Startup Cemetery

A big resource for entrepreneurs and startup owners, in which we have collected and analyzed why +100 big companies have failed. Learn from mistakes, and avoid being part of the 90% of businesses that fail.

Fuhu

Designer and seller of cloud-served softwares

General Information
Category
Software and Hardware
Country
United States
Started
In 2006
Business Failure
Business Outcome
Acquired
Closed
By 2015
Cause of Failure
Mismanagement of Funds
Founders & Employees
Number of Founders
Three
Name of Founders
John Hui, Robb Fujioka, Steve Hui
Number of Employees
Between 501 And 1000
Funding
Number of Funding Rounds
5
Total Funding Amount
$66.2M
Number of Investors
8
Description

Fuhu Inc. is most famously associated with the Nabi series of Tablets. Among the first product they came up with was urFooz which were digital trading cards, urDrive a software that permitted devices to install and run the applications straight from a USB device, and Fooz Kids a mobile device platform which was a safe browser for kids that enabled access to only selected areas of the internet. The Nabi series of red padded tablets for kids, however, is their signature product.

Cause of Failure

Fuhu went bankrupt, even though it ranked 1st on the Inc 500 companies list for two years in a row.

The company amassed an enormous amount of debt and had a very high burn rate. The level of disregard for any type of financial management was so high that the firm had only one accountant and one bookkeeper despite its 300+ employees.

Fuhu had one good idea which brought them to the top, but could never replicate it and kept borrowing money in the millions from various companies with the hope that they will be able to produce the next Nabi and break even.

In particular, Fuhu owed Foxconn, a Chinese hardware manufacturer, between $60 million to $110 million. The Chinese giant had previously already demanded from Fuhu to restrict its operations costs but little was done on that front. Suddenly the company just decided to stop backing up Fuhu and everything fell apart for the private U.S. based company.

Later, Mattel purchased Fuhu’s assets for just $21.5 million. Fuhu’s CEO, Robb Fujioka, still hopes to come back with alternative ideas that will revolutionize the world and seems to have considered Fuhu’s faith as an experience every major entrepreneur faces at some point of their career.

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