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Healthtech

Jawbone

Shut down · 2017

Bluetooth headset pioneer turned fitness-tracker and speaker maker that raised nearly $1 billion and became Silicon Valley's textbook case of "death by overfunding."

San Francisco, USA1999–2017

Key metrics

$930M

Total funding

$3B

Peak valuation

3

Funding rounds

Outcome

Shut down

Operations ended in 2017.

2017

Financial trajectory

Funding by round

$908.3M$605.5M$302.8M$0$49M2011Series C$70M2012Debt financing ...$811M2014Late-stage equi...

The Story

Founded

Series C

$49M

Debt financing (JPMorgan)

$70M

Late-stage equity and debt

$811M

Shut down

What worked

  1. 01

    Jawbone genuinely defined categories rather than following them

    Its Bluetooth headsets set the design standard for the entire accessory category in the mid-2000s

  2. 02

    Investor traction

    Real design and engineering wins that took the company from a niche accessory maker to a nearly $1 billion fundraising story and a $3 billion valuation at its 2014 peak.

What didn't work

  1. 01

    Jawbone's 2011 pivot

    Into the UP fitness-tracking wristband put it in direct, sustained competition with Fitbit and, from 2015 onward

  2. 02

    The Apple Watch — competitors

    With either a public-company balance sheet or Apple's ecosystem behind them.

  3. 03

    The first UP band shipped

    With serious hardware defects that forced a mass product recall shortly after launch, badly damaging the young product line's credibility right as the category was taking off.

  4. 04

    Funding window closed

    Nearly $1 billion in total, prompting CNBC to later describe its collapse as a case of "death by overfunding" — let it keep competing on multiple fronts (headsets, speakers, fitness trackers) without ever building a durable moat in any one of them.

  5. 05

    By June 2017, with debts exceeding $400 million, Jawbone began liquidating outside of bankruptcy court, winding down entirely by that summer.

Outcompeted by IncumbentsOverexpansionExecution Flaws

THE VENTURE TRAIL TAKE

Raising nearly a billion dollars doesn't force the discipline to pick one category and win it — it can just as easily fund losing slowly on several fronts at once.

Jawbone's arc is one of the clearest illustrations in startup history of how abundant capital can substitute for, rather than enable, strategic discipline.

Read the full postmortem

Company details

Business model
D2C Retail
Founded
1999
Headquarters
San Francisco, USA
Funding rounds
3
Investors
Andreessen Horowitz · Sequoia Capital · Kleiner Perkins · BlackRock · JPMorgan
Peak valuation
$3B

Founders

Alexander Asseily
Co-founder; the company started as AliphCom before rebranding to Jawbone
Hosain Rahman
Co-founder & CEO throughout the company's life

Sources

  1. 01CNBCJawbone's demise a case of 'death by overfunding' in Silicon Valley
  2. 02TechCrunchJawbone is being liquidated as its CEO launches a related health startup
  3. 03Inc.Jawbone, Once Valued at $3 Billion, Is Going Out of Business
  4. 04Fast CompanyFitness tracker company Jawbone is going out of business

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