Google Glass isn't the only game in town.
Misfit Wearables, a wearable computing startup from the founding team of mobile health company Agamatrix and former Apple chief executive John Sculley, just raised $7.6 million in a round co-led by Founders Fund. The other notable firm in the deal isn't disclosed, but we hear through a source that it's Khosla Ventures.
Misfit isn't saying too much about what it's working on, except to say that the next generation of wearable devices shouldn't compete with fashion, has to be ambient and has to have functions outside of sensing. It has to be the kind of thing a consumer wouldn't need to remember to wear and ideally, it would be something that's so critical that a person would go back home if they left it there.
“Wearables from the 1.0 era make people look like Iron Man,” said chief executive Sonny Vu.
The name of the company has a super-interesting backstory. Up until last fall, Vu, Sculley and his Agamatrix co-founder Sridhar Iyengar, were tossing around some pretty lackluster name ideas like Etherware. He, Iyengar and Sculley were sitting around at a table at the Rosewood on Menlo Park's Sand Hill Road, having trouble deciding when news flashed that Steve Jobs had passed away.
“It was a real shame we never got them together after John's departure from Apple, so we decided to name the company in honor of Steve,” Vu said.
The name Misfit Wearables is inspired by the opening line in the famous 1997 Apple commercial that launched the “Think Different” slogan: “Here's to the crazy ones. The misfits. The rebels. The troublemakers. The round pegs in the square holes.”
The other thing that's notable about the company is the team. Vu and Iyengar co-founded Agamatrix. It isn't a household name in Silicon Valley, but it made the first medical device add-on that Apple approved for the iPhone. It's a glucose meter that diabetes patients use to test their blood sugar levels regularly.
Over 10 years, Vu and Iyengar built it into a business that makes between $50 and 100 million per year through the sale of glucose test strips. The two of them started tinkering with glucose sensing technology, and found a way that was twice as accurate as the leading technology on the market purely through better math. Vu said since most research and development teams working on glucose sensing were led by biologists, his team could fix inefficiencies that experts from other disciplines couldn't see. When Agamatrix originally entered the market, there were more than 30 competing products. Yet they managed to gain a foothold.
Then when the iPhone came out, they dreamed up a new concept: a glucose meter that would upload and track a patient's blood sugar levels through an app. It took nine months of back-and-forth with Apple to get approved it for the iPhone. It also took a few years for them to get insurance companies and Medicare to cover the cost of glucose meters for diabetes patients. The FDA cleared it last December and pharmaceutical giant Sanofi-Aventis now markets it under the name iBG Star.
So for all of you who might complain about how hard it is start a mobile or Facebook app company, this was crazy hard!
Vu says he's using the new round of funding to grow his team. He's relocating to San Francisco from Boston where he'll build a hardware and industrial design team locally. Then, interestingly enough, Misfit's software team is located in Vietnam, because Vu found some world-class machine learning experts there that were trained in good U.S. technical Ph.D. programs like the one at University of Illinois-Urbana Champaign. (Honestly, this isn't so crazy though. I run into companies every week that have serious development studios in Eastern Europe, Pakistan and East Asia.)
“We're doing algorithms (machine learning) and app development in Vietnam because of speed, not just cost,” Vu said. “There's lots of this kind of talent in Silicon Valley but they're just not readily available, at least not to newcomers like us.”