Transcript: Nightly Business Report – January 15, 2018

ANNOUNCER: This is NIGHTLY BUSINESS REPORT with Tyler Mathisen and Sue

and welcome to this special edition of NIGHTLY BUSINESS REPORT. I`m Tyler


Tonight, we are taking a look at American entrepreneurship. Big dreams
often start in small packages with a single bright idea.

MATHISEN: And that bright idea, along with hard work, can turn into a
small business.

HERERA: And maybe with a little luck, that small business can one day make
you millions.

MATHISEN: Well, we begin tonight with one man`s bright idea. Ever find
yourself wondering how much your medicine will actually cost at the
pharmacy or maybe trying to discuss health issues in front of other
customers when you`re there?

The prescription drugs are a $400 billion plus business, but only 1 percent
is conducted online. One New York City entrepreneur got the bright idea to
relieve some of the pain points with a digital full service pharmacy.


MATHISEN: When Eric Kinariwala went to his drugstore to pick up a
prescription medication in January of 2015, his headache was just
beginning. He waited in line nearly an hour before speaking to a

ERIC KINARIWALA, CAPSULE FOUNDER AND CEO: He said, I`m so sorry, we`re out
of stock of Z-Pak. I`m thinking to myself, it`s January, like this is the
only thing that pharmacies should have, I can`t believe that this is an
experience that exists on every street corner in America.

MATHISEN: It`s a problem that`s getting worse. Forty-two percent of the
respondents in a 2016 survey said their pharmacy was out of stock at least
once, causing them to make a return trip, up from 33 percent back in 2013.

Struck by his own frustration and pulling on his background as an investor
in the health care, retail and technology fields, Kinariwala came up with a
concept for an online pharmacy. He refined for more than a year with an
old friend, pharmacist Sonia Patel.

SONIA PATEL, CAPSULE CHIEF PHARMACIST: Most pharmacies are built on
technology that was founded from 20 years ago and it didn`t work for the
pharmacies. It didn`t work for the consumer. And also, it didn`t work for
the doctors and insurers.

MATHISEN: They found these healthcare players need better communication
tools, that pharmacies have to improve inventory systems and that customers
want transparent pricing.

Aiming for solutions, they opened Capsule in the spring of 2016. Available
only in New York City, customers can order online or ask their doctors to
do it for them. The company says tens of thousands of people and thousands
of physicians are using Capsule.

Like other pharmacies, Capsule negotiates prices with wholesalers and takes
a cut from the retail sales. Capsule does not discuss whether it`s
profitable just yet.

Customers can pick up in person in Manhattan, but most opt for free
delivery. A team of 60 couriers, staff employees, braving the elements,
deliver anywhere in New York`s five boroughs.

are huge. I`m looking at our prescriptions.

MATHISEN: Dr. Jeffrey Dobro, chief medical officer at One Medical, isn`t
just telling patients to shop for medications these days, he`s doing it
himself, because he`s finding better prices online for his won medications,
sometimes less than half the price his pharmacy benefits manager or PBM
gets at CVS (NYSE:CVS).

DOBRO: Two out of five were wildly mispriced. I just cannot imagine what
the average consumer has to deal with.

MATHISEN: Why the difference?

DOBRO: What the independents do is try to find the cheapest price they can
across the market for each individual medication. The PBMs are looking at
a bundle of medications. It may be several thousand medicines. For the
insurance company, the bundle is less expensive. But for an individual
consumer, one particular drug may end up being much more expensive.

MATHISEN: Capsule alerts customers when it can beat their insurance
company`s price. But the company prefers not to be called an independent
pharmacy. It has big plans.

KINARIWALA: We will absolutely expand the business nationally and
internationally over time. We think the business works everywhere.

MATHISEN: Confidence that comes from experiences like the one Sonia Patel
had, texting with a customer only weeks after Capsule opened.

KINARIWALA: She said, hey, Sonia, can I take iron supplements while I`m
pregnant? And then there was this dot, dot, dot, by the way, is it weird
you`re the first person I`m telling I`m pregnant? My husband doesn`t even
know yet.

And we just had this amazing moment of, wow, we built this experience that
people have an incredible degree of trust in.


MATHISEN: Pharmacists have long ranked high in the surveys of the most
trusted professionals. But Capsule views health care as an ecosystem and
it`s hoping to help the doctors, insurance companies, drug makers and
patients work more efficiently together.

HERERA: Open up the maps a smart phone and it tells you where you are.
So, how come it is not easy to find you if you call 911 on a cellphone? A
dangerous fact, if you consider 70 percent of the roughly 240 million 911
calls we make each year come from cellphones.

And that`s why two young entrepreneurs in New York City are busy trying to
fix that problem.


UNIDENTIFIED MALE: Where you`re saying you`re at and where the phone shows
you`re at is about five miles apart.

HERERA: It`s a problem that`s dogged 911 operators. Built in the 1960s,
911 works well with landline phones. But call on a cell phone and 911 gets
only an approximate location, often using nearby cell towers, even if the
call is made at a 911 center.

meters away from where we`re actually at.

HERERA: That`s why Joe Thomas`s staff at the Sussex County Emergency
Operations Center in Delaware is testing RapidSOS, a software allowing the
existing 911 system to read more data coming from smart phones.

THOMAS: It pinpoints it right on top of the building where we were

HERERA: Michael Martin got the idea after he felt like he`d been followed
home in New York City one night back in 2012.

MICHAEL MARTIN, CO-FOUNDER & CEO, RAPIDSOS: Nine-one-one call takers are
doing heroic work in light of that challenge but we`re giving them
basically no data to manage those calls.

HERERA: In grad school, he teamed with Nicholas Horelik who`d volunteered
taking calls on an emergency hotline during college.

problem of someone`s calling in and they`re in distress and no idea where
they are.

HERERA: So they co-founded RapidSOS, but perhaps more important than their
tech know-how was the four years they spent taking input from government
officials, and many of the 6,500 911 call centers. In 2016, they released
a free app called Haven. Last December, Harrison Dandrea got lost when a
thick damp fog rolled in as he hiked in North Carolina`s Blue Ridge

HARRISON DANDREA, HIKER: Your mind just goes into frantic mood.

HERERA: So, he tapped the Haven app on his phone.

DANDREA: Operator told me to stay right where I was and a park ranger
would be there within 15 minutes and they were.

HERERA: Almost 20 percent of the nation`s 911 call centers are using
RapidSOS, but it may cover most of the country by year`s end.

For some, it can`t happen soon enough. In 2014, an FCC study said fixing
911 location issues could save more than 10,000 lives a year.

TOM WHEELER, INVESTOR, RAPIDSOS: Congress talked about it, but there
hasn`t been any legislation, let alone any passage of something that would
— that would make a difference.

HERERA: Tom Wheeler is one of three former FCC chairmen who have invested
in RapidSOS.

WHEELER: They have built a platform that can be applicable in multiple
kinds of situations, not just those 911 calls.

HERERA: Those situations upgrades to home security car monitors like
OnStar and wearable health devices are where RapidSOS hopes to make money.

HORELIK: If this were on a health wearable device, this screen is going to
have health information, heart rate, blood pressure. If it`s coming from a
connected car, now, it`s an it`s a picture of the car, where was the
impact, airbags deployed, who was wearing a seatbelt, how many people were
in the vehicle.

HERERA: The cost: about $3 to $10 a month. It could be a small price to

HORELIK: The enormity of what it is we work on here, I think that affects
everybody on our team. I mean that`s what really drives all of us.

MARTIN: This is technology that`s going to have the power to save a lot of


HERERA: One interesting addition RapidSOS has made, if a phone has a
camera, it can put out a video feed which a 911 operator can then push to
first responders, giving them a chance to see what they`re getting into
before they arrive onsite.

MATHISEN: Well, if you`re using an old school but still fashionable wrist
watch, you might appreciate the handiwork of a Philadelphia entrepreneur
who got the bright idea to design a timepiece built with natural materials,
harkening back to a simpler time in today`s digital world.


MATHISEN: If you make and sell wrist watches these days, you have to
compete with phones, Fitbits, smartwatches. It better be good. And it
ought to be different.

Lorenzo Buffa`s flexible wooden watch band, now, that is different.

LORENZO BUFFA, FOUNDER, ANALOG WATCH CO.: My personal interest in material
development led to the world`s first soft and flexible wooden watch band.
One you flatten it back out, pretty much appears unmarred.

MATHISEN: Wooden accessories were trending in 2012, but Buffa says wood
watches then weren`t up to snuff. Aiming to do better, Buffa`s senior
project at Philadelphia`s University of the Arts led him down a twisted
path, iteration after iteration, until he settled on a wood veneer backed
by leather, a process he has since patented.

Then posing as a professor, he began to contact design blogs and magazines
about a student who had made something he thought they should see. The
watch got some press and manufacturers as far away as China began to
contact him.

BUFFA: That`s the kind of gumption you need as an entrepreneur. So, I
have total — total no shame.

MATHISEN: His moxie, and passion for natural materials, convinced Buffa to
start the Analog Watch Company. The thing is, his watches aren`t analog.

BUFFA: We actually use quartz movements which are battery-powered. A
conventional analog watch would be a mechanical watch, but we`re at the
lower price point.

MATHISEN: Analog`s wood watches sell for $150. That tick, tick, tick
movement of the secondhand is a quartz movement instead of a smooth sweep.

BUFFA: Analog references are desired to be focused on the simpler things.
Our goal obviously is to inspire people and to add a little bit of nature
to their every day.

MATHISEN: In 2013, Buffa got hundreds of preorders on Kickstarter, raising
$75,000. At the time, Kickstarter had partnered with New York`s Museum of
Modern Art. Buyers at the museum`s gift shop placed Analog`s first
wholesale order.

Today, the business is about 60 percent online retail and 40 percent
wholesale, mostly museum shops across the country.

BUFFA: They appreciate the ingenuity that goes into the design process,
really the materials on display.

MATHISEN: In 2015, Analog put a new material on display, marble, as well
as a line of classics with watch faces made of either wood or marble. The
mid-century aesthetic attracted orders from New York`s Guggenheim Museum.

GIGI LOIZZO, GUGGENHEIM MUSEUM: I barely have to sell these. The staff
barely has to sell them, because people recognize them for what they are.

MATHISEN: Gigi Loizzo helps pick products for the Guggenheim`s shop.

LOIZZO: We have to stay connected to the art collection or, of course, the
actual building which is a beautiful piece of art itself.

MATHISEN: That vision belonged to architect Frank Lloyd Wright who
famously connected his work to its natural surroundings. His circular
design and use of light, both inspired by nature, turned museum
architecture inside out. Nature inspires Buffa`s work, too. There are
wooden sunglasses now and a botanist collection of watches and jewelry,
featuring real flowers encased in resin.

Frank Lloyd Wright he`s not, but perhaps Buffa`s time is yet to come.

BUFFA: We`ve been able to carve some space for us because we`re really
creating conversation pieces or what some of our museums call wearable
works of art.


MATHISEN: For his next trick, Buffa is working on a new product using

HERERA: Ever since Price Club introduced consume to the idea of stocking
up and saving, in the 1970s, we`ve been snapping up boat-size packages.
Now the biggest of the warehouse stores, Costco (NASDAQ:COST), Sam`s Club
and BJs do about $200 billion worth of business each year.

And that`s why one New Jersey entrepreneur got the idea to put bulk
discounts online.


HERERA: It sounds so storybook, starting a company in your parent`s

CHIEH HUANG, BOXED CEO AND CO-FOUNDER: The computer was right here. There
was still a car on that side. Man, it sure isn`t sexy when you`re sitting
here, and not getting an order on a single day.

HERERA: Chieh Huang and his team went from the garage to $100 million a
year business. Boxed selling bulk sized snacks, food, paper towels, toilet
paper, Costco (NASDAQ:COST) and Sam`s Club fair online.

HUANG: Here 150,000 square feet, the garage could only fit like 200 items.

HERERA: Just up the road from his parents` home, the newly automated New
Jersey warehouse can ship tens of thousands of items in a day. There are
also fulfillment centers in Las Vegas, Dallas and Atlanta.

Huang got the idea while he was in law school living in New York City,
where he didn`t have access to the bulk discounts his parents grew to
depend on in the suburbs.

HUANG: We just didn`t have the time, the patience or frankly living in a
city, the car to get up to the Price Club or to Costco (NASDAQ:COST) or to
Sam`s Club anymore. And so, we thought how many millions of other
Americans had the same problem.

HERERA: Huang and his team wanted a mobile solution, an app. Mobile is
part of their DNA, having sold their mobile video game studio AstroApe to

They went after retail and at the time, it was risky. Consumers were
shopping on phones in 2013, most of their buying was done on computers.

HUANG: Over the last four years, it`s become mainstream and that`s in 48
months. The consumer mindset has shifted in such a dramatic fashion.

UNIDENTIFIED FEMALE: Lunches, lunchtimes come in.

HERERA: Laura Kapuscinski has been using Boxed for more than three years.

LAURA KAPUSCINSKI, BOXED CUSTOMER: I always joke with people that I don`t
leave the house unless I have to. Boxed really helps me be home with the
children and doing things that I want to do as opposed to things I have to

HERERA: Boxed has no membership fees, competitive pricing and free
shipping on orders of $49 or more. Huang targeted busy individuals. But
in terms of dollars, its biggest customers are other businesses.

HUANG: That caught us by surprise, how big B2B is for us.

HERERA: Perhaps another surprise, no one lost a job when the New Jersey
warehouse turned on its automated system this summer. Eight months in the
making costing millions, it`s got a four story automated sorting system and
nearly three miles of track.

Boxed trained the same employees who pushed carts and filled orders by hand
to run its new system.

HUANG: It was about actually preparing them for the future where all jobs
and fulfillment centers and maybe even a lot of retail jobs will look like
what you`re looking at behind us.

It took a lot of folks getting out of their comfort zone to say, hey, I
don`t even have a college education and you`re asking me to troubleshoot
robotics when it goes down. And I said yes.

HERERA: And how about this for work-life balance.

HUANG: We`d love to pay for your wedding so that you guys can have it.


HERERA: Boxed is helping to pay for employee weddings and their children`s
college education.

HUANG: The last thing I want on my tombstone is here lies Chieh Huang like
innovator of toilet paper shipping. I much rather have, here lies Chieh
Huang, you know, made a difference in people`s lives.


HERERA: Boxed is also building its own robots to help makes its system
even more efficient.

MATHISEN: And still ahead, second acts. Why some older Americans are
making it big by doing what they love.


HERERA: Small businesses are often considered the backbone of the economy.
They`re job creators and innovators. But many are trying to overcome a
major obstacle — finding skilled labor.

Kate Rogers (NYSE:ROG) has the story from Denver.


Denise Burgess, the biggest challenge in running her construction
management firm is simply finding the right people for the job. Her
business, Burgess Services, is a second generation family-owned company
with 12 to 15 year-round employees. But depending on the size of the
project she`s working on, Burgess can need more than 100 subcontractors at
a time and that`s when things get complicated.

DENISE BURGESS, BURGESS SERVICES CEO: They`re younger, not as trained, not
as seasoned as previously, and it`s also a career path that`s not
glamorous. It`s not Silicon Valley software. It`s not Facebook
(NASDAQ:FB). It`s something that you`re going to work hard but you also
get paid really well for.

So, it`s a hard thing — it`s a hard sell, not impossible sell.

ROGERS (on camera): Burgess isn`t alone in struggling with the workplace
skills gap. In fact, finding skilled labor has become a top three issue
for Main Street, behind taxes and government regulations. And here in
Denver, it`s an extremely tight labor market with unemployment at just over
2 percent.

really good news that companies are looking to hire, but it`s a real
struggle for them sometimes. It`s always a particular problem for smaller
companies that don`t have the networks the large companies do.

ROGERS (voice-over): West of Denver, in Evergreen, Colorado, Tony Song
employs 12 full time workers at his bike shop, Evergreen Bicycle
Outfitters. Song knows those with particular skill sets including his top
two mechanics would be nearly impossible to replace.

the labor market being what it is and how competitive it is, in the front
range, it would be very difficult for us to find a replacement for somebody
with that level of experience.

ROGERS: So, Song, like Burgess, works to offer competitive benefits like a
health care stipend, paid time off and flexibility in scheduling to hang
onto the good workers both small businesses have.

SONG: With the cycling industry being what it is, there are very few
people who are making, you know, six figures plus. So, our ability to be
able to retain employees has to come from somewhere outside of just the
dollar figure that they`re making. That ability to hold on to their
enjoyment in working in the bike shop is very key.



HERERA: Sometimes, business opportunities come later in life. And a
growing number of older Americans are able to do what they love: chase
their passion, and run a successful business.

Kate Rogers (NYSE:ROG) is back, this time the story her to Philadelphia.


ROGERS: Bryan Kravitz has seen his career come full circle. He begun
fixing typewriters in the 1970s and continued until computers came on the
scene. But much to his delight and surprise, typewriters are back in vogue
and Kravitz is in business for himself.

BRYAN KRAVITZ, PHILLY TYPEWRITER OWNER: I just feel really good. I get up
every day. I don`t want to sit around. I`m not going to — what am I —
what can I do, go to the golf course? No, not me. I want to do things.

ROGERS: He launched his business Philly Typewriter in 2015, fixing and
selling machines that date back to the 1920s. Kravitz worked for years in
marketing and direct mail, and said his experience in the workforce has
helped him with his latest venture.

KRAVITZ: I`m much more aware because I`ve had so many more experiences in
being in business and doing things with people.

ROGERS: While millennial entrepreneurs like Facebook`s Mark Zuckerberg
maybe grabbing headlines, 2015 data from the Kauffman Foundation found that
baby boomers rarely twice as likely as millennials to plan to launch their
own businesses.

Experts say the rise in boomer entrepreneurship is part of byproduct of the
financial crisis that decimated retirement savings of many, and part the
desire to remain active.

JODY HOLTZMAN, AARP MARKET INNOVATION SVP: Most older people approaching
the traditional retirement age are actually looking to stay active beyond
65. They miss the social aspect of work. They miss the purpose of work.

And work is an important emotional contribution to people`s sense of
identity. And I don`t think that that, you know, disappears just because
you hit a particular chronological age.

ROGERS: Darrell Jennings launched his business, American Music Furniture
Company, in 2013 and today has seven employees and two co-owners, making
humidifying cabinets for guitars. While he`s seen success selling cabinets
to musicians like Jason Isbell and Clay Cook from Zack Brown Band, there
are challenges in being an older entrepreneur.

is the fact that you`re not going to make money for quite a while. If you
start a business, it always takes more money than you think it will. It
takes more time than you think it will.

ROGERS: But he has only one regret.

JENNINGS: I wish I had done it sooner.



HERERA: Coming up, how one entrepreneur turned his love of flowers and
fruit into a multimillion dollars business.


MATHISEN: Some of you may have at some point sent an edible arrangement as
a gift or maybe you even received one. I sat down with the founder of the
company to hear how his strong work ethic at an early age led him to create
a half billion dollar business selling fruit, but not just any fruit.


MATHISEN: It`s all in the twirl here.

TARIQ FARID, CEO, EDIBLE ARRANGEMENTS: You`re putting a little bit of a
finish on it.

MATHISEN: Oh, look at that.

Entrepreneur Tariq Farid certainly has reason to celebrate.


T. FARID: Cheers.

MATHISEN: His company, Edible Arrangements, has mushroomed into an
international sensation.

How much total revenue?

T. FARID: A little over $600 million.

MATHISEN: It`s a success that stems from humble beginnings. At 12 years
old, Tariq and his family came to the United States from Pakistan, settling
in 1981 in West Haven, Connecticut. Since money was tight, he and his
siblings had to get busy, fast.

T. FARID: My mother would sit there and, you know, kick us out of bed
every day and say, go work hard.

MATHISEN: Tell me about your earliest days as an entrepreneur.

T. FARID: A lady living down the street from me, I would cut her grass and
help her with the lawn. And she goes, honey, you know, if you keep working
this hard, you`ll be a millionaire by the time you`re 35. And I liked the
ring of that.

MATHISEN: Within a year, Tariq took a job with a local florist, where he
learned the importance of customer service and creative design. And when
the opportunity arose to buy a defunct floral shop in nearby East Haven,
Connecticut, Tariq moved fast. With $6,000 borrowed from his father`s
boss, Tariq became the owner of Farid`s flowers.

Who gave you the lease on the shop? Who`s going to sign a lease with a 17-

T. FARID: I don`t think he knew the 17-year-old was going to be actually
running it.

MATHISEN: But he did run it, dividing his time between the shop and
school. The business grew into three local locations. More than a decade
later, in 1999, the seed that really took root was his idea, one he had
been toying with for a couple of years: sell fruit arrangements that looked
like flowers.

T. FARID: I used to call it a wow, when a person receives it, when it
arrives at the house, the first thing out of their mouth should be, wow!
That reaction has to be there.

thing about Edible is we`re an experienced company.

MATHISEN: Somia Farid, Tariq`s daughter, is the special projects manager
at Edible Arrangements headquarters in Wallingford, Connecticut.

S. FARID: I`ve been in the story ever since I was a kid. I used to hang
out at the store after school. I started taking orders when I was 12 years

MATHISEN: Still, it wasn`t easy for Tariq to transition from flowers to

T. FARID: I would go to a supplier and say, hey, can you make me a food-
safe floral container, and they were like, get out of here. You know, what
are you taking about? Why would we do that? We put flowers in it.

MATHISEN: He had to create the company`s entire supply chain from scratch.
Everything from child safe skewers to securing what he says is the world`s
freshest fruit.

By 2000, the business was building real traction, and Tariq began getting
requests to franchise the business.

T. FARID: Somebody saw that Waltham, Mass one and called from Atlanta and
said, hey, I just saw this, and opened one in Atlanta. Somebody in Atlanta
called someone in New Jersey, and then somebody from New Jersey called and
said, hey, I just saw this, can I buy one for New Jersey. Next thing I
know, I was in North Ridge, California, opening the eighth store.

MATHISEN: How many stores today?

T. FARID: Thirteen hundred.

MATHISEN: Today, Edible Arrangements is available in nine countries, about
60 percent of orders come in online. But they`re fulfilled by local shops.

For the Farids, it`s been a fruitful journey, and one that continues to

T. FARID: There`s a lot that goes into it that we`ve spent the last 18
years perfecting.

MATHISEN: Tariq Farid, from immigrant to American dream, getting rich the
old fashioned way, slowly.


MATHISEN: Edible arrangements fruit bouquets range from price from $40 to
upwards of $1,000 for more extravagant custom displays. The company is now
focusing its efforts on expanding its product lineup to include parfaits
and smoothies in a push to drive brick and mortar sales.

HERERA: Sounds delicious.

MATHISEN: Very good.

HERERA: Thanks so much for watching this special edition of NIGHTLY

MATHISEN: And I`m Tyler Mathisen. Thanks from me as well. Have a great
evening, everybody and we`ll see you back here next time.


Nightly Business Report transcripts and video are available on-line post
broadcast at The program is transcribed by ASC Services II
Media, LLC. Updates may be posted at a later date. The views of our guests
and commentators are their own and do not necessarily represent the views
of Nightly Business Report, or CNBC, Inc. Information presented on Nightly
Business Report is not and should not be considered as investment advice.
(c) 2018 CNBC, Inc.


This entry was posted in Transcripts. Bookmark the permalink.

Leave a Reply