5 ms·

A relatively similar story to Pebble too, no? Interesting to see two well-known 'successful' startups implode like this in the same space.

paulpauper 9y ago
unless you're apple or tesla, hardware is a really tough business
- andruby 9y ago
  I think hardware is a tough business, even for apple and tesla.
- jonknee 9y ago
  Tesla is really great at losing money and blowing deadlines, hardware is a tough business no matter who you are.
  - paulpauper 9y ago
    but they are great at raising money and their car business is cashflow positive. Tesla certainly did a lot better than other attempts at electric cars
    - onetokeoverthe 9y ago
      Better than Leaf or Prius?
      - robotresearcher 9y ago
        Would you rather own a Tesla, Leaf or Prius? Would you rather have bought stock in Tesla, Nissan or Toyota ten years ago?
        bllguo 9y ago
        Silly comparison? So a Camry is not a successful car because people would rather own BMWs? Do you not realize Tesla has been intentionally making high-end, luxury vehicles, which are more desirable by nature? Leafs and Priuses are only part of Nissan and Toyota, their stock obviously cannot fully reflect the success of those vehicles. And Tesla's stock is notoriously overvalued.
        robotresearcher 9y ago
        You are misreading my comment. I didn't claim anything negative about Leaf or Prius. The Tesla S is an absolutely better car than Leaf or Prius. And since it costs much more, it should be. If we weight for price, that depends on your price sensitivity.
        jonknee 9y ago
        You are missing the point, all things equal of course people will want the vastly more expensive luxury product. That has nothing to do with how good Tesla is at making things. Regardless of the appeal of the Model S, Toyota is much better at making cars in volume than Tesla. Similarly, I'd rather have a McLaren than Tesla (or Toyota), but that doesn't speak anything about the talents of either firm at mass producing cars.
        deleted 9y ago
        [deleted]
        robotresearcher 9y ago
        This thread is a response to: > Tesla certainly did a lot better than other attempts at electric cars You have decided that that claim hinges on their ability to mass produce cars. I think Tesla has done more for the electric car market than any of the other companies. I can't justify that with data, but I think it's a reasonable position. We have different points. I'm not missing yours.
- xj9 9y ago
  unless you succeed, you fail
  - paulpauper 9y ago
    but hardware has high initial costs. higher than software in many instances. you need physical space, manufacturing , and more employees than in a purely digital company
    - xj9 9y ago
      yes, but what i said still applies. entrepreneurship is gambling with reasonable odds, right? hardware might be a longer shot, but at the end of the day its approximately random (skewed on the side of players with more money)
      - JoeAltmaier 9y ago
        ...except for the reasonable odds part, the way the VCs have it skewed.
- LeifCarrotson 9y ago
  Hardware is pretty tough. But it's possible to turn it into a nice business. You probably own a lot more hardware than software, and spend more on it - all that was produced by mostly successful hardware companies. What's really tough is turning a Bluetooth speaker business or a smart-watch business into a multi-billion dollar business. It's the over-investment and sunk-cost problem that ruined Jawbone, not the hardware nature.
bryanlarsen 9y ago
The big difference to me is that I think that Pebble had successfully found a small niche as the alternative smartwatch with considerable customer loyalty. If they would have stayed small I think they would have been a very successful company. Jawbone was in a larger market with more competition and much less customer stickiness. I believe that they were in more of a "go big or go home" scenario.
- intoverflow2 9y ago
  Think it's worth keeping in mind the state of the smartwatch market in 2017 is a fraction of what people thought it would be when Pebble was going big and the Apple Watch was a rumour. Investors were clearly hoping it was about to explode like smartphones did. I mean I don't even feel the Apple Watch will still be around in the next few years.
  - bryanlarsen 9y ago
    Yes, hindsight certainly makes things clearer; I doubt I would have made better decisions than Pebble did. The frustrating thing is that Pebble could have had a nice $20M p.a. business selling their smartwatches. Not big enough for Apple & Google, but definitely enough to make a good profit for a small company. That 2015-2016 smartwatch hype may well have killed the market for everybody. It reminds me of the VR hype in the early nineties that killed the market for ~20 years.
  - ghaff 9y ago
    A lot of people still wear watches. And I do like getting notifications on my Garmin watch as well as using the GPS for some activities. But, in a world where so many people also carry their smartphone with them almost everywhere, people aren't going to fiddle too much with the small device on their wrist when they can pull a phone out of their pocket.
    - luck_fenovo 9y ago
      > people aren't going to fiddle too much with the small device on their wrist when they can pull a phone out of their pocket Definitely. The jump from dumbphone to smartphone was pretty huge. I can do a lot more on the go now than I could before. The jump from smartphone to smartphone + smartwatch is smaller, and possibly just lateral rather than forward. It doesn't enable many more things than just a smartphone, but it offers you a slightly more convenient way of doing some things, at the cost of another device to charge and keep track of.
taneq 9y ago
Exactly my thought. Pebble was fine until they took a funding round and suddenly had VCs pushing them to become "the next Apple". Then they hired way too many people, refocused on where they thought 'the big market' was (ie. fitness) rather than where their market was (ie. long battery life, e-paper based smartwatches with an open application ecosystem), and tried to pump out new models too fast. It seems a recurring theme in SV that companies neglect to consider the overall market size for their niche product when deciding how large to try and scale their business.
mason55 9y ago
sama wrote a good article about this a few months ago[0]. The key quote as it applies here: "The second most important thing to understand is that raising too much money or raising money at too high a valuation can severely limit your optionality. Very often I’ve seen cases where founders know in their hearts they have an airplane but are able to convince good investors it might still be a spaceship. This really causes a lot of heartache, and often precludes your opportunity for a good acquisition later." [0] https://blog.ycombinator.com/navigating-mid-success/ https://blog.ycombinator.com/navigating-mid-success/
yellow_postit 9y ago
I wonder if this is true of the hardware wearable market on general. There's a solid set of niches but none are going to be hugely profitable on their own in the near to medium term due to a small market size. Apple is beyond "over funded", both in terms of equity and investor perceptions, so it can stay in on the hopes it eventually pans out.
- ghaff 9y ago
  In general, wearables, a lot of consumer IoT (SmartHome), action cams, maybe consumer drones (?), maybe VR (?), etc. there's also a lot of fashion/fad. And, as you suggest, the actual core number of users in a lot of these areas may turn out to be relatively small when the dust settles. And the current fads switch elsewhere for a couple of years. That's not to say that everything is doom and gloom. But it's a tough market for companies to play in and they probably need to be reasonably diversified for when one area falls out of mainstream favor.
- taneq 9y ago
  I think the problem with wearables is that the estimated market size, back when smartwatches were 'going to be the next big thing', was based on perceptions from before mobile phones took off, when everyone wore watches because they needed one to tell the time. But now everyone has a mobile phone, they don't need to wear a watch, and so the only people who wear watches are people who actually want to wear one, which is a far smaller market than "everyone".

paulpauper 9y ago

unless you're apple or tesla, hardware is a really tough business

andruby 9y ago
I think hardware is a tough business, even for apple and tesla.
jonknee 9y ago
Tesla is really great at losing money and blowing deadlines, hardware is a tough business no matter who you are.
- paulpauper 9y ago
  but they are great at raising money and their car business is cashflow positive. Tesla certainly did a lot better than other attempts at electric cars
  - onetokeoverthe 9y ago
    Better than Leaf or Prius?
    - robotresearcher 9y ago
      Would you rather own a Tesla, Leaf or Prius? Would you rather have bought stock in Tesla, Nissan or Toyota ten years ago?
      - bllguo 9y ago
        Silly comparison? So a Camry is not a successful car because people would rather own BMWs? Do you not realize Tesla has been intentionally making high-end, luxury vehicles, which are more desirable by nature? Leafs and Priuses are only part of Nissan and Toyota, their stock obviously cannot fully reflect the success of those vehicles. And Tesla's stock is notoriously overvalued.
        robotresearcher 9y ago
        You are misreading my comment. I didn't claim anything negative about Leaf or Prius. The Tesla S is an absolutely better car than Leaf or Prius. And since it costs much more, it should be. If we weight for price, that depends on your price sensitivity.
        jonknee 9y ago
        You are missing the point, all things equal of course people will want the vastly more expensive luxury product. That has nothing to do with how good Tesla is at making things. Regardless of the appeal of the Model S, Toyota is much better at making cars in volume than Tesla. Similarly, I'd rather have a McLaren than Tesla (or Toyota), but that doesn't speak anything about the talents of either firm at mass producing cars.
        deleted 9y ago
        [deleted]
        robotresearcher 9y ago
        This thread is a response to: > Tesla certainly did a lot better than other attempts at electric cars You have decided that that claim hinges on their ability to mass produce cars. I think Tesla has done more for the electric car market than any of the other companies. I can't justify that with data, but I think it's a reasonable position. We have different points. I'm not missing yours.
xj9 9y ago
unless you succeed, you fail
- paulpauper 9y ago
  but hardware has high initial costs. higher than software in many instances. you need physical space, manufacturing , and more employees than in a purely digital company
  - xj9 9y ago
    yes, but what i said still applies. entrepreneurship is gambling with reasonable odds, right? hardware might be a longer shot, but at the end of the day its approximately random (skewed on the side of players with more money)
    - JoeAltmaier 9y ago
      ...except for the reasonable odds part, the way the VCs have it skewed.
LeifCarrotson 9y ago
Hardware is pretty tough. But it's possible to turn it into a nice business. You probably own a lot more hardware than software, and spend more on it - all that was produced by mostly successful hardware companies. What's really tough is turning a Bluetooth speaker business or a smart-watch business into a multi-billion dollar business. It's the over-investment and sunk-cost problem that ruined Jawbone, not the hardware nature.

bryanlarsen 9y ago

The big difference to me is that I think that Pebble had successfully found a small niche as the alternative smartwatch with considerable customer loyalty. If they would have stayed small I think they would have been a very successful company. Jawbone was in a larger market with more competition and much less customer stickiness. I believe that they were in more of a "go big or go home" scenario.

intoverflow2 9y ago
Think it's worth keeping in mind the state of the smartwatch market in 2017 is a fraction of what people thought it would be when Pebble was going big and the Apple Watch was a rumour. Investors were clearly hoping it was about to explode like smartphones did. I mean I don't even feel the Apple Watch will still be around in the next few years.
- bryanlarsen 9y ago
  Yes, hindsight certainly makes things clearer; I doubt I would have made better decisions than Pebble did. The frustrating thing is that Pebble could have had a nice $20M p.a. business selling their smartwatches. Not big enough for Apple & Google, but definitely enough to make a good profit for a small company. That 2015-2016 smartwatch hype may well have killed the market for everybody. It reminds me of the VR hype in the early nineties that killed the market for ~20 years.
- ghaff 9y ago
  A lot of people still wear watches. And I do like getting notifications on my Garmin watch as well as using the GPS for some activities. But, in a world where so many people also carry their smartphone with them almost everywhere, people aren't going to fiddle too much with the small device on their wrist when they can pull a phone out of their pocket.
  - luck_fenovo 9y ago
    > people aren't going to fiddle too much with the small device on their wrist when they can pull a phone out of their pocket Definitely. The jump from dumbphone to smartphone was pretty huge. I can do a lot more on the go now than I could before. The jump from smartphone to smartphone + smartwatch is smaller, and possibly just lateral rather than forward. It doesn't enable many more things than just a smartphone, but it offers you a slightly more convenient way of doing some things, at the cost of another device to charge and keep track of.

taneq 9y ago

Exactly my thought. Pebble was fine until they took a funding round and suddenly had VCs pushing them to become "the next Apple". Then they hired way too many people, refocused on where they thought 'the big market' was (ie. fitness) rather than where their market was (ie. long battery life, e-paper based smartwatches with an open application ecosystem), and tried to pump out new models too fast. It seems a recurring theme in SV that companies neglect to consider the overall market size for their niche product when deciding how large to try and scale their business.

mason55 9y ago

sama wrote a good article about this a few months ago[0]. The key quote as it applies here: "The second most important thing to understand is that raising too much money or raising money at too high a valuation can severely limit your optionality. Very often I’ve seen cases where founders know in their hearts they have an airplane but are able to convince good investors it might still be a spaceship. This really causes a lot of heartache, and often precludes your opportunity for a good acquisition later." [0] https://blog.ycombinator.com/navigating-mid-success/ https://blog.ycombinator.com/navigating-mid-success/

yellow_postit 9y ago

I wonder if this is true of the hardware wearable market on general. There's a solid set of niches but none are going to be hugely profitable on their own in the near to medium term due to a small market size. Apple is beyond "over funded", both in terms of equity and investor perceptions, so it can stay in on the hopes it eventually pans out.

ghaff 9y ago
In general, wearables, a lot of consumer IoT (SmartHome), action cams, maybe consumer drones (?), maybe VR (?), etc. there's also a lot of fashion/fad. And, as you suggest, the actual core number of users in a lot of these areas may turn out to be relatively small when the dust settles. And the current fads switch elsewhere for a couple of years. That's not to say that everything is doom and gloom. But it's a tough market for companies to play in and they probably need to be reasonably diversified for when one area falls out of mainstream favor.
taneq 9y ago
I think the problem with wearables is that the estimated market size, back when smartwatches were 'going to be the next big thing', was based on perceptions from before mobile phones took off, when everyone wore watches because they needed one to tell the time. But now everyone has a mobile phone, they don't need to wear a watch, and so the only people who wear watches are people who actually want to wear one, which is a far smaller market than "everyone".