How does Misfit make money?

Misfit sells wearables and accessories directly to consumer and through brand partnerships

Of all the advances in healthtech over the past few years, and there have been many, the one that most people are familiar with is likely wearables.

Health wearables have been on the rise for years now, reaching a high of 70 million units sold in 2014, and its easy to see why: finally people have a way to monitor their own health thereby reducing their medical costs and trips to the doctor. People love their activity trackers, which typically come in the form of wristband or a clip-on device, and which can then monitor a range of different variables, from number of steps to heart rate and sleep quality.

One company in this space is Misfit, which develops wearable products with sensor technology for the health and fitness industry, but also smart home devices, including a smart light bulb.

EDITOR'S NOTE: On February 12th, Vator will be holding its first ever Splash Health event in Oakland, where speakers such as Dr. Katrina Firlik, Tom Lee, Founder & CEO of One Medical, and Ryan Howard, Founder & CEO of Practice Fusion, will be talking about the state of the healthtech space, and where they think it is going. Sonny Vu, Founder and CEO of Misfit will be a keynote speaker (Get your tickets here).

Misfit makes its money, obviously, from selling items directly on the site, including its flagship product, called Shine, a fitness and sleep monitor.

The device allows users to set a goal, use points to easily measure all activities, such as walking, running, swimming and cycling, and then track their progress. Shine can even tell them how close they are to reaching their goal.

It tracks sleep monitoring, steps, calories, distance, and also has daily photo food journal.

Other Misfit products include Flash, a plastic, and more lightweight, version of the Shine trackers. Selling the hardware results in a "small profit," Vu told me, with Shine costing $99.99 and Flash costing $49.99

The company makes a lot of money from accessories and upgrades for the devices, including tee shirts for $19.99, sports bands for $9.95, sports necklaces for $49.95, and sports socks for $19.99 a pack.

Misfit also makes money through brand partnerships, to which the company sells the product in bulk.

For example, Misfit teamed up with Coca-Cola for a Coca-Cola Red Shine, through which the company was named the official activity tracker of both the 2014 Winter Olympics in Sochi and the FIFA World Cup. In another deal, it partnered with Victoria's Secret to make a Pink Shine.

Since Misfit does not do any paid media, it uses these partnerships to drive awareness of the brand, Vu told me.

 In the fourth quarter of 2014, Misfit shipped over 1 million units of its activity trackers, and hopes to see over 1 million a month soon, Vu said. Interestingly, most of the company's revenue, around 66%, comes from outside the United States, proving popular in countries like China, the United Kingdom,France,Russia and Japan.

Misfit was founded in 2011 by Sonny Vu with John Sculley, the former CEO of Apple and Pepsi, and Sridhar Iyengar, co-founder and former CTO of AgaMatrix. The company has raised $63 million in funding from investors that have included Founders Fund, Khosla Ventures, Norwest, OATV, Max Levchin, and incTANK.