Special: "Why Now" for Digital Health (with Levels founder Josh Clemente)｜Acquired

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, like it was always way above the diabetes threshold.

It was like it was crazy.

So 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'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.

Wearing 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 Greinal.

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.

All right, listeners, now is a great time to thank a new friend of the show, Koifin.

And it's funny, they're new, but actually I've been using their product for years.

My research project for every single new acquired episode involves Koifin.

So when they reached out to sponsor the show, I thought, well, this is convenient.

Indeed.

So Coifin is a financial research tool loved by both individual investors and financial advisors.

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They have live market data and powerful analytics tools.

So it's kind of like a Bloomberg terminal, except without the huge price tag, right?

Yes, essentially.

It's a web app, and it's totally self-serve.

I've actually not talked to anyone at the company for the first few years that I used it.

So Koifin is a product that the broader market, like all acquired listeners, would use, not just Wall Street investment bankers.

It's where I pull things like growth rate or gross margins or the PE ratio or revenue multiples for every company we study.

And you can compare these things over time with historical graphs or against other companies.

It's often what I use when we're studying private companies too, like Rolex or Mars or Ikea, to look at the comparables, to estimate what these companies would be worth if they were public.

They also have a screener that lets you filter across thousands of stocks, so you can quickly surface investment ideas.

Yeah.

So the general idea is, if you're someone who's used to living in data, you should have that at your fingertips as you think about investing.

Exactly.

It's got these great graphs for data visualization wrapped around institutional grade data.

So if you want to understand what assumptions are baked into the stock price today, Coifin is for you.

I was about to say that acquired listeners have a great offer.

But Koifin's free product is actually already really robust.

Which is what I was using for years.

I know.

But indeed for Acquired listeners and also for you, Ben.

If you go to koifincom slash acquired and you end up upgrading to paid, you'll get 20 off your first year.

Our thanks to Koifin.

That's K-O-Y-F-I-N dot com slash acquired or click the link in the show notes.

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 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 we would like to have you as a guest on Acquired, 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?

Sure.

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 didn't have that job locked down.

So I actually sold used cars at CarMax for like three months and just kind of like hung on to hope and worked my network like crazy to try and get in.

Wow.

Did you cold email Elon?

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's like He didn't really know who Elon was, had no context whatsoever and just like dropped a name.

And I don't really know.

But like, at some point, that filtered down, and I ended up getting a phone call back.

And I think my uncle like put in beyond just that in person, but put in like 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 like first article has been built and tested, and then getting those into production.

So figuring out, you know, we were a small company when I started.

I think I was employee like 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 it was very much the wild west days i mean like you're you're taking these components that have been uh they 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.

And I spent a ton of time down at Cape Canaveral just getting launch articles.

So, 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 experience.

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.

The buck stops here 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 that pressurizes kind of the space between international, 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, Dragon Cargo and Dragon Crew have both successfully gone up.

So it must be crazy cool to see your work in action there.

Yeah, I 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.

Okay.

So Josh, before diving into the next chapter of your career and founding levels, we got to ask 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 is 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 and it's metallic or it was metallic at the time but it's very well supported.

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 is 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 with a pair of shears go up in an extremely tall genie boom.

This guy is 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 shears.

He's got like essentially bombs below you and bombs above you.

Yeah.

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 There's like this scarcity syndrome that if you have something, you fear 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 going to run out of money and not get this contract and cease to exist, or we're going to slice this thing off with scissors and try.

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 11 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 you 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 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 incredible and 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.

No other program does that because it's like airing your dirty laundry.

Yeah.

Yeah, that's such a good point.

Man, we could talk about this forever, but I got to 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.

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 in retrospect, I was burning the candle in multiple directions at once.

And it 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.

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 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 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 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...

I'm not the optimistic, 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 professional performance, personal performance.

Just keeping my siblings from hating me and my significant other from walking away.

It was that degree of i.

Something's wrong here um, and and i was getting these bouts of fatigue that were truly symptomatic, like i would be be 11, 30 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.

I didn't lose consciousness or anything, but it was just a.

It was a very real sensation and And so 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, 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 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 know, that you're in a closed system.

So why should, you know, like 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.

They can live five times longer in a deadly environment.

What is going on here?

How is this possible?

And that was 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?

Is there any objective data that I'm using to guide my choices?

And I was very unhappy by my findings, which was that the only reason I eat things is because they taste good or because somebody else told me I should eat them.

There's no data.

So I started to just self-experiment.

And as I'm approaching the end of my time at SpaceX, I'm still getting these extremely weird kind of stress induced or I don't know if 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. um 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 uh you know it's the 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.

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 SpaceX work 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 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 like just coming out and the price point was good.

And there had been Dexcom G5 and G4 prior to that, but they were, like you know, a thousand plus dollars a month minimum and very hard to get.

Yeah.

And DECCOM 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.

Um, the difference between type one and type two is that type one 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 is 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 2 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 sort of time frame.

It's a spectrum.

It's a spectrum, exactly.

It can get extremely acute.

Totally.

I think they're both acute frankly, but type one is.

It's a situation where if you, if you don't use insulin exogenously injected, the damage is happening much faster.

And, you know, the effects are very immediate.

Type two tends to be, you know, 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, you know, check out my spreadsheet.

You know, look, 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 if you saw the people who need that device, you'd kind of be ashamed to ask for it.

Like that's that's for people who have a disorder.

Yeah.

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, you measure what you don't want to fail.

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, and this is one of the things we really wanted to explore on this episode with you.

It's 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 doctor's, totally right.

Like there were... there are people out there who need this way more than you do.

But that's so zero-sum thinking, right?

Like you know, just because giving you access to a CGM isn't going to prevent somebody else from getting that too.

So how did the light bulbs start going off about like well hey, maybe this can be a consumer device too, right?

Well, I you know 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, you know, 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 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, your glucose, should be after a meal Um, and oftentimes, very often, well into the diabetic range.

And so I, 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, you know, correlate those crashes with the sensations I had been having, where the shakiness, the hunger, the irritability was all perfectly synced.

And just by tuning, you know, within two weeks I had tuned my approach 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 again in the diabetic range, responses to which was highly counterintuitive.

I thought, I'm a person who's like, I eat the paleo CrossFit style.

Even though I love sugar, I love candy and I love dessert, 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.

The goal of this is to see what your normal stuff does.

And I had recently worked in no sugar, just 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.

Through a ton of gushers in my mouth or something.

And I was staring at it like, OK, I guess that's not as good for me as I thought it was.

Yeah.

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 How heart healthy it really is.

How that ended up on the oatmeal canister.

And you know we're seeing a lot of these examples, but at the time you know it was just a realization.

You know I'm using this device which basically just spits out raw data.

It gives you like, you're at 88 right now.

It 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.

You don't say.

A stressful meeting.

Yeah.

Sitting through a stressful meeting with a 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, that was one of the biggest lessons for me.

During one of the weeks I was wearing a CGM from you guys, jenny and i were in texas during the crazy power outages, ice storms, not 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 big spikes, big 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.

All right, listeners, it's time to talk about another one of our favorite companies, Statsig.

Since you last heard from us about Statsig, they have a very exciting update.

They raised their Series C, valuing them at $1.1 billion.

Yeah, huge milestone.

Congrats to the team.

Timing is interesting because the experimentation space is really heating up.

Yes.

So why do investors value StatSeg at over a billion dollars?

It's because experimentation has become a critical part of the product stack for the world's best product teams.

Yep.

This trend started with Web 2.0 companies like Facebook and Netflix and Airbnb.

Those companies faced a problem.

How do you maintain a fast, decentralized product and engineering culture while also scaling up to thousands of employees?

Experimentation systems were a huge part of that answer.

These systems gave everyone at those companies access to a global set of product metrics –

From page views to watch time to performance.

And then every time a team released a new feature or product, they could measure the impact of that feature on those metrics.

So Facebook could set a company-wide goal like increasing time in app and let individual teams go and figure out how to achieve it.

Multiply this across thousands of engineers and PMs and boom, you get exponential growth.

It's no wonder that experimentation is now seen as essential infrastructure.

Yep today's best product teams like Notion OpenAI, Rippling and Figma are equally reliant on experimentation.

But instead of building it in-house, they just use Statsig.

And they don't just use Statsig for experimentation.

Over the last few years, Statsig has added all the tools that fast product teams need, like feature flags, product analytics, session replays and more.

So if you would like to help your team's engineers and PMs figure out how to build faster and make smarter decisions, go to statsigcom slash acquired or click the link in the show notes.

They have a super generous free tier, a 50000 startup program and affordable enterprise contracts for large companies.

Just tell them that Ben and David sent you.

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 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 levels.

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, 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 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 2 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 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 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 pouring over research articles.

It was like you can't rely on that for people to get context for what's 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 a, 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.

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 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.

I just need to know that that meal is not working as well as this other one.

And so that, that was the, the insight is that it's really a data science problem.

It's ideally innovation and hardware is going to be able to drive these sensors down to a more commoditized space, and 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 that's where things started.

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.

It was actually late 2017, early 2018, when i, when i went full, full bore on it, full bore and um, 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.

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, that's a big complicated, hairy ball of pain to to figure that out.

Cause it's a, you know, these were class three regulated medical devices, prescription only.

So that's, that's where things started, 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 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 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 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 one diabetic?

Like do you say well, actually you should go see a doctor about this.

All CGM data is being interpreted in a larger diabetes management context.

So very, very much.

I think, um, you know, it's a, 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 um 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, sort of 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.

Yeah.

Well, there have been some serious changes in the telehealth regulatory space 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.

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 are sort of falling behind the times.

Prior to that, 2018 2019 companies had been building inside of those onerous regulations, but primarily leveraging asynchronous capability.

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, 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 like uh, a whole new class of marketing, like a you're marketing to a whole a wholly different customer base than medical devices in a therapeutic sense were before, but that enables, you know, advertising as part of it.

And now they have an experience that's not.

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, 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, 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 how the companies 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.

What Alertive is sort of showing is well, what if you just bring these great like Enomata and Livanga, these great consumer experiences, to that sort of existing funnel population rather than the new unlock?

There's sort of like a dual, 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.

Yeah.

Right.

But to your point, once you're in that, you also should have a great experience.

Exactly.

There's a ton of opportunity there.

So it's been like you have superficial 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.

Right.

Again, once you get into the captured, I hate using terminology like this, but it is very true.

Like, once you're in the captured audience, like 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, you know your 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.

Yeah.

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.

This is why biotech, this is why medical device venture 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 classic disruptive innovation versus sustaining innovation.

If you're working within this existing system, 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... But the levels, hims, hers approach, that's the disruptive innovation.

That's the thing where you're saying like, it's exactly, Josh, what you're talking about.

You bring your spreadsheet to your doctor and 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 them my data.

I do get this sense that I'll get kind of laughed at of like, what is this toy that you're eating?

This is not a medical experience.

Come on, don't come to me with this.

Yeah, you know.

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.

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 they're.

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.

For sure.

So today we're still in development.

So we're in what we call our beta mode, which is invitation only, but we're.

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, you know the physician may have extra questions that you know 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 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 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 sort of been in communication between body and mind in a way that previously wasn't possible, because 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.

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 the price to participate in the program is $395, right?

$399, yeah.

So this is what's so fascinating.

This unlocks so much.

On the one hand, for a consumer product, that's 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 20000, 30000 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, you know, 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, you know, the company is currently designed.

We have our product effort, our content effort, and our research effort.

And, you know, one of the core issues we're facing is that metabolism as a word is not common.

Like 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 you know, eventually the consumer product is covered for insurance, self-insured employee programs, etc.

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.

So the way we're going about it is we're starting off with the direct consumer play very deliberately.

And a big part of that is that, A, we're going cash pay.

We need to unlock the traditional market forces.

We need to get out of the situation where the product is forced into conformity.

And then 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, if we can please a discerning audience for a premium product, we can build an exceptional experience.

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 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 wait list 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 vastly expanded access.

Yeah.

Yeah, I actually think we're even earlier.

We're kind of we're in the roadster phase.

It's expensive.

It's hard to get up there.

We don't have, you know, 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, 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

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.

Now is a great time to thank good friend of the show, ServiceNow.

We have talked to listeners about ServiceNow's amazing origin story and how they've been one of the best performing companies the last decade.

But we've gotten some questions from listeners about what ServiceNow actually does.

So today, we are going to answer that question.

Well, to start, a phrase that has been used often here recently in the press is that ServiceNow is the quote-unquote AI operating system for the enterprise.

But to make that more concrete, ServiceNow started 22 years ago focused simply on automation.

They turned physical paperwork into software workflows, initially for the IT department within enterprises.

That was it.

And over time, they built on this platform going to more powerful and complex tasks.

They were expanding from serving just IT to other departments like HR finance, customer service, field operations and more.

And in the process, over the last two decades, ServiceNow has laid all the tedious groundwork necessary to connect every corner of the enterprise and enable automation to happen.

So when AI arrived, well, AI kind of just by definition is massively sophisticated task automation.

And who had already built the platform and the connective tissue within enterprises to enable that automation.

ServiceNow.

So to answer the question, what does ServiceNow do today?

We mean it when they say they connect and power every department.

IT and HR use it to manage people, devices, software licenses across the company.

Customer service uses ServiceNow for things like detecting payment failures and routing to the right team or process internally to solve it.

Or the supply chain org uses it for capacity planning, integrating with data and plans from other departments to ensure that everybody's on the same page.

No more swivel-chairing between apps to enter the same data multiple times in different places.

And just recently ServiceNow launched AI agents so that anyone working in any job can spin up an AI agent to handle the tedious stuff.

Freeing up humans for bigger picture work.

ServiceNow was named to Fortune's World's Most Admired Companies list last year and Fast Company's Best Workplace for Innovators last year.

And it's because of this vision.

If you want to take advantage of the scale and speed of ServiceNow in every corner of your business, go to servicenowcom slash acquired and just tell them that Ben and David sent you.

Thanks, ServiceNow.

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.

Like 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 T-Zero.

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.

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?

Yeah.

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, price point driven primarily by the censored cost.

And these devices are still fairly expensive.

And so our subscription model, we don't make any money right now.

It's kind of a second tier of product offering to our one month experience.

And one of the reasons is that In development mode, we want to get maximum throughput.

We want maximum fresh perspectives for feedback reasons.

And so we've been biasing towards the one-month experience solely.

We have been slowly but surely trickling in a subscription offering.

And again not making really 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 you know.

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 in and 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 it.

But also, it's reminding me of our big episode on Meituan, the Chinese super app.

And one of the most critical factors for 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 is allows them to drive recommendations and insights of what to order for dinner, or 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.

Yeah.

I think this is where our competitive advantage really lies.

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 clinically relevant data points about a blood sugar curve, 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 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, 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 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 7000 people through the program.

But it speaks even more to just 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.

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 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 bubbling up.

They don't want to know about averages.

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 data sets, 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.

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, uh, there is no such thing as the average person.

There's the individual.

So Josh, before we wrap up, uh, I at least have one, uh, question I'm dying to ask your thoughts on.

I know you don't have any inside information on, on this front.

Um, You know, the rumor in this space has been for years that Apple is working on bringing this technology, CGM technology, noninvasively 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 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.

You know 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 selling 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.

They put the hardware out there and other companies fill in the gap for sleep context.

Yeah.

And so I think we would take the opportunity and very quickly leverage that.

So I think we're in a good position to benefit from really any innovation in the hardware space today.

Well, I mean, historically, you know, you would think it's 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.

So 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.

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 10, 20 years.

Something has to change.

It's got to change soon.

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 the outcomes for specific use cases.

Totally well josh, this has been awesome.

Thank you so much for joining us and um for listeners.

How can they get in touch with you?

How can they interact with levels?

How can they get on the wait list?

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 waitlist right there and also access the blog, which is it's that website 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 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.

[메타볼릭 건강의 혁명: Levels의 창업자 조시 클레멘테와의 대화]-[Special: "Why Now" for Digital Health (with Levels founder Josh Clemente)]

📋 Summary

메타볼릭 건강과 연속 혈당 측정기(CGM)의 등장

개인화된 건강 관리의 새로운 패러다임

규제와 비즈니스 모델의 혁신

미래 전망: 하드웨어와 소프트웨어의 융합

🎯Key Sentences

📝Key Phrases

📖 Transcript

[메타볼릭 건강의 혁명: Levels의 창업자 조시 클레멘테와의 대화]-[Special: "Why Now" for Digital Health (with Levels founder Josh Clemente)]

📋 Summary

메타볼릭 건강과 연속 혈당 측정기(CGM)의 등장

개인화된 건강 관리의 새로운 패러다임

규제와 비즈니스 모델의 혁신

미래 전망: 하드웨어와 소프트웨어의 융합

ListenLeap으로 딥러닝 학습

🎯Key Sentences

📝Key Phrases

📖 Transcript

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