How Wall Street Ruined the Roomba and Then Blamed Lina Khan
Deep Dives
Explore related topics with these Wikipedia articles, rewritten for enjoyable reading:
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DARPA
15 min read
The article mentions DARPA as the agency that funded iRobot's PackBot development and credits it with creating the internet, GPS predecessors, and other technologies. Understanding DARPA's history and role in technology transfer from military to civilian use provides crucial context for why iRobot's pivot away from defense work represents a broader pattern of abandoning strategic innovation.
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Shareholder activism
18 min read
The article centers on how hedge fund manager Willem Mesdag used shareholder activism tactics (proxy fights, demand letters) to force iRobot to abandon R&D and defense work in favor of dividends and buybacks. Understanding the mechanics and history of shareholder activism illuminates the specific financial pressures that hollowed out the company.
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PackBot
14 min read
The article specifically references PackBot as iRobot's significant military contribution—used in 9/11 rescue operations, Iraq and Afghanistan mine-clearing, and Fukushima. Understanding this robot's capabilities and deployment history shows what kind of strategic technology was sacrificed when iRobot exited defense work.
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 ...
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