Business Model Innovation in Digital Health: Bob Allison, Co-Founder of PEAR Health Labs (Part 4)

Sramana Mitra: Which brands did you go after?

Bob Allison: We built for Intel. We also built stuff for Bose, Life Fitness, and New Balance. We were building app experiences around training for these brands. We did TRX. The whole list probably had 25 brands.

Sramana Mitra: Can you double-click down on the business model? What I like about this is, very often, we see business ideas that are going to be super expensive to go to market as a B2C company. With the business model that you have pursued successfully, if you follow that route, you can go-to-market by piggybacking on other people’s brands and marketing dollars. Talk to me about the business model.

Bob Allison: Our thesis was that the complications of apps were going to increase over time. The difficulty in rendering to each of the mobile devices, creating user experiences, understanding how to manage data repositories and how it would stream were going to lead to a lot of confusion and barriers.

There could be an emergence of a platform company that could provide that technology stack to allow brands to have a faster time to market. We would be able to do that if we had many B2B customers on a low-cost basis for them.

Our thesis was, we can offset their cost related to developing apps and technologies and IP. We would count on our partners to take the products out to market and promote them with their audiences. The model was per-user, low-cost development, technological innovation, and a trusted supplier to these technology opportunities for these brands that didn’t have a digital orientation around them.

Sramana Mitra: In rte timeframe that you’re describing, wearables were of great interest to people. All these brands were exploring wearables. You rode that wave. What about the business model? Take whichever use case you want to and talk about a product that was built on this stack and brought to market by a brand. What were the commercials?

Bob Allison: There was a development fee that was paid for the work that would have to be done between the concept of the idea and the delivery of an actual product in the marketplace. Let’s put that in the $50,000 to $100,000 range in terms of total investment. Then it was on a per-user, per-month basis. That was somewhere between $1 and $2 per user per month.

Sramana Mitra: These products were being sold on the App store.

Bob Allison: Yes. The TRX app was used for their strap system coaching. We had 750,000 users that were downloaded and about 75,000 active monthly users.

Sramana Mitra: The monthly active users were paying for this app?

Bob Allison: We just want to make ourselves low cost, so we didn’t have to worry whether it should be free or should brands charge for it. With TRX, they’re selling a strap system for $150. They didn’t feel good about asking the customer to pay a premium to get the digital. Some of them were free for digital. Later, they monetized the digital experience.

At the end of each month, we would tell our client how many people were on the platform, how many were active, what they did, and how many calories they burned. We had a bunch of analytics reports that they could use and we could deliver that information to them. We would send that along with an invoice.

This segment is part 4 in the series : Business Model Innovation in Digital Health: Bob Allison, Co-Founder of PEAR Health Labs
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