Drugstore.com and PlanetRx.com want to be the next Amazon.com.
Prescription coverage is a vital part of the online drugstore business.
Mr. Neupert says it was a job he wasn't seeking. Quite content as vice president of news and publishing for Microsoft's interactive media group (where he had overseen such diverse entities as MSNBC and Slate), Mr. Neupert and his wife made a leap of faith last summer, "plunking down a bunch of money on a house we wanted to renovate." Then John Doerr called, looking for a chief executive officer.
PRESCRIPTION FOR SUCCESS
"I tried to say no, but you can't really do that with John," says Mr. Neupert of the persuasive powers of the Kleiner Perkins partner. After being flown to Mr. Doerr's CEO conference in Aspen -- on Mr. Doerr's plane, with Amazon.com (Nasdaq: AMZN) CEO Jeff Bezos as a fellow passenger -- Mr. Neupert started to warm to the idea of heading up an online drugstore.
"I really didn't want to leave Microsoft, for both family and loyalty reasons," Mr. Neupert recalls. "But John and Jeff both believed [Drugstore.com] was the best opportunity since Amazon." After talking the idea over with his wife, Mr. Neupert decided to jump.
"If I ever wanted to be a CEO, this was the right thing for me," he says of the Drugstore.com opportunity, which was unlike anything available at Microsoft.
"At Microsoft, Bill [Gates] and Steve [Ballmer] are the leaders," Mr. Neupert says. "They define the context in which the company operates. At Drugstore.com, I have to set the challenges, the expectations, and what constitutes good performance. I have to figure out how to motivate the troops. There was a lot more [to being a CEO] than I anticipated."
It wasn't like there was a book or any solid historical examples of how Mr. Neupert should proceed. "The hardest part about being an Internet executive is that time is your enemy," he says. "You don't have a lot of information to work with. You have to be willing to make big bets, with limited information."
THE RITE AID
One tactic Mr. Neupert has used efficiently is strategic partnering. For example, Drugstore.com had the benefit of learning from the successful online retail experiences of Amazon.com, one of its major shareholders. The company also brought in retail giant Rite Aid (NYSE: RAD) as a partner. The relationship gives Drugstore.com real-world exposure, as well as access to Rite Aid's important contracts with pharmacy benefit managers (PBMs), who handle pharmacy claims-processing for insurance companies and HMOs.
Building partnerships is nothing new to Mr. Neupert, who says this past year was not the most hectic in his career. For that honor, he designates a span between 1987 and 1988, when he was Microsoft's point man in the company's joint-development OS/2 relationship with IBM (NYSE: IBM). "I was orchestrating software builds from England, Florida, and Redmond," says Mr. Neupert. He recalls that the project at one point saw him make trips to England every week, 19 weeks in a row.
CLINICAL TRIAL
Though he's relatively unknown to the general public, Mr. Neupert is known to some great powers. During his stint overseeing the creation of MSNBC, Mr. Neupert sat across a negotiating table from an impressive list of potential partners, including Ted Turner, Jack Welch, John Malone, and even Hollywood dealmaker Michael Ovitz.
"Think about presenting a business plan to Bill Gates at one end of the table, and to Jack Welch at the other," Mr. Neupert says. "Those are the kind of things I've done."
Now his job is to make Drugstore.com a success, which is no small feat given how competitive the online drugstore space is. Well-funded entries like PlanetRx.com (Nasdaq: PLRX) and CVS (NYSE: CVS) are battling Drugstore.com for customers and orders. But Mr. Neupert is confident of his team's abilities.
"I think the story of what we've done is unique," he says. "The team we've been able to build and the results we've been able to achieve in a short time is outstanding. A key part of our IPO pitch was based on future performance -- investors have to decide which horse they want to bet on. I think we've demonstrated the ability to execute."
Though it's too soon to pick a winner in the online drugstore race, at least Mr. Neupert can be confident his company is moving faster than most real-world concerns.
"What's ironic is that in the past year, we've started a company, built a team, opened up shop, and gone public," Mr. Neupert says. "Meanwhile, the contractor still hasn't finished renovating my house."
Drugstore.com
PlanetRx.com
CVS
Rite Aid
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