Mr. Rubin helped popularize the use of keyboards on phones when he introduced the Sidekick device in 2002. He went on to develop Android, which was acquired by Google in 2005. Android software now runs on about 80 percent of the world’s smartphones.
In 2018, Essential received buyout interest from larger companies like Amazon, Wal-Mart, and several telecom carriers, according to a person familiar with the situation who was not authorized to speak on behalf of the company. Wal-Mart and Amazon did not immediately respond to a request for comment.
Any potential buyout would have valued the company below its $1 billion valuation, the person said.
But interest evaporated, in part because of the risk associated with Mr. Rubin’s workplace scandals. In 2017, The Information, a technology news site, reported that Mr. Rubin had departed Google after an inappropriate relationship with a subordinate, prompting him to take a leave of absence from Essential to deal with “personal matters.”
By the time The Times investigation into his departure from Google was published in October 2018, Essential was already experiencing difficulties. The company slashed the price of its first phone after disappointing sales. It dropped plans to build a home device and laid off a large number of employees, reducing its work force by the end of the year to fewer than 50 from around 120.
Essential will be shutting with around $30 million in cash remaining, the person familiar with the situation said. Investors, some of whom had written off the investment after Mr. Rubin’s scandals, will get “pennies on the dollar” back, the person said.
Essential’s decision to shut down comes several months after Mr. Rubin tweeted a photo of what appeared to be the company’s next phone, which the company called Project Gem. The elongated phone — in a variety of shiny colors — had a long, thin screen resembling a candy bar.
The handset was supposed to be a so-called companion phone, according to former employees familiar with the project. It was intended to free people from being overly reliant on smartphones and would allow them to use a smaller device for tasks like sending and responding to messages using artificial intelligence and voice controls, said the former employees, who declined to be identified because they did not have permission to speak about Essential products.