London-based STEM device maker Kano has confirmed that it is cutting a number of jobs that it believes are part of the restructuring effort to shift its focus to educational computing.
The job cuts – from 65 to 50 employees – were previously reported by The Telegraph. Kano founder Alex Stein confirmed in a call to trendzhq that Kano will employ 50 people next year. Although he said the child-friendly business of coding devices also adds engineering and design jobs and eliminates other roles as it shifts focus.
He also suggested that some of the cuts were seasonal and cyclical – related to reaching the holiday season.
Jobs are cut by stone as the company moves from building on the Raspberry Pi platform – where it started in 2013 with its crowdfunded DIY computer – to a Windows-based learning platform.
Other factors he referred to in connection with the layoffs were a new manufacturing facility in China with a "simpler, larger contract manufacturer"; to support less physical retail stores, with Kano relying more on Amazon (which he believes is "cheaper to support"); Reduced dependency on large partners and agencies: According to Stein, 18% of US parents with children between 6 and 12 years are familiar with the brand, which reduces marketing efforts. and the desire to reduce the number of managers and decision-makers on the books because "we have seen a stronger response to our Kano first-party products – Computer Kit, Pixel Kit, Motion Sensor Kit – this year than expected".
"We introduced some roles that focus more on this new platform [Kano PC] and some roles that focused on the Raspberry Pi are no longer with us," he said to trendzhq.
Kano presented its first Windows-based PC this autumn. The 11.6-inch touch-capable Intel Atom computer costs $ 300, which is within the standard price range of the Chromebook from Google.
The technology giant has continued to focus on the educational computer market – which puts competitive pressure on smaller players like Kano who are trying to start a company that sells their own brand of STEM-focused hardware. Against Google Goliath Stein advertises with factors such as the relative repair ability and the computing power for the Kano PC (which in his opinion is "on the level of the Surface Go") competition giant Microsoft.
"The more we got into the school environment, the more we talked to major North American school distributors, the more we realized that people wanted the" DIY "product design, they wanted the hackability and extensibility they wanted, that the tools are open source and manipulable, but they also wanted to run Photoshop and Class Dashboard and be able to run Microsoft Office. At this point, we have partnered with Microsoft, ”said Stein.
"Windows computing is packed with content and curricula for teachers and integration into Microsoft teams that require a different kind of viability," he added.
“The roles we add are subscription related, computer related, creating new applications and tools for the computer, and continue to expand the number of projects currently available to our members, things like enabling that people connect the sensors in their wands to household IoT devices. We are introducing a new app for drawing together during the Christmas season. "
According to Stein, Kano sees "a demand for 60,000 units for his Windows-based PC as early as the next calendar year" – which in his opinion is "far above what we expect … given the price".
Although he has not yet quantified the exact sales of the Kano PC.
He also confirmed that Kano will recall its product range next year.
It was recently announced that a private label camera device that Kano had traced for the first time in 2016 will no longer be available. Stein also informed us that another Disney co-branding product he planned for 2020 would be "put on hold" – without a new release date.
Stein denied the sale and claimed that the current Star Wars and Frozen E products had "done enough for us". (While a Harry Potter wand with a common brand sold faster than expected, Stein said he expected to have inventory by March, but it was "sold out".)
"The reorganization we did has nothing to do with growth and users," he told us. “We are well on the way to selling more units and products at a higher average selling price this fiscal year. We sell from Wands when we expect inventory levels by March. We have more demand before launching the Kano PC than ever before. "
Regarding the additional Disney co-branding e-product, which is delayed and may not be on the market next year, Stein said: "The fact is that we are negotiating with Disney in this regard and at the right time , Given that we are not sure if we will do it in 2020, we have taken on some of the tasks of the contractor, in particular licensing to develop some content around these brands and some of the devices established around these partnerships to manage – we don't need more. "
“This year we launched three new hardware SKUs. I don't think we'll be making three new hardware SKUs next year, ”he added, confirming that the number of device launches should be reduced in 2020 to focus on the Kano PC.
A source we spoke to suggested that Kano is considering getting his partner strategy fully underway. Stein did not go that far in his statements to us.
“We have been riding a certain bear for several years. We jump to a new bear. It will always be a bit amusing. But I think this is a promising place, ”is how he put the linchpin.
"I think what Kano can do better than anyone else in the world is a technology experience that makes its properties accessible to a wider audience," Stein said when asked if hardware or software was his future Focus will be. “The hardware element is crucial and beautiful, and we make some of the most interesting dynamic physical products in the world. It's a story often told that hardware is very heavy and brutal – and yes, because you do it right, you change the structure of society.
“It is difficult for me to draw a line between hardware and software for business because we have always been asked about it and in seven years we have found the best that people can do with the products… it is always when there is a combination of both. We are proud that we can combine the two well and will continue to do so. "
The space for STEM devices has gone through troubled times in recent years, as the early hype and investments did not lead to sustainable income with every turn.
The category is certainly full of challenges – from the low barrier to market entry, which leads to extensive competition (albeit in different quality), to the requirements for safe, robust and appealing products for (moody) children, integrate the hardware and software closely and reliably, check all relevant boxes and processes to win over teachers and support the curriculum requirements of schools, which are essential for direct sales to the education market.
Given the many demands placed on MINT device manufacturers, it is not surprising that a number of these startups have become aware of other players and / or larger electronics manufacturers this year – such as Sphero, which collects littleBits.
A few years ago, Sphero went his own way from selling Gizmos with Disney's "Learn to Code" co-branding to zoom into the education space.
Another British STEM device maker – pi-top – has also recently gone through several rounds of layoffs, apparently as part of its own pivot for the US edtech market.
Greater consolidation in the category appears very likely. Given the new relationship between Kano and Microsoft that came to Redmond through an acquisition, this could be the obvious endpoint for the startup.
According to the Telegraph report, Kano is in the process of raising funds. However, Stein did not comment when asked to confirm the company's financing situation.
The startup last reported an increase a little over two years ago – when it ended a $ 28 million Series B round led by Thames Trust and Breyer Capital. Index Ventures, the Stanford Engineering Venture Fund, LocalGlobe, Marc Benioff, John Makinson, the Collaborative Fund, Triple Point Capital and Barclays also participated.
trendzhq's Ingrid Lunden contributed to this report