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Essential Burned Through Cash, So Layoffs Are Underway

by Justin Herrick | October 18, 2018October 18, 2018 8:30 am PST

Essential can’t stop its ongoing struggle. As it explores what’s next, Bloomberg reported that a significant round of layoffs is underway. The Palo Alto-based company acknowledged the decision, but a company spokesperson wouldn’t say how many employees are affected. Now it’s unclear where the business goes from here.

The report suggests around a third of the workforce has been let go. If that’s true, Essential might be down to as few as 90 employees. Most of the eliminated positions are in hardware, marketing, and sales.

Here’s a statement from Essential:

“This has been a difficult decision to make. We are very sorry for the impact on our colleages who are leaving the company and are doing everything we can to help them with their future careers. We are confident that our sharpened product focus will help us deliver a truly game changing consumer product.”

When it burst onto the scene, Android co-founder Andy Rubin was back in the spotlight for reentering the mobile industry. But, despite his legendary status, Rubin’s leadership was severely lacking. Essential didn’t have anything substantial aside from a $300 million bank account and some hype. The first round of products is estimated to have cost $100 million in development.

Heading into 2019, Essential sits in make-or-break territory. Rubin and his team of industry veterans desperately need a successful product. If nothing clicks next year, the company could be closed or sold to an outside entity.

It’s been more than a year since Essential introduced a new product, and there doesn’t seem to be anything on the horizon. The PH-2, a flagship with upgraded hardware and software, was canceled for an unknown reason. Meanwhile, Essential also stopped developing its smart speaker. So far, it’s only relied on the PH-1 and some accessories to generate revenue.

Essential explored the possibility of a sale over the summer. Rubin enlisted the help of Credit Suisse, but nothing materialized from discussions. All assets are still in Essential’s name.

Last week, Bloomberg said there was another mobile device in the works. It’s a simplified smartphone that leverages artificial intelligence. Rather than asking users to do everything, Essential wants its technology to learn one’s behavior and act on their behalf.

Bloomberg

Justin Herrick

Justin is easily attracted to power buttons. His interest in technology started as a child in the 1990s with the original PlayStation, and two...

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