If you have not heard of the quantified self movement, you soon will – it is the drive to measure all aspects of our daily lives with the help of technology.
Right now, wearables and other activity-tracking devices enable us to monitor everything from sleep patterns to vitamin deficiencies to our posture. And it is about to have a big break-out moment.
In early April, Silicon Valley Bank and Terrible Labs, a Boston-based software design and development consultancy, hosted an engaging summit about the future of the quantified self revolution, focusing on lifestyle, health and fitness. More than 100 people, ranging from top corporate venture investors to start ups, gathered in Boston.
Panellists included corporate venture executives at LG, Comcast, Samsung, ESPN, Turner, Partners Healthcare, UnderArmor and New Balance, and founders and innovators at RunKeeper, Withings, Orreco, Sociometrics, MC10, Bolt, Crisply, Lose It and more.
Steve Allan, head of SVB Analytics, provided me with some great insights gleaned from the robust discussions at the summit about the opportunities and challenges facing investors in this nascent sector, which is growing at breakneck speed. Brian Moore, CEO of the sports analytics firm Orreco, predicted that breaking the 24-minute barrier for a 10k run will be enabled by the technology and companies represented at the summit.
We all know about counting calories and steps, but that is just scratching the surface. Allan reports that the over all sentiment at the summit points to accelerating growth opportunities in 2014. But he adds, for those who are only now dipping their toe, they will have to sprint to catch up. Corporate venture is already moving into the space, as evidenced by some of the corporatenames mentioned above. And the players come from all areas – makers of chips, athletic gear, consumer electronics and medical devices all want a piece of the pie.
It is going to be a big pie. Allan says some corporate investors are viewing the consumer market as a precursor to the medical market. In late March, Intel reportedly paid $100m for Basis Science, maker of a sophisticated health tracking smartwatch. The thinking is Intel and others do not necessarily see the consumer wearable market as the end game but rather an entrée into the potentially more lucrative digitisation of medical care. They are investing with an eye firmly on the growing appetite of consumers to monitor their bodies and become more involved in their own health decisions.
Allan suggests that adoption of wearables will happen faster than other technologies because there are precedent models to follow and a foundation of analytical tools to weave into the next generation of portable devices. In the consumer market, we are already moving on from simple activity tracker hardware, which is now simply embedded in your smart phone. The appetite has shifted towards niche-form factor products, such as devices that nag you to sit up straight or swim goggles that provide real-time performance displays.
While those at the summit expressed a real appreciation for the complexities of marrying self-improvement and technology – privacy, liability, bio-ethics just to name a few – there is also growing economic and political pressure to reduce systemically the overall cost of healthcare without sacrificing quality. The inevitability of data powering decisions about ourselves gives rise to the potential of both economic and social disruption – that which was reserved for the limitless budgets of the elite athletes or wealthiest patients is migrating to the weekend warrior and average health consumer.
Still, Allan said there was blunt discussion at the summit about the significant challenges and unknowns that often accompany opportunity. Lots of money will be made and lost as the winners and losers are sorted out. For corporate investors, he suggests, timing has to be balanced expertly between observing a fast-changing landscape and taking the plunge, even if the financial upside may be fleeting. To date, the providers of innovation capital are proceeding cautiously until use cases evolve into compelling business cases.
There are many unresolved issues in this fragmented ecosystem, ranging from how to plan for inevitable hardware cannibalisation – akin to the iPhone replacement of the iPod – and the almost certain impact of government regulation and reimbursement issues specifically around medically-targeted devices. The very public debate over what kinds of information consumers are willing to share and with whom is only going to get louder.
From an investment standpoint, which subsector – hardware, which collects the data, or software, which stores and visualises the data – will reap the greatest rewards is not clear. The current hardware leaders are becoming software companies, and no one has a dominant position in either space.
Just as digital advertising only really took off when technology improved to serve automatically the right ad to the right person at the right time, so too the quantified revolution will only fully take hold when consumers have access to real-time “recommendation engines”. It is easier to promote behaviour modification when consumers can immediately see the cost and health benefits of all that data collection. While the sub-24-minute 10k is a worthy pursuit, one participant in Boston tweeted a much greater potential: “In five years we should be using wearables improve the way we deal with chronic disease.”
As Allan says, this is an exciting place to be. In June, our SVB Analytics group will publish an in-depth report on the business metrics, funding environment and investment opportunities in the quantified self sector.