10/25/2019 09:54:11
This post marks the second in my series about the sad saga of Purism and the Librem 5. If you haven't read the first post yet, I highly recommend that you click here. Give it at least a good skim before reading this one as it contains important background information that is required to appreciate this one.
Sometime in the midst of the Aspen shipping window I began to casually express skepticism on the Purism subreddit. In some of my comments I posited the theory that Purism had hit rough financial straits. I also further theorized that Purism was using PR to generate more revenue in the form of pre-orders for the device so that the project could continue. Within a day of posting this, I was contacted by an informed ex-employee of Purism. They gave me their credentials which I verified using information they provided and information I was able to dig up. My source has decided not to go public yet at the time of publication. This means that while I have verified their identity, I cannot share any information you would require to do so.
Before we continue, I need to make it clear that as of right now, I have not verified all of the following claims. After listing the claims, I will attempt to correlate them with publicly accessible information. Readers should also take care to understand that these claims come from my verified source and not from me. That being what it is, here is a paraphrased summary of what my source has authorized me to share:
Sometime in April 2019 several employees decided to confront Todd about the manner in which he was handling the Librem One launch and expectations around its revenue performance. He responded by terminating them.
Despite Purism's statements that they plan on producing as many as 50,000 Librem 5 units by early 2020, the truth is that they have less than 10,000 backers.
Purism has long since spent all of the initial crowdfunding income and is depending on new Librem 5 pre-orders for most of their revenue.
Purism's current strategy regarding the Librem 5 is to raise more money in the form of pre-orders by generating marketing hype which encourages more pre-orders.
While a large portion of the Librem 5 hardware design was done in house, the actual testing and production has been outsourced to a firm in China. A large portion of the work was never completed once Purism ran out of money and thus was unable to keep paying them. As a result they ended up throwing together a few prototype boards locally at least some of which were used to create Aspen batch Librem 5 units.
The Librem 5 has not been FCC certified and Purism has made no attempt to start that process.
The current Aspen batch Librem 5 units have not been thermally tested and haven't been through any real quality control.
There are a lot of great people working at Purism who are not in any way aware of these issues. Todd has structured the company in such a way that employees can be segregated and isolated. In addition most of the work force is remote, so this makes it very easy to keep people out of the loop.
Now, let's go over what publicly accessible information can be used to help us at least partially verify these claims.
One of the involved employees was actually laid off while they were at Linux Fest Northwest and Jupiter Broadcasting reported on this in Linux UnPlugged Episode 299. Librem One discussion starts at 5 minutes, 58 seconds. Lay Off / Purge is discussed at 9 minutes, 22 seconds. This was handled in a very public manner during a major Linux conference and thus this is a matter of public knowledge. This was also verified by Zlatan Todoric as part of his interview on Phoronix. We can't however prove why they they were laid off using publicly accessible information.
We have no public way of verifying the number of current pre-orders for the Librem 5. The last Wayback Machine capture of the crowdfunding page before it was transitioned into a normal product page on Purism's store can be found here. According to that archived page, as of September 24th, 2018 the number of Librem 5 pre-orders was 3929 if add up all the individual and bundle order backer counts appropriately. That's over a year after the original campaign was opened. If we assume the same rate of pre-orders coming in over the last year, that probably puts them at just over 8000 pre-orders. That of course assumes that they are able to maintain a rate of 4000 new pre-orders each year. Some might say that's pretty generous as they got a lot of free advertising during the initial months of the crowdfunding campaign. However I believe Purism has spent a lot of effort on keeping the marketing hype pretty high, so I think it's a fair guess at the end of the day.
While there is no fool proof way to publicly verify this, Purism has started relying quite heavily on obtaining funding from Kickfurther. If you want the full history of their activity on Kickfurther, you'll need to create an account (as most content on the site requires a free login to view) and you'll need to dig into the history of two accounts as they apparently closed the account their original co-ops were run through and created a new one for their more recent co-ops at some point. Long story short: They originally had a co-op in 2016 and another in 2017. After that nothing until this year when they ran one in March, another in April and two in September which are still ongoing.
Given the Kickfurther activity we just discussed, it's is relatively safe to conclude that Purism is suffering from cash flow issues though this is not atypical of a burgeoning inventory heavy business (FWIW I know this because I watch Shark Tank). This conclusion is mostly driven by the fact that effective interest rates on these co-ops are far and above what a traditional corporate lender would ask for. Unless of course for some reason, Purism isn't able to obtain a credit line, hence the reliance on vehicles like Kickfurther and the cash they are pulling in from Librem pre-orders. Finally, Zlatan Todoric stated "entire paychecks were cut during campaign for several people" in his Phoronix interview which lends credibility to the theory that these cash flow issues are persistent.
Now if you read #2, you'll know that we can guess that the best case scenario for the level of Librem 5 pre-orders is 4000 a year. At $600 a piece that gives us a total revenue figure of $2.4 million. Divide that over 12 months and you end up with $200k of Librem 5 revenue per month. If you look at Purism's latest co-op on Kickfurther you'll see that they claim yearly revenues in excess of $6 million. However if you look at the March 2019 and April 2019 co-ops you'll see that they both claim that Purism's yearly revenues were in excess of $3 million.
In either event, assuming our rate of Librem 5 pre-orders is at least 4000 a year, then it seems relatively safe to conclude that Librem 5 pre-orders make up at least a substanial portion of Purism's revenue or the bulk of it, depending on which of those revenue figures you choose to believe. While it is possible that revenue figures from March and April were simply outdated, it seems unlikely since the March co-op was the very first co-op for this new account and the figure was definitely not copied and pasted from any of the co-ops associated with their old account as they have no yearly revenue information whatsoever. This of course begs the question of how Purism's yearly revenue figure could have doubled in a matter of six months even while they still claim the same 100% year over year growth rate.
If the revenue math from #3 is even remotely accurate, then it seems safe to conclude that Purism is currently relying upon Librem 5 pre-orders to keep the company afloat. However there is no firm way to tie that revenue guess to any of the exaggerated claims, overly optimistic projections and a clear reticence to admit to any setback, no matter how minor, that has become the hallmark of Purism Public Relations and Marketing. To put it another way, we simply have no way to read the minds of the people at Purism who are making these decisions so we can't definitively tie one to the other.
There is no known public information that can be used to confirm this particular claim.
Purism's own posts can be used to confirm that the Librem 5 won't be fully FCC certified until Evergreen. We can also confirm that the process hasn't started thanks to these helpful tips provided by /u/Steve_Streza on reddit which allows you to clearly see that they haven't even started.
This claim has since been largely verified by Purism's recent "Supplying the Demand" post in which they admit to RAM, heat, antenna and CPU placement issues.
So it's easy to verify that Purism has some really talented people working for them because we've all seen what they can do. I'm personally typing this sentence on a Librem 15 that I have really enjoyed using over the past two years. There isn't really a good way to verify where these employees are located, short of stalking or reaching out and asking all of them. Furthermore, verifying the internal structure of the company and how information is shared and naturally flows is virtually impossible.
If you want to hear about the actions I took once I received this information and what my ultimate opinion on this debacle is, you'll have to wait until the third part of this series which I plan on publishing in the next couple days. Stay tuned!