Mangrove Capitals Mark Tluszcz on the huge mHealth opportunity and why focusing on UX is key

Mangrove Capital Partners co-founder and CEO Mark Tluszcz is brimming with enthusiasm for whats 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 were 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 hes 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 Capitals last fund.
I really dont think that theres 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 thats something that Internet entrepreneurs do very well.
Extra Crunch sat down for an in-depth conversation with Tluszcz to dig into the reasons why hes 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 peoples 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 youre 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 its typically in areas where theres a lot of inefficiency. And anybody whos 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 its generally the one place where youre the least informed in life. So you go see your GP and he or she will tell you something and youre blindly going to take that pill theyre going to give you because youre not well informed. You dont understand it.
So I think thats 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 theres interesting stuff happening in financial services, and it continues to happen on commerce, and many, many places but I really dont think that theres a bigger area and a more inefficient area today than healthcare.
You combine that with the power that were beginning to see in all these mobile devices i.e. I have it in my pocket at all times. So thats factor two. So one is the industry is potentially big and inefficient; two is theres 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 youre about to have a heart attack or youre about to die because those products are not designed specifically for that. So you as a consumer are confused because youre not feeling well so you go online. The next day you go see your doctor and he or she says you didnt go to Google did you, right? I know youre probably freaked out at this point. So the second point is the tools are there.
Third Id say is that artificial intelligence, machine learning, which is kind of in the process of gaining a lot of momentum, has made it that were able to start to dream that we could one day crunch sufficient data to get new insights into it. 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 thats something that Internet entrepreneurs do very well. Its 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. Theres no other reason for it. And so I think theres this big opportunity thats 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. Its knowledge, its ease of use, and its 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 dont 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 investment firm. 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 well continue to broaden that base.
Weve 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 dont know. I can tell you they have 35M monthly active users, so its massive.
Now you might say, Why do women need this to help them track their cycles because theyve 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 theyre a generation thats 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, whos 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 youre 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 theres something there that the tech is coming and that people want to use it. And so thats 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, were going to conclude that its big enough or that its not big enough. But were going to have to go through the process of looking at these. And were 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 womans menstrual cycle process and then she starts feeding into the system, I am pregnant; Im 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 shes going to have a child, you can propose advice as well around heres how the first few months go. Because, as we know, when you have your first child, youre generally a novice. Youre discovering what all that means. And again you have another opportunity to re-engage with that user. So thats 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 side. All of thats 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 havent found such a targeted user experience in the more generic place. They feel as if theyre in a community of like-minded women. They have forums, they can talk, they have articles they can read, and its 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 its a much more general play in healthcare. Its 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 Im 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. app story only. 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 wasnt 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. Thats true for the U.K.; its true for the U.S. If you predict out to 2030, theres 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. and the U.K. is youre essentially a sausage factory. Come in and youve got 3 minutes with your customer. Its 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 heres what K thinks you have, and, by the way, heres a medicine that people like you were treated with. So theres an amazing amount of information that you get as a user, and thats 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 doctors visit. Were doing 15,000 of those a day. Think about the scale in which weve been able to go in a very short time. And all thats free.
To some extent its great for people who cant necessarily afford doctors again, thats 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. Theres about 4 billion people around the world for whom speaking to a doctor is a problem.
K Healths view is theyre bringing healthcare free to the world. 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 Ks diagnostic and either agrees or disagrees with it and gives you a prescription to do that. And what were 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 (thats the price theyre 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 dont have complementary insurance. That when they go to the doctor its $150. Isnt that a crazy thing? You cant afford complementary insurance but you could pay the highest price to go see a doctor. Such madness.
And then theres a whole element of its simple, and its convenient. Youre sitting at home thinking, Okay, Im not feeling so well and youve got to call a doctor, get an appointment, drive however long it takes, and wait in line with other sick people. So what were finding is people are discovering new ways of accessing information. Human doctors also dont have time to give empathy in an ever stretched socialized medicine country [such as in Spain]. So what were 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 dont know about that. Now theyre saying convenience at least in Europe is why thats interesting. In the U.S. its price.
So thats the second example; much more general company but one which has the ability to come and answer a very basic need: Im 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 thats heading in general medicine weve for a long time created this myth that doctors spent eight years learning a lot of information and as a result theyre 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. Thats our bet.
The third example of an investment that weve made in the health space is a company called Happify . Theyre a company that had developed like a gamification of online treatment if you have certain sicknesses. So, for example, if youre a little depressive you can use their app and the gamification process and they will help you feel healthier. So so far youre probably scatching your head saying I dont 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 whats very typical in the pharma industry is if youre able to modify a medicine you can typically either extend or have a new patent. So Happify, what theyve 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 thats what theyre going to roll out. When doctors say to their patients Im diagnosing you with anxiety or depression. Sanofi has a particular medication and theyre going to bundle it now with an online experience and in all the tests that theyve done, actually, when you combine the two, the patient is better off at the end of this treatment. So its just another example of why this whole space is so large. We never thought wed be in any business with a pharma business because were 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 thats 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 its seen the more open minded were going to be. Because one thing you have to be as an investor, at least early stage like ours, completely open minded. And you cant bias your process by your own experience. It has to stay very broad.
Its also why I think clinician led companies and investors are not good because they come with their own baggage. I think in this case, just like in any other industry, you have to say Im 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 whos 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 werent in place. Im only saying that because I dont think that should be the example by which we judge everything else. Thats just a case of a fraudster and dumb investors. Thats going to continue to exist in the future forever and who knows we might come across some of those but I dont think its 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 its undeniable that this industrys going to be completely shaken up through this tech. And we need it because at least in the Western world are health systems are so stretched theyre 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 isnt 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 its 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 theres 75M people who cant 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 dont 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 thats what weve 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 dont think theres a problem because they dont 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 app is all you need. And in 5% of the cases youre going to go the specialists that need to see you and then maybe theres enough money to go around for everybody.
And of course, as an investor, were 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 isnt 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 weve accomplished something quite significant. And imagine if its not 15,000 its 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 Ive mentioned to you that we could have hundreds of millions of users around the world. Because theres 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. Not at all. I think ultimately its the user in terms of his or her experience in using an app thats going to matter. Flo is not the only menstrual cycle app in the world; it just happens to be by far the biggest. But theres others. So thats the perfect example. I dont think theres going to be one winner takes it all.
Theres also (UK startup) Babylon Health which sounds quite similar to K Health
Babylon does something different. Theyre essentially a symptom checker designed to push you to have a Skype call with a human doctor. It answers a bunch of questions, itll say, Well, we think you have this, lets 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 arent enough doctors and then frankly you and I are not going to want to talk to a doctor from Angola. Because whats going to happen is there arent enough doctors in the Western countries and the solution for those type of companies Babylon is one, theres 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 youre 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 its 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. Ill give you an example in the U.S. with K Health. They have a deal with the second largest insurance company called Anthem. Their go-to-market brand is called Blue Cross, Blue Shield. Its the second largest one in America so why is this insurance company interested? Because they know that

Theres not enough doctors.

That the health system in the U.S. is under stress

If they could reduce the amount of doctors visits by promoting an app like K, thats financially beneficial to them.

So theyre going to be proposing it, in various forms, to all their customers by saying, Before you go see a doctor, why dont you try K?
In this particular case with K theres 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 theres no question that going international requires work. However, having said that, I would say a European, an Indonesian and a Brazilian are largely similar. Theres 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.
Ill 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 that bites you. Very, very prevalent in the Greater New York area. Not so much anywhere else in the States. But in New York, if you dont have it it looks like a cold and then you get very sick. Thats very much a regional thing that you have to have. And so if we were to go to Indonesia wed have to have thing like Malaria and Dengue. But all that is not so difficult. But yes, theres 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 its a much smaller problem than you think it is. Much smaller. 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 thats obviously catastrophic from their point of view
Of course.
Which is why, in the healthcare space, when youre using AI and data-driven tools to do diagnosis theres a lot of risk and thats 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, youre trying to say this is a massive risk. I can tell you that as somebody whos involved in these businesses it is a business risk we have to take into consideration but it is, by far, not insurmountable. We clearly have a responsibility as businesses to say: if Im 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. So I need to do that. 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 dont solve in this case Malaria and Dengue disease. It doesnt make sense [for a general health app]. Youd have too many flaws and people will stop using you.
I dont think thats so much the case with Flo, for instance But all these entrepreneurs who are designing these companies are fully aware that it isnt a cookie-cutter, one-size fits all but it is close to that. When you look at the exceptions. Were not talking about I have to redo my database because 30% or 20% its 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, theyve tested the crap out of your product. And then youre going to say well Im going to do this now in Indonesia well you get partners locally whore 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 doesnt 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 its 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 its challenging. Google perhaps has a head start because its Google. So the question then is how do startups get the data they need to address these kinds of opportunities?
If were just looking at K Health then obviously its 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 thats a bad dataset. Thats not anything else but a bad dataset.
Its instructive that theyre 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 dont think this is one of those insurmountable things. Again, what weve done is weve bought a database that had data on 2.5 million patients, data over 20 years. I think that dataset equates extremely well. Weve now seen it in U.S. markets for over a year. Weve had nothing but positive feedback. We beat human doctors every time in tests. And so you look at it and you say theyre just business problems that we have to solve. But what were seeing is the consumer market is saying holy shit this is just such a better experience than Ive 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 weve 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 dont smoke and so on perhaps they say they have 300,000 people in their database like you and theyre 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 youre using as a user as well If youre using that vs just a basic symptom checker that I dont 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 information. Thats K Health.
Why couldnt Google do the same thing? I dont know. They just dont think about it.
Thats a really interesting question because Google is making big moves in health. Theyre 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 theyre all obviously buyers of the companies youre going to build. So thats 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. Well they didnt. But all of a sudden telecom, communication became the current that the Internet guys wanted thats why eBay ultimately bought us and why they all had their own messenger.
What the futures made of we dont 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 large companies. Venture capitalists are always investing in companies that somehow are competing one way or another with Amazon, Facebook, Google and all the big guys. Its just that when you focus your energy on one thing you tend to do it better than if you dont. And Im not suggesting that those companies are not investing a lot of money. They are. And thats 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? Theyre now starting to build into every Wal-mart doctors offices. Why would they do that? Is it because they actually know that if you make $50k or less theres a high chance you dont have an insurance and theres a high chance that you cant afford to go see a doctor. So theyre going to use that to say, Hey, if you shop with us, instead of paying $150 for a doctor, itll be cheaper. And were 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 thats in the healthcare space. So the conclusion of why were so excited it were seeing it happen in real life.
Wal-mart does that so when Amazon starts buying an online pharmacy I get why theyre doing that. They want to connect with you on an emotional level which is when youre not feeling well.
So no, I dont think were particularly worried about them. You have to respect theyre large companies, they have a lot of money and things like that. But thats 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 its whos going to get that user experience right.
Google of course would like us all to believe that because theyre the search engine of the world they have the first rights to become the health search engine of the world. I tend to think thats 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 dont search on Google anymore you search on Amazon.
But the space is big and theres 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 weve put money into and weve put money in because we think those are the hottest areas. I just think that anything where you feel deep conviction about or youve 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 thats why theyre successful. Now Im not suggesting that you dont have to have doctors on your staff. For sure. At K Health, we have 30 doctors. What were 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 didnt know a whole lot about healthcare but he said to himself what I know is I dont like the user experience. Its a horrible user experience. I dont like going to the doctor. I can change that.
So I would say if youre heading into that space your first pre-occupation is how am I going to change the current user experience in a way thats meaningful. Because thats 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, thats the driving factor if youre going to go into this, go into it saying youre 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 thats 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. Moneys pouring in because people believe that the outcome could be big. So I dont think its overheated. I think that weve 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 were able to manage the data in an effective way But again youve got to get the user experience right.
Flo in my experience why its better than anything else one is its 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 were. Number one issue? Abortion.
Theres 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 thats why I say the user experience for me is just at the core of that revolution thats 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 thats why I think user experience is going to be so key to that.
So thats why were excited. And of course the gambit is large. You think about the examples I gave you can think of dietary examples, mens health examples. When men turn 50 things start happening. Little things. But theres at least 15 of those things that are 100% predictable I just turned 50 and given theres so much disinformation online I dont know whats true. So I think again theres 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 dont know who you can talk to in many cases. So thats another opportunity. And wow there are so many things out there. And when I go online today Im generally not sure if I can believe what I read unless its 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 dont even talk to their male friends about it So if there was a place where you could go and learn about it I think theres a big opportunity. I dont think erectile dysfunction is a business, but I think how men age is one.
So its opportunities for communities around particular health/well-being issues.
Exactly. Because were looking for truths when were going through that experience ourselves.
The addressable market is massive. Theres men turning 50 every year and theyre probably all pretty interested to find out what are the ten or 15 things that could go wrong for them. Theres a lot of opportunities. Its so broad. The challenge is you have to think about building it for people who are 50. Youre 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 youre 75? So you see it treats anywhere from certainly from 18 all the way up across a broad-based spectrum of things. So its 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 its a case of spotting the particular bits of the healthcare opportunity that need more attention.
Yes. Youve 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.
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