How Andy Rubin, and a lot of mistakes, killed Essential

When Andy Rubin started Essential, a big part of his sales pitch was that you'd be foolish to bet against the guy who started Android.

Back in 2016, potential Essential investors worried the mobile market was already saturated, that there was no room for another player, Rubin said when I interviewed him in 2017. His response was simple: "That's what they told me when I did Android." An executive at Essential in those early days said that "to be the ones who are responsible for launching the next Andy Rubin operating system is a very high-pressure mandate." By changing the rules of hardware and software, Rubin thought he could reinvent a supposedly stable industry yet again.

Investors bought it. The company raised $330 million in funding and was quickly valued at $1 billion. In hindsight, as Essential officially folds, being "The Andy Rubin company" didn't turn out to be such a good bet.

Essential's first (and ultimately only) product was a phone, but it was never supposed to be a phone company. The company had visions of what Rubin called "an invisible friend," a new interface for interacting with all the devices and information in users' lives. The phone was just a way to bide time to get to that next, bigger thing. "Essential is operating in this space where we think consumer products are an important step to the next wave," Rubin said.

But the company's trajectory changed only a few months later, after The Information reported that Rubin had left Google under accusations of sexual misconduct. Suddenly the face of the company became something of a liability. The story added to internal unrest at Google, where employees were growing frustrated that the company appeared to be protecting executives, and led to Rubin taking a leave of absence from Essential in the fall of 2017 — though he was only gone for a few weeks.

From the beginning, Essential had trouble actually shipping and selling its products, never making the splash in the market Rubin hoped his name and design sense might bring. Already by late 2018, Essential's end seemed to be near. It had cut 30% of its staff, canceled its plans for a second phone, and was exploring selling the company. Bloomberg reported it had already burned through $100 million in funding.

Then, suddenly, in the fall of 2019 Rubin was back on Twitter after a yearlong absence, teasing a new, TV-remote-shaped device called Gem. In a since-deleted tweet, he snapped a picture with a "New UI for radically different form factor" that seemed to be something between Essential's straightforward first phone and its more assistive, personalized ideas about the future. But given what had happened to the company, the Gem was received less as a statement on the future of phones and more as a curio — or a reason to talk about how we talk about people like Andy Rubin.

Essential said ultimately, Gem was what killed it: "Despite our best efforts, we've now taken Gem as far as we can and regrettably have no clear path to deliver it to customers. Given this, we have made the difficult decision to cease operations and shut down Essential." It's also not clear if Gem ever would have found an audience; smartphone owners are upgrading less frequently and may not have an appetite for wacky new ideas about their most important devices.

The product failed, the founder was ousted, what vision do you execute on, and how do you get that funded? The only surprising thing is that the company lasted this long and wasn't acquired for its IP and engineering staff. — Avi Greengart

What ultimately caused Essential's death is hard to know. Or, rather, it's likely a confluence of things. Stephen Baker, a mobile analyst at NPD, said Essential's No. 1 mistake was choosing Sprint as its carrier partner. "If you don't have distribution, you can't ever really be successful," he said.

And, of course, the revelations about Rubin severely undermined his credibility, causing him to step back from the company and the public spotlight — a crushing blow for a company built so much on the reputation and ideas of its founder. "As another hero phone, something for the cool elite who really knew their product, I think having a founder whose reputation had been tarnished probably didn't help," Baker said.

But it's also a simple story of a business model not working, as Techsponential analyst Avi Greengart put it: "Essential had no revenue. It launched a single phone model that didn't sell, and it planned a home entertainment/IoT device that never shipped." Ultimately, Greengart said, all these things are inextricably linked. "The product failed, the founder was ousted, what vision do you execute on, and how do you get that funded? The only surprising thing is that the company lasted this long and wasn't acquired for its IP and engineering staff."

An Essential spokesperson declined to comment beyond the company's blog post. The company had 114 employees, including Rubin, at the end. Newton Mail, an app Essential bought in 2018, is also shutting down, and Essential phones will stop getting updates. Playground, the investment firm and incubator Rubin also started — which shared office space with Essential in Palo Alto even after ousting Rubin from the firm in 2019 — isn't being affected by the shutdown. Soon, all that will be left of Essential is a Github account, hosting builds of the company's phone software.

In the very early days of Essential, Rubin told me he knew the future. Phones would change in shape and size, they'd become more personal — and ultimately they'd be replaced by something that fit even more seamlessly into people's lives. As we enter into the world of Alexa and foldable phones and 5G networks that connect everything, it looks like Rubin was right once again. But this time it won't be his invention that makes that future real.