Merchant Advance Blog

Blog Article: Pebble’s Rocky Exit: Lessons For Small Businesses

Those of you who’ve always had an eye on the latest, snazziest tech to hit the market are probably aware of Pebble, one of the first names to make waves on the smart watch and wearable world. The Pebble team was notable for blazing the wearables trail, but also for how they did it: with some of the most successful crowdfunding campaigns in history driving their funding model. The initial Kickstarter campaign for the Pebble watch generated $10.3 million. This was an unprecedented amount of capital coming from backer-investors the world over: subsequent campaigns garnered tens of millions more in funding for updated product and software development.

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Alas, Pebble is no more: the company announced today that its next round of funding would be cancelled, and its software assets sold to wearables-market heavyweight Fitbit, in light of declining market share as the wearables niche shifts toward fitness tracking and other new consumer interests.

This sounds like a grim story of an independent, self-funding entrepreneurial business model being overtaken by big box powers – at first. However, there are some positive lessons to be learned from the story of Pebble.

Small businesses have a different kind of funding life cycle than startups like Pebble. Where the Pebble team needed a super-sized accumulation of cash right at the start of their business cycle, and came to grief once that cycle demanded greater sustainability and market share in order to survive, brick and mortar or e-commerce businesses generally look towards funding solutions that create stability in times of accelerated or depressed demand.

Another lesson for small businesses that viewers of the Pebble saga can take away, is the importance of forward-looking strategic planning and keeping an eye on the market around you as it shifts. Small businesses need to ensure longer term stability in the face of powerful market forces, and can only do so by being aware that success extends beyond the best practices they may enact within their own borders.

There’s a customer service side to the story, as well. As it closes down operations, Pebble must refund thousands of dollars worth of Kickstarter pledges that will now, unfortunately, go unfulfilled in the run up to the Christmas season. Pebble’s infrastructure must also “sunset”, or slowly fade from being able to offer existing users support or updates. Of course, no company wants to find itself in this position – however, the importance of being able to transition or suspend operations (even temporarily) with minimal disruption is key to small business sustainability as well. The unexpected may happen, and it’s important to keep the community you’ve build around your business well-informed.

It’s not easy seeing a vibrant entrepreneur reach the critical-mass, Instagram-type point where they might sell what they have built to a major partner at the peak of their value, only to fall short. However, Pebble will be remembered as the vanguard of what could be considered “big crowdfunding,” and lessons from its arc will continue to impact independent businesses for years to come.

 

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