Is Contour Camera Still In Business

PROVO, Utah (TheStreet) -- Jason Green has learned just how tough the estimator hardware business has go.

"Our large problem was we were a hardware company in a software town," said the chief technology officeholder for action and sports camera maker Contour equally we shared a new-Utah fusion dejeuner of salary sushi and tuna salad served in martini glasses.

Greenish, along with his boss, Chief Executive Danny Lysenko, kindly saturday down with me for a surprisingly frank lunch hither in Contour's hometown virtually the visitor'due south odyssey of going from No. seven on the Inc. 500 list for America's Fastest Growing Companies in 2011 to bankruptcy past August -- so to a new and far smaller Profile this year, looking for a toehold in the fast-growing market for wearable sports and helmet cameras dominated by the likes of GoPro, BulletHD and Sony (SNE) - Get Sony Corp. Written report.

"Certainly, we could we take done a ameliorate task of getting the message out. I twelvemonth I think GoPro raised $xx million and nosotros raised $2 million," Green said. "Only I felt over and over that we were trying to explain ourselves in an investing climate where software is king."

Green and Lysenko's tale of the penalty pure hardware companies such as Contour pay in today's software-mad earth is sobering investor stuff. On the confront of information technology, there's non a thing this hardware startup did not do right.

The roots of Profile go all the way back to 2003, when Green worked with co-founder Marc Barros to win a $20,000 entrepreneurship prize at the University of Washington. That early on fame put the start-up in position to ride the wear device and activeness helmet camera wave -- a moving ridge that led straight to San Mateo, Calif.-based GoPro announcing an IPO before in Feb on rumors of $i billion in annual sales.

As well see: #DigitalSkeptic: Winter Tech With Olympic-Sized Business Ambitions>>

No question, Contour was thick in the action-cam mix. It grew to more than sixty employees, rivaled GoPro for sales for several years and boasted rich features such as Hard disk video, solid audio quality and splendid pattern and manufacturing. And the media ate it up: Time, Men's Journal and Outside all loved the unit of measurement. Yahoo! Financequoted then-CEO Barros that as late as March 2012 the company was on track to generate $fifty meg in sales that year.

In our chop-chop changing Information Age, though, even all that upside was not plenty to go on Contour afloat.

Peachy hardware is no longer enough

As Lysenko and Green explained it, backside the fast-growing sales were capital constraints in producing cameras at large scale, which led to the need for more than coin -- which turned out to be harder and harder to scare upwards. "We could not get in front of investors that seemed to get what we were doing," Light-green said.

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Profile too faced intense sales and marketing pressure from rivals such as GoPro, Barros said. "Nosotros built distribution first instead of brand," he said. "That resulted in a lower-margin business than our competitor, which they fed correct back into marketing, which was their strategic strength."

Either way, by 2012, greenbacks reserves had dwindled and current Chief Marketing Officer James Harrison says Barros was replaced by an interim CEO, Steve Moore. By last year, creditors sent the functioning into receivership, at which point an original investor, Clarke Capital letter, bought the remains of the business organization from the court-appointed receiver. Lysenko was recruited from Apple to reboot the operation.

Too see: #DigitalSkeptic: No to Software and Apps -- It's Hardware That's Hot>>

"What I learned was, information technology'south actually expensive to calibration a real production," Green said. "And that was just not what everyone seemed to understood."

Investors most certainly owe it to themselves to come across how easy information technology is to wind up in Green's position by doing what I did and getting hold of a Contour+2 ($299). They volition run across for themselves just how durable, rugged and well-realized this product is. Too existence an fantabulous video recording device, it'southward packaged beautifully and offers none of the invasive creep cistron constitute with other habiliment electronics such as Google (GOOG) - Get Alphabet Inc. Class C Written report Drinking glass or the Nike (NKE) - Get NIKE, Inc. Grade B Report Fuel Band.

Yes, there are issues: Contour'southward imaging software is odd, and it takes time to figure out how to actually photograph and process the mass of video recorded. But essentially, for just $300, a client gets a fully realized cocky-recording appliance that enables him or her to exercise something fundamentally new: capture one's life in existent time.

Simply even for all that, the sorry fact is that Contour could not detect the fresh funds information technology needed to back its growth. Contour had to fade to black.

A leaner, meaner Contour

Equally Lysenko explained it, the new, leaner meaner Contour is trimmed back to 10 employees and will concentrate on rebuilding its business slowly with its all-time former customers. "I don't see the states changing the production dramatically," he said. "The GoPro IPO validates the action-cam market equally a billion-dollar global business concern. My plan is to become out and find our share of it."

Only equally I walked Lysenko and Light-green to their automobile subsequently our repast, I got the feeling at that place's a deeper investor lesson lurking in Contour's activity-cam misadventures. Never listen the millions being raised on Kickstarter or Indiegogo for fancy new gadgets; selling real hardware in these unreal software days has never been more difficult.

"Am I partially responsible for not getting this product correct? Absolutely," Green said. "Just what I learned is that for all our success, it'southward non piece of cake to detect backers who get how the real earth of making something real works."

"Hardware is a really hard story to tell."

This commentary comes from an independent investor or market observer as part of TheStreet guest correspondent program. The views expressed are those of the author and exercise non necessarily correspond the views of TheStreet or its management.

Source: https://www.thestreet.com/personal-finance/digitalskeptic-how-action-camera-maker-contour-failed-and-how-it-comes-back-12346914

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