How to Web Live Episode #5 – Hardware is Hard

Welcome to How to Web Live! The show you need to watch to find out the latest news and trends from who’s who in the tech industry. Every other Thursday, log in on Crowdcast and get inspired!

In this How to Web Live episode,  that aired on November 5, 2020, Eric Friedman, Fitbit’s co-founder and CTO, is joined by Camil Moldoveanu, co-founder and CEO of the hardware medtech startup re.flex, and a grinder himself.

Eric Friedman and his co-founder have started Fitbit in their free time and with borrowed money. They’ve overcome a market where many have failed, launching popular products, going public, and building the most successful consumer hardware startup of the last decade. 12 years later, he’s closing the circle with a $2.1bln soon-to-be-finalised acquisition by Google.

Eric and Camil told us all about their early days embarking on the startup journey, while also presenting us with the prospects for the next generation of smartwatches and medtech devices.

Here’s a sneak peak into their live discussion:

Watch the full discussion on our YouTube channel here.
Listen to the full discussion on Spotify and soon on Apple Podcasts too.
3 takeaways from Eric and Camil’s live discussion:

►”And I think it’s really important to understand that there’s a lot of luck involved. And no one should ever mistake luck for skill. Now there’s a lot of skill in the sense of, like, you’ve got to place the right bets. And you’ve got to know that this bet is more likely to pay off and this one is less likely to pay off. But then it’s still that roll of the dice.” – Eric revealed, tapping into startup founders’ mythological figures.

►”So I just remembered two big issues. One was  – we had a magnetic charger system, and then the pins; we didn’t treat them with any anti rust and anti sweat. And yeah, we had big problems with them. And then the second was when we got all the sensors. We didn’t have a way to instal the embedded software, just to deploy it via bluetooth. So that was another interesting story as we had hundreds of boxes with sensors that needed to be installed. Anyway, so for us, those were some of the things that we’ve messed up.” – Camil confesses about all the things that had to go wrong before getting it just right.

►”But I used to spend, you know, two days filling out our annual tax return. Whereas I think there are other things that James found really exciting and really interesting. Like, he really enjoyed some of the sourcing stuff. Like, how can I go and spend all day searching Google for the right component, for the right shape, for the right size, and who gets to vendor? Now we’ve got a procurement team. And boy, they’re really good.”  – Eric, remembering the stretched role assignment in the early startup days.

Watch and Listen to the full episode to get your own takeaways!

Are you more into Reading? The Full Transcript is below!

Camil: Welcome to How to Web Live, episode #5. I’m Camil Moldoveanu, founder of Re.flex, the hardware medtech startup which offers virtual physical therapy. I’ll be your host host for today’s episode. Our guest today is Eric Friedman, the CTO and co-founder of Fitbit. 12 years ago, Eric and his co-founder have started Fitbit in their free time, and with borrowed money. They’ve overcome a market where many have failed, launched popular products, went public, and build the most successful consumer hardware startup of the last decade. Now he’s closing the circle with the $2.1 billion acquisition by Google. Thanks to Bitdefender for powering this series and empowering our internet experience safety. Eric, welcome to the show!

Eric: Thank you for having me!

Camil: And good morning, I think it’s pretty early.

Eric: I’ve got my coffee right next to me. So I’m ready to go.

Camil: That’s great. Let’s just jump straight into. I’m really, really excited to have you here. We are looking at Fitbit, since we founded our company and yeah, I’m excited both for us, and for the community, to get some lessons and to see, which are the successful strategies and the pitfalls of building such a great startup. So sure I have some questions, we’ll also get some questions from the audience. I’ll just start with my first question, which goes into the early days. Can you tell us more about that period, and how you’ve met your co founder, and what was the motivation to start Fitbit, and the idea that sparked all this?

Eric: Sure. So, my co-founder, James Park, who’s the CEO of Fitbit, we’ve actually worked together for over 20 years now. My entire job working life and all but one year of his working life. And, you know, for people considering startups, I personally highly recommend becoming a co-founder. There’s a lot of stresses in running companies, and there’s no one who knows exactly what you’re going through if you don’t have a co- founder, and is someone that you can wrestle topics with and things like that. It’s truly great. So, I met James in 1999, early 2000. He was doing a company in Cambridge, Massachusetts. I was the first employee there, founding engineer that grew to 40 people. And was what they call I think, a learning lesson, which means euphemistically, we went bankrupt. So we grew up, we shrank. In some ways what actually most startups go through, like the empty chairs and empty tables moment of like, ‘Hey, we have to let everyone go’. And then the eventual decision to shut it down and knowing when to return to your investors and when to, you know, cut our losses. In some ways, knowing when to quit is almost one of the hardest things of doing a startup. There’s always this balance between drinking your own Kool Aid and going full in. It was also interesting to learn a little bit about arbitrage from that. So I learned two lessons from that: one was arbitrage, so arbitrage is the idea of you sell things, you buy things one price and sell to the other. We went bankrupt, we sold these giant CRT monitors, they cost us $4,000, we sold them for $1,000. Computers, pennies on the dollars. Everything, foosball table, everything pennies on the dollar. There was no IKEA where we live, and so we had shipped desks from the state of New York up to the state of Massachusetts, where we where we all lived. No one knew what an IKEA desk should go for, they were $99 in the US. At auction, when everything got sold off, they got sold for $200 or $150 each. Everyone said those are nice deaths. So the only thing that made money in that entire company’s history was the IKEA desk that we resold. I think the other really valuable lesson is you have one pot of money. Investors have generally many pots of money. They would like to figure out which ones are successful, they want you to spend fast and figure out which ones they should keep investing their time and money into, and which ones are not. Whereas as a founder, you’ve got one jelly, have one baby, one thing you’re investing all your effort into. And being like, the right balance of frugality versus willingness to spend, it’s an art form. So it’s always the best thing for that startup was got to start working with James. We then went and co founded another company together, it was a photo sharing company. First company was kind of amorpheus B2B stuff. And we knew what we were doing, we’re both engineers by train, it was really fun, technical problems. But we were explaining to our friends, they’re kind of their face went blank, and made it should have been assigned to us. So the second one, kind of photo sharing, you know, grandma gets excited, everyone got excited, it really got us interested in consumer stuff, things are, like, you know, goes direct B2B. You should get an immediate reaction from people, you have enthusiasm, and I think we both thrived on that. And just the fact that our friends and family were passionate users of the product was really exciting. That one, you know, was also our first kind of social thing. So like, understanding scale of consumer social is also a lot of fun from a technical perspective, but also just again, really rewarding. We sold that to CNET, now owned by CBS, in 2005. And, you know, that was definitely a skin of our teeth type sale, but it was the positive outcome of great return on investment for investors. And then we spent a couple years at CNET, and then realised, you know, we’d spent a lot of time sitting on our computers. At that point, we thought we were really old, we were both in our late 20s and we were like, we’re getting old for this game, which now in my 40s, I think is kind of laughable. And, you know, James, we didn’t mind for Nintendo, we when it first came out, and we were just shocked how it transformed gaming. I don’t know, if people on this call remember, you know, video games used to be extraordinarily male. And, you know, it’s still skews male, but all seems to be something where you sit on the couch, be hunched over your controller and things like that. At Nintendo we got people up and moving. My grandfather was 94, in his elder care home, they were doing wheat bowling night. There’s no way that my grandfather was also playing Doom on an Xbox at the same time. And just seeing how that changed was really interesting. And we were really enamoured by the fact that they had these controllers that were 30 bucks, they were clearly selling at a profit. And we were kind of already thinking about how do we get ourselves more fit and more active, and I had the idea of like, what if we fuse these – this sensor technology with kind of the online social network you knew how to build – and create something interesting. It took health and fitness with you. And I think, in some ways, the most interesting thing about Fitbit, at least from my perspective, you know, first two companies, we pivoted all over the place, a constant change of business direction. The previous one was a web based photo coming in, we start off as a distributed shared data plan for cable modems, so lots of pivoting. Keep it, I remember, we sat in a burger joint, again, not a great thing, not a great look for Fitbit that we’re eating french fries and working our business plan. We had a list of all the features we need to ship with. It was incredible, it was about 10 years later, we finally finished that list. And the amount of variation from that list over the previous 10 years was very little. And the fact we didn’t pivot it’s been very unique for me and from other startups I’ve talked to. You mentioned 12 years, we’ve actually we’re going on almost 14 years this coming March, so about 13 and a half years now, it’s been a it’s been a crazy ride.

Camil: It was an overnight success. You know, lots of people are saying that it’s overnight success and looking at all these years it’s really a crazy ride. And I’m looking to find out more about how was the experience when you started producing the Fitbit, what were the first challenges and which was the first breakthrough? And also, can you tell us a little bit about the first investment rounds?

Eric: Sure, there’s a lot to unpack there. One of my colleagues, Don Baker, had a comment once of like, you’re always a star of your own story. And I think it’s very easy to mythologize successful startups and the early days of startups and definitely look back fondly, but in some ways, you asked me, ‘What was it like?’. I think the best example I can give you is kind of that whole roller coaster face of ‘Aaah’, you know, especially the added hardware component, like, you know, James and I have done software. How hard can hardware possibly be? You just put a bunch of chips like, you know, we’re both software guys and it’s always hardware’s fault. I see the motherboards behind you, you know, how hard can that be? You just put a bunch of things on the board and you ship it. It’s software, it’s a hard thing like that takes millions of lines of code. Hardware is called hardware for reason. It’s hard and so, I think it’s hard, but it was a great experience. Is kind of spending time at all the factories, we started manufacturing in Singapore in Indonesia. You know, I remember we used to go over there for a week, and I was dating this woman at the time, now being my wife, so clearly she put up with it, but I’d say I’m going there for a week to kind of work on something. And every Thursday, you know, we were really cheap, because we didn’t have that much money and I would get right back of like, ‘Hey, I need to stay here an extra week, I’ll come home next week’ so I move my ticket out. Two months later I returned, which really shocked kind of our plans, but again, she put up with it. To me, that’s a good lessons, you’re going to find a partner who is willing to put up with your startup. But you know, go over there, trying to debug the lines, had some truly terrifying moments. We had $2 million which we raised, we’d spent it all and we get the first final thing offline, kind of closed up. And our big thing was we were a wireless, you know, health activity tracker, that was our novel thing, we are taking something you can find sort of near McDonald’s, that you can buy a non connected or get a non connected pedometer, which is sort of an activity tracker for free, or McDonald’s Happy Meal. And we were trying to sell you one for $100, which it took a certain amount of salesmanship, but the fact is, like, we got when we first built it, we got about three or four centimetres worth of range. You’re supposed to get about, you know, 10 metres worth the range. And so we had an ‘OH MY GOD’, we’re about to lose before we even take off. And that was one of, I think, three or four truly terrifying like, you know, there’s emotional highs and there’s emotional lows, and that was definitely an emotional low in a startup. And not only for us, we thought our work was going away, but we also thought all those people who invested in us and believed in us, we’re gonna let them down. And luckily, we took it apart the work, we put it together and failed and we figured out that the flex cable that kind of went over, that connected the display to the board was interfering with the radio. And so James took a small bit of toilet paper, roll that up, stuck under the flex cable and magically, it worked. And you’ll be happy to know that for anyone who got an early Fitbit it did not, in fact, contain toilet paper in it. We went to our RCM and you know, finding a good partner is really important. And they were like, ‘Oh, we can replace toilet paper with a little piece of sticky foam tape, does that still work? And it did, and they went to got to work and we’re massively cutting little free millimetre squares of foam, which may have took it from a complete failure to Fitbit as it is today. So that’s been quite the ride. I’m gonna stop. I haven’t gotten to fundraise. I’m happy to talk about that next.

Camil: I mean, I’m curious, what were the first milestones that you agree with the investors? And how do that turned out? And also, we have a first question from the public: what were some of the most difficult moments early on? How did you overcome them? But this was already answered. So let’s get back to the fundraising. I’m curious. So you’ve raised $2 million, that’s the first official round because as far as I know, you also got some money from family and friends when you started. But with the official round you set up some milestones and I’m curious to see, did you achieve the milestones? What was the story?

Eric: So I think there’s several things in there. Some people are just amazing at raising money, and there’s some people who build great product and ideally there are people who will raise money and build great product. I like to think teams are really good at building great product. We went public on basically $60 billion raised, I’d love to tell everyone here that was due to our just our brilliance, our thriftiness, like, we knew how to thread that needle. And that was all the money we could raise and those turned out to be really good for the investors are really good for us because we all own more of this company, and we did it on less money. But that was not really the intention from the beginning. So, we did initial kind of seed round about $400,000 friends and family. We were on an event similar to this when we announced our product, which was TechCrunch 50 at the time. And James and I were both on stage, we were kind of having trouble closing money at that time. We got a really enthusiastic response from the audience, and that really facilitate closing that first round of $2 million. And our investors at the time were led by true ventures, and I think that in some ways, the thing that provided the most value in the early days, is, you know, stand back, say, ‘Look, we’re investing the people as much as the idea, we trust you’. And in some ways, knowing that they had our back, like, we have problems, we go to them and ask questions, they were not breathing down our neck, they were very supportive. They had opinions, but they just want to let us run and I think that early flexibility would really helped us a lot. But we pitch probably 50 or 60 firms, kind of everything from angels, to super angels, to early stage capital, to get the initial round with a couple of seed firms plus crew.

Camil: We also have lots of other questions, but I’ll gonna go through some of the ones that I have prepared. But please, if the audience can add more questions, we’ll gonna get them in the second part of the of the episode.

Eric: One thing, by the way, on the fundraising, just because I think there’s a lot of early stage companies on here. It is tough. Again, there’s some people just really into fundraising, we had somebody fall asleep during a pitch, we had somebody who, you know, through no fault of her own, it didn’t show up on their calendar. And they were basically annoyed, and they felt we were kind of stealing a pitch spot that we didn’t deserve. But because we were there, they let us pitch anyway, they kind of sat there, like arms crossed and really angry. All it takes is one or two successful pitches. And yeah, if you have a whole bunch of bad pitches, don’t give up, just reflect, figure out what’s you, what’s them, adjust and move forward.

Camil: I think that’s great advice. I also was thinking that your mission was really, really big and innovative. Basically, you’re changing a little bit of how people are doing their fitness. Now everybody talks about their 10,000 steps, and also, you’re competing for a place on the wrist where they have this nice and fancy design watches, so yeah, you are changing a lot. And I think $2 million it wasn’t that much, and you also already talked about the frugal moments. And I’m looking at this long timeline and I’m thinking about how do you stay motivated and focused as a founder, because I’m sure there were multiple times that were close to failure, or possibly failure? And I’m always thinking about, in all this journey, how can you still stay focused and have your mission in mind? And don’t look at the bad days necessarily.

Eric: Yeah, I see there’s a fine line between mission egotism, I think one does need a certain ego, as a founder, you know, you got this, you need to project it outside to be internally. The failures were really emotional, and we had multiple. We really had a lot of emotional turmoil. I don’t think they ever made us want to, like, it’s always that it motivated us more, because we need to pull up and survive and somedays you are bored. I used to comment in the early days, that we blow away all of our financials, in a good way. We would have great new products coming out, they’re all really excited. And if James aren’t focused on here, all the problems we have, here’s all the things we’re working on. Because we thought that was our job to give them that, we didn’t realise our job was also to sell the board. But I think the thing that motivates both of us is that next hill to climb, and in some ways, like, the nice thing about having problems is, boy, you’ve got a big hill to climb and that’s the fun part. Once you get to the top of the hill it’s kind of like, oh, who cares? I want to focus on that next hill. And I think the difference to me is between being a founder and as you start growing your employee base, is we didn’t honestly do a great job in the early days. And you know, I defer to our employees now, it’s whether we do a good job now. We never did a great job in the early at celebrating our achievements. Yes, again, what motivated us was that next hill to climb. And I think especially as you start growing your world, and also all the people who are joining you on the journey, whether it be investors, whether it be fans and family, spouses, all those people, sometimes they need that support, that celebration, more than you do. So making sure you celebrate not just for yourself, but also for everyone else, is really important. But then I think to keep yourself motivated, you need to really enjoy that next hill, because otherwise it becomes a slog. If you want to get rich, go become an AI banker, don’t become a startup founder. Do a startup, it’s fun, and that passion just infuse you, you can’t not do it. And then it’d be great if you make money. But you have to enjoy the journey. Just most startups fail. And you know, having been through that, I can look back and I really enjoyed the journey, even when I thought, ‘oh, was that a wasted two years?’ I could look back and say ‘no, I’ve learned something. I’m really qualified for my next job.’

Camil: Yeah, that’s great advice. Definitely, I think very competitive founders need to learn how to enjoy the celebration, and that’s specific moments, because we usually just go through the target and look for the next. I was thinking if you had any people that inspired you, when you started Fitbit, and if you had any role models to follow?

Eric: Either several buckets, you know, I think first and foremost, there is all the founders that came before us, you know, whether it be, you know, someone like Bill Gates and Steve Jobs, creating inspirational products, and had him for a different personality types. We watched what it’s called, there was a great Bill Kringle miniseries on like, kind of the rise of Silicon Valley, is talking about original Cisco founding and all these things. And those were really inspirational for us. I’ve always been amazed by how many startup founders will take the time to answer a call, answer an anonymous email, and you know, sit down and talk to you about what their experience is like. And we learn from a lot of people about all the different things, the mistakes they had made. And when they went and made, I’d say, 90% of mistakes that we learned about, we then went and made ourselves. But the fact we knew that, we could go, ‘Oh, wait, we just made that mistake we’d heard about’, made us better able to react, to recover and be more resilient, versus being knocked off our feet. Or it’s little things like how do you set up a sales commerce system? You know, taxes, like all kinds of little things, those little hints then add up. I think for me, personally, my father, who was both a science professor and a bit of an entrepreneur, was definitely a bit of an inspiration for me. Now, of course, he also told me that this Fitbit thing is really silly, don’t you want to get a real job? He didn’t invest. So you need to get good return on investment. He’s now very proud of that return on investment, but he was not. I think he felt it was safer to invest in Fitbit, or cheaper to invest in Fitbit than starting a business school. So that was, that was his belief in Fitbit. But I will say that seeing him constantly work and enjoying work, you know, I think fundamentally, you were asked, ‘how do you keep yourself motivated?’ Work should be fun and I think if you’re doing a startup and you’re having fun, that’s gonna maximise your chances. That’s not the only thing you need for success, but that’s gonna maximise your chance.

Camil: Yeah, that’s great advice. I will also thinking about when you’re looking at other companies, you mentioned some of them and for inspiration, you’re focusing more on mistakes that you should avoid, or achievements?

Eric: I think you look at both. When we were kind of in the in early ID and just the design stage, you know, at that point, the iPhone was just launching. And looking at kind of how they rounded edges and little things like that, okay, people pay more for design, and you know, it’s worth putting that extra effort in. You’d save a few pennies, which you get to pass on to your users, they will get more love and passion for the device. From kind of the design is important. I think we talked to a lot of users, we sat down. So our original device was actually clip based, not wrist faced, because, you know, our target demographic was going to be more female. Dislodging the bracelets and other things on the wrist was gonna be very hard. Women didn’t have pants. Well, actually, a lot of women actually work out in their bra. And so we then went and bought 50 bras to make sure that different types of you know, I learned more about the structural architecture of bra from doing Fitbit than everything from dating. And so you know, because kind of little things about how do you make the clip strength, how do you make it comfortable, like we put soft touch paint on it, because this is going in someone’s skin, how do you make it nice and comfortable? And so I think really looking at kind of what are things doing across all kinds of different industries and for us was, we’re looking as much clothing as hardware, what was really important and really, really valuable. I do think looking at mistakes is also important, especially for startups. And then trying to reflect on what was luck, and what was right place, right time and what was a unique insight and try to distil those different buckets was also really important. Generally successes fall into like, one of those three and often multiple, and then try and tease it apart.

Camil: That’s great. We have some questions from the audience, I will only be able to take one now. And then we have a short ad break and afterwards, we have another two or three. The one that we will do address right now is from Marius, and he’s asking about early validation of your idea, and that the friends will always be excited? And maybe you can tell us more about what was the first traction that you actually got with Fitbit?

Eric: First of all, you said your friends will always be excited. I would say, again, maybe it’s a cultural thing, or maybe I just had bad friends. I tend to retain a lot of cynical friends. So I would say, if you’re using your friends to validate your idea, get a bunch of cynics together. I even had family who are cynics. So I think that that is important. In terms of other validations, I think for us the big validation came from our product launch event, you know, our friends were generally excited. We did some focus groups, we had a friend who owned a chain of women’s fitness gyms, that gave us a validation. I think when we did this TechCrunch, we launched an online store, we didn’t have a product that shipped yet, so we’re taking pre orders. This was back and before, you know, people commonly took pre orders, so you created your website, you would be asked for a credit card, we didn’t charge the credit card. But we got up on stage, I said, ‘I don’t think more than 10 people are going to be dumb enough to give their credit card to a company they’ve never heard of for a product never seen’. And James is like, ‘Eric, you’re such a pessimist. I bet been 50 people give us their information’. And we got up on stage, did the pitch and by the end of the day, we had 1.000 pre-orders. And I think that was the real validation. We also, when we got this as a pre orders, we said we’ll be shipping by Christmas. We gave that to the demo in September. We sincerely expected we’re shipping that Christmas. We did ship by Christmas, but just a year late, which is not uncommon for startups. But I think that validation was really valuable to us and also valuable to our investors, like that’s what helped get them more comfortable. And then when we ran out of money, need a small bridge that, like seeing this pre orders and ongoing press, helped them get more coupled with that continued investment.

Camil: Okay. We will have to take a short ad break right now, we will back in less than one minute.

Camil: Welcome back. I will start with some of the questions that we got from the community. And let’s address the question from Irina. She’s asking if you had the strategy for ‘fake it until you make it’ and how long and how did it work? If you had such a strategy?

Eric: I’m not sure it was a specific strategy, I think you always have to project a level of confidence both externally, to investors and to potential customers, internally, if you have employees or contractors or people who are taking risks, even people who are service providers. There can be a risk if you’re going to be around to pay your bill. So you need to project the level of confidence. And honestly, you need to protect it internally, if you stop believing in yourself, and the idea, then, as you come in earlier, you can’t get motivated to get up in the morning, to keep working and plugging away at it. I think in some ways, the hardest thing was actually for the first. Like, when you keep going, and things are successful, then becomes really easy. You can keep building on that next success. And you go, ‘Yeah, actually, my bank accounts is on fumes, we’re getting orders in so we can keep going’. So that that becomes really easy. The hardest thing is when your things are on decline. So in some ways, for us, the biggest, you know, ‘fake it’ came not from successes. We had a recall, and we raised about $60 million that point, and we had a product that went out that was not up to our quality standards, and people wearing on their wrist and getting some skin reactions. And we decided that was better for the brand to recall it and risk the company then not recall, leave it out there and create a festering problem. And that cost about $120 million, and we’d only raise $60 million at points. So that was truly the terrifying event, especially when we didn’t know what the problem was. I think that was the biggest ‘fake it’ before you make it thing. Because yes, we’ve made it, we’ve rejected air of confidence, like we don’t know what the real problem is. So that was, in some ways, the scariest part. And making sure that our investors, our board, or leadership staff, we were transparent about the level of uncertainty and the challenge. But yeah, we projected this air of confidence, of what we were going to make it through it. And in some ways, that was the biggest challenge. And luckily we skated through. I am not the fake it before you make it, it’s more when do you how much you drink your own kool aid, and when do you stop drinking. And that’s kind of definitely the companies that are struggling knowing neither when to pivot or when to give up and return the money. I don’t think there’s a magic formula. To me, that’s where that partnership, like having a partner that can really wrestle with things, our wrestling tend to be at 3:00 in the morning over Skype at the time. Having that person who could hold up that mirror, and you’d see your real reflection, it was really valuable.

Camil: I definitely can relate with this. In our startup, we have this three dimension that we project, and for that you need the specific calibration algorithm, and also a muscle compensation algorithm, that in the first two years and a half didn’t work. And I always had to pitch that to investors and partners, and I knew how to make it work. But I knew that 5 out of 10 times doesn’t work, but you couldn’t say that. On the other hand, you look at documentaries, and you’re thinking if you’re an imposter or not. And if you’re gonna solve that problem, in the end, it’s exactly like you were saying, we were open to our investors, but on the other hand, we seem to be confident that it will be solved. And internally, we didn’t know how to solve it and we were thinking, ‘I hope we can solve it’. Nowadays, sure, everything works fine and it’s great. But I will always remember the nights that I couldn’t sleep and I was thinking a lot if I’m an imposter or not. And that is something that I think lots of startup founders have to address as a problem. When it’s too much and when you should pivot or say that you should stop it, or when it’s something that you just have to go forward and push it, and it will work out. I think this is one of the biggest challenges.

Eric: When I think especially, in the Bay Area there’s this mythology of the startup founder where everything’s going right, the brilliant people, just like, everything works for them. And that doesn’t happen even for the super successful ones. People create their own methods. And I think it’s really important to understand that there’s a lot of luck involved and one should never mistake luck for skill. Now, there is a lot of skill in the sense of like, you’ve got to place the right bets and you’ve got to know that this bet is more likely to pay off and this one is less likely to pay off. But then it’s still that roll the dice and that luck, like we’re at the right place, at right time, what is helping externally what are competitors coming in, who’s getting the major funding? And just trying to understand where, knowing, differentiate where you’re going to be lucky, where you’re going to require skill. That’s intimacy heart. And it sounds like that’s what you did, was the thing that you said, I think I can make it on this area and you’re right.

Camil: And also, the press is usually looking only about after the success stories, and they are pushing you to make always a success story. So you get by, you get lots of publicity. But, on the other hand, it has to be successful. So you have to be careful which is the right balance of.. yeah. Let’s get some questions also from the audience. We have one from Eric: ‘Consumers expect simple devices. How complex is it to keep things simple? Is simplicity even an option anymore?’

Eric: Um, so I think that the first thing is, you know, again, James and I are both engineers by training. Engineers tend to like complexity we like it a lot. We’d like all the bells and whistles, and we know they’re all possible. Um, you know, I think that you’re going back to that part of the value of having a partner was your complementary skill set. So I think one of James’s great skills has been kind of distilling down, you know, being able to kind of be excited by the speeds and feeds, like that giant list of features. But knowing, kind of staying away from that. And so, actually, the very first Fitbit, we have three screens, steps, distance and calories. And we’re like, and we have one button, and we’re like – we’re not gonna put time, everyone has like, this was a clip based thing. Everyone has a watch. Everyone has a phone. Why would we possibly put a clock there? Let’s get one more thing button pusher you have to do to get through the screens. Turns out that was a mistake. Like we thought we were adding simplicity. It turns out our users wanted the time. And so that was immediate feedback, really great. It’s easy, we’ve got a clock, we can easily throw the time up there. Um, I think to me, the most magical products actually have that complexity. Like real complexity is hiding the complexity. It’s like the, as soon as user says – I wish when I press this button, it did x. And I say – well, try and press it. And then x happens. That I think is great design. I think, again, one of the lucky things we had is – James has, I think a really good design sense and design aesthetic. I think the other thing we agreed on early on, is both when we worked internally with each other and had different design opinions or worked with external designers, is design by consensus is generally bad design. I think we both felt that a strong design ethos, even if it was wrong, was better than mushy design ethos, which is that’s where you can have the let’s put buttons everywhere. And so we always either, you know, James had a strong design or when we work with a designer, we would generally, we’d articulate our views within TRY NOT design my committee. I think trying to do that balance of like giving input but not designing my committee. That’s probably one of the harder things on designing something.

Camil: Okay. We have another question from the audience. And also, it’s interesting, and I will want to add one that is close. So it’s from Ana Maria. And she’s asking: ‘How did you manage to successfully combine the technical development and the business development?’ And I also want to add two more in this area. What are the roles when you started out as a team? And I know from my experience that, with me and my co-founder, there were always lots of roles that appeared out of nowhere, and we were just doing our best to take them. And I know also that what I’ve seen is that, especially his role as the CTO, it’s involving a lot. So for him, when we started, he was this great developer that had to have lots of skills and now he has to develop his skills as a manager, to manage the technical team. I am curious to see what happens next, when you have 1000 employees and how your role evolved during the the growth of the company.

Eric: So there’s a lot to unpack there. Can you go back to that beginning part. Um, so I think.. So, I cannot imagine starting with a co-founder that is not also technical. I think we both very much spoke the same language. I think there’s definitely people who have like the the business CEO and a technical CTO, and they work together. I would say James is as technical, if not more technically skilled than I am, especially in certain areas, and especially in your early days. And so we were both in the trenches together doing both kind of business development, fundraising, taxes, taking out the garbage, IT, you name it. First of all, knowing that trying to balance the ‘no job is beneath you’ – um, like, part of being a founder is making sure you’re filling all the cracks. Having the ego that you can do it, and then also recognising when do you need to hire a professional to step into that role. I mean, that’s, that’s a real challenge! Especially if you’re a fifth year founder, like there’s a temptation to do everything yourself. I mean the early days. So I think, you know, for us – in terms of roles, there’s usually a CTO and CEO. CTO is either a technical co-founder, the other technical co-founder; I’m the other technical co-founder in this case. Um, I also do the taxes, HR, like we hire first employees, I got to go figure out – in the US, we have to figure out health insurance, retirement benefits, and a whole bunch of legal complexities. I just happen to like that stuff and find it kind of interesting. I was quite pleased, we hired real professionals take it over. But I used to spend, you know, two days filling out our annual tax return. Whereas I think there are other things that James found really exciting and really interesting. Like, he really enjoyed some of the sourcing stuff, like – how can I go and spend all day searching Google for the right component, for the right shape, for the right size, and who gets to vendor? Now I’ve got a procurement team. And boy, they’re really good. But, you know, James really enjoyed that procurement aspect. And so, you know, I think it’s just a case of, you know, talking to people and just figuring out what you love, and just being aware that like, I like that breath. And I think a lot of founders really enjoy that breath of like, I get to see all the aspects of the business and like, I want to see how the whole sausage is made, as opposed to just one prepared piece. I’m not sure if I answered anyone’s question here. But..

Camil: No, it’s, it’s pretty accurate. Getting back to the team structure, some of the challenges that you have, as a co-founder, when you start out is that at the beginning, you’re just you with your co founder, or the rest of the co founders, and then employees start to appear. And then you need the company culture. And usually when you’re pretty small that it’s organically, and if you’re the right, have the right fit for leadership, it works itself. What I was thinking nowadays, as sure before 2020, I was travelling a lot to meet investors and strategic partners, and I saw how things were drifting a little bit as a as a culture. And I’m curious to see how you establish the culture. And then when you have a couple of hundreds of employees how you do it. And then I’m looking at you guys, and you have a super cool culture and an office in Bucharest. And I’m thinking, you guys are now in the Valley. It’s early morning in here, it’s evening. So definitely, there are so many challenges – and how do you do set up the culture? And, basically, how do you get it right, as the company is getting bigger and bigger?

Eric: Um, I don’t think that James and I put a lot of thought into company culture in the early days. In fact, I think one could argue we probably put less thought into it than we should have, as we’ve grown to a 2000 person. Um, I think we do have a great company culture. Um, I think that is due to not missing James myself. It’s like, it’s, if anything, it’s the hiring decisions we made, you know, it’s the people who join to kind of reflect our values and who share our values and how we approach problems. The trick is, you don’t want to hire a bunch of Yes people or identical you, but having people join you for the journey, who kind of enjoys like, for us, it’s like you enjoy the same dirty pursuits, want to build things that are good, like habit, same striving for excellence. I don’t think it was something we thought about. But something we definitely worked out in a lot of early employees really helped drive and then create this culture that we were then proud of it then kind of lifted, expanded. Like, you know, our Romania office – I go there, and I feel like I could I could.. that’s just like their San Francisco office. And I feel like the people are the same, the jokes are similar. Let’s do the fact that the early people we had there, you know, Daniel was the one who introduced me to you guys. Um, you know, he’s the type person that we would have hired in San Francisco, because we would have enjoyed hanging out with him. Ee enjoy like being in the trenches, solving the problems from day one, and therefore, him, Raluca you know, Andrei Pitis, like there were a whole bunch of people who were there at the very beginning. Those were the people who then create the cultures and experiences, or hiring people who have similar values to themselves, and create a great company culture. I would say, in retrospect, we hired HR a little bit too late. We already got to like 300 people before we hired HR. I and I think we didn’t actually have official company values until about a year ago. I think some of these things were probably a little bit later than we should have. We probably should have been a little more focused for our own good. But again, the right people create the right culture. You have the best things on the wall, but if you don’t have the right people, the things in the wall become meaningless.

Camil: We have some more questions that are getting us back to the hardware part. And we can take one from Adrian: ‘For a software product – you see bugs, you create updates. If a hardware product has flaws, you need to recall them. And if you’re in the ship to customer, then that is all there is. Is there a way, anyway, to prevent those recalls using your own software for wearables?’ And I just want to add that for us…yeah, we learned the hard way. And I’m also curious. So I just remembered two big issues. One was we had magnetic charger system, and then the pins – we didn’t treat them with an anti rust, an anti sweat. And yeah, we had big problems with them. And then the second was when we got all the all the sensors, we didn’t have a way to instal the embedded software, just to deploy it via bluetooth. So that was another interesting story as we had hundreds of boxes with sensors that needed to be installed. Anyway, so for us, those were some of the things that we’ve messed up. And I’m curious to see if you have any advice, it’s how you set up all these logistics with hardware when you basically, if you have any issues, you cannot simply provide an update for it.

Eric: I do you think in some ways our software background really helped us in the early days. Like now everything is fully updatable from a software perspective. That was not as common to these like you know – building an update protocol is really hard. And especially if you’re doing something like you know – we were fighting over not bytes, we were fighting over bits in memory. And so, um, you know, we basically said by fiyat, every SP filled up table and everything like that people are working on a contract, especially we’re pushing back, like, that’s absurd, you don’t need that, that’s a waste of space. And boy were we glad we had that cause a lot of things get fixed in software. You know, they send rovers to Mars, which completely breaking magic software fixes only work around those and bring them back to life. So definitely making sure things are fully updatable. Um, you also mentioned, you know, throwing out or kind of having real problems, the first several hundred. One of the pieces of advice we got on the early days was the first 500 devices you’re going to build your to throw out. And we’re like, do you know how little money we have? That is the stupidest thing we’ve ever heard. We’re not dumb enough to build 500 things and throw them out. We threw out the first 500 devices we built for that exact reason. I think a lot of startups like there’s something called DVT, TVT, PVT, or something we’d never heard of before, like these different production runs. Um, we have to work through. And a lot of startups feel like the first thing coming off the line, we ship it, we make money, we don’t have the luxury of not doing that. You have to. The other thing is, I think, especially for consumer stuff, you as a founder have to be super users. You’ve got to find other friends and family to be super users as well, and you’ve got to be self critical. Like what is that thing that’s going to annoy people, you know, that you mentioned – sweat. For us it was like the charging context didn’t always mate. And it was like it’s something you’re definitely battling into place. But, it was an annoyance. And we’re like, we can’t ship with this annoyance, we need to find a way of making sure when you slide a contact on it’s going to get a really good grip, it’s going to charge every time. It has that little snap feel, otherwise feels cheaper, feels broken. And so you’ve got to pay attention those details, you’ve got to care about those details. And sometimes you might, you might get lucky and your device might not have a problem. So you need to make sure you’ve got enough friends and family also playing with it or coworkers, who also share that passion for details. Early employees, I feel like it’s really worth kind of starting a new office like you got to have those people who are passionate about the details. Not as a detail blinders on – that’s all they focus on; they should they also need to focus on the big picture. But if you don’t care about the small details, the big picture just evaporates.

Camil: Let’s talk a little bit about competition. I was thinking about the Fitbit journey. And after you were successful, basically you had lots of very cost effective products in the market at half of your price. And then, after you managed to solve that, then Apple Apple and Samsung started competing you. And I would say this is also a question from Allina: ‘How important are design and offering price range as a differentiator from the competition? Let’s say Apple. So, it’s also a question from the audience.

Eric: So I think first of all, um, you know, our competitors now versus in the beginning, are completely different. Like, if you look through the the VC decks, venture capital decks, most of those competitors don’t exist anymore, but boy, they were supposed to eat our lunch at the time. And they were big companies, and they were multinational companies. So we initially – it was like all I want to make is own the predominant market; they were going to crush us. There was BodyMedia who, you know, had these fancy high tech device that went on your upper arm. It’s interesting, there were completely different parts of the market. Um, then, you know, then it was Jawbone – Nike came in. Nike, when they first launched, they have a wrist based device, um, they spent more on marketing in one day than we’d spent in your entire company history up until that date. Um, and I honestly saw an increase in sales that date. Again, this is part of, you’ve got to know who you speak to, and who your competitors speak to. And if they’re helped by highly funded competitors, and they’re speaking to the exact same market, and you don’t have anything novel, that’s a problem. What’s interesting is Nikes’ brand and Nikes’ product really resonated with, you know, 24 to 30 year old men. Whereas our products skewed half-way female. And so you know, they’re marketing came in with like, these big sweating athletes, like showing, like, if it’s all about that tough hill to climb. And our people were like, hey, I need to get my kids to school and I’d like to go on a brisk walk or go on a run; how do I balance my life? And so figuring out like, what’s interesting is, though, Nike drove awareness, and then our marketing kind of came in the form of like ‘Oh, that’s actually the product we’re looking at.’ So I think kind of craft your marketing and your, your skill set to know where you are. And there’s a real risk of being crushed in the middle. Because you do have to mechanise like, there’s often a like, you know, everyone builds a standard, like, you know, multi quadrant chart, and you’re always a top quadrant, and you’re always going to expand. Understanding, when is it a your unique quadrant, versus the other quadrants is going to squeeze in on you. That’s something you have to really kind of look at your business and understand specifically. Like you know, you mentioned, low cost competitors and Apple, like does Fitbit gets squeezed in the middle? Or does Fitbit have a unique value proposition of like – you know, they were both, you know, general fitness devices, or cheap things that are paired with phones. And we are kind of the health and fitness experts, and that’s our brand. We’re the non judgmental grant. And so understanding brand positioning of where you are, is really important. And then trying to figure out what are the choices you make from both a product and a marketing perspective, that kind of reflect that that thing and use as a rubric is important. And making sure you’re going back in full circle and just saying, just because you have a thesis doesn’t mean you get to that’s right, that’s a right thesis. You have to then do a constant, constant re-evaluation. I would say the hardest thing as we’ve grown as a company, as a startup, you tend to reevaluate on really fast cycle. And as you become a multi thousand person company, there’s a fine line between frequent reevaluation and people going – you’re wishy washy, you’ve got no focus, you’ve got to let us execute you when you get bigger. You can’t steer the ship the same way as when you’re in a small speedboat. And they both have different skills, like the big company, we’ve got that like, we go into stores and say, we want to put on a shelf to that tomorrow; no one asked questions. When you’re a startup. But that means that the property ticket, we’ve already picked that product that’s going on the shelf. When your startup, you can change that many times, but you can’t guarantee that spot on the shelf. And so there’s different pros and cons at different stages. And everyone is jealous of the other person stage, I found.

Camil: We have lots of other, let’s say more technical questions about Bluetooth and 5G. But I would also want to go in the area of the future of Fitbit and talk a little bit about healthcare, because I’ve seen that you’ve talked a lot about healthcare and about prevention, and using the huge amount of data that you guys already collected for the greater good. Can you tell us more about what you’re doing next with Fitbit, and how can you support the healthcare industry? And also, from our experience, there are two ways to approach it, you go B to C, and then you put the pressure on the healthcare stakeholders like doctors and insurance companies. And definitely I heard lots of stories where Fitbit users go with tonnes of informations in a spreadsheet to their doctor and they are saying now do something with it, because you have to know how to use it. So definitely, that’s something that you did. And on the other hand, we are trying to align all the stakeholders in the healthcare market, which is super complicated as they say that they want to innovate, but everybody is afraid to not do any mistakes. Therefore, it’s moving very slow. And I’m curious to see what’s your strategy and what would be basically the plan for going into the healthcare market?

Eric: Yeah, well, I think you have to know your strength. And our strength has always been the ability to talk directly to our consumers. Um, and so leveraging that for our springboard into healthcare. You know, if we were, if I were starting this from scratch and trying to compete with Fitbit, and I had a, you know, a CEO who was head of a major health provider or part of a national health system, I might take a very different approach. Um, you know, I think Fitbit, early on, we’ve made the invisible visible. Like part of the reason James and I fought so hard to make sure we could get this connected device is that so people could see longitudinally, how I’m doing this. I think humans tend to be very good at focusing on what is right in my face, but they’re not very good at knowing trends, or thinking about trends, or long term impacts. And so, um, I think people being able to see ‘Oh, I was really sedentary during the week’. Like, intuitively they knew that but until it’s black and white in front of you, or in this case, it was red and blue, because that was the colour of our grass at the time. They were like, oh, that I see it. Um, I, you mentioned the transition to health care. That has been a long and interesting journey. You know, when we first started working on heart rate, at that point, no one else was doing heart rate on the wrist, everyone told us it was a stupid idea. They say, their fury was you either had a chest strap, which is the most accurate way of doing heart rate, because you’re a high end athlete, or you’re in a coma in a hospital, which is used to put something on your fingertip. And that’s fine. They probably the worst place to get heart in the entire human body is right on the front of the back of the wrist. And that’s where we said that’s why we’re doing it. And our research team was luckily very patient with us. They said, that’s a really dumb idea. Because that’s really hard physiologically. We were like ‘We believe in you, you could go and do it’. And luckily, they were able to pull through. Um, but again, when people start seeing this data, it starts changing behaviour. And, you know, so kind of fast forward, now everyone’s doing heart rate on the wrist. And everyone thinks, of course, why wouldn’t you do heart rate on the wrist. And so, we start getting regular reports. And you know, one thing that’s great about consumer is, and it never occurred to me – like when I have a problem, I write to consumer, customer help. I never write in nice things to customer help, which you know, being a customer support person is really hard. Be nice whenever you call for customer support. Be nice those people there, they’ve got probably one of the hardest jobs you can imagine. But we got thank you notes. And we got people writing in to say ‘Hey, you know, this is great, but you know, I was driving along, and my Fitbit said I’ve got 150 beats per minute, but I’m in a car. My fitbit must be broken.’ They’re driving along, like still see it., I’m just gonna go the doctor just to be safe. You get to the doctor, the doctor said ‘It’s great. This, your Fitbit, matches our kind of fingertip length thing. Good thing you came in, you would have been dead in half an hour.’ And you know, it was great and really satisfying that we were saving people’s lives. We were doing that by accident, not directionally. And so I think we’ve been trying to do a much more focused effort to like how can you identify these things before the user knows, notices it. How to recognise what the trends in their data are? And people don’t always see these. How can we help them find them? And how do we help them change the behaviour to be healthier? And how do we also then help recognise. And again, health means something very different as you age. Like, you know, when we started Fitbit in our 20s, health meant something different. I’m now a parent of two in my 40s. Health means something different now. My Father who is in his 70s has type two diabetes – health means something different. And I think one of the things that I feel like, very lucky now with Fitbit, is we’ve been able to help health across all those different dynamics through a combination of data collection, through data analysis. We just present, through and AI on top of that analysis to try and give meaning to that data. Through guidance based on like that population level analysis. And through just human based health coaching; has also been been a another thing. And I think we’ve viewed ourselves as we’re not trying to replace, everybody keep talking about how technology can replace doctors. Doctors and the medical establishment are really good at specific things. They’re just overwhelmed right now. And I think our job is to figure out how can we help them? How do we help keep an eye on people when they’re not the doctor’s office, so that when they when they come to the doctor’s office, the doctor can do what they’re really good at and just solve those things in a moment. So that’s hopefully how Fitbit plays in the future.

Camil: Unfortunately, the time is running out. And we have to wrap it up. I have one more question, though. We talked a lot about the part that it’s hard in the hardware. And I was thinking that I’ve also seen this in an article that basically hardware, it’s just different, is not harder, and you have to prepare for it and know what to expect. And I was, I was thinking if hardware is easier now in 2020 and what would you have done differently in your journey? And this is the last question.

Eric: Um, so again, I think hardware is hard for us because we went in with zero hardware knowledge. Like we’ve both taken a, you know ‘Hey, let’s put integrated circuits on a board, put them put wires together and create a calculator.’ We’ve done that in school, but that was as much hardware as we, either of us had. So it was just more of a learning curve. It’d be like a Harvard person going ‘I’m gonna do a software, I’m going to do a tax software company.’ That would be hard because it’s a steep learning curve. Definitely working and identifying manufacturers has gotten a lot easier. I think also manufacturers have gotten really good at, or gotten much better, about working with startups and kind of understanding how to make that successful for both. Um, I think hardware startups tend to require more capital. So a lot of, like there’s times when it goes in waves, where a lot of the venture community invests in hardware, they’re really excited about it, then they all get burned. They stop investing in hardware, and it’s kind of it’s definitely a cyclical loop there. We were definitely lucky, we kind of caught them at the very start of the next cycle. And, you know, I think through our success we gave investors confidence for investing in other hardware startups. Um, I think that the other hard thing about hardware is just you have to raise more money because it’s more capital intensive. Because you’ve got to build stuff, and then manage inventory. And the other thing about hardware it’s understanding what is the business model. Because it’s very easy. You mentioned kind of, you know, cheap things out of China, they’re competing. There’s, um, there’s a whole ability to commoditise hardware. What is my business model such that I stay ahead? And you know, enterprise, it’s very different than consumer. Consumer hardware is a volume, there’s a lot more commoditisation than enterprise. So it’s, again, it’s a very different world. And then figuring out what is my services, component, things like that, you know, razor versus razor blade, um, that there’s a lot of interesting business models there. And happy to talk about that offline. If people would like.

Camil: That’s great. I was, I was really excited to meet you. I remember when we’ve went through How to Web, they have a contest, a startup pitching contest. And also they have an accelerator called MVP Academy. And we were talking with people about building this hardware startup, and it was four years and a half ago. And everybody from the community looked at us like you’re crazy. And the only successful startup that we knew in Romania was Vector watch, with Andrei Pitis, and the rest of the team. And now, after all these years, I’m looking how the community evolved and what How to Web is doing, and that we have a live call with you talking about this. So for me, it’s ‘Wow, I’m really, really excited’. And I want to thank How to Web for having this experience and helping the community like this, and also to Bitdefender for making this happen and supporting us. And it was a great call. And I was really happy to have it and to meet you, Eric. And thank you again for your time, and for your knowledge, and I hope there will be a chance that we’ll see you more.

Eric: I hope at some point to be able to do this type of thing in person. So Camil, thank you very much. It’s been great chatting with you.

Camil: Thank you.


Sign Up to receive exclusive How To Web updates:

You may also like

How to Web 2022: last days to join the leading startup & innovation conference in Eastern Europe

Welcome to How to Web Live! The show you need to watch to find out the latest news and trends from who’s who in the tech industry. Every other Thursday, log in on Crowdcast and get inspired! In this How to Web Live episode,  that aired on November 5, 2020, Eric Friedman, Fitbit’s co-founder and… Read more »


Read more

What it takes to build successful products — in an interview with Valentin Filip

Welcome to How to Web Live! The show you need to watch to find out the latest news and trends from who’s who in the tech industry. Every other Thursday, log in on Crowdcast and get inspired! In this How to Web Live episode,  that aired on November 5, 2020, Eric Friedman, Fitbit’s co-founder and… Read more »


Read more