The rise and fall of Roomba

In 2021, the company behind the Roomba line of robot vacuums was worth over $4 billion, and it was so popular that its name was basically synonymous with robot vacuums. But by December 2025, the company iRobot had filed for bankruptcy, and its assets are being bought up by a Chinese conglomerate, its largest supplier. This video is the rise and fall of Roomba.

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Back in 1993, scientists from MIT's Artificial Intelligence Lab, left the university to start a company with a vision of building robots that would be useful for everyday people. And these just weren't any scientists. The lead guy was a guy named Rodney Brooks, a famous guy in the world of robotics. He left the university and took a couple of his students with him to start the company. They originally named the company IS Robotics but later on changed it to iRobot. And their first customers weren't you and me, they were actually the government, folks like DARPA, the Defense Research Project, and different folks like that in the US government. Their first product was actually called the PackBot, which was used in some pretty hazardous stuff like the Fukushima nuclear disaster and disposing bombs in Afghanistan. But one of the students that had come along was a guy named Colin Angle, and he had a vision that robots should be in everybody's home being used everywhere. But this was a pretty early vision, and for 6 and a half years they went without funding. Basically, they never started a pay period with enough money to cover payroll for that period of time. They reportedly had pitched over 30 venture capital firms trying to get investment for their idea. Everybody passed. 10 years in, believe it or not, they were finally ready to bring their first product to market for the mass consumers. On September 18th, 2002, the team now called iRobot launched the Roomba. iRobot is excited to introduce Roomba, the world's first affordable automatic vacuum cleaner. A mass market vacuum for use by everyday people in their homes. And hilariously, the first name that they chose wasn't actually Roomba. They wanted to call it the Cyber Suck, which, man, that would've been awesome, but they wisely changed it. When they came to market, the first Roomba was priced at $199, which you're like, oh, okay, cool, pretty cheap. But that was crazy considering the major competitors on the market were sometimes priced $2,000 or even $3,000. And the first Roomba was actually pretty dumb. It didn't have any smarts at all. It basically would just bump around your room, vacuuming until it got tired. But even if it didn't work that well, it beat the hell out of vacuuming your own house and people loved it. In the first year, they sold over 150,000 Roombas and growth kept going from there. By 2004, they'd sold 1 million units. By 2006, they'd sold 2 million. And the crazy thing about consumer products like this is sometimes they can become cultural phenomenons. And in this case, like they were in Saturday Night Live. Heck, even Pepsi did a Dave Chappelle commercial, with him talking about his Roomba. This is nuts. Your vacuum cleaner ate my pants. 15 years after starting in their solo office and grinding away for a decade without much success, the iRobot team went public on the Nasdaq with their shares hitting $24 in the first day. Investors were as excited as you and I were to buy vacuums and vacuum cleaner stocks. The team decided at that point that the future was not any kind of government work, government contracts, or military stuff. They decided the future was in consumer stuff, selling to you and me, uh, people who would make decisions and write off some checks. So they went and sold their entire military and government contracting business to a private equity firm, and it was all in on consumer from then on. It was a good bet. Over the next decade, they went crazy. Basically, they ended up owning 64% of the household robot vacuum market. Then, as the 2010s ended, we started to enter 2020. And if you remember early that year, something happened that would change the world forever, and that was the COVID pandemic. Two things happened during that period of time that would be hugely beneficial for Roomba. One was people got a lot of free money from the government, so they needed to spend it, and they were happy now that they were stuck in their house to spend that money on making their home as comfortable as possible. And if you're going to make it comfortable, it needs to be clean. In 2020, the revenue grew 23% to $1.4 billion in e-commerce sales were over half of that. And crazily, some of the more advanced models, the ones that cost over $500 for Roomba, man, those grew 50% in sales during the pandemic. During that year, profit hit nearly $150 million, which was an all-time high for the company. In the back half of 2020 and into January 2021, the stock went parabolic. People were also taking all those stimulus checks they got and buying iRobot shares. The valuation of the company hit a peak at $4 billion in January 2021. The end of 2021 would be the high watermark for the company. Revenue would hit $1.6 billion and they would, by that point, have sold over 40 million robots. Colin Angle, who had been the CEO through this period of time and had been there when they left MIT back in 1990, well, his dream would become a reality. And over 30 years, the idea of household consumer robots even ones that weren't, you know, just kind of vacuum cleaners, had become a reality. But behind all the success, trouble was brewing.

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Here's the thing about capitalism, and this is what the Roomba folks started to learn, is if you're going to create a category and define it and you're going to make a lot of money doing it, eventually somebody else is going to come in and try to get a piece of that too. One of the beauties of being first to a market is when you enter it, well, there's no competition, but that doesn't last forever. Of course, iRobot and the Roomba folks, they knew this was happening. It's pretty standard business lore. It's just the way it works. The problem was the new competition was going to come in and way outmaneuver the Roomba folks. You see, Chinese manufacturers starting in 2015 had decided that they wanted to enter this space too, and multiple companies, some with names like Ecovac and Dreame, they had decided they were going to produce their own robot vacuums. These weren't cheap knockoffs. They were often better at lower prices than Roomba. While the Roomba guys stuck with tried and true technologies and didn't innovate using things like visual mapping to try to build maps for their vacuums, the Chinese came in and used new technology, things like lasers and LiDAR, to be able to do their mapping more efficiently and more effectively. Roomba didn't add LiDAR to their lineup until nearly 2025. Years after the Chinese competitors had already figured it out and deployed it at scale. The Chinese were also faster. They would update their product lines twice a year. Being close to the factories and the close to the design, they could just operate more efficiently. The Roomba folks, they would struggle to get one new release out per year. In 2023, a big rival for Roomba, Roborock, a Chinese company, was spending 15% of revenue on R&D. At the same time, the Roomba guys were cutting R&D and in order to survive. The reason they were forced to was the price gap was brutal. For Roomba, comparable Chinese direct models might be 20 or 30% cheaper. In markets like Japan, a comparable Ecovacs model might sell for $295, while the Roomba equivalent would be nearly $400. Interestingly enough, China is the world's fastest growing market for indoor vacuums. And it turns out the Roomba guys had just kind of not understood how things work there. While in the US it's very common to have carpeted floors, in most Chinese homes they have, you know, basically hard surfaces. If you live in one of those, you don't need so much a vacuum as you need an integrated mop and vacuum. And the Chinese vendors understood that and built in that system by default, whereas Roomba made you add extra add-ons just to be able to handle hardwood floors. Between 2016 and 2022, Roomba's market share fell from 64% to 46%. It would accelerate into 2025. As I record this, Roomba's market share is under 10%. Chinese companies Xiaomi, Dreame, Ecovacs, Roborock, they now control over half of the robot vacuum market. In China, the Roomba market share has dropped to less than half a percent. You see, Roomba this whole time was sourcing most of their products and parts from China, and the pandemic, post-pandemic supply chain crush hit them extra hard. While the Chinese were doing design, marketing, and build all in one geography without having to worry about a bunch of travel restrictions and all that kind of stuff, the Roomba folks were forced to cope with all those things from thousands of miles away. It looked like iRobot was going to run out of cash with sales declining and margins squeezed. Didn't look like the company would be around for long. And then came somebody with a lifeline. In 2022, Amazon came in to save the company and buy it with a $1.7 billion offer. On paper, it seemed like the perfect salvation for Roomba. Amazon could compete with the Chinese by integrating Roomba into its entire smart home initiative. And Roomba already worked with Amazon's Alexa. Alexa, can you tell Roomba to clean under the kitchen table? Okay. Quiet. It's Alexa. Together they could build a seamless entire home ecosystem around electronics, everything from Alexa to robotics. Colin, who was the CEO of Roomba, he felt this was great. He said publicly, "Finally, this is somebody who gets our vision and has the backing to get it done." To him, this is how they were going to be able to compete against these point solutions and the Chinese onslaught that was coming after them.

This is a story that's played out a lot.

In the United States, we tend to put stimulus on consumption and then let the free market figure out how to supply us stuff. In China, well, they put incentives on the supply side. And so you'll see things like this happen. Where markets get flooded as vendors get a lot of incentives from the government to build a lot of products and then figure out how to sell 'em. And that's what was happening in the robot market. Is that fair? Well, a lot of times it's not if you're in the US industry. Amazon deal for Roomba was announced in August 2022 and the stock market loved it. They should have, it was gonna save the company and the stock price bounced to $62. But the deal wasn't done yet. It required regulatory approval And the government, when there's big deals, steps in to make sure what's going to happen is good for consumers. And most acquisitions like this have to pass a couple of regulatory hurdles, one here in the United States, but then another one in Europe. And the Europeans were the first group to look in and raise questions about the Roomba acquisition. They raised questions as to whether Amazon could use its dominant position to delist other robot competitors or hide them entirely. The United States government started to raise similar concerns. And while they were doing that, time started going away. Roomba, well, it was bleeding cash. So Roomba, in a desperate bid to stay alive, borrowed $200 million from a private equity firm called the Carlyle Group. And the terms, well, let's just say they were onerous. They could not spend the money except with approval by the Carlyle Group. And the interest rate? A cool 14.3%. Some of us have credit cards that are better terms than that. Analysts would later note that this credit was 50% more expensive than typical high-risk credit in similar situations. This amount of money The money was just supposed to be a bridge to keep the company alive until the Amazon acquisition could get done. Except there was one problem. The bridge collapsed. The European Union was the first to act, and they made it very clear they were going to block the acquisition. They said, hey, this is going to make things unfair for consumers, so we're not going to allow the sale to happen. Amazon and iRobot saw no path forward, and they terminated their acquisition deal. As is common in deals like this, there's a breakup fee where if the deal falls apart, the buyer has to pay some money. And in this case, Amazon paid $94 million to Roomba for not being able to close the transaction. But interestingly enough, Carlyle Group, the creditor, well, they got the first $35 million of that under the terms of their loan. The immediate fallout was devastating. Colin Engel, who had by this time had been CEO for 33 years since founding, he stepped down. iRobot went into a death spiral. They laid off 31% of their workforce, 350 people. iRobot will be cutting 350 jobs, which is about 31%.

Of its employees.

Basically everything that was dedicated to growth, including the new lawnmower initiative, future development, it all got paused. Investors saw this position happening. The stock went from $40 down to $14 and it kept falling. Free from the binds of not being able to say what he wanted while he was in the hot seat, former CEO Cullen Angell basically went on the warpath in publicity, talking about how stupid this regulatory enforcement had been. The company had had a solution to deal with the onslaught of Chinese competitors coming in and underpricing them. And basically the government stopped that from happening. It was now going to be virtually impossible for the company to turn around with basically the limit on their ability to grow and develop. And on top of that, like basically crushing debt from the Colorado Group. In 2021, revenue went into a freefall from $1.6 billion at its peak, went down over 57% over the next 3 years. 2023 alone, the company lost $285 million. At the time of the Amazon deal, the company had 1,100 employees working on new products and getting them out to market. A year and a half after that, well, basically the company was down to half that size. In March 2025, the company came out and said they had concerns that they would be able to continue as a going operation. And that's pretty bad news if you're an investor. And the stock went down 31% that day alone. Meanwhile, the Carlyle debt that had been put on the company, it was at $190 million and it was sitting there. Getting charged 14% interest annually. But wait, then things got worse. In early 2025, the United States got a new president and, uh, Mr. Trump came in and one of the first things he did was slap variable tariffs all over Chinese products. And, uh, that increased the prices of Roomba vacuums by some, in some cases by 46%. And if things couldn't get worse, these tariffs added another $23 million. And additional costs to the Roomba business. In times like this, the companies will go into overdrive trying to sell themselves, but by October 2025, the company iRobot announced that the last buyer had walked away and they hadn't been able to make a deal. By Q3 2025, they were down to their last $25 million or so in the bank, not enough money to last very long given their cash burn, and, uh, they were running out of oxygen. So in November 2025, private equity firm Carlyle Group Well, they turned around, they sold their debt to somebody, and that somebody was a Chinese manufacturer of robot vacuums. And for $191 million, these guys suddenly had claim to the entire Roomba business. And this just wasn't any Chinese manufacturer. It was Shenzhen Paicea Products, the company that over there, well, manufactured all of the Roombas. They were actually one of the biggest creditors behind Carlyle for the company. Uh, Paicea was actually owed $161 million, by the Roomba company. This meant that the Chinese manufacturer now had the first $350 million in claims against the iRobot company. So in December 2025, iRobot, the maker of Roomba, filed bankruptcy. Roomba's vacuum maker, the iRobot, filing for bankruptcy. And that bankruptcy hearing, well, the first thing the Chinese Paisea folks did was come in and say that they would forgive the loan in exchange for 100% ownership of Roomba. Under this deal, shareholders, the people who had equity in the company, uh, they would get nothing. And this was a stock that had hit $161 back in 2021. Now iRobot, the maker of Roomba, will emerge from bankruptcy in February 2026, 100% owned by its Chinese manufacturer. And the irony is that, uh, the deal that was blocked by regulators in order to protect competition, well, that did manage to block competition. The American competition of Amazon. And now the company is 100% owned by Chinese interests. If you're keeping score at home, the Chinese firms now control 63% of the global robotic vacuum market. Obviously, we can look at this story and be angry about the regulatory stuff. You can also be angry about the situation the company got into when they didn't have many options in terms of debt and they got stuck with bad debt from the Carlyle Group that basically boxed them in. But for me, I think the big takeaway for the story is kind of how long entrepreneurship and creating things truly takes. And if you look at these guys, they worked for 6 and a half years without taking salaries. And, uh, that is an incredible level of sacrifice and how it just shows how hard it is to truly create new stuff in this world. And that's on top of the fact that these MIT guys had spent a lifetime learning everything they could about robotics. The game's hard and it takes a lot of patience. If you're interested in a similar video about how hard the hardware business is, and especially when there's Chinese competitors coming in, check out this one I did here from GoPro. Let me know what you think about this video in the comments below. And, uh, please subscribe. I'm trying to get to a couple hundred thousand and I would love to have you aboard. See ya. Talk soon.