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San Francisco-based Fitbit had a healthy stock market debut last Thursday, and the wearable-tech maker is currently valued at around $7.6 billion.
But even for a company that has become synonymous with activity-tracking gadgets and claims 85 percent market share, there’s so much competition out there that it’s difficult to say whether Fitbit can continue its growth trajectory, or whether it will go the way of the 1990’s pedometer.
Fitbit co-founder and chief executive James Park has been asked about this at least 37 times in the past week, so I asked him about different things, like what he ate after ringing the bell at the New York Stock Exchange, and whether he wears an Apple Watch.
Okay, I also asked him whether Fitbit can maintain its market dominance. The interview below has been edited for length.
Re/code: Congrats on your initial public offering last week, James. What did you do to celebrate?
James Park: Well, the company had a dinner, and personally I just stayed in New York for a couple days.
What did you do in New York?
I actually went to Shake Shack. I did have a hot dog from a hot dog stand, too. (Editor’s Note: Fitbit’s PR person interjected at this point to say that Park eats mostly healthy food.)
Hey, at least you’re keeping it real. How do you feel about people knowing you ate unhealthy food the weekend of Fitbit’s IPO?
Eh, you can run with it.
When you were launching Fitbit eight years ago now, did you ever think, IPO is the goal?
No. Honestly, the focus in the early days of any company is just building product, making sure there’s sufficient financing, a lot of tactical things. So exits were the furthest things from our minds.
And when did an IPO become more of a reality?
We started talking about it sometime last year. And we felt that it was a good time to go public because of the strength of our financials. And you really need to give investors early liquidity as well.
One of the things revealed in your S-1 filing is, we finally got a sense of your sales. And not just for Fitbit but for the activity-tracking industry, which previously had only been guessed at by analysts and research firms.
Everyone was really impressed that Fitbit is profitable, but unit sales are still not even comparable to, say, smartphone sales. Do you think wearable devices will get there?
Well, it’s hard for me to predict the future. But I do think that wearables, if done properly, have the opportunity to be a very pervasive part of the market. And I still think we’re in the early days.
I think market penetration is still really low, and I think companies are experimenting with form factors and feature sets and balancing the hardware and the software. What’s exciting is Fitbit is in the forefront.
Between 2012 and 2014 your company’s sales surged. What was the driving force behind that?
The market doesn’t create itself, so I think there was a lot of work that our sales and marketing team did. One, we’ve been building our distribution footprint, investing in sales and marketing. And two, we’ve always had a great product that people love, so word of mouth has been a big driver for us.
Who do you see as your biggest competitor right now?
The answer has changed for me over the years. Our direct competitors have struggled to compete with us. …
Apple is a competitor, but I think about it differently. When you think about over $200 billion dollars being spent on health and fitness products globally and they’re just getting started … I think consumer awareness around this is really new. So any company in this category has to invest in sales and marketing around it. (Editor’s Note: Fitbit’s advertising spend hit $71 million in 2014, but Apple has zero problem spending on glossy marketing. Also, I don’t have any data on this, but I’m fairly certain everyone in America now knows there’s an Apple Watch.)
Have you worn an Apple Watch?
I’ve definitely seen one.
But you haven’t worn one?
No comment.
Have you tried one on?
I have tried one on.
Are smartwatches and activity-trackers one and the same, though? I’ve reviewed a few products lately, including a new Garmin and your own Fitbit Surge, that seem to blend the two. They’re activity-trackers, but they have GPS built in and they have watch form factors.
One of the biggest misperceptions about this category is that you can try to split it. I think over time there’s going to be more blending. A lot of our own products have merged features, like caller ID or different form factors … And I think you’ll see more of that.
Do you think a company like Xiaomi (which is now the world’s second-largest seller of wearables, according to IDC) is a legitimate threat?
I mean, in general we respect all of our competition. In the case of companies like Xiaomi, it takes a lot of R&D to develop compelling products in our category. This year we’ll be spending $150 million across both hardware and software to make better products.
Another thing is our focus. It gives us a distinct advantage. We’re not making stuff like smartphones or light bulbs.
Will anyone in wrist-wearables get optical heart rate sensors right?
That’s implying that they’re all wrong today, which I disagree with. With any technology there’s always a tradeoff. In some cases, there’s accuracy in certain situations.
Are you pleased with the optical HR tracking on the Surge?
I wear it 24/7 so I’m happy with it.
But not everyone is.
Look, there are tradeoffs … With research and advancements in technology, there are always going to be major advancements in accuracy, battery life and form factor.
So how will wearables evolve in terms of design over the next two to three cycles of products?
Honestly, we feel like there has to be a fusion between fashion and technology. Something like the Tory Burch partnership has been great for us. The accessories ended up selling out online within several hours. (Editor’s note: Please do not put a Fitbit on a pocket chain.)
One of your main competitors, Jawbone, just filed a lawsuit against you. Has Fitbit responded yet to the Jawbone lawsuit?
No. Nothing beyond the initial statement. I can’t comment on that.
This article originally appeared on Recode.net.
