The Next Big Wave With IT In Healthcare
When the US government was debating the bill on affordable healthcare and setting up state exchanges, technology entrepreneur Sanjay Singh was looking for an idea to build his next business venture. Singh had just sold off his software solutions company GlobalLogic after successfully running it for about a decade. With the US healthcare bill, he found a new opportunity. He decided to set up hCentive, a technology start-up focused on building online health insurance exchanges for different states, enabling insurance companies to connect with them. In an exclusive chat with CXOToday Singh takes us through some interesting moments through his entrepreneurial journey. Excerpts:
Tell us how you started hCentive. What gave you this idea of starting a healthcare-focused company?
After selling GlobalLogic, we were looking at what to do next. I have always been a ‘policies’ person. I was following the healthcare debate in the US quite keenly. When the healthcare bill was passed, it gave us a new idea. We realized there was a scope to set up an online marketplace for health services. This was a new area as there aren’t many players yet so that would give us level playing field. We decided to start this company with an objective to help consumers get access to healthcare benefits to consumers through an online marketplace. As you would be aware, healthcare is a big business in the US and cost of healthcare facilities is a huge issue here.
Could you elaborate a bit on how this exchange works?
Let me clarify that we are not a healthcare company so we’re not trying to solve the problem of delivery of health facilities. We just want to make the whole process more efficient and accessible for the consumer. We are a healthcare technology company and we create a tech platform that provides you access to multiple facilities from different providers. So the customer can buy what suits him the best. This itself improves efficiency and makes the whole process more cost effective. Many times a customer may not need a very comprehensive set of services as his needs might be very specific. Therefore, depending on his needs, he can make the most efficient choice.
How did your experience with GlobalLogic help? Did it mean you could get funds easily?
Let me give you a brief background. When we were running GlobalLogic, we had 6-7 rounds of funding over a period of 13-14 years. Ultimately, when we sold the company, the founders got very little share. But this time we were keen to bootstrap the business as far as we could so that we could maximize the potential. Therefore, initially we consciously avoided taking any funding.
Of course the success of GlobalLogic did help as it meant that we could raise capital easily. Once you have been successful, people will come to you easily. With investors coming to us on their own, we had many options. So, money was not such a big issue. The point I am trying to make is that getting funding is easy, execution is the difficult part. We decided to first focus on execution. That was the driving factor in the beginning. Fortunately, after selling Global Logic we had the resources that we could use to fund this company.
That’s interesting, you mean you purposely avoided using external funds…
Yes, we kept saying no to funding for a long time. Sometimes people are just so enamored by the very idea of funding itself. They feel very proud that they have been able to raise so many million dollars. So what! You will be in the news for two days. But ultimately, what matters in the end is how you use that money. That discipline is important.
At what stage did you feel the need for funding? How do you plan to utilize this $35 million investment that you have recently got?
Last year, after we had a good track record and we won some state contracts, we started getting lot of inbound requests from investors. We also felt that this was the right time to scale up. So we started our discussions with investors. You know it was, in fact, the other way round. They were making hardcore pitches on why they are the right partners for us. We were actually interviewing investors to understand why we should take money from them.
So, what attributes were you looking for…
We realized we could take money from anyone, but it would really help us if we could find a partner with deep domain knowledge about the healthcare industry as we didn’t have that kind of expertise. If we could truly form a partnership where our products and solutions could be evaluated and supported by experts.
How do you plan to diversify your business? Are you looking at moving into other areas besides healthcare?
Yes, we are now looking at expanding business. Until recently we were in the B2B space. So we were mainly selling to states or government agencies. But now we are now planning to get into the B2C space as well, which means reaching out to consumers through large corporate houses etc. For very large contracts we also work with other IT service providers like Cognizant or Wipro. Their strength lies in execution of large projects. They have a wider reach so they help connect us to bigger clients. Our strength lies in the domain expertise we have developed over time. We plan to leverage on this knowledge and stick to the healthcare domain.
You have been part of other larger technology businesses earlier. According to you, what are the advantages or disadvantages of specialization vs. having a wide services portfolio?
One way to look at it is the stage at which your company is. If you are a new company or an early stage start-up, you will only succeed if you have a very sharp focus. If you try to be all over the place, you will not be able to compete with the established players. Therefore, it makes sense to develop your own niche – that is the key. At times, many companies get distracted when they see so many opportunities. They try to do multiple things and usually end up making a mess of it.
Many companies do adopt the approach of widening their portfolio through acquisitions or otherwise. Doesn’t it help win larger deals?
There are very few companies that have been successful in multiple diverse sectors. Only perhaps the very large ones like GE or Tatas. Otherwise, to remain in business and to do well in a particular area, you need to focus on it, drive continuous innovation and ensure improvement and growth on a continuous basis. You have only a certain amount of resources, if you start putting them all in different unrelated areas, it won’t work.
You have to realize that it is not just about winning the next big contract. It is important to also see how that contract will make it easier for you to take your next step and grow further. For example, if you decide to focus on the retail sector winning a large retail contract will give an entry point. After that it will be easier to get your next set of contracts in that sector. But if you try to get one in retail, one in BFSI and yet another one in a third sector you will have a problem expanding further. You have limited sales & marketing dollars, so you have to use them judiciously.
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