Interfacing with retailer buyers is labor intensive and they were trying to sell pebbles everywhere. So you have like one employee-equivalent (across multiple departments) per major client (amazon, target, walmart) and maybe half an employee per minor retailer and you can easily use maybe 30 employees just keeping the retailers entertained. Even if you only sell one unit to walmart it still costs you like one employee-equivalent just to keep the monster fed with paperwork and contracts.
Also hardware has very expensive customer support costs, lets say they had 1e6 sales and fifty customer support (to keep the math easy) and lets say a typical customer support dude burns an hour per ticket total (including training and everything back office) and works 2000 hours per year, thats 100000 or 1e5 customer service interactions per year. Thats only a 10% support rate. Of course the annual rate was probably much lower than 10%, and they probably had a lot less than 50 customer service employees, but you can see how selling consumer hardware can be incredibly expensive. Its very difficult to have a million units out there with fewer than say five people baby sitting them.
There's also the SV stereotype that it takes about Y folks in SV to do what 1 person in Chicago would do, where the value of Y is extremely debatable but certainly larger than 1. The nicest way to put it is if it takes six months to soak in the culture and we intend to double in size and sales every six months then need a team twice as big as it "needs" to be today to be ready in six months, and of course six months from now the team will have doubled again to keep up with the onramp to the next doubling 12 months out, etc. Of course when the growth rate doesn't achieve or flatlines or goes negative for a couple quarters then you have like ten people to do a one person job, so all sad company stories end this way, with why do you have 10M units worth of employees with only 1M sales, no wonder, blah blah.
What was the point of having a strong retail distribution, though, esp. given the nature of the product and its target market? If it's on Amazon why would it need to be available at Target or Walmart? Also, when you're small, keeping stock with big retailers can be very costly, not just in headcount but in cash.
If this was indeed part of their strategy it's weird.
Also hardware has very expensive customer support costs, lets say they had 1e6 sales and fifty customer support (to keep the math easy) and lets say a typical customer support dude burns an hour per ticket total (including training and everything back office) and works 2000 hours per year, thats 100000 or 1e5 customer service interactions per year. Thats only a 10% support rate. Of course the annual rate was probably much lower than 10%, and they probably had a lot less than 50 customer service employees, but you can see how selling consumer hardware can be incredibly expensive. Its very difficult to have a million units out there with fewer than say five people baby sitting them.
There's also the SV stereotype that it takes about Y folks in SV to do what 1 person in Chicago would do, where the value of Y is extremely debatable but certainly larger than 1. The nicest way to put it is if it takes six months to soak in the culture and we intend to double in size and sales every six months then need a team twice as big as it "needs" to be today to be ready in six months, and of course six months from now the team will have doubled again to keep up with the onramp to the next doubling 12 months out, etc. Of course when the growth rate doesn't achieve or flatlines or goes negative for a couple quarters then you have like ten people to do a one person job, so all sad company stories end this way, with why do you have 10M units worth of employees with only 1M sales, no wonder, blah blah.