Disappointed by the support for my FP4 and by the simultaneously ongoing dumb uninspired marketing I looked up the FP annual financial reports under investor relations.
I had my suspicions that the company is struggling.
2024 is not available yet.
But for 2023, I’ll just insert this summary quote from the document:
Fairphone B.V. incurred a net loss in the year ended 31 December 2023 of € 20,572,364 (2022: profit of € 44,007), a negative
operating cash flow of € 8,265,073 (2022: € 3,738,472 negative) and a positive equity of € 6,825,014 (2022: €9,126,571 positive) as
at 31 December 2023. The company is financed with proceeds remaining from the 2023 investment from the consortium of impact
investors.
What I see from the balance sheets is that the 20m loss was mainly due to a huge jump in their operating costs (~50%!)
I just skim-read it, you could probably unpack more:
Now seriously wondering the question in title.
We seen these recently:
2 CEOs leaving,
Declining support service (no response / unreal response times)
software update struggles
visual identity refresh
marketing push
These all make sense as the outfall of a struggling company.
For what it’s worth, they claim the loss was intentional:
After being profitable for three years in a row, 2023 was consciously a loss making year. We raised ~€17m of growth capital in ‘23, which has been invested in marketing (+€6m compared to 2022) and in building up a stock position to avoid out of stock occurrences we faced in the past. Our funding round enabled us to increase marketing investments significantly to increase brand awareness especially in Germany, France and the Netherlands. Fairphone has a high brand appeal, however simply not enough people know the brand. In 2022, Fairphone’s brand awareness in France was between 4 and 5%. Increasing brand awareness does take time, and it will increase the number of customers visiting our website, and visiting the websites and shops of our partners, thereby increasing sales.
As for the rest, yeah. Two CEOs leaving and the customer support essentially going AWOL strike me as red flags for the company’s future.
The announcements of the two latest CEOs leaving:
Interestingly enough the interim CEO left the company entirely at the same time Reinier was chosen.
I’m personally dying to know whether or not the Fairphone 4 is ever receiving another feature update. It’s been awfully quiet now and “early 2025” has basically passed at this point so…
I guess time will tell when the 2024 report drops whether or not the company is slowly sinking or not.
Yeah. Although it might be just the wording so as to avoid spooking their investors as much as possible.
Because despite their reasoning you also quoted, in literally the next paragraph they went on undoing the things they said they spent the money on:
Early 2024, management has taken action to secure Fairphone’s financial position going forward, including updating our financial
forecasts, reducing operating costs, lowering inventory and obtaining additional funds from shareholders in the form of a € 4,000,000
convertible loan and € 2,600,000 was drawn immediately.
So, paraphrasing it it’s like: hey so after all this, we were literally ran short on money so needed to scale it all back and asked around for more money so we can go on.
Indeed that part will be answered in the next annual report, will drop in a few months probably.
EDIT:
Me too!
And I am (was) also really eager to have this abstract idea validated:
Opting for a green / repsonsible product does not have to involve compromising on quality and convenience.
First a disclaimer: IT start-ups invariably burn through investor cash in the beginnings (for arbitrarily long values of “beginnings”). It has nothing to do with their success, some modest startups like Twitter and Facebook have spent many, many years making colossal losses despite their public successes. The point is, making losses isn’t a sure sign of impending disaster for a tech start-up. There is financial success, and there is public success.
That been said, Fairphone has really managed to make every mistake in the book. Instead of building upon a satisfied and dedicated user base, who feels like “they belong” and Fairphone is “their” company, they estranged a lot of their customers by making outrageous promises they knew they couldn’t keep, and treating them with a certain disdain (if not hostility), trying to silence any discordant voice instead of at least attempting to fix things. Or communicating, showing they are humans like us, not some cold, faceless corporation.
“Never apologize, never explain” might be OK for royalty, but not for tech start-ups…
Unfortunately by now Fairphone lacks a vision and a plan (besides “make money”), those two things most important for a tech start-up, and the two things investors are willing to pay for.
.
When pigs start flying… They already struggle releasing the promised security updates, which after all are made by Google, Fairphone has just to adapt and test them.
I’m afraid the “growing and improving” phase is well past us.
Updates are still released, right? There was also an Android 14 update planned. But issues were found that blocked the release. I don’t have an FP4, but if I had, I’d rather have them do what they do now. Of course it does build up the expectation that the Android 14 release for the FP4 is not going to have superficial and easy to spot issues or crippling bugs.
I think its mostly frustration. They do some awesome hardware but the software side and support are bad which devalue the whole thing so much. Maybe if the software was better, the support wouldn’t be so overwhelmed.
Considering their previous sales targets and what their actually sold, it’s not surprising if Fairphone are struggling financially. The Fairphone 5 might have been a major success but I doubt it.
The issues with Fairphone 4 dark screen overheating and random reboots, where terrible. Took way to long to fix. I do think Fairphone 5 sales probably sufferd from somewhat the issues experienced with Fairphone 4.
Both Google and Samsung have stepped up their lifetime support for their phones. Fairphone isn’t unique in this regard anymore. The privacy concerned user will probably buy an Google Pixel and install GrapheneOS and will at the same time have many many years of support.
My impression is that Fairphones core audience is the ecofriendly socialist and the nerdy alt tech privacy focused enthusiast. Maybe Fairphone lost the nerds. Or maybe many of the Fairphone core audience already owns a Fairphone and ain’t in a need for a new phone.
I think the next report will tell if the marketing campaign was successful,
Since it would carry the revenue from fairphone 5 sales, and they reasoned about putting a lot of money in the marketing for fairphone 4, 5 / brand awareness.
For what it’s worth I hope they increased the sales.
But, you can be sure that if not, they will explain it with confident words in the report why.
Whether it’s actually bending reality or not.
These reports - one needs to read them critically. They will never say “we effed up” to their investors. Not in writing at least
The speculation is well founded. At the moment I cannot really recommend buying anything from Fairphone. Maybe I wouldn’t even do so myself. And I was and still am a huge supporter of Fairphone, because of their sustainability, ecological and social goals. And because they are a European company.
But the last year was crazy bad in my opinion. They cut the support down to almost not existent, they don’t really communicate in this forum anymore, their small Fairbuds that they advertised as the last earbuds you will ever need have really big problems which they never talked about, fixed in the firmware or with improved hardware.
They only write Blogposts that reads as if they were written by AI.
So because of that I also hope that they are currently in a changing time that they will get over.
But I cannot understand people in this forum that pretend that everything is just fine.
In this topic it took only 5 posts to arrive at “There is nobody steering this ship anymore.”
And similar things happen frequently, i.e. I took that comment to take context into account, not just your post(s). So I personally see where that comment was coming from.
Because you mentioned the word “speculative”. My observation is that there is a tendency (not just here in the FP forum but basically everywhere) to express speculation with words of absolute certainty. That could in part be due to a language “barrier” (English is the default language here but not everybody’s native language, me included) but then I encounter this in my own language (German) frequently as well. Nobody is perfect, I’m sure I’m doing it myself, too, when I’m not paying enough attention/haven’t got the time or motivation for a lengthy, well-balanced post. And as people differ in all kinds of aspects I think some see this as a problem and some don’t and that leads to a second layer of disagreement on top of an ongoing argument.
Yes propelling out of proportion does indeed happen and I know that I may also contribute to that elsewhere.
I think it’s also good to share my “disclaimer”.
I’m frustrated with my FP4 and FP. I would love to love it, but I cant.
I work in tech, so I’m in the “nerd” group. I also have some startup experience, good and bad. So over time I developed some bias and a “BS detector” towards certain behaviors.
And that detector has started going off for Fairphone.
Whether its false alarm or not.
Oh yess. It fuels the suspicions for me. It just won’t be a commercial success if the half baked products shortcomings are not addressed adequately (and they weren’t). Marketing vs reality gap is just way too big.
I hope that the fairness / sustainability of their supply chain are not the same in terms of marketing vs reality.
I absolutely think there’s someone steering the ship. Whether it’s the right captain making the right calls or not, that’s the question.
Personally I think the new focus on marketing and empty blog posts is one of insanity. Most things, I can understand. Software development is hard, etc. But the customer support essentially being non-existent for phones with a 5 year warranty when it was just fine 6 months ago… Well that’s one way of making sure people aren’t cashing in on that warranty I guess
Yeah, but they don’t provide a device designed for the repairability that FP have or the ethics on the production.
The reason for me buying FP5 and drewling over the FairPhones for several years in advance has to do with this. The most common reasons for people replacing their phone is a bad battery or a broken screen. I’d say that FairPhone still is a good choice, if you consider this.
Fairphone is the superior choice in many regards. It’s just that many people, me included, regard the software and customer support as absolute garbage.
Being able to replace the battery at any given moment is nice, but it doesn’t really help when a bug is eating 50% of my battery over night.
Personally, 90% of my decision to buy a Fairphone was for the 5 year warranty since that essentially guarantees that the phone will last for a minimum of 5 years because I’ve never broken a phone ever. But after 3 years I already want to replace it due to all the software issues
The fair aspect for the workers is great. But personally and I’m sadden to say this, I would rather have a non-fair phone that actually works without major issues. Fairphone can do a lot better when it comes to the software, but for whatever reason they don’t. Instead they focus almost entirely on increasing their sales. They emailed people just a few hours ago inciting them to buy the Fairphone 5 because now the Fairbuds are included, yay…
So here we are. Wondering what the hell is going on.
Yes, they still have repairability and the social thing. But the repairability and battery change have aslo improved alot by other manufacturers. Not as easy as Fairphone but the days with glued batteries seams to be almost gone. This is a good thing.
They already struggle releasing the promised security updates, which after all are made by Google, Fairphone has just to adapt and test them.
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