Healthtech/Interview/

‘My biggest mistake was taking the company public’: Brunch with Babylon’s Ali Parsa

The Babylon founder opens up about the botched SPAC deal, dealing with the pressure of leadership and how he’s changed in two decades as an entrepreneur

By Kai Nicol-Schwarz

Ali Parsa, Babylon CEO

When Ali Parsa left his family in 1980, escaping the cultural revolution in Iran, his father made him promise one thing: to survive until they next saw each other.

“Within half an hour of making that promise, I was arrested. At the time there was a war with Iraq and they would have sent me to walk the minefields [on the frontline]. It was almost a death sentence,” says Parsa, founder of the British telehealth giant Babylon, which listed via a SPAC on the New York Stock Exchange (NYSE) last year at a $4.2bn valuation and has since seen its share price take a dramatic tumble.

“At that moment, another soldier came into the room and told the captain there was a phone call for him. When he left, the soldier told me to run.”

So Parsa ran, making it first to Pakistan, then Germany and finally the UK. It’s an origin story unlike that of many founders, and puts the trials and tribulations of running a healthtech with a $300m shortfall — caused by investors dropping out of its SPAC deal — into some perspective. 

Arriving as an asylum seeker in the UK

But our conversation starts on neither of these things, as we sit down for brunch at an Italian restaurant in swanky Knightsbridge chosen by Parsa’s assistant, which he jokes is “too posh” for him. 

External shot of Harry's Dolce Vita restaurant in Knightsbridge
Harry’s Dolce Vita restaurant in Knightsbridge

The first topic: goji berries.

“What’s a goji berry?” Parsa asks, noticing them on the menu, and I tell him I’ve got no idea before he sets off on a characteristic meandering tangent. 

“It’s probably this tiny thing that’s been shipped across the entire planet,” he says. “You can’t make this shit up.

“The truth is we need to fundamentally change the way we live. You and I do not need a goji berry,” he adds, just before the waiter comes over and we both order the goji berry yoghurt bowl.

With menus whisked away, Parsa asks me what we should talk about. I suggest we start at the beginning. 

“The story is really simple: it’s the story of every immigrant,” he tells me. Parsa couldn’t speak a word of English when he arrived in the UK at 16, was granted asylum and briefly stayed with a relative before moving into a flat he rented with his social security allowance. 

“There were no phones, no video calls and I didn’t know if I’d ever see my family again. Now that I have a 16-year-old I think how traumatising it must have been, but at the time you do what you’ve got to do.” It was a year and a half before his mother could come out and see him, and another year until he saw his father again.

Parsa locked himself away in his flat for the first few years he was in the UK, studying for exams to get into university. He eventually got a doctorate in engineering physics from University College London (UCL) — at the same time as launching his first business. 

Fast forward 27 years — during which Parsa worked as a tech investor for Goldman Sachs, founded private hospital company Circle and made the Sunday Times Rich List — and his third business Babylon is listed on the NYSE. But, it’s having a rough time following a summer of discontent.

Babylon’s share price has fallen 96% since its peak shortly after going public in October 2021, and although the company did report 220% year-on-year revenue growth in its Q2 results this year, in September it announced it would consolidate its shares to avoid being delisted. In recent months Babylon has also pulled the plug on all but one of its NHS contracts and laid off around 100 staff.

How Babylon works

But life at Babylon didn’t always look this uncertain. The scaleup was part of the first‚ and much-celebrated — generation of UK tech companies. 

Investors threw money at its digital doctor app (more than $600m before the SPAC), which offers an AI-driven symptom checker and video consultations with medical professionals, and bought into the quietly charismatic Parsa and his Babylonian dream. 

Sitting across the table from him, it’s not hard to see why. The dream — which he speaks about with a passion it’s hard not to get swept up in — is to fundamentally change healthcare. 

“You can give accessible, affordable healthcare to everyone in the world at a fraction of the money we think it requires,” says Parsa. “I can do the maths for you right now, and it’s not hundreds of billions of dollars. With tens of billions of dollars you can provide primary care to everyone.”

The idea is a simple one: offer health services to patients virtually, via an app, to keep more people out of hospitals and lower the cost of providing healthcare. 

“We’ve proven we can do it in the UK,” says Parsa, with understated, but seemingly unshakeable, confidence. In 2017 Babylon launched its NHS-funded primary care service, GP at Hand, and currently serves 115k patients in the UK.

“We published a peer reviewed paper [in 2021] that shows that when Babylon manages your health continuously [short-term hospital visits] are 15-30% lower.” 

But, it’s worth noting that all the authors of that paper were either employees of Babylon or had shares in the company — and not everyone’s convinced. Many also say Babylon’s business model requires so much growth capital to hit critical mass that it’s unsustainable in an economic downturn.

The company’s often been in the firing line. In 2018, Babylon was accused of “cherry-picking” young and healthy patients — something Parsa denies. In 2021, 85% of its NHS patients were aged between 20 and 39 (compared to just 28% nationally) — but Babylon says this is simply because younger people adopt new technology faster. The UK health regulator also raised concerns over the company’s AI-driven symptom checker, after an NHS doctor said it failed to spot serious conditions.

But Parsa is unmoved by the criticism. “The people who say Babylon’s not going to work are the same people who said patients will never see doctors remotely,” says Parsa. “They are the very same people who copy you two years later.”

What went wrong with Babylon’s SPAC

Babylon’s current doldrums revolve around its fall from grace on the public markets. So what led Parsa down the ill-fated path to a public listing, I ask, as we begin to tuck into our goji berry yoghurt bowls that the Babylon founder says are “actually damn good”.

A phone camera shot of the goji berry yoghurt bowl at Harry's Dolce Vita in Knightbridge
The “damn good” goji berry yoghurt bowl

“As the CEO of a public company I have to choose my words carefully,” he says after a brief pause. “I should be given the award for the worst time and worst method of taking a company public.”

But at the time it felt like the right thing to do, he says, because listing via a SPAC gives you a way of sharing predictions of revenue numbers for the future with the market — whereas an IPO is only based on historical figures. 

For a fast-growing tech company, where growth can skyrocket from one year to the next, being able to impact a listing valuation with revenue prediction is a pretty big perk. At the time Babylon listed, its historical revenue figures were a modest $16m in 2019 and $79m in 2020. Those numbers rose to $323m in 2021, and the company predicted $900m revenue for 2022 — a figure that was later revised to $1bn. 

The media was also overwhelmingly positive about SPACs in 2021 and some of Babylon’s investors were pushing for it at the time, Parsa says. But he doesn’t shirk the responsibility.

“I was the majority shareholder and I made the decision, so it’s not something I can blame on other people,” he tells me. “At the time, none of us predicted that the SPAC market would fall apart.” This year there have been just 325 SPACs and IPOs globally — a fraction of the 1,700 in the heyday of 2021.

Babylon ended up with “massive redemptions” just before the company went public — investors pulling their cash out of the deal — amid a broader withdrawal from the SPAC market. It’s a nightmare scenario for a founder, and one that Parsa found out about 24 hours before Babylon was due to list.

“At that stage, we should have pulled out of the deal,” he says. “But by that time, we were one day before the IPO and the whole train was going.” The SPAC left Babylon with a deficit of hundreds of millions in its finances.

“Right now taking the company public feels like my biggest mistake [at Babylon], but knowing what I knew at the time I wouldn’t have made another decision,” he says, with a coolness that suggests he’s far from panicking. 

And that’s fortunate, because life at Babylon is likely going to get harder before it gets easier.

So what’s next?

Parsa needs to plug a gaping $300m hole in the company’s finances.

The only remedy: raise more money. Babylon plans to claw back $100m by reducing “non-core activities” — which it’s so far done by terminating NHS contracts and laying off staff. But the company needs to find an extra $200m before its runway evaporates, which Parsa vaguely says will be sometime next year.

Raising money right now is no small feat, and only one digital health startup globally — France’s Alan — has convinced investors to write a cheque of more than $200m since the markets started to turn in March.

“The cost of capital has massively gone up,” acknowledges Parsa. “But I wouldn’t be sitting here with the confidence I have if I wasn’t sure of my existing shareholders and their commitment to Babylon.”

What Parsa says he’s absolutely not considering is selling the company — and Babylon came out publicly in August to quash suggestions it was searching for an acquirer.

But selling parts of the company to raise funds is very much on the cards. Last week — after Sifted’s brunch with Parsa — Babylon announced it’s looking to sell its US-based independent doctors network Meritage, and says the money will be enough to fund it to profitability.

Dealing with pressure

With the negativity surrounding Babylon so public — Parsa says he has to look at the falling stock daily because everyone reminds him of it — it’s easy to imagine the pressure mounting.

There’s “absolutely no question that it is”, he tells me. “Having said that, [in 2001] Amazon’s stock went down 93%. Jeff Bezos said the thing that kept him going was knowing the company was not the stock, and the stock was not the company.”

The comparison is one that Parsa brings up several times during our two-hour brunch — as he has on public shareholder calls over the summer — and it sounds like a mantra that’s keeping him going through the tough times.

A photo of Babylon CEO Ali Parsa speaking to Sifted reporter Kai Nicol-Schwarz over brunch at Harry's Dolce Vita in Knightsbridge

“I once had a conversation with [former UK Prime Minister] Tony Blair over dinner,” he says — although is then quick to point out it was a corporate event and Blair is no friend of his.

“I asked him how he dealt with all the pressure [from the public and media] and he said he just stops reading,” says Parsa. “The point is that you cannot allow other people to set your agenda. You set it, and you live and die by it.”

So where’s all this market pressure coming from, I ask?

“We’re dealing with a generation of investors and entrepreneurs who have never seen tough times,” Parsa tells me. “They were not around for the [dot com bust], their mummy and daddy put them through Eton and they ended up in Oxford. They have no coping mechanisms — apart from panic.”

What he’s learnt in two decades as an entrepreneur

But panicking is the last thing on Parsa’s mind — he says he’s been close to Armageddon so many times in his career and it’s always worked out. As you get older, he adds, you understand that progress is not linear.

“I’m not stupid, I hear what people say about my business, and we’re going through a tough patch at Babylon.” But a patch is all it is, Parsa insists.

“I know I’m not going to ignore it, I know I’m not going to panic and if I get unlucky I can look myself in the mirror and know I’ve done the best I could,” he says — before reciting a metaphor about a cockroach and a waiter that I don’t quite understand.

While there’s this contented — almost philosophical — sounding assuredness to much of what Parsa says, there’s also another fiercely driven and competitive side that rears its head every so often. “The people who [criticised my first healthtech] Circle are now in the doldrums and Circle is now the largest hospital group in the country,” he adds. Circle, however, has not been an absolute success, and the company came under major criticism when it withdrew from an NHS hospital contract in 2015. 

While the competitive edge has clearly endured over the years, Parsa’s leadership style has changed hugely since the early days of Circle, he says, when he was in his early 40s.

“When you’re younger you have an idea in your head and you believe that all you’ve got to do is set the direction and get the right people and they will follow,” Parsa, who’s now 57, tells me. “It’s so much harder to actually do that, and you can’t get upset with people if they can’t do it.” 

Getting people to do their best is all you need, he adds, but even that’s hard. These days, a huge amount of Parsa’s time is spent dealing with human emotions and how people feel about their job.

“If you’ve got a health issue or are going through a breakup, the last thing you want is me talking to you about your business objectives. What you really want when you’re going through that kind of thing is knowing that I’m there and I care,” he says. “A company that succeeds is a company that gives room for those human connections.”

Get the Parsa look

As our brunch — that’s gone on so long the restaurant has filled up with a lively lunchtime crowd — comes to an end, I ask Parsa to describe what he’s wearing.

He says the yellow shirt is handmade and was gifted to him by colleagues in Rwanda — where Babylon serves 20% of the population — before quickly adding: “I didn’t wear it because of you, I just wear it a lot.”

It turns out Parsa is something of an unlikely backpacker, and “lives out of a small suitcase” that he takes everywhere he goes. No easy task when recent destinations include places with sundry weather like San Francisco, Toronto, Boston and Costa Rica. “What I choose to wear depends on what fits in that suitcase and doesn’t get dirty easily.”

And how about those glasses? “If the face is this ugly you’ve got to figure out a way of hiding it. Look, I love beautiful things, and it’s not just glasses — I think as human beings we need to surround ourselves with less things, that are amazing, rather than a lot of rubbish things.”

I thank Parsa for chatting with me for so long — which he apologises for although I was the one continuously firing questions in his direction — and have to remind him Sifted is footing the bill when he offers to pay.

“Watch this space,” Parsa says with a knowing grin as he gets up to leave. “I wouldn’t be too worried about us.”

Kai Nicol-Schwarz is a reporter at Sifted. He covers healthtech and community reporting, and tweets from @NicolSchwarzK.

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