How did Fitbit become so successful?

If you exercise like I do, you may wear a fitness tracker. For me, it’s sort of rides on the gamification thought within my head to motivate me to run faster. And if you are choosing one of these trackers, you probably heard of Fitbit that is one of the top out there. And Fitbit’s rise is amazing. 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.

After its $4.1bn IPO in 2015, it spent the year as the world’s number one purveyor of wearables, shipping over 18m fitness trackers in the calendar year – without launching a single new product. In 2016, it’s launched four new devices. The Blaze, Alta, Charge 2 and the Flex 2. The company continues to lead the wearables charge ahead of Apple, Xiaomi and Garmin. Its revenues totalled With $745.4 million in 2014 alone, and in a Q3 2015 earnings call it revealed that it was 168% up year-on-year. In other words, it’s printing cash.

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.  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.

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.

Some 9,900 customers were reportedly affected by rashes from the Fitbit Force
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.

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.

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 are iPods in a world that’s 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 has sold 21 million devices since 2011, has 71% market share and sales are healthy. Since 2014, IDC estimates Fitbit has sold 36.7 million trackers in total, 4.8 million of those in the first quarter of 2016. But there are tanks on Fitbit’s lawn.

Android Wear and the Apple Watch are in the fitness game too, and even traditional Swiss-made watch manufacturers such as Mondaine are adding activity tracking to their range.

It still has a strong hand. Fitbit products are a good bit cheaper – the new Charge 2 is $149.99 compared to $269 for the cheapest Apple Watch Series 2 – but ultimately activity tracking isn’t a product. It’s a feature, and it’s a feature that’s being added to all kinds of devices by all kinds of companies, many of whom are hitching their wagons to Apple’s HealthKit or Google Fit. Stand-alone fitness trackers are iPods in a world that’s moving to iPhones.

For Fitbit to thrive, it needs to be much more than an activity tracking company. Park already knows where Fitbit needs to go. It knows the challenges it faces – its prospectus notes that “many of our competitors and potential competitors have significant competitive advantages” – and it knows that to survive, let alone grow, it needs to become a platform rather than just a product. That means moving into niche markets by making devices for very specific kinds of activities – as it’s done with the Surge, which is aimed at serious runners – and moving into healthcare and corporate healthcare.

Check out my related post: How Bandier wants to eliminate the concept of “Athleisure”?

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