The Largest Venture Backed D2C Consumer Exit; PillPack: $0-$300M Revenues in 5 Years &…

thrilled to be here. This is the first public thing I’ve done in five years. And obviously, I owe a ton to Fred as well. He bet on both of us when we were super young, so thrilled to be here.

Yeah. So I think if you go way back, like, I grew up in New Hampshire in a family that owned and operated a new classic mom and pop pharmacy. So I grew up in and around pharmacy. And I’d worked a ton of different jobs at my dad’s pharmacies, worked behind the counter, helped check people out, actually was delivering meds to people in their homes and saw that experience. I just knew there was a lot of opportunities to make it better. It was super frustrating. It was really complicated.

So I was in pharmacy school in Boston, doing the classic going down weird rabbit holes in the Internet as a as a college student and buying and selling sneakers, got really obsessed with design, thinking about furniture and architecture, and was just very interested in kind of aesthetic. And then very separately, got really interested in startups. Snuck into MIT, and they were super gracious. I didn’t go to school there, but helped for the the MIT hundred k, which was like their business plan competition at the time.

When I showed up for the sort of first meeting with all the students, and they’re like, you don’t go to school here. And I was like, nope. And they’re like, we’re not paying you. So if you want to do some free work, I guess that’s fine. And then I actually started this thing called hacking medicine at MIT with Elliot, my co founder, which was getting just doctors and designers and physicians all together to work on stuff in health care. And through that period, 2005 to 2010, my dad started this totally new pharmacy that was sorting and packaging meds actually very similar to PillPack, but they were selling into nursing homes and assisted living facilities that wasn’t a consumer business.

And so I always had this idea that could you take this kind of core product, but then offer it to consumers and do it in way that was really designed forward and aesthetic. I think for me, the big challenge is getting the confidence to think I could actually go do that. Could I actually raise venture capital? Could I find a real cofounder? Like, getting the inertia to believe that I could do that. Why

have

Yeah. I’m a little bit more of a nontraditional founder. Right? I didn’t go to an elite school. I didn’t have the sort of normal connections that a number of founders do. At least that was my perception. That’s probably not a 100% correct. But it was a wacky background. Right? I’m a pharmacist. I’m not like a normal entrepreneur in that context. And in hindsight, I think it was my perception and the actual reality, but that was the hurdle for me. I think once I made that jump from there, it was very natural.

It more like a snowball rolling down a hill. I think it’s a lot like if you’ve ever been skydiving, like jumping out of the plane is really scary, but like once you’re in the air, it’s actually pretty chill. And it was like that for sure for me. Yeah. I’ve been here for the first time at hacking medicine, which is an event that we started, so it’s wacky, but we won the event, which is very exciting. It gave me the confidence for better or worse. This is like the fall of twenty twelve.

I’d been a pharmacist for about six months, so like fresh out of school. I think within a month or two, we were in we got into Techstars, quit my job. It’s kinda like January 2013. But I think that it was for me, it just wasn’t an moment. It was like, how do we combine, my like, expertise in pharmacy with my interest in design, with my interest in tech? It was like, how do we put all these things together? And it was a very kind of iterative natural process in hindsight.

Right? Obviously, wasn’t intentional going into it. But it really was the combination of all these things I was doing and I was interested in that ultimately became PillPack.

Yeah. I think it’s really important to understand the customer problem. I think it’s less important in understanding, like, all of the nuance of the industry and dynamics and other things that are going on. But I do think if you don’t deeply understand the customer problem, it’s likely you’ll build the wrong solution. That’s where my expertise was unique. I don’t think it was that I was a whiz kid on how pharmacy worked. I think it was that I had spent enough time inside the pharmacy. I’d spent enough time in customers’ homes that I did deeply understand that problem.

And I looked at all the solutions that were out there, and I felt like we could offer something that was a lot better.

I had this conversation with someone a couple months ago. That made the comment that kinda stuck with me that we’re always looking for the opposite of the environment that we had as a kid to some degree. For me, my dad grew up with almost nothing and worked incredibly hard to become a pharmacist, to give us a childhood that was way better than his. But it was like a very kind of leave it to beaver childhood. Right? Very predictable, very stable, just very classic. And I think I was always looking for a little more excitement, a little more risk in my life.

And so I think startups were a great way for me to harness that, but led to me being very uncomfortable in very formulaic stable environments.

I think for me, it’s really about giving them an environment to be kids is probably the biggest thing. I don’t know if it’s as much about predictability versus non predictability, but the the thing that we’re trying to provide for our kids is the ability to go explore, be kids, to be able to have independence, and to grow independence early, which I did have in my childhood. We were, like, classic eighties, nineties kids that hopped on a bike and took off and came back before dinner. I’m trying to keep that, because for me, that was a magic of childhood, was being able to go build forts in the woods and be gone for the whole day.

It wasn’t like, my schedule’s packed, and I wanna make sure I provide that for my kids. And certainly, hopefully, our environment is stable. For me, that’s the thing I think about a lot, is how do I retain a childhood that is for the most part now gone for a lot of kids.

I think a thing that I believe now that I did not believe during the early part of the PillPack journey, or honestly, probably until the last couple years, is that there are folks that are on the extreme ends of this from a personality standpoint. Like, I think there are folks that truly are like much more comfortable in uncertainty than they are when the things are certain. And I think there’s obviously folks way on the other end of that spectrum. And obviously, lot of folks are more in the middle.

I’m super naturally comfortable in an uncertain environment. It’s kind of my happy place. And so I think the advice I do have is, like, being really honest with yourself about where on that spectrum you are as a human. Because I think if you like certainty, you like predictability, and you like that lifestyle, you honestly probably be happier at a big company. And if you like uncertainty, you’re gonna be miserable at a big company. Maybe it might make sense to go do something that’s a

riskier.

I think it does it’s plausible that there are a number of founders that are in the role and might be more comfortable in a different type of different type of role. In a broad perspective, mine is very narrow, but I have come to terms with the fact that I think it’s very hard for the classic overachiever that sat in the front row in every class and always delivered papers on time and always got a’s into every one of their classes. To go from that reality into a startup, which honestly rewards a very different type of behavior and a different type of tactics.

And I think there are some folks that got swept up in the sort of perceived glamour of being a founder rather than the reality of that job. And so I do think it’s there is a big, like, founder fit in the gig, and I think being super honest with yourself about who you are and what you really enjoy and what environments make you happy is, I think, super important.

Yeah. Think this would actually be way harder for me now. I sort of peel back, I was 26, and I had no preconceived notion that I had any idea how to do the tactical jobs better than the folks I was bringing in to do them. There was no way I knew how to acquire customers better. There was no way I knew how to run operations better. There was no way I knew how to be finance lead better than the people I was bringing in. The only technical training I had was in pharmacy, had very little relevance to most of the things that a founder’s doing.

So honestly, there was a beauty in being young and not having experience in this context.

Yeah. I was able to focus on the things that I thought I had to be good at, which was things like raising money and setting the vision and everything external. And we did have a big vision and it was a clear vision. As far as understanding who was good and not good, a lot of it was intuition and trying to read people. And then it’s plausible that I completely made the statistic up. But at one point, somebody told me that the difference between the worst and the best hiring managers was roughly like, if you’re a terrible hiring manager, you’re right like 40% of the time.

And if you’re an amazing hiring manager, like world class, you’re right like 65, maybe 7070% of the time. And my takeaway from that was, like, I better be really good at changing my mind if I’m wrong. And that’s the only way to get to 90 plus percent is, hire someone that’s not gonna work out, be really quick at making that call and trying again. But I took that to heart, and I I definitely behaved that way as we built the team.

I was incredibly impatient. It’s probably my biggest flaw is being pretty impatient. Once I was on that trajectory, I made the call. Like, I didn’t dilly dally around these things a whole lot. The only delaying was really because it’s hard. Right? But I was very decisive on this stuff. I think it came from the fact that I was just generally impatient as a operator.

Yeah. I always said that I think Elliot and I were in the perfect place personally when we started PillPack, and we got very lucky in that sense. I think we were absolutely not naive about the customer and about the what the customer needed, what the customer wanted. Like, we deeply understood that, but we were incredibly naive about the broader industry dynamics. We had no idea around incumbents and what they cared about and why all the things we wanted to do wouldn’t actually work. And, know, we looked at it and said, well, of course, we’re gonna make an awesome product.

We’re gonna make this way better for customers. And we’re gonna put it online, and we’re gonna acquire customers online. This is gonna be super straightforward. And we were just woefully ignorant about all the reasons it wouldn’t work from an incumbent and industry standpoint. And I honestly think that’s the perfect balance. It’s like, you got to understand the customer, but if you understand all the reasons it’s not gonna work, you’re never gonna start the company. If I had been working in pharmacy for a decade as an adult, there’s no way I would have started PillPack, because there were very specific reasons it shouldn’t have worked.

And I think that’s where the naivete is really powerful. If you don’t understand the customer, you’re hosed, so you can’t be naive there. But I think important to not know all the reasons that the thing you’re trying to do might not work. Okay. When is naivety good and when is it

But again, I think it is about like the difference between not totally grokking industry dynamics and grokking the customer. We took money from exclusively consumer tech investors. We weren’t out pitching health care investors. I think almost every health care investor would have said no because of the fact that the industry dynamics were the way they were, and so the investors were just as naive as us on a lot of the dynamics at play.

No. It’s probably a little different than that. I think I thought I didn’t really need the help of healthcare investors. I think I thought I needed the help of consumer investors, and so it’s augmenting the things I thought I understood. And it was less about whether they’d say yes or no for me. It was when you look at the PillPack business, yes, it’s a health care company. It’s a pharmacy. We interact with payers. We do all the things that health care companies need to do. But I at least thought I knew how to do that.

I’d been pretty involved in the space for a while. The And things I didn’t know how to do were how to build a consumer brand, how to acquire customers, how to build world class kind of consumer tech. And so it was more about augmentation and the people that I wanted to be pushing me on the board, and it was less about getting to a yes or no.

In this game, it’s the only thing that matters. Right? It’s like how fast can you figure stuff out? If you think about the game that venture funded founders are playing, they’re taking money and they’ve got roughly eighteen months to figure something out that’s really critical to getting to the next round of financing. What can you do to increase your speed of execution? It goes back to hiring great people and mostly getting out of the way and giving them the autonomy to make decisions. I think it is also being really explicit about which decisions are things that can be changed and need to be made really quickly and which decisions can’t be changed and are really high consequence.

And I think if you find the right leaders and you build the right exec team, they’ll mostly be able to parse those two things. If it’s even cuspy on the bigger decisions, they’ll be coming to you and you’ll be working through it. But for everything else, like, people should have the autonomy to go. Like, you should be hiring real doers that know how to execute, and then they should feel like they have the autonomy to make the call and go as fast as possible. Can you start from a relationship of full trust?

Yeah. It’s funny you asked that. When we were acquired by Amazon, we took all of our internal the equivalent of Amazon LPs, like leadership principles. Right? And we tried to mash them up one to one. Well, what’s the equivalent like Amazon one? And they actually like almost all tracked sort of one to one, like customer obsession and all these things were dead on. And the one that was was the exact opposite was we had this leadership principle at PillPack, was my favorite, which was assume the best.

So almost all your best relationships in life are about assuming the best in someone, not assuming the worst. Right? And so if you start from that frame, like, you’ll get rid of 90% of conflict by assuming that people are trying to figure it out and everyone’s doing their best. Amazon’s equivalent was earn trust, which is literally like the opposite leadership principle, and I didn’t actually think a whole lot of it. Like, we just tried we mapped them. Oh, yeah. The same. Earn trust. Assume the best.

In hindsight, that is like literally the opposite culture. Right? It’s assume the worst until you’re proven otherwise. We built a culture that assumed the best, that is people showed up, we made bets on people, and then we assumed that they were gonna execute, and that they and we trusted them.

Yeah. Never backfired on us in a meaningful way. Certainly, there was a lot of goodness that came from it. So no is the short answer, but certainly could have been burned. Speaking of kind

I think if you’re making really critical irreversible decisions rapidly, that will really fuck it up. Like, I think you’ll make a lot of really bad decisions. Honestly, like, I took as long as, like humanly possible to make those critical decisions and honestly, to some extent to the frustration of my exec team throughout the course of the business. But a lot of times, in a very kind of mutually agreeable productive way. Honestly, the best articulation of this out of everyone on my team was Elliot, who’s my co founder, who is amazing.

And I’d say the bigger decisions that we made over the course of the business were a byproduct of going on two hour walks three times a week for six months. Like, we were just batting these things back and forth for a very long time, sort of reticent to make the call. And I think that’s super important too. It’s like a bifurcation of decision making. If you can change your mind, just make those decisions as fast as humanly possible. Honestly, don’t even bring them to me. Just let go.

And if you’re wrong, we’ll change your mind, and we’ll do it the other way. That’s totally fine. But if it’s something that’s irreversible, we’re gonna we’re gonna work this one out until you’re so frustrated that you feel so confident that it’s the right decision, that we’ll know it’s the right decision. I think sometimes people make all the decisions in the media instead of bifurcating these things, but I think that’s super

We had a number of run ins with incumbents around our access to their networks over the course of the business. And I think we knew this was gonna be a problem back in probably, like, middle of twenty fourteen or something like that. And Elliot and I would just wrestle with nonstop. Is there a way to get in front of this? Is there a way to, like, get meetings and try to work through this productively before it blows up in our face? We batted it around nonstop.

And I think if you let your anxiety get the best of you, you would have made the call and just done something because you felt like you had to do something about it. But in reality, we just sat on it. We let it ride. But it ended up becoming, like, the make or break moment in the company, and I think it was the only way that we could have possibly pulled off what we did pull off.

I think that probably the more useful answer to your question is we made this certainly at the time a weird decision that we were only going to focus on the end customer. Like we in healthcare, you’ve got payers, you’ve got providers, you’ve got other constituents, you’ve got the end customer. And honestly, it’s the reason that most of healthcare is as fucked up as it is that almost no one is actually building for the customer that’s that is using the service. And so we effectively put on blinders to everybody else, but said everything we’re doing is to make this easier for the customer.

If we’ve to do weird stuff to make that possible, that’s totally fine. We’ll do the weird stuff. And if, like, a provider or a payer is upset about the way we’re doing something, it’s better for the customer, sorry, like, we’re we’re building the thing for the customer. We’re not actually building it for you. And that ended up being both incredibly critical, and it enabled us to build an amazing service. We never strayed from was that the only thing we care about as a business is building for that end customer.

I think one of the most difficult things as a founder is finding the balance between doing things that don’t scale and having less experienced folks just cranking away and figuring things out versus when it’s time to bring in some adults and when it’s time to bring in kinda real operators. And I think we messed up that balance in in bringing in a head of finance, bringing in a head of ops at the right time, and it was incredibly painful. We’re a deeply operational business, and we probably waited nine months to a year longer than we should have to bring in a real operator.

Tactically, we started the business. We had a head of ops that I had known for a long time, but was young, hungry, knew the business super well, and was actually the first person I hired. And he scaled that thing to four or 500 people, like zero humans to 500 people or something in operations, and was more dedicated to the business and the customer than anyone I’ve probably ever met. I bet he slept in the pharmacy forty days in one year, and was just able to figure anything out.

And that was amazing. That’s like the perfect archetype of an early operational leader is that a deeply know the domain. They’re happy places not like going and building unnecessary process. They’re happy places. Let’s just go figure this thing out. But at some point that approach breaks, At some point, you just get too big. It doesn’t work anymore. Like you have to have the right systems and the right process and all of that stuff. And I think he was so good. He, like, we just went too far with that approach.

It’s a funny story, actually. Probably the worst board meeting we ever had was the board meeting before Yvonne joined. Everything was breaking, but at that board meeting, it was like, oh, no. Everything is like really breaking. But the problem was that we had hired Yvonne, but she hadn’t started yet. So she came to the board meeting, and so it was this hilarious dance between the investors and me and Yvonne, where everyone knew it was broken, and the investors were pissed, but they didn’t wanna freak out of Yvonne, because if Yvonne didn’t show up, like, we were way more screwed.

So it was just like this hilarious, like, emotional dance of how do we say all the things we need to say in a way that, like, makes Yvonne excited to fix all these problems and not so scared that she runs away. But for sure, that was like the most operationally painful moment in the business.

I always think about each round for a classic venture backed company as trying to be super crisp about the thing you’re trying to prove on that round of financing. Right? But what is the bet your investors are making? And do you have the right team to achieve, like, that single bet? Right? Like, you kinda have to put blinders on and be really thoughtful about what that is. So for us, we raised the first round of financing like it was taken on face value that like, I knew how to open a pharmacy.

I knew roughly what the economics were because we were in a similar business before. I knew how to build a product ish because we had Elliot on the team and he had built products before. The flyer everyone was taking is, can you acquire consumers online for this company? And so the only thing that mattered post that first round of financing was, can we actually acquire customers online for a pharmacy? Which, if you jump back to 2013, like starting a pharmacy is not what starting a pharmacy is today.

Right? There’s Roe and HIMs and PillPack and Capsule and True Pill, like, there’s all this great activity in pharmacy. In 2013, there were not pharmacy startups. Right? So that was a weird thing to begin with. And so I think that was the bet we were making. To come back to your question, at that moment in time, would have been weird for us to go hire like a really killer CFO, and like a really amazing head of ops. Like, that would be, like, awesome to build that exec team.

It was like, can ignore that stuff, actually. Let’s go find the best folks to help us figure out customer acquisition. And I think you have this journey in any startup. Right? So, like, you get customer acquisition working, and then all of a sudden, ops are imploding, and now you got to go find a really killer operator. And I think you, to some extent, have to be in reactive mode, and less about, we’re going to go find, like, an amazing exec, and they’re going to build all this process and this function, and be comfortable with, this is the only thing I care about for right now, and we’ll figure that stuff out later.

So I think it’s less about being selfish in the sense of who you’re recruiting. It’s more be selfish who shows up in that weekly meeting that you spend three hours going through the business. Because a good rule of thumb is if you bring your head of HR and your head of legal and your head of finance and your head of ops, and if you bring every one of the kind of leaders on the team into that room, you should take the three hours you have and divide it by the number of humans in that room and assume each one of them gets that amount of time to talk.

And so do you really wanna spend a seventh of your meetings talking about promotions and leveling and HR stuff? Being really thoughtful about who’s in that room will determine what are you spending your time in that sort of most critical moment debating. So for us, and this honestly wasn’t intentional. It was just it was a byproduct of who was on the team. But our by the time we sold the company, we’ve got a thousand people. We’re doing a few 100,000,000 in top line. The entirety of that meeting was me, Yvonne, who was COO, CFO, legal HR, and all those functions.

Elliot, who was product and tech, Jeff, who was BD and growth, and Colin, who was marketing and design. It was five of us in that meeting. And if you look at who the five were, like, you’re going to spend 85 to 90% of your time talking about product and growth. The combination of HR, legal, ops, like all the tertiary functions get 10 to 20% of the time in the meeting. It just made us focus on the things that are ultimately gonna drive a startup success. But a startup is about product and growth.

That is the only thing that matters. And who on that team shows up, I think, determines what you’re focused on as a entire organization.

Yeah. So functional org is roughly what I described. Right? So if you look at the CEO and their exec team, each leader on that team is gonna have a function. You have a head of engineering. You have have a head of design. You have a head of product. You have a head of operations, a head of finance. It’s very functional. It’s like the most simplistic, straightforward org design. It’s where most companies are gonna start. A GM focused org is where most big companies end up. Right?

So a GM focused org is where you’ve got single threaded leaders that in theory own a p and l, And under that leader, they have a head of finance, head of ops, head of product, head of tech. And so you end up having like hundreds of these GMs that manage a single p and l and have pockets of each of these functions inside of their business. Maybe somewhat controversially, think the second you go to a GM focused org, you’re not a startup anymore. Like, you are a big company.

Almost all of the downsides of a big company that people bemoan, the amount of HR, the amount of overhead in decision making, like, the all the over processedness, I think it’s all a byproduct of that single decision. You could not have built a company like Amazon or another large company without doing that. But it has all sorts of negative repercussions. And I think if you’re a startup, like you’re so far on the other side of that extreme that I think it’s, like, more of a unnecessary intellectual exercise to think about going to GM than it is about than it is actually gonna do any good for you.

And you can build huge companies that are functional. You say Apple is like a functional award.

Yeah. I’m far on this extreme, but I think stick with functional until it’s so obvious that it can’t possibly work, that maybe there’s an excuse to go to a GM focused org. And certainly, if they’ve got like a manageable number of product lines, I wouldn’t even have the conversation. It’s just not worth the debate. It is going to make your business worse. And it might not do it right away, but it is definitely gonna do it on the long term. Yeah. If you think about all the extra process that that creates.

Right? So if you have a GM focused org, like, now have to do all this work to make sure that all of your eng twos are leveled at the same level because one’s in this team and one’s in that team and then don’t talk at all and they have no idea what the other team’s doing. And so if they transfer from this team to that team, you have to make sure that they’re both as competent and you have to make sure that everyone’s compensation is identical across 15 different businesses for the same level.

It is what creates, like, an enormous amount of HR work, an enormous amount of, like, overhead, because you’re trying to do all these weird backflips to make sure that there’s consistency in the business instead of just having an whole org of engineers and a whole org of designers where that stuff just comes in kind.

And you just don’t have your best people on every product. Right? If you’ve got your head of product and your head of engine, head of design, working on every product, they’re going to be better. Just like

going to be

I didn’t appreciate this nearly as much as I probably should have at the time, but incentivizing your team as much as possible on equity ends up being, like, the biggest lever you have from a cultural standpoint. But if you take kind of PillPack pre acquisition versus PillPack as part of a big organization, PillPack pre acquisition, like, I don’t think I ever once had a conversation about leveling someone or promoting someone in a meaningful way that was gonna dramatically change their comp. Like, we bet on people.

We gave them a big equity package the day they started, and we expected them to deliver on that equity package. And so, like, everyone either won as a team or we lost as a team. There was no point in trying to go carve out some way for you as an individual on that team to win in a way that mattered. And so everything falls out of that. We’re gonna win or we’re gonna lose. We’re all aligned, like, from an economic standpoint. You get to be a big enough company, even if it’s technically equity and it’s it’s stock.

It is rational to care far more about, like, your own career pathing and the next promotion and all of those things than it is to care about winning or losing. And so it is, like, the biggest lever a startup has culturally. You

with

should go work at a big company then. Like, it’s fine. That’s not the game we’re playing. Startups are about, like, pulling something off that’s incredibly difficult and everyone doing incredibly well if you pull it off, and that’s not cash. So it’s just a different game.

Yeah. I talked a little bit about to that sort of first bet. Right? We started the company. We raised about $4,000,000 between two quick rounds right out of the gate. And the bet people were making is that we can acquire customers. Everyone assumed we’ll start a pharmacy. They assumed we’ll get in network with payers. Like, all that stuff was a given. So if you jump forward, we started the company in 2013. We raised that around middle of twenty thirteen, and we launched the product in early twenty fourteen.

And for folks that were around at that time, the way you acquired customers was buying Facebook ads, like, point blank. But that’s how every D2C company was scaling. And so we assumed, like, we’re gonna do the same thing. We’re gonna buy Facebook ads, and, like, hopefully, economics work, and hopefully, we can acquire customers in this category. And we launched, we got our ads turned on, and were working. Right? Like, were requiring customers at a number that was lower than we promised, and we’re like, oh my god, it’s working.

This is great. And out of nowhere, our account got shut off. We got suspended from Facebook ads, and we’re like, this is not good. And, you know, their wonderful customer service was very helpful, as you can imagine. And they told us at the time, like, actually, you can’t advertise pharmacies on Facebook. Sorry. Like, you can’t do that. It’s a picture of this. Right? Like, you’re we’re a new ecommerce pharmacy. Like, we’re gonna build an amazing digital experience, and you lose, like, the single digital channel that every company is building their business on the back of at that point.

And we had this all this back and forth, and finally we got them to agree that if we got this thing called VIPPS, which was like this which was this accreditation for online pharmacies, that then we could advertise on Facebook, which is great news. It’s now, I don’t know, March 2014 or something. And we go, we contact Vips, and I came to get this accreditation and here’s who we are. And it’s like, cool. Yeah. Here’s the process. And they sent us this long, like, overview of all the things we had to do to get the accreditation.

And on average, it takes about twelve months to get this accreditation. We’re like, oh, God. Like, we don’t have twelve months to figure this out. From a financing standpoint, we got incredibly lucky because and this is not usually a lucky turn of events, but Fred at the time had been at Accomplis, which was a fund in Boston and led the Series A from there. Fred left Accomplis and went to Excel. And he knew the company super well. Obviously, he he liked the business and he just knew that this was gonna work.

When he took a flyer and he made a bet on on PillPack in September 2014, before we had any real customer acquisition working, like we were hacking our way to get some customers and the product was working. He then led the round in ’20 in the kind of back half of twenty fourteen. We also let in the folks from slow ventures into that round to our early Facebook folks for this reason. We got VIPs probably September, October 2014, so a bit faster than normal, but it still took six or eight months or something like that.

Once you

So we raised that $9,000,000 round in September, adds on in the probably, like, October or something like that. And I’d say within three weeks, it was a whole different situation. We turned the account on, customers were signing up at a CAC that we were happy with, and we just started turning the knob, and the business started grow like, it was that straightforward. And from the back half of fourteen through the middle of fifteen, it was just scaling, and we raised a $50,000,000 around six months later or something.

I think the practical answer to your question is we raised, a nine on 30 post or something.

Yep. I think that was market ish. This was not 2018, 2019, but it was fine. Like, I’ve never once looked back and be like, oh my god. I got so diluted. Like, I could have so much more money right now. That’s just silly. It worked out great. We raised around and we moved on, and then we raised around couple 100 pre nine months later. And so that one was probably way too frothy, and the one before was low maybe. But, like, at the aggregate, it was fine.

So I think the place we were woefully naive at PillPack when founded the company was this. Right? We didn’t really understand why there were more ecommerce pharmacies. There’s all these big winners in pharmacy. There’s basically there was no ecommerce player before PillPack. Like, they didn’t exist. Right? CVS and Walgreens, there’s PBM owned mail order pharmacies. There’s no ecommerce business. Well, that’s weird. We should just build. This will be great. We’ll build a great customer experience, and it’s gonna be awesome. And there are the things called PBMs, which stand for pharmacy benefit managers, and they are companies like Express Groups, CVS Caremark, OptumRx, and they’re the equivalent of insurance companies, but only for your prescription drugs.

Historically, they were in two different businesses. One was managing your benefits. So how much is your co pay? Which pharmacies can you use? How much is your out of pocket? Which medications are covered? Like, all the things an insurance company does. And then the other half of their business was owning and operating mail order pharmacy, so they did home delivery for consumers. And so, obviously, they weren’t particularly thrilled about other companies competing with them in that second category. Right? They had a captive market on doing home delivery in pharmacy.

Aren’t you fucked? Yes. You are fucked. This is why I say you would have never started this company if you knew how the industry dynamics work. It’s why no healthcare investor would have invested in this company. This is idiotic. There’s no way. But I’m

Oh, yeah. I was horribly confident that this would be a non issue. I’ve run pharmacies before. You decide you fill out the paperwork, you get in network with the insurance companies, like, it’s fine. And that’s actually what we did. Like, we started a pharmacy, and we got a network with all the insurance companies, and it was totally fine. So, like, 2013, ’14, first half of twenty fifteen, like, we were in network as a small, little independent pharmacy, like any other independent pharmacy, and they didn’t care.

Right? Like, why would they care? We’re doing, like, very small amounts of volume. They didn’t even know who we were, frankly. We filled out, like, very administrative paperwork to get a network. And then we got our Facebook ads turned on, and the company started scaling and started growing really quickly. And, of course, they see every transaction that you process because they are the transaction processor, and then things change quickly. Right? Like, we get to the middle of twenty fifteen. We went from $10,000,000 run rate to $70,000,000 run rate in six months, nine months, something like that.

Then they started really caring. Right? And so now, like, everyone knows who PillPack is. And we got very lucky. We got this guy, Jim Messina, who was Obama’s deputy chief of staff, joined our board, and he joined our board, especially to help us navigate regulatory and incumbent issues like this, and he’s very good at this. Through 2015, we got termination notices from all of the major PBMs, very obviously. And I would say every one of them but Express Scripts, we worked through in a very kind of private professional way with them.

And net net, we maintained access. We maintained coverage mostly because we were already serving their customers and their customers like the product, and it would have been very painful for them to take it away was the sort of base of that.

Like, literally impossible.

Why? It’s not just payment processing. They’re they’re they’re equivalent of you can think about a PBM or honestly a payer in general as, like, the demand aggregator in health care. They own that demand. They own the employer relationships. They have the Medicare relationships. As a startup, you could not have built what they had built unless you’re building an entirely different company. You can’t do it when we’re building the equivalent of a retailer. Like, literally impossible. So what happened then? So early twenty sixteen, Express Scripts sent us a termination notice.

Honestly, looks the same as all the other termination notices we had received, and we had managed quietly and figured out. And we reached out to them the same way we did with the others and try to get a meeting and try to help figure it out. We had two weeks. Right? So termination notice states like, in two weeks, you can no longer serve Express Scripts customers. Like, you can’t process transactions. For context, they are the largest PBM, so this was like 40% of our revenue. And as far as we knew, in two weeks, like, that revenue goes to zero.

But we spent a week just trying to get in touch with somebody, and they were just radio silent, would not even engage with us. And so we made the pretty aggressive decision to start a public war. And so Colin Rainey, who had started like three days before, designed a full explainer video that I talked about what a PBM is, what they do, why this matters. And then we filmed a customer testimonial of one of our customers, and I think within two days had 1,400 or 1,500, like, customer testimonials.

And these weren’t like, oh, like, it’d be so sad to lose PillPack. I love the packaging. It was like, if we lose PillPack, like, I’m gonna have to put my mom into a home, and we don’t really know actually what we’re gonna do. And it was 1,500 of these. Right? And so we built a whole website, fixpharmacy.com, had all the customer testimonials on it, had the explainer video, the customer video, and then we had all this wonky stuff for regulators if they want to drill into what was going on.

And then we just did a massive PR blitz. So we launched the site. I think we had 40 articles in two hours, and we leaned super heavy on this actually is gonna be really bad for these customers. This isn’t like a David and Goliath, like, hopefully one of the businesses wins and one loses. This is gonna be super bad for the customers that are using this service. And then we ran a regulatory process and tried to do what we could do. But I think within twenty four hours Express was at the table.

And then it gets even crazier. So we’re now like, let’s five days later, we’ve got two days to get this contract fixed. Now it is a business negotiation. We’re trying to find a path for it with Express Scripts. I don’t think anyone’s heard this story ever. But Elliot and I were sitting in a conference room with Colin. I’m sitting on my laptop. We’re like the war room. Right? We’ve got all the site design on the walls. Like, this is like a classic war room. I get an email from like the equivalent of our GPO for all of the other PBMs.

Like, have a like a GPO type thing that sits between you. And they’re like, hey, like we saw this Express Scripts. This seems bad. Like, actually, we’re gonna kick you out too. And so we were forty eight hours from going from, I don’t know what it was, a 100,000,000 in revenue to zero. Like, zero. We had to now both I have to go figure out how to fix the Express Scripts thing. And we gotta go figure out how to like fix all of the other contracts, like, at the exact same time.

And so I’m sitting there, I get the email, like, I don’t say anything. I just turn the computer around to Elliot, who looks at it. We say nothing for probably three minutes, and Collin’s sitting like, hey, guys, like, what’s going on? Two The of us walk out, and I’m like, Elliot, you gotta figure out this GPO thing. I don’t know how we’re gonna deal with that, but you gotta figure it out. And I was like, I’ll figure out Express Scripts, and we’ll figure it out. And by Friday night, that was the end for both.

Elliot had found a new GPO, done all the tech work and administrative work to flip into it, and I had signed a new contract with Express Scripts. We had not lost a single contract, and we had solidified ourselves, like, publicly as a company that was going to exist in the space, like, in perpetuity. So it was as live or die as you’re ever gonna see, and, yeah, that was what that sort of make it moment for the business. Are you

I have a personality that when things get really intense, like, I get calm. I don’t the opposite doesn’t tend to happen. So it was incredibly stressful, but I also felt like I was in my element. There was like an enjoyment. It’s a battle and we’re gonna figure it out and we’re like, we’re playing a chess match here and certainly was stressed and certainly was not sleeping well. But at the same time, like, there was like a an enjoyment to it. And when when we obviously when we pulled it off, like, it solidified the business in a way that we couldn’t have done in any other way.

And similarly, is one of those decisions that, like, I think if you were a little too anxious and you wanna make the decision, like, you would have wanted to get ahead of this one. Like, you would have wanted to, like, we should go do some BD deal with them. Like, let’s figure this out. And I was like, nope. None of that felt right. It’s not gonna work. Let’s just play this out and see how it plays out. And I don’t think there was any other path to pulling this off than the one we took, but you could have also never, like, architected this path.

It was just building something great for customers, and when it mattered, those customers came and defended the access that they had. TJ, why on earth did they relent? What what made them pull back? There was no excuse from a customer standpoint. Right? Like, it was all in fighting between businesses.

Yeah. So if you zoom back to that moment, I think it was, like, mid twenty seventeen, early twenty seventeen probably. We had just finished overhauling, like, all the software that powered the pharmacy. So when we started the company, we just bought everything off the shelf. Right? And over time, we’re ripping components out and ripping components out. But by early twenty seventeen, we had rebuilt and ripped out all of the underlying tech that powered the pharmacy. And we had this moment where, like, picked our heads up and we’re like, what should we do now that we’ve done that?

Right? Almost all our resources have been focused on that for the longest time. And we had this idea of, like, could we offer infrastructure up to other participants? Right? So could be another startup that needs to launch a pharmacy experience. Actually, we’re all launched on our infrastructure. And as part of that, we were meeting with all the large retailers and other potential customers to build on top of that. Right? And one of those large retailers went from a very commercial conversation to an acquisitive conversation, like, relatively quickly.

Yeah. Usually, they call and say, hey. Could we just buy the company? It’s it’s pretty clear. It moved from, like, a a commercial thing to an acquisitive thing. I wasn’t reading the tea leaves at the same time, but it was pretty explicit at that point. And I think we looked at where we were, and a couple things had happened. One, like, we were now, like, a version of scale. Right? Like, couple 100,000,000 in run rate or something like that. And we had a very good sense of what our economics were, and what it was gonna take to build what we really wanted to build.

And from that standpoint, like, it was gonna be pretty capital intensive to scale this thing to the extent that we wanted to. Right? Like, it was doable. Like, we could have definitely built an independent company, but it was gonna be capital intensive. And then probably more importantly, like, when we started to pull back, like, it was a very simple vision, which is just made this easy as possible for consumers. And I think as we started pulling on that string over the like we had all these incumbent issues and everything else, we were more ambitious.

Right? Like, we wanted to fix the supply chain. We wanted to fix a bunch of other stuff in the industry. And we had gotten convinced the best way to do that was to make pharmacy a shoppable, like, ecommerce experience, and a bunch of stuff falls out of that ultimately reshapes the dynamics. And so the combination of those two things, like, the best place to do that is at a large retailer that already exists. And so it was pretty straightforward, and we made the decision assuming that the terms came to a place that made sense that we would probably sell the company in, like, the back half of twenty seventeen.

That same initial kind of retailer that had thought they wanted to buy the company got to terms that we were comfortable with. And we spent some time with other acquirers, but it was clear that they were the lead horse, and it was probably the right fit and the best option. And so this is early twenty eighteen, and we had, I don’t know, six months of runway in the bank or something. And so normally, that’s when I would have raised around. Right? Like, raise eighteen months, you then probably raise when you’ve got six months of runway left, something like that.

And so we had started a fundraising process in January ’18. And then within a few weeks of that going, we got to terms with a potential acquirer, and we assumed we were gonna sell the company to that acquirer. And we shut down the fundraising process. We sort of full steam ahead on getting the deal done. Honestly, we were days, like, not weeks from being done, like, announcing. Like, this thing is done. Like, definitive agreement done. And it hits a snitch or it hits a snag, and it’s gonna get delayed.

The whole board thinks we’re selling the company in three days. I think we’re selling the company in three days. And now it’s not gonna be three days. It’s gonna be some unknown amount of time. And now instead of having six months of money in the bank, I’ve got two months, maybe? Because, like, we’re selling the company in three days. Like, had two months of money. Great. You perfectly timed it. I had to tell the board, obviously, as I get a phone call Thursday night. I tell the board on a Friday morning.

I picked back up the fundraiser, like, I’m flying to San Francisco Monday morning. I’m going to New York on Wednesday, and then maybe I’ll go see if I can get a meeting in Seattle with some other potential acquirer by the end of the week. And that’s what I did. So I got on a plane, I went back and met with all the potential funders, not acquirers, and told them what happened. I thankfully, like, we’d shared all our numbers in December, January, and we’d beat all those numbers in now, like, April or whatever this was, and that’s better than if we had missed them for sure.

And it was kinda like, we’re up for anything. We’ll figure something out here, but we don’t have a ton of time, so let’s just be creative. Then I had the meeting with the company in Seattle, and it was definitely the best pitch of my life. And at that point, I knew we were selling the company to Amazon. Like, all of our vision around what to do with pharmacy and how to make it shoppable and all those things, we were just super aligned. At that point. I knew we were gonna sell the company to Amazon, and ultimately we did, and it was a great outcome.

How do you come

Yeah. It’s a dance. By the end, yeah, I sat on the phone and said, I want a billion. That’s definitely what happened. But getting to the the first deal was a dance, and it was about where are the different companies valued, where are the investors’ positions, what’s an economic outcome that’s good for everybody. And if we can’t get there, we’re just not gonna do a deal. It’s not like we had to sell the company. We could have raised another round and kept going. And so that was more of a dance.

By the time I got to doing the deal with Amazon, like, ultimately, it was a phone call that was like, if you hit a billion, we’re done. And they hit a billion and we were done. When

So we had three potential buyers. Each structure was different, whether they bought the whole thing or most of the thing or whether it was all upfront or there’s some earn out, and there were varying degrees of those things. But I would say, by and large, every deal is gonna have some of the money up front and some of the earn out. And so I think we announced in June, no money then, because, like, you haven’t closed yet. There’s this whole, like, regulatory process and everything that takes some time.

So I would say, like, entrepreneurs, that moment from announcement to close, it’s a relatively stressful period of time.

Yeah. You’re definitely not loaded yet. There’s plenty of deals that blow up in in closing, not typically for diligence or more for government oversight reasons. But then we close in September, then yes, like a lot of money hits your bank account.

For me, the moment that was more like endearing was like was telling the team, which is the same exact time. Right? No. That isn’t the same time. That’s later. Okay. So we told the team that was better. My dad was there. My mom was there. Like, all of the companies that traded in pharmacy and the public markets dropped by 15% in three minutes. So it was the very that moment was honestly, for me, was, like, was better than when the money hit my account. It was just, like, such a moment.

When the money hit my account, it was just a lot of refreshing, like, is anytime lots of money hits your account. Where were you? Were you at home? Were you in the office? Were you with your wife? I actually don’t even remember. I don’t remember, crazily. I certainly remember where I was when we announced the deal, but I don’t know where I was when we when the money hit the account. I’ve heard quite a few people

No. I really don’t. That might be true. It’s not I’m not saying that’s not possible. But when we set out to start PillPack, like, just wanted to make pharmacy better. That was the ambition. And when we sold the company to Amazon, like, I deeply wanted to build, like, a shoppable pharmacy experience, and we did that. The thing we built and the work we did at Amazon, it’s the only big tech company that’s actually providing health care and doing real things in health care. And so that’s a legacy that I’m super proud of and really happy about.

And economically, like, don’t ever look back and wish I had kept going, and it all could have been so much bigger and so much better. Just super happy with the outcome.

Time makes me really happy, and money provides you a lot of extra time. So I’m pretty happy. It’s hard to parse. Like, when I started the company, I had no family, no kids, none of that. And now I’ve got three little kids and an amazing family and super happy with where we live. So I’m super happy. I don’t know how much of it’s the money or the time or neither, and it’s just the family, but I’m quite happy at the moment.

I had extensive taste, but I’m not gonna go through a laundry list of things I bought. Probably the most technically, the most lavish is we bought this we bought, like, a 12 acre farm in the middle of Park City, which we’re building. My wife is building, like, an amazing farm here. We’re gonna have a bunch of animals and a bunch of fresh produce in the backyard. And it’s a practical, but quite lavish purchase and one that I’m excited to to build.

I think the negativity is probably a little overstated. When we sold the company to Amazon, my goal was to build and launch pharmacyon.com and make all those, like, very non data driven, like, nuanced decisions, like, intuitive decisions to get that thing off the ground and then hand it off to an Amazonian that knows how to turn the crank and really build, like, a scaled business in a way that I honestly just don’t. I don’t think Amazon is any worse than any other big company, but it is a big company, and it comes with all the trappings of a big company.

And I think for me, given, like, the very beginning of our conversation where it was like, do you like stability? And do you are you comfortable with authority? And do you like predictableness or not? I am so far on this extreme that honestly, like, I don’t think I would be super successful at any big company. I’m a startup guy. And so, no, like, functionally, thrilled that we built, and Amazon is a big company.

Exactly how happy it’s made me to now not be at Amazon. I love that one. Listen. Next one. What do others not know to be true? That I think that customers are ultimately gonna shop health care like they shop everything else, and that until that happens, like, health care is gonna remain as fucked up as it is right now.

I think just be a normal human. Create normal relationships with your investors and your board members. Text them. Call them when things are good and bad. Get breakfast. Make David Tisch buy you sushi. Like, do all the things that you do and create relationships in the rest of your life with your investors and your board members, and it’ll probably be fine.

I used to think that people could, like, float between different types of companies and jobs pretty seamlessly, and it would be fine. Per some of the earlier conversations, I think that, like, you should really optimize for what your personality is best at. Like I said, you’re both really successful and really happy in a huge company, and then also really successful and really happy in a startup is unlikely. And so I think I’ve changed my tune on that one.

I think you gotta give it to the first person that ever bet on you, which for us is Katie Ray and Zen Cho. And Katie was the one that was running Techstars, we got into Techstars. Like, she bet on us before anybody else, and so it’s hard for me to not give that to that kudos to Katie.

most like

I’d really like for 20 that have never built a business to stop, like, pontificating on how to build a business. Just kidding. Love TJ, my friend. My my son’s name is Harry. It’s named after you. I love you. I’m just kidding.

20% margins, so you’re better than me.

I gotta give that one to Elliot Cohen. He was definitely my best board member. We were always perfectly aligned. What about another board member that’s not a founder? I this is rapid fire. There’s not time for to go deep on any of these questions here.

Hopefully, get the opportunity to to keep being involved in building things that make people’s lives better. I think it was super rewarding to build PillPack. I’m still young. I’ve got a lot more in me, so hopefully, still building and helping build things that that make people’s lives better. TJ, I love this. You

Course. It was my pleasure.