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Business
31 May 2017

LeEco: Slow and steady wins races, not the reckless

LeEco Saga: sizzle, fizzle and burn

LeEco, the Chinese phonemaker, in 2016 had a clear goal in front of itself- disrupt the US market.

It started off aggressively with smartphones that were suitably priced and aimed further expansion with its tech-related products such as speakers, headphones, and others.

But what it forgot was the fact that rapid expansion comes at a steep cost.

This is how it soared and crashed.

In context

LeEco Saga: sizzle, fizzle and burn
LeEco, Google, Samsung all in the same breath

Silicon Valley

LeEco, Google, Samsung all in the same breath

It entered the US by setting up base at the heart of the Silicon Valley, rubbing shoulders with majors such as Google, Samsung; by paying an astounding $250 million for Yahoo's (another disaster of a different kind) old developmental site.

A firm spending insane amount of money, just for a base in a new territory crowded with competition, was ambitious and also quite risky.

Aim

Making a very big bang at arrival

The task LeEco had set for itself was quite high; it aimed to be the first Chinese company to rule the west with an eco-system like that of Apple or Samsung, only with a much lower price-tag.

The US was, however, not the only market it had its eyes on, at the same time, it was wooing the Indian market too with its products.

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Everything and everywhere, all at once

Chaos

Everything and everywhere, all at once

LeEco came out with too many things at the same time; EcoPass, a Netflix-type streaming service, LeMusic, a music streaming service, LeEco's electric vehicle, the LeSee Pro, its TVs and last but not the least, a futuristic bicycle.

It was ready for its big moment and all the glory that came along with it. There was, however, a small hiccup, America didn't want it.

Mistake

Biting off more than it could chew

By the time they understood that their model of flash sales was not working and their products were not popular, it was too late.

"We blindly sped ahead, and our cash demand ballooned. We got over-extended in our global strategy. At the same time, our capital and resources were in fact limited." LeEco co-founder Jia Yueting admitted looking at the cash crunch.

It's almost like a bad magic trick

Downfall

It's almost like a bad magic trick

In a brief span of 273 days, LeEco just fizzled out; it has sold off its base site, fired 325 US employees and has retracted in a shell to lick its wounds.

The reason it told TechCrunch was, "Because we can't access the capital needed at this time, we will need to take a phased approach to the US market."

India

No consumer love from India

LeEco's Indian venture has failed too; its staff stands at 30 from 380, it has neither paid its vendors as of yet nor has it given full-and-final settlements to the employees that it sacked.

MD Jaideep Mehta was quoted saying, "LeEco has left a trail of unpaid dues as well as dead stock in the markets…Shipments are zero as they have left the country."

Vaulting ambition leads to downfall

Overambitious

Vaulting ambition leads to downfall

LeEco story is a classic example of what happens when you are too chirpy to even read the warning signs.

It is expected, that a company would want to pursue a lucrative market aggressively, but at the same time, it should remember expansion comes at a cost, which it should be able to bear.

Always, cut your cloth according to your coat.

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