Where can South Florida make its mark in technology? John Sculley, now an investor and mentor to entrepreneurs, believes the next big opportunities could be in healthcare.
“There has never been a better time to build a transformative multi-billion dollar company,” said Sculley, the former Apple and Pepsi CEO who lives in Palm Beach. His new book Moonshot! Game Changing Strategies on How to Build a Billion Dollar Business and video series offer advice for entrepreneurs, real-world examples as well as plenty of war stories from his Apple days. Moonshot is Silicon Valley speak for an industry and economy changing company.
In his book, he writes about how the exponential growth of mobility, cloud computing and Big Data analytics have caused a power shift that places customers — not producers — in control, and how entrepreneurs can take advantage of that shift, presenting a huge opportunity for entrepreneurs. “Customers now pay more attention to the opinions of other customers than they do to large incumbent companies. … I’ve never seen anything on the scale of what is happening now.”
Sculley may be best known for firing Steve Jobs during his Apple tenure. (He told CNN in an interview recently that he wished he had invited him back.) But Sculley’s corporate career began in 1967 when as a Wharton MBA grad he was hired by Pepsi-Cola as a trainee. Three years later, he became the company’s youngest vice president for marketing, applying his ideas about “experience-based marketing” to the Pepsi Generation campaign, including the Pepsi Challenge taste tests. By 1977, Sculley was Pepsi-Cola’s youngest CEO.
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Since being forced out of Apple in 1993, Sculley has founded several companies and today is a mentor to about 15 startups in a diverse array of industries including telecommunications, financial services, healthcare, Internet services and consumer marketing.
He invests in several companies in South Florida, too, including 3Cinteractive, MDLIVE, OpenPeak and PDQ Restaurants. Sculley talked with the Miami Herald about his investments, where he sees opportunities and how he sees South Florida's tech ecosystem evolving.
Q: Where do you see the best opportunities?
A: One of them is right here in Florida and that is healthcare. Healthcare is a $3 trillion annual spend, it’s incredibly inefficient, its rules are fought by special interest groups and there is a legacy of incumbent large customers and government institutions that don’t change quickly.
We’re moving into an era of healthcare where customers are taking a much bigger role in their own health and wellness. The reality is setting in … not only is health insurance more expensive, the result is that customers are discovering that there is not much more transparency in what things cost. For instance, if you wanted to check prices on a hip replacement … if you want to schedule an annual physical, or have the flu ... just to see a doctor takes an average of 20 days. And it will likely go up.
I am involved in MDLIVE; we think we are in one of the hottest industries of all, which is telehealth, where we do virtual doctor visits. We have experienced incredible customer satisfaction. We are growing like crazy — it’s a South Florida company that is at the sweet spot of a fundamental change in healthcare. And it's completely supportive of customers making choices for better services.
For a face-to-face doctor visit, $150 is typical. For a virtual visit, the typical price is less than $50.
Walgreens and MDLIVE made a big announcement on how they are working with MDLIVE in their pharmacies to create virtual visits with certified doctors who could write prescriptions … and that can all be done on a smartphone. We are moving into an area where technology is revolutioning the way customers can have customer-centric services.
Q: What are some of the other South Florida companies you are involved with as an investor or mentor?
A: OpenPeak of Boca Raton — we are doing all kinds of mobile data services. We run AT&T’s wireless data platform and we do it for other carriers as well. I am chairman of 3CInteractive in Boca; we are a mobile marketing cloud company doing really well.
I’m also chairman of PDQ Restaurants, a South Florida franchise for fast-casual dining. We’ve built out six restaurants so far and and we will continue to rapidly expand in South Florida.
Another one is 800razors.com — we are building a company for the ultimate shave. We can sell a five-blade razor of similar quality to the market leader for half price and around it we sell a whole range of personal care products, for pre-shave, after shave, shaving creams, beauty creams, all designed to give men and women the ultimate shave experience. It’s not in South Florida but a number of its investor are in South Florida.
Q: How do you see South Florida evolving as a tech center?
A: I think South Florida is a particularly good place to build healthcare companies because first of all we have a large market. The most expensive part of the healthcare system is chronic-care patients and a lot of them live right here in Florida — and it is a place where technology can make a huge difference. For example, the average chronic care patient is something like 5 percent of the population but the healthcare costs are 80 percent. One of the big costs is when these chronic care patients are discharged from the hospital; if they are readmitted within 30 days, then the hospital has to pay the cost of those patients, and that is an incredible risk overhead for the hospitals.
These are big problems that need solutions and there is a lot of talent in South Florida that could deal with everything from assisted living and nursing services to all kinds of specialties like dermatology to doing virtual therapy; MDLIVE just bought a company [Breakthrough Behavioral] n that space. It is incredible all the new solutions coming that are enabled by digital health.
Q: Where do you see challenges in South Florida?
A: In Silicon Valley, there are so many role models to look to and so much experienced talent around. In South Florida we have smart people too, but we tend to be more narrowly focused in terms of the industries the experience comes from. Look at healthcare or travel or real estate. Rather than create a new industry, it is logical to build strength around the industries we already have — but recognize that the incumbents may not be the role models.
The role models will come from other places and other industries. Look at Uber: It’s worth $40 billion, there are a lot of lessons to learn from Uber that can be applied to healthcare, travel and other industries. And one of the lessons is [that] it is not about investing in technology, it’s about a different way to solve a customer problem. … Before Uber, the taxis were doing $140 million in San Francisco, now Uber is a $400 million industry there and the incumbent taxis post-Uber are still $140 million. Uber redefined the industry in a transformative way and came up with a better service … that dramatically changed and expanded the market.
Q: What are three takeaways from your book?
A: There has never been a better time to build a transformative multi-billion dollar company. Moonshot! will not only tell you why but will tell you how. The book is filled with stories of successful entrepreneurs, about the things they’ve learned building their companies.
The power of the marketplace is shifting to customers in control; if you want to build a really successful company you have got to have a customer plan. I explain what a customer plan is, how to build a customer plan and how it can make the difference between being largely successful and moderately successful [companies.]
The third thing is about the importance of finding a mentor. Entrepreneurs don’t always go to business schools. Business schools are oriented to helping their students learn how to become executives in large established organizations and you get case histories about decisions that senior executives make. But that isn’t what entrepreneurs are interested in. They want to know how do you raise capital, how do you recruit talent to a team, when your back is against the wall after you have made a serious mistake how do you pivot from that and come out of it alive, how do you turn failure into an asset?
We learn from our mistakes, not from our successes. If anything, people become a victim of their successes. It is only when you make a mistake that you learn. Moonshot! is all about having an insatiable curiosity. If you aren’t curious about the world around you, you are probably not cut out to be an entrepreneur.
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