The Latch deal for Jamie Siminoff’s startup is basically a $20M acqui-hire

The recently announced deal by publicly traded Latch to acquire Jamie Siminoff’s startup Honest Day’s Work essentially gives Latch investors a well-regarded executive to manage the flagging public company, and Siminoff a public company to run where he can test out his plans for a new tech startup.

On Tuesday, Latch said it would exchange 29 million shares of its stock valued at 76 cents a share for Honest Day’s Work in a deal valued at $22 million. With the announced deal, Ring’s founder Jamie Siminoff will join smart apartment software company Latch as CEO once it closes. The closing is set for July 3, but could be extended through September.

Siminoff, who sold Ring to Amazon in 2018 for more than $1 billion, stepped down in March as CEO of Ring to take on the role of innovation fellow at the online retailer. On Monday, Amazon said Siminoff was leaving, and a day later Latch said that Siminoff would become the CEO of Latch after it completed a deal to buy Honest Day’s Work, Siminoff’s stealth startup.

Siminoff founded Honest Day’s Work in July 2022, and based on a job listings for Honest Day’s Work, the company is like a TaskRabbit for professional trades. So a consumer would log in to Honest Day’s Work to find and hire a plumber or painter. A tradesperson would list on the site much like they would with a service such as Angi (formerly Angie’s List) or in one-off local service directories. This is in line with Siminoff’s vision to help consumers who lead busy lives get access to goods and services using available technology. One example of that vision is Amazon’s Key program which used connected locks and cameras to let consumers provide access to their homes for services such as grocery or package delivery.

But Siminoff’s upcoming role as CEO of Latch is going to be a tough gig. Latch, which makes a smart lock designed for apartments and software to manage access control and other apartment services, went public through a Special Purpose Acquisition Company, or SPAC, deal in 2021. But despite being public, it hasn’t filed any financials for the last year. 

Back in August 2022, it disclosed in SEC filings that its audit committee was investigating how Latch had historically recognized revenue, its financial reporting, as well as its internal controls. The company said its financial results going back to 2019 could no longer be relied upon and would need to be restated. In January of this year, its CEO and founder Luke Schoenfelder left the company along with the CFO and chief accounting officer. Currently, Latch is led by interim CEO Jason Keyes. 

The company said the investigation into its accounting issues is “substantially complete.” However, to retain its listing on the Nasdaq as a publicly traded company it needs to comply with listing requirements (by filing its quarterly and annual financial statements) on or before Aug. 4 of this year. So Siminoff will join Latch and have a month before it must show the Nasdaq that it’s in compliance with its rules and those of the SEC. 

Latch does have some positives. When it last reported its financials in 2022, it said it had $335 million in cash and cash equivalents (remember, that number will be restated), and according to merger documents, Honest Day’s Work has $8 million in cash. Latch also has existing customers that have put its door locks in their apartment buildings, providing a captive market of customers that could act as a test market for Honest Day’s Work services. So after the deal goes through consumers living in a Latch apartment could hire a dog walker from the Honest Day’s Work’s platform and maybe give them access to the apartment in the same software.

For Latch investors, Siminoff is a well-recognized executive, famous for his turns on the TV show “Shark Tank.” Even if Siminoff fails in his big vision for a combined Latch and Honest Day’s Work, his presence could boost the stock enough for investors to see a bit of a return (or a smaller loss.) Since the deal was announced before the market opened on Tuesday, the stock has risen as high as 97 cents from its 76-cent closing price Monday. 

As a reporter who has spent two decades reporting on tech and business, I look at this deal as a smart one for the big investors who paid to take Latch public via the SPAC, and a potentially lucrative one for Siminoff. But I wouldn’t bet on Latch’s stock in the near term. It’s a reminder that the rich tend to make the deals they need to in order to stay rich and get richer, while the smaller investors take on the risks.