INSUBCONTINENT EXCLUSIVE:
Mangrove Capital Partners& co-founder and CEO Mark Tluszcz is brimming with enthusiasm for what coming down the pipe from health tech
startups.
Populations armed with mobile devices and hungry for verified and relevant information, combined with the promise of big data and
AI, is converging, as he sees it, into a massive opportunity for businesses to rethink how healthcare is delivered, both as a major platform
to plugging gaps in stretched public healthcare systems and multiple spaces in between — serving up something more specific and
intimate.
Think health-focused digital communities, perhaps targeting a single sex or time of life, as we&re increasingly seeing in the
femtech space, or health-focused apps and services that can act as supportive spaces and sounding boards that cater to the particular
biological needs of different groups of people.
Tluszcz has made some savvy bets in his time
He was an early investor in Skype, turning a $2 million investment into $200 million, and he also made a tidy profit backing web building
platform Wix, where he remains as chairman
But the long-time, early-stage tech investor has a new focus after a clutch of investments — in period tracking (Flo), AI diagnostics (K
Health) and digital therapeutics (Happify) — have garnered enough momentum to make health the dominant theme of Mangrove Capital last
fund.
&I really don&t think that there a bigger area and a more inefficient area today than healthcare,& he tells us
&One of the things that that whole space is missing is just good usability
And that something that Internet entrepreneurs do very well.&
Extra Crunch sat down for an in-depth conversation with Tluszcz to dig into
the reasons why he so excited about mHealth (as Mangrove calls it) and probe him on some of the challenges that arise when building data-led
AI businesses with the potential to deeply impact people lives.
The fund has also produced a healthcare reportsetting out some of its
thinking.
This interview has been lightly edited for length and clarity
TechCrunch: Is the breadth of what can fall in the digital health or
mHealth category part of why you&re so excited about the opportunities here?
Mark Tluszcz: I think if you take a step back, even from
definitions for a moment, and you look around as an investor — and we as a firm, we happen to be thematically driven but no matter who you
are — and you say where are there massive pockets of opportunity? And it typically in areas where there a lot of inefficiency
And anybody who tried to go to the doctor anywhere in Europe or around the world or tried to get an appointment with a therapist or whatever
realizes how basically inefficient and arcane that process is
From finding out who the right person is, to getting an appointment and going there and paying for it
So healthcare looks to us like one of those arcane industries — the user experience, so to speak, could be so much better
And combine that with the fact that in most cases we know nothing as individuals about health — unless you read a few books and things
But it generally the one place where you&re the least informed in life
So you go see your GP and he or she will tell you something and you&re blindly going to take that pill they&re going to give you because
You don&t understand it.
So I think that the exciting part about it
If I now look around and say if I now look at all the industries in the world — and of course there interesting stuff happening in
financial services, and it continues to happen on commerce, and many, many places — but I really don&t think that there a bigger area and
a more inefficient area today than healthcare.
You combine that with the power that we&re beginning to see in all these mobile devices —
I have it in my pocket at all times
So one is the industry is potentially big and inefficient; two is there tools that we have easy to access it
And there has been — I think again — a general frustration on healthcare online I would say of when you go into a search engine, or you
go into Web MD or Google or whatever, the general feedback it gives you is you&re about to have a heart attack or you&re about to die
because those products are not designed specifically for that
So you as a consumer are confused because you&re not feeling well so you go online
The next day you go see your doctor and he or she says you didn&t go to Google did you, right? I know you&re probably freaked out at this
So the second point is the tools are there.
Third I&d say is that artificial intelligence, machine learning, which is kind of in the process
of gaining a lot of momentum, has made it that we&re able to start to dream that we could one day crunch sufficient data to get new insights
So I think you put those three factors together and say this seems like it could be pretty big, in terms of a space.
One of the things that
that whole space is missing is just good usability
And that something that Internet entrepreneurs do very well
It figure out that usability side of it
How do I make that experience more enjoyable or better or whatever? In fact, you see it in fintech
One of the reasons, largely, that these neobanks are winning is that their apps are much better than what you have from the incumbents
There no other reason for it
And so I think there this big opportunity that out there, and it says all these factors lead you to this big, big industry
And then yes, that industry in itself is extremely large — all the way from dieting apps, you might think, all the way to healthy eating
apps to longevity apps, to basic information about a particular disease, to basic general practitioner information
You could then break it down into female-specific products, male-specific products — so the breadth is very, very big.
But I think the
common core of that is we as humans are getting more information and knowledge about how we are, and that is going to drive, I think, a
massive adoption of these products
It knowledge, it ease of use, and it accessibility that just make it a dream come true if we can pull all these pieces together
And this is just speaking about the developed world
This gets even bigger potentially if I go to the third world countries where they don&t even have access to basic healthcare information or
basic nutritional information
So I would say that the addressable market in investors& jargon is just huge
Much more so than in any other industry that I know of today.
Is the fund trying to break that down into particular areas of focus within
that or is the fund potentially interested in everything that falls under this digital health/mHealth umbrella?
We are a generalist
As a generalist investment firm we find these trends and then anything within these trends is going to pique our interest
Where we have made some investments has been really in three areas so far, and we&ll continue to broaden that base.
We&ve made an investment
into a company called Flo
They are the number one app in the world for women to help track their menstrual cycles
So you look at that and go can that be big, not big, I don&t know
I can tell you they have 35M monthly active users, so it massive.
Now you might say, ‘Why do women need this to help them track their
cycles because they&ve been tracking these menstrual cycles other ways for thousands of years?& This is where, as an investor, you have to
combine something like that with new behavioral patterns in people
And so if you look at the younger generation of people today they&re a generation that been growing up on notifications — the concept of
being notified to do something
Or reminded to do something
And I think these apps do a lot of that as well.
My wife, who had two children, might say — which she did before I invested in the company
— why would I ever need such an app? And I told her, &Unfortunately you&re the wrong demographic… because when I speak to an 18-
year-old she says, ‘Ah, so cool! And by the way do you have an app to remind me to brush my teeth?& So notifications is what I think what
makes it interesting for that younger demographic.
And then curiously enough — this is again the magic of what technology can bring and
great products can bring — Flo is a company created by two brothers
They had no particular direct experience of the need for the app
They knew the market was big
They obviously hired women who were more contextually savvy to the problem but they were able to build this fantastic product
And did a bunch of things within the product that they had taken from their previous lives and made it so that the user experience was just
so much better than looking at a calendar on your phone
So today 35M women every month use this product tells you that there something there — that the tech is coming and that people want to use
And so that one type of a problem, and you can think about a number of others that both males and females will have — for whom making that
single user experience better could be interesting
And I could go from that to ten things that might be interesting for women and ten things that might specifically be interesting for men —
you can imagine breaking that down
This is why, again, the space is so big
There are so many things that we deal with as men and women [related to health and biology].
Now for me the question is, as a venture
investor, will that sub-set be big enough?
And that again is no different than if I was looking at any other industry
If I was in the telecommunications industry — well is voice calling big? Is messaging big enough? Is conference calling big enough? All
that is around calling, but you start breaking it down and, in some cases, we&re going to conclude that it big enough or that it not big
But we&re going to have to go through the process of looking at these
And we&re seeing these thematic things pop up all over the place right now
All over Europe and in the U.S
as well.
It did take us a little time to say is this big enough [in the case of Flo] but obviously getting pregnant is big enough
And as a business, think about it: once you know a woman menstrual cycle process and then she starts feeding into the system, ‘I am
pregnant; I&m going to have a child,& you start having a lot of information about her life and you can feed a lot of other things to her
Because you know when she going to have a child, you can propose advice as well around here how the first few months go
Because, as we know, when you have your first child, you&re generally a novice
You&re discovering what all that means
And again you have another opportunity to re-engage with that user
So that something that I think is interesting as a space.
So the thematic space is going to be big — the femtech side and the male tech
All of that going to play a big role
One could argue always there are the specific apps that are going to be the winners; we can argue about that
But right now I guess Flo is working very well because those people haven&t found such a targeted user experience in the more generic place
They feel as if they&re in a community of like-minded women
They have forums, they can talk, they have articles they can read, and it just a comfortable place for them to spend some time.
So Flo is
the first example of a very specific play that we did in healthcare about a year and a half ago
The first investment, in fact, that we made in healthcare.
The second example is opposed to that — it a much more general play in
It a company called K Health
Now K Health looked at the world… and said what happens when I wake up at night and I have a pain and I do go to Google and I think I&m
going to have a heart attack…
So can I build a product that would mimic, if you will, a doctor? So that I might be able to create an experience when I can have immediacy
of information and immediacy of diagnostics on my phone
And then I could figure out what to do with that.
This is an Israeli company and they now have 5 million users in the U.S
that are using the app, which is downloadable from the U.S
What they did is they spent a year and a half building the technology — the AI and the machine learning — because what they did is they
bought a very large dataset from an insurance company
The company sold it to them anonymized
It was personal health records for 2.5 million people for 20, years so we had a lot of information
A lot of this stuff was in handwritten notes
It wasn&t well structured
So it took them a long time to build the software to be able to understand all this information and break it down into billions of data
parts that they could now manipulate
And the user experience is just like a WhatsApp chat with a robot.
Their desire is not to do what some other companies are doing, which is
‘answer ten questions and maybe you should talk to a doctor via Skype.& Because their view was that — at the end of the day — in every
developed country there are shortages of doctors
That true for the U.K.; it true for the U.S
If you predict out to 2030, there a huge hole in the number of GPs
Part of that is also totally understandable; who would want to be a GP today? I mean your job in the U.S
is you&re essentially a sausage factory
Come in and you&ve got 3 minutes with your customer
It not a great experience for the doctor or the person who goes to the doctor.
So K Health built this fantastic app and what they do is they
diagnose you and they say based on the symptoms here what K thinks you have, and, by the way, here a medicine that people like you were
So there an amazing amount of information that you get as a user, and that entirely free as a user experience
Their vision is that the diagnostic part will always be free.
There are 5 million people in the US.
using the app who are diagnosing
There are 25 questions that you go through with the robot, ‘K,& and she diagnoses you
We call that a virtual doctor visit
We&re doing 15,000 of those a day
Think about the scale in which we&ve been able to go in a very short time
And all that free.
To some extent it great for people who can&t necessarily afford doctors — again, that not typically a European problem
Because socialized medicine in Europe has made that easy
But it is a problem in the U.S.; it is a problem in Africa, Asia, India and South America
There about 4 billion people around the world for whom speaking to a doctor is a problem.
K Health view is they&re bringing healthcare free
And then ultimately how they make money will be things like if you want to speak to a doctor because you need a prescription for drugs
The doctor has access to K diagnostic and either agrees or disagrees with it and gives you a prescription to do that
And what we&re seeing is an interesting relationship which is where we wanted it to be
Of those 15,000 free doctor visits, less than one percent of those turn into I want to speak to a human and hence pay $15 (that the price
they&re charging in the U.S
to actually converse with a human)
In the U.S., by the way, about a quarter of the population — 75 million people — don&t have complementary insurance
That when they go to the doctor it $150
Isn&t that a crazy thing? You can&t afford complementary insurance but you could pay the highest price to go see a doctor
Such madness.
And then there a whole element of it simple, and it convenient
You&re sitting at home thinking, &Okay, I&m not feeling so well& and you&ve got to call a doctor, get an appointment, drive however long it
takes, and wait in line with other sick people
So what we&re finding is people are discovering new ways of accessing information…
Human doctors also don&t have time to give empathy in an ever stretched socialized medicine country [such as in Spain]
So what we&re seeing also is a very quick change in user behavior
Two and a half years ago [when K Health started], many people would say I don&t know about that
Now they&re saying convenience — at least in Europe — is why that interesting
it price.
So that the second example; much more general company but one which has the ability to come and answer a very basic need: ‘I&m
not feeling well.&
We have 5M users which means we have data on 5M people
On average, a GP in his life will see about 50,000 patients
If you think about just the difference — if you come to K, K has seen 5M people, your GP Max has seen 50k
So, statistically, the app is likely to be better
We know today, through benchmarks and all sorts of other stuff, is that the app is more accurate than humans.
So you look at where that
heading in general medicine we&ve for a long time created this myth that doctors spent eight years learning a lot of information and as a
result they&re really brainy people
They are brainy people but I believe that that learning process is going to be done faster and better through a machine
That our bet.
The third example of an investment that we&ve made in the health space is a company called Happify
They&re a company that had developed like a gamification of online treatment if you have certain sicknesses
So, for example, if you&re a little depressive you can use their app and the gamification process and they will help you feel healthier
So so far you&re probably scatching your head saying ‘I don&t know about that…& But that was how they started and then they realized
that hang on you can either do that or you can take medicine; you can pop a pill
In fact what many doctors suggest for people who have anxiety or depression.
So then they started engaging with the drugs companies and they
realized that these drug companies have a problem which is the patent expiry of their medication
And when patents expire you lose a lot of money
And so what very typical in the pharma industry is if you&re able to modify a medicine you can typically either extend or have a new patent
So Happify, what they&ve done with the pharma companies now, is said instead of modifying the medicine and adding something else to it —
another molecule for instance — could we associate treatments which is medicine plus online software? Like a digital experience
And that has now been dubbed Digital Therapeutics — DTx — is the common term being used for them
And this company Happify is one of the first in the world to do that
They signed a very large deal with a company called Sanofi — one of the big drug makers
And that what they&re going to roll out
When doctors say to their patients I&m diagnosing you with anxiety or depression
Sanofi has a particular medication and they&re going to bundle it now with an online experience — and in all the tests that they&ve done,
actually, when you combine the two, the patient is better off at the end of this treatment
So it just another example of why this whole space is so large
We never thought we&d be in any business with a pharma business because we&re tech investors
But here all of a sudden the ability to marry tech with medication creates a better end user experience for the patient
And that very powerful in itself.
So those are just three areas where we have actually put money in the health space but there are a number
of areas that one looks at — either general or more specific.
Yeah it is big
And I think for us at least the more general it stays and it seen the more open minded we&re going to be
Because one thing you have to be as an investor, at least early stage like ours, completely open minded
And you can&t bias your process by your own experience
It has to stay very broad.
It also why I think clinician led companies and investors are not good — because they come with their own
I think in this case, just like in any other industry, you have to say I&m not going to be polluted by the past and for me to change the
experience going forward in any given area I have to fundamentally be ready to reinvent it.
You could propose a Theranos example as a
counterpoint to that — but do you think investors in the health space have got over any fallout from that high profile failure at this
point?
With that company one could argue who fault it really was
Clearly the founder lied and did all sorts of stuff but her investors let her do it
So to some extent the checks and balances just weren&t in place
I&m only saying that because I don&t think that should be the example by which we judge everything else
That just a case of a fraudster and dumb investors
That going to continue to exist in the future forever and who knows we might come across some of those but I don&t think it the benchmark by
which one should be judging if healthcare is a good or viable investment
Again I look at Flo, 35M active users
I look at K Health, 5M users in the US who are now beginning to use doctors, order medicine through the platform
I think the simplicity, the ease of use, for me make it that it undeniable that this industry going to be completely shaken up through this
And we need it because at least in the Western world are health systems are so stretched they&re going to break.
Europe vs the US is
interesting — because of the existence of public healthcare vs a lack of public healthcare
What difference does that make to the startup opportunities in health in Europe vs the US? Perhaps in Europe things have to be more
supplementary to public healthcare systems but perhaps ultimately there isn&t that much difference if healthcare opportunities are
increasingly being broken out and people are being encouraged to be more proactive about looking after their own health needs?
Yeah
Take K Health — where you look at it and say from a use example it clear that everywhere in the world, including US and Europe, people are
going to recognize the simple ease of use and the convenience of it
If I had to spend money to then maybe make money then I would say maybe the US is slightly better because there 75M people who can&t afford
a doctor and I might be able to sell them something more whereas in Europe I might not
I think it becomes a commercial question more than anything else
Certainly in the UK the NHS [National Health Service] is trying to do a lot of things
It is not a great user experience when you go to the doctor there
But at the end of the day I don&t think the difference between Europe-US makes much of a difference
I think this idea that what these apps want to tend towards — which is healthcare for everybody at a super cheap or free price-point — I
think we have an advantage in Europe of thinking of it that way because that what we&ve had all our lives
So to some extent what I want to create online is socialized medicine for the world — through K Health
And I learnt that because I live here [in Europe].
Somebody in the US — not the 75M because they have nothing — but all the others,
maybe they don&t think there a problem because they don&t recognize it
Our view with K Health is the opportunity to make socialized medicine a global phenomenon and hoping that in 95% of the cases access to the
And in 5% of the cases you&re going to go the specialists that need to see you — and then maybe there enough money to go around for
everybody.
And of course, as an investor, we&re interested in global companies
Again you see the theme: Flo, K Health, Happify, all those have a potential global footprint right off the bat.
I think with healthcare
there are going to be play that could be national specific and maybe still going to be decent investments
You see in that in financial services
The neo banks are very country specific — whenever they try to get out of their country, like N26, they realize that life isn&t so easy
when you go somewhere else
But healthcare I think we have an easier path to going global because there is such a pent up demand and a need for you to just feel good
about yourself… Most of the people who go through [the K Health diagnostic] process just want peace of mind
If 95% of the 15k people who go through that process right now just go, &Phew, I feel okay& then we&ve accomplished something quite
And imagine if it not 15,000 it about 150,000 a day, which seems to be quite an easy goal
So healthcare allows us to dream that TAM — in investor terms, target addressable market — is big
I can realistically think with any one of the three companies that I&ve mentioned to you that we could have hundreds of millions of users
Because there the need.
There are different regulatory regimes across markets, there are different cultural contexts around the world — do
you see this as a winner takes all scenario for health platforms?
No
I think ultimately it the user — in terms of his or her experience in using an app — that going to matter
Flo is not the only menstrual cycle app in the world; it just happens to be by far the biggest
So that the perfect example
I don&t think there going to be one winner takes it all.
There also (UK startup) Babylon Health which sounds quite similar to K
Health…
Babylon does something different
They&re essentially a symptom checker designed to push you to have a Skype call with a human doctor…
It answers a bunch of questions, it&ll say, &Well, we think you have this, let connect you to a real doctor.& We did not want to invest in a
company that ever did that because the real problem is there just aren&t enough doctors and then frankly you and I are not going to want to
talk to a doctor from Angola
Because what going to happen is there aren&t enough doctors in the Western countries and the solution for those type of companies —
Babylon is one, there others doing similar things — but if you become what we call lead generation just for doctors where you get a
commission for bringing people to speak to a doctor you&re just displacing the problem from in your neighborhood to, broadly speaking, where
are the humans? And I think as I said humans, they have their fallacies
If you really want to scale things big and globally you have to let software do it.
No it not a winner takes all — for sure.
So the vision
is that this stuff starts as a supplement to existing healthcare systems and gradually scales?
Correct
I&ll give you an example in the U.S
They have a deal with the second largest insurance company called Anthem
Their go-to-market brand is called Blue Cross, Blue Shield
It the second largest one in America… so why is this insurance company interested? Because they know that
There not enough doctors.
That
the health system in the U.S
is under stress
If they could reduce the amount of doctor visits by promoting an app like K, that financially beneficial to them.
So they&re
going to be proposing it, in various forms, to all their customers by saying, &Before you go see a doctor, why don&t you try K?&
In this
particular case with K there revenue opportunities from the insurance companies and also directly from the consumer, which makes it also
interesting.
You did say different regions, different countries have different systems — yes absolutely and there no question that going
international requires work
However, having said that, I would say a European, an Indonesian and a Brazilian are largely similar
There sometimes this fallacy that Asians, for instance, are so different from us as Western Europeans
And the truth is not really — when you look at it down into the DNA and the functions of the body and stuff like that
Which you do have to do, though
If we were to take K to Indonesia, for example, you do have to make sure that your AI engine has enough data to be able to diagnose some
local stuff.
I&ll give you an example
When we launched K in the U.S
and we started off with New York, one of things you have to be able to diagnose is called Lyme disease which is what you get from a tick
Very, very prevalent in the Greater New York area
Not so much anywhere else in the States
But in New York, if you don&t have it it looks like a cold and then you get very sick
That very much a regional thing that you have to have
And so if we were to go to Indonesia we&d have to have thing like Malaria and Dengue
But all that is not so difficult
But yes, there some customization.
There are also certain conditions that can be more common for certain ethnicities
There are also differences in how women experience medical conditions vs men
So there can be a lot of issues around how localized health data is…
I would say that that is a very small problem that is a must to be
addressed, but it a much smaller problem than you think it is
For instance, in the male to female thing — of course medical sometimes plays differently — but when you have a database of 5 million of
which 3 million are women, and 2 million are men, you already have that data embedded
It is true that medications work better with certain races also
But again very tiny, very small examples of those
Most doctors know it.
At the big scale that may look very small but to an individual patient if a system is not going to pick up on their
condition or prescribe them the right medicine that obviously catastrophic from their point of view…
Of course.
Which is why, in the
healthcare space, when you&re using AI and data-driven tools to do diagnosis there a lot of risk — and that part of the consideration for
everyone playing in this space
So then the question is how do you break down that risk, how do you make that as small as possible and how do you communicate it to the
users — if the proposition is free healthcare with some risk vs
not being able to afford going to the doctor at all?
I appreciate that, as a journalist, you&re trying to say this is a massive risk
I can tell you that as somebody who involved in these businesses it is a business risk we have to take into consideration but it is, by far,
We clearly have a responsibility as businesses to say: if I&m going to go to South East Asia, I need to be sure that I cover all the
‘weird& things that we would not have in our database somewhere else
How I go about doing that, obviously, is the secret sauce of each company
But you simply cannot launch your product in that region if you don&t solve — in this case Malaria and Dengue disease
It doesn&t make sense [for a general health app]
You&d have too many flaws and people will stop using you.
I don&t think that so much the case with Flo, for instance… But all these
entrepreneurs who are designing these companies are fully aware that it isn&t a cookie-cutter, one-size fits all — but it is close to that
When you look at the exceptions
We&re not talking about I have to redo my database because 30% or 20% — it much, much smaller than that.
And, by the way, at the end of
the day, the market will be the judge
In our case, when you go from an Israeli company into the U.S
and you have partners like Blue Cross, Blue Shield, they&ve tested the crap out of your product
And then you&re going to say well I&m going to do this now in Indonesia — well you get partners locally who&re going to help you do
that.
One of the drawbacks about healthcare is, I would say, making sure that your product works in all these countries
And doesn&t have holes in the diagnostic side of it.
Which seems in many cases to boil down to getting the data
And that can be a big challenge
As you mentioned with K Health, there was also the need to structure the data as well — but fundamentally it taken Israeli population data
and is using it in the U.S
You would say that model is going to scale? There are some counter examples, such as Google-owned DeepMind, which has big designs on using
AI for healthcare diagnostics and has put a lot of effort into getting access to population-level health data from the NHS in the U.K., when
— at the same time — Google has acquired a database of health records from the U.S
Department of Veterans Affairs
So there does seem to be a lot of effort going into trying to get very localized data but it challenging
Google perhaps has a head start because it Google
So the question then is how do startups get the data they need to address these kinds of opportunities?
If we&re just looking at K Health
then obviously it a big challenge because you do have to get data in a way
But I would say again your example as well you have a U.S
database and does it match with a UK database
Again it largely does.
In that case the example is quite specific because the dataset Google has from the department of Veterans Affairs
skews heavily male (93.6%)
So they really do have almost no female data.
But that a bad dataset
That not anything else but a bad dataset.
It instructive that they&re still using it, though
Maybe that illustrates the challenge of getting access to population-level healthcare data for AI model making.
Maybe it does
But I don&t think this is one of those insurmountable things
Again, what we&ve done is we&ve bought a database that had data on 2.5 million patients, data over 20 years
I think that dataset equates extremely well
We&ve had nothing but positive feedback
We beat human doctors every time in tests
And so you look at it and you say they&re just business problems that we have to solve
But what we&re seeing is the consumer market is saying holy shit this is just such a better experience than I&ve ever had before.
So the
human body — again — is not that complex
Most of the things that we catch are not that complex
And by the way we&ve grown our database — from the 2.5M that we bought we now have 5M
So we now have 2.5M Americans mixing into that database
And the way they diagnose you is they say based on your age, your size, you don&t smoke and so on — perhaps they say they have 300,000
people in their database like you and they&re benchmarking my symptoms against those people
So I think the smart companies are going to do these things very smartly
But you have to know what you&re using as a user as well… If you&re using that vs just a basic symptom checker — that I don&t think is a
particularly great new user experience
But some companies are going to be successful doing that
At the end the great dream is how do you bring all this together and how do you give the consumer a fundamentally better choice and better
That K Health.
Why couldn&t Google do the same thing? I don&t know
They just don&t think about it.
That a really interesting question — because Google is making big moves in health
They&re consolidating all their projects under one Google Health unit
Amazon is also increasingly interested in the space
What do you make of this big tech interest? Is that a threat or an opportunity for health startups?
Well if you think of it as an investor
they&re all obviously buyers of the companies you&re going to build
So that a long term opportunity to sell your business
On the shorter term, does it make sense to invest in companies if all of a sudden the mammoth big players are there? By the way, that has
been true for many, many other sectors as well
When I first invested in Skype in the early days people would say the telecom guys are going to crush you
But all of a sudden telecom, communication became the current that the Internet guys wanted — that why eBay ultimately bought us and why
they all had their own messenger.
What the future made of we don&t know, but what we do know is that consumers want just the best experience
and sometimes the best experience comes from people who are very innovative and very hungry as opposed to people who are working in very
Venture capitalists are always investing in companies that somehow are competing one way or another with Amazon, Facebook, Google and all
It just that when you focus your energy on one thing you tend to do it better than if you don&t
And I&m not suggesting that those companies are not investing a lot of money
And that because they realize that one of the currencies of the future is the ability to provide healthcare information, treatment and
things like that.
You look at a large retail store like Wal-mart in America
Wal-mart serves largely a population that makes $50k or less
The lower income category in North America
But what are they doing to make you more loyal to them? They&re now starting to build into every Wal-mart doctor offices
Why would they do that? Is it because they actually know that if you make $50k or less there a high chance you don&t have an insurance and
there a high chance that you can&t afford to go see a doctor
So they&re going to use that to say, &Hey, if you shop with us, instead of paying $150 for a doctor, it&ll be cheaper.& And we&re beginning
to see so many examples like this — where all these companies are saying actually healthcare is the biggest and most important thing that
somebody thinks about every day
And if we want to make them loyal to our brand we need to offer something that in the healthcare space
So the conclusion of why we&re so excited it we&re seeing it happen in real life.
Wal-mart does that — so when Amazon starts buying an
online pharmacy I get why they&re doing that
They want to connect with you on an emotional level which is when you&re not feeling well.
So no, I don&t think we&re particularly worried
You have to respect they&re large companies, they have a lot of money and things like that
But that always been the case
We think that some of these will likely be bought by those players, some of those will likely build their own businesses
At the end of the day it who going to get that user experience right.
Google of course would like us all to believe that because they&re the
search engine of the world they have the first rights to become the health search engine of the world
I tend to think that not true
Actually if you look at the history of Google they were the search engine of the world until they forgot about Amazon
And nowadays if you want to buy anything physical where do you search first? You don&t search on Google anymore — you search on
Amazon.
But the space is big and there a lot of great entrepreneurs and Europe has a lot to offer I think in terms of taking our history of
socialized medicine and saying how can tech power that to make it a better experience?
So what should entrepreneurs that are just thinking
about this space — what should they be focusing on in terms of things to fix?
Right now the hottest are the three that I mentioned —
because those are the ones that we&ve put money into and we&ve put money in because we think those are the hottest areas
I just think that anything where you feel deep conviction about or you&ve had some basic experience with the issue and the problem.
I simply
do not think that clinicians can make this change — in any sector
If you look at those companies I mentioned none of the founders are clinicians in any way shape or form
And that why they&re successful
Now I&m not suggesting that you don&t have to have doctors on your staff
At K Health, we have 30 doctors…
What we&re trying to do is change the experience
So the founder, for instance
was a founder of a company called Vroom that buys and sells cars online in the States
When he started he didn&t know a whole lot about healthcare but he said to himself what I know is I don&t like the user experience
It a horrible user experience
I don&t like going to the doctor
I can change that.
So I would say if you&re heading into that space your first pre-occupation is how am I going to change the current user
experience in a way that meaningful
Because that the only thing that people care about.
How is possible that two guys could come up with Flo? They were just good product
people.
For me, that the driving factor — if you&re going to go into this, go into it saying you&re there to break an experience and make
it just a way better place to be.
On the size of the opportunity I have seen some suggestions that health is overheated in investment terms
But perhaps that more true in the U.S
than Europe?
Any time an investor community gets hold of a theme and makes it the theme of the month or the year — like fintech was for
ten years — I think it becomes overfunded because everybody ploughs into that
I could say yes to that statement sure
Lot of players, lot of actors
Money pouring in because people believe that the outcome could be big
So I don&t think it overheated
I think that we&ve only scratched the surface by doing certain things.
Some of the companies in the healthcare space that are either
thinking of going public or are going public are companies that are pretty basic companies around connecting you with doctors online, etc
So I think that the innovation is really, really coming
As AI becomes real and we&re able to manage the data in an effective way… But again you&ve got to get the user experience right.
Flo in my
experience — why it better than anything else — one is it just a great user experience
And then they have a forum on their app, and the forum is anonymized
And this is curious right
I think they anonymized it without knowing what it would do
And what it did was it allowed women to talk about stuff that perhaps they were not comfortable talking about stuff if people knew who they
Number one issue? Abortion.
There a stigma out there around abortion and so by anonymizing the chat forum all of a sudden it created this
opportunity for people to just exchange an experience
So that why I say the user experience for me is just at the core of that revolution that coming.
Why should it be such a horrific experience
to be able to talk about that subject? Why should women be put in that position? So that why I think user experience is going to be so key
to that.
So that why we&re excited
And of course the gambit is large
You think about the examples I gave — you can think of dietary examples, men health examples
When men turn 50 things start happening
But there at least 15 of those things that are 100% predictable… I just turned 50 and given there so much disinformation online I don&t
So I think again there a fantastic opportunity for somebody to build companies around that theme — again, probably male and female
separate.
Menopause would be another obvious one.
Exactly… You don&t know who you can talk to in many cases
So that another opportunity
And wow there are so many things out there
And when I go online today I‘m generally not sure if I can believe what I read unless it from a source that I can trust.
For 50 year old
men erectile dysfunction is another taboo — a bit like the abortion taboo is for women
Men don&t even talk to their male friends about it… So if there was a place where you could go and learn about it I think there a big
I don&t think erectile dysfunction is a business, but I think how men age is one.
So it opportunities for communities around particular
health/well-being issues.
Exactly
Because we&re looking for truths when we&re going through that experience ourselves.
The addressable market is massive
There men turning 50 every year and they&re probably all pretty interested to find out what are the ten or 15 things that could go wrong for
There a lot of opportunities
The challenge is you have to think about building it for people who are 50
You&re not building it for an 18-year-old
So the user experience again has to be somewhat different probably
And the healthcare goes all the way to the seniors
What are you looking for when you&re 75? So you see it treats anywhere from certainly from 18 all the way up across a broad-based spectrum
So it one of our major themes for the next five to ten years.
And so the idea of it being overheated in investment terms is a bit too
abstract because there are specific areas that are very underinvested — like femtech
So it a case of spotting the particular bits of the healthcare opportunity that need more attention.
Yes
You&ve described it perfectly
In our more simpleton terms, we look at it and say if I look at the previous hot industry — fintech — you would end up with companies
doing credit cards, companies doing bank accounts, companies doing lending, companies doing recovery — so many pieces of the value chain
In this case the value chain is humans.
We are even more complex than financial services have ever been, so I think the opportunities are
even broader to break it down and build businesses that are going to satisfy certain sexes, maybe certain demographics, certain ages and all
these kind of things that are out there
We are just so different.
