Part 2 of our interview with Florian Gschwandtner, Founder and CEO of Runtastic about lifestyle apps vs. mHealth apps, closed app models vs. open app models, sensor integration and the future of free and paid apps. If you missed part 1 of the interview you can read it here.
research2guidance (Ralf-Gordon Jahns): Your main focus is tracking. Could you imagine engaging further in the medical sector?
Florian Gschwandtner (Runtastic): We thought about this from a strategic perspective, but decided against it. Especially in the medical area, one has to be very careful. The quality of data in this area is very important. CE-tests for producing and selling medical hardware are extremely hard to be approved. Concerning our apps, this is not our favorite field of business. We are focusing more on lifestyle than medical or healthcare.
r2g: What is next for you? What can we expect in the future from you?
runtastic: Quite a bit. We will publish 2-3 apps this year. I cannot tell you any specifics right now. In addition, there will be also new hardware.
r2g: Generally there are two possible strategies: On one hand you can work with closed models. I.e. hardware works only with one device or only with one solution. On the other hand you have the open model, where sensors from other manufacturers are combined with your apps and vice versa. Which of these strategies are you following?
runtastic: Currently there are only a few other sensors, which are compatible with Runtastic. The reason being that we did not have our own sensors in the beginning. Now we can integrate our own sensors into the Runtastic app.
Our sensors are not equipped with an SDK for third party developers on purpose. We want to make the first experiences on our own. Currently we are pursuing the strategy of a closed eco-system. That means that we only work with hand-selected partners, such as MyFitnessPal in the U.S. We are not following an open-API strategy, like many others, where you can up- and download data. We assume, that one can only control the quality of the app when one knows how all parts are working together and how the data will match.
r2g: Wouldn’t it be best for you to allow access to your apps for the existing sensors and to create awareness amongst users, that the sensors that e.g. run through ANT+, also work with your apps?
runtastic: Yes, but you also have to consider this from a technical point of view and a reach point of view: Whom do you want to target? You have to be very careful. We also do not count on ANT +. To be honest I don’t believe that this standard will continue to evolve. We are relying on Bluetooth SMART (editor’s note: also known as Bluetooth Low Energy or Bluetooth 4.0).
We have about five integration requests per week. If we would start integrating all these requests, we would probably have about 1000 compatible sensors and a lot of problems, because a new update has to be made or because something is no longer supported. We always want to offer very high quality. We are considering very thoroughly, which sensors to integrate. It is not reasonable for us to overdo integration or to integrate niche solutions that cover only a very small fraction of the market but will cost quite a lot of integration expenses. If we followed that strategy we would not be where we are today.
r2g: What is your take on collaborating with traditional healthcare providers, such as insurance, pharmaceutical and device manufacturers? Since this is a rather complicated environment, do you prefer to work with innovative companies?
runtastic: In the last couple of years we have certainly learned that we will do B2B business in exceptional cases only. This includes traditional healthcare providers as well as innovative companies. We are clearly focused on b2c to create reach. We are using our own apps and our own assets for that. It clearly makes sense to start integrating in the future, especially in the healthcare sector. Also the traditional healthcare players are recognizing that this is serious business and that it can help users improving their lives. That was quiet different just 1.5 years ago. The whole thing was dismissed as a gimmick and big companies remained observant but inactive. The most important thing is that a standard is being established and not a proprietary solution. Proprietary solutions usually mean a lot of effort. At the moment we don’t consider collaborations with traditional healthcare providers, because they are working rather slowly, so it takes too long and would be too small of a market for us.
r2g: What is your prognosis for future market developments, are there any particular trends? How will you be earning your money?
runtastic: I do not think that the market will move into the “everything for free” direction. The accessories market will continue to grow. The market will grow within the next 1-3 years especially in emerging markets.
r2g: That sounds very good. Where do you see barriers or showstoppers?
runtastic: One always has to stay alert. Especially when big companies discover the market and realize, that it’s not only a fluke or short-lived trend, but a serious business. Currently you can see it with the Samsung Galaxy 4. On one hand, this is certainly a real lever that creates more market access; on the other hand, they are producing very good products and have big market reach. I don’t want to call it dangerous, but it could be a barrier, if Samsung decided to cut back on health and fitness apps or to delete certain apps; or if they decide to only offer their own tracking solution. These kinds of things can happen.
r2g: What do you think about the mobile health market in three years’ time? Will doctors be prescribing solutions and will patients be getting a mobile solution along with their prescription? Or is this a scenario that you see rather in the farther future?
runtastic: I do not think, that in three years’ time prescriptions will be delivered via apps. Although I think that awareness amongst doctors and healthcare providers will be high enough to give recommendations. It is very hard to say if the patient will take this recommendation seriously and e.g. will be following on the recommendation. For sure there will be projects to test if this is suitable for mass production. But I am rather skeptic. I don’t think that this will happen any time soon. But I am sure, that this will be the future market development.
r2g: What are your favorite apps, actually?
runtastic: What I like and what I use very often – apart from our own apps of course – is Shazam for music recognition. I also use WhatsApp very often, because the communication works very well.
r2g: Thank you for the interview.