Let’s demystify wellness. What is it? Why is important to investors? What sectors present the best opportunities?
What is it?
As defined by the Global Wellness Institute (GWI), wellness is “the active pursuit of activities, choices and lifestyles that lead to a state of holistic health”. Let’s break it down.
First, note the word “active pursuit” in the definition above — wellness is not about taking a pill to treat depression. Instead, it is an active participation in one’s wellbeing. Regarding this example, wellness would look like an individual investigating the causes of their lack of joy and experimenting with different lifestyle adjustments to treat it. People often seek wellness practitioners, like therapists, personal trainers, and nutritionists, when self-education fails. Unlike medical doctors, these professionals focus on the person rather than the problem. They help people participate with their problems through pinpointing how the individual is contributing to their issue and what practices could help tackle it. Furthermore, they often provide accountability and hand-holding while individuals undertake lifestyle changes.
“Activities, choices and lifestyles” are the 3 primary determinant of our wellbeing, not just genetics. The term “lifestyle” simply means to how people spend their time. Diet, sleep, exercise, work, and mental and emotional habits are all important factors.
The “holistic” in “holistic health” refers to what is often called a “whole person approach”. In the world of wellness, there is an understanding that all aspects of our life are interconnected. Our marriage affects our work, our work affects our mental health, our mental health affects our physical health, and so on. In fact wellness, is so broad, that many people break it down into categories. The classic spread looks something like this: physical health, mental health, relationships, career and mission, finances, and spirituality/contribution. It is important to note, the term holistic can also mean an integration of eastern and western approaches and nature based approaches to wellness.
At the center of the wellness industry are human lives — people seeking to alleviate their pains and maximize meaningful living and joy through intentional participation in their wellbeing.
Why wellness startups?
Startups, when successful, solve problems. The more widespread and severe the problem, the more successful the startup. Entrepreneurs and investors spend a lot of time thinking about which problems to solve. They ask: What are people annoyed by? What are people ready to spend money on to fix? In my opinion, there is only one thing that virtually everyone is willing to spend money on — their personal pains and aspirations. Not only is this demand near ubiquitous, it is also intense. In case you need some big numbers to illustrate the domestic landscape of human wellbeing, check out these statistics.
“Over 45 million Americans — almost 20% — are experiencing a mental illness” — Mental Health America
“Suicide is the 2nd leading cause of death among people aged 10–34” — National Alliance on Mental Health
“90% of money spent on healthcare in the USA goes towards treating preventable chronic and mental health conditions” — Center for Disease Control.
For those motivated to make an impact in the world, these stats are not just dark and scary, they signal a need for innovation. Of course, a startup cannot make everyone well. It can, however, make it easier for people to work on their wellbeing. For example, MindBody connects people to local wellness centers and classes, it has 35 million users and is rapidly expanding. While accessing information related to wellbeing has become easier than ever, the way we work with practitioners is just beginning to shift.
Where are the hottest opportunities?
To better predict “the next big thing” for the wellness industry, we must understand the common journey people take when “pursuing holistic health” and then identify where problems are.
What is the most common first step people take when deciding to actively participate with a personal problem or aspiration? Googling it. Online they learn about possible causes of their depression, discover how food can help their energy level, meditation practices to ease their anxiety, and so on. While self-education is helpful, sometimes even life-saving, for most people it is not enough.
When people are determined to improve an aspect of their wellbeing and fail to do so themselves, they often turn to expert intervention and guidance. At Nectar, we used Pollfish to survey hundreds of individuals about their issues and how they have attempted to work on them. We found that 88% of people want to work with experts, but do not. This is due primarily to cost, but also nervousness, difficulty searching, and time constraints. We believe that if a company can innovate the way people access and work with wellness experts, addressing any or all of these four variables, then they have a rapidly scalable opportunity to help hundreds of millions of people and make shareholders very happy.
We have seen this with BetterHelp and TalkSpace. They address the nervousness issue, allowing for virtual communication with therapists. They are both rapidly scaling. However, their costs, about $300 per month, are double what our survey data showed the average person wants to spend on expert guidance. They are also limiting themselves to therapists. Thus, they are experiencing rapid growth while being cut off from the vast majority of their potential customers. While tele-health is a great place to invest, the returns will be greater if the company has a plan to lower price points, as this is the primary barrier between people and expert guidance.
The way we work with experts on our personal problems and aspirations is about to change. Therapists, personal trainers, nutritionists, and coaches have a lot more to offer than weekly one hour sessions. And yet, this is what people are finding (and not buying) online, all day long. While most startups get excited about their particular solution to wellbeing – meditation apps, e-therapy, personal trainer marketplaces, etc – it is important that venture capitalists and angel investors seek companies that are fundamentally innovating the way people access this type of expert guidance.
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