Why GoPro failed? What happened to GoPro device? The fate of GoPro.

Remember gopro?  the insanely popular action camera brand that blew up in 2014 and 2015. gopro introduced a simple yet revolutionary way to share crazy adventures . whether that be surfing skydiving or scuba diving . gopro's small and durable cameras were perfect for a wide range of activities and even caught on within the vlogging space. even today gopros remain rather popular amongst adrenaline junkies and vloggers. 
However the same cannot be said about investors. when gopro ipod in 2014 investors piled in and bid up the stock over 100 percent in a matter of months. but ever since the initial hype died off gopro stock has just been selling off and it even became a penny stock for a few years trading under five dollars a share. gopro has recovered a little over the past year to about nine dollars a share but that's still 75 less than the ipo price and 90 perc. lower than their peak . so what happened to gopro? well taking a look back gopro was actually founded quite a while before they blew up in 2002. the story goes that nick woodman the founder of gopro went on a trip to australia and indonesia in 2002.

Questions
Why did GoPro failed?
Is GoPro a failing company?
What happened to GoPro?

During the trip nick went surfing and he wanted to record himself so he got a 35 millimeter camera and attached it to his hand using a rubber band. as you would guess this was not a very effective solution and much to nick's disappointment there weren't many solutions on the market . you either had to record from the shore which largely deprived the support of its intensity or you had to buy expensive waterproof cameras. so nick decided to create his own solution . he used his mom sewing machine to develop a camera strap that wrapped around his body. he also created a wrist strap that could attach the camera to his arm. nick strongly believed that there was a large group of sports enthusiasts who also wanted to capture their experiences . so he decided to launch gopro in 2002 .

 The name comes from the idea that users of gopro cameras could capture footage like the professionals . fortunately for nick his father dean was a baller himself . dean was the co-founder of an investment bank named robertson stevens which manages 1.5 billion assets today . so nick was able to borrow 200 000 from his father to kickstart gopro. with the funding secured nick worked with the chinese company called hotex to create a 35 millimeter camera using nick's wrist strap. the company was able to produce the cameras for just three dollars and five cents and the nick would turn around and sell the cameras for thirty dollars.
 Nick originally saw the cameras from his 1971 volkswagen bus . however it didn't take long for nick to hit his first big order . in 2004 nick was able to sell 100 cameras to a japanese sports company. and the following year he would make an appearance on qbc. this substantially boosted his sales and the nick would close 2005 with 350 000 in annual revenue . over the next several years nick continued to strike deals with sports companies and he continued to aggressively market the product. gopro's revenue was doubling on an annual basis and by the early 2010s gopro was generating over 100 million dollars in annual revenue . and this is when gopro would break out from being an up-and-coming startup to being a multi-billion dollar corporation .

 At the end of 2012 the taiwanese manufacturing company foxconn made a private investment into gopro . they purchased 8.88% of the company for a whopping 200 million dollars which valued gopro at 2.25 billion. at the time nick owned over 50 percent of the company which made him a billionaire. nick would take the company public a few years later in 2014. and as we previously touched on the stock exploded. gopro peaked at a valuation of over 10 billion dollars. moving forward in 2015 nick scored a partnership with the nhl and he would even be invited to shark tank as a guest shark. he actually made two investments on shark tank for a total of 125 thousand dollars. but the truth is nick was in no position to help other companies grow given that gopro itself was undergoing an internal crisis.

 But wait a minute didn't gopro just have an insane ipo and a major partnership? deal what went wrong? well the answer isn't some sort of pinpointable event rather it was years of complacency and missteps that slowly ate up the company . probably the biggest red flag for gopro was that nick was way in over himself. for example in 2014 nick was the highest paid u.s executive earning a total of 285 million dollars. now i know a lot of you guys think that that's way too much for any executive to earn. whether that be nick or tim cook. but the key difference between apple pay such a salary and gopro paying such a celery is that apple can actually afford it. in the last 12 months apple has profited 86 billion dollars. 
So paying a 200 million salary is less than a quarter percent of their net profit . in other words it doesn't affect the company's balance sheet whatsoever. with the gopro on the other hand they weren't profiting billions or even hundreds of millions. the year that nick made over a quarter billion dollars gopro only made 128 million . that's roughly equivalent to apple paying tim cook 60 billion dollars per year. i don't think i need to explain why this is an issue that same year nick bought a 180-foot yacht a gulfstream jet two mansions and a collection of vintage sports cars. nick also donated 500 million to charity which is awesome but this donation was also infamous for being a tax loophole. you see nick was technically supposed to wait 180 days after the ipo before selling any of his stock. 

Questions:
Are gopros successful?
Is GoPro losing money?
Who is gopro's biggest competitor?
Is GoPro worth investing in 2021?

But given that gopro went public in the second half of 2014 nick wouldn't be able to sell any of his stock till 2015. however as we touched on it nick had already spent a lot of money in 2014 . and having a tax write-off would be awfully helpful so he donated 500 million dollars in october of 2014. again nick was technically not supposed to do this and this made many investors quite angry. but no one took any action because that would just make themselves look bad. i mean if you sued to stop nick from making the donation you would be the bad guy preventing a half billion donation. so no one stopped him and this donation allowed him to write off 450 million dollars and avoid capital gains taxes on the stock he sold. 
Now i honestly have no problem with an exploration or donating whatever he wants . the problem is that gopro simply wasn't large enough to support this type of lifestyle. as nick's personal lifestyle inflated so did the operational costs of gopro . nick went on a hiring frenzy and expanded into every sector he could think of. in the 8 months following the ipo gopro's employee count ballooned from 700 employees to over 1600 employees. similarly the budgets for marketing campaigns photo shoots and basically everything else went through the roof. gopro's creative director says that budgets across the company increased tenfold during this time period. as gopro's operational costs exploded the company's bottom line got crushed. between the third and fourth quarter of 2015 gopro's bottom line fell off a cliff from 180 million dollars in the past 12 months to 37 million dollars.

 From there it didn't take long for gopro to start losing money . and by 2015 gopro was burning over 400 million dollars per year. since then nick has actually been extremely transparent about his reckless spending and the downfall of gopro. aside from his spending habits he's offered four additional reasons behind the fall of gopro starting with living in the future. nick says that he hyped up future products and projects way too much . it's great to be excited about the future but this turns into a problem when all of your employees and investors become fixated on the future . employees start to lose focus on making current products as good as possible and a perfect example of this was the hero 5 black .

 As gopro was attacking drones and entertainment head-on they slipped up on their core offering. the hero 5 black received several complaints that it was leaking underwater and it turned out that gopro had a production issue . having to fix the production issue prevented them from reaching their production goal for the holiday season. which put them in an even bigger hole . the second lesson that nick describes is that being great at one thing doesn't mean that you're great at everything. likely one of gopro's biggest blunders was trying to expand way too quickly. and the best example of this was their drone lineup. in 2015 and 2016 the popularity of drones was going to the moon . and given that the cameras on drones was one of their biggest selling points it seemed like creating a drone was right up gopro's alley .

 In late 2016 gopro launched a drone called the karma. karma was hyped up quite a bit and many thought that karma would give gopro the boost they needed. but the launch turned out to be a disaster . many reviewers and users started to complain that the drones were losing power mid-flight and literally falling from the sky. on the bright side nick didn't play any games when it came to this issue . he took it super seriously and recalled the drone just a few hours later. while this was the right thing to do this of course devastated the company. and the gopro wouldn't have been in that situation if nick didn't try to expand it too quickly. moving on to the next third lesson we have stick to what you feel most strongly about. amongst the gopro's expansion frenzy one of the sectors gopro targeted was entertainment.

 For some reason gopro invested heavily into producing their own shows. this included a travel show called beyond places. a family show called kids save the world and a reality show about new york city motorcycle cops . all of these shows were slated to release on a new streaming platform the gopro was developing. but as the company started to lose money nick realized that he didn't actually care about these shows or the streaming platform. these were simply a business expansion move as opposed to something he was actually passionate about . so he killed the projects and diverted the money back to the core business .

 And that brings us to next final and likely most important lesson which is that simpler is better. throughout gopro's entire rise and fall it seems like they're consistently trying to be something that they're not. they're not a drone business they're not a media business and they're not a giant conglomerate who needs thousands of employees. what made gopro successful was being a niche camera business that appealed to action seekers and vloggers. and for so many years gopro had completely ditched this market as they tried to expand their audience . at the rate gopro was going it wouldn't have been surprising if they went bankrupt. but it looks like nick is pulling through it at the last second . 

He is not trying to defend how he led the company or making any excuses . he admits that he was wrong and that he would like to return to what made gopro great. he heavily reduced the workforce he eliminated the unnecessary expansion programs and he's become much more mindful of his spending. all of these steps seem to be working as gopro's net losses have not only been improving but gopro just announced their very first positive 12 month period since 2015. maybe gopro's return to glory is just around the corner but only time will tell.

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