As someone working in the healthcare market, as well as tech gadgets and luxury regularly, I couldn't help monitor the rise of fitness trackers for many years, well before the birth of the Apple Watch.

Tech fitness has always been a glorified collection of gadgets at the intersection of geekiness and sports addicts (if I had been told such a diagram would exist in the eighties, it would have made my teenage mind explode). Brands like Fitbit, Samsung (Galaxy Fit), Xiaomi (Mi Band), Huawei (Huawei Fit and Watch), Withings, or even Fossil (Fossil Gen) have been trying for a decade or two to make sense of this market, hoping for a transformational event where consumers would suddenly feel they have to monitor their cardiac frequency variability daily. On the other hand, brands like Garmin, Polar, or Suunto ended up seizing the top space for prosumers riding their racing bike several times a week or climbing the Mont Blanc every other weekend.

Every one of these brands, since April 2015, has just been trying to survive the Apple Watch.

Ironically enough, it's worth remembering that the California giant had no clear idea at the launch that fitness tracking would be the watch's killer app. It took them the best of three years to get there, and Apple only unveiled their Apple Watch Ultra last year, competing with high-end "serious" sports brands.

Being the technophile I am, I use these products a lot myself (although I will deny it in public, I've been seen using both an Apple Watch and a Withings Scanwtach). And two weeks ago, I decided to try the new tech kid on the fitness block: a connected ring. I'm not going to benchmark the few models on the market for you, but I can tell you that after some comparisons, I ended up buying the lightest one that works without a subscription. It's from a Bangalore upstart called Ultrahuman. And I really love it.

Ultrahuman. Real-time nutrition and fitness tracking.
Ultrahuman Ring AIR ยฎ is the worldโ€™s most comfortable and compact smart ring that monitors your sleep, movement and recovery.

The current fitness vs. MedTech conundrum

Interestingly enough, when startups, investors, and current customers see a connected watch or ring, they now have expectations. It should be a fitness device.

Connected fitness is a grey zone of people caring for their own health or into sports enough that they want to monitor some basic physiologic parameters daily but are not really into charting anything with medical implications.

In which case, connected device startups explore medical applications to grab some marketing brand value ("testing medically for X, Y, and Z") but never cross the terrible line of actually delivering medical care monitoring. At best, they'll just tell you that you were seated for more than an hour and that you need to move your butt.

The logic of selling fitness and marketing it with medical claims is powerful. In practice, it doesn't work as consumers have been largely immunized to this approach by decades of brands selling chemical shampoos or dubious skincare. But the logic of showing high-end research and not grading it as a mass-market product is stubbornly active in most players' minds

Going down the fitness road, you still know that eventually, Apple wins, and you'll have to live under their shadow, risking being Sherlocked at any time.

Being "Sherlocked" refers to a situation where an external application or innovation, often created by independent developers, faces a significant setback or becomes obsolete when a major platform or company incorporates similar features into its core products. The term originated from an incident involving Apple's update to the Sherlock search tool, which overshadowed an external application called Watson. It's a grim reminder that adding a feature to an existing market where a huge platform is dominant doesn't make for a sustainable product.

New entrants eventually end up following the pack, dipping toes in clinical research, and selling non-medical devices while burning tons of marketing money on social media to have a chance to exist. The more money they burn, the better the opportunity to position themselves. It's a very short-term vision, but until now, VCs preferred it. Also, you don't have to reinvent the connected wheel, provide the same types of monitoring, and maybe add one or two more (even if they're useless for now, remember you have marketing claims on quick and dirty medical research that will let customers hope for future practical applications).

No added value, you say? Sure, but again, it's a predictable path forward.

Anyone trying to escape this commonplace strategy and foolish enough to go down the real medical applications road would be facing a steep investment cliff, years or now very real clinical trials and certification, and clashing with big pharma and large, established medtech companies. Don't even start me on the pain of going through medical certification, regulatory issues, and selling devices to healthcare professionals or patients...

Not many VCs could be convinced to go there for the last decade.

Breaking out of a deadlocked market mindset

Now, you might not care at all about this market, but it does pose a very interesting problem to solve if you want to sharpen your innovation skills: How do you get out of this deadlock?

You see, this market is a victim of a classic strategic sunk cost fallacy that you might be facing yourself in your market. Because everyone in the connected device market worked with fitness and sports in mind for years, all new entrants have felt compelled to go down that road. Understanding what's going on in this market might give you a powerful template to question your own positioning in a different market.

The notion of a strategic sunk costs fallacy is when a market has been for a long time adopting a specific approach to trying to innovate with a new technology or an emerging market demand, and that, after a few years, is now structured to follow a given path. New entrants are then expected to follow suit and comply with the established 'common sense.' Although the sunk costs fallacy is often discussed to explain how large incumbent companies cannot deviate much from large investments they made in the past if they prove reproductive, this notion does also apply to how an innovation ecosystem assembles along stable pathways within a few years, whether the dominant innovation logic works or not.

In the fitness/connected device market, for instance, we would see a third way. A market that would be beyond fitness and, yet, not medical. A blue ocean or a white space, if you will.

I would call it Medness (in between medical and fitness).

What would this market be? I would consider that rather than spending fortunes on social media in B2C with a slim (if any) added value when compared to other connected devices or getting into Russian campaign mode to emerge as an improbable medical business, I'd go in between with B2B applications for professionals that need to monitor their physiological parameters actively.

To critical interests in this shift:

  1. B2B is always better for exploring where your value is always more explicit and tangible than the inextricable fuzziness of B2C.
  2. Targeting people with real problems to solve is even more 'Startup 101".

What would be examples of such markets?

  • Train, airline pilots or heavy machinery operators, who have to be at peak rest to operate/drive/pilot expensive equipment with lives at stake (working with an airline customer at the moment, I wouldn't be too shocked that fine-tuning how pilots and cabin crew rest for optimal management rapidly translate into money).
  • By extension, industries with workers in shifts during nighttime and a predominant process optimization culture (yes, I mean Amazon).
  • Military personnel deployed in operations or drone operators isolated in dark rooms facing high stress and indirect PTSD.
  • High-wage workers on isolated sites such as drilling platforms also rapidly come to mind.

You can probably add a dozen more ideas to this list that result in a direct correlation between monitoring of ongoing physiological parameters and safety or process optimization (a.k.a. budget and investment savings).

Bonus points?

You don't even have to be 100% right on these as they can be explored and prototyped very fast with your current connected hardware and some work on the software UX and dashboardsโ€“fail fast and all that jazz.

Bonus, bonus points??

Even if these markets end up too narrow to move your sales forward (which, I doubt, they are potentially larger markets than B2C), you still can "pull an Omega" marketing move by claiming high-end professional applications of your technology...

"Pulling an Omega": selling premium tools for B2C when you have high-level B2B bragging rights...

Again, you don't have to care (As I do right now) about this connected fitness market to get this kind of logic working for you:

  • Are there more concrete problems to solve in your market than what the current status quo has decided?
  • Can you bring value in a year or two?
  • Can you test your hypothesis quickly compared to what you have currently developed?

Then, it's 100% worth challenging how your ecosystem expects you to innovate and how the flock of startups in your field is running.

[ Edit / Dec. 31, 2023 ] Not to toot my own horn too much, but, hey, spot on: Cathay has 2,532 pilots on staff and is now canceling 8% of daily flights for lack of rest... I'll let you imagine the financial losses.

Cathay Says Pilot Flying-Hour Caps, Illness Led to Flight Cuts
Cathay Pacific Airways Ltd., grappling with flight cancellations over the holiday period that have frustrated passengers, acknowledged that pilots reaching or at their 12-month limit on flying hours had contributed to the problem.
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