
Pebble went from being worth $740M to less than $40M - JumpCrisscross
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
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driverdan
This is a terrible article. It doesn't have any information about Pebble's
decline.

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SippinLean
The title was the most informative part

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lefstathiou
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).

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chollida1
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.

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jathu
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.

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chollida1
> 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?

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joshstrange
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.

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inputcoffee
"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.

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throw9987432
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.

~~~
inputcoffee
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...](http://www.wareable.com/wearable-tech/how-many-apple-watches-
sold-2016))

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?

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jasonshen
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.

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double0jimb0
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.

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Spooky23
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.

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

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lordnacho
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?

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bzalasky
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.

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SpikeDad
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.

