Its a good post - but it must be said: the CEO (and board?) fucked up hardcore. They let themselves be tempted by acquisition, and then didn't protect themselves or the team in negotiations.
It’s striking how little humility there is in the post. The majority of it sounds like a sales pitch, and I suppose, who can blame them if it is one in disguise?
Can someone fix the title? it's click bait. There's no way to tell what the article is about without clicking on it. At least mention the company. (Good article though.)
No, it is not fine. I know it is standard practice on HN but I really don't like it at all.
Just imagine every submitted article had a title like this: the HN frontpage would be full of links like "so close", "a look back", "introducing our most important features yet", "a statement regarding the events last weeks"...
HN would completely unusable like this because you would have to click on every single link to figure out what it is about.
The problem is that this guy did not select the title for HN but for his own personal/company blog. If you visit his blog then his title makes completely sense in this context but it loses its meaning in all other contexts.
Guidelines say to not editorialize titles, and stick with original, but I agree. Putting short summary in parentheses would help (like "So Close (Otto postmortem)")
That guideline needs to go. HN submitters often summarize the content of an article more appropriately for other readers than the original writer does. Often the newsworthiness of an article isn't apparent for one reason or another.
It took me a couple of minutes to figure out that this was a story of a promising hardware startup that ran out of operating cash during acquisition negotiations.
I think it just shouldn't be so strictly enforced, and allow for an objective summary, while still enforcing rules against clickbait/editorializing. On Reddit a headline that says "USD losing steam" would be changed to "Fiat crashing hard - Bitcoin is the salvation!" which is what the HN rule wants to prevent.
I've never seen dang or other editors take action against any title expansion/clarification that was intellectually honest in its nature.
When authors or site editors choose titles for their presumed audience, they aren't necessarily considering clarity for deep-linking external sites like HN.
Agreeing to no-fundraising and exclusivity clauses during a long due diligence process really puts your head in their vise. And once it's there, people within the acquirer will start saying, Hey, we could built this ourselves! Let's run the clock out and kill the competition.
Maybe. But I'd like to see the other side of the story, including why a public company wanted to purchase a startup making a smart lock that cost $699 that hadn't even hit the market yet. Maybe the potential acquirer decided it wasn't a competitive product, and decided to back out.
Seems strange that anyone would agree not to raise more funds or negotiate with other parties for their entire remaining runway.
I mean, it puts you in the situation that you either sell to that company or you go out of business. They could offer you a fraction of the amounts they were talking about before you signed, and you'd have no alternative.
Hell, even asking you to agree to such unbalanced terms seems like a sign they're planning to pull a fast one on you and they don't intend to negotiate in good faith.
What kind of chump would agree to shoot themselves in the foot like that, unless they'd exhausted every alternative?
Not defending him, but seems like a chump who had exhausted every alternative, but won't talk about it honestly, and prefers to go with "this wasn't a failure, you were amazing, I was amazing, product was batshit amazing, onwards to our next adventure!"
Were they? Source? How big was their beta? What was their revenue? Beta users will bias toward early adopters, and often not represent the mainstream market necessary to make a company profitable.
EDIT: I just read that they had ZERO revenue. So they certainly weren't succeeding.
Their preorders weren’t near enough to keep the doors open. Management has sone wealthy people, and it wasn’t enough to even get them to toss in enough money to get to that “imminent” launch.
If this is true, my guess is they didn't actually have any investor interest, and the acquisition offer was really more of a desperation move than a dumb strategy.
They didn’t succeed, they were utterly failing. Read the employees comment.
They couldn’t raise money because VCs realizes their product was too expensive and uncompetitive in the market. Their acquisition opportunity was a last ditch attempt to save the company.
> Treat investors as saying no till they unequivocally say yes, in the form of a definite offer with no contingencies.
>I mentioned earlier that investors prefer to wait if they can. What's particularly dangerous for founders is the way they wait. Essentially, they lead you on. They seem like they're about to invest right up till the moment they say no.
> When you talk to investors your m.o. should be breadth-first search, weighted by expected value. You should always talk to investors in parallel rather than serially.
If Otto had done the many investors in parallel thing they might still be launching.
If I understand the sequence of events properly, the company entered acquisition negotiations and agreed not to solicit other bids during that time. When the acquisition fell apart, the company was out of money and had to stop operations.
If that's correct, it seems to me like it's something they should have known in advance -- if they knew they would be out of money by the end of the year, why would they enter acquisition talks that were planned to last until then?
Either they didn't know when they would run out of money, which is a pretty important thing to know about a startup company, or they decided to bet the company on the assumption that the acquisition would not fail, which was very irresponsible.
An employee named Ben Havilland wrote a comment on the article that's worth reading.
> CEO and investment team ignored the negative aspects of the $700 lock and didn’t see that the competition would be able to provide the same features (and more) at less than 1/2 the price.
If Ben realized this, he should have never worked at this company in the first place. It sounds like it was a failure of a product strategy.
A $700 lock is a product offering, not a product strategy. A strategy could have been "start with a $700 offering at the top of the market and work down," but that's not something they tell you on the way in, and even if they do, it's no guarantee that the execution will/won't work.
Whether you want to call it an offering or a strategy, Ben doesn't claim that the failure was due to any aspect of the business model other than a) price, and b) competitive risk. Both of these were risks that existed (I assume) at the time he joined the company. So he can't blame management for failing to assess these risks any more than he can blame himself.
> A strategy could have been "start with a $700 offering at the top of the market and work down," but that's not something they tell you on the way in
This is absolutely the kind of thing you should be asking about and they should be telling you on the way in. As an early stage startup employee you are basically an investor. You should deeply understand how the businesses you are joining are going to work, and if they wont tell you you should consider it a red flag.
I have been lied to on the way in. You hear about all this incredible stuff coming down the pipe that just needs a little more work. After a few months you figure out that that cashflow was 1/10th of what was implied and the pipe is dry.
> @joshelman do something. Help us. Two days notice before a holiday with no compensation for the fact that not a soul hires during these weeks. You have the $ to pay severance when you terminate 70 people. So you decided on letting us all get screwed. You need to help us.
Okay, there's possibly some reason for sympathy here. But how much were these 70 people being paid? How much did they save? How many of them could have been in a position to have a month or more of cash saved as an emergency fund? It's smart in any situation to save for a rainy day but especially so when you're working for a startup.
It's likely that several of these employees are legitimately broke (for reasons beyond their control, not because they're bad at adulting), but they conceal it. Signs of weakness harm your negotiating position.
Paying off student loans, medical bills, emergency car repairs... basically anything that might deplete an emergency fund or where you might have dipped into this on the assumption your job wasn’t about to be made redundant.
Not having much of a savings, and moving to the bay area after getting a bay area job with a bay area salary (wow!!), only to realize that you also need to pay for bay area rent (WOW!!!).
If said person has animals, children, or a spouse it becomes even more complicated.
This question makes it hard to believe you’re of adult age. Just about any adult should be able to imagine reasonable circumstances in which they could make “six figures” and still struggle to (e.g.) make rent.
This is almost the definition of bad adulting. If you make six figures, there's so many ways to live in the US within your means. Of course you can create difficult circumstances for yourself by paying 4k in rent as the sole provider, but this is irresponsible.
protip -- that fucking deductible resets 1 January, so if you were to get hurt in late 2017 and the treatment spanned calendar years, surprise, you pay it twice! One of the reasons I left my last shitty startup job is the deductible was $6k, ie a month's take home wages. That's not real health insurance.
I don't think you appreciate just how crazy Silicon Valley, and by extension, most of the rest of California, is. You don't really get an option to not participate in the craziness if you live there. Your only real choice if you want financial sanity is to not live there. Naturally, it's difficult to work in a SF-SV-based startup if you don't live there.
So we're not talking about responsibility anymore, you're moralizing on people's life choices. There's no way to responsibly live in SV without being already rich.
I've been one of those people. Sending money home to parents who were barely holding on to their home, and with health conditions that insurance terminated coverage for, combined with rent getting jacked up, a $4000 emergency room bill I couldn't even pay, and my own health issues creating a vicious cycle of lower productivity, more stress, worse health.
This isn't even an uncommon occurrence. I had coworkers (at one of the big 5) who were making pretty decent money who were still in the hole for similar reasons.
A good friend's brother was badly hurt. Insurance is fighting paying for things. My friend has paid about $40k so far, and he was laid off two weeks ago. Even if you earn $150k in the valley (which btw is really only $95-ish k after taxes), that's a lot of money. The dirty secret to health care in the united states is the good providers can not serve you if you don't have the right insurance.
My partner worked in an industry that laid off 50% of their employees. It took her 8 years to get close to her old salary. No matter what anyone says, the reality is very few of us are truly prepared to have our jobs/industry vanish.
My brother who doesn't earn much money had significant health bills for one of his kids. I hadn't planned to spend that $10-$15k.
My idiot nephew road a dirt bike on a road (against all his parents' rules) when he was 15 and didn't have a license. He didn't look both ways, there was a truck coming, and he was hit by the truck. His parents had to buy the guy a new truck because my nephew wasn't licensed to drive, and pay the deductibles for several surgeries.
people only get backed into corners (i.e., exclusivity, compelled actions, or some kind of limitation on funding, bad pricing) when they're desperate.
protip: never be desperate.
easier said than done, sort of like "eliminate refined carbs from your diet" or "save enough for retirement" or "stop looking for love in all the wrong places"
The post didn't say this directly, but it could be that they had no other options. He said that they had started fundraising efforts and were resistant to an acquisition - reading between the lines, their attempts for another round of funding were shot down cold.
Those were exactly my thoughts upon reading it. “Four weeks from generating revenue” and then sudden death because of a failed acquisition sounds like awful planning for a well-funded startup.
Also, it’s a damn internet-connected door lock with Bluetooth. Do you really need $45M and designing new mechanical systems from scratch to make it work? I’m sure their team did amazing work but all of it sounds incredibly head-in-the-clouds.
>Also, it’s a damn internet-connected door lock with Bluetooth. Do you really need $45M and designing new mechanical systems from scratch to make it work?
If you don't intend on making just a "damn internet-connected door lock with Bluetooth", of which there are many, but a great one, then very possibly yes.
Many great hardware products and companies have been built on budgets a fraction of $45M. Even the Apple 1 was an ugly hodge-podge of parts. If you want to build pyramids, it's best figure out how to build sand castles before.
The thing is, the definition of a great product is one that solves a user's need. While people may have problems with the internet-connected door locks they have now, I'm pretty confident their issue isn't with the deadbolt mechanism, which is as close to a solved problem as you can get.
The market for people who care that their door locking mechanism is as precise as a Swiss watch is so vanishingly small, it feels almost self-evident that there's not a viable business there.
It reminds me of Juicero. The mechanism was total overkill -- it was actually very well engineered and machined as though cost was no object. They would have taken a loss selling them even at $699.
The mechanism of a deadbolt is pretty simple. Other smart lock companies do fine with simple mechanisms. The way to differentiate a product in that space is ease of use and battery life, not by needlessly over-complicating a part that the users won't see.
From their website: “Freed of keys, you might just have more time and opportunity to explore life’s possibilities.”
C’mon really?
Similar to Juicero they could have gone to market with a simpler and less over engineered product and have a viable company but leadership had their heads in the clouds. He even starts the article with how amazing the Swiss watch engineer respected their work - as if that matters in the door lock market.
From the article: “... our customers would fall in love with the way they engaged the product and actually experience joy as they used it.”
I’m having a hard time visualizing myself experiencing joy unlocking a door.
> From the article: “... our customers would fall in love with the way they engaged the product and actually experience joy as they used it.”
He doesn't seem to have literally copy-and-pasted that palaver from somewhere else, but the first page of these search results suggests a malfunctioning robot stringing together memorized phrases at random:
>it was actually very well engineered and machined as though cost was no object
I would argue that it wasn't really engineered at all. Almost anyone can build something with a practically unlimited budget; engineering is a game of trade-offs. That juice press was ridiculously over-designed and didn't need to cost anywhere near that much.
They must have wanted that deal pretty bad. At the very least they should have demanded a break-up fee in return for agreeing to forgo all other attempts at finding an investment partner. The acquirer might very well have refused but that would have been good information to consider.
There has to be something else going on, otherwise Greylock would have given them some kind of bridge. 4 weeks to revenue also doesn't mean 4 weeks to profitability. 70 employees in the Bay Area probably implies a burn rate north of $10mm annually.
I wonder what, if anything, the agreement to proscribe other fundraising was traded for? Why would the management enter that deal without something in return (i.e. a cancellation penalty payment)? It seems negligent at best.
To the people you love, you don't send a code or some app or procedure. You greet them at the door.
If you need to send people a code to enter your property, you're not loving them, you're running a business. Which is fine -- just don't pretend it has anything to do with "love".
Or if you truly love everyone... then you don't need a lock.
That’s an interesting definition of love. May I ask if you have kids?
For me, love is multi-faceted and can’t be defined as a single attribute like trust. People love food that literally kills them. You don’t always get to choose whom or what you love.
Yes you may. I have 3 (8-9-12). I don't "trust" them to not eat candy that I said they shouldn't eat, but I do trust them not to kill me in my sleep -- which is what trust is about (IMHO).
In fact I think I trust them more than I love them, and I love them a lot. But sometimes I'm upset with them. Being upset or angry doesn't affect trust.
Trust is a kind of binary quality that is either on or off; it may be too strong to say that love == trust, but I really can't imagine how I could love someone without trusting them.
So I guess you don't believe in "unconditional love"?
I just can't imagine not loving my kids even if I knew I could not trust them. Another example would be family with mental illness to such a degree you may actually fear they will kill you in your sleep, but hopefully they would be placed in a safer environment and still have their families love and support.
I do believe in unconditional love -- in fact it's my whole point. How can you not trust your kids?
The case of mental imparemeent is interesting and I had not considered it. It would be possible to argue that the person isn't there anymore if they're crazy, and there needs to be someone to exercise love against. I'm not sure.
Also, maybe persons with mental illnesses could be trusted more in our society.
> I do believe in unconditional love -- in fact it's my whole point.
OK, so if love is unconditional, then what about situations where you love them but they hate you? If it's unconditional love, then you love them regardless of their feelings towards you.
What do you do if your kid is an actual psychopath and doesn't love you. Do you still love them unconditionally? Would you trust them with the keys to the gun safe?
What do you do if you have an adult child that has made some really bad life choices and is spiraling out of control addicted to hard drugs? Do you still love them (unconditional, right)? Do you trust them with the keys to your alcohol cabinet? The details to your bank account?
Love != trust.
There are some situations where if you truly love someone you do not extend them trust (because they will abuse it regardless of your love for them).
> xx. In all four UK countries, most patients convicted of homicide also have a history of alcohol or drug misuse, between 88% in England and 100% in N Ireland. In other words it is unusual for mental health patients to commit homicide unless there is a coexisting problem of substance misuse.
I don't think it is so clear cut, there are certainly violent mentally ill people who don't use substances. Alternatively there are addicts who are very kind.
Yeah, based on the video I think they got the market for this wrong. I can easily imagine businesses wanting something like this. I don't know anyone who would be running to get it at home.
>I define startups as companies that don’t have control of their own destiny because they rely on investor cash infusions to operate. When asked, “How’s business?”, I always replied “I don’t have a business yet, we’re still a startup.”
I despise this definition. I have grown my hardware startup sustainably while pursuing an engineering degree and maintaining full control of the company. I may soon look for VC funding, I may continue to use revenues and personal savings, but nothing will change my responsibility for my business' future.
The fact that you've had money invested into your startup means you have increased control of your destiny, not the opposite. Use that money shrewdly and build a product people want, and you will succeed. That Otto was able to burn through $45 Million in funding without shipping a product makes me believe that poor management and product strategy is behind their failure, not bad luck as the article would ask you to believe.
Late response, but I often times do use the term small business when talking to people about it. But it's also a startup, which is why I responded so strongly to that bit of the blog post.
I found time by picking something I enjoyed doing - turning my hobby into something more, and occupying that time plus some more. And then honestly I prioritize it over getting great grades in my classes, because even if it fails I'll still get a lot more out of the experience (personally) than sitting in a lecture or checking over the answers of a problem set.
I bootstrapped with about $3000 of savings, and run a lab at school that's a bit of extra income. Pick the right market and be smart with your suppliers and revenue can start coming in pretty quick.
But you're right, time is the big thing stopping me from growing faster... I worked full time last summer and that pretty much stopped me from doing new R&D work, this summer I'm going to be working on the business full time, we'll see how it goes!
I don't see the reason to hate that definition. It feels spot-on.
The defining characteristic of a startup - as the word is used in the real world - is being unprofitable and funded by investors. That literally means one doesn't have control over their company, because they've sold ownership to investors.
What you have is a sustainable, bootstrapped small business. It may not sound sexy, as 'dfcowell points out, but IMO, it should - it suggests that the company is actually doing something useful, unlike many startups, which exist only as long as they can keep the growth up to solicit more investments.
The employee never worked on the actual product. He joined as a contractor 1 month before launch to work in the IT department on the website. He had been with the company only 3 months.
So, I disagree with his comments about the product. His points about management should be taken into consideration. The shutdown was mismanaged.
The core engineering team had folks with 3+ years working on Mechanical, Electrical, Firmware, iOS, Android and Backend engineering. This was not an easy feat to pull given the small team and that the manufacturing was in China on the same lines that build Apple's iPhone with the same level of quality.
I mean - think about, would you listen to someone who had given 3+ years of blood/sweat to a company and product vs 3 months.
The shutdown was mishandled, we all felt the pain. Most of all the contractors and I wish I could pay them. I would if I had the money. But I am also looking for a job.
> I mean - think about, would you listen to someone who had given 3+ years of blood/sweat to a company and product vs 3 months.
I think both people would be worth listening to. The one who was there for three months would probably have a very different perspective on the corporate culture and management, by virtue of not having worked there long enough for those things to seem normal.
This is the same reason some companies get value from bringing in outside consultants -- their different perspective enables them to recognize aspects of the business that have not occurred to the long-term insiders.
Right, and I would agree with you - we had outside consultants who worked alongside us, in iOS, in Firmware, in Cloud, in EE, in Security. We all worked as a team to put the last finishes on the product. Also, there were a lot of new employees as well. The whole SW QA team was hired this year.
We did not know about insolvency - no one did - except the leadership team, or many would have raised concerns or left. Maybe this was the fear. Who wants to acquire a company where people are jumping ship.
We wanted the product in people's hands. Heck, it's on my door at home.
I also would say that this employee has the right air his grievances. I disagree with his criticism of the product and the company's mission and vision. I believe - there was no malice. There was mismanagement.
That makes it sound worse. Based on what you say he wasn't paid for 2 out of 3 months. And presumably they were bringing new people on until the very end, when they must have known it might fall apart.
He fought hard to become full time, he came in as a contractor and became full time within a month. He was paid until the last day.
The contractors in the engineering team were all given option join full-time from the get go - they chose not to become full-time.
No one in engineering knew we were shutting down. We were told 2 days before shutdown. I worked until 11 pm with many team members, including my manager until the night before.
Our signed agreement restricted our ability to solicit other bids or fundraise and targeted a close on December 11th, 2017.
Indeed, that was just poor management. Did they have a board that accepted that too? It seems like having a sole bidder is the single worst way to get a good price. You only do that if there's no other choice.
Sam was a general partner at Mohr Davidow, and a Managing Director at Internet Capital Group. He was a 12 year early employee at Microsoft. He had to know better.
It doesn't even have a proximity sensor -- you have to touch it to make it work. Might as well stick a key in at the same time. If I paid that kind of money I would expect my door to unlock for me when I approached it.
It also has no manual override with a key like some smart locks -- it just has some backup batteries that last an unspecified amount of time. Because it has no key, it can't be re-keyed, so good luck convincing a landlord to let you install it in an apartment or rental home. And the company says it needs to be professionally installed.
I bet the owners of these things would spend more time thinking about and solving problems with them than most people spend operating their normal deadbolts with a key.
Having just bought a "non-luxury" car that locks and unlocks by proximity (plus things like OSX that does the same with Apple Watch) this seems like a no-brainer.
Depends on your risk tolerance. I always carry keys and use the smart features as a convenience and backup. It wouldn’t be unreasonable to ditch the keys if you were fairly confident your phone would still work when you arrive home and you’re willing to take the small risk that it doesn’t.
I enjoy my smart lock for the peace of mind it gives knowing that I didn’t forget to lock the door, and never having to go down 2 or 3 flights of stairs at night to fix it. I wouldn’t pay $700 for that, but I would pay $200ish for that plus the other things they do.
There are many cases where a virtual lock beats a physical one. Most of them involve scenarios where the main occupant is absent, but needs to give access remotely; for example, let's say I went on vacation, then realized I left one of the windows of my apartment open. Not everyone has access to trustworthy people (friendly neighbours, friends, relatives, colleagues) who are also guaranteed to be around and willing to show up on short notice. Involving the landlord might be a no-go, too.
When I travel and let friends or family stay in my NYC apartment, I leave them the keys in an envelope at a nearby 24/7 supermarket. It's not ideal. Key concierge services exist, but are not super practical either.
Sure, but is that actually an actual problem? I and my mom while I was little have given keys to the house to maids and similar and nothing ever happened in 40 years. I know most people do the same.
I would be more afraid of actual problems like a malfunction of some kind (no battery, money in the house so that I can't buy batteries, etc. etc.), and I can't enter the house. Or, I lock myself out and no one can open that door (while regular locks can be opened by specialized companies).
Of course it's a problem. I just outlined a use case. I don't want to leave my keys in a supermarket. The other scenarios (traveling and needing to grant someone access, for example) don't really have a good solution.
If you can afford a maid, then I doubt any of this would count as a problem, though.
I think that all the time, actually. Carrying keys in my pocket is one of those minor but persistent annoyances of life. I would not pay more than maybe $39 to be rid of them, though.
I think that all the time. I'd like something like this at home because it's a minor convenience benefit (and cool) and at a shared space because it'd be a major convenience benefit (and cool).
I thought the same until I stayed at a HomeAway property where they used the electronic locks. They defined an entry PIN for me for the duration of the stay, presumably revoking it after I was gone. This enabled me to come and go without worrying about their keys, and without them needing to change the locks after I was gone. While the lock was quite finicky, it worked well enough for the purpose that I surmised for it.
Really? I would love to not have to carry keys, or worry about losing keys. If my phone could unlock my door like I can pay for stuff with it, it would be great.
And this: "Not to be outdone, the software team challenged themselves to complete the full user experience so that our customers would fall in love with the way they engaged the product and actually experience joy as they used it."
Seems like that's the goal of all companies today - turn everything into a skinner box aimed at directly stimulating the pleasure senses while stimulating a stream of money from your bank account. Maybe it failed because the lock was sold as a one off payment instead of a subscription model, and didn't sync (yet) with a dopamine-dosing brain implant.
Indeed. That's why I'm skeptical when they say they care about the customer. Most of the times, they don't give a flying fuck about the product itself and whether or not it actually does anything useful for customers - the whole point is to get into someone's wallet; the product is just a proxy (and often customers themselves are a proxy too, to get more money from the investors).
Getting paid for building something valuable seems to be a dead concept in the startup economy.
In the same sense of "is there anything to this SUV that I missed, or is it really a $70K car?".
Quality and reliability matter, and not all locks are made the same. If a run-of-the-mill smart lock goes for $200, and if you can even buy lightbulb systems that go for the same or more, it's not really difficult to imagine a $700 smart lock if it's advanced enough.
Especially since most of those $200 smart locks are usually utter crap.
Heck, people pay way $500 (and way more) for plain old secure doors. Why does everyone assume such a project should target average Joes at first?
That’s why I asked a question instead of just saying the price was dumb. Did I, in fact, miss some aspect of this thing that makes it worth $700? If so I’d like to know specifics, not guesses.
I’m not assuming anything, I’m wondering what makes it so much more expensive than other products in this space, since the article (and the “Introdicing Otto” article I also found) don’t explain it at all.
Expensive cars are "worth" their prices as a status symbol though (as silly as you may find that, I think it's undeniable that's most of what's supporting high sticker prices on cars). A door lock doesn't have that advantage, save maybe a quick "let me show off my cool gizmo" thing at a party or something.
I tried watching the promo videos on the site, I have no idea what the thing does, but apparently when it's extremely freeing for people to not be limited by keys, or something. (Except now they're limited by their smartphone, internet connectivity, and some cloud servers, but you know...)
I just couldn't understand it all, how could a CEO decide to sell his startup without any plan for the interim period, at least let the production can continue in that time and several months afterwards?
On HN not every title needs to explain itself immediately. It's good for users to have to work a little.
With this type of post-mortem post in particular, there's a tradition of elegaic titles, and it seems fair to give poetic license to the author under such circumstances.
This is not what Tesla has ever done. Only a small fraction of people pay a large deposit for super-premium cars that come out first, and the rest pay a limited deposit.
On the other hand, just about every Kickstarter ever has a ton of people who've paid in full. Yet these Kickstarters frequently fail, because it takes a lot more money than entrepreneurs expect to ship a quality product.
Tesla took in $250 million of full-price preorders for their next-gen Roadster, which is years away from production. The comment you replied to didn’t imply that Tesla does this with every car.
It's better that this happened, than if they had gotten further and become the Juicero of door locks.
Edit - all the things that had my subconscious chanting ¡Juicero!
The consultation of a Swiss watchmaker, indicating an exacting exquisiteness of mechanical design (for a door lock) indicating idealistic overdesign. ¡Juicero!
The resulting $700 price tag. ¡Juicero!
...to replace an older system that already works great. ¡Juicero!
...despite its not having any of what he calls "intelligence," which equals an internet connection and a CPU. When in fact, a system as old as the deadbolt lock has a lot of true intelligence built in, and reliance on an internet connection and a CPU is a weakness, not a victory. ¡Juicero!
tl;dr Otto was almost successful in making a high-end smart door lock, but despite incredible engineering and design, bad luck (read: negligence) through an acquisition deal led Otto to run out of money.
Very interesting. I love to hear the other side of it though, because it feels perhaps self-serving.
E.g., he seems to imply the potential acquirer unexpectedly screwed them over, but no deal is done until it’s done, and this one did not really seem like it was that close.
There’s no reason for Otto to agree to an acquisition process that prevents them from raising money they desperately need if they had any reasonable prospects. As he said, they were not actually looking for acquisition. So it seems like this was a last gasp effort to stay afloat in some form, which ultimately failed (as previous efforts had).
One reason an acquisition might be looking good before due diligence and fall apart after is because things turn out to be significantly less rosey than initially presented. When you’re looking to make a deal of course you’re going to accentuate your positives but you have to acknowledge and address your problems as well or you’re simply wasting everyone’s time.
I suspect the fundamental problem is that a $700 smart door lock is a very difficult sell, especially with all the competition out there.
> While a tedious process, we built a close working relationship and shared their enthusiasm about our future together. On December 11th, they called me and stated they would not complete the acquisition nor revisit the investment proposal. I was stunned. The reason is still not understood.
That's the problem if your CEO is an inventor with no or little business acumen. They are always super-enthusiastic and can be played like puppets by some M&A guys with mediocre experience.
Memo: Don't be enthusiastic with "acquirers", restraint enthusiasm is the keyword. Screen them vs. them screen you.
Memo2: Deals are made to fall trough - Paul Graham. Never bid everything on one horse, don't put all your eggs in one basket etc. 9 out of 10
deals like this fall through, adjust accordingly.
However, this article was written by an experienced executive who had raised a $45M seed round for the company. Lack of business acumen or paper-thin attempt to excuse himself of this ridiculous failure? You be the judge.
>Our signed agreement restricted our ability to solicit other bids or fundraise and targeted a close on December 11th, 2017.
It is hard for me to understand the logic of doing that at the end of your runway, without a backup plan and without agreeing on a compensation in case the deal falls through. Unless you are deliberately trying to crash the company and blame someone else for it.
So looking more into this, is it just me, or it looks outrageously inefficient to raise $45m and have ~40 employees spend 4 years to release a product that is basically an IoT door lock? Both the mechanical and the electronic parts are based on commodity components, so I can imagine a well-motivated team of 5 delivering something like this in a year and being able to offer it at a much lower price.
So was making a competitive product ever a priority here, or have the founders discovered a different way to benefit from the over-optimistic tech investment climate?
It seems that they focused on perfection (security, UX) way over a low price and by own claims people were actually willing to buy. Still not sure how they managed to burn through that much money developing it. The IT security parts are likely already available for free as well.
Maybe inviting a mechanical watch guru to review their design in person and having the whole team watch him doing it is a good example of their spending.
The product was built in China on the same lines that build the iPhone with the same detail. Manufacturing quality hardware is capital intensive, Finding people who can support that level of engineering is capital intensive, Hiring security engineers is capital intensive, they chose to go all in.
The company was not wasting money. I have worked in Silicon Valley startups with lavish spending. This was not one of them. There was no free food, no wine/beer on tap, no lavish parties, no free memberships to the equinox.
I dunno. Going all in before you have validated the product/market fit sounds like a textbook rookie mistake. I don't understand how you can raise close to $50m while having a business aptitude of a 3 year old.
I mean - I don't know - this is the tech mecca of the world. If these VC's and Engineers don't have vision/mission to go all in, what chances does the rest of the world have to bet on hardware startups?
This has been blowing my mind for years, because I think it's surprisingly common.
I won't name the company because to my shock (and frankly vast horror) they're still chugging along and I don't especially want to get sued but, a few years ago when I was still working for Red Gate, one of the leadership of a local company - also significantly hardware driven - came in and told their story to anyone who wanted to listen.
Over a period of maybe a decade or so, through successive rounds of funding, they'd managed to raise about half a billion and had produced... nothing commercially viable. Zilch. This guy's job in the company had been and continued to be to raise the necessary funding from investors, and I have to say he was clearly pretty damn good at separating fools from their money.
So imagine the situation: this guy comes in to a bootstrapped software company that had always been profitable and acts like he's really pleased with himself for raising half a billion dollars and pissing it up the wall because they'd gone all in over and over again with no clear product market fit. (N.B., it may have been pounds, but it was years ago and I can't remember, so let's call it dollars to keep it less dramatic.)
The reaction was quite hostile: I don't think we knew whether to be befuddled or enraged.
I mean you literally could get a better ROI by handing me $50M or $500M or whatever it is and standing by whilst I try to blow it all on cocaine and high-end hookers because there's just no way I can snort my way through that much coke in an entire lifetime without overdosing so you'd at least get some, and probably most, of your money back.
Don't get me wrong: I understand that VCs expect most ventures to fail, and to an extent that's perhaps reasonable, but surely there comes a point where you stop throwing good money after bad?
Could it have been a way of "privatizing" the institutional investors' funds? Invest a few mil in a startup, then spend a chunk of it on hefty consultancy fees to a company conveniently owned by the fund manager's wife and another chunk to the CEO's best friend's firm.
I'm wondering if the investment funds and startups provide enough transparency to the people whos money is actually invested to detect such schemes.
That's an interesting thought although in the case I was talking about all I can say, sadly, is I don't know. As outsiders we certainly didn't have any visibility. I suppose - working for different companies, mind - I've encountered enough of the whiff of low grade nepotism to imagine that on a larger scale that kind of thing does go on from time to time.
This smells way off. Solid companies don’t fold and close up shop overnight because one acquisition deal falls though. Sounds like company leadership trying to take attention away from their own mismanagement.
Lots of people making the points that occurred to me so I'll avoid repeating those. But does anyone have any insight into what data (if any) supported a $700 device that no one seems to have asked for?
A $700 lock isn't meant to be even an MVP. It's public proof that you're doing something, and a test that your production pipeline can generate reasonable quality products.
The strategic vision for these kinds of startups is that the industry is super far behind the times, and billions of dollars can be captured by just trying to innovate. Remember that Keurig was originally a $900 coffeepot.
My assumption: the general audience here. When someone submits an article, they are supposed to use the actual title of the piece, unless (insert list of provisos). In practice, if there is a problem with the name, one can alter it before submitting.
What a garbage post from a garbage project that wasted lots of time.
Locks keeps honest people honest, they don't stop a determined burglar. A digital, key-less system with new gears to move the same deadbolt, is providing zero innovation, b/c it's still just a little deadbolt securing all ~inch of door-perimeter to the frame (unless I missed something and they also re-invented the door hinge).
So much business BS in this post, too. Like claims of a new UX! As if the process of unlocking is the "experience" factor of importance! And the part about wanting to create an "addictive experience"! About a door lock! And the part about "we created a culture of innovation"!!! What inflated garbage!
I think the cost honestly killed them. If they would have just bolted a SoC and decent software onto a mostly existing lock, they could have sold the thing for $50 more than a regular lock and still made money.
Their desire to build everything from the ground up is stupid. The physical door lock has been optimized for thousands of years by countless companies. The only way you're gonna make it any better is with new technology, so take a regular lock and bolt ur magic sauce onto it!
1. If you forget/lose your keys. If you still have your phone with you, then you can use that to unlock it, or if you set up a passcode ahead of time, you can use that too.
2. If you're having someone over and you're OK with them letting themselves in since it'd be inconvenient for you to meet them to let them in.
I've had both of these situations happen to me. Granted, the solution shouldn't cost $700, but a lock you can open with your phone and also email/text someone a time-limited passcode for is useful.
I have a keyless, non-IoT deadbolt (number pad with access code). It's hugely more convenient and more pleasant to use than traditional keys. One of those things that you don't really realize until you have one. I never worry about having house keys. I can pop in and out of the house on short jaunts with much less friction. I can give people access to my home without coordinating handing over keys. I don't have to go through the clumsy and annoying process of getting keys out, sticking them in the lock, turning them, turning them back, taking them out, and putting them back in my pocket just to walk through a door. It seems trivial but it really does noticeably improve quality of life.
In this culture of "everyone's a winner" sometimes people can't accept failure. Entering acquisition talks is a dangerous move because you totally lose your focus, it sounds like these guys just got sloppy in their decision making and paid the ultimate price. The people blaming the acquiring company on the comments at the bottom of the article, as if they committed some kind of grave injustice by not bailing out the company, make me sick.
Yep. Who or which user 'falls in love' with a lock (with reference to the lead line of the article) anyway? Sounds like there is some serious reality distortion going on.
Trying to recreate something each of us uses every day and make it delightful is a completely worthy goal. To say that a “keyless lock” isn’t a new user experience makes zero sense whatsoever - it’s a new UX by definition. The fact that it wouldn’t stop a SWAT team from breaking the door down is beside the point - they never claimed it would, and that wasn’t the goal.
Why is their passion for building great locks any more silly than the passion each of us has? They took a stab at it and it didn’t work out, and that’s too bad, especially since it seems to have been for business reasons as much as product reasons.
It’s ok to say it shouldn’t have worked out because it’s fundamentally flawed. But to cheer and mock the demise of a project a lot of people were passionate about, one that was dedicated to making a great anything, seems to me to be the antithesis of what a community of hackers and makers should be for.
Silicon valley is chock full of know-nothing delusionals who love the smell of their own farts a little too much. People who're convinced that their idiotic pilgrimage towards delivering a "magical" "experience", while completely divested from common sense and lacking any semblance of an answer to "but why?", will nevertheless change the world and "delight" users.
Fuck all of it.
Here's what this genius has to say: "...the software team challenged themselves to complete the full user experience so that our customers would fall in love with the way they engaged the product and actually experience joy as they used it."
Huh?
Whatever. Let's put a chip in it.
I've never EVER had an interaction with a motherfucking lock where the lock was even the subject of my consideration, let alone worthy of delighting me. Usually when I'm unlocking shit, I'm focussed on what lies beyond the lock.
There really IS such a thing as solving the wrong problem. I'd say all the engineers who joined this foolhardy project deserved what came their way, but unfortunately most of them were probably young engineers desperate for experience or a chance to work at a "startup".
This fucking internet of shit trend cannot fucking die soon enough.
> Silicon valley is chock full of know-nothing delusionals who love the smell of their own farts a little too much.
And Hacker News is full of people who lob bombs at everyone who tries and fails because it makes them feel superior for never having tried, all the while vastly underestimating the difficulty of building something meaningful.
Most efforts at building something great fail, so it’s easy to shit on everything and be right 90% of the time and think you’re a genius. The thing that makes Silicon Valley work is that the times when you’re are what really matter. If you say Facebook is overvalued at $3 Billion (as most of HN agreed) you could easily be wrong not just 1x, but 100x.
The world would be much better off with more people trying and failing while using hyperbolic language than having more trolls throwing parties on their graves. There’s absolutely no shortage of the latter.
I'm glad you work at CERN as an engineer. I work at Hacker News as a moderator. Really, please don't "do this". You're doing more damage to this site, which is trying against steep odds to be a place for thoughtful conversation, than even 100% rightness of your points could justify.
I assume you benefit from Hacker News, since you're a user here and a welcome one. But if you're benefitting from it, please take care of it, the same way you wouldn't litter in a city park or set fire to one.
If you read https://news.ycombinator.com/newsguidelines.html and https://news.ycombinator.com/newswelcome.html you'll get an idea of the intended spirit of the site. If you have a substantive point to make, make it thoughtfully; if you don't, please don't comment until you do; assume good faith, and please respond to the strongest plausible interpretation of what someone says, not a weaker one that's easier to criticize.
The thing is, I bet you they would find sympathy here if they launched, competed, and couldn't find a toehold. That would have been an honourable exit. But the way they went out here, after burning through $45m in investment funds and mismanaging a potential sale, then trying to imply blame on the would-be buyer--this doesn't look good at all.
What shows us it was mismanaged? How do we know the acquiring company didn’t cold feet and bail after the founders had run out of options to hedge?
You can’t raise a round with an acquisition pending, so you kind of have to put yourself in a precarious position. Perhaps they could have done something else, but hindsight is 20/20.
I have been a founder at 2 startups that were acquired. In both cases there was a "noshop" with no bailout penalty. But the "noshop" didn't say we couldn't look for additional investors. I don't see anything in this writeup that implies that the noshop was unusual.
"Hacker News always trolls new products" and "Entrepreneurs should always ignore Hacker News because they always troll new products" are equally problematic absolutes.
These know-nothing delusionals who love the smell of their own farts likely made both the hardware and the software you used to read that article, as well as everything you are using now using to post your message, on a site run by other know-nothing delusionals.
So yeah. Fuck them and their attitude. How dare people try anything.
I’m all for reinventing the wheel to make it better. It rarely works out, but when it does it’s well worth it. But if you can’t even describe what makes your wheel better, what are the odds it’s actually better?
0. We could all delightfully try to innovate all day without millions of wasted funding and a guy spewing garbage like every day that for a boss, filling our heads with propaganda. Also, does a lock need to be delightful? Did you not read they wanted you do be addicted to using their lock????
1. What's the difference? How about money, ego, and industry. we all get to have passions, but do they all deserve millions in funding?
2. Uh, what community is that? One of those "global" communities? I'm a hacker and maker, but I certainly don't feel like i'm a member of any such community. I'm not here to pat on the back the privileged failure of people I don't know, just cuz they are by some loose definition "makers" or hackers. Like, hackers do things with ingenuity and curiosity, not $50M. And I am mocking that project from the top-down, starting with the manic CEO who wrote that crap; so, it only trickles down to the hard working people who were conned into giving passion and time to the endeavor, but at least they got paid for being hoodwinked into believing they were "changing the world"... with a lock.
Please don't post indignant rants like this to Hacker News. It reliably leads to garbage threads, as the embarrassing sequence of 'fuck you', 'fuck you and your farts', and 'no fuck YOU' amply demonstrates below. It's cringeworthy.
The users who posted those things should be ashamed of defacing HN this way, but the original fault lies with your comment, since had you posted a thoughtful one instead, those other comments wouldn't have followed.
Your post was upvoted, predictably to the top, but that doesn't mean it was good. It's because of the fact that rage activates the Jerry Springer Show impulse in most of us. This is a weakness of the upvoting system and something that amplifies the worst in online communities. As a result, we need all HN users, including you, to exercise a bit of self restraint and not go straight to the bottom of the barrel. That doesn't mean you have to change your views, just post thoughtfully and with an orientation to good conversation rather than venting.
I disagree. Civility in conversation has been a tactic used against women for centuries. "You can't talk that way! It's un-lady-like!" It is the morality of society who want to control those they oppress, by silencing them.
And I didn't post from the bottom of the barrel, FYVM, I posted from the bottom of my heart.
I'm familiar with that argument against civility, and even sympathetic to it, but I don't see how it applies here. We're not asking anyone to be "ladylike", nor trying to prevent anyone from voicing their experience of the world—quite the opposite.
It doesn't work, though, to invoke such noble categories as standing-against-oppression to justify ordinary internet flamebait. There's far too much flamebait out there and it's all largely interchangeable. It all leads to the QED of online fora, "fuck you". We're trying, against long odds, to have something more interesting.
If you're saying you didn't intend to post ordinary internet flamebait, I believe you. In that case it would be good to distinguish your comments from that more clearly. We only have your words to go by, not the intention behind them. If the words fit the flamebait genre, that's the effect they're going to have whether you mean them to or not. This effect is destructive on the container here, so we have no choice but to moderate it.
HN is more fragile than most people realize. Some people seem to think of it as a corridor of power, which it's a blow against oppression to trash, but that's definitely not what HN is. I think of it more as a city square or park, and when people throw garbage in it (or appear to), they're just spoiling the opportunity for others to enjoy it and maybe meet and create together. If you're trying to express something for principled reasons, as your comment seems to suggest, that's fine. There are ways of doing so that make this place more interesting and that don't require you to compromise or mute your views. Scorched earth is not interesting.
You're welcome to post from the heart here. I wish more of us would. In my experience, doing so involves taking a certain risk of vulnerability. If all you do is heap scorn on something that pisses you off on the internet—which is how your comment read to me—that doesn't feel like a heart connection. It feels like the same war most people in online forums seem captured by, and which we're hoping to find a small corner of shelter from in this community.
This is not surprising to me. I've worked in this space, and I think consumer hardware startups are just incredibly hard. I just finished my stint at one (https://www.electricobjects.com/) last year after we failed to raise series B.
Why are consumer hardware startups hard?
- Consumers have high expectations and want high quality products from the get go.
- Quality products are incredibly capital intensive, resulting in much shorter runways.
- Building a quality product often times means partnering with an expensive design firm + hiring the engineering talent to back it up.
- Margins are much lower than a typical SAAS. This makes it less appealing for VCs than a pure software play.
- Scaling hardware is harder than scaling software. Lead times are long. The right decisions have to be made ahead of time. Any missteps or problems with your suppliers will delay your launch. If this happens around Black Friday / Christmas -- it's a big deal.
- Not only do delays impact your sales, they will also delay fundraises for much needed cash infusions.
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[ 3.8 ms ] story [ 283 ms ] threadThey went all-in with the acquisition with no backup plan, and lost.
Just imagine every submitted article had a title like this: the HN frontpage would be full of links like "so close", "a look back", "introducing our most important features yet", "a statement regarding the events last weeks"...
HN would completely unusable like this because you would have to click on every single link to figure out what it is about.
It took me a couple of minutes to figure out that this was a story of a promising hardware startup that ran out of operating cash during acquisition negotiations.
When authors or site editors choose titles for their presumed audience, they aren't necessarily considering clarity for deep-linking external sites like HN.
Agreeing to no-fundraising and exclusivity clauses during a long due diligence process really puts your head in their vise. And once it's there, people within the acquirer will start saying, Hey, we could built this ourselves! Let's run the clock out and kill the competition.
I mean, it puts you in the situation that you either sell to that company or you go out of business. They could offer you a fraction of the amounts they were talking about before you signed, and you'd have no alternative.
Hell, even asking you to agree to such unbalanced terms seems like a sign they're planning to pull a fast one on you and they don't intend to negotiate in good faith.
What kind of chump would agree to shoot themselves in the foot like that, unless they'd exhausted every alternative?
And they were succeeding. That was not their problem. And the average penny pinching Joe wasn't their target at first anyway.
You'd be surprised what people buy, and how many buy it, for way more than $700. Even smartphone covers.
Were they? Source? How big was their beta? What was their revenue? Beta users will bias toward early adopters, and often not represent the mainstream market necessary to make a company profitable.
EDIT: I just read that they had ZERO revenue. So they certainly weren't succeeding.
The CEOs excuses make near zero sense.
They couldn’t raise money because VCs realizes their product was too expensive and uncompetitive in the market. Their acquisition opportunity was a last ditch attempt to save the company.
> If you're doing really badly, meaning the company is about to die, you may as well talk to them, because you have nothing to lose.
> Treat investors as saying no till they unequivocally say yes, in the form of a definite offer with no contingencies.
>I mentioned earlier that investors prefer to wait if they can. What's particularly dangerous for founders is the way they wait. Essentially, they lead you on. They seem like they're about to invest right up till the moment they say no.
> When you talk to investors your m.o. should be breadth-first search, weighted by expected value. You should always talk to investors in parallel rather than serially.
If Otto had done the many investors in parallel thing they might still be launching.
I wonder if the bigger company had that plan all along...
If that's correct, it seems to me like it's something they should have known in advance -- if they knew they would be out of money by the end of the year, why would they enter acquisition talks that were planned to last until then?
Either they didn't know when they would run out of money, which is a pretty important thing to know about a startup company, or they decided to bet the company on the assumption that the acquisition would not fail, which was very irresponsible.
An employee named Ben Havilland wrote a comment on the article that's worth reading.
the original comment is at https://medium.com/@ben_73928/as-one-of-the-team-members-let...
If Ben realized this, he should have never worked at this company in the first place. It sounds like it was a failure of a product strategy.
This is absolutely the kind of thing you should be asking about and they should be telling you on the way in. As an early stage startup employee you are basically an investor. You should deeply understand how the businesses you are joining are going to work, and if they wont tell you you should consider it a red flag.
> @joshelman do something. Help us. Two days notice before a holiday with no compensation for the fact that not a soul hires during these weeks. You have the $ to pay severance when you terminate 70 people. So you decided on letting us all get screwed. You need to help us.
If said person has animals, children, or a spouse it becomes even more complicated.
So we're not talking about responsibility anymore, you're moralizing on people's life choices. There's no way to responsibly live in SV without being already rich.
Now, if you can get into a remote position, awesome, but I could see living in SV or NYC or similar and feeling middle class pangs at low 6 figures.
This isn't even an uncommon occurrence. I had coworkers (at one of the big 5) who were making pretty decent money who were still in the hole for similar reasons.
Have some compassion man, jeez.
My partner worked in an industry that laid off 50% of their employees. It took her 8 years to get close to her old salary. No matter what anyone says, the reality is very few of us are truly prepared to have our jobs/industry vanish.
My brother who doesn't earn much money had significant health bills for one of his kids. I hadn't planned to spend that $10-$15k.
My idiot nephew road a dirt bike on a road (against all his parents' rules) when he was 15 and didn't have a license. He didn't look both ways, there was a truck coming, and he was hit by the truck. His parents had to buy the guy a new truck because my nephew wasn't licensed to drive, and pay the deductibles for several surgeries.
protip: never be desperate.
easier said than done, sort of like "eliminate refined carbs from your diet" or "save enough for retirement" or "stop looking for love in all the wrong places"
Also, it’s a damn internet-connected door lock with Bluetooth. Do you really need $45M and designing new mechanical systems from scratch to make it work? I’m sure their team did amazing work but all of it sounds incredibly head-in-the-clouds.
If you don't intend on making just a "damn internet-connected door lock with Bluetooth", of which there are many, but a great one, then very possibly yes.
The market for people who care that their door locking mechanism is as precise as a Swiss watch is so vanishingly small, it feels almost self-evident that there's not a viable business there.
The mechanism of a deadbolt is pretty simple. Other smart lock companies do fine with simple mechanisms. The way to differentiate a product in that space is ease of use and battery life, not by needlessly over-complicating a part that the users won't see.
C’mon really?
Similar to Juicero they could have gone to market with a simpler and less over engineered product and have a viable company but leadership had their heads in the clouds. He even starts the article with how amazing the Swiss watch engineer respected their work - as if that matters in the door lock market.
From the article: “... our customers would fall in love with the way they engaged the product and actually experience joy as they used it.”
I’m having a hard time visualizing myself experiencing joy unlocking a door.
He doesn't seem to have literally copy-and-pasted that palaver from somewhere else, but the first page of these search results suggests a malfunctioning robot stringing together memorized phrases at random:
https://duckduckgo.com/?q=our+customers+would+fall+in+love+w...
I would argue that it wasn't really engineered at all. Almost anyone can build something with a practically unlimited budget; engineering is a game of trade-offs. That juice press was ridiculously over-designed and didn't need to cost anywhere near that much.
To the people you love, you don't send a code or some app or procedure. You greet them at the door.
If you need to send people a code to enter your property, you're not loving them, you're running a business. Which is fine -- just don't pretend it has anything to do with "love".
Or if you truly love everyone... then you don't need a lock.
For example if I love a junkie, I wouldn't want to enable that person to easily enter my house to steal something to pawn for drugs.
For me, love is multi-faceted and can’t be defined as a single attribute like trust. People love food that literally kills them. You don’t always get to choose whom or what you love.
Yes you may. I have 3 (8-9-12). I don't "trust" them to not eat candy that I said they shouldn't eat, but I do trust them not to kill me in my sleep -- which is what trust is about (IMHO).
In fact I think I trust them more than I love them, and I love them a lot. But sometimes I'm upset with them. Being upset or angry doesn't affect trust.
Trust is a kind of binary quality that is either on or off; it may be too strong to say that love == trust, but I really can't imagine how I could love someone without trusting them.
1. https://en.wikipedia.org/wiki/Stanford_marshmallow_experimen...
I just can't imagine not loving my kids even if I knew I could not trust them. Another example would be family with mental illness to such a degree you may actually fear they will kill you in your sleep, but hopefully they would be placed in a safer environment and still have their families love and support.
The case of mental imparemeent is interesting and I had not considered it. It would be possible to argue that the person isn't there anymore if they're crazy, and there needs to be someone to exercise love against. I'm not sure.
Also, maybe persons with mental illnesses could be trusted more in our society.
OK, so if love is unconditional, then what about situations where you love them but they hate you? If it's unconditional love, then you love them regardless of their feelings towards you.
What do you do if your kid is an actual psychopath and doesn't love you. Do you still love them unconditionally? Would you trust them with the keys to the gun safe?
What do you do if you have an adult child that has made some really bad life choices and is spiraling out of control addicted to hard drugs? Do you still love them (unconditional, right)? Do you trust them with the keys to your alcohol cabinet? The details to your bank account?
Love != trust.
There are some situations where if you truly love someone you do not extend them trust (because they will abuse it regardless of your love for them).
http://research.bmh.manchester.ac.uk/cmhs/research/centrefor...
Page 5:
> xx. In all four UK countries, most patients convicted of homicide also have a history of alcohol or drug misuse, between 88% in England and 100% in N Ireland. In other words it is unusual for mental health patients to commit homicide unless there is a coexisting problem of substance misuse.
https://www.drugabuse.gov/publications/research-reports/como...
Simple counterexample: An aged parent with severe Alzheimers. Maybe it's not OK for them to have unfettered access to the car.
You want oversight/control/verification because you love them, not despite it.
If not, that's ok but it's not "love" in my book.
>I define startups as companies that don’t have control of their own destiny because they rely on investor cash infusions to operate. When asked, “How’s business?”, I always replied “I don’t have a business yet, we’re still a startup.”
I despise this definition. I have grown my hardware startup sustainably while pursuing an engineering degree and maintaining full control of the company. I may soon look for VC funding, I may continue to use revenues and personal savings, but nothing will change my responsibility for my business' future.
The fact that you've had money invested into your startup means you have increased control of your destiny, not the opposite. Use that money shrewdly and build a product people want, and you will succeed. That Otto was able to burn through $45 Million in funding without shipping a product makes me believe that poor management and product strategy is behind their failure, not bad luck as the article would ask you to believe.
Being a stable bootstrapped small business is more worthy of respect than being an unstable underfunded startup, in my opinion.
Can I ask how you had time? And what was your source of income and funding while you were doing that?
And engineering degree alone is a huge workload, no?
The defining characteristic of a startup - as the word is used in the real world - is being unprofitable and funded by investors. That literally means one doesn't have control over their company, because they've sold ownership to investors.
What you have is a sustainable, bootstrapped small business. It may not sound sexy, as 'dfcowell points out, but IMO, it should - it suggests that the company is actually doing something useful, unlike many startups, which exist only as long as they can keep the growth up to solicit more investments.
So, I disagree with his comments about the product. His points about management should be taken into consideration. The shutdown was mismanaged.
The core engineering team had folks with 3+ years working on Mechanical, Electrical, Firmware, iOS, Android and Backend engineering. This was not an easy feat to pull given the small team and that the manufacturing was in China on the same lines that build Apple's iPhone with the same level of quality.
The shutdown was mishandled, we all felt the pain. Most of all the contractors and I wish I could pay them. I would if I had the money. But I am also looking for a job.
I think both people would be worth listening to. The one who was there for three months would probably have a very different perspective on the corporate culture and management, by virtue of not having worked there long enough for those things to seem normal.
This is the same reason some companies get value from bringing in outside consultants -- their different perspective enables them to recognize aspects of the business that have not occurred to the long-term insiders.
We did not know about insolvency - no one did - except the leadership team, or many would have raised concerns or left. Maybe this was the fear. Who wants to acquire a company where people are jumping ship.
We wanted the product in people's hands. Heck, it's on my door at home.
I also would say that this employee has the right air his grievances. I disagree with his criticism of the product and the company's mission and vision. I believe - there was no malice. There was mismanagement.
Indeed, that was just poor management. Did they have a board that accepted that too? It seems like having a sole bidder is the single worst way to get a good price. You only do that if there's no other choice.
Sam was a general partner at Mohr Davidow, and a Managing Director at Internet Capital Group. He was a 12 year early employee at Microsoft. He had to know better.
It also has no manual override with a key like some smart locks -- it just has some backup batteries that last an unspecified amount of time. Because it has no key, it can't be re-keyed, so good luck convincing a landlord to let you install it in an apartment or rental home. And the company says it needs to be professionally installed.
I bet the owners of these things would spend more time thinking about and solving problems with them than most people spend operating their normal deadbolts with a key.
For $700, it better open the door for me. I can get locks to merely unlock it for me for half that.
I never once thought my life would be better if I didn't need to put up with those nasty keys...
When I travel and let friends or family stay in my NYC apartment, I leave them the keys in an envelope at a nearby 24/7 supermarket. It's not ideal. Key concierge services exist, but are not super practical either.
I would be more afraid of actual problems like a malfunction of some kind (no battery, money in the house so that I can't buy batteries, etc. etc.), and I can't enter the house. Or, I lock myself out and no one can open that door (while regular locks can be opened by specialized companies).
I mean, everything is simple when you can pay someone to do it. Of course, if you're paying $700 for a smart lock, you can probably afford a maid.
If you can afford a maid, then I doubt any of this would count as a problem, though.
Getting paid for building something valuable seems to be a dead concept in the startup economy.
Quality and reliability matter, and not all locks are made the same. If a run-of-the-mill smart lock goes for $200, and if you can even buy lightbulb systems that go for the same or more, it's not really difficult to imagine a $700 smart lock if it's advanced enough.
Especially since most of those $200 smart locks are usually utter crap.
Heck, people pay way $500 (and way more) for plain old secure doors. Why does everyone assume such a project should target average Joes at first?
I’m not assuming anything, I’m wondering what makes it so much more expensive than other products in this space, since the article (and the “Introdicing Otto” article I also found) don’t explain it at all.
With this type of post-mortem post in particular, there's a tradition of elegaic titles, and it seems fair to give poetic license to the author under such circumstances.
Why not get people to pay in full ala Tesla and use that money to launch?
On the other hand, just about every Kickstarter ever has a ton of people who've paid in full. Yet these Kickstarters frequently fail, because it takes a lot more money than entrepreneurs expect to ship a quality product.
Tesla has done the same system with every car they've launched.
My purpose was to explain what Tesla actually does. I was not implying that the previous poster was wrong.
I don’t understand how “This is not what Tesla has ever done” could mean anything other than that they were wrong.
Edit - all the things that had my subconscious chanting ¡Juicero!
The consultation of a Swiss watchmaker, indicating an exacting exquisiteness of mechanical design (for a door lock) indicating idealistic overdesign. ¡Juicero!
The resulting $700 price tag. ¡Juicero!
...to replace an older system that already works great. ¡Juicero!
...despite its not having any of what he calls "intelligence," which equals an internet connection and a CPU. When in fact, a system as old as the deadbolt lock has a lot of true intelligence built in, and reliance on an internet connection and a CPU is a weakness, not a victory. ¡Juicero!
E.g., he seems to imply the potential acquirer unexpectedly screwed them over, but no deal is done until it’s done, and this one did not really seem like it was that close.
There’s no reason for Otto to agree to an acquisition process that prevents them from raising money they desperately need if they had any reasonable prospects. As he said, they were not actually looking for acquisition. So it seems like this was a last gasp effort to stay afloat in some form, which ultimately failed (as previous efforts had).
One reason an acquisition might be looking good before due diligence and fall apart after is because things turn out to be significantly less rosey than initially presented. When you’re looking to make a deal of course you’re going to accentuate your positives but you have to acknowledge and address your problems as well or you’re simply wasting everyone’s time.
I suspect the fundamental problem is that a $700 smart door lock is a very difficult sell, especially with all the competition out there.
That's the problem if your CEO is an inventor with no or little business acumen. They are always super-enthusiastic and can be played like puppets by some M&A guys with mediocre experience.
Memo: Don't be enthusiastic with "acquirers", restraint enthusiasm is the keyword. Screen them vs. them screen you.
Memo2: Deals are made to fall trough - Paul Graham. Never bid everything on one horse, don't put all your eggs in one basket etc. 9 out of 10 deals like this fall through, adjust accordingly.
By this definition, Microsoft wasn't a startup.
So looking more into this, is it just me, or it looks outrageously inefficient to raise $45m and have ~40 employees spend 4 years to release a product that is basically an IoT door lock? Both the mechanical and the electronic parts are based on commodity components, so I can imagine a well-motivated team of 5 delivering something like this in a year and being able to offer it at a much lower price.
So was making a competitive product ever a priority here, or have the founders discovered a different way to benefit from the over-optimistic tech investment climate?
The company was not wasting money. I have worked in Silicon Valley startups with lavish spending. This was not one of them. There was no free food, no wine/beer on tap, no lavish parties, no free memberships to the equinox.
I won't name the company because to my shock (and frankly vast horror) they're still chugging along and I don't especially want to get sued but, a few years ago when I was still working for Red Gate, one of the leadership of a local company - also significantly hardware driven - came in and told their story to anyone who wanted to listen.
Over a period of maybe a decade or so, through successive rounds of funding, they'd managed to raise about half a billion and had produced... nothing commercially viable. Zilch. This guy's job in the company had been and continued to be to raise the necessary funding from investors, and I have to say he was clearly pretty damn good at separating fools from their money.
So imagine the situation: this guy comes in to a bootstrapped software company that had always been profitable and acts like he's really pleased with himself for raising half a billion dollars and pissing it up the wall because they'd gone all in over and over again with no clear product market fit. (N.B., it may have been pounds, but it was years ago and I can't remember, so let's call it dollars to keep it less dramatic.)
The reaction was quite hostile: I don't think we knew whether to be befuddled or enraged.
I mean you literally could get a better ROI by handing me $50M or $500M or whatever it is and standing by whilst I try to blow it all on cocaine and high-end hookers because there's just no way I can snort my way through that much coke in an entire lifetime without overdosing so you'd at least get some, and probably most, of your money back.
Don't get me wrong: I understand that VCs expect most ventures to fail, and to an extent that's perhaps reasonable, but surely there comes a point where you stop throwing good money after bad?
I'm wondering if the investment funds and startups provide enough transparency to the people whos money is actually invested to detect such schemes.
Not "so close".
The strategic vision for these kinds of startups is that the industry is super far behind the times, and billions of dollars can be captured by just trying to innovate. Remember that Keurig was originally a $900 coffeepot.
E.g. "how smart-lock startup Otto almost became a success, but eventually failed"
The HN team does a pretty good job of cleaning up uninformative link titles such as this.
Locks keeps honest people honest, they don't stop a determined burglar. A digital, key-less system with new gears to move the same deadbolt, is providing zero innovation, b/c it's still just a little deadbolt securing all ~inch of door-perimeter to the frame (unless I missed something and they also re-invented the door hinge).
So much business BS in this post, too. Like claims of a new UX! As if the process of unlocking is the "experience" factor of importance! And the part about wanting to create an "addictive experience"! About a door lock! And the part about "we created a culture of innovation"!!! What inflated garbage!
Their desire to build everything from the ground up is stupid. The physical door lock has been optimized for thousands of years by countless companies. The only way you're gonna make it any better is with new technology, so take a regular lock and bolt ur magic sauce onto it!
1. If you forget/lose your keys. If you still have your phone with you, then you can use that to unlock it, or if you set up a passcode ahead of time, you can use that too.
2. If you're having someone over and you're OK with them letting themselves in since it'd be inconvenient for you to meet them to let them in.
I've had both of these situations happen to me. Granted, the solution shouldn't cost $700, but a lock you can open with your phone and also email/text someone a time-limited passcode for is useful.
(who knows what the state of their software is but that isn't something people will focus on compared to price)
It actually made me LOL. Sounds like someone read https://www.amazon.com/Hooked-How-Build-Habit-Forming-Produc... and tried to apply gained knowledge to a door lock.
Trying to recreate something each of us uses every day and make it delightful is a completely worthy goal. To say that a “keyless lock” isn’t a new user experience makes zero sense whatsoever - it’s a new UX by definition. The fact that it wouldn’t stop a SWAT team from breaking the door down is beside the point - they never claimed it would, and that wasn’t the goal.
Why is their passion for building great locks any more silly than the passion each of us has? They took a stab at it and it didn’t work out, and that’s too bad, especially since it seems to have been for business reasons as much as product reasons.
It’s ok to say it shouldn’t have worked out because it’s fundamentally flawed. But to cheer and mock the demise of a project a lot of people were passionate about, one that was dedicated to making a great anything, seems to me to be the antithesis of what a community of hackers and makers should be for.
Look at all the companies building the same old SAAS products doing the same old stuff and getting tons of investment.
Silicon valley is chock full of know-nothing delusionals who love the smell of their own farts a little too much. People who're convinced that their idiotic pilgrimage towards delivering a "magical" "experience", while completely divested from common sense and lacking any semblance of an answer to "but why?", will nevertheless change the world and "delight" users.
Fuck all of it.
Here's what this genius has to say: "...the software team challenged themselves to complete the full user experience so that our customers would fall in love with the way they engaged the product and actually experience joy as they used it."
Huh?
Whatever. Let's put a chip in it.
I've never EVER had an interaction with a motherfucking lock where the lock was even the subject of my consideration, let alone worthy of delighting me. Usually when I'm unlocking shit, I'm focussed on what lies beyond the lock.
There really IS such a thing as solving the wrong problem. I'd say all the engineers who joined this foolhardy project deserved what came their way, but unfortunately most of them were probably young engineers desperate for experience or a chance to work at a "startup".
This fucking internet of shit trend cannot fucking die soon enough.
And Hacker News is full of people who lob bombs at everyone who tries and fails because it makes them feel superior for never having tried, all the while vastly underestimating the difficulty of building something meaningful.
Most efforts at building something great fail, so it’s easy to shit on everything and be right 90% of the time and think you’re a genius. The thing that makes Silicon Valley work is that the times when you’re are what really matter. If you say Facebook is overvalued at $3 Billion (as most of HN agreed) you could easily be wrong not just 1x, but 100x.
The world would be much better off with more people trying and failing while using hyperbolic language than having more trolls throwing parties on their graves. There’s absolutely no shortage of the latter.
I assume you benefit from Hacker News, since you're a user here and a welcome one. But if you're benefitting from it, please take care of it, the same way you wouldn't litter in a city park or set fire to one.
If you read https://news.ycombinator.com/newsguidelines.html and https://news.ycombinator.com/newswelcome.html you'll get an idea of the intended spirit of the site. If you have a substantive point to make, make it thoughtfully; if you don't, please don't comment until you do; assume good faith, and please respond to the strongest plausible interpretation of what someone says, not a weaker one that's easier to criticize.
Edit: example of HN crowd sympathetic to a postmortem https://news.ycombinator.com/item?id=13421608
You can’t raise a round with an acquisition pending, so you kind of have to put yourself in a precarious position. Perhaps they could have done something else, but hindsight is 20/20.
- They didn't pay contractors for months of work
- They gave no hints to anyone that they were running out of funds
- They agreed to stop looking for acquisitions while in discussions, without requiring a bailout penalty clause in exchange
- $45m for a lock? Where the heck did it all go? Elon Musk's initial investment in Tesla was $6m in 2004.
So yeah. Fuck them and their attitude. How dare people try anything.
The "great product" bit seems to be the usual consumer startup rhetoric by the CEO, which many people fell for.
I can confidently say that it is marketing rhetoric because a similar example already exists in the world: car locks.
I still drive a car where you have to manually insert the key and turn it to open the door.
I've also driven cars where the locks are remote controlled.
I've also seen cars where you press your thumb to the lock to unlock it.
There's nothing "great" about any of the above after the first two or three uses.
0. We could all delightfully try to innovate all day without millions of wasted funding and a guy spewing garbage like every day that for a boss, filling our heads with propaganda. Also, does a lock need to be delightful? Did you not read they wanted you do be addicted to using their lock????
1. What's the difference? How about money, ego, and industry. we all get to have passions, but do they all deserve millions in funding?
2. Uh, what community is that? One of those "global" communities? I'm a hacker and maker, but I certainly don't feel like i'm a member of any such community. I'm not here to pat on the back the privileged failure of people I don't know, just cuz they are by some loose definition "makers" or hackers. Like, hackers do things with ingenuity and curiosity, not $50M. And I am mocking that project from the top-down, starting with the manic CEO who wrote that crap; so, it only trickles down to the hard working people who were conned into giving passion and time to the endeavor, but at least they got paid for being hoodwinked into believing they were "changing the world"... with a lock.
The users who posted those things should be ashamed of defacing HN this way, but the original fault lies with your comment, since had you posted a thoughtful one instead, those other comments wouldn't have followed.
Your post was upvoted, predictably to the top, but that doesn't mean it was good. It's because of the fact that rage activates the Jerry Springer Show impulse in most of us. This is a weakness of the upvoting system and something that amplifies the worst in online communities. As a result, we need all HN users, including you, to exercise a bit of self restraint and not go straight to the bottom of the barrel. That doesn't mean you have to change your views, just post thoughtfully and with an orientation to good conversation rather than venting.
https://news.ycombinator.com/newsguidelines.html
https://news.ycombinator.com/newswelcome.html
And I didn't post from the bottom of the barrel, FYVM, I posted from the bottom of my heart.
It doesn't work, though, to invoke such noble categories as standing-against-oppression to justify ordinary internet flamebait. There's far too much flamebait out there and it's all largely interchangeable. It all leads to the QED of online fora, "fuck you". We're trying, against long odds, to have something more interesting.
If you're saying you didn't intend to post ordinary internet flamebait, I believe you. In that case it would be good to distinguish your comments from that more clearly. We only have your words to go by, not the intention behind them. If the words fit the flamebait genre, that's the effect they're going to have whether you mean them to or not. This effect is destructive on the container here, so we have no choice but to moderate it.
HN is more fragile than most people realize. Some people seem to think of it as a corridor of power, which it's a blow against oppression to trash, but that's definitely not what HN is. I think of it more as a city square or park, and when people throw garbage in it (or appear to), they're just spoiling the opportunity for others to enjoy it and maybe meet and create together. If you're trying to express something for principled reasons, as your comment seems to suggest, that's fine. There are ways of doing so that make this place more interesting and that don't require you to compromise or mute your views. Scorched earth is not interesting.
You're welcome to post from the heart here. I wish more of us would. In my experience, doing so involves taking a certain risk of vulnerability. If all you do is heap scorn on something that pisses you off on the internet—which is how your comment read to me—that doesn't feel like a heart connection. It feels like the same war most people in online forums seem captured by, and which we're hoping to find a small corner of shelter from in this community.
Why are consumer hardware startups hard?
- Consumers have high expectations and want high quality products from the get go.
- Quality products are incredibly capital intensive, resulting in much shorter runways.
- Building a quality product often times means partnering with an expensive design firm + hiring the engineering talent to back it up.
- Margins are much lower than a typical SAAS. This makes it less appealing for VCs than a pure software play.
- Scaling hardware is harder than scaling software. Lead times are long. The right decisions have to be made ahead of time. Any missteps or problems with your suppliers will delay your launch. If this happens around Black Friday / Christmas -- it's a big deal.
- Not only do delays impact your sales, they will also delay fundraises for much needed cash infusions.
It seems fitting that the first name "Otto" is informally used in German to describe a person of little practical avail.