About spectacular failures, Rand Fishkin and kitchens
About spectacular failures, Rand Fishkin and kitchens
S01-E03 (19 January 2021)
Ciao,
after the last week rant about the nefarious effects of social media on democracy, I go back to innovation, product management and startup. Cleaning my files, I found an article that - for some reason - I never published. It is about three failures that have made the history of technology: the Delorean, the Apple Newton and the Segway.
Learning from failures
Failure is a very interesting and instructive topic. Probably there are more lessons to learn analyzing failures than contemplating successes. There are many reasons why a product or a company can fail. Sometimes these are heralded disasters, like spray-on condoms that needed three minutes to dry before the liquid latex solidified. Or Colgate lasagna (yes, we are talking about the company that makes toothpastes) or, again, bottled mineral water for dogs and cats. Other times, we talk about products that look exciting but that will never cross the chasm (or even get close to it). It is the case of the Deloran, the Apple Newton and the Segway.
We all know the Delorean DMC-12 from having seen it in Back to the Future, but very few of us have had the opportunity to see one live or even had the privilege of driving it. Today, it is a collector's item among film fans: there are few cars still in circulation, because the company went bankrupt before the release of the first episode of the series that made the DMC-12 famous. In the intentions of the founder, the Delorean had to be a light and high-performance sports car with an aggressive price ($ 12,000 as the name suggested) and a very futuristic appearance thanks to the gull-wing shaped doors and the brushed metal bodywork. Unfortunately, several engineering and manufacturing errors produced a car that had performances far from promised. The company never had the resources to fix them and was forced to file for bankruptcy.
The Delorean is the classic story of a product to be sold in a market where competing factors are well known: aesthetics, power, technological performance, prestige, masculinity. The challenge is to interpret them correctly: the founder - an industry veteran - had imagined a sports car that could compete with a Chevrolette Corvette or a Porsche 928. A project that, on paper, had all the credentials to be a success. Unfortunately, after a very promising prototype that had tickled the imagination of enthusiasts and of the trade press, the team delivered a car that did not match the promises both in terms of performance and of charm.
Why would a customer have to invest $ 25,000 (double the assumed price) to buy a car that cost more than its competitors and that didn't transfer the same “muscularity” and the same prestige of an established brand to the owner? Probably, the Deloreans would have all ended up in the junkyard, if they hadn't had the chance of a new life as the object of desire of collectors eager to own a nerd icon of the 80s: «hey, look that's cool ... that's the Return to the future car».
As the Delorean, the vast majority of new products that are designed by industry every year belong to well-known categories: we find them in supermarkets, fashion stores, car dealerships or shopping centers. These are mostly “variations on the theme” of existing products thanks to which companies try to satisfy a specific niche of consumers. In fact, people's preferences are constantly changing under the pressure of countless factors. Today, for example, it is very common to find products on supermarket shelves that are marketed because they do not have an ingredient that is perceived as undesirable by customers: fats, sugar, palm oil, genetically modified organisms (GMOs) and so on. Ten or fifteen years ago, many of these products would have been incomprehensible to most consumers. Twenty years from now, many will look with disapproval at the barbaric habits of eating animals and will choose vegetable or lab-grown meat. The evolution of consumer tastes and needs is the main drive for the creation of new products and services. Another is the evolution of technology, as the next two examples show.
The Apple Newton was launched in 1993 - around the time Steve Jobs was ousted from the company - as the first model of personal digital assistant (PDA), a new class of computers that could fit the pockets of consumers. It was the clumsy great-grandfather of the iPhone: an object the size of a notebook with a monochrome screen and a stylus. The novelty was that it could recognize handwriting. Too bad that the technology developed by Apple was still too rudimentary to be effective: the recognition of handwriting was so slow and inaccurate that it became the object of derision and the Newton was also mocked in The Simpsons. The difficulty of use, combined with the size and price, decreed the failure of the product which was removed from the market in 1998 by Jobs himself who in the meantime had returned to manage the company he had founded.
A similar product, the Palm Pilot, was launched in 1996: compared with the Newton, it was smaller, lighter, more effective in handwriting recognition and much less expensive (US$ 300 versus 700). It was a great success and demonstrated the potential of the PDA market, which in a few years grew thanks to many other products, such as the Blackberry which - thanks to its keyboard - perfectly answered a new need of businessmen from all over the world: respond quickly to emails.
For a decade, PDA has remained a niche market, populated by managers, employees and professionals who needed a device that would help them manage contacts, appointments, take notes and reply to emails. Until when Steve Jobs took the stage on July 27, 2007 and emphatically announced: “today, we're introducing three revolutionary products of this class. The first one is a wide-screen iPod with touch controls. The second is a revolutionary mobile phone. And the third is a breakthrough internet-communications device. An iPod, a phone, and an internet communicator. An iPod, a phone … are you getting it? These are not three separate devices: This is one device, and we are calling it iPhone”.
If the Apple Newton is the classic example of a visionary product that generates a lot of expectations but that fails because the technology is not advanced enough, the iPhone represents one of those rare products that creates new markets and redefines others.
Dean Kamen also dreamed of redefining the urban transportation market when he invented the Segway, a self-balancing chariot capable of transporting a person on any city commute. It was marketed in 2001, but few copies were sold. The interest was so little that in 2015 the company was sold to the Chinese Ninebot and in 2020 it was put into liquidation. Today the Segway is used mainly as a mean of transport for tourist tours, but practically no one owns one (I am probably one of the very few Italians who bought the Mini and who uses it with great satisfaction to move around the neighborhood).
When unveiled, the Segway was objectively amazing: the technology did exactly what its inventor promised keeping even the less experienced driver perfectly balanced. Too bad that consumers have never been able to place it in their commuting routine and have not understood what role it could have in their lives. Too heavy, too expensive, not cheap enough compared to a moped, a bicycle or an e-bike. The Segway has ended up becoming the paradigmatic example of another crowded category of failures: products that - despite a magical technology - fail to find a place in the minds of consumers.
There are many sites dedicated to failures and they are all very informative. If you want to dig deeper, I would suggest to start from here:
Museum of Failure ("a collection of failed products and services from around the world. The majority of all innovation projects fail and the museum showcases these failures to provide visitors a fascinating learning experience")
Failory ("a big resource for entrepreneurs and startup owners, in which we have collected and analyzed why +100 big companies have failed")
Killed by Google ("a free and open source list of discontinued Google services, products, devices, and apps. We aim to be a source of factual information about the history surrounding Google's dead projects")
If you have any other interesting source on failure stories, please let me know :)
Rand Fishkin and kitchens
These days, I’m reading Rand Fishkin Lost and Founder. A Painfully Honest Field Guide to the Startup World (highly recommended) . He has some “unorthodox tips” on choosing your market and your startup idea that are worth sharing:
If you can keep your ego and your aspirations below the need to pursue venture capital in order to aim for a billion-dollar unicorn, you can ignore a lot of the advice about choosing a giant, fast-growing market ripe for “disruption”. Instead, it’s totally cool (and makes your life vastly easier) to chase after smaller markets where you have unique knowledge and passion, and where ongoing, smaller, amount of innovation can separate you from the pack. There are thousands, maybe millions, of opportunities like there with dramatically fewer venture dollars and Harvard MBAs (or Stanford CS dropouts) chasing them. Because let’s face it: most of us aren’t going to be innovators in humankind’s quest to explore the outer space. But we might be able to develop a better way to clean out a garbage disposal that, say, sticking your hand down it.
Great ideas ad products are often born for mediocre ones. The keys are time (enough to iterate and evolve into something remarkable), humility (enough to see what’s wrong and admit a failure so you can move forward), and survival (a profitable service business can be a godsend here).
Your business will be even more likely to succeed if the market you target is served by incumbent solutions that are some combination of (a) hated by their customers, (b) unwilling or unable to evolve with their customers’ need, (c) protected by competitive advantage you can unravel (or that a shift in market dynamics or regulations are unraveling for you), or (d) in their early stage and not yet dominant (i.e., a non-mature market). If you find a market with two or more of these (think vacation home rentals before AirBnB or crowdfunding before Kickstarter), your odds rise exponentially.
Keyword research (wherein you uncover what words and phrases people are searching Google for and in what quantities) will almost always uncover untapped opportunity. Move beyond the solution keyword, and look for searches that indicate problems - the quantity of monthly searches for “cityname+taxi” helped Uber figure out which cities to launch in, just as the monthly searches for “best restaurants in cityname” helped Yelp pick their expansion markets.
In the first episode of this newsletter I wrote about my experience remodeling my kitchen and the excruciating process of visiting stores and obtaining quotes. The process is clearly broken and innovating the sale channel could be a very interesting opportunity for a new business:
incumbent solutions are hated by customers: you have to spend a huge amount of time searching online, visiting stores and talk to salespersons;
incumbents are unable to evolve: the market is made by furniture manufacturers and stores that have been selling kitchens the same way for decades. I met many middle aged persons and some of them where still working with paper and pencils;
the need to have huge spaces to showcase a kitchens is a big barrier to entry. Do we really need to start the purchasing process touching a kitchen? Probably not: there are many digital tools that we can use to design our cooking space before we go into the aesthetics features: colors, materials, stile details…
But be aware that this is a space where you will probably find tons of skepticism from venture capitalists. Kitchens? Physical objects to move instead of bytes? This is not scalable. Plus there is abundance of furniture projects backed by VCs that failed in last years.
Nevertheless, I believe that there are many untapped opportunities here. That’s why you will continue to read about kitchen remodeling: it is my way to keep thinking slowly about something.
Hey, thanks for reading my newsletter. I paused writing for a long time and I’m really happy I committed to do it every week. If there is something you would like to read, just ask: I’ll be more than happy to answer if I can :)
Nicola