Advice from a serial entrepreneur—don't follow … be a leader

Drug Store News,  March 19, 2007  by Stuart Skorman

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When I founded Elephant Pharmacy five years ago, all of my friends thought I was crazy. They couldn't understand why a dot-com pioneer like me would go back to the bricks and mortar world, especially to the conservative drug store industry. My wide-ranging entrepreneurial career, which has included organic supermarkets, video store chains and high stakes professional poker, in addition to my dot-com start-ups, has been far removed from the retail pharmacy industry.

My friends don't think I'm so crazy anymore. The pharmacy I opened in Berkeley, Calif., in 2001 is already leading the way to a new revolution in the drug store industry. Elephant is a hybrid combination between Whole Foods and Walgreens. It's where East meets West--the first pharmacy to have a full Western pharmacy for prescriptions and a full "Eastern" pharmacy for herbs. Our goal was to offer an unlimited resource of wellness, drawing on all cultures. And our wellness mission extended beyond pharmaceuticals. We were the first pharmacy to offer fresh, organic produce as well as a full-service natural body care department.

Because the key to wellness is really information, Elephant Pharmacy makes customer education a priority. We were the first pharmacy in the country to have free classes every day. In our first year, we averaged about six classes a day, all taught by local practitioners such as nutritionists, herbalists, estheticians and chiropractors.

We were also the first pharmacy to create our own information about the products we were selling and put that information on the shelves next to those products. Finally, we were the first pharmacy to have a bookstore--a bookstore packed with books from around the world on health and wellness.

The innovations that I brought to the drug store industry are drawn from both my business background and my personal goals--I write about both in my newly published book, "Confessions of a Serial Entrepreneur." As the son of a talented merchant, I learned much from my father about bringing creativity to business. My experiences as an executive at Bread & Circus (now Whole Foods) in the 1980s taught me the business potential of health and wellness. But Bread & Circus taught me more--it taught me that through business and enterprise, I could make the world a better place.

When I enter a new industry, I'm looking to create business models that have never been seen in that industry. I'm not looking to surprise the professionals; I'm looking to surprise and delight my customers.

Now I ask you: Are your customers surprised and delighted when they enter your stores? Are they learning?

I believe that the drug store business is at a crossroads and can take one of two paths. The path I dread is that retailers are going to become more like convenience stores, which has been the trend for the last 50 years. These stores will be selling tobacco and will be giving consumers a message that we're here for convenience; we are not here for health and wellness.

We can add a lot more value in people's lives by investing in their health and wellness versus just selling them cigarettes and unhealthy snack foods. The convenience store business is not a particularly profitable business; by contrast, the natural products business is actually a very profitable business. Just look at the success of Whole Foods, which has announced plans to acquire Wild Oats. So, the path blazed by Elephant Pharmacy is not just a path of customer well-being; it is also a path to big profits.

If I am right and big change is inevitable in the pharmacy retail industry, then where is this big change going to come from? Is it going to come from outside entrepreneurs like me? Is it going to come from insiders like the readers of Drug Store News? Or, is it going to come from the analysts, the investors, the outsiders who have a financial interest in the stores choosing the most profitable path? I believe that you, the people who are actually operating the drug stores, now have the choice. You can decide to lead the change, to take your industry in new and exciting directions. Or you can resist change and stick with your old way of doing business. In that case, outsiders like me or investors and analysts will lead this new revolution.

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