Fitbit Raises $43 Million(techcrunch.com)
techcrunch.com
Fitbit Raises $43 Million
http://techcrunch.com/2013/08/13/fitbit-43m/
57 comments
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/
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/
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.
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.
> 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>, 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?
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>, 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?
>> 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...
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...
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/
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/
My bets are on the first company that manages to include a working heart-rate monitor into their product. Inexpensively.
I almost made the mistake of joining a calorie counting startup that didn't grasp this. Luckily I scared them.
Thank you, that's a great analysis.
How much have they raised so far? According Crunchbase, around 96 million. http://www.crunchbase.com/company/fitbit
This means they need to exit at a 'cool billion' or IPO in order to provide the return their investors are seeking.
I think Fitbit is cool, but 1b for a product that has no demonstrable uniqueness would scare the hell out of me as a founder.
I'd love to know why they went for so much.
This means they need to exit at a 'cool billion' or IPO in order to provide the return their investors are seeking.
I think Fitbit is cool, but 1b for a product that has no demonstrable uniqueness would scare the hell out of me as a founder.
I'd love to know why they went for so much.
I agree with your math of $1b + exit. I don't think that's unreasonable. They are probably the current leader in terms of brand/mindshare. Nike's success is so/so on electronic devices so they're formidable but not overly scary. And the market is HUGE when you think of the $$'s being spent to fight obesity in healthcare and stay in shape in fitness. Lastly, anytime you can have this type of intimate relationship with the consumer ("I agree to wear you around and share a lot of personal data with you") the upside is pretty exciting.
My guess? They need more funding to pump out fitbits faster. The flex is about a 6 week back-order to get one right now. Sold out everywhere. Prices is inflated on ebay as well.
If that were the case they should of asked for bank financing. Working capital financing is extremely cheap, and VC equity is at least two orders of magnitude more expensive. Why would anyone want to dilute equity for the company's working capital needs?
1b for a product that has no demonstrable uniqueness
Sometimes marketing is demonstrable uniqueness. Pedometers have been around a long time, it's the whole package that makes Fitbit shine. (I have a Fitbit One and I love it.)
I agree they are swinging for the fences though.
Sometimes marketing is demonstrable uniqueness. Pedometers have been around a long time, it's the whole package that makes Fitbit shine. (I have a Fitbit One and I love it.)
I agree they are swinging for the fences though.
That's a good point. I don't have one, but I do wear a Nike Fuel Band, which I like a lot. My complaint, and we've seen this on Kickstarter, is that anyone can make one of these things.
>> "I think Fitbit is cool, but 1b for a product that has no demonstrable uniqueness would scare the hell out of me as a founder."
True + they're competing against Nike. In fitness. That's a tough big competitor with a lot of resources.
True + they're competing against Nike. In fitness. That's a tough big competitor with a lot of resources.
Everyone mentions Nike, but no one says Garmin. Perhaps it's just my background, but I see the influx of phone and phone-connected solutions as eating Garmin's lunch. Their solutions (including wearables) still probably have the edge in precision and battery life ... but Fitbit and the upward growth of pedometers is disruption for them.
Fitbit is a profitable company, they're using the money to expand the company faster.
You say they are not unique, yet cite no competitors. Do you know of any, without googling for it even?
Jawbone has a competing product, and even Samsung Galaxy S4's latest phone includes some of the functionality (ie: a pedometer) people look to Fitbit for.
My anecdotal experiences with GS4 vs my Fitbit One shows the Fitbit One to be superior, but I'm more likely to forget my Fitbit than I am to forget my phone.
My anecdotal experiences with GS4 vs my Fitbit One shows the Fitbit One to be superior, but I'm more likely to forget my Fitbit than I am to forget my phone.
iPhone has an app called Moves which is remarkably accurate (http://www.moves-app.com/). I'm getting fairly similar results from my jawbone. I believe the discrepancy is due to the fact that I don't have the phone on me when I'm at home.
Moves eats your battery quite a bit.
Nike Fuelband and Jawbone
Yep, as others have said, Nike Fuelband (I own one, as does my wife), Jawbone, a variety of iOS and Android apps. Tons of new Kickstarter projects, etc.
Gave my dad a fit bit. He now exercises much more.
That's why they are in business.
That's why they are in business.
This is such a perfect comment. You completely sum up their business in 11 words.
In the future, I hope they partner with hospitals/medicare to provide fitbits for free. There's immense savings in preventative medicine.
A lot of people don't see the potential for movement trackers beyond counting steps. By looking at the data, you can identify when a person is beginning to get sick or weak before they even feel symptoms.
One such startup working on the data problem: http://ginger.io/
In the future, I hope they partner with hospitals/medicare to provide fitbits for free. There's immense savings in preventative medicine.
A lot of people don't see the potential for movement trackers beyond counting steps. By looking at the data, you can identify when a person is beginning to get sick or weak before they even feel symptoms.
One such startup working on the data problem: http://ginger.io/
I'm sure my company is not alone in offering a wellness program with incentives that include reduced health insurance premiums for increased/consistent physical activity and preventive care. How do they know you performed physical activity -- they issue you a pedometer or allow you to connect your Garmin/MapMyFitness/Fitbit/MyFitnessPal/etc account to the program. It's brilliant, and the $0-75/mo employees can save on insurance is a strong motivator, as is the $50/mo gym reimbursement (as long as you connect your account to the wellness system and visit at least 4x/mo), and other perks.
What I would really like to see is an open standard for data formatting, similar to the IPC 2547 CAM-X series of standards for industrial equipment output, so it'd be easy for 1) developers and 2) consumers to shop around without worrying about losing their historical activity information. As you mention, this is a serious consideration for everyone, and it's incredibly annoying to feel locked in just because you can't get your data out (or even better, out and then into the next system). A personal example: I really like Runtastic and I have a couple hundred miles logged over the last few months. However, it's a European company and not nearly as popular in the US as Endomondo, Runkeeper, MapMyFitness and a few others. This means I'm missing out on the social aspect, which itself is a motivator. I'd like to try out some other apps, but I can't import my Runtastic data. Argh. (Runtastic is really great, btw.)
What I would really like to see is an open standard for data formatting, similar to the IPC 2547 CAM-X series of standards for industrial equipment output, so it'd be easy for 1) developers and 2) consumers to shop around without worrying about losing their historical activity information. As you mention, this is a serious consideration for everyone, and it's incredibly annoying to feel locked in just because you can't get your data out (or even better, out and then into the next system). A personal example: I really like Runtastic and I have a couple hundred miles logged over the last few months. However, it's a European company and not nearly as popular in the US as Endomondo, Runkeeper, MapMyFitness and a few others. This means I'm missing out on the social aspect, which itself is a motivator. I'd like to try out some other apps, but I can't import my Runtastic data. Argh. (Runtastic is really great, btw.)
> How do they know you performed physical activity -- they issue you a pedometer or allow you to connect your Garmin/MapMyFitness/Fitbit/MyFitnessPal/etc account to the program. It's brilliant, and the $0-75/mo employees can save on insurance is a strong motivator
I don't like it, and would not participate. Why should someone who is fit and healthy have to carry a tracking chip to avoid a $75/mo fee? Aside from the privacy concern, anyone with 5 minutes to devote to the problem can beat the system.
I don't like it, and would not participate. Why should someone who is fit and healthy have to carry a tracking chip to avoid a $75/mo fee? Aside from the privacy concern, anyone with 5 minutes to devote to the problem can beat the system.
I'm really interested in an open standard too. If anyone's up for getting involved, my email is in my profile.
As a counter-anecdote I purchased 2 fitbit ultras, and the aria scales and had nothing but trouble with all of them.
The fitbit ultra has a design flaw that means that if you wear them in a trouser pocket and then cycle, that they can deal with the twisting flexing motion. This results in popping the plastic case open and exposing the internals (electronics) to the elements, thus rendering them useless in all but fine weather when you're walking.
The aria scales have a fundamental design flaw that makes them incompatible with small apartments/flats. They expect to be stored flat, and calibrate over several weigh-ins. If you really have a small apartment, and small bathroom (as nearly everyone in London that I know of does) then you need to store them upright and lay them flat to use them.
The effect of that is that they never calibrate and weigh-ins seconds apart where they have been upright in-between can vary by as much as +/- 1.5kg on every weight-in. This makes them absolutely useless as scales... even if the accuracy wasn't there, consistency would have still left us with a predictability that allowed them to have some utility.
I tried to `reach out` to Eric (the founder) in addition to the support people about both issues, including reproducible steps to demonstrate the design assumptions that rendered the scales useless.
I feel to this day that they released a little tested alpha product and not a finished one. All I got back was an automatic offer to replace with a new one, and later (I was insistent they had a design flaw and clear about the effects of it) an acknowledgement that they were not going to update the firmware of the scales to pre-calibrate each weigh-in (which is what every other electric scale I've ever seen actually does).
My investment in every fitbit product turned out to be a waste of my money and time.
My investment in time, trying to tell them the issues as someone who cared about them getting it right turned out to be a waste too.
I tried the quantified self with fitbit and their version of it failed spectacularly.
I now strongly recommend Nike and Withings to everyone who will listen. I should point out I run one of the largest cycling web-sites in the world and this testing was done very publicly, 36,000 cyclists now know not to touch fitbit. I wanted fitbit to win, and that was why I so cockily did tried their range publicly. Nike and Strava (with Android) are the big winners within that community, with a few nods to Jawbone Up. Fitbit was tried by others with similar experience to mine... everyone I know who touched a fitbit has given away, for free, their fitbit hardware. It's worthless to us.
The fitbit ultra has a design flaw that means that if you wear them in a trouser pocket and then cycle, that they can deal with the twisting flexing motion. This results in popping the plastic case open and exposing the internals (electronics) to the elements, thus rendering them useless in all but fine weather when you're walking.
The aria scales have a fundamental design flaw that makes them incompatible with small apartments/flats. They expect to be stored flat, and calibrate over several weigh-ins. If you really have a small apartment, and small bathroom (as nearly everyone in London that I know of does) then you need to store them upright and lay them flat to use them.
The effect of that is that they never calibrate and weigh-ins seconds apart where they have been upright in-between can vary by as much as +/- 1.5kg on every weight-in. This makes them absolutely useless as scales... even if the accuracy wasn't there, consistency would have still left us with a predictability that allowed them to have some utility.
I tried to `reach out` to Eric (the founder) in addition to the support people about both issues, including reproducible steps to demonstrate the design assumptions that rendered the scales useless.
I feel to this day that they released a little tested alpha product and not a finished one. All I got back was an automatic offer to replace with a new one, and later (I was insistent they had a design flaw and clear about the effects of it) an acknowledgement that they were not going to update the firmware of the scales to pre-calibrate each weigh-in (which is what every other electric scale I've ever seen actually does).
My investment in every fitbit product turned out to be a waste of my money and time.
My investment in time, trying to tell them the issues as someone who cared about them getting it right turned out to be a waste too.
I tried the quantified self with fitbit and their version of it failed spectacularly.
I now strongly recommend Nike and Withings to everyone who will listen. I should point out I run one of the largest cycling web-sites in the world and this testing was done very publicly, 36,000 cyclists now know not to touch fitbit. I wanted fitbit to win, and that was why I so cockily did tried their range publicly. Nike and Strava (with Android) are the big winners within that community, with a few nods to Jawbone Up. Fitbit was tried by others with similar experience to mine... everyone I know who touched a fitbit has given away, for free, their fitbit hardware. It's worthless to us.
Its also mischaracterized as a capital purchase.
Lets see, my wife has washed hers (got a "free" replacement) and somehow it ended up under the car and narrowly escaped crushing, and narrowly escaped washing a couple times.
Mine has been washed once and still works. The key seems to be immediate bake out in the dryer. Take it out of the washer and start fooling with it and its toast, corroded in a couple hours.
Its probably a little more disposable than exercise shoes. The Nike competitor is a good pairing.
The scale is out of place. I'm not sure how it can be value engineered to require annual replacement. So far, its just doing its thing.
If their business model revolves around reselling every year (or not) then one of the products has to go.
Probably all they had to do to secure funding was show stats from the bracelet model, where it was available for about 2 days and perma-sold-out since. Obviously there's demand...
Lets see, my wife has washed hers (got a "free" replacement) and somehow it ended up under the car and narrowly escaped crushing, and narrowly escaped washing a couple times.
Mine has been washed once and still works. The key seems to be immediate bake out in the dryer. Take it out of the washer and start fooling with it and its toast, corroded in a couple hours.
Its probably a little more disposable than exercise shoes. The Nike competitor is a good pairing.
The scale is out of place. I'm not sure how it can be value engineered to require annual replacement. So far, its just doing its thing.
If their business model revolves around reselling every year (or not) then one of the products has to go.
Probably all they had to do to secure funding was show stats from the bracelet model, where it was available for about 2 days and perma-sold-out since. Obviously there's demand...
This sounds more like carelessness if anything.
I've head the Fitbit Classic for about 2 years now and it's still going strong. I shower and swim with my Flex and it's still working too.
I've head the Fitbit Classic for about 2 years now and it's still going strong. I shower and swim with my Flex and it's still working too.
You'll find me trying to walk at odd times of the day to hit my 10,000 steps.
Maybe my understanding of a "Startup" is wrong, can someone explain to me how a company founded in 2007 is still considered a startup?
The term "startup" is many times used for:
- Marketing: you get plenty of free press if you are a "startup" vs a medium sized business.
- Hiring: new hires and many hardworking people want to work in a cool and hip company. The use of "startup" creates that halo.
- Capital structure and financial discipline: there is nothing wrong if a "startup" isn't generating revenue and/or profits, because "we are in the growth stage". A medium sized business which isn't generating any revenue and/or profits isn't financeable and a shipwreck waiting to happen.
- Marketing: you get plenty of free press if you are a "startup" vs a medium sized business.
- Hiring: new hires and many hardworking people want to work in a cool and hip company. The use of "startup" creates that halo.
- Capital structure and financial discipline: there is nothing wrong if a "startup" isn't generating revenue and/or profits, because "we are in the growth stage". A medium sized business which isn't generating any revenue and/or profits isn't financeable and a shipwreck waiting to happen.
One definition of a startup is a company (person or business) that is still looking for product/market fit. I'd argue that you're a startup until you've found product/market fit and have found a verifiable profit generation mechanism in which you can put $10 in and get $10+ dollars out reliably.
Agreed - I once worked for a startup that had been around for 9 years - definitely defeats the purpose. I can't figure out how they raised that much with all the other competitors in the market with much bigger brand awareness - i.e. Nike's fuelband - yes the products differ but in theory do the same.
As another person commented, I know far more people with Fitbit's than any other device. They kind of hit a lot of sweet-spots with their product. I do however also know a couple people with the Nike product.
From there down I expect the competitors for those two split the remaining market-share up into tiny bits.
From there down I expect the competitors for those two split the remaining market-share up into tiny bits.
Yeah, back when they launched this tech was much more cutting edge. Now more and more devices can offer the same types of features.
I know more people with Fitbit's than Nike Fuelbands. Obviously anecdotal, but definitely surprising for me.
There's this handy definition: http://www.paulgraham.com/growth.html
I have a fitbit and enjoy it. I'd easily buy a second bracelet if it measured pulse or blood pressure periodically throughout the day.
Quantified self FTW.
Quantified self FTW.
if it measured pulse or blood pressure periodically
I'm with you on this suggestion. Though, I would really get excited if a device like this could somehow gather metrics from the blood stream without needing direct access. Pie in the sky, I know.
If pedometers get people to exercise more, I wonder how a real-time cholesterol monitor would change peoples' eating behavior?
I'm with you on this suggestion. Though, I would really get excited if a device like this could somehow gather metrics from the blood stream without needing direct access. Pie in the sky, I know.
If pedometers get people to exercise more, I wonder how a real-time cholesterol monitor would change peoples' eating behavior?
I'd love a device like this, but until it understands that cycling is not driving mode, it's pointless for me.
(I think I heard about someone tying it to his shoe when cycling; I'd be interested to know if that kind of thing actually works.)
(I think I heard about someone tying it to his shoe when cycling; I'd be interested to know if that kind of thing actually works.)
The fitbit one came with this velcro sleep wristband.
http://www.blogcdn.com/www.engadget.com/media/2011/10/fitbit...
When I want to ride, I take my fitbit out and put it into the velcro band and tie it around my ankle. It works surprisingly well, registering approximately each pedal stroke as a step. I register around 8,000 steps for a 15-mile bike ride. Since a 15 mile ride is a lot more exercise than 8,000 steps, I'll also mark in the app that I went cycling, and that's that.
When I want to ride, I take my fitbit out and put it into the velcro band and tie it around my ankle. It works surprisingly well, registering approximately each pedal stroke as a step. I register around 8,000 steps for a 15-mile bike ride. Since a 15 mile ride is a lot more exercise than 8,000 steps, I'll also mark in the app that I went cycling, and that's that.
The Garmin Vector is very cool for cyclists: http://sites.garmin.com/vector/
The $1699.99 price tag (plus cost of a matching unit) is the issue.
The $1699.99 price tag (plus cost of a matching unit) is the issue.
ouch. Thanks for the info! I can always just use an iPhone app to track GPS - the MapMy[Run|Cycle] series seems to do OK at this, including factoring in gradients, but I want the convenience of something like a fitbit so I don't have to mess around configuring it every time I want to do some exercise.
Got myself a Fitbit this month.
Makes me take so much walks. All I want is to fill those 5 little stars to have it rumble on my wrist as if I had a level.
...
Fitness too.
But levels, really. I'm grinding so much.
Makes me take so much walks. All I want is to fill those 5 little stars to have it rumble on my wrist as if I had a level.
...
Fitness too.
But levels, really. I'm grinding so much.
I hope that they use this money to fuel the development of new innovative products. I have a Fitbit One and want to see this company succeed. It seems like Fitbit and Jawbone are going head to head trying to out dazzle and out create each other.
Hope they use this to invest in customer service. I've been infinite-looped on their automated support line three times.
If you don't have your fitibit yet, get a 3D preview here! https://sketchfab.com/show/rtKMNxtTBPh5dA70gdt81nxipgx
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.