Strategy Shift Leads to Layoffs (and a Rogue Ex-Employee) at Coding Kit Company Pi-Top

Dec 04, 2019

A London-based company in the crowded market of do-it-yourself programmable hardware for students seeks to shake off negative headlines as it restructures and changes focus to the U.S. and to software products.

As part of this restructuring, Pi-Top, founded in 2014, has battled bad press related to its products and its decision to lay off staff. Today, the company hopes its computing kits and programmable laptops that cater to middle and high school students can stand out in an industry where competing products often focus on younger learners.

“Am I worried about competitors right now? Not really,” says Pi-Top Executive Chairman Stanley Buchesky. “It’s a wide-open market space.”

The company first announced its strategic shift with a capital injection of about 3.3 million British pounds (about $4 million) in September. The announcement came on the heels of a TechCrunch report of a student burned by a Pi-Top product, a report Buchesky claims was “inaccurate.” He says that TechCrunch reported on an isolated incident and that the company has taken measures to ensure the incident doesn’t happen again.

Email Details Complaints

Since the funding announcement, an anonymous former Pi-Top employee has contacted news outlets to say the company recently laid off staff. The former employee accused Pi-Top of insufficient product testing, low customer demand, a poor work environment and a high cash burn rate—all claims Buchesky denies.

Buchesy says Pi-Top has a rigorous and extensive product testing process that meets or exceeds industry standards, that Pi-Top has already sold all the stock from its first production run and is beginning a second run and a positive work culture. He says the company has an “ample runway” and “sound financial footing.” “We are not going bankrupt,” he says.

The employee also claimed that Pi-Top is in talks with Pearson for an investment or possible sale of some or all of the company. TechCrunch first reported on some of the employee’s accusations.

Buchesky says the company vets all credible proposals for new capital and potential exit opportunities, declining to comment specifically on the Pearson claim. Buchesky says the company is looking into criminal and civil action against the employee for violating confidentiality policies and making false and misleading statements to defame and damage the company.

Pi-Top has raised about 24 million British pounds (about $31 million) in venture capital to date. Its has sold products in thousands of schools across 70 countries. Buchesky says that even with the new U.S. schools focus, opportunity still exists for Pi-Top to grow internationally, particularly in the Middle East and China. He adds that Pi-Top has room to grow its direct-to-consumer sales.

Investors in the company have included family-owned investment holding company DLF, London venture capital firm Hambro Perks, investor Committed Capital and seed investor The EdTech Fund. Buchesky serves as a managing partner at The EdTech Fund and joined the Pi-Top board in May. Buchesky, 47, previously served as a senior adviser in the Trump administration’s Department of Education and as a senior director of mergers and acquisitions with McGraw-Hill.

The former Pi-Top employee contacted EdSurge in November to share a letter signed by Pi-Top chief operating officer Paul Callaghan that details the company’s strategic shifts. The letter, dated Nov. 13, suggested the company would lay off workers at its U.K. office, focus on software development over hardware development and focus on U.S. schools.

In 2019, Pi-Top “dramatically reduced” marketing and travel budgets, office space and executive team salaries, according to the letter, which stressed the need to become “a profitable and sustainable business in 2020.” Buchesky adds that Pi-Top expects to become profitable in 2020.

The company laid off eight employees in the U.K. office. But the company has hired three remote workers to aid in software development, Buchesky says. The total full-time employee count is now 47, down from a high of about 70 employees. Pi-Top will keep all three of its offices open in London, Austin, Texas; and Shenzhen, China.

Design Change and Customs Delay Shipping

Part of the company’s strategy to win over schools in 2020 includes marketing its Pi-Top 4 kit, which comes with 14 programmable sensors, buttons and other components. Unlike the company’s Pi-Top 3 laptop, the Pi-Top 4 is a device that can plug into any other computer or function as a standalone computer using a monitor and keyboard.

Along with Pi-Top 4, the company has developed a learning management syste called Further that comes with 100-plus hours of content and curriculum for educators and students. Lessons include one on making sensors that alert cars to nearby obstacles and one on the difference between analog and digital sensors.

The Pi-Top 4 kit sells for about $300. The company still sells its Pi-Top 3 and Pi-TopCEED laptop products on its website for $285 and $115, respectively.

In August, the company raised $197,000 from 521 backers through crowdfunding platform Kickstarter. Pi-Top updated customers in October of a delivery delay for screens, keyboards and motions and motor kits due to a component design change. It updated customers on Nov. 25 of another shipping delay due to a customs backlog in Hong Kong.

Buchesky says the company did ship product to customers in November “as promised. “Thousands of Pi-Top 4 units are on their way around the world to our customers, retail partners and education distributors,” he says.

The market of educational computing devices for children has seen some acquisition activity this year. In June, the maker of Roomba bought Root Robotics, which makes robots and apps to teach coding. Robotic toy maker Sphero bought electronic kits provider littleBits in August. Modular Robotics, the maker of Cubelet robot blocks, bought the company behind GiggleBot and GoPiGo in September.

The company behind Makey Makey invention kits launched a new product called GameBender earlier this year. And Unruly Studios raised $1.8 million earlier this year to scale sales of its floor buttons that react to user-written code.

A Pi-Top 4 kit. (Source: Pi-Top)


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