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| Where it began for the entrepreneurial spirit behind the Pebble smart watch |
In the early 2000s Eric Migicovsky was a kid with a vision.
Not to change the world with wearable technologies -- that would come a few
years later – but, instead, to unseat the monopoly of his high school cafeteria.
Why should they be the only ones able to sell food to a thousand plus hungry
teenagers, he thought? So he did what any young entrepreneurial spirit would
do: he set up an unofficial cafeteria in his locker. There, between classes, he hawked items he’d
bought at Costco. Better selection, more
convenient location, and the kids got to deal with one of their friends as
opposed to the hairnetted people in the caf. “And it was a cash only business”, remembers Migicovsky. Things were
going so well that another student cottoned on to the scheme and started up a
rival cafeteria in his locker. The
unusual congregating around the two lockers in between classes eventually
caught the attention of school administration and the market solution to
limited food choices in the high school hallways was over.
But for Migicovsky it was really just the beginning. After
graduating from Sir Winston Churchill Secondary in Vancouver he hit the road
for the University of Waterloo, in Southern
Ontario. The school is sometimes referred to as the MIT of Canada and is perhaps best
known as the home of the Blackberry, which, in the first decade of the 2000s, was the
company leading the global mobile revolution. While in the Systems Design Engineering program at Waterloo, Migicovsky started
a just for the heck of it project, something that would help him not miss any
emails or text messages while he was riding his bike. The project eventually
turned into the Pebble watch,
ended up beating the Apple’s iWatch to market by several years, has since sold hundreds
of thousands of units, and got there by raising a record-breaking $10 million
on the crowdsourcing site Kickstarter.
Eric Migicovsky came to speak at Toronto’s tech/innovation hub MaRS recently and
shared his story of getting from the earliest days in the smartwatch trenches –
before the term smartwatch was really even used – to now, where he finds
himself and his now Palo-Alto based
company at the crossroads of the next revolution in personal computing,
wearable technology.
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| Not actually my hand scribbling, but close enough |
Eric’s talk was
just over an hour long and the story was so captivating that I barely stopped
scribbling the entire time. Now you get
the story here, from this self-appointed reporter’s notebook, direct to your screen.
On the first version
of the smartwatch he created:
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| Pebble inventor Eric Migicovsky, rehydrating during his recent talk in Toronto. (Is that a Pebble on his wrist?) |
“It was done for fun. I never really thought of it as a
business, but as a ridiculously cool product that I wanted to use.”
From University of
Waterloo to Y Combinator
We got accepted to the Y Combinator program, a business incubator based in Silicon Valley. We
were only the third hardware company in the program and wearables were still a
very new thing. Y Combi-nator saw that this was the next phase of computers,
which started with mainframes, then moved to the desktop, then to laptops, then
to phones, and now to wearables.
Opening up the
platform to other developers
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| An early version of the Pebble watch |
While at Y Combinator one of the founders, Paul Graham, gave us a suggestion. Why
not open up your platform and do an SDK? (SDK stands for software
developer’s kit, which provides documentation that enables any programmer with
the kit to develop additional software for the program). We weren’t so sure at
first. After 7 years in Waterloo we had Blackberry goggles on and it was really
Paul that made us realize the iPhone and Android were also big, and that
outside developers were going to be key as well. So we spent maybe 2 weeks and
did a really simple SDK. The result: in
6 months we had hundreds of apps developed by the community, and that then
turned into thousands. And you have to remember we only had a few thousand
watches out there at the time, this was around late 2011 or so.
VC investors didn’t
come on board, but regular people did
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| The original "Pebble 5", with Eric Migicovsky in the middle |
In early 2012 I must have pitched about 30 investors on the
product. I did the whole Silicon valley circuit, but got turned down several
dozen times. And there was this new thing called Kickstarter that people were
talking about at the time, where you could put your idea out to people and they
would fund it with their own dollars by essentially pre-ordering the product if
it got them excited enough. At this
point we had 5 people at the company and 2 interns.
We modified the pitch from
the one given to investors. We made it all about the benefits to consumers. A
friend in Amsterdam gave me some feedback on our Kickstarter page before we
went live with it. He said: “This is the coolest thing I’ve ever seen. I can’t
wait to use this with Runkeeper. I can’t wait to buy it.” We hoped, of course, that this meant we were
onto something. Before we went live with
the Kickstarter page the people on the team started placing bets about how much
we would raise. I said we’d get $2000 in
24 hours. One of the interns said $5000, and if this was The Price is Right he would have won….because we ended up raising $500,000 in
24 hours. See the Pebble Kickstarter video here.
Kickstarter mania
kicks in
We then realized something bigger was happening and that we
needed to come up with some sort of press strategy. So as a group we started to go over all the
blogs we read, looked at that list, and decided
that we would pitch to Engadget,
because it’s a blog we all really like, and we offered them an exclusive, which
is what bloggers love.
We also learned from the feedback that there were 3 things
that were really resonating with people:
1.
That you could get the display notices of
emails and texts
2.
That you could control music from your watch
3.
That you
could download customizable watch faces
The Kickstarter ran for a month and we ended up getting just
over $10 million from 69,000 people, which set a record for the most funding to
date. We then had to go from 5 people living in the same house and working in
the living room to turning into a company making thousands of units of the
watch. It was the perfect storm of being early in crowdfunding and early in
smartwatches.
From 5 people working out
of the same living room to becoming a ‘real company’
We now needed everything. We needed developers for Android,
for iOS, for firmware. We needed to think about marketing, we needed to think
about customer service, we needed to figure out how we were going to ship the
completed product to the 150 countries the Kickstarter investors came from. So
we had to make some big decisions. And rather than go big at first we opted to
build the smallest possible team to ship the product to the 69,000 people who had
given us their money up front. Plus, now that the idea was out there and if we
didn’t move quickly, someone would steal it. I remember my mom used to call me
and say “Eric, how do you sleep at night with 70,000 people who have paid you
for a product you don’t have yet?”
I hired 7 of my buddies from Waterloo, and brought them to California to work with us. We decided we were going to build the product, not the team. We now had 10 people (plus 2 interns) and those 10 people got their hands dirty in every aspect of the company and that’s now the culture of the company.
I hired 7 of my buddies from Waterloo, and brought them to California to work with us. We decided we were going to build the product, not the team. We now had 10 people (plus 2 interns) and those 10 people got their hands dirty in every aspect of the company and that’s now the culture of the company.
Shipping the first
15,000
We shipped our first 15,000 units and we were profitable. With Kickstarter we
were backed for the production of 85,000 watches but we were very careful and
were able to build 110,000, and the extras had a high profit margin. But…hardware companies have a unique problem: cash flow for inventory. It would
have helped me to have a CFO at the time, which we didn’t. And I’m a terrible
fundraiser. Luckily I met George Zachary from Charles River Ventures around
this time and he ended up investing $15 million in the company.
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| The many faces of the Pebble smartwatch |
Lessons learned along
the way
Today the company is 100 people, based in Palo Alto. There
are 20,000 developers building apps for the Pebble watch. I’ve made a ton of mistakes, but just a few short of totally sinking the company. I’ve learned
that it’s not competitors that kill the company, it’s you. I had to loan the
company my last $5000 to make payroll. I’ve learned that whatever you’re doing
it has to be simple, it has to mesh with people’s lives. It needs to help
people get more done on a regular basis. You really can’t underestimate the
value of making something people want. And we listen to what people want.
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| Just a few of the Pebble's customizable watch faces |
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| September 2014: First look at Apple's iWatch |
On September 9th, 2014 the Pebble team in Palo Alto was doing what most tech watchers were doing all over the world, i.e. sitting in front of screen as Apple CEO Tim Cook unveiled Apple's volley into the smart watch game, the iWatch. Eric Migicovsky supplied the popcorn for the crew.
And in the days that followed his phone rang a lot, with reporters wanting to hear his thoughts on the iWatch and how this announcement from one of the world's largest companies would affect his 100 person company's early mover position? Migicovsky responded with his trademark quiet confidence, stating that he's not competing with Apple or Google but, rather, with the habits of a generation that has grown up not wearing anything on its wrist.
Pebble recently dropped its prices to approximately one third of what the iWatch will sell for, and Pebble is available now, working with iOS and Android, and with a prolific developer community cranking out new apps for it every day. More than a watch, it's a platform, which means yes, it can catch your emails and texts, it can control your music, and it can even replace those Fitbit clip-on things or Nike Fuel bracelets....and pretty much anything else that people in the ecosystem of software developers come up with. So yes, conceivably, it could also open and close your garage door and start your dishwasher remotely.
Still, the questions about a larger company, with deeper pockets, international relationships, and an ecosystem already in place linger. Will Apple or Google be able to capture the 'second mover advantage' in this market? As a small company Pebble has had agility, flexibility, and speed on its side. It's sort of a combination David-Goliath-hare-tortoise story, as so many on this blog are, and for that reason we watch with great interest as the small and sparky competes in the same arena as the big and bulky.
December 2016 update: Pebble sold, essentially for parts (software and patents) to Fitbit, for a reported $40 million, after turning down $740 million from Citizen in 2015 and $70 million from Intel. It's hard to be first. Full story here.
And in the days that followed his phone rang a lot, with reporters wanting to hear his thoughts on the iWatch and how this announcement from one of the world's largest companies would affect his 100 person company's early mover position? Migicovsky responded with his trademark quiet confidence, stating that he's not competing with Apple or Google but, rather, with the habits of a generation that has grown up not wearing anything on its wrist.
Pebble recently dropped its prices to approximately one third of what the iWatch will sell for, and Pebble is available now, working with iOS and Android, and with a prolific developer community cranking out new apps for it every day. More than a watch, it's a platform, which means yes, it can catch your emails and texts, it can control your music, and it can even replace those Fitbit clip-on things or Nike Fuel bracelets....and pretty much anything else that people in the ecosystem of software developers come up with. So yes, conceivably, it could also open and close your garage door and start your dishwasher remotely.
Still, the questions about a larger company, with deeper pockets, international relationships, and an ecosystem already in place linger. Will Apple or Google be able to capture the 'second mover advantage' in this market? As a small company Pebble has had agility, flexibility, and speed on its side. It's sort of a combination David-Goliath-hare-tortoise story, as so many on this blog are, and for that reason we watch with great interest as the small and sparky competes in the same arena as the big and bulky.
December 2016 update: Pebble sold, essentially for parts (software and patents) to Fitbit, for a reported $40 million, after turning down $740 million from Citizen in 2015 and $70 million from Intel. It's hard to be first. Full story here.
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