iRobot Bankruptcy: How Regulators Killed One of the Biggest Success Stories in Robotics

35 years of work, over 50 million robots sold, and finally… bankruptcy. The story of iRobot and Roombas is the latest example of how regulatory decisions can reshape the entire tech industry landscape. When last Sunday the company filed for Chapter 11 bankruptcy, it meant more than just the fall of one giant — it was a signal to the entire startup ecosystem.

How the FTC Blocked a $1.7 Billion Mega-Merger

It all started in October 2023, when Amazon announced the acquisition of iRobot for $1.7 billion. The planned deal was meant to save the company, which was losing market share amid rising competition from China. However, 18 months later, after an intensive investigation by the FTC and European regulators, the acquisition ultimately fell through.

iRobot founder Colin Angle does not hide his disappointment with the regulatory scrutiny. Describing the experience as “deeply frustrating,” he emphasizes that the teams spent nearly a year and a half preparing over 100,000 documents. Both iRobot and Amazon invested enormous financial and human resources to persuade regulators of the transaction. The effort proved futile.

Criticism of the Regulatory Approach

Angle argues that the regulators’ decision was unjustified. In the European Union, iRobot held only 12% market share — and was still losing it. Its main competitor, Roborock, had entered the market just three years earlier and was rapidly gaining popularity. This situation should have indicated a dynamic market, not monopolistic consolidation.

“It should take three to four weeks of investigation” — believes Angle. Instead, the process lasted a year and a half, which had a destructive impact on the company’s operational capacity. Paradoxically — bankruptcy was exactly what the regulators aimed to prevent.

Angle points to the FTC staff’s attitude, who hang posters of blocked transactions on their office doors “like trophies.” For an entrepreneur who built the company from nothing, it was a shock. “Here is an agency whose mission is to protect consumer interests, celebrating every blocked merger as a victory, while M&A is actually the main driver of value creation in the innovation economy” — he says with frustration.

Deterrent Effect on Startups

The fall of iRobot has far-reaching consequences for the entire venture capital and startup ecosystem. Entrepreneurs planning to exit via acquisitions now have to weigh regulatory risks more heavily. Venture capitalists may change their investment strategies — fewer acquisitions mean differently valued transactions and potentially weaker appetite for funding new companies.

Angle does not hide that his new venture has been shaped by his experiences with iRobot. “This precedent creates the risk of it happening again. It affects willingness to invest, transaction valuations, and the pace of new startups” — he explains. While it’s hard to quantify how many fewer startups have emerged because of this signal, it’s clear that it has not helped the US position in the global tech competition.

From the First Moon Mission to Crazy Success

The story of iRobot is a brilliant lesson in entrepreneurship. The company started in an academic lab as a project by a group of engineers eager to finally see the robots they had been promised. One of the co-founders, Rod Brooks, was a pioneer in AI technology in robotics.

The first business plan was ambitious: “a private mission to the Moon, selling the rights to the film.” It didn’t work out, but the technology was used in the Mars Pathfinder mission — Angle’s name is on Mars. The company built robots for the US Army (PackBot for neutralizing explosive devices in Afghanistan) and for Japan (robots entered the Fukushima reactor).

It wasn’t until the 12th year of the company’s existence, with a budget of just $15,000 and a two-week deadline, that Roomba was created. “You have $15,000. Two weeks. See what you can do” — Angle told his team.

Crazy Cats and Pepsi Changed the Game

But the biggest breakthrough came from an entirely unexpected direction. Pepsi, without iRobot’s consent, used Roomba in an ad with Dave Chappelle. The scene was absurd — a robot eating chips and a man’s pants, a beautiful woman appears, and he says: “Your vacuum ate my pants.”

That one ad sold 250,000 robots in two weeks. “You try to do good for so many years and keep getting hit in the face, and then sometimes something good happens” — he recalls with a smile.

Even more crazy was that cats riding Roombas became a cultural internet phenomenon. Billions of views, countless memes — it wasn’t a marketing plan, but an organic social effect. Does it make business sense? No. But it brought the company billions of views.

Lessons for Today’s Entrepreneurs

Angle has specific advice for those building in the robotics industry. First: understand the market before falling in love with the technology. “Robots are so exciting, so sexy, that it’s easy to convince yourself you’re doing something that will change the world” — he warns.

Second: don’t build a robot for the sake of a robot. When Roomba first appeared, people said: “This isn’t a robot. A robot has arms, legs, and a head.” Meanwhile, Roomba cost 10,000 times less than a humanoid vacuum with vision.

Third: understand what consumers truly need. iRobot spent years focusing on vision-based navigation, ignoring lidar technology that Roborock and Ecovacs had been deploying for years. The strategy was logical — laser solutions were fast but superficial. The problem? The market chose quick solutions over waiting for perfection.

A New Chapter

Angle is not giving up on the industry. He describes his new company as consumer-oriented, focusing on robots that can support health and well-being through interaction with people. “I realized that most things robots can do require emotional sophistication” — he explains.

30 years in robotics have taught him that the adventure never ends. Hopefully, this time the regulatory environment will be more supportive of innovation and entrepreneurship, which — paradoxically — are what the economy needs most.