What they should have done is cut costs and develop 10x fewer features, let the community grow slowly but organically and wait out the bad times.

It's easy to say that, but when you are up against the Apple/Samsung type companies who have much deeper pockets, don't have to wait out bad times, have the ability to lean on vendors, have contracts in place with manufacturing and the supply chain to efficiently deliver the product, it might not be realistic to do that. On top that, as others here have said, once you take VC money, there isn't really an option to go slowly and let the community grow.

Sure there is. Just not while also being the dominant, or one of the dominant players in the industry when there is competition form a bit name. Pebble didn't have to be a dominant player, they could have positioned themselves differently if they wanted. Both paths are a gamble, but if it comes to a small company I own trying to compete with Apple/Samsung/Google and it's obvious their resources give them an edge (which they almost always do), then I think I would try to position myself to net necessarily compete with them directly (e.g. be the more hacker friendly device, don't shoot for the luxury market, find some cool thing they aren't offering, etc).

They did not really have to go against Apple/Samsung, their product was unique enough that Apple and Samsung don't have anything that's similar to it, and people like me would prefer pebble over their products. I mean now that pebble is gone, I'll most likely go back to regular watches.

their goals become your goals and their goals are almost always "Make more money now"