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Brier Dudley's blog

Brier Dudley offers a critical look at technology and business issues affecting the Northwest.

September 24, 2012 at 10:04 AM

Contour building hardware in a software town

Gravel flies everywhere and the motor howls as an off-road racing car spins out of control on a rally course in the foothills east of Seattle.

The orange Subaru is more tricked out than usual, sporting an assortment of high-tech cameras stuck to the roof, fender, roll-cage and driver’s helmet.

For the morning, this is a testing lab for a Seattle startup called Contour, which makes small, cylindrical cameras to capture and share action video.

The testing session at the DirtFish Rally School in Snoqualmie was unusual, but so is Contour.

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Seattle has hundreds of startup companies, but it’s rare to find one that’s found national success developing hardware gadgets for consumers, a field that’s dominated by companies in Silicon Valley.

“We’re the redheaded stepchild in Seattle because we’re doing hardware in a software town,” said Marc Barros, Contour co-founder and chief executive.

(Barros is driving the car above and pictured below, in photos by Ken Lambert of the Times)

Contour is a homegrown venture. Barros and co-founder Jason Green worked on a University of Washington business-plan competition, where they won third place pitching an electronic rearview camera for motorcycles. Then they decided to make a helmet-mountable camera for skiers and others who wanted an easy way to film their adventures.

The business started as a sideline in Barros’ parents’ basement, backed by an uncle who cosigned a $50,000 loan. Their first break came when they showed a prototype to a distributor who said it would sell.

Barros, 31, grew up in Issaquah, the son of a Brazilian immigrant who came to Seattle to study and ended up at Boeing, and a mother who sold IBM systems. He played soccer at the UW and considered playing pro, but pursued a career in accounting instead, starting with an internship at Moss Adams.

“They about threw me out after the first two weeks because I was still doing the company on the side,” he said. “I just couldn’t do it. I couldn’t sit in an office all day long and audit things.”

2019235812.jpgNine years later, Contour employs 55 people and is one of America’s fastest-growing private companies, according to Inc. magazine. Last year Contour ranked seventh on the Inc. 500 list, after posting three-year sales growth of 11,663 percent. On this year’s list it fell to 277th, with three-year growth of just 1,303 percent.

Contour just released its latest model, the $399 Contour+2, a 1080p camera with a big sliding switch that’s easy to control with gloves on. It has a Bluetooth radio that lets you use an iPhone as a remote control and GPS to record the location and speed of the recorded action.

Even bigger for the business are new distribution deals with Apple and Best Buy that will help the company compete against its larger rival, San Mateo, Calif.-based GoPro.

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Barros said the business evolved from making a camera to making one to capture action video. Along the way they figured out what they were really offering people.

“It eventually became ‘make it easy to capture and share’ and then we figured out why we exist, and then from that point forward it was a whole lot easier,” he said.

Because Contour produces a specialty product, it’s been easier to market than it would be if the company were selling a truly mass-market product.

“We target people that are online, that use their phones, that are social in nature and that are action-oriented,” Barros said.

Skiers, surfers, skateboarders and mountain bikers are Contour’s bread and butter, but Barros said the company also has sold its cameras to Navy SEALs. Military, police and security services could be markets that Contour pursues in the future.

“I think this could be a billion-dollar company if we go after multiple markets, but that could take us five, six, seven, eight years,” he said.

There are some other Seattle-area companies making consumer hardware.

The biggest is Microsoft, which started building computer mice 30 years ago and now has a huge business selling mice, keyboards and webcams, plus the Xbox line and upcoming Surface PCs.

Over those three decades, Microsoft turned the region into a world center for software companies, but not so much for consumer hardware.

In addition to Microsoft, there’s a cluster of expertise in designing and manufacturing aerospace components. Industrial gadgets have long been made here by companies such as Fluke and Intermec.

There’s also a big industry producing medical devices — such as HeartStart defibrillators and Sonicare dental-hygiene products that Philips’ Bothell operation produces.

“They exist; it’s just not in the same volume as in the Bay Area,” said Chris Massot, vice president at Synapse, a Seattle hardware-design company.

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Synapse has grown to more than 200 employees designing prototypes and hardware for industrial, medical and consumer companies. For Nike, it worked on the SportBand and SportWatch GPS products that track pace, distance and calories for runners and walkers.

Massot said Seattle doesn’t have an ecosystem of financiers and manufacturers familiar with consumer hardware, but there’s still plenty of talent in the area.

“There’s more than enough smart people and ideas in the Northwest to make this a very substantial hardware market, just like Southern California or Boston or other places where there’s a lot of innovation and creativity,” he said.

Still, the current wave of gadget mania feeding consumers’ insatiable appetite for shiny new electronic toys has been mostly a Silicon Valley phenomenon.

Amazon.com chose to design its Kindle hardware at a subsidiary in San Francisco. Phone-maker HTC has its U.S. headquarters in Bellevue and a software studio in Seattle, but it bought a San Francisco design shop to work on its hardware.

Contour is straddling the divide. Its striking, rugged cameras are now designed in-house by a team in Seattle, where it’s convenient for them to test new models on skis, bikes, boats or rally cars.

But Contour turned to Silicon Valley for specialized hardware-engineering talent. It now has a satellite office in Sunnyvale with about eight employees. That’s also where it was able to hire an Apple veteran who is now Contour’s chief operating officer.

Barros recently shifted day-to-day operational duties to the COO so he can spend more time on things like strategy, marketing and working with investors. But it’s not clear whether he’ll get much more time in the mountains with co-founder Green — racing, skiing and “testing” with their cameras rolling.

“It starts with that,” he said, “then you end up working all the time.”

(Green is shown above, attaching a camera to a rally car. Below is a video Contour produced from its rally session at Dirtfish)

https://youtube.com/watch?v=D8oYGGtA664%3Frel%3D0

Comments | Topics: contour, Education, Entrepreneurs

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