News that Jawbone is to be liquidated might lead one to conclude that its life as a wearables business is over. But as the article by The Information, which originally reported this story, notes, founder Hosain Rahman hasn’t given up on the consumer wellness space altogether and the business will be reborn as a health IT and device business called Jawbone Health. Predictably, this has spawned a wide range of reactions.
Erin Griffith, author of Fortune’s Term Sheet, focused on Rahman’s tenacity and refusal to quit, albeit one she had the prescience to develop a year ago.
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The company has achieved many impressive feats in its 17 years of existence. It has raised hundreds of millions of dollars in funding, something very few companies do, and it created and launched a number of successful consumer products, including the Jambox wireless speaker, its namesake wireless Bluetooth headsets, and the Up fitness band. But in recent years the “can’t-miss” company has struggled with product delays; executive reshufflings; increased competition from Apple and Fitbit, costly lawsuits with its supplier, and Fitbit; and a down round that cut the company’s valuation in half. From the outside, it all adds up to an ugly picture.
Plenty of people close to founder and CEO Hosain Rahman have probably advised him to give up and make a graceful exit. Instead, his company continues to fight for its life. It’s the sort of thing that shows Rahman’s determination: If Jawbone fails, it won’t be because he gave up.
Axios’ Dan Primack noted that it wasn’t surprised by the move and said it was more a case of when not if.
“Jawbone has been a falling unicorn for years, due to both product and financial troubles.”
Last year, Jawbone ceased production of its Up2, Up3 and Up4 fitness bands and sold off its remaining inventory of the models to a reseller.
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In December 2011, the company recalled its original Up and offered full refunds to all buyers. The product relaunched nearly a year later.
Jawbone sued more successful rival Fitbit, claiming patent infringement, and has since levied more claims. But earlier this year, a California state judge ruled that Jawbone’s fight against Fitbit over the allegation that the wearables giant stole trade secrets from Jawbone could move ahead to trial.
One insight investors and entrepreneurs could take away from Jawbone is the risk of the direct to consumer wellness market. So many wearables businesses have added a b in the d2c model because the pockets are deeper, consumer fickleness with wearables and companies, especially tied to the healthcare industry, have longer term goals.
From the perspective of Fard Johnmar, the founder and president of Enspektos, Jawbone Health is moving into clinical wearables. Why? It’s easier to define the value proposition, he noted in an email. Gaining regulatory approval also gives a natural competitive edge for products in this area and have a clearer path to revenue. Johnmar pointed out that in the context of Jawbone’s developments, it’s helpful to think of how Fitbit has focused on growing its healthcare business and the partnerships it has built with employers.
“Similar to Jawbone, Fitbit has been pursuing a strategy of becoming a digital health company for a number of years. However, at the same time it is still responsible for churning out product that’s attractive to consumers and helps it meet quarterly sales growth expectations. Over the long term, shifting to health is a sound strategy for Fitbit, but with Apple ramping up its health-related activities, Google focused on AI (including its convergence with wearables), it makes sense to wonder if Fitbit is being outpaced by competitors and will just run out of time.
“The lesson for innovators and entrepreneurs is this: with adoption rates for digital technologies still very much in flux, it’s more important than ever to be nimble and forward-looking. And, being well capitalized is no substitute for a solid strategy that successfully creates and grows revenue.”
It will be interesting to see how it all pans out for Rahman.
