iRobot CEO says previous management was ‘in denial’ over group’s troubles – Financial Times
iRobot’s chief executive has defended the takeover of the US company by a Chinese competitor, warning that its previous leadership had been “in denial” about deep problems at the Roomba vacuum maker.
Gary Cohen, who took charge of the company in May last year after a $1.5bn deal with Amazon collapsed amid antitrust concerns, told the Financial Times that the company had failed to innovate and deliver a straightforward user experience at a time when it was being drastically undercut by Chinese rivals.
Cohen pushed back against comments made by the company’s founder and former chief executive Colin Angle on Tuesday accusing regulators of halting iRobot’s “path to scale” by scrutinising its pact with Amazon.
“I think when you blame all the external factors on your issue as a company you’re kind of in denial,” Cohen said. “I’m not going to be a victim.”
iRobot helped introduce robotics into the home with its Roomba vacuum cleaner through the early 2000s but failed to stay ahead of competitors. Chinese rivals including Eufy and Roborock were able to undercut the company and developed more novel product lines including a combination mop and vacuum robot that iRobot previously spurned.
Cohen said that had iRobot made “strategic choices” five to 10 years ago and taken competitors seriously at the time, its circumstances may have been different. He argued that it had been “forcing technology on consumers” rather than understanding their needs and ensuring its cost base was competitive.
The US-listed group filed for Chapter 11 bankruptcy in Delaware last week as part of a restructuring agreement with Shenzhen-based Picea Robotics, its lender and primary supplier, which will acquire iRobot’s equity.
At the time of its sale, iRobot owed Picea $161.5mn for manufacturing services. It also owed Picea’s Hong Kong subsidiary $191mn, debt the unit had acquired from Carlyle Group last month.
iRobot also owed some $3.4mn in unpaid tariffs, with the company having taken a hit from Donald Trump’s move to boost import duties.
Cohen said tariffs had “narrowed the funnel” of prospective buyers, while a deal with an alternative suitor did not proceed after it failed to reach an agreement with iRobot and Carlyle, the group’s primary lender at the time.
The iRobot chief executive would not indicate whether the prospective buyer was also Chinese.
Amazon proposed buying the company in 2023, seeing synergy with its Alexa-powered smart speakers and Ring doorbells, but the deal was terminated following EU and US regulators’ concerns that it would reduce the visibility of rival brands on its online marketplace.
Angle said on Tuesday that the company’s fall from grace had been spurred by regulators’ actions.
“Innovation doesn’t fail only when ideas are wrong — it can fail when the path to scale is removed,” he said. “When companies that create categories are denied viable ways to grow, everyone pays the price: consumers, employees and the broader innovation economy.”
“This is an unfortunate textbook example of regulators — in this case the European Commission and the FTC — losing the forest for the trees,” David Zapolsky, Amazon’s chief global counsel, said in a statement.
Zapolsky said the deal had resulted in the “loss of an innovative American company, American jobs, and American IP”.
Cohen said the company would rely on Picea for some engineering functions out of Shanghai but maintained that the deal had saved 500 jobs. He said the Chinese supplier was the only feasible option for the indebted manufacturer.
“I had to play the hand I was dealt and to me the alternatives weren’t attractive,” he added.
