A few days ago, consumer products company iRobot, the maker of iconic Roomba automated vacuum cleaner, declared bankruptcy. The CEO, a branding and mergers expert named Gary Cohen, sadly announced that the firm could not continue as a going concern.
The board, full of lawyers and financiers but not robotics experts, voted to sell iRobot off to Shenzhen Picea Robotics, the Chinese company to which it had offshored manufacturing. There are about 20 million active Roomba vacuum cleaners in operation, and unless Trump regulators or antitrust enforcers act, now all the data harvested from our homes will go to China.
The co-founder of iRobot, Colin Angle, was not introspective about this collapse, nor did he associate it within the broader context of the many firms who have had their technology transferred to China. Instead, he, like much of Wall Street, blamed the bankruptcy on Lina Khan. Why? Well she ran the Federal Trade Commission when it investigated Amazon’s possible acquisition of the company in 2022, a deal the two companies ultimately called off. Here’s Angle:
“I bet if you asked almost anyone prior to the blocking of the deal with iRobot: Would you rather see iRobot innovating like crazy, coming out with new and better robots for your home, or would you like to see it file for Chapter 11 in the process of being sold to a Chinese manufacturer?” he said. “The wrong thing probably happened.”
Many Wall Street dealmakers and foes of antitrust enforcement echoed this sentiment. For instance, former Obama chief economist Jason Furman, who is now the Aetna Professor of the Practice of Economic Policy at Harvard, used it as an example of the problem with populist economics. Blocking mergers, he believes, leads to destructive outcomes and national security problems.
So is Furman right? This critique matters, because the goal here is to return to the economic statecraft of Bush and Obama, a time when the consensus was that concentrating capital would generate positive outcomes, while restraints on capital would hinder growth. The modest burst of populism around antitrust under Joe Biden deeply shook Furman. With iRobot’s bankruptcy, there is now an opportunity to make the claim that any attempt to restrain Wall Street is a mistake. So what exactly happened with iRobot? And what kinds of lessons should we draw?
“What is it about capitalism you don’t understand?”
I first came upon iRobot years before the Amazon merger, when I edited a piece by defense analyst Lucas Kunce on Wall Street and national security. I had gotten interested in the collapse of the defense base, a crisis which is now widely discussed, but at the time wasn’t well-understood. Part of that collapse was a result of a phenomenon where financiers would force technology companies to stop innovating.
iRobot fit perfectly in that story. I watched a 2017 hearing in the House Armed Services Committee where a former Vice Admiral for the Navy, Joe Dyer, testified. After leaving the Navy, Dyer worked in operations at the robotics firm, when the company was far more than a consumer firm focused on importing automated cleaning tools from China. Here’s Kunce:
iRobot, which started in 1990 as a spinoff of MIT, was founded by three experts in robotics, artificial intelligence, and man-machine interface. In 1998, the company got a grant from the Defense Advanced Research Projects Agency (DARPA), the government agency that financed the creation of the internet, SIRI, the predecessor to GPS, and other conveniences of modern life. Their mission was to build an advanced robot that eventually came to be known as the PackBot. Packbot helped search the rubble after 9/11 and aided US troops in clearing mines in Iraq and Afghanistan. iRobot’s robotic technology has gone to Mars on rovers and was deployed in the Fukushima nuclear reactor meltdown to measure radioactivity. Its iRobot Seaglider was used to peer underwater after the Deepwater Horizon oil spill. But iRobot no longer makes anything for the military. It now focuses, instead, on branding and manufacturing vacuum cleaners in China and Malaysia.
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