Thank you very much. All right, we have a lot to cover. Tom is possibly one of the busiest men in San Francisco at the moment as he's readying for this IPO. So I'm very grateful that you carved out some time to be with us. I also should be upfront about a couple of things. I have been wearing an Oura Ring for 6 years. After I fell in love with the product, I became a very small shareholder in Oura. I recently sold about 90% of my shareholding. But I'm still a small shareholder. So I just wanted to be very clear upfront about that that I come to this conversation as a neutral observer. But I'm also very passionate about this company and this product and I'm super grateful that Tom is here for us today. For those of us, Tom, in the room who are not familiar with Oura, perhaps you could just give us like the 60-second origin story. What's the lore? Every cool company in the world has a foundation story. What's Oura's story?
Kickstarter in Finland. Three guys with a dream that a health ring could transform the way health is practiced. Envisioned that they could do it and here it is 13 years later and we actually are in the middle of transforming the way health and how individuals prosecute their health.
So I understand you've sold 5.5 million rings.
As of last year. More I guess more as of now.
About half of that has happened in the last 12 months or so.
What explains this like inflection change in inflection point growth trajectory over the last 12 months?
It has been a wild wild ride. Anybody can imagine that. And the three things that really affected us, the first is actually women's health. Women were underserved certainly by wearables. We sort of made some very good decisions about use cases for women and that drove our growth and it flipped the constituency of our customer base from mostly men to mostly women.
Yep. So, that was the first thing. The second thing was we went into retail. And I think the marketers and retailers who are here would understand that because some of what makes Oura interesting is has some of the properties of jewelry. You know, people think about it not necessarily as a piece of technology with feeds and speeds, but as something that they'll wear on their body 24/7 and at a very well-fashioned event like this. You know, you might see that as opposed to wearing a Here's my new watch. What do you think of it? Do you like it? It's very nice. Hold on. You know. So retail turned out to be a huge transformation. Also because you have to size the product. And so going into a retail outlet and putting your hand in our little sizing thing was much better experience than how we do it today, which is we ship you a sizing kit, you size yourself, you tell us what size, we ship you the ring. Multi-step process. So, that was the second thing. And then the third thing and I think you know, this is probably an interesting study in how to think about pricing. Maybe those of you who own Oura rings, thank you very much. Appreciate you. They'd recognize that we have taken a premium not a low-price approach to the market. And that premium has accrued to us in lots of ways. Not the least of which is that people think of us as a high-quality jewelry brand, which we are. But also they think of us as a tool that should be trusted, you know, with their most intimate data. But, that pricing strategy makes it harder to provide access to people who might need or benefit from the product. And so, one of the things that we did, and we were the first to do, was we made the first wearable that was accessible through your HSA or FSA program. So, that your employer set aside pre-tax funds could be used for this device because it was a health device, not a jewelry device.
HSA or FSA for those of us who don't
Health savings account, flexible spending account. So, basically some portion of your paycheck is put into these accounts. It's pre-tax dollars, and then you could use that money to buy an Oura Ring and basically use your credit, you know, a credit card-like experience on our website, and you type in your HSA credit card, and it gets charged against that account. Interestingly, what happened was we were surprised to find that that shot through the roof in the last week of the year because, of course, that's when your HSA FSA funds might expire. But, interestingly, it turned out to be a year-round way that people got access, and we've been very successful. So, those are the three things that really catalyzed the business.
Okay. I obviously have my own experience with the ring and how it changed my behaviors. But, I'm sure my experience isn't reflective of the kind of general experience.
70% of the audience here.
Yeah. But, like what how what Tell us some of the stories about how this device actually changes the way people live. It's one thing to get people to buy a ring. It's another thing altogether to get people to change the way they live.
I think that is a spot-on observation. We think of ourselves as being in the behavior business, not in the ring business or the fashion business or anything like that. We're in the business of helping people make healthy habits over the long term. And the thing is is that for everybody, that's actually a slightly different story. For me, healthy habits were things like not drinking too much coffee and wine in order to fall asleep at the end of the day after being all jacked up on coffee, and changing that habit was transformative for me. For other people, you know, one thing that's surprising about Oura for some people is that one in four Oura Ring customers tell us that they use the Oura Ring to manage their chronic illness. And their chronic illness could be something like ME/CFS, chronic fatigue syndrome, could be POTS, postural orthostatic tachycardia, could be lupus, could be IBS, could be a bunch of things, but it's generally not well served by the traditional health care. And so as a result, having a tool which gives them an insight into their physiology and how they're doing is really powerful. And so maybe they're not trying to get 10,000 steps in, they're trying to not get 1,000 steps in because if they get more than that they could have a crash. Or maybe they're really worried that if they get a small cold and they're immunocompromised, that that small cold could put them out of commission for 3 weeks. So the power of this tool as a health tool is actually really surprisingly different from somebody who's sick versus somebody who's healthy. Most people think of wearables as the tool of the healthy and wealthy, you know, we're trying to optimize, we're trying to, you know, hit some goal and, you know, achieve some longevity magic or something. That's true, but it's actually really really valuable for someone who's not well. Maybe a couple of examples here that are compelling. So who here in the audience has ever had a symptom radar alert on their or yeah, I see a couple around here. So this is basically us looking at your biometrics and seeing a set of signals happening in a very short amount of time. And those signals are the kinds of things that indicate that your body is starting to have an immune response. So this is your temperature rising even a very small amount. It is your heart rate elevating a little bit. It's your respiration changing. It is your heart rate variability taking a dip. And all of these things happening within the space of about, you know, 25 to 30 minutes means we're actually pretty sure that something's coming for you and your body is starting to respond to it. It's really interesting capability we developed during COVID. So this turns out to also signal that your body's under a kind of stress. And so here's an example. There is a Paralympian. He was getting these symptom radar alerts. He went home to visit his family for the weekend and he said, you know, I really think I should go to the doctor. And they were like, don't be a wuss. You're a Paralympian. You don't need to go to the doctor. This device I don't trust that. And he's like, I don't know, I kind of feel like maybe I should And he ultimately ended up staying for the whole weekend, not going to the doctor. When he finally returned and went to the doctor, the doctor said, it is a good thing that you came today because your appendix was about to burst and you, you know, you could have died within, you know, 10 hours of sepsis. So, that kind of like we call it a check engine light for your body or an early warning system on your health. That sort of predictive power coupled with behavior change, that's a little bit how I think about the two sides of the value. Behavior change happens because you see the quantitative and meaningful and trusted change in your physiology based on behavior change. I drink less coffee, I get more sleep. Okay, check. That's easy to understand. I change the way I eat, I actually feel better. I change the way I eat, my blood sugar stays within a certain range as we were looking just before we were here. Those kinds of things are behavior modification, but prediction and understanding where you're headed with your health journey turns out to be like sort of a superpower. I'll give you just one more example. I have daughters, I have kids who are women and for them, when they were in middle school, if they had had a device that could predict their period within a half a day, which is one of the things that Oura ring can do. It makes a prediction about your period based on the change in your body temperature, which everyone knows is a way you can do fertility or avoid getting pregnant, which is contraception. But we make this prediction. If they could have known within a half day when their period was coming, guess what? It would have been a superpower for them and their 13th and 14th years, which I remember both fondly and distinctly. It would have been transformative for them. And so our vision is like how do we become something that you have on your body? It meshes into the background of your life. It's not something that's like another digital mouth to feed. It's not asking you for attention. It's not trying to engage you. It is trying to support you on your journey, whatever that journey is. And that we imagine we can be that for you over your entire life. What would that look like and what would that be and what would be the different use cases and behaviors and things that we would do? That's what we've set ourselves against and as you pointed out, that's why we've achieved this valuation because people are starting to believe that that vision, which was imagined 13 years ago in a Kickstarter garage in Finland. They don't only have garages in Finland, but you get the idea. Has actually started to come true.
All right. So, I think the experience of any pioneering company is that when you go out and you do something new and pioneering, there are lots of people who come into your space and start to encroach on it, right? So, I think you know, Samsung has a ring now, a smart ring. Apple's reportedly working on one. There are I call them dupe brands trying to take the kind of Oura form factor and given your premium pricing have gone kind of undercut your pricing. I think in India especially. So, what are you doing to keep your competitive advantage in this kind of really interesting new market that's starting to grow?
Well, first of all, they'd say that imitation is the sincerest form of flattery. So, thank you. All of those competitors have seen the market opportunity and we're at the beginning of this category. So, we're not really too worried about like it's a market share battle and price is not the most important thing. But to answer your question directly, the kinds of things that we have focused on, the first is actually science and validation. And the thing is is like you might think, 'Oh, well, okay, that sounds like a lot of like people will say, 'Yeah, they have science and validation.'' But, you know, I think we're talking to the medical community, 11% of Oura Ring wearers are doctors or nurses of some form or another. And as a result, that kind of credibility, you can't buy that. You have to earn it. And you can't buy that even if you bring a ring to market and you're as powerful as a major conglomerate company might be, even though what they really want to do is sell you a ring as well as a washer, dryer, and a refrigerator, and a bunch of other things. They don't really care about your health. So, that's the second thing, which is that we're really oriented and focused on your health. We exist for your health. We're not there to take your data and do something with it. We're not there to sell you another device. We are there to make you have a healthier, longer life. And that is a really important property of Oura as a brand. That is all we exist for. In fact, it's one of the reasons why, you know, people have asked us why we have a membership subscription model. And the purpose is we don't want to have any incentive to do anything with their data other than serve you with it. And to invest more and more in serving you with it. So, that's the second thing. I think the third thing about competition and this may surprise people, but we have invested very heavily in intellectual property. And it turns out there's a reason for that because intellectual property turns out is a way of protecting yourself against, you know, we put probably, you know, $250 million of work and maybe, you know, millions of people hours at work, and we're protecting that investment. And Samsung is in the middle of learning this lesson the hard way.
Right. Yes, I know that there's some legal conversations happening, which I will quickly move past. I'm not that interested in legal conversations. I am interested, however, in you know, the mention you just made of like the sensitivity of managing data around health. You know, and building the kind of trust required for people to say, 'Okay, you can hold my data.' You know, you've moved into, you know, not just readiness and stress and women's health and metabolic health and glucose. Like, as you think about this growing set of data, how are you thinking about protecting that data? We all know that cybercrime is a growing, you know, hacking and all this kind of stuff is a big issue. But also, there's an opportunity in bringing all of that data together. So, there is a risk in managing the data, but there's also an opportunity.
Yeah. So, privacy and security is a non-negotiable for us. I mean, it's sort of, as you said, it's a property of the brand. You need to trust us. If we're able to see 14 days before you're pregnant that you're pregnant, that's really sensitive information in a lot of different contexts. And so, we think of ourselves as bound by the same kind of privilege that a doctor and a patient might have. We certainly invest in our technology in a way to ensure that that's true, to make sure that there are not data breaches. In fact, one of those copycat companies that you mentioned actually did have a massive data breach where everyone's health data was exposed to the internet. Wow. I mean, that's terrible. And so, part of the benefit of a premium brand is that we can invest to make sure that that never happens. So, we do take that kind of approach. There have certainly been people who have had concerns about privacy. And I think we think of ourselves as bound by the same kinds of constraints as something like HIPAA. If you know, that's the Health Information Portability and Privacy Act. And the thing that's interesting about that act is that it is actually true that most technology companies are going to be much better than most healthcare companies in terms of defending your data just simply because of the kinds of investments that technology companies make relative to that. We have both the margin and the time and the energy and the expertise to do that. Anyway, HIPAA is part of our fabric of the way we operate. Many people ask me, 'Can you see my data?' And I said, 'I cannot see your data. There's literally no scenario in which I get access to your information. Same is true of 99.9% of the employees in the company. They cannot query an individual's data. It's just not possible. System doesn't allow it.' So, privacy is a non-negotiable. And maybe more importantly, the trust that comes from that is critical to us. It's something that and maybe you guys all know this. You can earn trust and it might take you 10 years, you will lose it in a second. And you cannot afford to lose it because if you do, you're dead in the water. And particularly in healthcare domain, you can't lose that trust.
Okay. You've recently made some interesting acquisitions. There's two I want to talk about in particular. One is called Galen AI and one is called Double Point. Can you talk a little bit about what those companies did and for a company that's on track for an IPO, like why and how they fit into your future vision?
