a16z Podcast - a16z Podcast: The Wearables Session

Episode Date: July 31, 2014

Fashion, function or just a fad? Wearable technology is getting huge amounts of attention from companies of every size and stripe. Consumers are slapping on fitness bands, experimenting with smart watches and trying on jewelry that syncs with their smart phones. Christina Mercando, CEO and co-founder of Ringly, which fits in the fashion/jewelry segment of wearables, joins a16z’s Chris Dixon in a discussion about this emerging technology segment. What is working today, and where things are headed in wearables.

Hi, this is Chris Dixon. This is the A16Z podcast. I'm here with Christina Mercondo, who's the co-founder and CEO Ringley, which is a wearable computing company. And we're going to talk about wearable computing today. So, hi, Christina. Hey, how good. Good things. So what do you think is exciting now. I mean, people are excited about the, you know, Apple, of course, is rumored to be coming out with a watch. Samsung has had a watch. Google had made a lot of announcements around Google now. You obviously are working on. jewelry, you know, what, it seems like a very exciting time in wearables. And so, you know, what are you most excited about? Yeah, I mean, I'm excited to see what Apple does, as I think a lot of us are. But I think the most exciting thing for me is, you know, what these devices can do in the future. And I think we're just scratching the surface right now. So there's a couple spaces emerging, one in the fitness, one in the health. Us, we're a little bit more focused on fashion and communication. And there's a couple with ID that I think,

think is really, really interesting, something that we want to explore a little bit more as well. So you think it's useful to kind of segment it like this? It seems like people are saying Apple's going to be focusing on health. Obviously, there's, you know, we're investors here in Jawbone. There's things like Fitbit. It sounds like you have sort of a classification that... The good news is I don't think there will be a one-size-fits-all because, again, you're talking about fashion. And even with watches, maybe you wear one, maybe somebody has one watch that they wear all the time, but they like to change it up. They like to change, you know, fashion changes. So you think the average person will have multiple wearable devices? I think so, yeah. And I think that

they'll be buying devices, again, in the same sort of life cycle that they buy clothing. So when the new device comes out that season, they'll want to run and buy it. They'll want to buy it by the winter version, they'll want to buy the spring version, the summer version, and so on. And so you think they'll be, so maybe you'll use a health device or like a fitness device while you're running, you'll have a communication device like Ringley. You'll have a cocktail ring for your cocktail party. And then you'll have, so you think there'll be sort of multiple like that. Yeah.

High level, you sort of said there's fitness, there's communication. What else did you say? ID. So using your wearable as an ID. So there's another product in the market called the NIME bracelet that measures your pulse and your heart rate to uniquely identify you. So that when you walk into a room, the settings sort of match, you know, your profile. essentially. And you can use that for payments. How does it, so it just like technically the wristband communicates with what?

Your phone or with beacons? It communicates with your phone and then any devices in your space. I see. So the idea is, okay. So the idea is it's internet of things. Your mask, your lights, everything is speaking presumably by Bluetooth or something. And your wristband comes in, IDs you and changes the mood or the settings or something. Okay. Unlocks your doors, things like that. That's pretty cool. And you don't think that'll just be built into your. your watch or your phone? I mean, you know, it's all speculative right now. You know, we don't know what they're going to do, but I'd like it to be all built in. And what if this, like, one of you of all this is like it's sort of gimmicky, like that, not talking about Ringley, but let's say the Samsung watch.

Like a lot of this stuff is sort of gimmicky and, you know, is it a technology looking for an application? Do people really want to have the lighting change when they move into a room? I don't know. I mean, we'll have to see. Or, you know, don't we stare at our phones enough? Do we really want to have, like, the watch? Right. For us, it was more about solving a problem. So I think if companies take that approach, I think you're going to start to see a lot of interesting things. Again, with us, it's being less

tied to your phone and being more present in situations, but getting those short bits of information that you absolutely need, as opposed to just packing something with all this functionality because you can. Yeah, it's interesting. Like you kind of taking to maybe just some people to know what your device does is it lights up with different colors and vibrations depending on like if you're important your boss is calling you or your kid is texting you or something right and so the idea is actually to reduce the information overload and not be staring at your phone the whole time and right and to be able to manage your notifications so we're getting so many notifications right now we're very inundated i don't think that apple does a great job with managing them and so we're building

a platform where you can manage all those notifications and you deem what's most important to you. Yeah, it's interesting because I think like a lot of the views, like if you look at the Samsung watch, it's basically that their idea is just let's just take the phone and shrink it and remove some features and put it on your wrist, right? Getting back to those Dick Tracy days. Yeah, so it really feels driven by the platform as opposed to driven by the use case, right? Exactly, because I think, you know, big technology companies are trying to go for the platform play. Yeah. When you go back and look at, like, let's take touch computing as an example. There were all these companies in the 90s, everything from the

Apple Newton to there's a company called Go that raised a lot of money and was high profile. And they were excited about tablets and sort of what we do now with iPhones and things. And it turned out just to be way too early. And then actually there was probably like an opposite backlash. Everyone got very cynical about it and a lot of people were cynical about the iPhone. And then it turned out, of course, to work fantastically well. And now it's, you know, one of the major computing paradigms. So one question with wearables I have is are we in the kind of 90s or in the 2000s with touch computing? In other words, will this be the first wave? And it turns out because the batteries and the technology and just the platforms and things just aren't ready for it, that

it's the Apple Newton or will it turn out to be the iPhone? I think, you know, everyone wants to sort of make their wearable play right now. So you're seeing a lot of innovation happen. And I think that sparks a lot of creativity and makes these things possible. Again, I think we're just scratching the surface. Even if Apple comes out with something, you know, battery technology is such that if you want to power a screen and if you want to do all these things, you need a device that's large. So with us, you know, we made the decision to take out a screen and to communicate in other ways to be able to make the device smaller and more discreet. So I think, you know, it's similar to you how a lot of these products that are coming out that aren't that are designed a little

bit, you know, more masculine or use a lot of plastic parts. And it, that part reminds me of the early 90s when websites first came out. And, you know, websites just weren't designed well. And now finally people are designing things that are beautiful. And I think that's an important part too that we're missing. Well, it's also like a lot of these things have kind of system-wide network effects and what I mean by that is like so it could turn out that just having a watch today is like sort of cool but when you have a watch and by the way everything around us is also networked our lights are you know thermostat is other people are we have beacons everywhere you have software tying it all together it could be that you know that you kind of need a lot of those

pieces together to make the thing useful right so it's sort of like it's a lot like the internet in the sense of if you were the first person to have a computer and your friend had a computer, it's kind of cool because you can send each other files, but it's a lot more interesting when everyone has one. And then, you know, developers come and create new interesting things. I always think about, like, in the internet, if you went back to 1993 or something,

people, and you ask them what you do with when you network computers, they would sort of say the examples they give were things you did prior to the internet. So they would say you could copy files and you could send email and things that they were used to doing with two computers tied together. And then, of course, it took 10 plus years for people to invent Wikipedia and Twitter and YouTube and all these other great things. And similarly, what will probably happen, I think, with wearables is like wearables.

You'll have internet things. All these things will kind of come together. You'll start to lay the groundwork. There'll be certain early adopter use cases. But then what will be really exciting is when the developers come. Once you have that network effect. Once you have that network effect, then the developers come and they start inventing all this crazy stuff, which, of course, we can't think of now because it took 10 years of the Internet to even come up with a lot of these things, right? You need to have it out there and the whole thing develop and have lots of smart people thinking about it.

Yeah, and it's definitely happening. You can just feel it with all these new devices that are being built in everything becoming smarter. I mean, you know, from your thermostat to your coffee pot to your rings. Yeah, back to the network effect. The way I see it is there's these sort of four pillars that wearables can connect to. One, they can connect to your devices, so your phone. And they, you know, anything that comes through, any notifications that comes through in your phone, you can pass them to your device.

Similarly, you can take action on your device and pass it back to the phone. The second one is the self. So wearables can connect to your body. There's biosensors that can, you know, test your mood or how many steps you've taken. And then wearables can also connect to other people. So if I'm wearing a wearable and you're wearing a wearable,

we can essentially know that we're in the same vicinity of each other and communicate with each other or whatnot. And then the fourth one, which I think is the most interesting, is that it can connect to your physical space as well. So like we were talking about before, you know, you walk into a room and it's, you know, the music starts playing your favorite station or your coffee starts knowing, your lights go up,

and your physical space can adapt to you. Similarly, you can also, one of the things that I'm interested in in Beacons is when you walk into a physical space, you can now get more data on people and more information. So if you think about e-commerce, you know, there's so much data that we were collecting, you know, when I used to work at eBay, about people that you just don't have

when you go into a physical store. So you can see what people are buying, what sizes they are, what colors they like, whatnot. But when somebody walks into a store, you have no idea of their behaviors or what they're doing. So now we're going to be able to capture all this information to then target customers and better their experiences later on. Yeah, it's interesting. I've met a few companies recently who were doing basically

a temperature control inside of large companies using people's iPhones. So it turns out that, you know, if a room is empty, obviously you don't need to cool or heat it as much. And then basically the way it works, everyone puts in their kind of temperature preference on their phone. And then it figures out, okay, the 10 people are here. Here's the optimal temperature. But it turns out you can save it's like some astounding number, like 20% of energy use

using that. And, you know, they're also doing that automatically. Well, yeah, they're doing it now with security. And so actually, it might be a case where the enterprise applications lead the consumer ones, because in the enterprise, the company can control the whole network, right? They can reconfigure the whole building at once. They can go and give everyone badges and iPhones. And so we're starting to see that sort of on the security level.

Even on the fitness side, I heard insurance companies are giving everybody FitBits and job. No, that's, in fact, so like when we got acquired by eBay, eBay was giving everyone Fitbit. So it turns out if you're a large company that has, I think it's over 500 employees, it, um, those companies always actually self-insure, meaning they pay for their own, like you may see a blue cross thing on your card, but actually eBay is paying the bill, um, not an insurance company. And so there's a strong economic incentive for them to make their, uh, workforce healthier. Um, so you think eBay gave fit fits to, I think it was like partly to be kind of cool, trendy thing, but partly, yeah, there is a real, I mean, long-term financial incentive for them to,

to make the people healthier and, you know, um, yeah, I mean, but imagine that just, you know, people walk out of a room and the lights go off. You know, I'm sure that that can save a lot of energy as well. I think there's a reasonable chance that you'll see the corporate use cases leading, unlike what we've seen over the last 15 years in technology, which is the consumer has led to enterprise. You know, the stuff you have at home on your iPhone and Gmail is much better than stuff you have at work.

It may be that with wearables you see the enterprise cases leading, just because the enterprise can control everything, right? Yeah, same with Google Glass. I mean, I can foresee a lot of, you know, really strong enterprise use. Yeah, there's, there's, uh, There's already some use cases around. So basically, if you think of it as there's these cases where people are repairing oil rigs and you're looking through the glass and you're seeing a blueprint of what you're supposed to be doing

and somebody on the other side who's an expert on repairing that is watching the video. They're also using it in like medical use cases like that. So you basically have somebody who's like super experienced looking through your eyes and giving you guidance on what to do. It's also cool that you have things like Kickstarter now, right? So it used to be that just people like us, venture capitalists, were the kind of gatekeepers. And now you have so many other sources of kind of where these things can spring up, right? Exactly. I mean, you raise a little bit of VC money, but not like less than what was it, a million dollars or so.

Yep. And then funding the rest of it through pre-sales. And a lot of in that, and you were sort of, you are probably at the heavy end of the spectrum in terms of raising money, but a lot of these things just went straight to Kickstarter. Exactly. And hardware, you know, is expensive. It's really hard to be able to prototype, especially, I mean, for us, it was particularly expensive because we want to make a device that's really, really, really small. So manufacturing these things every time we get a board built, it'll be $8,000. So you do need a lot of capital to be able to do that, but it's definitely much easier now than it's ever been. It's also you can sell directly, right? Like, you're selling everything directly. We're selling directly from our site now. I think if people that haven't done retail business before don't really fit retail takes 50% yeah more or more yeah which dramatically or more yeah which dramatically changes the

the possibilities I mean you can't you know which means if you sell you you want to sell your product for 150 bucks you got to be able to make it for 75 you get rid of retail you can suddenly spend almost twice as much money building it right right and you don't need the enormous volumes that you used to to get your costs down you can sell something without going to retail on your own site for a decent cost okay we're out of time Thanks. Thanks, Chris.