Pebble founder says his new company is ‘not a startup’

Pebble’s founder, Eric Migicovsky, is doing things differently with his reboot of the Pebble smartwatch brand and an AI ring. The team is small, inventory isn’t being manufactured before it’s sold, and there’s no outside funding.

Most importantly, he says, the new company, Core Devices, is “not a startup.”

“We’ve structured this entire business around being a sustainable, profitable, and hopefully, long-running enterprise, but not a startup,” Migicovsky told TechCrunch on the sidelines of the Consumer Electronics Show in Las Vegas last week.

“Startups are good for the world,” he clarified. “You need to have money in order to build really new ideas and create something. But this is not a new idea,” Migicovsky said, referring to the smartwatch reboot. “This is an old idea. We’re just bringing it back.”

The Pebble founder said he’s learned a lot from his earlier efforts at building a hardware device maker, including what not to do.

Pebble, the original company that Migicovsky started, was sold to Fitbit in 2016 for around $40 million; Fitbit was later acquired by Google for $2.1 billion.

Just before its exit, Migicovsky’s team had been scrambling. Christmas 2015 had put Pebble into a tailspin, as the company had bought too much inventory.

“Hardware is different from software. You have to predict ahead of time how much you’re going to sell, because you need to build the hardware,” Migicovsky explained, reminiscing on the time when things went wrong.

Pebble’s team then had estimated they would do $102 million in sales that year, but they did “only” $82 million. While that number is impressive for a smartwatch brand (particularly one that’s not Apple, Google, or Samsung), the company was left with unsold inventory that had to be sold at a discount.

Retail partners were also upset because discounted sales meant reduced margins. Meanwhile, Pebble didn’t have enough money to finish developing its new products. To make ends meet, the company had to do rapid layoffs and reorganize. And ultimately, it had to find an exit.

“I think I lost sight of the vision of why I was building Pebble,” Migicovsky admitted. “At the beginning, it was very clear. We had a Kickstarter. We posted on the web: here’s exactly what Pebble does, here’s what the features are, here’s who should be interested in it. And then we kind of meandered a bit. We tried to do health tracking. We tried to do stuff that didn’t feel like us,” he said.

This time around, Migicovsky aims to take a different path. The new Pebble smartwatches aren’t meant to be for everyone, he says. They’re meant to be for people like himself: a self-described “bit of a nerd,” who just likes hacking, building, and creating things. Nor are they for fitness junkies or those who want a smartphone on their wrist.

“I want a companion to my phone, rather than a replacement for my phone. I want it to be more like a Swatch than a Rolex. I want it to be a little bit more fun, casual, playful, and plasticky.” Plus, he added, with the reboot of Pebble, he’s now okay with a watch that doesn’t try to do it all.

“I’m okay with a limited vision and a limited scope of what we’re trying to accomplish,” Migicovsky said.

Under the new company, Core Devices, the team has announced the Pebble Time 2 smartwatch, a round-faced Pebble Round 2, and a $75 AI smart ring, called the Index 01.

Notably, the company today is not going to be a large team of 180 employees as before, or one that works with distributors. Instead, there are only five people, and it sells directly to consumers on its website.

The foundation, however, remains PebbleOS, the smartwatch’s operating system, which was thankfully open sourced by Google.

Migicovsky recalls that he ran into a Google employee, Matthieu Jeanson, at a kid’s birthday party, where he got the contact information for someone who might be able to make a call about open sourcing the smartwatch’s operating system. He sent the email requesting that Google make the OS open source, and a year later, it followed through.

“I really am thankful to Google, because what other big company in the world would do that?” said Migicovsky. “I think they did it as an homage to the Pebble community.”

Without PebbleOS, the rebooted Pebble smartwatch would have been an impossibility, as it took a team of 30 to 40 people working for years to build it originally. Recreating that from scratch wasn’t an option.

So far, the new company’s structure is working. The company has sold 25,000 preorders for its smartwatches, and around 5,000 for its AI ring, which is newer.

Pebble preorders are currently shipping about six months out, but Migicovsky said that the team will tighten that down to a couple of weeks. In addition, the Pebble App Store features 15,000 watch faces and apps. In a few weeks, the team will also be relaunching the SDK for developers.

Migicovsky says the team is in a “comfortable spot,” where their expenses are paid, and they’re able to finance new projects.

That’s right — the team is not done yet. Migicovsky won’t detail what sort of hardware devices Core Devices may ship next, but says they’ll be the sort of things he personally wants to have.

“There are a lot of products that are already on the market. Nothing that we’re making is like something that already exists,” Migicovsky hints. “[The next products will be] fun, casual, simple hardware, and they’re things that will kind of make my life a little bit better, one block at a time. And they’re going to work together.”