Okay, so this round of the Finance of Startups, I’m going to dive into the S-1 for Fitbit – filing for its initial public offering (IPO) seeking $100M. I’ve been researching various finance concepts for a while now, and so I’d like to start putting more practice to the understanding with this kind of like David Cummings does. I figure if he’s successful and doing it, I could follow in his shadow, and take a crack and learning.
Fitbit, if you didn’t know, is well known for its wearables that count the wearers’ steps, calories burned, sleep habits, and the like. Fitbit devices are paired via Bluetooth with a user’s smartphone that then interprets the data to provide analyses and trends to the users. Fitbit is one of the first companies to really pave the way for the “quantified self” movement.
Diagram of Fitbit’s community of users – three categories and fitness levels
But before I begin, here’s what an S-1 form is:

The S-1 form, also known as “Registration Statement Under the Securities Exchange Act of 1933”, is required by the Securities and Exchange Commission (SEC) for any company seeking to sell securities on a national exchange. The form requires the company disclose details regarding the use of proceeds, current business model, etc.

So some highlights of Fitbit’s S-1:
  • Fitbit mission: “Fitbit helps people lead healthier, more active lives by empowering them with data, inspiration, and guidance to reach their goals.”
  • Company started in 2007, and as of March 31, 2015, has sold more then 20.8 million devices (~68% market share, by dollars, in 2014 accordingly to NPD Group)
  • Fitbit uses virtual badges and social competition (with other users) to motivate wearers
  • Revenue have grown rapidly (average year-over-year growth rate of 285.6%)

2011: $14.5 million

2012: $76.4 million
2013: $271.1 million
2014: $745.4 million

  • Net income (loss) has just turned into the black in 2014

2011: $(4.3) million… -30% of revenue
2012: $(4.2) million… -5.5%
2013: $(51.6) million… -19.0%
2014: $131.8 million… 17.7%

  • Device sales (ranging from $4.95 to $195.00 U.S. MSRP)

2011: 0.2 million
2012: 1.3 million
2013: 4.5 million
2014: 10.9 million

  • International Data Corporation (IDC) estimates 21.0 million devices were shipped in 2014, and estimates wearables will reach 114.0 million in 2018 – a 442.9% growth
  • Over 45,000 points of sale (retail) in more than 50 countries
  • 1.1 million registered users as of December 31, 2012; 19.0 million as of March 31, 2015
  • Acquired FitStar in March 2015 to enhance the company’s software and services especially with interactive exercise videos
  • Corporate wellness is mentioned a lot including citing the corporate wellness industry expanding from $7.4B in 2014 to $10.4B in 2018
  • The company incorporated in Delaware in 2007 as Healthy Metrics Research, Inc, but changed the name in October to Fitbit, Inc. Company is headquartered in San Francisco, CA
  • Paid Active Users:

2012: 558 thousand
2013: 2,570 thousand
2014: 6,700 thousand

  • Fitbit cites a highly competitive market not just including specialized consumer electronics companies like itself (Garmin, Jawbone, Misfit), but also the traditional health and fitness companies (Adidas, Under Armour) and even large, broad-based consumer electronics companies (Apple, Google, LG, Microsoft, Samsung). Think about that for a second, aren’t those “large, broad-based consumer electronics companies” now touching everything from fashion to cars to homes, as well? Crazy
  • Products are all contracted for manufacturing in Asian with Flextronics – sole source. This has business continuity issues and procurement implications all over it
  • Fitbit had a product recall due to users having “allergic” reactions to its devices in March 2014
  • For the three months ending March 31 of 2014 and 2015, Fitbit spent $71.9M and $21.1M on advertising and marketing campaigns
Okay, I reached page 28, and it’s getting pretty dense, so… I stopped. The S-1 continues for another 100+ pages describing in detail about each of the sections from the prospectus earlier presented as well as current product features. Skipping around, you can find some interesting other tidbits including executive compensation (like $7.8 for the President and CEO James Park, of which, $222K was salary) and much more.
Very interesting to see Fitbit, where they were, where they are, and where they plan to go. I’m surprised, though, the company did not include any other future plans including expanding into more integrative health such as building networks with healthcare providers. Hmm…
What questions do you have about the Fitbit S-1? How do you think the company will fare in the coming years?
Wow… so this is what 100 feels like! Actually, it feels about the same as 52, 89, and 75. But it sure as heck feels a lot easier than 1-10. Since about October 2013, I’ve posted once every week, typically on Wednesday. Today, it’s second nature for me to write and share – takes about two hours per post including editing.
When I first started writing, I didn’t really have a clear-cut goal other than to start my path down “thought leadership”. I knew that I had already earned a lot of experience that I could put to use today, rather than wait several years when I was “older”. Although, the blog was under the moniker “Supply Chain Ninja”. I’ve rebranded to Entrepreneurial Ninja, so the earliest posts were about supply chain and consulting.
I saw the number of posts continue to climb, and it was only till I hit 90 where I really started to reflect on what I wanted to say on my 100th post. If you ask most people around me, this isn’t really a big deal to me. I mean… 100? Really? Over a couple years? That’s really not much considering there are several bloggers who publish three times a week and real stalwarts who published DAILY.
Alas, I’m celebrating the consistency, especially given the countless times I wanted to just say, “Nah, I’m done. I have nothing left to share.” But I’ve kept it going anyways.
So for my 100th post, I’m going to give you three things: what I’ve learned, posts that have garnered the most views, and then, my own favorites.

Lessons I’ve Learned Through 100 Posts

  1. I love writing. I didn’t care much for writing in school, but post-school when I absolutely do not have to write this or in other mediums, I love it. I’ve done my own mini-research papers about relationships and technology, I’ve written about personal goals and my way of thinking on another blog, etc. It’s fun. It’s therapeutic. It’s distinctly me.
  2. People love my writing. People like my writing. People hate my writing. People don’t care about my writing. All of this is OKAY. I obviously want more passionate, lovers of my work, but I’m comfortable with those who don’t care about it, too. Sometimes my message resonates with people, and sometimes it doesn’t. That’s okay.
  3. Even as a consistent writer, I still get shy. There are posts when I have no idea if what I’m writing truly adds value in the message I’m writing. However, I do it anyways because it needs to be like clockwork for me.  And then, there are times I still feel shy about writing and sharing with the world. Even though I JUST said it’s okay for people to not care for my writing, I do have twinges of timidity.
  4. I love learning. When I write and write, I can run out of ideas. Luckily, there are sources of inspiration everywhere. Blogging has been a source of great ideas for me and great learning. I’ve read much more than I used to (again, in school, didn’t care for it). I meet so many more people now than ever. I like to ask questions, and I like to learn and share with the world.
  5. I write a lot. I’m going to change up my writing style soon (I’ll have a post about that, too), but I can write (and talk) A LOT. I’ve learned I’m very opinionated, but I’m open to others’ opinions and thoughts because then I learn. But I’m happy about being opinionated, too, because in my earlier years, I was shy and lacking of self-confidence. Now, I have confidence in my abilities and who I am.
  6. It’s about the message, not necessarily the details. As I click through my earlier posts, I smile at what I’ve written, but I also start editing little punctuation or grammatical mistakes. I’m like the guy on Match.com who will not date a chick with too many typos on her profile. In blogging, I can easily spin my wheels sweating the details of grammar, details, etc., but then I would be stressed and may never push out a post. What matters THE MOST is hitting that Publish button, and sharing the message with the world. As long as the main idea and key tenets are there, readers will appreciate it. As will I.

5 Posts with the Mosts… Views, comments, and more

My Favorite Posts… the ones I enjoyed writing and sharing

I’ve had a lot of fun writing both the goods and the bads (the challenges). Looking forward to hitting the next 100 posts, and maybe (MAYBE) up my frequency, too. Thanks for reading and following along!

What posts were your favorites? Any suggestions on writing style or topics to cover? 
Kenneth Cole speaking at the GMSC event at Goizueta Business School on Thursday, May 7th. 
Last Thursday, I had the pleasure of hearing THE Kenneth Cole give a keynote to MBA students at Emory’s Goizueta Business School (GBS) as part of their Goizueta Marketing Strategy Consultancy (GMSC). I was there as a judge of the group presentations, not as a student.
A little intro to both:
  • Kenneth Cole is the founder and designer of Kenneth Cole Productions, Inc. one America’s premier fashion brands today with products spanning shoes, clothing, bags, etc.
  • GMSC is a program that allows Emory MBA students work in teams to solve very complex, real problems for some of the world’s top companies.

So I’m going to share the short story about the founding of Cole’s company that highlights some of the creativity and persistence I enjoy so much about entrepreneurship and then some good sound bites from his talk… Sadly, I won’t be able to do his comedic side justice, but maybe you’ll have the pleasure of hearing from him live one day, too. Till then…

The Birth of a Shoe Company…

As any good presentation starts, Kenneth Cole open with a story on how his company was started. A newly minted graduate of EmoryUniversity, Cole wanted to start his own shoe company following in the footsteps (pun not necessarily intended) of his parents who owned El Greco, a shoe manufacturing company.
Cole applied for the “Kenneth Cole Inc.” as he started out – there was no Google to just search company names in the 70’s after all.
He started the company based on shoe designs he had incepted during his stay in Italy, and he knew the massive market and financial opportunity of America. He knew for success, Cole had to make an entrance at Market Week held at the New York City Hilton. However, he didn’t quite have the funds to pull it off.
Much like conferences today, it takes significant investment to grab a vendor booth – hundreds, if not thousands of dollars. However, many of the large brands would set up a secondary space located within blocks of the Hilton to showcase more products. For Cole, that was too much.
Cole was speaking to one of his friends about his predicament, and his friend offered up his 40’ trailer (who doesn’t have a friend with a 40’ tractor trailer?). However, it’d be insane to park a 40’ trailer on a busy NYC street. Cole would have to get a permit for that type of thing…
So Cole called the mayor asking for a permit to park the 40’ trailer on the street next to the Hilton – the show happening in 10 days. The skinny on that conversation: “No.” The mayor told Cole permits were only issued to utility companies and movie filming. So the only logical thing to do now was to ask friends and family for money to buy a booth. Just kidding.
Instead, the next day, Cole changed the name of his company from “Kenneth Cole Inc.” to “Kenneth Cole Productions Inc.” and applied for a permit to film a movie “Birth of a Shoe Company”. The permit was granted, and to top it off, the mayor provided a couple cops on set of the filming.
So what happened at the shoe show? Kenneth Cole sold 40,000 pairs of shoes in 2.5 days (!!!). And to this day, the company’s name is Kenneth Cole Productions Inc.
My Kenneth Cole wallet has served me for more than a decade – received as a present. I’ve received another high quality Italian wallet a couple years ago, but I’m not interested in replacing mine. Actually, I can’t remember where that new wallet is – don’t tell my sister.

Tassels, buckles, and more accessories

Kenneth Cole wouldn’t be the creative he is today without some witty, inspiring sound bites, so here are several of my favorite:
  • As it relates to resources and problem-solving, usually the most costly solution isn’t the best or the one that “wins”. Instead, the most creative solution pays off the greatest. Case in point: Cole’s request for a filming permit above.
  • The difficulty and honor of selling his brand is that he has to earn the right to be chosen. Nobody really needs another pair of shoes.
  • Kenneth Cole wants his company to be a vehicle for good citing his company goals intersecting with the needs of the community – its responsibility.
  • “Empower others to be change agents and change makers.”
  • “Build a platform that responds to change, not be stifled”. This is relevant to creating sustainable company despite rapid changes to fashion and technology today.
  • The brand is the greatest point of distinction, but today, everyone is creating their own brand and audiences. Kenneth Cole’s goal is to earn the right and convince everyone to include him in their brands.
  • The 4 top life tips:

1.      If you can’t change the world, be an accessory.
2.      What you stand for almost as important as what you stand in.
3.      When in doubt, wear my shoes.
4.      Good to be known for your shoes, but better to be known for your soul.
I enjoyed Cole’s speech a lot given how many of his talking points resonated with me as an entrepreneur – namely, points about being creative and the responsibility of a brand to the community. Real glad I got a chance to hear his keynote, and shake the Legend’s hand afterwards. (Now, if only I got a selfie with him… just kidding.)
Mr. Cole, I’ll be picking up a pair of your shoes soon… even if I don’t need them.

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Took a hike on Saturday morning to the top of Stone Mountain to catch the sunrise. There are a million reasons not get up this early, but if I hadn’t, I wouldn’t have caught this beauty.
If you’re a mountain biker, you know the importance of picking a line, attacking it, and driving your legs to get through tricky terrain. Turns out, this line-attack-drive mentality is actually pretty applicable in the world of startups and entrepreneurship, too, but not just in navigating the treacherous terrain of entrepreneurship, but also in just starting out.
When I was younger, my buddy and I biked around the neighborhood looking for “mini-off-road adventures”. That meant going down stairs around the ‘hood, flying through the wooded backyards of neighbors, and occasionally, fording a creek bed near the neighborhood pool.
The creek had rocks and dips in addition to the slow current of the creek, so it made for a “risky” adventure – hey, we’re in the suburbs. The key to navigating the traps and obstacles was to find a line, attack it, and keep churning your legs.
At first, my buddy had trouble fording the creek either stopping well before entering the creek or right smack in the middle. But once he focused on a clean line free of rocks and big dips, finding momentum into the line, and then driving his legs, he was crossing the creek almost effortlessly.
I’ve recently sat down with several “wantrepreneurs” and musicians, and so many of them are stuck in this “I’m not ready” phase or “I’m waiting for… [insert ‘stars to align’ here]”. But as they’re waiting for the right people to come aboard to help or for themselves to have the confidence to try, years have passed by. And in most cases, those ideas are now yesterday’s someone else’s successes.
So why are people holding back? How do you just “pick a line, attack it, and keep your legs driving”? Everything’s easier said than done, but maybe being conscious of what’s holding you back is a step towards accomplishing the goals you’ve set forth for yourself. So here are a few thoughts:

Surprise! You’re afraid of what others think.

How many times are we afraid that others won’t like what we’re doing, or they “disapprove”? Funny thing is that everyone has their own priorities, and you should too. That priority? Yourself.

I happened to meet a young girl in high school who said she liked to sing, but she didn’t consider herself a singer or musician. In fact, when my friend and I asked her why she didn’t share her music more, she mentioned “mean girls” at her school. Wow. That was truly sad. She was holding herself back from her passion, afraid of being teased by others who really didn’t care for her. Meanwhile, those who did care for her encouraged her, but it was the rotten apples in the group with nothing positive to say who held her back.

What you’ll learn in any marketing exercise, especially in startups, is that you’ll have multiple levels of the market, and those who your message resonates with are the ones who matter the most. It’s that depiction of a funnel where the right audience who comes through at the end. And believe me that there are plenty of people who will care about what you do and say.

You think you’re not ready.

“If we wait until we’re ready, we’ll be waiting for the rest of our lives.” – Lemony Snicket

Truth is, I don’t think we’re ever truly ready for a lot of things. Couple examples:
  • I hear from my friends who are now parents of little ones that they didn’t think they were fully ready, and even when their kids were born, they weren’t. But they learn on-the-fly.
  • As I’ve started consulting independently, I’ve had to rely a lot on my own experience and skills and my ability to quickly learn. Once I sold myself on projects and started working on them, I’ve continued learning which has been my way of powering through (the drive). Sometimes, it’s smooth, sometimes it’s not. But each time has been a great learning experience.

When we pursue a dream or a passion like entrepreneurship, we have to be strong, smart, and vulnerable enough to ask for help. Those capabilities you think you may lack can be learned, and asking for help is one of the best ways to do that.

It’s amazing what happens when we actually push ourselves and keep our legs churning – we accomplish what we didn’t think we could.

With more time (and falls), you seek the path of least resistance.

I was hiking on Stone Mountain this weekend, when I realized I started picking lines on the trail with the smallest “steps”. I remember I used to love jumping down the larger boulders. Now, I’m nursing a sprained ankle (I’m like Mr. Glass these days), and I’m consciously more cautious of what line I take.
When I was younger, I would dream about mountain biking up and down this granite. Now? Now I’m slowly, cautiously stepping down each boulder. Ah, how the years have affected my risk aversion…
As we all get older, “wiser”, we’ve got more experience and scars that keep us from both getting hurt and attempting anything too risky (like a growing family). Sure that can be a good thing, but it can also hold us back as we settle into a pattern. It’s important to weigh risks against the opportunities and realize, too, that some risks aren’t really risks at all. Instead, they’re just excuses.

You don’t think you’re good enough.

Patrick McKenzie (of Kalzumeus Software) wrote a post about the need for salary transparency in Talking About Money, but he also shared a little nugget of truth about skill growth. Patrick increased his consultancy rates dramatically from $12K per week to $30K to $50K (PER WEEK!!) DESPITE his skill levels being largely the same. Instead, it was his ability to continue to market and sell himself that drove up rates.
When we’re afraid to venture out on our own or to share our music or our ideas, most of the time, it’s because we THINK we’re not “good enough”. However, in most cases, we are. Patrick continued growing his consultancy rates by learning and iterating over the years. It took practice to learn and iterations… practice and iterations he would never have if he never started.

You put others and others’ obligations ahead of yourself and your own.

I was talking to my musician friend the other day. I’ve heard his stuff, and he’s genuinely a great musician, but due to his work with others, he hasn’t put out any new music in years. At least, he hasn’t shared it. It makes me sad a bit.
I explained it to him like his personality… he’s a great guy, has a good heart, and has some deep, creative thoughts. However, most people don’t know him that way because either he doesn’t open up to others or strangers don’t just say hello. I just happened to be the Curious George to say hello.
His music, like his personality, will never be liked, disliked, or even known it ever existed if he doesn’t share it with the world.
It’s easy to be so focused on the day-to-day that our true passions fall to the wayside while we earn the paycheck that puts food on the table. Important, sure. However, perhaps it just takes being conscious of the lack of effort we spend on what we’re truly passionate about to seize the opportunity and share.

The most successful DO-ERs know that stagnation is a trap, and it’s got this gravitational pull that keeps us there. They know that the only way to success is to… well, DO. Pick your line (your direction), attack it (you do), and drive through it (learn, iterate, keep doing). 
How would you use the Line-Attack-Drive mentality to achieve some goal you’ve set? What other step do you think is missing from this?