Life of startups can be fraught with peril, especially in the idea-rich Internet of Things space, and smart lock maker Otto has found that out the hard way by falling victim to a business-ending acquisition failure. Otto's product was unique in that it was a fully digital smart lock, unprecedented in a space full of locks with potentially insecure physical backups like old-school key tumblers. This made it all the more painful for founder and CEO Sam Jadallah when he received a call on December 11th saying that Otto's suitor, who he refused to name, was backing out of their agreed deal and would not reconsider or look at other options like an investment. The terms of the deal had kept Otto, which had already put its money on the table, from fundraising or finding other buyers. Otto was left high and dry without enough funds to continue operating and had no choice but to shut down, according to Jadallah.
Jadallah pointed out the firm had already created a large number of its $699 digital smart locks and had them sitting in a warehouse, ready for sale. All that was left at that point was to get the locks out on the store shelves, a step which required contracts and logistics. Without a buyer or enough money to take care of that part on its own, Otto has no way of getting its locks to the public. Jadallah noted that the company is still looking into available options, but with almost all of the employees looking for other work and the company's cash reserves all but drained, things are looking grim.
Failure to launch at the last minute is, as Jadallah noted, a fact of life for startups. Still, there is a market for a product like Otto's, so it's possible that something could change in the near future. Otto is another victim of what was a fairly rough year for the Silicon Valley, with startups telling similar tales to Otto's all too often as investors went through a vastly dynamic year that left most of them too unsure of the future to make big commitments. Even larger tech companies had a rough year, with the political landscape in the United States shifting in significant manner and authorities abroad pursuing them for their own reasons, among other things.