The archive · Hardware & Devices · Strategic decision · 1999–2017
Jawbone liquidates after the wearable bet fails; CEO pivots to clinical health
Wearable maker Jawbone raised about $951M; it was liquidating in July 2017 as CEO Hosain Rahman started clinical-health firm Jawbone Health Hub.
Jawbone
What the business is
Jawbone made consumer hardware — the Jambox Bluetooth speaker and the UP line of wearable health trackers — and in its final years was trying to move from selling devices toward clinical health services built on the data they collect.
How it started
Jawbone's roots go back to the late 1990s. It built a once-mighty speaker business with Jambox, then a line of wearable health trackers, and raised roughly $951 million over the years from Andreessen Horowitz, Sequoia, Kleiner Perkins, JP Morgan, Mayfield and Khosla. When the consumer wearable market started declining, the company was in a multi-year struggle to stay relevant and locked in a legal war with Fitbit.
What happened
BlackRock-managed funds had pumped $300 million more into the company about a year before Rahman's June 2016 'we're still committed' blog post. By early 2017 Jawbone's Facebook and Twitter accounts were silent and customer complaints piled up unanswered; TechCrunch reported in February 2017 that Rahman was planning to shift from consumer devices toward clinical health services. In March 2017 the law firm representing Jawbone stepped aside from the Fitbit fight, citing 'professional considerations,' and the once-mighty Jambox speaker business was already out of the picture.
How it ended up
On 2017-07-06 TechCrunch reported that Jawbone was being liquidated — first noted by The Information and independently confirmed — and that some employees were moving to Jawbone Health Hub, a new company funded by a new, unnamed investor that had posted hardware and software job listings describing a mission to revolutionize primary care. Sherwood Partners was handling the liquidation, including the ongoing legal war with Fitbit.
Background
Jawbone was a consumer hardware company whose roots went back to the late 1990s: it built the once-mighty Jambox speaker business and then the UP line of wearable health trackers, raising roughly $951 million from Andreessen Horowitz, Sequoia, Kleiner Perkins, JP Morgan, Mayfield and Khosla. The bet behind it was that dedicated health-tracking wearables were a durable mass category — that a design-led hardware firm could outlast Fitbit and turn years of biometric data into a clinical-health business.
The bet failed as the wearable market declined and dedicated bands lost ground. BlackRock-managed funds had pumped $300 million more into Jawbone about a year before Rahman's June 2016 'we're still committed' post, yet by early 2017 its Facebook and Twitter feeds were silent and complaints piled up unanswered. In February 2017 TechCrunch reported that CEO Hosain Rahman planned to leave consumer devices for clinical health services, and in March the law firm representing Jawbone stepped aside from the Fitbit fight, citing 'professional considerations.'
On 2017-07-06 TechCrunch reported, after The Information first noted it, that Jawbone was finally being liquidated. Sherwood Partners was handling the process and the ongoing Fitbit litigation, while some employees were transitioning to Jawbone Health Hub — a new company with a new, unnamed investor that had posted hardware and software job listings describing a mission to revolutionize primary care. Rahman and the old company stayed quiet, as they had for much of the previous two years.
What has to be true
- The category turned: the wearable industry went into decline, and dedicated bands lost ground as Jawbone struggled for years to stay relevant against Fitbit and cheaper competition.
- Money bought no durable edge: roughly $951 million in funding could not differentiate a design-led brand once the Jambox speaker business was gone and trackers became a commodity.
- The Fitbit legal war consumed the endgame: Jawbone's own law firm withdrew in March 2017, and the liquidation was left to Sherwood Partners to thread the last needles.
- The pivot had to happen outside the company: Jawbone Health Hub needed a new, unrelated investor and fresh job listings because the old entity's brand and balance sheet were already being liquidated.
What can be applied
Capital does not make a consumer hardware category durable: roughly $951M could not save Jawbone once wearables commoditized; the salvage needed a new investor, company and customer.
Aftermath
As of 2017-07-06 Jawbone was being liquidated: Sherwood Partners was handling the process and the Fitbit legal war, while Jawbone Health Hub — a new company with a new, unnamed investor — posted hardware and software developer listings describing a mission to combine 20-plus years of proprietary wearable technology with clinically relevant signals and connect patients and physicians through continuous, data-driven dialogue. Rahman stayed quiet, as he had for much of the prior two years, with Facebook and Twitter still silent and customer complaints unanswered.
Sources
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