PayPal co-founder finds fertile ground for growth with Glow app

August 8, 2013 2:00 pm

PayPal co-founder finds fertile ground for growth with Glow app

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.