WEBVTT - John Sculley Sees $10 Billion in Revenues for RxAdvance (Audio)

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<v Speaker 1>Global business news twenty four hours a day at Bloomberg

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<v Speaker 1>This is a Bloomberg Business flag from Bloomberg World Handquarters.

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<v Speaker 1>Son Charlie Pellett of the equity market rally continues for

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<v Speaker 1>a third day, Dow Jones Industrial Average trading above its

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<v Speaker 1>record close from May of two thousand fifteen, as investors

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<v Speaker 1>way corporate health amid the start of the earning season.

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<v Speaker 1>Alcohol which reported last night rallying five point two percent

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<v Speaker 1>now at ten sixty seven. The Dow is up a

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<v Speaker 1>hundred and thirty four points, gaining seven tenths of one

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<v Speaker 1>percent to eighteen thousand, three hundred sixty one, the record

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<v Speaker 1>on the Dow eighteen thousand, the old record eighteen thousand,

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<v Speaker 1>three hundred twelve SMP up seventeen twenty one fifty four

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<v Speaker 1>now a gain of eight tenths of one percent. Nez

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<v Speaker 1>stan Cup forty, also a gain of eight tenths of

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<v Speaker 1>one percent. The ten year down twenty five thirty seconds,

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<v Speaker 1>the yield one point five one percent, Gold down twenty

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<v Speaker 1>one ninety out four, a drop there of one point

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<v Speaker 1>six percent, and crude oil West Texas Intermediate of a

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<v Speaker 1>dollar ninety five v one. Uh, that is a gain

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<v Speaker 1>of four point four percent. I'm Charlie Putt, and that's

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<v Speaker 1>a Bloomberg business flash. You're listening to taking Stock with

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<v Speaker 1>Kathleen and Pim Box on Bloomberg Radio. How do you

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<v Speaker 1>build a multi billion dollar business? How do you satisfy customers?

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<v Speaker 1>How do you know the right questions to ask in

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<v Speaker 1>order to get the right investors? Well, chances are he

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<v Speaker 1>turned to John Scully. He is, of course, author, entrepreneur,

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<v Speaker 1>former chief executive of PepsiCo and Apple, and the author

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<v Speaker 1>of a new book entitled Moonshot, Game Changing Strategies to

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<v Speaker 1>Build Billion Dollar Businesses, and John joins me in the

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<v Speaker 1>studio today. John, thank you very much for being with us.

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<v Speaker 1>Let's start off by understanding what makes this book different

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<v Speaker 1>than other books about how to build businesses. You've done

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<v Speaker 1>that and one of the things that I wanted to

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<v Speaker 1>zero win on. First of all, is you talk about

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<v Speaker 1>a customer plan, not just a business plan. Explain that, sure, Well,

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<v Speaker 1>first of all, this is not an autobiography. Uh. This

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<v Speaker 1>is really made up of the conversations with so many

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<v Speaker 1>successful entrepreneurs that I've known over the years, and the

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<v Speaker 1>lessons we've all learned. Most of the lessons we've learned

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<v Speaker 1>PIM come from our mistakes, not from our successes, And

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<v Speaker 1>a lot of people are afraid to talk about their

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<v Speaker 1>mistakes because they're afraid of getting ambushed by it. Well,

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<v Speaker 1>I can talk to the two entrepreneurs. They know I'm

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<v Speaker 1>not going to ambush them. But going back to the

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<v Speaker 1>customer plan, so many people in business are used to

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<v Speaker 1>the tedious process of writing an annual business plan, which

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<v Speaker 1>is really a budget, which is really looking back and saying, so,

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<v Speaker 1>where were we before and how much further do we

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<v Speaker 1>think we can go in the future. The customer plan

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<v Speaker 1>starts in a totally different place. It says, what's the

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<v Speaker 1>really big customer problem that needs to be solved, and

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<v Speaker 1>can you be the ones to solve it? And if so,

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<v Speaker 1>how are we going to do it? And how are

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<v Speaker 1>we going to engage the customer? What's the cost of

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<v Speaker 1>customer acquisition? All the metrics are customer metrics. What's the

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<v Speaker 1>cost of customer retention? How do you monetize the customer?

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<v Speaker 1>What's the lifetime value of customer? And when you're building

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<v Speaker 1>the customer plan, you start with the customer problem what's

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<v Speaker 1>in it for the customer? And you look out green

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<v Speaker 1>field out into the future, and you say, you know,

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<v Speaker 1>let's look at what could be, not what was in

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<v Speaker 1>the past. To follow up on that, the questions that

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<v Speaker 1>a potential entrepreneur, or indeed someone that is currently running

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<v Speaker 1>an entrepreneurial company, the questions you say are really more

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<v Speaker 1>important than the answers. Well, of course they are, because

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<v Speaker 1>we're in the era of Google, We're in the era

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<v Speaker 1>of Wikipedia and many other sources. If you want to

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<v Speaker 1>go check answers their commodity, you can get them for free.

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<v Speaker 1>The problem is the way most of us grew up

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<v Speaker 1>and went to school, Uh, we were measured on memorizing

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<v Speaker 1>the answers. But what you really discover in life, it's

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<v Speaker 1>learning the context of the right questions. Ask the right questions,

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<v Speaker 1>and it's amazing how the same set of facts you

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<v Speaker 1>know looks entirely different. So I encourage people, particularly those

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<v Speaker 1>who want to be in an entrepreneurial world where you

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<v Speaker 1>wouldn't be doing it if you didn't think there was

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<v Speaker 1>a better way to do something, to ask the right questions.

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<v Speaker 1>In my opinion, it's always around the context of what's

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<v Speaker 1>in it for the customer talking about asking the right questions.

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<v Speaker 1>I want to turn your attention to a specific industry

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<v Speaker 1>that you have a lot of expertise in and that

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<v Speaker 1>you are working in right now, and this is healthcare.

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<v Speaker 1>What are the right questions to ask when it comes

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<v Speaker 1>to things like the price of pharmaceuticals or dealing with

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<v Speaker 1>health care as a huge, uh tangled mess of of bureaucracy. Well,

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<v Speaker 1>it goes back to what we've been talking about ask

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<v Speaker 1>the right questions. The right question in healthcare that I

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<v Speaker 1>focus on are the chronic care patients. About five percent

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<v Speaker 1>of the population in the US, about one point five

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<v Speaker 1>three dollars have health spent. Around fifty of every dollar

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<v Speaker 1>spent in healthcare goes to that five of chronically old people.

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<v Speaker 1>The whole movement today is to move these chronically old

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<v Speaker 1>people out of the hospitals and to serve them even better,

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<v Speaker 1>better customer experience, better patient experience in their homes. And

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<v Speaker 1>the high technology that we have today with sensors that

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<v Speaker 1>can measure their vital signs, the ability to use video conferencing,

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<v Speaker 1>which is really becoming increasingly increasingly accessible and expensive. The

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<v Speaker 1>part of the business I'm focused on are the pharmaceuticals,

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<v Speaker 1>because the pharmaceuticals UH represent hundreds of billions of dollars

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<v Speaker 1>of annual cost savings if you can be able to

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<v Speaker 1>deal with issues like avoidable drug costs. For example, the

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<v Speaker 1>chronic care patient typically has fifteen meds a day, but

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<v Speaker 1>they're being prescribed by different specialists who don't necessarily know

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<v Speaker 1>what the other specialists are prescribing because they can't get

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<v Speaker 1>the information in a useful form. What we do at

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<v Speaker 1>our company, our x Advance, we're the first cloud based

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<v Speaker 1>pharmacy benefit management platform with actionable intelligence. We use machine

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<v Speaker 1>learning other technologies, and we're able to dramatically cut the costs.

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<v Speaker 1>We believe will probably be about a ten billion dollar

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<v Speaker 1>revenue company. By we expect to be making close to

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<v Speaker 1>a billion dollars of profit. And with that we can

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<v Speaker 1>turn back, you know, at least another billion dollars of

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<v Speaker 1>profit back into the health system and dramatically lower the

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<v Speaker 1>costs of tens of billions of dollars for patients and

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<v Speaker 1>health systems. And we can increase the pay of the doctors.

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<v Speaker 1>And you say, well, how can you do all of that?

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<v Speaker 1>It's because the system is so inefficient. It was built

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<v Speaker 1>thirty years ago and no one upgraded the technology. We're

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<v Speaker 1>still living with technology that was designed for a different era.

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<v Speaker 1>So our company is just one example of that, our

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<v Speaker 1>x Advance, but there are others out there. It's a

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<v Speaker 1>huge industry. They are going to find different opportunities, but

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<v Speaker 1>always start with the customer. In this case, the customers

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<v Speaker 1>a patient, and always say, how do I give that

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<v Speaker 1>patient just an incredibly good experience now, something that not

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<v Speaker 1>many people have always been able to have in the

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<v Speaker 1>health care systems. I think of the frustrations of standing

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<v Speaker 1>in queues, waiting and waiting rooms, not knowing really what

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<v Speaker 1>they want to do, having trouble getting the doctors twenty

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<v Speaker 1>one days on average to get to see a doctor.

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<v Speaker 1>So those things can be dramatically improved on UH and

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<v Speaker 1>taking advantage of the skills of the professionals in the

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<v Speaker 1>health care system. There's nothing wrong with our professionals of

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<v Speaker 1>doctors and nurses, it's how do we get them up

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<v Speaker 1>to date with the same kinds of disruptive innovation that

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<v Speaker 1>have taken place in the private sector part of our economy.

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<v Speaker 1>In putting together are ex advans, you went through some

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<v Speaker 1>of the same issues that you note in your book

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<v Speaker 1>Moonshot one. If you could tell me some of the

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<v Speaker 1>maybe anecdotes that have illustrated your progress to under standing

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<v Speaker 1>what it means to put together a new company. Well,

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<v Speaker 1>one of the real challenges is that, uh, the incumbents

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<v Speaker 1>really don't want to change, you know, for a whole

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<v Speaker 1>bunch of reasons. It may be because they're worried about,

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<v Speaker 1>you know, what does it mean to their particular job.

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<v Speaker 1>How does it um you know, gonna make life different.

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<v Speaker 1>So what we realized was, even though we can build

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<v Speaker 1>an entirely new pharmacy based management supply chain system, that

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<v Speaker 1>that's probably not the best place to start because it

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<v Speaker 1>disrupts too many people's lives in the health care industry.

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<v Speaker 1>So we said, keep what you got and we'll build

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<v Speaker 1>on top of that. So we'll fit in. So you

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<v Speaker 1>can say, we can stand out with many of the

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<v Speaker 1>advantages I was talking about earlier, you know, cost savings,

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<v Speaker 1>better customer experience, more things we can do in the

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<v Speaker 1>patient's home, make it real simple for people who know

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<v Speaker 1>nothing about technology. For instance, we're using um the new

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<v Speaker 1>Alexa smart assistant that was developed by Amazon. Terrific product

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<v Speaker 1>Amazon development. We had corporate it back into our system

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<v Speaker 1>because the Amazon open the technology up. But uh, we

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<v Speaker 1>are trying to say we can fit in. We can

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<v Speaker 1>don't have to force you to change everything that you

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<v Speaker 1>already have. And it's amazing the difference of the reception

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<v Speaker 1>we get from the insurance industry when we say, hey,

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<v Speaker 1>we can fit in and by the way, we won't

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<v Speaker 1>charge your fee for service. We'll take the risk. And

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<v Speaker 1>when they say you mean you'll take the risk, you

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<v Speaker 1>of that much confidence and what you're doing that you're

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<v Speaker 1>willing to bet on performance. You don't get paid unless

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<v Speaker 1>you perform to what you've said to absolutely and why

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<v Speaker 1>can't we do that? Because the inefficiencies of the systems

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<v Speaker 1>are so incredibly big and the advantages of disruptive technology

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<v Speaker 1>can make such an incredibly large impact. How big is

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<v Speaker 1>our x advance today? We launched it in January of

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<v Speaker 1>this year, we started back in. We'll do about a

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<v Speaker 1>D five million revenue this year and next year we're

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<v Speaker 1>looking at well over five hundred million. It could be

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<v Speaker 1>closer to a billion next year. We think we'll be

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<v Speaker 1>at hen billion dollars revenues. Our plan by and we

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<v Speaker 1>think that we have pretty conservative outlook to get um

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<v Speaker 1>somewhere around eight hundred million dollars for profit. Now, there

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<v Speaker 1>aren't many businesses that grow that fast to that size,

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<v Speaker 1>but it's still very small in the context of a

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<v Speaker 1>three training dollar healthcare industry. I mean, even then, we'll

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<v Speaker 1>probably have less than a three percent market here at

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<v Speaker 1>that scale. At that scale, well, I want to thank

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<v Speaker 1>you very much. When you talk about that, it sounds

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<v Speaker 1>almost like a moon shot, and I guess that's a

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<v Speaker 1>good way to describe your book because that's the title,

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<v Speaker 1>Moonshot Game Changing Strategies to Build Billion dollar Businesses. Thank

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<v Speaker 1>you very much for spending time with us. John Scully, author, entrepreneur,

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<v Speaker 1>former chief executive of PepsiCo and Apple much appreciate it.

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<v Speaker 1>I keep him and it's available on Amazon. Maybe you

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<v Speaker 1>can use Alexa to order it as well. You can't. Actually, yeah,

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<v Speaker 1>say Alexa, I want to order John Scully's moon Shot,

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<v Speaker 1>and if you're connected to Amazon Prime, you'll get the book.

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<v Speaker 1>Thanks very much, John Scully, author of Moonshot game Changing

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<v Speaker 1>Strategies to Build Billion dollar Businesses. You're listening to taking Stock,

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<v Speaker 1>I'm pim Fox and this is Bloomberg