Business Model Innovation in Digital Health: Bob Allison, Co-Founder of PEAR Health Labs (Part 5)

Sramana Mitra: The business model is a development fee upfront. Then there’s a $1 to $2 royalty per user per month. That’s variable and it goes up and down. In some cases, the brands were charging for their app. In some cases, the app is free.

Bob Allison: Yes. I would say that we had some real lessons from all this. One was that big brands are often not that good at digital discussions with consumers. Large technical brands, even New Balance because they’re technical about their shoes, have their own issues about getting to real traction and a pretty low threshold for patience on their side. If you’re telling your CEO that sales are off and you’re spending $500,000 on digital solutions. They’ll say, “Why are we doing that?”

Sramana Mitra: What’s interesting about your business model is, it’s very relevant today where we sit with the advent of consumerization of AI. Now everybody is talking about AI, but they don’t necessarily know how to develop products on these kinds of AI technologies.

For a consumer brand that wants to do something with AI, this business model that you described is very interesting for those kinds of companies. Somebody who is technically oriented and that can provide the full stack and work with the brand to do the last-mile user experience is a better model.

Bob Allison: Right. I’m with you. That is extraordinarily powerful today.

Sramana Mitra: It is more important now.

Bob Allison: The complexity of our stack is massive now. We do have AI. We do have HIPAA compliance. We have security issues and delivery of content that is long form and short form. There are all the wearables that we have to suck the data out of.

It’s powerful stuff that is highly relevant and a big barrier to people entering the market without having somebody that’s got that capability. You wouldn’t go out and build your own CRM these days. You’re going to find a great partner that understands all that stuff.

Sramana Mitra: The more important parallel with Salesforce is their Force.com platform. You can build applications on top where Salesforce takes care of all the bottom layers. You just add the domain-specific layer and you can go to market fast.

Bob Allison: We do that through things like content that is specific to the tribes of the people that are in fitness groups. We have training that we dynamically deliver to someone that’s over 55. Those models are different. The training is different. The AI we use to physiologically recommend workouts is all set for that age and the challenges they have.

We have programming that we deliver to prenatal and postpartum groups. It’s very similar to those top-end applications that you’re talking about because you have to understand the specificity of the fact that somebody just had a baby and they can’t be doing jumping jacks. They can’t overstrain the lower part of their body that might be subject to bleeding.

Those are the top layers that we allow our product to be customized around so we can meet the tribal needs of the group. We are not doing as much on the athlete side. Typically, they’re broken up into age groups or certain conditions that might be present. It could be a chronic disease where exercise is a magic potion for a lot of folks.

This segment is part 5 in the series : Business Model Innovation in Digital Health: Bob Allison, Co-Founder of PEAR Health Labs
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