When Amazon bought mesh Wi-Fi router company Eero, our first reactions were of exhaustion, consternation and concern: why couldn’t a tiny company with an excellent privacy-minded product be left to its own devices, instead of getting snapped up by the big data giant from Seattle?
Now, we know why. Mashable reports that Amazon paid just $97 million for Eero, far less money than the $148 million it reportedly raised as a startup. That’s something you don’t do unless your business is in trouble, and it means Amazon may have actually saved Eero from a different fate.
The Verge can confirm that $97 million number, by the way, as well as many of the others in Mashable’s story — we’ve seen similar documents, and we believe they’re the real deal. Eero declined to comment.
There are many potential side effects to Amazon purchasing Eero in a fire sale rather than at a profit, and Mashable’s report details some of them, like how Eero’s executives are making out like bandits with multi-million dollar golden parachutes, while rank-and-file employees are now sitting on worthless stock options — or worse, shares they purchased for $3 that are now worth $0.03 each. That’s not unusual, but it is a cautionary tale about how stock options work.
But — and we’re very deep in speculation territory now — I’m curious if it also means that we should expect less from Eero, under Amazon, than we might have if it were more of a success story for the startup. If Amazon was able to pay so little for Eero, it may well have smaller ambitions for the company, and it would be that much easier to justify killing it off as a failed experiment if anything goes wrong.
After all, Amazon reportedly paid over $1 billion for smart doorbell maker Ring in early 2018, and has barely begun to integrate its products with Amazon’s Alexa voice assistant in no-brainer ways, over a year later.
And as Nest’s Tony Fadell and Oculus’ Palmer Luckey will tell you, a big sale price doesn’t necessarily mean a founder gets to continue steering a company indefinitely once it’s sold.
Amazon’s Dave Limp hinted in March that we should expect to see Eero’s first attempts to “make the smart home even easier” in the next 6 to 12 months.