Tech entrepreneur Faraz Khan wants to create more transparency in the insurance and healthcare industry
Generation start-up: e-commerce firm souKare muscles in on the healthcare sector
When former management consultant and investment banker Faraz Khan decided to set up a business, he identified three things everyone would need in 20 years time: education; water; and health care.
He then chose the segment he was most passionate about, launching his tech start-up in the summer of 2016 to help speed the delivery of healthcare products to consumers and bring more transparency to the market.
The e-commerce venture first went live with contact lenses in 2016, followed by fitness products at the end of last year and pharmaceuticals set to roll out by the second half of 2019.
But delivering healthcare products is only a small-part of the souKare vision; its ultimate value proposition is to store customers' data to help them track their medications and make more informed decisions about which insurer provides the best cover.
“In an ideal world, if there was no e-commerce, you would have one pharmacy that has everything you need and records all the products you use. They would know when you are going to run out of your prescription drugs and call you two days before,” says Mr Khan, 39.
But the souKare model, which has grown from a full-time staff of two in 2016 to six with 12 part-time employees, will also go one step further. As well as ensuring all medicines, contact lenses and fitness products are in stock and can be delivered locally within 90 minutes – a service the company already offers its Dubai clientele – the customers' database will also offer reveal which insurers serve their medical needs best.
“At the end of the year – you will have a dashboard saying these are the 20 drugs you bought – these 11 were covered, these nine were not – so, of your total spend of $8,000, $4,000 was covered by insurance,” says Mr Khan.
The portal will then outline how other insurers would have covered the same drugs, explaining that provider X would have covered $5,000; the customer can also find out how much other insurance policies would cost them.
That data can only be built through customer loyalty, says Mr Khan, but the idea is “not to be just another marketplace”.
“With insurance, the drugs are often not covered and the visibility is very low," he says. “In health care, right now, decision making is very ad hoc and that’s what we want to optimise.”
Entering the e-commerce space is not an easy ride for any new entrepreneur even if, like Mr Khan, they have identified a gap in the market.
The Middle East’s e-commerce sector is growing at the fastest pace globally with online sales expected to double to $48.8 billion by 2021, according to a report last month by Fitch Solutions Macro Research, a unit of Fitch Group. In tandem, the Middle East and North Africa region's healthcare sector is forecast to need 470,000 additional hospital beds in the next four years to keep up with minimum per capita requirements set by the OECD, a JLL report said last year.
Still, that’s no guarantee of success as innovative ideas can easily be replicated.
"People can make their own websites and have their own products but what they can’t deliver is the full experience,” says Mr Khan. "The value really lies in operational excellence and that’s what we focus on.”
One of its key service offerings is the 90-minute delivery policy in its test city of Dubai - difficult to guarantee in a city often clogged with rush-hour jams.
“Ninety minutes is not as important as the call we make within 10 minutes, so that we can arrange a time slot for delivery,” he says. “Fifty per cent of people don’t need the order straightaway but the fact that someone reaches out immediately is important.”
When it comes to rolling out the pharma range next year, how the company gets around the issue of prescriptions will be interesting. Customers will order the product, scanning in their prescription and then the delivery driver will pick it up with any insurance claim being processed in the same way as a pharmacy.
To offer that service, souKare must have a physical store of its own, operating 24 hours a day to ensure it complies with UAE regulations, but it plans to partner with an outlet to lower costs at the outset.
To help the entrepreneur realise his vision, he has a number of key investors already on board.
Among the 11 are former colleagues from his management consultancy days who now work for McKinsey, BCG and Bain & Company as well as Careem executives and figures in the private equity arena. The group raised about $250,000 for the seed round, with Mr Khan putting in a further $150,000 himself.
"We wanted the right mix of investors, so consultants mainly for advice, people from Careem because they have the start-up and marketing experience and then private equity because they know how to take the company to the next level,” he says, adding that the company has had double digit growth month-on-month this year, aside from August due to the traditional summer slowdown.
Among the investors is Yousuf Siddiki, partner at the consultancy ValuStrat.
"The business idea behind souKare, its scalability aspect, and the team credentials were the key drivers in my decision to invest," says Mr Siddiki. "SouKare aims to define a new normal, in terms of convenience and decision making, in the healthcare products space; an area where customer service levels can be significantly optimise."
Credentials are certainly something Mr Khan has in abundance. After a childhood in his native Pakistan, he read computer science at Cambridge University in the UK, later gaining an MBA from Insead in Paris. He worked in investment banking and later management consulting with global leaders such as McKinsey and Oliver Weinmann.
That level of pedigree will certainly aid his pitch for bridge funding, which he hopes to complete by the end of the year to fund the roll out of the firm's pharma offering and Abu Dhabi expansion.
Further expansion is also on the cards with 10 cities in the broader Mena region, including Istanbul, Cairo, Riyadh, Jeddah, Kuwait and Karachi, already selected. All have a very high gross domestic product or a very high population, says Mr Khan.
With the venture going to plan to date, Mr Khan says the one thing he would alter is his staffing strategy. In the early days he relied on interns, thinking that hiring would happen organically.
"That's something I would have done before I started because once you are running the business, the operation keeps you away from anything else so you don’t have time to interview people."
Barbara Van Pay, chief executive and founder of Smart HR, says interns are only a good option if you have the time to support them.
"Hiring the right team is imperative for building a strong foundation for any start-up. It may seem like common sense to find candidates with the most experience or highest degree, but this isn’t necessary the right criteria for a start-up," she says.
"A start-up needs people who have passion."
Mr Khan has plenty of that. "I always wanted to be in something that impacted everyone," he says.
"And if you do well, you are leaving something behind that helps people."
SouKare founder and chief executive Faraz Khan talks to The National about the business:
Do you think you timed the launch of souKare correctly?
It’s a too early to say yes or no because we are not big enough. In six to 12 months, we will know. So far all the indicators – that mainly come from investors – indicate that we got it right. They seem to like the idea. In a year to two, we hope to be disrupting a few things and as a disruptor timing becomes less relevant.
What will you be disrupting?
Basically your whole healthcare experience, the purchase experience and journey. When I moved to Dubai I did not know which doctor to go to whereas if you had a Trip Advisor for doctors that would make life very easy. That does not exist today and that’s the disruption model.
Are you going to create a Trip Advisor for doctors?
The end-to-end idea is to, yes, have three categories advising on the best-rated doctors, fitness people and yogis.
How are you building a defensible business?
Exclusive partnerships will key to be that so imagine if we have partnerships with clinics that don’t have their own pharmacies, then that will give us a first move advantage, In e-commerce building something that is defendable is very difficult, the only thing you can do is make sure that the products are always authentic.
What start-up do you wish you had created?
Careem, not just because of what you see as a customer but because I know their culture, their employees and their level of excitement and the way they buy into the company's mission. Then it's how the founders have managed to grow the company, the level of satisfaction that they have and the fact they are making a difference to so many people. If you go to Pakistan, everyone now – even those that could not afford taxis - are booking Careems because their prices are typically half. What’s they’ve done over the last five to six years is quite fascinating.
What new skill have you learnt through setting up your own company?
When you are a consultant you work with many people – partners, managers, the back office - and you think you have nailed it. Now I realise those people were almost all on the same wavelength. Now, as a start-up, the stakeholders can be the people getting your uniforms or bike boxes made, the person processing a licence or investors - and initially you do it all yourself. So you deal with the entire spectrum - there is a lot of learning there.