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JPMorgan Chase & Co
(Corrects to say that all three versions of Woodman Labs' new Hero3 camera have built-in Wi-Fi, not just the highest-priced model. )
Nicholas Woodman, the founder of the company that makes GoPro video cameras, often gets asked whether selling tiny, rugged cameras so surfers, skiers, and skydivers can record their exploits is just a niche business. “It’s becoming the norm to document more and more of our lives,” Woodman says. “If this is a niche, it’s a very big one.” So big, in fact, that he says his company, San Mateo (Calif.)-based Woodman Labs, will soon have the option of going public.
GoPro cameras allow action-sports enthusiasts to take professional-quality videos. Of the million or so HD Hero2 cameras the company sold in 2011, many were purchased by consumers who don’t have thrill seeking on their minds. Couples are leaving them on tables at weddings instead of disposable cameras. Elizabeth Henriquez, a physics teacher at Bergen County Technical Schools in New Jersey, puts GoPros on blindfolded kids and asks classmates to guide them through an obstacle course to give her students a sense of what it’s like to operate the Curiosity rover on Mars. Fire departments use them for training purposes, marine biologists use them for undersea research, and the U.S. Army uses them in tests of the damage to Humvees from roadside bombs.
On Oct. 17, Woodman Labs introduced a new model called the HD Hero3 that’s 25 percent lighter and 30 percent smaller than its predecessor. It offers better resolution, clearer audio, and slower slow-mo. The HD Hero3 comes in models priced at $200 to $400, each with built-in Wi-Fi that allows people to control their camera remotely using an iPhone or Android app.
Photo Illustration by 731; Photograph by Balazs Gardi/Getty Images
The next challenge is creating software to enable real-time streaming via the smartphone app, so, for example, new dads can share their child’s first moments live. “If we make this easy enough, why wouldn’t you use it to capture your precious moments?” says Woodman. “It’s not just about you being rad. It’s about your family being rad, and about you being a rad dad.”
Woodman Labs’ sales will approach $600 million in 2012, according to three people with knowledge of the company’s finances, who declined to be named because the information is not public. Although a fourth-quarter marketing blitz could trim profits, the company has retained investment bankers led by JPMorgan Chase (JPM), say two insiders, and an IPO filing could come early next spring. That’s if Woodman Labs isn’t purchased first by a company such as Google (GOOG) or Microsoft (MSFT), both of which are dabbling more in hardware these days, notes IDC analyst Christopher Chute. Asked if the company would command a $2 billion purchase price, Woodman laughs. “More than that,” he says.
In the mid-2000s, Woodman and a cadre of relatives and high school friends persuaded surf, bike, and ski shops around the U.S. to carry the cameras, sparking a craze for user-generated GoPro videos online. (He says the company’s YouTube page is nearing 170 million views.) The go-big marketing approach was clear at the HD Hero3 launch. The company rented a 30,000-square-foot hangar near San Francisco, where journalists got rides in fighter jets loaded with three cameras in each cockpit and one on each tail—and even decals with reporters’ names on the fuselages.
Photo Illustration by 731; Photograph by PhotoAlto/Getty Images
GoPro no longer has the market to itself, however. In August, Sony (SNE) unveiled its Action Cam line, which has earned solid reviews. Sales have been slow, but the $269 price for a Wi-Fi-enabled model stacks up nicely. Cheaper cameras from China are coming as well, says IDC’s Chute. “Four hundred dollars is going to be a tough price point,” he says. “If someone has an extra $400 this Christmas, they’re probably going to be looking at an iPad Mini.”
To maintain his company’s market share and brand strength, Woodman is following Apple’s (AAPL) example. In the company’s early days, Woodman and a product designer cobbled the cameras together from off-the-shelf parts. Now a 130-person product team is working with suppliers to develop custom lenses, chips, and light sensors. The company is pouring millions into TV ads featuring GoPro users skiing, diving, or bungee jumping.
Also like Apple, it’s hiring recruits with a range of eclectic specialties to stay ahead of more cost-constrained rivals. Travis Pynn, who’d studied unmanned flight for years at the University of California at Berkeley, was flying a remote-control helicopter in a Marin County (Calif.) park when Woodman’s father started chatting him up. Now, Pynn is Woodman’s “MacGyver guy” and spends his days figuring out how to prop the camera on everything from people’s shoulders to the backs of hawks.
Much of Pynn’s work stems from Woodman’s belief that generating interesting new content (both from users and the company’s production crew) is key. “I hesitate to call it marketing. That makes it sound commercial,” Woodman says. “Our customers are spreading the truth: that a GoPro really is that good for capturing and sharing their lives. This is a big snowball that isn’t showing any signs of slowing down.”
The bottom line: GoPro cameras, initially marketed to action-sports fans, are becoming mainstream, putting Woodman Labs in position for an IPO.