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James Nakagawa of Mobile Healthcare: 'Entrepreneurship Is about Sacrifice

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Published May 17, 2011 in Arabic Knowledge@Wharton

James Nakagawa never studied medicine, and until 2003, he headed a James Nakagawa of Mobile Healthcare: company that helped financial firms deliver online trading services. But after his friend was diagnosed with diabetes, Nakagawa set his mind to create a new tool for healthcare. He launched Mobile Healthcare Inc., and developed Lifewatcher, a mobile tool that allows one to instantly manage and monitor their health. The Canadian's innovations have earned him various accolades. He is a 2009 World Economic Forum Technology Pioneer Award winner in healthcare, the recipient of the Red Herring 100 Asia Award in Hong Kong, and was a finalist for the Asian Wall Street Journal Innovation@Entrepolis Awards. He and his wife also developed and operated Japan's first comprehensive cancer patient support site. Speaking to Arabic Knowledge@Wharton at the recent Global Competitiveness Forum in Riyadh, Saudi Arabia, Nakagawa relates his experiences as an entrepreneur in the healthcare industry, the lessons in leadership he learned from launching companies, and the sacrifices one makes to establish a venture. An edited transcript of the conversation follows. Arabic Knowledge@Wharton: What has being in healthcare entrepreneurship taught you? James Nakagawa: The thing about healthcare entrepreneurship is that if you're in it for the money, you know, "I just want to become rich," and exit, you're in the wrong field. It doesn't work. Healthcare and medical, especially Information Technology (IT), is not an easy sell. You need maturity, and a multidiscipline approach, and you can't do that if you're in your 20s; you just don't have the life experience. Well, maybe some people do, but it's not simply, "Hey, I have an idea, I'll put into PowerPoint or Excel, and I'm going to create this model…" No. I got into healthcare because I wanted to help a friend. My doctor friends challenged me, because I didn't know anything about diabetes. And they were very blunt; they said, "Jamie, you don't know anything about diabetes, do you?" I said, "Well, no, to be honest." And they said, "It's the next state of the world. You know, this is how patients and doctors are managing or not managing it. Why don't you do some research?" Arabic Knowledge@Wharton: What did you do? Nakagawa: So I did the research, and put a team together. We spent one month. Then I had an epiphany. I wrote a two-page proposal and I thought, "I gotta send it to someone. I gotta get some sort of validation." So I sent it to the president of Apple Computer Japan. I called up his secretary and I spoke in Japanese and English. I said, "Look, I'm not gonna try and sell you. I have this idea; I can do it. Let me just send you this two-page proposal, and if you have time, show him. And I'd love to get a meeting with some of your people." He read it. The next day she called us in the morning and said, "Can you come down at 2 p.m.?" I discover that the business development manager there, he's a diabetic. His grandfather just passed away of diabetic complications, his uncle just entered the hospital with diabetic complications, and he had just developed it. So this whole family understood the importance of what we were doing, and asked us, "This has never been done. How confident are you, that you can do it?" I said I was 95% confident I could do it, and he asks what we want. I told him we want free computers, and he says, no its policy, they don't give free computers. And I said, "O.K., servers?" Two weeks later, they were flown in from Singapore, fully loaded, with a note: "James, good luck." Arabic Knowledge@Wharton: Amazing. Was it all that easy? Nakagawa: One of our early mistakes was that we spent a lot of time doing research and development (R&D). One of our early partners and supporters was the Red Cross Hospital Group in Japan. We thought, "Hey, there is a niche opportunity for national healthcare reimbursement." So I did it in four months, spending a lot of time with these bureaucrats. We thought, "Yes! We're going to make it; this is it. Wow, big-time. National health. Now the doctors are going prescribe." And what happened? The government changed the reimbursement law. The Red Cross had over 1,000 beds, but the limit was 200 beds, and we couldn't afford to service the other hospitals. So we had no real business because you had to be tapped into the government.

we started commercializing and went through all this trouble. they'll just say. and we have to respect their families and schedules. But they add tremendous value. So we did our R&D. On my mother's side. I wouldn't do it. by law. especially when you can't pay them the salaries that they're used to commanding. This guy creates algorithms for fun. It was just really by necessity that we made the change. "What are we doing here?" So we looked at where are the biggest needs. That's one of the toughest tasks. where everyone over 40 years old gets a free checkup. Arabic Knowledge@Wharton: Can you explain your product development process? Nakagawa: You just don't do a lot of beta testing. we don't even fight. this is not staying in nice hotels. and then what happens? The global economic crisis. They didn't have a three-month runway. not just failure. big doctor support. and he is just brilliant. and you're always working. and decided it was in emerging markets.m. Bringing those type of high-level people and financial analytics to healthcare is pretty unique. and you're jetlagged. if it's very a senior person and that's the only time slot they have. to knock it down so . In the Middle East. Arabic Knowledge@Wharton: Not everyone is willing to be that daring. but they called it giri. They're all in their 50s. And. I have two chief operating officers (COOs). I work seven days a week. it's almost unheard of. and I built good relationships with key engineers and senior management. we can go back in history to 1152. it's just the way it is for them. Fortune 1000. This is not a party. because the people we're dealing with are typically doctors. which is an obligation. Nakagawa: It takes a long time. In healthcare you need to have big partners. He was the past president of ING Baron Securities. you have to give them a lot of upside. I get conference calls at 3 a. We started to travel a lot. high cholesterol. I think it's not the fear of failure. There's constant stress. and because you work with different time zones. more often than not. Still. because emerging markets became trendy. I give my wife a lot of credit. if you're wearing the wrong clothes. We had to compromise. you have to be very calculated (laughing). 60% of the month. money started to move. because there's a lot to be said for big company management. they couldn't stay alive for three months to even pay their mortgage. small. especially ergonomically. and government officials. Who does that kind of stuff. we have a position. there is a cultural stigma attached to failure. finding good people who have different skill sets. We have a sword in the museum out there. the challenge also in emerging markets is who pays. it's about what we're willing to sacrifice. it's not a yes-person culture.Another challenge was some of these government doctors created a new physical-checkup system. and we got a nice interview in the Wall Street Journal. 60s and sometimes in their 70s. I'm used to working on project teams. or they have to see the bigger picture. For venture companies. My London global COO. So we thought. But for my senior colleagues joining our teams. During the global economic crisis. they had to learn to adjust. preferably conducted by third parties. Arabic Knowledge@Wharton: So how did you build your company? Nakagawa: Coming from financial IT. and multimillion-dollar clinical-trial data. So for me it's this thing about living life. It's risk management. And if I had to do this over again. coming from big corporate cultures." It's not right or wrong. In Japan we thought. He is originally one of the first quant jocks on the Street. you work late at night. "What's wrong with you? You're too immature." And what happened? In Japan they put it in the books as a law. actually it takes more time than you expect. This is 24/7 workdays. And you have to be willing to do that. In fact. right? Finding quality people. And also. you know. This is where every company worldwide. you have to really use it and you have to have the mindset of continuous innovation. I'm Asian and from what I've been learning about Arabic culture. I travel 60% of the year. whether you're big. We're always open. Nakagawa: Well. distributive management. It's also important for us. entrepreneurialism is about sacrifice. Your health deteriorates. and they don't have patience. He is one of my mentors. It's not just irrational exuberance. though. The Japan COO is an American. and he was the operations director for Merrill Lynch Japan. If you have high blood pressure. which shocked me. finding new ways. Arabic Knowledge@Wharton: How did you keep going? Nakagawa: We started to win all the Silicon Valley tech awards. you're tired. they just come up with plans to do things. where you have to be willing to risk it all. to this famous samurai who served the emperor. Really. it's not enforced. and now we're going into three new countries. You risk too much. Arabic Knowledge@Wharton: You learned some tough lessons. "Great. we used our life savings to finance this. Because as an entrepreneur. your company provides health insurance. For four years I maintained the same lifestyle and financed everyone! So you have to be willing to risk. all have to go through the same escalator system where you need to have consumer studies. When you go see them. he's 12 years older than I. corporate senior management. my friends who lost their jobs.

from different viewpoints. I didn't understand most of the stuff I was reading. and let's say you're the global R&D department and you have US$1. So I researched it. but in the next five to seven years. development-wise. That's why you should make your mistakes when you're young. using your family's money. There's very little private equity going into early-stage companies in Japan. "Look. you can't be a yes man. It doesn't matter where you start in life." I'll give you an example. pattern recognition and seeing different ways of doing things. No one's done that worldwide. when I'm walking. If you've been raised properly. I did recognize that I'm very stubborn. because this comes back to healthcare: It's an integrative process. you have to know every piece of your business.you don't have to keep clicking. and we can do it.5 billion allocated. and you have to apply what you're learning. I can't wait to get to the office. it would be nice to have it at 60-70% accuracy. And I'm looking at things for fun. just family. It's a lifestyle. let's talk about not a solution. Not when I'm 70. I approached it. my management style is an open door. that's why I've accelerated our growth in the last three years. Every entrepreneur. the hardships. or know to try and solve it with them. I'm not that arrogant or naïve. but it feels good. It's where you finish. we're like evangelists. stranger things have happened. I don't see why you're not doing it. You wake up passionate. I don't know everything. But at the same time. we have the data. but I'm good with numbers. hedge fund trading. but it was incremental. I got an invitation to the COP15 [the 15th Conference of the Parties under . If I didn't go through what I went through. By later this year." And surprisingly. Arabic Knowledge@Wharton: What kind of solutions are you looking for to become more successful. we decided to develop food photo recognition. Bits and pieces. Because of everything I've done and all the mistakes I've made. You can waste your life away. to try and create better ways. Take more money and risk more of your own money. This is my third venture. in the bath. and it's the same thing. What I've found is that I'm not an engineer by training. I'm not tired. not even about work. not the total. If you come from wealth. But if you have the option of helping. They're paying you to give them an honest opinion different than their style. "Hey. and that you care. it's almost nonexistent. just talking with them and listening to their problems. You have to have really good lines of communication with each person. and it kept happening. or else you're going be diluted down. Arabic Knowledge@Wharton: What's the challenge that you haven't completed yet? Nakagawa: I would love to win the Nobel Prize in preventative medicine. they have all these different products. In the bath I read. So tell me. During the economic crisis. "Well. because more often than not. should take more money when they can. This is maybe very Asian. but different ways to approach it. just to take your mind off things. then you shouldn't be an entrepreneur. I also read three paperbacks a week just to relax. How does that play out with the team? Nakagawa: They kind of know my style. Arabic Knowledge@Wharton: What have you learned being in leadership? Nakagawa: You have to be tough. the opportunities you have.m. Because we have your health histories. But also. I spent maybe three weeks looking at why that hasn't happened. All the people I've met worldwide in healthcare. Don't be waiting for a thank you. but I say. but you spend excessive amounts of time in lunches. In other words. especially during the economic crisis. In terms of the venture-capital industry in Japan. and this comes back to if you're a big company. and I self-taught. It just happened. but the leader is not really leading. I do my best brainstorming when I'm exercising. I think too many CEOs kind of get this god complex. because they're used to doing this for delivery trading. Our investors laugh. the approach came from the financial guys. it will feel good to know that your sacrifice is benefiting people. Leadership is accountability. it's a collaborative process. I think." Arabic Knowledge@Wharton: Do you see development as a process of creativity through chaos? Nakagawa: No. or at 3:15 a. I wouldn't have made it to this stage. Arabic Knowledge@Wharton: You're a very hands-on leader. Arabic Knowledge@Wharton: Did you ever see yourself as innovator? Nakagawa: No. I think it's important to have those honest discussions and just say. I didn't wake up or have an epiphany thinking I'm going to reinvent the wheel. and the second company I've started. and for your product to become more successful? Nakagawa: Access to capital. Well. and I said. I can't wait to check email. you can continue to just spend your family money. and if you don't have majority control of the board or ownership. every night trying to fall asleep. your education. And in my previous incarnation working with Wall Street CEOs. One of the things is don't listen to your own PR.

middle-class family. I want to go back to school after I exit. This is a single/personal use copy of Arabic Knowledge@Wharton For multiple copies. Well. I want my MBA. please contact PARS International: reprints@parsintl. custom reprints. and not an honorary degree. I thought it was junk email. So I'd like to get that Nobel Prize. posters or plaques.the United Nations Framework Convention on Climate Change in Amsterdam].com / +1 (212) 221-9595 x407. Secondly. from a working. . e-prints. coming from Toronto. All these things are surreal. I want those three initials. because it was addressed to me. I met Al Gore through that.