FT
August 8, 2013 2:00 pm
By April Dembosky in San Francisco
One of Silicon Valley’s most successful entrepreneurs has
had enough of mobile payments and social media – he now wants all the data he
can get on ovulation.
Max Levchin, the co-founder of PayPal and Slide, is
partnering with clinics in the US to promote his new fertility tracking mobile
app, Glow, which launched on Thursday. The 38-year-old did not put any of his
own money directly into the company but has attracted a $6m investment from his
friends at venture capital groups Founders Fund and Andreessen Horowitz.
Mr Levchin said he is tapping into an increasing willingness
among consumers to track their own health patterns with digital apps and
gadgets, including people who want to lose weight or sleep better, but
especially women who have trouble conceiving.
“We are becoming much more self-quantified as a species,” he
said. “The data we’re getting on human health and behaviour will have some
impact on healthcare.”
Women’s health apps are among the most popular mobile health
apps today. Six of the top 20 most downloaded health apps, according to
ComScore, allow women to track their menstrual cycles and ovulation to predict
fertile times, either to assist in getting pregnant or to avoid it.
Mr Levchin said Glow is different. In addition to a user
interface and data-crunching technology that is “better than most”, he is
proposing a business model that could later extend to other health conditions
and create “a blueprint for the future of health insurance”.
Global sales for infertility drugs and devices were $3.55bn
in 2010 and are expected to rise to $4.77bn by 2017. The vast majority of
health insurance plans do not cover such costs. So Mr Levchin has put in $1m of
his own money to start a non-profit Glow fund for women who use the app. They
can choose to put $50 a month into the fund, and if they are not pregnant after
10 months, they get their money back, plus a portion of the pooled funds of
women who did conceive, to spend on fertility treatments.
Mr Levchin and co-founder Mike Huang said the incentive
would help Glow collect a superior data set from women that they can later use
to assess risk on a more granular basis. They can then set prices for insurance
products more precisely.
However, Glow will face similar challenges to any other
health insurance company that relies on the well to subsidise care of the sick,
said Les Funtleyder, a health care strategist with Poliwogg, a New York private
investment firm. Glow needs to attract enough women who will get pregnant to
fund the treatment of those who do not.
“Who’s going to use a fertility app but people who are
having trouble conceiving?” he said. “I’m a tad sceptical that they will have
better actuarial data than some of the enormous insurance companies. But if
they have a secret sauce, who knows?”
Eventually, Glow hopes to apply its model to other
conditions that are not covered by traditional insurance, such as certain
dental treatments.
Max has some of the most practical big data experience of
any entrepreneur or innovator I know of
- Jeff Jordan, Andreessen Horowitz
For now, the challenge is attracting enough women to sign up
for the app, and get them to enter data continuously and consistently. Glow is
enlisting the help of two fertility clinics to help them enrol more women:
Shady Grove Fertility in Washington and Pacific Fertility Center in San
Francisco.
Creators of other health apps have had difficulty raising
money, given a general Silicon Valley aversion to investing in healthcare and
other heavily regulated industries. Mr Levchin acknowledged that the Glow
financing was mainly the result of “inside baseball”, with investors he has
worked with closely in the past making a bet on him and his team, more than the
sector.
“I didn’t wake up in the morning and say ‘I have to do a
healthcare venture play,’” said Jeff Jordan, a partner at Andreessen Horowitz,
which rarely invests in healthcare. “Max has some of the most practical big
data experience of any entrepreneur or innovator I know of.”
The ultimate goal of Glow, Mr Levchin said, is to use big
data to “revolutionise” the “obviously broken” healthcare system.
Despite the fact that the US Congress and President Barack
Obama have spent the last few years hammering out an overhaul of the US
healthcare system, Mr Levchin and his investors say legislation will not prove
the answer.
“We keep trying to legislate our way to cheaper healthcare
in this country and it keeps failing,” Mr Levchin said.
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