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Jawbone's Jambox wireless speaker reverberated through the industry Illustration by Joe Zeff Design

Jawbone, whose $1.5 billion valuation makes it one of the hottest private companies in the world, is setting the standard for today’s gadget startups: Invest heavily in eye-catching design and innovative interfaces, and master a globe-crossing supply and manufacturing process that allows for frequent and spectacular upgrades. Jawbone is proof that the Steve Jobs playbook can work outside of Apple.

The company hit it big as the maker of the first Bluetooth earpieces that didn’t make you look like one of those guys who greets his buddies with blazing finger guns. But its dazzling second act–transforming from a headset company into an all-purpose outfitter of the mobile lifestyle–is what sets it apart from other cool, high-design consumer-electronics startups, such as Lytro, Nest, and Sonos. “From the outside, the view of our company was, Okay, they’re making interesting headsets,” admits Travis Bogard, VP of product management and strategy. “We think we’re building microcomputers for the body, and many of the products you’ll use in the future will be an extension of what you’re wearing or carrying with you.”

The first manifestation of that notable shift has been the Jambox, a stunning, jewel-shaped portable speaker that debuted late in 2010. On first glance, it looks like it’s all looks. How can this oversize Lego piece, compact enough to fit into a jacket pocket, not sound hollow and tinny? Then you turn it on and it pulls off an eerie ventriloquist trick, pumping out audio that you expect from a device five times its size.

Jambox, crucially, isn’t a “dock”: It connects to your phone wirelessly. “A lot of people–companies like Bose, for instance–looked at the iPhone and said, ‘Hey, we make iPod docks, so this is going to let us sell a lot more iPod docks,'” Bogard says. “But nobody wants their email, Facebook, Twitter, and everything else tethered to a dock in a corner. You want it in your hand.” It sounds like an obvious point, but it’s one that nearly every other audio company missed. By focusing on a lifestyle instead of a gadget, by asking how people want to use their phones rather than how the phone could fit into an existing product lineup, Jawbone created a hit. The $200 device rose to command 45% of the wireless-audio-speaker market by mid-2011, according to the NPD Group.

Another secret of Jawbone’s success is its unusually tight connection between its design and operations teams, which work together to come up with new products at the same time that they’re figuring out how to build them at scale. One morning in a dimly lit conference room at Jawbone’s San Francisco headquarters, Bogard points to a thin, curving ribbon of metal that forms the hidden backbone of the company’s latest device, a health-monitoring wristband called Up. “We actually wrapped the computer around this bending, flexing surface,” Bogard says. It was no easy task. Jawbone’s engineers had to figure out how to attach Up’s electronics to the metallic structure, and then the operations team had to devise a way of injection molding Up’s rubberized skin around the flexing machine. When Up began shipping just before the holidays, reviewers were rapturous and the product was flying off Apple Store shelves.

Then trouble struck–the true measure of the mettle of a most innovative company. A few weeks after Up went on sale, Jawbone began hearing reports that some wristbands were dying. At first, the problem, which engineers tracked to a couple of bum capacitors in some units, looked like it could kill the prospects for the young device. But Jawbone found a novel way to redeem itself. It temporarily put a stop to new orders and offered an unusual guarantee to everyone who’d already purchased a wristband, promising to refund their money, no questions asked. You didn’t even have to send in your dead Up. It was savvier than the way Apple handled the iPhone 4’s “antennagate,” and the company scored another $40 million in funding after the controversy. In other words, Jawbone is adding its own pages to the playbook.

Illustration by Joe Zeff Design

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