John Sculley, Strategic Advisor to Zedsen and Former Apple CEO, revealed why he chose to invest his time in Zedsen in his interview with Forbes, stating that:
“I love to get involved when [companies are] doing something that is truly innovative. For instance, Zedsen […] has really invented technology that is as significant as I believe MRI was or ultrasound was, and they’re now going through the development of productizing that in several different areas. So, working with talented CEOs like Daniel Honeywell at Zedsen has been a lot of fun for me and just exciting to still be part of the game, even if I’m not the CEO.”
By John Koetsier, Senior Contributor, Forbes. 16 October 2020.
Apple has the most popular health wearable on the planet. Google bought Fitbit. Amazon just released the Halo Band. All now have a fitness and health subscription service.
Why are all the big tech companies attacking health?
“The context is that in the U.S. it’s a $3.6 trillion industry,” former Apple CEO John Sculley told me on a recent episode of the TechFirst podcast. “I think it’s maybe about $9 trillion if you look at a global number for healthcare.”
That highlights one of the major reasons why big tech is getting into health. Frankly, it’s the same reason that infamous bank robber Willie Sutton was (falsely) reported to have picked his career: because that’s where the money is.
But more than that, it’s also where the opportunity is, Sculley says.
Sculley knows healthtech, as he’s made it his preferred area of investment for much of the last two decades. He’s invested in dozens of healthtech startups, from RxAdvance to Zedsen to MD Live to Celularity. He’s also the chairman and CMO of RxAdvance, a pharmacy benefit management company for customers like Amazon.
One of the bigger opportunities Scully is talking about is eliminating waste, which makes up as much as a quarter of all healthcare spending.
“McKinsey Global Institute has estimated in the U.S. that there’s $900 billion of fraud, waste, abuse, misuse, and avoidable medical costs,” Sculley says. “Now that’s $900 billion out of $3.6 trillion.”
That waste lies in excessive regulation. Massive lobbying from special interests — almost $400 million worth. Bureaucracy. Complexity. And a general failure to adopt new technology, resulting in ongoing uses of ancient technology like fax machines and paper documents.
Fixing that $900 billion worth of waste could potentially provide healthcare for all Americans at the same overall cost.
And fixing it is a particular opportunity for healthtech startups right now, because the giants are initially focusing on what you might call “well care” as opposed to “sick care.” Not only is the wellness and fitness part of the global health challenge less regulated and hidebound in that’s-the-way-we’ve-always-done-it attitudes and laws, it’s also the part that’s most initially amenable to the sensors and AI and machine learning that big tech can build and bring to market, perhaps better than any other companies.
But to continue to grow, they will need to go deeper.
“Chronic care disease is the majority of the health spend in the U.S. — it’s well over 80% of the health spending in the U.S.,” Sculley says.
The good news is that many chronic care diseases — up to 75%, Sculley suggests — are reversible. That includes diseases like Type 2 diabetes, which impacts around 100 million in the U.S. and perhaps 400 million globally. Type 2 diabetes is a perfect example of a disease that, because it’s related to body composition and exercise, could be managed or improved by use of smartwatches and fitness bands, plus other steps around diet and lifestyle.
As big tech fills out the “well care” portions of the health industry, it will probably start expanding to the “sick care” parts.
Amazon already owns PillPack, an online pharmacy. Google, or Alphabet rather, owns Verily Life Sciences, which focuses on preventing, detecting, and managing disease through technology and AI, and recently announced it will start selling “data-driven” health care insurance. Apple might be the last big tech member to hit these areas of health care, given its firmly ensconced position in consumer electronics, though Apple CEO Tim Cook has said he believes Apple’s biggest contribution to history might be what it does in health.
But as big as it is, big tech can’t eat the $9 trillion healthtech pie on its own.
“There are some really big success stories which are not Apple or Google,” Sculley says. “For example, if you take companies like GoodRX [which] just went public: $19 billion market cap. Amwell just went public, $9 billion current market cap. You have Teladoc, $19 billion market cap. Livango, which is an online coaching service for diabetes and hypertension, which is high blood pressure — $19 billion.”
Others are at early stages of development. Zedsen, for instance, a London-based startup that Sculley has invested in, has invented the first non-invasive blood glucose monitoring system.
Just think how critical that could be if integrated into a simple wearable, perhaps even a smartwatch at some point.
While long-term habit change is hard for most of us, real-time notifications that our blood sugar is spiking could lead to immediate changes in diet — no, I won’t have that second piece of pie — and so disrupt Type 2 diabetes. And imagine how wonderful it would be for diabetics of all kinds to know exactly at all times whether they need insulin or not … without having to draw blood or implant a sensor inside their bodies.
Big tech being what it is — rich and acquisitive — we could soon start to see these technologies in Apple Watches or Android smartphones or Fitbit smartwatches. Or Halo wristbands.
“This era of medical sensors combined with AI and starting to look at it in many different form factors is really a big part of the future,” Sculley says. “Could Apple be in that? Absolutely. Could Google be in for that? Yes. But don’t leave Amazon out.”
Google is in a particularly powerful position.
It has access to so much more information than Apple and Amazon thanks to its search engine. Google search is essentially a direct connection to the health issues of literally billions of people.
“Google Health is headed by David Feinberg who … has about 500 people in his group at Google Health and they’re looking at population health, they’re looking at the fact that Google gets — David Feinberg told me — 1 billion health requests over just their Google searches every day,” Sculley says.
Naturally, there’s a lot of privacy implications in that — and in all of big tech’s expansion into health — but there’s also huge power in knowing what’s happening and what people are worried about. Sifting that billion-query daily stream with artificial intelligence might, for instance, be a proxy for understanding the progression of infectious diseases through global populations.
“They realize they’re at a point of connection with people and their brilliant data analytics,” Sculley says. “They’re probably the smartest company in the world in terms of AI talent. So their focus will probably be how do you productize that? How do you monetize that?”
That, of course, raises even more questions about privacy and security. But properly done, it has the potential to help revolutionize medicine and health … as well as make big tech even bigger and more profitable.
How all this plays out will be interesting to follow over the next decade.
I also asked Sculley why he picked healthtech as a particular focus for his investments. He says a late-night 1983 conversation with Apple founder Steve Jobs and Microsoft founder Bill Gates was the initial stimulus.
“Bill and Steve were talking about how they were going to change the world one person at a time,” Sculley told me. “Steve was going to do it with personal computers for non-technical people to do incredible creative things, that became the Macintosh. Bill was doing it with a shrink wrap software, he invented shrink wrap software. And before Bill did that, everyone thought computers were just hardware and they gave the software away for free. And so you had these two geniuses and they both agreed on one thing, that they wanted to make a noble cause of what they were doing and their visions.”
A second conversation 14 years ago with Bob Metcalf, who invented Ethernet, cemented his focus.
“About 14 years ago, one of my close friends, Bob Metcalfe, who invented the ethernet — which is the foundational technology in the internet, packet switch networks — that he said, ‘John, you know, people like you and me as we get older, we need to reinvent ourselves to stay relevant.’ So as I thought about that, I said, ‘If I’m going to reinvent myself, I want to do it around a noble cause,’ and so I picked healthcare.”
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