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People are wondering why they'd need to raise so much at this point, so I'll throw in my guess: The consumer health wearables market is one that exploded recen

by kyro 13y ago

People are wondering why they'd need to raise so much at this point, so I'll throw in my guess: The consumer health wearables market is one that exploded recently, but is now at a standstill. We have several companies (Jawbone, Nike, Fitbit) who have been selling well-designed slightly-advanced pedometers for the last few years, and others (eg Basis) that are scheduled to ship similar products very soon. There's been little innovation in this space, but the market is still enormous, and there's a ton of money to be made. Now considering that the current products are more or less equal, the company that will win in the end is the one that can 1) first get to market with a new innovative product, 2) brand it effectively to appeal to a wider audience, and 3) develop an ecosystem around the product that leads to customer lock-in. With these points in mind, it may make the $43 million funding round more sensible. Although one could argue that Nike has the R&D resources to out-innovate its competitors, giving them point 1, Fitbit has also been in this game for a long time. Where FitBit is currently winning is their market and ecosystem. They're marketing to a large segment of the population who just wants to develop healthy and happy living, so they push features like calorie logging and sleep tracking -- features that Nike's products lack. Nike's Fuelband, on the other hand, is geared towards a smaller more athletic market. As for ecosystem, Fibit also offers the Aria scale, which can keep track of an entire family's weights, and a whole line of Fitbit trackers geared towards various lifestyles. And for Jawbone, well, they may have the R&D strength to innovate (I don't know), but they haven't been in this game long enough to get a foothold on a segment of the market, or to develop any sort of ecosystem around their product. At this point, there is no other company that's marketing to a wider audience and that offers both the variety in product as well as complementary offerings than Fitbit. My guess is that investors see that Fitbit is best-positioned to win this race and needed the cash injection to break the stalemate it's currently in with its competitors.

nhangen 13y ago
I think that's a reasonable assumption. My impression of Nike+ is that they could be great products, but Nike seems to lack the interest/agility necessary to iterate and move them forward. It's almost as if they are doing it just for fun. The Aria scale is an awesome concept (can't wait to get one), and I'm sure there is more where that came from. I'm just wondering why they didn't pursue alternative investment. As always, there's probably a significant portion of this round that was used to pay off earlier investors/founders.
auvrw 13y ago
> the company that will win in the end is the one that can ... develop an ecosystem around the product that leads to customer lock-in. but where should the lines of that ecosystem (for all kinds of custom consumer hardware, from thermostats to pedometers to ...) be drawn? fitbit is definitely making room at the lower end for apps <https://www.fitbit.com/apps> https://www.fitbit.com/apps>, but it appears <dev.fitbit.com> they want data to go directly from their hardware to their servers before anyone else's code can touch it. as a developer, of course, it would be nice to get as close to the hardware as possible. i mean, there's no point in releasing the firmware for hardware like this or that nest thermostat since you probably can't even reprogram the things once they're off the line, but could it make (business) sense to have 3rd-party software talk directly to some of these smart appliances, wearable devices, and the like? there was an interesting comment on the post about amazon buying the washington post, the gist of which was that business strategy is sometimes more about betting on some particular future and preparing for it rather than trying to build an entire future unilaterally. for amazon, the example was ubiquitous tablets; for google ubiquitous internet .... both of which are looking like pretty safe bets. but not everyone can buy into the table where they're gambling on this whole "internet-thing" panning out or not, so let's say you were going to wager on wearable fitness devices taking off. (final flog of the metaphor) where would you place ㅛyour chips?
- bluedino 13y ago
  >> it appears <dev.fitbit.com> they want data to go directly from their hardware to their servers before anyone else's code can touch it. The way Fitbit works is they push the data down to you whenever it's updated by the device or user. >> as a developer, of course, it would be nice to get as close to the hardware as possible. In our case it wasn't desired at all - all we want from the device is the data, which we get from the site. Building wellness products where it's so much easier to have the device automatically upload the phone app (bluetooth transfer) or USB dongle on the users PC. Half your problem is getting people to log into a site every day to record their activity. Other vendors such as Pebble require the developer to hit an API for the data and their site can be down for days at a time, without so much as a peep out of them. You think as a company they'd want to treat developers better...
swalsh 13y ago
Just throwing out a guess, but the fact that Qualcomm is putting money in makes me think of the Tricorder chip they were funding not too long ago. Fitbit would be in the perfect position to create a product and market a device that uses it. Edit: Apparently the competition ends 8/30 - http://www.qualcommtricorderxprize.org/ http://www.qualcommtricorderxprize.org/
callmeed 13y ago
Correct. It's not a guess: they need to own the market If any space qualifies for Ben Horowitz's "Fat Startup" model, it's this one. [1] Also, Nike is a public company with a $58B market cap. They can burn through money, lose, and still not care. Jawbone has raised 2x as much money but (I think) they can still succeed outside of the health space. [1] http://allthingsd.com/20100317/the-case-for-the-fat-startup/ http://allthingsd.com/20100317/the-case-for-the-fat-startup/
seivan 13y ago
I almost made the mistake of joining a calorie counting startup that didn't grasp this. Luckily I scared them.
swamp40 13y ago
Thank you, that's a great analysis.
kiisupai 13y ago
My bets are on the first company that manages to include a working heart-rate monitor into their product. Inexpensively.

by kyro 13y ago

nhangen 13y ago

I think that's a reasonable assumption. My impression of Nike+ is that they could be great products, but Nike seems to lack the interest/agility necessary to iterate and move them forward. It's almost as if they are doing it just for fun. The Aria scale is an awesome concept (can't wait to get one), and I'm sure there is more where that came from. I'm just wondering why they didn't pursue alternative investment. As always, there's probably a significant portion of this round that was used to pay off earlier investors/founders.

auvrw 13y ago

> the company that will win in the end is the one that can ... develop an ecosystem around the product that leads to customer lock-in. but where should the lines of that ecosystem (for all kinds of custom consumer hardware, from thermostats to pedometers to ...) be drawn? fitbit is definitely making room at the lower end for apps <https://www.fitbit.com/apps> https://www.fitbit.com/apps>, but it appears <dev.fitbit.com> they want data to go directly from their hardware to their servers before anyone else's code can touch it. as a developer, of course, it would be nice to get as close to the hardware as possible. i mean, there's no point in releasing the firmware for hardware like this or that nest thermostat since you probably can't even reprogram the things once they're off the line, but could it make (business) sense to have 3rd-party software talk directly to some of these smart appliances, wearable devices, and the like? there was an interesting comment on the post about amazon buying the washington post, the gist of which was that business strategy is sometimes more about betting on some particular future and preparing for it rather than trying to build an entire future unilaterally. for amazon, the example was ubiquitous tablets; for google ubiquitous internet .... both of which are looking like pretty safe bets. but not everyone can buy into the table where they're gambling on this whole "internet-thing" panning out or not, so let's say you were going to wager on wearable fitness devices taking off. (final flog of the metaphor) where would you place ㅛyour chips?

bluedino 13y ago
>> it appears <dev.fitbit.com> they want data to go directly from their hardware to their servers before anyone else's code can touch it. The way Fitbit works is they push the data down to you whenever it's updated by the device or user. >> as a developer, of course, it would be nice to get as close to the hardware as possible. In our case it wasn't desired at all - all we want from the device is the data, which we get from the site. Building wellness products where it's so much easier to have the device automatically upload the phone app (bluetooth transfer) or USB dongle on the users PC. Half your problem is getting people to log into a site every day to record their activity. Other vendors such as Pebble require the developer to hit an API for the data and their site can be down for days at a time, without so much as a peep out of them. You think as a company they'd want to treat developers better...

swalsh 13y ago

Just throwing out a guess, but the fact that Qualcomm is putting money in makes me think of the Tricorder chip they were funding not too long ago. Fitbit would be in the perfect position to create a product and market a device that uses it. Edit: Apparently the competition ends 8/30 - http://www.qualcommtricorderxprize.org/ http://www.qualcommtricorderxprize.org/

callmeed 13y ago

Correct. It's not a guess: they need to own the market If any space qualifies for Ben Horowitz's "Fat Startup" model, it's this one. [1] Also, Nike is a public company with a $58B market cap. They can burn through money, lose, and still not care. Jawbone has raised 2x as much money but (I think) they can still succeed outside of the health space. [1] http://allthingsd.com/20100317/the-case-for-the-fat-startup/ http://allthingsd.com/20100317/the-case-for-the-fat-startup/

seivan 13y ago

I almost made the mistake of joining a calorie counting startup that didn't grasp this. Luckily I scared them.

swamp40 13y ago

Thank you, that's a great analysis.

kiisupai 13y ago

My bets are on the first company that manages to include a working heart-rate monitor into their product. Inexpensively.