Amazon And UPS Are Betting This Electric Aircraft Startup Will Change Shipping

Harvard grad and former pro hockey player Kyle Clark’s startup Beta is on the verge of bringing workhorse battery-powered cargo planes to America’s skies that can take off and land like helicopters.

When he played minor league hockey in the early 2000s, Kyle Clark says his teammates would spend the long bus rides talking about the drugs they’d taken last night and who’d brought a hooker into their hotel room. Clark, a bruising 6-foot-6 enforcer, would bury his nose in textbooks on how to build airplanes. Pretty nerdy – but he’d even stood out as an engineering egghead in the locker room at Harvard, where his teammates had nicknamed him Beta.

Clark never made the NHL, but 20 years later, his startup Beta Technologies is valued at a billion dollars and is on the cusp of making the major leagues with Alia, a potentially groundbreaking electric aircraft.

Alia, whose gracefully angled 50-foot wingspan Clark says was inspired by the long-flying Arctic tern, is one of a slew of novel electric aircraft that aviation upstarts are building that take off and land vertically like a helicopter.

Virtually all of Beta’s competitors, including billionaire Larry Page’s Kitty Hawk and the SPAC cash-rich Joby Aviation, aim to transport people, enabling urbanites to hopscotch over traffic-snarled city streets. But Clark designed Alia primarily as a cargo aircraft, betting that a big market will develop for speeding ecommerce to and from suburban warehouses long before air taxis are considered safe to allow over city streets.

“We’re actually going to win at the passenger game because by the time others are doing passenger missions we will have thousands of aircraft, millions of flight hours and a safe, reliable, vetted design,” says the 41-year-old Clark, whose company is based in his hometown of Burlington, Vermont.

Clark is also spooling up what he thinks will be a lucrative second business: charging stations for electric aircraft of all types that he plans to dot around the country to create the aviation equivalent of Tesla’s supercharger network. There are nine up and running already, in a line from Vermont to Arkansas, with another 51 under construction or in the permitting process.

Most will contain banks of used batteries from Alia aircraft, removed when their capacity has declined about 8%, giving them a profitable second life while Beta sells Alia owners replacement packs at about a half a million a pop. Equipping the charging stations with battery storage will avoid the need for expensive upgrades to the local power grid: Clark’s plan is for them to fill slowly at off-peak times, while unneeded power can be sold back at peak to utilities.

“The aircraft is the sexy part but we’re going to make big money off batteries,” says Clark.

Beta investors Fidelity Management and Amazon are hoping the company will repeat the success of another electric vehicle startup they’ve bankrolled whose market cap recently topped $100 billion. “They see a lot of parallels between Beta and Rivian,” says Edward Eppler, a former Goldman Sachs investment banker who joined Beta as CFO after working on its Series A round, which raised $368 million in May at a $1.4 billion valuation. Forbes estimates Beta’s revenue over the past 12 months at $15 million, mostly from U.S. Air Force research contracts.

The cash infusion came a month after Beta won a big endorsement from UPS. Big Brown inked a letter of intent to buy up to 150 Alia aircraft, whose price is expected to fall between $4 million and $5 million apiece. Beta executives are hoping that an order will be forthcoming from Amazon, too, with both the giants looking for ways to make good on pledges to slash carbon emissions from their package delivery operations.

Beta aims to start delivering UPS’ first 10 aircraft in 2024 – assuming it wins safety certification for Alia by then from the Federal Aviation Administration. If not, the U.S. Air Force could end up fielding Alia first: Beta has won contracts worth $43.6 million to test out Alia for military use. In May, Alia became the first electric aircraft to win airworthiness approval from the Air Force for manned flight.

Beta says Alia’s bulbous cabin will be able to carry 600 pounds of payload, including the pilot, a maximum 250 nautical miles — at least 100 miles farther than any competitors that have prototypes in the air — or up to 1,250 pounds for 200 miles with one of the five battery packs removed. Clark expects FAA reserve requirements to restrict flights to 125 miles.

But given Alia’s high price – roughly double a similarly sized new Cessna Grand Caravan and up to five times the used planes that dominate small cargo fleets – Beta and UPS know Alia will only make economic sense if it flies a lot. That will require a radical reshaping of delivery networks away from the longtime hub and spoke pattern under which cargo planes typically make just one roundtrip per day, funneling packages from a local airport to a sorting center.

Instead, they envision Alia flying directly from one UPS warehouse to another – cutting out truck trips as well as plane flights — and eventually straight to large customers. Frequent flying will allow savings as lower operating costs kick in. Beta promises 90% savings on fuel and cheaper maintenance due to the fewer parts of electric propulsion systems — plus a fat 35% reduction if computers eventually bump pilots from the cockpit altogether.

Clark, a heavily tattooed dynamo who rises at 4 a.m. and says he can always find a late hour to work on motorcycles or his own airplanes, grew up outside Burlington obsessed with sports and flight. He was a star athlete at Essex High School, captaining the football, lacrosse and hockey teams. His wife, Katie, whom he met in 7th grade, says when Clark was invited to parties, he’d usually beg off to go home and build model airplanes.

Clark honed his grease monkey skills helping mechanics at a local airport in return for plane rides. When he set out to build an ultralight airplane from a kit, his mother, fearing he would kill himself, built a backyard bonfire and burned the parts.

Clark finally got in the pilot’s seat when the Washington Capitals signed him during his junior year at Harvard: He used the contract bonus to take flying lessons while playing on farm teams in Richmond, Va., and Portland, Maine.

Returning to Harvard after two years, for his senior project, Clark designed a flight control system for a single-person aircraft based on a motorcycle seat and handlebars. Failing to find investors to develop the plane, Clark started a business in 2005 building power supply equipment in his mother-in-law’s garage. In 2010, he sold that company to Dynapower, a Vermont power equipment manufacturer, and became its director of engineering, helping develop systems used in Tesla’s commercial energy storage offering, Powerpack.

After a private-equity group scooped up Dynapower in 2012, Clark found himself armed with a little cash. He motorcycled up and down the East Coast trying again to sell investors on his airplane design. With no takers, he cofounded a social-networking platform in 2014 that connected startups with talent and capital, hoping to use it as a springboard for his own plans.

But it isn’t to the Internet that Beta owes its existence; it’s to the iconoclastic biotech entrepreneur Martine Rothblatt.  After becoming wealthy from founding Sirius Satellite Radio, Rothblatt started a biotech, United Therapeutics, in 1996 to develop a treatment to save her daughter from a lung ailment. The drug worked, but at some point her daughter will still need a lung transplant. That motivated Rothblatt to make an audacious effort to solve the chronic shortfall in organs for transplantation: She’s developing artificial ones.

Electric vertical takeoff and landing (eVTOL) aircraft are the perfect solution to quickly — and greenly — get the perishable organs to hospital helipads. She contracted with the helicopter company Piasecki to develop one to her specifications, but at a 2017 meeting with subcontractors, she says she was deeply impressed by Clark, whom Piasecki had hired to build the electric power systems.

“I’ve been in countless technical presentations,” says Rothblatt. “I immediately saw that this guy was like a 99th percentile expert.”For customer United Therapeutics, Beta has developed a more elaborate version of its charging station with a landing deck atop modular metal container-like rooms that can be configured as crew rest quarters, mission planning space or storage units.

Discovering Clark lived near her vacation home in Vermont, she invited him over. What was supposed to be a 30-minute coffee became an all-day hangout, with Clark driving her to Montreal for previously scheduled meetings. She decided he was the right person to build the whole aircraft. She gave him $52 million to get Beta started, and has ordered 60 aircraft and eight charging stations.

“You get to tell by spending time with somebody face to face… who will smash down a wall to achieve success and who will just give you excuses,” says Rothblatt. “Kyle was equal to the best executive that I had ever worked with in my life before he’d done anything for me.”

In just eight months, Clark’s small team built and flew Ava, a test mule for key subsystems. Starting with the fuselage of a Lancair plane, they skewered the nose and tail with tilting shafts bearing four pairs of counter-rotating propellers that earned Ava comparisons to Edward Scissorhands.

At 4,000 pounds, it was the largest electric aircraft by weight to date to achieve a vertical takeoff and landing. But along with its successes, it led Clark to conclude that tilting rotors – which many of his competitors are using — were a mistake, adding weight and complexity that threaten to make safety certification more difficult.

Alia, which he began work on in summer 2018, has separate systems for lift and cruise: a pusher propeller at the rear for forward flight, and to take off and land vertically, four propellers mounted atop two booms bisecting its wings. Those long, high wings optimize it for long-distance flight. He says it’s such an efficient glider that if power were lost at 8,000 feet it would smoothly – and safely — descend for about 10 minutes.

And the placement of its 3,300 pounds of batteries at the bottom of the aircraft, counterbalancing the wings, makes Alia inherently stable, in stark comparison to tiltrotors. The simpler design means that Alia’s core flight control program contains only 1,200 lines of code, says Clark; tiltrotors need millions of lines of software.

Observers raise two safety concerns: If it lost one of its four lift propellers, Alia would become difficult to control in vertical mode, and placing the batteries in the belly could pose a fire risk to passengers above. Clark says the passenger compartment floor will have titanium shielding and that losing a lift prop is unlikely – each has four redundant motors.

But regulatory risk is high. After all, the FAA has yet to certify even a conventional airplane with an electric propulsion system, let alone a vertical takeoff and landing one. Clark and Rothblatt’s conviction is that keeping the aircraft as simple as possible is key but it’s anyone’s guess as to how much time it will take the agency to assess Alia’s novel technology – or whether they’ll require modifications that sap its performance. Even Beta true believer Rothblatt is hedging her bets by backing the development of two simpler aircraft: a helicopter retrofitted with an electric propulsion system and a large drone from the Nasdaq-listed Chinese company EHang.

Black images of flying unicorns adorn windows at Beta’s headquarters at Burlington Airport. It’s not a joke about Beta’s status as a billion-dollar aircraft startup. The tail numbers on the two Alia prototypes are N250UT and 251UT, for United Therapeutics and Rothblatt’s stipulation of 250-mile range.

When identifying the aircraft to air traffic controllers, the last two letters should be pronounced as “Uniform Tango” by aviation convention, but to annoy her husband when handling comms during flight tests, Katie Clark took to saying “Unicorn Tango.”

Clark follows two unusual strategies in running Beta: he’s aiming for a flat structure without titles where young engineers feel free to challenge older ones – and he wants everyone to learn to fly.

He gives his 350 employees free lessons in Beta’s motley fleet of 20 airplanes and helicopters, including humdrum Cessna 172 trainers, an Extra aerobatic plane, a World War II Boeing-Stearman biplane and a 1940 Piper Cub.

Many employees have no prior aerospace experience. Getting familiar with aircraft through flying helps them better design aircraft systems, as well as fosters a love of flight that Clark says is more motivating than bonuses. Investors have questioned the expense, but Clark is standing firm. “The sheer passion of when people give a shit is worth more than anything,” he says.

Beta’s investors also would prefer if Clark didn’t insist on being Alia’s test pilot – or burn off steam by doing barrel rolls in the aerobatic plane – as would his wife. Clark says it’s who he is. And he insists that flying Alia himself – which he claims has had no hard landings or crashes – gives him direct insight into whether design tweaks are working and how customers will experience it.

“Are we going to crash a plane or a helicopter? Of course it’s going to happen,” says Clark. “It’s the reality of bringing a new technology to market. The world’s going to be a better place for what we bring, and that takes risks.”

THE POWER THEY NEED TO SUCCEED

A key problem for eVTOL aircraft is the weight of batteries, which contain 14 times less energy by weight than aviation fuel. To achieve their range and payload goals, Beta, Joby Aviation and Kitty Hawk appear to need battery packs with energy densities at the outer range of the newest technologies, while Lilium is way out in experimental territory, according to battery experts Venkat Viswanathan and Shashank Sripad of Carnegie Mellon University.

Batteries are evaluated by two key metrics: specific energy, which is the amount of energy they contain for a given weight; and specific power, a measure of how much energy the battery can discharge at once for a given weight. In a recent paper, Viswanathan and Sripad estimated the pack-level specific energy requirements for five eVTOLs assuming an empty weight fraction of 0.5

(That’s the share of the maximum takeoff weight that’s taken up by the airframe, avionics and other onboard systems). The lower the empty weight fraction, i.e. the lighter the structure, the more room there is for batteries, meaning their specific energy doesn’t need to be as high. The bars to the sides of each square show how much the specific energy requirement varies at empty weight fractions between 0.45 to 0.55.

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Source: Amazon And UPS Are Betting This Electric Aircraft Startup Will Change Shipping

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Jeff Bezos’ Amazon Could End Up Bankrupt For These Reasons, According To Specialist

Right now, Jeff Bezos is the richest man in the world thanks to Amazon , his leading online sales company. However, retail expert Doug Stephens predicts that the giant could fall over the next decade, even going bankrupt.

On his Business of Fashion corporate page, Retail Prophet’s founder and advisor to some of the world’s most respected brands predicts “the end of Amazon.”

“I think that in ten years Amazon is going to decline and these are just some of the reasons,” Stephens wrote.

Amazon follows in Walmart’s footsteps

One of the reasons for the possible bankruptcy of the online trading platform would be that it is following the same patterns as other companies. Stephens gives Walmart an example.

“Between 1962 and the early 2000s, Walmart led the retail business, beating out dozens of competitors large and small. By 2010, Walmart had opened a staggering 4,393 stores, of which more than 3,000 opened after 1990, ” explains the expert.

After suffering a big drop in sales in 2015, Walmart has failed to take off in online retail. “The decline of the once impenetrable giant has shown that even the most titanic companies can fall,” Stephens said.

Amazon offers efficiency, but no shopping experience

The specialist considers it dangerous that Bezos intends to maintain the same long-term operating model. “In our retail business, we know that customers want low prices, and I know that is going to be true 10 years from now. They want fast delivery; they want a wide selection, “ said the tycoon in statements taken up by Business of Fashion.

However, Stephens believes that people don’t just buy because they want the products as quickly as possible. They also want the full shopping experience : getting out of the house, touching the products, comparing them with each other, trying new things or getting inspired. In that sense, the disadvantage of Amazon is limited to online purchases.

Focus on customer service will be lost

When a company has a powerful leader like Jeff Bezos at the helm, it would hardly function without him. The expert predicts that, as Amazon continues its expansion, the figure of Bezos could dissipate or disappear. Then it would be possible that you lose your initial mission, which is customer satisfaction, to prioritize the optimization of processes based on figures and data.

He also anticipates that the company will innovate less. “The energy, once directed to improving the business, will be depleted in simply working to maintain the organizational infrastructure ,” Stephens noted.

See also: See why Jeff Bezos will increase his fortune thanks to the arrival of Airbnb to Wall Street

Dough Stephens cites other reasons for Amazon’s potential downfall , such as the rumored toxic work environment and the migration of current partners to other,

friendlier delivery platforms.

The combination of these factors could cause Amazon to suffer losses over the next decade and be replaced by another similar company that offers better conditions for partners, workers and customers.

By: Entrepreneur en Español Entrepreneur Staff

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Foundation for Economic Education

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The Best Machine Learning Startups To Work For In 2020 Based On Glassdoor

  • Duolingo, HOVER, Ironclad, Orbital Insight, People.ai, Dataiku, DeepMap, Cobalt, Aktana, Chorus.ai, Noodle Analytics, Inc. (Noodle.ai), Signal AI, Augury, SparkCognition, and KONUX are the most likely to be recommended by their employees to friends looking for a machine learning startup to work for in 2020.
  • 96% of the employees of the 15 highest rated machine learning startups would recommend their company to a friend looking for a new job, and 98% approve of their CEOs.
  • Across all machine learning startups with Glassdoor ratings, 74% of employees would recommend the startup they work for to a friend, and 81% approve of their CEO.
  • There are over 230 cities globally who have one or more machine learning startups in operation today with Crunchbase finding 144 in San Francisco, 60 in London, 69 in New York, 82 in Tel Aviv, 22 in Toronto, 20 in Paris, 18 in Seattle and the remainder distributed over 223 global locations.

These and many other insights are from a Crunchbase Pro analysis completed today using Glassdoor data to rank the best machine learning startups to work for in 2020. Demand reminds high for technical professionals with machine learning expertise.  According to Indeed, Machine Learning Engineer job openings grew 344% between 2015 to 2018 and have an average base salary of $146,085 according their  Best Jobs In The U.S. Study. You can read the study shows that technical professionals with machine learning expertise are in an excellent position to bargain for the average base salary of at least $146,085 or more.

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Methodology

In response to readers’ most common requests of which machine learning startups are the best to work for, a Crunchbase Pro query was created to find all machine learning startups who had received Seed, Early Stage Venture, or Late Stage Venture financing. The 2,682 machine learning startups Crunchbase is tracking were indexed by Total Funding Amount by startup to create a baseline.

Next, Glassdoor scores of the (%) of employees who would recommend this company to a friend and (%) of employees who approve of the CEO were used to find the best startups to work for. 79 of the 150 machine learning startups have 15 or more Glassdoor reviews and are included in the analysis. 41 have less than 15 reviews and 30 have no reviews. The table below is a result of the analysis, and you can find the original Microsoft Excel data set here.

Follow me on Twitter or LinkedIn. Check out my website.

I am currently serving as Principal, IQMS, part of Dassault Systèmes. Previous positions include product management at Ingram Cloud, product marketing at iBASEt, Plex Systems, senior analyst at AMR Research (now Gartner), marketing and business development at Cincom Systems, Ingram Micro, a SaaS start-up and at hardware companies. I am also a member of the Enterprise Irregulars. My background includes marketing, product management, sales and industry analyst roles in the enterprise software and IT industries. My academic background includes an MBA from Pepperdine University and completion of the Strategic Marketing Management and Digital Marketing Programs at the Stanford University Graduate School of Business. I teach MBA courses in international business, global competitive strategies, international market research, and capstone courses in strategic planning and market research. I’ve taught at California State University, Fullerton: University of California, Irvine; Marymount University, and Webster University. You can reach me on Twitter at @LouisColumbus.

Source: The Best Machine Learning Startups To Work For In 2020 Based On Glassdoor

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Kaiser CEO Bernard Tyson Dies Unexpectedly, Here Is His Impact

In stunning news, healthcare lost a major leader today. Bernard J. Tyson, the Chairman and CEO of Kaiser Permanente, unexpectedly passed away in his sleep at just 60 years young. Unexpected is an understatement since it was only yesterday when Tyson was a guest speaker at the AfroTech gathering in Oakland as shown by this tweet:

                               

And three days prior, he had been in New York City to speak at the Fast Company Innovation Festival as seen in this picture:

Today In: Innovation

Discussing and advocating for key health issues was a big part of Tyson’s life. Through my career, I have met many hospital, health clinic, and insurance executives, and Tyson without a doubt has stood out from most of the rest. He was far from a “mind the store and pick up the paycheck” CEO. Sure, we can rattle off what happened to the typical metrics used to measure hospital and insurance CEO’s since he became Kaiser Permanente’s CEO in 2013 and it’s Chairman of the board of directors in 2014. Kaiser Permanente went from having 9.1 million members to 12.3 million, employing a workforce of 174,000 to 218,000, and generating $53 billion in annual revenues to $82.8 billion. These are all very impressive jumps but do not begin to capture the larger and what I think are the more important steps that have occurred.

Tyson has helped Kaiser Permanente become a leader in transforming how healthcare systems can have a greater impact on population health. Historically, many hospitals and much of the health care system in the U.S. have been way too focused on inpatient and “sick” care, because surprise, surprise, that’s where the immediate money seems to be. You can make a whole lot more money today trying to fix a medical problem (and even failing horribly to fix it) than preventing the problem in the first place.

This has made much of healthcare far too reactive, waiting for problems to occur, too focused on repairing people after they have already been broken. It’s like waiting at the of the wall for Humpty Dumpty to fall rather than helping him down from the wall or at least installing some seat belts. It can also be analogous to waiting for a car to fall into pieces before you take it (or rather carry it in a bag) to the shop and ask the mechanic, “hey, can you do something about patching everything together? I need to drive to a date tonight.”

Under Tyson’s leadership, Kaiser Permanente has taken major steps to expand the role of health care beyond the walls of hospitals and clinics. For example, as I reported previously for Forbes, there are the ongoing initiatives to address obesity and homelessness in the communities surrounding Kaiser facilities. Tyson covers the latter in this Kaiser Permanente video:

                                  

Another example is their first-of-its-kind partnership with the National Basketball Association (NBA) to tackle (or rather, since it’s basketball, assist with) children’s health issues, which I also have written about for Forbes.

Then there’s climate change, which for Pete’s and everyone else’s sake exists. Recognizing the impact that all of their facilities and many employees can have on pollution and the climate, Kaiser Permanente has been taking steps to become carbon neutral by 2020.

If this doesn’t sound like your typical hospital system or clinic, it isn’t. Tyson hasn’t been your typical healthcare system CEO either. When I spoke to Tyson earlier this year, the conversation was more about a vision of how healthcare should be and what a good healthcare system should be doing rather than a review of how great things already are. He didn’t dwell on dollar signs and listing the clinical services that Kaiser and its many physicians offer. Instead, he talked at length about how Kaiser was trying to not just be reactive but rather address the “social determinants of health” such as “improving basic infrastructure, promoting healthy eating, working on exercise, and taking care of the key ingredients to promoting health.” As he emphasized, “great health care is not just engaged with treatment.”

Tyson also pointed to a part of the body that healthcare systems frequently neglect. No, not the feet or the spleen. It’s the head or more specifically the mind, which incidentally should be connected to the rest of your body. As Tyson mentioned, Kaiser has been “extremely focused on the mind, as in mental health and well-being,” and “looking at the whole person.” He spoke of the “comprehensive package, looking at health and health care.” Again, while healthcare systems may talk about mental health and well-being, talk is cheap. They often don’t mind the gap or rather address the gap in taking care of the mind in the community. How many have actually invested in community well-being programs as Kaiser Permanente has?

Of course, Kaiser Permanente does have strong incentives to keep its millions upon millions of members healthy since it serves the dual purpose of insurer and healthcare system. However, this dual role alone may not necessarily lead to transformative change. When you talk to Tyson, you never got the sense that he was just spewing platitudes. Rather, expanding healthcare these directions seemed to be a passion.

For example, take a look at his experiences as a child. As he related to me, he was “greatly impacted by a wonderful mother, who was sick all of my life and wonderful doctor who take care of her and us.” This combined with the fact that his “father was a minister” meant that his “line of sight was always the community of the congregation. The community was the family.” He spoke of “having resources in the community and encouragement with multiple ‘moms’ who raised me as a child. The community came together,” and offered “a support system that you can rely on, that was in your corner,” that was encouraging, “you to be all that you can be.”

Certainly, Tyson was much more than the color of his skin. Nevertheless, in this day and age, color of the skin still unfortunately can be a major barrier in healthcare. It was an important step that Tyson, as a racial minority, became the leader of the largest nonprofit health plan and integrated delivery system in the United States. This brought a little more demographic diversity to healthcare leadership, which remains way too homogeneous. If you look at pictures of many healthcare system executives, the colors of the neckties are often more diverse that the colors of the skin. Tyson helped get many people more used to seeing an effective and forward-thinking healthcare system leader from a different background.

Tyson didn’t shy away from talking about how race, ethnicity, gender, and sexual orientation either. These demographic characteristics still unfortunately affect healthcare inside and outside hospital and clinic walls. In fact, he had strong interests in reducing disparities of care as well and said, “The fact that someone may not be getting what they should be getting because color of skin or sexual orientation is unacceptable. Period. No sentence to follow.”

The Kaiser Board of Directors has named Gregory A. Adams to fill Tyson’s shoes as Chairman and CEO on an interim basis. These are certainly big shoes to fill. Adams is no stranger to the Kaiser system as he had been reporting to Tyson as the Executive Vice President and Group President, overseeing all eight Kaiser Permanente Regions that includes 38 hospitals and 651 medical office facilities. Additionally, Adams has led Kaiser Permanente’s national Medicare care delivery strategy and was responsible for Kaiser Permanente’s partnership with the NBA. Adams appears in this video covering the launch of the NBA partnership:

                                

Adams has been with Kasier Permanente since 1999, beginning at Kaiser Permanente in Southern California and subsequently holding positions with increasing leadership responsibility. Adams’ Kaiser Permanente biography includes more information on his background.

In a statement, Ed Pei, Kaiser Permanente board member and Chair of its Executive Committee and the Governance, Accountability and Nominating Committee, said: “Bernard was an exceptional colleague, a passionate leader, and an honorable man. We will greatly miss him. The board has full confidence in Greg Adams’ ability to lead Kaiser Permanente through this unexpected transition.”

Indeed, in his five years as CEO and over 30 years in the Kaiser system, Tyson made a major impact on healthcare that went well beyond hospital and clinic walls in many ways. Unfortunately, we won’t be able to see all that he could have done with more years at the helm.

Follow me on Twitter or LinkedIn. Check out my website.

I am a writer, journalist, professor, systems modeler, computational and digital health expert, avocado-eater, and entrepreneur, not always in that order. Currently, I am a Professor of Health Policy and Management at the City University of New York (CUNY), Executive Director of PHICOR (@PHICORteam), Associate Professor at the Johns Hopkins Carey Business School, and founder and CEO of Symsilico. My previous positions include serving as Executive Director of the Global Obesity Prevention Center (GOPC) at Johns Hopkins University, Associate Professor of International Health at the Johns Hopkins Bloomberg School of Public Health, Associate Professor of Medicine and Biomedical Informatics at the University of Pittsburgh, and Senior Manager at Quintiles Transnational, working in biotechnology equity research at Montgomery Securities, and co-founding a biotechnology/bioinformatics company. My work involves developing computational approaches, models, and tools to help health and healthcare decision makers in all continents (except for Antarctica) and has been supported by a wide variety of sponsors such as the Bill and Melinda Gates Foundation, the NIH, AHRQ, CDC, UNICEF, USAID and the Global Fund. I have authored over 200 scientific publications and three books. Follow me on Twitter (@bruce_y_lee) but don’t ask me if I know martial arts.

Source: Kaiser CEO Bernard Tyson Dies Unexpectedly, Here Is His Impact

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The Kaiser Permanente model is all about integration and partnerships, and how everything comes together for patients, said Kaiser Permanente CEO Bernard Tyson. Tyson thus has to balance his time with both internal and external constituents, which is a non-trivial task for an organization of Kaiser Permanent’s size. “The outside influences so much of what happens on the inside, that I have to spend a lot of my time with customers, the government and other key parties.” In his visit to Systems Leadership on April 25, 2019, Tyson spoke with Lecturer Robert Siegel on the challenges of running an $80B per year company in a complex world while still focusing on the goal of keeping patients healthy.
Read more on Medium: https://stanford.io/2XZKhTZ

Next Billion-Dollar Startups: Truepill’s Dose Of Digital Disruption To The $400 Billion Pharmacy Industry

I was barely getting any sleep,” Umar Afridi, cofounder and CEO of Truepill, says of the tech-enabled pharmacy company’s early days. From 9 a.m. to 4:30 p.m. each day, he worked at Truepill’s distribution center in Hayward, California. Then he drove to his job as a pharmacy manager at a 24-hour CVS in East San Jose. On the side, he studied for a dozen state pharmacy exams so that Truepill, which at the time had no other pharmacists on staff, could legally ship to those states. “It was a pretty crazy first year,” he says with characteristic understatement.

That craziness has paid off for Afridi, 37, and his cofounder, Sid Viswanathan, 35, who hope to upend the staid, heavily regulated pharmacy business with technology. Truepill, which is based in San Mateo, California, shipped its first prescriptions in 2016. Last year its revenue reached $48 million, helped by the fast growth of direct-to-consumer customers like Nurx, which sells birth control, and Hims, which focuses on remedies for hair loss, erectile dysfunction and acne. This year Truepill could double its revenue to $100 million, as it expands its customer base beyond direct-to-consumer medications to prescriptions that treat more serious illnesses.

Those revenue numbers gained Truepill a spot on Forbes’ Next Billion-Dollar Startups list this year, despite its having raised just $13 million in venture funding led by Initialized Capital at a valuation of $80 million in its last round. That valuation makes Truepill an outlier on the list, as does the fact that Afridi and Viswanathan own the majority of the business and plan to continue to do so after raising the next round of capital, expected before the year’s end.

Afridi and Viswanathan—and their investors—are betting that Truepill will see a big payoff as consumers move away from in-person doctor visits and to a new model of telemedicine. “This is the building block of digital health and the future of healthcare,” says Initialized managing partner Garry Tan.

Pharmacy is a roughly $400 billion business in the United States, yet only recently have entrepreneurs begun tackling the market. In 2013, two young founders launched PillPack, a retail pharmacy startup that was acquired by Amazon last year for around $750 million. Other newcomers followed, including New York City’s Capsule, which grabbed $270 million in funding to do same-day prescription delivery refilled via text.

Truepill’s difference: Its business-to-business model makes it a behind-the-scenes player, invisible to retail customers, who will never have reason to know its name. That’s by design, and it allows Truepill to sign agreements with drugmakers and pharmacy benefit managers, those industry intermediaries that sit between insurers and drugmakers, without directly competing with them. “We’re not a traditional mail-order pharmacy,” Afridi says. “We’re way more than that.”

Afridi was born in Salt Lake City and grew up in Manchester, England, where his mother’s family was from. He studied pharmacy at the University of Manchester and worked as a relief pharmacist, filling in for those who went on vacation, in England. After passing the tests to practice in the United States, he took a job at Fred Meyer near Seattle. Unlike the typical pharmacist, Afridi always had an entrepreneurial side gig. During college, he imported performance cars, like the Mazda RX-7 and the Mitsubishi Evo 5, from Japan and sold them at a profit.

                              

While working as a pharmacist, he taught himself computer programming and began playing around with the idea of an on-demand pharmacy. His goal: to ease customers’ frustrations with waiting in line to pick up medications and to cut back the phone calls and faxes required for pharmacists to do their job. “I’ve always had a passion for technology, and every time I see a problem, I think, ‘How can technology fix this?’” he says.

Viswanathan, an Indian immigrant, had worked at Johnson & Johnson, then cofounded CardMunch, a business-card scanning app. In 2011, LinkedIn bought the startup for a reported $3 million. Viswanathan stayed at the larger company after the deal, and when LinkedIn went public the stock he owned made him wealthy for the first time. “It was fairly life-changing coming from no money to having some,” he recalls. After nearly four years at LinkedIn, he was ready to leave and work on another startup. “My only criterion was what do I want to spend the next 10 years of my life on,” he says.

While he was pondering what to do next, he stumbled upon Afridi’s profile on LinkedIn—where Afridi had changed his header to “startup founder, pharmacist”—and messaged him cold to talk about healthcare. Soon the two were meeting regularly and brainstorming ideas for a business to start together.

By then, other startup pharmacies, like PillPack, were making inroads with retail customers. Rather than compete in what had become a crowded space vying for retail customers, Afridi and Viswanathan figured they could operate in the background, using technology to build an extremely efficient pharmacy distribution center. “Truepill is what you get when you put together a pharmacist and a software engineer,” Viswanathan says.

“This is the building block of digital health and the future of healthcare,” says Initialized Capital’s Garry Tan.

Their idea coincided with the rise of new direct-to-consumer health brands that needed a distributor that could follow all the pharmacy regulations. To consumers, these Instagrammable health products don’t look like drugs, and often their subscription boxes contain a mix of both prescription and over-the-counter products. But if there’s even one vial of prescription pills going out in the mail, the startup sending it needs a pharmacy to fulfill the order. In talking with Nurx, Viswanathan says, “we came to find out they were literally picking up the phone to mom-and-pop pharmacies in different states.” They gained a customer by offering a better way.

In 2017, Andrew Dudum cofounded Hims, the fast-growing direct-to-consumer therapeutics startup for men, and he, too, signed up with Truepill. “We knew from the beginning we were going to grow very fast,” Dudum says. “We expected 30 to 50 orders per day, and that was the scale we communicated to Umar and Sid that we needed to be prepared for. In the first week, we were getting 500 orders per day.” Today, Hims, which is valued at $1.1 billion, does thousands of orders per day and is one of Truepill’s largest customers. “They figured out a way to scale with us,” Dudum says.

At Truepill’s Hayward distribution center, all orders come in electronically. When Hims sends a prescription for finasteride, the male hair-loss treatment, for example, it goes through electronic vetting and then a robotic machine pulls the 1-milligram tablets from custom-made 1,000-count bottles into a small pill vial that gets labeled with Hims branding. That automation allows Truepill to work more efficiently than a traditional retail pharmacy. So, too, does its focus on a small number of medications: Ten medications, including finasteride and the erectile-dysfunction drug sildenafil, represent 80% of its volume. Its scale in those allows Truepill to turn over its inventory every few days and gives it the power to negotiate prices with drug manufacturers and pharmacy benefit managers on those products.

“Truepill is what you get when you put together a pharmacist and a software engineer,” says cofounder Sid Viswanathan.

For Afridi and Viswanathan, direct-to-consumer medications are just the beginning. They are starting to sign agreements with drugmakers and pharmacy benefit managers, though they won’t name those larger partners yet. This shift comes none too soon, as Hims has announced that it would open its own pharmacy in Ohio to shift a portion of its distribution in-house—a move that Viswanathan says will begin to impact Truepill in 2021. “Hims is a large part of the business in quantity, but not in revenue,” he says, noting that medications reimbursed by insurance are higher cost than lifestyle meds that consumers pay for out of pocket. Truepill currently has two distribution centers and is adding another five.

Afridi and Viswanathan’s next step: building a nationwide network of doctors in every state that will enable their pharmacy startup to play a bigger role in the shift to telemedicine. Those doctors will allow it to work directly with makers of specialty medications, say, so that they can distribute their medications to consumers more easily. Over time, Truepill figures its orders could rise from 5,000 to 10,000 per day to 100,000.

“Lifestyle and ED [erectile dysfunction] medications have allowed us to build the infrastructure to all these other areas,” Afridi says. “There is a lot of innovation that needs to happen in the space.”

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I’m a senior editor at Forbes, where I cover manufacturing, industrial innovation and consumer products. I previously spent two years on the Forbes’ Entrepreneurs team. It’s my second stint here: I learned the ropes of business journalism under Forbes legendary editor Jim Michaels in the 1990s. Before rejoining, I was a senior writer or staff writer at BusinessWeek, Money and the New York Daily News. My work has also appeared in Barron’s, Inc., the New York Times and numerous other publications. I’m based in New York, but my family is from Pittsburgh—and I love stories that get me out into the industrial heartland. Ping me with ideas, or follow me on Twitter @amyfeldman.

Source: Next Billion-Dollar Startups: Truepill’s Dose Of Digital Disruption To The $400 Billion Pharmacy Industry

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Hi, I’m Garry Tan, venture capitalist and cofounder at Initialized Capital. We were earliest investors in billion dollar startups like Coinbase and Instacart, and we’re spending time with some of our best founders to learn the secrets of their success and see the future they’re building. Today I sat down with Sid Viswanathan, cofounder of Truepill, an API for all needs for telemedicine. Telemedicine has the potential to bring down costs and make high quality care more accessible for every person on the planet. We’re headed to Hayward, California, their west coast HQ and fulfillment center out of which they provide pharmacy services for dozens of telemedicine startups and practices large and small, shipping to all 50 states. Come learn about how as a founder, you need to choose a problem space that you could want to work on for 10 years or more. Please like this video and subscribe to my channel if you want to see more videos like this with top founders. Find Sid on Twitter at https://twitter.com/sidviswanathan Find Garry on Twitter at https://twitter.com/garrytan Learn more about Truepill at https://truepill.com Learn more about the companies we fund, and how we work with them at https://initialized.com
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