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Startup Report

With 33 Employees, Nextbit Hopes To Succeed In Ways That Smartphone Giants Can't

In a business where big companies struggle to compete, maybe being tiny is an advantage.

  • 01 /06
    | Nextbit's Robin smartphone
  • 02 /06
    | Robin is available in two color schemes
  • 03 /06
    | Robin on the go
  • 04 /06
    | Robin automatically manages storage
  • 05 /06
    | Robin's lighter color scheme
  • 06 /06
    | A darker shade of Robin

"Samsung Smartphone Sales Will Decline For The First Time Ever This Year"

"HTC Forced to Lay Off Employees Due To Loss In Smartphone Sales"

"Microsoft Writes Off $7.6B, Admits Failure Of Nokia Acquisition"

"Sony Weighing Up Options If Smartphones Are Unprofitable Next Year"

Read a few news stories about the smartphone business—at least ones involving any major company that isn't named Apple—and you might wonder why anyone bothers to stay in it. Between brutal price competition and the difficulty of creating truly distinctive products, making phones has become an effective way to lose a lot of money.

Of course, most of the manufacturers that are hurting have one thing in common: They're huge. Economies of scale are supposed to help companies do well, but in the current smartphone industry, they sure don't guarantee anything.

But what if you could build a smartphone startup that had virtually nothing in common with the category's biggest names? One that was willfully small and capable of designing phones that stand out from the me-too pack? At the very least, you'd face a different set of challenges than the companies that have been making phones for years.

Enter Nextbit. In an industry where high-profile global companies are laying off workers by the thousand, it has just 33 people total, ensconced in a cozy headquarters above a Safeway supermarket near San Francisco's AT&T Park. It can make phones with a staff that small because it's comfortable relying on outside expertise and resources to accomplish a lot of heavy lifting rather than doing as much as possible itself.

An important point: Nextbit isn't trying to build a smartphone to please everybody, the way manufacturers who hope to move handsets by the million almost always do. Its Robin phone runs Nextbit OS, a modified version of Android with some of the most substantial revisions that anyone's given Google's operating system. The phone's industrial design steers clear of the current conventional wisdom about what sells. (Which is, stated briefly, "phones that look kinda like an iPhone.") Even the brand "Robin"—which the company says it selected because customers are free to interpret it as the name of a man, a woman, a bird, a superhero, or whatever else they choose—is a departure.

Nextbit's Scott Croyle, Tom Moss, and Mike Chan

Nextbit isn't hopelessly naive about the difficulties of the business it's chosen to enter. Moss and Chan were both early members of Google's Android team; chief product and design officer Scott Croyle was formerly at HTC, a company that has proved in recent years that it's possible to make really nice phones and still struggle. When Moss and Chan started the company and began raising money, they planned to make software and services, not hardware. It's just that they concluded along the way that the best way for those software and services to have an impact was on a new smartphone.

"I've worked on both hardware and software and people are like, 'Oh, hardware is so hard,' says Croyle. "Software's hard too. I mean, think about how many software startups have failed."

A $400 Phone With A Few Differences

One of the lessons that big makers of Android phones have slowly learned is that it's tough to succeed with flagship models that take on the iPhone directly at high-end, iPhone-like prices. (Samsung is among the few companies still pursuing that strategy.) With Robin, which sells for an unsubsidized price of $400, Nextbit aspires to offer something better than bare-bones models without asking anyone to shell out $650, the starting price for an iPhone 6s.

Robin has a squared off, two-tone, polycarbonate case, less reminiscent of the iPhone than of the colorful plastic look of certain Nokia Lumia smartphones. The specs are pretty much what you might expect from a respectably equipped, midrange phone, with a comfortable (but not vast) 5.2" screen, Qualcomm Snapdragon 808 processor (the same one as in Google's Nexus 5x), a fingerprint scanner built into the power button, a 13MP rear camera, and dual front-facing speakers.

With its two-tone case and sharp angles, Nextbit's Robin is not trying to be mistaken for an iPhone

The phone's software is more of a departure than its hardware features and specs. Other Android-centric phone makers have been gradually moving away from radical tampering with the operating system as supplied by Google. Nextbit, however, implemented one great big change, designed to address a common concern with other phones: the possibility of running out of space for apps, photos, and other items.

Robin ships with 32GB of storage—not skimpy, but also not so much that no typical user will ever run the risk of filling it up. But Nextbit has rejiggered the operating system so that the phone, rather than its owner, is responsible for managing storage. If an app hasn't been used for awhile, the phone temporarily deletes it but leaves a grayed-out version of the icon on the desktop. Tap on the icon, and the phone will download and install it again on the fly. It also stores high-resolution versions of photos in the cloud, keeping more space-efficient, low-res versions on the phone.

To avoid taxing its battery or racking up data charges, Robin syncs local storage and the cloud when it's plugging into AC power and connected via Wi-Fi. Four LEDs on its backsite light up to show that shuttling information to and fro.

Robin's Nextbit OS manages storage by offloading data to the cloud

Whether this hybrid approach to storage is a radical advance on stock Android for any particular person depends in large part on how that individual uses a phone. (For plenty of folks, streaming apps such as Spotify have already reduced the need to keep humongous amounts of data on the phone itself). But it represents a fundamental rethinking of Android's architecture, and is therefore a departure from the typical modifications that phone manufacturers make to the operating system—most of which involve interface tweaks. Nextbit had made a few of those, too, including modifying the Android product launcher so it's more like iOS, with a single view of apps neatly organized into grids on multiple pages.

Bringing In The Big Guns

Creating a smartphone would be an ambitious undertaking for any small startup. And by producing one that's a bit out of the ordinary on several fronts, Nextbit made the challenge it set for itself even more...well, challenging. So how did it get it done?

On the manufacturing front, the company did what phone companies of all sizes do: It outsourced the job to a big Asian contractor. In fact, it hired Foxconn, the best-known and busiest one of all. "Foxconn, they make a few phones in this world, right?," Croyle jokes. "Whether it's Xiaomi or whether it's Motorola. The rumors are that they do some Apple phones too." Foxconn has deep knowledge of phone design, components, and manufacturing, and buys parts in vast quantities; its sheer hugeness was an asset to the Robin project.

For help getting the phone designed, the company called in a consultancy called Design Shift, whose other projects have included the DxO One smartphone camera and Clover mobile printer. Founded by a former executive at smartphone pioneer Palm, Design Shift has staffers both in the Bay Area and in Taiwan. That made it an ideal partner in managing the relationship with Foxconn, and meant that Nextbit could accomplish a lot without boots on the ground of its own in Asia. "There's definitely been times maybe where I wish I had somebody local, but I think overall it's been a great choice," Croyle says.

In some ways, he adds, choosing designing a modern smartphone and choosing components is a straightforward jigsaw puzzle. "It comes down to how much board area do you need for that particular chip set and feature set, and then what sort of [cellular] bands are you going to support in the phone, and then here's your battery size. Then, we have questions like, 'Well, is that [battery life] sufficient enough?' Then, you go through a whole exercise of how much thickness can you afford." Nextbit was comfortable relying on Foxconn and Design Shift's knowledge for technical matters such as decisions involving antenna design. "Stuff like the fit and finish, where I have a stronger opinion, we would work with them," he says.

Because Nextbit had so much help on the hardware front, it was able to invest more resources in Robin's software, an area where its Silicon Valley background could play a crucial role in differentiating the phone from garden-variety phones designed entirely in Asia. Even there, the company found that it made sense to call on external resources: It struck a deal with a company in Poland to do some of the work on the phone's launcher interface.

The Kickstarter Factor

With its plans for Robin mostly locked down, Nextbit launched the phone as a Kickstarter campaign in September 2015. It raised $1.36 million from more than 1300 backers, but as with many crowdfunding efforts by companies that already have financial wherewithal, the goal had less to do with raising cash than it did with efficiently creating a community and building a brand. (The company originally planned to ship backers their Robins by January; as many crowdfunding projects, it took a tad longer than expected, but it says that it's now delivered phones to those who backed the campaign or placed preorders.)

Kickstarting Robin also provided direct consumer input into product plans in a way that might not have happened if Nextbit were a gigantic company taking a typical approach to designing its phone.

"Originally, we didn't ship to Australia because we didn't have this one band," Croyle says. "Then we got messages, ''That band doesn't matter in Australia. It's only one carrier, and nobody ever uses that.' We opened it up to Australia and immediately had a little bump there, which was awesome. We got this real-time feedback."

Nextbit, which had been planning to ship a GSM phone for use on AT&T and T-Mobile's networks in the U.S., also heard from enough Verizon and Sprint customers to convince it that it was worth creating a second version of Robin, which it added to its Kickstarter campaign. "Both Tom and I have some experience dealing with the carriers, but Verizon and Sprint, they're very protective of their network and they have technology that allows them to be," Croyle says. "Whereas, if you're with AT&T and T-Mobile you just drop your SIM in and you're good."

In the end, though, the Verizon/Sprint version of Robin ended up proving that Nextbit's ability to compete with the phone business's big guys isn't boundless. In order to get Robin working on the Verizon and Sprint networks, the company needed a certain degree of cooperation from those two carriers, and the project turned out to be far more complex and pricey than it expected. Recently, it concluded that it can't make the Verizon/Sprint version of Robin work after all and ditched the effort, even though Kickstarter backers and people who'd placed preorders were expecting to get phones.

As Nextbit cofounder Tom Moss explained the embarrassing decision on the company's site:


What people at the carriers, in good faith given our need for quick answers, thought would take "weeks" has turned into "months." What they thought would cost "hundreds of thousands of dollars" has turned into "millions". And we’re still not there. The goal posts are still being moved, and at this point, we think it is better to cancel this version rather than continue to try and make progress with no clear answers to offer regarding when we would actually be able to ship.

Kickstarter backers who were expecting to get that model will get refunds; others who preordered it will have their orders cancelled without being charged. And Nextbit will offer both groups a 25% discount on the GSM model by way of apology.

The Carrier Conundrum

In a way, Nextbit running into trouble when it needed to rely on Verizon and Sprint for technical assistance was a reminder of a fundamental fact about the company: It's trying hard not to put itself in a position where its efforts and interests are entangled with those of the major wireless carriers. That's why it's selling directly to consumers, who buy a Robin and then pop in their own SIM card.

"What the carriers do for you is they get you access to customers," Croyle says. But as part of the proposition, carriers often want to get involved in product-design issues. They put phones through time-consuming, pricey lab testing and certification. And they expect manufacturers to cough up money to help market phones, especially if a given model isn't selling well without promotional deals.

Croyle tells me a story he heard from someone who works for another smartphone company. It chose to avoid offering a phone with a certain screen size because it was concerned about the reaction of a wireless carrier which it was working with on another model which wouldn't arrive for months. "They intentionally went to this product that they felt should be one screen size, and changed the screen size so it wouldn't have channel conflict with the carrier," he explains.

Even if people aren't going to buy a Robin because an AT&T or Verizon salesperson thrusts one into their hands, the phone is designed to be the sort of product that could succeed through the best marketing of all: word of mouth. "I was just flying back from Mexico yesterday and I kid you not, I was sitting there on the flight and I had my phone on the little table," Croyle says. "The flight attendant was giving me a cup of water and she's like, 'What's that phone? I want to know about that.' That's happened to me, just since November, at least a dozen times. Either I'm at a retail shop, or a clothing store, or it's this flight attendant." (Having carried a light blue and white Robin around while working on this story, I can confirm that it attracts unsolicited attention in a way no Apple or Samsung phone does.)

"The best we can do is work hard and get [consumers] a product that hopefully they're going to love," Croyle adds. "We're going to skin our knees and bruise our elbows. There's going to be things that aren't perfect, and this is true with any product launch, whether it's hardware or software. It's how you respond to that stuff that's really a key to the success of a company." In a world in which large and theoretically powerful smartphone makers have ceded control over their products in the interest of mass-market sales, Nextbit's willingness to be small and focused at least gives it a decent shot at determining its own destiny.

Slideshow Credits: 01 / Photos: courtesy of Nextbit;

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