Ben Gilbert: evaluation

Transcript context

…That didn't pan out, and I think for a number of reasons. 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 Abbott and/or Dexcom for going on three years now continuously. The biggest issue remains the insightfulness and actionability of the data. That's where our core competency, our core focus is centered, is improving the delta between the raw data coming out of a device and behavior change that needs to happen. For right now, although there is ground to be covered on the hardware, no doubt. 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, body temperature, et cetera. That is the direction we're moving. I think we will evaluate all of the options necessary to make sure that that future comes true. We're not going to stand by and just like, hey, we got great software. Anyone want to give us great sensors too? It'll be a situation where we're going to jointly develop and/or create the attention necessary that there is a market here but innovation has to happen to feed it. Certainly being a hardware systems background myself, I'm more than happy to get my hands dirty if necessary. I bet. From a value capture perspective then, as I think through the value chain of you're providing the insights layer, 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? As I touched on, our program includes access and fulfillment of the CGM sensors. It's kind of an all-inclusive product experience right now. We have pretty good margins on the order of 50%–60% for the one-month program. We are also introducing a subscription model, which of course has lower margins, price point driven primarily by the sensor cost. These devices are still fairly expensive. In our subscription model, we don't make any money right now. It's kind of the second tier of product offering to our one-month experience. One of the reasons is that in development mode, we want to get maximum throughput, we want maximum fresh perspectives for feedback reasons. We've been biasing towards the one-month experience slowly. We have been slowly but surely, trickling into a subscription offering. Again, not making really much on that product, but it does really down select for the most intent of our members. 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. For that user group, we're getting such high-value information about who they are, why they are subscribing continually. That will inform us about what a subscription has to be to really have staying power. We'll be starting to shift in that direction simultaneously with, I expect, some improvements and unit economics for the hardware, which I think are coming in the next 12–18 months.…

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