Smartwatch Maker Olio Raises $10M: ‘No Need For Cellphones On Wrists’
At first glance, the story of veteran technology product design expert Steve Jacobs could be told as a version of “David and Goliath.” But in this case, it’s a bit more like “David and Two Goliaths.”
With his startup smartwatch company, San Francisco-based Olio Devices, Jacobs is clearly challenging tech heavyweight Apple, whose long-anticipated Apple Watch made its debut in March.
But Olio, launched only this year, is also taking on another entrenched foe—the luxury watch industry that glitters with Swiss brands like TAG Heuer and Frederique Constant. Both these high-end watchmakers have plans similar to Olio’s: to make a smartwatch as functional and elegant as a classic Swiss timepiece.
Frederique Constant already has smartwatches on the market for $995 and $1,150, falling within Olio’s target price range of $500 to $2000.
Despite the tough competition, Jacobs has found investors who like his odds. This week Olio said it had closed a $10 million Series A financing round led by NEA Ventures. Before the end of the summer, the company plans to deliver its first batch of a thousand Model One watches, which were pre-sold after being offered in March. Olio is now marketing a second limited batch that includes two new styles, for delivery in the fall.
Jacobs seems to be reveling in his role as a plucky David, sizing up his bigger rivals to find their weak spots as he draws on a career background in new product development for companies including Google, Amazon, HP—and Apple.
He says a nimble new company like Olio is better positioned to straddle the two worlds of consumer electronics and luxury fashion than the dominant companies in either realm.
Traditional watchmakers are too far from their core competency areas to branch out into connected devices and compete for the talent required, Jacobs says. In his view, Apple was also out of its element when it designed the look of its mid-range watches with variously colored straps, which start at $549.
“They’re offering five colors of rubber and calling it fashion,” Jacobs says.
Also, by making the Apple Watch a small depository for mobile apps, Apple has misread the needs of customers looking for a high-quality watch enhanced with technology, Jacobs maintains.
“We don’t think that we need a cell phone on our wrists,” Jacobs says.
While Jacobs may have a point about the disadvantages for tech companies and watchmakers who each stay in their silos, Olio will also face competition from partnerships between those two big sectors. Tag Heuer announced in March that it has teamed up with Google and Intel to produce a smartwatch by the end of this year. Tag Heuer sells luxury timepieces for $13,000 or more, but also offers traditional watches at the mid-range price levels where Olio competes. Olio’s steel and black models start at $595. The new gold-clad styles cost $1,195 to $1,395.
Olio digital watch faces, leather bands, and bracelets have the look of traditional watches. The technology elements were designed to tell time, but also to save time, by acting as a sort of buffer between wearers and the information overload emitted to the watch by their smartphones, Jacobs says.
The watch face displays current weather conditions, a gauge of the number of digital messages awaiting the user, and the hours around the dial when events are scheduled. By swiping the watch face with a finger, wearers can access event details and messages. They can also send pre-set responses to e-mails such as “I’m in a meeting and I’ll call you later.” This relieves users of the social pressure people now feel to respond immediately, Jacobs says.
Through its sensors, its machine learning elements, and its Bluetooth connection to the content of the wearer’s smartphone, the Olio watch can eventually learn enough about its owner’s habits and current location to propose timely actions that can be executed with a swipe, Jacobs says. For example, the watch could know that it’s the end of the work day, it’s raining, and the cheapest ride home is available from Lyft, he says. This selective repertoire of information, prompts, and actions includes some app connections, but the watch doesn’t host a full range of external apps.
Olio watches work with both Android and iOS devices. “You shouldn’t have to choose your fashion style based on the last cell phone you bought,” Jacobs says.
In addition to adopting classic watch face looks, Olio is also copying the ongoing service commitment of luxury watch companies. Customers will be able to send in their watches for replacements of failing batteries or even of core electronics units, Jacobs says.
The potential market for Olio watches is very diverse, Jacobs says. Pressed to identify his core market, he envisions successful urban Millennials—men and women—who are well versed in technology and ready to buy a quality smartwatch to celebrate their accomplishments and enhance their image.
“They’re evolving from the Zuckerberg hoodie to something a little more refined,” Jacobs says. Olio’s watches now sell at a mid-range prices, but as the company explores new materials, it may move into the product segment priced over $2,000, where watches become what Jacobs calls “kinetic sculptures.”
Unlike Apple, Olio hasn’t set up distribution for its smartwatches at Best Buy.
“We aren’t selling through Best Buy, we have no plans to,” Jacobs says. The company is selling the watches directly now and will eventually seek distribution arrangements with selected fashion retailers, he says. “We don’t see ourselves as a consumer electronics company.”