Editor’s Be aware: GeekWire co-founders Todd Bishop and John Prepare dinner created this column by recording themselves discussing the subject, asking AI to draft a chunk based mostly on their dialog, after which reviewing and enhancing the copy earlier than publishing. Hearken to the uncooked audio under.
If we glance out GeekWire’s workplace window proper now, down at Seattle’s Burke-Gilman Path, we will virtually assure one factor: if we wait 5 minutes, at the least one Rad Energy Bike will zip previous. Most likely extra. They’re ubiquitous — the “Tesla of e-bikes” that appeared to redefine city transport through the pandemic.
However that bodily prominence masks a brutal enterprise actuality.
In the previous couple of weeks, the Seattle tech scene has been rocked by two tales that really feel like totally different verses of the identical unhappy track, as documented by GeekWire reporter Kurt Schlosser. First, Glowforge — the maker of high-end 3D laser printers — went into receivership and was restructured. Then got here the information that Rad Energy Bikes could be compelled to shut totally.
We’ve every coated the Seattle area’s tech ecosystem for round 25 years, and if there may be one enduring reality within the Pacific Northwest, it’s that {hardware} just isn’t solely arduous, because the previous saying goes, however for some purpose it appears more durable right here.
It’s naturally more durable to control atoms than digits. If Home windows has a bug, Microsoft pushes an replace. If a Rad Energy Bike has a busted tire or a defective element, you possibly can’t repair it with a line of code. You want a provide chain, a mechanic, and a bodily presence.
However the struggles of Rad and Glowforge transcend the bodily manufacturing challenges. They’re victims of two particular traps: the quirks of the pandemic and the curse of an excessive amount of capital.
The COVID mirage
Each corporations had been born earlier than the pandemic, however they boomed throughout it. When the world locked down, the thesis for each corporations regarded invincible. We had been all sitting at residence in our PJs, determined for a interest — so why not purchase a Glowforge and laser-print trinkets? We had been cautious of public transit and in search of recreation — so why not purchase an e-bike?
Many tech corporations, together with giants like Amazon and Zoom, guess large that these behavioral modifications had been everlasting. They weren’t. And we’re seeing a number of the indigestion of that interval play out with huge layoffs at tech corporations that acquired too large, too quick through the pandemic years.
The world went again to regular, or at the least discovered a brand new regular, however within the meantime these corporations had scaled for a actuality that not exists.
The VC curse
Then there may be the cash. In 2021, Rad Energy Bikes raised over $300 million.
If you increase that form of money, you’re not allowed to be a pleasant, worthwhile area of interest enterprise. You must be a platform. You must be a world-changer. Rad tried to construct an enormous ecosystem, together with direct-to-consumer retail shops and cell service vans to repair bikes in folks’s driveways.
Constructing a bodily service community is agonizingly costly. Had they raised much less and stayed centered on being an ideal bike maker, we could be having a special dialog. However enterprise capital calls for a “Tesla-sized” end result, and that stress can crush a client {hardware} firm.
The ghosts of Seattle {hardware}
Historical past tells us we shouldn’t be shocked. Seattle has a painful relationship with client {hardware}. We’ve acquired one phrase for you: Zune. Or how concerning the Hearth Telephone? Or Vicis, the high-tech soccer helmet maker that crashed and burned.
For these with lengthy recollections, the present state of affairs rhymes with the saga of Terabeam within the early 2000s. They raised over $500 million to beam web knowledge by way of the air utilizing lasers. It was a B2B play, not client, however the sample was an identical: huge hype, huge capital, and a expertise that was troublesome to deploy in the actual world. They ultimately bought for a fraction of what they raised.
We nonetheless love seeing these bikes on the Burke-Gilman. However on this economic system, with inflation squeezing discretionary spending, $1,500 e-bikes and $4,000 laser printers are a troublesome promote.
Seattle often is the cloud capital of the world, however in terms of client {hardware}, we’re nonetheless studying that you may’t simply obtain a revenue margin.
Ideas on this story-writing strategy? Electronic mail: todd@geekwire.com and john@geekwire.com.
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