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Comment by dijit | Hacker News Reader

I'd like to know how this happened really. Pebbles were pretty decent and their successful campaigns definitely contributed to the rise of smart watches. But after having two hugely successful crowdfunding campaigns, how did they fail?

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There are dozens of people on the pictures on the linked pages. You have to sell a lot of $99 watches to pay them all. They say 2 million watches sold; gross margin of - what - $10? $20? Say $40mm margin over the 8 years they mention; staff costs of $5mm/year (50 people, 100k/year including everything - unrealistically low estimate). That doesn't even leave room for other development costs, visits to production factories, returns, everything else. Having done 'a successful crowdfunding campaign' is not an enviable position to be in, most of the time - although of course the vast majority of backers have no experience running a business whatsoever and think 'these guys are sitting on a mountain of money, what can go wrong'.

This is what can happen when, unlike most tech startups, cost of goods sold is a business consideration.

> But after having two hugely successful crowdfunding campaigns, how did they fail?

One could argue having to go continuously go back to that well meant they never gained the market traction they were hoping for.

I don't know, that may be true, but I saw multiple people walk into target and ask for Pebble's. I was actually astonished when I first saw it, but I was like - "alright, pebble is going to be okay".

This was like six months ago, but it was in SF.

I think it was simply a kind of tradition. It wouldn't be Pebble without a Kickstarter for each new watch. Also I suppose this way they got better deal on preorders that they could do elsewhere, coupled with lots of free marketing.

I think it was simply a kind of tradition. It wouldn't be Pebble without a Kickstarter for each new watch.

It was the cute the first two times. By round #3, I was tired of the "we'll ship soon, after a slew of delays!" dance, and ready for Pebble to put on their big boy pants and let me know when they ship to a retailer from whom I can buy one that day.

And apparently those big boy pants were still fitting a bit loose.

When such a large percentage of your sales as a company come from kickstarter, where you seemingly have to give a heavy discount to the real price. My guess is that it becomes hard to succeed in retail/other channels at a real price with margin that could sustain a company.

Why do you think they failed? Didn't FitBit just buy them?

FitBit bought just their software assets for under $40 million. In 2015, Citizen offered to buy the whole company for $740 million.

FitBit did not acquire their $24 million in debt or any physical asserts. They offered jobs to 40% of the staff.

> In 2015, Citizen offered to buy the whole company for $740 million

ouch, i can only imagine how the founders feel

It depends on the terms of the offer. He might have thought he was working in his employee's best interests by not taking the offer. Alternatively he could have negotiated support contracts for existing customers and provided stock options to employees then cashed out.

But in hindsight he's probably kicking himself.

Pebble have entered insolvency:

http://www.proofofclaims.com/PebbleTech/documents/

A bankruptcy judge is going to have to approve all this. You can't sell all the valuable assets of a company the same day you declare bankruptcy - that could be considered fraud. If I had just fulfilled a big order of theirs yesterday on net 60 terms we had been operating under for the past 5 years I would be pretty upset.

No, Pebble is bankrupt and winding down operations. FitBit is buying some parts and offering jobs to the software people. This is not an acquihire. The designers and hardware people are not joining FitBit. The owners get nothing. Some of Pebble's creditors will likely also get nothing since the software/IP sale doesn't cover Pebble's debts.

What is success?

The product they named their company after is never going to be manufactured again. People who paid them for that product but haven't received it yet never will. Their company is dead.

Or do you mean the fact that their founders and owners probably got some cash back for selling the whole thing? Well, how much do you get back for an acquihire? Fitbit didn't buy them for their tech, or they'd still be selling it.

They may have bought them for patents though. E-ink display on a watch could be pretty important for fitbit going forward.

Pebble never used an E-Ink display. They used Sharp memory LCD displays (which Nike funded the development of in the watch formfactor) and called them E-Paper because they promised E-Ink in one of their kickstarters.

Bought because they likely could not survive on their own, cancelling their product lines & support for them, and for ~ 5 % of the highest buyout offer they received before. There are worse ways to fail, but it's not really success.

No, Fitbit are buying the assets of Pebble, the company is closing.

Well, it was a acquihire, which is kind of sad. Not a failure for investors, perhaps, but certainly for their customers.

> FitBit bought just their software assets for under $40 million. In 2015, Citizen offered to buy the whole company for $740 million.

I'd say that was a failure for Pebble investors as they raised $58.81M according to crunchbase.

And of that $40 million, they still owe their creditors something like $27 million. So for investors/founders, they're all looking at <1/4 of their investment cash value.

FitBit bought them for the equivalent of pennies because they were, it seems, deep in debt.

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