Pebble to Cease Operations; Assets Sold to FitBit for Undisclosed Sum

[timb]

https://www.kickstarter.com/projects/597507018/pebble-e-paper-watch-for-iphone-and-android/posts/1757212?ref=backer_project_update

As someone who owns an Original Pebble and a Pebble Steel, I'm sad to see this. I really liked the battery life and overall simplicity of their watches.

They just had a Kickstarter for the new Pebble 2 and Pebble Core, which they've now apparently canceled. Though, they won't be refunding people's money until March(!) which seems, uh, poor form...

I hope they release the source to their mobile app (doubtful) so the community can keep it alive. I also wonder how long their servers will stay running.

I had the opportunity to hang out at their headquarters and spend time with their staff for a few days before the Bay Area Maker Fair in 2014; Pebble and Spark (now Particle) shared a booth that year, so we had a hackathon to get some Pebble+Spark Core demos going, which was a blast! They seemed like a really talented bunch of hardware and software engineers, so I really hope they all end up with jobs at FitBit.

It's a shame they had to go this route... I guess the millions of dollars they raised just wasn't enough.

[trophosphere]

I hope they release the source to their mobile app (doubtful) so the community can keep it alive. I also wonder how long their servers will stay running.

Doubtful indeed. Fitbit has acquired the software assets of Pebble so I don't think they would release any portion of the source code.

[EEVblog]

The title says it all. Fools.

Don’t believe your own hype: How Pebble went from being worth $740 million to less than $40 million

http://qz.com/857412/pebble-went-from-kickstarter-to-being-worth-740-million-to-being-bought-by-fitbit-fit-for-40-million/

[LabSpokane]

This is stupid squared. Pebble fails, so Fitbit, who is also rapidly tanking, blows $40MM in cash they desperately need for operations to buy technology that has already failed in the marketplace.  The excuse is to hire Pebble's employees. 

Why not just hire the people that will end up on the street and keep the $40MM in your pocket?   

I'm betting Fitbit tanks/sells out in 18 months. 

[EEVblog]

This is stupid squared. Pebble fails, so Fitbit, who is also rapidly tanking, blows $40MM in cash they desperately need for operations to buy technology that has already failed in the marketplace.  The excuse is to hire Pebble's employees. 
Why not just hire the people that will end up on the street and keep the $40MM in your pocket?   

It excites the market and investors.
Doesn't make it a smart move though of course.

I'm betting Fitbit tanks/sells out in 18 months. 

Not looking good.

[timb]

This is stupid squared. Pebble fails, so Fitbit, who is also rapidly tanking, blows $40MM in cash they desperately need for operations to buy technology that has already failed in the marketplace.  The excuse is to hire Pebble's employees. 

Why not just hire the people that will end up on the street and keep the $40MM in your pocket?   

I'm betting Fitbit tanks/sells out in 18 months. 

Yeah, it doesn't make much sense. Fitness Trackers as a whole never made much sense to me, as your phone can do the same thing and most people keep them in their pocket all the time anyway...

Notifications were the big draw for me.

The Pebble was a really nice watch, the Sharp Memory Display has fantastic readability in sunlight and really helps to extend battery life. I much prefer it over the fancy full color display of an Apple Watch.

Unfortunately, Apple has much more exposure than Pebble. Once the Apple Watch came out, the writing was on the wall for Pebble I think.

[Ice-Tea]

I wasn't even aware they were in trouble 

[iaeen]

This is stupid squared. Pebble fails, so Fitbit, who is also rapidly tanking, blows $40MM in cash they desperately need for operations to buy technology that has already failed in the marketplace.  The excuse is to hire Pebble's employees. 

Why not just hire the people that will end up on the street and keep the $40MM in your pocket?   

I'm betting Fitbit tanks/sells out in 18 months. 

From what I hear, it's the exact opposite of this. They do NOT want the talent and are planning on letting most of engineering team go. Instead, they only want the Intellectual Property so they can make their fitness trackers more like full-featured smartwatches.

[LabSpokane]

This is stupid squared. Pebble fails, so Fitbit, who is also rapidly tanking, blows $40MM in cash they desperately need for operations to buy technology that has already failed in the marketplace.  The excuse is to hire Pebble's employees. 

Why not just hire the people that will end up on the street and keep the $40MM in your pocket?   

I'm betting Fitbit tanks/sells out in 18 months. 

From what I hear, it's the exact opposite of this. They do NOT want the talent and are planning on letting most of engineering team go. Instead, they only want the Intellectual Property so they can make their fitness trackers more like full-featured smartwatches.

*That* would make sense, but that was not what was announced in the media. 

[julianhigginson]

eh, you win some, you lose some...... Selling out at 740M might have been smart but he would have spent the rest of his life wondering what he could have done with the company. Now, at least, he knows... and I'm sure he's still better off now than if he's been in some job working for someone else for the last 5 years.

[EEVblog]

eh, you win some, you lose some...... Selling out at 740M might have been smart but he would have spent the rest of his life wondering what he could have done with the company. Now, at least, he knows... and I'm sure he's still better off now than if he's been in some job working for someone else for the last 5 years.

But still a stupid move. He not only rolled the dice and lost, but rolled dice loaded against him and lost. There was not an equal chance of the company getting a better offer, or failing like they did, he just couldn't see it for *insert reason here*

[EEVblog]

From what I hear, it's the exact opposite of this. They do NOT want the talent and are planning on letting most of engineering team go. Instead, they only want the Intellectual Property so they can make their fitness trackers more like full-featured smartwatches.

That's just as dumb. What do Pebble have that's patented that makes it so valuable?

[LabSpokane]

From what I hear, it's the exact opposite of this. They do NOT want the talent and are planning on letting most of engineering team go. Instead, they only want the Intellectual Property so they can make their fitness trackers more like full-featured smartwatches.

That's just as dumb. What do Pebble have that's patented that makes it so valuable?

A portfolio that either appeals to - or wards off - West Texas patent trolls. 

[Corporate666]

eh, you win some, you lose some...... Selling out at 740M might have been smart but he would have spent the rest of his life wondering what he could have done with the company. Now, at least, he knows... and I'm sure he's still better off now than if he's been in some job working for someone else for the last 5 years.

I'm all for sticking to your guns and seeing your baby through to the biggest and best that you believe it can be.... but there's also a point at which you have to look at the odds.  $740MM is a gigantic f*ckload of money, and even if he thought he could get to that point himself, or even beyond it... $740MM is enough money (even after taking into account how much you'd personally net from the sale after taxes and everything else) to life an utterly lavish lifestyle for the rest of your days and also to spend a ton of money on whatever business pursuits tickle your fancy.   He was in a hardware business facing competition from Apple, Samsung, and every other competitor... he had a first mover advantage, and got a sweetheart of a deal from a big name, well funded player who was willing to overpay for the hype, the brand and to cash in on his early lead.

It will go down as one of the dumbest moves in the history of business that he didn't accept that offer.  If it was $20MM right when the KS campaign was taking off and he had no debt, that would be one thing... but $740MM?  That's a whole other world of rich. 

[EEVblog]

He was in a hardware business facing competition from Apple, Samsung, and every other competitor... he had a first mover advantage, and got a sweetheart of a deal from a big name, well funded player who was willing to overpay for the hype, the brand and to cash in on his early lead.

That's the way I see it, and it was obvious both with hindsight and without it that the odds of getting a better deal and/or beating all those players were not very good.
Someone should have slapped him over the head with a wet fish.

It will go down as one of the dumbest moves in the history of business that he didn't accept that offer.  If it was $20MM right when the KS campaign was taking off and he had no debt, that would be one thing... but $740MM?  That's a whole other world of rich.

It's actually close enough to the magical $1BN "Unicorn" mark that you shouldn't have battered an eyelid.
Clearly he had the balance of power, because the investors would have taken the deal, surely?
https://www.crunchbase.com/organization/pebble#/entity

[timb]

From what I hear, it's the exact opposite of this. They do NOT want the talent and are planning on letting most of engineering team go. Instead, they only want the Intellectual Property so they can make their fitness trackers more like full-featured smartwatches.

That's just as dumb. What do Pebble have that's patented that makes it so valuable?

They have a stable software platform they've been working on for four years. That is a refined JavaScript API for writing watch apps, with thousands of developers who know how to use it.

On top of that there's the Watch Face/App Store built into the iPhone/Android apps, the server infrastructure, the notification APIs and a number of other things.

FitBit wants to allow people to write apps that run on/with their fitness trackers. They *could* roll it from scratch, but it would take years to do it right.

Instead they bought Pebble for a bargain basement price.

[julianhigginson]

Everyone's an expert after the fact.... but I don't see anyone on this thread talking about the time they raised up a company to the point where they could receive and then accepted a 740M offer.

[Corporate666]

That's the way I see it, and it was obvious both with hindsight and without it that the odds of getting a better deal and/or beating all those players were not very good.
Someone should have slapped him over the head with a wet fish.

Pure hubris, I think.  If you think back to the most successful hardware companies of the last several years... they would include Nest, Oculus, GoPro, Fitbit.  Nest was acquired for $3 billion.  Oculus for $2 billion.  GoPro did an IPO and is below $1.5 billion and has been for a while.  FitBit has a market cap of $1.7 billion now (was higher before)... but point being, $740MM is a substantial percentage of even the very cream of the crop of most successful companies.  And it's cash in hand.  Most of those other companies had substantially more rounds of investment and the owners will have less ownership than Eric had at Pebble.  So even if he really thought he could grow Pebble to the same level as the #1 top hardware startups, he would still probably net less money himself.   Better to take the sure thing right away and if he was so sure of the massive upside potential, he could likely negotiate an ownership stake post-sale too. 

It's actually close enough to the magical $1BN "Unicorn" mark that you shouldn't have battered an eyelid.
Clearly he had the balance of power, because the investors would have taken the deal, surely?
https://www.crunchbase.com/organization/pebble#/entity

According to the link, they had $375k of angel money and the series A funding came after the KS campaign.  Angels are never going to be interested in control of the company, certainly not at $375k, and $15MM in a series A isn't going to buy all that much of a share when they just took in $10MM in a month or two in pre-orders on KS.  I'll wager he retained a huge ownership stake, unless he is a horrendous negotiator. 

[Corporate666]

Everyone's an expert after the fact.... but I don't see anyone on this thread talking about the time they raised up a company to the point where they could receive and then accepted a 740M offer.

It's quite silly to suggest that this is the metric necessary for people to have a relevant opinion, especially since it would - for example - disqualify the opinions of Warren Buffer and Bill Gates.

[julianhigginson]

It's quite silly to suggest that this is the metric necessary for people to have a relevant opinion, especially since it would - for example - disqualify the opinions of Warren Buffer and Bill Gates.

I don't see Warren Buffet or Bill Gates posting in this thread, either.

[Koen]

https://backchannel.com/the-real-story-behind-pebbles-demise-303802a7afaa#.7uvcar7gj

From https://news.ycombinator.com/item?id=13161832

[Corporate666]

It's quite silly to suggest that this is the metric necessary for people to have a relevant opinion, especially since it would - for example - disqualify the opinions of Warren Buffer and Bill Gates.

I don't see Warren Buffet or Bill Gates posting in this thread, either.

....and you believe the reason for this is because, although they are members and are reading the thread, they do not feel qualified to comment, thus supporting your argument? 

The "if you haven't done exactly the same yourself, you shouldn't comment" has never been true.  Otherwise there would be nobody commenting on anything other than the people personally involved, and life would be rather boring.  FWIW, I have started a hardware company that I later sold to another company.  Let me guess... it only counts if it was sold for at least $740MM?

[julianhigginson]

....and you believe the reason for this is because, although they are members and are reading the thread, they do not feel qualified to comment, thus supporting your argument? 

The "if you haven't done exactly the same yourself, you shouldn't comment" has never been true.  Otherwise there would be nobody commenting on anything other than the people personally involved, and life would be rather boring.  FWIW, I have started a hardware company that I later sold to another company.  Let me guess... it only counts if it was sold for at least $740MM?

What I'm saying is we're all just talking here, and total outsiders with whatever went on... nobody knows what his plan may have been when he rejected 740M.  And yes.. on top of that, I think that the end of the market he got to - the crazy money end, works very differently to the standard business worth models that normal small businesses and larger established businesses are valued with. It's not something anyone posting here has experience with.

I just think it's really refreshing that someone actually wanted to keep their business and do the best they could with it rather than the instant something gets hyped, wait for an offer to sell out to someone with more money than sense. For whatever crazy reason, he wanted to continue what he started. He did his best, and it crashed, and in retrospect he could have had a mountain of cash plus no company, now he just has no company - he took a risk, and failed.

But what's the real disaster for him here? At the end of the day he'll probably not get to make 740M ever again - but he is young, and likely has many years ahead of him - we can agree that he will have plenty more opportunity to work on cool things and build stuff for people and learn from his mistakes here.

Compare to the guy who sold minecraft - money or not, he sure seemed pretty unhappy with his lot in life once he let go of the best thing he ever created and handed it all to someone else.

[trophosphere]

This is a good write-up on what was going on to lead to the sell-off occuring.