
How Fuhu went bankrupt - klenwell
http://www.latimes.com/business/technology/la-fi-tn-fuhu-bankruptcy-20160824-snap-story.html
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JohnTHaller
Fun related tidbit: Fuhu beat PortableApps.com out on a software deal to
distribute a package of portable Windows software on millions of flash drives
despite having no apparent experience in that area. The software package that
wound up bundled on the drives included software I wrote for PortableApps.com
distributed in violation of the GPL with my name and copyright stripped off
the binaries, documentation, and (reluctantly-provided) code.

I found it especially ironic when Fuhu later sued Toys R Us for launching a
competing tablet in 2012: [http://www.zdnet.com/article/why-fuhu-maker-of-the-
kids-tabl...](http://www.zdnet.com/article/why-fuhu-maker-of-the-kids-tablet-
nabi-is-suing-toys-r-us/)

Relevant ironic section:

Mitchell said he decided to go ahead with a lawsuit in part because of what
his two young daughters said after they found out about the Tabeo launch.

"They said, 'Dad, they're copying you. Isn't that wrong?' And I said, 'Yes, I
do think they are copying me,'" he said. "We just felt we had to take a stand
on this."

~~~
umanwizard
Just curious, why didn't you sue for the GPL violation? Seems like a slam
dunk.

~~~
JohnTHaller
Law doesn't really work for the little guy, sadly. It's next to impossible to
get a lawyer to take on a case like that when you don't have a ton of money to
pay them up front (like if you were bootstrapping a big open source project
yourself and trying to make a commercial go of it). I know, I asked a bunch of
them. There's a reason the vast majority of GPL violations go unpunished.

~~~
DiabloD3
For GPL software? You just ask the EFF or FSF.

They like to destroy idiotic companies.

~~~
JohnTHaller
The FSF only goes after folks that violate software they own the copyright on.
The EFF and SFLC only help non-profits and only in very specific
circumstances.

~~~
DiabloD3
FSF will ask you to assign copyright to them in those cases.

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rdtsc
> His [Rob Fujioka's] micromanagement — closely monitoring, for instance,
> details as small as packaging labels and the waist size of animated
> characters — represented an asset as Fuhu tried to find its footing.

Wonder if he imagines himself to be Steve Jobs. "Well he woke people up at 4am
asking them to change font kerning. Clearly that is the sign of a good leader.
I should do that too".

> Technologists at the company didn't get solid answers to why tablets began
> requiring proprietary cables. Thorough vetting occurred, and Apple’s
> strategy of proprietary accessories inspired its own, Fuhu said.

Ah yes. Apple did it, so we should do it too. We are just like Apple.

There is another thread on the front page about signs of failed startups --
wanting to be like Steve Jobs and like Apple and just copying superficial
behaviors from them is a sign of a failed startup.

~~~
donw
I suspect that a lot of founders forget that, at Apple, employees were part of
a technological revolution that they could see around them every day, a
revolution whose success was borne out by the company itself being incredibly
successful in terms of both cashflow and market share.

People can be motivated by being part of something greater than themselves,
but making a tablet for kids is far too small to fit that billing.

Even if you squint and look at it sideways, you know in you heart of hearts
that you are doing something evolutionary, not revolutionary.

You can only act like Steve Jobs if you are _actually_ changing the world, and
even then, it's not really a great idea.

Being kind to people, and delivering at a sustainable pace, are a much
stronger guarantees of success than randomly waking up underlings at 4am
because you wanted a font adjusted.

~~~
chris_wot
Don't forget also that Steve Jobs got booted out of Apple.

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wpietri
Wow, the Glassdoor reviews for this place are brutal:

[https://www.glassdoor.com/Overview/Working-at-Fuhu-
EI_IE3609...](https://www.glassdoor.com/Overview/Working-at-Fuhu-
EI_IE360968.11,15.htm#trends-overallRating)

2.2 stars overall. 41% CEO approval. Only 23% would recommend to a friend.

Even reptiles should recognize that an unhappy staff adds drastically to
turnover, recruiting costs, and organizational turmoil. While reducing the
quality, effectiveness, and creativity of the output. And human beings might
consider treating staff well just because they're fellow human beings.

~~~
x0x0
The first giant warning sign is family running the business. The only time
I've ever seen that work out well is Mattermark (nb: I don't work there, but
heard it's a good place). I have seen it work terribly at multiple places.

The next trick is to just write all the glassdoor reviews yourself. See, eg,
healthtap.

~~~
shams93
There's a tendency I've seen with family run businesses to also have issues
with executives treating the company like a piggy bank, where suddenly there
is no payroll. From my experience you're more likely to be treated as a member
of their dysfunctional family than a professional in some of the places I've
dealt with in the past.

~~~
randycupertino
Yep. Happened to me. They bought the sales guy (owner's daughter's boyfriend)
a Porsche while cutting hours for the engineers. I bounced outta there before
the next pay period. Last I heard they took away the 401k but are still having
the company summer picnic at the owner's Polo Club. Screw that place.

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cyberferret
Seems to be the age old story of: Some quirky personality traits are
beneficial to building a business, and some can be downright detrimental.

I am surprised that the board or other stakeholders didn't see it coming a lot
earlier. Nothing more bemusing than a maker of children's devices that doesn't
allow 'play' within the company culture. It's like a brewery that expects all
its employees to be teetotallers...

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Animats
Yet the bankruptcy report [1] indicates that retailers wanted the product and
customers were buying it. The problem was on the manufacturing and fulfillment
side. Fuhu had problems with Foxconn, problems so bad that Foxconn dumped them
as a customer. Fuhu owes Foxconn $61 million.

That's not an in-house culture problem. That's more of a cash management
problem. Were they selling at a loss to build market share?

[1] [http://www.latimes.com/business/la-fi-1208-fuhu-
mattel-20151...](http://www.latimes.com/business/la-fi-1208-fuhu-
mattel-20151208-story.html)

~~~
makomk
Their 2014 Christmas stock apparently arrived late due to a Foxconn screw-up,
meaning that Christmas shoppers couldn't buy it and they were left with a
bunch of excess stock and a shortage of cash. I can easily see that alone
being enough to mortally wound them; they probably do a large chunk of their
business over Christmas. The deep sales seem to be a last-ditch desperation
measure in response to that.

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jomamaxx
"With a parking lot overflowing with exotic cars and a string of office
renovations"

That was the story right there.

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dmix
Came across the linked article about Fuhu from 2014 [1]:

> Think 9 a.m. to 10 p.m. workdays. Very little vacation. Missed birthday
> parties and weddings.

This is such a bad idea. I hope this startup idea of unhealthy work-life goes
away soon. If you're a founder or have a crushing deadline for a big contract
then yes, go ahead and do this. But this should never be the day-to-day
pressure of any company.

They are fooling themselves that they are accomplishing more this way. A good
way to lose your best talent or the abilities of the talented who stay.

[1] [http://www.inc.com/magazine/201409/lindsay-
blakely/inc.500-2...](http://www.inc.com/magazine/201409/lindsay-
blakely/inc.500-2014-number-one-fastest-growing-company-fuhu.html)

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PieterH
It's not wise to do drive-by analyses yet this guy sounds like a classic
psychopath building a cult. I bet he never accepts any responsibility for what
happened.

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Inconel
I have an anecdote to add about Fuhu that may shed some light on the
management style prevalent there. It should be noted that this is second hand
info as it comes from one of my closest friends who worked there for a few
months helping to run customer service/tech support. Obviously take this with
the appropriately sized grain of salt. A couple of things:

1\. I’ve worked in customer service jobs before and I’ve generally found that
they can be an extremely tiring job as well as one that is difficult to hire
for. The pay tends to suck, especially if you’re trying to survive on those
wages in LA, and you get many employees who don’t take the job particularly
seriously leading to lots of turnover. My friend was extremely excited to join
Fuhu and I was happy to learn that many of her coworkers in support were
equally excited to be there, initially at least. They all seemed very eager to
be a part of a growing tech company and in the case of my friend, spent
countless hours on Facebook during her off hours answering customer inquires.
Her initial enthusiasm turned to dread in a matter of weeks due to what she
described as a hostile work environment where those who weren’t a part of the
inner circle of managers were treated with disdain. Now again, I’ve worked in
low level customer service before, and while the pay was indeed low, the owner
of the small business I worked at always treated me with respect. I feel you
can judge an organization fairly accurately by how it treats its lowest paid
employees.

2\. She told me on multiple occasions that she felt uncomfortable because of
what she perceived were different standards that were applied to non-Asian
employees by the predominantly Asian managers. Normally, I like to tread
carefully on such topics unless I have first hand knowledge, but being that
I’ve always valued her opinion, plus the fact that she herself is Asian, I
took her word for it.

3\. Some of you may remember that on Sept 21, 2012, the Space Shuttle
Endeavour, riding atop the Shuttle Carrier Aircraft, made its last landing at
LAX on way to its permanent display at the California Science Center. Fuhu was
at the time headquartered in the top floors of a low-mid rise building
directly across from LAX. They had just completed a new top floor office with
gorgeous views to the north including LAX and up to the Santa Monica
mountains, but most employees were still in an older office one or two floors
below facing away from the airport. A few hours after Endeavour’s arrival I
text my friend to see how she enjoyed the landing. Apparently, no one had
bothered to tell her and her lowly coworkers in the lower office of the
landing despite the fact that the managers and higher level staff all gathered
around the large windows to watch. Now I realize that I’m a space buff so my
view on this is obviously biased, but I found that to be a fairly petty. On
it's own it might not seem like a big deal but from her retelling, it seemed
to be a part of a broader culture that really wasn't inclusive or respectful
of the lower level employees.

While I feel bad that she missed the landing, it did lead to me developing a
simple basis for evaluating upper management. We can call it Inconel’s Rule of
Management Excellence. There’s only one rule:

If there happens to be a once in a lifetime Shuttle Carrier Aircraft landing
happening in your city, garnering mainstream press and causing people from all
over the city, even those without any connection to the aerospace industry, to
line up by the thousands alongside roadways, on freeway overpasses and gather
on top of roofs, for the chance at a quick glimpse as the Shuttle goes by, and
you happen to work in a building that offers probably the single best view of
the LAX runways and the Shuttle landing, and management, despite taking in
this once in a lifetime sight themselves, doesn’t bother informing their
underlings to take a quick 5-10 minute break to also enjoy this sight, well, I
think it's fair to assume that management is made up of assholes.

There it is, that’s my rule.

