#03: Sleep Tech 😴
Technological advancement have been changing (ruining?) our sleep habits for hundreds of years. Can a raft of new startups now turn technology into the antidote to its own poison?
Before we start, a quick reminder.
I’m Andrew. I was an Olympic athlete, then I moved into building health tech businesses. I’ve built and exited two businesses over the last 10 years: Bootstrapping our first business in 2013 through to acquisition, then helping lead the EMEA half of a global health and diagnostics business through to IPO on the Nasdaq in 2022.
I write in-depth analyses into exciting businesses and technologies at the intersection of sport, health, nutrition and mindset - I call this Human Performance Tech.
Ok, let’s go…
Sleep: The least obvious tech frontier
Once, on the day of a major international race, another athlete on the team asked me how my sleep was.
My answer: “Cataclysmic”.
So I’m writing this edition after almost a lifetime of sleep issues, which could infuse an air of cynicism (an additional, above my norm, air of cynicism) to my opinions.
The boring story of my troubled relationship with sleep is tightly coupled with my athletic status. When I was a competing professional athlete, I used to say “If I could only sleep well, I could achieve anything”.
Then as soon as I stopped competing, I suddenly found I could sleep. Who could have guessed?
While competing, a cacophony of sleep hygiene sins combined to make good sleep super difficult.
High levels of exercise (often late at night), nerves and anxiety, inconsistent sleep locations, even inconsistent room mates (when you’re not an A list athlete, you often end up sharing a room with complete strangers in awful hotels).
These all combined to make sleep both my biggest challenge, and my biggest opportunity for improvement.
In everyday health, chronic sleep deprivation is a proxy for an unenviable list of health disorders - so tech startups have been chomping at the bit to solve this problem for their users.
Sleep and tech have a complicated relationship
I’m staying away from giving advice here on how to sleep better. There are myriad productivity and science bros churning our podcasts/newsletters/smoke signals with tips on how to optimise your sleep hygiene. I do, however, want to take a close look at the businesses hoping to use tech to help us sleep better and/or longer.
The tech wave that seems to have had the biggest disruptive effect on our sleep was by an exciting startup called The Industrial Revolution. Before this, according to research by historian Roger Ekirch, it was extremely common to sleep in two stages, with a 1 or 2 hour gap in-between, imaginatively referred to as “First Sleep” and… “Second sleep”. This is known as poly- or bi-phasic sleep.
The theory goes that the Industrial Revolution, with it’s noise, electric lighting and punitive working schedule erased this old method of sleep.
In 1803, we were on edge about getting enough sleep so we didn’t die at work.
In 2003, we were on edge about not getting our eight straight hours of sleep.
In 2023, we’ve gone deep. Now we’re on edge about the amount of REM sleep or if our bedroom is cool enough to get optimal brown fat production.
So, how are tech companies trying to help us scratch our sleep itch? Outside of serious sleep related medical disorders, I think we can break the tech players into three groups:
1: App only coaching/guidance businesses.
Businesses like Calm and Headspace have integrated sleep specific mindfulness plans, or just relaxing stories read by Matthew McConaughey, as a key value proposition to their offerings.
And it’s worked:
Calm has >4 million paid users, a valuation over $2 billion and have raised >$218m
Headspace has >65 million users, of which 2 million are paying subscribers and has a thriving B2B business
Before the ubiquity of smartphones, it just wasn’t feasible to interact with technology as you went to sleep - that Dell desktop didn’t sit well on the pillow next to you.
In the post App Store era, these apps struck on a compelling Why Now case. People were scrolling and sticking these phones in their face just before sleep, why not try to make that interaction a calming one?
From a business model perspective, I’m of the opinion that with such huge user numbers already owned by the big players Calm and Headspace, the generalist relaxation/sleep app opportunity has passed.
Calm and Headspace have an almost insurmountable scale economy, with robust brand recognition that is hard to overcome for the general market.
If you’re building a sleep app, go niche or go clinical.
Big Health’s Sleepio, is an App-only Digital Therapeutics for sleep, and this area i think is super interesting.
Sleepio’s clinical trials make a strong case for the utility of tech interventions for insomnia
Their approach uses Cognitive Behavioural Therapy for Insomnia to develop personalised sleep coaching programs and has compelling evidence showing its utility. So much so, NICE (the body that provides clinical guidelines in the UK) have integrated Sleepio into their guidelines
If you go to your GP with insomnia, you might be prescribed Sleepio before you’re prescribed a pharmaceutical intervention - that would have been unthinkable not so long ago.
Others in this space take a variety of approaches, from simple soundscapes (i.e. white, pink or brown noise) to clinical grade sleep stage tracking
Aside: A quick thumbs up to SleepCycle’s homepage with a weekly leaderboard for random aggregated sleep stats across their users - love it.
2: Passive hardware with a software layer
This is a broad category, ranging from common wearables (Apple Watch, Fitbit, Whoop, Oura Ring, Withings Sleep)
Generally the value prop here is to track your sleep and sleep related biometrics - Heart Rate, HRV, temperature etc. Then take this data and give users guidance on how to improve.
Tracking sleep can be a double edged sword.
In my experience you have to commit to tracking over a long period to see results and normalise the fact you’re measuring your sleep.
I’m sure I’m not alone here, this even goes back to when I used to use the very first iPhone app that tracked sleep. At first, the fact that my brain knows I’m tracking my sleep conversely actually seriously harms my sleep.
I have to persevere through this initial period to give myself a fair chance of an honest appraisal. This is a kind of Orthosomnia, and is a genuine detrimental condition that the sleep tracking industry has exacerbated.
A friend of mine, who I'd say epitomises the human performance archetype, says he avoids this by waiting until after his breakfast (when he’s not intermittent fasting of course) to actually check how his sleep tracking metrics fared.
Form factor matters
This is where the form of hardware used to track really matters, and one of the reasons I think Oura Ring are seeing such great traction.
A watch or wristband takes a behavioural change to wear all night, plus their battery life makes it relatively impractical to wear all night and still find time to charge during the day.
Add to this that it’s likely your daytime tracking that is the biggest insight into your night time sleep performance. So to make sense of your sleep, you need a device that’s seamlessly able to be worn 24 hours a day.
This is one of the reasons Whoop have stated as to why they deliberately never added a screen/watch to their band (a genius decision imho).
Tracking alone only goes so far
This passive hardware as a tracker model is by far the most common method of bringing sleep tech to market, but it faces a fundamental barrier - it’s a one way street. You sleep, the tech provider quantifies this. How do you keep someone engaged past the initial honeymoon period (and so amortise your hardware COGS across a longer period)
There’s an attempt at a two way offering, given by a software interface, but it’s a weaker value proposition in my opinion.
If you can’t keep adding value, it’s hard to gain a meaningful lifetime value from your customers - this is why companies like Whoop are clever in selling the device as though it’s a SaaS business. They don’t invite you to “buy” the device, you “join” on a monthly membership, and new or novel biomarkers keep getting added over time as they develop (Whoop band for premature birth anyone?)
Personalised data has been shown to genuinely have a positive effect on adherence to advice, but in almost all cases, good sleep advice could be given with or without tracking.
That brings us nicely to the third channel or sleep tech.
3: Active hardware, supported by software
This is the hardest business to get right, for a number of reasons - clever hardware means complicated supply chains, two way feedback means potential regulatory hurdles and clinical efficacy questions, let alone user discomfort.
As far as I can tell, there’s only one company really delivering value at this point - but it will cost you.
Eight Sleep provides a “smart mattress”, they’ve raised over $150m and their latest valuation was ~$500m. What that really means is sort of the modern version of your grandparents electric blanket. A very modern version.
They’ll need deep pockets to keep innovating at the rate they have done to date
Users buy either a full mattress or a mattress cover with built in cooling and warming technology.
During sleep, our temperature changes. Eight Sleep’s products will not only alter the temperature of your bed based on your preference, but also will adjust dynamically throughout your sleep cycles with the aim of delivering optimal sleep ‘fitness’.
Temperatures can be adjusted for each half of the bed, so as to fit in with your partner’s preferences, and the tech will even gently wake you without the need for an alarm in the morning by a small increase in temperature.
Smart temperature control is great, but the real promise of this sort of technology is as a seamless tracker (with supposedly close to clinical grade ECG, Heart Rate etc) which you don’t have to wear or charge, armed with the ability to actually actively assist in real-time based on your tracking.
In a recent podcast, Eight Sleep’s founder and CEO, Matteo Franceschetti also framed a unique competitive advantage the company has when it comes to tracking - 100% user retention.
Win the LTV battle by putting the tech in a non-tech product
How many people do you know who bought a wearable, especially wrist-worn, used it religiously for one month, then never wore it again?
If you buy a mattress, you’re sleeping on that mattress until you need to buy a new one. This is a Lifetime Value that tech businesses very rarely ever see.
If you buy a mattress, you’re sleeping on that mattress until you need to buy a new one. This is a Lifetime Value score that tech businesses very rarely ever see.
Other use cases
A final interesting example of an active hardware layer is Zeit Medical - taking a more clinical approach, with their sleep headband that can signal early warning of Stroke. They received FDA breakthrough device clearance.
👀 Wrapping Up: My Take
Tech is at its most powerful when it interfaces with our lives in ways that we don’t notice. If tech is going to help our sleep, it needs to find the interface of least resistance.
Smartphones were the most frictionless, yet powerful, tech interface we had ever seen when they launched - and we’ve been trying to find the next level down on the friction scale ever since.
Voice seemed to be it, but the perception and direct nature of omnipresent microphones listening to us around our house understandably didn’t sit too well and voice first tech has stuttered since.
Wearables have become more and more part of life, but I think integrating the most powerful technology into traditionally offline things we already wear or use is a great example of true innovation.
I love the Apple Watch, but I don’t like sleeping with a watch on - I might sleep with an Oura ring on.
But adding accurate tracking to my mattress, while at the same time actually improving my sleep? That’s a win-win.
Sleep-as-a-Platform (Yes, SaaP)
If I were Eight Sleep, I’d open up the platform and let others build apps on top of their incredible tech.
Keep this within a closed ecosystem, don’t just use your partner API and lose control by sending data elsewhere, but give Eight Sleep users (who have paid >£2000 with an optional ongoing subscription service) the chance for genuine, vetted, high quality apps on top of this smart device will give the brand an even longer LTV and increase user satisfaction
I’d love to see what cool use cases could be built on a sleep hardware platform that’s in constant use every day for years, couple with next level sensors.
Struggling with what to do next with your smart sleep status?
Pivot to SaaP.
Thanks for reading, until next time!
You could consider adding Sleepiz to category 3. Swiss startup in sleep monitoring with a clinically validated bedside tracker for sleep apnea. Disclosure: I am not financially or scientifically involved, I just met the founders at a startup event & thought the idea was cool.