One summer’s day in 2018, Ali Parsa, the bespectacled founder of UK healthtech Babylon, took to the dimly-lit stage at the Royal College of Physicians in London to announce some big news.
Babylon’s AI-driven diagnostics chatbot had, he said, passed a medical exam with a score of 81%. The average mark for human doctors at the time was 72%.
Parsa called the results a world first and said it was a major step towards achieving the startup’s lofty ambition: putting affordable healthcare in the hands of every human on the planet.
Months later, the UK health minister dubbed Babylon’s NHS GP service — which offered video consultations with doctors via a slick app — “revolutionary”. The following summer the startup raised an eye-watering $550m round as it doubled down on taking its tech to the US — the land of opportunity for healthtech. At its peak, Babylon was valued at $4.2bn.
Four years on and Babylon has been sold for scraps.
The fall has been seismic, but for many industry watchers and the nine former senior employees Sifted spoke to — many of whom worked directly with Parsa — it was far from unexpected.
The company’s flagship AI chatbot — which came under fire from some doctors when Parsa announced it back in 2018 — continued to face critics and never lived up to the hype. Healthtech experts say that the scale of Babylon’s ambition was always a longshot in a conservative healthcare sector — and practically impossible during a funding crunch.
And yet, for years, so many people bought into Parsa’s Babylonian vision.
“Bull in a china shop”
A big part of that is down to Parsa himself, who, after launching Babylon in 2014, led the company to become one of the UK’s first generation of tech darlings.
“He knows how to get to people and knows how to open doors,” says one healthtech consultant — who preferred to remain anonymous — and worked with Parsa.
As Babylon looked to deepen ties with the NHS, Parsa employed Dominic Cummings — the man who masterminded Brexit — as a consultant and secured ringing endorsements from the UK health minister Matt Hancock.
He also stood out in an early UK tech sector dominated by hoodie-wearing founders. “He was the only entrepreneur in the first wave of digital health that wasn’t a tech bro and had some business acumen,” says the consultant. Before founding Babylon in 2013, Parsa had worked at Goldman Sachs as a tech investor and set up the private hospital company Circle.
Inside the company, Parsa was revered like a “cult leader” — but not in a “bad way”, says one former senior employee. “Ali was shouting about accessible, affordable care — and we believed it.”
Parsa idolised Jeff Bezos and Amazon — flying out to their head office in Seattle on one occasion to meet the team — and tried to implement Bezos’ philosophy of “constructive conflict”, the former employee tells Sifted. They add that Parsa would regularly encourage disagreements between team members to create competition in the company and meetings at 7:30am weren’t uncommon.
The culture at Babylon was “high pressure from day one” and Parsa was like “a bull in a china shop — always trying to push everybody to do better and do more”, the former employee says.
While some former employees claim Parsa could lose his temper when targets weren't hit, he also had a softer side, says a former senior leader at the company. “He could be this gentle person, asking about your family and parents' health.” One Christmas, Parsa opened his house up to company employees who would have otherwise spent the day alone.
Working at Babylon during those early years could be stressful, insiders say, but the mood at the company was positive. “It felt like this was going to be the Google of healthcare,” says one. “Babylon had a singular goal, to put healthcare in the hands of everyone, and everyone [at the company] bought into it.”
VCs did too, and after Babylon launched its telemedicine app in 2015, offering patients video consultations with doctors, they began to take notice.
The “big vision, a driven and capable entrepreneur and market that was clearly going to be impacted by technology” convinced Hussein Kanji, partner at Hoxton Ventures, to back the startup in its seed and Series A rounds in 2015 and 2016.
But the scale of that ambition put others off.
“When you try to service different payers in different geographies with different underlying patient populations — and you provide them with a wide-ranging suite of care — you end up with this incredibly complex thing,” says one healthtech investor, who didn’t end up investing in the company during those early years. “Even if you’re a country that's a pretty hard thing to pull off.”
While Kanji had worries about other investors’ appetite to back a startup like Babylon, Parsa had an ability to “pull off small miracles,” he says.
Babylon’s $60m Series B in 2017 was a record sum for a digital health startup in Europe at the time. The $550m Series C two years later, which Parsa raised from investors including VNV Global, Kinnevik and Saudi Arabia’s PIF, remains the biggest ever European digital health round.
Babylon inked several high-profile partnerships to provide its healthcare app — offering video consultations and an AI symptom checker — to patients of insurance giants Bupa and Prudential, governments in Rwanda and Saudi Arabia and the health arms of tech behemoths Tencent and Samsung. In 2017, Babylon launched the NHS’s first app-based GP service in London, before expanding to Birmingham — the UK’s second biggest city — in 2019.
Babylon went on to win huge deals with health providers in the US — which saw it provide hundreds of thousands of patients with everything from GP consultations to specialist care. By 2022, the vast majority of Babylon’s $1.1bn revenue came from US contracts.
The big idea was that patients using Babylon’s tech-enabled healthcare platform would spend less time being treated for health conditions by medical professionals and costs would therefore be lower.
The bottom line
Only they never were.
There were “critical flaws” in the business model from the early days, says one former senior employee. While Babylon saved the NHS money with its GP at Hand service, it struggled to make the business model — which saw the NHS pay Babylon a fixed fee of £100 per patient per year, according to the former employee — work for its bottom line. Parsa admitted the company lost money on every patient in the UK in 2022, before abandoning two NHS contracts later that year and pausing new patient registrations in its only remaining GP service in 2023.
The problems continued as Babylon expanded internationally. When the company signed a $100m deal with insurance giant Prudential in 2018 to roll out its healthcare app in several Asian countries, Babylon underestimated the work it would take to translate the platform into several new languages per country, the former employee tells Sifted. Symptoms also meant different things in different places. A headache and fever might mean a cold in the UK — but in South East Asia it could be dengue fever, they say. It meant Babylon had to employ scores of local doctors to input healthcare data into the chatbot.
In the US, costs continued to spiral as Babylon underestimated the challenges of rolling out healthcare to different populations with very different health needs. “One of Ali’s skills was simplifying hard problems — but he oversimplified healthcare too much,” the former employee adds.
When Babylon launched a healthcare service in Missouri as part of the US’s Medicaid programme — a government-backed health insurance for those with limited resources — the company assumed it could roll out the same app it had used for its GP service in the UK.
But there was one big problem: many of the patients in Missouri either didn’t have a smartphone or had one that was too low spec to support Babylon’s app, says the former senior employee. The company had to build a web version of the app for people to access the service and send employees out to the streets to go door to door to sign patients up. It ended up costing Babylon an extra $3-5m, they tell Sifted.
While revenues grew, losses also continued to skyrocket. In the first quarter of 2023, despite scrambling to cut costs by abandoning NHS contracts and laying off hundreds of staff, Babylon’s losses hit $63.2m (doubling on the previous year).
AI that never delivered
Babylon’s dogged determination to present a version of a startup that was making groundbreaking leaps in AI often ran ahead of reality.
In his speech at the Royal College of Physicians, Parsa presented a “demo” of a person using a new video call portal on Babylon’s app to get a diagnosis of an illness. “None of this is a show, all of this will be in the market,” he said.
Two former senior employees say the video Parsa showed was merely a mock-up done by a marketing firm. While Babylon had developed a number of the elements shown in the demo, the portal as a whole didn’t yet exist, says one.
After the company came under fire for calling its chatbot a “diagnostics” tool, Babylon removed the video of the speech from its website and social channels, says one of the employees. Babylon commented that the company is “constantly refreshing the website with new information about our products and services. As such, older content is often removed to make way for the new,” according to an article released at the time.
Despite quietly backing down over some problems internally, Parsa didn’t pull punches when responding to Babylon’s detractors publicly. The doctors’ organisation which runs the UK medical exam Babylon claimed its AI chatbot passed with flying colours called the findings “dubious”. Parsa, in turn, called them an example of “national stupidity”.
After the UK regulator Care Quality Commission published a report questioning the safety and effectiveness of Babylon’s digital health services in 2017, the company threatened to sue them. Babylon called online critics “trolls” and commissioned Brexit mastermind Cummings to write an internal report on how to combat negative publicity, a former senior employee tells Sifted.
But Hugh Harvey, who worked as Babylon’s head of “regulatory affairs in clinical artificial intelligence” from 2016-2017, says the company oversold the tech from the beginning. Despite Babylon saying it was aiming to develop artificial intelligence in 2016, when Harvey joined the chatbot was still powered by an Excel spreadsheet with clinical pathways written by junior doctors.
While Babylon started building out a probabilistic graph model (PGM) in 2017 which could predict disease risk factors and symptoms to calculate a diagnosis, the probabilities themselves were still inputted by doctors. The AI Babylon had was “a bit of natural language [processing]” at the first stage of the chatbot where a user would tell the app their symptoms, says Harvey. “You’d write ‘I've got a headache’, and the chatbot would recognise you’re talking about your head and then go down those pathways.”
“Babylon was sold on the promise that AI tech was going to work and therefore got loads of investment and signed loads of deals,” says Harvey. “But the tech ended up never working, or being able to do what it wanted to do.”
Even when the tech improved over the years, there were always issues integrating it into the wider business. If a patient told Babylon’s symptom checker that they were a smoker, that information wouldn’t pull through to a separate tool that showed users how lifestyle choices can impact risk of disease, says one former senior employee.
The problem was that the different tech solutions were built by separate teams without guidance on how it would impact the platform as a whole — which put the brakes on plans to become the “intelligent everything-health app”, they tell Sifted. It didn’t get near a point where it could actually make a tangible difference to healthcare, they add — “but we thought we had so much money we could make it work eventually”.
After Babylon raised its $550m round in 2019, Parsa began handing out Reid Hoffman’s Blitzscaling book to the company’s senior leadership. The front cover of the book reads: The Lightning-Fast Path to Building Massively Valuable Companies. “He wanted to get as big as possible,” says one former senior leader.
Following the cash injection, the company went on a hiring spree. Babylon’s headcount grew from 705 at the end of 2018 to a peak of 1,700 by the summer of 2022, according to Dealroom data. Focus turned to the US, where Parsa saw an opportunity for Babylon to grow massively.
Babylon showed signs of hitting the sort of scale that was needed to generate returns and revenues rose — but there was one big problem. As former employees tell Sifted, it’s hugely challenging to apply hypergrowth to a sector as complicated as healthcare — where products have to be adapted so much across several verticals and geographies.
“Ultimately, what led to Babylon's downfall was that we were stretched too thin. We had products stretching across 20 or 30 verticals, from South East Asia to Rwanda and North America to the UK,” says one.
Those products included a symptom checker, chatbot tools, an app platform, appointment booking, workforce management, video consultations, prescriptions and referrals to other care pathways. Babylon would’ve been fine if it had focused on any one of those — but it was always up against it building products across so many, say former employees.
It was a problem Parsa was all too aware of, but the promises he made to investors meant he felt Babylon had to go for broke, one former senior leader tells Sifted.
“At one point Ali turned to me and said, ‘we can’t pick a single condition to focus on, because if we do we won’t fulfil promises to investors’,” they say. “We agreed privately that we had to focus on a single vertical, but publicly he had to focus on the whole healthcare journey.”
“The whole fundraising environment encouraged mistakes — investors were focused on growth and there was no focus on the bottom line,” says another former senior employee. “Ali is guilty of wanting to grow too fast and being too ambitious, but at the same time, it was the name of the game.”
As Babylon scaled, so too did cracks in the company culture.
After the company raised the $550m round, Babylon had media in the office “almost everyday” — but there was a “constant political war” going on behind the scenes, says one former senior employee. As investors began to expect revenue and pressure to make money rose, departments began shifting blame onto others for missing targets, they add.
Parsa would allegedly “publicly eviscerat[e]” staff in team meetings, says another former senior employee. There were meetings with 80 people where Parsa would, allegedly, publicly call out junior product managers on project progress, another company insider says.
Senior leadership didn’t get off scot-free either. In meetings with Babylon’s C-suite, Parsa would liken the group to a football team, one former senior leader says. “If any one of you is not performing, you’ll be kicked off the team,” he told them. But the notion of there being any sort of leadership team was “laughable”, they add. In that person’s view, Parsa would rarely hold meetings with the entire group, preferring one to one meetings with each team member. Their view was that Parsa never encouraged teamwork — “it was part of his divide and conquer strategy.”
Turnover among the C-suite was high, and it led to a team at the top that was populated with staff that were afraid to challenge Parsa, a number of former employees tell Sifted. “Ali said ‘this is what I want’ and the leadership team said ‘yes’. A few years before there was genuine debate and discussion,” says one.
While part of Parsa’s brilliance was his ability to convince investors to part with their cash — it was also his downfall. “Ali played the game too well,” says one former senior employee. “We were in an environment where money was pouring in from investors and Babylon raised too much money at a crazy valuation.”
That crazy valuation ended up being $4.2bn after Babylon listed on the New York Stock Exchange via a SPAC in October 2021 — and it was more than the public markets were prepared to pay.
Parsa called listing via a SPAC his “biggest mistake” in an interview with Sifted in 2022 — while conceding that some of his investors were also pushing for it — after Babylon was left with a $300m hole in its finances when investors pulled out on the eve of the float. Cash-strapped and with an enormous burn rate, its share price plummeted, and Parsa’s exceptional ability to rally backers dried up.
As Babylon tried to extend its runway and cut costs, NHS contracts were abandoned, headcount was slashed and the company took on debt funding. Ultimately, it never managed to balance the books. 18 months after that fateful listing, debt funder AlbaCore Capital stepped in to take the company private again — as it looked to recoup some of the $300m+ it had pumped into Babylon — wiping the stakes shareholders had paid hundreds of millions for.
The pieces of the business Babylon has managed to offload so far, after most of the global business became insolvent in August, brought in less than $7m. Just 0.17% of the $4.2bn Babylon was once worth.
Sifted made multiple attempts to contact Ali Parsa by email and phone, but didn’t get a response. Sifted made multiple attempts to contact Babylon by email and by phone, but didn’t get a response.