Softbank Investment Lifts Whoop Valuation to over $3.6B

Yahoo Finance's Brian Sozzi breaks down fitness wearable startup Whoop's latest valuation following a major investment by Softbank.

Video transcript

- All right, welcome back to "Yahoo Finance Live." We were just talking about Peloton, the real giant in the fitness world, the connected fitness world. But Whoop, which makes these wristband trackers which both myself and Brian Sozzi are wearing-- not as paid promotion. We just like the product.

Brian Sozzi, Whoop, out over the weekend announcing a big fund raise from SoftBank.

BRIAN SOZZI: And that was not synchronized. (LAUGHING) We just did that in real time! And I really have to give you a hat tip, Myles. Because you got me into the Whoop about six or seven months ago. And it's been very interesting journey since I've been wearing this. But, nonetheless, let me get some news real quick.

Whoop now being valued at $3.6 billion after that capital raise from SoftBank. Now, let's keep in mind, October, 2020, Whoop raised $100 million from a series of investors, including SoftBank, also sports stars Eli Manning, Rory McIlroy, and a couple others, valuing the company at $1.2 billion.

So in under a year, this company's valuation almost rose or did rise about three times, very impressive stuff here for the company. Now, if you're Fitbit, you have to just be shaking your head here a little bit here. Fitbit was sold to Google in November, 2019, for $2.1 billion. And Fitbit arguably has a larger, a much larger user base, and I would say a name that a lot more people know than Whoop.

But nonetheless, Whoop is feeling good this morning here as well. Also Oura, which makes connected rings, in May, they raised $100 million, valuing the company at $800 million. So you're seeing these upstarts really start to raise a good bit of capital as they compete with the likes of a Google, and a Fitbit, and, of course, the behemoth in the space, the Apple Watch.

And Myles, I own both an Apple Watch and a Whoop Strap. And I'm wearing both at the same time right now. They just do different things. The Whoop Strap just collects data better. It gives me details on my health, and my sleep, and my restoration that the Apple Watch doesn't seem to do. Or if it does, I need about 12 different apps on the watch to make that happen.

But overall, my journey on the Whoop has really highlighted to me that I don't get enough sleep and I better start getting more sleep or I'll be six feet under very soon.

- Well, I mean, it does-- we could go for, like, another 15 minutes about all the things Whoop does. I mean, for example, last night, I only got, I think, six and a half hours of sleep. But what does the Whoop say? I got a lot of deep sleep, a lot of REM sleep. My heart-rate variability-- a metric I didn't know about but is really central to your health-- was through the roof. So my recovery score today is 92%, even though, traditionally, two years ago, I would have said, oh, I only got 6 and 1/2 hours of sleep.

The quality of the sleep is what the Whoop tells you about and what Outa tells you about. And there's things you can put over your mattress. You know, Eight Sleep is another hot startup in this space that's trying to do all this stuff. But really, the contrast with the Fitbit and the Apple Watch-- specifically the Apple Watch, really-- is that the battery life on Whoop-- it's just a different product, right?

It's not a watch. It doesn't have the kind of intensive needs that an Apple Watch does. So you go three, four, five days without charging it. Whereas, Apple Watch, you're taking it off at night. So you can't really track your sleep in the same way. I have the Whoop charger sitting here. It's this stupid little piece of plastic.

I mean, they're raising all this money. They need to fix this. Because I slide this over the straps. And then I have this kind of, you know, big tank sitting on my wrist for 30 minutes or whatever. That's what the money should be for, Brian Sozzi, right? It's a very like 1.0 experience of, every three days, I put this hunk of plastic on my wrist for 30 minutes to recharge the Whoop.

Like, let's get this thing charged for a month, two months, three months, four months on end. Because the hardware itself is very primitive. But the software, as you know, it gamifies your sleep, right? It gamifies your life. Even though neither of us are high-level athletes, we want to get green recovery score, so on and so forth. That's what Oura is after. Apple does this with Steps. Fitbit started this. So that is really, I think, the opportunity here. I know--

[INTERPOSING VOICES]

BRIAN SOZZI: You have, historically, at least in the time that we have chatted about it, you've been getting some great recoveries, Myles. My hat's off to you. I don't know how you do it. I don't know how you game the system. But I rarely get any green recoveries. But, you know, to you're point-- and the magic here is that this is a subscription business. I think that's why-- it's unclear how many users they have.

But again, here is a fitness company-- I don't have a subscription for my Apple Watch. It's a one-time purchase, by and large, unless I want to-- excuse me-- pay for an app. This Whoop Strap, I'm paying, what-- we're paying $30 a month--

- $30 a month.

BRIAN SOZZI: Yeah, give us access to this software. But again, to your point, I would like to see a little bit better hardware. This is very much a 1.0 device.

- So, really, three things that it comes down to, Sozzi, for the recovery. One, you've got to be hydrated. You've just got to drink enough water.

BRIAN SOZZI: Not me.

- Two, melatonin. Melatonin is-- two and a half to three hours before I go to sleep, melatonin is the hack. Three, it's got to be cold in the bedroom. And I know that can be challenging.

BRIAN SOZZI: That I have.

- I know it can be challenging in the summer. And it's been a little uneven here with the heat. But if it's cold, and I'm hydrated, and I'm able to take a good hour to sort of unwind before I get in bed, then the heart rate comes down. The heart rate can get into the high 40s on a really good day. The variability gets up to 80 or 90.

And that's how you get green recoveries, my friend.

BRIAN SOZZI: Well, all right, I got to go and buy some melatonin vitamins. Do they sell those? Maybe Whoop should start.

- Oldest trick in the book. Come on, oldest trick in the book.