Andy Rubin's Essential Products, which raised $330M to build smartphones and was valued at $1B, says it is ceasing operations

The smartphone company founded by Mr. Rubin, a former Google executive, struggled to win over customers. — SAN FRANCISCO — Essential Products …

New York Times 2020-02-13

Context & Ripple Effects

Essential Products' shutdown closes an arc that was visible for years: SoftBank scrapped a planned $100M investment before launch, and by mid-2018 the company was already weighing a sale and had canceled its next phone. The $330M total — including a $300M round from Tencent and Amazon that made Best Buy and Amazon its US retail launch partners — never translated into customer traction.

What makes this more than a single-company failure is who founded it: Andy Rubin created Android at Google, meaning the best-credentialed founder possible could not crack a smartphone market already locked up by incumbents with scale in supply chains, carrier relationships, and software update commitments.

First-order effects

Tencent, Amazon, and Essential's other backers write off their stakes in what was valued at $1B, while Best Buy and Amazon lose a flagship Android device they had committed to merchandising.

Second-order effects

For any remaining challenger-phone startups, the bar for raising hardware capital rises further: investors now have a cautionary tale showing that founder pedigree plus top-tier retail partners does not overcome incumbent scale.

Third-order effects

If the pattern holds, the premium smartphone market consolidates structurally around a handful of vertically integrated players, pushing would-be entrants toward niches (rugged, modular, privacy-focused) rather than head-on flagship competition.

The trend: Smartphone hardware is consolidating around incumbents whose supply-chain scale and update commitments shut out even celebrity-founder challengers with nine-figure backing.

Discussion

@cassidyjames Cassidy James on x
A company getting this far with a product (and extremely slick marketing materials!) and then folding points to extreme mismanagement. But *damn* that GEM phone looks really interesting. I would have loved to see it come to market. https://www.essential.com/...
@androidcentral @androidcentral on x
No more Essential Phone sequels. Andy Rubin's Essential is shutting down https://www.androidcentral.com/ ...
@carnage4life Dare Obasanjo on x
The fact Andy Rubin's startup to create the next great phone failed after raising $330M likely indicates that a big part of Android's success was because Google acquired it. Food for thought as FTC decides to revisit old acquisitions by big tech companies. https://9to5google.com/…
@msurguy Maks Surguy on x
Wow, feels like General Magic part II... Especially for Andy Rubin (https://en.m.wikipedia.org/ ...). Wonder what went wrong with the vision and financials. https://twitter.com/...
@dcseifert Dan Seifert on x
it's very weird that the meaningful result of a phone company shutting down is that I'll have to find a new email app to use https://www.essential.com/...
@tapbot_paul Paul Haddad on x
I hate to speak ill of the “dead” but wow those videos make this device seem truly awful. This is not a good form factor for a touch screen device. https://www.essential.com/... https://twitter.com/...
@alex__rubel Alex Rubel on x
@Techmeme @unpositive Still using PH-1 after 2 years. Such a great phone
@daiwaka Daisuke Wakabayashi on x
We updated our story on Essential. A few companies had expressed interest in buying Essential in 2018 including Amazon and Walmart — but ultimately the interest disappeared because of “headline risk” with Andy Rubin. https://www.nytimes.com/...
@rquandt Roland Quandt on x
Gem's dead. And so is Essential. This is the end of the road for Newton Mail, too. And the weird stick-phone. https://www.essential.com/...
@saschasegan Sascha Segan on x
Phone company Essential shuts down. Betting the farm on Andy Rubin, a deeply flawed personality, turned out to be fatal. https://www.essential.com/...
@hunterwalk @hunterwalk on x
essential first to market with the folding smartphone.... https://twitter.com/...
@mgsiegler M.G. Siegler on x
Inessential, as it turns out. https://twitter.com/...
@danprimack Dan Primack on x
Essential, the Andy Rubin-led phone startup that just shut down, had raised $330 million from a giant list of backers. They include Tencent, Foxconn, Amazon, Redpoint, and Rubin's own Playground Global.
@stevekovach Steve Kovach on x
$330 million in funding for one phone that didn't sell very well. https://twitter.com/...
@s_m_i Stacy-Marie Ishmael on x
so much waste. https://www.nytimes.com/...

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