Acquired - Special: "Why Now" for Digital Health (with Levels founder Josh Clemente)
Episode Date: April 6, 2021We dive into the fast-changing world of direct-to-consumer digital health, with perhaps the best person in the world: Levels founder Josh Clemente. (Shoutout to Ben Grynol and Michael Mizrahi... from our LP community for introducing us!) Levels is on a mission to make consumers everywhere aware of their metabolic health by enabling anyone to track blood glucose levels with a continuous glucose monitor. Josh has had an incredible career, working as an early engineer at SpaceX and later at Hyperloop One before founding Levels out of a very real personal need. Join our conversation as we cover everything from Josh's time at SpaceX to why the market has changed for consumer digital health, and what the future holds for Levels. Sponsors:ServiceNow: https://bit.ly/acqsnaiagentsHuntress: https://bit.ly/acqhuntressVanta: https://bit.ly/acquiredvantaMore Acquired!:Get email updates with hints on next episode and follow-ups from recent episodesJoin the SlackSubscribe to ACQ2Merch Store!The Levels / Digital Health Playbook is available on our website at https://www.acquired.fm/episodes/special-why-now-for-digital-health-with-levels-founder-josh-clementeLinks:Levels: https://www.levelshealth.com
Transcript
Discussion (0)
So I would get bran flakes and eat it by not only the bowl full, but also like dumping in smoothies
and stuff. And it is probably like the single most reactive substance I was putting into my body.
It was always way above the diabetes threshold. It was like, it was crazy. Welcome to this special episode of Acquired, the podcast about great technology companies
and the stories and playbooks behind them. I'm Ben Gilbert, and I'm the co-founder and
managing director of Seattle-based Pioneer Square Labs and our venture fund, PSL Ventures.
And I'm David Rosenthal, and I am an angel investor based in San Francisco.
And we are your hosts.
Today, we have a special episode that dives deep on the dynamic digital health ecosystem,
especially with the lens on the complete upending of the landscape happening with companies
going direct to the consumer.
Today's episode primarily centers
around Levels, a new company that's on a mission to make all of us aware of our metabolic health,
aka track your blood glucose with a real-time wearable sensor known as a continuous glucose
monitor or CGM. We're in mine right now. Me too. We were introduced to the company by two of our
LPs and members of the acquired community.
Shout out to Michael Mizrahi and Ben Greinall.
One of our favorite things about the incredible community that has developed in Slack and
on our LP calls is that we get to learn about some of the most interesting companies in
our ecosystem today.
We are joined on this episode by the founder of Levels, Josh Clemente.
Josh has a fascinating background
even before starting Levels from his days as an early engineer at SpaceX, where he worked on
Dragon Capsule as the lead life support systems engineer, and then afterwards at another Elon
company, Hyperloop One. If you are wondering how the business models behind these new direct-to-
consumer healthcare companies work?
Why the time is now for this revolution?
Or perhaps you just want to be one step closer to being a cyborg.
This episode is for you.
Okay, listeners, now is a great time to tell you about longtime friend of the show, ServiceNow.
Yes, as you know, ServiceNow is the AI platform for business transformation.
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They boost productivity for employees, enrich customer experiences, and make work better for everyone.
Yep. So learn how you can put AI agents to work for your people
by clicking the link in the show notes or going to servicenow.com slash AI dash agents. Now on to
our interview with Josh Clemente from Levels. So Josh, welcome to Acquired. Super happy to be here.
This is going to be so fun. We're excited to have you. David and I are both right around the one
month mark. David, I think just finished using Levels for his first month. I'm about to cross
that threshold and so many insights, so much about to cross that threshold. And so many
insights, so much fun to learn all this. Really cool company you founded.
And I think you guys are maybe winning in the startup category for market share of acquired
community members as employees. Super, super fun to do this with you.
Well, that's a trophy I will hold proudly.
Well, Josh, I'd like to start with your background because before Levels, you were doing some crazy interesting stuff.
And I want to dive in to unpack some of that a little bit because, you know, we would like to have you as a guest on our card, even if you hadn't started Levels.
So let's start in sort of the SpaceX and Elon chapter of the world working on Hyperloop.
First of all, can you explain to us what you worked on at SpaceX?
Yeah, I entered SpaceX as a manufacturing engineer. So I was fresh out of school.
I only really wanted to work for Elon when I had graduated and I did not have,
I didn't have that job lockdown. So I actually sold used cars at CarMax for like three months and just kind of like hung on to hope and work my network
like crazy to try and get in. Wow. Did you, did you cold email Elon? Like how?
I cold emailed everyone, including recruiters at other Elon companies like Tesla. I actually
got an internship at Tesla first and then they got DOE funding right as I was about to
join. And they shut down the design office I was going to work at and relocated. And basically,
we're like, sorry, we don't have a space for you. So we'll do this again sometime. And so I was just
like, well, how about SpaceX? Can you help me get in there? And what's crazy is that I actually,
out of pure coincidence, my uncle met Elon. He ended up working with Tallulah Riley, Elon's
former wife's father. And he met Elon. And I was like, oh, my nephew is really interested in your
company. He didn't really know who Elon was, had no context whatsoever, and just dropped a name.
And I don't really know, but at some point that filtered down and I ended up getting
a phone call back. And I think my uncle put in beyond just that in person, but put in an email
good word as well to try and get me in there. And anyway, long story short, after three months of
selling cars, I got a call from SpaceX and they were like, here's an entry-level manufacturing
engineer job, which is primarily focused on taking the concepts that
have been designed or first article has been built and tested and then getting those into production.
So figuring out... We were a small company when I started. I think I was employee 678.
And it was just a big empty building. Which is 10 times smaller than it is today.
Yeah. So when I left, it was probably around 5,500 people.
And it's now, yeah, easily 7,000 and growing. So it was very much the Wild West days. I mean,
you're taking these components that have been designed and tested, but you need to get them
into spacecraft form and launched. And most of the
stuff had never been done before. So it was all like initial systems. And as a manufacturing
engineer, it was focused around designing process, training up technicians and putting like work
instructions in place. And then also just kind of like building yourself. And so I spent a huge
amount of time in that first stage in the factory, like on the factory floor, I was
kind of like a glorified technician and then ended up learning a lot from the existing technicians
and just like the hands-on process of building aerospace components. And I spent a ton of time
down at Cape Canaveral just getting launch articles. So like once the vehicle was prepared
for flight, it was then integrating all the final systems, putting it through wet dress and static fire, and then watching it go to space.
So it was just pretty wildly educational.
And from there, I moved into what's called a responsible engineering position.
You're responsible end to end.
There is no other individual to point to and say, we didn't succeed.
It's your fault.
You know, it's the buck stops your type role. And so I worked there
on a few structural systems. And finally, about halfway through my career at SpaceX,
we had succeeded at getting the cargo vehicle through its COTS program. And we were starting
on the human rated program at SpaceX. And so this required a life support system to be
developed. And SpaceX had obviously no human rated experience. And I was one of the first
four employees who had the opportunity to work in that department. And I look at that project as
for sure the pinnacle of my experience at SpaceX. I mean, the team was just unbelievable.
Some of the best people I've ever met and had the opportunity to work with.
And I got to lead the pressurized life support systems team. So this was developing the oxygen breathing system. So the pressurized tanks that go in the vehicle that
carry high pressure oxygen, distribute it, regulate it down to lower pressures into the cabin,
into the spacesuits, sensing oxygen concentrations, keeping the cabin at like environmentally safe
pressures and compositions, the fire suppression system, the docking adapting system that
pressurizes kind of the space between the International Space Station and the Dragon
capsule after docking, kind of all of these pneumatic pressurization mechanisms. And so I
was able to lead that small team, amazing team through to
completion of the critical design review phase. That's great. And as we know now, you know,
Dragon Cargo and Dragon Crew have both successfully gone up. So must be crazy cool to see,
you know, your work in action there. Yeah, I mean, it's pretty surreal, to be honest. It felt like
an impossible amount of time away always. And then all of a sudden, it mean, it's pretty surreal, to be honest with you. It felt like an impossible amount
of time away always. And then all of a sudden, it's happened and it worked. And it's just such
a huge, you know, the stress is still high. There's going to be another flight with four
more astronauts later this year. So the stress is still high every time because each system is
unique. But as SpaceX develops more experience with reusability and reflight, it just kind of, it allows kind of some more confidence and breathing room, I feel like.
Mm-hmm.
Okay, so Josh, before diving into the next chapter of your career and founding levels,
we got to ask, like, is there a fun Elon story that you've got or something crazy that,
I mean, everything that happens when you're working
at SpaceX, I'm sure is crazy, but anything you want to share? I think one moment that always
just reminds me of the kind of the unique culture of SpaceX was really the first major launch. So I
got to SpaceX just after they flew the Falcon 9 1.0 rocket for the first time. So basically, SpaceX failed three times to
get the Falcon 1 rocket into orbit. The fourth time it was successful. Then on the first try,
they got the larger Falcon 9 rocket into orbit. So I got there just after that success.
So the second Falcon 9 rocket was getting ready to launch. And at this time, the duration between launches was
on the order of years. And so everyone was working full-time, basically hand-building a vehicle.
So we had this machine, this entire integrated first and second stage on the launch pad.
And there was an air conditioning vent that basically conditioned the interstage. It's basically the
hollow space between the first stage and second stage. And the second stage sits on top of it and
has this very long vacuum nozzle. So it's designed to give better efficiency to the rocket engine
in the vacuum of space. So it's very long and it's very, very thin. It's thin enough that you
can tear it with your fingers. it's metallic or it was metallic
at the time, but it's very well supported. So this skirt it's called is supported by these rings.
And so this air conditioning unit was blowing a high volume of air into the interstage to keep it
purging. And we noticed during inspections that the skirt had actually been fluttering in the high pressure sort of air source,
and it actually torn. And this was a really big problem, of course, for a number of reasons,
just debris and also efficiency loss in the engine. The typical approach in old aerospace would be
break everything down, deintegrate, push the schedule out, analyze everything, determine why this failure happened, press release, redesign. The SpaceX approach was Elon calls up one of the
lead technicians in the entire company. His name was Kelly. And he used to basically work on
airplanes and was an airplane mechanic. But the guy was just an absolute machine and brilliant.
And Elon convinces him to get on an airplane to Cape Canaveral was just an absolute machine and brilliant. And Elon convinces
him to get on an airplane to Cape Canaveral with a pair of shears, go up in an extremely tall genie
boom. This guy's terrified of heights, by the way. Crawl through a hole in the interstage,
which is about yay big, into an integrated stacked rocket, right? So you're 100 plus feet
off the ground. There's a second stage above you.
And use those-
You've got like essentially bombs below you and bombs above you.
Yeah, no, it wasn't fueled up at the time, but certainly it was intimidating, I'm sure,
to say the least. And then he trimmed the lower edge of the skirt off, removing the tear in the
nozzle. And we did a little bit of propulsion analysis to ensure
that the second stage would have what it took to get to orbit, even with the loss of efficiency
with the smaller skirt. But basically, Kelly hand-trimmed this thing in the inner stage,
walking around on the dome of the first stage, and climbed out, and we launched, and we successfully
got to orbit. And the whole process was like... I mean, the whole company ground to a halt when this happened.
It was a huge, scary situation.
And Kelly pulled it off.
Part of the funny thing was that as an airplane mechanic, Kelly was like, this is a little bit scary actually, but he was terrified to fly.
Like he just, he hated airplanes.
I think he's seen too much.
And that was the biggest problem was like convincing him to go up on the rocket was actually not the hard part. It was convincing him to get on an airplane to go
to Cape Canaveral in the first place. But I think it just speaks to the scrappiness of everything
back then. It was really Wild West. Yeah, I'm sure you've thought about this a lot,
but why does that work? SpaceX has worked and it's been because of 1,000 or 10,000 of decisions like
these. Was the industry just
too conservative before? Or is there something different about SpaceX that makes it possible
for them where it wasn't possible for people before? Definitely. I mean, I think that
this kind of goes to psychology generally, but people are, you know, there's like this
scarcity syndrome that if you have something, you losing it and if you don't yet have
something there's nothing to lose and so spacex was in a we have nothing to lose mentality for
the entirety of its kind of early days and so it's basically like we're either gonna run out
of money and not get this contract and cease to exist or we're gonna slice this thing off with
scissors and try and and that's kind of like the approach was
we were always one launch failure away from losing the company until probably 2014. Once
Falcon 9 1.1 flew, we got a ton of orders on the books and things started to smooth out a little
bit. But up until then, it was Elon, every single opportunity he got was telling people,
look, you personally have to succeed.
And if you don't, 2000 people are going to lose their jobs, including you. And I mean, he would
not mince words. And I think that old aerospace had kind of been resting on its laurels in a sense,
but also combined with the failures of the shuttle program was in the political nature of the entire program was worried about losing what they had. Any
failure was career ending for a politician and any failure was potentially career ending for
the engineer. And so failure is not an option in old space and it was always an option for SpaceX.
And that proliferates the culture all the way through to live streaming explosions of Starship.
You know, no other program
does that because it's like airing your dirty laundry yeah that's such a good point man we
could talk about this forever but i i gotta hear about how levels came to be so i'm wearing a
continuous glucose monitor on my arm it has a patch with your logo over it like catch me up from
you were a spacex engineer to you decided to have
David and I sitting across the internet from you wearing this. How did it come to be?
It kind of started at SpaceX and partially in a good way, partially in a bad way, but I kind of
hit a total burnout wall in the late part of the life support program I was working on. And, you know, in retrospect,
I was burning the candle in multiple directions at once. And, you know, certainly was just working,
was not managing stress, sleeping very poorly. My average sleep was like probably four to five
hours. And my approach to like maintaining wellness was working out as hard as possible as a CrossFit.
You know, I was a trainer, but I didn't really train people. I would just, I would train myself.
And I got to imagine this was pretty common at SpaceX. I would at least,
it doesn't look like Elon sleeps much to this day.
Yeah, there's definitely one of the, you know, it's a classic, I think, startup environment where
everyone wants to be the hardest worker. And you give a bunch of people who are, who don't like to fail an
impossible deadline and they're just going to like, the failure mode is going to be them.
They're just going to like physically burn out trying to succeed. And that's what it was like
at SpaceX. And I think it still is to some extent, but yeah, I was just, you know, kind of doing,
I had been doing this for my entire career at SpaceX, but I think there's a compounding return
and we can touch on this, you know, as it relates to metabolic health, um my entire career at SpaceX, but I think there's a compounding return and we can touch on this as it relates to metabolic health in a little bit. But I had
gotten to the point where I woke up one day and was just like, I think I have a terminal illness.
I have zero energy. My mood is always low. I'm not the optimistic, like sort of happy person I think I am anymore. And I don't know what
changed, but I just constantly feel irritable. And I am struggling to make it through the day
in terms of not just like professional performance, personal performance, like just keeping my
siblings from, from hating me and my significant other from, from walking away. You know,
it was that degree of like, I, something's wrong here. Um, here. And I was getting these bouts of fatigue that were truly symptomatic.
Like I would be 1130 in the morning and I would feel this like shakiness and cold sweat
and kind of a whole body tingling or itchiness type sensation.
And I would just need to like sit down.
And so I was like, am I about to pass out?
I had never passed out.
I didn't lose consciousness or anything, but it was just a, it was a very real sensation. And so I I'm describing this to
my doctor and we ran a bunch of blood panels, kind of the standard stuff and nothing came up.
And so anyway, I, this was kind of going on in the background and I was also working on the life
support program. And part of the, you know, we were designing a super high pressure oxygen system
to deliver breathing gas to the crew. And, you know, something that divers and astronauts could
potentially face in a failure scenario is a high pressure, high oxygen concentration environment.
And what actually happens there is because oxygen is such a reactive molecule, you can generate a
huge amount of oxygen toxicity in the brain. It's called
central nervous system toxicity. And this can cause neurological shutdown. You can cause seizures,
potentially even death. So this is why divers are limited. They can't really just breathe pure
oxygen underwater forever. They only have a short period of time. So I'm kind of thinking about
failure scenarios, like how do we avoid anything like this ever happening, obviously, but also what does happen.
And I read a paper just randomly, just in my kind of side research from Dominic D'Agostino,
who's a ketogenic researcher at University of South Florida.
And this paper described a series of studies he did on rodents where they fed rodents a
ketogenic diet,
actually gave them exogenous ketones, as well as feeding them just a high-fat diet.
Which for the uninitiated is basically almost zero carbs, zero sugar. The only macronutrients
you're eating are fats and proteins. Exactly. So in a certain macronutrient
ratio, which is very high fat, your body will generate these macronutrient bodies called
ketones,
which are essentially a water-soluble fat molecule. And that's crucial because water-soluble
means that it can cross the blood-brain barrier and provide energy for the brain. So typically,
the brain is fueled by sugar, glucose solely, and traditional fatty acids can't cross that barrier.
So ketones can. So they are a brain energy source. And they,
you know, in this study, he gave these rodents a ketogenic diet and then submitted them to a
high oxygen, high pressure environment. And the result was that these, these rats could live up
to five times longer without seizure, just because of the ketogenic state they were in.
And that completely blew my mind because
up until this point, I was a calorie is a calorie absolutist. And it didn't matter what you ate,
if you worked out hard enough, it was all just energy in the end.
Right. It's all thermodynamics. You're in a closed system, so you should be able to burn it off.
Right. Just an equation. And so although this wasn't in humans, I'm obviously extrapolating
to humans and thinking, wait a minute. So the macronutrient selection here is giving these
rodents superpowers. Like they can live five times longer in a deadly environment.
What is going on here? How is this possible? And that was like the first moment where I started to
think what superpowers can be unlocked with dietary selection? And what am I doing to select for diet? Like, is there any objective data that I'm using to guide my choices? And I was very unhappy by my findings, which was that, like, I have the only reason I eat things is because they taste good, or because somebody else told me I should eat them. Like there's no data. So I started
to just self-experiment and this is like, you know, as I'm approaching the end of my time at
SpaceX, I'm still getting these like extremely weird kind of stress induced, or I don't know,
they were symptomatic episodes and trying to figure out what's going on. And then I come
across this paper and I'm like, maybe there's more to it than just the gym. You know, I work out really hard. I've got a decent amount of muscle.
I can run fast, but I don't feel healthy. So, you know, clearly there's, there's a difference
between the way you look and how healthy you are or perceive yourself to be. And so that's when I
started self-experimenting and, you know, my goal was to understand, you know, where my energy is
coming from and how to optimize it.
And so the primary energy molecule in the modern human is glucose.
It's the sugar byproduct of carbohydrate breakdown.
And I started, I got a finger prick glucometer, it's called.
It's this little device you prick your finger, bleed on a strip, and you can get a single
data point.
You're in the equivalent of Elon on the plane back from Russia building the Excel spreadsheet.
Yeah, I think so.
Hey, guys, I think we can put something in orbit for a lot less money.
Or to be even more obnoxious about the metaphor, it's as if Fitbit hadn't been invented yet.
And you're just like, hey, are you walking right now once a day?
Right.
Yeah, it was like, what is glucose was step one.
And then, okay, how do I gather this information into an insight?
Basically, I'm having these energy issues.
And the energy is coming from these macronutrients.
I'm not in a ketogenic state, which means my energy is either coming from glucose or
it's coming from fat.
Those are the two sources that it can be coming from.
And I can measure glucose by buying this little device at CVS and pricking my finger. So
I'm going to try to learn something here. Started pricking my finger, got very obsessed with it,
started doing it like 60 times a day at one crazy point. And then I was plotting the numbers in
Excel to like kind of emulate a continuous data source. The problem was at this
point, I had started sleeping more as I was tapering down my, my SpaceX work and, and moving
into Hyperloop, which we can touch on in a minute. But so I'm sleeping more. I am in meetings, I'm
doing work, you know, I'm working out during those time periods, I can't prick my finger, right? So
I've basically got point cloud in the morning, point cloud, cloud in the evening, nothing in
between. And it's not making any sense.
It's just like, it's stuff, but it's not helpful.
And then I read a book called Wired to Eat, which talks about continuous glucose monitoring.
And I was completely unsophisticated about biosensors.
Yeah, were they on the market yet?
Or was this still before the Libre and Dexcom?
So, you know, CGMs, continuous glucose monitors have been available in, you know,
kind of trickling from the research like lab environment through to just therapeutic research
studies. The first one kind of came out actually, it was an early Dexcom or a Medtronic. Those came
out in the kind of 2006 to 2010 timeframe. So they've been out for some time, but there hasn't
been a mass market move until right around this time. So 2017, the Freestyle Libre from Abbott hit the market.
And so this is 2017. It was just coming out and the price point was good. And there had been
Dexcom G5 and G4 prior to that, but they were like a thousand plus dollars a month minimum
and very hard to get. Yeah. And Dexcom is its own, it was a startup started
to build a continuous glucose monitoring device for a diabetic therapeutic purpose.
Exactly. So at this time, you know, really even now all continuous glucose monitors have been
developed for the sole purpose of measuring blood sugar so that you can manage diabetes. Dexcom, they only do one thing. They
develop continuous glucose monitoring sensors for type 1 diabetes. They're starting to move into
type 2. The difference between type 1 and type 2 is that type 1 is an autoimmune condition,
primarily where the pancreas stops producing insulin. And insulin is the hormone that is,
it acts like a key to open the lock in your cells and let glucose in. So insulin's a
signaling hormone. And when the pancreas stops producing it, blood sugar levels start to go very
high and it can be in, and when glucose gets very high, similar to that oxygen scenario,
it's a reactive molecule. You start getting tissue destruction. So type two diabetes is
considered more of a chronic lifestyle illness so this is where
over time you break down the insulin glucose feedback loop and either your body can't produce
enough insulin to keep up with demand or you're just kind of outpacing the production of insulin
and you create what's called insulin resistance by amplifying demand to the point where your cells
stop responding to it.
And when you say breaking the feedback loop, this is like I have actively made lifestyle
choices in what I'm eating where like the natural feedback loop in my body of, hey,
I should be producing this much insulin based on what this, you know, what the macronutrients
that just came in were like that just gets all out of whack and you can no longer rely
on the natural system to function anymore. Yeah. It seems to be actually potentially an adaptive response where
your body's kind of designed, we've been historically in a certain range of blood
sugar values and that's where you want to stay. And if we're constantly jamming more glucose into
the system than it was kind of designed for. You require more insulin than
you're designed for. So the devices have been developed for this condition, for diabetes
specifically, which is very acute. Type 1 is very acute. Type 2 is kind of a longer, you know,
sort of timeframe where... It's a spectrum.
It's a spectrum, exactly.
It can get extremely acute.
Totally. I think they're both acute, frankly. But type 1 is a situation where if you don't use insulin, exogenously inject it, the damage
is happening much faster and the effects are very immediate.
Type 2 tends to be semi-controlled in the sense that glucose levels won't go as high
because there is still some insulin feedback.
So this is where the devices have been primarily focused. And so 2017,
I read about this and I was like, oh man, I need one of those. Like I'm trying to emulate this with finger pricking. My fingers are black and blue and I still haven't discovered anything. So I went to
my doctor and I was like,
hey, check out my spreadsheet. I'm pricking my finger a ton. I'd love to get a CGM. And he was
like, dude, you are one of the healthiest people I see. If you saw the people who need that device,
you'd kind of be ashamed to ask for it. That's for people who have a disorder.
You're like, yeah, I'm trying to not get a disorder here.
So I was kind of surprised by that response. I thought, well, firstly,
I mean, if you look at systems generally, like you measure what you don't want to fail.
Like you don't just measure the thing that is broken because that's obviously useless at that point. So in systems engineering, especially complex systems, you get as much data as you can,
and you observe failure modes as they develop and find ways to counter them.
And so having already dove into the research on the, you know, kind of the metabolic health
crisis that I had not known about at the time, or I had not known about prior, but it was
aware of at the time, I was like, well, this is
just, you know, it's just me trying to learn more about myself and like understand if there's
something going on with my metabolic system. And yeah, my physician was just totally opposed and
was not willing to get me access to a CGM. Well, this is, and this is what we, one of the things
we really wanted to explore on this episode with you is like this disconnect. It feels looking at this industry,
like this huge disconnect developed between uses in a therapeutic sense as
like medical interventions for your,
your doctor is totally right.
Like there were,
there are people out there who need this way more than you do,
but that's so zero sumsum thinking, right?
Just because giving you access to a CGM isn't going to prevent somebody else from getting that
too. So how did the light bulb start going off about like, well, hey, maybe this can be a consumer
device too? Well, eventually after trying for several months, I was able to get a CGM, but it was through a
friend of mine who brought one back from elsewhere where they're over the counter. So he actually
went to Australia and threw some in his backpack where you can buy him just like a glucometer.
And I was still just interested. I was like, I wonder what's going on. I'm pricking my finger,
didn't have any insights yet. Put the CGM on and was instantly blown away by how bad things were. My blood sugar was essentially,
you know, it looked much more like a heart rate trace than a blood sugar trace and huge spikes,
huge crashes. Everything I was doing, all of the meals I was consuming were putting me
above what would be considered the pre-diabetic postprandial threshold.
So where your glucose should be after a meal and very often well into the diabetic range.
And so my body was not managing blood sugar spikes effectively.
It was able to bring them back.
So it's not like I was diabetic and had lost control, but it seemed to be like blood sugar
would go very high.
My body would release a ton of insulin, overcompensate.
I'd have these precipitous crashes.
And I was able to just immediately correlate those crashes with the sensations I had been
having where the shakiness, the hunger, the irritability was all perfectly sane.
And just by tuning, within two weeks, I had tuned my approach to diet, just like
trial and error on the meals I was eating and was able to bring those huge spikes down
to a minima.
And, you know, at the time, I still wasn't sophisticated on what the ideal levels would
be.
And actually, much of this remains to be discovered.
But I was able to identify that things I was eating that I thought were healthy, large
servings of sweet potatoes, brown rice, quinoa, I was having huge, you know, again, in the diabetic range responses
to, which was highly counterintuitive. I thought, you know, I'm a person who's like, I eat the
paleo CrossFit style, you know, it's like, even though I love sugar, I love candy, and I love
dessert, like, that's not what I'm eating for dinner anymore. I was in college.
So just this realization that things were going haywire and it was the things that I thought I
was doing well that were causing these huge inconsistencies. I mean, Josh, I'll tell you,
in my first week of using Levels, I was doing the thing that I think the setup guide recommends,
which is eat your
normal diet don't try and eat healthy you know the goal of this is to see like what your normal
stuff does and i had recently worked in like no sugar just like steel cut oatmeal into my diet
and i think it wasn't actually steel cut it was like the quaker whole oat but it was advertised
as whole and like it was wild how much that spiked
my blood sugar afterwards. Like it was like, I just like a holy bad. Yeah. Threw a ton of
gushers in my mouth or something. And I was staring at it like, okay, I guess that's not
as good for me as I thought it was. Absolutely. And I mean, oatmeal is a prime example. So
Google healthiest breakfast and it's like top three, no matter what is oatmeal.
And, you know, it's considered heart healthy.
Well, last time I checked, and it has been a few months, but one of the worst foods in
the data set was oatmeal.
So like something like 70 plus percent of people that were eating oatmeal while using
levels had, you know, exceeded that, that prediabetes threshold was, were well into
the significant blood sugar spike territory from
a food that's described as heart healthy. And the reason that that's interesting is that
glucose variability, the number and peak sort of amplitude of blood sugar spikes is closely
correlated with cardiovascular disease. So because that's an inflammatory event, the number of these
that are happening throughout the day, which is obviously higher for people with diabetes, is it's connected with negative heart outcomes. And so it draws into
question how these... How heart healthy it really is.
How that ended up on the oatmeal canister. And we're seeing a lot of these examples,
but at the time, it was just a realization. I'm using this device, which basically just spits out raw data gives you like you're at 88 right now, and at least gives you an error, a trend arrow. But it's not telling you anything about what is creating this situation that you're in. It doesn't tell you how nutrition, exercise, sleep, stress are related. And I started to intuit these things through use. And it quickly became the most powerful accountability and education
tool about how my body works that I'd ever used in my life. And that's really the realization was
just this thing was hard to get and it's completely transformed my approach to lifestyle. I'm a person
who cares about health, but never knew the effects of cortisol, right? I had been stressed for a few
years professionally and
personally sitting through a meeting, a stressful meeting, sitting through a stressful meeting with
the CGM on and seeing without calories, my blood sugar exceed 145 milligrams per deciliter, which
is the postprandial kind of threshold for kind of a pre-diabetic response, changed my perspective
on stress in one fell swoop i'd never seen
anything so serious oh man i'll tell you the that was one of the biggest lessons for me the um
during one of the weeks i was wearing level wearing a cgm from you guys jenny and i were in
texas during the crazy power outages ice storms even water. And like my blood sugars during that week versus
other weeks, it was just unreal to see the data of like, like I knew I was feeling bad. Like I was
very stressed. I was very unhappy. Much higher, David, or like more spiky.
Yeah. Much more spiky, not, um, big spikes, big crashes. Uh crashes. And like I saw it in my mood. I'm like, yeah, I'm very unhappy. I feel terrible. And like, there it is in the data. security companies today. It's purpose-built for small to mid-sized businesses and provides
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Josh, I want to take us in a little bit of a more sort of flash forward direction here. So folks should know that when you are using Levels today, it is an Abbott Freestyle Libre device. So
we're still not to the point where you're not like making your own CGM at all. But let's just talk
about the scale of the company a little bit. Thousands of people that are customers that are wearing these things,
that are using this app, that are entering their food to help understand how to correlate,
oh, this meal precipitated this spike. So obviously, it's a company, it's a commercial
enterprise now, you started a startup. How did you come to the conclusion that, hey,
I actually, there's a startup to be started here and I can be the consumer brand rather than just assuming, oh, you know what, Abbott
or whoever is going to, the makers of the device are going to be successful in the consumer
market.
Yeah.
I mean, my sort of patient zero experience with the technology was the only reason that
I paid attention here.
It was just like, this thing has changed my perspective.
It's given me confidence in areas that I didn't previously know anything. And it's informed me much more than a
textbook would have about what's happening behind the scenes, nutrition, exercise, sleep, and stress
all in one device. So this is something that has real potential. But there's a huge accessibility
problem. Like, it's not being used for general wellness. It's not being used for education.
It's only being used post, frankly, post-diagnosis when someone's already sick and things have
already gotten to a bad place. And the realization that, you know, across society, we have an
epidemic of metabolic breakdown that is largely caused by chronic lifestyle choices. So that is
the, is the key unlock is that we are breaking our bodies down
over decades without feedback on the positive or negative effects of our choices. And this has led
to a situation where we have 90 million people in the United States with prediabetes, 70% of whom
will convert to type two diabetes within their lifetime. And 84% of them don't know that they
have this situation. It's because we're
making these chronic choices without feedback. So this was the tool in my opinion. And it's,
it's like, it's powerful for post-diagnosis to manage a condition, but potentially even more
powerful to prevent that next wave. So that's kind of where things started to congeal in my mind that
this, this could really bring a lot of solutions into people's lives.
But the technology alone, like the device alone, requires way too much. You know, I had spent
hundreds of hours, frankly, at this point, poring over research articles. It was like,
you can't rely on that for people to get context for what's coming out of the device. So it seemed
like the huge value proposition was building an insights layer on top of this
raw data.
So pull it in and, you know, Aura and Whoop and others do this now with heart rate and
heart rate variability data.
You know, you take an LED that costs a few pennies and can measure heart rate and you
transform it into a behavior change tool by adding an insights layer that tells you what factors have affected your sleep, what a recovery score looks like, and why
you should want to focus in this area of your lifestyle in order to improve it.
Or another allegory would be there's a huge amount of code between the sensor pack that's
on the back of my Apple Watch and the rings that Apple is presenting me on.
You know, hey, make sure you go on a seven minute brisk walk before bed.
Exactly. Yeah. So it's the difference between that Excel spreadsheet and a meal score saying,
you know, this was a one or a nine out of 10, helping people just understand, okay,
large scale, I don't need to know the background data on how, you know, what the optimal blood sugar range is and what milligrams per deciliter are, what a postprandial peak is. don't need to know the background data on what the optimal blood sugar range is and what
milligrams per deciliter are, what a postprandial peak is. I just need to know that that meal is not
working as well as this other one. And so the insight is that it's really a data science
problem. Ideally, innovation in hardware is going to be able to drive these sensors down to a more
commoditized space, but the value proposition is not going to improve if to drive these sensors down to a more commoditized space. But the value proposition
is not going to improve if someone doesn't build the insights layer on top of it to contextualize
and create behavior change. So that's where things started. It just kind of came together as like,
what do I wish this experience had been like rather than what it was and go build that.
So you started working on the company in like 2017, right?
Yeah, it was
actually late 2017, early 2018 when I went full bore on it. Full bore. And I'm imagining from
the outside, just thinking about what was going on at that time, that was right around the time
of the rise of HIMS and HERS and Roman. And there was this new idea out there that, hey, things that are locked behind medical
prescriptions, but that really aren't dangerous and could be beneficial to large portions of
non-therapeutic populations, there might be a way to get that to the public. Did you guys see that?
Were you thinking the same thing? How did that come about for you guys?
Yeah. I mean, one of the earliest issues
was like, okay, let's say we build the app that provides insights, can pull in CGM data. Well,
nobody has CGMs and there's no way to get your hands on them. So no one's going to even Google
that thing. No one's going to find that in the app store. We have to get the hardware and the
software together into the hands of people who want it. And that was a huge, it was like, oh man, that's a big, complicated, hairy ball of pain to figure that out. Because these were
class three regulated medical devices, prescription only. So that's where things started. It was like,
actually, the accessibility of the hardware is the problem to solve first before we can solve
the behavior change issue. And companies like HIMSS and Roman and others were demonstrating a new model where you combine telehealth capability with low-risk
products, medical products into a direct-to-consumer experience. And it is a traditional practitioner,
licensed physician reviewing information about their patient, developing patient-physician
relationship, and then a mail-order pharmacy powering the whole thing. But most of that is kind of hidden in an
experiential sense from the end user. It feels very much like ordering something online,
which is really convenient. And you look at Roman's numbers, they work in sexual dysfunction
for men, and they've got massive conversion rates that no sexual therapeutic physician is seeing the
number of young men come to them for Viagra at nearly the rate that Roman is. Because of the
privacy and the sort of- The stigma, yeah.
Distance between, it's just like there's a lot of stigma there. And so this convenience factor
and the privacy factor has probably allowed a lot of people to improve their lives that otherwise
wouldn't. So I think that was a very unique business model that they
put together. And it gave us a lot of ideas like, okay, maybe there is a way, despite the sort of
onerous regulations, there is a way that we can design something that would be elegant and as
close to a delightful experience as you can get while still maintaining regulatory ethics.
And just to put a fine point on it, what you're basically saying is, yeah, people are still
totally getting prescribed. The doctor is just, you know, someone that's sending them a survey
and communicating over text. And, you know, it's happening through a web browser that feels like
an online checkout, a little more friction as it should have, but not like, you know,
you don't have to go anywhere. You can do it from your phone or computer. That's right. Yeah. So we, you know, we set about developing
a relationship with an independent network of physicians who intellectually are on board with
the concept of informational biometrics. So using what would otherwise be used for
management of a condition, but instead for education and awareness.
Starting there and then building the sort of platform where we can collect the information necessary and deliver it to the physician who will then engage in an asynchronous electronic consultation with that patient.
And so these are all, you know, inside of the telehealth regulations that have been built and are, yes, definitely similar to the HIMS, HERS, and ROMANS,
but building it in such a way that was specific and unique to the CGM use case, which again,
this is a device, it's minimally invasive. It has a little filament that goes beneath the skin,
but it's not a drug. It doesn't have symptoms, side effects, complications, allergy considerations.
The risk is quite low, especially given that the user is not managing an acute
condition. So there is no situation where someone who's using levels for information about their
diet is going to inject insulin and potentially over-inject due to faulty data. That's the
situation that type 1 diabetes and CGM is built upon. Oh, so what if someone says,
yeah, I am type 1 diabetic? Like, do you say, well,
actually, you should go see a doctor about this? Yeah, right now, the software that we're building
is, you know, it's not approved as a medical device. It's not approved for diabetes management.
So right now, you know, we, although we are working as quickly as we can to get to the
point where we could get this approved for, you know, therapeutic use as well. Today, we aren't there. And it's really important that people who are managing
an acute condition have a close relationship with their primary care provider and all CGM data is
being interpreted in a larger diabetes management context. So very, very much, I think, you know,
it's a very different implementation for CGM and we will get there. And I think there's
tons of lifestyle unlock to be had for people with diabetes still. And I'm looking forward
to get there, but we're not quite ready. Yeah. And so do I have it right that the regulations
didn't necessarily change to enable this? It was just that several people all at the same time,
I know Curology is one of them in sort of the
dermatology space, obviously, hims, hers, Roman that you've talked about, it was sort of a
reinterpretation or using technology to apply to existing regulations, not some new regulation
that came about that made it possible. Well, there have been some serious changes in the
telehealth regulatory space, actually actually since COVID. So much
of this was, it was already plausible, but it wasn't clear. Many systems were, for example,
not allowed to be used with telehealth. When COVID rolled around, which is obviously a little
bit after we had launched, we saw a huge number of, I think, improvements where physicians could
be licensed across many states.
Right now, you have to be state-by-state licensed even to practice telehealth.
You could also use the platform of choice.
So if you want to engage in synchronous consultation with a patient, you can use FaceTime or you
can use Google Meet.
You can use whatever platform is most convenient rather than having to use these clunky-
HIPAA compliant.
Yeah.
EMRs is what they're called.
Yeah. EMRs is what they're called. Yeah. Where you have a built-in
web client that it's just very old school and nobody has those platforms. You got to download
an application, et cetera. So we saw a lot of, I think, advancement and just sort of a span of an
overnight awareness of how much these onerous regulations, sort of falling behind the times. But yeah, prior to that 2018,
2019, companies had been building inside of those onerous regulations, but primarily
leveraging asynchronous capability. So there is many states do allow physicians to correspond
just through written communication, as opposed to having to be synchronous. And that's the most
convenient path for someone who's not managing an acute condition. It's the most convenient path for
them to engage in these sorts of, you know, sort of optional medical product requests.
And it feels like from just like a business model standpoint, what this insight that you and other
companies had, you know, around this time, it sort of unlocks really a connection of a whole new class of marketing.
A, you're marketing to a wholly different customer base than medical devices in a therapeutic sense were before.
But that enables advertising as part of it or things like you go on lots of podcasts well you can talk to this whole population and now they have an experience that's not you
know it's not a you watch a tv ad for a drug and it's like talk to your doctor about so and so it's
like no do you would this be this is something that could be additive to your life just like
an apple watch just like a fitbit or the like. And if you want to experience this product, here's an easy consumer-friendly route to do it. You don't have to go decide,
yeah, I'm going to make an appointment. I'm going to remember to bring this up.
It might be a little embarrassing. My doctor might make me feel weird.
Yeah. I mean, I think this goes to the why now question of digital health, which is historically, there's two ways to approach health.
It's like you're either general wellness and making only general statements.
You're just saying like, eat healthier and work out more.
Or you're going down the route of a medical experience, which is, as we all know,
peppered with regulation, very complicated, inconvenient.
There's quite a bit of friction
there. And this is how, if you look at the space, this is kind of how the companies kind of filter
out. You've got the Livongos and the Omadas and the Onduos. And these are organizations that
once you're past the diagnosis phase, well, now you're in the captured audience. And so it's like
your insurance will reimburse, your doctor will prescribe, customer experience.
I will say it is amazing.
There's a PSL Ventures company
that we've invested in, Alertive.
There's so much innovation in this space.
Even if you're not going the direct consumer route,
you guys have gone.
Like what Alertive is sort of showing is,
well, what if you just bring these great,
like Enomata and Livongo,
like these great consumer experiences
to that sort of
existing funnel population rather than the new unlock. There's sort of like a dual,
you know, two different paths of innovation going on here.
Totally. No doubt about it. I think most of us just kind of avoid, like if it becomes too
inconvenient, we just avoid the medical experience altogether. It's like, I'll just kick the can down
the road. And certain people can't, you know, it's like they have a legitimate condition. It's so
challenging to carry on your day-to-day life and have a healthcare issue because the system is not
designed for convenience. Right. But to your point, once you're in that, like you also should
have a great experience. Exactly. There's a ton of opportunity there. But, you know, so it's been
like you have superficial
kind of population generalities happening in the digital health space for the general wellness
group. And then once you're post-diagnosis, you get more targeted, more consistent information,
but the friction level is so high and the actionability of the data is just not the focus.
Again, once you get into the captured,
I hate using terminology like this, but it is very true. Once you're in the captured audience,
you have a payer who's going to reimburse, you have a doctor who is going to draw from their
list of potential treatments, and they're going to diagnose and prescribe. And then you, the end
user, are just going to go through whatever experience has been
built. And it's like your feedback, your customer experience, your frankly process of
improvement falls behind, I think, where any mass market consumer product would be
just because there's so many conflicting incentives in there.
Yeah. Well, you mentioned payer for folks in the audience who aren't deep in this space. We're
talking about insurance companies mostly and maybe employers occasionally, and the government too
through Medicare and Medicaid. And this is where that sort of business model, if you're a company,
if you're a medical device company, if you're a pharmaceutical company, if you're something
that's been historically operating in the therapeutic space, it's a great business.
You know, this is why biotech, this is why medical device venture has done, has been
a thing for so many decades.
But it's so different than the tech world where it's like you get something you demonstrate efficacy you
prove that to payers all those categories over a long period of time and then you basically just
have a license to print money forever right well it's it's uh it's classic disruptive innovation
versus sustaining innovation if you're working within this existing system like you can make
the patient experience 10 times better but you're still working within insurance companies and billing codes and existing clinics and, again, can be a
great business. And it takes years to get that set up where you're like, yep, I got the code
from a billing code. Now I'm, you know. Yeah. Yep. But the levels, hims, hers approach,
that's the disruptive innovation. That's the thing where you're saying, it's exactly, Josh,
what you're talking about. You bring your spreadsheet to your doctor. Or frankly, right now, I'm even thinking
about, okay, I have my levels data and I want to go figure out if I'm diabetic. Well, I should go
talk with a doctor and show him my data. I do get this sense that I'll get kind of laughed at of,
what is this toy that you're... This is not a medical experience. Come on, don't come to me
with this. Yeah. Again, it comes back to the way that the
healthcare system is set up here is all oriented. And it wasn't always this way,
but I've talked to many doctors who believe this is the root. The insurance coding system
changed everything. So once it became a requirement that a physician enter a diagnostic
code in order to proceed
with treatment, everything changed.
It went from the nuance of an individual to, if you don't fit this bucket, I can't do anything
for you.
And this is the reason that no one, well, this combined with, I think, well-intentioned,
but overreaching data privacy rules have led to a situation where no one uses their healthcare data to make a
decision in their lifestyle ever. Like I can basically make that statement and feel confident
about it because it's just true. People don't, they get their blood work done once a year, maybe
you get a single point that's extrapolated to define your health overall. And you don't use
that to decide what to eat for lunch. You don't know whether or not you're sleeping well. And so you have companies that are, you know, once you're in that diagnostic
coded section, it's like, all right, I get this amount of reimbursal. It doesn't matter whether
my product is 10 times better. I'm still going to get that same reimbursement. So my costs go up,
but you know, I don't, I certainly don't get a higher, the payer is not going to pay me more.
So you have a situation where everyone's forced to conformity and you get one option. And the consumer, no matter how price insensitive they
are, if they're using an insurance reimbursal route, they don't have selection choice.
So I think the future is a situation where you're hybridizing this and you're taking
really high quality information and you're going cash pay only direct to consumer and you're providing the framework to meet the regulatory requirement, but you're sort of working outside
of the three-party system. You're saying, this is the premium option. And if user experience
factors into your healthcare journey or your general wellness journey, this is the option
that can deliver that experience, that quality of experience.
And that's certainly, I think, where the entire market, we're going to see
a move in this direction because that also unlocks traditional market forces. And so now
you can have a situation where economies of scale step in, prices drop, and now you're
genuinely competing. It may start out pricey, but with time, I think we can get to the point where these premium non-reimbursed options are actually price competitive.
Yeah. Okay, great. So let's talk about your business model at Levels and what your guys'
vision is for how this works. Maybe to start, can you walk us through just from a business model sense,
how Levels works today, and maybe a little bit what you're thinking about as
next step down the road and then after that? For sure. So today we're still in development.
So we're in what we call our beta mode, which is invitation only. But the process is you get
invited into the beta and you fill out kind of an e-commerce
like checkout experience.
So you pay for the program and then you move into a questionnaire process, which is a consultation
for a prescription consultation intake form.
And so you fill out some of the medical history required there that gets transmitted to an
in-state physician.
So this physician is part of a network that is wholly independent of Levels. And they're licensed in the same state that you reside in.
They review your consultation form, and they determine whether or not an informational CGM
is right for you, the individual. And this is entirely in the physician's hands. Levels has
no control over who gets a prescription, who doesn't get a prescription. And that's required for obviously ethical independence. And the physician doesn't have
any requirements or quotas or anything like that from levels. And so after that process,
and potentially an exchange of information, the physician may have extra questions that
they ask the patient. It's entirely up to them. Once we get a determination from the physician,
we then fulfill, if a prescription was received, we fulfill that order through
our mail order pharmacy partner. So that whole process feels very seamless to the end user,
and you end up getting access to a CGM device if prescribed, and the level of software.
So then you go through a one month experience where you wear the CGM
system, you go about your life. The first week we recommend you don't really make any changes.
You just kind of see where you are, how your body's responding to the choices you're making,
the nutrition selections, the exercise you're doing, the sleep that you're currently sustaining,
et cetera. In the middle two weeks, we recommend you start exploring. So try things you maybe don't
normally do, eat different foods, sleep well, walk after meals, all of these different sort of
called metabolic challenges, but testing the boundary cases. And then the final week, the goal
is to string what you've learned together into metabolic optimization. So shoot for like your
high scores. And you know, we after that one month period, people have developed metabolic optimization. So shoot for like your high scores. And, you know, we, after that one
month period, people have developed metabolic awareness. So for the first time, they've closed
the loop between the actions they're taking and the reactions their bodies are experiencing.
They've, they've sort of been in communication between body and mind, um, in a way that
previously wasn't possible because we don't, we don't have a sensory feedback mechanism for the quality of
our nutrition. And so that metabolic awareness, they've only been practicing optimization for a
week, but the lessons learned are quickly turned into habits. So when you first see that a 10,
15 minute walk after an indulgent meal can completely modify your body's ability to
process that sugar,
that lesson sticks with you in a way that, hey, you should walk after meals as general advice
doesn't. It's specific to you. It's grounded in objective data. And so those are the little magic
moments that we're looking to uncover as often as possible in the one month program we've built.
Cool. And so the one month program is a beta,
but what I think is so interesting is like,
so the price to participate in the program is $395, right?
$399, yeah.
So this is what's so fascinating.
This unlocks like so much,
like on the one hand for a consumer product,
that's, you know, a lot of money.
On the other hand,
there's no other way you're going to get access to this.
And is the value of learning that worth $400? Well, it's up to an individual person. But you
guys, how many... You have thousands of people that have done it, 20,000, 30,000 people on a
waitlist. It turns out there's a large population of people out there that are willing to do this,
right? Yeah. So thus far, we've had about 7,000 people go through the beta program. And we actually have
about 105,000 people on a waitlist right now trying to get in. And this is largely... Again,
we're in beta mode. We're really putting no effort into marketing. We're doing a lot of
educational effort. So podcasts and our content platform is a prime
driver of attention. But the company is currently designed, we have our product effort,
our content effort, and our research effort. And one of the core issues we're facing is that
metabolism as a word is not common. Nobody is thinking about metabolism, let alone metabolic fitness. We need to inform
the world that this is something you should care about. And to do that, we can't rely on
osmosis from product experience, especially if we're in invitation-only mode right now.
So the education effort is to build a world-class content platform that helps people understand what it means to be
metabolically fit and why that matters. So your brain, your body, all the cells in all of the
tissues in you need energy to survive and to function. And if your energetic production
systems are failing, you cannot experience mental health. You cannot experience physical health.
So it's truly the situation where metabolic fitness underlies physical fitness. It underlies
mental fitness. And we talk about the other two, but we don't talk about the foundation. And so
the content effort is in and of itself intended to be the leading source of education about,
yeah, why you should care about metabolism. And then our research effort is then kind of
going to pair with our direct-to-consumer product to look deeper into mechanisms,
into efficacy, into effectiveness. And so we'll take the large data sets, the trends from those
from our direct-to-consumer group, we'll take the research findings, and looking ahead in the
roadmap, combine that information about how people who don't yet have
a metabolic condition to concern themselves with are still improving the markers of long-term risk
through just simple behavior change in their daily lifestyle. And that I think is how we get
to the point where eventually the consumer product is covered for insurance, self-insured
employee programs,
et cetera.
So it's sort of working backwards.
Oh, so you think you can get to a point where payers, not consumers, will also be paying
for levels?
Yeah.
You know, I think, so the way we're going about it is we're definitely, you know, we're
starting off with the direct consumer play very deliberately. And, you know, a big part of that is that, A, we're going cash pay. We need to unlock the traditional market forces. We need to like get out of the situation where the product is forced into conformity. And then, you know, that will allow us to open those economies of scale and drive price down. That's necessary. We can get to the socioeconomic
considerations. But the second thing is like, if we can please a discerning audience for a premium
product, we can build an exceptional experience, you know, it's table stakes here, then I think
that will ensure that the enterprise offering is well received. If we just design something for B2B,
you know, reimbursal, we fall into the same trap that so many other products have that user experience
doesn't matter. What matters is selling an organizational decision maker that this is
something they should add to their offering. So by working backwards, not only will we be able
to demonstrate with the data we're generating from our paying customers that this is important
and that it is helpful, we'll also, I think, achieve a quality of experience
that we wouldn't get if we worked in the other direction, going from enterprise product to
consumer product. It's almost like to just completely beat the Elon analogy to death.
It's like Level's current iteration is the Model S, very expensive, but you guys have double digit
millions of revenue on your waitlist sitting
there right now. You can use that to make the Model 3 to bring the price down. And then you
can use that to launch the robo taxi fleet of get vastly expand access. Yeah. I actually think
we're even earlier. We're in the roadster phase. It's expensive. It's hard to get up there.
We don't have huge scale. We know very well that this is the mode we're in. But if we can satisfy
the roadster crowd, we can then take that success and the sort of economic foundation that we build
through a secure higher margin business model and start to work down market. And we need to get to the
model two stage. Model three is even too expensive for most people. So looking at the environment of,
or really the landscape of metabolic dysfunction, it essentially focuses on lowest socioeconomic
groups. It's the people who have the least ability to access the levels program who need it the most
right now. And we're well aware of that. It's going to be a process. In order to get to that mass market
option where you have real-time data informing your decisions every day, we need many things
to change. It's got to be hardware innovation. It's got to be software intelligence. It's got
to be regulatory improvement. Tons of different, very complex systems have to adapt for this to
happen.
But similar to what you've seen Tesla do, the entire market's adapted. I mean,
the whole automotive industry is different now. And that is all sort of building inertia towards the zero pollution future for electric vehicles. And I think that's what Levels hopes to do is
trigger this new market, trigger innovation, make people aware that real-time data, biometric data,
health data being used in our daily lives is the key to turning around the sort of frustrating,
complex, and failing medical outcomes we're seeing. We want to thank our longtime friend of the show,
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Yep, Vanta is the perfect example of the quote
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Vanta.com slash acquired. So just to play devil's advocate here a little bit, like
Tesla didn't just make really good software that then got shipped to a bunch of GM and Toyota cars.
They redid the whole thing from scratch. So sort of a two-headed question here, like why isn't
Abbott and the device manufacturers building the insights layer and building the consumer platform? And then two, do you think eventually you also need
to become a hardware company to really apply best-in-class research and push the consumer
experience that you want to create? Yeah. I mean, it's a great question.
Tesla kind of did start off with focusing on taking the concept was we'll take AC propulsion,
batteries and software, we'll combine them with Lotus. Yeah. The T0.
That didn't pan out. And I think for a number of reasons, but we're in a better situation where
the hardware is really convenient. It's really good. I mean, I've been wearing a CGM from
Avid and or Dexcom for going on three years now continuously. And the biggest issue
remains the insightfulness and actionability of the data. So that's where our core competency,
our core focus is centered is improving the delta between raw data coming out of a device
and behavior change that needs to happen. So for right now, although there is ground to be covered
on the hardware, no doubt. And I'm also looking to the future where sensors are not just measuring one analyte, they're measuring multiple
and they're doing it seamlessly and in combination with say superficial metrics like pulse and body
temperature, et cetera. You know, that is the direction we're moving. And I think we will
evaluate all of the options necessary to make sure that that future comes true. So we're not
going to stand by and just like,
hey, we've got great software. Anyone want to give us great sensors too? It'll be a situation
where we're going to joint develop and or, I think, create the attention necessary that there
is a market here, but innovation has to happen to feed it. And certainly being hardware systems
background myself, I'm more than happy to get my hands dirty if necessary. I bet. And from a value capture perspective then, as I think through the value chain of
you're providing the insights layer and the software and the consumer experience,
you're relying on other people to provide the hardware. This hardware has been
in development for a really long time. How much of what the consumer ultimately ends up paying
do you get to capture versus
having to pass along to the device manufacturers?
So as I touched on, our program includes access and fulfillment of the CGM sensors.
And it's kind of an all-inclusive product experience right now.
We have pretty good margins on the order of 50% to 60%, depending on the specific for
the one-month program.
We are also introducing a
subscription model, which of course has lower margins driven primarily by price point driven,
primarily by the censored cost in, you know, and these devices are still fairly expensive.
And so our subscription model, we don't make any money right now. It's, it's a, it's kind of a
second tier of, of product offering to our, our one month experience. And one of the reasons is that,
you know, in development mode, we want to get maximum throughput, we want maximum fresh,
fresh perspectives for feedback reasons. And so we've been biasing towards the one month experience
solely, we have been slowly but surely, you know, trickling in a subscription offering.
And, again, not making really much much on that product, but it does really
down select for the most intent of our members. So people who are like, I absolutely cannot stop
using this, I need to subscribe, they're the ones that find the subscription offering and get in
there. And so for that user group, we're getting such high value information about who they are,
why they're subscribing continually, that that will subscribing continually, that that'll inform us about
what a subscription has to be to really have staying power. And we'll be starting to shift
in that direction sort of simultaneously with, I expect, some improvements in unit economics for
the hardware, which I think are coming in the next 12 to 18 months.
And I would imagine too, the subscription part of levels will become so important over time
for lots of reasons. One, just simply from an ongoing value to your customers,
but also defensibility and moat for you guys. If all of my data and all of my insights around that over a long period of time are in levels, well, of course, I'm going to keep using levels.
But also, it's reminding me of our big episode on Meituan in surviving war on so many fronts against thousands of other companies in
China was the Dianping, their reviews database. The data from all of the reviews allows them to
drive recommendations and insights of what to order for dinner, where to travel, or where to book
so much better than just a flat system. I imagine for you guys too, the more data, the more ongoing data you have, the better your insights layer becomes.
Yeah, you guys got to pry my fitness pal out of Under Armour. That'd be huge to have that
sort of like auto-completed, auto-macro filled in data set.
Yeah, you know, right now we're definitely biasing towards low overhead for the user to log.
So the goal is actually to connect the outcomes of your choices with the inputs to you. So just surfacing a picture reminds people, okay, what did I eat in what portion? What was the composition
of that meal? And then giving them a score along with it helps to educate them very quickly with
minimal input requirement on whether or not that was like
positive or negative. And so those right now, like requiring macro tracking or requiring
calorie counting becomes onerous and our adherence drops off quickly. So we've done a bunch of
experiments with this, but I agree like the future is to get more information from those
who are willing to volunteer it. In terms of like the sort of switching cost concept here,
I think this is where our competitive advantage really lies. You know, again, we're focusing
entirely on the data science and on the actionability, the sort of behavior change
platform. So the metrics that we're producing, which are composites of a number of clinical,
well, clinically relevant data points about a blood sugar curve, you know, how your
body responds to a meal, how quickly, how high it goes, how long you stay elevated, all of this
stuff is packaged into a composite that is actually quite sophisticated and getting better all the
time. And so that's where, you know, the metrics, they turn raw data into behavior change opportunity,
and the majority of the value is there. So I do believe that as we continue to dive into the research, develop the largest data set of
its kind, we currently do have, by coming up on an order of magnitude, the largest data set ever
in non-diabetic glucose, especially when paired with lifestyle information. And we're still in
invite-only beta mode. The opportunity when we do go to market is going to be tremendous and it will continue to allow us, like you said, you know,
as the data set enlarges, our phenotyping will improve. So we'll be able to identify you're like
this group. And these are the recommendations and insights that we can sharpen to make it more
individual, more unique, and ultimately improve the outcomes for each person. That's great. Yeah. I mean, that's so, A,
incredibly impressive. Speaks to you guys of building a company in a short amount of time,
this incredibly complex space, getting to market, dealing with the regulatory issues,
prescriptions, getting 7,000 people through the program. But it speaks even more to just like the industry and how far behind,
I mean, CGMs have been around for over 10 years and that you already have the largest data set
of non-diabetic CGM data of a population out there is it's just like, that's crazy. Yeah, it is. And one thing that I like to look at is just the historic kind of bifurcation of the market.
We've seen so much data generation in these, and it sounds like a derogatory term, but
superficial metrics.
It's like, this is your pulse count, your step count.
So much of our wearable data is oriented here.
And I think the reason
that things are different now and going forward is that we've had a quiet microelectronics revolution.
We've had like software eating the world. All this stuff's been happening. Big data analytics
are getting better and better. And in the meantime, we've also had more individualization
and personal ownership concepts like bubbling up. And so all of this is kind of coming together into a moment where people want to know more about themselves specifically. They
don't want to know about averages. There's enough awareness that just looking at 23andMe where we
thought that a specific gene would tell you enough to know what to eat for lunch. And that's just not
the case. It's like the uniqueness of the individual is so multivariate that you really need
real-time continuous feedback to know whether things are improving for you. So we're seeing
a moment where I think all the pieces are in place where we can decentralize the solution.
So by building large enough datasets, obviously anonymized in order to run research and sharpen
insights, you can decentralize the actor down to the minimum
viable one, which is the individual. So rather than trying to solve nutrition with legislation
or policy, you can instead have each person solve for themselves, multiply that by enough people,
and you fix the social scale problem without having to pass some complex administration
package. You know what I mean? Obviously,
the food pyramid doesn't work. Right. Yeah. I mean, just look at the way things have been
done historically and all well-intentioned, but the goal is just too broad. It's to try and solve
for the average person. And there is no such thing as the average person. There is the individual.
So, Josh, before we wrap up, I at least have one question I'm dying to
ask your thoughts on. I know you don't have any inside information on this front. You know,
the rumor in this space has been for years that Apple is working on bringing this technology,
CGM technology, non-invasively to the Apple Watch. Do you think that's going to happen anytime soon? If it does, I imagine it's a
huge unlock for levels as the insight layer for this. Yeah, I spent a lot of time diving into the
future of the tech and thinking about, you know, how do we how do we set up the chessboard so that
the innovations happen that need to happen? So Apple's dealing with a situation where they can't break the skin.
It will destroy the image of what an Apple product is, frankly. And so they have the toughest go at
it. We can work with the hardware that exists, which does go below the skin and it gives you
direct interact, like that filament is interacting with molecules of glucose in your skin.
It's the gold standard for measurement in real time. Apple needs to solve what I consider a mechanical miracle, which is non-invasive measurement of a colorless,
small, water-soluble molecule in a fluid, which is primarily water. And they have to be able to
do it in concentrations and resolution that is useful for people that don't have diabetes. So
the fluctuations are smaller, concentrations are tight, accuracy is important. I'm hopeful. It's called Raman spectroscopy is what I think the
technique they're working on is, and it's a light scattering technique. It's complicated. And I've
heard the rumors that the next generation of the Apple Watch will have it. If they do, I'm going
to absolutely be blown away. And I'm going to be excited because if you look historically, I mean,
the Apple Watch is one of the best sellingselling products of all time. And yet, Apple typically delivers the hardware before the software
solution. So it gives Levels, like you said, the opportunity to leverage a prolific, non-invasive
option and build the insights layer on top of it to help people contextualize. And it's something
like Apple's had the hardware necessary to do exceptional sleep tracking for a
long time, but they haven't, you know, they, they put the hardware out there and other companies
fill in the gap for, for sleep context. And, uh, and so I think we would take, we would take the
opportunity and very quickly, uh, leverage that. So I think we're in a good position to benefit
from really any innovation in the hardware space today.
Well, I just, I mean, historically, you know, you'd think it was the best, like every time these events now come with much less frequency, but back in the day, every time there was an
Apple keynote for a new version of the iPhone with new hardware sensors, that just launched
an opportunity for so many companies. I mean, Apple adds great cameras to the iPhone. It's like, well, that enables Instagram, you know? Yeah. Apple has the camera app, but like, uh, other
companies are going to be the ones that really, you know, Apple's not going to build networks on
top of this. Apple's not going to build, you know, great dedicated consumer, you know, software
services on top of this. Oh, that would be a massive opportunity. Yeah, I tend to agree. And, you know,
not to mention the non-invasive measurement of a molecule and that concentration, just like
it opens up the space for future analytes tremendously. So that, you know, that will
strictly be a benefit for what we're trying to achieve, which is to solve the metabolic health
crisis. And it requires, you know, we didn't really touch on the global implications, but
estimates are that 30%
of the global population is pre-diabetic and 70% of those will progress to type 2 diabetes in their
lifetime. So, you know, we're talking about billions of people today who are on a path towards
unhealth and really dramatic degeneration of their bodies over the next, you know, 10, 20 years.
So something has to change. It's got to
change soon. And it's not a situation where Levels wants to own every piece of that process. It's
really a situation similar to the energy crisis where everyone's got to go all hands on deck on
this thing. And I would welcome Apple cracking this one because I think we can always refine
the insights they provide at scale to better, you know, the outcomes for specific use cases. Totally. Well, Josh, this
has been awesome. Thank you so much for joining us. And for listeners, how can they get in touch
with you? How can they interact with levels? How can they get on the wait list?
Yeah. First off, thanks so much for diving into this stuff with me. This is a really exciting conversation. It gets the wheels spinning to dive into the tricky questions. I love
it. Anyone that's interested in levels should definitely jump to the website, levelshealth.com.
You can sign up for the wait list right there and also access the blog, which is, it's that educational
opportunity to discover what metabolic awareness is, why it's relevant and kind of follow along as
we introduce more, I think, insight into how the product is affecting people today and how it's
helping them understand themselves better. And then check us out on Twitter and Instagram at
levels. And you can follow along, you know along in real time as people roll out their personal insights.
Cool.
What about for members of the Acquired community like Ben and Miz and others who might want
to come work with you guys?
Well, I would love to be in touch with anyone who hears this conversation and gets excited.
We do have a careers page at
levels.link forward slash careers. But I'll also just reach out to us either through the
Acquired community to Miz or Ben Grinnell. I'd love to provide my contact info directly to you
guys to distribute to your community. So you'll end up with my email address and anyone that's
interested, reach out directly to myself or Sam. And we'd
love to talk about the scaling opportunities that we have. A lot of challenges to be solved.
Great. That's awesome. That sounds awesome. Well, listeners, thank you for coming on this
health journey with us. We're excited to be diving into these new sort of areas
on Acquired and hope to do more of it coming up soon. Thank you guys.
Listeners, we will see you next time.
We'll see you next time.