Stories
Slash Boxes
Comments

SoylentNews is people

posted by cmn32480 on Friday January 05 2018, @02:17PM   Printer-friendly
from the funding-goes-boom dept.

Submitted via IRC for SoyCow1984

Smart lock company Otto is suspending operations after a failed acquisition agreement. In a blog post late last year, CEO and founder Sam Jadallah says the company made an acquisition deal that limited its ability to fundraise, but the buyer pulled out at the last minute, leaving Otto with no remaining cash. The first locks were supposed to ship within the next few weeks, but "Otto will not ship next month and it may never ship," says Jadallah. The company will "evaluate [its] options" for moving forward in the coming weeks.

The Otto Lock was pitched as a tiny and stylish, but very expensive, smart lock. It sold for $699, and was intended for wealthy homeowners.

Source: https://www.theverge.com/2018/1/1/16838016/otto-smart-lock-startup-suspends-operations


Original Submission

 
This discussion has been archived. No new comments can be posted.
Display Options Threshold/Breakthrough Mark All as Read Mark All as Unread
The Fine Print: The following comments are owned by whoever posted them. We are not responsible for them in any way.
  • (Score: 2) by JoeMerchant on Friday January 05 2018, @03:41PM (5 children)

    by JoeMerchant (3937) on Friday January 05 2018, @03:41PM (#618355)

    That's business. If you've got a $1M company with potential to grow to a $100M company in the next few years, but you'll be competition for an existing $500M company, the $500M company won't even hesitate to buy you out for $10M (or often less) just to snuff the potential competition. Maybe they'll pick up your unique ideas and market them under their brand, more likely that's more trouble than it's worth.

    --
    🌻🌻 [google.com]
    Starting Score:    1  point
    Karma-Bonus Modifier   +1  

    Total Score:   2  
  • (Score: 2) by drussell on Friday January 05 2018, @04:20PM (4 children)

    by drussell (2678) on Friday January 05 2018, @04:20PM (#618365) Journal

    Indeed. It even happened to Homer...

    https://www.youtube.com/watch?v=H27rfr59RiE [youtube.com]

    • (Score: 3, Insightful) by JoeMerchant on Friday January 05 2018, @04:36PM (3 children)

      by JoeMerchant (3937) on Friday January 05 2018, @04:36PM (#618375)

      That does happen, too (the Homer buyout...)

      I worked for a place that was built from the ashes of a company that won a patent infringement lawsuit. Little company won a judgement against a bigger company, but the problem was that the judgement was for more than the little company was worth, so the bigger company bought the little company and shut it down, avoiding paying for the judgement in the process (sound hinky, why didn't the market cap of the smaller company increase by the amount of the judgement? Apparently a factor of 2 in the heft of the mosquito wasn't enough to bother the 800lb gorilla...) 300 people out of work, huge factory building stood empty for years...

      5-10 years later the people from the bought-out company mostly ended up with a new startup in a similar, but not competing, line of business.

      --
      🌻🌻 [google.com]
      • (Score: 2) by frojack on Friday January 05 2018, @06:48PM (1 child)

        by frojack (1554) on Friday January 05 2018, @06:48PM (#618435) Journal

        so the bigger company bought the little company and shut it down,

        I'm calling bullshit.

        With a judgement in hand, why would little company sell for less? By choice perhaps? In which case there was no injustice done.

        --
        No, you are mistaken. I've always had this sig.
      • (Score: 0) by Anonymous Coward on Friday January 05 2018, @10:27PM

        by Anonymous Coward on Friday January 05 2018, @10:27PM (#618542)

        sound hinky, why didn't the market cap of the smaller company increase by the amount of the judgement?

        Because the owners of the little company either figured it was better to get bought out, or that it would take years more to actually collect on the judgment. In either case, the asset value of the judgment was discounted, so the stockholder equity was lower, so the market cap was lower.

        Was this a privately owned company? It's often a no-brainer for a small group of owners to take a cash payout of x times their original investment. Companies with more, or institutional investors *may* be willing to see the judgment through to the end, based on their personal risk tolerance and second-guessing of company's management's opinion.