Jawbone Failed, But Its Founder Remains Determined

Jul 07, 2017

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Jawbone is liquidating itself and Founder and CEO Hosain Rahman is moving to a new company he started called Jawbone Health, according to The Information.

The demise of a company as high-profile, well-funded, and beloved by the Silicon Valley cognoscenti as Jawbone will launch a thousand thinkpieces. Lucky for me, I wrote mine a year ago, when Jawbone’s struggles were already widely apparent. The premise holds up:

There are two reasons startups fail, according to Y Combinator founder Paul Graham. They run out of money, or the founders give up.

We know when the former happens because it’s usually sudden. But overnight failures are rare. Instead, startups often die painful, drawn-out deaths, because Paul Graham's second reason for failure—giving up—goes against the nature of most entrepreneurs. It takes a lot of grit and determination to start a company. Even the basics—raising capital, building a team, launching a product, and signing customers—require overcoming monumental odds. The “hero’s journey” mythology of famous, successful founders always describes the way they ignored everyone who said their idea would never work.

That explains why so many startup founders hang on to their dreams long after everyone else knows they’re doomed.

Exhibit A is Jawbone. The company has achieved many impressive feats in its 17 years of existence. It has raised hundreds of millions of dollars in funding, something very few companies do, and it created and launched a number of successful consumer products, including the Jambox wireless speaker, its namesake wireless Bluetooth headsets, and the Up fitness band. But in recent years the “can't-miss” company has struggled with product delays; executive reshufflings; increased competition from Apple and Fitbit, costly lawsuits with its supplier, and Fitbit; and a down round that cut the company’s valuation in half. From the outside, it all adds up to an ugly picture.

Plenty of people close to founder and CEO Hosain Rahman have probably advised him to give up and make a graceful exit. Instead, his company continues to fight for its life. It’s the sort of thing that shows Rahman’s determination: If Jawbone fails, it won’t be because he gave up.

Even in liquidation, Rahman isn't making a so-called graceful exit. From The Information's report:

Jawbone co-founder and CEO Hosain Rahman has founded a new company called Jawbone Health Hub that will make health-related hardware and software services, according to the person. Many employees of Jawbone moved to the new firm earlier this year, the person said. Jawbone Health will service Jawbone’s devices going forward, said the person. BlackRock, which loaned Jawbone $300 million in 2015 and is the only secured creditor, received a stake in the new firm, the person said.

By keeping the Jawbone name (and one shareholder) at his new effort, Rahman appears determined to make some version of his company live on. Jawbone is out of money. But it's founder isn't giving up.

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