How Clair Labs Raised $9M to Build Contact-Free Remote Patient Monitoring for COPD Patients (Interview with Co-Founder and CEO Adi Berenson)

Introduction: Adi Berenson and Clair Labs

Nathan Latka

00:00Hey, folks. My guest today is Adi Berenson. He's the co founder and CEO of Clair Labs. Prior, he was three years as human interaction designer and prototyping at Apple. And before that, eight years as VP of business development and marketing for PrimeSense, the leader in three d sensing technology behind Microsoft Kinect and Apple's face ID cameras. PrimeSense was acquired by Apple. Adi, are you ready to take us to the top?

Adi Berenson

00:20>> Yeah. Thanks a lot. Great to be here.

What Clair Labs Builds: Contact-Free Remote Patient Monitoring

Nathan Latka

00:23You bet. So Clair Labs, that's c l a I r. You're building contact free remote patient monitoring systems. What got you into that space?

Origin Story: From Apple Digital Health Work to Founding Clair Labs

Adi Berenson

00:31>> So actually it's all started from our work in Apple, which I cannot get too much into it. So my background is coming from consumer electronics, but in my days in Apple I got to work a bit with them on digital health projects. That was back in 2017. And I realized what a monumental challenge it is for modern societies. And once I started getting into this and learning about how old fashioned workflows are there, we realized that

01:02>> technology can make a huge difference. We very, very quickly, even before we started the company, we narrowed in on a horizontal workflow which is patient monitoring, And I can get into it more, but I'll follow you on Okay.

Nathan Latka

01:17So patient monitoring, are sensors that are installed. Is there an IoT play here? Do you pay for the sensor installation?

Adi Berenson

01:23>> So it is an IoT play. You got it right. The unique part about it is that it is not touching the patient. Clinicians are calling it passive monitoring because the patient doesn't need to do anything. Contact free is not wireless, it's actually collecting the signals environmentally without touching your skin.

How the Device Works: Passive, Contact-Free Signal Collection

Nathan Latka

01:43It's not a- Adi, is it though? Is it like a lamp you sort of sit next to your bed? How do you think about it?

Adi Berenson

01:48>> Yeah, it's a beautiful comparison. It is like a lamp, yeah. So it does need to have some kind of line of sight to your skin, okay? And then by looking at your skin in two waves of near infrared it can see movements of superficial arteries, so arteries that are very close to the surface. By looking at those arteries we see volumetric changes and we see tone changes, and then we are actually

02:16>> recreating or regenerating the PPG signal, pulse rate, oxygen sat, respiration rate, and so on.

Nathan Latka

02:24Interesting. What does the physical device cost?

Adi Berenson

02:31>> Okay, so me for that, I'm not going to expose our costs because we're not selling it to the consumer. The way it works, the business model, is that our customers are providers, our healthcare providers, and they are offering it under, I will call an umbrella of RPM, remote patient monitoring services, which is reimbursed by Medicare and all major healthcare payers. So it is a prescription service, the device is FDA cleared, and the way it works is

03:00>> the payer is paying for it as long as you are recognized as a chronic patient or a patient at some kind of

Nathan Latka

03:07Are you manufacturing it directly? Did you have to go source in China the manufacturing plant or is this someone else's No, no,

Adi Berenson

03:15>> no. It's our hardware, so it's our own hardware. We are sourcing it exactly as you mentioned, we're fabless, of course, so we're sourcing it in China, and we are building the device itself, yes.

Nathan Latka

03:25When did you ship your first device?

Adi Berenson

03:27>> We are currently actually in clinical trials, so the devices that we are shipping into facilities in The US for clinical trials are actually not built in China, they're built in Israel in a low volume prototyping facility. The trials are going on for two months already, so it's not in production.

Business Model: Reimbursement-Based Revenue from Healthcare Providers

Nathan Latka

03:47How many have you produced for all the trials combined?

Adi Berenson

03:51>> 50.

Nathan Latka

03:52Five zero. Okay.

Adi Berenson

03:53>> Yeah, five zero. That's it, it's very low volume.

Nathan Latka

03:55Okay, 50 for testing. Got it. And the healthcare providers are obviously the customers. Tell me about how you make money from them. What do they pay you on average per month?

Adi Berenson

04:04>> I'm not going to get into numbers, but I'm going to get into the business model. Basically the components that the payer is paying the healthcare provider is made out of installation, is made out of what the clinician is getting to review the material, and is made out of the actual monthly payment for digitally collecting the signal from the patient. I'm getting most of this. And I'm gonna explain a little bit, so I'm not gonna get into

04:32>> my revenues, but the way it works is that if you have a

Pre-Revenue Status and Path to First Paying Customers

Nathan Latka

04:35chronic mean, just to be fair, you're like, I mean, you're basically pre revenue. You're doing clinical trials, right?

Adi Berenson

04:39>> Absolutely, we're pre revenue, but we do have a plan. I can give you an idea.

Nathan Latka

04:43Oh yeah, so when you say you don't wanna get into your revenues, mean you can just tell me your pre revenue, right? That's a much better way to say it. Makes it very easy.

Adi Berenson

04:48>> No, no, but I thought you were referring to what are our plans regarding revenue. So today is zero, yeah, fair enough. But if you wanna know how big is the market and what is our plan for future revenues, then I can a little bit, I can give you one data. A chronic patient recognized as such under an RPM program can generate revenues for the care provider in the order of magnitude of $150 per month. It pays

05:15>> out of several components, so this is $1,800 per year. We believe that we're going to get a big chunk of it. That's the business model. So we're not charging the provider for the device itself, we're actually getting recurrent revenues out of the reimbursements.

Clinical Trials: 50 Devices Shipped, COPD Focus

Nathan Latka

05:31So let's just focus on Israel for a second. How many patients do you believe should have this lamp next to their bed that should be paid for with the government money, right, Medicare, Medicaid, whatever you Yeah, guys have an issue so over

Adi Berenson

05:44>> I will actually answer you in US numbers because that's the market that we analyze, and that's the market we're targeting. So the way it works is that I can picture for you right now a dream of all the chronic patients, but that's gonna be a little bit superficial. So there is, for example, one condition that we're doing active clinical trials on, and we are showing actual clinical outcomes, which is COPD, for example. It's So a respiratory

06:09>> condition, it's a chronic obstructive pulmonary disease. There are sixteen million patients recognized as One six,

Nathan Latka

06:18one six or No,

Adi Berenson

06:20>> no, one six. One six million recognized as such. There's a lot of talk in the industry about the

06:29>> undiagnosed, but diagnosed there are sixteen. So you have sixteen million people you can get on an RPM program. All of them should be.

Nathan Latka

06:38Sure. Sure. So a $150 a month, that's 2,400,000 a month or about $30,000,000 run rate for you getting a 100% penetration of this market. That's actually not that big, right, for what you guys are building. That's very small.

Adi Berenson

06:49>> Actually, I will I don't know how you got to it, but if you have 16, 16 million.

Nathan Latka

06:54Sorry. Sorry. Sorry. You're right. I missed a bunch of zeros there. 16,000,000. So so how do you the the the test you're running right now on the 50 devices, you're targeting The US market exclusively?

Adi Berenson

07:02>> Yes. Right now, exclusively. Yeah.

Nathan Latka

07:04Okay. Okay. Got it. Yeah. Sorry. That math is obviously much bigger, right? So 16,000,000 patients at $150 a month is like 2,400,000,000 a month, right?

Adi Berenson

07:13>> And the reason- Per month.

Nathan Latka

07:14Well, the reason I bring this up, right, is that's almost $30,000,000,000 per year, right? Which effectively is gonna come out of my pocket, right? It's me paying, it's The US citizens paying into Medicare, Medicaid, or the US government printing more money to cover these expenses.

Adi Berenson

07:28>> Actually saving a lot of money. And I will explain. So an average COPD patient, which is diagnosed as such, is having an average incident of hospitalization at least once a year. This hospitalization is costing $12,000 The reason why we are enrolling them on RPM programs is because we are showing data that we can

07:55>> raise a flag, an alarm, to the clinician taking care of them seven to eight days before such hospitalization event, and with simple intervention of antibiotics or steroids, you can prevent the whole hospitalization incident. So it's economically money saving.

Nathan Latka

08:16So how many hospitalizations are there right now in The US from COPD patients exclusively?

Adi Berenson

08:21>> Every year, sixteen million, because it's almost on average once a year. Yeah.

Nathan Latka

08:25So every single person in The US with COPD goes to the hospital at least once per year?

Adi Berenson

08:30>> On average. So some more, some less. That's the average rate. Yeah.

Nathan Latka

08:35I I see. I see. Interesting.

Clinical Outcomes: 95% Alarm Accuracy Seven to Eight Days Before Hospitalization

Nathan Latka

08:39But you're there's what what you're arguing what you're arguing, though, is that with your early indicators, right, via the veins in the skin and the early things seven days early, you're basically saying no none of your you're not gonna replace all 16,000,000 hospitals.

Adi Berenson

08:52>> No. No. We're No, no, are not. And it's gonna be very irresponsible of me right now to say exactly how many we are. What we are showing, and I'm gonna be very accurate with you Nathan, what we are showing is that we are raising an accurate alarm flag seven to eight days before, in very high rates, like ninety five percent. Ninety five percent of the hospitalization

09:19>> cases of the clinical trials of the sample we sampled, we are showing a very obvious deviation of a score combined out of oxygen sat heart rate and respiration rates out of norm, and we know that there is an effective intervention. So we and that's what we are pitching, that there's gonna be a substantial economical benefit to this RPM.

Nathan Latka

09:45Why does have to be your IoT device? I mean, listen, I use WHOOP and I look at resting heart rate, I look at respiration, I look at the exact same things you're talking about. I could tell when I was getting COVID because my resting heart rate was jumping through the roof. Was very obvious. They put a little warning in the app that said, You probably have COVID. And sure enough, I did. Why can't somebody else do

10:03this for much cheaper?

Adi Berenson

10:04>> Okay. So it's actually a very good question. So you are asking me to compare ourselves to wearables because wearables are everywhere. So number one problem with COPD patients and with other chronic patients, especially elderly, is compliance. Everything that requires them to take action, is charging, putting it back on, tolerating it even, pairing it with the phone is is gonna lead to low compliance. So there is gonna be there there are a lot of attempts to use

10:35>> wearables with them. It just doesn't work.

Nathan Latka

10:37Isn't it harder to convince all of them to install this thing on the desk next to their bed and make sure their skin is exposed for at least five minutes every day so your thing can do the reading?

Adi Berenson

10:45>> No, no. What you're describing is not passive. If I would have pitched that, that would have been better. What I'm claiming is is that they don't need to do anything, it just happens. I mean, there

10:55>> is They have to install the thing.

Nathan Latka

10:56How they have to install the thing in their house.

Adi Berenson

10:58>> No. No. You need to install the thing, but they

Nathan Latka

10:59Okay. So that is something. Right? Just like you have buy a wearable and put it on your wrist.

Adi Berenson

11:03>> Fair enough. No, no, no, but once. And for years you don't need to do anything. That's once. You don't need to expose I mean, what you described, you need to expose your skin. Absolutely not. I reject it completely. You need to manage yourself naturally. Was, in the clinical trials we've done, there was no single night. We didn't collect quality data over the night, enough samples to fill- How close do

Nathan Latka

11:28they have to sleep to your device? Five feet, two feet, 10 feet?

Adi Berenson

11:32>> Five to six feet. Not 10 feet. Up to six feet. It's enough.

Nathan Latka

11:36You as long as their body as long as their body is sleeping within six feet of your device, your device can get the readings they need.

Adi Berenson

11:43>> Right on.

Nathan Latka

11:44I see. Interesting. Okay. Give me the backstory here. When did you launch the business?

Adi Berenson

11:48>> So we launched the business in 2018.

Nathan Latka

11:502018. And have you guys bootstrapped or raised?

Funding: $9M Raised Across Two Tranches, Investors Named

Adi Berenson

11:53>> We bootstrapped for a year, and then we raised a seed round of 9,000,000 in two trenches in 2019 and 2020.

Nathan Latka

12:00Okay? Okay. 9,000,000. And then Yeah. It's big tech.

Adi Berenson

12:04>> That's why it takes yeah. Yeah. We are gonna raise more for conduct in early twenty twenty two to Okay.

Nathan Latka

12:10But 9,000,000 total to date?

Adi Berenson

12:12>> 9,000,000 total to date. Yes.

Nathan Latka

12:14How much have you already burned through?

Adi Berenson

12:17>> Yeah. I mean, we are not sharing that. Yeah. I'm sorry for that. We're not sharing that. I can tell you that we are certain people. Okay? We're not just a big company. All of them, part of me, are researchers and engineers.

Nathan Latka

12:29How many are full time on the team?

Adi Berenson

12:31>> All of them.

Nathan Latka

12:32How many?

Adi Berenson

12:33>> Oh, 13. Yeah.

Nathan Latka

12:3413. Okay. So there's there's 13 on the team. How many are engineers?

Adi Berenson

12:38>> So half of them are researchers, half of them engineers, and I'm the only one who is doing all the rest.

Nathan Latka

12:43I see. And do are you the only founder? Do you own a 100%?

Adi Berenson

12:45>> No. No. No. No. We are we are two co founders. So my co founder was working with me in Apple and he's the he's the brains behind the technology. He's a PhD in computer vision. He's one of the brightest minds in Israel in computer vision. Yeah.

Nathan Latka

12:56Okay. You guys just split it fifty fifty or he gets more guys smarter?

Adi Berenson

12:59>> No. Well, he should bet, but I'm lucky. So we're fiftyfifty.

Nathan Latka

13:02Alright. You guys split it fiftyfifty.

13:05Obviously, do a seed, you take some dilution. Most folks are raising seeds now and they're selling, call it 10 to 20% of the business. Were you sort of in that average?

Adi Berenson

13:12>> We were diluted by the two rounds that we entered this is, of course, naturally. Yeah. But we're very proud of those partners.

Nathan Latka

13:21My point is, though, most people are when you raise that money, you're giving up and selling 10 to 20% of the business, correct?

Adi Berenson

13:26>> Yeah. Yeah. Well, 10 is in the low side. Yeah. Yeah.

Nathan Latka

13:31Yeah. But you didn't give up more than 20% for 9,000,000, did you?

Adi Berenson

13:35>> Yeah. I'm not sharing that. Sorry for that. Yeah.

Nathan Latka

13:37Okay. Well, I mean, that would be a yes. Why why No.

Adi Berenson

13:40>> That's my internal business. It shouldn't be too interesting.

Nathan Latka

13:44Well, it's what do mean? It's Adi, it's extremely interesting. The more you're diluted, less control you have. It's the number one thing that matters when you're trying to build a business is control, so you can execute your vision. It's the most important thing any founder can be thinking about when you're launching your business. So I totally disagree that it's not important.

Adi Berenson

13:56>> And so let's agree to disagree. I've done it in the past.

Nathan Latka

14:00With what company?

Adi Berenson

14:01>> No, with PrimeSense. We had a beautiful company. We entered VCs.

Nathan Latka

14:06You are VP of business development, correct?

Adi Berenson

14:08>> Yeah, Yeah. Yeah. Would not the founder.

Nathan Latka

14:09Fair enough. The founder.

Adi Berenson

14:10>> So it's completely But I know how it works. No. But I know how it works. So I if there is one thing that I will push very hard on is that there is no one formula to build the startups. Okay? They're all different.

Nathan Latka

14:23So the startups Which is exactly why I'm asking. Right? That's exactly why I'm asking. So why are you okay taking 30% dilution so early? Tell me more about the quality of the money. Where is it coming from? Why did you need these partners?

Adi Berenson

14:35>> Okay. I will the quality of the money, will tell you. So it's coming from a very reputable Israeli VC called 10D. Okay? 10D, you you can look them up. I mean, it's it was founded by one of the most reputable venture capitalists in Israel, veteran. And the other fund is called Supermoon Capital, which is out of Silicon Valley. Both of I mean, there are other private investors, but I will I will just focus on those two

15:00>> because they are the most active investors, and I'm working with them only on almost on a daily basis.

Nathan Latka

15:06Mhmm. Very cool. Alright. Did you learn anything about the equity you know, how equity was managed at PrimeSense? You know, mistakes that you wanna make sure you don't you don't do here in your current business?

Adi Berenson

15:15>> I mean, your point that my job was very different than a founder,

15:22>> I'm learning every day how different this was. So I had some exposure, but not complete exposure. I was not going through what the founders went through. I was mostly on the operational side. So, that's a fair point. Yeah. Yeah.

Nathan Latka

15:33Yep. Yep. Yep. I mean, no. I mean, look, that company raised 36,000,000, well, almost $40,000,000, right? And so that that 20,000,000 series B, if, you know, if they were raising at at minimum 10 X, it was probably higher than that. That's a almost a 300,000,000 valuation. But- You are

Adi Berenson

15:45>> talking about PrimeSense, right?

Nathan Latka

15:47PrimeSense, correct. Yeah. I mean, they go out at two thousand and eight, right? Then you go out and sell for, to Apple for $360,000,000. You know, that's basically at the valuation that it was four years prior to the exit, right? So you just lose optionality, but I get it. You're building a company that requires a lot of capital investment upfront. There's an IoT play. There's tech. So I get it. Yes. Okay. Very cool.

Adi Berenson

16:05>> FDA and so yeah.

Nathan Latka

16:06Yeah. 13 on the team. So when do you guys think you'll have your first paying customer?

Timeline: First Paying Customers Targeted for Early 2023

Adi Berenson

16:11>> Early twenty twenty three.

Nathan Latka

16:122023?

Adi Berenson

16:14>> Yes. Wow. Mean, a long no, no. It's because you need in order to realistically not realistically, in order to make business, reimbursement based business, not out of pocket business, reimbursement based business. In healthcare in The US, you need to have FDA. In order to have FDA, you need to complete clinical trials, you need to do submission, and you need to wait for clearance. So yeah, I mean, I'm a very realistic person. I can say 2022, but

16:41>> I can guarantee 2023.

Nathan Latka

16:43Are you looking to raise more right now?

Adi Berenson

16:46>> Yeah, we have a decent runway ahead of us, but we are keeping our options open. I mean, if there is gonna be a very, very smart money in good terms, why not?

Future Fundraising Plans and Ideal Investor Profile

Nathan Latka

16:56Mhmm. What would you consider really smart money?

Adi Berenson

16:59>> Money that comes from the domain that open doors that

Nathan Latka

17:02Name name an investor that you'd consider. Gonna No, name an investor would be a great partner for you, or you would kill to have them involved.

Adi Berenson

17:09>> That Why a hard question, Adi?

17:11>> Because what would the other investors say? I mean, I have Yeah, I'm not naming names. Yeah. Because what if I don't get them? Did I get my second best? So that's why I have my own lists, and that's yeah. And that's a private information. Yeah.

Nathan Latka

17:27Who who would be very strategic for Clair?

Strategic Partners: Medtronic, Masimo, ResMed, Philips

Adi Berenson

17:32>> I would describe them and not name them. Reputable VC's that are operating in digital health and medical and or venture arms of the leading

17:45>> medical devices companies.

Nathan Latka

17:47Who is a leading medical device company? Ignore who you I just don't know, right? Answers aren't helpful to my audience who doesn't know your space, right? So who is a top medical device company?

Adi Berenson

17:56>> Okay, so that's easier for me, okay, because that's clear. If you look at companies like Medtronic, Masimo, ResMed, Philips, those are beautiful names to have involved in my company.

Nathan Latka

18:05Now see, Adi, was that so hard? Was that really that difficult?

Adi Berenson

18:09>> No, it's fine. Yeah, but this is I'm not gonna do. Sorry for that, Nathan.

Nathan Latka

18:14No, was so simple, right? That's so helpful.

Adi Berenson

18:16>> Thank you for answering.

Famous Five: Books, CEOs, Tools, and Advice

Nathan Latka

18:17Let's wrap up with the famous five. Number one, favorite book.

Adi Berenson

18:21>> Wow, favorite book. Wow, I didn't prepare for that. So it's actually The Corrections by Jonathan Franzen.

Nathan Latka

18:28Number two, is there a CEO you're following or studying?

Adi Berenson

18:34>> Actually, it's Philips. I know him for many years. I worked under him directly. Frans van Houten. When when when I lived in The Netherlands. Yeah. Mhmm.

Nathan Latka

18:44Number three, what's your favorite online tool for building, Clari? Or Clair. Sorry.

Adi Berenson

18:49>> MyMentors. No.

Nathan Latka

18:51No. Your favorite online tool.

Adi Berenson

18:53>> Online tool?

18:56>> I don't know. We're working with Monday, if that's right. Monday. But I'm not I'm not too in love with it. Yeah. I mean, it's just a tool. Yeah.

Nathan Latka

19:02You can't say that. Roy is another Israeli engineer. You've gotta say you love it.

Adi Berenson

19:05>> No, no, no, no, I'm working with them, but I'm not in love with any online tool, yeah.

Nathan Latka

19:09Fair enough. Number four, how many hours of sleep do get every night?

Adi Berenson

19:13>> Oh my God, that's a bad one. Much too little. So I would say, to give you a direct answer, I don't know, four or five.

Nathan Latka

19:21Four or five. And what's your situation, married, single, kids?

Adi Berenson

19:24>> Married with two kids.

Nathan Latka

19:25Okay, and how old are you?

Adi Berenson

19:29>> 50.

Nathan Latka

19:30That's the toughest one.

19:31Five, five, zero?

Adi Berenson

19:33>> Five, zero, yeah.

Nathan Latka

19:34All right, last question. Something you wish you knew when you were 20.

Adi Berenson

19:39>> Something I wish I knew when I was 20.

19:43>> Wow.

19:46>> I was asked in my fiftieth birthday if I have any regrets or if I would have done things differently, and I answered no, which is probably a lie, but I'm happy to believe in this lie. So I will This

Nathan Latka

19:56not a regret question, Adi. It's for other people who are 20 who are listening that would love to learn from you. Right? So something you wish you knew when you were 20.

Adi Berenson

20:10>> I mean, yeah,

20:13>> do relocations, explore other cultures as early on. I did not enough of it, and I should have done it.

Nathan Latka

20:21Clair Labs, guys, they've invented a way to basically install, think of it like a light or a lamp next to your bed for COPD patients to understand, again, early warning signals to try and prevent hospital visits, save taxpayers a lot of money. They're targeting US market, 50 devices shipped today in clinical trials. Raised $9,000,000 to get this thing to market, hoping to get their first paying customers by 2023. 13 folks on the team, we will see

20:42what happens. Adi, thank you for taking us to the top.

Adi Berenson

20:44>> Thank you. That was super fun. I appreciate it.

Nathan Latka

20:48One more thing before you go. We have a brand new show every Thursday at 1PM Central. It's called Shark Tank for SaaS. We call it deal or bust. One founder comes on three hungry buyers. They try and do a deal live and the founder shares back end dashboards, their expenses, their revenue, ARPU CAC, LTV, you name it, they share it and the buyers try and make a deal alive. It is fun to watch every Thursday one

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