HBS 9-519-010 — Case reading aid

DayTwo: Going to Market
with Gut Microbiome

Israeli startup (est. 2015) · CEO Lihi Segal · Weizmann Institute algorithm · ~30 people
$17M
Funding raised
$329
U.S. kit price
114M
Diabetics + pre-diabetics
$9,600
Avg yearly diabetes cost
68K
U.S. nutritionists
~2 wk
Kit to app delivery
01 — Product

How it works

📦
Step 1
Order kit
$329 online or via provider
🧬
Step 2
Stool sample
Customer mails sample to lab
🔬
Step 3
Sequencing
Shotgun method (full genome)
🧠
Step 4
ML analysis
Weizmann algorithm predicts glycemic response
📱
Step 5
App scores
Foods rated 1.0–9.9 for your body
Science basis Zeevi et al. (2015) Cell paper, tested on 800 people in Israel
Key claim Predicts individual glycemic response, not generic dietary advice
Database "Largest whole shotgun microbiome database in the world" — Bachrach
02 — Segments

Three target markets

Diabetes / Pre-diabetes

114.4M
U.S. patients
30.3M diabetics + 84.1M pre-diabetics. Spend $9,600/yr on treatment. Highest motivation — blood sugar is life-or-death. Already doing medical tests, stool sample friction is low.
"We want the user population that brings the most bang for the buck: those who want it, those who are most motivated to use it." — Bachrach
✓ Best fit

Overweight / Obese

70.7%
of U.S. adults
Massive TAM but DayTwo can't promise weight loss. The weight-loss services market was actually shrinking (Exhibit 5). High friction for a non-medical audience.
Product helps manage blood sugar, not shed pounds. Value prop doesn't match what this segment is buying.
⚠ Tempting but misaligned

Athletes / Wellness

11,800
U.S. pro athletes
Highly motivated, used to body tracking, good for PR and credibility. But not a business at scale. Total addressable market is tiny.
Good influencer/ambassador channel. Bad primary segment.
→ Marketing asset only
💡
Hidden market: IBS — Over 1,000 existing users reported IBS symptoms unprompted. Real pull without DayTwo pushing. Could be a natural expansion once diabetes is established.
03 — Channels

Go-to-market options

DTC (direct to consumer)

  • Fast to launch, own the brand
  • Direct customer data
  • Product takes 15 min to explain
  • High CAC, stool sample friction
  • No brand awareness in U.S.
"DayTwo products require almost 15 minutes to explain." — Segal
Not viable as primary

B2B (employers / insurers)

  • Large contracts, recurring revenue
  • J&J + Mayo Clinic connections
  • 151M employer-insured workers
  • Each deal takes ~1 year
  • Needs FDA for insurer coverage
  • Slow bureaucracy
This is where DayTwo eventually pivoted — and it wasn't enough.
Long-term play

B2B2C (dietitians / providers)

  • Trust transfer from provider
  • Higher conversion rates
  • Proven model in Israel
  • 68K nutritionists + 7K endocrinologists
  • Harder to scale quickly
  • Dietitians initially feared replacement
"Customers have more success when DayTwo is handed off to them by a dietitian or their doctor." — Stevens
✓ Best near-term channel
04 — Dilemmas

Strategic tensions

Timing
Option A
Sell now as wellness product, build revenue and data
vs
Option B
Wait for FDA clearance + clinical trials for credibility
Revenue model
Option A
One-time $329 kit purchase
vs
Option B
Add subscription for ongoing coaching + data
Brand
Option A
Keep DayTwo brand, build consumer recognition
vs
Option B
White-label for health systems and employers
Geography
Option A
Deepen Israel (8.4M people, known market)
vs
Option B
Prioritize U.S. ($3T healthcare market, investor expectations)
Infrastructure
Option A
Build own labs ($5M for 100K units/yr capacity)
vs
Option B
Use partner labs (less control, variable quality)
05 — Competition

Competitive landscape

Company Method Price Threat Key difference
Viome RNA sequencing (metatranscriptomics) $400/yr High Captures more microbial types, looks identical to consumers, but no peer review
Thryve 16S rRNA ~$100 Medium Cheaper but less precise sequencing
uBiome 16S rRNA ~$89 Collapsed FDA raided offices 2019, shut down — cautionary tale on compliance
23andMe DNA (not microbiome) $199 Low-med Different product, competes for "personalized health" mindshare
ZOE (post-case) Gut microbiome + CGM sensor ~$354 Highest Raised $100M+, built strong consumer brand — what DayTwo could have been
06 — Key insight

The income-diabetes paradox

Exhibit 8: The people who need it most can't afford it

Diabetes prevalence is highest in low-income populations. DayTwo costs $329 out of pocket. Without insurance coverage (which needs FDA approval they don't have), the core target faces a price barrier.

This is why B2B through employers/insurers matters — it removes the individual cost. But B2B requires FDA or clinical proof, which circles back to the timing dilemma.

Need FDA for insurance → Need insurance for affordability → Need affordability for target segment → Need target segment for FDA trial data ↻
07 — Epilogue

What actually happened (post-case)

2015
Founded in Israel, Weizmann Institute spin-off
2017
Seed + Series A: $17M (J&J Innovation lead)
2019
Series B: $31M — pivoted to B2B employer health plans for U.S.
2020
Mayo Clinic validation published in JAMA Network Open
2021
Series C: $37M — total raised ~$85M
2023
Laid off most employees. GLP-1 drugs (Ozempic, Wegovy) emerged as simpler alternatives for the same population.
Aug 2024
Shut down operations. $85M over 9 years, never reached profitability. Gap between clinical validation and commercial viability was too wide.
DayTwo Case Overview · HBS 9-519-010 · Israeli & Lane (2019) · ESADE Marketing for Entrepreneurs