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Essential, a once-buzzy smartphone-maker led by a controversial ex-Google executive, folds

February 12, 2020, 8:40 PM UTC

Consumer technology startup Essential, co-founded by a former Google executive who was accused of sexual misconduct, plans to close.

The startup, which debuted a smartphone in 2017 that failed to gain traction, said Wednesday in a blog post that executives “have made the difficult decision to cease operations and shutdown Essential.”

Essential had faced a number of setbacks over the past few years, including poor sales of its flagship smartphone after its glitzy debut followed by reported layoffs in 2018. More recently, the company said on Wednesday that it had failed to get its latest planned phone, called GEM, ready to ship.

The closure marks a huge change in fortune for a company that was once heralded as a potential challenger to Apple and Samsung. The company had raised nearly $330 million from big-name investors like Amazon, Chinese tech giant Tencent, and electronics manufacturer Foxconn, achieving a private valuation of $1 billion as of 2017, according to deal-tracking service PitchBook.

The buzz was largely based on Essential’s co-founder Andy Rubin, the inventor of Google’s mobile Android operating system that is used in hundreds of millions of phones. He was pitched as Essential’s version of Steve Jobs, someone who could build the next big thing in tech.

But in 2018, The New York Times reported that Google’s leadership had hid allegations about Rubin’s sexual misconduct while employed there and that the company paid him a $90 million when he left in 2014. The news of Rubin’s payout and the initial silence about it triggered a wave of anger among some Google employees, who staged a high-profile employee walkout in 2018. That protest was the start of increased tensions between Google and its employees over corporate culture that is still ongoing.   

Essential had discussed future products including an Internet-connected speaker that would come with a voice-powered digital assistant that would challenge Apple and Google. But none of those ever came to market.

Essential said that it released one last security update for its PH-1 smartphone on Feb 3, and while the smartphone should still function after the company closes, there will longer be “any additional updates or customer support.”

“We are incredibly grateful to our employees in Palo Alto and Bangalore as well as our global partners for their help and dedication bringing this concept to life,” the blog post said.

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