Pebble went from being worth $740M to less than $40M

http://qz.com/857412/pebble-went-from-kickstarter-to-being-worth-740-million-to-being-bought-by-fitbit-fit-for-40-million/?em_pos=small&ref=headline&nl_art=7

by JumpCrisscross • 10 years ago

35 20 10 years ago

qz.com

Spooky23• 10 years ago

It takes balls to turn down a high nine figure number. I don't understand the thought process behind turning down something that essentially gives you a 50% probability that you'll be a billionaire.

SpikeDad• 10 years ago

Because it was never worth $740M to begin with. The Pebble is garbage and the company never really cared about the device or the folks that Kickstarted it.

Even as a big Apple fan as I am the Apple Watch also had nothing to do with the failure of Kickstarter. Even low end Android watches made better devices.

joshstrange• 10 years ago

This article does little (if any at all) to explain "How Pebble went from being worth $740M to less than $40M". It just lists a timeline of product launched and valuations.

blackkettle• 10 years ago

tldr: It was never worth $740M to begin with.

chollida12• 10 years ago

I think Pebble's biggest issue is that they should have been a product of a larger company rather than a stand alone company.

A few years ago I bought a product called a Flip. It was a standalone video camera that was dirt simple to use, took decent quality video and was cheap.

It came along at the right time, just before the iPhone took off and people realized that their phone's camera was good enough from most of their video needs.

Flip understood that they were a product mascarading as a company and sold to Cisco.

Pebble is similar in that they were the right product at the right time. Their failure was in not realizing they had a window of a few years to build their product and sell. There's nothing wrong with that, lots of products, like the flip, are valuable for only a few years before their main features get consumed into other devices and they become obsolete.

I'm really not sure how the board let the CEO make the decision to not sell when they had an offer on the table.

I'll buy the book when it comes out as its probably a good case study of product not company.

jathu• 10 years ago

How do you differentiate a product and a company? There are obvious examples like most of the stuff on Shark Tank (i.e. cookies, jam, clothing, food products). However, I find it hard to think Pebble was just a product and not a company. Doesn't every company start off as a product? Apple started off as Apple I, Google started off as search and Snap started off as a photo sharing app. By your definition, a product is something that can be superseded by a competitor? Isn't that every company ever? My guess was, Pebble believed it could become a company and not just a product... but Apple had other plans for them.

chollida12• 10 years ago

How do you differentiate a product and a company?

Good question. And I think you got it mostly right. Being a product doesn't mean the company has no value, just that its only a matter of time before someone else builds their features into their product.

The answer is that its very fluid. Everyone is a product until they are big enough. My rule of thumb is, can I see this companies being a feature for another company, or put another way....

What moat does this company have that ensures another company can't just create a feature to their own product that duplicates them.

In the Flip case, it was obvious once the iPhone came out that the average person wasn't going to carry around a separate device just for video.

Dropbox was a company that was famously refereed to as a feature, and they've done a great job of becoming more than a generic file syncing company.

Cruise automation is a company that I think would have been in trouble if they hand't sold, not necessarily today, but can any one really see a future where most cars produced don't have self driving hardware built into them by the manufacturer?

wodenokoto• 10 years ago

While I get that cameras have been absorbed into phones, I am not really sure what product has absorbed smart watches. I actually still see this as a new(ish) product category.

inputcoffee2• 10 years ago

"Today, Migicovsky is selling Pebble’s software and intellectual property to competitor Fitbit for less than $40 million, in a deal that’s mainly about hiring the company’s engineers, according to Bloomberg. The sale price is less than Pebble’s debt, which Fitbit isn’t acquiring. Pebble will reportedly sell its inventory separately."

So it is actually worth a negative number.

throw9987432• 10 years ago

Well lets say he sold for 40 million (for IP), and also not accounted for has 50 million in debt, but 100 million in boxes of watches.

One could argue that the debt + more can still be paid off by selling the existing inventory. It may be a bit hard to get full retail for an "old" product though from a "dead" company, so who knows.

inputcoffee2• 10 years ago

So the $40 million would go to the debt in this case.

They would still owe some money to debt (say -$10m in your example).

I agree that the inventory can't be worth much. I mean if it was worth that much it would be the main story, not the sale. In your example the inventory is worth over 2x the IP!

Let's see, between Feb 2015 and July 2016 they sold about 800,000 units. (http://www.wareable.com/wearable-tech/how-many-apple-watches...)

So that means if they sold 800k units in 18 months, that is about 44,444 units/month. If they keep around one quarter of inventory, that would be about 130,000 units. (not accounting for deceleration).

On Amazon they go for about $60/pop (and discounts will deepen). So they have about $8 million in inventory on the high end. This doesn't take into account the cost of goods sold.

The question is: how much debt did they have?

driverdan• 10 years ago

This is a terrible article. It doesn't have any information about Pebble's decline.

SippinLean• 10 years ago

The title was the most informative part

lefstathiou• 10 years ago

Actually the title goes beyond "uninformative" to misleading. A company isn't worth $740mm because it says so. The deal failed so it was never worth that. This article said the offer was "rejected" and sourced Techcrunch which did not say the offer was rejected but that the deal failed (likely in due diligence).

Yhippa• 10 years ago

This bothers me a lot. I'm trying to cut back on useless information these days and this article really didn't tell me anything. And I knew the title from reading a better article yesterday that was on HN.

Would be cool to blacklist certain domains from your personal HN feed the way you can hide certain subreddits on reddit from /r/all.

lordnacho• 10 years ago

What's the idea behind paying 40M for the engineers? Why don't you go on LinkedIn and scoop them up? Are they building something valuable as a team?

serg_chernata• 10 years ago

I don't think it's just engineers. The article mentions IP as well. So they're buying all that as a package.

bzalasky• 10 years ago

The $40M is for Pebble's assets and intellectual property. They're hiring the engineers on the side. Sometimes acquisitions are done this way so the acquiring company can avoid the outstanding liabilities/debts of the company being acquired.

jasonshen• 10 years ago

I loved Pebble - I was a fan from the first Kickstarter. I found the devices comfortable (loved the band!) and I think it was a brilliant move to use e-ink on the watches, which saved enormous amounts of battery life. I like to wear my watch all the time (even at night) so it was great to only charge once every few days while at my desk at work.

The Pebble Time added the calendar view which was super useful and I really liked where they were going with canned responses and voice-to-text on the mic. There is nothing wrong with a company that makes a niche product - many product businesses started out doing only one thing - I mean hell look at other major watch companies (Swatch, Rolex, etc). I don't know the team personally but I'm sad to see them fold. I felt like while they did not invent the smartwatch, they introduced the smartwatch category to the world.

double0jimb0• 10 years ago

Didn't realize QZ turned into click-bait trash.

It's called 'projection' QZ. No amount of shaming others "loss of value" is going to fix the fall from grace and value you are presently in. But you probably already know that, enjoy the booze and prozac.

Pebble went from being worth $740M to less than $40M

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