Human, the Seattle startup that launched its distinctive ear-shaped wireless headphones last month after five years of development, has laid off almost its entire team — including its CEO and other top executives — and placed itself into receivership in an attempt to find a buyer and satisfy its debts.
The company has laid off 25 people out its workforce of more than 30 people, leaving a small team to support the continued sales of the Human headphones. Bill Moore, the veteran tech executive who served as Human’s CEO, confirmed the cutbacks in a phone call with GeekWire this afternoon.
Moore said the company faces a cash crunch due to a combination of rising manufacturing costs, an inability to raise more funds from investors, and the decision to reduce the price of the headphones from $399 to $259 based on media and consumer response. While reaction to the unorthodox design was decidedly mixed, the original price was often perceived as too high, based on feedback from consumers to whom GeekWire showed the headphones prior to launch.
“It was kind of a perfect storm,” Moore said.
Human is not filing for bankruptcy, Moore said, but based its board’s decision, as of Friday evening the company was set to be transferred to a receiver, a trustee legally appointed to oversee a company’s assets and business operations.
The company raised more than $26 million from investors. One of its backers was Microsoft, which inked a strategic partnership with Human that gave the startup access to translation services built by the Redmond, Wash.-based tech giant. Other investors included Sage Venture Partners, Sugar Mountain Capital, Darling Ventures, and Ropart Asset Management II.
The sudden turn of events was especially bittersweet, Moore said, because the headphones continue to sell at a steady pace of about 100 units a day even without dedicated marketing. The company has sold about 2,500 units since the Aug. 20 launch, and about 5,000 overall, including an earlier campaign on the Indiegogo crowdfunding site.
Human received widespread media coverage. CNET dubbed them “AirMuffs.” A video about the headphones on Unbox Therapy has received nearly 6.5 million views.
“I’m not only proud of a team, I’m proud of the creativity,” Moore said. “This is a product that probably would have never been built in a big company. There would have been too much risk in form factor. And we actually believe the form factor is the largest asset that’s sitting here. For those that it resonates with, it resonates hugely. And we knew a few people would make fun of it. But people tend to turn around on that, as well.”
Human co-founder and inventor Ben Willis addressed the unorthodox design in an interview with GeekWire prior to the launch. “This is a market that is just smothered with nothing really that different,” Willis said. “Everything looks the same.”
Apart from the unique look and feel, Human touted the premium audio quality, 32-point touch control, seamless integration of digital assistants, real-time language translation, a 9-hour battery life, and 100-foot wireless range. They also become a Bluetooth speaker when attached to each other.
Despite the company’s efforts to tout the advanced features of the Human headphones, the pricing benchmark for wireless mobile listening was set by less-expensive alternatives, most notably Apple’s popular $159 AirPods. Human was also going head-to-head against similarly priced over-the-ear headphones from established brands such as Bose and Beats.
The company had a veteran executive team, including Moore, who joined as CEO in 2016 after leading RootMetrics. Other leaders included Ann White, chief marketing officer, previously an Amazon and Microosft marketing leader; CFO Ron Stevens, formerly a financial exec at RootMetrics and Haggen; Eliza Arango-Vargas, vice president of engineering who spent eight years at Microsoft working on products including Zune; and Jim Holt, executive director of firmware and software who previously worked at Microsoft and Intellectual Ventures.
The privately held company didn’t disclose details about its debt or cash position. While the first priority is paying off the company’s creditors, Moore holds out hope that a buyer could take what Human has developed and carry it on from here as a successful product.
“There’s actually a tremendous asset here, and I’m super proud of the team that delivered this,” he said. “No one thought we could — a small, independent company such as ourselves. And it was ambitious for sure. But we were able to successfully launch it and get it out there to good acclaim and good sales. We just couldn’t raise the money to continue this forward.”