Noom: Saeju Jeong

When Saeju Jeong moved from South Korea to the U. S. in his mid-20's, he barely knew anyone, didn't speak much English, and had only $5,000 in savings. Today, he's the CEO of Noom, one of the most popular weight loss/wellness apps in the U. S. Inspired by his late father—a doctor who criticized the profession for treating people only after they got sick—Saeju and his co-founder built their first fitness product in 2007. Several pivots later, they arrived at Noom, an app that carefully tracks what you eat, how you sleep and when you're stressed out. Noom has hinted it may go public this year—if so, the valuation could be as high as $10 billion. See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Guy Raz?

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• 0:46Guy Raz?

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• 1:32Guy Raz?

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• 4:23Guy Raz?

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• 5:07Guy Raz?

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• 5:15Speaker 01

  The reality was, Guy, that we didn't have much money left in the bank. I remember we had like $2,700. And I returned to our one-bedroom office during the summer. I remember we had the one tiny AC and super hot. So we were all like wearing only the underwear.

• 5:37Guy Raz?

  Because it was so hot.

• 5:38Speaker 01

  Yeah, everyone just wearing the underwear. And there's a fan, just one fan and one tiny AC was like struggling to blow out the cold air because it's not cold anymore. Even like one of the engineer had like the towel around his neck because he was sweating too much. And I had a hard time not crying because I felt so bad.

• 6:05Guy Raz?

  Welcome to How I Built This, a show about innovators, entrepreneurs, idealists, and the stories behind the movements they built.

• 6:16Guy Raz?

  I'm Guy Raz, and on the show today, how a failed idea for a stationary bike led to more failures before Saeju Zhang landed on Noom, a wellness and weight loss app with millions of users.

• 6:36Guy Raz?

  There's a book that came out in 2009 called Nudge. It was written by two influential scholars, Richard Thaler and Cass Sunstein. One of the central arguments the writers make is that it's possible to nudge people into making better decisions about their finances, their health, and even their happiness. And you can do this, the book argues, by making very simple tweaks in how you present information and options to people. The book was incredibly influential. It was almost required reading in the Obama White House. And it also had a huge impact on business and marketing. It's why, for example, many companies automatically enroll their employees in retirement or health

• 7:21Guy Raz?

  plans rather than ask them to sign up. It turns out, most people want to participate in those things, but many of them just forget to check the box. I mention all this because it plays a somewhat indirect role in today's story. Because the two founders of Noom were very much trying to figure out how they could encourage small tweaks in human behavior to help people get healthier, and more specifically, to lose weight. But initially, that wasn't quite the plan. In 2008, when Saeju Zhang and Artem Pedikov launched what would eventually become Noom, the health and wellness space was just taking off online.

• 8:04Guy Raz?

  Saeju's original idea was for a stationary bike linked to a smart screen, sort of like what Peloton is today. His idea eventually morphed into a cardio trainer, sort of an early version of Strava. But Saeju discovered that many users were looking for a different type of app, one much more targeted to helping them lose weight, which is, by the way, one of the hardest things in the world for a human being to do. But Saeju and his partner Artem wanted to try to build something that might help. So they designed Noom as a holistic approach to weight loss. It's not a strict diet, but it uses a detailed system for food tracking and incorporates fitness, stress management, and good sleep into the program.

• 8:49Guy Raz?

  It took many years, lots of failure, a few different business models, and even some team mutinies before Noom finally got traction. Today, the app is used by tens of millions of people. And if Noom files for an IPO sometime in the next year or so, which it's been hinting at, it could reach a market cap of around $10 billion, all of which might surprise you when you hear how Saeju Jong got to this point. He arrived in New York City from Korea in 2005. He was in his mid-20s, and he knew almost no one. But he had a little bit of money saved from his first business, which was such a different type of business from Noom

• 9:33Guy Raz?

  that I don't even want to give it away just yet. What I can tell you is that Saeju arrived in New York, open and earnest and ready to learn, and was lucky enough to meet his business partner, Artem, pretty much by chance. Saeju grew up in Yosu, a small fishing town in South Korea. His dad was an OB-GYN, and his mom trained to be a professional violinist. And when Saeju was growing up, he felt an extreme pressure to succeed.

• 10:03Speaker 01

  You know, in America, people speak about tiger mom, tiger, something like that, right? I would say Korea is kind of tiger society, tiger parent, tiger teacher, I would say. Let me give you an example. You will not believe this, but I will tell you exactly my memory. In my high school, I went to school by 8 o'clock in the morning.

• 10:21Guy Raz?

  Yeah.

• 10:22Speaker 01

  And I came home 10:45 PM.

• 10:25Guy Raz?

  Wow.

• 10:26Speaker 01

  Yes.

• 10:27Guy Raz?

  Wow.

• 10:28Speaker 01

  Believe me.

• 10:29Guy Raz?

  And it was about achievement, right? Because I guess

• 10:32Speaker 01

  Yes.

• 10:33Guy Raz?

  achievement is a status symbol.

• 10:37Speaker 01

  Correct. Very important.

• 10:40Speaker 01

  Taking an exam like SAT test in South Korea is very important. And that is a major parameter to measure how good student you are from college.

• 10:49Guy Raz?

  Yeah.

• 10:49Speaker 01

  And that test is designed that every single student taking an exam at same day, at the same time, and same test. I mean, I still don't get it, kind of. If you are unwell that day for some reason, stomach ache, or if you are just sick, you are screwed. It's your business that you did not manage your condition well. Because they give the exact time, exact date for entire class in, out of entire nation is taking exam at the same time. You'll be surprised, even the airport stopped the service because they want to make sure the student can pay attention during the test.

• 11:31Guy Raz?

  Yeah. I mean, it sounds like it was very important to you to be a good student, to be a, to succeed academically. Is that true?

• 11:42Speaker 01

  100% yes. My family background has a little story that our family, we run the hospital together. My uncles are doctors and my aunts are all pharmacists. So the general theme of John family is saying, we have to produce more doctors. So the pressure was like extra, to be honest.

• 12:04Guy Raz?

  So it was your intention to become a doctor? That was what your goal was?

• 12:09Speaker 01

  It was a preset, to be honest, guy.

• 12:11Guy Raz?

  It was preset?

• 12:12Speaker 01

  Yeah, I didn't even have a thought about becoming a non-doctor career in my life.

• 12:19Guy Raz?

  And, I mean, eventually you had to take those exams. How did you do?

• 12:24Speaker 01

  I was a good student, I would say, and I studied hard and I call it a judgment day. The day arrived and I took an exam and I did my best and was waiting for the result. And the result came out just like a little shy to be guaranteed to go like a medical school because all the good students go to medical school. So I was like, okay, we'll see. It was a little like shy number, we'll see, but I failed. So I couldn't get into medical college. I vividly remember that I cried so hard, like I closed the door and because so embarrassing and stupid, it has to be really tough, over the top. And I was okay.

• 13:06Speaker 01

  So I was like, oh, God, how can I deliver this news to my parents, right? And I just, I, I, I felt exactly, and I still vividly remember that that day, the afternoon, you know, the sun looks very gray and then the world was kind of really like coming down. That's how I felt because I failed. That's the, that's the outcome.

• 13:29Guy Raz?

  You did end up going to college.

• 13:31Speaker 01

  Right.

• 13:31Guy Raz?

  You actually studied electrical engineering, right?

• 13:34Speaker 01

  Correct, I did.

• 13:35Guy Raz?

  And I guess at some point you, we should, I should mention this. You grew up

• 13:41Speaker 01

  Uh huh.

• 13:42Guy Raz?

  obsessed with

• 13:43Speaker 01

  Uh huh.

• 13:44Guy Raz?

  heavy metal, like hardcore heavy metal, mostly American heavy metal?

• 13:49Speaker 01

  Yeah, American and also European both. I mean, whatever heavy metal music is like, yeah, yes.

• 13:54Guy Raz?

  Like Megadeth or even beyond Megadeth?

• 13:56Speaker 01

  Oh, yeah. Megadeth is a good start, I would say. Megadeth, Metallica is a good start. I recommend you. I mean, all the listeners, by the way, they are still very good and their albums are great. Still amazing.

• 14:06Guy Raz?

  But that was just like dipping your toe. You're talking about like extreme hardcore metal.

• 14:11Speaker 01

  Exactly. It's just like heavy metal one on one is a Megadeth, right? And then, and then enter into a deeper level like death metal, like black metal, like progressive metal, all the metals like you can imagine. You don't want to even, you know, like it's intense, fast and like, you know, crazy guitar riff. That's my music.

• 14:31Guy Raz?

  So how did that happen? How did you get into like hardcore heavy metal?

• 14:37Speaker 01

  Well, one day I listened, I can accidentally listen to some like heavy metal music from radio station. And I caught that and I asked my sister, hey, sister, what was that music? Oh, it's called a hard rock in America. Says you, hard rock? And I went to the record store and then asked, um, I want to buy a hard rock music. And he gave me The Metallica.

• 14:59Speaker 01

  And that was the beginning when I was like nine.

• 15:02Guy Raz?

  Wow. I'm trying to imagine you in your bedroom at your home in the town where you grew up in Korea. With a mother who was like a semi-professional classical violinist. With heavy metal music blaring out of your room. Like, what did they say?

• 15:18Speaker 01

  They just laughed at me. That's the part I really, really appreciate my parents, that they both were extremely generous. They did not judge me badly. My father never asked, why do you like it? My father was just like, you like the music? And dad, it's so good. And I, one day I remember clearly this is the kind of gift that I brought him to my room and I played Pantera. You know Pantera?

• 15:38Guy Raz?

  Yeah, Pantera.

• 15:39Speaker 01

  And he actually listened to the Pantera music with me. And I said, dad, this is like so good. Don't you think in my desk? Yeah, it's very energetic, right? And let's go and have some dinner. Just like that. They respect my hobby, I would say.

• 15:53Guy Raz?

  So you're in college. You were really into heavy metal music. I bring this up because I guess when you were like nineteen, you kind of started like a heavy metal record label in Korea. What was that, what was that label?

• 16:06Speaker 01

  So I entered the school and I studied electroengineering because it looks very safe choice, right? In terms of Korea growth and Korea is kind of known for, you know, a lot of good, like the tech company, like Samsung, LG. But I'll be honest, from day one, I was like, why am I here? That's, that's all day long I was thinking. I couldn't pay attention to orientation program at school. And I was a completely lost guy. I was completely lost from like, why am I waking up? And where am I going to school and class? And I was shocked how much I have to study about like advanced physics and magnetic field, all that stuff. And I was like, oh my god, am I going to study this? And also like, what if I become a best student?

• 16:51Speaker 01

  I may have a chance to go to Samsung Electronics, which is a best case outcome. It's like, oh my god, my life is like doomed. That's how it felt.

• 17:01Guy Raz?

  So basically, you're thinking like, I don't want to end up working in a place like Samsung because that would just be a miserable life.

• 17:08Speaker 01

  Right.

• 17:08Guy Raz?

  And you were clearly miserable at school.

• 17:11Speaker 01

  Right, right.

• 17:12Guy Raz?

  And I'm assuming you were probably listening to a lot of heavy metal music around this time.

• 17:16Speaker 01

  Yeah.

• 17:17Guy Raz?

  But how did the record label come about? What got you started with that?

• 17:22Speaker 01

  So I got into more, I mean, because I was, I went to school in Seoul, right? So I was like, kind of like forced to be independent. So I received a like ultimate like freedom, kind of.

• 17:36Speaker 01

  So I listened to metal more music. I had expectation if I come to Seoul, which is kind of like the city in my world, I can have an easy access to have metal music, which was very difficult to purchase from Yosu where I grew up. Because I, by the time I was already listening beyond Metallica.

• 17:54Guy Raz?

  Yeah.

• 17:54Speaker 01

  I was listening to like death metal from like Philadelphia, nobody care. I want to listen to that. I have to buy from like some importing, you know, like record studio and it's just hard.

• 18:05Guy Raz?

  Yeah.

• 18:05Speaker 01

  Remember those days, CD and cassette tape that you have to purchase, not a streaming service?

• 18:10Guy Raz?

  Right, of course, yeah. Obviously, before Spotify.

• 18:13Speaker 01

  Oh, yeah.

• 18:14Guy Raz?

  Right, you'd go and buy your music at a physical store.

• 18:17Speaker 01

  Yep.

• 18:17Guy Raz?

  And I'm assuming that in Korea, there probably wasn't like a, like a heavy metal record store on every street corner.

• 18:25Speaker 01

  Exactly.

• 18:26Guy Raz?

  So you would probably have to, have to make a special trip to wherever that store was, right?

• 18:30Speaker 01

  Exactly. So I took like 45 minutes away and got there finally. And then, do you have that album? For like a, it's kind of some Norwegian band, like a Demo Burger. Yeah, I don't have it. But you told me that like, well, now we have it. So that's why I came. Sold out. And I was like, that's it? Yeah. And when can I get it? Uh, probably like another month or two months. Give it a try a month later, kid. And then they treated me like a bad. And I was so mad about this attitude. And then I was in deep thinking on the way back and I found a company the next day. It's called ByHeart.

• 19:07Guy Raz?

  But just to be clear, you were not, you weren't, it wasn't like a studio where you recorded death metal bands, like Korean death metal bands. It was basically a way to import records from the US and Europe in a cheaper way.

• 19:21Speaker 01

  Correct. So I did it as a buy hard distribution first, and then it evolved as buy the production. So the answer is no, but yes.

• 19:29Guy Raz?

  How did the business do? Because I don't think it lasted very long, right?

• 19:33Speaker 01

  Yeah, I have personal story that it didn't last that long, but it was quite successful in the beginning, to be honest. I was lucky that 1999, the dot com arrived.

• 19:41Guy Raz?

  The dot com, yeah.

• 19:42Speaker 01

  Right. So it was perfect time that I could convert that. I didn't need to have a retail space. I could start online. And my best friend was like computer nerd, and I asked him, can you do a dot com? He said, no problem. So.

• 19:56Guy Raz?

  He made a website for you?

• 19:58Speaker 01

  Oh, yeah, 100%. Yes. Yes.

• 20:00Guy Raz?

  And how did you, I mean, did you need any money to start Buy Hard Productions? Or was it just like?

• 20:05Speaker 01

  Absolutely. So when I started, I needed like around like 3,000 grand I had in my bank.

• 20:11Guy Raz?

  Yep.

• 20:11Speaker 01

  Because that money was a petty cash I received since elementary school.

• 20:14Guy Raz?

  So where were you selling? And you were selling entirely through the website? You were selling music through the website?

• 20:20Speaker 01

  Yeah, website, website to heavy metal listeners in South Korea. And you know what? Yes, heavy metal music will never become like major music. I get that. But once you are into heavy metal music, brother, sister, you are there.

• 20:32Guy Raz?

  It's a tribe.

• 20:33Speaker 01

  Oh, my God. Yes. Yes.

• 20:36Guy Raz?

  I mean, I'm not part of the tribe, but I know I recognize the tribe. But so you, and so what happened? I mean, you're getting people buying these records. Why didn't the business continue?

• 20:50Speaker 01

  So what happened was, so the business grew really fast. And I got a call from my mom one day. And you know, like, my mom's voice was kind of like, not normal. I can tell something's wrong. She goes like, Saeju, we need to have you now. And we are going to have some family discussion. And I was like, oh, my God, Mom, don't tell me it's about the health, right? Is it about health, about you or that? And my mom just silent, but I can hear from the phone that she was crying. And I was like, oh, man, really? Mom, really? And then I took a train back to Yosu.

• 21:29Speaker 01

  It took seven hours to get there. It was the longest travel ever I had. Like, you know the feeling of anxiety?

• 21:34Guy Raz?

  Yeah.

• 21:35Speaker 01

  Like, Mom, just tell me what's going on here. I mean.

• 21:38Guy Raz?

  You didn't know what was going on. You just knew that there was a family discussion that you had to go home for.

• 21:43Speaker 01

  Mom wanted to have a discussion, you know, together. And my sister was already there. And as usual, my father was in the center of the dinner table. And my father laid out what happened and what's gonna happen. So he basically told us that he got a lung cancer, terminal lung cancer, that stage four, very serious condition that as a doctor, he knows what's gonna happen and not much time left. The message was very, he delivered that very calmly. He didn't set the false expectation, nor he didn't give up. He said, so this is very unfortunate, but I'm gonna engage with this plan, that plan. He laid out the plans with the chemotherapy.

• 22:25Speaker 01

  But it was not easy to digest the information, very difficult.

• 22:33Speaker 01

  I was into very, I really loved, finally, like, I couldn't tell my dad, like, finally I found my direction there. I think I have a, you know, talent in entrepreneurship, all that, right? And I felt like that I was derailed, but now I'm on track. That's how I felt. But when I heard that, I felt like it's too early to receive the message. I need you to be there so I can show you, you know? And it was very difficult, very difficult.

• 23:05Guy Raz?

  You were, I think your dad told you he had about six months.

• 23:12Speaker 01

  Right.

• 23:13Guy Raz?

  And he did survive, I think, for almost a little bit more than a year.

• 23:17Speaker 01

  Yeah.

• 23:19Guy Raz?

  You were really close with your dad. He was a young man. He was only 51. You were, I think, 21 at the time of his death. I can't even imagine, say, you, how difficult that was.

• 23:33Speaker 01

  Difficult. I also realized now I'm like, basically my father's departure and, you know, the last month with him was a precious gift to me and to my family. And that event completely changed the way I view the world still today.

• 23:51Guy Raz?

  Yeah. You, I mean, as I say, this was in 2002, you were young, you were 21. And in Korea, I think all young men must serve in the military for a period of time. You have to do your national service. And it was around that time where you also began your military service. I wonder in a strange way if that, you know, if that helped you after your father's death by giving you something to focus on, or if it was hard. I mean, your dad passed away and you start your military service.

• 24:33Speaker 01

  My military experience was very invaluable to me and extremely helpful to me at this moment. What happened was after my father passed away, two years after, my senior member at my pod.

• 24:46Guy Raz?

  This was like your captain of your platoon?

• 24:49Speaker 01

  Yes. And he yelled at me and actually slapped on my face. He said, "Hey, Saeju, two years, stop mourning. Your dad is gone. You gotta wake up. Wake up." And I asked back, "Is that that long?" "Yeah, two years. I think that's enough. Don't you think, son?" And I was like, "Yeah, two years." And then I changed my perspective of thinking on that event of the death of my father. And then I paid attention. If he is alive, what would he care at this moment? And the answer became very clear.

• 25:33Speaker 01

  Because before he passed away, he said, "Saeju, my only departure will make you very strong, very strong." That's what he said. "You are sad today, but you'll become very strong. Like, the bird know how to fly. Birds that get out from the nest sooner, they can learn how to fly faster. And you are basically doing that right now. I'm kicking you out of nest. So do not take this event too bad." That's what he said. And he goes, I am sad personally because I know you have a great potential and you will achieve a success. And that story, I cannot be there, I cannot watch. So I just realized it is true.

• 26:18Speaker 01

  I'm here with some talent, but I have more and I'm, I don't know what else I can do better and I should optimize and learn. So I can become a better person.

• 26:29Guy Raz?

  Hmm. So I guess this is around 2005 and, and after your, your time in the army. You decide to come to move to the US to, to New York.

• 26:42Speaker 01

  Right.

• 26:42Guy Raz?

  And I guess, I guess you get a student visa to come here. So you can study at a music college in New York. But you were, I think you were still thinking about keeping your business going or, or doing something with, with that business, right?

• 26:57Speaker 01

  Oh yeah, of course. I figured my path of being an entrepreneur from ByHeart Distribution and Production. And I was looking for how I can scale that up and do better and learn. So yeah, 100%.

• 27:12Guy Raz?

  And so when you arrived to New York, did you, but did you know anybody there?

• 27:17Speaker 01

  No one, no single human, no. So when I left Korea, my mom, I told my mom, mom. I figured from ByHeart Production, at first year I made more than a million dollars, mom.

• 27:29Guy Raz?

  ByHeart did over a million dollars in revenue.

• 27:31Speaker 01

  Yes, and I know how to make money. I think I will not die out of a starving. I will do it again. And I, what helped me to, once I cracked a million dollar revenue, that really changed the way I see the money.

• 27:46Guy Raz?

  You thought, because you realized that you could do this. I mean, you, you know, this was a very specialized world, right? It was heavy metal, death metal, but like you were the center of the e-commerce world for, in Korea. So.

• 27:58Speaker 01

  Correct.

• 27:59Guy Raz?

  All right. So you go, so you get to New York, you know, nobody.

• 28:02Speaker 01

  Nobody.

• 28:03Guy Raz?

  You've got some cash with you.

• 28:05Speaker 01

  Mm-hmm.

• 28:05Guy Raz?

  Do you remember how much you had with you?

• 28:07Speaker 01

  Yeah, I remember that. I brought like $5,000.

• 28:10Guy Raz?

  $5,000?

• 28:11Speaker 01

  Below $5,000 actually.

• 28:13Guy Raz?

  Okay.

• 28:13Speaker 01

  And the reason is I gave all my money to my mom, the what I made from ByHeart and I reset myself again.

• 28:19Guy Raz?

  To support her, I guess.

• 28:20Speaker 01

  Of course.

• 28:21Guy Raz?

  Your dad wasn't, was obviously not, not around. So you get to New York. I mean, it is a big city, but you were. You were by yourself in a country where, you know, you were, it was not your native language. You didn't know anyone.

• 28:36Speaker 01

  Right, right, right. So I settled in North Massapequah.

• 28:40Guy Raz?

  North Massapequah in Long Island.

• 28:42Speaker 01

  Yeah, how do you know that?

• 28:44Guy Raz?

  You know, I got my geography down, but you're saying, so you didn't even move to the city. You moved to North Massapequah, which is like, how come you settled there? Was it, was it just cheap?

• 28:53Speaker 01

  Yeah.

• 28:54Guy Raz?

  Okay, I got you. Were you, did you feel lonely?

• 28:58Speaker 01

  I was completely lonely. Really, I was lonely. I even spent like 40 minutes with Sprint, the customer support center, because I was lonely sometimes. They want to learn English.

• 29:07Guy Raz?

  But you would, you would spend at the customer support center for?

• 29:10Speaker 01

  Just speaking to humans.

• 29:12Guy Raz?

  Oh, on the phone?

• 29:13Speaker 01

  Yeah, Sprint.

• 29:14Guy Raz?

  You would call the customer service people at Sprint? Because I'm, wow.

• 29:17Speaker 01

  Yeah, I'm not, I'm not.

• 29:18Guy Raz?

  Wow, yeah, no, I'm, I'm feeling it.

• 29:20Speaker 01

  I did it.

• 29:21Guy Raz?

  I wish I was there. I would, I would, I would have hung out with you. So you moved all the way to New York City only to live in North Massapequah. No disrespect to people in North Massapequah, but that's not, not living the, not living the dream.

• 29:34Speaker 01

  Not really.

• 29:35Guy Raz?

  Of, of moving to New York City.

• 29:36Speaker 01

  But that's how I started.

• 29:37Guy Raz?

  Got you. All right, okay. And from, from what I, from what I've read, not that long after you got to the US to, to New York, you got an invitation to a party, right? Where you would meet somebody really important, somebody who would, who would eventually factor into your future here.

• 29:55Speaker 01

  Oh, my God, yes.

• 29:56Guy Raz?

  And I guess how this happened is that, like, I read like some distant relative of yours, who was a student at Princeton, invited you to a get together in New York with, with a bunch of her friends.

• 30:06Speaker 01

  Right. So they were looking for a bar, and by the way, they call themselves like, we are Princeton University, like, eating club, like, alumni.

• 30:14Guy Raz?

  They were one of the eating clubs together. These are like these, they're, they're like, kind of like residence halls, really.

• 30:19Speaker 01

  Exactly, I can say that. Exactly.

• 30:21Guy Raz?

  And it was all their Princeton, all their Princeton friends?

• 30:23Speaker 01

  100%. I'm the, I'm the only non-Priston and who don't even speak English properly. I was kind of an odd guy. And I was invited. And they were like very nerdy Princeton guys, right? And they were looking for, oh, we should explore New York City because we are in New York, we should not just go to bar. And I told them, hey, guys, I'm gonna take care of you because that's how it works in Korea. And I took them to Korean bar.

• 30:47Guy Raz?

  Oh, man. So you guys are hanging out on the town. And there's a guy there named Artem.

• 30:55Speaker 01

  Yep.

• 30:57Guy Raz?

  And he was also an alumni, Princeton alumni.

• 31:01Speaker 01

  Exactly. Artem was one of the group members there. He studied computer science at there.

• 31:06Guy Raz?

  Yep.

• 31:06Speaker 01

  Artem Pedacow.

• 31:07Guy Raz?

  And I guess at this hanging out, like you and Artem kind of hit it off. You started talking. What did you talk about? What, I mean, how come the two of you hit it off?

• 31:18Speaker 01

  So what happened was I was sitting with like a complete Princeton alumni people, right? And they would not give me any like interest to pay attention to this random guy, right? And I was trying to participate this like, you know, a lot of random topic here and there, that table, here table, and I was trying to get lost. But I was like, ah, I want to know about this guy, but I cannot get into. And Artem, he paid attention. I was like, wow, this man has a pretty good empathy to like me, like immigrant and nobody.

• 31:48Guy Raz?

  Artem, I think he is the, he's the child of Ukrainian immigrants, or maybe he even came to the US from Ukraine as a child.

• 31:54Speaker 01

  Oh, my God. You said very well. Yes.

• 31:57Guy Raz?

  And what were you, you were saying, ah, I've come here from Korea and I think I want to try to start a business.

• 32:02Speaker 01

  That's the basic, high level comment that I had, which nobody actually care, kind of. Okay. And but he actually, he was curious about. And I got his email. And that night, train back to, it take one hour, 20 minutes. Back to North Massapequa, I came back that night, I wrote a letter to him, email. And I received email back the next day, I still remember. I said, the first line was, wow, Saeju, what a great email. I never have ever received this kind of, such a great kind of email. And I suggested to him, I think we should meet. And he agreed. And he came to North Massapequa, not New York City, the next day.

• 32:40Guy Raz?

  Wow.

• 32:40Speaker 01

  So we, we met and we had a dinner. And then we were speaking until 4:00 AM that day.

• 32:47Guy Raz?

  Wow.

• 32:47Speaker 01

  And I learned about his background as a Ukraine and his immigrant life, all that. So I realized, oh, wow, probably that also helped him to understand my struggles and he has empathy. So we had a great conversation. Yes.

• 33:01Guy Raz?

  What was, I'm curious, I mean, because you were still just learning English. Was it hard for you? It must have been hard for you.

• 33:09Speaker 01

  Oh, still today. It's very hard for me.

• 33:11Guy Raz?

  Yeah.

• 33:12Speaker 01

  By then, mega difficult guy, mega.

• 33:15Guy Raz?

  Yeah.

• 33:16Speaker 01

  But he really pay attention, not the flow of English, but he pay attention to my context and the value, which I appreciate.

• 33:24Guy Raz?

  What was he doing at the time? What was his job at the time?

• 33:28Speaker 01

  He was tech lead at Google Map in New York City office.

• 33:32Guy Raz?

  Wow, so this guy was a, I mean, not only did you meet somebody who was nice, but you met somebody who was a software developer.

• 33:41Speaker 01

  Exactly.

• 33:42Guy Raz?

  Which is pretty great.

• 33:43Speaker 01

  Right, right, right.

• 33:44Guy Raz?

  And, and what were you doing at the time? I mean, were you, you know, you were on a three-month visa, but, or you were on a student visa.

• 33:52Speaker 01

  Correct.

• 33:52Guy Raz?

  You were on a student visa.

• 33:53Speaker 01

  Correct.

• 33:54Guy Raz?

  So were you going to classes at that music school on Long Island?

• 33:58Speaker 01

  Yeah, I went to school in the morning and afternoon. I had a lot of general freedom. And then I was hustling and I was trying to figure the business extension of my by heart. But I didn't want to do, have metal business anymore because, you know, how many heavy metal listeners are there in Korea while the Korea is a small market? So I lost the interest to continue to do the business. So I was looking for more. And also, when my father passed away, he left a very big question such as like, he always told the patient to make sure that they have a healthy lifestyle. But like, majority of patient developed the conditions and he has to do, in other words, sick care management.

• 34:41Guy Raz?

  Sick care management.

• 34:42Speaker 01

  Right. So he left a very big question to me that why, why are the societies pointing me out and respect me as a healthcare leader? I became a sick care management leader.

• 34:53Guy Raz?

  In other words, he was saying, why are we focused on when people, why are we focused on treating people after they're sick rather than

• 34:59Speaker 01

  Exactly.

• 35:00Guy Raz?

  preventing them from getting sick in the first place?

• 35:02Speaker 01

  Exactly. So that was a big question. And this kind of comment I made and shared with Arton by then. Arton became my best and brother level friend. So we hung out at least twice or three times per week. That much we were

• 35:15Guy Raz?

  A week? And he was, you were going into New York or he was coming to Long Island? You really were like, you guys were bonding. You were really becoming friends.

• 35:23Speaker 01

  Oh, my God. He, I mean, we are like that. We are like, yeah, super. So I shared that, right? And he picked that off the story. And he gave me the book. It's called Good to Great.

• 35:35Guy Raz?

  Good to Great, yeah, Jim Collins.

• 35:37Speaker 01

  Jim Collins, exactly, the guy. So Artem told me that, Saeju, this book probably give you some answer about general question about the business, being an entrepreneur, what is enterprise, why? This make you an answer. And I really like the way Artem told me. Then I read that book and I was like, I awaken like, wow.

• 35:59Guy Raz?

  All right. So he's working at Google. He's an engineer there. It was a great job. You are kind of trying to figure out what you wanted to do. I mean, clearly Artem is a guy that you're becoming close with and you can see in him, somebody who you can start a business with. What are some of the ideas that you start to think about that you might be able to do?

• 36:25Speaker 01

  So Artem and I, we both had a lot of, over six months of brainstorming, six months. We went to park, we sat down, we write down a lot and ideas and then two sector came. First, education. Second, healthcare. And then we decided to, we need to tackle the healthcare.

• 36:45Guy Raz?

  And from what I understand, you were actually working out of Artem's apartment in New York while he was at work at Google during the day, right?

• 36:53Speaker 01

  Yes. I want to be motivated. So I came to, all in the morning, Artem and I, and Artem headed to Google and I was working at Artem's apartment. And often I stopped by lunch at Google's office and I had a free lunch and

• 37:07Guy Raz?

  Oh, because they have free food.

• 37:08Speaker 01

  Correct.

• 37:09Guy Raz?

  You just grab some free sandwiches.

• 37:10Speaker 01

  I want to say sorry to Google for that.

• 37:12Guy Raz?

  They can afford the free sandwiches.

• 37:13Speaker 01

  Exactly. And I came back again and I was working afternoon and Artem, as soon as he finished his work and he bring extra sandwich from Google cafeteria leftover and we eat that dinner and we work until like midnight or 1 a.m. every night, including weekend.

• 37:31Guy Raz?

  This is like 2006, 2007, you're talking about, you both agree that there's something to do with health, healthcare.

• 37:40Speaker 01

  100% yes.

• 37:41Guy Raz?

  And so I guess initially, your idea was, let's do something around exercise, motivating people to exercise.

• 37:50Speaker 01

  Right, right, right.

• 37:51Guy Raz?

  And I guess you guys kind of came up with this idea to start something called Work Smart Labs, which sounds really great. It sounds like a big office with a bunch of scientists, but really, it was just an idea in your head, right? Work Smart Labs.

• 38:03Speaker 01

  Right, right, right.

• 38:04Guy Raz?

  And what was the original idea that you guys had?

• 38:08Speaker 01

  So Artem sold these shares to sponsor the ideas, and I also use all my money that I saved. And then we launched the Work Smart Labs, Inc. And we instantly thought, we need to help our users can do more better fitness.

• 38:25Guy Raz?

  At the gym?

• 38:27Speaker 01

  Yeah, gym and exercise more. So our first prototype was interactive screen with a stationary bike that you can touch the screen, you can follow the guide from the screen, all that, it can copy with the others, something like that. So it's a very similar product you can imagine today. So that was our first, very first prototype, yes.

• 38:46Guy Raz?

  So you would be on a stationary bike, there'd be a screen. From what I understand, it was like you are pedaling along a rainbow and catching butterflies.

• 38:56Speaker 01

  Correct.

• 38:57Guy Raz?

  So you guys built a prototype? You built this thing?

• 39:00Speaker 01

  We did it, and it was quite successful from our beta test.

• 39:03Guy Raz?

  How did you build it with such limited funds? I mean, was it, because it sounds complicated and expensive, but I guess...

• 39:11Speaker 01

  It is.

• 39:12Guy Raz?

  It was?

• 39:13Speaker 01

  It was, it was. But Artem also brought these high school friends, who was a genius of genius in MIT. And then we also adopted some help from Princeton Network friends that who is very advanced in mechanical engineering, using all the sensors. So we were able to convert the stationary bike from gym, the boring stationary bike, to a smarter bike, right? And nowadays, there's a Peloton, Peloton products like that competitor. So we basically built that idea, and we launched that in 2007.

• 39:47Guy Raz?

  It was a Peloton competitor. Obviously, Peloton didn't exist, but it was a... So your idea was we're going to gamify

• 39:56Speaker 01

  Correct.

• 39:56Guy Raz?

  exercise, starting with a stationary bike.

• 39:59Speaker 01

  Right.

• 39:59Guy Raz?

  And but and did you get presumably you had to test this out at a gym?

• 40:04Speaker 01

  Right, so we hustled and found a gym in Queens and they allow us to install and test it out with their members. And the usage was outstanding compared to the other generic stationary bikes. So we were very excited about that ideas. And with the initial prototype and success, we thought we can now raise capital. And we and we try, we tried to raise capital for years and years.

• 40:32Guy Raz?

  Nobody wanted to get involved in this because

• 40:34Speaker 01

  Nope.

• 40:34Guy Raz?

  Because this is and by the way, this is the story, this is a problem Peloton had. Investors probably said, well, so you're going to manufacture the hardware and the software. And and by the way, how big is this market?

• 40:46Speaker 01

  Exactly.

• 40:47Guy Raz?

  If you're just sending selling to gyms, presumably that was what they were asking you.

• 40:51Speaker 01

  Mm hmm.

• 40:51Guy Raz?

  So you it was clear to you that when investors did not were not interested in this.

• 40:56Speaker 01

  Correct.

• 40:57Guy Raz?

  Maybe you were not on the right path. Maybe your idea wasn't the right idea to pursue.

• 41:03Speaker 01

  So Artem and I, we completely believe in that direction, right? But

• 41:07Guy Raz?

  Yeah.

• 41:07Speaker 01

  After two years of straight like getting a no from all the engine investors or VCs or even friends, it became clear. And the reality was, Guy, that we didn't have much money left in the bank. I remember we had like $2,700. And

• 41:27Guy Raz?

  Yeah.

• 41:28Speaker 01

  I was I had a very hard time myself and I returned to our one bedroom office during the summer. I remember we had the one tiny AC and super hot. So we were all like wearing only the underwear, everybody, like so hot.

• 41:45Guy Raz?

  Because it was so hot.

• 41:45Speaker 01

  Yes, I'm not, yeah, everyone just wearing the underwear and there's a fan, just one fan and one tiny AC was like struggling to blow out the cold air because it's not cold anymore somehow. Even like one of the engineer had like the towel around his neck because he was sweating too much. And I

• 42:03Guy Raz?

  Yeah.

• 42:04Speaker 01

  I had a hard time not cry because I felt so bad.

• 42:09Guy Raz?

  When we come back, how a sputtering idea gets revamped until it eventually becomes noom, and why, just as the company starts to take off, a lot of people who work there decide to walk out. Stay with us. I'm Guy Raz, and you're listening to How I Built This.

• 42:38Guy Raz?

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• 44:01Guy Raz?

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• 44:18Guy Raz?

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• 45:01Guy Raz?

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• 45:44Guy Raz?

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• 46:12Guy Raz?

  Hey, welcome back to How I Built This. I'm Guy Raz. So it's 2008, and after two years of failing to raise capital for their stationary bike, Saeju and Artem are almost out of cash. But fortunately, Artem and some friends who are helping out also work at Google for their day jobs. And that leads to a new idea for an app.

• 46:36Speaker 01

  Because they were working for Google by the time, they heard Google is responding on iTunes Store, the Android App Store. So we had a meeting again, and guys, we need to drop this hardware thing. We need to do what we are good at, which is software development, and we can move fast. And that was the day that we are going to all-in application business. And that's how we debuted Cardio Trainer. As soon as the App Store opened, we were one of the first application was available at the store.

• 47:12Guy Raz?

  For the Android phones, the Android App Store?

• 47:15Speaker 01

  Yes.

• 47:16Guy Raz?

  And this was called, this is called the Cardio Trainer?

• 47:19Speaker 01

  Yes.

• 47:20Guy Raz?

  And the app was, from what I understand, it was designed to track running and bike rides. So what, I mean, this was kind of pre-Strava, right?

• 47:30Speaker 01

  Exactly.

• 47:31Guy Raz?

  But it was sort of like a proto-Strava, if you will, a little bit, right?

• 47:36Speaker 01

  Yes, that was designed for like using GPS and a cell meter to monitor cycling and running over mobile. That was our product.

• 47:47Guy Raz?

  And people, but people were using Fitbits already, and that was out there. But now you could just put the app on the phone, and it could more or less do a version of the same thing.

• 47:55Speaker 01

  That's right, Guy.

• 47:56Guy Raz?

  And by the way, to finance that app, I guess the biggest cost was the engineers, right? But everybody was, presumably, they were all kind of working for nothing.

• 48:05Speaker 01

  Exactly. And also, we were well-funded by, they were all working for Google. And then, once we realized this is actually working, and we became number one at the market, and they all start working for Google, and they convert to full-time.

• 48:19Guy Raz?

  I guess it was adopted by lots of people. I think within eight months, by eight months, it was like the top most downloaded fitness app.

• 48:26Speaker 01

  We were, yup.

• 48:27Guy Raz?

  On Android.

• 48:29Speaker 01

  Yeah, we received like five million downloads within six months by then. And by the time that was a record breaking number. Because the smartphone was not adopted that many. But basically, if you buy Android phone, then you have our product almost.

• 48:45Guy Raz?

  Oh, wow. But still not making money from it because it was free.

• 48:49Speaker 01

  Yeah, exactly. That's how we actually received the first ever venture capital money too. Because we became the known app maker at fitness category.

• 48:58Guy Raz?

  I got you. Okay, so this is the point where you get some VC money. So you can keep kind of plugging away at this thing, right? This cardio trainer.

• 49:08Speaker 01

  Yes. And then we need to figure out what is our business, right? And then we launched the premium services that people can buy extra features, all that. The conversion was not bad, but not great neither. And bigger problem was it did not answer our promise. The promise is our mission that are we helping our users get better in terms of overall health? That bothers us more than that we are not making money enough. Do you see?

• 49:38Guy Raz?

  It bothered you more that people were not actually really engaging with it?

• 49:43Speaker 01

  People engaged a lot. The problem is we reviewed our data and then we were kind of like surprised. Majority of our users, 90% plus more, our users are not using the major features, which is tracking their running or the cycling. They are actually using our product for parameters.

• 50:05Guy Raz?

  They were counting their steps like a Fitbit?

• 50:07Speaker 01

  Yes. We were all like shocked. Why are you not using our main features? This is designed for...

• 50:16Guy Raz?

  Because they weren't cyclists or runners, probably.

• 50:18Speaker 01

  They are not. Yes, you're right, guy. But there's a massive adoption of our product, right? So we asked, why are you using our product then for step counting? Why do you need to count your step? And majority of users answered because they want to lose weight. That was a real aha moment for us.

• 50:36Guy Raz?

  And this insight that the users, many of the users were just using it to count steps because they wanted to lose weight, inspired the team to come up with a second app, which was, which I guess was a calorie counting app that you called Calerific.

• 50:52Speaker 01

  Correct. So we made, this was a big decision for us because we were literally number one at a fitness, health category in Android market for three years straight. And we were kind of like, the company for fitness. But we are in a very early stage by then. Early stage means we were looking for, what is a product market fit that can deliver a long lasting business?

• 51:18Guy Raz?

  Being number, in other words, being number one was great, but you knew that that didn't necessarily tell you that it was going to be number one for 10 years.

• 51:27Speaker 01

  Exactly, exactly.

• 51:29Guy Raz?

  From what I read something in the story, and I'm not sure if it's apocryphal or not, that basically at that moment, this is around 2010, you guys, the founders, started to feel pressure to optimize for revenue first rather than results. Is that, is that, is there, is there truth to that story?

• 51:51Speaker 01

  Yes, it's true. And it's a fair, right? Look, investors, their job is, they need to make sure their, their portfolios are returning the money. And we told our investors, we are going to retire cardio trainer and we'll, we'll build new product, which is calorie counting product, Calerific. And, and I remember by the time our investor was like, what are you talking about? We had a very intense conversation.

• 52:19Guy Raz?

  Yeah. Because they, what, they didn't want you to retire the cardio trainer? They thought that was the promising app?

• 52:25Speaker 01

  At least, I mean, we were number one. Literally, we were number one at fitness and health category. So. We but we were ballsy enough that we said we are going to retire the product. We will we will stop providing the service for the further we will we will retire it.

• 52:41Guy Raz?

  Why wouldn't you just transform the product to the calorie counting to calorific? Instead of creating a brand new app, why wouldn't you just change the features within the app? You already had the downloads.

• 52:51Speaker 01

  I think you're right, and I was wrong.

• 52:53Guy Raz?

  Yeah, I should have been there. I should have been there saying, what are you doing? You've got 10, 5 million downloads of this thing. You want to start a brand new app and and try to attract 5 million people from the start? That's hard.

• 53:06Speaker 01

  Where were you guy by then? We needed you by then.

• 53:09Guy Raz?

  All right, so a brand new app and you sunset the cardio trainer.

• 53:13Speaker 01

  We did, we sunset.

• 53:15Guy Raz?

  And and did people adopt the calorific app? Did that have the same adoption rate?

• 53:22Speaker 01

  We literally launched the calorific with no marketing budget. We just we we were probably naive by then. We launched the product. We firmly believed that if the product is good, people will somehow just download it. And matter of fact, the calorific actually received a ton of download. It became a top downloaded application within three months right after we launched. So we again proved that we know how to make an app, but we need to figure what is this then? How can we use technology to help population health? And then it comes up, you know what? Rather, we have a belief or try this way, that way. It must be holistic way approach.

• 54:08Speaker 01

  That was the new like aha moment over calorific. We have to build a product is approaching in holistic way to end users. So we again sunset the calorific. And then we put together holistic approach service in 2014. There was a beginning of like, we need to help our users learn about these four major pillars. Nutrition, fitness, stress management and sleep. And behavior change is very powerful. That was a beginning of like aha moment for us and we launched in 2014.

• 54:47Guy Raz?

  All right, so you begin to really dive into this. And one of the things that you guys managed, because I should mention, you changed your name to Noom. So you went from WorkSmartLab to Noom. And Noom, I shouldn't have known this, I felt like such a bozo when I didn't realize it, is just moon backwards.

• 55:08Speaker 01

  It's all good. A lot of people ask like, why Noom? And I go like, moon backward. And they're, oh, I see. But the deeper meaning of moon, why the moon? Because we see Noom's approach is we are here to support our usual lifetime. And behavior change and also healthy lifestyle is a journey. We get that. At night, when we get lost, we look up to, reorient ourselves, and the moon is right there. We want to be the moon for our users. The problem is, we could not trademark moon. So that's why we flip around the Noom, and we became Noom.

• 55:51Guy Raz?

  So here's what I'm wondering about, right? I mean, you're talking about an age-old challenge. I mean, this is like, in all of human history, the sort of cracking the code of weight loss, let's just be clear, it hasn't been cracked, right? I mean, it's like, there are all kinds of things that we haven't cracked, as you said, addiction, you know? We know more about it, but it's a much, much bigger challenge today, you know, weight loss. So you are entering, you guys decide to enter the most challenging, one of the most challenging spaces. Because there's no, even now, there's no simple answer. There's no button you can push and say, push this button, you will lose weight. And so I just wonder, the conversations you guys were having, I mean, you keep saying

• 56:35Guy Raz?

  you were naive, but I mean, you guys were naive to think that you could maybe push this, you know, push this huge challenge a little farther.

• 56:46Speaker 01

  So the problem is it's simply difficult to adopt healthy lifestyle if you don't have a good guidance. And also, changing behavior is powerful, yet it is difficult. That is why that we invite our people who join Noom that we ask, are you fully motivated and you have a conviction, full conviction to stick with a mission and deliver because we believe we can provide better behavior changing program. A lot of our users are exposed to either chronic conditions. Let's talk about grand level.

• 57:28Guy Raz?

  Yeah.

• 57:28Speaker 01

  USA, forty-five percent of adults are already diagnosed at least one chronic conditions.

• 57:36Guy Raz?

  Forty-five percent of US adults have one chronic condition.

• 57:38Speaker 01

  At least.

• 57:39Guy Raz?

  Like hypertension or diabetes or some other condition.

• 57:43Speaker 01

  Correct. And seventy-two percent of American adults are either obese or overweight. So, we get a great inspiration from the good school. Good school means we are empathetic teachers. We welcome the student who want to learn. We understand where they are. We don't judge how good, how bad they are.

• 58:10Guy Raz?

  Yeah.

• 58:10Speaker 01

  Some students are very introvert. Some student needs extra motivation. Some student needs like a very hold accountable. Some student do not want that because they feel like policing about by the teachers and it actually can actually hurt the motivation. So, it's just simply difficult to define how human behavior about the weight because everyone has different background and different stage of where they are.

• 58:37Guy Raz?

  Yeah.

• 58:37Speaker 01

  A lot of our users told us that weight loss is so difficult and they failed in the past. It built a very sad and also stigmatized experience.

• 58:49Guy Raz?

  Yourself, that you feel like you're just constantly defeated.

• 58:53Speaker 01

  Mm-hmm. Which is very difficult.

• 58:55Guy Raz?

  Right.

• 58:56Speaker 01

  The reason why we choose weight management is because weight is one of the greatest barometer over your health.

• 59:05Guy Raz?

  I want to jump in and ask you, I mean, look.

• 59:09Guy Raz?

  There is no question that people who are overweight can have some impact on their health conditions, right? If they change their diets and their exercise regimen. We know that, that's a fact. And it's not to take away the personal responsibility side of it, but we also know that there are significant genetic factors involved, that there are people who are just genetically more predisposed to retain weight, to increase their weight. It doesn't matter what they eat. It doesn't matter if they eat, you know, more or less the same foods as somebody who is significantly Correct. You know, lighter than they are.

• 59:50Guy Raz?

  Just genetically, their body processes and converts that food into fat in different ways. So, and again, it's not to say that people can't have an impact, but for a significant portion of population, it's, it doesn't matter how hard they work, right? I mean, it's, it's just going to be almost impossible.

• 1:00:09Speaker 01

  Well, that's why we build our muscles by approaching behavior change, help our users to understand how to read their body signal, how to read their mental signal, and then build a completely customized foundation start from there. We formally know one size fits all approach is not working for population health management. That is why technology can do a good job to support our platform, we can be scaled, but also customized experience.

• 1:00:50Guy Raz?

  I just want to take a moment and kind of explain what Noom was at this point in 2014, because I know it would change a little over time, but in 2014, it was basically a freemium app, right? So if you joined for free, you could log your food and track your calories and things like that. Yeah. But there was also a kind of like an AI component, right? Like, if you, if you paid, what, something like 10 bucks a month, you would get computer assisted coaching. Is that, is that more or less right? Yes.

• 1:01:25Speaker 01

  But we learned two things. Number one, when users are receiving a good, right guidance, it does work in terms of improved retention, engagement. That way, they get a better outcome. So we learned that, number one. And number two, we also learned there is a glass ceiling with just AI-based service. We cannot, we cannot do better than we hoped. In other words, we tested with a human coach by then. We put the human coach.

• 1:01:58Guy Raz?

  Yeah.

• 1:01:58Speaker 01

  And that version delivered better outcome. And that was the beginning of intervention of human coach. Yes.

• 1:02:04Guy Raz?

  There's a human coach on video?

• 1:02:06Speaker 01

  We did video, we did a phone call, we did a chat, all different type of intervention and all delivered better results.

• 1:02:14Guy Raz?

  Yeah.

• 1:02:15Speaker 01

  So that helped us to understand, wow. And then we figured, probably, yes. And actually, it became clear empathy cannot be made up. Empathy cannot be recreated by computer.

• 1:02:27Guy Raz?

  Yeah.

• 1:02:27Speaker 01

  And that is important component.

• 1:02:30Guy Raz?

  All right. So one of the things that you, you did was you managed to secure a grant from the National Institutes of Health to actually study binge eating. And, and this was a, and it was, I guess it was like trying to sort of use technology to see if you could figure out the connection between binge eating and human psychology.

• 1:02:54Speaker 01

  Correct.

• 1:02:55Guy Raz?

  And tell me, tell me what you found out from this, this NIH-funded study?

• 1:03:00Speaker 01

  We learned from doctors at the Mount Sinai Hospital that psychological support is the key to overcome the barrier of, unlock the, the healthy lifestyle. So I can say the current version of Noom, the real inception was started in 2014, but we invested another two years to be ready with a human coach and psychological component over two years and then launched that.

• 1:03:29Guy Raz?

  All right. So you are developing this plan. And at the same time, you're under some significant pressure from some investors, rightfully so, because they're not, it's not clear. You know, what your path to profitability is. And in 2016, you kind of abandoned this freemium model and essentially say, this is gonna, you know, we're good to make this work, we're gonna ask people to pay for the app, to subscribe. Was that, and I imagine that there were probably many users who were not happy about that, and you had to expect that that was gonna happen.

• 1:04:06Speaker 01

  We had a moment that we need to put the price, price wall. That is the way we can weed out who are not ready to commit for adopting healthy behavior. And that is the way also as we are a product company, we can actually gather, gather higher quality data in order to build a better product. That was the reason that we abandoned, completely abandoned free features and relaunched the paid version, comes with a human coach. But I want to tell you one more thing. Because we also didn't have any real business and because this is a big move, I lost many people who did not believe in our direction.

• 1:04:47Guy Raz?

  You lost many investors?

• 1:04:49Speaker 01

  No, investors, yes, they gave up or they sold out their ownership to really like, really like almost none. And I lost many product people by the time, people left. Our, who did not believe in the direction, they left, they think, oh, it did another pivot and this direction says you, I'm not sure. And then we lost a handful of product people by then.

• 1:05:11Guy Raz?

  Of product people?

• 1:05:12Speaker 01

  Yeah.

• 1:05:13Guy Raz?

  Because they were, because they felt like, hey, this was always supposed to be a freemium thing.

• 1:05:16Speaker 01

  Yes.

• 1:05:17Guy Raz?

  Yeah. And that happens. People, people join companies and they, and they get mad when those kinds of changes are made. And, you know, it's, it's a perfectly legitimate view to, to hold, but obviously companies change, they have to change.

• 1:05:30Speaker 01

  Correct. And also, I, I take the blame because, you know, Guy, sunsetting the product that we create from the nothing and we have to sunset that, that is, is actually quite difficult experience. It's very emotionally difficult and you need to, again, start a new code writing from scratch. And that's not easy, so. I understand that and that we lost a few key, the product people by then. I remember we had a very quiet dinner together, the survivor's dinner. And I told him that we keep moving on. We are not compromise company mission. This is direction. There's a lot of data that this will work.

• 1:06:13Speaker 01

  And thank you for staying with us and see you tomorrow morning.

• 1:06:19Guy Raz?

  When we come back in just a moment, how tomorrow morning came and Seju and his team continue to reinvent and retool Noom. Stay with us. I'm Guy Raz and you're listening to How I Built This.

• 1:06:44Speaker 02

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• 1:07:42Speaker 04

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• 1:08:18Guy Raz?

  Hey, welcome back to How I Built This. I'm Guy Raz. So it's 2016 and Noom has switched its business model from a freemium app to a subscription service. And as a result, Seju has lost some investors and some employees. I mean, part of me really just wishes you stayed selling heavy metal music on the internet. Like, part of me is just getting anxious, thinking about how complex this is because

• 1:08:45Speaker 01

  True.

• 1:08:45Guy Raz?

  The value proposition effectively was, look, you may have tried other weight loss programs. We think this one has a better shot at success for you. Now, you're not promising that people are going to lose weight. You can't. That's not possible. You cannot promise people that because it's up to them. But you can promise them that you will give them, let's say, better tools to do that. That's still a lot of pressure.

• 1:09:10Speaker 01

  Thank you for your empathy, Guy. I feel you and I appreciate the comment. And let me be frank, probably we were, again, naive, but we were so, I don't know, I mean, by the time, we were kind of maybe rightly stubborn about it. We said, like, look, I mean, we are very confident we can build a great product, software. We were kind of, you know, when you are young, you can't have overconfident about your ability that about what you are good at. So our team was like, we know how to make an app. We know how to make a software. But we have to figure which mountain we will climb up. And it was not a fitness. It was not a just diet. It was not like just one thing. And we figured it has to be holistic

• 1:09:53Speaker 01

  approach. And we figured, oh, my God, we have to really crack this Pandora box. And we just opened that up. And when we opened that up, we were kind of like scared at the same time. Holy moly, we just figured if we do better.

• 1:10:08Speaker 01

  We can finally deliver healthy outcome and we can shift the paradigm. Preventative approach can be the prime.

• 1:10:16Guy Raz?

  Right. So inevitably, as you grow and as you get, I shouldn't say inevitably, but oftentimes, when a company grows and gets bigger, it becomes a bigger target. Oftentimes, that is perfectly justified, right? You know, Uber is a big company, big target, so is Tesla. And you guys were slapped with some angry users and eventually a lawsuit because when you went to the pay system, some users said, hey, wait, we were charged for a subscription and it was hard to cancel it. You actually addressed this in an open letter to the users. What happened? Was it just a bungled kind of rollout? Why did you get in a situation where people were, you know, lots of people were complaining

• 1:11:01Guy Raz?

  about this?

• 1:11:02Speaker 01

  Well, I mean, first of all, that we care every single user's voice and we are happy to put this behind us.

• 1:11:11Guy Raz?

  Is it settled now? This is now settled?

• 1:11:14Speaker 01

  Yes. We are paying attention as this is a consumer-led healthcare company. For sure, we are paying attention, every single voice, we do actually do. And we wanted to make sure that our bar of customer support experience and even like cancellation is like high enough. So matter of fact, we invested a ton into that, the opportunity and now the 100% self-cancellation is right there. You can, you have three click that you can cancel that. We made it very clear that we are right there to support if the program needs to be paused or canceled because we are here to support whenever you are ready. So we'll continue to invest into our user experience should be good and we will not

• 1:11:59Speaker 01

  compromise the bar.

• 1:12:01Guy Raz?

  All right, so let's talk about what makes this different, right? Like, so let's say you're doing Jenny Cragg or Nutrisystem, right? You, you get, depending on how you sign up, you get meals sent to you and you heat them up and there's shakes or powders or whatever, right? And there are all kinds of competing systems like that, which can work for some people.

• 1:12:26Speaker 01

  Mm-hmm.

• 1:12:27Guy Raz?

  Yours is different, because yours is about nutrition, fitness, sleep, and behavior, psychology.

• 1:12:33Speaker 01

  Yeah, stress management.

• 1:12:34Guy Raz?

  Stress management, okay. So you get those four things, and on the app it says, "Look, we're not a restrictive diet program. We don't, we don't tell you to restrict diet, but you must." I mean, there's a, the simple fact, like, the simple math around gaining and losing weight is, you take in a certain number of calories, and, and if you take fewer calories in, you know, it's gonna have a different impact. I mean, the math is kind of clear on that, right?

• 1:13:00Speaker 01

  Yes, yes, yes.

• 1:13:02Guy Raz?

  So, I mean, let's just talk about the food side first.

• 1:13:06Speaker 01

  Sure.

• 1:13:07Guy Raz?

  When you sign up, I know you, you sort of categorize food into three colors, right? Green, red, and yellow, I believe?

• 1:13:13Speaker 01

  Mm-hmm.

• 1:13:14Guy Raz?

  And green foods are really the ones that you should focus on the most, right? Those are like, basically, vegetables, fruits.

• 1:13:20Speaker 01

  Yes.

• 1:13:21Guy Raz?

  And red is like meats and proteins and fats, and, uh, yellow is like carbohydrates, more or less.

• 1:13:29Speaker 01

  Mm-hmm, that's true.

• 1:13:30Guy Raz?

  And so, I'm on it, let's say I want to lose 20 pounds, let's say I want to lose 30 pounds. How, I mean, does it tell me exactly what to eat at every meal?

• 1:13:41Speaker 01

  We don't. We, we don't want to present that we dictate what you need to eat. This opposite guy, we don't want to restrict, you need to stick with some supposed meal or diet.

• 1:13:55Guy Raz?

  Right.

• 1:13:56Speaker 01

  Because that creates, you know, more stress to our end users, and also it's very hard to stick with. And, look, eating is not just eating, we are human, we are social animal. There's a lot of, like, the interaction while you have a dinner or gathering and you eat together, and it's very difficult to stick with one diet, and it's not sustainable. So, we do not approach that way. We rather guide our users.

• 1:14:26Speaker 01

  Build the muscles that can be more cautious and be mindful about what choice they have, about intake, what they eat, what they drink, and how they rest, how they burn the calories. The thing is, if we limit our users, there's enough study and I want from our experience, if we limit our users, do this, not that, they may work for maybe two weeks, but it cannot work more than that. And that create, as we know, and which make me sad, yo-yo.

• 1:14:56Guy Raz?

  Yeah.

• 1:14:57Speaker 01

  By the way, we actually wanted to update our food color system from red to orange. The reason is because we use the red, people associate the red color that means, oh, this is bad, this is warning, blah, blah. It's not true. Red category food is, we need to pay attention in terms of volume. We don't want to ban any. The thing is, you need to be moderated, and especially red category food. But unfortunately, red color coding is sending a wrong signal, the message to our users. So we actually are creating to call it to orange. By the time that you listen, it might be already orange. So that's the way we adapt. But I want to make sure that we provide the guideline is actionable today.

• 1:15:41Guy Raz?

  All right. So you really, the kind of the growth and also your ability to attract capital really kind of takes off. I mean, I think you did a Series C in 2016 and a Series D in 2018. I think over the course of Noom, you've, I think you've raised more than $500 million. Is that, or more than that, almost a billion dollars, I think, right?

• 1:16:09Speaker 01

  Yes.

• 1:16:10Guy Raz?

  I mean, a lot. You've had, tell me about the pandemic. What happened during the pandemic? How did, what did it mean? I mean, did it, did you see a very rapid increase in user adoption during the pandemic?

• 1:16:23Speaker 01

  So COVID-19 time, what we have learned, a lot of people are, they understood either they had to, or media spoke all the time that you need to build immunity better. You need to pay attention that you are in good health. So many people are looking for how to get healthy. Many people too want to have like, I want to manage my chronic condition. I want to have very healthy lifestyle. When I say healthy lifestyle, that means mind and body both. My father was a renowned medical doctor, sacrificed entire his life until he passed away.

• 1:17:03Speaker 01

  And the last word he left, why did I help the sick people only? And that big questions. And somehow, luckily, Noom figured, and we are answering that. We did not figure everything, but we are in the path that preventative approach is primary. And we firmly believe this trend will not go away. It will become even stronger and become a primary in healthcare.

• 1:17:31Guy Raz?

  Yeah.

• 1:17:35Guy Raz?

  Saajee, when you think about, you know, this journey you've taken from Korea, from South Korea to, you know, your beginnings in sort of e-commerce, to coming to the US and meeting Artem and starting this business, which initially was about fitness and exercise and was going to be like an exercise machine to what it is now, you know, a company valued at right now over $10 billion. How much of that, of that do you, how much of where you are now, do you think has to do with your skill, your hard work? And how much do you think is because you got lucky?

• 1:18:12Speaker 01

  I think we are extremely lucky. For sure. I think we are extremely lucky and I cannot express how much we are thankful. Like angel investors, our people, while we were managing like no revenue business, the brilliant, smart people stayed with us. And then remember the night, the Survivor's Dinner night? It was like, I don't know how I can describe how much, how I'm thankful and we are thankful and how much luck we received. And as we received the luck in the past, we expect if we continue to stick with our mission and do good job, I believe we shall receive more luck as we deserve in the future. But, you know, we don't run

• 1:18:54Speaker 01

  the business based on the luck. We work hard and when the luck arrives, then we will be grateful.

• 1:19:03Guy Raz?

  That's Saeju Zhang, CEO of Noom. His co-founder, Artem Petikov, is the president of the company. By the way, one of Saeju's preferred ways to jumpstart his mornings, turning his speakers up to 11 and blasting out "Lamb of God," one of his favorite heavy metal bands. And if you aren't familiar with them, here for your listening pleasure.

• 1:19:36Guy Raz?

  That's a Good Morning Rockin' song. I'd get up to that.

• 1:19:42Guy Raz?

  Hey, thanks so much for listening to the show this week. If you want to contact the team, our email address is [email protected]. If you want to follow us on Twitter, our account is @howibuiltthis and mine is @guyraz. On Instagram, we're @howibuiltthis and I'm @guy.raz. This episode was produced with music composed by Ramtin Arablouei. It was edited by Neva Grant with research help from Claire Murashima. Our audio engineer was Maggie Luthar. Our production staff also includes Elaine Coats, John Isabella, Liz Metzger, Casey Herman, Kerry Thompson, Catherine Seifer, Alex Chung, Chris Messini, Carla Estevez,

• 1:20:23Guy Raz?

  Josh Lash, and Sam Paulson. I'm Guy Raz and you've been listening to How I Built This.