DAQRI

What did it do?

DAQRI was a Los Angeles-based augmented reality company. Its best-known product was the Android-based Smart Helmet, which gave industrial and construction workers visual instructions, real-time alerts and 3D mapping. The company later shifted to wearable glasses for industry called DAQRI Smart Glasses.

Why did it shut down?

After moving into hardware the company grew quickly through acquisitions and a European headquarters in Dublin, but the enterprise augmented reality market never reached a scale that could support this structure. In 2017 around a quarter of staff were laid off, founding CEO Brian Mullins stepped down and co-founder Gaia Dempsey left. The new management sidelined the smart helmet it had invested in for years and turned to glasses. In September 2019 the company was reported to have closed its headquarters, laid off most of its staff and sold its assets ahead of shutting down.

The story

DAQRI's story can be summed up in a hard hat: an augmented reality helmet running on Android, fitted with cameras and sensors, projecting instructions, real-time alerts and 3D maps into an industrial worker's field of view. Founded in 2010, the Los Angeles-based company aimed with this helmet to take augmented reality from advertising campaigns to the factory floor.

In its early years the company was known for apps combining QR codes with augmented reality, and in June 2013 it raised a new $15 million investment. In 2014 it moved into wearable hardware and began developing a smart helmet for industry and construction. A string of acquisitions followed: in 2015 Melon, maker of an EEG headband, and ARToolworks, known for the open-source ARToolKit libraries; in 2016 head-mounted display maker 1066 Labs and the UK holographic technology company Two Trees Photonics. A European headquarters opened in Dublin. The smart helmet appeared on stage during Intel's keynote at CES 2016. In July 2017 total funding was reported to have reached $275 million, led by Tarsadia Investments.

The turning point came the same year. After reports that around a quarter of staff had been laid off, co-founder and CEO Brian Mullins stepped down in October 2017; he was replaced by product chief Roy Ashok. Two months later co-founder Gaia Dempsey also left. The new management announced that the smart helmet would no longer be the focus and that the company's hardware offering would be lighter, more affordable glasses. According to Ashok, customers had completed their innovation projects with helmet programmes and were now looking at how to roll the technology out across their organisations.

The shift did not bring the expected scale. In September 2019 former employees and sources close to the company said DAQRI had closed its headquarters, laid off most of its staff and sold its assets ahead of shutting down. TechCrunch reported the news by stressing that yet another heavily funded augmented reality headset start-up was shutting down.

The lesson of DAQRI is that a customer list full of pilot projects does not mean lasting revenue. Enterprise customers can take years to move from trial to wide deployment; over that period, a cost structure swollen by acquisitions can leave even the best-funded company without cash.

Lessons for founders

• In enterprise hardware, do not mistake pilot projects for revenue; track the rate at which customers move from pilot to wide deployment as a separate metric.
• Building up a technology stack through acquisitions before the product has found its market grows the cost base faster than revenue.
• If your flagship product is going to change, do it before the cash runs out and on the basis of customer data.

Sources

1. Daqri (Wikipedia)
2. Augmented reality headset company Daqri is reportedly shutting down (The Verge, 2019-09-13)
3. Another high-flying, heavily funded AR headset startup is shutting down (TechCrunch, 2019-09-13)
4. https://www.wikidata.org/wiki/Q22080784
5. Wikipedia (English)

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