Ananth Narayanan: The medicine man
The CEO of Medlife talks to Mint about life after Myntra, the challenges of a digital healthcare business, and being a wine connoisseur
Ananth Narayanan has adopted a routine befitting his new job as chief executive officer of healthcare startup Medlife.
Narayanan, who joined Medlife last year after a three-and-a-half-year stint as CEO of online fashion retailer Myntra, conducts many of his meetings walking around the paved office building of Medlife in central Bengaluru with the aim of racking up 15,000 steps every day. He is an early riser, waking up at 5am on most days. He makes it a point to switch off from all devices by 9.30pm and only begins using his phone in the morning after meditating for 20 minutes. On most days, he sleeps for six to six-and-a-half hours, significantly more than the 4-5 hours he was accustomed to. Narayanan, who reads a book every week, made the change last year after reading Why We Sleep, the acclaimed book on the science of sleep by Matthew Walker, a British professor of neuroscience and psychology.
“I am convinced that sleeping is the single largest thing you can do to improve your performance at work," Narayanan says.
We are meeting at the ITC Gardenia hotel. The lanky Narayanan is dressed in dark chinos, a striped white and blue shirt and loafers—all made by his former company Myntra. He shops only Myntra private brands, and especially favours brands introduced under his leadership.
It is a measure of his pride at what he accomplished at Myntra. By the time he left the company in early 2019, its sales had grown more than six times while its burn rate had reduced by 60% from the time he had joined the company in the second half of 2015. Myntra’s performance in this period helped its owner Flipkart dominate the crucial fashion category in e-commerce and stay ahead of arch-rival Amazon. Before Myntra, the Chennai-born Narayanan spent 15 years at global consulting firm McKinsey, rising to the position of senior partner. He joined McKinsey after completing his master’s in industrial engineering and operations research from the University of Michigan, US.
“After consulting, being in an operating role is a very different challenge. What consulting teaches you is problem solving. What you need in an operating role is some part of problem solving, but, more importantly, the ability to make decisions, the ability to hire a great team and build the right work culture," Narayanan says.
After quitting Myntra, Narayanan took a break of six months. His profile had risen considerably—not only is Narayanan one of the very few professional CEOs in the startup ecosystem, he had proved his mettle during Flipkart’s high-stakes battle with Amazon in the hurly-burly world of e-commerce. Unsurprisingly, he had many options. Some venture capitalists urged him to launch a startup and pledged to back him with large amounts of capital. He was approached by companies in sectors other than technology. But he was reasonably sure he wanted to continue working in the internet space. Still, he would take his time before deciding. At 42, he wanted to take up something he could do for the next decade or more.
Narayanan decided to travel and set a target of meeting about 100 people in the startup world and other industries in India, China and the US. He wanted to exchange ideas and “see what caused people to do what they do"—he thought this would help him figure out his next gig. As he spoke to people, he realized that what he liked to do, and was good at, was “turning around and scaling businesses", not starting them. The initial journey of a startup, the first 24-36 months, wasn’t something he felt he was suited for.
“More power to the people who are doing it, but I am not a zero to one guy—I didn’t want to start with a brand new idea. I am more of the kind of guy who likes to take businesses from $100 million to $2 billion. That’s what gets me excited," he says.
He identified three spaces that are sure to be transformed by the internet over the next decade: agriculture, finance and health. These are all very large markets, more than $100 billion each. They are all also serious undertakings, with the potential to have a more “meaningful impact" on people’s lives than plain commerce. As Narayanan studied them, he was put off by the complexity of the supply chain of agriculture and the prohibitive regulations in financial services. Healthcare, on the other hand, seemed ideal.
Among the companies he evaluated, he found Medlife to be the most attractive firm. The company’s founders, Prashant Singh and Tushar Kumar, were looking for a professional CEO. Founded in 2014, Medlife was the leader in the fast-growing online medicine delivery market. But the firm had bigger ambitions and wanted to become a one-stop healthcare provider by growing its two fledgling businesses, diagnostic services and online doctor consultations, and by expanding into new businesses.
In August, after a couple of months of talks, Narayanan agreed to join as CEO of Medlife, replacing Kumar. The Medlife founders continue to hold board seats and help in devising the firm’s strategy but Narayanan has a free hand to run the firm on a day-to-day basis. The former Myntra CEO, who was handsomely rewarded with stock sales after the $16 billion buyout of Flipkart by Walmart in 2018, has invested a sizeable chunk of his wealth in Medlife.
“It’s a bet on myself, on my abilities. It’s a strong signal to Prashant and Tushar and the team that I believe in the potential of the business completely. And I fully expect it to be financially beneficial to me too," Narayanan says.
He has been taking good care of his money—in the seven months that he has been at the helm, Narayanan has overseen a sharp increase in Medlife’s margins of about 6 percentage points. This has been achieved by a combination of steps: expanding the high-margin private label business in over-the counter products; using technology to optimize the logistics operation so that a delivery executive delivers more orders on every journey; using data science to improve demand forecasting; extracting better terms from suppliers; and finally, by cutting discounts. At the same time, the company has been growing its sales by 6-7% every month—that brings economies of scale. Medlife now expects to be break-even at the Ebitda (earnings before interest, taxes, depreciation and amortization) level by the end of March 2021.
While he’s applying some of the lessons that he learnt at Myntra, Narayanan recognizes that medicine is a substantially different business from retail. To start with, the median age of the Medlife customer is 40, far higher than in e-commerce. Second, healthcare is literally a life or death business, with all the attendant requirements of quality and service. This involves implementing strict, law-mandated processes in warehouses, requiring a prescription for every order, verifying the prescriptions uploaded and dozens of similar things that aren’t found in e-commerce.
“Compared with e-commerce, medicine is not very discount-oriented. If you have a good range of medicines and provide really good service, people will keep buying. You need to develop a deep understanding of consumer behaviour when they go through a health crisis, or when they go through a chronic disease that will last, say, for the next 25 years. And in health, maintaining quality is absolutely paramount. In Myntra, shipping the wrong size is not going to lead to anything. At Medlife, if you ship the wrong medication, it’s a real problem. Every step in the supply chain, right from receiving medicines in warehouses to delivering them to the customer, is recorded digitally," Narayanan says.
This approach translates into slower growth, or, as Narayanan describes it, “quality-adjusted growth". Still, the potential of the market remains very attractive. Medlife estimates that the digital health market will touch $16-20 billion over the next five years. The company has set a target of building a $2-3 billion business in this time, from $200 million at present. More than 60% of its sales will continue to come from medicine delivery, followed by diagnostic services and the rest. Medlife has been in talks with investors to raise $150 million to finance its expansion plans.
“We can build a sustainable $2-3 billion business while at the same time making a real difference in the lives of 15-18 million people—that’s creating a meaningful impact," Narayanan says.
While he was on his break, Narayanan turned into an active angel investor, putting money into as many as 14 startups, including CureFit, Vogo and Unacademy. He travelled extensively with his wife, who separately runs a family-owned chain of diagnostic-care units, and three daughters. He now plans to do at least three annual trips with them, especially because his eldest daughter will go to college in four years.
Narayanan collects art, favouring south Indian artists. He is also serious about wine—he reads The Wine Advocate and Wine Spectator and buys wine futures. He has expanded his wine collection, which has grown from 800 wines to 3,600 in four years. “I did have six months free...(but) I don’t think I will finish drinking them through my lifetime," he says.
FIRST PUBLISHED21.02.2020 | 11:31 AM IST
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