When we founded Tidepool in 2013 (yes, that’s right - it’s been 11 years!), we had a few simple goals:
This desire grew out of my personal frustration: After my child was diagnosed with T1D in 2011, there was no way for me to see their Medtronic insulin pump and Dexcom CGM data in one place at one time, and I wasn’t OK with that. I found a bunch of other people who felt just like I did, and we decided to form Tidepool as a nonprofit organization to do something about it. (You can read more about why we made the open-source and nonprofit decisions here.)
From 2013 through 2021, our simple approach worked. We slowly but surely added new devices to the platform, eventually supporting every major brand of insulin pump, continuous glucose monitor, and blood glucose meter available in the US.
Over that time period, we also made the Tidepool Data Platform available at no cost, for everyone. That just felt like the right thing to do in support of our mission. It also turned out that we did a really good job of building software that people loved, both people with diabetes AND their healthcare providers.
Then a crazy, sad, and awful thing happened: there was a global pandemic.
While the use of the Tidepool Data Platform had been growing steadily prior to 2020, once the COVID-19 lockdown started, we saw a dramatic jump in the use of the Tidepool Data Platform. Instead of adding 1,000-2,000 new patients per month (which we thought was pretty awesome), all of a sudden, we were adding 5,000-10,000 new patients/PwDs per month. And that growth did not stop. In 2023, it was not uncommon for us to add 20,000-30,000 new patients/PwDs per month. That trend continues in 2024.
During the craziness of the pandemic, a few other things became clear, ultimately leading us to the decision to expand the offering of the Tidepool Data Platform to include a premium tier, in particular for larger clinics and health systems:
Fortunately, we are a very cost-effective and efficient organization. We are a completely virtual and remote team, meaning we can hire people wherever they are. We have no physical property expenses like rent. About 85% of our operating expenses are people-related (salary and benefits). The rest of our expenses are server costs, insurance, and software tooling. We manage all of this very carefully, as you can see in our publicly available finances.
We’re pretty proud of this: Tidepool is currently developing and supporting two complete and important FDA-regulated product lines:
We do all this with a mighty team of more than 50 people. Given our growth and all that we have to do, we expect to continue expanding as 2024 progresses. (Be sure to check out tidepool.org/jobs if you are interested in joining us!)
Our current operating budget is approximately $10M per year. Over time, our goal is to cover 85% of this with Earned Income, that is, mission-related revenue generated by selling our products. The remaining 15% will be from philanthropic activities from foundations, individual donors, and other grant-making organizations.
So, why share all of this detail? Well, for starters, that’s just what we do. We are a radically transparent organization—always have been and always will be. Radical transparency is a core value of ours. We think it’s a better way to operate because it allows the community to give us feedback on what we do. We like this.
But the bottom line is this: In order to keep doing what we are doing, AND to keep growing our impact, AND to rely less on philanthropy and grants as a source of operating income, we have decided to start generating additional revenue by charging some clinics for use of the Tidepool Data Platform.
Here’s how it will work:
At this point, you probably have some very specific follow up questions.
A: Making a conversion to a new for-profit entity, or spinning up a for-profit subsidiary (similar to Mozilla or OpenAI) is always a possibility. However, Tidepool’s motivation for staying a 501(c)(3) nonprofit organization are strong:
We believe that being a nonprofit organization helps us stay focused on the needs of the diabetes community. Conversely, for-profit entities have fiduciary responsibilities to their investors and shareholders that may not always align with the best interests of the diabetes community.
Don’t get us wrong: Being a nonprofit is tough. But by generating revenue that supports our mission, we are well positioned to be self-sustaining, which will allow us to shift philanthropic dollars towards expanding equity and access programs for underserved populations and clinics.
A: Tidepool has always believed that diabetes is largely a self-managed disease and that we should do everything we can to empower and inform PwDs by liberating their diabetes data and making it accessible and meaningful.
That said, many people with diabetes get their care from both primary care and specialty clinics, and those clinics also need access to that diabetes data to provide care.
We’ve also seen a dramatic shift towards remote patient care and monitoring (RPC and RPM). This was starting to happen before 2020 and was dramatically accelerated during the COVID-19 pandemic when telemedicine became very popular very quickly.
We will continue to encourage clinics to share the data that they have with their patients and continue to believe that PwDs own their own data. This is one of Tidepool’s core values.
A: The idea that nonprofit organizations are not allowed to sell things or generate revenue is a common misconception. We often remind people that the Girl Scouts of America sell A LOT of cookies.
Generating revenue as a nonprofit organization is allowable and encouraged! That revenue must go towards supporting the mission and operations of the nonprofit organization. No investors may make a return on their investment. As long as the revenue is aligned with the mission of the organization, it is not considered “unrelated business income,” which is taxable.
In the case of the Girl Scouts, selling cookies is aligned with their mission of teaching entrepreneurship.
In the case of Tidepool, selling Tidepool+ Professional aligns with our mission of serving the diabetes community and making diabetes data accessible, actionable, and meaningful.
A: We aren’t there yet, but we are on a good path. Our financial records are publicly available, where you can see that in some years, we have generated up to 65% of our operating budget as “Earned Income” revenue. I think of “earned income” as “real revenue,” where clinics and device companies are giving us money in exchange for the value that we deliver to them.
We also generate revenue from private philanthropy (individual donors) and grant-making organizations. This revenue is not considered “Earned Income”.
Based on our current projects and sales projection, we hope to be a self-sustaining organization that generates 85% of our revenue via Earned Income within 3 years. The remaining 15% of revenue will still come from philanthropic activities and will fund expanding the reach of our efforts to underserved populations.
While we wish that we had infinite financial resources that would allow us to continue to provide Tidepool’s software and service at no cost indefinitely, we hope you understand that this does not match the reality of what is needed for us to be self-sustaining and less reliant on philanthropic funding as we grow.
We are so grateful to you all for your support over the years and hope you’ll agree that this is the right time for us to make this change so that we can continue to expand our support for the diabetes community.
Cheers,
Howard
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