Three lessons a hot midwestern weight-loss startup can teach us about digital health

This week, Chicago-based personal weight-loss company Retrofit announced that it had raised an $8M series A round, an investment nicely covered by my Forbes colleague Kelly Reid, who also wrote a terrific profile of Retrofit back in August.

In short, the company sells a highly-personalized, digitally-enabled weight loss coaching service, at $250-$350/mo with a one-year commitment required.  As Reid described, each Retrofit client is paired with an experienced team that includes a dietician, an exercise physiologist, a behavior coach, and a program manager, who regularly and directly interact with the client (often via Skype).  Progress is also monitored electronically, both through a wifi-enabled scale and a FitBit wireless activity monitor. 

Retrofit targets a weight loss of 10-15%; in the view of founder Jeff Hyman, most diets fail because they promise rapid weight loss that even if achieved, is rarely sustained - 95% of "successful" dieters regain the weight (or more) within a year, and 99% within 3 years.  In contrast, Retrofit aims to deliver a more "realistic" or achievable goal that can be sustained, and is said to be associated with significant health benefits.

Retrofit's growth and traction offer three key lessons for digital health.

1. Tangible revenue model.  Among the most significant issues plaguing the digital health space is the absence of a viable revenue model - a solid answer to the question "who is going to pay for this?"   (As my Forbes colleague Brett Nelson shared in a memorable column, "Generating positive cash flow is one of the f-ing hardest things in the world.")

Retrofit has this covered, via a hefty subscription fee - perhaps it's not a coincidence that early adopters seem to include a Chicago law firm and a Silicon Valley venture fund.

They have also focused on the workplace, and try to leverage network effects there; if several colleagues are subscribers, and seem to be succeeding, others might be tempted to join as well.  With their recent raise, they've also announced a "Retrofit My Company" contest specifically to drive this segment.

2. Realistic health goals. Many digital health companies I encounter are fired up about their potential to change the world (a laudable goal), yet often overpromise the dent in the healthcare universe their enterprise will deliver.  Retrofit seems to take the opposite view, evidently believing that successfully delivering on a seemingly more modest goal is a ultimately a better proposition.

That said, Retrofit certainly promotes their benefits to employers by suggesting a benefit to the bottom line, a premise that I've recently argued tends to be more theoretical than realized - a conclusion shared by disease management guru Al Lewis,  who has written an entire book, "Why Nobody Believes the Numbers,"  deconstructing the questionable math associated with many health and wellness revenue claims.

3. Technology plays a supportive role.  This is perhaps the single most important lesson of Retrofit, which is basically a high-end coaching service.  While digital health monitoring devices figure prominently in the offering, they are explicitly used in service of the customized advice developed and delivered by real people.

There may be a real parallel here in the success of Up-To-Date , essentially an e-textbook that has nevertheless become indispensible for many if not most physicians (as I've discussed here).  The key to Up-To-Date's success aren't fancy algorithms that collect data or generate advice, but rather the many expert physicians who distill the literature and offer interpretations and recommendations, insight with far more credibility (at least at this point) than what faceless algorithms seem likely to offer.

Rather than replace expert health advice with computer-generated and delivered suggestions, Retrofit seeks to enable experts, allowing them to provide the most useful input possible (I've made a similar case for digital health enabling, not replacing, physicians).

It's still early days, and far too soon to designate Retrofit a "success story."  Their price point is conspicuously high, and it's possible that a well-designed offering could deliver a similar benefit for less using fewer experts, sophisticated algorithms, and great design - and many startups are explicitly working on this.

But I'm inclined to believe there's an important lesson about health and technology here: at the end of the day, so much of health (as I've incessantly argued) is about people and connection, and the best digital health technology will support, not supplant, human relationships.

One final observation: it's interesting to note that there seems to be a rise of digital health investors in the Northern Midwest - the "Cold Coast," as I've termed it.   While Retrofit's latest round was led by Silicon Valley-based DFJ, previous investors included New World Ventures and the I2A fund, both based in Chicago.  Chicago-based Apex Ventures joined New World and others in funding Analyte Health to the tune of $22M this summer, while Minnesota-based Lemhi Ventures announced (also this summer) that they had raised their second fund, $150M, to focus on "disruptive new business models" in healthcare.

With the ascent of intrepid healthcare investors, the emergence of promising startups, and the established dominance of Minnesota-based Epic (see here and here), the Cold Coast may be one of the hottest regions for innovation in digital health.

 

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About the Author

 

David
Shaywitz
  • Dr. Shaywitz trained in internal medicine and endocrinology at MGH, and conducted his post-doctoral research in the Melton lab at Harvard. He gained experience in early clinical drug development in the Department of Experimental Medicine at Merck, then joined the Boston Consulting Group’s Healthcare and Corporate Development practices, where he focused on strategy and organizational design. He is currently Director of Strategic and Commercial Planning at Theravance, a publicly-held drug development company in South San Francisco. He recently wrote Tech Tonics: Can Passionate Entreprenuers Heal Healthcare With Technology? 

  • Email: davidshaywitz.aei@gmail.com

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