- Improving sleep is a massive market opportunity. It has fueled Oura’s growth as well as other companies like Calm.com.
- “99.9% of Americans will try to sleep tonight, but only 10% will exercise per day.” – Harpreet Rai
- For optimal health, you want a low resting heart rate (your heart is strong and you are relaxed when you sleep) and high heart rate variability (your body is adaptive).
- Most hardware companies try to raise too much money early, which sets expectations too high. It’s better to test and iterate. Hardware development timelines are too long and risk of delay is too high to keep momentum when over-capitalized.
- Employers have used Oura to keep their employees safe in COVID, sensor technology can often detect sickness before symptoms are felt.
CEO Oura Ring (2018-Present)
- Joined as President in May 2017 (4 years into Oura’s life)
- Previously worked as a portfolio manager at Eminence Capital for 9 years
- Began career in Investment Banking at Morgan Stanley
- Majored in MEMS, Micro Electronic Mechanical Systems (sensor design) at University of Michigan
- Sleep has been a major driver for customer adoption of the Oura ring.
- There is a limit to productivity if you are not getting good sleep.
- Poor sleep reduces your critical thinking ability. The quality of your decisions matters. For example, “if you’re a PM at a software app, making the right decisions on data analysis or UX flow can lead to dramatically different outcomes.”
“99.9% of Americans will try to sleep tonight, but only 10% will exercise per day, and only 15-20% will work out each week.” – Harpreet Rai
- Oura saw improved sleep in the pandemic, due to improved consistency of schedules from not having social events, regular bedtimes & wake-up schedules are a leading indicator of recovery.
- Oura data showed that people slept 45min less on Election night.
- Binge-watching & phones are negatively impacting people’s sleep.
It’s hard to eat well when you have a bad sleep
- Two hormones control your appetite. Ghrelin determines how hungry you feel. Leptin determines how full you feel after.
- When you are sleep-deprived Ghrelin levels double and Leptin levels go down by half.
- Evolutionarily, if you were not sleeping, it was likely because you were under stress from a predator (like a Cheetah), and your body wants to maximize calories to be ready to run.
How Oura verifies their scores
- A subject wears the Oura ring at a sleep lab (like UC Berkeley), where they are hooked up to the state-of-the-art sensors.
- 16 nodes read brain activity, and then data scientists tune the Oura ring’s algorithm to generate similar conclusions from its sensors.
Lowest resting heart rate
- Reaching your lowest resting heart rate requires both physical and mental relaxation. When you are relaxed, it reduces stress on the autonomic nervous system (the vagus nerve that connects your brain and your body).
- Research shows that when you get sleep that leaves you well recovered and well-rested, you’ll normally reach your lowest resting heart rate sort of midway through the night.
Heart rate variability
- Heart rate variability (HRV) is the variation between every single heartbeat.
- High HRV is a good signal; it means your body is more responsive and capable of adapting to situations. Low HRV is indicative of stress, smoking, and poor health.
- Affordable, compact sensors precise enough to measure HRV are a recent advancement.
- Electrical signals, breathing, temperature, and movement can indicate which stage of sleep you are in (Light, Deep, Rapid Eye Movement (REM), Awake).
- Oura designs hardware, develops software to analyze & display user’s health patterns, and markets their product direct to consumers & businesses.
- 500K+ rings sold to date, ~350K in the last year.
- Rings retail from $299-$399 with 2-year warranty, there is no additional fee to use the Oura app.
- 100% online at ouraring.com, they have not yet used channels like Amazon.
- Similar to Warby Parker, Oura designed a ring fitting kit that comes in a small box for customers to try on.
- Oura regularly monitors the temperature of the skin, HRV, respiratory rate, and other signs. Together these signals can typically detect stress and sickness before the wearer.
- For frontline health care workers, Oura donated 2000 rings and had a sponsor donate another 1000 rings to hospitals across the US.
- The team used early research and findings to create an algorithm rolled into an enterprise application, “Health Risk Management.”
- Oura partnered with the NBA, UFC, NASCAR, Red Bull Racing, Las Vegas Sands, and others for COVID monitoring using their Health Risk Management platform.
- Oura’s cost is low compared to shutting down the economy, daily testing, or high cost of human health.
- Most organizations can’t afford a test every day (they weren’t even available), the Las Vegas Sands used Oura to monitor the health of their employees and then used Oura data to prioritize those who got tests.
- Everything needs to be opt-in from the employee side. Empower the individual, notify them first.
- Oura will not tolerate companies using their rings to terminate employees. (Oura’s contracts give them the right to terminate their customer contract if enterprises misuse data.)
- Admins can have pre-customized notifications to employees (For example: send a notification when someone may be sick).
- Oura sees interest from a lot of corporations as they go back to the office to de-risk against new variants and Flu season risks.
- “Oura-wellian.” – Jason
- Companies want de-identified tracing tools and frameworks to avoid data risk on their part. They embrace Oura’s cautious and thoughtful approach.
- Google and Apple have both said they want to own health. Apple has the Apple Watch, and Google has acquired FitBit.
- Oura plays nicely with both of them; they distribute the apps on their app stores and integrate with both Apple Health and Google Fit.
- Oura can remain neutral because of its focus on sleep and because it is seen as a complementary product, many Oura users (estimated ~1/3) also wear a smartwatch.
Why the finger is better for monitoring than the wrist
- For accuracy, the pulse signal from your finger is about 100 times stronger than the wrist. This is because the skin is thin, and the arteries are close to the surface.
- Oura samples at 250 hertz. This means their LEDs fire 250 times per second (LEDs are used to shine into the arteries to measure blood flow).
- If bootlegged an Apple Watch or Fitbit to 250 hertz it would die in about an hour.
Oura roadmap & potential experiments
- Oura’s current competitive advantage is the accuracy of its data. Improving its sleep staging algorithm to continue to be the market leader is important.
- Jason asked about implants: Basic procedures for simple implantation still cost $5K in the US, so it’s not going to be a near-term solution.
- Due to the size of the data set at Oura, they can improve their algorithms faster than the hardware sensors themselves. More data improves the fidelity of the insights.
- Oura will likely create both thinner rings and ones with more design.
- They are thinking through the best way to do design partnerships and have already had inbound interest from brands like Tiffany and Gucci.
- Test and iterate. Make sure you have product-market fit, then when you are more confident, raise more capital.
- Many hardware companies aggressively raised capital, but with an aggressive raise comes high expectations. Physical products have a longer development cycle than software, so investors accustomed to software performance will be disappointed.
- Companies like Jawbone fell victim to this dynamic.
- Apple is selling 15M+ Apple Watches, which is beginning to show the size of the market.
- Oura has seen a lot of inbound interest from SPACs, but does not see it as strategically advantageous at this point.
- Harpreets’ hedge fund background makes him appreciate the rigor of being a public company, but he knows Oura is still early in its distribution maturity (only DTC with some enterprise.
- M&A in the wearables & health space will continue to heat up. Google closed Fitbit, Amazon launched a wearable, and rumors suggest Facebook will be trying to do this as well.