Company: Jawbone
Select VC investors: Khosla Ventures, Sequoia Capital, Kleiner Perkins Caufield & Byers, Kuwait Investment Authority, Black Rock, Rizvi Traverse Management, SevenVentures, JPMorgan Partners (JPMP), Deutsche Telekom, Silver Lake Partners, Wells Fargo, Fortress Investment Group, Andreesen Horowitz, Atomico, Mayfield Fund, SV Angel.
In July 2017, device maker Jawbone became one of the most spectacular failures in the history of startups.
The company’s announcement that it was selling off its assets was long coming: despite grabbing $984M in funding during its 17-year lifespan, Jawbone failed to hold on to significant market share for its cumulative line of wearable fitness trackers.
With its demise, Jawbone became the second-costliest VC-backed startup failure of all time. Number 1 place remains Solyndra, the solar tech company that filed for bankruptcy in 2011.
(Somerville, 2020.)
Jawbone was originally formed in March 1998 under the name AliphCom. The San Francisco based founders had a typical start in Silicon Valley, they met as Stanford University undergraduates. Hosain Rahman, an American entrepreneur and Alexander Asseily, a British/Lebanese technology entrepreneur and investor launched Aliphcom during the height of the dot com bubble.
They made personal technology comfortable, usable, and beautiful. The flagship product, the award-winning Jawbone Bluetooth headset with NoiseAssassin™ technology set a new standard for mobile voice quality. Unmatched in the industry, Aliph’s NoiseAssassin technology was originally perfected with DARPA for battlefield applications. It eliminated background noise and provided unparalleled call clarity in all environments. They cycled through various tech products before eventually betting everything on their fitness tracking device, UP3 launched in 2011.
In 2011 they raised $159M in 3 rounds, VCs included JPMP, Deutsche Telecom, Kleiner Perkins, Andreesen Horowitz. Jawbone raised a total of $983.8M in funding over 11 rounds in its decade long span.
The largest investment came in the debt financing round in 2015, $300M from BlackRock.
Year | Round | $ | Investor | Investor | Investor | Investor | Investor |
2016 | Private Equity | $165M | |||||
2015 | Debt Financing | $300M | |||||
2014 | Private Equity | $147M | |||||
2013 | Debt Financing | $93M | |||||
2013 | Private Equity | $84M | |||||
2011 | Venture Round | $40M | |||||
2011 | Venture Round | $70M | |||||
2011 | Venture Round | $49M | |||||
2008 | Series B | $30M | |||||
2007 | Series A | $5M | |||||
2006 | Seed Round | $800K |
Their ultimate downfall seems to be 3 fold, Firstly betting everything on the UP3, which failed to meet the standard promised. The fitness tracking band also faced fierce competition as the market place became crowded with the likes of Nike and Fitbit, and with the Apple watch the UP3 seemed limited for its price point.
Penultimately, in 2016 when they discontinued production they seemed to anger their remaining customers, by failing to pay their external customer service company, thus discontinuing their relationship and failing to replace their service in any kind.
Business Insider. Steve KovachFinally, with the level of debt Jawbone had to service, and their valuation being so high without actually turning over a profit, the bar may have been set far too high for the UP3 to ever live up to.
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