Capsule Is Reimagining The Pharmacy As A Patient-First Experience
This digital pharmacy makes getting your prescription easy and painless
It’s a pharmacy you won’t have to visit, but you might just want to. That’s how NYC-based digital pharmacy Capsule sells itself. Launched last year, Capsule’s key differentiator is its top-notch customer experience, cutting out the long lines, the out-of-stock prescriptions, and the pharmacists who only see you as a name on a pill bottle rather than a person. By delivering prescriptions directly to your door and letting you chat with pharmacists online, Capsule does away with all those pain points.
A former investor for Bain Capital, Eric Kinariwala saw healthcare as rife for disruption after his own terrible experience dealing with the traditional pharmacy model. He waited in line for an hour with a sinus infection only to hear “sorry, we’re out of stock.” Soon after, Kinariwala, together with friend and longtime pharmacist Sonia Patel, created Capsule. Though only based in NYC at the moment, the company’s model provides an intriguing insight into the future of healthcare, which is becoming increasingly personalized to each patient’s needs. We recently met up with Kinariwala at Capsule’s offices and got to pick his brain on these trends and more.
What are the main differences between what Capsule does and what a traditional pharmacy does?
We built Capsule to solve all of the pain points that exist for consumers with traditional pharmacies. There are five big things that everybody that goes to the pharmacy regularly experiences. One is, the average wait time is an hour. Two is that 40 percent of the time you go to the pharmacy, your medication’s out of stock. Three is that there’s no price transparency. You literally have no idea what your medication’s going to cost before you get to the counter. Four is that it’s really hard to get information about the drug, because most people take that little piece of paper that’s in 3-point font and throw it away. The fifth thing is it’s really hard to ask questions to a pharmacist when you have those questions.
I certainly don’t want to ask those questions when there are 20 people in line behind me and everyone can hear me. I also just might not have that question at the time I’m getting my medication. I might have it at 10 o’clock at night. The way we designed the experience is to be completely digital. So there are two ways you can use Capsule. One is when you’re at your doctor’s office and your doctor asks you what’s your pharmacy, you just say Capsule. We’re already in every doctor’s system. We electronically get your prescription and we immediately text you, and you can schedule a time to have it delivered and enter your payment information. The other way you can use it is through the app or website by just typing in where your pharmacy is and the name of your medication. Then we’ll transfer your prescription over from the other pharmacy and arrange a delivery time. It’s super seamless, and it’s totally digital.
You used to work in a totally different industry than where you are now. Why did you leave your previous career and what was the initial idea to start Capsule?
I spent the early part of my career as an investor. About two years ago, I went to the pharmacy, and I think literally everything that could go wrong with the pharmacy went wrong. I had this killer sinus infection and my head was just about to explode, and I was waiting in line for an hour. I finally get to the pharmacy counter and they told me, “Hey, we’re out of stock of your medication.” So I scoot out of line to call my doctor to get something else—no cellphone service. I end up just leaving the pharmacy, going home.
I woke up the next day, and I just started thrashing my head. I was like, “How could this be an experience that everybody deals with every month?” In this serendipitous series of events, I ran into an old friend of mine who’s now our Chief Pharmacist [Sonia Patel], and I started chatting about my experience. From there I started digging into the industry because I’ve been an investor, and she started telling me more about that experience from the pharma side of things. My background as an investor has helped because I was already used to digging through complicated things, and the [healthcare] industry is really complicated. We had to figure out, “How do you build the best thing for doctors, hospitals, insurance companies and drug companies?”
How did you design Capsule with the customer in mind?
We spent a lot of time really trying to understand the consumer journey. What is every point of friction and how do we remove them? We designed the business model to make sure that it supports how people actually want to use pharmacies, and we designed the product experience so that it’s completely seamless. Your doctor doesn’t have to do anything special to use it. You don’t have to do anything special. You don’t even need an account to use it, which is amazing. You go to your doctor, tell him Capsule is your pharmacy, and we get it. We built the brand from a visual perspective and a communication perspective to be something that’s super high trust and emotionally resonant. A big piece of the business isn’t just, “How does the brand make you feel? How does it look?” but also, “How does it engender trust?” You’re putting this thing in your body. You’re putting it in your kid’s body.
You mentioned that 40 percent of the time you go to a pharmacy, prescriptions are out of stock. How big of a problem is that in the pharmacy industry, and why is that even a problem to begin with?
When you think about the business model of pharmacies, there are 2,600 pharmacies in New York City. There’s one literally on every street corner. There are two things happening. One is that traditional pharmacies haven’t invested in the technology to predict what people are going to need, and that’s something we’ve invested a lot of time in, to make sure that people have the medication they need when they need it. The other thing is that because there’s one on every street corner, you’re replicating your inventory on every corner of New York. The combination of the way we’ve built our business with one central facility plus the predictive inventory technology makes sure that we always have the medication you need when you need it.
Could you explain more about how predictive inventory management works?
About half of our core team is focused on product design engineering. What we’ve done is understood what the patterns are of what people are taking, what doctors are prescribing, and how frequently they are refilling those medications. We’ve been able to basically build technology to say, “This is the type of inventory, and this is when you should be ordering it to have the greatest likelihood of having it when somebody needs it in stock.”
Capsule is a digital-first pharmacy, but you also have this brick and mortar location here in Chelsea. Why have that open to the public? Why not just be totally digital?
It’s been really important for us is to build a pharmacy that works for everybody, whether you’re young and tech-savvy and want to use Capsule through an app, or you might be older and be more comfortable using it only over SMS or over the phone, or you might want to come in because that’s how you’re comfortable with using a pharmacy. We find that most people love the convenience of having it delivered to their house or their office, but for us it’s just important that people have an amazing pharmacy experience that’s personalized to however they want to use it.
You guys are only in NYC right now. Is there any plan to eventually expand beyond the city?
In some ways, we’re so lucky that so many innovative things start in New York City, but 70 percent of Americans took some sort of medication last year, so this is a problem that impacts everybody, and the model works everywhere. Everybody deserves a better pharmacy experience, but I’m pretty focused on just making sure that we deliver New Yorkers an amazing experience.
We’ve talked a lot about customers, but doctors interact with pharmacies more than anyone. What do they think of Capsule?
All of these frustrations that customers have around out-of-stocks and no price transparency in dealing with insurance companies—it’s completely magnified for your doctor and her staff. So doctors are really receptive. They love the fact that finally somebody has built a pharmacy that cares about them and their needs, and is looking after them. It lets doctors be doctors again and focus on interacting with their patients, and not interacting with insurance companies and dealing with pharmacies who aren’t able to be partners with them.
The healthcare industry as a whole is rife with innovation, yet the pharmacy is still much the same as it’s always been. Why’s that?
It absolutely is, and I think you’re really right. Everyone’s always talking about healthcare, but no one talks about the pharmacy, no one’s ever talking about medication. The pharmacy’s literally the same as it was 15 years ago. Everything around the pharmacy has evolved, but that last mile hasn’t moved. That’s a result of two things. One, you have a couple of really large, entrenched old-school pharmacies that haven’t had the incentive to innovate. Then on the other side, you have a lot of small mom-and-pop type pharmacies that don’t have the resources to innovate. The role of medication in health care has also changed so much over the last 15 years. Never before has there been more complicated medications that treat a greater array of things, and when you think about 20 years ago, that wasn’t the case, and yet the pharmacy hasn’t kept pace with the advances in the therapies that we take.
What are some of the biggest things that you’ve learned in the last year since launching?
The traction over the last year and the number of people that have been using Capsule validated our thought that the pharmacy needed to be rebuilt, and it needed to be rebuilt completely from scratch with technology and with a great brand that people care about. We get so much feedback from our customers because the vast majority of our customers interact with us over SMS or via in-app chat. Every interaction we have with our customer is a human conversation, and people tell us, “Hey, Capsule, we love you. Thank you for doing this.” They’ll also tell us, “Hey, that thing that was confusing for me, can you fix that?”
So its been really cool to get that amount of engagement with people and that amount of feedback so quickly for a business. It’s helped us iterate the experience better and make it more what people want over time. Healthcare is obviously an incredibly large industry. It’s very, very old and archaic and broken, and needs to be rebuilt. We see the business opportunity, but I’m also just emotionally really passionate about making people’s lives better, having experienced that as a consumer myself.
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Jared is partner at Pioneer Fund, a a venture fund that pools capital and expertise from 170+ Y Combinator alumni to make diversified investments in select YC companies. He is also founder and CEO of Crowd Med, a company that has raised over $4M in venture capital to date from several top-tier Silicon Valley venture funds to solve difficult medical cases.
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