Speaker 1: Face is Bloomberg Business Week with Carol Masser and Jason
Speaker 1: Kelly from Bloomberg Radio. Welcome to the Bloomberg Business Week
Speaker 1: Extra podcast this weekend, joined by James Park, the CEO
Speaker 1: of Fitbit. Great to have you with us. So much
Speaker 1: going on with Fitbit right now. Bring us up to date.
Speaker 1: New products out of news this Yeah, we just announced
Speaker 1: a few new products. We announced Inspire and Inspire HR,
Speaker 1: which are new low cost affordable trackers. We also announced
Speaker 1: First to Light, which is a lower cost, more affordable
Speaker 1: version of our top selling Versus smart watch, along with
Speaker 1: Ace two, our successor to an amazing kids product that
Speaker 1: we launched last year. Talk to us about the strategy
Speaker 1: where you see kind of Fitbit going as a result
Speaker 1: of some of the new products you're announcing this week. Absolutely,
Speaker 1: a large focus for Fitbit is really about growing our
Speaker 1: user community, what we call our active users. Last year
Speaker 1: we grew active users ten to almost twenty eight million
Speaker 1: active users. That's one of the largest online health and
Speaker 1: fitness communities in the world. And our strategy is to
Speaker 1: lower a SPS, increase the number of active users that
Speaker 1: we have, and later this year uh launch and monetize
Speaker 1: our user based with a paid premium offering. James, I'm
Speaker 1: always curious about once you get a user, how sticky
Speaker 1: is it? How how often do they stay with you?
Speaker 1: Health and fitness is always a challenging thing for people
Speaker 1: to stick with. But we've been incredibly happy with our
Speaker 1: attention of our users and that's a testament to the
Speaker 1: innovation that we're bringing in both our hardware and software.
Speaker 1: Are active users are increasing every year? What's the retention rate?
Speaker 1: We don't break that apt but you're happy with I'm
Speaker 1: happy with it, and I think continue to improve It's
Speaker 1: it's been improving over time as we roll out continuous
Speaker 1: new features, both on hardwarens off. So let's talk about
Speaker 1: the software side, because you know you mentioned this paid
Speaker 1: premium product coming out later this year. I have a
Speaker 1: fit bit, I'm wearing my ionic now. I do use
Speaker 1: the app that you know fairly frequently to just sort
Speaker 1: of check in being a data geek and all that.
Speaker 1: Um what needs to come for that? How do you
Speaker 1: get people even more addicted to to that app? Absolutely,
Speaker 1: A lot of what we've delivered in the app historically
Speaker 1: has just been data numbers, scores, graphs, etcetera. Um, what
Speaker 1: we feel will bring a lot of value to our users,
Speaker 1: is actually something beyond that? So what do I do
Speaker 1: with the data? So it'll all be about coaching, guidance
Speaker 1: and premium content around sleep, nutrition, exercise, mindfulness, etcetera. And
Speaker 1: bringing together holistic solution that tells people what should I
Speaker 1: do next? How do I improve? That's the next step
Speaker 1: for us, And so do you develop all that organically
Speaker 1: or their partnerships. We're going to get to another partnership
Speaker 1: in in a second round the health arena. But you know,
Speaker 1: there are so many apps out there. I feel like
Speaker 1: I see a new one every day, whether especially on
Speaker 1: the mindfulness side, whether it's Calm or headspace or others.
Speaker 1: How do you make that work in this sort of
Speaker 1: sea of opportunities. Absolutely, it'll be a combination of stuff
Speaker 1: that we develop along with partner content as well. And
Speaker 1: one of that more interesting things is we acquired a
Speaker 1: company called twine Health last year that we be launches
Speaker 1: fit bit Care that's bringing personalized human coaching to a
Speaker 1: lot of these fitness and health goals. And you know,
Speaker 1: at some point we'll be making that available to consumers
Speaker 1: as well. You know, there's fitness and health and then
Speaker 1: there is health and healthcare, and I know this has
Speaker 1: been certainly a focus for you guys in terms of
Speaker 1: kind of wrapping ramping up that health solutions business. Talk
Speaker 1: to us a little bit about that, what's the growth
Speaker 1: potential and where do you see that going? And because
Speaker 1: you're doing collaborations right with a lot of healthcare companies. Absolutely,
Speaker 1: We just announced a new partnership today with a company, Solera,
Speaker 1: around diabetes management. So a lot of what we're doing
Speaker 1: is focused on helping people with more serious chronic disease
Speaker 1: conditions like diabetes, heart health, sleep disorders, mental health. And
Speaker 1: we've partnered up with over six d eight clinical research partners,
Speaker 1: over fift hundred employers, and over a hundred health plans
Speaker 1: including Humana, United Healthcare, Blue Cross, Blue Shield. And that
Speaker 1: healthcare portion of our business is growing incredibly well, eight
Speaker 1: percent year over your growth last year, double digit growth
Speaker 1: this year. We're projecting to be about hundred million dollar
Speaker 1: business for us. How does that work though? When you
Speaker 1: so when you hook up with an employer, um, is
Speaker 1: it a case that all the employees get one of
Speaker 1: your devices, one of your wearables or how does it work? Uh,
Speaker 1: You're you're pretty close to the mark, so most of
Speaker 1: the employers will either fully subsidize or partially subsidize a
Speaker 1: device and software services for their employees. Similarly with health plans.
Speaker 1: One of the more interesting developments is that we're actually
Speaker 1: in a covered benefit in forty two Medicare advantage plans
Speaker 1: in twenty seven states, and a lot of those cases
Speaker 1: plan members are getting Fitbit devices for free. It's one
Speaker 1: of the first times that you know, device like ours
Speaker 1: has been part of a Medicare advantage plan. And then
Speaker 1: what happens with the data I'm always curious about, right
Speaker 1: because data is valuable and it can make a product
Speaker 1: much more useful, but also very personal, but very personal,
Speaker 1: So and I think right now we're in this environment
Speaker 1: like who owns that data? Absolutely, the data is really
Speaker 1: under the control of our use and so we've always
Speaker 1: had a philosophy and it's enshrined in our privacy policy
Speaker 1: that we will never sell data to third parties that's
Speaker 1: not our business model, and only share your data with
Speaker 1: your explicit opt in consent. So we're not an advertising
Speaker 1: company like a lot of the tech giants out there.
Speaker 1: So users have come to trust us with their data.
Speaker 1: But James the healthcare companies that you work with, they
Speaker 1: have access to that data or do they not. It's
Speaker 1: only an anonymised data. They don't know exactly who you
Speaker 1: are unless you share that an opt in explicitly. All right,
Speaker 1: let's talk a little bit about the competitive landscape, because
Speaker 1: we're sitting here across the table from you. I've got
Speaker 1: my fitbit, Carol's now I have an Apple lot. What
Speaker 1: does it look like out there right now? Because a
Speaker 1: lot of the same things you're talking about, especially as
Speaker 1: it relates to health We hear your counterpart Tim Cook
Speaker 1: talk about as well, everybody's sort of going after this space.
Speaker 1: How do you differentiate there? How do you differentiate in
Speaker 1: general from the competitor. I think the great thing is
Speaker 1: the healthcare industry is such a gard gan to an
Speaker 1: industry that there's a lot of room from multiple play
Speaker 1: is to take different approaches and compete and succeed. For
Speaker 1: us in particular, um, you know, two years ago we
Speaker 1: had no smart watch business. We launched Ionic, which you're
Speaker 1: wearring and versa and today Versa Light. We announced the
Speaker 1: product and you know, in a matter of two years,
Speaker 1: we've become the number too smart watch player in the
Speaker 1: United States, you know, beating out a lot of other
Speaker 1: tech giants, whether it's Samsung, Android Ware, etcetera. So I
Speaker 1: think we've become incredibly successful. And for us, you know,
Speaker 1: it's not just the devices. It's about the devices, the
Speaker 1: data that you mentioned, our active users or community, and
Speaker 1: a lot of the work that we're doing with healthcare,
Speaker 1: especially with large health plans. How tough is it there
Speaker 1: are you're contantly looking over your shoulder because I do
Speaker 1: feel like it's such a competitive space. Well, that's the
Speaker 1: nature of technology, I think. You know, Uh, we'll be
Speaker 1: celebrating our twelfth anniversary as a company in a few weeks,
Speaker 1: so I think it's a testament to our ability to
Speaker 1: continuously innovate. I think what's interesting too is this fitbit
Speaker 1: ACE two and tapping into the into kids. That is
Speaker 1: interesting to me, especially when you see um the childhood
Speaker 1: obesity rates and so on. Tell me a little bit
Speaker 1: about that market for absolutely, you know, adults are having
Speaker 1: a lot of you know, chronic obcity rates in the
Speaker 1: US are going up, not just for adults, but particularly
Speaker 1: for kids in activity a lot of screen time, which
Speaker 1: is reducing physical activity and physical play. And so we
Speaker 1: launched a product last year called ACE. It was kind
Speaker 1: of our tiptoe into this water of trying to help
Speaker 1: kids become more healthy. It did a lot better than
Speaker 1: we expected, and so we decided to invest in a
Speaker 1: new product called ACE two, and we added a lot
Speaker 1: more features which make the product much more fun and
Speaker 1: engaging for kids. We've expanded the age range and made
Speaker 1: the product available to younger kids by designing the band
Speaker 1: in the appropriate way. So we're pretty excited about the product.
Speaker 1: And it's really a passion of mind to see that
Speaker 1: the innovations that we're bringing is not just available to uh,
Speaker 1: you know, people of higher income, but that it's available
Speaker 1: to a wide range of people and across a lot
Speaker 1: of different ages. That's an interesting point because I feel
Speaker 1: like Jason and I we talked, especially when a lot
Speaker 1: of these gadgets the price point right, some of these
Speaker 1: things can be so expensive that you automatically it's just
Speaker 1: a certain sector of the consumer population that's out there.
Speaker 1: It sounds like you guys are thinking about that a lot. Yeah.
Speaker 1: For us, Uh, we think of fitbits should be available
Speaker 1: for anyone and everybody, not just the most well off.
Speaker 1: And you kind of see that in the smartphone category.
Speaker 1: But these prices are just going through the roof. Um.
Speaker 1: You know, there always be a room in our portfolio
Speaker 1: for higher price products for the higher end athlete, etcetera.
Speaker 1: But when it comes to people's health, it really needs
Speaker 1: to be affordable nexcess, right, all right, So take us
Speaker 1: inside the company a little bit. You know, we've talked
Speaker 1: a little bit about the competitive landscape. How are you
Speaker 1: leading hiring recruiting these days? Especially with that you know
Speaker 1: you're a number two, You've got a little bit of
Speaker 1: an underdog mentality maybe at times with with Apple specifically.
Speaker 1: Take us inside headquarters there in San Francisco. Yeah, I
Speaker 1: think the most important thing is that, you know, what
Speaker 1: attracts people to work at fitbit is really the mission
Speaker 1: of the company. It's to make everyone in the world
Speaker 1: healthier through data, through inspiration and guidance. So it's a
Speaker 1: self selecting group of people that choose to work for us.
Speaker 1: Not only uh in San Francisco and Silicon Valley where
Speaker 1: we're headquartered, but we have multiple offices around the world,
Speaker 1: and so it's that mission that really resonates with the
Speaker 1: people that work here. Um, is it tough? Funny employees
Speaker 1: though at this point. Uh, you know, there's always that challenge,
Speaker 1: but again it's that mission. People are attracted to the mission.
Speaker 1: We're just not your standard run of the mill tech company.
Speaker 1: Where do you guys go in terms of future products?
Speaker 1: And I bring it out because there were some statistics
Speaker 1: this week about wearables overall, and when they talk about wearables,
Speaker 1: it's not just smart watches, they talk about EarPods and
Speaker 1: so on and so forth. Ear biometrics. Is this something
Speaker 1: that will ultimately be part of fitbit possible? You know,
Speaker 1: alas can't talk about the future roadmap, but for us,
Speaker 1: you know, we do think there's room for devices beyond
Speaker 1: the wrist. We actually have a connected body fat and
Speaker 1: weight scale that really helps people lose weight and keep
Speaker 1: track of of their health. So um, for people to
Speaker 1: be really successful, whether it's losing weight, becoming more active,
Speaker 1: sleeping better, it's not just going to be about one device,
Speaker 1: but it's going to be about multiple devices and more importantly,
Speaker 1: software and a community of users that helps you along
Speaker 1: the way. So, without giving away the roadmap, take us
Speaker 1: around the corner a little bit. What have you discovered
Speaker 1: about people's habits? What have you discovered about how people
Speaker 1: use either their devices or the app. Uh that that
Speaker 1: might have surprised you as you get to know your
Speaker 1: users more and more in some ways. Uh. You know.
Speaker 1: One interesting stat for us is that the power of
Speaker 1: peer pressure and your friends and family really helps. So
Speaker 1: what we've discovered is that people with over five friends
Speaker 1: on Fitbit walk nineteen more steps per day than someone
Speaker 1: with no friends on Fitbit. A e nineteen steps doesn't
Speaker 1: sound a lot, but actually over the course of a month,
Speaker 1: it adds up to over twelve miles additionally in that month,
Speaker 1: so every little step helps. That is so funny. I
Speaker 1: think about the story that was in the magazine recently
Speaker 1: about the workout things that work is where you develop
Speaker 1: some kind of community and doing it with friends. I
Speaker 1: gotta ask you one more question, just because we're Bloomberg.
Speaker 1: You guys recently were ordered earnings stacks sold off I
Speaker 1: think about four. There was some disappointment on the street
Speaker 1: about the forecast. What can you tell us? Yeah, so
Speaker 1: for us, when we look at our results, we exceeded
Speaker 1: our guidance both in revenue and EPs. Uh in Q
Speaker 1: four Uh you know, so we continue to hit our
Speaker 1: financial commitments. I think some of the highlights are the
Speaker 1: fact that for US device shipments in Q four grew
Speaker 1: year over year for the first time in two years.
Speaker 1: So it's been a long journey for us to try
Speaker 1: to turn around this company. In Q four, uh, you know,
Speaker 1: we're starting to see the first signs of that turnaround,
Speaker 1: and we when we look at our guidance for we're
Speaker 1: projecting revenue growth or about one to four percent again,
Speaker 1: revenue growth for the first time in two years, and
Speaker 1: we're expecting to grow grow our unit shipments year over year.
Speaker 1: Do you ever worry though about an economic downturn on
Speaker 1: what it means for your business or do you feel
Speaker 1: like these are the types of products that people have
Speaker 1: no matter what. Look. I think that again goes into
Speaker 1: their strategy of making sure that these products are affordable
Speaker 1: and accessible to a lot more people, broad our reach
Speaker 1: and our attractiveness, and I think that's a good hedge
Speaker 1: and defensive measure against any you know, macro economic factors. James,
Speaker 1: great to catch up with you. Congrats on the new
Speaker 1: products and eager to see what comes next. Thanks for
Speaker 1: having me. You've been listening to the Bloomberg Business Week
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Speaker 1: Street Time. I'm Carol Masser, and this is Bloomberg