Dear friends, 

In JC’s Newsletter, I share the articles, documentaries, and books that I enjoyed the most in the last week, with some comments on how we relate to them at Alan. I do not endorse all the articles I share, they are up for debate. 

I’m doing it because a) I love reading, it is the way that I get most of my ideas, b) I’m already sharing those ideas with my team, and c) I would love to get your perspective on those. 

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💡 Must-read

👉 John Foley (Peloton CEO) (Master of Scale)

Referrals:

• An impassioned testimonial from a trusted source is a powerful thing.

 ➡️ Testimonials at scale are very important. How we make a product so great, that people genuinely talk about it.

• Now, it’s not easy to convert full-on skeptics. And let me be clear: You don’t want to pursue them at the expense of friendly early adopters. But if you can find a way to hack that scepticism and convert it into a passion for your product, you’ll create an organic, loyal following that binds themselves to your brand.

 ​➡️ Who are our sceptics? How do we convert them?

Communities:

• Over a million connected fitness subscribers and a user base of over two-and-a-half million members.

• He described a network of home riders, thousands per class, pedaling away at the same time, to the same live instructor, in a gamified leaderboard system.

➡️ What is the inspiration to build leaderboards? 

Everything starts small:

• Only 178 people bought a Peloton bike from the original Kickstarter. And there’s no sugar-coating it: this setback hurt.

➡️ ​​Big ideas can have tough debuts.

“Feeling” the product: 

• This actually happens a lot with crowd-funding. It turns out, it’s better for rallying your own supporters than it is for finding new ones. It’s definitely not the place to convert skeptics. But in John’s case, there’s something else they’d come to learn. No video of someone using the Peloton would be as convincing as a customer trying it out for themself.

➡️ We have a similar problem before people use the product. ​How can people test Alan? 

Vertical integration:

• One of the things you undoubtedly really stuck to your guns on was the vertical integration everything, from the bike to the media elements to the production of media. Undoubtedly you got a ton of, "Oh, that's really expensive." "You're trying to do too much." What gave you the conviction to stay with that vertical integration?

 ➡️ I love vertical Integration.

Studio for production:

• We hired these instructors and we had the production techs and maintenance folks and we had 30 or 40 people working in that studio, which felt like incremental burn for a young tech company.

• So notionally, that studio and the instructors and the salaries were paid for via the side P&L of the studio business.

➡️ What would be an Alan studio? 

Brick-and-mortar:

• They experimented with Facebook ads, pop-up shops. But their greatest success came from what tech guys like me think of as an unlikely place: an old-fashioned brick-and-mortar store.

• John’s team had calculated that to keep the doors open, they needed to sell one Peloton bike a day. But soon after opening their first showroom, they were averaging four.

➡️ Interesting maths, but it computes when you see the price of a Peloton bike and the necessity to test it. 

Gifts:

• The first year of Peloton we started sending hundred ride t-shirts. When you do your hundredth ride, you get a Peloton hundred ride t-shirt. It's one of the most coveted things in our community and you earn it. It's gamified. You can't buy it.

➡️ Great Idea. Should we send you a t-shirt for your preventative actions?

🏯 Building a company

👉 Spenser Skates (Amplitude Analytics) - Challenging Big Ideas (JoinColossus)

• We worked with this meditation app in the early days named Calm.

  • Number one characteristic or feature of a user to make them a highly engaged user?

  • The number one predictor was whether someone decided to set a daily reminder to meditate.

  • What was crazy was only about 3% of their user base was using the feature. The reason only 3% of the user base was using the feature was because it was buried in like a settings menu.

  • When you first sign in, bam, it hits you, do you want to set a daily reminder to meditate?

  • They went from 3% to more than 50% of their user base setting a reminder overnight.

➡️ Very interesting product learning for our healthcare features.

• There's no way you're going to have that huge ownership upside and potentially get very wealthy by working at the startup with one-year grant windows.

• Join a company that sees you as a four-year owner in the business as opposed to a one year mercenary.

➡️ Interesting take on one year grant.

👉 DoorDash: Re-Inventing Last-Mile Logistics (Secret Capital)

• The DoorDash of today isn’t the end state DoorDash. DoorDash is aggregating consumers, dashers and merchants on its platform and adding great value to each party. This paves the path for the company to one day dominate last-mile logistics and upsell their customers with higher-margin products and services.

• As DoorDash aggregates merchants on its platform, they can use the delivery offering as a Trojan horse for extra functionalities, such as Point of Sales systems. Meituan, the Chinese delivery company, did exactly that and even went upstream by aggregating inventory suppliers on their platforms and negotiating bulk discounts on behalf of their merchants.

➡️ How to go upstream.

• DoorDash was quite aggressive on its marketplace fee for merchants, waiving it for several months when onboarding a merchant.

• They have exclusive partnerships, such as the one with Chipotle where DoorDash provides 50% of all marketing expenses in a year, with their partners. All these efforts are made to streamline operations for both the restaurant and the platform.

➡️ How to be aggressive with your price to start the flywheel.

• Tony himself does customer service every single day to find hidden, under-the-surface problems to get the lowest level of details.

➡️ On the importance of keeping doing customer care.

👉 The Feynman Learning Technique (FS)

• Information is learned when you can explain it and use it in a wide variety of situations.

• There are four steps to the Feynman Learning Technique:

  • 1. Pretend to teach a concept you want to learn about to a student in the sixth grade.

  • 2. Identify gaps in your explanation. Go back to the source material to better understand it.

  • 3. Organize and simplify.

  • 4. Transmit (optional).

• Identifying gaps in your knowledge—where you forget something important, aren’t able to explain it, or simply have trouble thinking of how variables interact—is a critical part of the learning process. Filling those gaps is when you really make the learning stick.

• Only when you can explain your understanding without jargon and in simple terms can you demonstrate your understanding.

• Bayesian updating—starting with a priori odds, based on earlier understanding, and “updating” the odds of something based on what you learn thereafter. An extremely useful tool.

🗞 In the news

📱Technology

👉 Facebook Earnings, Investor Trust, Facebook Reality Labs (Stratechery)

• First, only a founder-CEO could likely get away with spending $10 billion a year — again, with a promise that that will increase — for something that won’t drive meaningful revenue for years; Zuckerberg said:

• For the next 1 and 3 years, especially, I think what you’ll see is us putting more of the foundational pieces into place. This is not an investment that is going to be profitable for us anytime in the near future...So on the next 1 to 3 years, I wouldn’t focus on the sort of business outcomes there quite as much as I would just the products and infrastructure that we’re putting in place.

➡️ Thinking very long term.

• And then if we do a good job on this, and I would say later in this decade, is when we would sort of expect this to be more of a real business story.

• This is much more of a VC-style bet, but the scale is just another level entirely.

👉 Roblox announced a host of new features at its developer conference, including an NFT-like system enabling developers to collect royalties on the resale of virtual items (link)

• Beyond improving the avatar experience, Roblox also announced plans to introduce limited edition items, an interesting new way for people to make money (in the form of Robux, which can be traded for actual bucks) from its bustling in-game economy. Roblox creators can put items they design up for sale for a set period of time or in a limited run, building an element of collectability into the game’s well established virtual economies.

• Creators can also generate money off of subsequent sales by enabling royalties — a perk that Roblox’s in-game items will share with some NFTs. “The idea is that you [will] eventually be able to set the rules of what happens in the resale of an item,” Bronstein told TechCrunch, noting the NFT connection.

👉 A catastrophe at Twitch (Plateformer)

• The entirety of Twitch, Amazon’s increasingly popular live streaming service, is now available for download.

• That all of the following can be found in the 125GB file, a link to which was posted to 4chan.

• The entirety of Twitch’s source code with comment history “going back to its early beginnings”.

• But according to the former engineers I spoke with, Twitch had a notoriously lax approach to internal security that, in the view of some, made an incident like today’s more likely. Among the issues they identified:

  • The company did not develop an effective model to counter internal threats — that is, employees who might seek to steal data or cause other problems. 

  • Every engineer could clone every code repository, making it possible for someone to essentially copy and paste the entire code base.

  • Despite being owned by Amazon since 2014, Twitch still has its own information security practices, which are generally weaker.

👉 Apple's bad antitrust week (Platformer)

• The Dutch antitrust authority found that rules requiring developers to use Apple’s in-app payment system are anti-competitive, and ordered it to change.

• A company called Paddle announced an in-app payments system meant to rival Apple’s own, taking 5 to 10 percent of the payment as a commission compared to Apple’s 30.

• Any developer who lets you create an account within their app must also let you delete it.

🏥 Healthcare

👉 Scaling Organizations, Patient Payments, and Collections with Lora Rosenblum (Out-of-pocket)

• At Oscar you helped work on scaling the customer service team. 

• By mid-January or February, once members started seeing their providers for the 2016 plan year, we became inundated with paper claim volumes that far exceeded our projections. There was a lot of risk exposure in letting these claims pile up.

• I remember staying late with my team, manually stamping received dates on the claims (...) and physically scanning claims forms to upload into our in-house tracking system. Our scanner sucked and it took forever. Some of the documents were so big (usually medical records for appeals) that they were bound by massive rubber bands. I spent a lot of time with a six sigma certified colleague learning about single process flow and why it was more effective than batch processing.

➡️ Interesting story about Oscar Ops and customer service and how they fixed high volumes of claims. 

• We built out "pods" consisting of clinical and non-clinical team members, who were assigned to panels of patients. These pods could conduct proactive outreach to members based on activity that we saw in our system.

➡️ For Alan’s virtual clinics.

• I became really curious about the birth journey and birth experience and found that there is a whole body of research demonstrating the tangible impact that doulas can have on the birth experience: this paper specifically talks about reductions in preterm births and C-sections. I started to learn more about the challenges that doulas face as I looked into why they are also such an underutilized resource. 

• Eventually, I developed an idea (with many classmates along for the ride!) for a tech platform that would enable doulas to manage their businesses (marketing, payments, taxes - basically all of the elements they’d rather toss to the side) that would also serve as a marketplace for new parents to search for and connect with doulas. 

• I’m less keen on the marketplace element, but I do think there’s something worth unpacking on the tech platform side. And there are so many companies popping up in the space! I love the teams at Mahmee and Oula.

👉 Researchers’ novel mind-body program outperforms other forms of treatment for chronic back pain (bidmc)

• A growing body of evidence suggests that psychological factors may be associated with some forms of back pain.

• Late John Sarno, MD, a professor of rehabilitation medicine at the New York University School of Medicine pioneered an idea further developed by Physician-scientists from Beth Israel Deaconess Medical Center (BIDMC) into a 12-week mind-body program that takes a new approach to chronic back pain.The mind-body intervention was highly beneficial for treating back pain.

• Treatment strategies include educating patients about the links between stressors and pain, as well as the relationship with emotions. Armed with this knowledge, participants learn healthier ways to process stress and express emotions. The program also focuses on desensitization or reverse conditioning to help patients break the associations that often are formed with triggers of pain such as bending or sitting.

• After just four weeks, researchers saw an astonishing 83 percent decrease in reported pain disability.

👉 Apple is looking to turn AirPods into some sort of health device

• Potential uses include “enhancing hearing, reading body temperature and monitoring posture.” 

👉 HTN: Weekly Health Tech Reads 10/17 (HealthTechNerds)

• UnitedHealth Group also talked about launching a virtual-first product in 2022, with a virtual PCP directing care for members. UHG expects to price that product at a 15% discount relative to other products.

➡️ What would be a virtual first product for us?

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