Brian Dolan in Mobihealthnews exclusively broke the news this morning that Quantified Self darling and pioneer (2009) Zeo has likely shut down, turning in not just for the evening but for the foreseeable future. Unfortunately for the founders, employees, investors and users, it illustrates how Clayton Christensen’s disruptive innovation works fast, fast, fast in the real world. Its sleep monitor/coach was perhaps too good or complex for the market, and certainly too expensive at $400. Consumers traded off sophistication and features for less expensive (Lark at $160) and better value in the wider ‘jobs to be done’ in health tracking (fully mobile, multiple activity monitors/trackers such as FitBit and Jawbone Up now include sleep.)
It also demonstrates how the ‘better mousetrap’ does not trump a sound business model adjusted to realities over time. Zeo to date has not attracted a buyer or new investors, despite heavy direct response TV (DRTV) and internet advertising to reach their targeted consumer market, endorsements from luminaries such as Dr. Eric Topol as late as last month’s HIMSS13, raves from dedicated Quantified Selfers, good PR and strong early-stage funding ($20 million). Your Editor from personal experience knows how DRTV can be crueler than March in exposing flaws in your plan and e-tailing can burn through cash like a visit to a Las Vegas high-limit blackjack table. What seems obvious in retrospect was that Zeo could have moved up the scale–disrupting the professional high-end of clinical sleep monitoring with a less expensive, fully featured device. But this was not to be. Based on an FDA search, Zeo never obtained or even filed for FDA registration as a medical device and in fact in its marketing deliberately ran in the other direction. Their cash was spent on going mobile.
Other pioneers with fine ideas have gone through this. Health tech is no exception. Zeo is but one example of the inevitable. Some morph: social media darling and kind-of-PHR Keas rebooted into a wellness rewards platform for insurers and apparently transitioned successfully over to large employers (VentureBeat). Waldo Health has totally rethought and is now Televero. Others, that we cannot reveal, struggle, dreams hitting the dust. If lucky, they are acquired at the right time or just-in-time, like Living Independently Group/QuietCare, MedApps, Vitality GlowCaps, Massive Health; if unlucky, the company files Chapter 7 or 11 and is ‘parted out’ like a too-far-gone old car. It reminds us that the fundamental but somewhat politically incorrect saying, ‘you can always tell the pioneers–they’re the ones with arrows in their backs,’ still applies. Health tech, whatever you want to call it, is no different than other cutting-edge businesses of the past. Your Editor recommends reading a few aviation and aircraft business histories for the parallels.
Editor’s Note: The Wired follow up has additional details, but its closing cheerleading for the QS hypesters decides to spin the facts though quoted: Pew has electronic/online/mobile self-tracking at a mere 21 percent [TTA 29 Jan] and their Suzannah Fox admits that health app uptake has been flat for three years. Now that may mean, according to venture capitalist Tim Chang, that “the market potential for this is vast. It’s everybody!” or more realistically, that there are many rivers to cross, deep and filled with rocks. As the Health-Gadget Market Swells, It’s Lights Out for Zeo’s Sleep Tracker