- Duration: 29 min
- Platform: zoom
- Source: Read.ai 01JCE63BV41W3A3JWX37BX49AZ (https://app.read.ai/analytics/meetings/01JCE63BV41W3A3JWX37BX49AZ)
Transcript
[Scott Hickle]: Howdy, Scott. [Michael Houck]: How you doing? [Scott Hickle]: I’m good. How are you, Michael? [UNKNOWN_SPEAKER]: I’m good. [Michael Houck]: Good to meet. Likewise, man. [Scott Hickle]: Where are you based? I’m in New York. [Michael Houck]: What about you? [UNKNOWN_SPEAKER]: Austin. Oh, cool. [Michael Houck]: Um, it’s, uh, probably not crazy hot there anymore, right? Oh, it’s like actually livable now. [Scott Hickle]: I was there in, uh, in August once and I, I really regretted my decision. We locals get out of here for August. Yeah. That makes right. Airbnb, the suckers who will come through. There you go. [Michael Houck]: We’re at one right here. [Scott Hickle]: Yeah, that’s true. Never make the same mistake twice. [Michael Houck]: But yeah, man, look, I took a look at the deck. It’s super fun. It’s super cool. I’m excited to hear more, learn more about you. It’s Yeah, it’s, it’s one of those things where it’s like, once you see like, okay, that makes a lot of sense. But you just see it as like a in and of itself. And you’re like, Whoa, like you’re gonna put AI on my toilet. That’s crazy. But then you’re like, actually, it makes a lot of sense. [Scott Hickle]: Yeah, yeah, I agree. It’s one of those that is my co founders been thinking about since college, he introduced me to the concept like three years ago, literally, like second time we ever hung out as friends. And it was like a one of the recurring like, you know, conversations in a friend group for years before like, man, like, I’m gonna actually do this, right? Like, I mean, there’s a lot of like layers of like, bad jokes and puns, you got to kind of peel back to see the actual get like, holy shit, like this is actually like, I think very meaningful. Yeah. But you know, it took me a while to get there. [Michael Houck]: Yeah, I guess tell me the tell me the backstory. Obviously, you’ve you know, you sold another company in the past. So you sort of know what you’re doing. But yeah, give me some context of your journey. [Scott Hickle]: Yeah, so I’ll start at the very beginning. So like both my parents are physicians, my mom’s a geriatrician, my dad’s a medical device inventor and anesthesiologist. So like growing up, like I always knew, I actually I wanted to do something entrepreneurial just because apples and trees. But I actually wanted to avoid health care basically my entire life just because big shoes to fill. And, you know, like let’s stray out from the nest and go forge our own paths a little bit. So I studied mechanical engineering undergrad and spent most of the last decade doing product management. And then, you know, I did start in cell carbon zero. Tim, I met, as I mentioned, he moved to Austin as part of the exodus from SF. During COVID. And so my best friend from college connected us as, you know, Hey, you know, you should meet Scott as a soft landing into Austin. I brought him into the poker game and literally it was like a second or third game. He had pitched the idea of like a smart toilet. And I was like, dude, that’s amazing. Clearly that company would be named thrown and put a leaderboard on it and sell it into frat houses. [Michael Houck]: Like the original joke. Yes, sir. [Scott Hickle]: So I recruited Tim to the last company I was working at right after selling Carbon Zero, that was like a soft landing, but didn’t lose money. And all my investors made a little bit and it was like a live to fight another day with a lot of scar tissue and lessons learned and didn’t know what I wanted to do next. But J.D. Ross, who started Opendoor, was an acquaintance and he was like, come be our first employee at Royal and I’ll be your first investor when you go start your next company. So it was like a pretty sick stepping stone, right? Explicit, like, you know, come park here for long enough to figure out what you want to do next. And I recruited Tim to that. And we treated that, you know, this is dating before marriage. We know we want to start something probably together. Don’t know what yet. He also comes from a health care family, both. He has three sisters and a nurse and a mom that are all nurses. And so we ended up starting a health care staffing agency similar to like clipboard health or a shift key. [UNKNOWN_SPEAKER]: Hmm. [Michael Houck]: What’d you say? I almost worked at clipboard. I was almost their first product manager way back in the day. No way. Yeah. They, they made me an offer and I chose Airbnb at the time, uh, made more sense to me at the time, but I, I do regret that decision. [Scott Hickle]: Really? I mean, they’ve done quite well. So this is a fun full circle, full circle, full circle moment for us was when we raised the first round for three rounds, we then came in as one of our angels from clipboard after we’d already pivoted away from, you know, doing a clipboard competitor. But that was like a very fun, like full circle moment for us, getting to work with, you know, someone who we previously thought we’d compete with. So, you know, basically within six weeks of this, we built like the whole two sided marketplace, bootstrapped it. And within six weeks of like raising money to launch it, we realized like, ah, fuck, we missed the boat on this one. Like, you know, everything is shifting back towards like a W-2 full-time employment model post-COVID. It’s no longer an employee’s market. It’s heavily an employer’s market. Like on-demand nurse staffing is not as hot as it was, you know, six months ago, much less two years ago. Let’s, you know, go back and in search of greener pastures. And that’s when we circled back to the smart toilet idea and actually started exploring that and, you know, sincerity and kind of realized like, whoa, there’s a huge space here because there’s all sorts of continuous health monitors for, you know, cardiovascular health. You have 50 different, you know, wrist-worn monitors, Apple Watch, Whoop, Oura Ring. There’s another, you know, dozen sleep monitors that, you know, alarm clocks now that will track your sleep. There’s, you know, like continuous glucose monitors, continuous glucose or continuous ketone monitors. Nothing tracking gut health or hydration though, which is like kind of shocking to me once we kind of like started looking at it from that framing. Yeah, and then, you know, basically just did six weeks of like user research and putting up Facebook ads pointed at a landing page, just seeing when people sign up for this and interviewing strangers outside of Trader Joe’s asking, hey, if you could track gut health and operation, is that something you’d be interested in? And pretty, you know, pretty quickly convinced ourselves like, whoa, this is the time is now the world’s ready for this. [Michael Houck]: Yeah, I mean, look, gut health has been on my radar for a while. Uh, for context, my, uh, old co-founder, you know, my last company, we raised our series, AFM Andreessen, and then we went on to raise a fund and did all this stuff. Um, my co-founder of that company, he, um, actually had like a massive health issue because of his gut health. He was like, he had to step back from the company. He was in the hospital for months. He had like organs removed. Like it was a really big deal. Um, thankfully he survived, but like, there was a real chance he wouldn’t, uh, Um, and it was literally just because of his gut health and doctors like wouldn’t tell him that in time, basically. Um, so been a near and dear sort of issue on my radar for my own body. [Scott Hickle]: Um, ever since. Makes total sense. This is a Jacob. [Michael Houck]: Yep. Yep. [Scott Hickle]: I’ve talked to him. He mentioned his colectomy. Um, yeah. [UNKNOWN_SPEAKER]: He had a rough time. [Scott Hickle]: I, I, yeah. Like, Can’t imagine. I did not realize that that was happening while that was that during the launch house chapter. Yeah. [Michael Houck]: So we we, you know, we started in Tulum and then we came to L.A. And we were in L.A. Basically within three months, four months, he started to have issues. And then the next month after that, he was bedridden in the hospital for two months straight and had to step back from the company. We didn’t announce it for a little while after that, but like Yeah, it was a, it was tough time for him. [Scott Hickle]: Wow, dude. Yeah. Yeah. So, I mean, you’ve seen up close and personal, you get it. Yeah. Yeah. And so I think one of the big things for me is like, I look at like the composition of our wait list. It’s roughly 40%, what I call like the worry well crowd, right? So like people that wear earrings and think about health more from like a longevity perspective. Yep. And there’s, you know, of our waitlist is like folks with a chronic gut health condition that are exceptionally motivated to monitor like one particular aspect of their health to help manage that condition, right? So like people with Crohn’s and ulcerative colitis are very interested in tracking, you know, just like their day-to-day bowel movements and frequencies and consistency so they can track if they’re flaring. Similar with IBS, then you have like folks with chronic kidney disease or recurrent kidney stones formers. Yeah. And for them, the pain is much more acute and like very real. [Michael Houck]: Would you would you say that like, like, let’s project out five years from now, is the majority of the user base going to be the latter or the former? [Scott Hickle]: I think at the beginning, it’s going to be mostly folks with chronic health conditions. But like, when you their pain is like they’re much more motivated right and that said like I think in 10 years I think there’s a case to be made like it’s everyone just because hydration monitoring is like obviously relevant to just overall like how you feel day-to-day I think you know especially if we crack like kind of the vision for this is twofold right there’s like building like the world’s best best gut health and hydration tracker and then the second piece of it is like you know longer term on want to invest in multispectral imaging to look for trace amounts of fecal occult blood. And that is the earliest sign of colorectal cancer, which is the deadliest cancer in the country behind lung cancer. It’s effectively random, unlike lung cancer. And if we can reliably detect trace amounts of blood in your stool, we don’t need to be diagnostic. We don’t need to say, hey, you have colon cancer. We need to be able to say, hey, you have a pattern of blood in your stool that is concerning, and you should go talk gastroenterologist and show them this data and that will save lives. And like that is, you know, we live in a world where five percent of Americans will get colon cancer at some point in their lives, like one in 20. That’s fucking insane to me. And it’s it’s the second deadliest cancer, but the easiest to cure. Right. If you catch it early, you get a colonoscopy and you’re done. If you catch it late, it you know, you’re like five year survival chance. Dropped down like 15%. [Michael Houck]: Jesus Christ, I didn’t know that. That’s, that’s a wild, like Delta based on just like paying attention versus not. Yeah, yeah. [Scott Hickle]: But like, that’s the thing is like, you know, people don’t pay attention and like, fair enough. But I think a device that did that attention paying for you and like raised a flag when there was cause for concern is like, that is ultimately where I’d like this to go. And I think that version of is in every household in America. [Michael Houck]: Now, is this like, is this like a, are you gonna be building new hardware devices or sort of the hardware tech already in there? Like, will people need to buy a new device if they buy the original and then you release this? Or is it sort of like, hey, the tech’s already in there, we just haven’t built out the software side to like monitor it and all that? [Scott Hickle]: Some of both, right? So for colon cancer, that’s gonna have to be a new device. That’s gonna require new sensors for the for the trace fecal blood detection, but like we do have some hardware in here to allow us to measure like urinary flow rate. We haven’t built out the algorithms for it yet, but we do have like the sensor in there. [Michael Houck]: Yeah. Cool. Okay. So there is some B2 device, but there’s more to do with the existing device than this. Okay. Got it. When, what do you anticipate like the timeline being for, I guess, getting, I assume you need some sort of like FDA approval or something. I know it’s FDA, but some. [Scott Hickle]: Approval. And so that’s basically the way we’re thinking about this is like, I think we can build a business the size of like aura, just doing health and wellness without doing the blood detection. Um, just cause like, when you think about like, you know, the, the types of interventions we can drive are like just much more granular than whooping aura, which are like basically peak out at like drink, less alcohol, and, uh, you know, don’t eat heavy meals before bed. That’s like at that point, we’re 90% done. Percent of what folks are going to get out of like the learnings from like a Wooper Nora. I think for us, like just the nature of like how individualized people’s gut health is gives us a lot of opportunity to like, you know, talk about sensitivities or intolerances and a very specific like hyper individualized level that I’m very excited by. So basically kind of what the roadmap looks like for us is like build a health and wellness device first and continue to that device until we get to the point where we can do blood detection and then fork off and submit that version of the device through FDA. And the reason is I don’t want to go through FDA prematurely because we lose the ability to iterate. Yeah, makes sense. I would rather build a device in the health and wellness space. Once we need FDA, fork that version off, go through FDA with that, continue to have our business in the health and wellness world, and then basically run two separate products. Product lines. [Michael Houck]: So you drew the comparison between you guys and like the aura ring of the world, right? Sam at levels is a good friend. So like, draw the draw the comparison to two levels for saying they go one level deeper than, you know, than an aura ring would because it’s more, you know, it’s literally on your body, it’s more actionable. Like, how do you how do you see this fitting in against against that? [Scott Hickle]: Um, I mean, so we’re totally complimentary to levels because we’re looking at a totally different data set. The with Levels, I don’t know if Sam, but Josh at Levels is a really good friend. And they have a couple of challenges, frankly, like a couple of like, I’d say, like, the nature of their product, right, is they’re effectively like, built on top of someone else’s hardware. You know, so they, they got the fundamentally their first entry into market was a regulatory arbitrage. Right. Which is like, so they are still developing their own technology. And ultimately, they want to own the full tech stack. But like right now, they are, you know, a software layer on top of someone else’s hardware, which is great because it was like, you know, relatively quick for them to enter the market. The downside is that, you know, now those same companies are releasing their own direct to consumer over the counter continuous glucose monitors now competing with levels. And then the other kind of like, disadvantage is like, it’s just much more expensive to use levels on a monthly basis than it would be to use throne. Oh, I think you muted yourself. [UNKNOWN_SPEAKER]: I did. [Michael Houck]: I’m so sorry. [Scott Hickle]: My, my roommate just was like, hang tight. No worries. Yeah, no, I that makes sense. [Michael Houck]: Those are the same sort of challenges I see them going up against. So that makes sense. Yeah, it’s tough when you prove out the and then the hardware players are like, well, actually, hey, we like this market too. [Scott Hickle]: The other big challenge Levels had has is like their pricing because they’re using like basically consumable hardware devices. It’s like 200 bucks a month. And let me grab a piece of paper here real quick. I’ll just kind of sketch out for you. All right. [Michael Houck]: So a piece of paper is $7 a month. [Scott Hickle]: time fee up front, right? That's it. Or right, exactly. So a PM will describe this to me, right, which is like when you look at like the value you get from any new wearable over time, the graph looks like this. We're like, you get the most value in like the first like two or three months of using it. And then it tapers off somewhere above zero but below the peak. Yeah. And the challenge is like, you know, for or like levels, like you really get most of the value in that first month of using it every single day. And you kind of learn your path, right? Like, Hey, I spiked when I eat this, you know, I feel badly when I'm spiking. Like most of the insights come are front loaded. Right. But the, the cost to use a consumer is like uniform and high. [Scott Hickle]: So like, you know, like levels, like it's really valuable to you up here where you have that consumer surplus. But then once you drop below here, it's the ratio is not no longer worthwhile. Yeah. [Michael Houck]: You don't feel the ROI quite the same as you would have for dollars a month. [UNKNOWN_SPEAKER]: Yeah. [Scott Hickle]: That's the same challenge, by the way. Right. Which is like, you know, just justifying twenty dollars a month in the mind of a consumer is like much higher than six dollars a month like Aura does. And that like hugely informs kind of our approach to the business model, which is like, we would much rather charge upfront for the device. And then six bucks a month in perpetuity, because no one bats an eye at $6 a month. That’s literally less than my latte was this morning. So I guess, what do you say? [Michael Houck]: I mean, I personally don’t feel this like pushback, but I guess that some consumers would. What do you say to people who are like, Hey, you want to put a camera in my toilet? That’s like creepy. Like, what are you going to do with it? [Scott Hickle]: you know what are they gonna do with that that’s a that’s a creepy place to put something it’s so a couple things right the first is like it’s pointed down there’s like we just care about the contents of the toilet bowl there’s nothing unique or interesting there or like you know nothing unique or interesting there from like a privacy perspective you know like the the real privacy stuff is like your health data um but like poop like it can’t be traced back to you or re-identified to you. Like, that’s just like not actually, I think, that much of a privacy concern. The second thing is, you know, once we extract the health information, we delete the raw data because at that point it’s no longer useful to us. So, like, that’s number one and two. Number three is like, yeah, it is a camera and toilet. It is going to be polarizing to some people. And like, frankly, that’s OK with me because, like, to build a good business, we just need people that love you. Like, like haters, you know, only help insofar as they’re loud about it. Right. [Michael Houck]: It’s actually good for you in some ways. What’s the what’s the go to market? Because I think you look at like Squatty Potty, they have a lot of fun with it. Right. Like, are you guys planning to do like a like a fun brand or is it more like a medical sort of serious brand? [Scott Hickle]: Somewhere in the middle. So we like, you know, we don’t want to lean heavy into poop jokes. Kind of our internal mantra around that is like, leave it for the comment section, because like everyone makes the jokes for us. We don’t need to be the ones doing that ourselves. And the reality is, kind of what we were talking about earlier, there are people like Jacob. There’s people whose gut health is one of the defining characteristics of their life. And when they’re having a bad gut health day, it’s really fucking bad. And we have to be deferential and reverent around that, while also acknowledging that there is inherent levity to the fact that we’re dealing with poop. It’s a little bit of like a tightrope walk, but like the way I think about it is like we are a health company, not a toilet company. We want to be something that like evokes a health spa, right? Like I want this device to be something that you could see in like in Amman. It’s like it’s truly health is a luxury. I feel it. And I I think for us, like, you know, we are more than happy for people to make the jokes about us, we just don’t amplify it. [UNKNOWN_SPEAKER]: Makes sense. [Michael Houck]: I think that’s the right the right positioning. You can you’re going to miss out on some viral marketing moments, but you’ll you’ll build sort of the core users, I think, will actually like you a bit more and respect you guys a bit more than just like leaning into the jokes too much and making levity of their their conditions. [Scott Hickle]: Totally. And there will be viral marketing. We’ve gone viral twice already without meaning to. We’re prelaunch. Like, that’s wild to me. Like, and It wasn’t because we were making jokes, it’s just because people are like, holy shit, a poop camera. [Michael Houck]: Right, exactly. Cool. Look, I think it’s really cool. I think it’s interesting. What’s the, yeah, so what’s the timeline of sort of, you know, you say your pre-launch, what’s the timeline of getting it out there? What’s the go-to-market to grow it from there? [Scott Hickle]: Yeah, so we’re shipping the first hundred devices like in the next, before the end of the month. We got the first 10 assembled back at the office. Those are going out tomorrow. So we’ll ship out these hundred into November. The next batch will go out in spring, that’ll be another like call it three to five hundred and then we’ll do one more batch on the order of like five hundred to a thousand next summer. And the big reason is twofold. Number one is we just want to get some reps under our belt shipping hardware devices before we scale up to like contract manufacturing and try and get you know ten thousand out the door. The second is getting these first thousand devices out will give us some statistically significant data as to like which user cohorts are the most retentive because those are the ones we kind of want target for the big launch. So we can read messaging around it. Is it IBS? Is it IBD? Is it chronic kidney disease or current kidney stones? Is it the worried? Well, the, you know, folks in their forties and sixties thinking about aging gracefully. Um, and so those are the, you know, the two big things. And then as far as like go to market goes, it’s pretty typical, like direct to consumer marketing strategies. We’ll do the podcast circuit. We’ll do, you know, performance marketing. We’ll do organic social. We’ll do the creator thing where we pay a bunch of creators to create a video day and then keep the two accounts that are most performant and fire the three that aren’t. Is an obvious one for us. We’ve gotten literally pre-launch, we’ve already gotten Men’s Health, TechCrunch, Gizmodo, New York Post, Daily Mail, all organic, which is awesome. It’s one of those things, leaning into that, I’m very excited about, but I frankly don’t want to do that. Cause like right now it’s all the tone of the story is a lot, the novelty of it. And I wouldn’t do it in six months. And we have like user testimonials and case studies to point to where it’s less novelty and more like, look at the actual benefits people are getting for their health. [UNKNOWN_SPEAKER]: Yeah. [Michael Houck]: You can’t pull that lever too many times, especially in the early days of the company, especially in the early days of the company too. Um, so yeah, it makes sense the way that you guys have case studies and can sort of thread the line between, you know, Yes, maybe the article will make some pun or something like that, but hey, this is really helping people. [Scott Hickle]: Yep, exactly. Makes sense. [Michael Houck]: Cool. Look, man, I think it’s interesting. Where are you guys at with the rounds? I saw it was 5 million. Yeah, so up to 5 million. [Scott Hickle]: And honestly, the way we’re thinking about it now is a little bit different than when we first started because one of our investors was like, hey, it looks like up five million you’re raising, we budgeted 3.6 for the big launch, like end of next year. And kind of the breakdown for that is 15,000 devices. And we budgeted $120 in CAC and $120 in COGS for those first 15,000. So that’s like 240 times 15k is 3.6 million. Like we’re just planning to pay for that with activity financing. One of our investors is like, dude, like you can do like purchase order financing for like three to 4%. So now we’re at a point where it’s we might just raise significantly less because it’s less diluted to do it that way. And so now we’re currently sitting at two million in commitments. And basically the decision is we’re going to like, you know, we’re still in like late stage conversations with a few leads. So like if we find a lead, we might raise the full five just and be done with it. The other side of it, I mean, that also doesn’t preclude us from doing purchase order financing. Right. The other piece of it, though, is like, We’re at 2 million in commitments right now, and that’s more than enough to get to that point. So we’ll plan right now, just close whatever we have committed the week of Thanksgiving and be done with it. Cool. [Michael Houck]: Good to know the timeline, too. I think that’s smart. I mean, you know, the other argument would be that if you have the capital coming your way now and the launch goes well, it’s going to be way cheaper to take it on now than it would be. It’s going to be way easier to get in the door now, depending on how the launch goes. Exactly. [Scott Hickle]: So it’s in general, like I’m a fan of take the fucking money. Yeah, exactly. Exactly. [Michael Houck]: That’s the concise way of putting it. But yeah, no, I see the argument to sort of say, hey, we have something that people are really liking and maybe we maybe we play the game a little bit, too. So I can see it both ways. Well, look, here’s what I can do. So I don’t know if I mentioned, but So I’m working with Ryan Hoover from Weekend Fund on So this would be coming from Weekend Fund. So what I’m going to do is I’m going to chat with Ryan. [Scott Hickle]: Talk to Ryan. I had no idea you guys were working together. [Michael Houck]: That’s all you guys. You guys have talked. [Scott Hickle]: Well, I’ll like talk to like not during the fundraise, but like we have a bunch of mutual friends and like he’s at my birthday party or this year. So like I probably got that two, three months ago. I just go back and look at my calendar. But yes, like he is aware of Trump. [Michael Houck]: Oh, I think you froze. Oh. Oh, I think you’re back. You’re back. [Scott Hickle]: I don’t know if he lost you, but long story short, he is aware of Throne, but we probably talked like two months ago before we were raising. [Michael Houck]: Okay, cool. Well, I’ll shoot him a note. I’ll remind him that you guys exist. And yeah, we’ll see where it goes. They do 200 to 400k checks, pretty high conviction, so don’t need a lead or anything like that. And they can move quickly too. So I also have some other folks who might be interested as well, But yeah, the reason that I reached out to Philip and he reached out to you is specifically because I’ve worked with Ryan on a couple of deals right now. So, but look, I think it’s really cool. [Scott Hickle]: So we’d love to support and get in front of more folks too. Perfect. Michael, thanks so much for taking the time, man. [Michael Houck]: This was a fun conversation. Yeah, man. I appreciate it. And yeah, we’ll talk more soon. I’ll get back to you ASAP. [Scott Hickle]: Sounds good.