Fosun Interview

Tap into the Healthcare Market in Two Super Powers

Resource:

––Interview with Scanadu Founder and CEO Walter de Brouwery

 

Before my interview with Walter, I thought I would run into a scientific genius and I might get lost in our conversation. He was a serial entrepreneur, a collateral thinker, and founding father of Europe’s first “thinkubator” (Starlab) and the concept of “Deep Future” research: Someone who is making Star Trek’s tricode into reality. It’s a lifetime chance to meet with the living Albert Einstein.

 

During our meeting, when he used all humorous and plain language to talk on different topics, I was quite impressed by his knowledge and inspired by his mission. While visiting Scanadu’s office located in the NASA Ames Research Facilities, I saw the big bear dressed in Scanadu jersey, and he was replacing Walter to physically represent him in the office. I finally laughed it over with his colleagues. As far as a mysterious and philosophical entrepreneur I encountered, he is also an easy going person who is leveraging both the US and China’s great market opportunities to build up the next big thing.

 

Here is an excerpt of my interview with Walter:

 

Q: As an entrepreneur, what are your observations on the entrepreneurial environment in the US and in Europe?

 

A: Well, as you know I have been active for 25 years. So basically I have been entrepreneurial in two sections. If you take Einstein for instance, the interesting thing is that for the first 40 years of their lives, they’re geniuses, but for the last 40 years they sort of make a fool of themselves because they are unable to update their assumptions from one century to the other. So I decided that if I was going to be an entrepreneur in the 21st century, I couldn’t continue without updating—times change—as you can see I am within two centuries. In the 20th century the biggest deal for entrepreneurship was the USA. The American dream is all about consumption, the upcoming middle class, and productivity. Now the conversation is no longer about USA and Europe, but rather two superpowers: the USA and China. And so, I came to America and my life changed in 2012 when I met Jerry Yang (Yahoo!’s founder), who introduced me to china. In America 25 percent of people live in the middle class. In china 10 percent people live in the middle class. Now, there is a classification difference: people in the middle class in China are richer than people in the middle class in the USA. The bracket for the middle Class in china is anywhere between $50,000 and $500,000 a year. So 10 percent of 110 million people live in the middle class, there is room for growth up to 25 percent like in America. This room for growth is the China Dream: It has transferred to China. The Chinese dream is about the growing middle class, it is about the baby boom; it’s about free markets, its about releasing its currency (gradually). Everything is going to happen there—in China. ‘In Silicon Valley, it’s about unicorns: A unicorn is a company that has an evaluation of a billion dollars. But the Chinese are not so much into company evaluations: they think longer term. That is the difference between China and the US: China is longer term in their thinking. The Chinese are not interested in evaluations: but rather they are interested in how you can make a company from zero, in five years, to a billion dollars in revenue? That is a completely different perspective. In America you have the startups, in China you have scale-ups. Another thing that is different in China, is the position of the entrepreneur. In Europe an entrepreneur is someone who couldn’t get a proper job, so he started his own company. In America, entrepreneurs are everywhere. People eventually say “you know it would be good if a couple of MBAs or a CEO could help you. In China, an entrepreneur is almost god-like: they value the founder—entrepreneur. So rather than replace him, they mentor him into the next version of himself. Basically the founders give their most valuable asset, their own personal direct line—via Wechat. That is worth more than anything else—I only know 7-8 people over in China, but they are all sitting-tycoons. Sometimes I can Wechat with them for hours in the evening. We can have groups, conversations with great minds pushing you into the next better version of yourself.

 

Q: Why do you pick Fosun as a business partner, not just as an investor but as a partner?

 

A: Well, basically they chose me. They approached me and said “Fosun is going to set up a venture capital arm. I didn’t know Fosun then. So I looked them up—My goodness, it was one of the largest consortiums I have ever seen, and in such a short period of time. Guo Guangchang flew over to see me. I was astounded, one of the top people in China was flying over to see me, which I would have thought would be for him a very small amount. But he came over to see me to share his vision. His vision was that he was going to create the economies necessary for the upcoming middle class in China. This upcoming middle class was going to need a lot of things: travel, brands, food. Now at the moment, consumption in China is still a concept. But very soon, in the next decade, it will be like America—that 10 percent will grow into 25 percent. So he is actually organizing Chinese money to make this happen. Now Fosun is not really a Chinese company: Fosun is a global company, they’re in Germany, Portugal, USA, Switzerland, Israel…everywhere. And they are putting that together for the middle class, so I was impressed by the man, by his flying over, and by his vision. So I immediately accepted, and went to the annual meeting. I saw him do Tai-Chi there, and I said “Next time you will have to show me how to do Tai Chi, it doesn’t look so difficult”, to which he said “Ah, well you might be surprised-- it is not as easy as it looks.”

 

Q: What are some of the trends you have noticed in health-care that links technology to health-care.

 

A: The major trend for me is that basically governments from all over the world have tried to fix our healthcare system but it doesn’t work. So it’s too big, too full of investor interests, or legacy. So there is only one superhero left who can save this: the people. We have to do it ourselves. It’s the consumer that has to do it. Governments sell over the world agree that they have to help the consumer do it. Now this is the biggest trend: patients are becoming consumers. They are going to get a lot of information, and give these to the medical sector. So the medical sector will no longer be in supply, they will be in demand: because the consumer will be in the driver’s seat.

 

Q: Can you talk more about the challenges faced in the founding SCANADU?

 

A: The challenges are: 1) as an entrepreneur we like to think that we see things that other people don’t see. Or don’t want to see. The problems of the world are our opportunities. No one likes to update or change his or her assumptions. One assumption that if people haven’t been to China, they won’t understand in China, the people are nomadic, even his or her home is nomadic. They have no fixed lives: there is no desktop—it’s all wireless. In Silicon Valley, they think that everyone has a laptop—well, that’s not true. Everyone has mobile phones. So this mobility forces us to create a new technology for healthcare that is based on optics.  If you look at the five major cities in China, then you have sort of a darker part of China—and if these people can have access to quality health-care, or if the people in Africa can have access. How you can give that to people with new technology all in mobile, that’s the first challenge.

 

The second challenge is that people think that it works like this: you do something in America and you make it successful that it will transfer it over the border in China that you can protect it—that it won’t be copied. You have to treat the two superpowers as individual—at the same time that you are doing something in USA you are simultaneously doing something in China. They will not be the same product probably, but you have to have parallel routes—you have to do it in conjunction. Not wait until something is successful to start selling in China. I sent some people over to China recently and when they came back they said: “Use Wechat!” I run my company on Wechat. I don’t send emails, I use Wechat. But I have to press my people to do it. In order to have this, I decreed that 20 percent of my company had to be mandarin speakers. That means that every new post has a qualification next to it that applicants have to be mandarin speakers. There are enough mandarin speakers at MIT or at Stanford, etc. so it is not that we have to import them, they are already there. Also the challenge of the regulator—the government is imponderable. The government has its own deadlines and everything. We are not first going to go to FDA and wait for approval to pursue the route in china, we are going to do them in parallel.

 

Q: What is the major corporate culture at Scanadu, using three words?

 

A: It’s very interdisciplinary. We have a lot of PhDs, electrical engineers, manufacturing, biochemical, mathematicians, data scientists, computer scientists, doctors, medical research, risk and compliance staffs. Everyone in our company has a different specialty. We are all intellectual hustlers trying to understand each other’s specialty.

 

Idealistic: we are truly changing the status quo.

 

Scientific: everything we do is scientific and researched. There is also the idea of people owning their own data and exploring and sharing.

 

Q: What are other Fosun Portfolio companies you want to work with more closely? What resources will you need?

 

A: The most contact we have is with Fosun Pharma, life insurance, health insurance. Fidelidade and etc.

 

Q: What are your long-term vision as well as your Short term plan?

 

A: Short-term plan is to get our products in the markets both in China and in the USA. Long-term plan is to do an IPO because it’s a global branding event.

 

Q: Any plan for the Chinese market?

 

A: In China as all markets, we will become a domestic company. We have been working with regulatory team at Fosun to set up everything. We are more and more going to one of the joint venture schools. Tencent and Fosun mostly invest in the same things.