The baby sock that found its market, then ran into the FDA

It started with a cord

In 2013 a group of BYU students were working on a wireless version of the pulse oximeter, the little red light clipped to your finger in a hospital. One of them worked in a hospital and saw that nobody liked the cord. It tangled and got in the way.

They tested the idea in about a week. Of 58 nurses they talked to, 93% said they wanted it. Then they talked to the hospital administrators, who said no, because it wasn’t cost-effective. The nurses would use it, but the administrators held the budget. In their pitch, the founders put it plainly: “your user is not always your customer.”

The pivot home

Kurt Workman, one of the founders, had seen his own family lose a child to respiratory failure. So the team asked a different question: what if the same technology watched over a baby at home, and told the parents if something went wrong during the night? They started with a smart anklet and a base station, and a phone app for convenience.

Proving parents wanted it, before building it

They surveyed 105 mothers first. The average score was 8.5 out of 10, and 96% said they’d use it. The founders called that “very early validation,” which was the right call. People are generous in surveys.

The strong signal came from a video they made for a class project. It showed what the product could do, though nothing worked yet. They called it “smoke and mirrors.” It leaked, got picked up by 40 news outlets in 13 countries, and brought in more than 500 emails, mostly from parents asking to buy one, even as a prototype. Fifteen distributors got in touch. The whole thing cost about $220 and took two weeks.

Later that year, they ran their own pre-order campaign and raised more than $140,000 from over 840 backers, against a goal of $100,000.

Getting the price wrong, then right

The team assumed a baby monitor this expensive would have to be rented, and their first survey agreed. Then someone at a Babies R Us told them most monitors sold for around $200. They didn’t believe her, so they called 33 more baby stores. Same answer: 71% of the monitors being bought were in the $200 to $250 range.

Their survey had asked what parents would expect to pay. When they asked for the most parents would pay, the answers changed completely. Then they put a reserve button on their website at different prices, to see where people stopped clicking. It pointed to $299. Their lesson, in their words: surveys “can also lie if you don’t word it correctly.”

They knew about the FDA from the start

In the same 2013 pitch, the founders said they had learned, later than they’d have liked, that the product needed FDA clearance. Their words: “alarm plus pulse oximetry means that you need an FDA clearance.” They estimated it would take up to 13 months and $200,000.

So they made a plan. Launch first with a version that had no alarm, an infant health tracker that didn’t need clearance. Then get the alarm version cleared and launch it about seven months later.

What happened instead

The Smart Sock that sold in the US for years did alert parents. The FDA’s letter quotes Owlet’s own marketing, including the line “Tells you when Baby needs you.” It also says the FDA had been telling Owlet since 2016 that the Smart Sock was a medical device, not a low-risk wellness product. Public records don’t say why the 2013 plan changed. They show a disagreement that ran for five years.

In 2018, a study in JAMA tested the Smart Sock in hospitalized infants. It caught every episode of low oxygen at least once, but it also showed normal readings during some of them.

The letter

Owlet went public in July 2021 by merging with a SPAC. On October 1, 2021, the FDA sent a warning letter, corrected on October 5. It said products that measure blood oxygen and pulse rate are medical devices when they’re meant to spot a problem and alert the user. The Smart Sock had never been cleared. The letter didn’t claim the sock was unsafe. The problem was selling a medical device without clearance.

The stock fell by roughly a quarter to a third on the next trading day. On November 24, 2021, Owlet stopped selling the Smart Sock in the US. Sales in other countries continued.

How close it came

Owlet’s annual report for 2022 showed $69.2 million in revenue, down from the year before, and $11.2 million in cash at year end. It said there was substantial doubt the company could keep going. By November 2022 the stock had been under $1 long enough for the New York Stock Exchange to send a warning, and in July 2023 Owlet did a 1-for-14 reverse stock split to stay listed.

The comeback

In 2022 Owlet launched the Dream Sock, a wellness product focused on sleep that made no medical claims. In June 2023 the FDA cleared BabySat, a prescription version with alarms a doctor can set. In November 2023 the FDA authorized the Dream Sock with health notifications, which Owlet describes as the first over-the-counter medical pulse oximeter for infants. Both launched in January 2024.

In June 2024 the FDA wrote to say it had reviewed Owlet’s fixes and that the violations in the 2021 letter appeared to be addressed.

What a product manager should take from it

• Your user isn’t always your customer.

  Nurses loved the first idea. Administrators paid, and said no. Find out who holds the budget before you fall for the enthusiasm.

• Test demand before you build.

  A $220 video told Owlet more than a survey of 105 mothers. Count what people do, not what they say.

• Word the question carefully.

  “What would you expect to pay” and “what’s the most you’d pay” got opposite answers from the same kind of parent.

• The words you sell with can decide what the product is.

  The FDA pointed at Owlet’s own marketing. What a product claims to do is part of the product.

• A known risk is a roadmap item, not bad luck.

  The founders named the FDA risk in 2013 and had a plan for it. Eight years later it nearly ended the company.

• Split the product, don’t kill it.

  The technology was sound. Owlet came back with one version for wellness and one for medical use, each clearly one thing.