In just about a week, iRobot, Luminar, and Rad Power Bikes all filed for bankruptcy.

They’re very different companies — selling Roombas, lidar, and e-bikes, respectively — but as Sean O’Kane, Rebecca Bellan, and I discussed on the episode of the Equity podcast, they faced some similar challenges, including tariff pressures, major deals that fell through, and a failure to establish themselves beyond the products that first made them successful.

You can read an edited preview of our conversation below, with Sean providing an overview of each filing, Rebecca weighing in on whether she has a Roomba, and me speculating about what the popular narratives about these bankruptcies leave out.

Sean: Rad Power is big for an e-bike company, but small, I think, in most people’s minds, since that’s still a bit of a niche. They were founded a long time ago and became popular even before the pandemic, and really were thought of as an industry leader, as far as quality of the bikes that they’re making, pretty good branding and marketing and trying to connect with with customers — which is really hard to find in the world of e-bikes, where most of them are just like alphabet soup companies on Amazon. 

They rode that wave in the pandemic up high as micromobility really took off, and people were really rethinking how they were getting around, they weren’t commuting into the office as much. And we get glimpses of that in the bankruptcy filings. It only shows revenue back three years, but they were pulling in well over $100 million in revenue in 2023 — like $123 million, I think that fell to about $100 [million] last year, and through the bankruptcy this year, they were only at about $63 million, so they were clearly coming down off a pretty big high. They have a pretty diverse product lineup, but they just never really found a way to establish a foothold there.

And I think you could say similar things about these other two companies. Luminar is another company that was founded in the early 2010s, came out of stealth in 2017, and its mission was essentially to take lidar sensors, which at the time were really expensive and big and really only used in, like, defense applications and aerospace. 2017 was sort of the first big hype cycle of autonomous vehicles. They wanted to apply those sensors, make them more affordable for that use case. That helped them get some deals, most notably with Volvo, and then some other deals with Mercedes Benz, and a couple other players. But they were just heavily concentrated in that, and that was one of the reasons they wound up filing this week, too.

And then iRobot [was] the most well known of these three companies — a lot of people listening probably even have a Roomba at home or something very like it. It’s just another one of these situations where iRobot became synonymous with a certain thing, and then the advances in the technology that build that product move so quickly that they wound up in a situation where they were looking for a way out. And we all saw this, they were trying to get acquired by Amazon, and that deal got blocked by the FTC and so here we are. 

They’re very different companies, but they all ran into similar problems. Do either of you guys have a Roomba?

Rebecca: No, I don’t have a Roomba. Those freak me out, but I bought my mom a Rad Power bike years ago, and she loves it. But now, you know, they had not only this bankruptcy issue, but they also had the issue with the batteries — they weren’t able to do their recalls because they were, like, “If we have to recall these bikes, we’re going to go bankrupt.” But they’re going bankrupt anyway! 

I’m curious about the tariff thing, and how much this affected everyone’s bottom lines. You hear a lot on social media, people who are pro merger, how certain FTC blockings of [mergers] leads to the companies going bankrupt, or getting acquired by a Chinese firm rather than an American firm. 

Sean: iRobot represents, to me, the sort of macro global trade problem of, could you have ever built this company here in the United States with a localized supply chain over the last 15 years? Probably not. And so it makes sense that they became so heavily reliant on China — which, let’s be real, probably led to the ability for these other companies to pop up and essentially copy what they did. 

That reminds me of in Trump 1, when he flipped on tariffs for Chinese imports, and we saw a bunch of startups like Boosted Boards and other ones in the micromobility space get hit. So they’re contributing factors, for sure. The battery recall with Rad Power absolutely was, I think, a bigger dagger at the end, but the tariff stuff put them on uneven footing that made it harder for them to respond to stuff like that.

Anthony: A lot of times when a company fails, there [are] larger structural issues, and then there’s maybe a more immediate proximate issue. And particularly in the case of iRobot, I think that a lot of former executives and even outside commentators are pointing to this Amazon deal that was reached a few years ago — it kind of looked like the EU was not going to allow it to go through, and there is this sense of, “Okay, well, by blocking this deal, you’ve essentially put the dagger in their heart that eventually killed the company.”

That narrative also maybe ignores the fact that there were other things that caused them to want to get acquired in the first place.