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May 21 '20, 07:17
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In a race against time, startups have quickly released apps for many state health departments seeking to “flatten the curve” of coronavirus infections.
Yet, the business prospects for these contact-tracing apps remain unclear. A general consumer app could fall short of widespread adoption because of privacy or security concerns. On the other hand, startups could benefit if companies or other organizations help drive the adoption of these apps.
Two startups have launched apps for state health departments. Healthy Together, which launched April 22 in Utah, was built by Twenty Holdings Inc., a venture-backed startup that previously developed a social-networking app to help friends set up in-person gatherings.
Another, Care19, which has launched for North Dakota and South Dakota, was built by ProudCrowd LLC, a Fargo, N.D.-based company.
Some venture investors believe contact-tracing apps need to provide incentives to motivate people to download and use them in order to be venture-scale businesses. Consumer versions of these apps may not offer enough incentives to get to the high adoption rate—some estimates are 60% to 70% of a population—required to be effective, said Kristin Baker Spohn, a health-care investor at venture firm CRV.
However, enterprise versions of these apps—which would be sold to companies and provide incentives to employees—could reach a large audience, Ms. Spohn said. For example, the apps could be used by employees in a particular office building or by employees in a retail setting who interact with the public.
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Public health authorities, developers and tech companies are working on apps to help us keep track of who we came in contact with and where we’ve been to aid in Covid-19 contact-tracing efforts. WSJ’s Joanna Stern explains the technologies using an 8-bit video game.
“If you rely on consumers to download apps, they’ll make trade-offs on privacy versus effectiveness,” she said. “Whereas with a company, you may be thinking of productivity and employees can be bought into that. I may want to make sure my company does well so I might be more incentivized to engage in sharing information back with my company or a third party.”
Twenty Holdings, which makes Healthy Together, gets paid by the state of Utah. It has received interest from a variety of government agencies and companies about its technology, said Diesel Peltz, chief executive of Twenty.
ProudCrowd gets paid a nominal amount for Care19, said Tim Brookins, owner of ProudCrowd. Mr. Brookins, who previously built a football fan app, was asked by North Dakota to develop Care19. He runs ProudCrowd as a for-profit but is mainly seeking to break even, said Mr. Brookins, who works for Microsoft Corp. though ProudCrowd isn’t affiliated with Microsoft.
Because the ultimate length of the pandemic is still unknown, it isn’t clear how long these apps will be needed and therefore how long they will be viable businesses.
“Things have changed so much so quickly that It’s hard to see what the future holds,” Mr. Peltz said. “We do see a future where governments and businesses think differently and act proactively to protect the health of their citizens, employees and customers. We believe Healthy Together solutions can be a part of that effort long term.”
For many companies, the need for such apps could become part of regular security measures, just like companies now have sign-in apps on iPads at reception desks, Ms. Spohn said. “We can see a world where this becomes part of the physical security of an organization,” Ms. Spohn said.
That bodes well for the widespread adoption of these apps. But whether that adoption comes from a startup, a larger company or a nonprofit, or is a feature of some other app provided by a health-insurance company, remains to be seen.
Nodle.io staff members in the startup’s office. From left to right are Amanda Arvizu, co-founder Micha Benoliel, Eliott Teissonniere, Isaiah Pan, co-founder Garrett Kinsman.
PHOTO: NODLE
Public-health priorities mean an open-source model makes sense, said Ben Levy, an early investor in Internet of Things startup Nodle.io through venture firm BootstrapLabs. The San Francisco-based company spun out Coalition Network, a nonprofit foundation that built the Coalition contact-tracing app as well as the WhisperTracing Protocol, an open-source technology to make contact-tracing apps interoperable. Coalition works with the governments of France and Senegal and the city of Berkeley, said Micha Benoliel, co-founder of Coalition Network.
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Still, the success of Coalition or Whisper could eventually benefit Nodle, which plans to release custom contact-tracing applications for companies as well as a hardware device for contact tracing, Mr. Benoliel said. Nodle had raised $4 million from BootstrapLabs, Blockchain Ventures and others.
Startups have an opportunity to take advantage of their nimble structure to roll out these apps quicker than large incumbents. “It’s no surprise to us that startups can build incredible technology that outcompetes larger players,” Mr. Levy said. “And every week that goes by without contact tracing increases the impact on the population.”
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Some of these developers have specific expertise, such as Nodle’s Mr. Benoliel, who previously built the popular FireChat app for communicating via Bluetooth where internet access wasn’t available. But some other developers of these apps have little experience building health-care or related apps.
Coalition and Covid Watch, a nonprofit contact-tracing app, don’t keep the data from users—the data is stored on the user’s phone. This model is similar to what Apple Inc. and Alphabet Inc.’s Google have proposed in their contact-tracing technology.
Many people may not be comfortable with a company having their location data, said Jesse Colligan, a spokesman for Covid Watch.
“When I talk to people about a Covid app, immediately the reaction is, ’I don’t need another app following me around with GPS.’” Mr. Colligan said. “I think a privacy-first approach is going to be necessary in order to succeed.”
Write to Tomio Geron at [email protected]
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