It's no longer enough to motivate and inspire
It doesn't take a devout Nike fan to know its business strategy extends far beyond fitness gear and apparel. After all, Nike didn't establish itself as one of the world's most admired brands through quality footwear alone. Rather, it's the company's motivational ads that resonate with audiences -- a message that you can jump higher, run farther and achieve greatness, so long as you believe in yourself. Nike employees are particularly fond of one inspirational gem: if you have a body, you are an athlete. That's the message of Nike's late co-founder, Bill Bowerman, and it's clear that the University of Oregon's former track and field coach left an indelible fingerprint on the company.
The fitness landscape is shifting, however, thanks in large part to wearable computers and software that have spawned the quantified-self movement. By combining activity-tracking sensors with a little bit of journaling, users are able to see a more complete picture of their daily exercise, sleep habits, mood and nutrition -- and ultimately, set goals and chart their progress over time.
Of course, the quantified self is a familiar realm for Nike, but it's also bringing about a strategy shift in Beaverton. For insight, consider the words of Nike's VP of Digital Sport, Stefan Olander. Upon taking the stage at Demo Day in Portland, Olander was very clear about the company's ambitions, saying that it's no longer enough to motivate and inspire -- that Nike must now provide the tools to help individuals accomplish their fitness goals. At a fundamental level, it seems this is what the accelerator is all about -- a recognition of the possibilities and expectations surrounding quantified self, and a tacit admission that Nike can only do so much on its own.
When Nike introduced the FuelBand in early 2012, it ushered in a new way of thinking about activity that went beyond steps taken and calories burned. The concept is known as NikeFuel, which the company is seeking to establish as the de facto currency of physical activity -- something that's quantifiable, which can also be exchanged for things of value. All products with the Nike+ branding allow users to gain and amass NikeFuel, but up until this point, the "currency" has had little meaning beyond unlocking achievements and comparing one's performance to others. Naturally, a currency is only as good as the number of people that adopt it, and with this in mind, it seems that Nike had no choice but to open its API.
According to Olander, Nike wanted to open its platform from day one. Then again, the company's timing could've also been in response to market forces. Nike's primary competitors, Fitbit and Jawbone, have taken a more open approach with their APIs and already benefit from third-party apps such as MyFitnessPal, Endomondo, RunKeeper, Lose It!, EveryMove and MapMyFitness. Meanwhile, sources close to the situation state that Nike's developer portal remains closed to all but a handful; those with access include its accelerator participants, along with a few companies that signed one-off agreements such as Lose It! and Path. Naturally, the locked-down approach isn't the quickest way to establishing partners, but it's understandable. As the 10 accelerator companies quickly learned, the Nike+ API wasn't quite ready for prime time.
An unfair advantage
Step into the Nike+ Accelerator and it's immediately clear that Nike brought its knack for inspiration to the work environment. Upon entering, you'll find spacious meeting rooms named Fuel and Pre, wall-to-wall storage lockers and athletic bags, and even more meeting rooms with artificial turf carpet, walls of whiteboards and names like PowerSong. A giant photo of Bowerman during his coaching days hangs in the main work area, adjacent to a hand-drawn mural that pays homage to the accelerator companies. Vintage magazine ads and product photos line the walls, serving as a gentle reminder that Nike was once a startup, too.
The Accelerator's main work area is very open, but also close quarters. From the outset, companies were encouraged -- nay, forced -- to communicate with one another. Beating your head on the wall about a nagging issue? There's a chance that the girl two tables over found a solution just an hour ago. It's in this environment that people tackled problems, shared contacts, developed lasting relationships and consumed lots and lots of Red Bull.
Vintage magazine ads and product photos line the walls, serving as a gentle reminder that Nike was once a startup, too.
One could speculate that if Nike had its way, more companies might have taken part in the program -- if, for no other reason than to expose the API to a wider number of developers -- but it didn't get to call those shots. The accelerator itself was managed by TechStars, a renowned and highly selective venture capital investor that provides funding and mentorship through its startup programs. TechStars is considered by many to be the gold standard of the accelerator world, which operates from a formula of working with just 10 companies over an intense three-month period.
As TechStars' co-founder, David Cohen, put it, the aim is to give seed-level startups unfair advantages. By his reckoning, entrepreneurs gain two years of startup development experience in their first 30 days.
During the first month, companies were exposed to an intense process likened to mentor speed dating. It involved 20-minute one-on-one sessions over three-hour blocks, five days a week, where companies would pitch their ideas to experienced mentors from Nike and TechStars' network, and then receive brutally honest feedback. According to Cohen, the process is sometimes equated with mentor whiplash, but it forces companies to develop a conviction for their plan, along with the ability to defend it. Likewise, the process can also help some teams get oriented in the right direction -- so that when they actually step on the gas, they'll end up where they'd intended.
As you might imagine, the experience can be exhausting. At Demo Day in Portland, TechStars' Managing Director of the Nike+ Accelerator, Dylan Boyd, reminisced that during this period of mentor speed dating, countless people seemed hungover in the morning -- not because they'd been out partying, but because they were bombarded with so much information the day before.
Not everyone was completely enamored by the first month of feedback and presentations, either. Some merely wanted to dive in and start plugging away at their product. That's what the second month was all about. Teams worked more closely with individualized mentors, and received nearly unlimited access during that time. As Cohen put it, "It's one thing to hear Stefan [Olander] give a talk and disappear. It's another thing for him to sit there and work on your product with you ... and sit in five hours of meetings with you." It's "unfair advantages" like these that seem to be par for the course.
Over and over again, when asked to explain their attraction to the program, company leaders likened the combination of Nike and TechStars to the perfect storm for a fitness startup. Even beyond mentorship, there was a spirit of making things happen, and between those two names, it's safe to say they share a pretty large Rolodex. Prior to joining the accelerator, a company might have repeatedly (and unsuccessfully) tried to gain access to a particular firm, but within the program, it was simply a matter of asking. Either Nike or a TechStars affiliate would pick up the phone and make the introduction.
From the outset, it was clear that 10 startups were given an unfair advantage, but Nike's motivations were never entirely clear. Curiously, the company was skittish on this front and refused multiple opportunities for an interview, but various startup leaders provided at least a partial explanation. During the phase of heavy product development, all companies received one-on-one access with Nike's technical team for the Nike+ API. As it turns out, much of the API's functionality was developed at the accelerator, based on the needs of the individual companies.
"In essence, it seems the Nike+ Accelerator was a borderline charitable route for readying the Nike+ API for the masses ..."
In essence, it seems the Nike+ Accelerator was a borderline charitable route for readying the Nike+ API for the masses -- a way of giving back to the companies that helped make it happen. Company leaders explained Nike made no demands upon them in the program, and merely served to remove blockers and restrictions that they faced along the way. Even integration with the Nike+ API was purely optional -- though, certainly a hell of a benefit. One might consider this a radical move for a Fortune 500 firm, but then again, Nike also carried little risk; up to this juncture, only TechStars holds an investment stake in the accelerator companies.
In the buildup to Demo Day, companies shifted their focus from crafting their products to perfecting their pitches. By TechStars' count, 4,683 pitches were given over the three-month span, but it became serious business in the program's final month. Pitches were recorded in front of the camera and analyzed by a group of Nike executives. Even outsiders were brought in to help polish the delivery.
Startups and wild ideas emerge
Even though Nike didn't impose any restrictions on the accelerator participants, it's worth stating that it selected all of the companies in conjunction with TechStars. In other words, Nike made a calculated bet on them, and it had a pretty good idea of what it was getting into. As Olander explained at Demo Day, each of the companies represents an aspect of Fuel that Nike finds important, but is unable to address on its own. It was a considerate way of peppering the crowd of investors for the diverse array of products they were about to see... ones that focus on training, gaming, coaching, rewards, young athletes and even corporate wellness.
Upon taking the stage, Phil Black of FitDeck quickly made an impression by doing one-armed pushups before the auditorium of investors -- a bold move that, fortunately for Black, elicited a round of applause. Shifting into pitch mode, Black told the story of his company, which sells a line of playing cards that allow users to experience ever-changing workouts by shuffling the deck. FitDeck also sells an iPhone app that replicates the experience, but Black's looking to develop a future version that provides custom workouts that are geared to the amount of NikeFuel that users want to earn.
Naturally, all 10 companies had a lot on the line at Demo Day, but that was particularly true of the upstarts -- companies that came to the accelerator with only a vision. Marcus Estes of Chroma provided a very blunt overview of the situation. "It's the most intense pressure-cooker. You have a chance -- and it's not a guarantee -- you have a chance at saving your company. At actually establishing it, in our case. And it's this window. And when it's over, that's it. All the advantages that you had are gone a week after Demo Day."
"It's the most intense pressure cooker ... And when it's over, that's it."
Chroma's co-founder, Mike Merrill, also had a lot riding on the event: accountability to his shareholders. Merrill is a publicly traded individual, who lets friends and strangers alike buy shares in him -- a self-admitted "high-risk" investment -- in exchange for the ability to vote on significant choices in his life. Merrill quit his job at Panic, a Portland-based software developer, and joined the accelerator based on a vote from his shareholders (and heavy lobbying from Estes).
For Chroma's co-founders the best way to spend NikeFuel was clear from the beginning: fighting robots. The pair devised a turn-based strategy game called JumpBots, which involves customizable characters that are built and enhanced with NikeFuel. Both Estes and Merrill are gamers at heart, and they want to create a series of activity-fueled games that make fitness addictive. In their minds, Fuel is more meaningful when you spend it on something you care about.
Taking a different approach to motivation is Nextstep.io, which encourages users to become more active through a series of challenges. To explain the concept the company's CEO, John Schnipkoweit, used flashy mockups, which include suggestions of mixing up one's daily routine, and turning meetings into walk-and-talks. In one example, if you frequent Peet's Coffee, you might be presented with a challenge to walk to Stumptown instead -- with the added encouragement that you could add two years to your life expectancy by doing so.
Laura Temel of FitCause is operating on the notion that NikeFuel might create a better world. In her mind, a fundraising event can be just as empowering when it's done from one's wrist. Like Black of FitDeck, Temel took a risk on Demo Day by asking the crowd if they'd ever participated in a charitable run. Fortunately, nearly 90 percent of the audience raised their hands. Building on the momentum, Temel announced a private beta of FitCause -- open to the attendees of Demo Day -- that allows users to participate in corporate-sponsored causes, along with solo missions that users fund themselves. FitCause also revealed its first corporate sponsor: Hurley, with its Waves for Water campaign -- an initiative to bring clean drinking water to areas where it's most needed.
Not all companies within the Nike+ Accelerator emerged with their initial vision intact. The group from Totem came with a very conceptual idea of creating a fantasy sports league that was powered by NikeFuel, but along the way, they perceived a problem; as they see it, the adventures of FuelBand wearers are lost in a flood of data and metrics. Not a month into the program, the team pivoted to focus on a social platform for adventure. Totem is still in heavy development, but the aim is to weave users' locations, photos, videos, tweets and NikeFuel into activities that can be easily shared with others.
Some accelerator companies are targeting businesses as their primary customers. Take HighFive, which is an ad network that offers rewards for user achievements. HighFive hopes to provide greater engagement between consumers and advertisers, but it might've also solved a problem for many of the other accelerator companies -- the question of how to monetize their apps. Sprout is similar in this respect -- it provides a corporate-wellness platform that focuses on motivation and activity monitoring.
For many of the established startups, integration with the Nike+ API is a value-added proposition, rather than a whole new way of doing business. GoRecess is establishing itself as the OpenTable of the fitness world, allowing users to discover and reserve spots in local fitness classes. By integrating with the Nike+ API, the company's CEO, Megan Smyth, sees Fuel as a helpful way of measuring a class' intensity. Meanwhile, CoachBase develops a virtual playbook for iOS that supports a broad number of team sports. Its creators view FuelBand integration as a way for coaches to easily view the activity of all team members -- not always an easy task amongst large groups of kids.
Surprisingly enough, Nike invited the maker of another fitness tracker into the accelerator. GeoPalz currently sells an activity tracker for kids called the iBitz PowerKey, which lets users unlock game time and prizes based on their activity. By integrating with the Nike+ API, parents will have the option of wearing the FuelBand, while also keeping track of the entire family's activity within the GeoPalz app. At Demo Day, the company's CEO, Rich Schmelzer revealed new retail partners such as Target and Best Buy, in addition to an agreement with Disney that will bring integration with its MMO-style game, Club Penguin.
Following the presentations, each of the CEOs took the stage to receive a standing ovation, but the true measure of success would be determined in a reception area that housed their presentation booths. Here, investors spoke with the company leaders, swapped business cards and made plans for future meetings. Needless to say, not many checkbooks come out on Demo Day.
Keeping the momentum
Goodwill and unfair advantages aside, it's not yet clear whether the program will pay off for Nike. As it stands, only the 10 accelerator companies (and a short list of others) have access to the Nike+ API, and whether they succeed is now in the hands of the investment community. According to Cohen, companies within the TechStars accelerator typically raise an average of $1.5 million as result of Demo Day, and 80 percent of the companies emerge with some form of meaningful funding or revenue. Still, it's up to investors to pick the winners and losers, and that's where uncertainty comes into play.
Understandably, investors are a tight-lipped bunch, but insightful, too. In the eyes of one, Nike is raising the profile of the quantified-self movement, while also exposing investors to its multitude of possibilities. Combine this with the perception that wearable computing may soon break into the mainstream, and some are envisioning a perfect storm in the making. With that in mind, regardless of which companies succeed and fail, it could be that Nike's move into the startup realm is giving momentum to the ecosystem as a whole. If that's Nike's true motivation, its greatest challenge might be to keep its foot down on the accelerator by opening the API to the masses.