The Power of Price – Affordable Alternatives and their Impact on Consumer Health
As the wearable market continues to expand with dozens of new trackers for the body emerging on the market, Health 2.0 sat down with Pivotal Living to discuss the ways one wearable is disrupting the entire market. David Donovick, Co-Founder and CEO of Pivotal Living shared his reasoning for designing and selling a fitness tracker starting at $12.00. Look for a demo at Health 2.0 WinterTech, January 15th.
Indu Subaiya: Okay. Great! All right! So David, I’m going to start off by asking you about the unique business model that you guys have at Pivotal Living and if you want to just kind of give me some background about what your inspiration was to have this unique business model subscription service.
David Donovick: Yeah, great question. Well, really, it kind of stems on the research that we did back in 2010, as you may know. We, especially my business partners, had a 20-year working relationship with the University of Washington School of Nursing, Social Work, and Pharmacy. We got together with them on an Elder Friendly Futures’ initiative in 2010 whereby we did a 30,000 person survey and five focus groups. The research really focused into kinds of key tenets or pillars. One is, what are the health and wellness needs of adults of different ages? What do they really care about? What matters to them most? Then two, how do they use technology? Which technology do they use? How do they use it? What matters most to them? The research kind of informed two different things. One that said, “Hey, people really want to do the basics well.” And if you look at some of the research that has come out even since the Pew Internet Project, people, they’re really trying to track the basics, calorie burn, weight, steps, and activity levels. So that informed for us, let’s do that basic really well. The second thing that we learned is people are really cost sensitive especially if you think about wearable pack. We’ve made a lot of progress in terms of the level of technology that we have, but we haven’t really made as much progress in terms of getting that technology to the masses. At the end of the day, I think a lot of the technology that’s come out is really out of reach for the average American, especially if you think about a device like that one that we’re shipping. People aren’t really going to spend $100 a unit or $400 for a family of four in middle America to be able to kind of participate in that movement. So we made a commitment to the university, we made a commitment to ourselves, and the research has basically informed the decision that we needed to make whatever we built affordable within reach for the masses. With that, also comes the opportunity to break fragmentation if you can make the cost palatable. We’ve seen a lot of fragmentation in the ecosystem. So for us, that’s compelling fighting fragmentation. Then you know the upside of that too is that it jump-starts the Quantified Self Movement. We actually can make this technology medium go mainstream. As much as I would love to take responsibility and credit for coming up with the business model, in a lot of ways, we’re just duplicating history. The Telco model is one of the earliest ones where transition from a model where you have to pay for the device and a service too, to the model where you get the device for free and you only pay for the service because the service is really what’s driving the value. Just like Telco, we think the value is in the service; it’s in the regionalistics. It’s an access to the community of like-minded people that are all seeking a healthy conscious lifestyle and a longer life and better health. So I think that history is repeating itself for this new category.
Indu Subaiya: Great! Okay. Then kind of along the same lines with this new category of connected devices and connected consumers, how do you see hardware, software, different trackers, etc, adapting to this new world of connected consumers? Do you see it evolving? I mean, it seems even just from a couple of years ago the space is so different. So I guess, how do you see that adapting as people become more and more connected?
David: Well, I mean, I think we’re going to continue to see evolution the same way the PC business has seen evolution; the same way Telco has seen evolution. I think wearables will continue to evolve. I look at the hardware as important but really just data collection apparatuses in an ecosystem.I think in a multi-device world, they’re going to have to either be inoperable across platforms or there has to be platform consolidation. There are too many once they choose these products out there. There are a lot of wearables products. You can get devices that will help keep your posture in check or you can have temperature sensors in socks. There are just so many once they choose the products as part of this kick-starter evolution. But I’m convinced that the platform companies are the ones that are going to win out and we will see that fragmentation broken accordingly because the thing is — people get burned out. There are so only so many passwords in usernames and devices and logs. So they can manage and I think it has to come together. I think you see evidence of that in Apple’s creation of HealthKit. Microsoft has tried to create a health platform — started with Amalga and they’re now kind of reinventing it as part of the launch of the Microsoft Band. You’ve seen companies like Nest create a platform and they started to think about security in addition to some other traditional products. So, I think that platform dynamic wins out. Again, history will repeat itself.
Indu Subaiya: Yeah. I think a lot of these new players, like you said, Apple and Samsung and Google with their new platforms, everything is condensing and consolidating a little bit.
David: It has to. I mean, otherwise consumers are just going to be overwhelmed. They think that’s what we’re trying to do, as much as we’ve launched with the Pivotal Tracker 1 and we’re pushing this device as part of our platform launch. The software is really where the value is going to be and it’s about the family of devices, the portfolio of data apparatuses that we will introduce, affordably, that will make that platform and that member experience really rich and exciting. I think that’s where we’re going to drive value.
Indu Subaiya: Great! I was just going to ask you about — if you can share — any partnerships or announcements that you guys are exploring or if you can let us know what’s next for you guys after the band? Are you guys just really focusing on that for now? Are you looking into expanding into other areas of similar model?
David: We’re very active on the partnerships front. We’re going to announce a very large partnership probably in the next two weeks at least for this holiday season. I think initially, we’re really focused on getting the Pivotal Tracker 1 and the Pivotal Living App launched successfully in the marketplace. We have very aggressive partnership opportunities that we’re cuing up for early 2015. I think they’re kind of split between distribution and how do we get our product to more people versus industry partnerships that will drive success for the platform, drive clinical relevance and foundation, and so I think there’s a good split there. I can’t quite go into it yet, but we should talk. I think there might be a possibility to announce something at WinterTech.
Indu Subaiya: Absolutely. WinterTech will be a great platform to announce new partnerships. Can you remind me again when you guys are fully launching it — it’s in December, right?
David: Yes. That’s interesting. We’re probably going to ship — I mean we’ve got our first product. That’s just actually our shipping time, which is really exciting.
Indu Subaiya: Okay. My last one is, how have your relationships changed, if they have, with any hardware manufacturers given these different announcements of Samsung and Apple?
David: See, the thing is — competition is a validation. Like, I’m very happy about what they’re doing in the space. I don’t really view them as a competitive threat — one, because our business model is different, two, because the product and our approaches are different. I think we’re going after different customers. Yeah, I’m glad that they continue to innovate within the space. They have been paid more money than us, so they’re in a better position to be able to innovate that way. But yeah, we don’t really look at it as a competitive threat. I think it does a lot of goodness for the category, and they’re the tip of the sword. But you know — they’re more focused on the 20%; we’re focused on the 80%.
Indu Subaiya: Great.
David: I know we have some technophile gadget heads that are going to buy our device just because they buy every device. But generally speaking, that’s not my core customer demographic.
Indu Subaiya: Wonderful, well thank you for your time David and we look forward to your exciting news at Health 2.0 WinterTech, January 15th.