Three of the Pebble Watches. Photo courtesy of Pebble Technologies.
Kickstarter, a website that helps projects find funding through mass patronage (a practice also known as ‘crowdfunding’), has long been the domain of musicians and other creatives who can’t find sponsorship for their ideas elsewhere. Since the site was founded three years ago, artists of all stripes could start a campaign page through the site, set a monetary goal for their project, and ask their social network to help them make it a reality.
Through the power of social media and the almighty word of mouth, thousands of projects from music videos to art installations have seen the light of day thanks to this inventive business model tailored for the Internet Age. Yet the site’s most successful campaign, which raised $10 million from everyday donors over the last month, is not a pristine new album from an aspiring indie band or campy zombie movie from a recently graduated film student, but a wristwatch that syncs applications with your smartphone.
The Pebble, a wristwatch developed by Palo Alto-based hardware company, Pebble Technologies, far surpassed their $100,000 goal within a few days setting up a campaign page on Kickstarter in mid-April. Their modestly produced campaign video enticed viewers with demonstrations of the watch’s text-message synchronization, seamless integration with other diverse smartphone applications, and crisp e-paper display:
Within a week, more than 26,000 had laid down their cash, incentivized by exclusive deals on the product based on the level of their donation. By giving $125, sponsors would receive one Pebble watch in any color with free shipping to anywhere in the U.S. As of the time of this writing, 31 people have placed $10,000 donations, earning them a “Mega Distributor Pack” of 100 watches and free shipping in the states.
Yet as with many overnight success stories from Silicon Valley, the path to $10 million wasn’t exactly a smooth one. When CEO Eric Migicovsky and his team at Pebble unrolled business plans for east coast venture capitalist firms last year, no one was biting. So they resorted to Plan B, says Pebble’s Head of Operations, Rahul Beghat.
“Eric, our founder, has been using Kickstarter for a while and I knew of it,” reports Beghat. “And the pivot towards hardware projects by Kickstarter has been quite recent. It’s only in the last four months or so that we’ve seen multi-million dollar hardware Kickstarter projects come to light.”
While having essentially no qualms about the backseat wristwatches have taken to cell phones over the last decade, it was the hardware aspect of the project that initially turned away VCs from Pebble in the first place.
“Hardware tends to have lower [profit] margins and higher overhead because you’re making a physical component, so VCs tend to shy away from it a little bit more than they would a software project.”
This was a slightly disheartening turn of events since the team had previously made significant headway at Y Combinator, a four-month, Silicon Valley-based business incubator program that provided them with $375,000 in seed money through angel investors.
“They were really excited about the prospect of a wearable display that could be that flexible,” says Beghat, reflecting the level of interest the public demonstrated through their Kickstarter campaign.
While not quite inspiring a flat-out, crowdfunding gold rush in the valley, Beghat anticipates that more hardware start ups from Palo Alto will be turning to Kickstarter in the near future, and holds no reservations that their record-setting campaign will be surpassed.
“We’re actually looking to see who’s going to raise more money than we do,” says Beghat, referring a recent Kickstarter blog post tracing the history of their most successful campaigns. “And our bet is someone is going to come along in the next two or three months because the awareness has increased that much more.”
Yet far more than the bigwigs holding the purse strings of Wall Street, Beghat says the valley tends to be extra sensitive to being in touch with John Q. Public.
“There is a lot of excitement around crowdfunding [in the valley] and the product itself, but we’re trying to take that with a grain of salt because the main market is outside the valley,” says Beghat.
“We tend to live in a bubble where everyone is very much into tech, so we’re trying to curve our expectations as to what a normal person in the valley thinks the biggest new thing is.”
For more with Rahul and his associates at Pebble, check out his full interview with Matthew DeMello on BTR’s new current events show, Third Eye Weekly, debuting today on BreakThru Radio.