What can tech firms learn from GoPro’s decline?
GoPro appears to be in a high-velocity slide, with the company recently laying off 250 more staff – a third round of redundancies in 18 months – and scrapping flagship projects as its share price and profits tumble.
Killing off the Karma drone is the latest setback for a company that flew high as consumers initially rushed for its all-action cameras, but now faces an uncertain future after the company reportedly called in JP Morgan to help find a buyer.
Where did it go wrong and what can other tech companies learn from GoPro’s go slow?
Keep innovating and releasing
A few years ago, it would be hard to envisage GoPro heading for the rocks. Its brand had almost become a byword for dinky little action cameras and it had a stream of successful products. Since then, its share price has plummeted from $86 in 2014 to $6.30 at the time of writing, tumbling faster than a parachutist wearing one of its helmet cams.
Experts say GoPro made a series of mistakes. “Pricing debacles, the cannibalisation of its own devices with cheaper cameras, and a slow response to user demands for better software doomed the company,” said Leo Sun, a tech specialist with market watcher The Motley Fool.
Analysts say that part of the company’s problem stems from the long wait between releases, particularly ahead of Christmas, meaning that even if customers wished to upgrade, they couldn’t. “The company should emulate Apple and have a product every year if it wants consistency,” said Michael Pachter, managing director and GoPro specialist at investment firm Wedbush Securities. “But, to be honest, its product improvements haven’t seemed to resonate sufficiently with consumers to drive growth. I think that GoPro has been attempting to balance innovation with creating demand for new products, which has led to irregular launches.”
On top of its failure to release new models, the company went after a new, lower-value audience. The flagship $500 Hero 4 was followed by a smaller Hero 4 Session, which started at $400, but was quickly cut to $200. “In retrospect, they’ve cheapened the brand and trained consumers to expect a high-quality video capture device priced at $199, making it hard to charge $399 or $499 for the newest version,” said Pachter. “Once again, emulating Apple might be the best strategy.”
GoPro had another problem that was beyond its control – high-definition video recording was thrown in for free on most smartphones. “Almost everyone in GoPro’s target market has a video capture device inside their phones already,” said Pachter. “By focusing on action sports and active lifestyle, GoPro limits its appeal to a subset of consumers. I am not sure it can overcome this hurdle.”
Cut your bosses
No matter how charismatic your CEO might be, if the company is failing and staff lose confidence, then it might be time to move him on – even if he started the company.
Since it went public in 2014, Nick Woodman has retained power and focused resources on several projects, such as a content creation channel, that many believe have distracted the company from its main goals.
While the surf dude image suited the young company, once it had floated many believe it needed a more corporate and business-minded view. “Absolutely terrible management, simply the worst – the CEO does not listen to advice and just does his own thing, then ‘regrets his decision’ a year later and fires another 200 people,” wrote one reviewer on the employment website Glassdoor.
“Stop listening to Nick’s ‘gut decisions’ and use data to drive the ship,” wrote another.
Conversely, the company also faces criticism from former workers who say the company culture changed too quickly and failed to repay and promote the staff members that contributed to the company’s initial success.
In a lesson in how not to manage growth in a tech startup, the company spent a lot of money on vanity projects such as the content-creation channel. According to insiders, the money being spent on those glossy productions led to resentment. Staff who had been with the company on modest wages felt aggrieved that they were being left behind with no route into management, while the company brought in higher-paid executives – from Microsoft, Apple and others – to drive that push into content creation.
“What absolutely needed to change was the corporate leadership culture,” Matthew Reyes, an engineering project manager who worked as a contractor at GoPro, told PC Pro. “Some managers operated purely on their friendship with the leaders, and not on their managerial or technical competence. I never saw proper professional development opportunities for full-time employees to learn and advance their careers.”
This was most evident, Reyes believes, in the way production teams were treated when the company brought in expertise from blue-chip media companies. “The GoPro was in part inspired to spin up an entertainment division based on the performance of its early, talented media marketing workforce,” he said.
“That early system worked because these young employees were motivated not by personal financial profit or career growth, but a passion for showcasing their craft, and gratitude for the opportunity that the brand’s tech provided them. I can’t tell you how many young people were living in vans or crammed in apartments.”
That Silicon Valley startup mentality changed when the new blood was hired to improve GoPro’s fast-growing media operations. “On paper, it may have made sense, but the execution wasn’t thoroughly thought out,” said Reyes. “These were expensive new people who were accustomed to bigger budgets.
“There were culture clashes on issues ranging from creative direction to what kinds of editing software to use. It didn’t help that [former GoPro president] Tony Bates would drive to work in his Bentley and Nick Woodman was bragging about being the highest paid CEO. In hindsight, the problem wasn’t waste: it was a poorly envisioned, ego-driven strategy that resulted in inefficient tactics.”
When GoPro tried to diversify, it always seemed one step behind in areas such as virtual reality and, in particular, drones, where a good product was let down by poor timing. Its Karma launch faltered when a battery design fault needed rectifying and the project was gazumped by rival DJI, which was already established and in Apple stores.
“GoPro faced two unexpected challenges that were major contributory factors to its failure,” said Ben Wood, an analyst at CCS Insight. “The announcement of the DJI Mavic Pro within a week of the Karma launch put GoPro on the back foot – particularly given some of the enhanced features on the DJI product, such as collision avoidance. And the battery problem resulted in it being off the shelves for three months during the most important selling period of the year.”
GoPro has also been reluctant to let developers access the hardware. According to Reyes, it should have allowed customers – especially businesses – to access firmware and make cameras more relevant for their industries. “GoPro cameras are incredible pieces of hardware. They are loaded with sensors and high-power processing capabilities and have radios and touchscreens,” he said. “In fact, today’s GoPros are just a few circuits and functions away from having the same capability as a cell phone or an Amazon Echo Dot.
“By opening up the firmware, I am saying that they should encourage wider development of the camera firmware in ways similar to how Magic Lantern works on Canon. This way they can create a more open system that enables developers to do different things with the camera or multiple cameras.”According to Reyes this would also help the company build communities of developers to sell apps and functionalities “that GoPro can’t even dream of, much less implement”.
GoPro declined to comment on this article.
Too late to change?
But is it too late for the company? Reports suggest JP Morgan has been brought in to sell the company to the highest bidder, but if it is to continue in its current form, GoPro must urgently refocus.
“To survive, GoPro must execute on only two things,” explained Reyes. “First it needs to develop impeccable hardware that can be used in a near infinite number of use-cases, and second to create extremely user-friendly software that makes capturing, sharing, and storing visual moments painless.”