How a wooden box was bought by Google for $2.1bn


Fitbit’s launch of the Charge 4 comes at a huge time for the company. Its buyout by Google means the Fitbit Charge 4 could be the last device from the current order.

How Google’s ownership will affect the company is truly anyone’s guess. In fact, the deal is still being examined by the Justice Department, so it might not happen at all. And that could put Fitbit in a precarious position.

But as Fitbit goes through this major change, we’ve taken a look at how it all started. How Fitbit broke through the wearable tech arms race to become a household name, achieve a $4.1bn IPO in 2015, and what happened next.

Fitbit’s gone from hopeful startup to a tech powerhouse in just a few years. But how did it get here? Like all good stories, this one involves triumph, terror and even a little bit of sex.

Update: This article was originally published in 2016. We’ve updated it with more of Fitbit’s recent history

The beginning

James Park

Fitbit was founded in early 2007 by James Park and Eric Friedman, who saw the potential for using sensors in small, wearable devices. They raised $400,000 but soon realised that that wasn’t enough, so they did the rounds of potential investors with little more than a circuit board in a wooden box.

But the idea was good, and when Fitbit addressed the TechCrunch 50 conference on 9 September 2008, Park and Friedman hoped to get 50 pre-orders, although Eric suspected the actual number would be nearer five.

In fact, in one day, they took 2,000 pre-orders.

Getting orders was the easy bit. Neither Park nor Friedman had any manufacturing experience. As Park recalled in an interview with Jeff Clavier at the Computer History Museum.

Fitbit Ultra

Fitbit Ultra (2011)

“Several times, we were pretty close to being dead. Seven times we were close to death. We probably spent about three months in Asia looking at suppliers, bringing up production lines.”

There were problems with their design, too: the antenna wasn’t working properly. “In my hotel room I was thinking this is it,” Park said. “We’re done. We literally took a piece of foam and put it on the circuit board to fix an antenna problem.”

Fitbit launched its tracker at the end of 2009, shipping around 5,000 units with a further 20,000 orders on the books.

Because Fitbit was selling its product directly to customers, those 5,000 units were sold with “pretty darn good” profit margins – but Park and Friedman knew that to shift big numbers, they’d need big partners.

They raised more money from venture capitalist Brad Field, teamed up with Best Buy to reach four, then 40, then 650 Best Buy stores, and Fitbits are now sold in thousands of retail outlets worldwide.

Don’t stop movin’

Fitbit Flex - 2013 (right) and Flex 2 - 2017 (left)

Fitbit Flex – 2013 (right) and Flex 2 – 2017 (left

One of the reasons for Fitbit’s ongoing success is its investment in new models.

The first tracker was pretty good, but in 2011 Fitbit improved it by adding an altimeter, a digital clock and a stopwatch. That was the Ultra.

The following year, the Fitbit One and the Fitbit Zip were the first wireless fitness trackers to use Bluetooth 4.0 / Bluetooth Smart, with the former tracking steps, distance, floors climbed, calories burned and sleep patterns while the more minimalist Zip tracked steps, distance and calories. Both devices synced to both iOS and Android phones as well as the Fitbit website.

Fitbit Force

Fitbit Force (2013)

The following year, Fitbit moved to the wrist with the Fitbit Flex and Fitbit Force, but it wasn’t entirely successful: some Force customers reported that the band was irritating their skin, an issue that was most likely due to allergic reactions to nickel, and the product was recalled in early 2014.

Some 9,900 customers were reportedly affected, and the Force was replaced with the supposedly non-irritating Fitbit Charge and Charge HR – although allergies appear to be an ongoing irritation for Fitbit, with complaints coming in about the duo – with the company forced to blame hygiene issues.

Too much information

Fitbit Charge 2014 (left) and Fitbit Charge 2 2015 (right)

Fitbit Charge 2014 (left) and Fitbit Charge 2 2015 (right)

From the very beginning, one of Fitbit’s strengths was its website: you’d upload information from your Fitbit device to the web so you could analyse your performance and share it with other Fitbit users.

In 2011, however, that caused a little bit of a problem: it turned out that users who recorded their sexual activity (in terms of time spent, not what they spent the time doing) were unwittingly sharing that information with the world, and with Google.

Fitbit realised that “share all my stuff with everyone” wasn’t the best default option, and it changed its site so that user information would be private by default. Stand-alone fitness trackers were iPods in a world moving to iPhones.

One of the problems of being an innovator is that you can end up at the forefront of issues you might not have considered, and in the case of Fitbit one of those issues is privacy.

Health data recorded by Fitbit isn’t legally protected in the way normal medical records are, and that means Fitbit’s data can be subpoenaed by the relevant authorities.

Fitbit data has already been used in court. In December 2014, a personal injury lawyer in Canada used Fitbit data in what’s believed to be the first case of its kind.

The client was a personal trainer who claimed she was unable to work normally after an accident, and she shared her Fitbit data voluntarily to support her claim; however, there’s no obvious reason why a lawyer wouldn’t request such data to use against a defendant either.

In 2016, data from a Fitbit Surge was used to prove that a woman had lied about being sexually assaulted.

Fitbit vs the world (and Jawbone)

Jawbone vs Fitbit

Fitbit Charge HR vs Jawbone UP3

In August 2014, US Senator Charles “Chuck” Schumer singled out Fitbit as a “privacy nightmare” and – in all-caps – declared that “WITHOUT THEIR KNOWLEDGE, FITBIT BRACELETS & SMARTPHONE APPS ARE TRACKING USER’S MOVEMENTS AND HEALTH DATA THAT COULD BE SOLD TO THIRD PARTIES.”

Schumer demanded that the US Federal Trade Commission regulate fitness trackers, although in its response Fitbit pointed out that the firm didn’t sell data to third parties and said it would “welcome the opportunity to work with Senator Schumer on this important issue.”

Fitbit Alta - 2016 (left)

Fitbit Alta – 2016 (left)

The firm has since made its privacy policy clearer and hired lobbying firm Podesta + Partners to work with politicians on privacy and healthcare issues. Schumer said was delighted, and that customers should “be aware that this company cares very much about their privacy and their security… we are urging all other fitness-tracking companies to follow Fitbit’s lead”.

Since its decision to go public was announced, the company became embroiled in two lawsuits in 2015, pursued by big rival Jawbone, over its sleep tracking claims by a consortium of claimants and heart rate data accuracy came under scrutiny.

However, Jawbone soon pulled out of the wearables market, and claims were settled in 2017.

Tanks on the lawn

Fitbit Blaze (2016) was a first stab at a smartwatch. The Surge (right) was its 2016 running watch

Fitbit Blaze (2016) was a first stab at a smartwatch. The Surge (right) was its 2016 running watch

But the introduction of the first Apple Watch into the wearable tech space put tanks firmly on Fitbit’s lawn, and the company was slow to react to the consumer shift to smartwatches.

What’s more, it wasn’t just Apple playing in Fitbit’s backyard.

Xiaomi, which launched its first Mi Band in 2015, has also become a thorn in Fitbit’s side, offering comparative features at a fraction of the price. It’s launched five devices in that time, most available for around $30 – with the Mi Band 5 expected imminently.

And Fitbit felt the effect. In 2018 revenues started tumbling, and despite the Fitbit Versa setting a record for the fastest selling product in the company’s history, the follow up Versa Lite was not a financial success.

And with Apple and Samsung aggressively owning the smartwatch world, Fitbit’s market share has ebbed.

Acquisitions

Fitbit Versa (2018)

Fitbit Versa (2018)

It soon became apparent that smartwatches would eat the fitness tracker market – and Fitbit was exposed. So next came a series of acquisitions aimed at bringing the right technology on board.

The main additions was smartwatch start-up darling and Kickstarter superstar Pebble for just $23 million, which had itself run out of stream against the powerhouses of Apple and Samsung. The company would have been work 10x that just a few years before.

And then followed Vector – a Romanian start-up closely linked to the Swiss watch world. It had made breakthroughs in battery life, which would enable Fitbit’s Versa to compete with the Apple Watch on battery life, offering seven days as opposed to 24 hours.

Google Buyout

Fitbit Charge 4

Fitbit Charge 4 (2020)

But the next move for Fitbit took everyone off guard. Rumours and whispers quickly turned into an announcement that Google was to buy Fitbit. Perhaps a union of the weakened, Google has not managed to get traction with Google Fit and Wear OS has stuttered – leaving the company well behind Apple in terms of health care ambitions.

Fitbit, therefore, is a natural fit. It brings the user base and the health and fitness knowledge – and a hardware operation Google has always struggled to harness.

And Google brings the financial clout that Fitbit needs to progress to the next level – and perhaps the two could take on the might of Apple Health.

But it’s not a done deal yet. The merger is subject to Justice Department scrutiny, and questions around Google’s acquisition of health data won’t go away, which means the next chapter of Fitbit’s history is yet to be written.



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