♪ emily: i'm emily chang in san francisco and this is "bloomberg technology." coming up in the next hour, amazon makes a $1 billion splash in health care. pillg the online pharmacy pack. cheers therump groundbreaking of a foxconn plant in wisconsin. robots, prepare for liftoff. ibm plans to launch and ai

astronaut the system. what this means for the next generation of' of space travel. amazon is buying into the heart of the u.s. health care industry and shaking up the prescription drug machine. they are buying the company for $1 billion. news of the deal sent shockwaves through the industry were u.s. consumers spent $329 billion on retail prescription drugs in 2016. both walgreens and cvs dropping over 8% when the news broke. it is the latest in a series of big-name moves by amazon ceo jeff bezos. remember amazon purchased whole foods last year, and this year they are creating a new venture to reshape employee health benefits. here to discuss we have bloomberg tech senior editor brad stone. also the managing director of oppenheimer, focusing on health care. and on the phone we have george

zachary. he invested in pill pack and is on the board. this is after months of speculation about amazon making moves in the pharma industry. how much could this potentially shakeup? >> there were a couple of forms of speculation. we heard that walmart was circling pillpack, and maybe george could tell us about why that didn't happen. two, amazon was looking at taking pharmacy licenses in several states. well now we know amazon outmaneuvered a major competitor and that it now suddenly has mail delivery licenses in 50 states. what does it mean? it means amazon is almost instantly a big player in the pharmacy business. it means that pillpack has more resources now to fulfill its vision. over the long-term it raises all sorts of interesting possibilities. pharmacies at whole foods. pharmacies at amazon goes stores. it is another bugle call that -- amazon go stores. it is another bugle call that jeff bezos is serious about health care. george: i wish i could say more

, but unfortunately i cannot reveal any details about any of that. so i really sorry. am emily: talk to us about the growth of pillpack. obviously you were an early investor. you have been on the board. what is it that made the company so special? george: when i first met the founders i was aware that this is a big problem. i had a family member who had dementia who had to take prescriptions. i had other family members who had to take multiples prescriptions. the average person over the age of 50 has to take five prescriptions in the u.s. that involves staying on lines inside of a pharmacy, driving to a pharmacy, taking multiple prescriptions at home, putting them into a pillbox, remembering when to take them, remembering if there are potential interactions between them and separating them in time.

and that is kind of a hassle for people. so, my view on it was, there needs to be a better way. so, i automatically was looking for something, a company in the space that was a full-service company. and i heard about the company and had the good fortune to meet tj parker, and they were the ideal founder set. tj's family was in the pharmacy business and he automatically understood the mind of people who buy prescriptions and what they do. so that is why i invested specifically because he knew what people wanted. emily: so, we actually interviewed pillpack ceo tj parker a couple years ago. take a listen to what he had to say back in december 2016. tj: the business model is no different than a traditional pharmacy. we dispense medication for consumers.

there are insurance companies pay the bulk of those medications and they pay their co-pays. other than that the service is completely free. we monetize his service assembly more than any other service does. we just offer other services around that. emily: how do you expect amazon to integrate? mohan: i think this removes the long speculation that amazon will get into the dispensing of drugs. i expect amazon to use this to start working on optimization between j.p. morgan, berkshire and amazon to start off on the pharmaceutical site. they also need to acquire something around the pbm landscape. that is a big gap. bm, it is hard to go and negotiate with. my thinking right now is they are going to either in-build in stores or acquire a company, so they can have an end to end solution to contact with employers and start deploying medications to homes. emily: how big of a threat is this to walgreens and cvs?

brad: in the short term maybe not a big one because pillpack is a limited service. as george mentioned, primarily people who take more than a few medications a day. they have brought two kinds of innovation to bear. one is an os where they are tracking and managing their patients prescriptions and making sure the combinations are healthy. two, they have this neat rectangular device that helps people manage their daily prescriptions. i have heard estimates of around 40,000 customers. probably not a significant threat to a walgreens or cvs. but the power of amazon behind it and jeff bezos and his long-term thinking, i think that's why the stocks are down today. emily: how big a potential business could this be for amazon? >> retail drugs is about 1.5% to 2% gdp overall health care spending right now. that is a big business to be involved in. drugs.es $200 billion in

express scripts does the same amount of revenues on the pbm side. this is kind of a big financial direction they are going and trying to get technology involved in trying to drive medication. pillpack is just not dispensing medication. it is packing it in a right ways that the patient can take it in a proper way so they do not miss the medications in the right order. that is a deviation. the current incumbents have not done enough. brad: by the way, bringing hardware to bear as an accelerator for any retail experience is a very amazon-like approach. emily: george, i know you cannot talk about the specifics of this deal, but having been on the board of this company, having obviously poured a lot of time into researching the space, how do you see the pharma and online pharma market changing over the next two years? george: when i invested in pillpack, i just thought it was a huge opportunity to build

better pharmacy experiences. so, i am not really sure how it is going to change. but i think it is going to get a lot better, because people have better access. it will just be a lot easier for everyone. so, that is what i am excited about. it will just be more people-centric. emily: brad, what is next for amazon? brad: they have a mail order license in 50 states, but that only gets them so far. they need a different kind of pharmacy license in many states. if they want to bring pharmacy to some of their retail experiences. so i think this is just the beginning. you mentioned buying a pbm. you know, we are at the beginning. one thing, one advantage to this acquisition is they are now stockpiling health care innovators. you have tj and elliott from pillpack, jpmorgan, warren buffett. so a lot of interesting talent

coming in at amazon. emily: all right. thank you so much for stopping by. also, george zachary on the phone, thanks for calling in. later this hour, we are going to be speaking with managing partner and cofounder of founder collective and a lead investor in pillpack as well. he will join us, ahead. speaking of amazon, one of its competitors is trying to make sure you know longer have to drive to the grocery store. kroger, the u.s. is largest supermarket chain is testing self driving cars. kroger is partnering with bay area startup on a vehicle which can steer itself from a grocery store to a customer's home. this follows kroger's increase state and a british rusher. -- grocery. at oneot will be began

store. they are known for automated warehouses where robots quickly fill orders. coming up, packing the election. could the key to safeguarding november's midterms lie with hackers? this is bloomberg. ♪

♪ emily: the u.s. midterm elections are just around the corner. and russia's attack on the 2016 presidential elections continues to haunt the united states. the risk of electronic voting systems being hacked is of paramount concern. so much so that those systems were named part of the nation's critical infrastructure by the obama administration. just last week, a new piece of bipartisan legislation was introduced this week in congress to try to prevent election hacks. it is based on a pentagon hacker one.ted by joining us now is the ceo of hacker one. thank you so much for joining us. hacker one is comprised of

hackers.", "ethical how are they different from typical hackers? marten: we have 200,000 of them ready to help you reduce your cyber risk. emily: so you have been hired by the pentagon, starbucks, gm, and many companies and organizations to test their systems and find security flaws. in the case of the u.s. air force, it only took you eight minutes to get in? marten: and we found 200 ways to get into the systems. emily: that is very concerning. isn't it? marten: it is very good that we found them. they are first to know and they fix them before anybody else gets to them. emily: but certainly china and russia, hackers there are trying to get into the systems all day long, aren't they? marten: exactly. and that is why you need us, the good guys, to get there before them. emily: some find your tactics controversial and say we cannot necessarily trustees ethical

hackers. they could turn certain vulnerabilities into blackmail. how do you counter that? marten: the bad guys are already out there hacking you every single day, so you cannot get any worse. hackers.r we test what they are doing. we know they have good intent and they're committed to reporting to you what they find. that is why we call them white hats. emily: how concerned are you that the u.s. midterm elections will be hacked again? marten: i believe that democracy in the united states is threatened today by a multitude of risks. one of them is the the integrity of the election systems. and not so much that the results would be altered, but that the trust by the people in the system would you road, and that is a risk. emily: president trump has said he does not think the hack impacted the votes. do you think that the votes themselves were impacted in the presidential election? marten: in a way it doesn't matter what we think. we must ensure full integrity of the systems. that is just part of democracy.

emily: so how do we do that? marten: we fix the voting machines. we fixed democracy. we open source security and make sure we get help from hackers outside. slowly but surely we would fix all those problems. emily: can they actually be fixed? won't a determined hacker find a way into a electronic voting machine if they want to get there? marten: we have such a large army of good hackers, so we can outpace them if we are invited to do so. emily: i mean, how can you be sure? marten: i have faith in the good intent of human beings. we have shown it. we have found and fixed over 72,000 valid security flaws are already. so we know if we just start working on it, we will get there. are electronic voting systems the way to go or should we move back to paper ballots? marten: that is a great question. it is a question for the political decision-makers.

we can certainly build technology that will allow the politicians to make whatever determination they make. emily: in addition to the elections, we have been talking about how other parts of the u.s. infrastructure, our electric red for example, are very vulnerable to attacks, if they are not being attacked at this very moment. should we be waiting for the big one, so to say, the big hack attack that cripples u.s. infrastructure? marten: the likelihood is high , but i do think the ship is already turning and we have much better cyber security awareness today. cybersecurity hygiene is improving, so i do think we are on a path to a better future. but on the path, we may have some serious breaches. emily: ceo of hacker one. thank you for stopping by. coming up, betting on the crypto market as japan's biggest messaging service opens crypto exchange. we will hear from the ceo of blockchain. this is bloomberg. ♪

♪ emily: despite a selloff in 2018, crypto assets are still in high demand, with japan 's biggest messaging service line announcing a new cryptocurrency exchange. more companies are trying to tap into institutional demand, including blockchain. it has the new offering targeting high net worth individuals. caroline hyde has more from london. what have you got? caroline: a great conversation. blockchain promises unrivaled liquidity, access to initial coin offers, and startups in the space. liquidity, andim

a $300 million crypto fun for ico's. how does blockchain hope to compete? we got an exclusive take with the company ceo. peter: today the institutional market is really immature. there are not a lot of mature platforms out there that people are staffed by people institutions are used to dealing with. so really institutions are looking to get exposure in a safe way. increasingly they are motivated about getting the best execution. today the market crypto is immature and fairly nascent. caroline? when were looking at the likes of coinbase, they already offer institutional clients. i want to understand how you are going to be different? peter: circle trade is an otc desk. similar story with coinbase. they are offering a training facility. we're focused on offering an end to end server.

research, deep liquidity, the ability to hold assets directly for the institution. it is a more conference of offering. caroline: ok. what about when you're looking at the demand you are seeing flowing through from institutional clients? has it waned with the sudden dive off we have seen with crypto prices? when i talk about, bitcoin, ether prices. peter: sure. i think there are two separate things. one is institutions trying to set up so they can trade, and institutions wanting to trade. right now you are seeing more of the former than the latter. i think you have to see the market reverse before you see more of the latter. caroline: where do you think that will pick up most? you have so much activity in china. opening an exchange in japan. where do you see demand inbound coming? peter: mostly inbound coming from london and new york. which partly is probably because we are in london and new york. and partly that is where the big financial markets are. most of the inbound right now

are either from really large family offices or macro hedge funds. and so it is really limited in new york and london. you are not seeing a lot of institutional demand out of asia. most of asia is very retail-driven. indeed, a lot of the market today is very retail-driven. caroline: when you are based in new york and london, how do you see the regulatory environment? your offering end to end, you'll not just be offering access to cryptocurrencies but give access to ico's. when i talk of ico's, i think immediately of regulation. what is it going to look like? are you going to go for those who are already ready to be deemed secure? peter: generally speaking the regulatory environment is easier for institutional clients. consumers are under a different regulatory environment, based a lot around consumer protection. so it is a little easier on institutions. at the same time, it is really

difficult to figure out where some of this is going. you saw the sec a week ago released some helpful guidance , which i think will make it easier for institutions to get exposure. at the end of the day a lot of it comes to reputational reputation management. as a firm, we lean heavily on our board and legal staff to figure out which assess the want to be committed to in the long-term. caroline: that was blockchain ceo peter smith. he always has a healthy dose of reality. when it comes to the hype around crypto, the prices surging. the fact that has fallen off so much. so it is interesting his take is institutional interest is still nascent. maybe we will have to see some recovery in prices before they really get involved. emily: it has been fascinating to watch this bitcoin roller coaster, rising over 1000% last year, down more than 50% this year. is it the result of just bad news or negative sentiment piling up? caroline: both. i think the fact that social

media has blocked advertising has not helped. i think the fact that we see facebook potentially turning that one around, but that has hit sentiment. we see the regulatory environment be the key issue. here on my side of the atlantic, the bank of england just sent out letters to ceos of banks, of funds, of insurance companies. the deputy governor himself sent out a personal letter to the ceos saying beware of crypto. you see it on your side with the castingw much they are an eye over securities, whether they are indeed securities are not. either has not performed as bad. it got a tip of the hat from the sec saying you are not security. i think regulation is a key one. advertising is another issue. and just the hype around ico's. there have been too many. the products are not ready yet. emily: meantime, some of the other coins that people were about, etherium,

ripple is way down. is it too far at this point? can they really turned around? caroline: i think bloomberg intelligence is still saying this has not bottomed yet. maybe it does need to catch up in terms of the actual products that underlie the so-called cryptocurrencies. i mean, ether has not done as badly. you can see it there is off by about 40%. we're starting to see blockchain being used, the underlying technology, the smart contracts. maybe that is showing a little more reality and maybe not just deemed a security helped. bitcoin in the white line is off by a 50%. but check out the bottom. ripple off by about 80%. why? i guess the mighty fall the hardest. it was up 35,000% last year so it comes down the most. also many feeling it is not as decentralized as many would like

it to be. emily: what is it that is keeping some investors so optimistic, despite so many people saying the party is over? caroline: i hear it time and again, from bank ceo's in particular saying i am not so sure about cryptocurrencies, but i really like the underlying technology of blockchain. i think that is why the hype actually totally refuses to come draining out entirely. because some of these cryptocurrencies, some of these ico's, have value. you just have to expand. you have to show how to scale them. bitcoin being hampered by the scalability problem. that is doing tackle. research is being put into it. i think eventually a lot of them will have you eventually, but about 80% have been deemed scams thus far. emily: bloomberg's caroline hyde live for us in london. coming up, foxconn is breaking ground on a $10 billion plant in the u.s. heartland, all in the

backdrop of rising tensions within washington and beijing. this is bloomberg. ♪

♪ emily: this is "bloomberg technology." i am in the chang in san francisco. president trump traveled to wisconsin to attend a groundbreaking of foxconn's $10 billion plant on thursday. the administration sees this as a big win that will bring jobs to the region, but there has been criticism of the tax break and incentives that foxconn received. trade tensions within the u.s. and china has not ceased. one person said it was the company's biggest challenge. alibaba is scaling back its investments in the u.s. we're joined by selina wang and gerrit de vynck. talk to us about the economic and political irony here given

that foxconn is also china's largest employer. gerrit: i think trump wants to make foxconn one of america's largest private employers. he was very happy. this is sort of a signature trump visual media show he loves to kind of point to. he kept talking about how many jobs this is going to bring. if this goes perfectly to plan over the next 15 years they and all this money gets spent, there should be about 13,000 pretty high-paying jobs created. he tweeted this morning it will bring 15,000. no matter how well it goes it is not exactly in the realm of hyperbole he's bringing into it. it is very controversial. not everyone in wisconsin , which is an important state electoral early, supports it. there were about to $4 billion $3 billion of incentives that were promised and of course that is not all up front. that comes in the form of tax breaks and subsidies as the plant gets built over the next decade. emily: so a tweet from the

governor of wisconsin, "we are beginning to see the statewide economic impact of foxconn as businesses and workers all over the state of benefiting from foxconn supply chain and management. once it is fully operational, foxconn is expected to bring in $1.4 billion in supplier purchases annually within the state." of course the deal that was ultimately struck was very controversial. how many jobs are actually being created? gerrit: best case scenario, 13,000. those are not going to happen tomorrow. this was a groundbreaking ceremony. they don't even have the building set up yet. and the average salary of those jobs, the commitment that wisconsin isto they would be paid $56,000. so these are well-paying jobs, not silicon valley well-paying jobs, but for the area they would be manufacturing jobs. they are the kind of thing we s where you can see people working together, working in tandem with robots, exactly the kind of jobs president trump thinks of when he thinks about bringing jobs back to america.

it is very core to his message he is sending out that he can get deals like this done. of course we have another at the have no idea in reality whether those jobs will actually come to the extent that they want them to. emily: watching president trump shake hands with the chair of foxconn, who has been out there saying a tech war is the biggest challenge to the company, is kind of crazy. selina: it is really ironic to say the least. this deal might not be great for wisconsin. there are a lot of tax breaks and incentives they are doing to bring foxconn there, not to say the least of this trade war that trump has started could hurt some of the wisconsin farmers there. so the backdrop of this handshaking event, there are a lot of ominous things that are at work. and just yesterday, trump said he wants to block chinese investments in the united states. they want to expand the powers that on the one hand this is great for bringing jobs to america. on the other hand is good be extremely harmful to foxconn and

its global supply chain. emily: meantime, alibaba has only made one investment in the united states so far this year. what should we be be reading into that? selina: the data is pretty shocking. there has been a clear pullback in silicon valley. just in the years following the ipo, the sentiment was so different about alibaba. they were supposed to be making these huge sizable stakes, everyone was looking at their investments in companies like snapchat, lyft, tango. they were making tons of deals. there was actually some concern in the valley that this chinese investor was taking board seats and maybe wielding too much influence. now we have seen them dramatically pull back and they have only made one tiny investment in an early stage startup this year. my sources have told me they did lose their top dealmaker and they are not replacing him, and i think that is pretty indicative about the prioritization they are putting on investments in the u.s. but there is a lot of stuff at work behind the scenes here. emily: what is alibaba saying? selina: alibaba has declined to comment.

and this is a company that has repeatedly said they are not out there to compete with amazon, they are not out there to steal u.s. consumers. but could they become more competitive? selina: in the near-term it is differently not their priority. they have a lot more greenfield space in domestic china and in southeast asia where they just pour $4 billion into the e-commerce market. focus u.s. before their was to find partnerships and find things that could be tangential to their core e-commerce in china. even know they will probably not be able to make any splashy deals in the future, they are still investing heavily around the world. they will invest $15 billion in r&d over the next three years. they want to build labs around the world for scientists in the u.s., israel, russia, and china to be leaders and artificial intelligence, internet of things, robotics, all areas that the trump administration is very concerned about. emily: paint a bigger picture for us here.

obviously we have this groundbreaking in wisconsin. we have have potential legislation. we have the continued back-and-forth between the white house and beijing. i mean, how does all this impact the global supply chain? gerrit: it is difficult to tell. we have this trade war going on. from foxconn's perspective, they got a very good deal from wisconsin, regardless of the whole trump and trade war factor. but you could tell in the way that the foxconn chairman was talking, he even have his moment where he raised his fist and said, jobs, jobs, jobs, speaking just before the president took the stage. he is obviously appealing to trump on a personal, political emotional, and political level to say look, i am not one of those bad chinese companies, one of those bad companies trying to compete with you and take away jobs from americans. i am here on your side. and i think that they understand that if you can give trump the headlines that he wants, he may

go easier on you, or you may not become at the center of his crosshairs. but at the end of the day, this trade war is continuing, the rhetoric is escalating, and the trade barriers that do go up due affect foxconn's work in china, which may be another good reason for them to begin manufacturing things here in the united states. emily: all right, bloomberg's gerrit de vynck and selina wang, thank you for a much. meantime, beijing's multibillion-dollar belt and road initiative has been lost in the storm. one private equity player says he is not missing out on the massive cross-border opportunities. he caught up with bloomberg in beijing and talked about how he plans to capitalize on china's changing economy. yi: our investment strategy is synergy on cross-border and industry of alliances. so we focus on industries such as automotive, advanced

manufacturing, health care in the consumer space. tom: what within the auto sector is particularly attractive? which areas are you focused on? is the electric vehicles, autonomous driving? yi: very much focus on the electric vehicle sector. ev is the future. just like mobile phones, like internet, e-commerce, the arrival of ev is revolutionary. two, it will come much faster than people are expecting. tom: a focus on you is investing in companies, using high-tech and bring that back. have you got some examples of businesses you are looking along those lines? that built the carmated bell system for

components manufacturing and pharmaceutical manufacturing. what we do is we bring it to v to traditional chinese carmakers, this great product. tom: you have a euro fund as well. are you seeing greater flows into that fund? are you going to expand your funds? yi: our next step is to create a bigger fund in euro and u.s. dollars. and then we will expand the market out of germany into japan, europe, or even with the u.s. tom: where are you seeing the greatest opportunity now? yi: i think the greatest opportunities from china's say istive it is what i arch. for advancement, which is china's need for industry upgrade. there is a huge market demand for these industrial upgrades. and there is also renaissance, which is china's one belt and one road strategy.

there is also cut through, which some of china's already leading sectors. for example, artificial intelligence. for example, certain health care technology, electric vehicles. leslie is happiness, domestic consumption upgrade, which is written in china's constitution now, people's pursuit of a better life. emily: that was cedar lake capital founder bao yi speaking to bloomberg's tom mackenzie. well, microsoft is closing the gap with amazon in obtaining federal security approval. it provides an edge for the other potential bidders in the pentagon's winner take all contract. amazon is the only tech firm currently certified to store the government's most classified and sensitive data, which other companies complain favors it for the deal. coming up, ai and space. the international space station

is getting a new member. people are calling it alexa and space, but what makes it different? that is next. this is bloomberg. ♪

dave: open the pod bay doors, hal. hal: i'm sorry, dave. i'm afraid i can't do that. emily: it is perhaps the most iconic line uttered by an ai robot in space. "2001 a space odyssey," hal refusing an astronaut's direct order. and as a scarier thought that might have been for moviegoers in 1968, a hopefully kinder and

gentler ai robot voice is headed into space on friday. >> how are you today? >> i'm a bit tired at the moment. how about you? i can do a lot. do you want to know more? >> yes, sure. >> we can do skill training with a rubik's cube or play games. i can assist you with instructions and act as a mobile camera. my robot feelings are fine. emily: it is called simon and it is basically a flying and talking basketball with a screen. it will be answering astronauts questions on the international space station while floating in zero gravity. it was developed by airbus and ibm. here to tell us more about the iss's newest member is the project lead for simon. he joins us on the phone. matthias, is simon going to be more well-behaved than hal?

have you trained the ai to do that? matthias: definitely. simon is actually trained by humans and can only do the things that we trained him. so don't worry that he is going to be a hal imitation. emily: how is this any different than the tech behind alexa in space? is it a novelty or is it a breakthrough? >> it is definitely a novelty. we are having very deep conversations with simon based on ibm watson. imagine you are an astronaut and you are conducting an experiment and you are now at 43 of more than 100 steps. what you can ask simon is what kind of tool do i need to use right now. thaty do i need to use right now rather than any other material. and those kinds of questions assignment is able to answer. he kind of incorporates context

into his conversation. emily: give us a more examples. what do you imagine astronauts will actually be asking for help with? matthias: right now the main focus is on these experiments. for example, we have a so-called crystallization experiment that simon needs to support. the astronauts will then call simon. he is actually a free flying robot, autonomously free flying. they can say, simon come here, and simon will turn towards the astronauts, fly there, and then he can help guide them through the experiment procedure, and that is how we interact with simon. emily: we have covered a lot of ibm's flashy releases, watson, of course, the debater a couple weeks ago. there is this big question of how this will actually improve ibm's business. why is this worth ibm pouring money into?

how will this impact the bottom line? matthias: the cool thing about simon is that the actual technology is already existing. is the ibm technology based on our ibm cloud. and we are using existing out of the box ai services that can be combined to build such a great solution. emily: so, why haven't ibm's ai products in general lived up to the hype, in a way? matthias: i think we are quite living up to the hype, in my opinion. and it really depends always on how much you train the system and how good you train the system. and we started with the project simon in 2016, working together with airbus and also the german space agency to make simon happen, actually. and we trained them quite a lot and that is why it is very good system right now. emily: matthias biniok of ibm,

we will leave it there. thank you so much for joining us. we will be right back. ♪ be right back. ♪

♪ emily: let's return will more time to our top story. amazon buying online pharmacy startup pillpack for $1 billion. the acquisition will give the e-commerce giant in nationwide drug network and bring into direct competition with traditional pharmacy chains, including walgreens and cvs. we are joined by david frankel. managing partner and cofounder of founder collective. thank you so much for joining us. what is your reaction to this? obviously it is good news for you as an early investor. but what do you make of amazon's ambitions? david: we are tremendously excited about this, and absolutely thrilled for the team, the founders. it is a huge leg up for pillpack. these are probably the most mission-driven founders i have ever come across. they had fantastic options both in terms of financing and acquisition.

ultimately they have used this as the launchpad to continue the mission. emily: so, you know, where do you think this is going? you have certainly spent a lot of time researching the pharma business. you have got the big incumbents like walgreens and cvs, you have amazon buying an upstart. how do you expect this industry to transform over the next few years? david: i think it is like all tech advances. it feels like it is going very slowly until it feels like it is going very, very quickly. i think that amazon has been putting people in a position to look at the space for the last few years. pillpack has been working furiously at it, literally bowling over challenge after challenge to get to where they are. and i think ultimately what you're looking at is exactly the way amazon provides delivery of anything else you need. they will ultimately deliver your drugs, too.

so, any way you interact with them in terms of home delivery, you should expect to do that in terms of pharmacy now, too. i think that is the ultimate vision. emily: now, in many ways pillpack, and we heard a bit earlier from the ceo from an earlier interview, he said they are not much different from a traditional pharmacy. what is it that you think is it that makes pillpack so special and such an attractive target for amazon? david: you know, i think it is always what you don't see. people interact with pillpack in terms of the box and the pack of blister pack of meds, and it is delightful. it means you don't have to sort out meds in traditional boxes. pillpack hast that built is behind the scenes. a company really harmonizes a bunch of difficult, spaghetti

codes in our industry, archaic, old systems were you need to adjudicate drug by drug in a package on a sub-second basis. and their ability, the tech that is being built on the scenes to do that quickly, then literally everything behind the scenes that gets the right drugs to you at the right time that you can take in the right time, it sounds incredibly simple, just like self driving cars or uber started, simple. the complexity to actually produce that was tremendous. and i think that when amazon really got under under the skin of that, a tremendous simpatico arose from that. i think there is a platform in pillpack that is very, very tough to beat. aspirationally, many will want to do this. many will have to do this. to get there in an incredibly seamless and integrated way, given the complexity of the u.s.

health system, is really complicated. and i think amazon recognize d that. emily: how big a threat these think this is to the incumbents like walgreens and cvs? david: well, you know, i think i can speculate as well as anyone else. i think that they will have to respond, and they will have to respond more energetically. that is not to say that the traditional retailers have not started to think a lot about this. but certainly this action will throw down the gauntlet and accelerate in a way that i think will ultimately be exceptionally good for all consumers. an ultimately with the mission that founders of pillpack set out to accomplish. emily: david frankel, early managing partner and cofounder of founder collective, investor in pillpack, thank you so much. bloomberg's emma chandra explained pillpack's disruptive model and took a look inside the company's operations. check it out. ♪

emma: amazon is taking on the neighborhood pharmacy with its $1 billion acquisition of pillpack. >> at a traditional retail pharmacy it is all-around individual prescriptions. emma: an online pharmacy with a different approach. >> instead of having seven-a different wattles are get one of these boxes. emma: that box is then delivered to a customer every few weeks. >> you literally have a pack for each time of day. emma: pills are sorted by the time and date the should be taken. a.m.,this one is for 8:00 you have one for 12:00. emma: tj parker is focused on the 30 million americans that take five or more prescriptions a day. >> they are ultimately the highest value customer in the market. emma: he launched pillpack in orderand now has a mail license and all 50 states, which would allow amazon to grow

quickly. headquartered in massachusetts, pillpack has a 50,000 square foot warehouse in new hampshire. here, robots help sort pills. and software automates many routine pharmacy tasks, like verifying refills and confirming insurance. >> the business model is no different than a traditional pharmacy. we dispense medications for consumers. there insurance company pays for those medications, and they pay the co-pay. otherwise the surface is completely free. emma: they also have bm'stionship with most p and works with medicare part d drug plans. >> they don't think about the overall value of the consumer. their systems are designed to be about individual transactions. so if they decided they have to build a pillpack, they could do it. it is just going to take a long time. emma: emma chandra for bloomberg news. emily: and that does it for this

edition of "bloomberg technology." from san francisco, i am emily chang. this is bloomberg. ♪ what's a gig of data?

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