Future of Fitness (Part 2)
In Future of Fitness (Part One), I highlighted various fitness-tech business models that attracted investor capital during the COVID-19 pandemic. In part two of this essay, I would like to highlight a trend in smart wearables I’m excited about.
Trend to watch: Smart Wearables — Descriptive to Prescriptive, Cross-functional Use Cases
The global end-user spending on wearable device is expected to reach around $63 billion dollars this year as fitness activity trackers become more ubiquitous. Fitbit users grew 53x over the last seven years, growing from 0.56 million to 28.57 million users globally. Along with user growth, data generated in the present “Quantified Self” era has also become more sophisticated, advancing from the simple measures of the past like calories burned and heart rate to now more advanced metrics such as blood oxygen/glucose and respiratory rate that measure body readiness and recovery.
Given the growth in popularity and advancement in technology, where is the use of fitness data going and how is that data being used?
One important trend is wearable manufacturers across industries improving their analytics that enable customized predictive use of data, allowing actionable insights to the consumer about their health. Whoop is a B2C fitness category leader, establishing itself as a premium brand through customized user recommendations such as how many hours to sleep given daily strain and goal set.
In healthcare, providers of wearable motion sensors that enable recovery and preventative care have raised large sums of venture and growth capital. For example, Hinge Health, a digital healthcare solution that combines wearable sensors with app and health coaching to remotely deliver physical therapy and behavioral health, raised $300M at a $3BN valuation in January 2021. For athletes whose performance on field is their job, UK-based wearables technology company STATSports collects performance data through pieces of hardware worn by professional/college athletes and then utilizes AI and real time machine learning to provide performance analytics that optimize athlete performance and reduce injury risk. The company raised $3M series B in June 2020. Similar to STATSports, California-based Zone 7 employs algorithms to break down performance data collected from wearables and predict when professional athletes are at risk of injury. A newer player in that space, Playermaker — a footwear motion sensor that utilizes AI and machine learning to provide insights to soccer players’ performance — raised $10M in September 2020 to expand internationally. An example of a fintech/healthtech crossover, Paceline — a retail wellness platform that links user health and wellness activities from their wearable of choice (e.g. Apple Watch) to their credit cards and reward users with financial benefits if they hit their fitness goals — raised $5M in January 2021. Even Big Tech joined the smart wearable space. In 2020, Google acquired Fitbit, Facebook wanted to turn the Quest into a fitness device, and Amazon launched its own wearable tracker Halo band.
Takeaway: I’m largely bullish on the smart wearable space because of its technological potential and ubiquity across business models, industries, and consumer segments. COVID-19 has highlighted resource allocation issues in the US. In 2020, $9.4BN in digital health funding have gone into connected healthcare, connected hospital devices, and remote patient monitoring which seek to solve care provider pain points — such as disconnected electronic medical records that leads to gaps in patient care and more administrative work for healthcare providers. With all the buzz surrounding a healthcare industry on the cusp of disruption[1], why have there not been any incumbents that have found success in a disruptive scale? The biggest obstacle to scaling has been the lack of infrastructure and workforce within hospitals and providers to enact the full potential of a synchronized digital health, contributing to the “recalcitrant mindset” of the healthcare community that is difficult to penetrate with quickly evolving technology.
This leads to the question for the consumer and sports space, as to what the driving value factors for users are. Do people care about experiencing customized predictive analytics on wearables or would data extraction that is merely descriptive suffice in driving their willingness to pay? At what point does the smart wearable get “too technical” and become cumbersome to the user experience? As connecting data across ecosystems becomes easier, what opportunities are there for industries to merge and will we continue to see industry categories blurring? As companies continue to innovate, what kind of security are needed to ensure privacy, threat management, and safety? Gaining clarity to these questions will accelerate opportunities for innovation.
Thank you to Marcel Wolff and Lance Dietz for contributing insights and reviewing drafts of this post.
[1] The Digital Health Revolution by Kevin Pereau.
