Jawbone Fails To Pay Key Business Partners and Has Almost No Inventory In Stock: Sources (businessinsider.com) 67
BarbaraHudson writes: The battle between Fitbit and Jawbone may be coming to an end. Business Insider is reporting that wearable fitness maker Jawbone is facing some serious financial problems as the company has almost no inventory in stock and is running out of options to generate revenue. If you click on any of the products for sale on their site, it will say that they're all sold out. Business Insider reports: "Jawbone's Facebook page is littered with complaints from customers saying they have been unable to get in touch with a customer service representative to help with defective products. The Jawbone Facebook account has been responding to these issues, blaming a backup of complaints for the delays. A Jawbone spokesperson said the complaints were because of Jawbone's customer service restructuring. Another person close to Jawbone told Business Insider that there is almost no inventory left and the company is running out of options to generate revenue. The speculation among some Jawbone employees now is that the company might sell to a private equity firm if it can't raise more money, the person close to the company said. Jawbone also declined to explain why its inventory has sold out. A spokesperson said, 'they have sold through what they have to sell.' The company said it was not because it couldn't pay vendors though. It would not provide any estimate on when products would be available for sale on its site again, but did say it planned to make more products." The report says that, according to an internal NexRep email, the company cut ties with the customer service agency NexRep earlier this month after Jawbone failed to make payments. "The email, written to NexRep employees by a NexRep executive, claims that Jawbone is 'struggling financially' and that it couldn't pay NexRep for its services," reports Business Insider. "It also says Jawbone is 'fighting hard' to raise more funding. 'Jawbone is not able to pay us for past services, and their ability to pay us in the future is uncertain at this point,' the NexRep email reads." This resulted in "many staffers being laid off."
" a backup of complaints "?? (Score:1)
Well at least they have a good IT department... Maybe you meant a "backlog"?
Unusual situation (Score:4, Insightful)
Usually, we have a company that makes garbage no one wants, so when they liquidate they have a ton of stock. This is unfortunate... and stupid, because it seems like they should have taken SOME KIND of action before they had nothing to sell.
I wonder exactly how terrible they are when they have a product with a solid demand, yet no one will invest in them. There has to be embezzlement.
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Jawbone is more known for high quality Bluetooth ear pieces. When they were popular in the mid 00's. However that isn't a name I would think to look at for fitness monitors. I guess they realized that they weren't going to win early on so never built up the stock to try to flood the market. Especially Jawbone like Apple tries to sell their product at a premium, and flooding the market will lose out their name status.
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"Jawbone is known for being the first big Bluetooth ear manufacturer."
Ignoring Jabra, this is true. Or, actually, it is false.
And I did indeed own an original Jabra, several since they were terribly short-lived. And Jawbones, Samsungs, Plantronics, Motorolas, blah blah blah. I was a Bluetooth junky from the very, very beginning. Jabra was first and big. Jawbone came to the party in mid-orgy, had great sets, but got distracted.
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they have a product with a solid demand,
No they didn't. FitBit is the dominate player in the "fitness" band market.
Jawbone also had some quality issues.
Aside from the market for the health insurance big brother monitoring, this fitness band market is just a fad and is starting to die off. Folks realized that spending hundreds of bucks on a electronic gizmo won't shed those pounds off. And the fact that a $20 Casio watch can do everything that a FitBit can for the user - it just doesn't log the info for insurance companies to monitor you.
Now, I
Re:Unusual situation (Score:4, Informative)
Re:Unusual situation (Score:4, Insightful)
Sayonara. Jawbone got tempted by the fitness market, but it wasn't a good fit.
Not so unusual (Score:5, Interesting)
I wonder exactly how terrible they are when they have a product with a solid demand, yet no one will invest in them. There has to be embezzlement.
There doesn't have to be embezzlement. Most common when a company runs into a situation like this is that they are short on cash. The cash cycle of a consumer products company is typically something like this. I've simplified the times to make the example easy to understand:
1) Place order for components with 30 day terms. Components received within a few days of placing order
2) Build product between days 5-30.
3) Pay for components on day 30.
4) Sell product into distribution channels with 30 day terms on day 30
5) Receive payment from customers on day 60
So they are paying for components about 30 days before they get paid by customers in this example . That means that if they run low on cash, they don't have enough money to buy new components to build next batch of new product. What usually happens next is a viscous cycle. They push out the length of time before they pay vendors. Eventually vendors get tired of this and put them on credit hold or demand cash on delivery. This means they don't have enough cash on hand to buy new components to build new product so their incoming cash flow declines which makes it even harder for them to pay vendors. Lather rinse repeat and the company prospects decline.
This happens all the time to companies. If there is strong demand for products and/or back orders the company might be able to get a bridge loan or investment. If product demand is weak the company is probably looking at bankruptcy.
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I think I will adopt the term "viscous cycle" and use it whenever I get in a sticky situation.
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Net 30 terms are incredibly rare in big-box store sales.
Don't get in the weeds about the dates. I just used simple numbers to keep the example simple. Relatively few industries actually pay in Net30 terms routinely.
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When you're playing with 2000+ stores, each of whom want 15-20 of your products, you're talking about 40,000+ units sitting on the shelf. And that is money that you spent to build the products that you won't get back for several months. A major crimp in cash flow - which causes companies to fold.
It is the weeds that matter, when companies put on their big boy pants and step out of the startup mode. Cash flow, amortization, lead times - all end up strangling you and are much, much harder to solve than "ho
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So they've got a liquidity problem and a fluidity problem?
It is a possibility (Score:5, Interesting)
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I could never understand why would any company risk JIT (just-in-time) on anything mission critical. At the same time everyone does it and disasters keep happening.
Your failure to understand, as well as the "backup" vs. "backlog" comment earlier, are just evidence that /. is still a nerdy tech site inhabited by us IT trolls in the basement.
People with a business background have no trouble understanding it. My guess would be MBA decisions based mainly on the product life cycle. Commodities like steel are pretty basic and don't change very often. You can stockpile hundreds of tons when it's cheap and as long as you take basic storage precautions it's good as new year
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1. All the customers not able to get their complaints addressed, along with Jawbone saying that they're reorganizing their customer service, lends credence to them being in trouble. You don't cancel one customer service company without having another in place unless you're either stupid or broke. That's something easily independently verifiable by looking at the complaints on their Facebook page.
2. All the products being marked as out of stock on their website, with no indication of if or when there will b
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Uber has a lot more cash to draw down on. At the last round of funding, Jawbone and the investors settled on a total value of the company of $1.5 billion, so there's only $500 million left to issue stock against. This is not speculation, it's fact - numbers anyone can run in their heed. When valuation stood at $3.3 billion, there was much more margin ($1.8 billion in all) left to play with and issue equity against.
Am I an investor? Ha - I don't gamble, so no. Maybe you are one of their shills, trying to ke
Extra assets = waste (Score:2)
Greyhound used to keep full and complete busses at many of their depots, and spare parts for the major assemblies like transmissions, engines, driveshafts. They were considered unused/new items so they weren't taxed on them.
If they did keep unused buses in cold storage that was idiotic. Beyond any property taxes they would incur all sorts of expenses from storing them including the property and buildings to hold them, people to maintain them (even unused vehicles need maintenance), opportunity cost of cash tied up in an illiquid and non-revenue generating asset, security to protect them, and much more. Buying assets for non-mission critical just-in-case situations is wasteful and usually unnecessary. Taxes on the property a
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If they're doing repairs to buses there, they have enough space to store 1 whole bus. It's supposed to be there to be cannibalized for parts as needed, so it never has to be in running order or pass an inspection or be plated, so very low maintenance. Replacement parts are probably just stored on the bus or elsewhere instead of installing them.
They get full depreciation allowance on their tax bill, same as other assets.
It's also a smart idea to have immediate access to spare parts rather than tying up ser
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FYI if the assets aren't in service they wouldn't be depreciated. Only once they are put in service is depreciation started.
Safety stock is wasteful and expensive (Score:5, Informative)
I could never understand why would any company risk JIT (just-in-time) on anything mission critical. At the same time everyone does it and disasters keep happening.
Money. Storing extra inventory is wasteful and expensive. If the supply chain is sufficiently robust then the risk of a stock out is minimal or can be absorbed if it happens. Companies like Toyota that have JIT production systems generally work very closely with suppliers to ensure reliability and they have draconian punishments if something goes wrong. If a supplier shuts down an auto assembly line with a stock out the fines are (no exaggeration) something like $10,000 PER MINUTE the line is idle so the suppliers are typically highly motivated to not cause a stock out.
Excess inventory is considered one of the seven deadly wastes [processexc...etwork.com]. Defects, WIP, overproduction, waiting, motion, transportation, and overprocessing are all unnecessary expenses and companies should strive to minimize them. When you keep safety stock you have overproduced, generated excess WIP, have parts waiting for processing, and moved parts your customer doesn't actually need. All of that costs money. Now granted you have to weigh the cost of that against the cost of a stock out. Sometimes safety stock is unavoidable but it isn't something desirable.
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Only if customer is willing to pay for it (Score:2)
If you're the customer waiting on parts, safety stock is pretty much mandatory from your point of view.
Only if the customer is willing to pay for it. Safety stock costs money. If the customer is willing to pay the extra cost of maintaining safety stock then and only then is it reasonable to keep safety stock.
If you want new tires and the store says sure, come back in 4 days when they arrive, you're going elsewhere
That depends on the tires and what sort of customer you are dealing with. JIT is only applicable with items with a production+delivery lead time shorter than the time between identification of need and time of delivery. You also have to consider the economic utility of stocking the part. If you have
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Keeping stock on hand is part of customer service. That has both a cost and a value. It makes up part of the value of good will that's on the books. Crappy service impairs the value of that good will, forcing the business to write down a portion of it, and possibly triggering loan covenants.
And if they know the value is impaired and don't write it down, they can have their ass sued off by investors, especially those who buy shares after it should have been written down. The SEC doesn't like companies not
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Fitness trackers not a slimming aid (Score:3, Informative)
Probably for the better. According to a study in theJournal of the American Medical Association, JAMA, fitness trackers don't actually help with weight loss. People get fixated on the numbers from the trackers and stop following a recommended diet.
Shouldn't this be in a business journel? (Score:4, Insightful)
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The fits and collapse of a business are better discussed in a business journal. This story isn't really about technology at all.
If Apple were to collapse tomorrow, would you say the same thing?
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I know I would...
But at the same time I know lots of people would be affected so i don't mind reading an article about a company I never heard about before. After all, it's the information/event that is interesting, not who the information/event is about.
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I never used bluetooth headsets.
Technology is more than just engineering (Score:2)
The fits and collapse of a business are better discussed in a business journal. This story isn't really about technology at all.
It most certainly is a story about technology. Stuff that affects the companies that make technology is relevant to the technology itself. Slashdot is not and never has been solely about pure engineering stuff. Business, ethics, civil rights, and much more are all discussed here and always have been. Perhaps it doesn't interest you and that's fine but it does interest a lot of us who have been here a long time. It's certainly news for nerds and it's certainly stuff that matters.
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Many technologists think that running a business is kind of easy - like it's just a matter of having a good idea, banging out a bit of code, and then bam - you're Zuck or Gates.
The business of technology is, I think, a very interesting part of the entire process as well. There's a few interesting comments already in this article (e.g., about supply chain financing etc) which many people won't know anything about.
I'm sure there are many engineers out there that would love to do their own startup - you only h
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Marissa Mayer strikes again, lol what a tech visionary huh?
For those struggling to make sense of the above comment [allthingsd.com]
And so what? (Score:2, Insightful)
And we should care why, exactly?
Two niche gadget makers go after the same market, one wins, one fails...so what? Why are we supposed to care?
This kind of thing happens all the time, every day. What's the Earth-shaking news here?
Body Media (Score:1)
Premise = Bullshit (Score:1, Interesting)
"If you click on any of the products for sale on their site, it will say that they're all sold out.."
Except, _all_ of the articles are (still) available to order, just, not in the initially selected color.
Now, none of this makes either the articles themselves, or indeed the websites coding (how about, default to in-stock color on page load, chaps?) any more (or less) worthwhile. But the article above sounds like entirely speculative bullshit to myself and indeed, the first (and only) thing I checked, took
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took me literally ten seconds to disprove and find every article still in stock
You are SO full of shit. No wonder you posted AC. Of 19 different model/color combinations, all but three are sold out - 1 Up2 and 2 Up3 - No Up1 whatsoever.. In other words, the 3 colors that nobody wants are still available because, well, nobody wants them. The 16 other ones are totally out of stock, and so marked.
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Again, bullshit. I checked yet again, and ALL Up1 stock on their web site (the link is in the article) is sold out, including the blue and the -orangey-red.
There might still be some left elsewhere, such as Amazon. You would have known this if you had actually clicked through to read the article, because it gives Amazon as an example of where there might still be some left in the channel, but that doesn't change the fact that Jawbone's online store has NO Up1 for sale.
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Reaching for the lawyer's number would appear, n this case, somewhat justified
Why? You say every single one is in stock, and that you checked it yourself, which is easily verifiable (and I did). Besides, they're more likely to need a lawyer to help sell the business or do a prepackaged bankruptcy.
Its also why, you should probably have capable editors
How about capable trolls? You certainly don't fil the bill.
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Not surprising.. (Score:1)
Not surprising that Jawbone would tank after their phenomenally abysmal support of their original Jawbone Bluetooth unit. The charging terminals just didn't work after a few months. And for a unit supposedly able to communicate well you couldn't hear a call over the fan in the computer.