Item tracking startup Adero is laying off 45% of staff, just weeks after it pivoted

Published February 8, 2019

Pivots can be the making of a startup, helping teams refocus on a good idea when previous things haven’t worked. But sometimes, they are just one more step on a difficult track. TechCrunch has learned and confirmed that Adero — an Amazon-backed maker of Bluetooth-enabled tracking tags that until last December was known as TrackR — is laying off at least 45 percent of its staff. The cuts come as Adero refocuses on building software instead of hardware products, and attempts to build a B2B business that reduces its emphasis on the consumer market ahead of plans to raise another round of funding.

The layoffs, which started last week, follow a pivot about two months ago from selling individual tracking tags — a business that had become increasingly commoditized — to developing solutions to organise and track groups of items that tend to be used together (such as the contents of a school backpack).

It’s not clear exactly how many employees are being affected, but when the pivot was announced at the end of November, the company had 60 employees, which would work out to 27 employees in this latest cut.

A spokesperson said that layoffs were being made to put more focus on building software instead of hardware.

“As our new brand grows, we can now move to the next chapter in developing the intelligent organization platform,” he said. “As a result, we’ve parted ways with a portion of the team that was brought on to help design and deliver the consumer product. We will both support the consumer products and focus new energy on developing the platform that powers our consumer products so it can power the experiences of our strategic partners.”

The layoffs and shift at Adero underscore the more general, continuing challenges of building hardware startups. If the product is unique, chances are that the economies of scale to manufacture it will be too capital-intensive for even well-capitalised startups.

But often, the products are just not unique enough. Adero, for example, competes with Tile and a plethora of smaller brands selling tracking dongles that are either very similar or fulfill a similar purpose, and that in turn commoditizes the core product. The mission then becomes building services around the hardware that are in and of themselves distinctive, or at least trying to be.

“It took a superhuman effort to develop and deliver a new product from scratch — hardware, software, cloud — in nine months,” CEO Nate Kelly wrote in an emailed statement when contacted to provide more detail about the layoffs.

“We threw everything we had into that work and are happy to say that not only did we launch but we have, since launch, delivered two updates to iOS, one to Android and will be delivering… a firmware update that increases the reliability of the product and releases new functionality like removing the limits on the number of taglets.”

Adero’s relaunch in December saw the company building a new line of large and small tags that allowed users to group items that often travelled together to help track them more logically, with plans to add more predictive and other intelligent features over time. “We did more than launch new products, we also built a platform, Activefield, that can scale across many products, many companies and unlimited use cases,” Kelly said.

He added that now the company is trying to work with more (unnamed) strategic partners. That B2B shift also has translated to cutting costs and streamlining particularly in “areas where we had bulked up” to launch the consumer product. “We don’t need that level of support anymore,” he said.

“Now that we’ve launched on our website and on Amazon” — which is an investor in Adero — “we will continue to take our product into other channels and countries, but the push in consumer comes second in focus to the further development of the platform and the deployment into a number of strategic partners,” he said. “This is all very ambitious and we are a small company with limited resources so I’m having to make some changes to the org that makes us leaner and sharpens our focus on deploying our ‘powered by Activefield’ strategy.”

He said that while Adero will continue to support its consumer products, “we hope to come back to you soon to share some good news on partnerships.”

He added that Adero also hoped to have more news of a new round of funding later this quarter. To date, the company has raised about $50 million, but its valuation has yo-yoed from $150 million in August 2017, to just $40 million in July 2018. Investors in the company, in addition to Amazon, include Foundry Group, NTT and Revolution.

While the company would only confirm 45 percent of employees were laid off, our tipsters paint a slightly more dire picture of the company. One tip we received described the layoffs as covering “almost everyone” and another noted that “the majority of the team” at the Santa Barbara-based startup are now gone. “Very few remain to help close the business,” it said.

The news caps off a tricky year for Adero. In January 2018, still branded TrackR, it laid off around 42 employees — at the time just under half its employees. The layoffs came as it was emerging that the startup’s core product, its Bluetooth tag, was becoming increasingly commoditized, with dozens of me-too trackers sold alongside it on Amazon and other marketplaces. (Its biggest rival, Tile, has also seen some big changes and also appears to be shifting its focus to a wider home IoT play.)

Around the time of those layoffs, first one and then both of the company’s founders — Chris Herbert and Christian Smith — stepped away from day-to-day roles at the company. Herbert had been CEO and he was replaced by Kelly, who had been the COO.

Then came the funding round at a big devaluation. “Foundry and Revolution [two of the startup’s investors] were hoping that they would put this money in and I could fix and scale things, similar to how I’d scaled Sonos and so on,” Kelly said about the funding in November (his experience includes Sonos, Tesla and Facebook). “But within six weeks, it became evident that we didn’t need to scale but figure out what the future was and where this is going.”

Where this is going continues to be the question as Adero takes its next steps.

TrackR is rebranding to Adero as it looks beyond small devices to track lost items

Published October 19, 2018

When TrackR raised $50 million from investors that included Amazon a year ago, the Santa Barbara startup made a big splash in the growing market for small connected dongles that you could attach to “dumb” objects like keys to keep tabs on their location. But times for the company have been challenging since then. It’s weathered layoffs; a succession of natural disasters; and its co-founders stepping away from exec roles as CEO and president. Those events took their toll: we discovered that TrackR quietly closed an additional, small amount of funding earlier this year — but on a valuation of $40 million, a 73 percent drop compared to less than a year before.

Now it looks like the startup is about to enter another new phase. TrackR is launching a new brand, Adero, and sources say it is widening its focus to other uses for its tracking technology, taking TrackR beyond the circular Bluetooth fobs that form the core of its service today.

TechCrunch first learned of the brand change from an anonymous tipster, who said he’d noticed a legal name change for the company on Carta, from TrackR to Adero, “to match their new focus on home solutions.” Another source said that TrackR had been talking to retailers to sell what sounds like a larger connected home solution, although the outcome of those discussions is not clear.

We have also noticed that TrackR has been discounting its existing stock, a sign that it could be trying to clear the decks for whatever is coming next. Contacted for this story, a spokesperson did not comment on whether it would continue to sell products like the TrackR Bravo and Pixel — only that it would continue to support them.

“TrackR will continue to support all products we’ve sold into the market,” he said. “Both the battery replacement program and the Crowd Locate network are both active.”

Christian Smith, who had been the company’s president but quietly left his executive role at the startup at the end of last year, had once described a bigger vision of targeting enterprises in an IoT play, although it’s also not clear if this is part of TrackR’s plan now, or if it ever will be.

Whatever the pivot will entail, it is happening at a critical time. The company quietly raised $10 million in July, at a $40 million valuation according to Pitchbook. It was a clear downround: TrackR was valued at $150 million when it raised $50 million a recently as August 2017. Investors were not disclosed in the most recent funding, but previous backers of the company, in addition to Amazon, include Foundry Group, NTT, and Revolution.

“As our valuation reflects, at the start of this year, we made a conscious decision with the support of our board to build a new future instead of chasing incremental growth,” a spokesperson said of the reduced valuation. “The future we’re building revolves around helping our users proactively manage the chaos of life. We’re excited to reveal the first chapter of our new story in a few weeks.”

TrackR is expected to make an official announcement of its plans towards the end of November, we understand. It declined to comment on the new brand or direction for this article.

But we found a trail of records connecting TrackR to Adero dating from the middle of this year — an indication that the startup has been working on this strategy for at least six months.

Starting in May 2018, Trackr registered three trademarks for Adero. One filed in May of this year describes Adero in fairly generic terms: “Telecommunications services, namely, electronic transmission of data, messages, graphics, images, audio, video and information among users relating to locating, managing, organizing, and tracking assets, devices, and objects.”

Another trademark application details “cloud based software for tracking, organizing, and managing assets, objects, and devices; providing an interactive website featuring non-downloadable software that allows for the tracking, organizing, and managing of assets, objects, and devices; providing temporary use of non-downloadable cloud-based software for sharing information about, organizing, and managing networked wireless devices; providing temporary use of online non-downloadable software that shares information and data between electronic devices within a community of users; providing an on-line network environment that features technology for sharing, organizing, and managing data between wireless devices.”

A third describes hardware to manage such a service.

Trackr also registered separate trademarks around the same time is for a brand called “Activefield,” which might be one of the components of the Adero solution. (Its descriptions match those of the Adero trademarks.)

In addition to that, a Twitter profile for Adero features a picture of Santa Barbara — the homebase of Trackr. And ownership of the Adero.com domain, meanwhile, was transferred in May 2018, although the owner is not listed publicly (not unusual with domain applications). (An older Adero that some might remember was a telecoms company that had raised nearly $97 million in the first dot-com wave but then — like so many other startups of the time — shut down.)

IoT or bust

Trackr’s shift speaks to some of the challenges that have hung over the market for IoT when it comes to consumer services.

There is a lot of exciting potential in having all of the physical things in your world able to “speak” and for you to be able to control them by way of data, but there are also hurdles.

To name just two, the market is full of competition, not just between lookalike dongles, but also between a wide range of products that are all getting connectivity built into them, removing the need for the dongle to begin with. This all makes for difficult margins.

Second, although we have seen a flood of products hit the market, it’s still early days when it comes to understanding just how strong demand is for these products, and what it is that consumers ultimately will want to invest in. “Issues around interoperability, security and privacy concerns, and the cost of devices will continue to be leading inhibitors to the market’s growth,” IDC analyst Adam Wright noted in a recent report.

As it happens, both TrackR and its closest competitor Tile have reportedly had disappointing sales in key periods like the holidays, and tellingly Tile has also seen a series of recent changes.

In September, the company appointed a new CEO, CJ Prober, as it took on a new strategic investment from Comcast that points to its own efforts to widen its business beyond its square trackers. It also moved into subscription services, with the launch of a new device with a battery that can be replaced by way of a subscription.

For its part, Tile last month said that it has sold more than 15 million of its square devices, accounting for some 95 percent of the market in the US (according to estimates from NPD), while TrackR’s most recent update of 5 million shipped dates from 2017. In the wider game of economies of scale that underpins so much of the hardware business, those figures may have been the writing on the wall for TrackR.