Jawbone, the originator of wearables, is rumored to have withdrawn from the sports bracelet field, and there are indications that the smashing unicorn is fading. In the past 20 years, the company has survived through continuous financing. The only way out is to be acquired or listed. In the United States, when the financing environment is not prosperous, it is not surprising that the startup loses its voice and declines. But Jawbone is not isolated, it represents a typical way of life for global technology companies.
The latest news about this unicorn is that it plans to transfer the wireless speaker business and is looking for potential buyers. It is even more aware that it is not good. Jawbone has now completely discontinued the Up series of health tracking devices. Existing stocks are sold to third-party retailers, knowing that it is seen as the originator of wearable devices.
According to media reports from Fortune.com and Business Insider, Jawbone declined to comment on the rumors, so I don't know if it is permanently out of the wearables field. Company CEO Hosain Rahman said in an interview earlier that the company plans to launch a clinical-grade health device. After the company's new round of business reduction, I wonder if this plan will continue to advance? The question currently facing this company is whether it can find a suitable buyer for this round of business sales.
When the wave of wearable devices became popular, Jawbone was considered the originator of this field. Its valuation was once comparable to Uber. In addition to the Up smart bracelet, Bluetooth headset and stereo are the company's three iconic products, but Before the "death signal" was issued, all the signs showed that the company was in trouble.
The first is discount financing. Just in February of this year, Jawbone raised $165 million. According to reports, the valuation is only $1.5 billion, which is 50% discount to the $3 billion in the previous round.
The layoffs before this show that the company is tightening its expenses. Last year, the company announced that it would lay off 60 people, equivalent to 15% of the total number of employees. It also closed the New York office.
In addition, in the past two years, the company has been caught in a lawsuit with its peers: In 2014, foundry Flex called Accused Jawbone to breach the contract and file a lawsuit. Although the lawsuit was settled, Jawbone almost compensated for $20 million; 2015 After the listing of Fitbit in the year, Jawbone filed a lawsuit against Fitbit, accusing Fitbit and its employees of stealing the company's trade secrets and infringing patent rights. But recently the court made a ruling in favor of Fitbit.
At this point, the fate of this unicorn has surfaced – it is dying. But if you look back at the company's 20-year survival path, this is not unexpected.
Survived by 13 rounds of financing for nearly 20 years
One fact that is easily overlooked is that the company has been established in Silicon Valley for nearly 20 years, and its products have been relatively single and difficult to achieve profitability. It has survived 13 rounds of financing.
Jawbone's current CEOs Hosain Rahman and Alexander Asseily met at Stanford University. In 1999, they founded Jawbone's predecessor, Aliph. The initial plan was to develop noise-cancelling headphones for the US military; until 2002, they got contracts from the US military. They began to lay out to the consumer market. In the following years, the only major improvement in product development was the release of wireless headsets at CES in 2007; three years later, in 2010, the company first released a non-headphone product, Bluetooth Audio; in 2011, the company released The UP series of healthy bracelet products. At that time, the pursuit of wearable devices spread from Silicon Valley to the world, Jawbone is regarded as the leader in this field.
Operating in a single field for decades, this is a relatively unique phenomenon in the United States: for example, Twitter has always been in the social arena, and Square is committed to mobile payments. And those companies that are expanding their business rapidly have become powerful companies—from the very beginning of Facebook to the current VR and artificial intelligence.
In contrast, Chinese startups are much more aggressive in expanding their business: Xiaomi was founded in 2010, from the initial mobile phone business to TV rice cookers and young people's housing rental business; hammer mobile phone was established in 2014 In the year, it also announced its entry into the VR business this year.
In the United States, where the financing environment is relatively mature, many investors pursue a philosophy: investing in the future of a company, even if the company is temporarily not profitable, but believes its future prospects are good. Sometimes they are “superstitious†about this idea for decades.
The most typical case is Amazon - even the most brutal Wall Street, the company is also tolerant, the company's price-earnings ratio reached more than 4,000 times at its peak. Amazon started from the e-commerce business, and later developed the cloud business, as well as the latest rocket business. In the more than 20 years since its establishment, the company's development strategy and the management philosophy of founder Bezos have become the textbooks of the world's business world. But what is easy to overlook is that this is a company that has not achieved profitability for 20 years. Until the second quarter of 2015, it finally released a profitable financial report. It seems that in the future, both its e-commerce and cloud business will have considerable profitability. Undoubtedly, in this case, investors provide a good environment for innovation for a promising company.
The other side of the environment is to allow some companies to live in the greenhouse. When the financing environment is good, many companies can get the same treatment as Amazon - relying on capital to continue to survive. Including the financing in February this year, Jawbone raised a total of 13 rounds with a total financing of 983 million US dollars. In contrast, its competing rival Fitbit only circulated four rounds, raising a total of $66 million.
It is not difficult to find that many famous investors have been optimistic about the future of this company. According to data from Crunchbase, Andreessen Horowitz, Blackstone Investments, and JP Morgan are all early investors in the company, and investor Suhail Rizvi has also been a investor in Twitter. In early 2014, the famous American technology magazine "Connected" reported that "Silicon Valley still expects Jawbone to launch some great products. In general, after each round of financing, Jawbone will enter a new product field, such as Up fitness bracelet."
Starting around 2011, centered on Silicon Valley, the ancient concept of “wearable device†began the commercialization process with the sports bracelet as the entry point, and Jawbone climbed the peak of this wave. "Connected" magazine said in a February 2014 article, "From a design perspective, Jawbone's new ideas may be better than Apple, which is exactly what it poses to Apple."
Needless to say, the development of the sideline business, Jawbone did not develop new products as investors have imagined. Jawbone did not follow up when competitors began to provide screens for the sports bracelet, automatically recognizing sleep and exercise.
More than just wearables, even the company’s original Bluetooth speaker business was in crisis. Alex Asseily said in an interview with Fortune magazine that their share of the US market has fallen to 5%. Painful, but also carefully considered.
When people believe in the "future high return" to the extent of fanaticism, there is inevitably suspicion, which is exactly what people call the bubble burst. Since 2015, this suspicion has already appeared, and venture capitalists often bargain when they contribute. According to the Silicon Valley Fenwick & West law firm's 148 headquarters in the first quarter of 2016, the Silicon Valley company's financing survey found that the companies that raised funds this quarter compared to the previous round of financing, the price rise, that is, the industry called the rising round of financing, It accounted for 78%; compared with the previous quarter (ie the fourth quarter of 2015), the 82% decline, the average price increase (53%) is slightly lower than the historical average (56%).
Fenwick & West has calculated statistics on financing since the first quarter of 2004, with green representing the proportion of rising companies and red representing the proportion of falling companies.
In this case, the days of some companies such as Jawbone have become difficult, and in order to obtain sustained funding, they have to accept harsh financing terms or “blood financingâ€. In March 2015, Jawbone raised $300 million. But since then Bloomberg reported that the part of BlackRock's investment is actually a loan rather than equity financing. BlackRock's investment is equivalent to a convertible bond with very demanding conditions: when Jawbone is sold, BlackRock will get funding earlier than earlier shareholders; BlackRock has a lot of management issues. The right to speak; BlackRock will also intervene in how Jawbone spends money. Just after Jawbone received the funds from BlackRock, 20 employees were laid off in June.
In addition, there are discount financing. In fact, just as the company refinanced $165 million in February this year, Jawbone's valuation shrank from $3 billion in the last round of financing in April 2015 to $1.5 billion. Investors are a well-known investor who has been able to bring various resources and even “endorsement†to the company. This time it is a “successor†from the Middle East – an investment company of Kuwait’s sovereign investment. These investors from the Middle East can only intervene in some of the company's late private equity investments in most of Silicon Valley. Because these companies are not able to bring additional resources like mainstream investors in Silicon Valley, they are generally not. Strong companies are favored. Often, when these Middle Eastern capitals, which are called “oil princes†by Silicon Valley people, intervene, they often represent the company as being “sellingâ€.
This long-term focus on a certain area of ​​the company can be said to have been waiting for the acquisition of a large and powerful company. When Jawbone’s fate has surfaced, it’s almost ironic to look back at the article in Wired magazine. The article said that one of Apple’s solutions was the acquisition of the company, given Jawbone’s threat to Apple. "Apple seems to have embarked on a dead end, but Jawbone's future is full of possibilities."
Today, two years later, it was Jawbone who walked into the dead end. Apple certainly did not acquire the company but released its own sports watch.
Another question asked by Jawbone is whether the wearable device that was once advocated is a real market.
Become popular with the help of the pseudo-market concept
At least for now, mainstream wearable device manufacturers in the US market are suffering. In addition to Jawbone, the fashion-oriented Misfit was acquired by the Fossil Group for $260 million; Jawbone's most important competitor, Fitbit, landed on the NYSE in June last year and now has a stock price of around $14, compared to the highest point. The US$51.90 fell by nearly 73%. Just in early May, the company released its first-quarter earnings, which showed that its operating costs were three times higher than the same period last year, resulting in a 77% drop in profits.
Most analysts attribute this collective survival difficulty to the cheap bracelets produced by Chinese manufacturers Xiaomi. A person from consulting firm CreaTIve Strategies said that fitness wearable devices are now monopolized by several players. Xiaomi and Fitbit account for 70% of the market share. The former monopolizes the low-end market, while Fitbit dominates the high-end market. above 50. "This makes the survival of other players very difficult."
But the company’s real experience is divorced from the data presented in the market report. Fitbit's experience is as mentioned above, and Xiaomi is not powerful. Xiaomi has announced that it has entered the US market since February 2015. Due to patents and other reasons, mobile phones cannot enter this market. The Xiaomi bracelet has become an important stepping stone. However, so far, this price is only Fitbit and Jawbone. One of the products is only sold to this market through their English website, and Xiaomi public relations people revealed to the interface news that their sales data in this market can be almost “negligibleâ€.
But market research firm data is still advocating this market, IDG recently released a report that in the first quarter of 2016, wearable device shipments increased by 67.2% compared with the same year last year.
Source: IDG
In this report, even Apple Watch has shown a decline. The Apple Watch was released last spring. Considering that there is no sales data in Q1 2015, and the shipment volume is affected by the sales season, this data is not available. value. However, from the perspective of occupancy, in the Q1 2016, Apple Watch market share was 7.5%; in the fourth quarter of last year, this figure was 15%, and there was a 14.9% share in the whole year.
Wearable devices may themselves be a "pseudo-proposition", a mass market that does not exist. In a market research report conducted by Business Insider last year, 51% of users said that they did not see any need for use - the emergence of smart devices such as iPhone and Android met the vast majority of users' needs, when the iPhone itself With the step counting and heart rate detection function, the market is overturned to some extent, which raises the threshold for users' pain points.
Wearables re-emerged around 2011, and with the concept of the Internet of Things (IOT), various hardware such as networks and chips have been developed to connect the world, including connecting people's bodies through wearable devices. The Internet of Things does exist. Nest is a smart thermostat that has been popularized in most apartments in the United States. Amazon recently sold a $5 button to the average family, and put these buttons next to the washing machine. When the laundry detergent is used up, just press it. In the field of wearables, private companies are dying, and the stock prices of listed companies are raging, at least indicating that wearable commercialization is difficult to prop up a giant.
And just as Jawbone is dying, market reports and the media are advocating new wearable concepts, such as clothes with smart chips... If you don't mind the next Jawbone, you can trust this.
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