When Sphero laid off 45 employees in early 2018, the Boulder, Co.-based company explained the difficult decision as an effort to return its focus to the education market after a foray into creating consumer toys. Today, the robotic toymaker is following through by adding a big building block to its educational offerings.
Sphero has acquired littleBits, a New York City-based company best known for its electronic kits and instructional resources that introduce kids to building and programming by hand.
“We are both pursuing the same goal,” says Sphero CEO Paul Berberian, which he describes as providing students with playful tools that nurture creativity as they learn to use and build with technology. “But we have different ways of bringing that to life.” His company’s flagship offerings are robots that come pre-built with LED lights, sensors and motors that respond to light and gestures, and which kids can control via an app on a computer, smartphone or tablet.
LittleBits takes a more barebones approach. Its kits include batteries, boards, blocks, circuits and other gadgets that children can assemble into different configurations and program. Last August, littleBits acquired DIY, which offers a library of do-it-yourself maker projects and instructional videos, as well as an online community where kids can share their creations.
In other words, think of Sphero more as a pre-built robot that kids can control with code, and littleBits as Lego pieces that can be assembled into any number of programmable permutations. The former focuses on “mastery of coding and applying computational thinking,” while littleBits “is about design-based thinking, assembly and hands-on experimentation,” in Berberian’s words. Bringing the two together “allows us to provide a more complete solution for schools to serve children who may have different ways they like to learn,” he adds.
According to a prepared statement, the two companies boast a combined reach of more than 6 million students and 65,000 teachers across 35,000 schools across the world. Additionally, Sphero says it has more than a thousand lessons and activities that are aligned to Common Core and other state academic standards for math and computer science.
Financial terms of the deal were not disclosed. Berberian declined to share details about Sphero’s revenues, other than stating that “we are a much healthier company coming together than we were as individual entities.”
Both parties have raised plenty of venture capital. Sphero has received just north of $120 million since its start in 2010; littleBits, founded a year later, has secured $62 million. The two companies met through a common investor, Foundry Group, which helped spark the initial conversations between the CEOs that ultimately led to this deal, according to Barberian.
They also share a Disney connection as participants in the Disney Accelerator, the media juggernaut’s program that offers mentoring and funding for startups. Sphero was part of the inaugural class in 2014; littleBits joined two years later. (Despite the program’s stated emphasis on media and entertainment, it has supported a number of other educational startups including Byju’s, Codarica and Kahoot.)
In 2015, Sphero secured a licensing deal with Disney to sell robotic toys modeled after droids from the Star Wars franchise, BB-8 and R2-D2. It also created a toy based on Lightning McQueen, from another Disney franchise, Cars. These deals marked a new phase for the company, which originally focused on selling to educational institutions, as it tested the waters of the consumer market.
Despite selling more than 3 million of these Disney-branded robots, the company decided at the end of 2017 that “going after the toy market wasn’t the business we wanted to be in,” says Berberian. These toys would be discontinued the following year—around the time that the company laid off part of its staff. He told The Verge at the time that although the toys were popular when the accompanying movie came out, that momentum would peter out shortly afterward.
Similarly, littleBits partnered with Disney in 2017 to offer a “Droid Inventor Kit” that lets kids build and program robots that hail from a galaxy far, far away. Earlier this year, the two companies partnered to launch a nonprofit, Snap the Gap, in partnership with UC Davis to provide STEM education programs to female students. Disney is contributing $4 million to support the first year of this effort.
Along with littleBits’ assets come roughly 30 new team members, which will boost Sphero’s headcount to 150 full-time employees, says Berberian. Ayah Bdeir, who founded littleBits and served as its CEO, will not be among those making the transition. (She declined a request for an interview.) Sphero now has offices in Boulder, New York City and Hong Kong.
This deal marks Sphero’s third acquisition, following its June 2018 purchase of Specdrums, a music technology startup that develops rings kids wear to make music. An education version will launch later this year.
Expect Sphero to eye other assets for purchase, Berberian teases. “When a company like ours can scale across multiple products and services, we can leverage our supply chain, distribution channel and curriculum development. To the extent that it supports our mission of inspiring the creators and inventors of tomorrow, we will keep looking at opportunities that come up.”
His team is looking to grow its presence abroad as well, particularly in Australia and the United Kingdom, which are currently its biggest overseas markets. Japan is emerging as another growth region, according to Berberian.
Sphero says this deal now makes it the largest player in the educational robot market, claiming that, together with littleBits the companies have sold more than $500 million combined in robots and kits. But the space is hardly uncontested. Among its competitors are KinderLab Robotics, based outside Boston, and Wonder Workshop, a San Mateo, Calif.-based company that also offers sphere-shaped bots and is backed by more than $78 million in venture capital.