Notes about the GoPro S-1 (or The Rise of the Lean Hardware Startup)

Some notes about the GoPro S-1 filed earlier today.

In general, this is a great look at one of the first lean hardware companies (which also includes companies like Fitbit, Makerbot, and 3D Robotics) This is an amazing time for experimentation in technology as the cost of starting has dropped so significantly in the past 5 years.

GoPro is the #1 selling camcorder in the world with 45% of the camcorder market (by revenue) worldwide (up from 11% in December 2011.) This was partially enabled by the GoPro team taking advantage of Flip leaving the consumer market when Cisco shut down their business in April 2011.

On the consumption side, in Q1 2014 on YouTube, 6,000 daily uploads and 1 bn views of videos with “GoPro” in the title. They’ve also signed distribution deals with Virgin America and xBox live as part of their plan to expand to become a media company.

They emphasize the untapped revenue potential from their media business throughout the filing. It’ll be interesting to see the transition from media as marketing to media as a business. Do users care that they’re being monetized? How will event sponsorship work / do they hold their own events?

1.5% of the offering will be directed to Loyal3. Loyal3 is a venture-backed company that helps individuals invest in brands they love. They did their first offering with Santader Bank in January 2014. The company pays the fees for each customer purchase – the pitch is that investor customers spend way more and help evangelize the brand

More details: https://www.loyal3.com/about-loyal3.html

The business is very dependent on holiday sales. Q4 2012 = 44% of revenue. Q4 2013 = 37% of revenue.

Similar to other hardware businesses, revenue is highly dependent on new product releases. Interesting note in the risks about their Hero3 product where they released too early in order to make the holiday season and received a bunch of negative press because they had a bunch of bugs.

Really new leadership team. GoPro CFO joined January 2014. GoPro GC joined September 2013. GoPro COO joined in February 2013.

Related: an issue with weak financial reporting which they’re now fixing – but is four paragraphs in the risk section. (The largest part of the section)

Company has only raised $20m of equity capital. Raised large $120m debt round (which they’ll repay with part of the financing) Capital efficiency. Founder owns 48% of the company.

Best Buy is the largest channel for GoPro – 15%, 15%, and 17% of sales over the past three years respectively. Overall, half their business is direct through retailers online and half is through third party distributors.

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adam

I work for True Ventures, an early-stage venture capital fund with offices in Northern Virginia, San Francisco and Palo Alto. We partner with promising entrepreneurs at the earliest stages in the technology market providing hands-on management support to guide our portfolio companies through the challenges of early growth.