Business Model Innovation in Digital Health: Bob Allison, Co-Founder of PEAR Health Labs (Part 2)

Sramana Mitra: What happens next?

Bob Allison: If I’d sold it for $200 million then, I’d have a different storyline. One of the things I didn’t know very well at that time was how to value my business. We did an exchange. There was some cash. It was primarily stock. In 1990, there was a big collapse in the marketplace. That affected Mimic. After that, I went to work for Aero Electronics.

After the acquisition, I spent a couple of years with Mimic doing international. That was not as healthy for my family, so I ended up coming back to California. I was recruited by Aero to run marketing for them. I had the opportunity to help them with M&A. I had my first opportunity to understand a lot from a great mentor, Steve Kauffman, about structured finance and leveraged finance. I did that through 1995.

In 1995, I founded Innovate Partners which is my venture investment company that serves as the primary investors in a lot of the things that I’ve done since 1995.

Sramana Mitra: Since 1995, you’ve primarily been an investor?

Bob Allison: Yes, an operational investor. We have co-founded companies. We are the primary, if not the only, investors. We are starting these companies around the idea of finding really good operational talent and people that need help on the strategic side or the financial side.

Sramana Mitra: Bridge me to this company that we are talking about today.

Bob Allison: Just a bit of background before this. In 2001, Innovate was the lead investor for a small audio-based company in the hands-free audio business called Jabra. Today, they’re a well-known brand. At that time, they were a small company building in-ear speakers. We acquired that and helped the management team run that business successfully. It was acquired by Great Nordic, which is why it’s called Jabra GN today.

After we sold that, we then made an acquisition in another company that was in the audio space by the name of Ultimate Ears. Ultimate Ears was acquired by Logitech. At that time, one of the things that we had experience at was that Ultimate Ears was the incredible power of audio in motivation and instilling an emotional response. As part of that, we said, “It would be really interesting if you could apply this audio to fitness and wellness.”

We filed a patent or two. When we sold the company, we asked to carve that patent out. That patent became the key tenant for PEAR Sports. PEAR stands for performance-enhancing audio research. The patent that we filed was around coaching somebody across a computer network using audio and giving them the right experience. That was the genesis.

Sramana Mitra: What’s happening here? What’s the user experience like? Is it for rank and file?

Bob Allison: That’s a great question. When we started, the smartphone wasn’t there. There was no iPhone.

Sramana Mitra: What year was this?

Bob Allison: 2011.

Sramana Mitra: The iPhone was already there in 2007.

Bob Allison: But it had no Bluetooth capability. We built all of our own radios and transmitters. We had our own heart rate monitor. Because of Ultimate Ears, we had a great relationship with Apple. Apple gave us some music sources. The original coaching concept was targeted at runners. If you would go out, it would say, “I’m coach Bob. We’re going to run five miles. We’re going to keep your heart rate in four primary zones. Let’s start with zone one.”

We would give them a coaching experience all the way through that five-mile run, all being real-time audio. It’s a very immersive experience. It was primarily targeted at people who are in running, triathlons, or cycling because it was meant to be an outdoor experience. We sell that through the Apple store.

Sramana Mitra: What was the configuration?

Bob Allison: At that time, it wasn’t an app. It was a web-based product. The App store wasn’t there yet. If you could imagine a box that would sit on the shelf, it was a web-based product. You would download everything you needed into the device. You’d come back and upload your results through the web where you’d be able to see all your stats and statistics.

This segment is part 2 in the series : Business Model Innovation in Digital Health: Bob Allison, Co-Founder of PEAR Health Labs
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