Otto, the San Mateo-based smart lock startup, suspends operations

Just four months after unveiling its $699 digital door lock in August, San Mateo-based smart lock startup Otto announced on Tuesday it is suspending its operations.

Otto CEO Sam Jadallah said the decision to suspend his company’s operations came last month, after an unidentified public company backed away from acquiring Otto at the last minute, according to a lengthy post written by Jadallah on the tech-centric blog HackerNoon.

In the blog post titled “So Close,” Jadallah said the public company proposed acquiring Otto by Dec. 11. During the negotiation period, Otto was not allowed to solicit other bids or fundraise cash for the company.

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But on Dec. 11, the company told Jadallah it would not complete the acquisition nor revisit the investment proposal for unexplained reasons.

“I was stunned,” wrote Jadallah. “We had extended our cash to get to the closing date, and now were left without alternatives. Rather than telling our dedicated team that we were accelerating our growth plans and their equity ownership might provide them some financial stability, I had to tell them we could not continue operations.”

Otto was a newcomer to the smart lock scene, competing with established players such as Nest and August Home, which was recently acquired by Assa Abloy, the world’s largest lock manufacturer. Jadallah, a former Microsoft executive, sought to make a premium smart lock smaller and more secure than its competitors with former Apple employees making up about 70 percent of its early employee count, according to TechCrunch in August.

With both Bluetooth and Wi-Fi radios inside a compact lock, the Otto lock was designed to open by a finger touch by someone whenever it senses an authorized phone within range, or with a mobile app or a four-digit passcode.

Jadallah announced that pre-orders will not be honored as the company suspends its operations, and that the company will revisit the possibility of re-opening in the coming weeks.

“I’m so very saddened that we can’t deliver Otto, which was planned for first revenue in just four weeks,” said Jadallah.

In a separate interview with TechCrunch, Jadallah spoke more about the volatility in Silicon Valley, especially for new hardware startups.

“You’re not in charge of your own destiny, and the margin for error is a lot smaller,” said Jadallah. “Building a really exciting hardware product needs a ton of resources, and is probably best inside of a bigger company. Frankly, that’s part of the reason I was excited about the acquisition. I knew it would take us out of the cyclical venture capital market and put us inside a company that knew how to make and ship products.”

Photo: A press image of Otto’s smart lock. The company announced it was suspending its operations on Jan. 2, 2018. (Courtesy Otto)

 

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