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CNBC Transcript: Rosaline Chow Koo, Founder and CEO, CXA Group

Below is the transcript of an interview with Rosaline Koo, Founder and CEO, CXA Group. The interview will play out in CNBC's latest episode of Managing Asia on 14 February 2020, 6.30PM SG/HK (in APAC) and 11.00PM BST time (in EMEA). If you choose to use anything, please attribute to CNBC and Christine Tan.

Christine Tan (CT): You started CXA in your living room in 2013. What made you launch a tech startup to disrupt the corporate health insurance business?

Rosaline Koo (RK): I was already in the business. So, I was running the biggest broker across Asia in 14 countries, but they all complained that the industry wasn't helping them with their worsening employee health. I begged for five years for $10 million to fix this. It never happened, they never approved. So, when my boss and the global CEO were fired, that's when I left and built it on my own. But little did I realize that it would be my $10 million that I would spend!

CT: What were you trying to build? Were you trying to take out the middleman and reduce healthcare costs? What were you trying to do?

RK: One of my main clients in China, one of the main companies said to me, "We bought cancer insurance for our employees, but do you know what happened?" They discovered there were too many late stage cancers. It was too late. It's not about insurance. It's about attacking the disease early, preventing diseases or managing diseases, and also the insurance in case you need treatment. We are trying to shift the paradigm, shift the money and connect all the players. So, instead of waiting for something bad to happen, why not prevent it from happening and managing it all the way through?

CT: So, prevention rather than treatment?

RK: Yes, but actually shifting the money. So, all employers pay the insurance for their employees, but you can only use it when something bad happens, when you need to see the doctor or when you need to go to the hospital. What if you can use some of that money instead to actually find out if you have that disease and get healthier? Or use that money to manage all the way through, so that's what we decided to do. Once we connected all the players - the doctors, the hospitals, the insurers, all the components - we were able to get rid of the middleman.

CT: So, when you look at your app and if I'm a user, how much flexibility do I have in choosing the options?

RK: So, it depends on your company. So, your company can say, "Okay, gyms are fine, massages are fine, but no facials." So, we wouldn't have any facials.

CT: It's something you negotiate with the company?

RK: Exactly. So, since we have a whole menu, they can just select from it. As we get bigger and bigger, our network gets bigger and bigger, and we can negotiate better discounts.

CT: So, what are some of the popular options on your app that users often go for?

RK: The shop is really popular because people do want to go to the gym and everyone uses it to go see doctors. So, you can locate all the doctors in the network, but you can also talk to a tele doctor. What if you have an MC? You actually don't need to go see a doctor and potentially get sick. You can actually do a tele doctor, get your MC and also have the drugs delivered to your house. But the other thing is, your lab tests are here and only you have access to it. So, with your lab tests, we can tell you if you're at risk of disease and then what can you do about it? We also show you what your lifestyle is doing to you. We take a picture of your face and we show you what your bad habits are doing to age you.

CT: So, was it easy convincing people to change their mindset in the very beginning?

RK: It was not hard convincing people to change their mindset. It was harder to convince companies to move from big global firms like my old firm to a no-name brand built out of my living room.

CT: Was it a struggle for you?

RK: It was always a struggle. So, in the beginning, I knew I needed to buy brokers just to get into the business. But I found out from Monetary Authority of Singapore that I have to be the sole shareholder, that was how I got stuck using all my family's money. The difficulty was building a company like this from scratch.

CT: So, at the age of 51, you decided to launch CXA. (Yes.) Using five million dollars a year almost to do something that's never been built before. (Yes. Yes.) Did you think of the huge risk you were taking?

RK: I don't think I thought about it, but my husband did. Unfortunately, he married me. He's very risk averse. He was trained as a lawyer and he was in a company where they helped companies manage risk.

CT: How did you get him to part with his money?

RK: Well, by that time, I'd already built up the platform. I had already negotiated the acquisition. I had already negotiated the loan. I already had a backer. I had already negotiated the approval from the MAS.

CT: All the pieces were in place?

RK: Yes, everything was already done. It was really like, oh, we're missing $3 million. You have to do it, okay? That's how we did it. So, it really was by that time we were launching.

CT: So, let's talk about the acquisition because when you started CXA, you actually made the bold decision to acquire Pan Group, Singapore's largest employee benefits broker. (Yes. Yes.) What gave you the confidence to make such an acquisition at such an early stage in the business?

RK: So, when I was running Mercer and Marsh, we had 14 brokerages in every country. So, the whole essence of the model is if you can buy your insurance through us, the platform comes for free. So, you need a broker to do that - that was the essential piece. So, I needed to buy a broker or not even get into it at all. At that point in Singapore, you couldn't apply for a broker too, you had to buy one. I decided to buy the biggest one. (Laughs)

CT: In the last six years, you've managed to secure from companies like HSBC, Telkom Indonesia, Sumitomo Corporation and private investors like Facebook cofounder Eduardo Saverin. How did you go about getting access to all that financing?

RK: While I didn't know any of them of course, the only way you can actually get fundraising is if you grow and you have a model that is disruptive, where you build a moat and no one else can copy that fast. So, it's a very difficult model because can you imagine integrating to the insurance companies when they can't do that - they have all the green screens - integrating to all the clinics, to the hospitals, to the gyms, to the health screening, to the e-pharmacy. So, it's a brick-by-brick model. So, they believed in the model, but also, we grew really fast and because we had the proof that we could do it, that's when they decided to give us the money.

CT: Some of the corporate investors eventually became your clients as well, how did it happen?

RK: Yes. Yes. It was part of the deal. So, in our last round, we raise US$25 million - all from strategic investors who agreed to actually license our platform to cross-sell to their own clients. So, with HSBC, one of our investors, we now have a long-term contract.

CT: It was a vote of confidence for you?

RK: Yes, it was a prerequisite. It was a prerequisite for them. If they wanted to invest, they have to license the platform.

CT: Smart move.

RK: So, we were looking for companies actually with large corporate bases. So, everything I built over the last six years, they can actually use for their clients. So, that their clients can get healthier too, at a lower cost.

CT: You've also managed to strike out key partnerships with Fosun. (Yes, yes.) and Howden to expand to 20 countries across. (Exactly.) Any other partnerships you're looking at?

RK: We actually have a lot of partnerships which will be announced over this year because we're launching all of these strategic partnerships. Most of them are investors. Some are not, for all of their clients. We're getting into more countries right now. We're primarily in Singapore, Hong Kong, China, Vietnam - that's where our staff and our clients are. But you'll see us go all across Southeast Asia and get bigger in China.

CT: That will happen this year?

RK: Yes. So, it's not just CXA helping corporates anymore directly, we're actually using the largest banks, insurers and the telcos, and they use our platform for all of their clients and all the employees of their clients. So, that is the next stage and they can offer all their corporate clients lower cost insurance and lower cost health care, that is the game changer. So, that's our next expansion.

CT: What would your user base look like?

RK: It should get to about 5 million relatively fast.

CT: You work very closely with companies, your clients (I do). What is the overall impact of the coronavirus epidemic on business?

RK: So, in Hong Kong and China, businesses are at a standstill. So, hardly anyone is going out except buying necessities. A lot of our clients actually have stopped their employees from traveling too because you don't want to take that risk.

CT: What message are you sending out to your clients?

RK: So, many of our clients are actually in China and in Hong Kong. So, most of our clients actually have closed their offices and allowing their employees to work from home. But we actually reassure them about the insurance coverage and what they need to do. So, we're trying to help them with ways to keep their employees safe while keeping everyone home and out of contact. I don't think it's about the insurance, everyone's scared for the employees' health, more so than the insurance.

CT: After raising US$25 million last year, I understand you're now aiming to raise another 50 million dollars (We are, we are.) at a valuation of 250 million (Yes, hopefully). Why go back to the market so soon?

RK: Because we are expanding so rapidly. So, we went back so soon because the type of platform you built when you are just a broker and the type of technology and platform you build when you are actually the technology for large global banks is very different. So, to scale to millions of users, you actually have to invest in the technology and to open offices across the region.

CT: The company is aiming to achieve profitability (Yes, yes, yes.) this year, are you on track?

RK: We've decided that we need to grow more, so it'll probably be two years. So, next year is the profitability target.

CT: So, you shifted that a bit further out?

RK: Yes, only because we need to invest even more to scale now that we have the investors who are partners and we need to grow that base.

CT: Can you give us a projection of your revenue growth this year?

RK: Last year, we grew 50 percent. This year, we expect to grow 100 percent.

CT: So, what actually is the end game for you? Is it your ultimate goal to take the company public eventually?

RK: There is probably going to be some sort of exit or if we could take a public exit out here and help with chronic disease out here, that would be great. You know It's just…I'll probably be 70 by then!

CT: But still at it?

RK: But still at it. Yes. Yes. I don't really retire for very long.

CT: Are you getting any feeling what you might do, which sort of exit strategy you might take whether it's a public listing route or whether you might exit the business through a sale?

RK: So, what's strange is we're always being approached to be bought, but it's not time yet because there's so much more to do.

CT: What is the right time?

RK: The right time probably when I just hit my milestone. We get offers. We've gotten offers since the very beginning.

CT: So, have you told them to come back two years later?

RK: I just tell them not now. That doesn't stop anyone from coming back. But we do say not now, or not yet.

CT: When you look at your journey, are you amazed at how far you've come?

RK: Yes, I am. I am. I didn't know we would go so far. I didn't realize we would hit so many countries. So, yes, in in those stressful moments, I try to think of how far we've come.

CT: You don't exactly fit the CEO profile of a young tech startup.

RK: Yes, I'm the opposite. I'm like the grandma!

CT: Any regrets? Any regrets of not starting your journey earlier?

RK: Um, I don't know if I have regrets. I don't know if I have regrets about that. I have more regrets about how we execute and not moving faster. So, I actually think I believe in destiny. There's a time and place for everything. It's only when you look back that you find out, okay, all your jobs prepare me for this. So, I didn't think I was prepared earlier. So, I think there's a time and place for everything. But luckily, 75 people who used to work for me before, came to work for me again.

CT: That's amazing. How did you do it?

RK: Not just from the last company, but from the last few companies and a lot of them are women. Because we had very, very flexible hours and accommodating our employees through births, divorces, parents, all of that, they've come back!

CT: After investing so much time, money into building the company and the business, do you ever worry that you might lose it all?

RK: I think the team worries and my husband worries more than I worry.

CT: Pretty confident?

RK: Fairly confident about figuring out a way.

CT: Gut feel?

RK: I don't think it's gut. It's really just having worked through so many crises, overcome so many obstacles all the way through. You just know that if you could just figure it out, you'll get there. But sometimes you have to work through a lot of people and sometimes they are not that confident. So, how do you together give everyone hope even when there's no hope? How do you problem-solve to get to the next stage? How do you quickly execute?

CT: So, really holding everything together?

RK: You have to hold everything together, because it's difficult.

CT: You're Chinese-American. I've been reading your bio, you grew up in the ghetto in Los Angeles. (Yes. Yes.) What was your childhood like?

RK: Well, so one night I woke up in middle of the night because my mom has to take a bus to a restaurant to work. And all I heard her say was, "Next time he approaches me, he's going to get it!" And I see my mom putting a machete into her purse. That and during the Watts Riots, I still remember my dad outside during the night with all the helicopters. He was there with the police, keeping the rioters away. My two sisters from China who just arrived, running home because they were burning down buildings. So, we grew up, you know, being bullied.

CT: That's a tough childhood you have to go through?

RK: But you don't know any better. You just think that's what childhood is.

CT: Well, having survived the tough neighborhood...

RK: I learnt to run really fast! (Laughs) And then I wasn't bullied as much. I used to be bullied and beaten up. But once you learn to run really fast, they can't catch you.

CT: So, you survived the tough neighborhood and along the way, eventually you made it to UCLA. (Yes.) Do you think your tough childhood, your tough experiences have really shaped the entrepreneur you are today? (Yes.) It has made you more resilient?

RK: Yes, well, what's failure versus disfigurement or dismemberment, right? So, it's all relative right? Who cares about saving face? It's like... you're not going to beat me up right? You're not going to rob me. So, it's really different. Because I've taken such hard jobs, I know I can overcome whatever obstacle there is at every single job. So, my first job out of college, I was a factory manager for 33 mostly men in their 40s and 50s, and I was 21. So, how do you overcome being a bad leader at 21? So, yes, it's always about improving and getting better.

CT: You've always said you felt like an outsider, and in some ways, you said that's been your greatest strength. How so?

RK: Yes. So, when you're the only non-black in a black neighborhood right, you're a complete outsider. You're the bottom of the totem pole. When I went to Iowa, I was the first Asian they met up close and the first Asian to work in that factory, so I was totally the outsider. So, you have to learn to adapt and you have to learn to listen, observe and figure things out because you don't want to be beaten up. You don't want to be just the substitute teacher managing all these men who were making fun of you. So, yes, you have to learn to adapt and lead.

CT: So, just for the record, how many times did you get beaten up?

RK: Three times before I just learn to run much faster.

CT: So, as a CEO of your third startup CXA, what kind of leader are you? What style do you practice?

RK: I try to be inspirational.

CT: You laugh when you say that.

RK: I know. I know. So, I'm very hands on. And we try to align all the leadership so that we move in tandem. But I hate politics. I hate bureaucracy. I hate people who are toxic.

CT: What do you mean by toxic?

RK: So, people who are know-it-alls, who think they're always right, who mistreat their fellow employees, who after the meeting throw stones and are very negative. They treat clients well, but they come in here and treat their employees poorly, and they create a lot of negativity. So, I let those employees go, even if they're effective, even if there are rainmakers, because it leads to a bad culture.

CT: Are you happy with the culture today?

RK: I think we work at it all the time. We actually have a pretty family culture. We do a lot together. We even had a wellness program for all employees who are about 200 people. Together, we lost 20, 30, 60 kilos and 300 centimeters off our waists. Half the employees said they were less stressed and were happier. So, we're always trying. We had to eat what, you know, we have to eat our own food.

CT: You sound like one big happy family?

RK: We try to be a family, but we also try to execute at the same time.

CT: And finally, you are going to be 60 years old in a couple of years' time (Oh, yes.) Where do you see yourself in the startup world? Still going at it?

RK: I'll be even older than everybody else! Most of the other female entrepreneurs are not in hardcore insurtech, health tech. Now that the banks are licensing us, we are also fintech right? So, I do want to be a role model not just for other female entrepreneurs, but women who aren't happy at their jobs, I want them to take a risk. Because if you never try, you don't know. If you don't go outside your comfort zone, you aren't gaining those skillsets to do something different. So, it's okay to fail. I failed my whole life.

CT: You didn't fail your whole life! You think you failed.

RK: (Laughs) Yes, but now, if I could take all those skillsets, learn from a life of hardship and just try to get better and better every day, could I make an impact? Can I get others to make an impact? Can we have CXA and all our employees make any impact?

CT: Rosaline, thank you so much for talking to me.

RK: Thank you.


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