FitBit CEO: What I'm Going to Do With This $43 Million in Funding
It's hard to ignore: the quantified-self movement has got the start-up world buzzing this year. While big guys like Jawbone and Nike used to get most of the attention, a handful of start-ups are inching in on the booming wearable tech market. One of the higher-profile companies in the space is San Francisco-based FitBit. Founded in 2008, the company, which makes a handful of wearable health tracking devices, has seen steady growth: for example, it went from a modest starter deal with Best Buy to being sold at about 20,000 stores worldwide over the last three-years. Earlier this month, the company, which boasts 180 employees, announced a $43 million funding round bringing its total investment to a reported $96 million.
But continuing to grow in such a crowded market--especially when tech giant Apple could change the game entirely with the rumored launch of an iWatch--is easier said than done. Here, James Park, CEO and co-founder of FitBit talks to Abigail Tracy about how he will use the cash and how he plans to keep the company ahead of the curve.
What were the earliest challenges faced by FitBit?
We shipped our first FitBit in late 2009. We started selling our product on our website and then gradually started adding retailers. Initially, it was a pretty big challenge. It was a totally new product category and it took a lot of work to convince retailers that consumers were going to buy FitBit and that it was a mass market product.
It seems the game has changed since your company's launch?
It’s pretty clear now that the connected health a fitness category is really a mass-market category. People are now talking about connected health and wearable fitness, so there were a lot of investors excited to participate in our funding round.
What are your plans with this latest round of capital?
A lot of people see FitBit as a consumer brand but the other side of our business is selling our products to self-insured employers who distribute our products to their employees in an effort to make them healthier and lower direct health care costs. As a result, corporate wellness will be an investment focus in the coming years.
We will also focus on hiring. To support our growth we need great employees so a lot of the money will be used to expand our company--particularly the engineering department. About two-thirds of our engineering team is focused on software. It’s really the software that people the right motivational tools so we are going to make a lot of investments in the software functionality of our tools and FitBit’s online tools and mobile apps.
Why did you raise a round in the first place?
The problem that faces most hardware companies which is capitalization. Hardware companies are very capital-intensive. That’s why we went out for the series D funding round. I think our recent $43 million round puts us in the position to separate ourselves from the rest of the pack in the category. There is a lot of noise in the category but I think there are very few companies who have raised the capital and have the brand awareness to really succeed.
Steve Murray, a SoftBank Capital partner and new FitBit board member, recently said, “It would be reckless to say that we're not concerned at all about what Apple is doing, but it reminds me a bit of 10 or 15 years ago when people would say 'Well, Microsoft could do that,' about virtually every startup." Are you at all worried about a possible iWatch launch in September?
I don’t think there would be any change in our game plan [if an iWatch comes to market]. We feel pretty confident in our strategy and its really built around our sole focus on health and wellness in the category. We understand the consumer and have focused on the right set of products that really help people achieve their health goals. That has been the backbone of our success for the past six years.