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Remembering the startups we lost in 2020
Even in a non-hell year, running a successful startup is a tremendous lift. After the events of 2020, however, no doubt many already lean businesses are hanging on by the skin of their teeth. For every company that saw increased interest in their offerings during the pandemic, there were several that simply couldn’t make it through the finish line.
We’ve put this list together for several years now. It’s not a fun task, but it seems worthwhile to commemorate the startups that have closed up shop over the past 12 months. (Some of them were acquired by larger companies before shutting down, but all of them began their life as startups, and it still felt worthwhile to mark the end of their stories.) It also offers an opportunity to examine those issues from a bit of distance to see if there are any broader takeaways for the community at large.
This year’s list is among the most diverse we’ve done, ranging from standard smaller-name closures to big blockbuster crashes like Quibi and Essential . For some, the pandemic was the final nail in the coffin, but in many cases, cracks in business models were already starting to surface well before COVID-19 ground the global economy to a screeching halt.
Total Raised: $75 million
Atrium, a 100-person legal tech startup founded by Justin Kan, shut down in March after failing to find an efficient way to replace the arduous systems of law firms. The startup even returned some of its $75.5 million in funding to its investors, including Andreessen Horowitz.
The shutdown comes after the platform had pivoted just months earlier, laying off in-house lawyers and turning into a clearer SaaS play. Ultimately, Atrium’s failure shows how difficult and unprofitable it could be to disrupt a traditional and complicated system.
The closure came just three years after it launched with the goal to build software for startups to navigate fundraising, hiring, acquisition deals and collaboration with their legal team.
Total Raised: $330 million
Image Credits: Darrell Etherington
Big plans, big names and a boatload of money should have been enough to buy Essential a lengthy runway. Sure, Essential was entering a mature and oversaturated market, but the Playground-backed startup was doing so with $330 million in funding, a team of top industry executives and some genuinely innovative ideas.
When I spoke to the company at launch, an executive outlined a 10-year plan to become a major player in both the mobile and smart home categories. Ultimately, the company was able to eke out just under three years of life after coming out of stealth. And while it did give the world a promising handset, its connected home hub never arrived.
Timing, broader marketing issues and troubling allegations of sexual misconduct were all contributing factors that stopped Essential’s big plans dead in their tracks.
Total Raised: $11.4 million
Image Credits: HubHaus
HubHaus, founded by Shruti Merchant, was a long-term housing rental platform rooted in the belief that adult dormitories would take off. The startup targeted working professionals in cities, and raised only around $11 million in known venture capital. When it came to raising a Series B, Merchant says the company struggled to close and lost investor interest due to WeWork’s failed IPO.
After then pivoting to a self-funded company, HubHaus was just finding footing when the coronavirus pandemic arrived in the United States, drastically hurting the rental market (as shown by Airbnb’s public struggles, as well). The housing company eventually decided to close down in September, leaving landlords, members and vendors in limbo and bringing on a fresh sweep of critique and controversy.
Affordable housing continues to be an issue in the Bay Area, and HubHaus’s departure from the scene underscores this truth.
Total Raised: $55 million
Image Credits: Hipmunk
Hipmunk, founded by Adam J. Goldstein and Reddit co-founder Steve Huffman, was one of the first travel aggregation platforms on the market. The company put together information on flights, hotels and car rental all into one place so consumers could compare and contrast prices with ease.
The focus was enough for the platform to get acquired by Concur, but now after four years, the travel startup shut down. Notably, the travel startup’s closure wasn’t necessarily tied to the coronavirus pandemic. The site officially went dark on January 23, months before lockdowns came to the United States.
Total Raised: $51.4 million
Photo: Thomas Barwick/Getty Images
IfOnly had created a marketplaces of exclusive events — such as “goat yoga” — a business that faced obvious challenges during the pandemic. The startup was actually acquired by one of its investors, Mastercard, late last year, but the acquisition wasn’t announced until IfOnly revealed over the summer that it was shutting down.
Mastercard also said IfOnly’s team and technology are still part of its Priceless experience marketplace: “The IfOnly platform will continue to help advance our Priceless strategy and our combined team will be even better positioned and equipped to deliver exclusive experiences for cardholders globally.”
Mixer/Beam Interactive (2014-2020)
Total Raised: $520,000
Image Credits: Microsoft
Microsoft shut down its Twitch competitor Mixer this year, handing off its partnerships to Facebook Gaming. The service had its roots in the software giant’s acquisition of Beam Interactive shortly after the startup won TechCrunch’s Startup Battlefield in 2016.
Before giving up, Microsoft made some big investments in Mixer’s success, most notably signing streaming superstars Ninja and Shroud to exclusive deals. (They became free agents after the shutdown.) However, Microsoft’s gaming chief Phil Spencer said the company suffered from starting out “pretty far behind” the biggest players in the streaming market.
Total Raised: $10.2 million
Image Credits: The Outline
Despite a busy year of innovation and venture for news media platforms, The Outline, which branded itself as “the next generation version of the New Yorker” was shut down. The media site was started by Josh Topolsky and had an explicit focus on serving millennials with a digital-first news media brand.
The shutdown was part of a broader layoffs at Bustle Digital Group, which acquired the publication in 2019. Pre-acquisition, The Outline had already scaled back its editorial staff and refocused on freelance articles. (Input — a tech site that Topolsky founded for BDG — continues to publish.)
Periscope went out with more of a whimper than a bang. The startup was acquired by Twitter before it had even launched a product. With Meerkat bursting on the scene that year at SXSW, Twitter went on the offensive, buying the startup to build out its own live video offering.
Periscope’s run was decent as far as these things go, and its technology will live on as part of Twitter’s video offerings, even after the app is officially discontinued next March. But in the end, Periscope was a shell of its former self. In fact, this is a rare instance where the pandemic may have actually delayed its shutdown.
The company notes, “We probably would have made this decision sooner if it weren’t for all of the projects we reprioritized due to the events of 2020.”
Total Raised: $15.1 million
Image Credits: PicoBrew
The company made beer-brewing machines that used coffee pod-style PicoPaks, then expanded into other categories like coffee and tea, but never quite attracted enough customers to make the business viable. It sold its assets earlier this year to PB Funding Group — a group of lenders recruited by then-CEO Bill Mitchell in 2018 to keep it afloat.
It’s possible that PicoBrew will live on in some form, as PB Funding Group says it’s seeking buyers for the company’s patents and other intellectual property, and that it will keep the website running in the short term so that the machines don’t stop working.
Total Raised: $1.75 billion
Quibi CEO Meg Whitman speaks about the short-form video streaming service for mobile Quibi during a keynote address January 8, 2020 at the 2020 Consumer Electronics Show (CES) in Las Vegas, Nevada. (Photo by ROBYN BECK/AFP via Getty Images)
More so than any tech company in recent memory (with the possible exception of Theranos), Quibi’s existence feels like a fever dream. $1.75 billion in funding later and what do we have to show for it? “Fierce Queens,” a nature documentary about female animals. The HGTV-style program, “Murder House Flip.” And, of course, “The Shape of Pasta.” A show about pasta.
Early reports of the service’s demise seemed premature — if only because there was seemingly no way a company could burn through that much capital that quickly. By late-October, however, it was over. “All that is left now is to offer a profound apology for disappointing you and, ultimately, for letting you down,” founders Jeffrey Katzenberg and Meg Whitman wrote in an open letter.
Sometimes startup failures are bad timing. Sometimes it’s just plain bad luck. With Quibi, the diagnoses of what went wrong can be summed up in one word: everything.
Total Raised: $15 million
Image Credits: Rubica
Rubica spun out of security company Concentric Advisors with the aim of offering tools that were more advanced than antivirus software, while still remaining accessible to individuals and small businesses. CEO and co-founder Frances Dewing said that when customers cut back on spending during the pandemic, the company tried to shift its focus to larger enterprise, but it failed to convince investors there was a business there.
“We were all really surprised given how relevant and needed this is right now,” she said. “Investors didn’t agree with that or see it in the same way.”
Total Raised: $104 million
Businessman’s hands with calculator and cost at the office and Financial data analyzing counting on wood desk. Image Credits: Sarinya Pinngam/EyeEm / Getty Images
ScaleFactor was a startup claiming to offer artificial intelligence tools that could replace accountants for small businesses; it blamed the pandemic for cutting its revenue in half and forcing the company to shut down. However, former employees and customers told Forbes a different story — that ScaleFactor actually relied on human accountants (including an outsourced team in the Philippines) to do the work.
While it’s hardly unprecedented for a startup to fudge the truth about their level of automation versus human labor, this reportedly resulted in error-filled accounting for ScaleFactor clients. (Responding to a fact-checking email, former CEO Kurt Rathmann said the email was “filled with numerous factual inaccuracies and misrepresentation” and declined to comment further.)
Total Raised: $20 million
Self-driving trucks startup Starksy Robotics began with this first, and problematic truck. Image Credits: Starsky Robotics
“In 2019, our truck became the first fully-unmanned truck to drive on a live highway,” Starsky Robotics co-founder and CEO Stefan Seltz-Axmacher wrote in a Medium post in March. “And in 2020, we’re shutting down.” After five years and $20 million in funding, the autonomous trucking company shut its doors that month. It wasn’t for lack of ambition or demand — it seems safe to assume there’s still a bright future for self-driving trucks.
Ultimately, however, Starsky won’t be along for that ride — a fact Seltz-Axmacher blames largely on timing. A crowded market is certainly at play, as well, with countless companies currently pushing to bring autonomous technology to the road.
Total Raised: $10 million
Image Credits: Bryce Durbin
Founded in 2018 by ex-Googlers, Stockwell AI shut down after being unable to find business for its in-building smart vending machines that stocked everything from condoms to La Croix. The company blamed the “current landscape” (also known as the global pandemic we are experiencing) for its closure.
Stockwell AI, formerly known as Bodega, was well-funded and well-known, with more than $45 million in funding from investors that included NEA, GV, DCM Ventures, Forerunner, First Round and Homebrew. Still, even venture capital couldn’t make vending machines work well enough.
Total Raised: $2.5 million
Image Credits: Trover
Another travel-focused startup bites the dust as the coronavirus limits the chance to safely explore the world (let alone your neighborhood). Trover, a photo-sharing hub for travelers acquired by Expedia, shut down in August. The startup was founded by Rich Barton and Jason Karas and was meant to connect people travelling to the same places. The startup had quite the life: it began out of the remains of TravelPost, a travel review site, and got scooped up by its parent company when it only had $2.5 million in funding. Unfortunately, its nine-year journey is over for now.
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Andy Rubin’s Essential shuts down
Essential was supposed to disrupt the smartphone industry. And when it was done with that, it was coming for the smart home. The company came out of stealth with a $330 million funding round and grandiose plans for a new brand of handset, led by none other than Android head, Andy Rubin.
But bad timing, broader industry issues and a founder embroiled in some pretty troubling allegations of sexual misconduct contributed to a company that has struggled to make it far beyond the launch of its first handset. In a blog post today, Essential announced that it would be ceasing operations and shutting down.
The post is a strange mix of existential dread and hopefulness, unveiling a final device it was never able to launch in the process. “Our vision was to invent a mobile computing paradigm that more seamlessly integrated with people’s lifestyle needs,” the ‘Essential team’ writes. “Despite our best efforts, we’ve now taken Gem as far as we can and regrettably have no clear path to deliver it to customers. Given this, we have made the difficult decision to cease operations and shutdown Essential.”
That’s all a nod to Project Gem, a new mobile form factor Essential first showcased through renders on social media back in October. The post features the first product videos for Gem, set to a kind of moody acid jazz soundtrack showcasing the skinny candy bar form factor that plays out as a sort of alternative history insight into what might have been, had things gone better for a company once valued at $1 billion.
The news follows years of speculation about the health of the company. In May 2018, reports surfaced that Essential was up for sale following disappointing sales of its first handset. Spokespeople for Essential have long insisted, however, that the company was carrying on in spite of reports. The Project Gem reveal, it seems, was a Hail Mary that turned into a parting shot. What “taken Gem as far as we can” means with regard to a product that didn’t make it beyond the promotional video stage remains to be seen.
Sadly, this also seems to be an end for Newton Mail, the power user-focused email client Essential took over when it acquired CloudMagic in 2018. Essential says that “current Newton Mail users will have access to the service through April 30, 2020.”
TechCrunch reached out to Essential for further comment, but we were ultimately directed to the initial blog post. The same month Gem was revealed, news surfaced that Rubin had been bought out of his Playground incubator, which shared closed ties — and an office — with Essential.
The executive had become a liability following explosive allegations of sexual misconduct during his time at Google.
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What the hell is up with this Essential device?
Essential CEO Andy Rubin has been pretty silent over the past year for, well, lots of reasons — both business and otherwise. The company has struggled to sell devices, reportedly shipping only 88,000 handsets in its first year. On a far more serious note, Rubin has been plagued by reports of inappropriate behavior during his time at Google. A bombshell report from The New York Times highlighted sexual misconduct accusations prior to his receiving a $90 million exit package from the company.
The former Google executive last used Twitter to state that the story “contains numerous inaccuracies about my employment at Google.” Now, a year later, he’s back on the platform touting a new device. It could be the next Essential handset, or it could be something else entirely.
It’s not the shiny “GEM Colorshift material” on the back that’s caught viewers’ eyes, as much as the “new UI for radically different formfactor.” The closet thing I can thing to compare the long, skinny handset to is the new Galaxy Fold when closed. Of course, this has the decided advantage of a full length screen.
New UI for radically different formfactor pic.twitter.com/Es8hFrTuxx
— Andy Rubin (@Arubin) October 8, 2019
The UI appears to be a collection of different widgets, each sporting different apps: weather, maps, calendar and Uber on one, with a full length map on the other. It’s certainly different and even more of a departure from the original Essential handset, which had very little of the industry revolutionizing impact the company was initially hoping for.
A spokesperson for the company confirmed that the new device is in “early testing” in the real world, which is probably why Rubin opted to get out in front of leaks by showing the half-phone on his own terms, rather than grainy leaks. Here’s the official statement from Essential:
We’ve been working on a new device that’s now in early testing with our team outside the lab. We look forward to sharing more in the near future.
There are, of course, way more questions than answers right now, like whether the company is abandoning the first gen’s modular attachment system. Also, is the lack of cellular information at top a sign? Is this why the company acquired CloudMagic? Can one say this is truly “essential”?
At the very least, the existence of such a device does seem to contradict earlier rumors about Rubin canceling the device and attempting to sell the company. Maybe. If I had to venture a guess, I’d say Essential is courting a similar secondary handset market as Palm — though that, too, didn’t exactly set the smartphone world ablaze.
More soon, I suppose.
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Essential is releasing a wired headphone jack accessory
Essential has been nearly radio silent since reports surfaced late last month that Andy Rubin was looking for a buyer for his hardware startup. The company didn’t really confirm or deny the rumors — or say much else for that matter. A few weeks later, the company does have some news — but it’s not what you were most likely expecting.
The startup just dropped the second modular accessory for its first smartphone. The Audio Adapter HD features a built-in amp and the ability to play back MQA (Master Quality Authenticated), a hi-res streaming audio technology. Oh, and there’s a 3.5mm audio jack, because everything that’s old is new again.
Bonus track: We teamed up with @TIDAL to give new and existing Essential Phone customers a free 3-month TIDAL HiFi subscription. Learn how to redeem this offer and start listening to thousands of MQA tracks today: https://t.co/JUYZD89dto pic.twitter.com/ETM58Hjqa9
— Essential (@essential) June 7, 2018
The new add-on is set to drop at some point this summer. The company has also teamed up with Tidal. The streaming service has also reportedly had some issues of late, though, for its part, the company did offer a more outright denial. The partnership gives new and existing Essential customers a three-month trial subscription of Tidal’s HiFi service — a taste of what they’ve been missing with their low bit rates.
The company has declined to provide pricing for the add-on. Its first mod, the 360-degree camera, retailed for $200 at launch, though that price has since dropped considerably on retailers like Amazon — much like the Essential phone itself. As with the camera, the Audio Adapter HD feels like a niche, compared to mods from Motorola, which include things like battery packs and speakers.
At the very least, however, it does show that there’s still some life left in the Essential line.
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Andy Rubin’s Essential is reportedly up for sale and has cancelled work on its next smartphone
Essential, the smartphone company helmed by Android co-creator Andy Rubin, is trying to sell itself and has cancelled development of its next phone, Bloomberg reports.
The report states that Essential has hired Credit Suisse Group AG to advise them on potentially selling itself. The company raised $330 million from investors, including Rubin’s own Playground Global, Tencent Holdings and the Amazon Alexa Fund. The news of a potential sale accompanies news that the company has ended development on its next smartphone, a major blow for a company aimed to challenge companies like Apple and Samsung with a device that it hoped would hold its own.
“We always have multiple products in development at the same time and we embrace canceling some in favor of the ones we think will be bigger hits,” an Essential spokesperson told TechCrunch. “We are putting all of our efforts towards our future, game-changing products, which include mobile and home products.”
The Essential phone went on sale in August for $699 with a bold, reduced bezel design that was soon present on a variety of smartphones. A report from IDC suggested that the company only sold 88,000 phones in 2017. Sluggish sales prompted the company to slash $200 off the price of the phone just months later, earning it a price that one of my colleagues called the “best deal in smartphones.”
Though Essential’s smartphone is still on sale, without a clear plan to continue their smartphone line, it’s pretty dubious how they’ll continue their dream of a unified experience centered around the company’s ambient OS. The company has already detailed some of their work on Essential Home, a home assistant hub that would include a circular display that could also deliver visual notifications.
Essential was always setting itself up for a David/Goliath battle, but it seems that nine months after showing off their flagship smartphone they’ve realized they weren’t quite ready to go up against the giants.
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Essential’s first handset is coming to more markets
It’s hard launching a phone company — something Essential was pretty candid about from the start. Andy Rubin’s latest endeavor got off to something of a slow start, according to outside accounts, but today the well-funded hardware startup is getting ready to add a whole bunch of new markets to its online store.
On Twitter today, the company announced a handful of key additions to its coverage map, including Canada, France, Japan and the U.K. As Engadget notes, availability in some of those markets already exists, but not through the company’s own shop, most notably Canada, where users can pick up the handset via Amazon or Telus.
Starting today, we’re opening the https://t.co/5XqZeQu9cW store to orders from more countries, including Canada, France, Japan and UK. Special terms and conditions apply to these orders, so please read the information carefully: https://t.co/uZK8sLvUA5 pic.twitter.com/QXEWf8OEnE
— Essential (@essential) April 27, 2018
There are also some country-specific caveats here. Those can be found through the company’s Terms of Service, which notes that the handset is now also available in Germany.
It’s been a slow roll out for the company, but understandably so. It’s not easy starting this kind of endeavor from scratch, even with the $300 million in funding the company managed to drum up. Essential spent its first year primarily focused on its home market, delivering Amazon and Best Buy availability, along with a Sprint deal.
Building distribution channels this time out should ease some of the burden of launching when the time comes to deliver version 2.0.
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Essential really wants to solve the screen notch problem
In a way, Essential is something of a pioneer. Before the iPhone X helped the world reluctantly embrace the screen notch, the company proudly displayed one atop its first flagship. Since then, of course, it’s become a feature, not a bug, with a long list of companies rushing to embrace it on their latest flagship. But Essential’s clearly hoping to solve the issue with a number… Read More
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Essential reportedly only shipped 88,000 phones in 2017
Essential knew it had a hard road ahead of it. Andy Rubin and company acknowledged as much when they launched a handset aimed at taking on the likes of Apple and Samsung. Given that the company hasn’t issued anything in the way of official numbers thus far, a new batch of numbers from IDC are the best we have to go on at the moment — and things don’t look great. Read More
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Essential offers up an Android Oreo beta for the Essential Phone
Android smartphone maker Essential promised that it would be releasing an update to Android 8.0 Oreo for its devices soon, and now there’s a beta version of the update available through its developer portal. This is just a beta, as mentioned, but it’s broadly available for anyone interested enough in the Oreo update to try out pre-release software. Read More
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Essential Phone gets a $200 price drop, existing customers get credit
Essential has an offer that’s honestly very hard to refuse: The price of the Essential Phone (PH-1, going by technical model number), is now $200 cheaper, so $499 off-contract and unlocked. That’s an amazing price for their debut smartphone, which remains my favorite in terms of straight up industrial design (and it has one of the best color-tuned displays in devices right now in… Read More
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