Wellness services boom as users cope with COVID-19 stress

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Wellness Coach is a data-drive wellness platform that provides live fitness classes, nutrition coaches, and guided meditations. Wellness Coach CEO D. Sharma joins Yahoo Finance’s On The Move to discuss how users are coping with the stress of the coronavirus pandemic.

Video Transcript

JULIE HYMAN: We have been covering closely the trend of people doing all kinds of things remotely, among them taking fitness classes, doing meditation. And many employers for people who work from home right now are offering those kinds of services. Some of them are doing it through a company called wellness coach, which is actually funded by Softbank.

D. Sharma, the Wellness Coach CEO, is joining us now from Miami. D., thanks for joining us. So when you look at the usage of these kinds of things, we've seen an uptick for many companies. I imagine that's the same for you. What has been most popular in terms of, whether it's fitness or meditation, the kinds of things that people are looking for right now?

D. SHARMA: Yeah, Julie, thanks for having me, and thanks for the question. So we've been analyzing data across hundreds of companies over the last three quarters. So like in Q4, you know, as people are going to their family for Thanksgiving or Christmas, we saw more emotional-intelligence-related products or, you know, very little fitness, more sleep tools. As January or Q1 started, you know, folks will have New Year's resolutions, so fitness got up, you know, quite a bit. February dropped like it usually does, you know?

But then the real trend started in March as COVID-19 hit. You know, we saw a couple of dramatic things. One is the amount of stress-related classes grew by over 50% across the board. And then fitness grew by almost 250% on sectors like advertising and travel, which are more hard hit.

And so that trend actually continued into April as stress was more further increase, and then we saw more increase in fitness. And then in May as we collected the data before this call for last 11 days, we've seen increase in sleep-related tools, like people are having a hard time sleeping. They're using more kid sleep stories or kid bedtime stories and things like that.

ADAM SHAPIRO: When you talk about relaxation classes, what does one of those look like? Is it, you know, listening to the spa music on Spotify, or what is it?

D. SHARMA: Adam, great question. You know, we do have a lot of music in the app. So there is soothing music, music to put to sleep. So if you download the app, you can see a lot of ways to relax and not stress out.

There's also, like, tools like yogic sleep where you don't want to stay but you want to lay down, and he'll walk you through your parts of your body and how to relax the body.

So like people are sitting at home, you know, they're watching a lot more TV now, and they're more relaxed. So we saw that relaxation went up quite a bit as well during COVID-19 period.

MELODY HAHM: Hey, D., I know you had closed a funding round last fall with Softbank Capital New York, not part of the Vision Fund. And can you give us an update on what that $3 million is being used for? What is Softbank like as an investor during this period of time?

D. SHARMA: Yeah, great question, Melody. First of all, you know, pre-COVID, post-COVID, it's a very different word for startups. This is my fourth startup. My wife Julie and I have started this company together as co-founders with another friend of ours, Bhartesh. And, you know, what we've seen is, you know, investors that were heavily bidding on term sheets. You know, we were overfunded within 24 hours. So our first tranche was oversubscribed within 24 hours. Well, now investors are really hoping to conserve cash for their companies they've invested in.

Just a quick note on Softbank. Our partner, Jordan, he's a great guy. He's friends, and he lives half time in New York, half in Miami. We used to live in New York, and we moved to Miami, thankfully in a better time to be here. But they've been all great to work with.

So part of the strategy for us is to conserve cash, try to get to profitability without having to worry about raising the next round in this difficult environment.

MELODY HAHM: And you say you're not worried about raising the next round, but as we talk to economists and strategists thinking about how long term these effects and these damaging economic effects will be, especially with the startup community, are you concerned about runway? I'm sure you're not closing any doors with investors as you think about how to really buoy and make sure that you guys are having a healthy balance sheet here.

D. SHARMA: You're absolutely right. I actually meant we are concerned about closing the next round. We are concerned about runway. So our strategy is more about getting to cash-flow break even than actually, you know, high-growth, high-cost infrastructure where we're not looking to raise a big loan and spend it all, which was the philosophy of sort of pre-COVID.

JULIE HYMAN: D., to sort of take a little bit of a step back, can you talk me through what the business model is here? As you talk about getting on that path to profitability, do you collect a fee from a company for using the platform? Is it per class? Is it per user? How does that all work?

D. SHARMA: Yeah, thank you, Julie. Great question. So 100% of our revenue is generated through enterprises paying for their employees. So basically the business model is very simple. They pay $3 per employee per month. And we actually use active user pricing, which means if the employees are using the platform, then they pay us $3. If they don't use the platform, they don't pay for it.

With that active user pricing and reasonable price point, we've been able to attract, you know, Fortune 500 brands like Kimberly-Clark, Unilever, and many other companies that are using the platform.

It's also a low-enough price point that they don't have to extend it to employees. You know, there's a lot of models where, you know, employers and employees pay together, or sometimes they just pass the cost to employees. In our case, 100% is paid by the employer.

JULIE HYMAN: And do you then-- the services that you're provide-- I mean, you talked about music and sort of prompts and bedtime stories and things. On the fitness side, do fitness instructors work for you? Are they freelancers? How does that work?

D. SHARMA: Yeah, pretty much across the board we use freelancers sort of model because our coaches-- you know, we call them coaches-- are very high caliber. You know, some of them are doctors. Actually, Dr. Jonathan is a Harvard-trained cardiologist. He's a practicing doctor. Dr. Julie is another. We have a very high-caliber staff. So they're doing this a couple of times a week for us and the platform.

So classes are live. Just like this call, you know, you can join a class. You can interact with the coach. You can ask questions. And usually they're done in groups of, like, 50 to 60 people. We have Lindsey Vonn on the platform. She's on the platform. We have the biggest class was her just about a few weeks ago.

But in general, all coaches are consultants for us, in a matter of legally speaking, and they do fill in the whole-- you know, sort of schedule for us across the weeks.

JULIE HYMAN: Got you. All right, D. Sharma, Wellness Coach CEO, thank you so much for joining us. Appreciate it.

D. SHARMA: Thank you, Julie.