The article makes the case that iRobot mismanaged their business at the behest of investors. Suppose one grants that this mismanagement occurred[0]. Then years into the mismanagement, Amazon offers to buy them. At this point, whatever path the company has been doomed to by mismanagement has already been taken.
In 2022, one cannot go back to the 2010s and repair whatever bad business decisions have been made. So the FTC decisions must then be seen in this light. So the case made by this article is that a dominant player in an industry has made decisions that slowly but surely doom them. Seeing the imminent doom, they have found an acquirer who might be able to rescue them.
The FTC is not operating in a universe conditional on iRobot already having done what they've done. Consequently, even if you can blame iRobot for getting into the situation, you must also blame the FTC for closing off their escape route and de-facto enforcing the sell-off to the Chinese.
As for the other thing about neither the FTC nor the EU actually bringing any proceedings against Amazon or iRobot and simply requesting information: this seems either naïve or a misrepresentation of how governments act to end deals. It's not that convincing to me that organizations that have expressly indicated that they want to break up the big companies are "just asking for information".
One thing I find interesting about Western governments is that they're very similar to the Indian governments that I am familiar with. They employ the same tactics. Every immigrant knows to be rightfully fearful of the white, pink, blue, and yellow slips and the RFE notices they receive. A simple "Request For Evidence". A common strategy back home in India, too.
I suppose the reason those in the West are less aware of these things is that the standard bureaucracy mostly works if you're a domestic W-2 employee. Interactions with the government are few and generally functional. So they come to believe that the government is a highly honest machine: if it asks for X, it does not indicate anything more than a request for X. Those interacting with the more politicised parts of Western government find that they strategically employ the usual tactics that Indian bureaucracies wield routinely at the lowest level.
Overall, therefore, I don't find this convincing. Looking at the other things that Matt Stoller writes, I also suspect there is a partisan slant to this.
0: Businesses are hard. You operate in the fog of war. We could easily be telling a different tale if the bet paid off.
To be honest the Roomba sucked and got eaten alive by better chinese competitors.
I bought a top of the line expensive Roomba years ago and ended up switching to neato a year later, because I would just come home and it would be stuck on something.
Sure, but the author is arguing that the outcome you're describing is tightly coupled to the perverse incentives that he describes in the article. Investors pushed the company towards extraction over innovation and the end product suffered as a result.
The innovation being shutdown wasn't innovation towards making robot vacuum cleaners better. It was innovation direct towards military applications like building robotic hands.
Let's run an expierement where we just run exploit forever, let's restrucute the private sector, our countries moral baselines and eventually our executive leadership to be maximally exploitive, lets do that for about 45 years and see where it lands us -Some greed is good guys in the 80s probably.
I had an ancient-ish Roomba (620, 11 years ago). The repairability was amazing. This was from back when there was little competition, but just 2 years ago I could still get every part replaced. Only screws, nothing else. It was beautiful. I got a new vacuum/mop now, vastly better functionality, in exchange for the cloud, but I'm glad my old one lives one at my parents.
I've read it's way worse nowadays, but if they stayed at their quality from back then, I'd have probably paid more for an offline workable repairable vacuum.
Growing up, local morning radio shows were no longer allowed to say "that sucked" so they all switched to "that vacuumed". The ridiculousness of being offended by idioms like this amuses me
That's a good reminder I need to go track down my roborock, it got stuck somewhere again. There's a map thankfully which helps me figure out where to look.
How much difference was made by the Chinese competitors being able to use whatever IP they wanted, and Roomba being constrained by law and licensing, and not being able to enforce their own IP? What were the consequences of having to engage with China for manufacturing, effectively giving them the capability to clone any R&D on the fly, without having to figure things out themselves?
How much did regulation and taxation and red tape play into Roomba's inability to compete?
What sort of VC deals were they shackled by, in order to siphon off the data and abuse it for third party marketing, and other forms of enshittification?
There's a lot that American companies have been held back by. Some of it is actually good, consumer protective and well crafted, but it won't work if you allow other players in the same market to ignore the regulations and restrictions without consequences. Other policy is just stupid and self destructive, and other policies border on malignant, deliberately giving foreign companies significant advantages, directly and indirectly, without any other purpose.
American companies are way too easily forced into a race to the bottom dynamic, resulting in failure and huge wastes of money and effort.
No one ever forced any company to work with China. They all went to China over decades because it was cheaper and made more profits, knowing full well there’d be technological transfer since it was always China’s goal and even explicit in contracts and agreements.
Being surprised now that profits became technology transfer and China is now a real competitor is useless. They knew it, just didn’t think the Chinese could be real players in tech, or didn’t care because short-term profit was more attractive.
So it was profits then, and if you’re asking “what sort of VC deals were they shackled by”, it’s profits now. So the point of the article still stands, Wall Street screwed them over.
From the article: Under a trade regime overseen by men like Furman, the company offshored production, thus teaching its future rivals in China how to make robot cleaners.
In many cases (I suspect this is one of them) there is room for multiple bad guys. Why couldn't the FTC, Roomba Management, Wall Street, China, etc. all be at fault? Seems like it fits the evidence nicely.
Roombas just weren't that useful for most house layouts and situations (cords/toys/clutter/etc.) I seriously considered getting one and decided it just wouldn't be a win.
I bought a top-of-line Dreame, Roborock, and Eufy recently for our place - we have lots of pets.
The Dreame is easily 10,000x better than Roomba ever was. It never makes mistakes. I'd advocate for Dreame for anyone in the market for a robot vacuum. The app is annoying, but everything else about it is sublime.
Eufy would be better if they'd fix their roller brush design and didn't lean so heavily into making you buy their replacement components. It's designed around buying Eufy refills. The Anker team nails user friendliness and design, though.
Which does best with pets? We have a German shepherd that sheds like crazy. We vacuum every week and it will often fill a Dyson canister vac. We empty it every time we vacuum. We had a Roomba back in 2002 or so, but it was little more than a novelty (just wasn’t great vacuum and got hung up on too much stuff).
A huge fraction of the knee-jerk reactions here seem to miss the key point that the post is trying to get across:
> In the mid-2010s, during Furman’s tenure running economic policy under Obama, the company sold its defense business, offshored production, and slashed research, a result of pressure from financiers on Wall Street.
> Mesdag engaged in a proxy fight to wrest control of the company from its engineering founders, accusing one of its founders and iRobot Chairman Colin Angle of engaging in “egregious and abusive use of shareholder capital” for investing in research.
Yes Roomba sucks at this point. We get it. Thing is, if you slash research... that's what eventually becomes of your product.
This is what's wrong with investing overall: 1Q future blindness.
We'd have almost nothing if it weren't for university partnerships and corporate R&D way back when. There's no way to accomplish this now except to stay private.
It's crazy that the Dodge brothers destroyed the company/shareholder relationship for every contemporary and future US-based corporation and then died.
Typically we don't say that someone with cancer is slowly committing suicide. Technically correct, perhaps, but it needlessly applies central autonomy where it doesn't really exist.
Apparently it's not just "Wall Street" but "the market" which is a singular entity, which ruined the Roomba and then blamed Lina Khan and which can hardly complain about being described as a singular entity since it describes itself as such.
"On Monday, the FTC requested more information from both companies about the $1.7 billion deal, according to an investor filing from iRobot, in what’s known as a “second request” and an indicator of deeper scrutiny by antitrust officials."
So then back to the original aricles implied take about the incompetence of these wall street investors. What kind of billion dollar deal doesn't have info on the deal?
There are later press communications where Khan's FTC took credit for it. There was a strong implication they let the EU do the lifting but would have filed suit if they hadn't.
This is a fantastic video essay on iRobot's strategy/leadership mistakes. The company was distracted and stubbornly out of tune with what consumers wanted:
> Why not let Amazon take a stab at turning things around, then?
The point the article is making is that iRobot's bad decisions are the reason the company was failing. Blaming regulators for a poor acquisition outcome may be fair, but they were a very minor part of the outcome.
They'll just hire the engineers they need out of the failed iRobot and not compensate the investors / founders for building something worth acqui-hiring.
The existing Roomba revenue stream probably doesn't matter. The expertise or maybe the brand (not a great brand imho) aligns with some company priority.
Free money? I honestly don't understand comments like this. It's as if you aren't even trying to make sense. Amazon would have been bailing out Roomba so if anything this would have cost Bezos money.
> “In my trips to Wall Street,” Dyer told the panel, “one of my analyst friends took me to lunch one day and said, ‘Joe, you have to get iRobot out of the defense business. It’s killing your stock price.’ And I countered by saying ‘Well, what about the importance of DARPA and leading-edge technology? What about the stability that sometimes comes from the defense industry? What about patriotism?’ And his response was, ‘Joe, what is it about capitalism you don’t understand?’”
I find this article a pretty compelling critique of the extractive incentives of Wall Street and a good argument for government stepping in from time to time to adjust those incentives. Where is the societal good in the engine of capitalism prioritizing short-term extraction over long-term value creation?
Given how many people are getting rich from the inflated stock prices of every AI-adjacent company right now, including the ones with no obvious path to profitability, I could make the argument that they're already in a short term extraction phase.
(I'm also not sure if putting a significant % of the population out of work will create long term value to society.)
> Wall Street believes current $$$$$ capital investments will create massive long-term value
Clearly not. The stock market has a correction at least every few years. So Wall Street only believes they can sell the stock for higher within a few years. Not very long term is it?
If you could predict a stock market correction before it happens, you'd be very, very rich. The fact that corrections sometimes happen does not negate the existence of market-wide expectations for any given stock.
Hard for me to understand how the consumer was protected by preventing Amazon from acquiring them. Only for Chinese firm to get for cheap in bankruptcy. But maybe I’m not educated enough in socialism to understand the nuances
Possibly an unintended consequence. Those abound in our governing systems as you're rightfully complaining about.
On the other hand, competition is good for consumers and letting Microsoft and Amazon use unfair tactics to crush the competition or their large revenues to just buy up all competition isn't good either. That is part of the problem today in that practically every industry is a monopoly or near total monopoly (maybe there are 2-3 firms colluding). There are no incentives to innovate or keep prices competitive in such a gilded-age system. There was a reason we broke up all the robber barons. There is also the hazard when you have businesses that are so large that they effectively control everything and the government can no longer regulate them. High inflation is at least partly coming from this lack of competition. There is also the issue of the money supply where we degrade our currency to make it easier to service the debt. That is also a really big component here.
Not sure how you could construe U.S. anti-trust actions as socialist. They prevented Amazon from acquiring iRobot. That is government intervention in the free market, but that is not the same thing as socialism. In fact you could argue a socialist administration would have wanted the merger (large firms tend to make labor organizing more tractable since there is only one employer to negotiate with).
Khan had already accused them of abusing monopoly power and filed a lawsuit against them, and had a history of blocking acquisitions. At this time she also had a lawsuit in place seeking to undo the nearly decade old acquisitions of Instagram and Whatsapp.
The smart thing to do in that environment isn't to push the issue so that years later someone can't write that there wasn't an official challenge. It's to read the room and abandon the deal.
Couldn't you just blame any business non-decision on fear of regulation?
"We were prevented from building a proper Windows phone because we already had such large market share on desktop, and already had an anti-trust against us so our hands were tied"
The foundational minds in Capitalism called for the need for government controls on it to keep markets healthy. It is LITERALLY Capitalism to have government oversight and intervention.
I don’t see evidence that iRobot vacuums would have been competitive with Chinese ones, simply because the moat does not exist (there is no secret sauce that makes it difficult to make a competing product).
As for the rest of the article, it’s not Wall Street’s fault the government doesn’t pay iRobot enough for research (nor should it).
As the article states they were more than vacuums- they also did defense work and research. They gutted that for higher short term gains. Offshoring to China also likely helped China learn to build their own.
It only mentions a one sided view presuming an investor’s intentions. There is no numerical analysis on whether or not iRobot’s spending on various efforts was yielding or likely to yield a return.
Thank you for this article. It explains a phenomenon where many robotics and AI companies are actually failing in the current era. I learned so much from the reporting.
> Part of that collapse was a result of a phenomenon where financiers would force technology companies to stop innovating.
Here's the thing: not every company needs to do deep tech innovation, and not every company should.
The financiers were almost certainly correct that iRobot would make more money focusing on selling vacuum cleaners, not developing military/space robots on the side. Building fancy military and space robots is fun and cool, but if it's not producing profit or clearly leading to better consumer products that make money, then it's not the right company to be doing it. Plenty of other companies will do it better -- it makes sense to have one set of companies relying on grants and defense contracts that innovate and that do fundamental research and aren't taking investor money, and another set of companies that take lots of investor money and focus on consumer products without expensive R&D. The idea that they have to be the same companies is silly.
The real story here is not about shutting down R&D -- that makes sense. It's about whether you think the FTC/Lina Khan was right to oppose Amazon acquiring iRobot, and whether they bear any responsibility for what happened after.
"On January 31, 2024, one of the FTC’s Commissioners spoke at an antitrust conference in Brussels and said the
FTC had been prepared to block the transaction."
"We are pleased that Amazon and iRobot have abandoned their proposed transaction... The Commission’s investigation revealed significant concerns about the transaction’s potential competitive effects. The FTC will not hesitate to take action in enforcing the antitrust laws to ensure that competition remains robust."
"Amazon and robot vacuum maker iRobot (NASDAQ:IRBT) said Monday they would end their plans to merge in the face of opposition from EU and U.S. antitrust regulators."
This is such a bad faith, and frankly dishonest take on the situation.
As you know, Khan’s FTC worried it wouldn’t be able to prevent Amazon’s acquisition of iRobot in court, so instead it dragged out approval, which it never granted, while continuously threatening to block.
Simultaneously, her FTC openly worked with the EU to convince the EU to use its more expansive antitrust regime to get the EU to block the deal. That dragged the shot clock for the deal lower and lower (deals have backend dates contractually agreed to, after which the parties no longer are committed to work towards closing the deal and can walk).
Even as the EU was challenging the deal and the shot clock was approaching zero, her FTC was STILL not granting approval and threatened to block and drag it out another year in U.S. courts, all the way until Amazon threw in the towel.
After the deal collapsed, the FTC celebrated and took credit.
The fact iRobot later failed and was sold to Chinese competitors is directly attributable to that block, as it would otherwise be owned and supported by Amazon right now.
The point is that "sold to Amazon" or "sold to chinese competitors" being the only options is a false narrative. There was also the "do a good job" option which is being conveniently omitted by people who want to blame the FTC.
The article makes the case that iRobot mismanaged their business at the behest of investors. Suppose one grants that this mismanagement occurred[0]. Then years into the mismanagement, Amazon offers to buy them. At this point, whatever path the company has been doomed to by mismanagement has already been taken.
In 2022, one cannot go back to the 2010s and repair whatever bad business decisions have been made. So the FTC decisions must then be seen in this light. So the case made by this article is that a dominant player in an industry has made decisions that slowly but surely doom them. Seeing the imminent doom, they have found an acquirer who might be able to rescue them.
The FTC is not operating in a universe conditional on iRobot already having done what they've done. Consequently, even if you can blame iRobot for getting into the situation, you must also blame the FTC for closing off their escape route and de-facto enforcing the sell-off to the Chinese.
As for the other thing about neither the FTC nor the EU actually bringing any proceedings against Amazon or iRobot and simply requesting information: this seems either naïve or a misrepresentation of how governments act to end deals. It's not that convincing to me that organizations that have expressly indicated that they want to break up the big companies are "just asking for information".
One thing I find interesting about Western governments is that they're very similar to the Indian governments that I am familiar with. They employ the same tactics. Every immigrant knows to be rightfully fearful of the white, pink, blue, and yellow slips and the RFE notices they receive. A simple "Request For Evidence". A common strategy back home in India, too.
I suppose the reason those in the West are less aware of these things is that the standard bureaucracy mostly works if you're a domestic W-2 employee. Interactions with the government are few and generally functional. So they come to believe that the government is a highly honest machine: if it asks for X, it does not indicate anything more than a request for X. Those interacting with the more politicised parts of Western government find that they strategically employ the usual tactics that Indian bureaucracies wield routinely at the lowest level.
Overall, therefore, I don't find this convincing. Looking at the other things that Matt Stoller writes, I also suspect there is a partisan slant to this.
0: Businesses are hard. You operate in the fog of war. We could easily be telling a different tale if the bet paid off.
To be honest the Roomba sucked and got eaten alive by better chinese competitors.
I bought a top of the line expensive Roomba years ago and ended up switching to neato a year later, because I would just come home and it would be stuck on something.
Sure, but the author is arguing that the outcome you're describing is tightly coupled to the perverse incentives that he describes in the article. Investors pushed the company towards extraction over innovation and the end product suffered as a result.
That is probably true. But Roomba sucked in the early 2000's too. They never got better.
I believe the author's thesis is that if they had invested in innovation over a couple decades, the product probably would have sucked less.
It's a vacuum cleaner. All you want it to do is suck.
But not at navigation.
The innovation being shutdown wasn't innovation towards making robot vacuum cleaners better. It was innovation direct towards military applications like building robotic hands.
And the commenter above is highlighting the article's hypothesis about why they never got better.
Explore vs exploit?
Let's run an expierement where we just run exploit forever, let's restrucute the private sector, our countries moral baselines and eventually our executive leadership to be maximally exploitive, lets do that for about 45 years and see where it lands us -Some greed is good guys in the 80s probably.
I had an ancient-ish Roomba (620, 11 years ago). The repairability was amazing. This was from back when there was little competition, but just 2 years ago I could still get every part replaced. Only screws, nothing else. It was beautiful. I got a new vacuum/mop now, vastly better functionality, in exchange for the cloud, but I'm glad my old one lives one at my parents.
I've read it's way worse nowadays, but if they stayed at their quality from back then, I'd have probably paid more for an offline workable repairable vacuum.
Sucked not the ideal pejorative for a vacuum
Sucking is a good state for a vacuum. If Roomba sucked well enough, it wouldn't have gone bankrupt.
Growing up, local morning radio shows were no longer allowed to say "that sucked" so they all switched to "that vacuumed". The ridiculousness of being offended by idioms like this amuses me
"We have not yet begun to truly suck."
That's a good reminder I need to go track down my roborock, it got stuck somewhere again. There's a map thankfully which helps me figure out where to look.
How much difference was made by the Chinese competitors being able to use whatever IP they wanted, and Roomba being constrained by law and licensing, and not being able to enforce their own IP? What were the consequences of having to engage with China for manufacturing, effectively giving them the capability to clone any R&D on the fly, without having to figure things out themselves?
How much did regulation and taxation and red tape play into Roomba's inability to compete?
What sort of VC deals were they shackled by, in order to siphon off the data and abuse it for third party marketing, and other forms of enshittification?
There's a lot that American companies have been held back by. Some of it is actually good, consumer protective and well crafted, but it won't work if you allow other players in the same market to ignore the regulations and restrictions without consequences. Other policy is just stupid and self destructive, and other policies border on malignant, deliberately giving foreign companies significant advantages, directly and indirectly, without any other purpose.
American companies are way too easily forced into a race to the bottom dynamic, resulting in failure and huge wastes of money and effort.
No one ever forced any company to work with China. They all went to China over decades because it was cheaper and made more profits, knowing full well there’d be technological transfer since it was always China’s goal and even explicit in contracts and agreements.
Being surprised now that profits became technology transfer and China is now a real competitor is useless. They knew it, just didn’t think the Chinese could be real players in tech, or didn’t care because short-term profit was more attractive.
So it was profits then, and if you’re asking “what sort of VC deals were they shackled by”, it’s profits now. So the point of the article still stands, Wall Street screwed them over.
what law and licensing prevented iRobot to adopt Lidar? Given Lidar is used everywhere already.
> better chinese competitors.
From the article: Under a trade regime overseen by men like Furman, the company offshored production, thus teaching its future rivals in China how to make robot cleaners.
* Surprised Pikachu face *
Did your Roombas also yelled in the middle of the night "PLEASE CHARGE ROOMBA!!!" every few minutes with no way to disable that behavior?
I now have 2x $150 iLifes and couldn't be happier. They're also imperfect, but they are affordable and simple.
One of the first things I did with my robot vacuum cleaner was open it up and yank out its speaker.
They all suck. (No pun intended)
Not every story needs to have a bad guy.
In many cases (I suspect this is one of them) there is room for multiple bad guys. Why couldn't the FTC, Roomba Management, Wall Street, China, etc. all be at fault? Seems like it fits the evidence nicely.
Roombas just weren't that useful for most house layouts and situations (cords/toys/clutter/etc.) I seriously considered getting one and decided it just wouldn't be a win.
Roombas have always been terrible.
I bought a top-of-line Dreame, Roborock, and Eufy recently for our place - we have lots of pets.
The Dreame is easily 10,000x better than Roomba ever was. It never makes mistakes. I'd advocate for Dreame for anyone in the market for a robot vacuum. The app is annoying, but everything else about it is sublime.
Eufy would be better if they'd fix their roller brush design and didn't lean so heavily into making you buy their replacement components. It's designed around buying Eufy refills. The Anker team nails user friendliness and design, though.
Which does best with pets? We have a German shepherd that sheds like crazy. We vacuum every week and it will often fill a Dyson canister vac. We empty it every time we vacuum. We had a Roomba back in 2002 or so, but it was little more than a novelty (just wasn’t great vacuum and got hung up on too much stuff).
A huge fraction of the knee-jerk reactions here seem to miss the key point that the post is trying to get across:
> In the mid-2010s, during Furman’s tenure running economic policy under Obama, the company sold its defense business, offshored production, and slashed research, a result of pressure from financiers on Wall Street.
> Mesdag engaged in a proxy fight to wrest control of the company from its engineering founders, accusing one of its founders and iRobot Chairman Colin Angle of engaging in “egregious and abusive use of shareholder capital” for investing in research.
Yes Roomba sucks at this point. We get it. Thing is, if you slash research... that's what eventually becomes of your product.
This is what's wrong with investing overall: 1Q future blindness.
We'd have almost nothing if it weren't for university partnerships and corporate R&D way back when. There's no way to accomplish this now except to stay private.
>There's no way to accomplish this now except to stay private.
cue all the lamentations about how evil private equity is.
It's crazy that the Dodge brothers destroyed the company/shareholder relationship for every contemporary and future US-based corporation and then died.
> Thing is, if you slash research
And if you dump your defence contracts you may have trouble paying for research.
I'd be interested in learning about how the US military uses Roombas (assuming it's not classified)
In the article it's mentioned. They have built robotic stuff to clear rubble for example.
It's interesting that Rod Brooks has been erased from the history of Roomba. He's not even mentioned in the Wikipedia article.
I see him (Rodney) in both the Roomba and iRobot articles.
The Roomba is not in the Rodney Brooks article.
"Wall Street" is one entity, which first ruined the Roomba, then wanted to buy it, then blamed Lina Khan for not being allowed to buy it. Makes sense.
It is a single entity that contains multitudes. Some of those multitudes have contradictory intentions.
Just like you. When it happens to a person we call it "cancer".
Typically we don't say that someone with cancer is slowly committing suicide. Technically correct, perhaps, but it needlessly applies central autonomy where it doesn't really exist.
Wall Street actors almost universally love to describe the market as a singular entity, so they can hardly complain righteously.
Apparently it's not just "Wall Street" but "the market" which is a singular entity, which ruined the Roomba and then blamed Lina Khan and which can hardly complain about being described as a singular entity since it describes itself as such.
Roomba screwed up for sure, but they found a way out with Amazon until US consumer "protection" shut it down.
"The FTC didn’t bring a challenge, but nevertheless, in 2024, Amazon and iRobot called off the deal."
How did they shut it down?
"On Monday, the FTC requested more information from both companies about the $1.7 billion deal, according to an investor filing from iRobot, in what’s known as a “second request” and an indicator of deeper scrutiny by antitrust officials."
https://www.cnn.com/2022/09/20/tech/roomba-amazon-ftc-invest...
IRobot says it was the EU which killed the deal: https://media.irobot.com/2024-01-29-Amazon-and-iRobot-agree-...
The article claims EU didn't challenge the deal, only requested information about the market and possible unfair practices.
https://ec.europa.eu/commission/presscorner/detail/en/ip_23_...
Preparing all the requested information can be expensive. It is likely enough to kill many deals.
So then back to the original aricles implied take about the incompetence of these wall street investors. What kind of billion dollar deal doesn't have info on the deal?
In other words, they didn’t shut it down.
There are later press communications where Khan's FTC took credit for it. There was a strong implication they let the EU do the lifting but would have filed suit if they hadn't.
A routine request for information is not shutting down a merger and presenting it as such is not good faith communication.
This is a fantastic video essay on iRobot's strategy/leadership mistakes. The company was distracted and stubbornly out of tune with what consumers wanted:
https://www.youtube.com/watch?v=44XYQepBF7g
The patent expiry sealed the deal.
Why not let Amazon take a stab at turning things around, then? It's better that they fail? I don't get it.
> Why not let Amazon take a stab at turning things around, then?
The point the article is making is that iRobot's bad decisions are the reason the company was failing. Blaming regulators for a poor acquisition outcome may be fair, but they were a very minor part of the outcome.
couple things
- tbh, I think the Amazon deal doesn't matter much in the long run. The damage had been done earlier.
- why give Bezos any more free money? He's already rich enough.
They'll just hire the engineers they need out of the failed iRobot and not compensate the investors / founders for building something worth acqui-hiring.
The existing Roomba revenue stream probably doesn't matter. The expertise or maybe the brand (not a great brand imho) aligns with some company priority.
Free money? I honestly don't understand comments like this. It's as if you aren't even trying to make sense. Amazon would have been bailing out Roomba so if anything this would have cost Bezos money.
> “In my trips to Wall Street,” Dyer told the panel, “one of my analyst friends took me to lunch one day and said, ‘Joe, you have to get iRobot out of the defense business. It’s killing your stock price.’ And I countered by saying ‘Well, what about the importance of DARPA and leading-edge technology? What about the stability that sometimes comes from the defense industry? What about patriotism?’ And his response was, ‘Joe, what is it about capitalism you don’t understand?’”
I find this article a pretty compelling critique of the extractive incentives of Wall Street and a good argument for government stepping in from time to time to adjust those incentives. Where is the societal good in the engine of capitalism prioritizing short-term extraction over long-term value creation?
What is the current AI/data center mega-boom if not forgoing short-term extraction for long-term value creation?
Given how many people are getting rich from the inflated stock prices of every AI-adjacent company right now, including the ones with no obvious path to profitability, I could make the argument that they're already in a short term extraction phase.
(I'm also not sure if putting a significant % of the population out of work will create long term value to society.)
The stocks are inflated because Wall Street believes current $$$$$ capital investments will create massive long-term value!!
> Wall Street believes current $$$$$ capital investments will create massive long-term value
Clearly not. The stock market has a correction at least every few years. So Wall Street only believes they can sell the stock for higher within a few years. Not very long term is it?
If you could predict a stock market correction before it happens, you'd be very, very rich. The fact that corrections sometimes happen does not negate the existence of market-wide expectations for any given stock.
> So Wall Street only believes they can sell the stock for higher within a few years.
Or they think the returns from holding the stock will be higher.
> What is the current AI/data center mega-boom
Short term extraction.
The long term value is in AI research not scaling LLMs.
Related:
Roomba maker goes bankrupt, Chinese owner emerges
https://news.ycombinator.com/item?id=46268854
Hard for me to understand how the consumer was protected by preventing Amazon from acquiring them. Only for Chinese firm to get for cheap in bankruptcy. But maybe I’m not educated enough in socialism to understand the nuances
Possibly an unintended consequence. Those abound in our governing systems as you're rightfully complaining about.
On the other hand, competition is good for consumers and letting Microsoft and Amazon use unfair tactics to crush the competition or their large revenues to just buy up all competition isn't good either. That is part of the problem today in that practically every industry is a monopoly or near total monopoly (maybe there are 2-3 firms colluding). There are no incentives to innovate or keep prices competitive in such a gilded-age system. There was a reason we broke up all the robber barons. There is also the hazard when you have businesses that are so large that they effectively control everything and the government can no longer regulate them. High inflation is at least partly coming from this lack of competition. There is also the issue of the money supply where we degrade our currency to make it easier to service the debt. That is also a really big component here.
At the time the former was a known bad, and the latter was a potential bad.
The FTC properly weighted known bads more highly than potential bads.
Not sure how you could construe U.S. anti-trust actions as socialist. They prevented Amazon from acquiring iRobot. That is government intervention in the free market, but that is not the same thing as socialism. In fact you could argue a socialist administration would have wanted the merger (large firms tend to make labor organizing more tractable since there is only one employer to negotiate with).
Did you read the article? Amazon wasn't "prevented" from acquiring, they decided against proceeding:
> The FTC didn’t bring a challenge, but nevertheless, in 2024, Amazon and iRobot called off the deal.
Khan had already accused them of abusing monopoly power and filed a lawsuit against them, and had a history of blocking acquisitions. At this time she also had a lawsuit in place seeking to undo the nearly decade old acquisitions of Instagram and Whatsapp.
The smart thing to do in that environment isn't to push the issue so that years later someone can't write that there wasn't an official challenge. It's to read the room and abandon the deal.
Couldn't you just blame any business non-decision on fear of regulation?
"We were prevented from building a proper Windows phone because we already had such large market share on desktop, and already had an anti-trust against us so our hands were tied"
It's just an argument that creates a Kafka trap
The foundational minds in Capitalism called for the need for government controls on it to keep markets healthy. It is LITERALLY Capitalism to have government oversight and intervention.
Outstanding article. Our current goals and incentives are not sustainable.
I don’t see evidence that iRobot vacuums would have been competitive with Chinese ones, simply because the moat does not exist (there is no secret sauce that makes it difficult to make a competing product).
As for the rest of the article, it’s not Wall Street’s fault the government doesn’t pay iRobot enough for research (nor should it).
As the article states they were more than vacuums- they also did defense work and research. They gutted that for higher short term gains. Offshoring to China also likely helped China learn to build their own.
If they were getting paid enough for defense work and research, then they would not have gutted it. But the government should do R&D itself anyway.
You should try reading the article, it mentions that too.
It only mentions a one sided view presuming an investor’s intentions. There is no numerical analysis on whether or not iRobot’s spending on various efforts was yielding or likely to yield a return.
Thank you for this article. It explains a phenomenon where many robotics and AI companies are actually failing in the current era. I learned so much from the reporting.
> Part of that collapse was a result of a phenomenon where financiers would force technology companies to stop innovating.
Here's the thing: not every company needs to do deep tech innovation, and not every company should.
The financiers were almost certainly correct that iRobot would make more money focusing on selling vacuum cleaners, not developing military/space robots on the side. Building fancy military and space robots is fun and cool, but if it's not producing profit or clearly leading to better consumer products that make money, then it's not the right company to be doing it. Plenty of other companies will do it better -- it makes sense to have one set of companies relying on grants and defense contracts that innovate and that do fundamental research and aren't taking investor money, and another set of companies that take lots of investor money and focus on consumer products without expensive R&D. The idea that they have to be the same companies is silly.
The real story here is not about shutting down R&D -- that makes sense. It's about whether you think the FTC/Lina Khan was right to oppose Amazon acquiring iRobot, and whether they bear any responsibility for what happened after.
when and how did she do that exactly?
"On January 31, 2024, one of the FTC’s Commissioners spoke at an antitrust conference in Brussels and said the FTC had been prepared to block the transaction."
https://oversight.house.gov/wp-content/uploads/2024/04/05012...
"We are pleased that Amazon and iRobot have abandoned their proposed transaction... The Commission’s investigation revealed significant concerns about the transaction’s potential competitive effects. The FTC will not hesitate to take action in enforcing the antitrust laws to ensure that competition remains robust."
https://www.ftc.gov/news-events/news/press-releases/2024/01/...
"Amazon and robot vacuum maker iRobot (NASDAQ:IRBT) said Monday they would end their plans to merge in the face of opposition from EU and U.S. antitrust regulators."
https://www.investing.com/news/economy/amazon-roombaparent-i...
This is such a bad faith, and frankly dishonest take on the situation.
As you know, Khan’s FTC worried it wouldn’t be able to prevent Amazon’s acquisition of iRobot in court, so instead it dragged out approval, which it never granted, while continuously threatening to block.
Simultaneously, her FTC openly worked with the EU to convince the EU to use its more expansive antitrust regime to get the EU to block the deal. That dragged the shot clock for the deal lower and lower (deals have backend dates contractually agreed to, after which the parties no longer are committed to work towards closing the deal and can walk).
Even as the EU was challenging the deal and the shot clock was approaching zero, her FTC was STILL not granting approval and threatened to block and drag it out another year in U.S. courts, all the way until Amazon threw in the towel.
After the deal collapsed, the FTC celebrated and took credit.
The fact iRobot later failed and was sold to Chinese competitors is directly attributable to that block, as it would otherwise be owned and supported by Amazon right now.
The point is that "sold to Amazon" or "sold to chinese competitors" being the only options is a false narrative. There was also the "do a good job" option which is being conveniently omitted by people who want to blame the FTC.