Special Why Now for Digital Health (with Levels founder Josh Clemente)

In this episode of the Acquired podcast, hosts Ben Gilbert and David Rosenthal, along with guest Josh Clemente, founder of Levels, deep dive into the burgeoning digital health ecosystem, particularly the rise of direct-to-consumer health tech companies. Levels is pioneering a new approach to metabolic health by providing real-time blood glucose monitoring through a wearable continuous glucose monitor (CGM). Clemente shares his journey from SpaceX engineer to startup founder, detailing how personal health struggles led to his passion for metabolic awareness and the decision to start Levels. The discussion also touches on the business model of Levels, the regulatory landscape of medical devices, and the potential impact of non-invasive glucose monitoring technology rumored to be in development by Apple. With over 7,000 people having gone through Levels' beta program and a waitlist of 105,000, the company is at the forefront of a health revolution that emphasizes individualized data for lifestyle optimization.

• Speaker A discusses their own health issues, including fatigue, mood changes, and symptoms like shakiness and cold sweats.
• They sought medical advice and underwent standard blood tests, which did not reveal any issues.
• Speaker A's interest in metabolic health was sparked by research on oxygen toxicity and ketogenic diets in the context of their work on life support systems at SpaceX.

"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 the optimistic sort of happy person I think I am anymore."

The quote highlights Speaker A's serious concerns about their health, which they felt were impacting their day-to-day life and relationships.

"I read a paper just randomly, just in my kind of side research from Dominic Di Agostino, who's a ketogenic researcher at University of South Florida."

Speaker A's exploration into metabolic health began serendipitously through their professional work, leading to a personal interest in the ketogenic diet and its potential benefits.

• Levels is a company that aims to raise awareness about metabolic health by using real-time wearable sensors to monitor blood glucose levels.
• The company's mission is to enable people to track their metabolic health, which is closely linked to overall wellness.
• The founders of Levels were introduced to the company by members of the Acquired community, highlighting the community's role in connecting entrepreneurs and investors.

"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."

This quote summarizes the focus of the episode, which is to discuss Levels and its mission to improve metabolic health awareness through technology.

• Josh Clemente, the founder of Levels, has a background in engineering, including work at SpaceX and Hyperloop One.
• His experience at SpaceX included manufacturing engineering and leading the pressurized life support systems team for the Dragon capsule.
• Josh's transition from engineering in the aerospace industry to founding a health-tech company was influenced by his own health challenges and interests.

"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."

This quote provides context for Josh Clemente's expertise and the skills he brought from his aerospace engineering background to his entrepreneurial venture in health technology.

• Pilot is a company that offers accounting, tax, and bookkeeping services to startups and growth companies.
• The firm is backed by prominent investors and has grown to become a significant player in the startup accounting space.
• Pilot's philosophy aligns with the AWS-inspired axiom of focusing on core business strengths and outsourcing non-core functions like accounting.

"Pilot is the one team for all of your company's accounting, tax and bookkeeping needs, and in fact now is the largest startup focused accounting firm in the US."

The quote emphasizes Pilot's role as a comprehensive provider of financial services for startups, highlighting its growth and expertise in the field.

• SpaceX's culture is characterized by a "nothing to lose" mentality, which encourages taking risks and embracing failure as an option.
• The company's success is attributed to its willingness to make unconventional decisions and its focus on problem-solving.
• A story about a technician named Kelly illustrates SpaceX's hands-on and scrappy approach to overcoming challenges.

"SpaceX was in a we have nothing to lose mentality for the entirety of its kind of early days."

This quote captures the essence of SpaceX's culture, which is driven by urgency and a willingness to take risks to achieve success.

"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."

The anecdote about Kelly's actions demonstrates SpaceX's practical and results-oriented approach to problem-solving, even under pressure.

• After experiencing burnout and health issues, Josh Clemente's interest in metabolic health led him to found Levels.
• The idea for Levels was influenced by research on ketogenic diets and their impact on brain energy sources.
• The transition from aerospace engineering to health-tech entrepreneurship was driven by a desire to address personal health challenges and make a broader impact on wellness.

"I kind of hit a total burnout wall in the late part of the life support program I was working on."

Josh's personal experience with burnout at SpaceX was a catalyst for his shift in focus towards health and wellness, eventually leading to the creation of Levels.

• The discussion begins with a challenge to the idea that "a calorie is a calorie" and that all that matters is the balance between energy intake and expenditure.
• The speaker reflects on how macronutrient selection in rodents could potentially lead to "superpowers," such as increased longevity in hazardous environments.
• This leads to the speaker questioning the basis of their dietary choices and the lack of objective data guiding these choices.
• The speaker starts self-experimenting to understand energy sources and optimization, focusing on glucose as the primary energy molecule in humans.

"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?"

The quote reflects the speaker's surprise and curiosity about the impact of macronutrient selection on the health and longevity of organisms, which leads to a reevaluation of dietary choices.

• The speaker begins to self-experiment with glucose monitoring using a fingerprick glucometer to understand energy issues and macronutrient effects.
• The process involved pricking the finger multiple times a day and plotting numbers in Excel to simulate continuous data.
• The speaker encounters limitations due to the inability to measure during certain activities and seeks further information, leading to the discovery of continuous glucose monitoring (CGM).

"And then I come across this paper, and I'm like, maybe there's more to it than just the know. I work out really hard. I've got a decent amount of muscle, I can run fast, but I don't feel healthy."

This quote reveals the speaker's realization that despite being physically fit, there might be underlying health issues not addressed by exercise alone, prompting a deeper investigation into metabolic health.

• CGMs have transitioned from research labs to therapeutic research studies and became commercially available between 2006 and 2010.
• CGMs were primarily designed for diabetes management, with Dexcom and Medtronic being early developers.
• The speaker explains the differences between type 1 and type 2 diabetes, and the role of insulin in regulating blood glucose levels.
• Despite the technology's potential for general wellness, CGMs were not widely accessible for non-diabetic individuals.

"Dexcom, they only do one thing. They develop continuous glucose monitoring sensors for type one diabetes."

This quote highlights the initial focus of CGM manufacturers on a specific medical condition, which limited the technology's broader application in preventive health.

• The speaker's personal experience with CGM reveals significant glucose spikes and crashes that correlate with feelings of shakiness, hunger, and irritability.
• The data from the CGM leads to dietary adjustments that reduce these spikes and crashes.
• The speaker notes the counterintuitive responses to foods considered healthy, like sweet potatoes and oatmeal, and the need for an insights layer to interpret raw data from CGMs.

"My blood sugar was essentially. It looked much more like a heart rate trace than a blood sugar trace."

This quote underscores the speaker's shock at the volatility of their blood sugar levels, which were visually similar to heart rate fluctuations, indicating a need for lifestyle changes.

• The speaker discusses the impact of stress on blood sugar levels, observing significant increases during stressful meetings without any caloric intake.
• This observation emphasizes the interconnectedness of nutrition, exercise, sleep, stress, and metabolic health.

"Sitting through a stressful meeting with the CGM on and seeing without calories, my blood sugar exceed 145 milligrams per deciliter."

This quote captures the speaker's realization that stress alone can have a profound impact on blood sugar levels, which is an important factor in overall metabolic health.

• The speaker sees potential in using CGM technology for general wellness and education to prevent metabolic breakdown.
• The idea is to provide feedback on the effects of lifestyle choices before the onset of metabolic diseases.
• The speaker suggests that the real value lies in creating an insights layer that interprets the raw data from CGMs and makes it actionable for behavior change.

"It's powerful for the post diagnosis to manage a condition, but potentially even more powerful to prevent that next wave."

This quote encapsulates the speaker's vision for CGM as a tool not just for managing existing conditions but also for preventing metabolic diseases through informed lifestyle choices.

• The speaker envisions a data science approach to transform CGM data into actionable insights for users.
• The goal is to simplify the data into understandable metrics, such as meal scores, to facilitate better dietary decisions without requiring users to understand complex medical data.

"It's really a data science problem. Ideally, innovation in hardware is going to be able to drive these sensors down."

The quote suggests that the challenge is not just in the hardware of CGM devices but in the interpretation and presentation of data in a way that drives positive health outcomes.

• The company was developed to improve the value proposition in health tech by adding an insights layer on top of commoditized data.
• The goal was to create a better user experience than what was previously available.
• The company aimed to contextualize data to promote behavior change.

It 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.

The quote explains the founder's motivation to build a company that would offer a better experience than what was available, focusing on the user's perspective and needs.

• The company started in late 2017 to early 2018.
• The focus was on going "full bore" into the development of the company.

Yeah, it was actually late 2017, early 2018, when I went full bore on it.

This quote indicates the specific timeframe in which the company's development began in earnest.

• The company's development coincided with the rise of direct-to-consumer health companies like Hims, Hers, and Roman.
• There was recognition that certain medical products could be beneficial to a wider audience if made more accessible.
• The challenge of accessibility was identified, particularly for class three regulated medical devices.

And that was a huge. It was like, oh, man, that's a big, complicated, hairy ball of pain to figure that out, because these were class three regulated medical devices, prescription only.

The quote highlights the difficulty in making regulated medical devices more accessible, which was a significant challenge the company faced.

• The company was inspired by the business model of combining telehealth with low-risk medical products.
• Telehealth regulations and the use of asynchronous electronic consultations were key to the company's approach.
• The company aimed to create an elegant and convenient user experience while maintaining regulatory compliance.

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.

This quote describes the telehealth model where a licensed physician reviews patient information and prescribes medication, which is then delivered through a mail order pharmacy, streamlining the patient experience.

• The company sought to use biometric data for education and awareness, not just condition management.
• The goal was to create a platform that collected necessary information and delivered it to physicians within telehealth regulations.
• The company focused on a specific use case for Continuous Glucose Monitors (CGMs) and aimed to provide metabolic information without the risks associated with managing acute conditions.

So we set about developing a relationship with an independent network of physicians who intellectually are on board with the concept of informational biometrics.

The quote explains the company's strategy to partner with physicians who support the use of biometrics for informational purposes, which is central to their business model.

• Telehealth regulations changed significantly during COVID-19, improving accessibility and convenience.
• The company was able to leverage these changes to enhance their service.
• The company's approach was built within existing regulations but took advantage of asynchronous communication capabilities.

So much of this was, it was already plausible, but it wasn't clear.

This quote indicates that while the regulatory environment was challenging, the company found plausible ways to operate within it, which became clearer during the COVID-19 pandemic.

• The company represents disruptive innovation by providing a new route to healthcare outside of traditional channels.
• The existing healthcare system is described as inconvenient and resistant to individualized treatment due to insurance coding systems.
• The future of health tech is seen as a hybrid model that combines quality information with direct-to-consumer approaches.

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.

This quote suggests that the future of health tech will involve a mix of high-quality information and direct-to-consumer models that bypass traditional insurance systems, leading to more consumer choice and potentially lower costs.

• Levels is in beta mode, offering an invitation-only program.
• The program involves a seamless prescription process through an independent network of physicians and a mail order pharmacy.
• The one-month program focuses on developing metabolic awareness and optimizing metabolic health.
• Levels aims to educate the public about metabolic fitness and conduct research to further understand its impact.

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.

This quote emphasizes the company's commitment to educating the public on the importance of metabolic fitness, which is a cornerstone of their business model and vision for impacting health and wellness.

• The beta program has a significant cost, but there's a large waitlist, indicating strong consumer interest.
• The company's approach has resonated with many people willing to pay for metabolic insights.
• The company balances the high cost of participation with the unique value provided by the program.

We've had about 7000 people go through the beta program, and we actually have about 105,000 people on a waitlist right now trying to get in.

The quote shows the significant demand for the company's program despite the high entry cost, reflecting the perceived value of the product among consumers.

• Direct-to-consumer health technology is being designed to improve metabolic markers through simple behavior changes in daily lifestyle.
• The goal is to eventually have consumer health products covered by insurance and employee programs.
• The approach involves starting with a direct-to-consumer model, demonstrating the product's value, and then scaling to enterprise offerings.

"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."

This quote explains the strategy of using research findings to show how individuals can improve their health markers through lifestyle changes, which is critical for gaining insurance coverage for consumer health products.

• The company is deliberately starting with a cash pay, direct-to-consumer play to avoid product conformity and drive down prices.
• A premium product for a discerning audience is being developed to ensure a high-quality user experience.
• The focus is on pleasing customers first, then leveraging the data and experience for a B2B offering, avoiding the trap of neglecting user experience.

"if we can please a discerning audience for a premium product, we can build an exceptional experience. It's table stakes here."

This quote emphasizes the importance of satisfying a premium market segment to build an exceptional user experience, which is foundational for broader market acceptance and success.

• Levels is compared to Tesla's strategy, starting with a high-end product (Roadster) and then moving to more accessible options (Model 3).
• The company acknowledges the need to cater to lower socioeconomic groups who need the product most.
• The strategy involves using initial success to build a foundation for a business model that can scale down-market.

"we're in the roadster phase. It's expensive, it's hard to get. We don't have huge scale."

This quote draws a parallel between Levels' current stage and Tesla's initial phase, both characterized by exclusivity and the intention to scale to more affordable products.

• Crusoe is a clean compute cloud provider that specializes in AI workloads and partners with Nvidia.
• Crusoe's data centers utilize wasted, stranded, or clean energy, providing cost benefits and environmental advantages.
• Their data centers are located at energy sites, allowing for efficient use of power that would otherwise be wasted.

"Crusoe's data centers are nothing but racks and racks of a because Crusoe's cloud is purpose built for AI and run on wasted, stranded or clean energy, they can provide significantly better performance per dollar than traditional cloud providers."

This quote highlights Crusoe's unique approach to data centers, which leverages unused energy sources for better performance and cost-efficiency in AI workloads.

• Levels focuses on the insights layer, improving the actionability of data from Continuous Glucose Monitors (CGMs).
• The company is open to developing or collaborating on hardware innovations to ensure the best consumer experience.
• The value capture for Levels includes a good margin on their product, which includes both the hardware (sensors) and the software insights.

"the biggest issue remains the insightfulness and actionability of the data."

This quote underscores the company's focus on turning raw data from health devices into actionable insights for behavior change, which is where they see their core value.

• Levels is introducing a subscription model with lower margins due to the high cost of sensors.
• The subscription offering is used to gather high-value information from dedicated users.
• The company's competitive advantage lies in its data science and behavior change platform, leveraging a large dataset to improve individual health outcomes.

"we currently do have, by coming up on an order of magnitude the largest data set ever in nondiabetic glucose, especially when paired with lifestyle information."

This quote conveys the significance of Levels' extensive dataset, which is unparalleled in the field of nondiabetic glucose monitoring, providing a competitive edge.

• Non-invasive CGM technology, potentially from companies like Apple, would be a significant advancement for Levels and the industry.
• Levels is prepared to leverage any hardware innovations to enhance their insights layer.
• The company is focused on addressing the metabolic health crisis and is open to collaboration to achieve this goal.

"I would welcome Apple cracking this one because, you know, we can always refine the insights they provide at scale to better the outcomes for specific use cases."

This quote expresses openness to external technological advancements, such as Apple's potential non-invasive CGM, which would complement Levels' insights layer and contribute to solving the metabolic health crisis.