DOCTORS, DATA AND AI
"For me safety is in becoming an entrepreneur. That's when you have full control."
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Thomaz Srougi: Let's go to the, huh, largest favela or shanty town of Sao Paulo of Brazil, of perhaps Latin America and, and see if our model can fly, because if it, if it can fly there, it means it can fly anywhere in the world, so that’s what we did.
David Madden: Silicon Valley likes to say that it's making the world a better place. But that's mostly bullshit.
The problems that most famous tech companies are solving, aren't real problems. But in other countries - developing countries - there are entrepreneurs who are building things that are actually changing people's lives, in very practical ways.
That's what this podcast is about.
I'm David Madden. Welcome to The Revolution of Necessity.
On this podcast, we share the stories of tech entrepreneurs in developing countries. These are people who are innovating in places where technology could genuinely make the world a better place.
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On today's episode: healthcare. In many countries around the world, lots of people don't have access to good, quality, affordable healthcare. This is especially the case in developing countries where public health systems are often really bad.
This is definitely the case in Brazil. About 150,000,000 (150 million) people rely on the public health system, but there's long wait times, the service isn't great. A recent survey found that 70% of people rate the system as bad or very bad.
Imagine a [state of the art] health clinic: spotlessly clean, full of modern equipment, some of the best doctors in the country and low-cost to boot.
Now imagine that clinic sitting just outside one of the poorest neighborhoods in Sao Paulo.
This is how today’s guest, Thomaz Srougi, decided to tackle the healthcare problem in Brazil.
From that one experiment, Thomaz built a network of over 50 clinics providing high quality affordable care for low income people in Sao Paulo.
On the back end is an impressive technology platform that allows him to efficiently serve over a quarter of a million (250,000) patients per month using 2,000 doctors and they're getting 60,000 new patients every month. The company is called Dr. Consulta. It's an important story and I'm really excited to have Thomaz here to share it.
Thomaz, welcome to the Revolution of Necessity.
Thomaz Srougi: Pleased to be here.
David Madden: Thomaz, you're not a doctor, but your dad is a doctor. As a child growing up with a dad as a doctor, did you have an understanding of the problems of the Brazilian healthcare system?
Thomaz Srougi: No, huh, the only thing that I understood is that my dad worked his ass off and I never saw him and, um, he was never home. Huh, and, um, he never made money, quite, quite enough to go through the month. I knew he was really really a top doctor. It was also, it was very clear that top doctors, they, most of them, they, they barely do it through the month.
David Madden: So, when you finished school, was this one of the reasons why you didn't go into medicine?
Thomaz Srougi: Well, I knew I, I didn't want to be a doctor, I wanted to, uh, build stuff. I always wanted to change stuff. I was kind of against the rules and doctors, they need to follow rules so I never thought about being a doctor.
David Madden: So you end up getting a business degree and then you're lucky enough to go to Chicago where you get masters degrees in both business and public policy and you come back to Brazil in the 2000s and you play key roles at some big companies and you end up forming an investment company with some of your friends and colleagues. What made you decide to put all that to the one side and tackle the health system?
Thomaz Srougi: I guess I was not fulfilling my potential.
David Madden: When did you begin to feel that?
Thomaz Srougi: Throughout my life, I've switched from finance to the real world. Finance is just an appendix, it’s a very important means for companies and to build, huh, wealth. But what really drives innovation and change are organizations, being public or private. And, and I think I've realized the biggest challenge that I could set myself into was setting up a new service or product and scaling that. So I made the shift and when I was about 27 or 28, I quit my established life within corporations, because I realized, when you work for someone else, you're not in control and there's this false sense of security and safety. So for me, safety is in becoming an entrepreneur. That's when you have full control.
David Madden: Thomaz got his first taste of entrepreneurial life developing a low income home builder business. It was a big success and after that there was no going back.
Thomaz Srougi: That was amazing, an amazing journey, amazing experience. I've learned tons and from that moment on, I said, I, “There's no way I'm going to work for someone else. There's so much to be done here, huh, and, huh, I want to do it in my own rhythm and my own way and with people that I admire because we can do a lot. So if we apply all the managerial know-how we’ve learnt in previous lives, I think we can do a lot in Brazil.”
David Madden: Business is pretty slow during the 2009 global financial crisis so Thomaz takes a break and attends a graduate management course at Harvard Business School.
Thomaz Srougi: I read this case about a Mexican company that was offering very affordable, low-income medical visits for low-income folks. And, um, they also had as, a drugstore network, and they were offering, uh, consultations with doctors inside the pharmacies. So I thought it was fantastic.
David Madden: Why did that speak to you, though? because you were reading lots of interesting cases and lots of interesting business opportunities. Why did this one in particular, why did the lightbulb go off?
Thomaz Srougi: Health is the largest dysfunctional market in the world. People are dying. It seems that people pretend nothing is happening, just because there's big lobby and a lot of power concentrated in the hands of companies and other medical associations around the world, and patients are there, huh, just spending more money, aging unhealthy and it seemed to me that doctors were failing to provide a real, uh, effective and efficient services. Medical companies were failing that as well. We found out that in Brazil, 150,000,000 people were, uh, not, uh receiving proper care. 100,000,000 people were medically homeless, meaning they are trying to see doctors but only seeing doctors after 12 months and, huh, when you do the math tons of people are dying and it seemed to me something better could be done.
David Madden: Thomaz, can you explain to us why the Brazilian healthcare system is doing such a bad job of serving this population?
Thomaz Srougi: I think, well there's two reasons. Unrealistic plan: huh, free healthcare for everybody is unrealistic. It's impossible because someone is paying for the healthcare, the citizens are paying forms of taxes. So it's not free. And secondly, huh, we don't have enough money, we're not wealthy enough to pay for everyone.
David Madden: You're studying the healthcare system with your partners at the investment firm that you helped to create. What's the initial idea for Dr. Consulta?
Thomaz Srougi: So, back then, there wasn't a term called, huh, “high-impact” or “impact entrepreneurs”. We just knew we had the means to do something cool for people and at the same time, build an amazing and huge business. There's nothing wrong with it, right? Do good, do well. And healthcare seemed to be the perfect situation, where the government was failing, private institutions were failing as well and the private healthcare market in Brazil -which is one of the largest in the world, is not a market, it's a niche, because only 25% of people are there- so the other 75% or 150,000,000 people were left behind. So we thought “Wait a minute, we can do something here and we think we can do something that can be replicable and scalable”.
David Madden: And, and the only idea was “Let's have these super accessible, super affordable clinics”, right?
Thomaz Srougi: The idea was “Let's go after the best healthcare services and ideas around the world, try to bring those to Brazil and offer those services at the lowest cost possible. That's it. Let's give people access, very affordable access and the best way to do it is to position ourselves in the most challenging environment. Let's go to the, huh, largest favela or shanty town of Sao Paulo, of Brazil, of perhaps Latin America and, and see if our model can fly. Because if it, if it can fly there, it means it can fly anywhere in the world”. So that’s what we did.
David Madden: What did your dad think of this idea?
Thomaz Srougi: The first time I spoke to him about this, he said “If this was a good idea, someone else would have done it already”.
David Madden: Ah, that old line.
David Madden: I’ve heard that before.
Thomaz Srougi: So that was very very inspiring, right? And I went on to talk to more people. Now I've talked to other doctors, I've talked to about 15 to 20 doctors and I got the same answer.
David Madden: All, all of them?
Thomaz Srougi: All of them “This is not going to fly”.
David Madden: Take us back to those first conversations with doctors, you had to get some doctors on board, how did you convince those four or five doctors in the beginning to...?
Thomaz Srougi: Man, it was a ride, cause, I knew I had to convince the top doctors.
David Madden: Right.
Thomaz Srougi: Because if I had one top doctor, it was going to be like a snowball, he was going to talk to two other doctors that was, that was, were going to talk to two other doctors and, and we could grow exponentially. But doctors are very risk averse, um, they're very skeptical. They don't like business people. And, I, my style is not the best style at first, because I'm very straight to the point, at times I may be very aggressive; it’s just because I don't want to waste time and culturally sometimes that in Brazil may not be well perceived, but I don't care because my, all my intentions are crystal clear, I'm very transparent, straight to the point, honest. Honesty, right? I said “You know what? I, I, I have to invite doctors for pizza”. So I’d invited 30 doctors to a pizzeria here in Sao Paulo and I spent two hours showing graphs and numbers and, huh, speaking and serving pizza and feeding them very nicely. At the end, everybody was laughing and I said “You know what? I think I got 30 doctors!” And, huh, they all came, said goodbye and that was it, they thanked me for the pizza and they left. There was only one doctor that stayed and said “You know what? I'm interested. It sounds very crazy, I have to admit, but if this thing clicks, this has the potential to change Brazil and, and the world.” And I said, you know, “I got one!” So, I got one out of 30. And that doctor was Dr. Bruno, so he was the, huh, the one that, huh, stayed with us until today.
David Madden: Can you remember how you felt and as these 29 doctors walked away and Dr. Bruno stayed?
Thomaz Srougi: You have two options: you can think “I’ve talked to 30, I got one” which is not good, or you can think “I had none and now I have one” and that's what I thought. So, mission accomplished, let's move on and, and, and see what comes out of it.
David Madden: In 2011, with just a handful of doctors, a few support staff and his own voice on the answering service, Thomaz opens the first Dr. Consulta clinic in Heliopolis, one of Sao Paulo’s biggest and poorest favelas.
Thomaz Srougi: It went really bad. We had a secret clinic, no one knew we existed, it was too good to be true. Doctors were very skeptical about going into the favela, the, all the people that lived in the favela was very skeptical about “Why someone is opening a clinic here with the best doctors in the country at very very low prices? No way. This is a scheme, there's a catch. I'm not entering there.”
David Madden: Can you tell us, Thomaz, some of the things that you did to try to convince the community? Can you remember the first time that you went to a church in this favela?
Thomaz Srougi: First time, I had to go back about seven times because first time I went, the church was closed. Second time I went, it was open, but no one was there. Third time, I got received by, you know, the preacher, but, huh, he was very skeptical and, so I ended up going back about 15 times before I was able to and speak to the folks that were there, and guess what? They were very skeptical. It was not successful.
I had to distribute flyers in, just in front of a, huh, public clinic, huh, right in the, the core of the favela. So there's no magic silver bullet.
What's not hard, right? Everything is hard.
David Madden: Right.
Thomaz Srougi: You talk to people “Oh no, we're not going to try this. This is very hard.” So, just gotta go and do it.
David Madden: You're a very empirical guy, was there a moment when you were looking at these numbers, you were getting maybe one, two patients a day and you were like …?
Thomaz Srougi: So I was measuring everything.
David Madden: Sure.
Thomaz Srougi: Everyday. We had an excel. I didn't put money on technology cause I needed to validate the service. I had a very clear sense of what needed to happen. That's before I even thought about replicating and scaling the model. So only one, with only one clinic, I needed to develop a full model, right?, a very new model. There's no such thing as what we've done here or elsewhere. And in each phase, I had clear metrics, and...I was trying to ramp up, we were not ramping up. We were growing 20% per month but from ten patients to twelve.
David Madden: From a low number.
Thomaz Srougi: From twelve to fifteen, right? From a low base. And at some point I said “You know what, I think I'm crazy, this is just insane. I should have heard all those people that told me this was going to be impossible.”
David Madden: After a year and a half of very slow growth, Thomaz is ready to throw in the towel. So he calls a board meeting.
Thomaz Srougi: Not happening. Not scaling. Huge problem, people are dying. Why they're not using us? It's the best doctors in the country. Totally affordable. What's wrong? They said “really? but, are you sure?” I said “I'm not sure but it's empirical. It's not happening and I've tried everything.”
David Madden: But Thomaz doesn’t want to just abandon the clinic …
Thomaz Srougi: It's fully equipped, very good service, let’s keep it alive, let's try to sell it or pass it away. So, they said “Okay, so what do you want to do?” I said “I'm going to look for a journalist, let’s try to, people need to know we exist and maybe someone will come over, a businessman, and he'll try to assume this or buy it” They said “Ah, we don't think you should do it, because you're going to expose yourself. Don't do it.” I said “You know, I'm going to do it.” So I called a journalist I knew and she said “Yeah, okay”. And, um, there was a very small note, two lines, on the corner of the paper. She published “Oh there's this clinic, great service, very affordable, huh, they want to turn it into an NGO” and that was it. After a week, a journalist from an, a main newspaper called me and said “Is this real? Is this true? that you guys, what you guys have done? All these doctors? For that price?” I said “Yeah” “So tell me more about it” So we spoke for about three hours and after a week she published a full page article in the main newspaper of Brazil, on a Sunday.
David Madden: The press is exactly the shot in the arm Dr. Consulta needs. Suddenly, demand increases.
Thomaz Srougi: “Whoa! what's happened here?” So there I am, calling my, my board, calling my partners and saying “Okay, I don't have a mental problem. It's just that no one knows we exist!” So we said “Okay, so we have an, an awareness problem, a communication problem.”
David Madden: You actually start running a proper marketing program, right? over the next few years and you actually prove that this clinic can be... it starts making money! What's really interesting about this, Thomaz, is that you, you really do spend like nearly three years validating this model, like doing this experiment and proving that it could work. What was the moment when you thought “We've got something here and now we need to really take it to market.”?
Thomaz Srougi: So I think, huh, we've done differently from many companies that I see today. Huh, many companies they try to, huh, they expect to ramp up really fast, they, they’re acquiring users, that's it, they are not concerned about profitability. We've done the opposite. Since the first moment, we knew we needed to have a profitable model, before scaling. Otherwise we would be replicating thin air.
David Madden: Yeah.
Thomaz Srougi: So, huh, when we broke even, the clinic, we said “Great. We have a model, we've developed a new concept that can be replicated profitably”, and that's when we begin, three and a half years ago actually, we begin building Dr. Consulta opening centers, building the management team, investing heavily in technology. So, after we broke even, the first clinic, that's when we begin replicating.
David Madden: And you really do, really do ramp up, in 2014 you had several clinics, by the, the end of 2016 you had maybe 20…
Thomaz Srougi: Yeah.
David Madden: Now you’ve got 50, like you were actually scaling exponentially. Can you explain to us what your strategy was for expansion?
Thomaz Srougi: It was very simple, concentric. We wanted to gain scale on every investment we've done, in terms of operations and marketing. So, for instance, if you're in a neighborhood, huh, in the south part of Sao Paulo, doesn't make sense to open an, another one in the north part of Sao Paulo, there are no gains of scale, in the market investments you do.
David Madden: Think about a bus line...for example.
Thomaz Srougi: Place clinics in the same bus line and you want to advertise in that bus line, it's only one bus line for ten clinics. Now, If you spread out clinics, huh, you have to purchase, huh, way more bus lines and you, there’s, there's no scale in that market investment.
David Madden: So you were very strategic about where you opened.
Thomaz Srougi: Oh, there's no other way, I mean, we have limited resources, you gotta make sure you spend them very wisely.
David Madden: What were the biggest challenges with this massive rollout?
Thomaz Srougi: It's always people. Leadership, communication. Make sure people know exactly what they have to do. What are their boundaries. Make sure you empower people to make decisions within those boundaries and.. and that's very hard to do.
David Madden: Can you give us an example of how you managed to take an element of your culture and make it work when suddenly you've got three thousand employees? How did you maintain that?
Thomaz Srougi: Walk the talk. Our first meeting, our first office was in the second floor of a first, of the first clinic and we didn't want to spend money in furniture, we want to spend money in the service, in the equipment, so… our table was a door.
An investor came talked to us, a Brazilian investor, and he was like, I heard them talking in the corridor “No way these guys are going to get our money, they don't even know how to acquire furniture, they're using a door, did you realize that, the, the table we were was a door!” and I'm like “What?” I mean, it's the, it’s the complete opposite of our, of our mindset. And I had a, a, an American investor. She was like “This is amazing, what you guys, your mentality. The only time I saw this was with Amazon.” I'm like “What?” “Yeah, no, did you know Jeff Bezos’ first table was a door?” I'm like “No, I didn't know that”. So it was quite funny. We were having meetings with Siemens and GE and they're all sitting around this door and over, you know, boxes in the second floor and, huh, it was quite funny, so we, it's the same attitude. Even today.
David Madden: Technology plays a critical role at Dr. consulta. Once Thomaz proved that the basic model could work, he starts using tech to help the business run more efficiently, to keep costs down and to offer a better service
Thomaz Srougi: I was a total ignorant and I still am about many things, huh, and the first time I thought about technology was because I wanted to make sure that doctors were collecting the right data.
I don't have to infer if a patient is hyper tense or diabetic, I have to look in the system, because the doctor said so, because the patient was diagnosed. And when we cross all that information today, that is massive. We're crossing medication prescription with treatment outcome to understand if the medical conduct is right, if the prescription was right and appropriate, if there's something else we can do.
I was very concerned about building a model without luxury, right? In Brazil that's very common: very fancy furniture, um, leather couches; that's healthcare, that's how traditional companies communicate quality healthcare in Brazil. We were not like that. We said we, we “We don't care about luxury, we care about results.”
So, how do you do that? How do you empower doctors and patients? You got to make sure they're productive cause if we want to see lots of people and provide the best medical outcome, we need to use tools. The main tool doctors have is electronic medical record system.
David Madden: Did you guys build that from scratch?
Thomaz Srougi: We built… It's a homegrown system, we had to, because there’s, there was nothing in Brazil. But I needed to make sure doctors were very fast but precise about their medical solicitation or prescription or recommendation, and the, the system was key for that.
David Madden: Thomaz, can you talk us through just a general picture of how the technology enables you to deliver this amazing service?
Thomaz Srougi: So patient needs a doctor, you can book an appointment for today in less than a minute.
David Madden: So scheduling can be done...
Thomaz Srougi: Scheduling can be done online.
David Madden: Yep.
Thomaz Srougi: And... you can choose whenever, wherever you want to go, you can choose a doctor, and it's very very simple. And there's 56 medical specialities. When you feel sick, you don't have to think about “Oh, do I need to go to a, to a clinic A or clinic B or clinic C” No, you know, you can count on us for everything, even dental.
David Madden: It's a one stop.
Thomaz Srougi: One stop, one stop shop. Everything under one roof.
David Madden: So you make an appointment, you rock up to Dr. Consulta. Just describe for the listeners...so…
Thomaz Srougi: You, you arrive at a center so you begin your service within this, huh, self-check in. You'll see a nurse or a nurse practitioner and some medical information is collected and stored into the system as well. All of this processes are being recorded, the time, and all the interactions are being, will be evaluated by the patient, once, once she leaves the medical center, huh, using online means.
David Madden: You mean to assess “Was your experience good...?”
Thomaz Srougi: Oh, so to, so the patient grades our doctors, the patient grades all the medical professionals. Our NPS score is 71%.
David Madden: NPS means “Net Promoter Score”. It’s a popular way of measuring how customers feel about a company. 71 is a very high NPS.
Thomaz Srougi: We have to use that to continually improve the patient experience, to understand what went wrong, what was good and act upon it.
David Madden: And your net promoter score is 71?
Thomaz Srougi: 71.
David Madden: It’s amazing!
Thomaz Srougi: That's the average yeah, we have a high proportion of patients that are giving us 81%.
David Madden: So there's a lot of technology that's being used here to help the patient have a really smooth and efficient experience and ensure that the quality of service they're getting is really good.
Thomaz Srougi: Correct. Lots of technology allowing communication, lots of technology in software and hardware. For instance, we have now a robot. A patient arrives to a center, instead of being seen by someone, he's going through a machine, a machine is, is a scale, he's measuring the person's height, vital signs and all of that information is going through the person's digital file and then the person goes straight to see a doctor.
David Madden: Dr. Consulta now uses artificial intelligence. The company’s doctors work at other hospitals and medical clinics so a critical task is making sure the doctors are available at the time that they are most needed. This used to be an incredibly painful manual process but the company’s developed an intelligent algorithm that uses all its data to figure out the best scheduling automatically.
All of this technology helps Dr. Consulta keep its cost down and this of course helps keep the service affordable.
Thomaz Srougi: That’s why we’ve been correcting prices less than regular inflation in Brazil. When you...
David Madden: Can you give us a sense of, of pricing? Like, maybe Thomaz just explain to us the different sort of socio-economic levels of people in, in Brazil and where Dr. Consulta is aiming at?
Thomaz Srougi: Yeah. So 20% of people in Brazil they make more than, let's say, 50,000$ per month. Only 20%. Everyone else is below that threshold. That's our target, right? folks that are below the threshold and, huh...
David Madden: Which is 80% of the population?
Thomaz Srougi: 80% of people in Brazil are there, and those are the ones left behind. That's where we can tackle the system strategically, organize all the resources so that we promote savings everywhere. A medical appointment in Sao Paulo costs, on average $150. Our medical appointment costs $30. A hemogram in Sao Paulo you can pay all the way up to 30$. Our hemogram is about $2.50. So that's the magnitude of price difference that we, we practice against the private market.
David Madden: And how can you do it this cheaply and still make money?
Thomaz Srougi: Just because… just because we deploy tons of technology along the process, so that we not only improve the patient experience, optimize the patient experience, but also empower the doctor for faster way to get to solutions. We've disintermediated folks along the value chain. So, huh, we do our own phlebotomy. Um, all the imaging exams for instance, we have internalized. It's very complex to run an imaging operation and we've been able to do it within the same roof where we're executing, uh, all the lab work and all the 56 medical specialties. Each medical speciality is a process. So lots of technology needs to be embarked.
David Madden: With all these clinics, doctors and data, Dr. Consulta is in a strong position to serve an even bigger market and to address even more fundamental health issues.
The company wants to use all its data and predictive models to provide better preventative healthcare. The early experiments have been encouraging.
Thomaz Srougi: We are at this moment fine tuning a product to offer to individuals and companies to manage their population's health care risk.
David Madden: So Dr. Consulta is, is, is scaling, you've got, you’re amassing huge amounts of data, which you're starting to use really intelligently and that then allows you to offer your services outside the clinic to, directly to other individuals and to other companies.
Thomaz Srougi: As everything we did in, in, in our previous lives in management, huh, we were obsessed about measuring. People need to know where they stand today from a clinical perspective. They need to know if they continue to behave the way they behave, what's going to happen to them in the future. They need to know the probability of becoming sick. That's what we're working today. We want to help people know what's going to happen to them in the future. It's a healthcare crystal ball, define it the way you want.
David Madden: But you've already done some testing, right? of this work with a public company...
Thomaz Srougi: We've done some testing in the past and it was actually very successful. It was a, a public company, self insured, thirty thousand lives. Huh, we've been able to save those folks 35%, reduce their healthcare, annual healthcare bill by 35% by only, by only reorganizing logistically the patients within the system.
Everytime you promote a health outcome means you reduce the healthcare risk, you're avoiding hospitalization. So what we have here is the best indication that we are in the right path, that's how we believe we're going to change healthcare globally, by empowering people and helping them navigate the risk in the future. Those are the three necessary elements: data, AI and doctors.
David Madden: Where do you see Dr. Consulta in five years time? Right now you're just in Sao Paulo but you're building this incredible platform.
Thomaz Srougi: If we execute well what needs to be executed, we'll be all over Brazil, huh, we'll be in, huh, Latin America and, huh, we have a global model. We always say “To dream big has no cost” So we dream big but, huh, we still need help, but funny enough, a company in Brazil, which is very unlikely, is very well positioned to provide a solution at scale, we only need to execute well and continue to attract the best talent.
David Madden: Thomaz, it's a real privilege to hear you share your story today. Thanks for taking the time and we wish you all the best with this this big vision you have.
Thomaz Srougi: Thanks. It was a pleasure to be here
David Madden: Thanks for listening to the Revolution of Necessity.
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This episode was produced by Julia Alsop with production assistance from Ellie Lightfoot and editing help from Sarah Barret. Our engineer is William Smith. Music by Coyote Mustache. Special thanks to FX Studios in Sao Paulo and Clean Cuts Studios in DC.
We’ll have another episode for you very soon.
Is there a song that…
Thomaz Srougi: An anthem?
David Madden: An anthem yeah! If Dr. Consulta had an anthem, what, what would it be?
Thomaz Srougi: So okay, it's going to be ridiculous and funny.
David Madden: That’s okay but it always is!
Thomaz Srougi: We, we say to each other: “We are in a war to save lives”. In a war you have to be very very lean and communicate a lot and very efficient. I mean, there’s not very, it’s efficient and effective, otherwise you die. And every morning I jog, and, huh, I, I, I like to listen Eye of the Tiger. Huh... (laughs). That pumps me up.
David Madden: That pumps, that pumps, that pumps a lot of people up that song.
Thomaz Srougi: But, um, yeah, that’s what I hear and yeah it’s so funny, so....