Protocol | Workplace

This online marketplace for people of color is making wellness more accessible

After closing its doors during the pandemic, it's bringing its yoga and meditation classes online for Black people and people of color.

A woman with pink sunglasses in a bright green field

Ethel's Club, the tech startup focused on wellness for Black people and people of color, is shifting its model to make wellness more accessible to people who need it the most.

Photo: Ethel's Club

If there's anything the last year taught us, it's that personal wellness is underrated. Especially in communities of color.

Ethel's Club, the tech startup focused on wellness for Black people and people of color, is shifting its model to make wellness more accessible to people who need it the most. Instead of selling monthly memberships, Ethel's Club is embracing a pay-as-you-go model for access to live wellness classes offered on its digital platform. Free, prerecorded courses will also be available online.

"We wanted to make everything that we can more accessible," Ethel's Club founder and CEO Naj Austin told Protocol. "Putting wellness for marginalized communities behind a paywall started to feel more and more just not the right way to approach it."

That's a departure from Ethel's Club's previous strategy, which at one point charged a $195-per-month membership for access to its Brooklyn-based location and then $17 per month for a digital-only experience.

There doesn't seem to be anything quite like Ethel's Club, which has raised venture funding from True Ventures, Dream Machine and others, but there are companies and services in its orbit. For one, there's The Wing, but that's specifically geared toward working women and functions as a coworking space. There's also Clubhouse and Twitter Spaces, but Austin doesn't see those audio-only experiences as competition for Ethel's Club.

Austin said to think of the new Ethel's Club as a marketplace for all types of wellness courses, with a mix of free and paid experiences led by Ethel's Club-vetted practitioners. The wellness courses will cover topics such as food and nutrition, mind and body, sex and romance, financial health and others. Each guide is responsible for determining how much they want to charge for their courses, so the prices will vary, Austin said.

A screenshot of a class from Ethel's Club's platform Photo: Ethel's Club

Many wellness spaces don't center Black people and people of color, Austin said. That's where Ethel's Club sees an opportunity.

"There's not one place to go to to watch content, buy live content, read content all from the perspective of not just race and ethnicity but by body type and hair type," she said.

Austin said it's also important to signal that "wellness is not this foreign matcha, yoga pants concept. But it is just feeling better throughout your life generally. And there are many ways in which one can do that."

Ethel's Club's first iteration of its digital offering gave members access to classes covering topics such as cooking, Black art and yoga. Wellness-related courses were the most popular among its members, as well as series-based courses, such as a four-part series on meditation through journaling, Austin said.

She attributes that popularity to "the community feel of showing up and seeing the same people in the room, and then also the accountability aspect of it."

Austin found that members returned to Ethel's Club for specific topics led by specific guides. That's partly what led to a greater emphasis on practitioners in this new version of Ethel's Club.

"Now that we're on the other side and we've spent the last year really learning about who these global people are, who are our audience that we magically have all of a sudden, we're wanting to really build a product with thought and intention," she said. "Which we were unable to do because we had to have a digital product in a day."

Prior to the pandemic forcing the closing of Ethel's Club's physical location, there were about 280 people paying for the monthly membership. When Ethel's Club brought its space online in March 2020, about 90% of its members crossed over to digital membership, Austin said. Ahead of ceasing its digital membership offering, Ethel's Club had about 1,500 paying members.

A screenshot of a video from Ethel's Club's platform Photo: Ethel's Club

Ethel's Club held onto its space, with the hopes of eventually reopening it after the pandemic, but the company has since permanently closed its location in Brooklyn. In the fall, the plan is to open up another physical location but Austin said she first wants to see which courses gain the most traction and how they would work in a physical environment.

"If we find out that most of the digital series people are purchasing are not yoga classes, but are classes that need a whiteboard, now we know to build that into the next space versus trying to retrofit what we have."

Ethel's Club will also determine the location of its physical space based on where its subscribers live.

With Ethel's Club, Austin said the company is really leaning into video because that visual aspect is a core part of its offering. That's not to say Ethel's Club will never add an audio-only supplement, but Austin said Ethel's Club has yet to make a decision. Still, Austin doesn't see features like video and audio as relevant differentiating factors between Ethel's Club and other community-based services.

Ethel's Club will also eventually live within Somewhere Good, a technology platform Austin and her team are building to house a variety of digital communities.

"The differentiator is in the fact that there is no place where communities centering identity are in one place," she said. "That alone is the best feature about the platform and I think anything on top of that is just extra. I think the way in which one connects we can sort of figure out but I think just the ability that you can connect in this way, I think is already pretty magical."

Image: Yuanxin

Yuanxin Technology doesn't hide its ambition. In the first line of its prospectus, the company says its mission is to be the "first choice for patients' healthcare and medication needs in China." But the road to winning the crowded China health tech race is a long one for this Tencent- and Sequoia-backed startup, even with a recent valuation of $4 billion, according to Chinese publication Lieyunwang. Here's everything you need to know about Yuanxin Technology's forthcoming IPO on the Hong Kong Stock Exchange.

What does Yuanxin do?

There are many ways startups can crack open the health care market in China, and Yuanxin has focused on one: prescription drugs. According to its prospectus, sales of prescription drugs outside hospitals account for only 23% of the total healthcare market in China, whereas that number is 70.2% in the United States.

Yuanxin started with physical stores. Since 2015, it has opened 217 pharmacies immediately outside Chinese hospitals. "A pharmacy has to be on the main road where a patient exits the hospital. It needs to be highly accessible," Yuanxin founder He Tao told Chinese media in August. Then, patients are encouraged to refill their prescriptions on Yuanxin's online platforms and to follow up with telehealth services instead of returning to a hospital.

From there, Yuanxin has built a large product portfolio that offers online doctor visits, pharmacies and private insurance plans. It also works with enterprise clients, designing office automation and prescription management systems for hospitals and selling digital ads for big pharma.

Yuanxin's Financials

Yuanxin's annual revenues have been steadily growing from $127 million in 2018 to $365 million in 2019 and $561 million in 2020. In each of those three years, over 97% of revenue came from "out-of-hospital comprehensive patient services," which include the company's physical pharmacies and telehealth services. More specifically, approximately 83% of its retail sales derived from prescription drugs.

But the company hasn't made a profit. Yuanxin's annual losses grew from $17 million in 2018 to $26 million in 2019 and $48 million in 2020. The losses are moderate considering the ever-growing revenues, but cast doubt on whether the company can become profitable any time soon. Apart from the cost of drug supplies, the biggest spend is marketing and sales.

What's next for Yuanxin

There are still abundant opportunities in the prescription drug market. In 2020, China's National Medical Products Administration started to explore lifting the ban on selling prescription drugs online. Although it's unclear when the change will take place, it looks like more purely-online platforms will be able to write prescriptions in the future. With its established market presence, Yuanxin is likely one of the players that can benefit greatly from such a policy change.

The enterprise and health insurance businesses of Yuanxin are still fairly small (accounting for less than 3% of annual revenue), but this is where the company sees an opportunity for future growth. Yuanxin is particularly hoping to power its growth with data and artificial intelligence. It boasts a database of 14 million prescriptions accumulated over years, and the company says the data can be used in many ways: designing private insurance plans, training doctors and offering chronic disease management services. The company says it currently employs 509 people on its R&D team, including 437 software engineers and 22 data engineers and scientists.

What Could Go Wrong?

The COVID-19 pandemic has helped sell the story of digital health care, but Yuanxin isn't the only company benefiting from this opportunity. 2020 has seen a slew of Chinese health tech companies rise. They either completed their IPO process before Yuanxin (like JD, Alibaba and Ping An's healthcare subsidiaries) or are close to it (WeDoctor and DXY). In this crowded sector, Yuanxin faces competition from both companies with Big Tech parent companies behind them and startups that have their own specialized advantages.

Like each of its competitors, Yuanxin needs to be careful with how it processes patient data — some of the most sensitive personal data online. Recent Chinese legislation around personal data has made it clear that it will be increasingly difficult to monetize user data. In the prospectus, Yuanxin elaborately explained how it anonymizes data and prevents data from being leaked or hacked, but it also admitted that it cannot foresee what future policies will be introduced.

Who Gets Rich

  • Yuanxin's founder and CEO He Tao and SVP He Weizhuang own 29.82% of the company's shares through a jointly controlled company. (It's unclear whether He Tao and He Weizhuang are related.)
  • Tencent owns 19.55% of the shares.
  • Sequoia owns 16.21% of the shares.
  • Other major investors include Qiming, Starquest Capital and Kunling, which respectively own 7.12%, 6.51% and 5.32% of the shares.

What People Are Saying

  • "The demands of patients, hospitals, insurance companies, pharmacies and pharmaceutical companies are all different. How to meet each individual demand and find a core profit model is the key to Yuanxin Technology's future growth." — Xu Yuchen, insurance industry analyst and member of China Association of Actuaries, in Chinese publication Lanjinger.
  • "The window of opportunity caused by the pandemic, as well as the high valuations of those companies that have gone public, brings hope to other medical services companies…[But] the window of opportunity is closing and the potential of Internet healthcare is yet to be explored with new ideas. Therefore, traditional, asset-heavy healthcare companies need to take this opportunity and go public as soon as possible." —Wang Hang, founder and CEO of online healthcare platform Haodf, in state media

Zeyi Yang
Zeyi Yang is a reporter with Protocol | China. Previously, he worked as a reporting fellow for the digital magazine Rest of World, covering the intersection of technology and culture in China and neighboring countries. He has also contributed to the South China Morning Post, Nikkei Asia, Columbia Journalism Review, among other publications. In his spare time, Zeyi co-founded a Mandarin podcast that tells LGBTQ stories in China. He has been playing Pokemon for 14 years and has a weird favorite pick.

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