The co-founders of Wyze Labs, from left to right: CEO Yun Zhang, chief product officer Dongsheng Song, COO Elana Fishman, and head of marketing Dave Crosby. Photo: Courtesy of Wyze

In the world of gadgets, there are plenty of good deals to be found, but it’s usually either a high-priced item with exceptional value, or a slightly cheaper item that feels more expensive than it is. Then there’s the Wyze Cam: a wireless camera that works extremely well, has an app and storage features that match or exceed those of much of the competition, and sells for just $20 (other “cheap” wireless cams start at $100, and usually run at around $150). It makes the camera not only a great deal, but something of a puzzle: how do they do that?

It’s been a major hit with both customers and investors — Wyze just announced its first round of funding at $20 million, giving the company a $100 million valuation. We talked to Elana Fishman, chief operating officer at Wyze, about how they manage to keep things so cheap, how they plan to use their new funding, and the most creative things people have done with their highly affordable webcam.

So, all four of the founders of Wyze Labs are ex-Amazon employees. What did you guys learn at Amazon that you were able to use when you were first starting up Wyze?

﻿The biggest thing is the customer-centric focus — putting customers at the center of everything that we do and having their voice in the room when making big decisions. And then there’s operational efficiency. A bunch of us worked on the operational side of Amazon, so there’s an understanding of the supply chain and forecasting and driving efficiencies on the inventory side.

Is that how you’re able to sell a webcam for $20? Like, what’s the secret there?

﻿Ultimately, what we’re trying to do is drive down costs in everything we do, and then pass those savings on to consumers. It’s very much a volume play for us. We found manufacturing partners who were already producing at scale so that we could leverage their expertise and their efficiencies.

The WyzeCam.

Then there’s forecasting, so we can turn our inventory over very quickly. We don’t have inventory sitting around. There’s also making sure that our products not only meet but exceed customer expectations. We don’t spend money on marketing. We don’t have celebrity endorsements. We don’t do fancy advertising. We believe in making great products and letting them speak for themselves; word of mouth is how people find out about us. Historically, customers have paid for things that are not ultimately in the product they’re using. So we try and cut out as much of that as possible.

We make money on every individual camera and it’s important that we do that. We’re not selling at a loss. We have to succeed at scale to be a sustainable business. So, to do that, we have to make good product. We have to really delight customers.

So there was no point at which you were selling Wyze Cams at a loss?

﻿Nope.

That sort of high-volume, razor-thin-margins play is a lot like Amazon.

﻿Yep, exactly.

When you look around at the space, it seems like even cheapo cameras are $100. Is that people paying for things that you’ve figured out how to cut out?

﻿I think so, yeah. I mean, we don’t have a ton of visibility into other people’s business. It’s possible that their supply chains are not as efficient or optimized. So, it may be that their costs really are higher. And especially when you’re dealing with traditional sales channels, there’s often a pretty big margin that gets taken out. We don’t have a markup built in for sales-channel partners.

In the tiny corner of the gadget world, the Wyze Cam was sort of a viral hit. I, and lot of other people, wrote things that boiled down to: “This camera shouldn’t be this cheap and this good, but somehow it is.”

We were very intentional in how we launched. It was a new product, new app, new software, and a very different value proposition. We wanted to specifically speak to — and find — customers who would be excited about both the technology and understand how hard it was to do what we were doing at the price that we were doing it. Our cameras are exciting to people who are super into the technical side, because they understand how hard it is to deliver what we are at the price we’re offering it [for], but it’s also very accessible to a mass user, because of the price.

On the flip side, do you have to deal with suspicious customers because of the price? Like, my immediate reaction was, “Okay, what’s the catch? Are they selling my info on the back end?”

﻿That was absolutely something we were trying to figure out as we were deciding how to price the camera. Our goal was to put it out there at the absolute best possible price, but we understood that coming out at $20, there’d be a lot of skepticism, and that was definitely something we battled early on.

One example: In the very beginning, our cameras used a peer-to-peer connection service to connect the camera when you’re viewing a livestream remotely. The way it used to work was, whenever you pulled up a live feed, it would ping servers across the world and pick whichever one was fastest. Because we had a very tech-savvy audience, they saw that and they had those questions like, “Why is my data going to all these different countries?” It was about whatever was the fastest, but we took that feedback from users that they didn’t want their data going outside the U.S., so now we restrict the traffic so it’s all done on U.S. servers. For us it was just about speed, but we took that feedback from customers. Cameras, you know, they’re an incredibly sensitive … you’re putting them in your home.

But we don’t sell data, we don’t use customer data to train algorithms — that’s not our business model, to monetize that. Like I said, we have a little bit of margin on the hardware and that’s what drives the business.

Amazon has been huge for you as a direct sales channel. Is there any concern about Amazon having its own line of smart home cameras it wants to push? It owns the platform and it also has its own products on the platform.

﻿Yeah, there will always be that tension with Amazon. But Amazon, at the end of the day, is a very customer-centric company. They will pick the product that they think is the best fit for customers. So for example, Amazon approached us this last holiday to do a bundle where if you bought any Echo with a screen, you could add a Wyze Cam for $5. We offer that combination of value and performance for the customers and our cameras have great ratings, so Amazon absolutely will pick the product that they think is the best fit for customers.

And I’m sure that you guys still probably have some relationships at Amazon helps with things as well.

﻿Yeah, it does, for sure.

You just landed a $20 million round of funding. What’s that money going to allow you to do in the short term and in the long term?

﻿The biggest thing is continuing to invest in our growth and our company and our products, so continuing to invest in those camera lines we currently have. Then we’re looking to expand beyond cameras. Our vision is a full ecosystem of home products that work together with a single app. This gives us the funding to be able to go out there and double down on that and bring additional Wyze products to market.

Wyze is now moving from the “will this work?” phase into the “let’s make this grow” phase. Are there lessons that you’re taking from your time at Amazon as you see how far you can push it?

﻿The biggest is just a willingness to try things, see if it works, and iterate quickly. We empower everyone across our company to bring ideas together, to propose new features, to help prioritize. And we involve customers in that process, too. Some things work and some things don’t, but we can then double down where things are working.

What’s the most creative use of a Wyze Cam that you guys have seen so far? It costs 20 bucks — I can imagine people have found some pretty unusual uses for them.

﻿Absolutely. That is one of my favorite things, the incredibly creative things that people use the cameras for. One of my favorites is using it with animals. We had one video that went viral where a bear is in somebody’s kitchen. We have these amazing videos of dogs escaping kennels and you would never believe that they can climb the fences that they climb.

There’s also some really powerful ones. People use them with elderly family members. For example, a user set one up to watch his parents’ pillbox, so he could check in and see, what time did they take their meds, and be able to contact them if they didn’t. We had somebody who had an elderly parent fall in his home and she was able to get there in time and credits the Wyze Cam with being able to stay connected.

There’s a user who is actually a U.S. astronaut who integrated it into a powerful telescope and set it up to watch the moon. It opens up possibilities when the camera is $20. People might buy one for security, then realize how useful and fun it is and come back and buy more, and find fun and creative ways to use them.

This interview has been edited and condensed for length and clarity.