A tough week for hardware companies | TechCrunch

Within about a week, iRobot, Luminar and Rad Power Bikes all filed for bankruptcy.

They’re very different companies (selling Roombas, lidar, and e-bikes, respectively), but as Sean O’Kane, Rebecca Bellan, and I discussed on the Equity podcast episode, they faced some similar challenges, including pricing pressure, big deals that fell through, and an inability to branch out beyond the products that initially made them successful.

You can read an edited preview of our conversation below, where Sean provides an overview of each filing, Rebecca addresses whether she has a Roomba, and I speculate about what the popular stories about these bankruptcies leave out.

Sean: Rad Power is big for an e-bike company, but in most people’s eyes I think small as that’s still a bit of a niche. They were founded a long time ago and became popular even before the pandemic, and were really seen as a market leader, in terms of the quality of the bikes they make, pretty good branding and marketing and trying to connect with customers – which is very difficult to find in the world of e-bikes, where most of them are like alphabet soup companies on Amazon.

They rode that wave of the pandemic when micromobility really took off, and people really started rethinking how they got around, they weren’t traveling to the office as much. And we see glimpses of that in the bankruptcy filings. It only shows three years of revenue, but they took in over $100 million in revenue in 2023 – about $123 million, I think that’s down to about $100. [million] Last year, and with the bankruptcy this year, they were only about $63 million, so they were obviously coming off a pretty high level. They have quite a varied product range, but they never really found a way to gain a foothold there.

And I think you could say similar things about these other two companies. Luminar is another company that was founded in early 2010 and came out of stealth mode in 2017, and its mission was essentially to take lidar sensors, which at the time were very expensive and large and really only used in, for example, defense applications and aerospace. 2017 was kind of the first big hype cycle of autonomous vehicles. They wanted to take those sensors and make them more affordable for that use case. That helped them make some deals, especially with Volvo, and then some other deals with Mercedes Benz and a few other players. But they were just very focused on that, and that was one of the reasons why they filed this week as well.

And then iRobot [was] the most well-known of these three companies – many people listening probably even have a Roomba at home or something very similar. It’s just another one of those situations where iRobot became synonymous with a certain thing, and advances in the technology building that product happened so quickly that they found themselves in a situation where they needed a way out. And we saw all this: they tried to get acquired by Amazon, and that deal was blocked by the FTC and so here we are.

They are very different companies, but they all faced similar problems. Do any of you have a Roomba?

Rebecca: No, I don’t have a Roomba. This drives me crazy, but I bought my mom a Rad Power bike years ago, and she loves it. But you know, not only did they have a bankruptcy problem, but they also had a problem with the batteries. They couldn’t do their recalls because they said, “If we have to recall these bikes, we’re going to go out of business.” But they still go bankrupt!

I’m curious about the rates, and how much impact this has had on everyone’s bottom line. You hear a lot on social media, people who are pro-merger, how certain FTC blocks are happening [mergers] leads to the companies going bankrupt or being acquired by a Chinese company instead of an American company.

Sean: iRobot to me represents the kind of macro global trade problem of: Could you have ever built this company here in the United States with a localized supply chain in the last 15 years? Probably not. And so it makes sense that they’ve become so heavily dependent on China – which, let’s face it, has probably led to the ability for these other companies to emerge and essentially copy what they were doing.

That reminds me of Trump 1, when he put tariffs on Chinese imports, and we saw a number of startups like Boosted Boards and other micromobility companies get hit. So they are definitely contributing factors. The battery recall with Rad Power was, I think, ultimately a bigger dock, but the tariff issues put them on an uneven footing, making it harder for them to respond to things like that.

Anthony: It often happens that a company goes bankrupt [are] larger structural problems, and then there may be a more immediate, proximate issue. And especially in the case of iRobot, I think a lot of former executives and even outside commentators point to the Amazon deal that was reached a few years ago. It kind of looked like the EU wasn’t going to let this go through, and there’s a sense of, “Okay, by blocking this deal, you’ve basically stuck the dagger in their hearts that ultimately killed the company.”

That story may also ignore the fact that there were other things that made them want to be acquired in the first place.