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Jawbone CEO Hosain Rahman. Photo by Flickr/TechCrunch. Chart by Jeff Greco, chart images by Jawbone..
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Startups

What Went Wrong at Jawbone

By
Reed Albergotti
 |  Sept. 8, 2015 7:06 AM PDT
Photo: Jawbone CEO Hosain Rahman. Photo by Flickr/TechCrunch. Chart by Jeff Greco, chart images by Jawbone..

May was a triumphant month for Jawbone, an otherwise embattled maker of fitness-tracking bracelets and other gadgets. For more than 12 months, it had been looking for badly-needed investment capital, after having spent heavily on product development, new employees and dealing with complaints about defective products. But that month it raised $300 million in funding from private equity firm BlackRock and hired a Google executive Sameer Samat to serve as its president.

The funding and executive appointment opens a new chapter for a company that since its founding in 1999 has had plenty of ups and downs, including frequent glitches with products requiring, in at least one case, embarrassing refunds. Yet Jawbone is one of the few private Silicon Valley firms that has built a well-known consumer electronics brand in an era in which software companies have dominated. It is also a classic case of a company led by a co-founder who has kept his hand firmly on the tiller despite major setbacks.

For the first time, CEO Hosain Rahman addressed some of these issues in interviews with The Information. For instance, Jawbone blames its most recent struggles on a funding round gone wrong. Private equity firm Rizvi Traverse was in line to put $175 million into the company, Jawbone says, but abruptly halted its investment after the first $25 million payment.

But in dozens of interviews with former engineers and executives, other causes of Jawbone’s troubles emerged.

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