If you know me at all, you know that one of my greatest joys in life is cracking jokes. It is something that I have grown up with all my life. It’s almost like a second language in Mexican families and it has served me well when I played women’s basketball.
So as I was reading through my daily digest of VC deals and came across a company that had raised $12 million led by the great a16z and was pre-launch, my natural instinct turned on and I ventured into the land of Twitter to poke the bear with some jokes.
The result was unexpected but definitely…welcomed and led to not only my conversation with the CEO of Levels Health, a truly innovative company but also a conversation with an early investor of the company. (The juicy investor conversation will come in part two of my blog.)
See below documentation of elegant shade-throwing:
So, what is Levels Health?
It is a system that provides real-time insight on your body through attaching a continuous glucose monitoring (CGM) device to your skin. This device then transmits vital signs to your smartphone or tablet.
It collects information on how your diet and lifestyle impact your metabolic health – everything from blood sugar, triglycerides, high-density lipoprotein (HDL) cholesterol, blood pressure, and waist circumference.
Why is this an important metric to measure?
A person’s metabolic health is directly related to their risk of heart disease, diabetes, and stroke. This is important because it measures more than a person’s weight and provides comprehensive real-time updates so you can adjust your nutrition, exercise, and sleep throughout the day with the goal of increasing your metabolic rate.
This is what I am calling “My Stages of Acceptance” after doing research on the company and how they gather vital information:
Step 1: Absolutely not! There is no way you can place a device in my arm for 24 hours a day just so you can gather information on my body. What is next? A chip in my neck?
Step 2: What is the allure that creates a 50,000-person waitlist for Levels Health?
Step 3: Then I started scouting out their competitors and investors - Huh, maybe they’re onto something?
Step 4: I can’t wait to learn more…
So over the most COVID meeting style, I met with the CEO of Levels Health, Sam Corcos on Zoom and this is how it went.
First off, the man is sharp, humble, generous with his time, and an entrepreneur through and through.
Before starting Levels, Sam had launched a couple of businesses including CarDash, a car repair maintenance service, and Sightline Maps, a 3D printing topographical maps system. I was curious about how the companies he founded were connected and he shared his passion for entrepreneurship began long before founding these firms. It started when he first graduated college and (through this brother’s suggestion) he taught himself how to code. Sam believes that once you can build the tech foundations of a business then you can solve any problem that you’re passionate about.
The Opportunity that Levels Sees is Two-Fold:
1) The increasing number of people with healthcare problems (see below) demonstrates that we need a preventative care solution.
10% of the United States is diabetic
84 million Americans are prediabetic and 70% will be diabetic within 10 years
Latinos, African Americans, and Indian Americans have the highest rates of diabetes and are the least likely to be metabolically healthy
2) We are now in the second stage of wearables and people are ready for this change.
When I made the joke about “What’s next? A chip in my neck?” - Sam beautifully responded that a decade ago it was bizarre to think of renting your car or house out to strangers but now it is part of your life (think Uber and Airbnb). He stated that even wearing a Fitbit or Apple watch would have never occurred but now it's part of our lifestyle that provides us external data on our bodies.
The Opportunity: Health problems are increasing, and people have become even more conscious of preventative healthcare especially as illnesses linked to low metabolic rates are increasing mortality for folks with COVID. Levels Health is a solution that empowers you to take control of your health, understand the data, and make changes.
All of this sounds dandy but how are they tackling growth and getting people to actually use the device?
They’re thinking about growth in waves. The first wave is focused on the performance and the athletic market to build brand credibility and thought leadership. This plus a massive waitlist for the product is their way of destigmatizing Levels and making it cool (think of a Clubhouse before everyone had access to it and Tesla strategy). During this stage, Levels will focus on increasing affordability to make the product more accessible for their second wave of customers – the general public.
While having the product penetrate these two customer segments the goal is to invest external capital and revenue from sales in research and development to comply with the U.S. Food and Drug Administration (FDA) regulations. Their end goal is to have Levels Health covered by insurance companies and mainstream health and wellness. The process for FDA approval is lengthy and expensive.
Instead of going through the traditional route that similar tech applications do in the healthcare space which is to focus on the B2B market (getting covered through insurance companies), Levels decided to flip this on its head and focus on the consumer.
As someone who is a true B2B enthusiast and would normally never take this route, I thought this was GENIUS.
Socialize the product, bring in revenue, reinvest funding for R&D, and then get it approved by insurance companies to penetrate B2B customers - Yes 1,000 times. It’s a roundabout way to get to your end destination while making money along the way.
Another question that came up was how did you close a $12M round while being in pre-launch mode during a global pandemic?
According to Sam during a normal cycle, Levels would have raised a couple million from his large network of Angel and VC investors but due to the COVID19 Pandemic, there were macro factors working in their favor.
1) Funds had stopped deploying funding in March 2020 and by the summer they needed to invest capital
2) Funds were now focused on investing in digital health companies spurred by COVID
3) Funds were looking for companies with remote teams
Levels was perfectly positioned to capitalize on all these factors. This was a perfect storm when opportunity, hard work, and relationships meet.
And of course, my last question, why did you decide to go with a16z as your lead? I mean they’re a huge deal but is there more?
I loved his answer here and believe this is how founders should think about accepting investments from VCs. Yes, I fully acknowledge that many founders (especially underrepresented founders) do not have the option to turn away capital but when you do have the choice to decide, be strategic.
Sam decided to go with a16z because of his relationship with Jeff Jordan. He shared that Jeff deeply understood the space investing in companies like Accolade and Incredible Health but more importantly he was personally tied to investing in solutions to manage diabetes as his family is impacted by the disease.
Besides his relationship with Jeff, a16z has the Cultural Leadership Fund, a partnership with global cultural leaders in the African American community. By leveraging this important partnership, Levels saw an opportunity to quickly launch their first wave of growth, bringing to the table an investor with capital and networks to help the company grow.
My final thoughts: I deeply enjoyed my conversation with the CEO of Levels, Sam Corcos. I see and believe in his vision. He is a strategic founder and will lead the next generation of wearables.
Up Next: Look out for my conversation with one of Levels’ earliest investors and how they knew they were onto a potential unicorn.
Sources:
Conversation with Sam Corcos, Levels CEO on December 12, 2020
Think You’re Metabolically Healthy? Only 12% of Americans Fit the Bill
https://www.healthline.com/health-news/what-does-it-mean-to-be-metabolically-healthy
Levels Raises $12M Seed Round to Bring Biowearables into the Mainstream and Improve Metabolic Health
The Cultural Leadership Fund