Coca Cola : More Than the Next Shiny Object: Why Coke Is Investing in Wearable Tech

Misfit Wearables launched with a mission to stand out, but has since made its mark in a competitive category by fitting in.

Misfit was incorporated in 2011 on the day Steve Jobs passed away. The company's name was inspired by a quote from Apple's iconic 1997 commercial: "Here's to the crazy ones. The misfits. The rebels. The troublemakers. The round pegs in the square holes."

The company's first product, the Misfit Shine, is a sleek, all-metal activity monitor designed to be worn anywhere on the body, and for any occasion. The Shine integrates seamlessly -- and discreetly -- into users' lifestyles and wardrobes.

When the company launched, wearable computing had yet to crack the mainstream. Just over a year later, it was the talk of the town in Las Vegas at the 2013 Consumer Electronics Show, an annual summit of tech tastemakers. Fitness buffs and the investment community began to take notice.

"We didn't start the company to make Shine… it was a pivot," recalls co-founder and CEO Sonny Vu, who says Misfit's primary product has yet to be released. "We saw how well others in the space were doing and knew we could do better."

Their first challenge? To design wearable devices that were more, well, wearable. They wanted to introduce a degree of style and cachet to a category defined by gadgets made of mostly plastic and rubber.

"People, especially women, don't want to wear dorky stuff," Vu said. "We knew we needed to focus on wearability, which includes everything from selecting the right materials to designing and making something people can and want to wear without feeling self-conscious."

Misfit's answer, Shine, is made from durable, aircraft-grade aluminum and is about the size of a quarter. Users can wirelessly sync the water-resistant device, which is powered by a standard coin-cell battery that lasts up to six months, to its companion iPhone or Android app by simply laying it on their smartphone screen.

By early 2013, the buzz surrounding wearable technology caught the attention of The Coca-Cola Company's Strategic Marketing Ventures team, which invests in high-potential startups aligned with Coke's core business, including digital music streaming service Spotify, social fitness community Endomondo and music licensing firm Music Dealers. Fitness bands and other activity monitors motivate people to be more active -- a key priority for Coke -- by letting users set personal goals and track everything from steps taken, to calories burned, to sleep.

Bachir Zeroual, global director of marketing ventures, flew to Silicon Valley with a few Coke colleagues to meet the industry's key players, including a small startup by the name of Misfit.

"We were searching for an address in Daly City, south of San Francisco, when we arrived at a small townhouse," Zeroual recalled. "It was exactly what you picture when you think of a tech startup. Their head of design came to the door in shorts and a t-shirt and took us back to the garage, where he walked us through their story."

Misfit didn't even have a working prototype of the Shine at the time, but the Coke team saw potential. "We left with a good intuition," Zeroual added. "We knew they had something special."

When considering potential partners, Coke focuses on three Ps: People, Products and Purpose. Misfit had all three.

Zeroual was drawn to the company's attention to craftsmanship and creating consumer experiences. Vu's pedigree as a successful entrepreneur and product designer was equally impressive. His previous company, AgaMatrix, invented the first medical device add-on Apple approved for the iPhone -- a glucose monitor diabetes patients could use to test their blood sugar levels.

Misfit had a few rounds of capital under its belt and had just wrapped up a wildly successful Indiegogo crowdfunding campaign, raising more than $800,000 from nearly 8,000 people in 64 countries. The Shine had a built-in clientele months before going into production.

"This told us that from a technology perspective, they're solid," Zeroual adds. "And their long-term vision to inspire people to be more active by equipping them with the right technology aligned with ours."

The Indiegogo campaign steered Misfit's focus to design-conscious women. The company doubled-down on their accessories business (leather wristbands, clips, necklaces and more) and expanded its focus outside the U.S.

"For our first iteration, we translated our website, app and packaging into 16 languages," Vu said. "People thought we were nuts, but it worked. More than 60 percent of our volume is from overseas."

Zeroual and his boss, Emmanuel Seuge, met Vu at South by Southwest in Austin, Texas. Vu -- who missed the initial meeting a few weeks prior due to Bay Area traffic -- was skeptical at first. Why would a global company like Coke be interested in his company's technology?

"We had to roll up our sleeves and explain our shared ambition to inspire people to be more active -- what we'd done, what we were planning to do, and why this is important to us over the long term," Zeroual said.

Vu agreed to visit Coke's headquarters to meet more of his prospective partners. After just a few hours in Atlanta, he was sold.

"I had a really good feeling," he said. "I could see that Coke was a good company with solid values. I toured the archives and was wow-ed… I soaked it all up and eventually said, 'Let's go for it.' And it's been an amazing partnership ever since."

The teams moved quickly to integrate an exclusive Coca-Cola Red Shine into Coke North America's MyCokeRewards loyalty program and a summer 2013 campaign, "Get the Ball Rolling," as a premium giveaway.

Zeroual credits Misfit with inspiring Coke to make quick decisions, take risks and embrace an entrepreneurial mindset.

"When we suggested the idea of the red Shine -- they were only considering silver at the time -- Sonny got his manufacturer in South Korea to produce one and send it to us in four days," he adds. "The willingness to be flexible definitely rubbed off on us."

Misfit also partnered on Coke's hospitality program for the 2014 Olympic Games in Sochi, distributing Shines to Russian Olympians, VIP guests and fans along the Olympic Torch Relay route. The Shine will play a yet-to-be-disclosed role in Coke's FIFA World Cup marketing efforts in Brazil and will be integrated into the company's employee well-being program.

Looking ahead, Zeroual says Coke hopes to build an "ecosystem" of consumer experiences integrating multiple partners, versus launching one-off programs. This includes linking activity tracking to a reward component.

"We're asking ourselves what we can bring to the experience to motivate users even more," he adds. "For example, what if we used music -- a top teen passion point -- as a reward for physical activity? And 80 percent of teens are not getting the World Health Organization's recommended 60 minutes of physical activity per day. So we have in our hands both a key fact and access to some of the most important assets, properties and passion points people are looking for."

Wearables continue to gain popularity, and analysts expect 50 percent more devices to reach the market by the end of 2014. Vu predicts wearable hardware such as activity monitors and fitness bands will soon conflate into wearable computing platforms such as smartphones and smartwatches, just as mp3 player and GPS devices have.

"The market cannot support that many players," he says, again stressing the importance of wearability as a differentiator.

"To be truly wearable, a device needs to be so beautiful people would wear it even if it didn't work -- and we think Shine fits that bill -- or it needs to be invisible," Vu concludes. "We're not there yet… but we're just getting started."

Misfit Shine is available for sale in Misfit's online store and at the Apple Store, Best Buy, Target and other retailers in more than 20 countries. The Coca-Cola Red Shine is sold exclusively in Apple Stories in the U.S.

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