As New Year’s resolutions are made and broken, revenues for Noom, a mobile weight loss company, have soared to $ 237 million. Boasting over 50 million downloads and users who generate the bulk of the health app’s revenue, Noom’s latest figure is up from $ 61 million in 2018 and $ 12 million in 2017. , quadrupling income.
“The industry is somewhat seasonal, although being in the behavioral change business we don’t want people to think January is the only time you can be healthy,” said co-founder Artem Petakov. . Forbes. “It’s a behavior change product that requires a very subtle touch to push people. “
Noom’s behavior change weight loss product had been in the works for eight years. Saeju Jeong and Petakov formed the company in 2008 and launched the app in 2016. The past few years have been a race to meet demand for their product and iterate based on user data. January, and all of its resolutions, is always a busy time for the New York-based company.
Petakov, a former Google engineer, studied psychology and computer science at Princeton. Noom is a marriage of these two fields, which aims to “disrupt the weight loss industry” using AI, evidence-based guidelines from physiology, psychology and cognitive behavioral therapy. He positions the company more as meditation apps such as Headspace or Calm than Weight Watchers.
“Weight Watchers can focus on the latter way of counting points, but if you think about it, this is all a different way of saying, ‘Eat this, not that’, and we know psychologically that ‘Eat this, not that. this “is not a great way to change your behavior,” Petakov said. “We’re trying to figure out a habit, break it down into, ‘What’s the trigger that’s happening? What thought arises in your brain and what action does it cause you to do and can we interrupt any of these things? This process is rooted in cognitive behavioral therapy.
In addition to tracking and catching bad behavior, new users submit a quiz and set general goals like losing weight or getting back in shape. The questions increase in specificity and at least range from a family history of illnesses like diabetes or heart disease to what time a user tends to eat. The app includes a messaging feature where a coach or group of coaches interacts with users to help them achieve their goal. Users can also track weight, food, exercise, blood pressure, and blood sugar. There is also a food database that includes 3.7 million items.
In the popular apps subsection of the Apple App Store for health and fitness, there are 240 apps including MyFitnessPal, Fitbit and Calm from Under Armor, which provide physiological and psychological solutions for better health. and are all cheaper on a monthly subscription than Noom. The market for digital weight loss tools is saturated – last year the US market was worth $ 1.4 billion and should grow. Noom ranks 23rd in the Apple App Store among health and fitness apps and is rated 3.9 in the Google Play Store.
“Because we are changing the brain, our results are long lasting, 60% of users one year after using Noom are still maintaining their weight loss,” says Petakov.
The average weight loss for people who complete a program is 7.5% of their body weight over four months. The age of users on the platform is relatively evenly distributed among users aged 18 to 60 and over. The largest percentage of platform users are those aged 40 to 59 at 24%.
Users can purchase subscription packages ranging from one month to one year, and a 14-day sliding scale trial, which costs between $ 1 and $ 18. The average monthly price of a subscription is higher or lower, depending on the length of the program selected by the user. Average monthly subscription prices range from $ 30 to $ 49, but the company says a four-month plan at $ 129 is the most popular, which works out to $ 32.25 per month. The second most popular plan is a six month program at $ 149, or $ 24.83 per month. The shorter one-month and two-month plans are $ 59 and $ 99, respectively.
“We use a variety of factors to pick and suggest a set that we think would appeal to a user. Much depends on how long we think it will take them to achieve the health outcomes of what they are trying to work on, ”Petakov said. “It’s a somewhat episodic product; it’s not like an ongoing subscription forever.
Overall, users who need more time on the platform to achieve their goals will pay more, while the reverse is true for users who, according to the app’s algorithm, can achieve their goals. goals faster.
“We spend a lot on marketing, and we do it profitably. If someone only stays for a month, we don’t make a lot of money with that person, ”said Adam Fawer, COO and CFO of Noom. Forbes.
Fawer says MyFitnessPal, for which the subscription fee is $ 9.99 / month or $ 49.99 / year, is little more than a calorie counter, and like Weight Watchers, which charges a monthly fee. standard $ 19.95, does not offer TCC. He offered additional insight into Noom’s higher prices.
“The longer you stay in the program, the more human resources you use in coaching and, therefore, the higher our costs,” explains Fawer.
At the end of 2019, Noom hired 1,000 coaches to help with the “vacation rush”, bringing its number of employees to 1,800. But the company describes itself as “staunchly against the gig economy,” saying more than 90% of employees are full-time, with benefits. About 100 people are “grassroots”, who are not coaches.
“We liked the fact that AI, combined with coaching, retains an asset-light business model,” said Miyuki Matsumoto, Managing Partner at Aglaé Ventures, the technology-focused investment arm of Groupe Arnault. Forbes. Aglaé Ventures participated in the company’s Series E financing, as part of a $ 58 million funding round led by Sequoia Capital.
Noom’s success, like weight loss, did not come overnight. This slow and steady growth attracted former Goldman Sachs Matsumoto, so much so that it was his first contract after recently joining Aglaé.
“What struck me the most was the incredible dedication, persistence and execution of this team,” said Matsumoto. Forbes. It’s not one of those overnight successes; it took 12 years to build. For a team like Artem and Saeju, who worked for almost a full decade before the financial measures took effect, in a way, this got investors excited. A lot of that is because they were dedicated to a great mission, ”says Matsumoto.
Noom’s mission to help people lead healthier lives continues. The company is looking to diversify into health services outside of weight loss. Most recently, she has partnered with Eversana, a life science company that helps with drug pricing, on a treatment compliance improvement program. Noom is also in partnership with Novo Nordisk, providing education and psychological support to patients using Novo Nordisk pharmaceutical weight management drugs. The company is also looking to enter new markets internationally, but investors recognize that it will not be easy.
“It will be a challenge to decide what to focus on next because you don’t want to do too many things at the same time,” Matsumoto said. “Once they decide where to focus these efforts, they will get there. “