s the second-largest retail category. People go to the pharmacy six times more often that they go to their doctor. What if the experience was delightful?
How did you build the brand?
We had a simple idea: If there were one pharmacist in the world and it was your mom, what would that look like? “Well, Mom would know what was in stock, she’d bring it to me, and she’d find the best price. She’d coordinate with my doctor. She’d tell me how to take my medication.” We thought about how to use technology to bring that experience to millions of people.
Will Walgreens and CVS be able to compete?
We’ve built our own pharmacy and software from scratch. We have the benefit of not having to worry about how to innovate around 10,000 existing stores.
What are your investment plans?
In the next 18 to 36 months, we hope to be in all of the major U.S. cities. We are also investing in our technology.
What are the biggest challenges for Capsule?
The business has grown dramatically in every metric: number of orders, revenue and personnel. Our challenge now is to manage the growth as we scale the business.
Does telemedicine fit into your plan?
Our goal is to reduce friction. If we learn people have difficulty getting to the doctor or there are places where it is hard to access doctors, that would be in line with our mission.
What’s the benefit of your customer experience?
The first waves of the internet eliminated the need for human interaction. But in health care, finance and real estate, you need people. Consumers like the privacy and convenience of chatting with a pharmacist on the app. And they value that it’s a person on the other end.