By now, one wonders what tech news will be tucked into the public record the days before a major holiday travel week approaches. While I have no horse in this particular race, I was really excited to read that Boston’s PillPack was being sold to Amazon:
Let’s quickly unpack the highlights from this deal:
1/ No Schlep Blindness Here – Pillpack succeeded for a variety of reasons, one of them being that the team actually thought about the underlying processes in the industry and rebuilt them with better flows, software, and operations. This success reminds me of a famous Paul Graham post, Schlep Blindness, where Graham argues while incredible startup ideas lie around us, this specific work can feel to many to be both tedious and boring. “Reinventing the direct mail pharmacy business” doesn’t have the sexiest appeal, sure, but it’s clear reading all the reports the team thought deeply about each process and succeeded at creating value for all stakeholders in its orbit.
2/ Amazon’s Broader Health Initiatives – Amazon recently made national headlines in launching a new healthcare initiative in partnership with JP Morgan and Berkshire Hathaway (where Atul Gawande was recently named CEO); Amazon made big waves with its purchase of the Whole Foods franchise, which instantaneously gave Amazon over 400 new retail locations; and years ago, purchased Drugstore.com. It remains to be seen if and how all of this comes together, but given Amazon’s rate of execution these days versus the state of our nation’s healthcare sector today, I’d wager many would be rooting for Amazon to enter the space and make an impact.
3/ The Ultimate Retail M&A Cage Match – If I could be anywhere in the world, I’d be a majority shareholder in a company that both Walmart and Amazon are in pursuit of. Jokes aside, it is clear Walmart is eager to play after its moves with Jet.com and Bonobos, but it’s hard to keep up with the strategic moves of Amazon, most recently with Ring (around home security and automation) and now with a foray into pharmacies. Whether it’s angling for multi-billion dollar franchises in faraway places like India, or competing for a small startup in Boston — the gloves are off and founders in the right position stand to benefit.
4/ Not A Great Of Contact High – As soon as the news of PillPack hit, various public pharmacy and drug store companies got pummeled in the markets. One analyst estimated $15b+ of incumbent market value was wiped out. Those numbers are likely to go up and down a bit, and I’d guess many analysts have already baked Amazon’s moves here into their longer-term forecasts. That said, I’d have to disagree with the Walgreen’s CEO who said he wasn’t terribly worried by Amazon — I would definitely be worried about Amazon and would be analyzing inventory to make sure our stores were providing the SKUs and services consumers need.
5/ (Pill) Bottle Returns – This is the part where we talk about the venture-scale return. PillPack raised a bit over $100M and, if the rumors are true, getting purchased for $1B (or close to it) for a company formed in 2013 is a fantastic outcome in a relatively short period of time. PillPack didn’t over-raise venture capital, likely had several million on the balance sheet when it was acquired, and the acquisition presents a terrific outcome for the Boston area. That is much-needed news for a region with incredible talent and passion despite many larger VC firms (and their LPs) quietly moving out of the area.
6/ Real Brass – On a personal level, I was introduced to one PillPack founder, TJ Parker, by a close mutual friend (Steve Schlafman) who has an incredible knack for finding authentic founders (and we have co-invested often over the years) told me about TJ as one of his favorite entrepreneurs. So, I met TJ once just to hang out, and I loved the kid. He is the type of person I’m always looking to find – quiet, a good listener, someone who kind of lives in his or her own world, who tunes out noise or things that a pure waste of time — in a short hang out session TJ quietly oozed entrepreneurial rigor. While I don’t know TJ well, I am super happy for him, his cofounders, colleagues, and folks in the PillPack orbit. Well done!