- Bezos is willing to make big bets and wait a long time.
- Bezos has been investing in health tech since the 1990s, when Amazon took a big stake in Drugstore.com.
Amazon made its first big step into the health care industry this week by joining up with Berkshire Hathaway and JPMorgan Chase to tackle the problem of skyrocketing employee health care costs.
That left many wondering how exactly the companies will achieve that mission, especially given the lack of detail.
So we looked at Amazon CEO Jeff Bezos' personal investments in health to glean what his strategy might be as he makes his biggest move yet.
Bezos is no stranger to health care. He's been investing in it since the late 1990s. Not everything he has tried has succeeded, but that hasn't dissuaded him.
And for the most part, he's invested in big ideas that could fundamentally change the way that health care is delivered — if they succeed.
In the late 1990s, Amazon took a 40 percent stake in Drugstore.com.
Bezos made no secret of his plans, which included promoting the site on Amazon.com's home page. '"We're going to let people know that we are a major investor," Bezos reportedly said to a packed crowd in Palo Alto.
Walgreens ultimately acquired the company for more than $400 million — a decent outcome, but not a slam dunk.
Selling drugs online proved to be far more challenging than Amazon expected, and most of Drugstore's revenue ultimately came from over-the-counter products, which actually competed with Amazon's core business rather than complementing it.
But as CNBC reported in October of last year, Bezos has never given up on his pharmaceutical ambitions. So don't be surprised by any bold moves from Amazon into the drug supply chain, this time with decades of lessons behind them.
Bezos' venture fund Bezos Expeditions has also made some very ambitious bets in health-technology and biotech, alongside the future of media, robotics and a few other areas.
- Unity Biotechnology, a company looking for a cure for aging
- Grail, a start-up developing a blood test for cancer
- Juno Therapeutics, a cancer immunotherapy company that Celgene recently bought for around $9 billion
- ZocDoc, a web site and app that lets you shop for a doctor, and a long-rumored IPO candidate.
Health investors following Bezos' health investments, as well as his broader business strategy, should understand the following.
First, Bezos seems to want to disrupt the middlemen. In the case of Drugstore.com, that was the burgeoning supply chain, including pharmacy benefits managers and distributors, that sit between the manufacturer and the pharmacy. Zocdoc made it easier to find a doctor, no matter your insurance plan.
Secondly, Bezos has no problem taking his time on an opportunity, even if it takes decades. For instance, since the Drugstore.com sale, Amazon has held regular strategy meetings to talk through whether it should finally start selling drugs online. Bezos would not have taken the decision to start a health care consortium lightly, and it's safe to assume that.
He's also fairly good at picking winners in health care, a complicated sector that has eluded many tech executives before him. The Celgene-Juno deal is good evidence of that.
Finally, he seems to be making audacious bets that would shake up the U.S. health care system. Grail, for instance, represents a huge opportunity to change how cancer is diagnosed and even treated, but faces some huge obstacles.
One unknown: Whether Amazon will partner with these companies, or compete with them, as it executes on its goals.
But one start-up CEO whose company received an investment from Amazon is optimistic that the company will be able to do great things with its new partnership.
"Amazon, Berkshire Hathaway and JPMorgan Chase are key players in e-commerce, underwriting and consumer finance, and as such positioned to create something really advantageous for patients from this greenfield," said Zocdoc CEO Oliver Kharraz. "I don't think you need to start from scratch to make health care more efficient."