By editor on January 28, 2018 — 2 mins read

We stumbled into this business model accidentally. In my family, my dad, who passed away, had diabetes for 30 years. Of my 17 aunts and uncles, 11 of them had diabetes. The first thing I really did once I left Facebook was I helped co-found this company called Glooko, which is a diabetes company.

We started very accidentally, with, “Let’s just get all of the data off the glucometer.” Our suspicion was that if we could aggregate enough data, we’d be able to forensically attack this disease by giving interventional tools, by giving forecasting, by giving predictability, to a disease that was otherwise left untreated. People would check themselves every day, maybe, but the docs and endocrinologists would see these people once every six months.

What we found was, over time, that business model made sense. What we were doing was taking a very low cost sensor, putting it on an individual, capturing some very critical data around a specific disease state, sending it into the cloud, aggregating it across populations, and then acting.

When we first went to market, direct to consumer, it was a total failure. We had an Amazon store, we were trying to single-source these little Bluetooth modules, we tried to sell it, nobody would buy it.

We finally stumbled into a payer who said, that’s worth $10 [per member per month] to us. And all of a sudden, the light bulb goes off, and we’re like, “Oh my god, that’s $120/year.” We were trying to sell this little module for a few bucks.

The real business is in building these cloud-based solutions for provider and payer systems and what we really need to do is build very non-invasive, low cost sensors that can capture the data. So that’s what we did.

In asthma COPD, we did the same thing in diabetes, and we’re in the midst of doing the same thing now in chronic heart failures. Same business model.

In order of success I would say diabetes has done unbelievably well for us, asthma COPD is moving in the right direction, and CHF is a little early.

Let’s put $50–$100 million to work, roughly in that general idea, and see what happens around chronic diseases. Then we went to the other end of the spectrum.

Let’s take a bunch of really binary, low-probability bets on things that could be important. One of them was precision medicine, and one of them was a new kind of athletic sensor.

That’s how we started, that’s how it played out. What we’re finding is that the sensor business model seems to be the one for us, where we feel most comfortable in. We’re willing to take lots of capital risk. We’re building good relationships amongst payers and providers who now trust us, that when we come to them with a specific disease state we know what we’re talking about. (3:30)

Posted in: Entrepreneurship

Editor's Note

These are Chamath Palihapitiya's words. They are probably some of the best thoughts on VC, business, and life, but were scattered around the Internet. They live now in this archive.