I’ve written about both wearable companies previously. Levels Health is a continuous glucose monitor for non-diabetics looking to optimize their health. Whoop is the hardcore athlete’s version of Fitbit. I’ve been looking into optimizing my health for the long run and have been researching Levels recently. I’m also a long-term Whoop user. The question I have been pondering is: which company would I rather invest in (hypothetically)?
Customer Pain Point
I love Whoop but readily admit they are merely nice to have. Their value-add above merely knowing my resting heart rate is not overwhelming in the long term. Levels could solve a significant need (for patients who truly need to monitor their blood glucose indefinitely). For the consumer market (more here shortly), they are attempting to benefit long-term health. A noble cause but also not a burning pain.
Both products do address long-term, structural issues we face, but those most motivated to use high-end consumer wearables likely need them the least.
Competition
Whoop’s biggest red flag is that Apple (and somewhat my employer Google via Fitbit) has made health and fitness a tentpole of their Apple Watch and overall device strategy. Whoop’s hardware is differentiated to the extent that Apple Watches need to be charged every day. That 5-day battery life is a major win for Whoop, but it comes at the expense of a screen or any non-athletic functionality. (I explicitly choose Whoop to dodge notifications on my wrist). Beyond the battery life, one should assume the Apple Watch will match or better any features of Whoop (hardware or software). None of their algorithms seem overwhelmingly complex when matched up against some big tech PHDs. A core base of diehard athletes may stick with Whoop, but the Apple Watch is a serious ‘good enough’ threat for the rest.
Levels CGM has less established direct competition (though it exists). The real competition is the FDA and regulated medical devices. They appear to use FDA-approved devices such as the Dexcom G6 CGM and the FreeStyle Libre. They have a huge risk here in not controlling their own tech stack. For consumer audiences, they may be able to win as the core consumer brand. If they want to expand to a sicker population, their real competition is the doctor who prescribes their FDA-regulated competition. Also, don’t put it past Apple to attempt to add glucose monitoring to the watch.
Neither company has the strongest positioning, but gun to my head I would take Levels. Another consumer-facing CGM would either face the same issues with suppliers or face the same FDA regulatory journey. Whoop’s long-term health is very worrying to me.
Sustainability of the Revenue
One of the motivators of this article was my recent experience with an app called Rise Sleep. Rise attempts to use your phone’s accelerometer to measure when you wake up and go to bed. From there, it attempts to calculate a projected sleep need and a ‘Sleep Debt” that is accumulated over the prior 14 days. I loved the concept, I did feel better correlated to when my projected sleep debt was lowest, and yet I just ended my free trial without renewing. The culprit: I effectively learned what the app had to teach. Sleep at consistent times. Get enough sleep. Catch up with a nap on the weekend. I have a Whoop already, so I have a decent measure of how much sleep I am getting.
Whoop is a much better business here (for its core customer set) than Levels. For the target audience of high performers, life is an ongoing attempt to optimize and outperform. I learned the lessons of Whoop equally quick compared to Rise: alcohol is bad, sleep is good, sleep consistency is important, etc. Yet I have continued my membership, in large part because I want to continually improve.
Some may disagree, but I peg Levels much closer to Rise than to Whoop. Certain foods will spike your blood glucose, walks after dinner manage the spike, etc. While it is certainly important to avoid pre-diabetic glucose (or worse), infrequent blood work seems more than adequate here. For the consumer audience, this is much more likely. Those with a medical need to monitor their diabetes are more likely to need ongoing CGM support. As I mentioned above, that’s a gap for Levels that I see.
Predictions
I see Whoop having a successful niche with hardcore athletes, and otherwise I see Apple cutting off the rest of their opportunity. Whether they can reach their last valuation is an open question.
I think Levels is a strong acquisition candidate for an existing healthcare device company (preferably one with a CGM). Churn for the consumer market strikes me as quite high once the concept of the Glycemic Index is internalized.