#NetworkEffects : Fitbit Q1 2016 Earnings Call

If anyone still has any doubt that Fitbit's success is due to network effect, the opening paragraph of James' 2016 Q1 Earnings Conference Call should answer this:

“Thanks, Brad. Good afternoon, everyone. I’m very proud of the company’s first quarter 2016 results. Strong growth and defensibility of our business continues to be powered by product innovation, network effects of our community, our expanding global distribution and investment in our brand. I’m excited to talk about each of these key strengths during the call.”
— James Park, Chairman & CEO of Fitbit

Note how the unquestionable winner of activity tracker talked about defensibility as a direct result of network effects.

This following statement, made at 05'40" of the audio webcast, makes it even more clear:

Next I’d like to highlight the network effects of our user community. Our community continues to be both an accelerator of our growth and a powerful competitive mode that makes it difficult for new companies to gain meaningful traction. A significant portion of the Fitbit experience is the ability to compete and connect with friends and family across a variety of health and fitness metrics.

Due to our breadth of users, people are more likely to buy Fitbit device because our friends and family are already likely to be Fitbit owners and less likely to leave to a competitor due to the same dynamics.

These are all public statements that could easily be found. It sometimes surprised me that so many people in this industry still missed this part of the Fitbit success. As an entrepreneur it would be great sin not to at least understand how other people succeed, whether one chooses to go down the same route or not.

Webcast for the full Earnings Call is available for re-listening. You can find full transcript at the Seeking Alpha website.

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