For health care platform Noom, 2020 was a banner year. The company generated $400 million in revenue, thanks to millions of people looking to shed pandemic-fueled pounds. The artificial intelligence-driven app integrates fitness tracking, nutrition, and sleep and stress management to form a one-stop shop for health and wellness. But it took a lot of trial and error for the 13-year-old company, founded by Korean entrepreneur Saeju Jeong and Ukrainian Artem Petakov, to become a success story. Noom is a two-time honoree on the Inc. 5000 ranking of the fastest-growing U.S. private companies and on the Inc. Best Workplaces roster. According to Bloomberg the company has just closed a mega-round of private-equity investment at a $4 billion valuation and plans an initial public offering in the next year.
Jeong spoke with Tom Foster, an Inc. editor-at-large, in an exclusive stream event on Tuesday about lessons learned from the company's early stumbles and how it finally found a healthy balance. Here are the biggest takeaways for entrepreneurs from the session.
1. Finding the right product-market fit takes time.
Long before Peloton became popular, Noom experimented with a connected bike that integrated with its fitness platform. The company planned to corner at-home gym users by selling them a platform that would gamify exercise and motivate them to work out. But it turned out that people weren't quite ready yet for the CardioTrainer back in 2008.
"After two years, we couldn't sell the product or raise capital," says Jeong. At a time when only a fraction of Americans were getting enough exercise, the market for a connected bike was already small to begin with. The company would need to expand its audience to fulfill its mission, which was to apply technology in a way that would make people's lives healthier.
"We made so many mistakes ... I learned the painful way that it's almost inevitable," says Jeong.
Noom eventually launched its weight-loss and tracking app in 2010, which allowed users to track nutrition as well as their fitness according to an activity of their choice. It found that roughly 90 percent of its users were using the app for its pedometer feature, or to track steps. The founders were then curious about why more users weren't opting for more high-intensity exercise like running or cycling. After doing some research, the company discovered the main reason many users weren't engaging in more physically strenuous activity: excess weight.
Jeong says he realized then that there was a huge opportunity in the weight-loss and nutrition market. The next step was to create a product that would allow users to accomplish both their weight-loss goals and their fitness goals.
2. Stay focused on customers.
Noom's founders realized earlier on that they had to take a holistic approach to improving the user's overall health. They realized that their customer's journey to better health wasn't just about shedding pounds or logging more steps. To ensure that users met weight-loss goals, Noom had to integrate everything it learned in the past about health and fitness. The founders also realized they had to incorporate psychology in the mix as well to effectively change user behavior.
"A lot of us will have a bad habit. There's a reason why we cannot get out from a bad routine," says Jeong.
The company decided to make human coaching a core part of the Noom service. While the app was already utilizing A.I. in order to assess a user's fitness and nutrition profile, A.I. could only do so much.
"Empathy is not a thing you can generate out of A.I. technology," says Jeong.
3. Deliver great value.
It's no secret that health care is a saturated market. Jeong says that he had a strong belief that if Noom was able to deliver great value to its users, the business would follow. During the app's early days, it topped the charts in both the Android and iOS stores. He says the company had multiple opportunities to easily generate revenue by simplifying the app to focus on just fitness tracking or calorie counting.
"There are many fitness tracking applications that are doing good business. Calorie counting, same," says Jeong.
But neither calorie counting nor fitness tracking fulfilled the company's mission, which was to improve the overall health of a wider population. Instead, Jeong says Noom took more than a decade to figure out the best way to approach the health of its users in a holistic way.
"We found a tough way to deliver our mission," says Jeong.