It’s hard to know where to begin with this mess. It’s only been seven months since LeEco launched in the U.S. with one of the most bizarre press conferences in recent memory, right down to the super weird Michael Bay cameo.
Since then, it’s been a constant parade of bad news for the company, cumulating with a conference call today that will lead to around 325 layoffs in the US alone.
The company confirmed as much with a statement that’s still stubbornly optimistic about its future in the States, writing in part,
While we’ve made progress in growing our distribution channels, the challenges with raising new capital have made it difficult in the past few months to support all of our business’ priorities. As a result, the capital we do have will have to be highly focused resulting in a significant restructuring and streamlining of our business, operations and workforce. This will impact approximately 325 people in the U.S.
It’s the culmination of an on-going shit show that isn’t likely to end any time soon. The full list of red flags is too long to labor over here, but consider this a bit of a greatest hits. Of special note are the recent resignation of CEO and founder Jia Yueting, its decision not to purchase Vizio after all and a big rethink of that giant swath of land it bought from Yahoo in the Silicon Valley.
So, what’s going on with LeEco? The consensus from pretty much the start is the Chinese brand flew much too close the sun. It’s hard to watch that press conference from back in October and not come to the same conclusion. Tackling either the U.S. smartphone or TV market would have been an uphill climb in and of itself, so LeEco’s executives just said “screw it, we’re taking on everyone.”
The event included the announcement of several phones, TVs, a streaming media service, an electric car, a bicycle and a VR headset among others, launched with all the grace and panache you’d expect from an event that listed the consummate Transformers auteur among its credits.
Now, after appearing to have backed away from India in a big way, the company looks to be near packing up its things and going home here in the US, as well. Or rather, it has regressed to much more measured baby steps, focusing on a toehold it should have played into in the first place: Chinese-speaking households here in the States.
The company didn’t distinguish itself much on the hardware front, but it’s always had one key thing going for it: a breadth of Chinese language programming available through its service that many have deemed to be, “the Netflix of China.”
The statement continues,
Our goal is to continue to gain momentum. In the past few months, we have gained a large foothold in Chinese-speaking households in the U.S. by offering tailor-made products and content for this community. We believe this provides us an opportunity to build on our strengths and grow from there.
Before a rebrand as the much more ambitiously-named LeEco (that’s “eco” as in “ecosystem”), the company was LeTV, a primarily content-focused service. Amidst all of its other plans, the company hope to recapture some of that success in the U.S. market, and it started buying up English language production companies and served as a key investment in this year’s bizarre historical fantasy, The Great Wall.
But so far the company’s play in the States has been about as well received as that Matt Damon/monster vehicle. Few outside of LeEco’s executive board rooms expected this to end well. And maybe it’s not completely over as long as the company still has a base of operations. The lesson here is not to avoid being ambitious, it’s just to know your limitations.
A big, flashy launch doesn’t amount to much without the products to back it up, and at the end of the day, LeEco didn’t have much to deliver aside from promises and a few middling handsets. The real concern here, of course, isn’t the end to products like its smart bike — it’s the massive job losses that have seemingly become routine for the company.
A number of employees jumped on board from high-profile competitors with the promise of being there for the launch of an exciting company. Many seem to have left of their own accord in recent months, while the rest are back on the job market, no doubt dizzy from the corporate backlash. Perhaps this is precisely the tourniquet the company needs to stem the bleeding, but in spite of some hopeful words from corporate, there really doesn’t seem to be much reason to hold out hope.
Update: We got word from on-again-off-again partner Faraday Future that its own operations will remain unaffected by LeEco’s massive downsizing. The car maker has no plans for layoffs, nor will the news impact its own product plans. Here’s the full quote from global CFO Stefan Krause,
Hearing about layoffs at our strategic partner LeEco is discouraging. However, I want to be clear that these layoffs have no impact on Faraday Future. We remain committed to our immediate goals of diversifying FF’s investment sources and getting FF 91 on the road in 2018, and we remain confident in the outlook for diversifying FF’s global investment.