Fitbit: James Park

Hey, it's Guy here, and before we start this brand new episode of How I Built This, I just wanted to let you know that we started a regular video conversation every week with different founders to talk about the creative ways that they're building resiliency in the midst of this crisis. Last week, I talked to six incredible chefs from Daniel Hom of Eleven Madison Park. To Alice Waters of Shea Panese and Jose Andrés, who's been donating meals through his nonprofit World Central Kitchen. You can join the conversation and ask your questions by going to Facebook.com slash how I built this, and you don't need a Facebook account to watch. This week I'll be talking to Tim Brown and Joey Zwillinger, the founders of Allbirds. And also to Stuart Butterfield, the founder of Slack. You can join me on Wednesday and Friday at noon eastern nine AM Pacific by going to Facebook.com slash how I built this. And hope to see you there.

sitting in my hotel room in Singapore and I was I was testing out one of the prototype builds and the radio. range was not good at all. It was supposed to have a range 10 feet or 15 to feel that was the hope that would have 15 to 20 feet range, but the range was actually like two inches. We've got a ship this holiday season. Like I've got tens of thousands of these people waiting. And I'm thinking, wow, this is it. We're done.

It's how I built this. show about innovators, entrepreneurs, idealists, and the stories behind the movements. There you go. I'm Guy Raz and on the show today. how the Nintendo Wii inspired James Park to build a device and then a company that would have a huge and lasting influence on the health and fitness industry.

Fitbit. So it's taken me a few weeks to get motivated about exercise. This whole pandemic thing just had me in a state of anxiety and it messed with my routine. But I was inspired to jump back into it about two weeks ago after watching my 11-year-old proudly announce his daily step count recorded on his Fitbit. Now, fitness isn't all that important to him. He's 11, but the gamification of fitness, the idea that it could be fun to hit 5,000 or 10,000 steps a day. That's what matters.

This is the stroke of insight James Park had soon after he stood in line at a Best Buy in San Francisco to buy the brand new video game system called Nintendo Wii. And you'll hear James explain the story a bit later, but what he realized by playing the Wii. is that you could actually change human behavior around exercise if you turned it into a game. And the thing is Up until James Park and his co-founder Eric Friedman founded Fitbit in 2007. There really weren't any digital fitness trackers that were designed that way.

It took a few years for James and Eric to gain traction, but by 2010, 2011, Fitbit took off. At one point, their fitness devices accounted for nearly 70% of the market. And by 2015, the company was valued at more than$10 billion. But that same year, the Apple Watch was released, and Fitbit and its market share. got hammered. When I spoke to James Park a few days ago, he was in San Francisco living in an Airbnb.

I'm in a temporary Airbnb because my uh the place that I typically live in has been flooded out by a malfunctioning washing machine. I woke up at one AM. In the middle of this whole thing? You had a flooded washing machine w like you woke up in the middle of the night and there was w water everywhere? I know amazing timing. Yeah, I woke up at one AM and I just woke up to the sound of water gushing. Everywhere. Um coming through the ceiling. Ah it it was a massive flood.

Okay, so on top of sheltering in place and running his company remotely, James had to move out of his apartment in the middle of the night and then set up the microphone and gear we sent him for this interview. He started to tell us about his parents who emigrated from Korea when James was four. Back in Korea, his dad had been an electrical engineer and his mom was a nurse, but as with many immigrants They had a hard time getting those same jobs in the US. So instead His parents became small business owners.

The the first conscious memory I have is My parents actually owned a wig shop. in downtown Cleveland. Wow. It was just it was just a way to kind of earn a living. Yeah, I think a way to earn a living and uh you know, the typical immigrant story is you have friends who live in, you know, the country that you're immigrating to and

I think my dad had a friend who worked in wig hole sailing, so that's where he started out. They were selling wigs to people who lived in downtown Cleveland, African Americans, mostly women. And I remember my mom she'd spend a lot of time just looking through black fashion magazines, styling hair. Beating them, et cetera. They had a wig shop, dry cleaners, a fish market.

At one point we moved to Atlanta and they ran an ice cream shop there. We sold track suits, starter jackets, fitted baseball caps, you know, thick gold chains. sort of hip hop. Urbanware. Right. Like Fu and stuff like that. They sold Fubu jeans. Yep, I remember that.

And they could switch from one genre or one type of business to another. And really not skip a beat. Yeah. And will your parents Did they expect you to perform well at school? Was that just a given? You know, I think they had incredibly high expectations and as a kid I think I remember my mom telling me when I was pretty young, I don't know, five, six, seven

That she expected me to go to Harvard. So wow. Yeah, I didn't I didn't I don't think I quite knew what that meant back then, but you could tell that uh their expectations were pretty high from from the very beginning. James did in fact meet his mom's expectations, He did go to Harvard, but He put in three years studying computer science, but after his junior year, he got a summer internship at Morgan Stanley and then ended up deciding to start his own business.

And that we had hoped to finish his college degree. He never went back. Mm- you know, I always had a little bit of a stubborn streak and that was when I was trying to figure things out, try to try to think of ideas. Um I think there was a lot of opportunity, a lot of problems to be solved and Uh I was also looking for a co founder at the time, so those are two critical ingredients, an IDI and a co founder. This is nineteen ninety eight. This is not

twenty fifteen when these kinds of conversations seemed so common, like this was unusual in nineteen ninety eight for A young person, it was just less common for a young person to just sort of say, I'm gonna look into a tech startup and try to find a co founder and just take some time to think about these things like I w I I would imagine your parents were nervous. I'd be nervous if my twenty year old said to me, I'm not gonna go back to college and I don't really know what I'm gonna do, but I'm just gonna think about it. Yeah, I they they were understandably pretty upset, um, angry even, I'd say. And you know the irony is that they probably took

A way more incredible personal risk moving from Korea. to United States and you know, running these series of businesses which uh are commonly done but not easy in themselves and and pretty high risk, but I do understand obviously the perspective at the time. Okay, so you you decide you wanna start something up and I think you You eventually landed on on e commerce, right?

Yeah, that was uh not a groundbreaking thing at the time. Obviously Amazon was around, et cetera. Uh A lot of e commerce startups, but No, settled on this idea of making e commerce a lot more seamless and and frictionless and came up with this idea of a electronic wallet that would automatically Make purchases for you.

I could work with a lot of different e commerce sites. And you know, the goal there was that we would take a cut of of every transaction. Right. And what was the company called? Uh that was interesting. We we originally named it Kapoof. that was how it was incorporated. Yeah. Uh until a lot of people said, you know, that might not be the best name for a company.

Sounds like you know, we we called it ka poof'cause it sounded like magic, et cetera, Kapoof. Right. Uh things were done, you know, your transaction was completed. Your money is gone. Yeah, yeah. Exactly. Time of crazy names like Yahoo, et cetera, but

Uh we decided to change our name at some point and we changed it to uh Epic, which was So Heele for fast. And so that was the that was the ultimate name of the company. And and you guys were actually able to raise uh a fair amount of money, right? Uh we did. We ended up raising uh a few million dollars from some individuals and some from uh some venture capital firms as well. And

We hired some people, we found a cool uh renovated firehouse. So that was nice. Really uh Really amazing place to to hang out in for many, many, many hours of the day. Uh, and we hired up to uh it was close to about thirty people. Wow. One super important thing that happened there was you met Eric Friedman, right? The guy that you would eventually launch

Fitbit width. Uh I did, and you know, that's probably one of the more fortunate turns in my life, Eric. We we didn't know each other at all before before the company Epic. He was actually just graduating from Yale.

on computer science. And I interviewed him. I I liked him a lot, and he ended up ultimately becoming the first employee of the company. Okay, so you hire Eric and I think the company lasted like Eighteen months or or a little less than two years. Yeah, uh yeah, about it about two years and

a lot of ups and downs during that period, and you know, if I had to think back, I would attribute two thirds of of the challenges and problems we faced as a business to to myself, um uh just because I had never managed people. I I didn't really know how how to run a business even if it was only the technology side. And you know, at some point the that dot com crash happened. Yeah. And all of our potential customers, the whole industry, the whole economy started taking a downturn.

So this company Sort of sputters out in two thousand one. Um, and when that happened were you Did you think, okay, I should go back to college now and finish my degree, or I gotta start something else. W where where was your head at that point?

Well, it was a really challenging personal time for me, you know, at towards the end of the company we obviously had to lay off uh Most of the company. you know, compassionate, um

was really, really difficult. I don't think the thought of entering school or going back to school Pop. back into my head at all. And and I don't know why. I think it was because Despite this this very emotional failure, I knew this was what I wanted to do.

I had a firm conviction about that. And so I I I knew I wasn't gonna go back. So what'd you do? Uh, so we all ended up working at the same place, actually. Um it was a company, a pretty large company called Dun and Brad Street. At the time.

Uh very stable company and we are all pretty fortunate to be able to find work there as engineers. So uh daytime working at Dunbrad Street and then what at night? Sitting around, uh just brainstorming. Yeah, it was, you know, we go into work during the daytime. And then we'd we'd come home in the evenings, code different things, try different things out. You know, so it's a pretty intense work. I think in terms of the numbers of hours, I don't think anything changed from

our first startup to to trying to figure this this next one out. And before too long you Decide to to do another startup, this time um with Eric Friedman. from your previous company and then another guy named Go Khan Cadlu, um, I think this was what, two thousand three, two thousand four?

Yeah. This was about two thousand two, actually. Okay, and this time the startup was like a a photo editing kinda platform like sharing platform, what what was it called? Well the company's name at the time was called Hay Pix. And the product itself was called Electric Shoebox because

You know, a lot of people put their old photos in shoeboxes and this was just gonna be a digital. Yes, I still have them in shoe boxes them, probably. Um I should, I know. Yeah. And so, you know, electric shoebox is just gonna be a digital version of your shoebox. And and what could you do? Well, i there are digital cameras were were coming about back then. It still wasn't easy to to connect them, upload photos. Like it was getting easier, but um nowhere near what it is today, obviously. Uh so the whole idea of Electric Shoebox was to make the whole process of getting photos off your camera a lot easier.

And more importantly, we wanted to make the process of sharing these photos with your friends and family a lot easier. So did you raise money for for the product for the electric shoebox? We did. We ended up raising money primarily from One of my friends from middle school. who was a mutual fund manager in Boston.

And so he put in a bit of money, not a lot. I think about at least for him, it was about a hundred thousand. And yeah, we had a bunch of savings. ourselves uh that that we were going to use. And in anticipation I also opened up a a few more credit cards as well. And it was just really the three of you. Like

Tapping the keys like all my own. Uh we would wake up in the morning. Walk over to the third bedroom. And just start typing away.

For twelve we take meal breaks. Uh I remember um Eric did a lot of cooking, so we'd eat our dinners uh on some T V stands watching TV. That was a a good break for us, watching Seinfeld. And then uh go to bed and then repeat it the following day. Alright, so you come up with this product and by the way, how are you gonna make money off of this thing? This is a free service, a free

It was um I guess what you call t it would be called freemium software. So it would be free for a period of time. And then the trial period would end and then you'd have to submit your credit card information to continue using the software. Yeah. Got it. Okay. And so our our primary goal was making sure that a lot of people knew about the software. So we we put it on shareware sites, et cetera. And then we spent a lot of time debating, you know, should we send out a press release? And I I remember it was a huge debate'cause Sending out a press release was gonna be about three hundred dollars. And uh

That was a that was That was the level of expense that required a vigorous debate at the time. Uh so we said, You know what? without getting the product known, you know, how are we gonna be successful? So Uh we we wrote up a press release.

And uh we we put it out. And actually it was probably the most pivotal decision we ever made. in in that company's history. Yeah.

Because the first email came in a few hours later. I think the second one came in a day later, but we got Two emails, one from Uh C net. which is a huge digital publishing company. And then we got another email from Yahoo.

saying, Hey, we we just heard about This launch of this this software product. And you know, we'd like to Talk to you guys more about it. Wow. Exactly. This is coming from their corporate development. arms which typically, you know, deals with uh M and A with with buying buying companies. Yeah, exactly. We're like, Whoa, this is magic. How did this happen?

Two thousand five. It gets purchased by Cnet. They make an offer to buy this company. buy this product from you guys and you sell it to Cnet, Was that uh was that life changing money? Did that mean that you never had to work again? Uh it was um

It was definitely a good acquisition for for all of us at the time. Uh you know, remember you were three guys working out of apartments. I was at the time about forty thousand dollars in credit card debt. As well. Uh so we were we were down to some desperate times, and We are negotiating.

Numbers and They threw out a number, which was uh you know, their first offer was uh four million. And that's amazing. Like, God, I can't believe We built something that's that's worth this much at the time. They were just stunned.

And then we quickly got to okay, how do we negotiate something better? So you sell your company to Cnet in two thousand five and you've got And um And he moved to San Francisco.

Um, and did you enjoy it? I mean it w I mean it was probably like a huge company at this point, right? It it was a huge company, but I think the moment at least for me that I moved to San Francisco, I instantly fell in love with the city. And Cina. Even though it was a larger company.

I actually found it to be an amazing time. I I learned a lot. No, I got some management training. A small team of people uh learned a lot about how technology scales to millions and millions of users, how you market products.

So I I really enjoyed my my experience there. I think it was pretty formative. So why did you leave Cnet? So We left C Net just because of I guess you could you could call it a bolt of lightning in some ways. Uh it was December of two thousand six.

And Nintendo had just announced the Nintendo Wii. And I remember Coming home, putting it together. And at the time Nintendo had come up with this really innovative control system, uh, using motion sensors, yeah, accelerometers to serve as inputs into a game. And after using it, especially in in you know We Fit, which was a sports game.

I thought wow, this is This is incredible. This is amazing. This is magical. You can use sensors in this way. You can use it to bring people together and and particularly for We Fit, it was a way of

of getting people active, of of getting them moving together, and I was just blown away by this whole idea, really excited about it. I couldn't stop thinking about it. And after some time of of playing We Fin and the Wii and a lot of other games, I thought... You know, this is great. It's it's in my living room, but What if I want to take this outside of the living room? And I kept thinking about that idea, like how do you take the we fit outside? Outside, exactly and

So I I couldn't let it go and I ultimately ended up calling up Eric. Yeah, we we started talking about this idea for for hours and hours and and we couldn't stop talking about it. It's like How do we capture this magic and and make it more portable? How do we give it to people 247? And that was really the genesis of A fitbit.

So the technology for I mean pedometers have been around forever, right? Um w was that your sort of where your head was was going or thinking, okay Maybe we just create like an electron pedometer, but he I think even electronic pedometers were around in two thousand seven, right? Yeah, pedometers were definitely around back then. Actually they had been around for probably a hundred years. One of the things though is that

They weren't something that people would want to use or to wear. Yeah. They were Very big. They were pretty ugly. They look like medical devices. Um A lot of senior citizens wore like used them. Yeah, they weren't a very aspirational device. So you know, it wasn't something that people were excited.

To use? And so I think that's why that whole category of device just Never really had any innovation. And there are also much higher end devices. You could buy much fancier running watches, like GPS watches, et cetera, but Those are really expensive for people. They were three hundred, four hundred dollars at the time.

So you you had this idea, um, and that means you had to raise money, um and this is the th gonna be the third time now that you've had to do that for a business. And I think I I read that you raised like four hundred thousand dollars to launch this and um I don't I mean, I don't know a lot about hardware, but that doesn't seem like it was gonna take you very far. in in like building a physical product. As we quickly found out, yes, we had grossly underestimated the cost of of taking this to market.

W and and what did that initial amount of money, how far did that get you into actually conceiving of what this product was going to be. It got us to a prototype. Um write some rudimentary software.

And what did the prototype look like? It looked absolutely nothing like a fit bit. So there there are two things. There was a Actual somewhat working prototype. And then there is an industrial design model. Which is a piece of plastic. Plastic and metal that was supposed to look like the ultimate product. And so that actually looked really, really nice. But it didn't work. It's totally non functional. And we'd always have to tell people before showing this this is this doesn't work here. Okay. Because they get all excited looking at the model. No no no, that doesn't work. The thing that actually worked looked like something that came out of, you know, a garage, literally. What did it what what did it look like? It was you know rectangular circuit board.

A little bit smaller than your pen. And it had a motion sensor, it had a radio. It had a microcontroller which was the brains of the product. Yep. And it had a rudimentary case, which was a balsam wood box. Wow. So you would take to investors a circuit board and a balsal wood box as your prototype. Yeah. When we first announced the company, that was the prototype that was actually being used at the announcement.

Wow. But how did you even get it to that point? Like,'cause you guys are both software engineers. How did you develop a a physical product that Even even a such a s such a crude

Prototype could track movement. Did you have other people help you do that? You know, that was our big task was to find the right people who could help us. So um I knew the founder of a really great industrial design firm in San Francisco called New Deal Design. Um his name's Ga de Amit. And then on the algorithm side, because it was gonna take a lot of sophisticated translate this motion data to actual data that users would be able to understand. I ended up

asking my best friend from college, Ed, 'Cause he was in grad school at Harvard at the time. And he said, Wait, I I think I might know somebody And it ended up being his teaching fellow. His his name was Shelton. And we we talked and was like wow. Uh.

This guy's super smart and we need to get him working on their algorithms. Yeah. So he he ended up working on the side while doing his PhD, helping us out with a a lot of the software. So I mean you leave Cnet in two thousand seven. And you've got four hundred thousand to Come up with a prototype.

That that quickly run out of that. So it's two thousand eight and you're trying to raise money. And how much do how much did you raise? I think our first round was about two million dollars. Which was not gonna take you that far if you wanted to develop a physical product that was super sophisticated, a piece of hardware. We thought we could do it. Um we thought we knew a little bit more about the hardware business. We put together another business plan budget. You know, it was a it was actually a pretty challenging time to raise money as well because Oh the financial crisis, yeah. Exactly. It was the fall of two thousand eight. when we're trying to raise raise money. Yeah. And you know, one of the I guess the good and bad things about V Cs is the good thing about V C is they're incredibly healthy people.

They're super fit. But it also made it difficult for a lot of them to understand the value of the product because what we were trying to do was It wasn't a product meant for super athletic people. It was really meant to help Normal people become more active, become healthier, etcetera. And It was hard for a lot of them to grasp why that was valuable. They'd ask, Well, did it do X or did it do Y and did it do Z? And we'd say, No, it it

doesn't do any of that. And so it's very difficult for a lot of these superfit VCs to understand the value of the product, even though a lot of them claim They don't try to put their own bias on these products. It's naturally human to to do that. And did you I know right away that this was gonna be I mean, now their fit bits are are are m watches mainly, right? That their wrist are on your wrist. But at that time.

You were thinking that this was just gonna be something you would clip to your Your clothing? Yeah, something to eclipture clothing for men and then what we found out in talking to a lot of women Was that they wanted to tuck it away somewhere, hidden.

They didn't want people to see it. And we said, Okay, where would you want to put it? and said, Well a lot of our pants don't have pockets, so it can't be in our pocket. And so the preferred place was actually on their bra. Right. Uh so a lot of the physical design that we had to think about in the early days was

How to come up with a product that would be very slim, slender, and clipped people's bras. And clip the bras pretty easily. And by the way, how did you come up with the name Fibit? It that was uh you know, it's never easy to name a company and it's even more challenging just because of domain names, right? That's some that's typically a lot of the limiting factor in in naming a great company.

And so we would spend hours and hours and days just going through different permutations of names, some and some awful ones as well. Like at some point we got onto a uh fruit theme. So we were thinking like FitBerry or Berry Fit or Fitcado or You know, just some just some really awful names. And you know when the Fitcado, yes, history might have turned out a lot differently. For sure.

Uh so I was just taking a nap. And My office. One afternoon. I think I was actually Napping on the rug because I was so tired.

And I woke up. And it just hit me. It was it was Fitbit. Okay. And the next challenge was actually the domain name. The domain name was not available. And it was owned by this guy in Russia.

And like, Oh my God, how are we gonna get this domain name? Um We'll just we'll just email the guy and see what happens. And He said, Well how much are you willing to offer? I said, Oh God, I I don't know. How about like A thousand bucks.

He's like, Ooh, how about ten thousand? And I said, Oh, I don't know. That sounds like a lot. How about two thousand? He's like Oh okay. Two thousand. Deal.

I I think it was literally like two or three emails that we sent back and forth in this negotiation. Probably the best two thousand dollars you ever spent in your life. Except for the three hundred you spent on the press release a couple years earlier. Definitely a definitely a good return. You've probably spent many millions of dollars on other things in your life that were not as good of a deal as that two thousand dollars. Yeah, it's tens of thousands on cons you know, naming consultants and focus groups and trademark searches and and all of that. So it's it's kinda funny. Small company small problems. Big company big problems. Exactly. So

Where do you begin? I mean, you gotta m make it, you gotta find a factory, you gotta find Um designers uh Where do you where do you go? Uh yeah, very good, very good question. So um we obviously had zero connections. The challenge though was not actually the connections to the manufacturers, but finding a manufacturer Who we could actually convince.

This product. because we didn't have a background in hardware. Yeah. And so would they actually want to work with us? That was the the biggest concern at the time. So how did you find them? Uh we went out to China, we we went out to Singapore. And we were never gonna be able to get the Foxcons, the one that to go to a smaller place. We had to go to a smaller place who'd be more nimble, more flexible, who'd who'd want to take a financial risk.

And we finally found uh a great manufacturer based in Singapore called Racer Technologies. And and the good thing is actually it was the best of all worlds. The headquarters was in Singapore. Most of the management team and the engineering staff was in Singapore, but they had manufacturing facilities that were in Indonesia. So the labor there was gonna be Lower cost than in Singapore. You go to TechCrunch to present

to kinda like, you know, unveil this product. And what What was the product that you were offering? We said, All right, we're we've got the sink all the Fitbit and it does this. What did you What did you say it did at that point? So

Our pitch to the crow at TechCrunch and ultimately to our consumers was that It was a product that would track your steps. Distance. Calories. And would answer it.

Some basic questions about your health. Was I active enough today? Did I get enough sleep? What do I need to do to lose weight? Uh, et cetera. And in one of the more important aspects was this idea of a community. Yeah. join other people who own Fitbits, your friends and family.

Yeah, you could Compete with each other. And it was all wireless. Like you don't really have to do anything. All you'd have to do is wear this device. Don't even think about it. And all this magic would happen. So that was the promise of of fifty at the time.

There was a lot of excitement there. But I'm wondering like Were you nervous to do these presentations? Did you have to like prepare like crazy or Or did you just find your ability to like Be this person you had to be on stage.

When you got up there. Yeah, I think um there was no other choice. So it was just something we had to do and you know I think uh Are you better at it than Eric or is Eric better at it than you? I think we're both good in our in our different ways. It just fell upon me. I don't even know how we decide

you know, th those things, but actually what was running through our minds was not what we were gonna say and how we're gonna say it, but whether the demo would actually work. Oh right. Again, it was it was a little sketchy. It was um still very early. It was on it was still in the in the wooden box. And the balsal wood box. Balsa wood box phase. Right. So we're just worried that the demo would just Fail or crash. That was

It worked and actually it did crash in the middle of the presentation because the whole demo was about me walking on stage The device would be collecting stats and at one point I would turn to Eric and say, hey Eric, why don't you refresh the page and show that all the stats have been uploaded. Magically. Do this wireless connection. And so the demo actually crashed while I was talking and Eric was furiously trying to reboot his computer.

during this period and I don't even know anything about it. But ultimately, um, you know, the demo did work. And so to to many people it seemed like magic. Yeah. Literally people started clapping. It was it was really amazing. So originally right before TechCrunch uh Eric and I You know, we made just the verbal bet, Hey oh, how many pre-orders are we gonna get after this conference and we announce and make the company public?

And You know, I think Eric said, Oh, I think we'll get like five pre orders. So it's like the device isn't even available, people are gonna have to give us their credit card information. And I said, Nah, you know what? I'm not as pessimistic. I think there's gonna be like Ten fifteen twenty. And so we got off stage and by the end of the day we had about

Wow. When we come back in just a moment. James and Eric have a prototype. In a balsal wood box. And they don't exactly know how they are gonna get from there to filling thousands of pre-orders, but a lot of people are expecting them.

in time for Christmas. Stay with us, I'm Guy Roz, and you're listening to How I Built This. PR Hey, welcome back to how I built this from NPR. I'm Guy Roz. So it's 2008, and James and his co-founder Eric Friedman show off their Fitbit prototype at TechCrunch, and it makes a huge splash.

Problem is, they have no finished product. They haven't even figured out how they're gonna make it. In pre orders Are pouring in. And they just kept coming in. It was crazy. We're like, oh my God, now we gotta. It's not just dozens of

these units we have to build. It's it's now thousands and more and more every day. And so we were still thinking Christmas of that year. that we were gonna start shipping out units. And it rapidly became clear to us that we weren't gonna make Christmas.

And so we're thinking, okay. How do we keep all these people happy? While we pull this off. So Uh this was before Kickstarter and and you know, in Gogo and all that, so we kinda had to improvise. We're like, Okay Why don't we just

Blog about the whole process and just be very open. And transparent about it. So we started a blog and I and I wrote maybe Weekly updates on how things

We're going. challenges and delays that that we're facing And I was really surprised actually, um You know, it it worked. It made people understand what we were going through.

Yeah. the thing being made, the sausage being made behind the scenes and I th I think that people that kept people really engaged throughout the process. So you have uh basically a bunch of contractors and freelancers and you guys are going back and forth to Asia And you're so you got people working on the software to transmit the data to the web.

You've got some people working on the hardware, presumably in Singapore, trying to shrink down the motherboard and do something that is two inches by one half inch. And Were you just constantly running into Failures like You would think that oh here it is and then

Like somebody would hit the hit the go button and then it would just fizzle out, it wouldn't work. Yeah, I can't even enumerate the number of um challenges with the product that we had and go please start. You know in some ways he A lot of people I think when you think about hardware, it's like, Oh, I'll find a manufacturer in China. Yeah.

They're j they'll just run with it, you know, and then they'll just give me the send me the bill. Yeah. And they'll just crank out thousands, tens of thousands of this. But Like a suitcase we've done away, right? So so it works if it's If it's that thing or something that That's very similar to something that they've built.

Before. That's that's that's a different story than this thing that This manufacturer never had Built it for. So they would send you things and say, Yep, we got it and then you would get it and it sucked. It just didn't work.

Yeah, we wouldn't wait for them to send it. I mean, either myself or Eric would be in Indonesia or Singapore at and at at any given time. We'd we trade off different weeks and We were out there on the production lines pretty much inspecting every Every part of the process. I was ap I was absolutely convinced.

You had no doubt that this was that this I had no doubt because we were getting proof every day. That this was something that was going to be big. And I think the first evidence of that was at Tech Crunch. We had two thousand pre orders and we're getting pre orders every day, I think.

By the summer time we had We had about twenty five thousand. Pre orders? At a hundred dollars per unit. That's that's a fair amount of revenue if we could ship these units. And how much was it gonna cost you to make each unit? That was a very good question. We didn't know that. Hopefully under a hundred.

You didn't know you were selling them for a hundred, but you didn't know how much it was gonna cost you? We had a sense of the bill of materials. Um I think we were trying to shoot for a gross margin of about fifty percent. So we're targeting you know, the full cost of the product, including shipping, etcetera, being no more than fifty dollars. So that's what we're targeting. It's a it's a high cost, but um you know that was a cost at which we felt we could sustain ourselves as a business. How did you and Eric um manage your relationship and friendship? I mean

with the stress of this delay and inability to meet demand and all these like Was there tension at all between the two of you or are you guys totally on the same page? Yeah, I don't I don't think uh There was

That much tension. Lot of stress, but not Not tension. I think we trust in our ability to, you know, help each other out, and there are periods when either of us would be pretty down. On the company.

Mm. in the product. And luckily we weren't down Both at the same time. Uh and and that's why it helps, I think, to have a co founder. So there were times where you were really down and and he can

And Yeah, exactly. And then I'd wonder why he wasn't down. And and there's some pretty dark times right before we shipped. I remember we were months before we thought we could finally get the first unit off the production line, and I was sitting in my hotel room. in Singapore and I was I was testing out One of the prototype builds that.

that racer had produced and The radio. Range. Was not good at all. It was supposed to have a range feet or fifteen to Well th that was the hope that would have fifteen to twenty feet range, but the range was actually like two inches.

God. Wait, so the antenna in the device. at a two inch range. Yeah, it it would only work at two inches. And I'm thinking We've got a ship this this holiday season. Like I've got Tens of thousands of these people waiting.

Oh God. And so I'm I'm just freaking out in my hotel room. Yeah. Exactly, exactly. So I couldn't sleep that night, obviously, and I I took the unit apart. Like I had a multimeter and I was measuring different voltages and currents and

What I realized was huh. The cable for the display. was kind of flexible and long enough that Maybe it was actually drooping down and touching the antenna. And that was caused by creating interference. Creating interference.

And I could kind of see that when you put the whole thing together that it might troop down, and I thought, okay. Uh how do I create a shim that would prop the antenna up? So I went to the bathroom, grab some toilet paper. rolled a little bit of it in a ball and stuffed it between the antenna. and the display cable. Yeah. Put the device back together.

And it started working. Like it's like so you had to separate one wire. from the antenna and that was it. With toilet paper with like toilet paper, yeah. That that was it. And uh Uh I still couldn't sleep, so the next as early as possible the following morning I raced into our manufacturing said, Okay, I I think I found a problem.

But obviously toilet paper is not A a scalable high volume. situation. So they went back and figured out how they could make this manufacturerable. So they ended up uh creating these little tiny die cut pieces of rubber.

that they would glue onto the circuit board. To keep the antenna away. From the display cable. Wow. Yeah. Wow, so that was basically was just

inserting something in there and then it it worked. Yeah, it wasn't exactly duct tape, but that was the equivalent. It was prose duct tape. It was pretty close, yeah. So you guys launched this product in Christmas of two thousand nine. And it was a pretty successful

Product launch um you had twenty five thousand orders and Sounds like you're off to the races, but I I I I I guess even like with the success, did you when you went out to raise money? This is two thousand ten. Were investors more excited or was it still a challenge to to get more investors in?

It was still it was still a challenge. Um And and at the time it wasn't you know, okay, I guess you guys are having some success, like consumers are buying the product, et cetera. It's like and they congratulated us on that. Right. But They were very scared of hardware businesses.

I think there had been a lot of really high profile failures in the consumer electronics industry. And so it was very difficult for us to raise money. I remember, you know, we had a a spread sheet of of target VCs. I think there are forty names that we put on that list. And literally we went to number forty. before we were able to raise money. And just giving the same pitch again, again, answering the same questions. Same pitch, driving, you know, we're in San Francisco driving down one oh one to Sand Hill Road.

Constantly giving the same pitch to forty VCs. You know, f that's probably the one thing I I didn't like about that whole time period was I hate keeping the same pitch over and over and hearing the same questions and same objections, et cetera. So that that was not a a a fun or stimulating time for me. Yeah. Alright, so eventually

the fortieth investor does decide to give you some money. I think you raised about eight million dollars. And at this point, were you able to then have like a proper office and a and a staff, were you able to kind of begin to Recruit.

Real full time engineers and developers and People like that. We were. We we did that after with the round that was right after our first two million dollar institutional round.

Yeah. We hired a bunch of um, you know, customer support personnel. I interviewed and hired our first, you know, head of sales. I you know interviewed and hired someone to finally run all of our manufacturing and operations, which is still a job. that I was doing. Like I was still issuing all the POs and managing the inventory. And I think we're really fortunate because the early management team that we hired in those days, uh, pretty much made it

up to and past our IPO, which I think rarely happens. It's so crazy to think about now, but I think early on, right, with with the Fitbit the idea was to be part of a bigger community, so like the data from your activity would be available. You would just go to a site and you could see and you could see everybody else's, because the idea was we're all part of this together. But I think like early on, right, um Some like users were tracking like Facts.

And When you started to hear about these things, was your reaction like oh my god, never even thought about this being like a privacy thing, I I always thought that people would just want to share stuff. Yeah, I think um We this was still kind of the early days of of

Sharing things like that. And I found that about it because I saw this tweet about Some going, Hey, if you do this Google search. you'll see because Google is indexing all our all our public pages where people are logging things that people have made public. you could find out all the sexual activities that people were logging on Fitbit.

And I saw that, I'm like, oh my god, this is not good. Yeah. So that ended up being The first real PR crisis for the company And it was happening over

the fourth of July weekend, so I had to call an emergency board. You know, we had to scramble to Delete all that stuff, turn everything private. Cause the default setting initially when you got a FIP it was it's it's not private, it's open. 'Cause the idea was it was gonna be a big community of people trying to get fit. Yeah, I mean we made a lot of things private by default, so we made sure that people's weight was private'cause we thought that would be sensitive, but we didn't think that

Oh. People's activities, you know, there wasn't any harm in doing that and we just didn't realise that people would And just to be clear, like People who log sexual activity, this is not like a a category that you offered up. It was just people were voluntarily deciding to just log that as one of their activities. Wha was

It was a category, but it wasn't something that we had Realized so We we use this database from the government. That was like thousands of different activities that people would do. Oh, I see. I and so it was an option. Um, we just didn't think people would

We were just naive about that. We were naive. We were like, okay, this is a government database of activities. It must be fine. Um That was that was quite a shock and and a wake up call for us. So Fitbit for the first couple of years was a still a clip, mainly um a clip and then

I think Really two thousand eleven. You release the first product. Christmas of two thousand nine, you've got two thousand ten, by two thousand eleven. I read your

Just business exploded like five X growth from two thousand eleven, two thousand twelve. You went from fifteen million dollars in revenue to seventy six million dollars in revenue. What was going on? Was it just the self

generating phenomenon? Like were you surprised by it? Were you investing in marketing? Was it just unearned media just People r reporting on it? What was going on? I I think The primary reason is, you know,'cause we had baked in this social element, this community element into it from the very beginning. It ended up being a very viral

Very viral product. Um so one family member would get it. and to really realize the potential, you know, the the community aspect and the competitive aspect. You had to have someone else as well. So they'd either buy it. For their spouse.

Or their parents. and they would start competing and then they'd buy it for their friends and they'd try to get their friends to Uh by the product. So it's so they could each see how many steps you were people'cause I remember this. I I remember this at N PR. People were wearing Fitbits and they were talking and there was I think there was even people were encouraged to get Fitbits. Exactly. So it was it was very driven by word of mouth. And and this viral spread was um was a huge driver. Of our growth in in those days.

Um I think by twenty thirteen. You had some competitors coming in. The Nike uh Nike was making one and and Jawbone was making one and

I mean I remember going to the TED conference in twenty thirteen. and getting a jawbone in my gift bag. Um, were you worried about the competition at that point or or or or not really? Yeah, at that time I think people were looking at the success and you know, there was even a name coin for the whole category which is quantified self.

How do I use sensors, et cetera, to measure everything that I'm doing. in my entire life. And so that attracted a lot of competition, as you said. Um And I'd have to say the competitive aspect was was definitely worrying. at the time, uh, especially with Nike and and Job. Yeah, because they're so huge.

They're a huge I mean Nike obviously it's a multi billion dollar multinational company uh with a lot of media dollars. I remember when they announced the fuel ban You know, they had all these celebrity athletes at the announcement and we're like, Well, God That's insane. And yet by twenty fourteen you had sixty seven percent of the activity tracking marketplace, right? I mean Fitbit

was just totally dominating the marketplace. I mean, were you and and Eric doing like like victory laps and high fighting each other and thinking back to all those like all those doubters? Uh I mean, what was going on? I think we're still pretty I I don't know if scared's the right word, I think. Still very very cautious. Um you know, nothing was was guaranteed.

There was a lot of competition that was emerging. Uh, we still had a lot of internal challenges in the business, you know, scaling production. scaling the company, etcetera. So again a lot of fires for us to be solving on a day to day basis. And I remember occasionally we'd always check in and say, Hey, um When do you think we'll know like this is This we're gonna make it. Yeah.

And we'd say I think we'll know in six months. And we kept saying that every Six months. So it was pretty much an an ongoing thing. Um You know, pretty much up to the IPO.

Twenty fifteen was a huge turning point for you in in many ways. Um Go public. think your market cap at a certain point reached ten billion dollars. That year

twenty fifteen. Apple The Apple Watch is released and they stop selling. Fitbit in their stores. At the time you were quoted as saying

you know, I don't really not really worried about this because it's a huge market. It's a two hundred billion dollar market. You know, the Apple Watch is just crammed with a bunch of stuff, or smart watches are crammed with a bunch of stuff, and what we're doing is something simpler. Was that What you were saying publicly Because

I don't know, did you felt like you should be saying that or did you really think that was true? that the the Apple watch wouldn't actually Have much of an impact. You know, we we're definitely concerned with Apple. I mean this was the preeminent technology and especially hardware company at the time with an amazing brand.

We had Faced Off, Phillips and Nike and Jawbone, which were, you know, in their rights very big competitors, especially Nike. We did feel very strongly that our product had very clear advantages. It was a simpler product. Um if you looked at the Apple Watch that was announced at that time. I think everyone will admit, maybe even Apple, that

It was a product that Didn't quite know what it was supposed to be used for. So With the launch of the first Apple Watch, I don't really think that that had an actual impact.

On the trajectory. Other business. Um it wasn't The product that I would later. later become and the industry wasn't where it would eventually evolve either.

I mean but eventually the industry Did change, right? I mean I mean Apple Watch got really popular, I think like by twenty sixteen Um Fitbit stock.

A drop by like seventy five percent over the course of of a year. Um I mean you and Eric were running a publicly traded company And the stock was just like Tumbling.

So what did you think? I mean, I I can't imagine that was pleasant for you. No, it was definitely a stressful stressful period. And y you could argue, well, we maybe we shouldn't been have been valued at ten billion. In the first place. Uh and I I think in a lot of times it's a question of

you know, perception, right? If if we had never hit that ten billion. And we had steadily grown. into You know the two billion. uh I think people's perceptions and, you know, just psychology about the whole situation would have been different.

Then going to ten. And and falling to two. Yeah. And it was a very you know, challenging period'cause it's a private company Despite challenges, your valuation doesn't

Change. very often. It only changes when you raise money, which could happen once a year, once every two years. So if you hit a bump in the road Your employees don't really Feel it. We had a product recall where

If we had been a public company, our valuation would have plummeted. Immediately. But at the time we're private. So we just told the employees, Hey, look, this is the challenge. It's pretty serious. But here are the steps that we're gonna take to get through it. And everyone kinda rallied together. But when you're being measured every day.

By the stock price. Uh, you're not really given a lot of breathing room. to to try to fix things. Even though you are introducing new products Revenue is declining every year.

From the time you went public. And I read an article about something that you did in twenty seventeen and I'm I'm really just curious to get your take on it,'cause I actually think it's really Courageous, but but also probably super

Stressful and difficult? Which is you asked your employees to submit a An evaluation of the company and of you. And uh and then you sat in front of them.

to hear the results of the this evaluation and it wasn't good. You had a you even had some employees who wrote letters to the board. Asking that you be removed as CEO. Um I can't imagine that was easy for you to hear.

Uh you know, I don't know if I heard that particular feedback directly, but clearly the survey results were were not great. Um You know, I I kind of half jokingly think, you know. Probably used to hearing very critical feedback because of my parents. I don't think there was a moment where they were truly happy. With uh with anything. That I did. I remember even uh when I took the SETs and I got my score back. It was it was a pretty good score, but my dad just honed in.

on clearly the areas that that had not done well. So I don't think I have a huge ego. I mean I I do have an ego, I think it's human to have one. Sure but um My primary focus was how do I how do I get things back on track. You had there was a quote from somebody in an article, it was an anonymous quote, said you know, we were focused on Um

At a certain point we're focused on the right things. We had the ability. and have the ability to know a lot about our users, which you do, but our users don't want to be told what they did. In other words, they don't want to be told, hey, you exercise, you did 10 steps today. They want to be told what to do. Like how to get better. So

and the quote was this was the greatest missed opportunity. Um I know you've you've made a pivot since then, but was that a a fair assessment at the at the time in twenty seventeen that You were just you were too focused on telling people what they've accomplished rather than telling them what they need to do? Yeah, I think they're ultimately kinda too big. things that were driving the headwinds in the business. First of all, I think we were really behind in

Launching a competitive smart watch. the time. Like people were transiting. Competitive to to that to that. Competitive to Apple. Yeah. Yeah. It was clear that the industry, uh consumers were moving to that category and we were seeing that in our sales. So uh in a пі in a very short period of time our tracker business uh fell by eight hundred million dollars in in revenue. And you know, at the time at our peak we were doing about two point one billion in revenue. So we had an eight hundred million dollar hole. Uh and we finally launched our smartwatch but it was only sufficient.

To fill that hole. Very barely. You know, we we hadn't We hadn't transformed a software into giving people guidance. And advice.

And it also ties to uh our failure at the time to quickly Diversify a revenue stream beyond just hardware to a services business. Exactly. Yeah. Um we were so focused on growing our hardware business because that was what was bringing in the money. That was what retailers wanted.

et cetera, and you know, one of the mistakes I made was not setting up enough time, enough focus to building the subscription part of the business that actually answered those pivotal questions for for our users. As many, many companies find themselves, you know, successful companies

that have a successful legacy product. It's crazy talking about a a legacy product for your company, which is only ten years old. Um or twelve years old, but but Yeah, the you could argue that the Fit bit. Product is your legacy.

Product, right? And that As as any company with a legacy product Realizes. they've gotta make a pivot. Like for American Express, it was travelers' checks for a hundred years, right? You know that's how they made their money.

Uh and they had to pivot into other things, travel services and credit cards and so on. Um It sounds like in twenty nineteen you really made a pivot into thinking about Fitbit. Not as a

hardware company that makes like a tracker watch or device, right? Smartwatch. But um A company that really is about healthcare and is designed to kind of pivot into more into Healthcare data and analysis is that

Fair, is that right? Yeah, I think that's that's fair. I think we we stop thinking of ourselves as a device company and and more of as a behavior change. company.'Cause that's effectively what People were buying. our products and services to do, right? Was to change their behavior in a really positive way.

And not only You know, individual People but companies as well. Companies who in the US especially bear the direct

costs of the health care of of their employees. So We started thinking about ourselves as a behavior change company. and you know figuring out what are the products and services that that really Deliver that both to To people and to businesses.

Okay. So We get to the end of last year where Google announces that they Or going to buy Fitbit.

two point one billion dollars. Um We shouldn't mention that at the time of this recording it hasn't closed yet. Um To me it makes perfect sense. If I'm you or Eric, I would have done it. I would have said two point one billion dollars. That's a very that's great. That's a great outcome because now with Google, we've got access to their their dollars and their research um labs and all the you know, the the people who work there and the analytics and our ability to really go to the next level. Um why did it make sense for for from your perspective to

To sell to Google. Yeah, that's a very complicated and kind of emotionally fraught question, but um Last year our board met and it was pretty clear to everybody that's not the first time.

We had a lot of challenges in the business. Um we weren't profitable. There was a lot of competition out there, uh, from the likes of Apple, from Samsung, um some emerging Chinese competitors. But there was a lot of just great things going on. in the company. Like I was so excited about our product roadmap, about something, you know, things that were in our pipeline. all the advanced research that we're doing around health and sensors.

Like I would look at our product roadmap every day and just, you know, come away super excited about that and and then also be you know, confronted with a lot of the business challenges as well. And for me most importantly, um, it was about a legacy and I wanted The Fitbit brand and and what we did.

to continue onwards for a very, very long time. And we just had to figure out the best way to do it, whether it was as an independent company. or or within a larger company. That was really what was most important. I I I I imagine that there are some details you can't talk about for for obvious reasons. But um

As of this recording, we're we're talking in in mid April. There is a hold on the Google acquisition. The t the Department of Justice is doing a an investigation because there's some interest groups who have said, Hey, you know, we don't think that Google should have access to all this data that fit fit fit, but as twenty eight million users, there's this incredible Um Is that

Causing you stress right now that that there is this Does Justice Department hold up on the acquisition? No, it's and it's because um you know, sometimes the press does like to sensationalise things, but The process that we're undergoing right now um with the department of justice and also with the EU

in in some other countries around the world is pretty normal for acquisitions of the size, in fact it's required. Uh really, you know, the whole review is about the anti competitive element and especially around the wearable market share. So that's just something that We have to convince regulators that, you know, this doesn't reduce competition in the marketplace. As far as you know, the situation now.

with the the lockdowns and and the pandemic does not have any impact on Google's interest or commitment to making this happen. No, I think everyone's thinking towards the long term. Fingers crossed is that.

We do find ourselves through This Covid nineteen. situation and that there is life Beyond that, maybe it comes back slowly, but You know, I think everyone is thinking, what is this whole

category look like in time span of years. How and I think what one of the things that Covet nineteen has shown is that Especially if you look at healthcare, this idea of remote health care, remote monitoring, keep all people healthy. outside of a hospital setting is actually really important.

super it's it's gonna totally change medicine. I've had I've had a a video call with my doctor just for a quick question. You know, it's Actually super convenient. Exactly. And if if during these telemedicine visits, if they have a snapshot in summary of what you've been up to and what your health has been outside of that visit. And almost be predictive in that way. I mean I think that's

that can be really groundbreaking in terms of the way that's being practic in the way medicine gets practiced. And this whole time period is merely accelerating that transition. When you think about all of the the things that that you have done um professionally and and your successes and You made a lot of money. I mean, you're extremely wealthy. You're wealthier than your parents could have ever imagined you would be or they would be. And they took a huge risk too. Come to the US and had all these little

Mom and pop stores. Um How how much of that do you think is because of your Intelligence and and skill and how much Do you tribute to luck?

Yeah, that's always a a a tricky Tricky question to answer. Yeah, I think very fortunate to have grown up with my parents, um, just having Seeing them persevere.

through life, you know, you get the realization that nothing really comes easy. that it it does take a lot of You know, just grinding away at things that at the time seem seem kind of unpleasant. So I think those are good traits and very fortunate to to have parents like that who sacrificed a lot to put me in some in great schools over time, even though they

They started from some humble beginning, so But also have learned a lot of ways, gotten some lucky breaks where things have could have gone the wrong way. Very Very quickly.

You know, ultimately I attribute it to uh a little bit of Little bit of all of that. I think it's um Not fair to say that everything is luck, because then I think you start to discount the actual things, actions that you can take on your own to affect the future. And that's really important.

It's James Park, co founder of Fitbit. And here's a number for you. thirty four million six hundred and forty two thousand seven hundred and seventy two That is how many steps James has tracked since he first put on that Balsa Wood Fitbit prototype, at least as of this recording. It's about 15,430 miles, or 24,832 kilometers. And thanks so much for listening to the show this week. You can subscribe wherever you get your podcasts. You can also write to us at hibtnpr.org.

And if you want to send a tweet, it's at How I Built This or at GyRaz. This episode was produced by James Delhousi with music composed by Routine Arablui. Thanks also to Sarah Sarison, Candice Lim, Julia Carney, Neba Grant, Casey Herman, and Jeff Rogers. I'm Guy Raz, and you've been listening. This is NPR.

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