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>Our signed agreement restricted our ability to solicit other bids or fundraise and targeted a close on December 11th, 2017. It is hard for me to understand the

>Our signed agreement restricted our ability to solicit other bids or fundraise and targeted a close on December 11th, 2017. It is hard for me to understand the logic of doing that at the end of your runway, without a backup plan and without agreeing on a compensation in case the deal falls through. Unless you are deliberately trying to crash the company and blame someone else for it. So looking more into this, is it just me, or it looks outrageously inefficient to raise $45m and have ~40 employees spend 4 years to release a product that is basically an IoT door lock? Both the mechanical and the electronic parts are based on commodity components, so I can imagine a well-motivated team of 5 delivering something like this in a year and being able to offer it at a much lower price. So was making a competitive product ever a priority here, or have the founders discovered a different way to benefit from the over-optimistic tech investment climate?

solarkraft 9y ago
It seems that they focused on perfection (security, UX) way over a low price and by own claims people were actually willing to buy. Still not sure how they managed to burn through that much money developing it. The IT security parts are likely already available for free as well. Maybe inviting a mechanical watch guru to review their design in person and having the whole team watch him doing it is a good example of their spending.
- _aarti 9y ago
  The product was built in China on the same lines that build the iPhone with the same detail. Manufacturing quality hardware is capital intensive, Finding people who can support that level of engineering is capital intensive, Hiring security engineers is capital intensive, they chose to go all in. The company was not wasting money. I have worked in Silicon Valley startups with lavish spending. This was not one of them. There was no free food, no wine/beer on tap, no lavish parties, no free memberships to the equinox.
  - john_moscow 9y ago
    I dunno. Going all in before you have validated the product/market fit sounds like a textbook rookie mistake. I don't understand how you can raise close to $50m while having a business aptitude of a 3 year old.
    - _aarti 9y ago
      I mean - I don't know - this is the tech mecca of the world. If these VC's and Engineers don't have vision/mission to go all in, what chances does the rest of the world have to bet on hardware startups?
    - bartread 9y ago
      This has been blowing my mind for years, because I think it's surprisingly common. I won't name the company because to my shock (and frankly vast horror) they're still chugging along and I don't especially want to get sued but, a few years ago when I was still working for Red Gate, one of the leadership of a local company - also significantly hardware driven - came in and told their story to anyone who wanted to listen. Over a period of maybe a decade or so, through successive rounds of funding, they'd managed to raise about half a billion and had produced... nothing commercially viable. Zilch. This guy's job in the company had been and continued to be to raise the necessary funding from investors, and I have to say he was clearly pretty damn good at separating fools from their money. So imagine the situation: this guy comes in to a bootstrapped software company that had always been profitable and acts like he's really pleased with himself for raising half a billion dollars and pissing it up the wall because they'd gone all in over and over again with no clear product market fit. (N.B., it may have been pounds, but it was years ago and I can't remember, so let's call it dollars to keep it less dramatic.) The reaction was quite hostile: I don't think we knew whether to be befuddled or enraged. I mean you literally could get a better ROI by handing me $50M or $500M or whatever it is and standing by whilst I try to blow it all on cocaine and high-end hookers because there's just no way I can snort my way through that much coke in an entire lifetime without overdosing so you'd at least get some, and probably most, of your money back. Don't get me wrong: I understand that VCs expect most ventures to fail, and to an extent that's perhaps reasonable, but surely there comes a point where you stop throwing good money after bad?

solarkraft 9y ago

It seems that they focused on perfection (security, UX) way over a low price and by own claims people were actually willing to buy. Still not sure how they managed to burn through that much money developing it. The IT security parts are likely already available for free as well. Maybe inviting a mechanical watch guru to review their design in person and having the whole team watch him doing it is a good example of their spending.

_aarti 9y ago
The product was built in China on the same lines that build the iPhone with the same detail. Manufacturing quality hardware is capital intensive, Finding people who can support that level of engineering is capital intensive, Hiring security engineers is capital intensive, they chose to go all in. The company was not wasting money. I have worked in Silicon Valley startups with lavish spending. This was not one of them. There was no free food, no wine/beer on tap, no lavish parties, no free memberships to the equinox.
- john_moscow 9y ago
  I dunno. Going all in before you have validated the product/market fit sounds like a textbook rookie mistake. I don't understand how you can raise close to $50m while having a business aptitude of a 3 year old.
  - _aarti 9y ago
    I mean - I don't know - this is the tech mecca of the world. If these VC's and Engineers don't have vision/mission to go all in, what chances does the rest of the world have to bet on hardware startups?
  - bartread 9y ago
    This has been blowing my mind for years, because I think it's surprisingly common. I won't name the company because to my shock (and frankly vast horror) they're still chugging along and I don't especially want to get sued but, a few years ago when I was still working for Red Gate, one of the leadership of a local company - also significantly hardware driven - came in and told their story to anyone who wanted to listen. Over a period of maybe a decade or so, through successive rounds of funding, they'd managed to raise about half a billion and had produced... nothing commercially viable. Zilch. This guy's job in the company had been and continued to be to raise the necessary funding from investors, and I have to say he was clearly pretty damn good at separating fools from their money. So imagine the situation: this guy comes in to a bootstrapped software company that had always been profitable and acts like he's really pleased with himself for raising half a billion dollars and pissing it up the wall because they'd gone all in over and over again with no clear product market fit. (N.B., it may have been pounds, but it was years ago and I can't remember, so let's call it dollars to keep it less dramatic.) The reaction was quite hostile: I don't think we knew whether to be befuddled or enraged. I mean you literally could get a better ROI by handing me $50M or $500M or whatever it is and standing by whilst I try to blow it all on cocaine and high-end hookers because there's just no way I can snort my way through that much coke in an entire lifetime without overdosing so you'd at least get some, and probably most, of your money back. Don't get me wrong: I understand that VCs expect most ventures to fail, and to an extent that's perhaps reasonable, but surely there comes a point where you stop throwing good money after bad?