Rumors swirl Pebble may be in financial trouble post-Apple Watch launch

Ever since it launched its first Kickstarter, Pebble has been a poster child for successful product crowdsourcing campaigns. Unlike many Kickstarter gadgets, which go missing, take years to materialize, or collapse in allegations of fraud, Pebble has delivered a device that’s been generally well-regarded. Overall shipments haven’t been Apple Watch-sized, but the company announced that it shipped its
one millionth watch on December 31, 2014, while the Kickstarter campaign for its third watch, the Pebble Time (with a color screen), hit its Kickstarter funding goal in 17 minutes.

Given this, you’d expect reports coming out of the company to be rosy, but that’s not what Techcrunch is reporting. Sources close to the company have apparently stated that Pebble recently turned to bank loans to maintain its growth, tapping a $5M line of credit and a $5M loan. These funding decisions are apparently the result of failing to secure more venture capital funding, though a cynical person might note that before the days of insane valuations and endless streams of silicon valley cash, securing a bank loan to continue operating a business in startup mode wasn’t anything unusual.

More worryingly, the anonymous source notes that employees within the company reportedly aren’t happy after Pebble has pivoted to address competition from companies like Apple, as well as fresh attacks from Android devices. Manufacturers like LG and Samsung haven’t been standing still with their own device offerings, and though Pebble has had an early mindshare and market lead, it can’t hope to match the marketing chops of a giant like Apple.

If Pebble is having trouble, it seems likely to be related to its efforts to expand rapidly. It’s hard to argue that the company’s $99 products compete directly with most of its Android or iOS competitors, when these devices sell for $300+ and are often more limited as far as their ability to link to other products (and exact limitations vary depending on the smartwatch). Furthermore, the entire market is so new, it’s premature to be calling winners and losers. Pebble’s strong brand and general consumer satisfaction should stand it in good stead, provided that the financial operation of the company isn’t out of whack.

Pebble has previously said that its third-generation timepiece should be ready to ship by this summer. The company has generally taken a different tack from Android or iOS-based products, with much weaker underlying hardware, but emphasizing battery life. Instead of charging once per day, Pebble claims its devices can run for up to a week, and its watches work with both Android and iOS. There’s room enough in the market for small, svelte devices like Pebble, as well as the more powerful hardware offered by Apple’s Watch — hopefully the company is able to iron out any issues it’s facing.