Pebble arguably started the modern smartwatch craze.

In 2012, the startup became the darling of the tech world when it raised over $10 million on crowdfunding site Kickstarter to create the first Pebble watch, which can connect to your iPhone or Android phone and deliver notifications to your wrist. It formally launched in early 2013.

That was before Samsung had a chance to launch its Gear smartwatches. Or before Google could introduce Android Wear, its operating system for smartwatches. And it was way ahead of the Apple Watch, which won't launch until early 2015.

If anything, Pebble proved there's a thirst for wearable computing devices. Thousands of people voted with their wallets before the product even existed.

On Tuesday, Pebble cut the price of its smartwatches. They now start at $99. The company also added new fitness-tracking features thanks to a free software update. It's part of CEO and founder Eric Migicovsky's move to start selling Pebble watches on a larger scale.

Business Insider spoke to Migicovsky last week about Pebble's new price cut and features and wearables in general. Below is an edited transcript of that conversation:

Business Insider: What are the changes coming to Pebble?

Eric Migicovsky: You’ve heard about Pebble and you’ve known about it for a while, so the big news is a software update that we’re pushing out to all of our Pebble users. It finally brings a major feature to Pebble that people have been asking for for a while, and wipes out an entire other category of wearable that people have been using so far — it’s activity tracking on Pebble. It took a little while because we wanted to do it in a very Pebbley way. We have a lot of aspects of our product philosophy that are really important to us, one being battery life. We’ve worked really hard to build a new feature in our operating system that lets other apps run algorithms in the background. But it's also the work of our partners. Misfit, Jawbone, and Swim.com are all more of the enlightened activity trackers.

BI: What sensors are in the watch, or are you tracking activity through the phone?



EM: No. It’s all on the watch. You can walk away from your phone and it still works. It’s effectively a fitness tracker.

BI: So the fitness-tracking hardware was built in before you enabled it? That was kind of some foresight on your part.

EM: Yeah, we basically future-proofed the watch to make sure it would be possible to do this. The other cool thing is Misfit is actually bringing sleep tracking to Pebble as well.

BI: How does the sleep tracking work?

EM: It does automatic sleep detection. That means you can run the app in the background and it just works. It just always detects when you’re sleeping or when you’re walking. That’s really cool because it meshes really well with our vibe that Pebble shouldn’t be something that you change your life around. It should be something that meshes into your existing life. It also leverages one of the biggest features of Pebble, which is the battery life. On average, Pebble users get 6.2 days of battery life.

BI: That was one of my favorite parts about testing Pebble. Other smartwatches only last a day or two, it seems.

EM: And we love that. Because, I mean, for me, it reduces the anxiety. This is yet another device that you’re wearing on your body, that you’re carrying around. Do you really need something else to charge? Our argument is no, you don’t. Because we actually have the technology to let you not charge. And the reason why it took us so long to launch this activity tracking, why we didn’t launch it right out the get-go, is because we had to make sure we could do this while maintaining the amazing battery life we had. So on average, by running activity tracking in the background, for someone who gets about 6 days of battery life per charge, it only knocks off about half a day.



The Pebble Steel smartwatch. It now costs $199, down from $250. Steve Kovach/Business Insider



BI: You're also cutting the price, right?

EM: Yeah, so this is something that’s been in the works for a little while and it kind of goes back to the early days of why we started doing this. I started working on smartwatches about six and a half years ago. The only other watch at the time was Sony Ericsson. They made something called the MBW Series. It was $399. And that was the state of the art. I was this 22-year-old engineering student and I was like, there’s no way I’m going to buy this $399 watch. So I started a company, which was the obvious thing to do, and made a watch that we priced at $150. We knew that that product had to be that amount, that the $399 that other people were charging for equivalent functionality was ridiculous. And it was a disservice to the users interested in trying out this new technology. It's difficult to spread technology when it costs that much. When we launched on Kickstarter it was $99 to $120. And that was the sweet spot. Since Kickstarter, we bumped the price up to $150 and we’ve sold hundreds of thousands. But always in the back of our heads we knew that $99 was that sweet spot.

BI: Do you think there's a psychological barrier for customers there at the sub-$100 price?

EM: Totally. There’s that, and also the idea that that’s the price that fits for the product we’re making. It’s the right price. We’re not trying to make a luxury product like Apple is making. We’re not trying to make something that’s made out of gold and fancy materials. Pebble is a watch. It works pretty damn well as a watch. But it’s also a smartwatch. It has the notifications, the apps, and activity tracking. But it’s not meant to be anything more. It’s not meant to be a computer on your wrist. It’s not meant to be revolutionary or everything combined into one tiny rectangle on your wrist. It’s a great watch. And the price reflects that. The vast majority, 70% of all watches, are priced between $0 and $150. And it’s that way for a reason. People love changing their watch. They love buying a new watch when a new one comes out. They like buying one that fits their personality.

BI: Are you worried about the Apple Watch launching next year, even though it's going to cost at least $250 more?

EM: I’m not worried it will take units away. I think it will drive a lot more interest and a lot more volume to Pebble. What I’m most excited about is the idea that there are three platforms. There are now three main wearable platforms. They each have a very different aura, or a different motivation factor. And I think the most important thing we have to do as a company is speak about what Pebble does really well. And that means people in the world can self-identify and say, like, "I’m tired of the infighting with Google and Apple. It’s time to go with a choice that keeps it simple, affordable, and accessible, and puts really good quality hardware on my wrist."

The Apple watch will cost a lot more than the Pebble because it uses high-quality materials like gold and steel. Business Insider BI: You talked a lot about price making technology more accessible. Do you think the Apple Watch is too expensive?

EM: Not for what they're pitching. I mean, they're pitching a luxury watch. It has gold. That kind of stuff costs money. When you start putting in sapphire and all this stuff, it gets expensive. I don’t think the price is extraordinarily large for what you get, but it’s large for the market. If Pebble’s there at $99 and $199, making the argument that the thing’s going to be four or five times as expensive, it’s not just about what it does, but it should have a pretty different effect on your life. And I think what we’re arguing is that for the core things we know people appreciate about Pebble — watchfaces, notifications, activity tracking, some basic apps — I have the Yo app on my watch, for example.

BI: I feel bad for you.



EM: It’s interesting. Me and my girlfriend, we use this as a single bit of communication. Sure, it says the word yo, but in reality it means something different for me and her. And I think there’s going to be a lot more of these interesting, trivial applications that start out as a joke or an idea, that tell a different story when it’s on your wrist. In the same way that like, imagine using your laptop or a really old cell phone and getting told about Uber or Pandora. Like, someone with an iPod, try telling them that you’re not going to store any of your music there and you’re going to stream all of your music from the web with a radio inside your iPod? It’s kind of a crazy idea. And I think a lot of the times some of these early smartwatch and wearable applications will seem a bit crazy or weird. I think what Pebble is here to do is give them a platform, or give them room to create ideas and try them out. Because in five years smartwatches and wearables will have the same kind of penetration as smartphones.

BI: Do you still see Apple and Google as competitors?

EM: Oh, totally. There’s no beating around the bush. You only have two wrists, so there’s going to be competition. I think what we have to do is just tell a story about why we think Pebble is much better suited to solve the problems people actually care about. And one of the things we’re doing with our analytics is answering this burning question of the hour, which is: What are people actually doing with wearables? Because when you think about it, at the Apple presentation, what they showed off talked about 50 different use cases for the watch, and they don't really have one really strong, concise story. But we’re saying we actually know what people are doing. There are hundreds of thousands of people using Pebble on a regular basis, and we can see. We can just ask them. It turns out people really like using Pebble as a watch. It makes sense. It’s been 100 years that people have been putting watches on their wrist. It has to solve that problem. The thing people really love about Pebble is that it’s completely customizable. There’s the app store with the watchface generator. There are over 4,000 different watchfaces and apps available for Pebble now. And the watchface generator, which is this website where you can actually upload the images has 250,000 watchfaces.

The entry-level Pebble watch now costs $99. Pebble BI: One of the biggest problems with smartwatches today is they mirror everything that happens on your phone. You get a buzz with every incoming call, text, tweet, or whatever. Why do I need something like that when I can just look at my phone?

EM: A lot of people tell us that they turn off the notifications on their phone when they start using Pebble. And it becomes this way to triage notifications and messages without having to take your phone out of your pocket. With iOS 8, we just launched the ability to dismiss notifications from your watch. So that means if you see a notification on your watch you can dismiss it and you don’t see it again on your phone. People love it because it gives them even more ability to turn their phone off and keep it in their pocket. In about a month or two we’re going to be launching the same kind of concept but with even more features on it on Android. Android naturally gives you a little more, so what we’re doing there is canned replies, being able to reply to messages from your watch. Because you’re doing it from your phone anyway, why not receive the notification, hit a quick button, and not have to deal with it again?

BI: You talked about platform. Right now Android has the biggest platform by a mile, but it's still usually an afterthought for app developers. If Pebble gets to be that huge, how would you combat that five years from now assuming smartwatches do have the penetration you think they will?

EM: I think the hardest thing we have to crack, and I’m completely honest about that, is no one really knows what apps will look like on wearables yet. Because right now what an app looks like on your phone is a rounded rectangle that you click in and you can get information out of. They’re very siloed. On the wearable, what we’re realizing is that metaphor does not work. We do it right now and we have all these apps that are siloed, but the best experiences are the ones that kind of mesh into the background like activity tracking. It’s always on, it always works, you never have to open the app, you never have to worry. Our job is basically to tap in.

BI: As an accessory maker, you rely a lot on what Google and Apple do with their operating systems. What's something you'd like them to change that would help you?



EM: I would make Bluetooth not suck...the implementation is fraught with bugs.

BI: Do you report that to them?



EM: Yeah, and they’ve been pretty good about working with that. In fact, Apple has been quite happy to interact and solve bugs. But it’s an ongoing battle.

BI: What else would you change?

EM: Notifications. I think iOS could do a lot to improve. We have a bunch of hacks we have to do to be able to extract notifications from the operating system. There are no APIs. We can't send text messages from the watch through iOS.

BI: Do you think Apple would ever do that on iOS 8? It seems like Apple is slowly opening iOS. It just allowed third-party keyboards, for example.

EM: Yeah, I'm cautiously optimistic. I think Apple has taken a turn for the open. Even the privacy stuff, they’ve said exactly what they’re going to do with user privacy.