Special: “Why Now” for Digital Health with Levels founder Josh Clemente

Burnout is real. When compounded by metabolic dysfunction, it’s even worse. For Josh Clemente, co-founder of metabolic health company Levels, his burnout took him by surprise because he was outwardly very healthy. Today, technology and data can uncover what a simple doctor’s visit often can’t. Josh joined Ben Gilbert and David Rosenthal on Acquired to share how continuous glucose monitoring revealed his path to better health. Looking at the current health system, they discuss why a personalized approach to diet is needed, how Levels is putting user experience first, and what needs to happen to turn a restricted medical device into a consumable product.

• Check out Levels
• Follow Levels on LinkedIn or Twitter
• Connect with Josh Clemente on LinkedIn or Twitter
• Check out Acquired
• Connect with hosts Ben Gilbert and David Rosenthal

17:46 – Rocketing burnout symptoms started the search for answers

Josh was working on life support systems at SpaceX, while his own health was deteriorating rapidly.

“It kind of started at SpaceX and partially in a good way, partially in a bad way. But I kind of hit a total burnout wall in the late part of the life support program I was working on. And in retrospect, I was burning the candle in multiple directions at once. And certainly was just working. Was not managing stress, sleeping very poorly. My average sleep was probably four to five hours. And my approach to maintaining wellness was working out as hard as possible as a CrossFit trainer… I had gotten to the point where 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 happy person I think I am anymore. And I don’t know what changed, but I just constantly feel irritable and I am struggling to make it through the day in terms of not just professional performance, personal performance. Just keeping my siblings from hating me and my significant other from walking away. It was that degree of: something is wrong here.”

21:33 – Superpowers can be unlocked with dietary selection

For most people, sugar is the main fuel for the brain. Studies have shown that switching to a ketogenic diet with low carb intake has given rodents the power to survive in seemingly impossible environments.

“In a certain macronutrient ratio, which is very high fat, your body will generate these macronutrient bodies called ketones, which are essentially a water-soluble fat molecule. And that’s crucial because water-soluble means that it can cross the blood-brain barrier and provide energy for the brain. Typically the brain is fueled by sugar, glucose, solely. And traditional fatty acids can’t cross that barrier. Ketones can, so they are a brain energy source. In this study, he gave these rodents a ketogenic diet and then submitted them to a high oxygen, high-pressure environment. And the result was that these rats could live up to five times longer without seizure, just because of the ketogenic state they were in. And that completely blew my mind. Because up until this point, I was a calorie is a calorie absolutist. And it didn’t matter what you ate, if you worked out hard enough, it was all just energy in the end… Although this wasn’t in humans, I’m obviously extrapolating to humans and thinking: wait a minute. So the macronutrient selection here is giving these rodents superpowers. Like they can live five times longer in a deadly environment. What is going on here? How is this possible? And that was the first moment where I started to think what superpowers can be unlocked with dietary selection.”

30:00 – Measure what you don’t want to fail

Rocket ships and the human body have something in common: it’s a lot easier to track what’s working. That way, when problems start to show they can be tackled before there’s a complete breakdown.

“If you look at systems generally, you measure what you don’t want to fail. You don’t just measure the thing that is broken because that’s obviously useless at that point. In systems engineering, especially complex systems, you get as much data as you can and you observe failure modes as they develop and find ways to counter them. And so having already dove into the research on the kind of the metabolic health crisis that I had not known about at the time. Or had not known about prior, but it was aware of at the time. I was like, well, this is just me trying to learn more about myself and understand if there’s something going on with my metabolic system. And my physician was just totally opposed and was not willing to get me access to a CGM. Eventually after trying for several months, I was able to get a CGM, but it was through a friend of mine who brought one back from elsewhere where they’re over the counter. So he actually went to Australia and threw some in his backpack where you can buy them just like a glucometer.”

31:38 – Data is a driver for change

It took just two weeks wearing a CGM and receiving data for Josh to realize his ‘healthy’ food choices weren’t so healthy. The symptoms he’d been having were signs of metabolic breakdown, setting him on the path to diabetes.

“My blood sugar essentially looked much more like a heart rate trace than a blood sugar trace. Huge spikes, huge crashes. Everything I was doing, all of the meals I was consuming, were putting me above what would be considered the pre-diabetic postprandial threshold. So where your glucose should be after a meal. And very often well into the diabetic range. So my body was not managing blood sugar spikes effectively. It was able to bring them back. So it’s not like I was diabetic and had lost control, but it seemed to be blood sugar would go very high. My body would release a ton of insulin. Overcompensate. I’d have these precipitous crashes. And I was able to just immediately correlate those crashes with the sensations I had been having where the shakiness, the hunger, the irritability, it was all perfectly in sync. And just within two weeks, I had tuned my approach to diet, just trial and error on the meals I was eating. And I was able to bring those huge spikes down to a minimum. And at the time I still wasn’t sophisticated on what the ideal levels would be and actually much of this remains to be discovered, but I was able to identify that things I was eating that I thought were healthy. Large servings of sweet potatoes, brown rice, quinoa. I was having huge, in the diabetic range, responses.”

39:32 – America is teetering on the edge of a disease epidemic

There are 90 million Americans with pre-diabetes, and 84% aren’t even aware. With access to data about how lifestyle choices are affecting health, millions of people could come back from the edge of disease.

“There’s a huge accessibility problem. It’s not being used for general wellness. It’s not being used for education. It’s only being used post-diagnosis when someone’s already sick and things have already gotten to a bad place. And the realization that across society, we have an epidemic of metabolic breakdown that is largely caused by chronic lifestyle choices. So that is the key unlock. We are breaking our bodies down over decades, without feedback on the positive or negative effects of our choices. And this has led to a situation where we have 90 million people in the United States with pre-diabetes. 70% of whom will convert to type two diabetes within their lifetime. And 84% of them don’t know that they have this situation. It’s because we’re making these chronic choices without feedback. So this was the tool, in my opinion. And it’s powerful for post-diagnosis to manage a condition, but potentially even more powerful to prevent that next wave. So that’s kind of where things started to congeal in my mind that this could really bring a lot of solutions into people’s lives.”

43:41 – It takes ingenuity to bring a restricted product to market

Few people have heard of CGMs. Combined with restrictions on medical products, this shouldn’t be an easy product to get to market. Levels uses the emerging telehealth market to link people with physicians who can prescribe the tool.

“One of the earliest issues was, let’s say we build the app that provides insights. It can pull in CGM data. Well, nobody has CGMs and there’s no way to get your hands on them. So no one’s going to even Google that thing. No one’s going to find that in the app store. We have to get the hardware and the software together into the hands of people who want it. And that was huge… These were class three regulated medical devices prescription only. So that’s where things started. It was actually the accessibility of the hardware that was the problem to solve first, before we can solve the behavior change issue. And companies like Hims and Roman and others were demonstrating a new model where you combine telehealth capability with low-risk products, medical products, into a direct-to-consumer experience. And it is a traditional practitioner, a licensed physician reviewing information about their patient. Developing patient-physician relationship. And then a mail-order pharmacy powering the whole thing. But most of that is hidden in an experiential sense from the end user. It feels very much like ordering something online, which is really convenient. And if you look at Roman’s numbers, they work in sexual dysfunction for men and they’ve got massive conversion rates. No sexual therapeutic physician is seeing the number of young men come to them for Viagra at nearly the rate that Roman is. Because of the privacy and the sort of stigma, there’s a lot of stigma there. And so this convenience factor and the privacy factor has probably allowed a lot of people to improve their lives that otherwise wouldn’t. So I think that was a very unique business model that they put together and it gave us a lot of ideas. Maybe there is a way, despite the sort of onerous regulations. There is a way that we can design something that would be elegant and as close to a delightful experience as you can get while still maintaining regulatory ethics.”

55:42 – The highway to health needs a choice of lanes, not a single route

The current healthcare system is based on fitting people into certain lanes based on their symptoms. This is largely due to the insurance system. Josh argues that there needs to be more individual choice in which route might be best, as everyone is unique.

“It comes back to the way that the healthcare system is set up here. It’s all oriented – and it wasn’t always this way, but I’ve talked to many doctors who believe this is the route – the insurance coding system changed everything. So once it became a requirement that a physician enter a diagnostic code in order to proceed with treatment, everything changed. It went from the nuance of an individual to ‘if you don’t fit this bucket, I can’t do anything for you’… So you have a situation where everyone’s forced to conformity and you get one option and the consumer, no matter how price-insensitive they are, if they’re using an insurance reimbursal route they don’t have selection choice. So I think 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 consumer, and you’re providing the framework to meet the regulatory requirement, but you’re sort of working outside of the three-party system. You’re saying this is the premium option. And if user experience factors into your healthcare journey or your general wellness journey, this is the option that I can deliver that quality of experience. And that’s certainly, I think, where we’re going to see the entire market move in this direction. Because that also unlocks traditional market forces. And so now you can have a situation where economies of scale step in, prices drop, and now you’re genuinely competing. It may start out pricey, but with time, I think we can get to the point where these premium non-reimbursed options are actually priced okay.”

58:30 – It just takes a shopping cart and a doctor’s note to access individualized health

Levels is purchased online, with an individualized and independent follow up from a physician. It’s simple to access, with the peace of mind that a physician has signed off on it.

“The process is you get invited into the beta and you fill out an e-commerce checkout experience. So you pay for the program and then you move into a questionnaire process, which is a consultation for a prescription, a consultation intake form. And so you fill out some of the medical history required there. That gets transmitted to an in-state physician. So this physician is part of a network that is wholly independent of Levels. And they’re licensed in the same state that you reside in. They review your consultation form and they determine whether or not an informational CGM is right for you, the individual, and this is entirely in the physician’s hands. Levels has no control over who gets a prescription who doesn’t get a prescription. And that’s required for obviously ethical independence. And the physician doesn’t have any requirements or quotas or anything like that from Levels. And so after that process and potentially an exchange of information, the physician may have extra questions that they ask the patient; it’s entirely up to them. Once we get a determination from the physician, we then fulfill, if a prescription was received, we fulfill that order through our mail order pharmacy partner. So that whole process feels very seamless to the end user. And you end up getting access to a CGM device, if prescribed, and the Levels software.”

59:31 – A one month health experience to develop metabolic awareness

The Levels 30 day experience helps to reveal how current decisions are affecting metabolic health, suggests small changes through the app, and ultimately leads to optimal health choices.

“You go through a one month experience where you wear the CGM system, you go about your life. The first week we recommend you don’t really make any changes. You just kind of see where you are, how your body’s responding to the choices you’re making, the nutrition, selections, the exercise you’re doing, with the sleep that you’re currently sustaining, et cetera. In the middle two weeks, we recommend you start exploring. So try things you maybe don’t normally do. Eat different foods. Sleep well. Walk after meals, all of these different sort of fun metabolic challenges, but testing the boundary cases. And then the final week, the goal is to string what you’ve learned together into metabolic optimization. So shoot for your high scores and after that one month period, people have developed metabolic awareness. So for the first time they’ve closed the loop between the actions they’re taking and the reactions their bodies are experiencing. They’ve been in communication between body and mind in a way that previously wasn’t possible because we don’t have a sensory feedback mechanism for the quality of our nutrition. And so that metabolic awareness they’ve only been practicing optimization for a week, but the lessons learned are quickly turned into habits. So when you first see that a 10-15 minute walk after an indulgent meal can completely modify your body’s ability to process that sugar, that lesson sticks with you in a way that, ‘you should walk after meals’ as general advice doesn’t. It’s specific to you. It’s grounded in objective data. And so those are the little magic moments that we’re looking to uncover as often as possible in the one month program we’ve built.”

61:02 – Metabolic fitness is the foundation of a healthy life

Metabolism is little understood, however a healthy metabolism is essential for better mental and physical health. Levels is using data and research to build up a picture of optimal metabolic fitness and using this to educate the public.

“We’re doing a lot of educational effort. So podcasts and our content platform is a prime driver of attention. But the company is currently designed: we have our product effort, our content effort, and our research effort. One of the core issues we’re facing is that metabolism as a word is not common. Nobody is thinking about metabolism, let alone metabolic fitness. We need to inform the world that this is something you should care about. And to do that, we can’t rely on osmosis from product experience. Especially if we’re in invitation only mode right now. 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. So your brain, your body, all the cells in all of the tissues in you need energy to survive and to function. And if your energetic production systems are failing, you cannot experience mental health. You cannot experience physical health. So it’s truly the situation where metabolic fitness underlies physical fitness, it underlies mental fitness. And we talk about the other two, but we don’t talk about the foundation. And so the content effort is in and of itself intended to be the leading source of education about why you should care about metabolism. And then our research effort is going to pair with our direct-to-consumer product, to look deeper into mechanisms, into efficacy, into effectiveness. And so we’ll take the large data sets, the trends from our direct consumer group. 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 changes in their daily lifestyle.”

64:04 – Consumers over conformity

Levels has made customer experience and feedback the number one priority. The tool will be available as a B2C consumer product, so it has to fit consumer needs and wants.

“We’re starting off with the direct consumer play very deliberately. And you know, a big part of that is that we’re going cash pay. We need to unlock the traditional market forces. We need to get out of the situation where the product is forced into conformity. And then that will allow us to open those economies of scale and drive price down. That’s necessary. We can get to the socioeconomic considerations. But the second thing is if we can please a discerning audience for a premium product, we can build an exceptional experience. It’s table stakes here. Then I think that will ensure that the enterprise offering is well received. If we just designed something for B2B reimbursal, we fall into the same trap that so many other products have, that user experience doesn’t matter. What matters is selling an organizational decision-maker that this is something they should add to their offering. So by working backwards, not only will we be able to demonstrate with the data we’re generating from our paying customers that this is important and that it is helpful. We’ll also, I think, achieve a quality of experience that we wouldn’t get if we worked in the other direction going from enterprise product to consumer product.”

Josh Clemente:

So I would get Brand Flakes and eat it by, not only the bowl full, but also dumping in smoothies and stuff. And it is probably like the single most reactive substance I was putting into my body. It was always way above the diabetes threshold. It was crazy.

Ben Gilbert:

Welcome to this special episode of Acquired. The podcast about great technology companies and the stories and playbooks behind them. I’m Ben Gilbert, and I’m the co-founder and managing director of Seattle based Pioneer Square Labs and our venture fund PSL Ventures.

David Rosenthal:

And I’m David Rosenthal. And I am an Angel Investor, based in San Francisco.

Ben Gilbert:

And we are your hosts. Today we have a special episode that dives deep on the dynamic digital health ecosystem, especially with the lens on the complete upending of the landscape happening with companies going direct to the consumer. 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.

David Rosenthal:

Wearing mine right now.

Ben Gilbert:

Me too. We were introduced to the company by two of our LPs and members of the Acquired community. Shout out to Michael, Ms. Rahi and [Ben Grinal 00:01:28]. One of our favorite things about the incredible community that has developed in Slack and on our LP calls is that we get to learn about some of the most interesting companies in our ecosystem today. We are joined on this episode by the founder of Levels, Josh Clemente.

Ben Gilbert:

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. And then afterwards, at another Elon company, Hyperloop One. If you are wondering how the business models behind these new direct to consumer healthcare companies work, why the time is now for this revolution, or perhaps you just want to be one step closer to being a cyborg, this episode is for you.

Ben Gilbert:

Now, speaking of the Acquired community, we have a presenting sponsor who many of you will recognize from the Slack and our LP community, James Avery. James is the founder and CEO of Kevel. The company that provides API infrastructure, to quickly build custom ad platforms for sponsored listings or internal promotions or native ads and more. If you remember Dick Costolo talking on our Twitter episode about how hard it was to build their own advertising infrastructure, Kevel now takes care of all of that sort of thing.

Ben Gilbert:

The customers that use Kevel include Yelp, Rappi OfferUp, Mozilla, Strava, and many other large platforms. So over the next few specials, James is going to share with us the journey he’s been on in digital advertising since 2007 and his vision with Kevel. Your first internet business was that you became the owner of an ad network called The Lounge, before being obviously, the founder and CEO of Kevel today. Take us back. What was The Lounge?

James Avery:

Yeah, absolutely. So history and facts. Kevel edition here. Back in 2007, I was a software engineer kind of independent consultant. And like everybody else, I was writing the blog. And like most people who write a blog, I put Google AdSense on it. And you feel good about your five to $10 a month from writing the blog. But then, I got invited to join a small ad network called The Lounge. And so, the lounge was focused on developers. So that was my audience in the blog. And went from making $5 a month to $50 a month.

James Avery:

And the crazy thing was that there was less ads. So The Lounge was focused on a single ad unit with a little bit of text in a very prominent location, versus the three or four ads I had running with AdSense. To this day, that’s a really kind of fundamental tenant of Kevel is that the right ad in the right place to the right audience is exponentially more valuable to both the publisher, the advertiser, and it’s a much better experience for the user.

James Avery:

A couple months into being part of The Lounge, the guy running it sent us all an email and said he was deciding to shut it down. And at the time, I’d call myself kind of indie hacker. So I just shot him back an email and said, “Hey, can I take this over?” He quickly got back and said, Well, I guess that’s better than shutting it down.” So we kind of worked out a deal. I took over the network and kind of found myself writing code during the day and running kind of a micro ad network at night.

Ben Gilbert:

That’s awesome. Thank you so much to James. Since we know only probably a small percentage of you are in the market right now for an industry leading set of APIs to power your ad platform, we figured it’d be more fun to point you to a page showcasing their company story in history in true Acquired fashion. You can check that out at kevel.co/history. And our thanks to James and the team. Now onto our interview with Josh Clemente for Levels. So Josh, welcome to Acquired.

Josh Clemente:

Super happy to be here. This is going to be so fun.

Ben Gilbert:

We’re excited to have you. David and I are both right around the one month mark. David, I think just finished using Levels for his first month. I’m about to cross that threshold. And so many insights, so much fun to learn all this really cool company you founded.

David Rosenthal:

And I think you guys are maybe winning in the startup category for market share of Acquired community members as employees. Super, super fun to do this with you.

Josh Clemente:

Well, that’s a trophy I will hold proudly.

Ben Gilbert:

Well, Josh, I’d like to start with your background, because before Levels, you were doing some crazy interesting stuff. And I want to dive into unpack some of that a little bit because we would like to have you as a guest on Acquired, even if you hadn’t started Levels. So let’s start in sort of the SpaceX and Elon chapter of the world working on Hyperloop. First of all, can you explain to us what you worked on at SpaceX?

Josh Clemente:

Yeah. I entered SpaceX as a manufacturing engineer. So I was fresh out of school. I only really wanted to work for Elan when I had graduated and I didn’t have that job lockdown. So I actually sold used cars at CarMax for like three months and just kind of hung on to hope and worked my network like crazy to try and get in.

David Rosenthal:

Wow. Did you cold email Elon?

Josh Clemente:

I cold emailed everyone, including recruiters at other Elon companies like Tesla? I actually got an internship at Tesla first and then they got DOE funding right as I was about to join, and they shut down the design office I was going to work out and relocated. And basically we’re like, “Sorry, we don’t have a space for you. So we’ll do this again sometime.” And so I was just like, “Well, how about SpaceX? Can you help me get in there?”

Josh Clemente:

And what’s crazy is that I actually, out of pure coincidence, my uncle met Elon. He ended up working with Talulah Riley Elons, former wife’s father. And he met Elon. And he was like, “Oh, my nephew is really interested in your company.” He didn’t really know who Elon was, had no context whatsoever, and just dropped a name. And I don’t really know, but at some point, that filtered down and I ended up getting a phone call back. And I think my uncle put in beyond just that in-person, but put in like an email, good word as well to try and get me in there.

Josh Clemente:

And anyway, long story short, after three months of selling cars, I got a call from SpaceX and they were like, “Here’s an entry-level manufacturing engineer job”, which is primarily focused on taking the concepts that have been designed or first article has been built and tested, and then getting those into production. So we were a small company when I started. I think I was employee like 678. And it was just a big empty building.

Ben Gilbert:

Which is 10 times smaller than it is today?

Josh Clemente:

Yeah. So when I left, it was probably around 5,500 people, and it’s now easily 7,000 and growing. So it was very much the wild west days. You’re taking these components that have been designed and tested, but you need to get them into spacecraft form and launched. And most of the stuff had never been done before. So it was all like initial systems.

Josh Clemente:

And as a manufacturing engineer, it was focused around designing process, training up technicians and putting work instructions in place. And then also just kind of like building yourself. And so I spent a huge amount of time in that first stage in the factory. On the factory floor, I was kind of like a glorified technician, and then ended up learning a lot from the existing technicians and just the hands-on process of building aerospace components.

Josh Clemente:

And I spent a ton of time down at Cape Canaveral, just getting launch articles. So once the vehicle was prepared for flight, it was then integrating all the final systems, putting it through wet dress, static fire, and then watching it go to space. So it was just pretty wildly educational.

Josh Clemente:

And from there, I moved into what’s called a responsible engineering position. You’re responsible end to end. There is no other individual to point to and say, “We didn’t succeed.” It’s your fault. It’s the buck stops here, type role. And so I worked there on a few structural systems. And finally about halfway through my career at space X, we had succeeded at getting the cargo vehicle through its cots program. And we were starting on the human rated program at SpaceX. And so this required a life support system to be developed. And SpaceX had obviously no human rated experience.

Josh Clemente:

And I was one of the first four employees who had the opportunity to work in that department. And I look at that project as for sure the pinnacle of my experience at SpaceX. The team was just unbelievable. Some of the best people I’ve ever met and had the opportunity to work with. And I got to lead the pressurized life support systems team. So this was developing the oxygen breathing system.

Josh Clemente:

So the pressurized tanks that go in the vehicle that carry high pressure oxygen, distributed, regulate it down to lower pressures into the cabin, into the space seats, sensing oxygen concentrations, keeping the cabin at environmentally safe pressures and compositions, the fire suppression system, the docking adapting system that pressurizes kind of the space between the International Space Station and the Dragon capsule after docking. Kind of all of these pneumatic pressurization mechanisms. And so I was able to lead that small team, amazing team through to completion of the critical design review phase.

Ben Gilbert:

That’s great. And as we know now, Dragon cargo and Dragon crew have both successfully gone up. So must be crazy cool to see your work in action there.

Josh Clemente:

Yeah. It’s pretty surreal to be honest with you. It felt like an impossible amount of time away always. And then all of a sudden, it’s happened and it worked and it’s just such a huge-

Ben Gilbert:

Not bad.

Josh Clemente:

The stress is still high. There’s going to be another flight with former astronauts later this year. So the stress is still high every time because each system is unique. But as SpaceX develops more experience with re usability and reflight, it allows kind of some more confidence in breathing room, I feel like.

Ben Gilbert:

Okay. So Josh, before diving into the next chapter of your career and founding Levels, we got to ask like, is there a fun Elon story that you’ve got or something crazy that … I mean, everything that happens when you were working at SpaceX. I’m sure is crazy, but anything you want to share?

Josh Clemente:

I think one moment that always just reminds me of kind of the unique culture of SpaceX was really the first major launch. So I got to SpaceX just after they flew the Falcon 9 v1.0 rocket for the first time. So basically, SpaceX failed three times to get the Falcon 1 rocket into orbit. The fourth time it was successful. Then on the first try, they got the larger Falcon 9 rocket into orbit. So I got there just after that success.

Josh Clemente:

So the second Falcon 9 rocket was getting ready to launch. And at this time, the duration between launches was on the order of years. And so everyone was working full time, basically hand building a vehicle. So we had this machine, this entire like integrated first and second stage on the launch pad. And there was an air conditioning vent that basically conditioned the inter-stage. It’s basically the hollow space between the first stage and second stage.

Josh Clemente:

And the second stage that’s on top of it and has this very long vacuum nozzle. So it’s designed to give better efficiency to the rocket engine in the vacuum of space. It’s very long, and it’s very, very thin. It’s thin enough that you can tear it with your fingers. And it’s metallic, or it was metallic at the time. But it’s very well supported. So the skirt it’s called is supported by these rings.

Josh Clemente:

And so this air conditioning unit was blowing a high volume of air into the inter-stage to keep it purging. And we noticed during inspections, that the skirt had actually been fluttering in the high pressure sort of air source and it actually torn. And this was a really big problem, of course, for a number of reasons, just debris and also efficiency loss in the engine.

Josh Clemente:

The typical approach in old aerospace would be break everything down, de integrate, push the schedule out, analyze everything, determine why this failure happened, press release, redesign. The SpaceX approach was, Elon calls up one of the lead technicians in the entire company. His name was Kelly. And he used to basically work on airplanes and was an airplane mechanic. But the guy was just an absolute machine and brilliant.

Josh Clemente:

And Elon convinces him to get on an airplane to Cape Canaveral with a pair of sheers, go up in an extremely tall Jeannie boom. This guy is terrified of heights by the way. Crawl through a hole in the inter-stage, which is about yay big, into an integrated stacked rocket. So you’re 100 plus feet off the ground. There’s a second stage above you. And [crosstalk 00:14:22].

David Rosenthal:

Bombs below you and bombs above you.

Josh Clemente:

Yeah. No, it wasn’t fueled up at the time, but certainly it was intimidating, I’m sure to say the least. And then he trimmed the lower edge of the skirt off, removing the tear in the nozzle. And we did a little bit of a propulsion analysis to ensure that the second stage would have what it took to get to orbit, even with the loss of efficiency with the smaller skirt.

Josh Clemente:

But basically, Kelly hand trimmed this thing in the inter-stage, walking around on the dome of the first stage, and climbed out and we launched. And we successfully got to orbit. And the whole company ground to a halt when this happened. It was a huge, scary situation. And Kelly pulled it off. Part of the funny thing was that as an airplane mechanic, Kelly was like, “This is a little bit scary actually.”

Josh Clemente:

But he was terrified to fly. He hated airplanes. I think he’s seen too much. And that was the biggest problem was like convincing him to go up on the rocket was actually not the hard part. It was convincing him to get on an airplane to go to Cape Canaveral on the first [inaudible 00:15:24]. But I think it just speaks to the scrappiness of everything back then. It was really wild west.

Ben Gilbert:

Yeah. I’m sure you’ve thought about this a lot, but why does that work? SpaceX has worked and it’s been because of 1,000 or 10,000 of decisions like these. Was the industry just too conservative before, or is there something different about SpaceX that makes it possible for them where it wasn’t possible for people before?

Josh Clemente:

Definitely. I think that it kind of goes to psychology generally, but there’s this scarcity syndrome that if you have something, you fear losing it. And if you don’t yet have something, there’s nothing to lose. And so SpaceX was in, we have nothing to lose, mentality for the entirety of it’s kind of early days. And so it’s basically like we’re either going to run out of money and not get this contract and cease to exist, or we’re going to slice this thing off with scissors and try.

Josh Clemente:

And that’s kind of the approach was we were always one launch failure away from losing the company, until probably 2014. Once Falcon 9 v1.1 flew, we got a ton of orders on the books and things started to smooth out a little bit. But up until then, it was, Elon, every single opportunity he got was telling people, “Look, you personally have to succeed. And if you don’t, 2000 people are going to lose their jobs, including you.” He would not mince words.

Josh Clemente:

And I think that old aerospace had kind of been resting on its laurels in a sense, but also combined with the failures of the shuttle program was in the political nature of the entire program was worried about losing what they had. Any failure was career ending for a politician.

Josh Clemente:

And any failure was potentially career ending for the engineer. And so failure is not an option in Old Space, and it was always an option for SpaceX and that proliferates the culture all the way through to live streaming explosions of Starship. No other program does that because it’s like airing your dirty laundry.

Ben Gilbert:

Yeah. That’s such a good point. Man, we could talk about this forever, but I got to hear about how Levels came to be. So I’m wearing a Continuous Glucose Monitor on my arm. It has a patch with your logo over it. Catch me up from you were a SpaceX engineer to you decided to have David and I sitting across the internet from you wearing this. How did it come to be?

Josh Clemente:

It kind of started at SpaceX. And partially in a good way, partially in a bad way. But I kind of hit a total burnout wall in the late part of the life support program I was working on. And in retrospect, I was burning the candle in multiple directions at once. And certainly was just working, was not managing stress, sleeping very poorly.

Josh Clemente:

My average sleep was like probably four to five hours. And my approach to maintaining wellness was working out as hard as possible as a CrossFit. I was a trainer, but I didn’t really train people. I would train myself.

David Rosenthal:

And I get to imagine this was pretty common at SpaceX. It doesn’t look like Elon [crosstalk 00:18:31] much to this day.

Josh Clemente:

Yeah. There’s definitely one of the … It’s a classic, I think, startup environment where everyone wants to be the hardest worker. And you give a bunch of people who don’t like to fail an impossible deadline, and the failure mode is going to be them. They’re just going to like physically burn out trying to succeed. And that’s what it was like at SpaceX. And I think it still is to some extent.

Josh Clemente:

I had been doing this for my entire career at SpaceX, but I think there’s a compounding return. And we can touch on this as it relates to metabolic health in a little bit. But I had gotten to the point where 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.

Josh Clemente:

And I don’t know what changed, but I just constantly feel irritable. And I am struggling to make it through the day in terms of, not just professional performance, personal performance. Just keeping my siblings from hating me, and my significant other from walking away. It was that degree of like, “Something’s wrong here.” And I was getting these bouts of fatigue that were truly symptomatic. I would be 11:30 in the morning, and I would feel this like shakiness and cold sweat and kind of a whole body tingling or itchiness type sensation. And I would just need to sit down. And so I was like, “Am I about to pass out?”

Josh Clemente:

I had never passed out. I didn’t lose consciousness or anything, but it was a very real sensation. And so I’m describing this to my doctor and we ran a bunch of blood panels, kind of the standard stuff, and nothing came up. And so anyway, this was kind of going on in the background and I was also working on the life support program. And we were designing a super high pressure oxygen system to deliver breathing gas to the crew.

Josh Clemente:

And something that divers and astronauts could potentially face in a failure scenario is a high pressure, high oxygen concentration environment. And what actually happens there is because oxygen is such a reactive molecule, you can generate a huge amount of oxygen toxicity in the brain. It’s called central nervous system toxicity. And this can cause neurological shutdown. You can cause seizure, potentially even death. So this is why divers are limited. They can’t really just breathe pure oxygen underwater forever. They only have a short period of time.

Josh Clemente:

So I’m kind of thinking about failure scenarios like, “How do we avoid anything like this ever happening, obviously?” But also, “What does happen?” And I read a paper just randomly, just in my kind of side research from Dominic D’Agostino, who’s a ketogenic researcher at University of South Florida. And this paper described a series of studies he did on rodents, where they fed rodents a ketogenic diet. Actually gave them exogenous ketones, as well as feeding them just a high fat diet.

Ben Gilbert:

Which further initiated is basically almost zero carbs, zero sugar, are the only macro nutrients you’re eating are fats and proteins?

Josh Clemente:

Exactly. So in a certain macronutrient ratio, which is very high fat, your body will generate these macronutrient bodies called ketones, which are essentially a water soluble fat molecule. And that’s crucial because water soluble means that it can cross the blood-brain barrier and provide energy for the brain. So typically the brain is fueled by sugar glucose solely, and traditional fatty acids can’t cross that barrier. So ketones can. So they are a brain energy source.

Josh Clemente:

And in this study, he gave these rodents a ketogenic diet and then submitted them to a high oxygen, high pressure environment. And the result was that these rats could live up to five times longer without seizure, just because of the ketogenic state they were in. And that completely blew my mind, because up until this point, is a calorie absolutist. And didn’t matter what you ate. If you worked out hard enough, it was all just energy in the end.

Ben Gilbert:

Right. It’s all thermodynamics. You’re in a closed system, you should be able to burn it off.

Josh Clemente:

Right. Just an equation. And so although this wasn’t in humans, I’m obviously extrapolating to humans and thinking, “Wait a minute. So the macronutrient selection here is giving these rodents super powers. They can live five times longer in a deadly environment. What is going on here? How is this possible?” And that was the first moment where I started to think, “What super powers can be unlocked with dietary selection. And what am I doing to select for diet? Is there any objective data that I’m using to guide my choices?”

Josh Clemente:

And I was very unhappy by my findings, which was that, the only reason I eat things is because they taste good or because somebody else told me I should eat them. There’s no data. So I started to just self experiment. And this is like, as I’m approaching the end of my time at SpaceX, I’m still getting these extremely weird kind of stress induced, or I don’t know. They were symptomatic episodes.

Josh Clemente:

And trying to figure out what’s going on and then I come across this paper and I’m like, “Maybe there’s more to it than just the gym.” I work out really hard. I’ve got a decent amount of muscle. I can run fast, but I don’t feel healthy. So clearly, there’s a difference between the way you look and how healthy you are or perceive yourself to be. And so that’s when I started self experimenting.

Josh Clemente:

And my goal was to understand where my energy is coming from and how to optimize it. And so the primary energy molecule in the modern human is glucose. It’s the sugar byproduct of carbohydrate breakdown. And I started. I got a finger prick glucometer. It’s this little device you prick your finger, bleed on a strip, and you can get a single data point.

David Rosenthal:

You’re in the equivalent of Elon on the plane back from Russia, building the Excel spreadsheet saying like, “Hey guys, I think we can put something [inaudible 00:24:28] for a lot less money.”

Ben Gilbert:

Or to be even more obnoxious about the metaphor. It’s as if Fitbit hadn’t been invented yet, and you’re just like, “Hey, are you walking right now once a day?”

Josh Clemente:

Right. Yeah. It was like, what is glucose? It was step one. And then, “How do I gather this information into an insight?” Basically I’m having these energy issues and the energy is coming from these macronutrients. I’m not in the ketogenic state, which means my energy is either coming from glucose or it’s coming from fat. Those are the two sources that it can be coming from.

Josh Clemente:

And I can measure glucose by buying this little device at CVS and pricking my finger. So I’m going to try to learn something here. Started pricking my finger, got very obsessed with it, started doing it like 60 times a day at one crazy point. And then I was plotting the numbers in Excel to kind of emulate a continuous data source.

Josh Clemente:

At this point, I had started sleeping more as I was tapering down my SpaceX work and moving into Hyperloop, which we can touch on in a minute. So I’m sleeping more. I am in meetings, I’m doing work, I’m working out. During those time periods, I can’t prick my finger.

Josh Clemente:

So I’ve basically got point cloud in the morning, point cloud in the evening, nothing in between. And it’s not making any sense. It’s stuff, but it’s not helpful. And then I read a book called Wired To Eat, which talks about continuous glucose monitoring. And I was completely unsophisticated about biosensors [crosstalk 00:25:52].

David Rosenthal:

Yeah. Were they on the market yet? Or was this still before the [crosstalk 00:25:55]?

Josh Clemente:

So CGMs, Continuous Glucose Monitors, have been available in kind of trickling from the research like lab environment through to just therapeutic research studies. The first one kind of came out, actually it was an early Dexcom or a Medtronic. Those came out in 2006 to 2010 timeframe.

Josh Clemente:

So they’ve been out for some time, but there hasn’t been a mass market move until right around this time. So 2017, the FreeStyle Libre from Abbott’s hit the market. And so this is 2017. It was like just coming out. And the price point was good. And there had been Dexcom G5 and G4 prior to that, but they were like $1,000 plus a month minimum and very hard to get.

David Rosenthal:

Yep. And Dexcom was a startup started to build a Continuous Glucose Monitoring device for a diabetic therapeutic purpose?

Josh Clemente:

Yes, exactly. So at this time, really, even now, all Continuous Glucose Monitors have been developed for the sole purpose of measuring blood sugar so that you can manage diabetes. Dexcom, they only do one thing. They develop Continuous Glucose Monitoring sensors for type 1 diabetes. They’re starting to move into type 2. The difference between type one and type 2 is that type 1 is an autoimmune condition primarily, where the pancreas stops producing insulin.

Josh Clemente:

And insulin is the hormone that, it acts like a key to open the lock in yourselves and let glucose in. So insulin is a signaling hormone. And when the pancreas stops producing it, blood sugar levels start to go very high. And when glucose gets very high, similar to that oxygen scenario, it’s a reactive molecule. You start getting tissue destruction. So type 2 diabetes is considered more of a chronic lifestyle illness.

Josh Clemente:

So this is where over time, you break down the insulin glucose feedback loop. And either your body can’t produce enough insulin to keep up with demand, or you’re just kind of outpacing the production of insulin and you create what’s called insulin resistance by amplifying demand to the point where your cells stop responding to it.

Ben Gilbert:

And when you say breaking the feedback loop, this is like, “I have actively made lifestyle choices in what I’m eating”, where like the natural feedback loop in my body of, “Hey, I should be producing this much insulin based on what the macronutrients that just came in were.” That just gets all out of whack and you can no longer rely on the natural system to function anymore.

Josh Clemente:

Yeah. It seems to be actually potentially an adaptive response where your body’s kind of designed … We’ve been historically in a certain range of blood sugar values. And that’s where you want to stay. And if we’re constantly jamming more glucose into the system, then it was kind of designed for, you require more insulin than you’re designed for. So the devices have been developed for this condition for it, for diabetes specifically, which is very acute. Type 1 is very acute. Type 2 is kind of a longer sort of timeframe.

David Rosenthal:

It’s a spectrum.

Josh Clemente:

It’s a spectrum. Exactly.

David Rosenthal:

It can get extremely acute.

Josh Clemente:

Totally. I think they’re both acute frankly, but type 1, it’s a situation where if you don’t use insulin exogenously injected, the damage is happening much faster. And the effects are very immediate. Type 2 tends to be semi controlled in the sense the glucose levels won’t go as high because there is still some insulin feedback. So this is where the devices have been primarily focused.

Josh Clemente:

And so 2017, I read about this and I was like, “Oh man, I need one of those. I’m trying to emulate this with finger pricking. My fingers are black and blue and I still haven’t discovered anything.” So I went to my doctor and I was like, “Hey, check out my spreadsheet. I’m pricking my finger at ton. I’d love to get a CGM.” And he was like, “Dude, you are one of the healthiest people I see. If you saw the people who need that device, you’d kind of be ashamed to ask for it. That’s for people who have a disorder.”

Ben Gilbert:

You’re like, “Yeah, I’m trying to not get a disorder here.”

Josh Clemente:

So I was kind of surprised by that response. I thought, well, firstly, if you look at systems generally, you measure what you don’t want to fail. You don’t just measure the thing that is broken, because that’s obviously useless at that point. So in systems engineering, especially complex systems, you get as much data as you can and you observe failure modes as they develop and find ways to counter them.

Josh Clemente:

And so having already dove into the research on the kind of the metabolic health crisis that I had not known about at the time, or had not known about prior, but was aware of at the time, I was like, “Well, it’s just me trying to learn more about myself and understand if there’s something going on with my metabolic system.” And my physician was just totally opposed and was not willing to get me access to a CGM.

David Rosenthal:

And this is one of the things we really wanted to explore on this episode with you. It’s this disconnect. It feels looking at this industry, this huge disconnect developed between uses in a therapeutic sense as like medical interventions for. Your doctor is totally right.

David Rosenthal:

There are people out there who need this way more than you do, but that’s so zero sum thinking. Just because giving you access to a CGM isn’t going to prevent somebody else from getting that too, so how did the light bulbs start going off about, “Well, hey, maybe this can be a consumer device too.”

Josh Clemente:

Well, eventually after trying for several months, I was able to get a CGM, but it was through a friend of mine who brought one back from elsewhere where they’re over the counter. So he actually went to Australia and threw some in those backpack where you can buy them just like a glucometer. And I was still just interested. I was like, “I wonder what’s going on.” And pricking my finger didn’t have any insights yet. Put the CGM on and was instantly blown away by how bad things were.

Josh Clemente:

My blood sugar was essentially, it looked much more like a heart rate trace than a blood sugar trace. And huge spikes, huge crashes. Everything I was doing, all of the meals I was consuming were putting me above what would be considered the pre-diabetic postprandial threshold, so where your glucose should be after a meal. And very often, well into the diabetic range. And so my body was not managing blood sugar spikes effectively. It was able to bring them back.

Josh Clemente:

So it’s not like I was diabetic and had lost control, but it seemed to be like blood sugar would go very high. My body would release a ton of insulin. Overcompensate. I’d have these precipitous crashes. And I was able to just immediately correlate those crashes with the sensations I had been having where the shakiness, the hunger, the irritability was all perfectly same.

Josh Clemente:

And within two weeks, I had tuned my approach to diet just like trial and error on the meals I was eating and was able to bring those huge spikes down to a minima. And at the time, I still wasn’t sophisticated on what the ideal levels would be. And actually, much of this remains to be discovered. But I was able to identify that things I was eating that I thought were healthy, large servings of sweet potatoes, brown rice, quinoa, I was having huge, again, in the diabetic range responses to, which was highly counter-intuitive.

Josh Clemente:

I thought, I’m a person who’s like, I eat the paleo CrossFit style. Even though I love sugar, I love candy and I love dessert, that’s not what I’m eating for dinner anymore. I was in college. So just this realization that things were going haywire and it was the things that I thought I was doing well that were causing these huge inconsistencies.

Ben Gilbert:

Josh, I’ll tell you, in my first week of using Levels, I was doing the thing that I think the setup guide recommends, which is eat your normal diet, don’t try and eat healthy. The goal of this is to see what your normal stuff does. And I had recently worked in no sugar, just steel cut oatmeal into my diet. And I think it wasn’t actually steel cut. It was like the Quaker whole oats, but it was advertised as whole. And it was wild how much that spiked my blood sugar afterwards.

David Rosenthal:

Like wholly bad.

Ben Gilbert:

Threw a ton of Gushers in my mouth or something. And I was staring at it like, “Okay, I guess that’s not as good for me as I thought it was.”

Josh Clemente:

Absolutely. And oatmeal is a prime example. So you Google healthiest breakfast and it’s like top three, no matter what is oatmeal. And it’s considered heart-healthy. Well, last time I checked, and it has been a few months. But one of the worst foods in the dataset was oatmeal. So something like 70 plus percent of people that were eating oatmeal while using Levels had exceeded that pre-diabetes threshold, were well into the significant blood sugar spike territory from a food that’s described as heart healthy.

Josh Clemente:

And the reason that that’s interesting is that glucose variability, the number and peak sort of amplitude of blood sugar spikes is closely correlated with cardiovascular disease. So because that’s an inflammatory event, the number of these that are happening throughout the day, which is obviously higher for people with diabetes, it’s connected with negative heart outcomes. And so it draws into question, how these-

Ben Gilbert:

How heart healthy [inaudible 00:35:30].

Josh Clemente:

How that ended up on the oatmeal canister. And we’re seeing a lot of these examples. But at the time, it was just a realization, I’m using this device, which basically just spits out raw data. It gives you like you’re at 88 right now. And at least gives you a trend arrow, but it’s not telling you anything about what is creating this situation that you’re in. It doesn’t tell you how nutrition, exercise, sleep, stress are related. And I started to intuit these things through use.

Josh Clemente:

And it quickly became the most powerful accountability and education tool about how my body works that I’d ever used in my life. And that’s really the realization was just, this thing was hard to get and it’s completely transformed my approach to lifestyle. I’m a person who cares about health, but never knew the effects of cortisol. I had been stressed for a few years professionally.

Josh Clemente:

And personally sitting through a meeting [crosstalk 00:36:24] a stressful meeting. Sitting through a stressful meeting with a CGM on and seeing without calories, my blood sugar exceed 145 milligrams per deciliter, which is the postprandial kind of threshold for kind of a pre-diabetic response. Changed my perspective on stress in one fell swoop. I’d never seen anything so serious.

David Rosenthal:

Oh man, I’ll tell you, that was one of the biggest lessons for me. Doing one of the research wearing a CGM from you guys, Jenny and I were in Texas during the crazy power outages [inaudible 00:36:57] It was not even water, and my blood sugars during that week versus other weeks, it was just unreal to see the data. I knew I was feeling bad. I was very stressed. I was very unhappy.

Josh Clemente:

Much higher, David, or more spiky?

David Rosenthal:

Yeah. Much more spiky, big spikes, big crashes. And I saw it in my mood. I’m like, “Yeah, I’m very unhappy. I feel terrible. And there it is in the data.”

Ben Gilbert:

Okay. Now it is time for our second sponsor of this episode, masterworks.io. Did you know that only 1% of day traders actually turn a profit? So why are so many of us mistaking picking stocks for serious investing? You cannot control the markets, but you can control your risks. So how do billionaires like Gates and Bezos control their risk? They invest in blue chip art.

Ben Gilbert:

If that sounds unusual to you, you are not alone. It may be surprising, but contemporary art as an asset class returned 13% over the last 25 years compared to 9% with the S&P, with a lower loss rate than gold and almost no correlation to the stock market. With the fed injecting money into the economy at a rapid rate, smart investors are moving some of their wealth to hard money assets like art to hedge against inflation.

Ben Gilbert:

Masterworks.io is the only platform that lets you fractionally invest in paintings by artists like Banksy and Monet. The experts there will create a custom portfolio for your investment needs. They’ve been covered on places like Bloomberg, Business Insider, CNBC, and more for what they are doing. So please see information at masterworks.io/disclaimer, and you can sign up today and use code Acquired to skip the 15,000 person wait list, or click the link in the show notes.

Ben Gilbert:

Josh, I want to take us at a little bit of a more sort of flash-forward direction here. So folks should know that when you are using Levels today, it is an Abbott FreeStyle Libre device. You’re not like making your own CGM at all. But let’s just talk about the scale of the company a little bit. Thousands of people that are customers that are wearing these things are using this app. That are entering their food to help understand how to correlate, “Oh, this meal precipitated this spike.”

Ben Gilbert:

So obviously, it’s a company, it’s a commercial enterprise now. You started a startup. How did you come to the conclusion that, “Hey, there’s a startup to be started here and I can be the consumer brand.” Rather than just assuming, “Oh, you know what? Abbott or whoever, the makers of the device are going to be successful in the consumer market.”

Josh Clemente:

Yeah. My sort of patient zero experience with the technology was the only reason that I paid attention here. It was just like, this thing has changed my perspective. It’s given me confidence in areas that I didn’t previously know anything. And it’s informed me much more than a textbook would have about what’s happening behind the scenes, nutrition, exercise, sleep, and stress all in one device. So this is something that has real potential.

Josh Clemente:

But there’s a huge accessibility problem. It’s not being used for general wellness. It’s not being used for education. It’s only being used frankly, post-diagnosis when someone’s already sick and things have already gotten to a bad place. And the realization that across society, we have an epidemic of metabolic breakdown that is largely caused by chronic lifestyle choices.

Josh Clemente:

So that is the key unlock is that we are breaking our bodies down over decades without feedback on the positive or negative effects of our choices. And this has led to a situation where we have 90 million people in the United States with pre-diabetes, 70% of whom will convert to type 2 diabetes within their lifetime. And 84% of them don’t know that they have this situation. It’s because we’re making these chronic choices without feedback.

Josh Clemente:

So this was the tool, in my opinion. And it’s powerful for the post-diagnosis to manage a condition, but potentially even more powerful to prevent that next wave. So things started to congeal in my mind that this could really bring a lot of solutions into people’s lives. But the technology alone, the device alone, requires way too much. I had spent hundreds of hours, frankly, at this point, pouring over research articles. And was like, you can’t rely on that for people to get context for what’s coming out of the device.

Josh Clemente:

So it seemed like the huge value proposition was building an insights layer on top of this raw data. So pull it in oral and whoop and others do this now with heart rate and heart rate variability data. You take an LED that costs a few pennies and can measure heart rate and you transform it into a behavior change tool by adding an insights layer that tells you what factors have affected your sleep. What a recovery score looks like and why you should want to focus in this area of your lifestyle in order to improve it.

Ben Gilbert:

Or another allegory would be, there’s a huge amount of code between the sensor pack that’s on the back of my Apple watch and the rings that Apple is presenting me on, “Hey, make sure you go on a seven minute brisk walk before bed.”

Josh Clemente:

Exactly. Yeah. So it’s the difference between that Excel spreadsheet and a meal score saying, “This was a one or a nine out of 10.”Helping people just understand, “Okay, large-scale, I don’t need to know the background data on what the optimal blood sugar range is and what milligrams per deciliter are, what a postprandial peak is. I just need to know that that meal is not working as well as this other one.

Josh Clemente:

And so the insight is that it’s really a data science problem. It’s ideally innovation in hardware is going to be able to drive the sensors down to a more commoditized space. But the value proposition is not going to improve if someone doesn’t build the insights layer on top of it to contextualize and create behavior change. So that’s where things started. 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.

David Rosenthal:

So you started working on the company in 2017, right?

Josh Clemente:

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

David Rosenthal:

Full bore on it. And I’m imagining from the outside just thinking about what was going on at that time, that was right around the time of the rise of Hims and Hers and Roman. And there was this new idea out there that, “Hey, things that are locked behind medical prescriptions, but that really aren’t dangerous and could be beneficial to large portions of non-therapeutic populations, there might be a way to get that to the public.” Did you guys see that? Were you thinking the same thing? How did that come about for you guys?

Josh Clemente:

Yeah. One of the earliest issues was like, okay, let’s say we build the app that provides insights. It can pull in CGM data. Well, nobody has CGMs, and there’s no way to get your hands on them. So no one’s going to even Google that thing. No one’s going to find that in the app store. We have to get the hardware and the software together into the hands of people who want it.

Josh Clemente:

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. So that’s where things started was like, actually the accessibility of the hardware is the problem to solve first, before we can solve the behavior change issue.

Josh Clemente:

And companies like Hims and Roman and others were demonstrating a new model where you combine tele-health capability with low risk products, medical products into a direct to consumer experience. 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. But most of that is kind of hidden in an experiential sense from the end user.

Josh Clemente:

It feels very much like ordering something online, which is really convenient. And if you look at Romans numbers, they work in sexual dysfunction for men. And they’ve got massive conversion rates that no sexual therapeutic physician is seeing the number of young men come to them for Viagra at nearly the rate that Roman is. Because of the privacy and the sort of-

David Rosenthal:

The stigma.

Josh Clemente:

Distance between, it’s just like there’s a lot of stigma there. And so this convenience factor and the privacy factor has probably allowed a lot of people to improve their lives that otherwise wouldn’t. So I think that was a very unique business model that they put together and it gave us a lot of ideas like, “Okay, maybe there is a way, despite the sort of onerous regulations, there is a way that we can design something that would be elegant and as close to a delightful experience as you can get while still maintaining regulatory ethics.”

Ben Gilbert:

And just to put a fine point on it. What you’re basically saying is, yeah, people are still totally getting prescribed. The doctor is just someone that’s sending them a survey and communicating over a text, and it’s happening through a web browser, that feels like an online checkout. A little more friction as it should have, but not like you don’t have to go anywhere. You can do it from your phone or computer.

Josh Clemente:

That’s right. Yeah. So we set about developing a relationship with an independent network of physicians who intellectually are on board with the concept of informational biometrics. So using what would otherwise be used for management of a condition, but instead for education awareness. Starting there, and then building the sort of platform where we can collect the information necessary and deliver it to the physician who will then engage in an asynchronous electronic consultation with that patient.

Josh Clemente:

And so these are all inside of the telehealth regulations that have been built and are yes, definitely similar to the Hims, Hers and Roman, but building it in such a way that was specific and unique to the CGM use case, which again, this is a device, it’s minimally invasive. It has a little filament that goes beneath the skin. But it’s not a drug. It doesn’t have symptoms, side effects, complications, allergy, considerations.

Josh Clemente:

The risk is quite low, especially given that the user is not managing an acute condition. So there is no situation where someone who’s using Levels for information about their diet is going to inject insulin and potentially over inject due to faulty data. That’s the situation that type 1 diabetes and CGM is built upon.

Ben Gilbert:

Oh, so what if someone says, “Yeah, I am type 1 diabetic?” Do you say, “Well, actually you should go see a doctor about this.”

Josh Clemente:

Yeah. Right now the software that we are building, it’s not approved as a medical device. It’s not approved for diabetes management. So right now, although we are working as quickly as we can to get to the point where we could get this approved for therapeutic use as well, today we aren’t there and it’s really important that people who are managing an acute condition have a close relationship with their primary care provider, and all CGM data is being interpreted in a larger diabetes management context.

Josh Clemente:

So very much, I think, it’s a very different implementation for CGM and we will get there. And I think there’s tons of lifestyle unlocked to be heard for people with diabetes still. And looking forward to get there, but we’re not quite ready.

Ben Gilbert:

Yeah. And so do I have it right that the regulations didn’t necessarily change to enable this? It was just that several people sort of all at the same time. I know Curology is one of them in sort of the dermatology space. Obviously, Hims, Hers, Roman that you’ve talked about, it was sort of a reinterpretation or using technology to apply to existing regulations, not some new regulation that came about that made it possible?

Josh Clemente:

Well, there have been some serious changes in the telehealth regulatory space, actually since COVID. So much of this, it was already plausible, but it wasn’t clear … Many systems were, for example, not allowed to be used with telehealth when COVID rolled around, which is obviously a little bit after we had launched.

Josh Clemente:

We saw a huge number of, I think, improvements where physicians could be licensed across many states. Right now you have to be state by state licensed, even to practice telehealth. You could also use the platform of choice. So if you want to engage in synchronous consultation with a patient, you can use FaceTime, or you can use Google Meet. You can use whatever platform is most convenient, rather than having to use these clunky-

David Rosenthal:

HIPAA compliant-

Josh Clemente:

Yeah. EMRs is what they’re called, where you have a built-in web client that it’s just very old school and nobody has those platforms. You got to download an application, et cetera. So we saw a lot of, I think, advancement in just sort of a span of an overnight awareness of how much these owners regulations are sort of falling behind the times.

Josh Clemente:

But prior to that, 2018, 2019, companies had been building inside of those onerous regulations, but primarily leveraging asynchronous capability. So many states do allow physicians to correspond just through written communication, as opposed to having to be synchronous. And for someone who’s not managing an acute condition, it’s the most convenient path for them to engage in these sort of optional medical product requests.

David Rosenthal:

And it feels like from just a business model standpoint, what this insight that you and other companies had around this time, it sort of unlocks really a connection of a marketing, a whole new class of marketing. Like a year marketing to a wholly different customer base than medical devices in a therapeutic sense were before.

David Rosenthal:

But that enables, advertising is part of it or market things like you go on lots of podcasts, where you can talk to this whole population, and now they have an experience, it’s not you watch a TV ad for a drug and it’s like, “Talk to your doctor about so-and-so.” It’s like, “No, this is something that could be additive to your life, just like an Apple watch, just like a Fitbit [inaudible 00:51:00] And if you want to experience this product, here’s an easy consumer friendly route to do it.”

David Rosenthal:

You don’t have to go decide, “Yeah, I’m going to make an appointment. I’m going to remember to bring this up. It might be a little embarrassing. My doctor might make me feel weird.”

Josh Clemente:

Yeah. I think this goes to the why now question of digital health, which is historically, there’s two ways to approach health. It’s like, you’re either general wellness and making only general statements. You’re just saying like, “Eat healthier and workout more.” Or you’re going down the route of a medical experience, which is, as we all know, peppered with regulation, very complicated, inconvenient. There’s quite a bit of friction there.

Josh Clemente:

And if you look at the space, this is kind of how the companies kind of filter out. You’ve got the Livongos and the Amadas and the Onduos. And these are organizations that once you’re past the diagnosis phase, well, now you’re in the captured audience. And so it’s like your insurance will reimburse, your doctor will prescribe, customer experience.

Ben Gilbert:

I will say it is amazing there’s a PSL Ventures company that we’ve invested in, Alertive. There’s so much innovation in this space, even if you’re not going the direct consumer route, you guys have gone … What Alertive is sort of showing is, “Well, what if you just bring these great Amada and Livongo, these great consumer experiences to that sort of existing funnel population, rather than the new unlock. There’s sort of like a duo, two different paths of innovation going on here.

Josh Clemente:

Totally. No doubt about it. I think most of us, if it’s becomes too inconvenient, we just avoid the medical experience altogether. It’s like, “I’ll just kick the can down the road.” And certain people can’t. It’s like they have a legitimate condition. It’s so challenging to carry on your day-to-day life and have a healthcare issue, because the system is not designed for convenience.

Ben Gilbert:

Right. But to your point, once you’re in that, you also should have a great experience?

Josh Clemente:

Exactly. It’s a ton of a opportunity there. So it’s been like you have superficial kind of population generalities happening in the digital health space for the general wellness group. And then once you’re post diagnosis, you get more targeted, more consistent information, but the friction level is so high and the actionability of the data is just not the focus.

Josh Clemente:

Again, once you get into the captured, I hate using terminology like this, but it is very true. Once you’re in the captured audience, you have a payer who’s going to reimburse, you have a doctor who is going to draw from their list of potential treatments, and they’re going to diagnose and prescribe.

Josh Clemente:

And then you, the end user are just going to go through whatever experience has been built. And your feedback, your customer experience, your frankly process of improvement falls behind, I think, where any consumer mass market consumer product would be just because there’s so many conflicting incentives in there.

David Rosenthal:

Yeah. Well, you mentioned payer for folks in the audience who aren’t deep in the space. We’re talking about insurance companies and mostly, and maybe employers occasionally, and the government too, with your Medicare or Medicaid. And this is where that sort of business model, if you’re a company, if you’re a medical device company, if you’re a pharmaceutical company, if you’re something that’s been historically operating in the therapeutic space, it’s a great business.

David Rosenthal:

This is why biotech, this is why medical device venture has been a thing for so many decades. But it’s so different than the tech world where it’s like, you get something, you demonstrate efficacy, you prove that to payers, all those categories over a long period of time. And then you basically just have a license to print money forever.

Josh Clemente:

Well, it’s classic disruptive innovation versus sustaining innovation. If you’re working within this existing system, you can make the patient experience 10 times better, but you’re still working within insurance companies and billing codes and existing clinics. And again, can be a great business.

David Rosenthal:

And it takes years to get that set up where you’re like, “Yeah, I got the code from a billing code. Now I’m-”

Ben Gilbert:

Yeah. But the Levels, Hims, Hers approach, that’s the disruptive innovation. That’s the thing where you’re saying … It’s exactly Josh, what you’re talking about, you bring your spreadsheet to your doctor. Or frankly right now, I’m even thinking about, “Okay, I have my Levels data and I want to go figure out if I’m diabetic. Well, I should go talk with a doctor and show him my data.” I do get this sense that I’ll get kind of laughed at of like, “This is not a medical experience. Come on, don’t come to me with this.”

Josh Clemente:

Yeah. Again, it comes back to the way that the healthcare system is set up here is all oriented. And it wasn’t always this way, but I’ve talked to many doctors who believe this is the root. The insurance coding system changed everything. So once it became a requirement that a physician enter a diagnostic code in order to proceed with treatment, everything changed.

Josh Clemente:

It went from the nuance of an individual to, “If you don’t fit this bucket, I can’t do anything for you.” And this is the reason that no one, well, this combined with, I think, well intentioned but overreaching data privacy rules have led to a situation where no one uses their healthcare data to make a decision in their lifestyle ever. I can basically make that statement and feel confident about it because it’s just true.

Josh Clemente:

People get their blood work done once a year maybe. You get a single point that’s extrapolated to define your health overall. And you don’t use that to decide what to eat for lunch. You don’t know whether or not you’re sleeping well. And so you have companies that are, once you’re in that diagnostic coded section, it’s like, all right, I get this amount of reimbursal. It doesn’t matter whether my product is 10 times better. I’m still going to get that same reimbursement.

Josh Clemente:

So my cost go up, but the payer’s not going to pay me more. So you have a situation where everyone’s forced to conformity and you get one option. And the consumer, no matter how price and sensitive they are, if they’re using an insurance reimbursal route, they don’t have selection choice.

Josh Clemente:

So I think 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 consumer, and you’re providing the framework to meet the regulatory requirement, but you’re sort of working outside of the three party system. You’re saying, “This is the premium option.” And if user experience factors into your healthcare journey or your general wellness journey, this is the option that can deliver that experience, that quality of experience.

Josh Clemente:

And that’s certainly, I think, where the entire market, like we’re going to see a move in this direction because that also unlocks traditional market forces. And so now, you can have a situation where economies of scale step in, prices drop, and now you’re genuinely competing. It may start out pricey, but with time, I think we can get to the point where these premium non-reimbursed options are actually price competitive.

David Rosenthal:

Yeah. Okay. Great. So let’s talk about your business model at Levels. And you guys’ vision is for how this works. Well, maybe to start, can you walk us through just from a business model sense, how Levels works today and maybe a little bit what you’re thinking about as next step down the road, and then after that.

Josh Clemente:

For sure. So today, we’re still in development. So we’re in what we call our beta mode, which is invitation only. But the process is, you get invited into the beta and you fill out kind of an e-commerce like checkout experience. So you pay for the program and then you move into a questionnaire process, which is a consultation a prescription consultation intake form. And so you fill out some of the medical history required there, that gets transmitted to an in-state physician.

Josh Clemente:

So this physician is part of a network that is wholly independent of Levels. And they’re licensed in the same state that you reside in. They review your consultation form, and they determine whether or not an informational CGM is right for you, the individual. And this is entirely in the physician’s hands. Levels has no control over who gets a prescription and who doesn’t get a prescription.

Josh Clemente:

And that’s required for obviously, ethical independence. And the physician doesn’t have any requirements or quotas or anything like that from Levels. And so after that process and potentially an exchange of information, the physician may have extra questions they ask the patient. It’s entirely up to them. Once we get a determination from the physician, if a prescription was received, we fulfill that order through our mail order pharmacy partner.

Josh Clemente:

So that whole process feels very seamless to the end user. And you end up getting access to a CGM device if prescribed and the Level software. So then you go through a one month experience where you wear the CGM system, you go about your life. The first week we recommend you don’t really make any changes. You just kind of see where you are, how your body’s responding to the choices you’re making.

Josh Clemente:

The nutrition selections, the exercise you’re doing, the sleep that you’re currently sustaining, et cetera. In the middle two weeks, we recommend you start exploring. So try things you maybe don’t normally do, eat different foods, sleep well, walk after meals. All of these different sort of call metabolic challenges, but testing the boundary cases. And then the final week, the goal is to string what you’ve learned together into metabolic optimization. So shoot for your high scores.

Josh Clemente:

And after that one month period, people have developed metabolic awareness. So for the first time, they’ve closed the loop between the actions they’re taking and the reactions their bodies are experiencing. They’ve sort of been in communication between body and mind, in a way that previously wasn’t possible because we don’t have a sensory feedback mechanism for the quality of our nutrition.

Josh Clemente:

And so that metabolic awareness, they’ve only been practicing optimization for a week, but the lessons learned are quickly turned into habits. So when you first see that a 10, 15 minute walk after an indulgent meal can completely modify your body’s ability to process that sugar, that lesson sticks with you in a way that, hey, you should walk after meals, as general advice, it’s specific to you. It’s grounded on objective data. So those are the little magic moments that we’re looking to uncover as often as possible in the one month program we’ve built.

David Rosenthal:

Cool. And so the one month program is a beta, but what I think is so interesting is, so the price to participate in the program is $395, right?

Josh Clemente:

1. Yeah.

David Rosenthal:

So this is what’s so fascinating. This unlocks so much. On the one hand, for a consumer product, that’s a lot of money. On the other hand, there’s no other way you’re going to get access to this. And is the value of learning that worth $400, well, it’s up to an individual person. But you guys, you have thousands of people that have done it, 20, 30,000 people on a wait list. It turns out there’s a large population of people out there that are willing to do this, right?

Josh Clemente:

Yeah. So thus far, we’ve had about 7,000 people go through the beta program. And we actually have about 105,000 people on wait list right now trying to get in. And this is largely, again, we’re in beta mode. We’re really putting no effort into marketing. We’re doing a lot of educational effort. So podcasts and our content platform is a prime driver of attention. But the company is currently designed.

Josh Clemente:

We have our product effort, our content effort and our research effort. And one of the core issues we’re facing is that metabolism as a word is not common. Nobody is thinking about metabolism, let alone metabolic fitness. We need to inform the world that this is something you should care about. And to do that, we can’t rely on osmosis from product experience, especially if we’re in invitation-only mode right now.

Josh Clemente:

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. So your brain, your body, all the cells in all of the tissues in you need energy to survive and to function. And if your energetic production systems are failing, you cannot experience mental health. You cannot experience physical health.

Josh Clemente:

So it’s truly the situation where metabolic fitness underlies physical fitness. It underlies mental fitness. And we talk about the other two but we don’t talk about the foundation. And so the content effort is in and of itself intended to be the leading source of education about yeah, why you should care about metabolism. And then our research effort is then kind of going to pair with our direct consumer product, to look deeper into mechanisms, into efficacy, into effectiveness.

Josh Clemente:

And so we’ll take the large data sets, the trends from those, from our direct consumer group. 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. And that I think is how we get to the point where eventually, the consumer product is covered for insurance, self-insured employee programs, et cetera. So it’s sort of working backwards.

David Rosenthal:

Oh, so you think you can get to a point where payers not consumers will also be paying for Levels.

Josh Clemente:

Yeah. So the way we’re going about it is we’re starting off with the direct consumer play very deliberately. And a big part of that is that A, we’re going cash pay. We need to unlock the traditional market forces. We need to get out of the situation where the product is forced into conformity. And then that will allow us to open those economies of scale and drive price down. That’s necessary. We can get to the socioeconomic considerations.

Josh Clemente:

But the second thing is, if we can please a discerning audience for a premium product, we can build an exceptional experience. It’s table stakes here. Then I think that will ensure that the enterprise offering is well received. If we just design something for B2B reimbursal, we fall into the same trap that so many other products have, that user experience doesn’t matter. What matters is selling an organizational decision maker that this is something they should add to their offering.

Josh Clemente:

So by working backwards, not only will we be able to demonstrate with the data we’re generating from our paying customers, that this is important and that it is helpful, will also, I think, achieve a quality of experience that we wouldn’t get if we worked in the other direction, going from enterprise product to consumer product.

David Rosenthal:

It’s almost like to just completely beat the Elon analogy to death. It’s like Levels current iteration is the model S. Very expensive, but you guys have double digit millions of revenue on your wait list sitting there right now. You can use that to make the model three, to bring the price down. And then you can use that to launch the robo taxi fleet, vastly expand access.

Josh Clemente:

Yeah. I actually think we’re even earlier. We’re in the Roadster phase. It’s expensive. It’s hard to get up there. We don’t have huge scale. We know very well that this is the mode we’re in. But if we can satisfy the Roadster crowd, we can then take that success. And the sort of economic foundation that we build through a secure, higher margin business model and start to work down market. And we need to get to the model two stage. Model three is even too expensive for most people.

Josh Clemente:

So looking at the environment of, or really the landscape of metabolic dysfunction, it essentially focuses on lowest socioeconomic groups. It’s the people who have the least ability to access the Levels program who need it the most right now. And we’re well aware of that. It’s going to be a process. In order to get to that mass market option, where you have real time data informing your decisions every day, we need many things to change. It’s got to be hardware innovation. It’s got to be software intelligence. It’s got to be regulatory improvement, tons of different, very complex systems have to adapt for this to happen.

Josh Clemente:

But similar to what you’ve seen Tesla do, the entire market’s adapted. The whole automotive industry is different now. And that is all sort of building inertia towards the zero pollution future for electric vehicles. And I think that’s what Levels hope to do is trigger this new market, trigger innovation, make people aware that real time data, biometric data, health data being used in our daily lives is the key to turning around the sort of frustrating, complex and failing medical outcomes we’re seeing.

Ben Gilbert:

All right. Now, before we move on to the final part of our conversation, we would like to thank Perkins Coie, the official legal sponsor of these special episodes of Acquired. As longtime listeners know, Perkins Coie is a premier technology focused international law firm, known for providing high value strategic solutions and extraordinary client service to businesses ranging in size from startups to Fortune 50 companies. I have personally worked with Perkins, and it’s been an awesome experience. I know several other Acquired listeners who feel exactly the same way.

Ben Gilbert:

Clients rely on Perkins Coie for council on formations, IP protections and enforcement, financings, including IPOs, as well as the classic financing events in the private markets, and mergers and acquisitions among other areas. They also advise VCs in fund formations and in investments and represent their portfolio companies throughout the arc of their growth.

Ben Gilbert:

To learn more, you can click the link in the show notes or visit them @perkinscoie.com. So just to play devil’s advocate here a little bit, Tesla didn’t just make really good software that then got shipped to a bunch of GM and Toyota cars. They redid the whole thing from scratch.

Ben Gilbert:

So sort of a two-headed question here, why isn’t Abbot and the device manufacturers building the insights layer and building the consumer platform? And then two, do you think eventually, you also need to become a hardware company to really apply best-in-class research and push the consumer experience that you want to create?

Josh Clemente:

Yeah. It’s a great question. Tesla kind of did start off with focusing on taking … The concept was we’ll take AC propulsion batteries and software [inaudible 01:09:50] we combine them with Lotus.

David Rosenthal:

The T zero.

Josh Clemente:

That didn’t pan out, and I think for a number of reasons. But we’re in a better situation where the hardware is really convenient. It’s really good. I’ve been wearing a CGM from Abbot and, or Dexcom for going on three years now continuously. And the biggest issue remains the insightfulness and actionability of the data. So that’s where our core competency, our core focus is centered, is improving the delta between raw data coming out of a device and behavior change that needs to happen.

Josh Clemente:

So for right now, although there is ground to be covered on the hardware, no doubt. And I’m a also looking to the future where sensors are not just measuring one analyte, they’re measuring multiple and they’re doing it seamlessly and in combination with say, superficial metrics like pulse and body temperature, et cetera. That is the direction we’re moving. And I think we will evaluate all of the options necessary to make sure that that future comes true.

Josh Clemente:

So we’re not going to stand by and just like, “Hey, we’ve got great software. Anyone want to give us great sensors too?” It’ll be a situation where we’re going to joint develop and, or I think create the attention necessary that there is a market here, but innovation has to happen to feed it. And certainly being hardware systems background myself, I’m more than happy to get my hands dirty if necessary.

Ben Gilbert:

I bet. And from a value capture perspective then, as I think through the value chain of you’re providing the insights layer and the software and the consumer experience, you’re relying on other people to provide the hardware, this hardware has been in development for a really long time. How much of what the consumer ultimately ends up paying, do you get to capture versus having to pass along to the device manufacturers?

Josh Clemente:

So as I touched on our program includes access and fulfillment of the CGM sensors. And it’s kind of an all inclusive product experience right now. We have pretty good margins on the order of 50 to 60% for the one month program. We are also introducing a subscription model, which of course has lower margins, price point driven primarily by the sensor cost. And these devices are still fairly expensive.

Josh Clemente:

And so our subscription model, we don’t make any money right now. It’s kind of a second tier of product offering to our one month experience. And one of the reasons is that in development mode, we want to get maximum throughput. We want maximum fresh perspectives for feedback reasons. And so we’ve been biasing towards the one month experience solely. We have been slowly but surely trickling in a subscription offering. And again, not making really much on that product, but it does really down select for the most intent of our members.

Josh Clemente:

So people who are like, “I absolutely cannot stop using this. I need to subscribe”, they’re the ones that find the subscription offering and get in there. And so for that user group, we’re getting such high value information about who they are, why they’re subscribing continually, that that’ll inform us about what a subscription has to be, to really have staying power. And we’ll be starting to shift in that direction sort of simultaneously with, I expect some improvements in unit economics for the hardware, which I think are coming in the next 12 to 18 months.

David Rosenthal:

And I would imagine too, the subscription part of Levels will become so important over time for lots of reasons. One just simply from ongoing value to your customers, but also defensibility for you guys. If all of my data and all of my insights around that over a long period of time are in Levels, well, of course I’m going to keep using Levels, but also it’s reminding me of our big episode on Meituan Chinese super app.

David Rosenthal:

And one of the most critical factors for Meituan in surviving war on so many fronts against thousands of other companies in China, was the Dion Ping, their reviews database. The data from all of their reviews allows them to drive recommendations and insights of what to order for dinner, where to travel or where to book, so much better than just a flat system. I imagine for you guys too, the more ongoing data you have, the better your insights layer becomes.

Ben Gilbert:

Yeah. You guys got to pry my fitness pal under armor. That’d be huge to have that sort of auto completed, auto macro filled in data set.

Josh Clemente:

Yeah. Right now we’re definitely biasing towards low overhead for the user to log. So the goal is actually to connect the outcomes of your choices with the inputs to you. So just surfacing a picture reminds people, “Okay, what did I eat? In what portion? What was the composition of that meal?” And then giving them a score along with it helps to educate them very quickly with minimal input requirement on whether or not that was positive or negative.

Josh Clemente:

And so those right now, like requiring macro tracking or requiring calorie counting becomes onerous and our adherence drops off quickly. So we’ve done a bunch of experiments with this. But I agree, the future is to get more information from those who are willing to volunteer it. In terms of the sort of switching cost concept here, I think this is where our competitive advantage really lies.

Josh Clemente:

Again, we’re focusing entirely on the data science and on the actionability, the sort of behavior change platform. So the metrics that we’re producing, which are composites of a number of, well, clinically relevant data points about a blood sugar curve, how your body responds to a meal, how quickly, how high it goes, how long you stay elevated. All of this stuff is packaged into a composite that is actually quite sophisticated in getting better all the time.

Josh Clemente:

And so that’s where the metrics, they turn raw data into behavior change opportunity, and the majority of the value is there. So I do believe that as we continue to dive into the research, develop the largest data set of its kind, we currently do have, by coming up on an order of magnitude, the largest data set ever in non-diabetic glucose, especially when paired with lifestyle information. And we’re still in invite-only beta mode.

Josh Clemente:

The opportunity when we do go to market is going to be tremendous, and it will continue to allow us, like you said, as the dataset enlarges, our pheno typing will improve. So we’ll be able to identify y’all like this group, and these are the recommendations and insights that we can sharpen to make it more individual, more unique, and ultimately improve the outcomes for each person.

Ben Gilbert:

That’s great.

David Rosenthal:

Yeah. That’s so incredibly impressive. Speaks to you guys of building a company in a short amount of time, this incredibly complex space, getting to market, dealing with the regulatory issues, prescriptions, getting 7,000 people through the program, but it speaks even more to just the industry and how far behind. CGMs have been around for over 10 years. And that you already have the largest data set of nondiabetic CGM data of a population out there, that’s crazy.

Josh Clemente:

Yeah. It is. And one thing that I like to look at is just the historic kind of bifurcation of the market. We’ve seen so much data generation in these, and this sounds like a derogatory term, but superficial metrics. It’s like, “This is your pulse count, your step count.” So much of our wearable data is oriented here.

Josh Clemente:

And I think the reason that things are different now and going forward is that we’ve had a quiet micro electronics revolution. We’ve had like software eating the world. All this stuff’s been happening. Big data analytics are getting better and better. And in the meantime, we’ve also had more individualization and personal ownership concepts bubbling up. And so all of this is kind of coming together into a moment where people want to know more about themselves specifically.

Josh Clemente:

They don’t want to know about averages. There’s enough awareness that, just looking at 23 in me, where we thought that a specific gene would tell you enough to know what to eat for lunch. And that’s just not the case. It’s the uniqueness of the individual is so multivariate that you really need real time continuous feedback to know whether things are improving for you. So we’re seeing a moment where I think, all the pieces are in place where we can decentralize the solution.

Josh Clemente:

So by building large enough data sets, obviously anonymized in order to run research and sharpen insights, you can decentralize the actor down to the minimum viable one, which is the individual. So rather than trying to solve nutrition with legislation or policy, you can instead have each person solve for themselves, multiply that by enough people, and you fix the social scale problem without having to pass some complex administration package. You know what I mean?

David Rosenthal:

Obviously the food pyramid doesn’t work.

Josh Clemente:

Yeah. Just look at the way things have been done historically and all well intentioned. But the goal is just to broad it. It’s to try and solve for the average person. And there is no such thing as the average person. There is the individual.

David Rosenthal:

So Josh, before we wrap up, I at least have one question I’m dying to ask your thoughts on. I know you don’t have any insight information on this front. The rumor in this space has been for years, that Apple is working on bringing this CGM technology noninvasively to the Apple watch. Do you think that’s going to happen anytime soon? If it does, I imagine it’s a huge unlock for Levels as the insight layer for this.

Josh Clemente:

Yeah. I spend a lot of time diving into the future of the tech, and thinking about, how do we set up the chessboard so that the innovations happen that need to happen? So Apple’s dealing with a situation where they can’t break the skin. It will destroy the image of what an Apple product is, frankly. And so they have the toughest go at it. We can work with the hardware that exists, which does go below the skin. That filament is interacting with molecules of glucose in your skin. It’s the gold standard for measurement in real time.

Josh Clemente:

Apple needs to solve what I consider a mechanical miracle, which is non-invasive measurement of a colorless, small water soluble molecule in a fluid, which is primarily water. And they have to be able to do it in concentrations and resolution that is useful for people that don’t have diabetes. So the fluctuations are smaller. Concentrations are tight. Accuracy is important. I’m hopeful. It’s called Raman spectroscopy is what I think the technique they’re working on is, and it’s a light scattering technique. It’s complicated.

Josh Clemente:

And I’ve heard the rumors that the next generation of the Apple watch will have it. If they do, I’m going to absolutely be blown away. And I’m going to be excited because, if you look historically, the Apple watch is one of the best selling products of all time. And yet, Apple typically delivers the hardware before the software solution. So it gives Levels, like you said, the opportunity to leverage a prolific, non-invasive option and build the insights layer on top of it to help people contextualize.

Josh Clemente:

And it’s something like, Apple’s had the hardware necessary to do exceptional sleep tracking for a long time, but they haven’t. They put the hardware out there and other companies fill in the gap for sleep context. And so I think we would take the opportunity and very quickly leverage that. So I think we’re in a good position to benefit from really any innovation in the hardware space today.

David Rosenthal:

Well, historically, you think is invest like every time these events now come with much less frequency, but back in the day, every time there was an apple keynote for a new version of the iPhone with new hardware sensors, that just launched an opportunity for so many companies.

David Rosenthal:

Apple adds great cameras to the iPhone, it’s like, well, that enables Instagram. Apple has the camera app, but other companies are going to be the ones that … Apple’s not going to build networks on top of this. Apple’s not going to build great dedicated consumer software services on top of this. So that would be a massive opportunity.

Josh Clemente:

Yeah. I tend to agree. Not to mention the non-invasive measurement of a molecule on that concentration, just like it opens up the space for future analytes tremendously, so that, that will strictly be a benefit for what we’re trying to achieve, which is to solve the metabolic health crisis. And we didn’t really touch on the global implications, but estimates are that 30% of the global population is pre-diabetic. And 70% of those will progress to type 2 diabetes in their lifetime.

Josh Clemente:

So we’re talking about billions of people today who are on a path towards, on health, and really dramatic degeneration of their bodies over the next 10, 20 years. So something has to change. It’s got to change soon. And it’s not a situation where Levels wants to own every piece of that process. It’s really a situation similar to the energy crisis, where everyone’s got to go all hands on deck on this thing. And I would welcome Apple cracking this one, because I think we can always refine the insights they provide at scale to better the outcomes for specific use cases.

David Rosenthal:

Totally. Well, Josh, this has been awesome. Thank you so much for joining us. And for listeners, how can they get in touch with you? How can they interact with Levels? How can they get on the wait list?

Josh Clemente:

Yeah. First off, thanks so much for diving into this stuff with me. This was a really exciting conversation. It gets the wheels spinning to dive into the tricky questions. I love it. Anyone that’s interested in Levels should definitely jump to the website levelshealth.com.

Josh Clemente:

You can sign up for the wait list right there, and also access the blog, which is, it’s that educational opportunity to discover what metabolic awareness is, why it’s relevant, and kind of follow along as we introduce more, I think, insight into how the product is affecting people today, and how it’s helping them understand themselves better. And then check us out on Twitter and Instagram @Levels. And you can follow along in real time as people roll out their personal insights.

David Rosenthal:

Cool. What about for members of the Acquired community like Ben and miss and others who might want to come work with you guys?

Josh Clemente:

Well, I would love to be in touch with anyone who hears this conversation and gets excited. We do have a careers page @levels.link/careers, but also just reach out to us either through the Acquired community to miss or Ben Grinal. I’d love to provide my contact info directly to you guys to distribute to your community. So you’ll end up with my email address. And anyone that’s interested, reach out directly to myself or Sam. And we’d love to talk about the scaling opportunities that we have. Lot of challenges to be solved.

David Rosenthal:

Great.

Ben Gilbert:

That’s awesome.

David Rosenthal:

That sounds awesome. Well, listeners, thank you for coming on this health journey with us. We’re excited to be diving into these new sort of areas on Acquired. And we hope to do more of it coming up soon.

Josh Clemente:

Thank you guys.

Ben Gilbert:

Well with that, our thanks to our presenting sponsor, Kevel. And also to masterworks.io and Perkins Coie. Listeners, we will see you next time.

David Rosenthal:

We’ll see you next time.