First breakthrough
This was our first breakthrough (a classic 5 year overnight success!) Over the next few years, we sold 2 million watches and did over $230m in sales… We succeeded at inventing the smartwatch and an entirely new product category.
Success
We recruited a super talented team that invented and defined an entirely new multibillion dollar product category.
Requirements of success
Through a combination of luck, timing, and dedication we inspired the imagination of a passionate community that grew around Pebble
The Final story
But in the end, we failed to create a sustainable, profitable business. We sold parts of our business to Fitbit at the end of 2016.
Too much inventory
Sales for our version 2.0 (Pebble Time) in 2015 didn’t hit forecasts and the oversupply in inventory put us into a major cash crunch
Doubling operating expenses
In 2015, we also doubled our operating expenses in anticipation of future growth.
Making the wrong product
The underlying problem was that we shifted from making something we knew people wanted, to making an ill-defined product that we hoped people wanted
Remembering the good times and the bad times
Startup founder lesson learned — never forget to define and talk about your long term vision for the future. When things are going well, it’s easy to get caught up in growth. But you need this to carry your company through hard times
Anticipating orders
Similar to most consumer electronics products, our watches had long production lead times (over 4 months) which meant we had to place all our build orders for the holiday quarter
Synchronization
We didn’t do any of the standard practices like synchronizing a campaign across all channels or building a strong influencer network. We struggled with making strong decisions on marketing (and sticking to them) and wavered on hiring a head of marketing for years, before making a decision in early 2015.
Mismatch in positioning
There was a big mismatch between positioning and physical appearance. This demoralized our software design team as well as the industrial design folks because we weren’t being effective at targeting a specific user base.
Not clear who’s our target customer and never knew why it was a success
Not only did we not have a clear understanding of our target customer that was shared across hardware, software, and marketing, I think we allowed early success (KS1 and even to some extent KS2) to mask the fact that we never gained a good understanding of what our actual customers valued the most. We lucked into having made something people wanted (the original Pebble) and, IMO, never really were able to figure out exactly why it was successful. So it was hard to reproduce that success.
Dont’ grow OPEX
Don’t grow OPEX unless your revenue continues to grow.
Talk to customers
Market positioning . We forgot the cardinal YC rule: talk to customers. Build something people want.
Consumer electronics cycle
I haven’t written this post yet, but long story short Pebble was on the ‘consumer electronics’ release cycle. We had to launch new products each year in order to make money. Instead, we could have charged a subscription or created enduring product lines that could be sold year-over-year.
Defining longterm vision
But our main issue was that I did a terrible job at defining our long-term vision I struggled over and over to define a strong long term vision for what Pebble as a company would accomplish.
Communicating the vision was absent
My personal vision was that Pebble would become a brain-computer interface company, with the smartwatch as the first always-on, always-worn gateway between computers and our bodies. But I rarely discussed this with the team, or even the exec team.