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Wearable Tech

Misfit CEO Sonny Vu on Vietnam's modern-day success story (Q&A)

As part of Road Trip 2015, CNET sits down in Ho Chi Minh City with the CEO of Misfit Wearables to talk about the Vietnam tech scene and why the fitness tracker is making a big bet on the country.

Click here for more Road Trip 2015 stories.

HO CHI MINH CITY, Vietnam -- Sonny Vu looks utterly at ease as he sips a Vietnamese iced coffee laden with condensed milk and opines about the state of technology in Vietnam.

We're sitting by the pool at his new home in Ho Chi Minh City in early July, the morning after Vu relocated his wife and infant daughter to the city, the former capital of South Vietnam before the country was reunified in 1975. Thirty-six years after leaving Vietnam for the US, Vu is moving back home -- and not just for the world-famous banh mi sandwiches and spring rolls.

The move signifies just how important Vietnam is to 42-year-old Vu and his company Misfit, the wearable devices maker he co-founded in October 2011 with longtime partner Sridhar Iyengar and former Apple CEO John Sculley. The company -- which offers low-priced fitness trackers, including the new $20 Flash Link smart button -- started in Vietnam and the US at the same time.

Misfit is a bit of an anomaly when it comes to the Vietnamese tech scene. Despite Vietnam's growing position as a tech manufacturer, the company doesn't actually build any of its fitness trackers in the country. Instead, most of its devices are made in South Korea. Misfit also doesn't sell any fitness bands here. Instead, its employees work on software features like the new Link app that lets users do things like control the music on their phones or take selfies by pressing the button on their Misfit devices. By the end of the year, about half of Misfit's expected 265 employees will be based in Vietnam.

"We're one of the larger tech companies here," Vu said. "If we could do it in Vietnam, we would. We're starting to actually move some of the sales functions to Vietnam, believe it or not."

Sonny Vu, CEO of Misfit Wearables, co-founded the fitness tracker maker in the US and Vietnam. Shara Tibken/CNET

Here's an excerpt of CNET's conversation with Vu, edited for length and clarity:

Q: Do you view yourself as an expat returning to Vietnam? How does Misfit fit into the whole Vietnam tech ecosystem?

Vu: Misfit is a little bit of an outlier. We don't sell anything in Vietnam. Our app and our website is translated into 17 languages. It's even translated into Hebrew and Tagalog [a language used in the Philippines], but it's not translated into Vietnamese. We don't service the local economy at all. Everything is for export. And it's all intellectual property that's exported.

We might do some packaging here, but we hardly do any manufacturing here. We did not come to Vietnam for manufacturing. That's the second weird thing...When people ask about manufacturing in Vietnam, I say, "Oh man, we manufacture awesome code and patents." That's what we do. Which is like, "What? I thought that's why you went to Vietnam?" People can in fact do more than screw things together.

The third thing that's outlier-ish about Misfit is the...diversity of jobs that we have in the office here. We have roughly 100 people in the office here in Vietnam. Everything from logistics and supply chain to operations, finance to customer service. All of our email customer service is done here. That's why we've been able to get back to people very quickly. And we just have an amazing team here. All the way to data science and algorithms development. And firmware engineering. We even have some graphic design here. It's a very wide range, it's like a full-on company.

Q: What are some of the other things your employees in Vietnam do?

Vu: It's not just rows and rows of software engineers coding away and doing as they're told. No. The thing is people actually own the entire product here. There are entire products that are completely made here in Vietnam.

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One of our apps we're going to be publishing, for example, was completely developed in Vietnam [the new Link App, released in mid-July]. And it's not for use in Vietnam, which is kind of cool. It's not like they're told what to do either. It's that the engineering is completely done here. Some of the product design was done in the US, but it's very collaborative.

Q: Why don't you actually sell products in Vietnam?

Vu: We don't do business here maybe for the same reason we don't do business in Nigeria -- it's just a really small market. Yeah, both are big countries, but neither country has much of an interesting market to buy this stuff. People are buying motorbikes and maybe computers and Internet access and iPhones, but wearables, I think by and large, when you look at everyone here, they'll all in pretty good shape...Whereas, us Westerners, we've got to get in shape...We'll get here later.

Q: What prompted the decision to have so many employees here, aside from your background?

Vu: There's several things. We have a philosophy on getting the best talent at the best price. I remember talking to a friend. I ripped it off of him, by the way. All the great ideas are stolen. So my friend, that was his philosophy, and I was like, "Don't you just want the best talent?" He said, "No, because if that's the case, if you're going to hire a software engineer, you're going to hire the head of search at Google. And you'd pay him a billion dollars, but you've got the best talent. But you wouldn't do that. You can't. So we have to get the best talent at the best price." I was like, "You are exactly right."

So what we've done is optimized our hiring to be in places where we have unfair competitive advantages. So in Vietnam, we have an unfair advantage here. Why? Because we're just the coolest company to work for...People want to work for companies like us. Otherwise they're making financial software for banks, which is boring. It's a fun place we be at. We make an environment where we really try to take care of people. We bring in food, we give everybody cool hardware and iPhones. Other Vietnamese companies don't do that.

But the second thing is, if you just come here with a mentality, I'm going to get cheap outsourced labor, then that's exactly what you're going to get. You're not going to get amazing talent that are inventive and ingenious. So we really give them a lot of authority. Here's a product. Make it, the whole thing, and it better be good. And people rise up to the challenge...It's about giving people opportunities to create great things and express their creativity and productivity in meaningful ways.

Q: What do Vietnamese employees struggle with?

Vu: We've learned over time that consumer product development is not a core strength here. Those are skills to be acquired over time. And so we've had some difficulty there, but we've gotten better. And also as a result, we've focused the teams on doing different things. For example, algorithm development, data science, logistics, supply chain, customer service. It's been pretty good. It's turned out that people we've been able to find here are actually really good at that. And so we focus them on doing that. We've continued to train and whatnot and develop skills in consumer product development. But that's not natural here because there really wasn't a market for those things here, so there's not a natural pool here.

Whereas in China, for example, there is an indigenous market for it. There are people who made Baidu and Alibaba and Tencent, the great Internet companies that rival the Western tech giants. And former employees of those companies are great at product development. So that's why we do a lot of product development in China.

Q: Intellectual property theft has been a concern for companies operating in China. Is it an issue in Vietnam too?

Vu: It hasn't been that much of an issue in either country. We have been copied a lot, our products, but that's by other companies...For the record, we have 22 copies of Shine in China...It's annoying, but on another level we're kind of flattered. As far as we've counted, there's only three copies of Fitbit. So I can't tell if we've reached some level of cultural significance to be copied or we're just easier to copy.

I don't think we're easier to copy. The Shine is actually pretty complicated to manufacture. Fitbit, at least they're manufactured in China, so it would be pretty easy to make, but [Shine] is a very different kind of product. I think people like it for that reason. But the brand's taken off so you get copied. But honestly, the more times we've been copied, the more volume we've been able to sell because it raises the level of awareness of the product. People end up saying, "Oh, you have a real Shine?"

We've bought one of each of the fake ones. Some of them are really good copies.

Q: How does the Apple Watch impact you? Does it help you? Or hurt you?

Vu: Both. There is an awareness increase, but if you're going to buy a smartwatch, you're not going to buy an activity tracker. You're not going to buy Fitbit, you're not going to buy Jawbone, you're not going to buy Misfit. It's fine. But then not everybody can afford a $500 thing. Our stuff is $50, $100.

Also it doesn't have a screen. A lot of people don't like screens on their wrist because it's weird. So that's why we're pushing hard on the fashion and design and jewelry side. I think people are going to be more open to that. For certain segments, they'll be more open to it. Like my wife. She doesn't want a screen on her wrist. She wears jewelry and watches that she doesn't even wind.