All right. Hey, Tom, you started at Oura in April 22.
April 1st. Fool's day and I remember sitting in Helsinki in a cafe with that first sunray coming and you told me, you looked me in the eye and told me that, Timo, this company is not what I was sold to, but don't worry, it's not my first rodeo.
I think I said goat rodeo.
Yeah. I mean actually that was a funny moment because of course I fell in love with the product. That's why I ended up at the company. I love the product so much and I came and then I came and I looked at the company and it's like, you know, you pick up a rock and you look underneath the rock and you're like, 'Oh, oh, okay. All right.' It was great, though. It was better than I thought, actually.
Oh, okay. All right. So, a little bit of history. So, our 21 revenue was 100 million. Our 22 revenue was 165 million.
But our target was 250 million. So, you missed your first target.
I missed my first target. Yeah. So, thanks for setting that by the way before I got there.
Yeah. So then obviously 23 revenue was 250, then was half a billion, and now this year is going to be around a billion.
So, tell me what did you do first when you started scaling? So for the audience we're trying to unlock how did Oura scale? So I'm trying to be super practical. So what did you do first?
You know, the first thing that we realized was we had to stop spending so much money on marketing.
Okay. So, you stopped marketing spend.
We stopped marketing spend.
Well, because we were losing so much money.
Okay. And how did you find it out?
So, we said, let's run a little test. Let's cut back marketing spend by 10%, see what happens. Marketing team freaked out. 'Oh my god, you can't do that. Sales are going to stop.' We said, 'All right, well, let's do that.' And marketing stopped spending and the sales went down a little bit. I said, 'Okay, well, how about the next month? Let's cut it by 20%. See what happens.' So, we did that. Sales went down a little bit, but not as much.
Okay. So, you had the best month ever. So, the first things you did as a CEO is you cut marketing spend 10%, 20%. And then to zero.
Okay. And the sales went up.
All right. How did you dare to do that? Because you were a fresh CEO. And I remember those times Oura was not on the level of success we are right now. So you could have been got booed. I mean...
Yeah, it could have been wrong.
I think what I believed was that the product was going to sell itself.
Okay. That sounds like a Finnish engineer.
It's a great product and we knew it, we knew that people loved it. But we also had data and the data suggested that one out of two of our customers came because someone recommended it to you.
Sure. Right. So, we knew that if we cut back on marketing, we would see if we could make marketing more efficient.
Turns out we were exactly right. The second thing that we did, and this is maybe a good lesson for all y'all, is we focused on a partner and we found a partner who added value to the product and it was called Natural Cycles. I don't know, some women might use it. And what it does, it's basically a contraceptive. It tells you, you know, when's the right day if you don't want to take a hormonal birth control, when's the right day to have sex.
How did that partnership go? Because Oura has, looking back right now, Oura has done some really right strategic choices, right? And Natural Cycles is one very good partner and it kind of took the company to the women's health, right?
That's right, that's right.
So how did we get into the partnership? Was it just serendipity or...
You're a mastermind of course, but besides that...
We thought about what's a market that's not being served very well, especially by wearables and especially in health, and women were a great example.
So what were then the markets that were served?
So Oura had been like a great sort of sleep tool for biohackers, right? These kind of people who are really trying to optimize every aspect of their life and that was a great market but then there was this whole market of women who wanted to like understand their bodies and to use data to like optimize their lives.
And how did you find out about that market?
Well, we had some women in the company and the women in the company said, 'Hey, we think this is an important part of the company and this is important part of the product. Let's invest in that direction.' And I came in and I was like, 'Yeah, that's a good idea. We should do that.' So, we found that partner and I tell you the first month sales like really rocketed in the first month. You're like, 'That's good validation.'
Sure. Sure. Sure. Sure. So, what is then, tell me a little bit about the Oura product and culture etc. I know that even if you are like an American executive from Silicon Valley, so you have always said that we need to stay true to our intent.
What does it mean for you?
Well, for us the company was founded with this intent of making a difference in people's lives, giving them a lot of value but also maybe changing the way people approach healthcare. Instead of being told what to do in their health, they become the CEOs of their own health journey, the drivers of their health bus. That was always the intention. And so this women's health thing was a perfect connection to that. It was sort of like, let's give women a tool to understand their cycle and understand, you know, what's going on with their body, when they should exercise, when they shouldn't exercise. And sort of leading into that, we were both listening to our customers and I think we were being true to our spirit of having a desire to make a difference in women's lives.
Sure. That's very good. So, I mean if I compare Oura in a way and I go and look at some of the friendly competitors, what I see there is like sweaty people, right?
And in their ads like us.
Yeah. Like us. Like us. Yeah. So then what I see when I go to Oura is normal people, right?
Is that the conscious choice or and then how does it tell about the brand and intent?
You know, one of the most important lessons I've ever learned in my career is that you should pick a really big market.
Because even if you do okay in a big market, you can have a good outcome, right? So fitness is a good market, but it's very churny. How many people go to gym, you know, in January and they're like, 'I'm going to work out a lot' and then by March the gyms are empty, right? It's a churny use case but health both is a bigger market because everybody cares about their health, everybody sleeps, everybody wants to be healthy but you know not everybody goes to the gym all the time. So bigger market and then maybe more importantly it's the kind of thing that if you actually have a health problem or you're struggling with something you're not going to churn.
This is a stat that's interesting, you know this but I'll tell the audience: 25% of Oura ring wearers, they wear it because it's a tool for managing their chronic illness.
Yeah. So they might have like chronic fatigue syndrome or lupus or long COVID or any number of things.
One out of four. Now what do you think the retention rate of someone who has a chronic illness and use it as a tool to manage their health?
Well, it's pretty much 100%.
If it works like a train toilet. So that's a great Finnish statement.
For the non-Finnish because you like these idioms.
We do. I love Finnish culture. It's a big part of the company. We pride ourselves on our Finnishness. I'm an adopted Finn. I'm not quite Finnish. I'm an adopted Finn. But it works like a train toilet. A train's toilet means it just works. You're never going to, you know, you're never going to have a problem with it because it's basically just a hole in the floor of the toilet of the train. And that's where it goes. It just works.
Yeah. Hey, talking about those strategic choices for the audience when I'm kind of looking back, I started at Oura as the first investor, you know, I don't know even when, congratulations by the way, 2013 or something like that.
Yeah. So it was a good investment.
Yeah. So the first kind of a strategic choice that we made right was that we selected sleep over activity. So we selected normal people over sweaty people.
And I think Oura kind of works for sweaty people as well. But that was the first choice. Then we coined readiness instead of recovery, right? There's a small nuance, but readiness means that how ready you are, it's a positive thing, right? And that kind of guides the product. Then you became and then we selected the female audience.
And then what you, you know, that I've been really an advocate of this broadening the stress and daytime use, right? So tell me about that. What's the thing behind the daytime use? And tell about this retention cycle and all that stuff.
I think that the thing about sleep that's so powerful is that everybody is going to sleep in a 24-hour period. At least we hope so. Maybe some of you aren't because it's Slush and you're going to be up all night. But that urge to sleep is so powerful. You're going to do it and then you're going to wake up in the morning and you're going to feel how you feel about the day and we give you some information that's called the morning moment. How am I going to do? And that's such a powerful way of generating engagement because if you do something every 24 hours, it's an opportunity for us to say, 'Hey, here's some value for you. Here's what we do for you. Here's some information. Here's something about your body you didn't know.' And that moment, that moment of engagement, it leads to a second moment in the middle of the day. And that was stress or exercise. Did I, you know, how am I doing? Do I need to get my steps in? How was I stressed because I was on stage? What was it that drove my day? And then there's a third moment, which is this sort of nighttime moment.
Frequency of engagement turns out to be the number one predictor of retention. So if you can keep people engaging, you can retain them. You have more opportunities to deliver value. So that was the key. And stress was a big part of it because again, who hasn't felt stress? Who doesn't feel stress at some point during the day whether it's, you know, a situation in your work or with your family there's going to be some stress.
Yeah. Yeah. Hey, this is really interesting. Let's get back on this like how do we kind of manage this like a hyperscale, right? So the first thing, this was a 100 million company and you came and you said that no marketing budget anymore. Right. So what else did you do? So you said that the management sucks and you need to hire the new guy.
Basically, we basically got a brand new team and it was a team that had seen the movie of scaling before. So they kind of, it's starring them. They were in that movie. So they knew how to do it and they knew we had kind of grown from a small startup to a kind of a midsize company and we saw that if we wanted to do a billion dollars in revenue and be an 11 billion company, you just needed a different type of person.
So, now being very practical. So you were coming here into a 100 million company, right? Yeah. So when you kind of started hiring team and now it has been like rehired a few times already in certain parts did you kind of hire people who can run like a 200 million company or a billion company or 10 billion? So what's the kind of a time frame you are building a team for?
I think for a billion to five billion.
