[Applause]
welcome back to case studies with the
biz doc this week gets GoPro and what
happened to GoPro I’m gonna cover four
things a little history a little
enthusiasm around the IPO what’s
happening today and why I think it
happened and there’s lessons in that for
you and me whether we’re running as I
like to say a little t-shirt company
downtown or running something large like
a consumer electronics technology
company like GoPro so let’s dive in it
starts with Nick Woodman in 2002 going
to Australia he would become the founder
of GoPro he goes down to Australia and
he wants to take really great surfing
pictures but for more he is on the beach
and with the regular consumer equipment
like you and I would buy at a photo
store he only can get certain level of
quality he wants to be close to the
action and get great amazing pictures I
even see in surf magazines well guess
what the professionals are out there
with these big expensive cameras in
these expensive water boxes and stuff
and they got jet skis towing him around
and dive tanks and that’s just expensive
and that was the dream wouldn’t it be
great if a simple consumer like you and
me could go pro and get professional
quality pictures off affordable
equipment and that little thought was
the dream for GoPro he 2002 he starts
saving his pennies believe it or not he
was selling beads and belts and things
made of shells out of a Volkswagen micro
bus that’s not in the Android logo I
tried to draw a Volkswagen micro bus so
I get an F for art but there he is with
that and then he gets about two hundred
and fifty thousand right around a
quarter million from his parents and so
he truly bootstrapped like most
entrepreneurs saved some money money
from friends and in this case family and
away he goes in 2004 the very first
GoPro camera comes out but it’s got film
it sold thirty five-millimeter well very
old-school but that’s where it all
started however two years later in oh
six the first hero digital camera comes
out so oh five the sales was about 150
thousand so he
selling something to somebody by oh-6 it
goes up to 800,000 and then it’s 3.4
million in oh seven and the hero digital
is off and running and this enters him
what we call the golden era for GoPro
more cameras are being introduced they
start offering colors a little bit later
on there’s this huge run-up and we all
know it and I’m not going to cover that
part although that is a case study and a
great story in itself of what happened
over those six years from the first
digital camera and what happened was
just enthusiasm and again a cult brand a
cult following everything was absolutely
phenomenal then I’ve got the boom here
well what’s the boom the boom is life is
so incredibly good in 2014 let’s go
public it took them a while to get there
but going public they’ll have money they
want to buy some little companies to get
editing software so they had some plans
and things to do it
so they go off at 13 and say let’s go
public they would go public in 14 and
one of the first things they did as they
were going public does I hired a guy
named Tony Bates who is an executive for
Microsoft so now you have Nick who is
this guy the inventor and now we have a
very credible corporate guy in Tony
Bates who’s going to be the president
but report to Nick to give credibility
to the team they’re assembling to go
public and away they go but guess what
the going public would be the end of the
golden era for GoPro I’m going to show
you what happened as we step into the
second part which is the not so fun and
games that happen with the IPO the IPO
goes out as most IPOs do – a lot of
fanfare $24 a share which meant on day
one they were worth three billion
dollars well done however now they gotta
announce quarterly reports they got to
keep the drumbeat going because once you
go public you have to serve that master
which is all the shareholders that own
your stock and GoPro continued to have
kind of robust growth and everything and
I’ll take a look back here in 2014
the revenue was 1.4 and then going into
15 the revenue was 11.7 and as that
run-up happened October of 2014 they hit
a peak of $98 a share in October of 14
so that was an implied valuation of a
little bit over ten billion dollars this
is a real company now with real value
and more importantly shareholders and
analysts and people that want you to
keep the beat going except that it
didn’t in all of their growth and all
their spending there was a few things
that went down well let’s take a look so
this is the IPO era starting from 14 I’m
gonna walk you through some financials
now revenue was 1.4 then in 15 1.7 so it
grew 16% and by the way it had grown 41%
from 2013 going into 14 which was the
part of the kaboom we’re growing 41%
let’s go public and we’ll get all this
money on the stock market we’ll go buy
those little editing companies and those
things we want okay hang on maybe they
should have taken a deep breath at that
point but the way they went well 14 to
15 was only 16% growth you know who was
paying attention the market was paying
attention you turn in a 16 percent
growth which is less than half the
growth rate that you had here the market
starts to get nervous what they also get
nervous about is you had made you had a
45% gross margin and what gross margin
is most of you know that’s the profit
you make selling each product so you
start with your revenue then the profit
you make selling the camera then you
deduct that you’re operating and people
expenses
that’s called operating expenses or op X
and finally you get to your net well so
they were making 45 cents on the dollar
when they sold the camera but then you
have four hundred and forty million of
op X and they made 128 well as you can
see there are some other things not just
the 16 percent growth that the market
got annoyed with o op X jumped to 618
million and the net was only 36 million
it gets worse the next year they only go
one point seven to one point one eight
so they a growth was minus
27% and they spent even more on op X and
by the way it was this time in this era
that they had two Super Bowl ads that’s
right so if we have all these problems
going on we spend a whole bunch more
right here on the OP X line on Super
Bowl ads if we just advertise more
things will turn around now that may be
okay for young company but I want you to
look at something you’ve been building
this Colt brand for 10 freaking years
you don’t need a Super Bowl ad to get
people’s attention you have a loyal
following you’ve come off the golden era
people loved it
I had a GoPro my friends had GoPros that
even they put on their kids ski helmets
and we’d have these amazing little
parties where we looked at all their ski
footage off a GoPro on the the little
tykes helmet it was fun it was great you
need Super Bowl ads to get the world’s
attention here no the answer was you had
the money and you spent it on it
I don’t think Super Bowl ads pencil out
well and they lost four to nineteen
million dollars that year 27 percent
growth I mean – 27 percent growth and
then 2017 which is just close it’s just
an estimate here that came out from some
analysts is that they grow not at all
they’ve reduced the loss by spending
less and how did they spend less well
they laid off 200 people than 100 people
in 2016 then they laid off 250 people in
2017 then they told Bates that he can go
on the board but he’s not going to be
president anymore so you can see what’s
going on and there was something else
you see this little bump here so the
stock went down and came up along the
way as this is going down and things are
going on with the sale of cameras
we’ll be a media company yeah we’ll be a
media company well just hire some media
executives and so they went out and they
hired from Hulu a woman that was in
charge of original content in July of 15
and then they hired the guy that was in
charge of HBO Sports in October of 15
said hey we’re a media company so the
market said hmm and they gave him a
little pop-up but then they started
seeing the earnings reports and the
results here and they’re like
No and so it goes all the way down to
where it is today six dollars a share
worth about eight hundred and forty
million dollars now there is value
inside you know GoPro because in this
era they bought a couple companies and
there’s real technology assets in those
companies and that would be okay if you
were still a private company and you
could take those technology assets maybe
put them together and do some things but
as a public company man boom you got to
turn in the results and they had a
company that was based in Austin a
company it was based in Paris they
bought them and then they left them in
those locations so how do you bring all
of that into the fold and get momentum
so there’s a lot of things that went on
with the acquisitions that were
troubling as well and it led to where
they are today so where are we today
Nick just this past week says I’m open
to selling the company now he says he’s
open to selling the company meanwhile
they had already contacted an apparently
contracted JP Morgan to sell the company
so saying that you’re open to selling
when you’ve already got JP Morgan is
like the Kardashian sisters saying I’m
open to dating an NBA player who are you
kidding it creates this death spiral so
now you’re on this death spiral where no
we’re a media company we’re not a media
company and now we’re open to selling
because they do have assets to sell and
right now they’re worth 840 million
dollars the IPO was 3 billion so they’re
sitting there a little more than
one-quarter of their IPO value they’ve
lost almost 75% of their IPO value so
let’s go down the death spiral and let’s
go over here and let’s talk a little bit
for you and me about strategy because
we’ve talked about the history we talked
about the IPO and we’ve talked about
what’s happening right now with Nick and
oh I’m open to selling but let’s go look
at what really happened to Nick never
mind that
you know the enthusiasm of all this
growth that caused them to go public I
think what happened is as I read things
they got flanked in the camera market
they were the leader and there were fast
followers going to challenge them
360 cameras came out you know those are
everywhere and 360 they said we’ll buy
two of our cameras put it together like
this and you get a 360 effect whereas
other people were putting out single 360
cameras with real trick lenses that’s
just one of many things where I think
they got flanked also I saw last winter
out skiing I saw kids that had their
iPhone sideways in these I don’t know if
they’re crust proof but it was a
heavy-duty case that went on their
helmet or up next to the to their
shoulder for like snowboarders so they
were out there actually using iPhones
not all of them but everyone that was
using an iPhone with some device to do
it is no longer using a GoPro that’s a
lost GoPro customer and the iPhone is
connected right now a great bandwidth
androids have bandwidth so you can
upload your pictures right now remember
the GoPro you always went back and
transferred it to a computer or use
Wi-Fi and transferred at some place
where as your your iPhone and Android
boom put it to Facebook right now put it
to insta right now so I think they got
flat flanked they got flack for being
flanked on the product side the second
thing the strategic focus when you’re in
the middle of a product issue and you
still have some of your IPO money in the
bank you don’t suddenly go out and say
I’m gonna be a media company and do
something else I’m just gonna hire a
bunch of executives we talked about this
we talked about blue apron when they
bought that damn ranch
oh yeah we’ll buy a ranch no you’re a
marketing group and you make recipes and
you ship food those are your core
competencies what were the core
competencies of Go Pro sticking to your
roots envisioning professional quality
images coming to you and me through a
great little camera that’s your core
competency not saying oh I’m gonna make
a media company I’m gonna be a Content
company no you’re not your customers
make content with your cameras so I
think that strategic focus was just
wrong and all it did was accelerated the
layoffs a close of divisions of things
they bought and so when I look at this
and I see you know this is this here has
been a very exciting for years because
2018 right here so a year a year a year
a year this has been you know four years
so you took a company that was around
ten years and then in four years you’ve
destroyed everything that was the golden
area take ten years to make and after
that it’s only one word for that and
that is damn you blew it we loved your
cameras we loved it you’re all about why
didn’t you stay with it you had this
brand that was beloved you had people
that loved it why didn’t you just stay
with it and make great cameras and keep
us just delighted yes in the era of the
iPhone yes and era competition but know
who you are
stick to your knitting and don’t get
distracted and those are the lesson
points for you and me whether we’re
operating a t-shirt company downtown or
we’re lucky enough to start something
that’s small and we’re selling beads out
of a microbus and we build a cult
following and a great product called
GoPro for the were lucky enough to have
that kind of a run stick to your
knitting know who you are know your
competencies cultivate your competencies
and build that culture where you are
because a pivot like this I think
basically they may have had a shot to
turn it around but once they go media
company and they make that pivot and
everything goes so the market gave you
one chance then it gave you another
chance now the markets giving you no
chance six bucks a share buddy and
that’s what’s sad and so now I think we
will see the sale of GoPro to somebody
because there are assets and technology
things in there and there is a great
little brand
think somebody will buy it but I think
it needs to go back private be a private
company where without having to worry
about earnings reports and things that
they can go back to doing what they do
best and then maybe they can go knock
off one or two of these companies that
are making the 360 cameras and all the
great stuff that’s out there today and
make a comeback I’d love to see it
because I remember the GoPro and I
remember the joy I had same friends and
their kids use it that’s this week’s
case study and remember when we get to a
million subscribers the first value
tainment conference led by Patrick that
David is gonna happen so go help it
happen subscribe to this video and we’ll
see you with more case studies I’m Tom
Ellsworth the biz doc and I hope I left you better than I found you
welcome back to case studies with the
biz doc this week gets GoPro and what
happened to GoPro I’m gonna cover four
things a little history a little
enthusiasm around the IPO what’s
happening today and why I think it
happened and there’s lessons in that for
you and me whether we’re running as I
like to say a little t-shirt company
downtown or running something large like
a consumer electronics technology
company like GoPro so let’s dive in it
starts with Nick Woodman in 2002 going
to Australia he would become the founder
of GoPro he goes down to Australia and
he wants to take really great surfing
pictures but for more he is on the beach
and with the regular consumer equipment
like you and I would buy at a photo
store he only can get certain level of
quality he wants to be close to the
action and get great amazing pictures I
even see in surf magazines well guess
what the professionals are out there
with these big expensive cameras in
these expensive water boxes and stuff
and they got jet skis towing him around
and dive tanks and that’s just expensive
and that was the dream wouldn’t it be
great if a simple consumer like you and
me could go pro and get professional
quality pictures off affordable
equipment and that little thought was
the dream for GoPro he 2002 he starts
saving his pennies believe it or not he
was selling beads and belts and things
made of shells out of a Volkswagen micro
bus that’s not in the Android logo I
tried to draw a Volkswagen micro bus so
I get an F for art but there he is with
that and then he gets about two hundred
and fifty thousand right around a
quarter million from his parents and so
he truly bootstrapped like most
entrepreneurs saved some money money
from friends and in this case family and
away he goes in 2004 the very first
GoPro camera comes out but it’s got film
it sold thirty five-millimeter well very
old-school but that’s where it all
started however two years later in oh
six the first hero digital camera comes
out so oh five the sales was about 150
thousand so he
selling something to somebody by oh-6 it
goes up to 800,000 and then it’s 3.4
million in oh seven and the hero digital
is off and running and this enters him
what we call the golden era for GoPro
more cameras are being introduced they
start offering colors a little bit later
on there’s this huge run-up and we all
know it and I’m not going to cover that
part although that is a case study and a
great story in itself of what happened
over those six years from the first
digital camera and what happened was
just enthusiasm and again a cult brand a
cult following everything was absolutely
phenomenal then I’ve got the boom here
well what’s the boom the boom is life is
so incredibly good in 2014 let’s go
public it took them a while to get there
but going public they’ll have money they
want to buy some little companies to get
editing software so they had some plans
and things to do it
so they go off at 13 and say let’s go
public they would go public in 14 and
one of the first things they did as they
were going public does I hired a guy
named Tony Bates who is an executive for
Microsoft so now you have Nick who is
this guy the inventor and now we have a
very credible corporate guy in Tony
Bates who’s going to be the president
but report to Nick to give credibility
to the team they’re assembling to go
public and away they go but guess what
the going public would be the end of the
golden era for GoPro I’m going to show
you what happened as we step into the
second part which is the not so fun and
games that happen with the IPO the IPO
goes out as most IPOs do – a lot of
fanfare $24 a share which meant on day
one they were worth three billion
dollars well done however now they gotta
announce quarterly reports they got to
keep the drumbeat going because once you
go public you have to serve that master
which is all the shareholders that own
your stock and GoPro continued to have
kind of robust growth and everything and
I’ll take a look back here in 2014
the revenue was 1.4 and then going into
15 the revenue was 11.7 and as that
run-up happened October of 2014 they hit
a peak of $98 a share in October of 14
so that was an implied valuation of a
little bit over ten billion dollars this
is a real company now with real value
and more importantly shareholders and
analysts and people that want you to
keep the beat going except that it
didn’t in all of their growth and all
their spending there was a few things
that went down well let’s take a look so
this is the IPO era starting from 14 I’m
gonna walk you through some financials
now revenue was 1.4 then in 15 1.7 so it
grew 16% and by the way it had grown 41%
from 2013 going into 14 which was the
part of the kaboom we’re growing 41%
let’s go public and we’ll get all this
money on the stock market we’ll go buy
those little editing companies and those
things we want okay hang on maybe they
should have taken a deep breath at that
point but the way they went well 14 to
15 was only 16% growth you know who was
paying attention the market was paying
attention you turn in a 16 percent
growth which is less than half the
growth rate that you had here the market
starts to get nervous what they also get
nervous about is you had made you had a
45% gross margin and what gross margin
is most of you know that’s the profit
you make selling each product so you
start with your revenue then the profit
you make selling the camera then you
deduct that you’re operating and people
expenses
that’s called operating expenses or op X
and finally you get to your net well so
they were making 45 cents on the dollar
when they sold the camera but then you
have four hundred and forty million of
op X and they made 128 well as you can
see there are some other things not just
the 16 percent growth that the market
got annoyed with o op X jumped to 618
million and the net was only 36 million
it gets worse the next year they only go
one point seven to one point one eight
so they a growth was minus
27% and they spent even more on op X and
by the way it was this time in this era
that they had two Super Bowl ads that’s
right so if we have all these problems
going on we spend a whole bunch more
right here on the OP X line on Super
Bowl ads if we just advertise more
things will turn around now that may be
okay for young company but I want you to
look at something you’ve been building
this Colt brand for 10 freaking years
you don’t need a Super Bowl ad to get
people’s attention you have a loyal
following you’ve come off the golden era
people loved it
I had a GoPro my friends had GoPros that
even they put on their kids ski helmets
and we’d have these amazing little
parties where we looked at all their ski
footage off a GoPro on the the little
tykes helmet it was fun it was great you
need Super Bowl ads to get the world’s
attention here no the answer was you had
the money and you spent it on it
I don’t think Super Bowl ads pencil out
well and they lost four to nineteen
million dollars that year 27 percent
growth I mean – 27 percent growth and
then 2017 which is just close it’s just
an estimate here that came out from some
analysts is that they grow not at all
they’ve reduced the loss by spending
less and how did they spend less well
they laid off 200 people than 100 people
in 2016 then they laid off 250 people in
2017 then they told Bates that he can go
on the board but he’s not going to be
president anymore so you can see what’s
going on and there was something else
you see this little bump here so the
stock went down and came up along the
way as this is going down and things are
going on with the sale of cameras
we’ll be a media company yeah we’ll be a
media company well just hire some media
executives and so they went out and they
hired from Hulu a woman that was in
charge of original content in July of 15
and then they hired the guy that was in
charge of HBO Sports in October of 15
said hey we’re a media company so the
market said hmm and they gave him a
little pop-up but then they started
seeing the earnings reports and the
results here and they’re like
No and so it goes all the way down to
where it is today six dollars a share
worth about eight hundred and forty
million dollars now there is value
inside you know GoPro because in this
era they bought a couple companies and
there’s real technology assets in those
companies and that would be okay if you
were still a private company and you
could take those technology assets maybe
put them together and do some things but
as a public company man boom you got to
turn in the results and they had a
company that was based in Austin a
company it was based in Paris they
bought them and then they left them in
those locations so how do you bring all
of that into the fold and get momentum
so there’s a lot of things that went on
with the acquisitions that were
troubling as well and it led to where
they are today so where are we today
Nick just this past week says I’m open
to selling the company now he says he’s
open to selling the company meanwhile
they had already contacted an apparently
contracted JP Morgan to sell the company
so saying that you’re open to selling
when you’ve already got JP Morgan is
like the Kardashian sisters saying I’m
open to dating an NBA player who are you
kidding it creates this death spiral so
now you’re on this death spiral where no
we’re a media company we’re not a media
company and now we’re open to selling
because they do have assets to sell and
right now they’re worth 840 million
dollars the IPO was 3 billion so they’re
sitting there a little more than
one-quarter of their IPO value they’ve
lost almost 75% of their IPO value so
let’s go down the death spiral and let’s
go over here and let’s talk a little bit
for you and me about strategy because
we’ve talked about the history we talked
about the IPO and we’ve talked about
what’s happening right now with Nick and
oh I’m open to selling but let’s go look
at what really happened to Nick never
mind that
you know the enthusiasm of all this
growth that caused them to go public I
think what happened is as I read things
they got flanked in the camera market
they were the leader and there were fast
followers going to challenge them
360 cameras came out you know those are
everywhere and 360 they said we’ll buy
two of our cameras put it together like
this and you get a 360 effect whereas
other people were putting out single 360
cameras with real trick lenses that’s
just one of many things where I think
they got flanked also I saw last winter
out skiing I saw kids that had their
iPhone sideways in these I don’t know if
they’re crust proof but it was a
heavy-duty case that went on their
helmet or up next to the to their
shoulder for like snowboarders so they
were out there actually using iPhones
not all of them but everyone that was
using an iPhone with some device to do
it is no longer using a GoPro that’s a
lost GoPro customer and the iPhone is
connected right now a great bandwidth
androids have bandwidth so you can
upload your pictures right now remember
the GoPro you always went back and
transferred it to a computer or use
Wi-Fi and transferred at some place
where as your your iPhone and Android
boom put it to Facebook right now put it
to insta right now so I think they got
flat flanked they got flack for being
flanked on the product side the second
thing the strategic focus when you’re in
the middle of a product issue and you
still have some of your IPO money in the
bank you don’t suddenly go out and say
I’m gonna be a media company and do
something else I’m just gonna hire a
bunch of executives we talked about this
we talked about blue apron when they
bought that damn ranch
oh yeah we’ll buy a ranch no you’re a
marketing group and you make recipes and
you ship food those are your core
competencies what were the core
competencies of Go Pro sticking to your
roots envisioning professional quality
images coming to you and me through a
great little camera that’s your core
competency not saying oh I’m gonna make
a media company I’m gonna be a Content
company no you’re not your customers
make content with your cameras so I
think that strategic focus was just
wrong and all it did was accelerated the
layoffs a close of divisions of things
they bought and so when I look at this
and I see you know this is this here has
been a very exciting for years because
2018 right here so a year a year a year
a year this has been you know four years
so you took a company that was around
ten years and then in four years you’ve
destroyed everything that was the golden
area take ten years to make and after
that it’s only one word for that and
that is damn you blew it we loved your
cameras we loved it you’re all about why
didn’t you stay with it you had this
brand that was beloved you had people
that loved it why didn’t you just stay
with it and make great cameras and keep
us just delighted yes in the era of the
iPhone yes and era competition but know
who you are
stick to your knitting and don’t get
distracted and those are the lesson
points for you and me whether we’re
operating a t-shirt company downtown or
we’re lucky enough to start something
that’s small and we’re selling beads out
of a microbus and we build a cult
following and a great product called
GoPro for the were lucky enough to have
that kind of a run stick to your
knitting know who you are know your
competencies cultivate your competencies
and build that culture where you are
because a pivot like this I think
basically they may have had a shot to
turn it around but once they go media
company and they make that pivot and
everything goes so the market gave you
one chance then it gave you another
chance now the markets giving you no
chance six bucks a share buddy and
that’s what’s sad and so now I think we
will see the sale of GoPro to somebody
because there are assets and technology
things in there and there is a great
little brand
think somebody will buy it but I think
it needs to go back private be a private
company where without having to worry
about earnings reports and things that
they can go back to doing what they do
best and then maybe they can go knock
off one or two of these companies that
are making the 360 cameras and all the
great stuff that’s out there today and
make a comeback I’d love to see it
because I remember the GoPro and I
remember the joy I had same friends and
their kids use it that’s this week’s
case study and remember when we get to a
million subscribers the first value
tainment conference led by Patrick that
David is gonna happen so go help it
happen subscribe to this video and we’ll
see you with more case studies I’m Tom
Ellsworth the biz doc and I hope I left you better than I found you
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