Sphero, maker of robotic toys, lays off 45 employees after disappointing holiday season and says it's now focusing on its efforts in education
Brian Heater / TechCrunch :
Context & Ripple Effects
Sphero's January 2018 retrenchment lands just months after it spun out Misty Robotics with an $11.5M Series A to chase home robots — meaning the company was splitting its bets even as its core toy business hit a weak holiday season. The layoff of 45 employees and the declared shift toward education mark the moment the consumer-toy bet stopped being the center of gravity.
The pivot held: within eighteen months Sphero had raised fresh capital on the education story ($12M of a planned $20M round), and by 2019 it doubled down on classrooms by acquiring littleBits' electronics kits. The January cuts were the hinge between toy company and education company.
First-order effects
- Forty-five Sphero employees lose their jobs immediately, and the product roadmap narrows: retail toy lines give way to school-focused offerings as the stated priority.
- Sphero's leadership now has to sell investors an education thesis rather than a holiday-quarter toy business, resetting the metrics the company is judged on.
Second-order effects
- Investors validated the retreat rather than punishing it — the mid-2018 raise shows capital flowing toward classroom robotics, where sales cycles are longer but demand is institutional instead of seasonal.
- Rivals in educational robotics face a better-funded, focused competitor, while Sphero's consumer shelf presence thins, ceding toy-aisle ground it once used as brand advertising for the education line.
Third-order effects
- Consumer robot toys are proving structurally hard to sustain — the same dynamic that later pushed iRobot into deep layoffs after its Amazon deal collapsed — pushing hardware startups toward buyers who sign contracts, not wishlists.
- If the pattern holds, toy robotics consolidates into education-first platforms built through acquisitions like littleBits, with consumer products demoted to marketing funnels or spun off entirely.
The trend: Consumer robotics companies are restructuring around institutional buyers — schools, first responders, enterprises — because seasonal toy demand cannot carry hardware R&D.