Bloomberg News

Ex-Apple Chief Sculley Mentors Next Steve Jobs in Health Care

December 13, 2012

John Sculley says he thinks he’s found the next Steve Jobs. Several of them, in fact.

The former Apple Inc. (AAPL:US) chief executive officer is taking on the thorny problem of reforming health care by mentoring technology entrepreneurs. Working from his Palm Beach, Florida home, he’s invested almost $10 million in five startups, often using his name to raise the companies’ profiles.

“The real heavy lifting is not done by me,” he said. “I get a front row seat at what I think will be a revolution.”

Sculley knew little about the health-care industry until just a few years ago. He was also new to computers in 1983 when Jobs recruited the onetime PepsiCo Inc. (PEP:US) president to run Apple.

Sculley’s decade-long tenure, which included company growth and successful products, was marred by the flop of the Newton portable digital assistant and his role in forcing out the man who became a business legend. In the years after his own ouster from Apple in 1993, Sculley kept a low profile while backing technology and telecommunications companies, as well as oddball products like the Wine Clip, a device that clamps to a bottle and supposedly improves the drink’s taste.

During that time, Sculley became increasingly interested in trying to change the U.S. health-care industry. Patients should have better access to their own health records with more freedom to choose care options, and technology could help open those doors, he said.

Microsoft, Google

Other prominent tech executives, who thought so as well, were unable to create successful products.

Microsoft Corp. co-founder Bill Gates was a champion of the company’s HealthVault, a repository for sensitive health records that has failed to find an audience. Marissa Mayer, now CEO of Yahoo! Inc., oversaw a rival tool called Google Health when it was introduced in 2008. Google Inc. shut down the service at the beginning of this year.

Sculley’s education in the health-care industry began in 2005 when he met Sean Heyniger, the founder of heart monitor maker PDSHeart, at the Consumer Electronics Show in Las Vegas. Heyniger had been trying to track down Sculley, then a board member at MetroPCS Communications Inc. (PCS:US), to tap his connections in the wireless industry. The pair soon began talking about starting a new business together.

“We were playing golf one day,” Heyniger said. “I said, ‘Look, John. I’ll make a deal with you. I’ll teach you how to become a better golfer if you teach me how to become a better CEO.’”

Two years later, Heyniger sold (BEAT:US) PDSHeart to CardioNet Inc. (BEAT:US) for $57 million. The next year he and Sculley co-founded Watermark Medical LLC, which makes a device for diagnosing sleep apnea.

Mentor’s Role

Heyniger, 47, introduced Sculley to other health-care entrepreneurs. Sculley became an investor in Audax Health Solutions, developer of a social network that encourages healthy living and works with insurance companies, after founder Grant Verstandig, 23, agreed to let Sculley mentor him.

“I’ve never seen these insurance companies move so fast to work with anyone before,” Sculley said. Verstandig could be “the Steve Jobs of consumer health services,” he said.

While he acts more as a CEO coach than a day-to-day operator, Sculley jumps into the fray when he senses an opportunity.

Last year, after investing in MDLiveCare, a Sunrise, Florida-based company that connects patients with doctors via video, he called the founder, Randy Parker. Sculley was insistent about dropping “Care” from the company’s name, and Parker, who was atop a ski slope in Colorado, reluctantly agreed. By the time Parker reached the bottom of the mountain, he said, he’d received another call from Sculley announcing that he had just spent $200,000 of the company’s money to buy the Web domain MDLive.com.

Experience Mix

Sculley says his mix of experience in consumer marketing, information technology, and health-care policy will help him succeed. The time is right for ventures that get people actively involved with their health care, since under so-called Obamacare more employers will move people to health plans with high deductibles, according to Sculley.

“Suddenly, employees must pay attention to what health care costs,” he said.

Sculley is upbeat about his ventures and expresses confidence in his new protégés.

The latest addition is Sonny Vu, 39. Together, they founded Misfit Wearables Corp. last year and developed a quarter-size device that tracks a person’s physical activity.

With the help of Sculley’s public evangelizing, the startup has raised more than $480,000 on the crowdfunding website IndieGoGo Inc. from 3,000 people who pre-ordered the sleek Misfit Shine gizmo.

“Sonny is amazing,” Sculley said. “A true talent, in the spirit of Steve Jobs.”

To contact the reporters on this story: Douglas MacMillan in San Francisco at dmacmillan3@bloomberg.net; Mark Milian in San Francisco at mmilian@bloomberg.net

To contact the editor responsible for this story: Douglas Cantor at dcantor5@bloomberg.net


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