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So Close

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Re: So Close

#201

Post by fphhotchips »

nkkollaw wrote: post #78
lobster_johnson wrote: post #60

Earlier quoted context omitted.

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 t…

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 t…

> given keys to the house to maids

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.

Re: So Close

#202

Post by brucephillips »

amazingman wrote: post #199
brucephillips wrote: post #129

Earlier quoted context omitted.

Honest question: What normal circumstances would lead to anyone making six figures being broke that doesn't involve bad adulting?

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.

Re: So Close

#203

Post by mathattack »

twblalock wrote: post #10

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 acqui…

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.

Re: So Close

#204

Post by mathattack »

ricardobeat wrote: post #26
twblalock wrote: post #10

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 acqui…

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…

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.

Re: So Close

#205

Post by mathattack »

cocktailpeanuts wrote: post #148

Stuff like this--naive "CEO" making rookie decisions--happens all the time so I'm not surprised. However, I really don't understand what made him think it's OK to celebrate the failure going out, with such an idiotic blog post, pretending that everything is OK. That's the thing that makes people angry about stuff like this. If you failed, just acknowledge it and move on. Better yet, don't even proudly write a medium…

This wasn't a naive 20something. He had 30 years of experience, including time as a VC Managing Partner.

Re: So Close

#206

Post by john_moscow »

_aarti wrote: post #192
solarkraft wrote: post #67

Earlier quoted context omitted.

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 th…

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…

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.

Re: So Close

#207

Post by ballenarosada »

brucephillips wrote: post #202
amazingman wrote: post #199

Earlier quoted context omitted.

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.

What's the deductible on your health insurance, my dude?

Re: So Close

#208

Post by greglindahl »

yawaramin wrote: post #194
austenallred wrote: post #182

Earlier quoted context omitted.

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.

A few things: - 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.

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.

Re: So Close

#209

Post by rahimnathwani »

kevinburke wrote: post #130

I worked on Otto's server side software as a contractor for five months. The company had some servers written in C and exchanging messages using a custom binary protocol, designed for millions of transactions per second, when they needed only 2-3tps, readability, and the ability to make fast changes. We rewrote those servers in Go, found and fixed consistency errors in them, and actually got to the point where you co…

In the UK, the situation you described is called 'wrongful trading', and company directors can be held personally liable: https://www.icaew.com/archive/library/subject-gateways/law/i...

Is there any similar thing in the US?

Re: So Close

#210

Post by fencepost »

kevinburke wrote: post #142
fencepost wrote: post #127

My immediate reaction on reading it was "Whoever they were talking to wasn't serious about buying them but was serious about killing them." There's a reason why a lot of acquisition deals include a "breakup fee" like the one that allowed T-Mobile to buy a bunch of spectrum. I also can't imagine a $700 lock unless I'm desperately trying to keep my collection of Juiceros safe, but I'm not really their target market. Li…

Your reaction does not reflect the reality of the situation

Obviously you're a lot closer to the situation than some shlub reading a Medium post from the guy who shafted everyone working for him.

It's entirely possible that a major player in locks or home automation was going to invest a big chunk of change or outright purchase the company. It's also entirely possible that with no earnest money or termination penalty in the negotiations stringing Otto along until it folded (and its IP might become available at fire sale prices) probably cost that potential suitor very little - a few tens of thousands of dollars in salaried employee time and travel, but that's about it. Depending on who it was, that company might also have a much better grasp on the potential market size for a high-tech wireless smart lock - be it at $700 or something significantly lower.

I will note that a simple search for "Bluetooth door lock" turns up a wide variety of listings with prices ranging from $90-260, and even if some have different feature sets right now anything truly innovative could likely be copied and added to the firmware on many of them. Even the concept of a door with a sensor that picks up the presence of something carried and unlocks is far from novel - you can find that in hundreds of thousands of office buildings around the world.

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