Collapse of Enterprises Ranges from Foxconn to Anki
When tech startups succeed, they tend to grow into larger and larger entities and often spawn spinoffs or buy up smaller companies. When they fail, its often due to “premature scaling,” according to a study by the Startup Genome Project, as reported in TechCrunch.com. Ambitious growth is as much of a killer as lack of money, and can lead to depletion of venture capital.
This year and 2020 are likely years when technology growth slows down. Several “bubble companies” are closing shop, including Anki the smart phone-operated toy manufacturer. It was reported in Recode that the company closed its doors in April due to a lack of sales. An article from theverge.com says last August, Anki said it had sold 1.5 million robot units up to date, which appears to have included both its toy cars and personal robots, but it wasn’t enough to keep the business going.
In March, another consumer robot company, called Jibo, also shut down, with the devices announcing their own demise to those who had purchased them. A story in Wired explained the social robots’ decline as being caused by their lack of usefulness, making a Roomba seem a far more practical product since it manages to clean the floor.
Another startup, Juicero, raised $118 million for its high tech juice squeezing machine, which sold pouches to accompany it. Shortly after it went to market, consumers decided it was an expensive luxury they didn’t need.
If 2018 was a year for startups in augmented reality, it was also the year for shutdowns. Here is a list of some closings listed on VentureBeat.com: Klout, StumbleUpon and Blippar. Even the consumer version of Google + bit the dust.
Like all markets, even the tech market goes in cycles. When investors don’t see the return on investments, they tend to pull back their money. Even established companies cut back on expansion at such times.
For instance, when Taiwan-based Foxconn – a major supplier of Apple technology — announced it was going to build its first U.S. manufacturing facility outside of Milwaukee, it received $3 billion in state credits. But last summer, the agreement with Foxconn lost momentum. The company first said it would reduce the size of the LCD display screens it would make, meaning fewer promised manufacturing jobs. Then Wisconsin’s Republican Gov. Scott Walker, who had enticed the company to locate there, lost his re-election bid. Foxconn decided to pull out of Wisconsin altogether. President Trump had to step in, to convince them to re-commit to building something. But exactly what still is in question.