Alex Chriss, President and CEO, PayPal
Paul Hudson, Chief Executive Officer, Sanofi
In conversation with: Kristin Stoller, Editorial Director, Fortune Live Media
Paul Hudson, Chief Executive Officer, Sanofi
In conversation with: Kristin Stoller, Editorial Director, Fortune Live Media
Category
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TechTranscript
00:00Hello, everyone.
00:01All right, Alex, Paul, thank you so much for being with me here today.
00:04So you both come from two vastly different industries, but
00:08have kind of parallel stories, I think.
00:09So you both lead decades old brands, but are relatively new CEOs.
00:14Paul, you've been at Snoppy five years.
00:16Alex, you just had your one year anniversary, congratulations.
00:19And you both made some giant pivots in your very short but very productive time.
00:23So Alex, let's start with you.
00:25You've called yourself an underdog in the past.
00:28You took over at a time when PayPal stock was struggling a bit.
00:31So what would you say has been the biggest pivot you've made in the past year?
00:35Yeah, well, first, thank you for having me here.
00:37It's been fantastic to be with you all.
00:40PayPal, 25-year-old company, one of the most well-known brands in the world.
00:46We also have the Venmo product, which again is a top brand.
00:49So incredible products serving hundreds of millions of consumers and
00:54tens of millions of merchants.
00:56But a product and a company that I think had lost its way a little bit
01:00from an innovation standpoint.
01:02And so coming in, what I really wanted to do was get the innovation muscle back and
01:07open up the addressable market that we could go after.
01:11So one of the things that I've really focused on in this past year is changing
01:15the mindset of the company and the mindset of the external world.
01:18From being just a payments company,
01:19which is what we were all known for, to really focusing on commerce.
01:23And commerce spans so many other things from the moment a consumer tries to find
01:28something all the way through to post-purchase.
01:31And with the data that we have, with the technology that we have, and
01:34with the talent that we have, that's an opportunity for us to expand and
01:39really become a commerce company.
01:40Amazing, and Paul, you've had a bit of a newsy last week.
01:44Your company prepared to sell a stake in your consumer health unit.
01:47Opalek, can you tell us about what this means for
01:49your overall business strategy and if it's a bigger pivot for you?
01:52Well, I'm five years in, as you know.
01:55Sanofi produces almost a billion doses of vaccines and
02:00medicines every year.
02:02We're absolutely focused on miracles and breakthroughs for patients, but
02:06it wasn't always that way.
02:07And five years ago, we decided to double down on being best in class or
02:10first in class, doing things that companies, drug companies,
02:13had never done before to try and treat unmet need.
02:16Take more risk, but in areas where we were strong and we had great capability.
02:20And we stepped back, in fact, from quite a lot of the areas where we thought we
02:24couldn't offer real radical breakthrough for
02:26patients to step change in efficacy or safety.
02:30And so part of that streamlining and
02:33taking us towards a pure play biopharma was to exit our consumer business.
02:37And you reference it, we're going to exit about 50% through private equity to
02:43see DNR, who we think will create even more value for patients and
02:47those that go into the pharmacy in a trusted way to get what they need.
02:51And we'll focus on chasing miracles, which is really what we're supposed to do and
02:55what we're designed for, and I think what we're best at.
02:57And we're well underway in achieving that.
03:00Excellent, and I know we've talked about this a lot today already, but
03:04have the results of the election last week impacted how you're looking at your 2025
03:08strategy at all, especially, Paul, for you with healthcare?
03:11And is there anything top of mind?
03:13Well, the first question we ask ourselves with any administration,
03:15of course, governments are changing in most major markets,
03:19the vast majority of the world going to vote at some point over the last 12 months
03:23and coming 12 months, and it's really about what will it do in terms of changing
03:27access to healthcare and access to medicines, that's what we ask.
03:30And we hope the democracies choose the right leaders, but beyond that,
03:35we want to know what will it mean for out of pocket here in the US,
03:39what will it mean for making sure innovation is rewarded,
03:42that scientific jobs are encouraged, and they can proliferate even more, and
03:46we can do incredible things.
03:47So we come at it almost entirely from a healthcare innovation angle,
03:52and that never changes, we're always iterating.
03:55And I think most big businesses look at it, perhaps, through similar lenses.
03:59Yeah, Alex, any thoughts for you?
04:00Very similar, we start, first and foremost, working customer back.
04:04And so we focus on our customer,
04:05nothing based on the election changes how we serve our customers.
04:09But six months ago, we took the leadership team aside and said,
04:12we need two playbooks, and post-election,
04:15we'll pull one of the playbooks out and throw the other one away.
04:18And so we'll run with the playbook that we have now, but
04:23otherwise our focus is really on the customer.
04:25Makes sense, and I want to come to the audience soon for questions, so
04:27think of any you have and feel free to raise your hand.
04:29But first, Alex, I want to talk to you about acquisitions,
04:32because you've said publicly that PayPal had done too many acquisitions.
04:36Venmo, of course, a big one for millennials like me, but
04:39how are you approaching acquisitions over the next few years?
04:43Is that something you want to keep doing?
04:44Yeah, inorganic growth is going to be an essential part of our long-term strategy.
04:49But at the same time, I feel like you have to earn the right to be able to get
04:53into the market and find the right acquisitions.
04:56And coming in new, really taking a look at a number of acquisitions
05:01that the company had done over the previous four or five years.
05:05We wanted to make sure that we were on stable footing, and so
05:08we're working really hard internally right now, focused on our organic growth.
05:12Focused on ensuring what's core and what's context, delivering on our strategy,
05:17and then we'll look into the market and figure out how we grow inorganically.
05:21Paul, what about you?
05:22Well, I'm just thinking about Venmo, actually.
05:24I mean, I have PayPal, but not Venmo.
05:26My kids are a bit older, like, hey, dad, I'll Venmo you.
05:29Knowing I don't have it, which means I never get it, right?
05:33It's the best ad for Venmo, however.
05:35I think that's, they know that I'm never on the receiving end.
05:39But for us, we really doubled down.
05:46In October last year, we declared that we were going to invest 700 million more a year
05:51in our own R&D, and we've spent five years improving our probability of success,
05:57how sophisticated our machinery is to make the right decisions on
06:01which medicines to double down on.
06:03We've built out our desire to be the world's leading immunology player, and
06:07we stay very open-minded to acquisitions.
06:09We typically guide that we're in the two to five billion range where we can to do
06:12things, because buying science early, for
06:16those that don't really follow the healthcare sector, in phase one,
06:20when you've got about seven, eight, nine years to go, you have a 90% chance of
06:26failure, and typically you want to buy a really great phase one asset.
06:31You're in the 500 million to 2 billion range,
06:33depending on how exciting it is, with a 90% chance of failure.
06:38And so we have tried to use AI and other things to improve probability of success,
06:44set a very high bar comparing external opportunities with our own science
06:48internally to say, just simply does it make sense?
06:52And so we're picking off the areas where we think we can do something
06:55really revolutionary for patients, and that's the exciting thing now.
06:58So like everybody, we look to see what could be the next great thing, and
07:03stay open-minded about that.
07:04Tell me more about that.
07:05I'd love to talk about AI, especially, I feel like, in healthcare.
07:08How are you incorporating it ethically and
07:11into both your decisions and the research that you're doing?
07:15Well, I think, first of all, you have to have rules of the game.
07:19We have an ethical AI review board, so
07:22almost all of our projects go through that.
07:25But I think we need to be a bit more sophisticated in how we calibrate
07:29the AI initiatives.
07:30First of all, I think there's a lot of AI washing, a lot of CEOs,
07:33we were talking about this, doing AI projects to say they're doing it.
07:37Most CEOs that I've met talk more about AI as cyber risk,
07:42and perhaps a little too much Terminator 2 and Skynet, and
07:46perhaps not enough actually really understanding what the opportunity could
07:50be, and we break AI down to a couple of components, what we call expert AI that
07:55could revolutionize, say, structural biology to be able to target an undruggable
07:59disease by designing a molecule that can attach to a receptor.
08:02You don't need to understand it, you just need to know it's bloody difficult, so
08:05that's AI can really help us with that.
08:08And then we have, and we're very careful about how many people get access to that,
08:12what it means, a lot of intellectual property around that.
08:14On the other side, we have snackable AI, which I phrase,
08:18coin just because a lot of AI is like people using Waze or
08:22people getting an informed decision, should I turn left or
08:26right at the end of the street?
08:28Sometimes I think I know better than Waze, I don't, frankly.
08:31And so it's just, I've got to get in the car, drive it, but
08:34I'd love to get the nudge about whether it's better to turn left or right.
08:39And so we have about 18,000 people using AI every day in snackable format
08:44to make better decisions, we call decision intelligence, democratize data,
08:49to unleash the resources of the company.
08:51That's actually more fun than people realize.
08:54And I have the whole company on my phone, I leave with this little nugget on it,
08:58which is every morning I wake up and I get Instagram notifications.
09:01And it's in our business, which is a sort of 45 billion euro business,
09:06it tells me where I should look to create more value,
09:10where I should look to pull back.
09:12And it's processing the entire data set for the entire company real time.
09:17And that's useful for me, to be able to have data real time that other,
09:22right through all the levels of the organization, curated for me and
09:26my interest, much like, say, Instagram, but in a business context.
09:29And that's giving us a competitive advantage, I believe,
09:32versus the naysayers on AI.
09:35Last comment would be, AI is a huge opportunity, and
09:39we can't sort of be deniers, but we do have to manage the risk, but
09:44we really have to go for the opportunity.
09:45Yeah, that makes sense.
09:46And if you have an Instagram, I think you also need a Venmo, so
09:49we'll come back to that in a bit.
09:50That's next for me.
09:51Yeah, and Alex, you made some big announcements at PayPal.
09:55You talked about smart receipts, Fastlane.
09:57Tell us about this, the new interesting things you're doing over at PayPal.
10:01Yeah, so tremendous focus on innovation and really, again,
10:06delivering for the customers.
10:07I want to comment on AI and how we think about it as well,
10:10because it moves to some of our innovation.
10:13So we've been using AI for a decade, as you can imagine, when it comes to risk and
10:17fraud and ensuring that we've got the data to make the right payment decisions for
10:21people.
10:22But one of the things that we think a lot about now is with 40 million
10:26small business merchants that use our platform to be able to accept payments
10:30around the world, there's really two paths that AI can lead us down.
10:36In order to be successful with AI, you need a tremendous amount of data.
10:39You need a tremendous amount of really good data scientists.
10:42Well, those are two things that small businesses don't have.
10:45So there is one path where the largest merchants in the world just get really,
10:50really good at personalization, really, really good at ads,
10:52really good to make sure that that Instagram feed is personalized to you.
10:56And the small businesses are left behind.
10:58We see that as our opportunity and our responsibility, to be honest,
11:01to be able to say, look, let's build a platform where we can leverage the scale
11:05that we have, the data that we have, and give to our small business merchants
11:10the opportunity to be able to personalize their data,
11:14find the right customer at the right time, price it in the right way,
11:17ensure that the purchase is done, and then have the follow-up with a smart receipt
11:21that says, hey, you're a new user, how would I like to bring you back and
11:24maybe give you a discount so that we can have a follow-up?
11:27And so all of the innovations that we're putting out are customer-backed and
11:30customer-focused, but leveraging AI and trying to democratize the data that we
11:35have, the data scientists that we have, the scale that we have, and put it in
11:38the hands of the small businesses around the world that really need it.
11:42Maybe I can add to that, because it's a brilliant point, really.
11:46The Snackable AI initiatives that we run, we deliberately decided to keep them open
11:51so every time we innovate, other companies that are now on the same platform can use.
11:55Because even our data set, as huge as it is, isn't enough.
11:59And we want everybody to benefit, a bit of a sort of all boats rise.
12:03I didn't realize you could do it like you're doing it to the individual retail.
12:07I think it's so important.
12:08Otherwise, you're just left behind.
12:09And even in big companies, it can still apply too.
12:12And so there's an open nature that I think, and
12:14I think historically, maybe perhaps more in healthcare, people like to innovate and
12:18then keep things very much to themselves, perhaps even as a competitive advantage.
12:23And if you join healthcare because you want to do good, you want to make people
12:26better, the all boats rise has to be part of the phenomena.
12:29And AI is maybe our first moment in healthcare to be able to do that.
12:32Yeah, that makes a lot of sense.
12:34I want to go to the audience.
12:35Any questions we have out there?
12:38I see one down here.
12:43Hi, Alex Javankov in Silico Medicine.
12:46My question is to Paul Hudson.
12:48Paul, you are the first CEO who openly stated that they are going all in on AI.
12:54And you did it just on the right time,
12:57when generative AI started truly producing miracles.
13:01So how do you assess the productivity increases that you see at Sanofi,
13:08and also that shareholders recognize the value of what you are doing and
13:12give you credit for that?
13:15Well, I think it's going to take a while for
13:18shareholders to give us any bump in sentiment based on the fact that we're
13:22doing it.
13:23I think the proof of the pudding will come in our success rate to your
13:27first part of your question.
13:29If our probability of failure is 90% in phase one, and
13:33we can drop that to 80% with AI over the next few years,
13:38that is a log change in ability to reinvest more in chasing miracles.
13:42And so what we're hoping for is those probabilities of success get stacked,
13:48cumulative into the positive for us.
13:51And so there's one part, just doing better what we do today, more informed,
13:55more reliably, with more predictive capability.
13:58The other part is doing things we've never done before.
14:01And we've met before, and I've seen some of the work, for example,
14:04you do it in Silico, and I understand being one of the first companies
14:10to bring a medicine through, which I think is one of your objectives,
14:13that was rooted in discovery in AI, has never been done before.
14:18And you may be the first, we will see, but we have to then go on and
14:21do that ourselves, because that's the next great battleground to do something
14:25incredible for patients.
14:26Yeah, makes sense.
14:28Anyone else?
14:30Someone down here?
14:35Thank you, Alex and Paul, great insights and perspective, thank you.
14:40I have a question, I'm Emily Jeffs, I'm a founder and
14:43president of Sustainability Woman in the World, it's a non-profit.
14:47And so my question is around sustainability.
14:49I want to congratulate both of you for setting net zero by 2040 for
14:55PayPal and 2045 for Sanofi.
14:58And access to funding for small to mid-sized businesses,
15:04I think it's like over 2 billion, and also access to 30 medicines
15:11to 40 more of poorest country around the world.
15:15In the Trump era, and you talked about, Alex, the two playbook.
15:21Under the Trump playbook, would sustainability, strategy,
15:27and roadmap in context of innovation AI would,
15:32how would you, what does that look like in terms of continuing to
15:37do great, making great progress in PayPal?
15:42And similarly, for you too, Paul, in context of the anti-vax
15:49discussions that are going on under Trump era, what are some of
15:54the strategies under that playbook that you can share with us?
16:00Yeah, I guess I'll hit it just, sort of, for
16:05us, regardless of administrations, we have a mission for the company.
16:10And we follow where our customers are.
16:13And when I go around the world and meet with small businesses,
16:15sustainability is top of mind for them.
16:17And so when we talk to our end user customers,
16:21when we talk to our small businesses, when it's important to us and
16:23it's important to our customers, we have a strategy.
16:26We will continue to execute on that strategy.
16:28And obviously, whether it's, I mean, when you're a global company,
16:33you deal with different regulatory issues in every part of the world.
16:36And so you find a way through when you have a clear strategy and
16:41you're serving your customers.
16:42So nothing, I think, is going to change for us.
16:44We will just continue to march forward.
16:46And Paul, I know we're running out of time here, but if you could give us-
16:48Yeah, just a few things.
16:49The vax, anti-vax discussion is really about data and facts.
16:57And I just implore everybody always just to go to trusted sources for
17:02the data because the data supports the use of vaccination.
17:08On, just to give you some sense of perspective,
17:1195% of the carbon negative in healthcare is actually scope three.
17:19So it's a real challenge for us.
17:21It's the partners we work with and
17:22we have to work together to try and address that because that's a lot, right?
17:28We work, we'll be at net zero long before the dates that you suggested,
17:32though you're very well informed by the way, but long before those dates.
17:36It's about then moving our partners at the right speed with the right level of
17:40accountability.
17:41Just a couple of things for you to realize.
17:43The delivery of healthcare is 5% of global emissions and more than airlines.
17:49But 95% of that is not making medicines.
17:53It is somebody driving needlessly to a hospital,
17:56driving round and round it looking for a parking space for
17:58a non-essential visit that could have been done remotely.
18:01In a hospital that's overheated or overcooled.
18:05And then, perhaps somebody that is pre-diabetic,
18:08who will create about 16 tons of carbon in their lifetime.
18:12Who becomes diabetic because they weren't coached properly,
18:15didn't make the right life choices and create 48 tons of carbon.
18:19So I passionately lead with King Charles and
18:21others a project on decarbonizing the delivery of healthcare.
18:26Because that delivery is going to be critical.
18:28We're chasing the miracles at Sanofi.
18:30Now we've got to work on the rest of it to make sure when the patients get access
18:33to those medicines, it can really change the impact on the environment.
18:36Because ultimately, there's a convergence between climate and health.
18:39And that's the next big battleground after that.
18:42And we'll do our best like everybody else.
18:44Amazing. Thank you both so much.
18:45I appreciate it.