The $165 million Jawbone raised last week is a signal that, despite a string of layoffs last year, the company is still charging ahead with its land grab in the wearables market.
The San Francisco-based company raised the funding in a round led by the Kuwait Investment Authority, with participation from existing investor Sequoia Capital. This brings total capital raised to more than $890 million, following a $300 million private equity round led by BlackRock in April 2015. Founder and chief executive officer Hosain Rahman told WWD today that the capital will be used to fund operations, fuel further growth and help bring new products to market.
Just add Jawbone to the list of tech companies and fashion brands trying to solidify their position in the hot wearables space. Hermès and Apple are expanding distribution of the Apple Watch Hermès. On Friday, all styles of the luxe smartwatch will hit hermes.com and apple.com. At the Consumer Electronics Show in Las Vegas this month, Fossil said it would launch 100 wearables this year, and new product were unveiled from Under Armour, WiseWear and Fitbit.
Despite some troubles in November, when the company cut its staff and shuttered its New York outpost, Rahman said Jawbone was merely consolidating offices to “drive focus and efficiency.” Jawbone is in the midst of undergoing restructuring to accommodate growth in several areas this year, he said.
“We laid off a relatively small amount, less than 15 percent. We had too much overlap and inefficiencies with respect to geographical spread….Our financial position is the strongest it has been in several years,” Rahman said.
He acknowledged that the team did have “some unexpected bumps” during the last two years, but he called it a “wonderful testament to the team at how we came through all of it much stronger and better.”
He said he’s not worried that the company’s valuation, reported to be as high as $3 billion two years ago, has dipped to $1.5 billion. While he’s unable to comment how much Jawbone is worth after closing the most-recent round of funding, Rahman did point to “a lot of misreporting for some time” on the topic of soaring valuations and tech companies.
“The overall market landscape is such that you will see valuations change dramatically over the next 12 months,” Rahman said, adding that the company has introduced a 30 percent option pool for employees. He stayed mum on any plans to take Jawbone public in the near future.
Something he was eager to discuss, though, is the integral role fashion has begun to play in wearables.
In September, Jawbone unveiled a handful of new color and style activity trackers to coincide with the kickoff of Fashion Week, including a braceletlike band that resembles jewelry in its $99 Up2 range. Navy, gold and red colorways of the more advanced sports and multisensory Up3 tracker, which retailers for $179, were also released at the same time.
Rahman said wearables are more intimate than other consumer electronics — and for this category to scale, it will inevitably have to “be closer to fashion.”
The brand has been lauded for its design-centric approach to bringing activity trackers to the masses.
“It would be strange if everyone wore the same shirt or shoes; instead we mix and match things to our own individual tastes and styles. But this will take two to three years as traditional jewelry and watch companies embrace new technology and the underlying sensors evolve,” Rahman said. “Fashion DNA and thinking is really important to us and to what people want. One can have a beautiful and highly functional, technical product…there shouldn’t be an either or.”
The company told WWD late last year that it sold millions of devices in 2015, but Rahman declined to get more specific. The category has experienced meaningful expansion the past two years, with Jawbone specifically seeing 200 percent growth year over year in 2013 and 2014.
Meanwhile, Jawbone’s most-direct competitor in the space, Fitbit has been weathering its own struggles. After a flurry of press and stock market gains following its initial public offering in June, Fitbit’s shares have lost significant ground as overall competition in the space ramped up. It closed up 0.7 percent to $17.79 Wednesday, near its all-time low and down 66 percent from its high of $51.90 in August.