The CEO of Whoop, a fitness band favored by athletes, is claiming victory over Amazon after the e-retailer pulled the plug on its line of Halo devices.
Amazon said last week it will discontinue its Halo health and fitness devices, and shut down the Halo program, resulting in some employees being let go. The move coincides with a broader effort by CEO Andy Jassy to rein in costs amid a worsening economic environment and slowing retail sales. The company initiated the largest layoffs in Amazon's history, a corporate hiring freeze, and axing several unproven projects.
Whoop CEO Will Ahmed said he views the demise of Halo as a win for his startup. Ahmed began calling out Amazon after it released the Halo in 2020, marking its first foray into wearables.
He claimed the Halo wristband, which tracks users' physical activity, sleep and mood, was a knockoff of Whoop's own device. Whoop launched its first product, the Whoop 1.0, in 2015. Ahmed targeted the device for athletes, pulling from his own experience as a former squash captain at Harvard University.
Amazon's Alexa Fund approached Whoop in 2018 about a potential investment, Ahmed said. The fund was launched in 2015 with an initial $100 million to invest in companies innovating around voice technologies.
Ahmed says he "spent a lot of time with Amazon" and shared confidential information about Whoop. He was under the impression that there was a "firewall" between the company and the fund. But Ahmed alleges that as part of its due diligence process, the fund consulted with Amazon employees from other departments.
Amazon ultimately chose not to invest in Whoop, and two years later, it unveiled the Halo band.
"You look back on it now, or certainly once they had launched that copycat product and you say to yourself, 'Maybe we shouldn't have done all that. Maybe we shouldn't have engaged in that process,'" Ahmed said. "There's no hard feelings about it. I think my perspective on it is more just, how can an entrepreneur learn from this?"
Amazon denied that it copied Whoop's product, pointing to the absence of any legal claims filed by the company over its concerns. Amazon also disputed Ahmed's claim that the company uses information collected by its fund to inform product decisions.
"We do not use confidential information that companies share with us as an investor, or potential investor, to build competing products, period," Amazon spokesperson Kristy Schmidt said in a statement. "For nearly 30 years, we've pioneered many features, products, and even whole new categories. From amazon.com itself to Kindle to Echo to AWS, few companies can claim a track record for innovation that rivals Amazon's."
It's not the first time companies have lobbed complaints of copying at Amazon. An investigation by The Wall Street Journal in 2020 found that Amazon appeared to use the investment and deal-making process to help launch competing products, which often ended up hurting the businesses it invested in, citing interviews with entrepreneurs, investors and deal advisers. A separate report by the Journal found that Amazon uses data from third-party sellers to help develop its private-label goods.
Camera bag maker Peak Design grabbed headlines in 2021 after it posted a YouTube video accusing Amazon of launching a private-label item that copied one of its products.
Amazon has also denied using non-public data from individual sellers to determine which private-label products to launch.
Ahmed said the experience has made him more cautious about what data he will disclose when exploring potential deals.
"If a bigger technology company came to Whoop today, because we have established our own business and credibility and we really can stand up on our own two feet, we would reveal far less," Ahmed said. "Some of that comes from having to learn from past mistakes."
Whoop in 2021 raised $200 million in a funding round led by SoftBank's Vision Fund 2, at a valuation of $3.6 billion. That valuation was assigned at a time of record venture financings and IPOs. Investments in startups valued at $1 billion or more nearly tripled in 2021 to more than 600, with the amount invested in those deals surging to $140.8 billion from $52.7 billion in 2020, according to the National Venture Capital Association.
The venture capital market has since reset and the IPO pipeline has dried up, as investors have less of an appetite for money-losing startups. Several highly-valued fitness startups have seen their valuations drop, including at-home fitness company Tonal who was most recently valued at between $550 million and $600 million, down from roughly $1.6 billion in 2021, according to the Journal. Shares of exercise-equipment company Peloton have lost more than 90% of their value since 2021.
Whoop has continued to launch new versions of its fitness wearable, the most recent being the Whoop 4.0, which includes the same core sleep, heart rate and respiratory rate tracking, as well as newer features like stress monitoring and muscular strain to help with weightlifting.
It also includes a warning shot to rivals. Etched on the circuit board of the Whoop 4.0 is the phrase, "Don't bother copying us. We will win."