Uncovering and explaining how our digital world is changing — and changing us.

Last year, it looked like Jawbone was toast. The mobile technology company — which invented wireless phone headsets, Bluetooth speakers and fitness-minded wrist wearables — announced in July it was liquidating its assets.

But now, with new investors and a fraction of its original staff (about 110 compared to 600 at its former peak), Jawbone has morphed into Jawbone Health, a medical subscription service that aims to help users catch health problems early. Although it will offer a wearable device free to paying subscribers, the new company will be “device and sensor agnostic,” partnering with other “clinical-grade” device makers and able to accept data from hardware like the iPhone and the Apple Watch, CEO Hosain Rahman said on the latest episode of Recode Decode.

“Two-thirds of all deaths today are lifestyle-disease related, which means it’s just bad living, right?” he said. “But the reality is, if you catch that stuff early and you change your behavior or whatnot, you can push out half of those deaths and save 70 percent of the cost.”

“The problem is, we have no information,” Rahman added. “We don’t know where we stand. What’s going on with us, right? We have half a million minutes a year in our lives. If you’re good, you spend 15 minutes a year with a doctor, maybe four times a year. That’s a very small percentage of the population. So the idea is to give people tools.”

In an email, Rahman likened the new service to a “highly personalized check engine light for humans.” He told Swisher that, unlike the purely automated Smart Coach software that Jawbone’s earlier Up wristbands offered, Jawbone Health will work with a Salesforce product called Health Cloud to protect users’ data and securely share it with human doctors.

“One-third of the people that went through our clinical trials in the U.S. found a disease, a major one, that they didn’t know they had before,” he said. “It was shocking to us. In our international trials, we had crazy results. Like, 60 percent of the people, nearly, that went through it didn’t know that they had high blood pressure, 30 percent didn’t know they had full-blown diabetes. Crazy stuff.”

You can listen to Recode Decode wherever you get your podcasts, including Apple Podcasts, Spotify, Google Podcasts, Pocket Casts and Overcast.

Below, we’ve shared a lightly edited full transcript of Kara’s conversation with Hosain.

Kara Swisher: Today in the red chair is Hosain Rahman, the co-founder and former CEO of Jawbone, which is a wearable technology pioneer that started in 1999 and actually launched at our AllThingsD conference back then. We’re gonna talk about what happened there, and his new project. Hosain, welcome to Recode Decode.

Hosain Rahman: Thanks, Kara.

So, we’re gonna have a tough discussion and a not-so-tough discussion, but we’re gonna talk about what happened at Jawbone. So, let’s let people get a background of where you came from and what you created with Jawbone, because it really was a pioneer in this space, and then the same thing with speakers and things like that, which everyone copied really quickly. We really want to have a discussion here about what happens to entrepreneurs when they run into a buzzsaw, essentially, and then what you’re doing now, which you’re gonna announce this week. Talk a little bit about your background, how you got to where you got.

Yeah. So, I was at Stanford, mid ’90s, and it was an incredible time, right? Larry and Sergey were there, the formation of Google before I got there. David and Jerry had started Yahoo, so it was this incredible explosion of creativity. Everybody was encouraged in the engineering school to go try their ideas.

Out of that environment ... We came out in sort of 1999. The original vision for the company was, we were trying to build a speech recognition overlay on top of mobile devices, and as we started to build that, we realized so much of what we wanted to do to ...

So, explain a speech recognition overlay.

Siri.

Right.

It was effectively like Siri on top of a Palm device or a Nokia phone. We were really fascinated by mobile, and we thought, “Wow, wouldn’t it be neat if you could interact using your voice?” It’s funny. Now, flash forward 18, 20 years later, voice is finally a thing, and people are doing that.

So, we thought about this back in the late ’90s, and as we started to build that, we realized that there were so many limitations around what you could do with speech recognition, and we thought that — we ended up inventing this noise cancellation technology, which removed all the background noise from a mobile phone call. The idea was to improve the signal so that it would make speech recognition work. When we invented that, it turned out that was the biggest ...

Because this ... Remember, at the time these phones weren’t very good.

They weren’t very good.

This is pre-iPhone, right?

This is, come on, 1999. It was way pre-iPhone.

That was 2004, right?

Seven.

2007, right. Okay. Yeah.

Yeah. Anyway, so this was very early. People actually still talked a lot on their phones, and so mobile audio quality mattered a lot. So we shifted from trying to make speech recognition work to just kind of building this fundamental layer for audio quality. That was now ... call it circa 2000/2001. Things were tough in the technology market because you’d had this first internet crash. We ended up teaming up with DARPA to refine the science and the technology behind what we were doing. They wanted to ...

The noise canceling?

The noise canceling stuff. We refined that, and then in 2002 we decided to build our own consumer product utilizing the technology, and we decided to do that in a headset. So, that was kind of the inception, if you will, of the first sort of smart headset.

The headset.

The smart headset.

So, this was the idea that ... This had a wire to it, because you debuted it at AllThingsD.

That was the first one that we debuted.

Yeah. It had a long wire down to a pack on your ...

Onto the body, and this was pre-Bluetooth. Right?

Right.

So, it was a bit of a kludgy physical implementation, but the technology performance was ...

So, you had a thing that went in one ear, and then it had a long wire, if I remember, and then it went down to a box.

Long wire that clipped onto your belt, and then there was a box there with a bunch of processing, and then it connected to your phone.

Right. So, it was a long version. Yeah.

That we launched at the D conference. I think it was the second D conference, 2004.

Right, and we put a lawnmower behind it, or ...

A weed whacker, and we turned it on and off, and it was an amazing demo.

Weed whacker, for noise canceling. Right, but how many of those did you sell? You didn’t sell ... I think I might have one in a box.

We didn’t sell a lot, so the company almost died at that point. That was in 2004.

Right, and what was the price point of that one?

Gosh. I think it was like 150 bucks, and so it was pre-Bluetooth. So, in 2005, we went down to four people and we focused on making that technology and that product Bluetooth, and so call it in the end of 2006, we launched the first Bluetooth Jawbone. And you and Walt talked about it, and that one really took off, because now at this point ...

Right, and this was a device that went on your ear.

It went on your ear. It was wireless, had all that same functionality.

But it was big. It was biggish.

It was as big as it needed to be to satisfy the state of the computing power — the chip-size, battery, all of that. So, we launched that and it took off. We went from like zero to $100 million run rate of revenue in the first year, and it was a wild ride. We were trying to hold on for dear life.

After that, we continued to scale that and make it smaller, and then when the iPhone launched in 2007, we were one of the third-party headsets that Apple sold alongside it in their stores, had great success from that. Also, there was all this hands-free legislation that came out that really drove that business. And then in the fall of 2008, when you had the big economic collapse, we were caught up alongside that where a bunch of orders we had from the channels and whatnot kind of disappeared.

Right, and also, everybody copied you. Correct?

I mean, that’s the thing that happens in hardware, is you end up establishing a category. Either the incumbents or a lot of manufacturers in China, everyone sees that there’s demand and they all rush to sort of do a copycat. So, we were effectively the first smart headset.

Then another thing happened, which is the market moved from one ear to two ears. As your iPhone actually started to develop a bunch of media capability and all your music was there, your video, people wanted two ears, and that was where you got companies like Beats and all of that. And what we did at that same time is we invented the first wireless speakers for your mobile phone devices, and that was the Jambox.

Right. They were called Jambox.

That was in 2010. So, when we came out with the Jambox, the market for wireless speakers in the overall speaker market was 0 percent, and everyone thought we were crazy to do this very high-quality portable mobile speaker that was wireless for your phone. But the thought was, “You’ve got all this rich media in that device. How do you unlock it without having to dock it, take it with you everywhere and turn the speaker into a computer?” And that was the first smart wireless speaker.

So, that debuted in 2010, and people loved it. It went crazy. And now I think the wireless speaker market, of all speakers, is in the 99 percent... So in some ways that product was kind of the godfather to everything that you see from Alexa or the Echo, etc., all the way down.

It was good-looking. We’ll talk about design in a minute, but ...

It was good-looking.

So, you jumped to that because the wireless earphone market changed. That business dropped out.

Yeah. It sort of flat-lined. Right?

Right.

So, for the next stage of growth, we went and created this new category of wireless speakers, and it’s fun for us to see what’s happened to that with all the innovation in the home. You’ve got products like Google Home, Amazon Echo with the Alexa. It’s sort of evolved into media device meets voice interface for the home, and that’s awesome.

At the same time, in parallel, one of the things we were working on internally starting in 2009 is a lot of the sensors that we used in the headsets to measure when you were talking, actually, if you move them around the body, you could see other things about people’s physiology and understand them.

So, I felt like, hey, this would be a really interesting opportunity to open up this whole new understanding about what’s going on with ourselves on sort of a continuous daily basis, so we worked on that for a couple years. And then in 2011, we debuted the whole wrist wearables category. It was the first time we did that, did it onstage at TED, got a bunch of wonderful feedback. People were really excited about this could be this ...

This was called?

This was called Up.

Up, right.

So we debuted it in mid-2011, talked about it publicly for the first time, and then we shipped the products in ’11. They sold like crazy.

You had some glitches.

First of all, it just went crazy. It was faster-selling than anything we had ever had.

Yes, it was. Yeah.

People were really excited about it. But we started to get reports from the field that they were breaking, and we couldn’t get them back fast enough to figure out what was happening. And finally when we did, we realized that what was happening is water was getting into the device.

Sweat.

Whether it was sweat or just washing your hands, whatever. Just when you wear something, it gets wet, whether you think it does or not, and that was getting into the device and shorting out some of the capacitors. So, when we figured that out, we pulled it off the market. We went and did this big thing, apologized to all our customers, gave them refunds, let them keep using it, and people liked the way that we treated that whole situation, the way we handled it. So, we went back to the drawing board in 2012, fixed all those waterproofing issues and relaunched it at the end of 2012, and it went vertical again from a demand perspective.

Then we ended up hitting a different problem, which is one of the things that plagues hardware startups when you get to a certain scale, is that we had a working capital issue where we had all these millions of units on order from our channel partners. We had a manufacturing base that needed to build up the supply chain, buy all the components, tooling, all that sort of stuff, build out that production capacity to supply it, but you need cash to do that, and it is extremely costly, and you’ve gotta front-load a lot of that cash.

Given you’re a startup, no manufacturer really wants to give you big credit or anything like that. So, we scrambled in early 2013 to figure out, how do we get this working capital cycle figured out, and we did a big debt deal with Fortress and Silver Lake, JPMorgan and Wells Fargo, and that part MES debt as well as asset-based lending facility, and it’s something that a lot of technology companies don’t traditionally do that much because there aren’t that many hardware startups.

But you needed the cash.

We needed the cash, and that’s one of the things that happens with a hardware company is you’ve gotta ... If you have a successful product, you hit another wall, which is how do you fund all that growth efficiently, and equity’s not a great way to do it.

So, the thought then was, in 2013, let’s do this big debt round. We’ll pull the whole thing together. It’ll get momentum back in. Yes, we had great momentum and we’re back-ordered, but we actually needed to fulfill it, get the revenue machine going, and then we would go pay that debt off.

You’re like a wrist Tesla, but go ahead. A wrist version of Tesla.

I feel for a lot of the scaling issues they have. I mean, obviously it’s on a much smaller scale and a smaller product, but it’s not that dissimilar in terms of the fundamental issues that you face, and you’re doing new things, so there’s new manufacturing processes, and you want to ensure quality. It’s complicated.

Anyway, so we’re doing all that. That’s ’13, and the idea was we’d get the momentum back through the sort of working capital injection, and then at the end of that, we would do an equity raise, which would pay off some of the debt and then create the next wave, and we’d sail off and do our thing.

At the end of 2013, beginning of 2014, we ended up doing a deal. We had two deals on the table — and this is an interesting lesson, candidly, for all entrepreneurs, and this is one of the big mistakes that we made as an organization, me as sort of running the company, is we had two offers on the table. One was that, call it, two billion-ish, and then we had another one that was like $3.2 to $3.5 billion, depending on how you looked at how the deal was structured.

So, obviously a big delta, and we had a big split in the organization at the board level, shareholder level. Some of the folks that had come in in the last round obviously wanted us to take the larger markup, and earlier, folks were saying, “Hey. We might not be ready. We’re not stable enough to take such a high valuation,” etc. Ultimately, we ended up taking the larger valuation. That deal, for a variety of reasons, didn’t work, and it broke apart, so we didn’t actually ...

Right. That was the one with ... Who was the big funder there?

The lead on the financing was Rizvi Traverse. And so again, for a variety of reasons, the financing broke. We never actually completed it, and that put us into a tailspin in 2014 because we had a capital intensive ...

Why did it break?

With all these things, there’s maybe a thousand reasons and, ultimately, none.

Give me two of those things.

Look, there’s so many things that went wrong. One of the things was that the capital that we were expecting to get didn’t all show up.

Right. They were giving it to you in pieces. Correct?

It wasn’t that they were giving it to us in pieces. There was sort of a syndication model, and I think there was misunderstanding on how the timing and how that process would work, and I think there was just ... Again, it happened in the past, and it’s one of the things ... At the time, we were all very frustrated, and I think there was a lot of anger on all sides of the equation, but it broke. It didn’t happen. The syndicate didn’t come together the way I’d anticipated at the time that it was expected to be ... The company felt like it wasn’t the company’s fault. Of course, right? So, the capital wasn’t all there in the way that ...

You needed.

... the deal had been signed up to do. So, then all of a sudden, now we found ourselves in a scramble, and effectively, you’re trying to sort of duct tape and baling wire this thing up, and so I talk to a lot of entrepreneurs now about, “Be really careful how you structure these deals, the capital that you take in, what you agree to, and is the business ready for it, because when you raise money at those kinds of prices, it’s really hard to move and recover and sort of be nimble. You’ve got a big-scale organization. Things get really, really complicated.”

So, what ended up happening is when that financing broke, we all, the management team had to go out of the building to go raise capital and try to hold things together, and that’s when a lot of things started to crack. If we’re not in the building, there’s not direction. Our product execution suffered. Our in-market execution suffered. Obviously, a lot of our competitors surged at the time and started to catch us in the various markets in terms of market share.

Fitbit and others.

Fitbit and others, even in the speaker space, so in a lot of these spaces we had 80 percent market share, but as these things evolve, people start to chip away from you.

Then the other thing that happened to us in early ’15 is that we realized that six of our ex-employees had systematically stolen 365,000 documents, which was basically all of our trade secret information, and gone to Fitbit. So then we got into this very expensive legal battle to protect ourselves. Since then, actually, the DOJ just a couple months ago criminally charged all six of those people for that, so ultimately showed why we had to protect ourselves, because there was pretty massive criminal activity around that.

So that was happening at the same time, and then what ended up happening is, in order to salvage ourselves from that situation, we had to do a bunch of structures, ultimately including a bunch of debt structures that the company frankly just wasn’t tooled to ...

So, you were desperate for money.

Yeah. I mean, you’re trying to hold it together. There’s all this cool promise of the technology. You see that there’s demand. One of the things that we’ve always been really good at at Jawbone was inventing new stuff, creating new technologies, creating new product categories. I mean, we did it three times, right? We did the smart headset devices. A number of the people on the Jawbone headset team have ended up working on AirPod, which is awesome. I’m really proud of the work that they’re doing there. A number of our speaker folks ended up at Amazon and other places, working on products that are now rolling out and getting scale.

So, we see that ... And obviously we created the wrist-based wearables market. We were the first ones there, well before Fitbit or Nike, and then ultimately before any of the smart watches. So, we saw these things early, and we had continued to develop really cool technology that we felt like was gonna take this thing to the next level.

Mm-hmm, but not taking advantage of it. It strikes me as ...

Well, I think the thing that’s hard in a hardware business model, candidly, is you don’t necessarily generate enough gross margin to fund R&D and marketing, and that’s what makes it really hard to get to an escape velocity. So, if you think about hardware, anybody ... The two companies that really make money in hardware are Apple and Samsung, right? If you think about the startups, what startup has achieved total escape velocity and continued to scale?

You look at guys like Ring. They sell out. They get great success, get out at a billion, and with Nest, Tony got out at three. It’s awesome. They get to a certain scale, and they say, “Look, to get to the next level we need bigger partners and bigger backers to fund that expansion.” And if you look at companies like Fitbit or GoPro, they do put a lot of what they get in margin into marketing, and they build brands, and they spend a hundred million dollars and a quarter for TV advertising and all that stuff.

Right, but one’s doing better than the other. Obviously, GoPro has been in distress for a while.

Fitbit has its challenges, right?

Yes. Yeah.

It trades at a fraction of its, I think, revenue multiple. Right?

Right.

But the point is that they didn’t make all the R&D investments, and so what we were doing is putting a lot of our capital into R&D investments and funding inventory and trying to scale, not so much on marketing. Right?

You’re running around persistently looking for funding.

Yeah. It’s a tough way to live, right?

Well, it’s also you’re always selling. You’re like a bit of a P. T. Barnum in that, “It’s gonna work, it’s gonna work. We have these great ideas.”

Yeah, and we believed it.

Mm-hmm. I didn’t say you didn’t believe it. I’m saying it’s ... But you’re constantly hocking the future, essentially, this time.

When you’re raising capital?

In general, yeah, when you’re doing this, because you’re going from one to the other and losing the previous business. You started with the earphones, and then people caught up. It cost too much. These things do have a cycle, by the way, all these products.

Yeah, absolutely. Right?

Then you move to the next one, which is the speakers, and then that gets eaten up, and then you move to the next one. It strikes me as the plains are covered with the bodies of pioneers. You know what I mean? That concept of that people ... and that’s what happened, and then you end up sort of trying desperately to keep the funding going at the same time.

To go to the next stage of it, because there’s that inception of the market.

Right, and then it creates bad will all over the place. So, we’re gonna talk about those errors when we get back, but one of the things that I’d really like to get into is this journey of the entrepreneur, because more than any, you know, we talked about this, the emails I get about Jawbone are really ... You’ve got some people who hate you, for example, and you have some debts behind. And what do you do with the investors?

So, I want to talk about that, because I think you want to be honest about what happens with these things, because on one hand, you have these incredible pioneering concepts that everybody else takes advantage of. You’re not Echo. You started that. You’re not Beats. You started that. You’re not ...

The Apple Watch.

... the Apple Watch. Right?

Yeah.

So, the plains are covered with the bodies of pioneers. I want to talk about what mistakes you think you made along the way so entrepreneurs can get an idea of what it was and what you regret doing, and then what you think you did well.

You talked about this idea of creating all these amazing things, and you really did. You kept coming up with something. You were heavy in design. You made things very beautiful. It was very Apple-esque in a lot of ways, even more so, more stylish, more colorful. The earphones were beautiful. The Fitbits kept changing to look like ... Remember, one time you said they were gonna look like jewelry. You were trying to add features onto all of them. You had a deal with ... Was it Amex at one point, to payments?

Yeah, we had a deal with Amex. Yeah.

Yeah, you were trying everything.

We were doing wearable payments. Yeah.

Right, wearable payments.

Early.

Very early. And I think you’re the first person I heard talking about this concept.

We were the first people to do it, and there was issues there. There weren’t terminals ready to accept the payments. There weren’t enough places. It was new behavior. Yeah.

Right, but you were talking about it before that was.

We saw it.

You saw it, yeah.

We saw it early.

Right. Exactly. But along the way, you’ve raised how much, total?

A little bit over, north of a billion.

A billion dollars?

Yeah.

Where did that money ...

A lot of that came after 2011. Right?

Okay, with all those different debt financings and things like shareholder ...

Some of the growth investors at that point, that’s when we started to raise ...

Some of the biggest investors in Silicon Valley, too.

Yes. Those guys came in earlier than that, where we didn’t raise huge amounts of money, really, until 2011.

Right, and then you had a stellar board. You had Marissa Mayer, ex-Yahoo CEO. You had Ben ... I’m losing my mind.

Ben Horowitz.

Ben Horowitz from Andreessen Horowitz. You had Yves Béhar. Is that correct? Was he on the board?

Yves wasn’t on the board, no.

He designed it. He was one of ...

He was our creative partner.

Creative partner. Who else was on the board there?

Vinod Khosla.

Vinod Khosla. Lots of ... You had all the ...

Roelof Botha.

Yeah. You had everybody, pretty much.

Yeah.

So, you’re raising all this money... I sound like an idiot, but where did the billion dollars go?

So, a lot of it came after 2011, and that’s when the business was scaling. We never shared our revenue numbers, but we were doing several hundred million dollars at a time. I think at our peak, we got to almost a five, $600 million ...

Of selling, yeah.

... of revenue to us, five, $600 million run rate to Jawbone, which means that we produced billions of dollars in revenue for our channel partners like Best Buy and Apple and Amazon and all the carriers and all those guys. So, the franchises were successful from a revenue perspective to our partners. As I said, I think that the challenge with hardware for us is we put all that design content into it.

We put all of that new technology into it. And it’s hard, as a hardware startup, you don’t generate enough margin to really ... somebody told me the other day, Apple spent $900 billion on tooling for the Apple Watch. Sorry, $900 million, not $900 billion.

That’s what I was thinking. It’s a lot.

Yeah. No, $900 million.

Everybody should have one on their wrist if they have that much money, yeah.

Even $900 million is a lot of for tooling, I can tell you, as somebody who’s built a lot of devices. I mean, we shipped about, call it, 40 million-ish devices over time in the different categories. So, a good amount. The challenge is, how do you, as a startup, build for that kind of scale? The automation, the supply chain, efficiencies you get, etc.

Yeah, and when you have glitches and things like that.

When you get glitches, you don’t have room for error.

Right.

To go fix that stuff, so what takes up a lot of the cash is the working capital cycle. You’re trying to scale R&D, right, because you’ve got to build the next thing, and in all these things, you’re only as good as your next device, or your next product.

Look, as we evolve and as the devices got smarter and as they became more connected, we added a lot more software content to it. In the early days, a lot of our software team was machine learning, algorithms, digital signal processing, and then as it sort of evolved, we moved up the software stack.

With the Up device, we had a full-blown application. It was the most engaging application of digital health ...

Yeah, you were trying to get people in to answer questions, compete. You tried gaming.

Yeah, oh, I mean, it was great. I mean, it had 10X, the engagement still does, of anybody in the digital health space.

Right. Right.

I think it’s that, between Facebook and Snapchat, in terms of daily engagement.

Right, right, it would give you messages.

And it changed behavior, and we’re building off a lot of this stuff that we learned from it. So we did a lot of that, and that software and services create more stickiness, and more community. And there’s a bunch of data that you can use to, how to help people, and that’s a lot of the foundation for what we’re doing now.

But again, it gets back to the fact that you just don’t generate enough margin to do all of that heavy future R&D.

Right.

That doesn’t ... R&D doesn’t work on a linear basis. The cost of creating new stuff is not linear, right?

Absolutely, and one of the things that you were always trying new, that you would call me with lots of new things. I kept thinking, “Oh, my God, when is this guy going to stop?” Like, it’s not going ... It’s like jumping from lily pad to lily pad, it felt like.

But let’s talk about the problems of that. Obviously, where did the $1 billion ... let’s start with the money. Where did the money go?

Yeah. So look, a lot of it went to fund the R&D and the creation of technology. A lot of it went to working capital, to fund inventory, and then scaling, and a lot of it went to whatever was left. We funded the operation, and people, as well as ... And again, we weren’t able to generate enough margin.

And there was lots of arguments at a board level, which is, are we putting too much energy into the design side? Are we putting too much dollar investment, or are unit economics so expensive, that we can’t charge enough to justify that, right? The Apple model is, “Let’s put a bunch of really cool technology into it and high design, but we’re gonna charge a real premium.” And they’re able to do that at scale, right? We weren’t able to necessarily charge the premiums that would justify all of the cogs, at the cost of goods sold, that we put into the device. That’s the downside, frankly, of being a high-design product.

So why take all that money if you knew this wasn’t going to work?

Well, at the time, you didn’t ... I mean, look, we didn’t take money thinking it wasn’t going to work.

Right, no, I get that. I get that.

Look, we created the smart headset space.

Right.

We thought that was going to continue. It’s very hard to predict when these things flatline, as you know, and then, do you have the R&D part ...

Except that they always flatline. That’s ...

They always do. At some point, they asymptote, right?

Right.

One of the things that people don’t talk about enough is Apple did the iPhone as a transition from iPod. It was probably one of the most masterful product transitions, when they were at the peak of the market. Everyone’s like, “Wow, they’re sort of dumping that off.” We watched the other side of that, which was the Motorola Razr, where I think they did 21 versions of that same phone, right?

Yeah.

Just trying to sort of ride the wave. A lot of that is a timing issue, cannibalizing yourself, deciding you have the new thing that’s ready to go and scaling to the next level. And I would say that we did it for a couple generations, but what we didn’t do well was continue to harness and to continue to bring the new thing and the new thing and the new thing.

Candidly, it’s really hard to do that across three different categories at the same time within a startup. The capital it takes, the amount of people, the talent to forward-front all of that is really, really expensive.

So, why would investors ...

So ...

Go ahead, keep going. Sorry.

I think that’s a big part of the challenge. I was talking to Mary Meeker the other day, who was an investor in the first Jawbone, and she said, “I wonder what would have happened had we thought about selling off those businesses at their peaks.”

Yeah, why didn’t you?

Well, it’s hard to predict when peak is.

Well, I know, but you know, there is a peak.

But by the time you see it, it’s starting to be descending, right?

Right, right.

There’s a variety of factors. In some ways, the thing that got us through when we had to take the Up ... was our speaker business. When we had to take the Up off market, we stayed alive because we had the speaker business that ...

So why didn’t you sell? I’m suspecting you had a number of chances to do so, at some point, because it was very hot for a long time.

Look, it wasn’t just a “me” decision.

Right.

I think that there was opportunities where we had opportunities to exit the business. I think that you look at all the factors. You look at where you stand and you look at what you have in the pipe and you make that decision the best you can, with your board, to say, “Can we take it to the next level? Do we have the resources of ...”

And you kept thinking you could.

You know, we’re believers.

Right.

We’re entrepreneurs.

Except you keep getting kicked in the head with each product, like, at some point.

But at some point you get credit for perseverance, right? I mean, maybe.

Not usually, but, okay. Yeah. No, but I mean, I’m talking ... Why don’t you get to the idea of ...

But isn’t that what the Valley’s built on?

Right, but most people who’ve done better have sold, it seems like. I’m thinking of Instagram, lots of things. So it could have ... By the way, he could have made Instagram enormous, Kevin Systrom, who is investing in your newest thing. We’ll talk about in a minute, but ...

He has made it enormous, then.

Yes, he has made it enormous, but it’s ... where, someone else, what would he have done if it was it by itself, for example? Or would he have gotten to that level? These are all the things that entrepreneurs go into. What prevented you from doing that? Because, then, like I said, the plains are covered with the bodies of pioneers. There’s so many, it’s hard ... The one that they just did the documentary about, that became the iPhone.

Yeah, the thing that [Tony] Fadell did.

Yes, exactly.

Yeah, yeah, absolutely.

Yeah, a long time ago.

You mean, it became the iPod, you mean. Yeah, yeah.

Yes, eventually, a version of it became ...

Fuse, it was called.

No, not Fuse, it was called something else. Anyway, there was tons, there’s just tons of them, and I have them all in a drawer, in my house. Why not sell? Talk about that journey. It’s like, you just think you’re going to be the next big thing, I presume?

Yes, there’s a part of that, for sure. But you also see it, and you see what you’ve been able to achieve, you see what’s held you back. Part of being that pioneer and that creator is thinking that you can push through those walls, right?

I’ll give you a great example. When we were doing wireless speakers, when we invented that space, there were a lot of people who told us that we were crazy to do it, right? That going in the speaker space, there were so many dead bodies, big brands, a lot of channel pressure. It wasn’t a great category.

Right.

But we did it, and we transformed it, right? I find that process of creating new things extremely rewarding. It’s tough. There’s a lot of fights and you’re pushing and you’re trying new things. There’s no playbook established. But that process is, if you’re a creator, that’s what you live for, right?

Right.

The opportunity to do it, and for people to value what you bring to their lives. Look, I’ve had so many incredible experiences with the products that we’ve built and people loving them, right? I had somebody come up to me at a party once that I’d never met who said, “I feel like you were there for the birth of my child.”

I was like, “What do you mean?” They said, “Well, I had one job when my kid was born, which was to be in charge of the music, right? I had a Jambox, and we were late getting there, and it was this extremely long labor. And having that Jambox there and playing the list of music that my wife wanted ...”

Right. Well, that’s the hope, that ...

No, but it was a touching thing.

Right.

Right? To hear that that played a role in this significant moment in someone’s lives.

Right, but in being creative, and creating things ...

Yeah.

You also leave behind a lot of anger, right? I mean, you were aware of that. We’ve talked about it extensively. I used to get emails from employees, I think they were employees, who were unhappy with you. I can’t imagine investors were happy about losing that amount of money. And then you also had vendors and stuff like ... we talked about that, too.

Yeah.

That you didn’t pay, and stuff like that. But you’re also in, it’s this creative mode, and I want you to get to a bigger idea of the entrepreneur, when you’re like this. When you’re juggling. You’re not paying this person. You have investors on your back. You’ve made management mistakes.

I want to finish, I’ll finish this part, I promise, but what things do you think you did wrong there, and what things did you do right, for instance?

How much time do we have?

No, we keep going.

No, I mean, no, no, I’m saying, this is like ...

No, I know that, of course.

We could do a 10-day series on this.

Right. But not, or, like when you don’t ...

When things don’t go well ...

When you owe people money, or when you ... yes?

You spend every ... there’s not a moment in my life where it goes ... where I don’t think about it every single night.

Right.

About all the mistakes we made and all the things that went wrong and what would we do differently.

So, for all the people listening ...

Like, all of that, it’s hard.

Tell me two or three.

I mean, it can be emotionally and mentally crushing.

Right.

Right? It crushes your soul, you put every ...

But then again, you took the money, right? So you wanted to do it.

Which is why I stuck with it.

Yeah.

I had a lot of people who said, “Hey, you know what? Come do this. Here’s this job, or here’s this other opportunity. Jump into this. Wanna help do this?” And I didn’t walk away.

So, why? I want entrepreneurs to hear this.

Because I took a bunch of other people’s money.

Right.

Until I thought I was going to die, I was ... they were going to have to carry me out in a body bag.

So what mistakes do you think ...

That’s a commitment that I made.

What would you have done differently?

I mean, again, do we have a month?

Yeah, I know. Give me two or three things.

Well, look. A) I think that a hardware business model’s really hard.

Right.

And I think that we would have moved to services a lot faster, which is what we’re doing in the new thing.

Right.

No. 1, I think we wouldn’t have overreached on valuation, right? I think we would have been a lot more paced and disciplined.

Do you get caught up in that, or ...

Of course!

Yeah.

Of course. We were one of the first unicorns and everyone’s like, “Oh, my God, you’re great!”

I remember, yeah.

And “you could be this,” and you get all these accolades.

“Would you like a plane?” Yeah, and that kind of ...

I mean, come on. It’s hard. Nobody teaches you how to be disciplined in these situations, where everything’s trying to sweep you off your feet.

So, overvaluation, hardware.

Overvaluation, wrong structures.

What about management?

I mean, look, you come into these ... one of the things a firm like Andreessen Horowitz does, and what Ben’s been amazing at, is they help train a lot of these people. Because you don’t get that training. There is nothing that you can go to school for that helps you be a great manager, right?

Right.

But you need that training. You need that rigor. And a lot of it is by doing, right? I’m 42 now. Do I think I’m way better as a manager than I was when I was younger? Absolutely.

Well, the reason I’m asking is because a lot of these companies are in the hands of people who aren’t even ... look at Facebook. I think it’s a management problem. He was not experienced. He’s not been experienced. You don’t have to say anything about Mark Zuckerberg, but I don’t think … That management team had a veneer of being highly competent, because they did very well, but a lot of it is stuff they shouldn’t be doing.

Well, look, hypergrowth hides a lot of problems.

That’s what I mean. Exactly.

I’ve been through three or four hypergrowth circles.

Yeah, yeah, yeah. Exactly.

And so, you don’t end up taking the time to build a really, really good foundation.

Or a management structure.

Or a management structure. Look, I used to think HR was this thing that you just applied later, as you were scaling. In the new thing, we’ve had HR partners right from the beginning, right, building the infrastructure.

Here’s how we operate. Here’s how we work. Here’s our set of thinking. Here’s what’s okay, here’s what not. Here’s how we communicate, here’s how we catch problems early. Here’s how we hold people accountable. These are all things that are important, and just as important as the creation side. Frankly, you think that it’s all about the creation.

Right.

Right? It’s all about that new thing and everything’s going to fix itself. Well, guess what? It doesn’t, and you have to do that. You have to invest in yourself. You have to grow. You have to manage your insecurities, your blind spots. You have to be really transparent and understanding about that.

I’m a big advocate of coaching and mentorship and talking about this stuff. I’m a lot more open about my strengths and weaknesses. I work on them. Mental health, people don’t talk about enough, right? That stress is hard, and it’s wonderful when everyone’s saying good things, and the level ...

Look, what you realize in these things is all the credit is sometimes overplaced, and all of the blame is sometimes overplaced. Both sides, right? It’s one of those things where you have to find that balance. What makes you and what drives you and what are the things that give you confidence, and what are the things that cause stress?

Right. Well, one of the other things is, you rode a really positive press wave, and then a negative one when the things broke down. That was the first time. I remember when there was stories about the problem with the sweating, which I think every company goes through. Apple’s gone through it 20 times.

Sure.

But with you, it mattered a great deal more because you were just a small company.

Right.

Right.

No, you go through the ups and downs, right?

So do you think you handled those?

Why do you think that is, by the way? From a ... I mean, you are the queen of Silicon Valley press.

No, I’m not a queen of anything.

Why is that? Why do they take it up and take it down? Why does that cycle have to be ...

Because I think you all hype it, too, like, “We’re all great!” “We’re all this!” I think what we don’t a good job of is monitoring it during the time. It’s like, “Isn’t Mark Zuckerberg a genius?” I’ll use him, not you, necessarily.

Now it’s clear, there’s some management problems there, right? There’s some decision-making problems, there’s some wisdom problems there that are clear. And I think, when you start to say — which I think I’ve been more than most people — say, “They can’t do that,” people in Silicon Valley don’t like at all.

Don’t like what?

Well, you know, when we were ... I was tough on your board member, Marissa Mayer. I didn’t think she was up for the task of that job [CEO of Yahoo]. I didn’t think that ... Travis [Kalanick of Uber] didn’t hang the moon, and I think saying it ...

But the way it goes is, it’s this attack, and then the other side digs in. And it’s not like, “Hey ...”

Right, but ...

“Can you get help? What are the problems that you need to solve?”

Yeah, but we’re not your partners. But I agree with you, I think it’s too hype-y ...

No, no, I’m not saying that that’s necessarily your solve. It’s just, it becomes this polarization, right?

Well, yeah, it’s true. But part of it is, your products were very exciting, right? And at the same time, when you’re hearing, “He didn’t pay this person, these investors are mad, maybe they’re gonna go out of business,” you have to, it’s hard to do a more ... This is why I want to talk about this.

Yeah.

It’s a much more complex issue ...

Very.

Than it is, and so, what you do is you leave behind a lot of people who are angry at you, and they’re willing to talk about it. Had it gone ... Had you sold to Apple, the way Beats did, you’d be a genius, right? Right? I’m just saying. That’s the thing. If you had sold, nobody would be complaining, right? Or would you have ...

Look, I like to look at everything that happened in a lot of detail, to think about what to learn from it, what to do better, and I spend a lot of time now thinking about, how can I take those lessons? Or how can other people learn from my mistakes? Right? And what are the platforms and what are ...

Give me ... and then we’re going to talk about what you’re doing next, I promise, in the next section. What are your two biggest mistakes that you made?

I think we absolutely overreached on valuations, and picking the wrong partners, and end up agreeing to structures that just weren’t right for us. And I think we probably should have taken a step back, slowed down, rebuilt, built a solid foundation that was better to scale from, and gone slower.

I think there’s a lot of pressure to move quickly, to grow faster, and I think one of the things that happens is, each business has its own dynamic, right? So, consumer internet businesses scale really fast because you have platforms set up that allow that to happen.

Enterprise businesses scale differently. Healthcare businesses, completely different cycle. Pharma businesses, biotech, different cycle completely, right? Hardware, a different cycle. So I think there needs to be more rational discussions of what are reasonable growth rates.

But when you have an environment where some things are growing really, really fast, everybody gets caught up in that. You’re like, “Oh, no, no, I need to be there, too.”

And you also, I think you all get licked up and down, and then it ends up in the worst way, in a Theranos situation where there’s actual fraud going on and a lot of hyping, but she’s a version of everybody else. Do you know what I mean? Just taking it too far, taking it too far. I think she’s a version ... too salesy, too, “Everything’s gonna be fine,” too positive. I hate to say that, but it’s too positive, it’s ...

It’s a balance, right? Because you have to be extremely, brutally honest, when you look in the mirror and when you look at your organization.

But y’all aren’t, I don’t think.

But, then, no. But I think everybody is, in the dark.

Sure.

Or when they’re by themselves.

Right.

Like, way more people let on.

Right.

And then the balance is ... And I don’t know who’s achieved this well, and I don’t feel like I necessarily have, either.

No, because the ones that are successful look good, right?

Well, again, success washes away a lot of sins.

Right, exactly.

And bad foundational elements, right? But I think that what you need is the ability to be optimistic, lead a charge, because that’s what it takes to break new ground and do something new. If you weren’t optimistic and just pessimistic, you’d never take these risks and these challenges on.

So you need that. But you also have to be really grounded in the realities of where you are, and that’s a hard duplicity, right, of going back and forth. It’s hard to move yourself back and forth.

Yeah. I get that.

And so how do you do that?

The only issue I have with most Silicon Valley people is, they took the money. So, stop. You took the money and so you have a responsibility.

Yeah, and you have a responsibility.

Yeah, right.

So you stick with it till it ...

Right, exactly.

Through the trenches, right?

All right, we’re going to talk about what you’re doing next. Thank you for answering these questions. Just saying, I appreciate it, but I do want to talk about this, because I think people, the real ...

I think it’s important. I mean, look, we’re unpacking a lot of ...

Yeah, right. Right.

Beyond what happened to Jawbone, stuff that I think could be interesting lessons, because that’s what I hope for now, right, is that ...

And also, the forgiveness zone, and who gets forgiven and who doesn’t. We’re going to talk about that, because ...

Let’s talk about that.

Because you have been forgiven. You’ve gotten new funding.

Sort of.

Sort of.

I hope, right?

I’m not God, so I won’t say anything. Anyway, when we get back ...

I don’t know that you’ve forgiven me yet.

Yeah, I’m never going to forgive any of you people.

We’re here with Hosain Rahman. We’re talking about happened to Jawbone, which had raised $1 billion, put out a lot of great products, but had a lot of problems. But now he has a new company called Jawbone Health.

You said, “phoenix,” I was saying, “phoenix from the ashes,” but, a $1 billion of ashes. So what have you done? You closed Jawbone?

Yeah.

You said, “Sorry, people who lent me $1 billion.”

No, no, what happened was, we ended up, in 2015, doing a big debt deal that, ultimately, the structure of it just made it hard.

Right.

We didn’t have the flexibility to shift in a new direction.

Yeah.

In 2015, we also realized a lot of this consumer fitness stuff was flatlining, and that wasn’t really where the future of wearables was going to go. We had a number of breakthroughs on the technology-sensing side. We started to get into deeper clinical measures around vitals, and understanding more of what was going on with people. We had bought a few things, hired a chief medical officer, and just sort of expanded what ...

Is this the same management? You went through a lot of different people. You seemed to have a CFO every five minutes. But was it the same team or is it a different team?

At Jawbone Health?

Yeah.

There’s about 110 people that came over from the old company.

How many were at the old company?

At peak, I think it got close to 600.

Wow. Yeah.

So, that process of going up and down is hard to ...

Oh, I can imagine.

Another podcast.

Yeah.

The new company, what ended up happening was, we had this big debt structure. We tried a number of different ...

And there was no way out of it.

Business plans and different initiatives, and there was a lot of back and forth.

What was your last one? I can’t remember. What was the last one you did that ... You were trying different things?

A lot of what we were doing in ‘16 we never talked about.

Right.

And then, so, but it was all ... we turned off all of our retail stuff and said, “We want to focus on this deeper health stuff.”

You stopped making the devices.

Stopped making devices, turned all of our sales in early ‘16, and we said, “We’re going to focus on this deeper clinical health ...”

Were the sales off? These were off? They’re just flatlining?

I mean, we were still selling.

Right.

There was a lot of revenue, but it wasn’t profitable. And it wasn’t yielding the future, right? So we said, “Instead of focusing on that, and going to fight that …”

Which takes a lot of time.

Takes a lot of time, takes more capital, all those things. We said, “Let’s go. We’ve got this really interesting stuff. Everyone that sees it is blown away by what we’re doing.”

And patents.

2,800, right, we had a huge intellectual property war chest at the time. And so, the thought was, let’s go figure out what it looks like in this deeper healthcare arena, and what, if anything, we could do. We learned a lot. It was a crazy journey in ’16, and we tried different paths, and ultimately none of them worked, because we couldn’t just get out from underneath this kind of structure that we had. This debt structure.

There was a group in the Middle East called Meraas, which is a Dubai-based group, served one of the largest investment groups there.

So you travel all the way to the Mideast to get money.

We met them ...

They do have a lot of money. They seem to be spreading it around. SoftBank.

Look, the Middle East investors, the sovereigns and a lot of these folks, are the capital behind the capital. Right? And have been since the late ’70s. I think it’s just something that people don’t realize. Their large LPs ...

They are.

... and all the financial institutions in New York.

But they’ve shown up more visibly, I think.

Yeah. And I think that they’re thinking about ...

Around Tesla and SoftBank.

Tesla, SoftBank. And I think they’re doing great stuff. I think they realize, “Look, we can deploy this capital directly into innovative businesses and pushing envelope and market make and be a lab to showcase what’s possible and bring that to the rest of the world.”

Actually, I think it’s exciting and I think that it’s frankly a cool alternative narrative for the Middle East versus a lot of what gets out in the other domains around, frankly, terrorists and, you know, political instability and all that stuff. I think deploying capital to further innovation is an awesome part of what they do.

And then the jig is up in oil at some point, so they need to move it into ...

They need to diversify, for sure. But, I think that ... Look, they have a vision for the future, and I think they’re willing to invest. And they have been long-term investors in a lot of stuff. Things that you’d be surprised to know that they were big, big massive backers and owners of, and have been for decades, right?

So, we had some of those folks in the old Jawbone, and they had introduced us to this group in Dubai, Meraas, and they came and saw what we had built and they were really blown away by a lot of the clinical-grade technology that we were working on.

They said, “Look, if you had a fresh start and ability to launch into a new market, what would you build?” We said, “Wow. That’s a really cool opportunity. Here’s sort of what we’d build.” They said, “That’s neat. We want to set up a new company, Jawbone Health, and we’ll back that, and we’ll buy out the assets.” So that’s what ended up happening, and they hired us in to do that.

So, you invested to buy out the assets. What is that? I mean, this was...

They went to ...

You had this massive valuation.

They went to the debtors. At that point, the company’s in the hands of the creditors.

And the shareholders are zeroed out.

The shareholders are sitting underneath all of that, right?

Right.

This is the kind of tough structure. There’s not flexibility to do stuff.

Right.

But, anyways, they went to those people, it was like an arms-length transaction. They said, “We formed a new company and we want to buy out all the health stuff. You guys can go sell all the audio pieces off, but we want to take this thing into a deeper thing, Jawbone Health.” And they hired me and a bunch of the team that we brought over to go do that.

So, we formed that company in January 2017, and we’ve been heads-down focused on building this new service, which we’re gonna talk about publicly, the total picture of it, for the first time this week.

So, you’re taking the services that you probably should have invested in before and doing a health ... Explain what you’re doing.

Yeah. So, what Jawbone Health is building is this personalized subscription service where we take all of this continuous health data about you and we combine that with a lot of machine intelligence, so AI plus human doctors. They go analyze all this data. The idea is to catch issues going on with you, health issues, particularly in the lifestyle ...

Preventative health.

... disease, preventative health, to catch them early when they can be treated and you can improve longevity. Because the problem is, look, two-thirds of all deaths today are lifestyle-disease related, which means it’s just bad living, right? But the reality is, if you catch that stuff early and you change your behavior or whatnot, you can push out half of those deaths and save 70 percent of the cost.

The problem is, we have no information. We don’t know where we stand. What’s going on with us, right? We have half a million minutes a year in our lives. If you’re good, you spent 15 minutes a year with a doctor, maybe four times a year. That’s a very small percentage of the population. So the idea is to give people tools.

What we realized through the wearables journey is you had to elevate the actual sensor technology to a clinical-grade level. What does that mean? That means you have to take it through an IRB process of doing clinical trials, which is an institutional review board, approved by the NIH. Everybody, the big institutions like Mayo and Stanford ...

And you’re going to be publishing these studies?

We already started to. So, a couple weeks ago, a few weeks ago, we published, at the Deep Learning Conference, the KDD Conference in London, we published a lot of our deep-learning stuff around atrial fibrillation, for example. It’s the thing that Apple announced. We’ve got fantastic results there. Four nines on positive predictive value, which means that we’re 99 percent accurate at predicting that. That’s something that we did as UCSF. That has been accepted as in the American Heart Association, so we’re gonna publish there.

It’s a very different model, where you do this stuff, you publish it. Third parties. The idea of the clinical trials is you have third parties running this data, you correlate it to ground truth against known standards, like FDA or other certification bodies. Then, you go correlate all of that, and it’s then proven out clinically, empirically in published data that it works. You take all that information, so now you know you have really accurate stuff, and you go run a bunch of machine intelligence on that, and then you have humans look at that, and make determinations.

Right. So you’re trying ... Right. Then it goes to your doctor and insurance company? The privacy implications, obviously, are important.

So the whole thing is an encapsulated service. Where we grab the data off, we analyze it, you have a doctor in the system that analyzes it.

There’s a lot of startups that are trying these days.

There’s people doing different pieces.

There’s Cardia, there’s all kinds.

No one’s pulled the whole thing together.

Right.

And we’re looking at a series of different lifestyle diseases. We have the continuous monitoring piece.

Which is a device. You’re gonna be having another device, right?

Well, the device is free with the service. So it’s not like a hardware business model.

So it’s not a hardware ...

It’s a monthly subscription model.

But you will have a device of your own. Will you build into other devices?

We have a device on our own. We did that because we needed to show what was possible. The plan is to let other people build on our sensor technology.

Like Apple. Well, they’re doing their own thing.

Well, we’re actually going to integrate Apple Watches. Because, now that they’ve gone to a clinical grade level, we can use that information. So we’ll never build a smartwatch, for example, right? Apple’s doing a great job of that.

Our device is to showcase what’s possible, and the idea is to let other people build on our sensor technology because we’ve proven that’s it’s clinical grade.

But you will have a device, once again, but you’ll give it away.

We’re giving it away. And then ultimately, there’ll be other people’s devices.

Right. So, this group in Dubai bought out the investors.

They bought the assets in the health domain of the old Jawbone.

Which is not unlike, say, Slack was a game company that lost all kinds of money, then they pulled Slack out of it.

I don’t know what Slack’s restructuring was. Yeah.

So, it’s a restructuring. The shareholders in the old Jawbone: Gone.

What ended up happening when the new company was created, ultimately there was no plan for the old company. So they sold off the audio assets. I think whatever proceeds went to the debtors and then they shut that down.

Zero. Right. So zero.

No, they got some stuff. There was a litigation with Fitbit, and a bunch of those other things that were assets in the old company, and that all got sold off. It wasn’t a return of capital to debtors, and it didn’t cross the debt so that the shareholders got paid back. Then, we’ve been focused on ...

You created ... you have new investors. Are the old investors still investing with you?

Some.

Some.

Some have gotten back in.

And then you’ve got a bunch of angel investors, correct? You have Kevin Systrom, Mark Pincus.

So, primarily it’s been funded by this Dubai organization, Meraas.

Mm-hmm. And this is ... How much did you raise?

We haven’t been saying.

Okay.

But, it’s enough to fund the operation, get us to clinical trials and get going.

Tens of millions of dollars, I understand. You don’t have to answer. Anyway, it’s tens of millions of dollars. All right, but it’s to get this service out.

Alongside Dubai, a number of folks came in, as well.

Right. And it’s also Salesforce.

Some of our old investors.

You’re also using ...

Well, so, as I was explaining it, the whole thing ... So, I went to see Marc Benioff about what we were doing, and I showed him this whole thing where we’re grabbing all this data, continuously monitoring this ...

And he says, “I have a cloud ...”

Well, it’s interesting. They built this Health Cloud solution, and he said, “Look, we can power this whole part of what you’re doing, where all of our data plus your health record ... It’s all HIPAA compliant, doctors can get in there and manage the patients, message them.”

So we were building that, and we saw what Health Cloud had done. We said, “Great. Let’s use that to power our platform.” And Health Cloud has become this great tool for us where you have all the HIPAA compliance so the data is super-protected. You have all of the electronic healthcare records integrated, you have all of our lifestyle context. So doctors in our system can look at all this information and make determinations, and they take care of you.

So, you’re doing a service now? You’re doing a service.

The service is part automated ...

And what does that cost? How are you gonna make money?

There’s gonna be a monthly subscription fee that ranges up for ...

Monitors your health.

That’s remote monitoring.

And then, say, insurance companies would like it.

Yeah. So, look, in our clinical trials ...

This is what other people ...

... one-third of the people that went through our clinical trials in the U.S. found a disease, a major one that they didn’t know they had before. It was shocking to us. In our international trials, we had crazy results. Like, 60 percent of the people, nearly, that went through it didn’t know that they had high blood pressure, 30 percent didn’t know they had full-blown diabetes. Crazy stuff. So you catch it early.

We had built out a whole proprietary automated behavior chain system in the original Smart Coach.

Before. It would send in suggestions.

Yeah. Well, suggestions that moved your behavior.

Right.

We scrubbed that with ...

“You should sleep eight hours,” this and that.

Well, it was way beyond that. It was sort of personalized, and it was tools to coach you and do that.

I remember, it was irritating. But, go ahead.

Look, it worked. It scaled over 13 million users. The results were staggering.

No, I get it. I agree.

So, combining that ...

I don’t even like when Apple Watch tells me to get up. But that’s why I don’t wear it anymore.

You don’t like people telling you to do stuff.

That’s true. That’s a fair point.

It’s another entrepreneurial trait, Kara.

No, so look. You combine all that machine automation with this early detection, and the results have been staggering in terms of what we’ve been able to catch [for] people. The whole notion is catch it early when you can treat it. It saves a bunch of money for your company, for your insurance, for your government.

Let me say again, great early idea, but lots of people are in this space.

There’s nobody who’s doing the entire service stack.

Okay.

There’s different people ...

Apple. There’s a lot of people gonna get in it.

Apple’s doing great devices, we’re gonna integrate with those devices. There’s people ... And I can explain to you ...

There’s Cardia, there’s Color, there’s all kinds.

Color is a partner, right?

Yeah, okay.

So we integrate the genetic data. There’s different people who’ve tried to do AI, but when you have the continuous raw information that lets you build better models, some people are doing the human component but not the human component combined with the automated component. So, it’s the entire stack.

Right.

What’s cool is that Health Cloud allows us to pull it all together and allows doctors and healthcare professionals to make smarter decisions.

So, you’ve pulled out the choice bit from all these different devices? Like the choice bit which is this service? Correct? Because that was part of your Up device.

The service ... On the Up device, we had an application that we ran that did all the stuff automated. So we’ve built the new one off of the foundations that we’ve learned from that, but we’ve added in all this human doctors. This is a whole new service that we’ve built, it’s completely new from scratch.

And what’s it called?

For now, the company’s called Jawbone Health. We haven’t announced the name of the service yet.

This software could be available on your device? Or other people’s? It can be ... It’s a system that you ...

It’s a system. So we will use other wearables.

It’s a subscription system.

The reason we made our own wearables is so that we had really accurate data.

Right. I got that.

Right.

So, let’s finish up talking about this. So, it’s debuting this weekend, then you will roll it out to people in a variety of ways.

Correct. We’ve already started to roll it out in formal clinical trials.

Right. So individuals can buy it, or companies will do it, or insurance companies will recommend it.

All of the above.

And there’s a lot of these. Like I said, what is your worry right now? You’ve certainly raised significantly less money. You don’t have to deal with a device, or people sweating on it.

Yeah, no.

Or the Chinese coming in and copying it.

I worry about people, execution, making sure it’s tight. All the ingredients that we have for this service have been proven now. It’s very different from, you know, you build a device, you put it on a package, on a boat, put it on a shelf, hold your breath, is it gonna sell? Now we’re rolling it out 100 users at a time. We make sure it works. Are we achieving it? Then we get the next set, then the next set. So it’s a different kind of scaling model. It’s slower, but it’s a lot more foundationally sound.

We’re really excited because now we’ve gotten to a point where it’s clinically validated. We have third-party results. We’re publishing all that data. It’s a different sort of channel structure. It’s a subscription model. We’re just taking our time to tune it, get it right.

All right. Well, I have two more questions, and one’s a positive, one’s a negative one. I’m just gonna tell you in advance. Let me do ... Which one do you want first?

Whatever you want.

Is it ... Okay, I’ll do the negative one.

Let’s go negative, and then a positive.

Okay. You raised all this money ...

I haven’t raised all this money in the new thing.

You did before, previously.

Yeah, yeah, yeah.

Previously, yeah. Why do you get a chance again? If a woman did this, I’m guessing would never get funded again. Like that kind of thing.

A) I hope that’s not true.

Well, it is.

I think everybody should get a second chance.

Of course.

I don’t care if you’re black, white, Muslim ...

Right.

Jewish.

Most people don’t.

Female.

It seems like guys get bigger extension. Why do you get this more-than-second chance? Why do you think you get it?

I don’t know. Look, to be totally candid, it hasn’t been easy.

Mm-hmm.

I think that it’s hard to get a second chance. I mean, we were fortunate. We created a lot of things that no one had ever done before, and now there are sort of leading ... Let me think about what’s hot right now. It’s all stuff that we would have got from ...

Yeah, but everybody else is benefiting. Yeah, right, yeah, but how does ...

Everybody else is benefiting, right?

How does that feel, for one? And then secondly, why do you get the chance?

Look, I’m so proud of what we did, and I’m proud that other people stood on our shoulders. These ultimately ... Like, I feel like a little bit of the godfather of a bunch of these different things.

Now, sitting on your shoulders is one thing. But squashing you down and you don’t get the benefit of it is ...

Well, look. It’s a journey. And the story’s not done yet.

So, why do you get a second chance?

This is the next chapter.

Why you? Why do you deserve a second chance?

Well, look, No. 1, I actually think when you go through these things it makes you a million percent smarter. Right? It makes you a million percent more humble. It makes you a million percent more thoughtful. Frankly, I think we’re better tooled now, given all of the fire that we had to walk through.

It was not easy, Kara. A lot of people were just like, “Walk away. Go do something else.” It would have been a lot easier, right? But we stuck with it.

Also, “Hosain, you’re an asshole, how dare you?” Like that.

Totally. And you know me.

I’m using you as a proxy for all of Silicon Valley. I’m sorry to do that, but sometimes it’s like, “Why should we give all of you ...”

I can handle it. I can handle it. I’m handling it.

Okay. Why should we give all you people a second chance? You know what I mean? You’ve broken a lot of stuff. I’m not giving you Facebook responsibility. You didn’t break democracy. But why should we give Silicon Valley ...

That’s a hard burden to carry.

Right now there’s a techlash, why should we give you all a second chance? There’s this new thing that Julia Angwin’s doing, The Markup to ... There’s a lot of like, “What the hell?”

So, look. I think everybody deserves an opportunity to continue to push forward. Our whole model is predicated on trying new things, right? If you aren’t allowed to fail and you aren’t allowed to learn from those mistakes, it’s not gonna build the next thing. I mean, look, I remember sitting with you and listening to Michael Dell say, “They should shut down Apple.”

Yes.

He’s retracted from that.

Yeah. He was wrong.

Michael, to his credit, was like ...

His credit!

“I was wrong.” No, no, but it’s hard.

Yeah.

And when he said it, everybody understood why he said it. But now, that’s the world’s most valuable company, right? So if people didn’t give Steve a second chance, what would have happened?

Right.

Right? And I’m not saying that we’re there, but I just think everybody deserves a second chance. Slack, right? It was a failed thing. It’s the nature of Silicon Valley. It’s the nature of innovation.

So what does Silicon Valley have to do to ... Because the thing is they’ve taken the money, they’ve taken the ... They’ve lost the money, they’ve kept the money for themselves. Everyone’s benefited themselves. This is the positive question. Can you and Silicon Valley be more mature? Is this finally the moment where you’ve learned these lessons and are now ... I mean, this is a more serious business. It’s a less exciting business. It’s not as hype-y. It’s not ...

Absolutely. We’re going slower. It’s just different. I mean, look, you’ve known me since you put us onstage. I was like 25 or 26 years old. Do I seem different?

No. But go ahead. No, I get it.

Come on!

Yes, of course, I’m teasing you.

Hopefully more mature. You watched me have kids. Mature, all those kinds of things. I think we’re a lot more ...

Where is it going next for you? And I’m gonna use you as a proxy, where does it go? Has everyone understood the damage and then understood ...

I think that there’s a lot of really candid conversations about the damage. I think we have to own up to the responsibility. I think we gotta ... Look, it’s a trust thing, right? People have been entrusted with their lives, with their data, with taking care of them. We have to own up to that trust. We have to live up to it.

We have to do good stuff, right? And I think that there needs to be a lot more thinking through, “All right, here are the positive benefits, but how does this go wrong and how do we make platforms and systems that protect from that happening?” Versus just focused on building something great and having it scale. We’ve got to think about the downsides early in the process.

Right.

And build and solve that. Because, ultimately ...

Consequences, it’s called.

And the consequences. Right? And ultimately build solutions that get there.

All right, Hosain, I appreciate you talking to me about this and what’s going on. I wish you luck in your new endeavor.

Thank you.

Try not to fuck up this time.

Thank you.

I’ve got so many Jawbones, products of yours, in a drawer with a lot of others, so you’re not the only one. It was great talking to you.

Thank you, Kara.

And thanks for coming on the show.

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