Inc.
This Company Makes Wearable Devices for Babies So Their Parents Can Sleep Better
By: Emily Canal
When Kurt Workman and his wife, Shea, decided they wanted to start a family, their first concern was that their child would inherit Shea's heart condition. A standard video monitor couldn't tell them if their baby's heartbeat was irregular and wouldn't alert them if the situation was dangerous.
Workman's solution was to develop the Smart Sock, a noninvasive device that measures an infant's heart rate and breathing and alerts parents if they fall outside of normal ranges. The then-23-year-old was already a veteran entrepreneur: He had run a paintball business out of his backyard when he was 12 and a flooring and tile operation when he was in high school. He didn't have the technical or medical skills necessary to design the Smart Sock, though, so he teamed up with his Brigham Young University classmates Zack Bomsta, Jordan Monroe, and Jake Colvin to build the hardware and develop the startup, which they called Owlet. The founding team also got help from BYU engineering interns, who were originally paid in pizza and are now staffers at the company.
Owlet started selling Smart Socks in September 2015, and by the end of the year it had booked $2 million in revenue. The 115-employee business, based in Lehi, Utah, closed 2017 with $25 million in revenue and is projecting nearly double that this year.
"Parents spend a lot of money on their children, and will spend more if you can solve problems for them," says Workman, who is now the father of three young children. The three most important things for parents are "keeping baby safe, healthy, and happy," he says. "We've created something that can help them do that better."
The Smart Sock, which Owlet sells for $300 on its website, fits on most children up to 18 months old. The device wraps around a baby's foot and uses pulse oximetry, a noninvasive method for tracking oxygen levels and heart rate. Parents have a wirelessly connected base station that will glow green to let them know their baby is healthy and will notify them with lights and sounds if that changes. Parents also can use the company's app to get real-time readings, as well as an accompanying Owlet camera to check in remotely.
Recognizing a need
Workman is far from the only entrepreneur trying to give parents some peace of mind--the baby tech industry has been growing rapidly in recent years. Consumers are eager for tools that help track fertility, make breast feeding easier, and assist with getting their babies to sleep: The online baby-product industry booked $7.4 billion in revenue last year, an 84 percent increase from 2012, according to the market research firm IBISWorld. The industry will continue to grow rapidly, IBIS predicts, reaching $10.4 billion in revenue by 2023.
The baby tech boom is in part a result of the ever-increasing processing power that has also fueled the widespread adoption of wearables and other small devices. "When you look at the growth in health care, tracking, biometrics, heart rate, and temperature monitoring, it's no wonder it got specific to one of our most vulnerable populations, which is babies," says Jill Gilbert, who produces the annual Baby Tech Summit, part of the International Consumer Electronics Show. "There has always been a need for it, but I don't think people recognized technology as a solution."
While Owlet's Smart Sock is the only product on the market utilizing pulse oximetry, the startup competes with Angelcare, which makes an under-the-mattress breathing and movement sensor pad, and Snuza, a wearable device that clips onto a baby's diaper and monitors its breathing. Despite the large demand for products like these, survival in the industry is contingent on focusing beyond just one limited time period in parenthood, Workman says. While Owlet's initial product was designed for infants, the company is working on technology aimed at pregnancy so it can start working with new customers earlier. (Workman declined to give further details, but says Owlet expects to release a new product in 2019.)
Another challenge is getting people to spend large amounts of money for a product that they may use for only a very limited period of time, Gilbert says. Startups in this industry need to craft business models like Owlet's, which will follow customers through multiple stages in parenthood, or they need to make a strong case for investing in a product that may not be used for long.
The birth of a good idea
Workman and his co-founders built a few prototypes of the Smart Sock before receiving $50,000 from an angel investor, and winning money from innovation competitions through their school. In 2014, Owlet raised $2 million in a seed round. After closing a Series B round this year, the company has raised a total of $50 million.
During the development process, Workman and his wife had two children, on whom they tested the Smart Sock prototypes. When they first tried one with their son, it didn't function as well as it was supposed to. "I still remember Shea telling me, in the nicest way she could, to give the money back to our investors because she didn't think it would work," Workman says. But things changed dramatically when the couple had a daughter two years later. Once Shea outfitted their daughter with an updated version of the sock, Workman relates, "she told me she couldn't imagine not having this product."
