The Exchanges

Q Yeah. And walk me through how that works. So, like, what was the valuation, and is it just one kind of thing that you've let open and let it roll, or what?

A Yeah, we've done a few different funding rounds. Uh, so when we started, we had a five million dollar valuation. Then we had a ten million dollar valuation. And most recently, uh, we're raising five million dollars at a thirty two million dollar valuation based on the progress that we've made. And so if you looked at a 48 month graph of the company, which is how old we are, uh, we've raised a little bit over 200,000 dollars per month from physicians just through crowdfunding and LinkedIn advertising. And so instead of having One venture capital firm, we thought, what if we made it more of a grassroots movement of physicians that want to improve healthcare with technology, but can also, uh, act as medical advisors. So, uh, we've done different price equity rounds based on our progress.

AI assessment note: “we started, we had a five million dollar valuation. Then we had a ten million”

Q And is the platform, I mean, is it a SaaS platform or no, not really?

A It was a SaaS platform in the beginning, last time we spoke. Where we were licensing it for 200 dollars a month, and doctors and dieticians could use it with their patients. What we ultimately realized is that that was a really challenging model, even though it sounds attractive and high margin, because the customers that were licensing the software were struggling to get reimbursed from the health insurance for telemedicine visits, and they were struggling with how do they sign up customers. And so what we realized is that we had the perfect program for Uh, you know, lifestyle modification program, and that's when we pivoted into working with the commercial health plan. So right now, we, you know, Solera enrolls patients from these health plans and sends us a file every day that says, here's the patients that picked Fruit Tree. Then we're reimbursed, 345 dollars and 60 cents per patient for the program, where we get, uh, one payment when the patient signs up, at which point they get a free wireless scale, another payment at week four, at which point they get a Fitbit at no cost, Another payment at week nine. And then the final payment's based on five percent weight loss. So we have all these data pipes set up that report things like, wait, how many pictures of food did they take? Did they use their Fitbit? Did they text message their dietician? And, uh, we get paid every Frida…

AI assessment note: “It was a SaaS platform in the beginning, last time we spoke.”

Q six percent of whatever my fat, right? I, I, I get slimmer, right? Uh, but you know, cause you have the tracking in place that I haven't watched any of the videos and I only logged on three times. That still counts in your data set. You can actually take credit for that and get your payouts for it, but there's not a direct correlation. How do you manage that?

A Yeah. So actually we would not get paid in that case. So for example, Uh, those four milestones, week one, week four, week nine, five percent weight loss, we can't earn the payment for five percent weight loss until we meet the requirements for week four and week nine. For example, for the second milestone, it's not just that they attended four weeks. They actually have to have been meaningfully engaged. So what that means is that they did two out of the following six things in a week. They took five pictures of their food. They weighed themselves three times. They text messaged a coach, report physical activity, watch a video, or read an article. So they actually have to be engaged so that it is kind of You know, attributed to us. Um, it can't just be that like, okay, they have a scale and they're weighing themselves and they lost the weight on their own. I see.

AI assessment note: “So actually we would not get paid in that case.”

Q Yeah. Thanks for coming on man. So tell us first, what does fruit street do and how do you generate revenue?

A Fruit Street is a HIPAA compliant telemedicine software product that's licensed to healthcare professionals, and it allows the healthcare professional to do HIPAA compliant video consultations with their patients, but also monitor their patient's health, diet, and lifestyle with medical devices, wearable devices, and mobile applications. For example, each patient that uses the software has a personal health record that integrates with Fitbit products to track physical activity and sleep. Wireless bathroom scales, FDA approved blood pressure costs and glucometers. And then our mobile application, which allows the patients to take pictures of their food and get feedback from a registered dietitian, for example. And so we use the software as a service business model where the healthcare professional will pay us a monthly licensing fee to use the software with the patients in their medical practice.

AI assessment note: “we use the software as a service business model where the healthcare professional will pay”

Q How do you take credit for that? How do you close that attribution loop and say, they're not just like, it's not just, we have so many people, of course some of them are gonna lose 10 pounds, of course some are gonna lose one pound, how do you Credit that back to what you're delivering.

A Yeah, so ultimately, um, the larger the number of, you know, patients enrolled, the more statistically significant the data becomes, and we're planning to, you know, publish this in a peer-reviewed journal. Um, we have to send our outcomes data to the Centers for Disease Control, and they monitor our outcomes. They require an average of five percent weight loss. So ultimately, what we can do is, um, a study where we publish our outcomes data, and we compare that to historical data, because there's Already been tons of research on the in-person program, so we can compare the in-person program to the video conferencing model to a different type of digital model and just compare directly, and that's what we're hoping to do in the next 12 months as well.

AI assessment note: “we publish our outcomes data, and we compare that to historical data”

Q Do you put them all though in a syndicate and just that one syndicate company is listed on your cap table, or are there literally a 180 different line items in your Excel sheet for your cap table for every name of every investor?

A Yeah, there's literally a 180, um, shareholders, so they're not in a syndicate. Um, we might have to do that if we ever reach the point where we hit the SEC's, um, investor limit, and then we might put them Uh, it used to be 2000. I think they raised it to 5000. I don't think we'll hit that. I mean, we'd have to raise quite a bit of capital to hit that. So we try to keep the minimum investment to 25 to 50 K. We've had some positions put in like a hundred or a quarter million. Um, but so I don't think we're going to hit that limit. But if we did, that would be one reason to start moving them into like special purpose vehicles or something like that.

AI assessment note: “there's literally a 180, um, shareholders, so they're not in a syndicate.”

Q versus the actual revenue you make. Right. So I'm, and I'm guessing there last time you were on the show, you said you were doing about a 180 K per year. That was about 18 months ago and you were only six or seven months in at that point. Um, do you require when people invest that they also adopt and use the platform as an onboarding strategy for you?

A Not necessarily, but ideally what we look for is, um, for example, if we could get physicians to refer to the diabetes prevention program, that would be great because right now the problem is that you go to your doctor, might be overweight, and they basically say just, you know, eat healthy and exercise, but that's not really going to do anything, right? So the idea is that what if these physicians could refer their patients into an evidence-based program that's a year long and 22 classes? So we're trying to work with our physicians to get their health system to refer, um, Some of the physicians use our software, but we're a little bit more focused on getting them to refer for the diabetes prevention program. So it's not a requirement, but it is part of our business strategy to work with these health systems where our investors work. So it's really strategic money, um, as well.

AI assessment note: “So it's not a requirement, but it is part of our business strategy”

Q So when do you cross five million in revenue, you think?

A Um, yeah, we're still, still a ways off, uh, you know, maybe, maybe in, uh, two years, but, uh, we have some pretty, you know, we just started selling to big, uh, fortune 500 employers. We're also about to launch a direct to consumer campaign where you might have like a 50 to a hundred dollar price point. I mean, if you look at businesses like Weight Watchers, they have, you know, hundreds of millions of dollars of revenue just from consumer advertising. And, you know, it's great to go through the health plans. Um, and we think that's a really good option if people can use their health insurance. But there's also people that would just, you know, pay out of pocket for a program like this. So, um, you know, we launched this diabetes prevention program about six months ago. We have really good outcomes so far. We have people that have lost 11 or 12%.

AI assessment note: “we're still, still a ways off, uh, you know, maybe, maybe in, uh, two years”