Despite Popular Kickstarter, Pebble Seeks $5 Million Loan 'To Stay Afloat'

[jameskatt]

150 employees means $20 million a year in salary, health insurance, Worker's comp, and numerous other expenses.

Essentially they already burned through their $20 million kickstarted funding with nothing to show. That is why they want another $10 million from banks.

Pebble is completely out of control mismanaged. And this mismanagement is what will kill them.

Pebble has a nice niche product. But the $399 Apple Watch completely blocks their ability to escape their niche. They should be satisfied with their niche. Because otherwise, they will die.

 

[NeilHD]

Sounds to me like Pebble is still profitable and good. The only problem they sound like they have is liquidity - i.e. they have a bit of a cashflow problem and need some $ floating around in the bank in order to operate properly. Cashflow is the lifeblood of a business. You can be profitable as hell but without cashflow you'll still go under.

That's probably not unexpected really. The launch of the new product will have cannibalised sales of the old one and stifled incoming cashflow for a while, but the new is not yet ready to purchase in bulk via normal channels. The Kickstarter money will be going on tooling up the production lines, component purchases, and assembly etc. Not to mention the staff.

150 staff sounds a little high, but by the time you factor in app developers (IOS and Android), Firmware developers for the watch, SDK developers, hardware engineers, R&D, Testers for both Software and Hardware, Sales (domestic and international retail channels), Marketing, Legal, IT Infrastucture, Customer Support, Operations and so on it does start to add up.

I hope they continue. Pebble meets my needs. Apple Watch currently does not. And as much as I like Apple products, the world would be very boring if everything was made by them!

 

[azntaiji]

Sounds to me like Pebble is still profitable and good. The only problem they sound like they have is liquidity - i.e. they have a bit of a cashflow problem and need some $ floating around in the bank in order to operate properly. Cashflow is the lifeblood of a business. You can be profitable as hell but without cashflow you'll still go under.

That's probably not unexpected really. The launch of the new product will have cannibalised sales of the old one and stifled incoming cashflow for a while, but the new is not yet ready to purchase in bulk via normal channels. The Kickstarter money will be going on tooling up the production lines, component purchases, and assembly etc. Not to mention the staff.

150 staff sounds a little high, but by the time you factor in app developers (IOS and Android), Firmware developers for the watch, SDK developers, hardware engineers, R&D, Testers for both Software and Hardware, Sales (domestic and international retail channels), Marketing, Legal, IT Infrastucture, Customer Support, Operations and so on it does start to add up.

I hope they continue. Pebble meets my needs. Apple Watch currently does not. And as much as I like Apple products, the world would be very boring if everything was made by them!

+1 Perfectly stated - I definitely agree with you and think that if the rumors are true, it's due to a cash flow issue from being in a transition period and current pre-order only business model.
They really have no other way to generate cash flow at this moment, other than Pebble generation 1 sales which I'm sure have lost a ton of momentum with new product introductions and competition. Looking for funding in this situation seems like a logical step.

 

[dumastudetto]

They were never going to able to compete with Apple. The minute Apple announced their plans for the watch Pebble was doomed. Apple always wins when they choose to compete with a new product or service. It'll be the same with the new music streaming service too.

 

[thepoynt]

They were never going to able to compete with Apple. The minute Apple announced their plans for the watch Pebble was doomed. Apple always wins when they choose to compete with a new product or service. It'll be the same with the new music streaming service too.

The difference here is they aren't competing - Pebble and Apple have two VERY different devices that claim to do different things. Pebble can do a few things really well, works with both iOS and Android, and is wide open to developers who add whatever they want to it. Its battery lasts a week, and the screen is always on. It's really quite a different device from your phone. Apple watch is an extension of your iPhone, bringing most of the phone's features to your wrist, and adds some nice fitness tracking. It has a better screen, but isn't on all the time and needs to be charged every day.

These are two different devices, and if anyone really does their research beforehand, they won't have much of a choice to make - it'll be pretty obvious which one fits their needs.

Also, I don't see Apple's music service doing well (of course, I haven't seen it yet). It'll have to be pretty amazing to beat out Spotify, which already has just about everything the average user wants from a music service.

 

[iSee]

Looks like my prediction from February is coming true. https://forums.macrumors.com/posts/20668804/

Quote from above thread:


Admittedly not bankrupt yet and they still have 8 months to prove me wrong

Also this post of mine from the same thread:



And everyone told me how wrong I was. It's only May and they're already in trouble.

They raised $20 million on a Kickstarter while the Apple Watch coming soon.

To me that shows there is enough interest for them to do just fine assuming they deliver (for the most part) on what they promised in the Kickstarter. Considering their experience, I don't think there's any reason to have more than the usual doubts.

Raising and borrowing money for product development and launch is a normal part of business... that doesn't necessarily show any trouble. And if they get the money, that reflects quite well on them since you know the people handing them $10 million looked at everything very carefully.

Anyway. I'm not claiming to know that they will succeed, but you're crowing too early.

 

[Rigby]

They were never going to able to compete with Apple. The minute Apple announced their plans for the watch Pebble was doomed.

Given that 80-85% of smart phone users worldwide use something other than an iPhone, I assume they would somewhat disagree with your assessment. Pebble was the #2 smart watch vendor behind Samsung before the Apple watch was introduced, and they probably still have that position in the non-iOS market.

 

[iSee]

Just look at the list of current job openings and benefits, and you can get an idea of the bureaucracy and overhead costs.

https://getpebble.com/jobs

What's wrong with that?

The two things that stand out to me are the two lawyers and the technical recruiters. But the reality of tech is that they need to patent the crap out of everything they do, whether for defensive or offensive purposes. The recruiters, I don't get... at their size, do they really want to put multiple recruiting specialists on the payroll? I'd put the bulk of that responsibility on the direct managers (but spend good money to support and train them since good hiring is both hard and very important... maybe that *is* the support, but it seems like a lot).

 

[rimcrazy]

It was inevitable

Dating myself.... I remember when digital watches first came out. First was the Pulsar at a ridiculous price $2100, more than a car at the time. National Instruments got into the game and came out with their own version. I remember an article in Time magazine where the interviewer was asking the National representative if they were worried about Timex, who at the time did not have a digital watch. The National person commented "... all Timex has to do is sell two watches at every outlet that sells their watches and they will instantly have 50% market share, so yes I'm worried about Timex." Well Timex still sells watches and I know National does not so the fact that Pebble cannot compete against the likes of Apple is no surprise at all.

 

[gigaflare]

I see a lot of people unhappy with the Pebble news. Many are concerned with "goliath crushing" the little guy worried about lack of competition when here we see the results of competition.

If a "little guy" company fails it is a good thing to the extent that its failure is caused by either mismanagement of the company or lack of customer sales/interest in its product due to some other product appealing more to customers.

People vote with their wallets, Apple didn't send an army to shutter Pebble and Apple isn't holding a gun to people's head forcing them to buy their products...

This is simply the result of competition...

 

[PJL500]

Define "gave".

At the time many people would have said it was throwing good money after bad. Apple stock was sliding toward junk status. Commentators said at the time that it was in MS interests to have Apple around to give the impression of no MS OS monopoly. So yes, in this instance, the definition of "gave" is contextual and appropriate.

 

[thatsmyfish]

150 employees means $20 million a year in salary, health insurance, Worker's comp, and numerous other expenses.

Essentially they already burned through their $20 million kickstarted funding with nothing to show. That is why they want another $10 million from banks.

Pebble is completely out of control mismanaged. And this mismanagement is what will kill them.

Pebble has a nice niche product. But the $399 Apple Watch completely blocks their ability to escape their niche. They should be satisfied with their niche. Because otherwise, they will die.

A major chunk of the $20 million is likely going towards the new watches as I believe most of the early adopters get them at a discount.

I've already had my Apple Watch into the Genius Bar and out for a few days for a battery replacement, so I'm back to my Pebble. The one thing that the Apple Watch can't touch, beyond water resistance, is battery life.

I'm absolutely going to return the Apple Watch if I don't get much better battery life out of the second battery. There just isn't enough in a Gen 1 product to justify all the sacrifices.

 

[solarguy17]

I understand why their initial product needed a kickstarter, but any follow up should NOT have used a kickstarter. Established companies should not use kickstarter to find their companies. Just like TLC should not use kickstarter to find a new album.
Can anyone here imagine if Apple did a kickstarter 2 years ago to help fund their new wearable? They would have been dragged through the mud, but Pebble, it's ok.
Blah! For an initial product kickstarter is fine but for follow ups, stop using kickstarter, grow up an be a real company.

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A major chunk of the $20 million is likely going towards the new watches as I believe most of the early adopters get them at a discount.

I've already had my Apple Watch into the Genius Bar and out for a few days for a battery replacement, so I'm back to my Pebble. The one thing that the Apple Watch can't touch, beyond water resistance, is battery life.

I'm absolutely going to return the Apple Watch if I don't get much better battery life out of the second battery. There just isn't enough in a Gen 1 product to justify all the sacrifices.

How bad was you battery and what watch did you get?

 

[thatsmyfish]

I understand why their initial product needed a kickstarter, but any follow up should NOT have used a kickstarter. Established companies should not use kickstarter to find their companies. Just like TLC should not use kickstarter to find a new album.
Can anyone here imagine if Apple did a kickstarter 2 years ago to help fund their new wearable? They would have been dragged through the mud, but Pebble, it's ok.
Blah! For an initial product kickstarter is fine but for follow ups, stop using kickstarter, grow up an be a real company.

----------



How bad was you battery and what watch did you get?

I don't necessarily have an issue with a company getting a source of funding for a new product line. Apple back in the day also needed an infusion of cash.

I have the 42mm Sport. I'd start the day at 100% around 5:30am. At work I'd find myself constantly triggering the screen with normal use and tried to use complications meagerly. I'd use it for workout and control my music for 30-35 minutes in the afternoon. By 3pm I'd be in the 40-50% range and into the evening I'd be in the 10-20% range. It'd be dead between 9-12 depending on use. I'd find days where I was very conscious of use, I'd get it to stretch very late. If I was using it for text messages, Siri without checking the battery, it'd be dead earlier.

 

[Esoom]

I've owned 3 Pebbles, and unfortunately, the Apple Watch kicks its ass, they're in trouble.

Best case scenario for them is to sell themselves to Microsoft, and MS needs to make it work with Windows on their phones.

One of the cool things about Pebble is that you can pair it with an iPad Mini with WiFi & or LTE, gives you more options...

Competition is good for consumers, I hope they sort things out.

 

[davideotape]

Seems like while yeah the apple watch is going to cut their share majorly, they can still be competitive and not "doomed" if they focus on their strengths. They still have a few of those. theyre more flexible in compatibility than the apple watch- can be used with android and ipads so if you switch phone ecosystems its one less thing to worry about, they have a much longer battery life, theyre at least a little bit cheaper.

personally id considered getting one a few times but couldnt get past the look- the screen space looks smaller than the bezel and generally has a "the future as imagined in the early 90s" feel to me, but if they fix that i think theyre fine. Even if they dont i think they still have a market.

 

[cocky jeremy]

Why does it seem people want and are happy to watch Goliath crush the little guy here?

Because the little guy makes an ugly, inferior product.

 

[APlotdevice]

Because the little guy makes an ugly, inferior product.

If that's how you feel, don't buy it. But just realize that not everyone agrees with you.

I personally don't need my smart watch to be a whole platform. I just want to be able to remote control my music and view my notifications at a glance. The Pebble does this, while costing a fraction with the Apple Watch does not needing to be charged nearly as often. I also don't especially care what my smart watch looks like. I wear it for function, not fashion.

 

[cocky jeremy]

If that's how you feel, don't buy it. But just realize that not everyone agrees with you.

I personally don't need my smart watch to be a whole platform. I just want to be able to remote control my music and view my notifications at a glance. The Pebble does this, while costing a fraction with the Apple Watch does not needing to be charged nearly as often. I also don't especially care what my smart watch looks like. I wear it for function, not fashion.

That's fine.. but the guy asked why people would be happy it was going downhill. That's my reason.

 

[powers74]

Pebble

You had your day. It was fun. Now it is dusk. You can move on. I know you can. Maybe you could get into cross platform VR headsets before they're a thing.

 

[the8thark]

Eric just responded to this TechCrunch article during a QA session the other day (http://www.drapertv.com/livestreams/eric-migicovsky, at the 22:45 mark). He says they've been profitable for the last 3 years and aren't raising any extra funds at the moment - just focusing on "selling a hell of a lot of watches"

So according to him this is a false rumor. Just thought I'd throw that into the mix...

When do rumour sites ever let the facts get in the way of a good story?

 

[jblagden]

A $5 million loan. That's strange considering that "The company is pledging $1 million toward the development and commercialization of smart straps for its wearables." http://mobile.pcmag.com/news/54683-...p-smart-strap?origref=https://duckduckgo.com/

 

[jblagden]

Because the little guy makes an ugly, inferior product.

I agree the Apple Watch is better. If the Pebble and the Apple Watch cost the same, everyone here would probably buy one. But for most people, cost is a deciding factor. The Pebble privodes the core functionality of a smart-watch while costing a fraction of the cost of an Apple Watch. The Apple Watch is nice, but it's too expensive for practicality. I realize this is an Apple forum and we pay more for Apple products because they're higher quality. But you have to admit that $500 is too much for a wristwatch which will become obsolete in a few years. Once you put a CPU in a watch, you have to deal with the fact that it will become obsolete when a new one is released, and it'll last 10 years at best. A good analog watch can last decades if it's made right. I could see paying $500 for an analog watch which will last decades, but not for one which will only last 5-10 years and will be made obsolete by the next Apple Watch.

Even look at the Apple Watch, it's really neat and it has a lot of bells and whistles, but starting at $350, it's just too expensive for practicality. And yet, the Pebble Steel can be purchased for $100 less, or if you're more concerned about price than style, you can get the regular Pebble for $250 less than the Apple Watch. Even the new Pebble Time is roughly half the price of the Apple Watch.

This is a conflict of extreme idealism vs reality. We would all love to have Apple Watches. But they're just too expensive. Most people don't even wear watches anymore.

The Apple Watch is supposed to be an accessory for your iPhone. Should an accessory cost as much or more than an iPhone?

 

[APlotdevice]

I agree the Apple Watch is better. If the Pebble and the Apple Watch cost the same, everyone here would probably buy one. But for most people, cost is a deciding factor. The Pebble privodes the core functionality of a smart-watch while costing a fraction of the cost of an Apple Watch. The Apple Watch is nice, but it's too expensive for practicality. I realize this is an Apple forum and we pay more for Apple products because they're higher quality. But you have to admit that $500 is too much for a wristwatch which will become obsolete in a few years. Once you put a CPU in a watch, you have to deal with the fact that it will become obsolete when a new one is released, and it'll last 10 years at best. A good analog watch can last decades if it's made right. I could see paying $500 for an analog watch which will last decades, but not for one which will only last 5-10 years and will be made obsolete by the next Apple Watch.

Even look at the Apple Watch, it's really neat and it has a lot of bells and whistles, but starting at $350, it's just too expensive for practicality. And yet, the Pebble Steel can be purchased for $100 less, or if you're more concerned about price than style, you can get the regular Pebble for $250 less than the Apple Watch. Even the new Pebble Time is roughly half the price of the Apple Watch.

This is a conflict of extreme idealism vs reality. We would all love to have Apple Watches. But they're just too expensive. Most people don't even wear watches anymore.

The Apple Watch is supposed to be an accessory for your iPhone. Should an accessory cost as much or more than an iPhone?

The price of the Apple Watch does seem rather excessive. Though even if they were the same price, I'd still buy a Pebble just cause of the difference in battery life.

 

[jblagden]

The price of the Apple Watch does seem rather excessive. Though even if they were the same price, I'd still buy a Pebble just cause of the difference in battery life.

For the reasons you and I have mentioned, I would expect the Pebble to greatly outsell the Apple Watch. Unfortunately, I don't know how many of each have sold. And there's also the fact the the Pebble has been around longer than the Apple Watch, which some may say gives it an unfair advantage over the Apple Watch.

Update- I did some research and apparently 7 million Apple Watches have been sold and according to The Verge, only a million Pebbles have been sold. And yet, there are five things which make the Pebble better than the Apple Watch: http://www.zdnet.com/article/five-things-the-pebble-time-can-do-that-the-apple-watch-cant/