Well, We Failed – Wattage is shutting down

https://medium.com/inside-wattage/well-we-failed-77e795e16ecf

by divy • 11 years ago

328 157 11 years ago

fl0wenol2• 11 years ago

Should have focused on a specific sub-market at first, used it to proof-out internal tools and design->front door delivery processes, show the potential.

Something boutique-ish but simple, maybe a few internal configurables, that could use customization. Like headphone amplifiers (since headphones are becoming like fashion accessories).

Or e-ink pens.

wodenokoto• 11 years ago

That seemed to be what they did. Only a pod cast radio instead of a headphone amp.

fl0wenol2• 11 years ago

But that's not how they marketed themselves from the get go. It was more about enabling the end user to come up with stuff (I remember reading they were basically targeting other software developers who had a hardware itch they wanted scratched). I think that was _specifically_ the leap too many.

wasd• 11 years ago

It's really easy to say this is why someone failed and this is what they should have done instead but take a moment to walk in their shoes. Do you really think it never occurred to them? Every decision has incredible amount of weight to it and only they had to the bear the consequences of the those decisions.

joslin01• 11 years ago

You sound defensive. He's just voicing his opinion.

jeremybell18• 11 years ago

I spoke about that in the post - we had narrowed our efforts to just be hardware focused, but soon realized that wasn't enough. We then narrowed even further and were going to simply offer a podcast radio with a number of customizations. But that decision was made too late.

soneca• 11 years ago

I agree. My personal choice: they should have focused on "build your own personal digital alarm clock - make it snooze however you want: shouting at it, moving it or just placing the snooze button on a particular hard to reach place".

jkestner3• 11 years ago

I had a speculative-design project in the back of my head, where objects physically evolve over successive versions, using only existing use data fed into a generative design. The alarm clock was the specific object I chose (what method of waking you up works the best for you?), and this would've been the perfect platform to realize it. Just a silly concept, but you need to come up with a reason to do millions of one-offs, rather than letting a designer doing her job well for a single universal model.

VLM2• 11 years ago

Something to think about WRT focus is consider a world, magically without retail car part stores. Actually I'm old enough to remember the world before autozone and pep boys and whatever other competitors I'm forgetting, and we got by pretty easily. But anyway...

It would be tough to startup the first ever disruptive retail car parts store if you focused deeply on parts for a '98 Saturn, however convenient it would be for a couple people. You'd have to make sure you focused deeply on ... How bout sparkplugs? Every spark plug commercially available today. It probably sounds insane, but there's a successful chain that theoretically sells nothing but batteries. This was actually pretty easy to focus. I think their project was immensely harder to focus. I think it would be extremely challenging to narrow their market yet still have more than a handful of customers.

coldcode• 11 years ago

It's always instructive to see how people failed and how they eventually realized why.

In this case I would have told them up front this is too much to do to start with. To get big wins eventually you have to start with small ones.

pcarolan• 11 years ago

I'd say you were just too early, everyone will benefit from them having pushed these ideas further.

rasz_pl2• 11 years ago

Early? Chumby was 10 years ago.

jeremybell18• 11 years ago

Chumby was an inspiration. As were things like LittleBits.

pistle• 11 years ago

Thanks for the mostly transparent insight into your experience.

How does one enter a deal to pay back investors with a shuttered operation? Does that mean make them whole or just pay something back? It seems like someone is holding onto a bag - THE bag?

jeremybell18• 11 years ago

Nobody is holding a bag of money. I only wish it played out that way. It was essentially an acquihire, so I'll be going to another company, and part of that deal allows me to make our investors whole.

jkrejci• 11 years ago

POP!

1123581321• 11 years ago

How did Wattage secure a deal to return its investors money? Presumably they had spent it. Did they arrange a loan on terms that would give the original investors liquidation preferences?

bitsweet• 11 years ago

acquihires are one way

suitcase• 11 years ago

They probably stopped spending their remaining funds once the next round didn't come through.

jkestner3• 11 years ago

The good news is the vision of mass-customized electronics is a huge deal. The bad news is, Apple proved it in 2007-2008 with the iPhone + App Store.

The points that you could've focused on a specific object are good. It would've made you think like your intended customer, the designer. You would've been forced to answer the question "Who wants this?" instead of planning layers of abstraction.

You should've taken a smaller slice not only so that a small team could execute it well, but also to make the concept much more graspable to customers. That's the true brilliance of the App Store.

pjc502• 11 years ago

? The iPhone is less customisable hardware than the old Nokia candy bar phones.

jkestner3• 11 years ago

The customization people actually want is met by the software layer. With a responsive touch screen and apps, you can satisfactorily reproduce physical interfaces, and more importantly, their functions.

jeremybell18• 11 years ago

There are some questions about the deal we secured to return our investors' money. Without going into the specifics, I can say it was essentially an acquihire. I'm going to another company, and part of that deal allows me to repay our investors in full.

jonknee• 11 years ago

That's a standup move on your part.

kamaal• 11 years ago

Just wanted to ask how common is it to return money to VC's?

Or how is this any different than a bank loan, If the VC doesn't shoulder the risks that come with these kind of projects I wonder what is the value they add.

People might as well borrow the money on loan.

oalders• 11 years ago

The post says they raised "$250,000 from friends & family". That seems like a strong incentive to make sure your investors (read: loved ones) can recover their investments.

joshu• 11 years ago

That doesn't make sense. Banks don't make unsecured loans of that size.

javajosh• 11 years ago

That's a good question, but realize that the OP is returning the money to angels, the $250k they got from "friends and family". So, even more than being a standup guy, he's ensuring congeniality with the in-laws. :)

TheCoelacanth• 11 years ago

It's far from guaranteed that an unsuccessful startup will be able to return the investor's money.

daenz2• 11 years ago

I'm astonished at the amount raised from "friends and family." If my network of people I can ask is 250 people (a lot!), and my success rate for securing some amount of money is 10%, the average amount contributed per person is $10,000. Maybe it's my modest means speaking here, but that's an insane amount.

ska2• 11 years ago

VC's exist to service a market that banks wouldn't touch with a 10 foot pole.

Mahn• 11 years ago

If you are being acquihired, how come you hint you are open to job enquiries on your post? Just curious.

jeremybell18• 11 years ago

I've secured a job, but the others are still looking.

bhagman2• 11 years ago

Only Jeremy was offered a position. The rest of us are pounding the pavement.

advertising2• 11 years ago

That's awesome

shin_lao• 11 years ago

The idea is interesting, but I think the technology isn't there for scalability (need of better 3D printers like the OP said).

Just allowing me to customize a radio (do people still buy radios? I'm curious) isn't of incredible value right now.

I'd wager that "custom drones" would have been a more successful start point, but scalability would have been a problem.

VLM2• 11 years ago

I read the pitch deck. Reading between the lines they were planning to be a far more advanced version of something like FPE.

http://www.frontpanelexpress.com/

Or maybe seeed studios is reminiscent of what they're aiming for.

The more advanced part being assembly and the like, plus coupling with suppliers.

I can only imagine how entertaining the customer support would be for something like that. FPE has it easy, whip out the digital dial calipers and is there, or is there not a 2.54 mm hole there or not, customer support is just simple yes no QA work, whereas debugging someone else's electronics design is not for the faint of heart.

Think of it like print on demand for books. Somebody PODs a "Complete genealogy of the Towne family in colonial Massachusetts" and puts it in the background photo of the pitch deck and the point isn't that almost nobody is interested in that topic, but that everyone who isn't hopelessly boring has something to make, whatever it is.

rasz_pl2• 11 years ago

Whole business model was around selling box that can be replaced with fancy tablet case/stand? Wow, wonder why it failed.

copsarebastards• 11 years ago

1,600 people signup for our email newsletters, and each of them received a personal message from me. I gave them my email address and phone number, and invited them to chat if they had any questions. I heard from 100's of them, and many shared “the thing” they wanted to create. The problem is many of them simply weren’t feasible with the current technology. I suspect we could have eventually delivered on most of them, but not in the foreseeable future.

I would love to see these emails (anonymized in some way).

consultutah• 11 years ago

That sucks. I really like that you were pushing boundaries and creating a platform that had the potential to advance mankind - too few people are building things that have that potential.

BillyParadise• 11 years ago

That really IS a nice pitch deck.

mushi3• 11 years ago

Can you (or someone else) provide a mirror? The public Dropbox links are no longer functional due to generating too much traffic...

myth_buster3• 11 years ago

It's on Google Drive now.

https://drive.google.com/file/d/0B95cJ2uw4oQlSm5rSTEwU0NZLUk...

myth_buster3• 11 years ago

That deck is really pretty but I'm really curious whether investors would spend their time going through so much text. Here is a pitch deck that buffer used.

http://www.slideshare.net/Bufferapp/buffer-seedrounddeck

jeremybell18• 11 years ago

I felt I needed to tell a richer story about what we were trying to achieve, mainly because we were created an entirely new market. I couldn't point to another company and say "we're like them, but 10x better." I didn't exactly have market numbers to use as a method of framing the investment potential. I felt

I needed to paint a picture about a future we were trying to create... but you may very well be correct.

BukhariH• 11 years ago

When I was reading through it I was thinking way too much text.

Really well designed but they really neglected to talk about their business model.

I mean I would have loved to have known how much their 'OneWatt' breadboard cost to manufacture and what they were planning on selling it for.

That being said I loved their slide on 'HOW BIG IS THE MARKET?'.

knodi123• 11 years ago

It must have been- dropbox blocked the file for drawing too much traffic. :-/

tptacek3• 11 years ago

It's a nice slide deck. It doesn't appear to be a pitch deck.

noteloop• 11 years ago

Sorry to hear things didn't work out. I am curious to know more about your thoughts on VCs in Toronto versus those south of the border. Canadian VCs have this rep of being quite conservative, only wanting to invest at later stages when there is very little risk. Does your experience agree with this characterization?

Lord_Zero• 11 years ago

"Having previously raised $250,000 from friends & family"

I cant imagine any of my friends or family being able to give me a quarter million.

ryanSrich• 11 years ago

Right? I see this a lot and it's often an investors first response when asking for small seed rounds: "Well have you considered raising money internally? Ask around your friends and family".

If I had friends and family that could just toss me a $250k I don't think I'd be in this position.

daenz2• 11 years ago

Reminds me of Mitt Romney's entrepreneurial advice: "Borrow money if you have to from your parents." Such a disconnect. Must be nice to have parents to be able to bankroll your businesses, Mitt.

pbreit6• 11 years ago

Raising $250k from your close network should be very easy for anyone hoping to be a founder. If you can't get 10 people to write a $25k check, you should reconsider founding a company.

smackfu2• 11 years ago

But they have to ask, because if the answer is no, that's a huge red flag. "You are willing to lose my money, but not your friends or family?"

jeremybell18• 11 years ago

Ya, we were lucky in that regard. I'm not really sure what we would have done otherwise...

clarky07• 11 years ago

I could raise $250. Maybe $2500. :-P

billyhoffman2• 11 years ago

See the comment above. It's not "Friends and Family." It's "Friends and Family who qualify as accredited investors." This is not your extended family giving you a $500 or $1000 to pursue your dream.

Kranar2• 11 years ago

This is a misconception. Friends and family are allowed to invest in your company without being accredited investors.

marincounty3• 11 years ago

I would never ask my middle class friends and family for funding on such a speculative venture to begin with. I would ask--if I had rich friends and family, and it was a great idea. This was not, but I don't understand most fashion anyways.

t1m• 11 years ago

You may have failed, Wattage, but you certainly left the place in better shape than you found it!

In a time where a good portion of the industry is helping us click on ads that we would rather not see, you attempted something difficult, different, and with less money than most VC backed start-ups spend on their espresso machine.

I am looking forward to your next venture.

grffn• 11 years ago

Nailed it @t1m. Excited to see what these guys do next!

danielvinson• 11 years ago

Mirror for the pitch deck? Looks like Dropbox is 429'ing it.

bhagman2• 11 years ago

fixed - it's on Google Drive now

pbhjpbhj2• 11 years ago

I wonder if somewhere a Dropbox engineer is crying over that comment!?

jeremybell18• 11 years ago

Ya, it's up on Google Drive now... Dropbox temporarily suspended my account because of “excessive traffic”. I guess a few people downloaded that deck.

solve• 11 years ago

“Now That’s A Beautiful Pitch Deck”

Reminds me of this quote:

"As a designer, this is hard to admit: Extremely beautiful design is a negative warning signal for startup success. (70%+ accuracy.)"

https://twitter.com/dcurtis/status/571082598920925187

So, so true. Also, I've long noticed that startups who call themselves beautiful on their front page seem 99% bound to fail. Noticeably higher failure rate.

jeremybell18• 11 years ago

I would tend to agree with this, but it's usually a sign that the startup has incorrectly focused their energies and money on design, instead of focusing on the underlaying business itself.

In this case, I simply designed the deck myself. I'm flattered that everyone thinks it looks nice, but my intention wasn't to make something with style over substance.

pbhjpbhj2• 11 years ago

On the penultimate slide, p.24, what's the relevance of the company logos? It appears to be an endorsement, in what way is that true or false. The alternative interpretation is that the 70 years of product development has been for the listed companies?

alaskamiller• 11 years ago

This is like making a McDonalds because everyone says they want it their way but deep down the truth is we just want an In-N-Out menu of 5 things. And the McDonald's way is bloated, slow, expensive, and dying.

aaron-lebo• 11 years ago

One of my favorite Jobs stories is how he took Apple's late-90s lineup of numerous products and simplified it in a 2x2 matrix.

(Maybe not the best link, but it shows what I'm talking about.)

http://www.slopefillers.com/steve-jobs-product-matrix/

jeremybell18• 11 years ago

That strategy worked because Apple was dying and Jobs needed to focus their efforts. But that all changed once they found their footing. Consider the iPod and all the sizes and colours they offered, or what Apple is now doing with the Watch. There are many many customization options, and I suspect these options are only going to grow.

ben010783• 11 years ago

Just the other week I was listening to a podcast where they were talking about how Apple seems to be moving in the opposite direction now. They have the MacBook, MacBook Air, MacBook Pro (and a non-Retina version), iMac (and a Retina version), Mac Pro, and a Mac mini.

jeremybell18• 11 years ago

You're thinking of Burger King's "have it your way", not McD's. Regardless, I'm not sure it's an apt comparison. McD's is dying not because they offer lots of choice, but rather because the food is shit and unhealthy. In-N-Out is in a similar situation, but their food just happens to be of a higher quality.

When it comes to mass-customization, there's actually a lot of evidence that shows people do want more choice. You're seeing it with products like Moto X and NikeiD. Or even with what Apple is doing with the Watch. It's logistically more difficult to pull off, but it's doable online.

Animats3• 11 years ago

It's not about the pitch deck. It's about the product. How many people really want a custom radio front panel?

There are other customized products in that space which might be more useful.

* Customized entertainment remotes. Tell us what gear you have, what you like to do with it, and we make a remote or remotes that makes it easier to use. You might have a simple "watch TV only" remote, and a tablet type "does everything" remote.

* Light your house and garden. Send us pictures of your house and garden, answer some questions about how you use them, and we'll design an outdoor lighting system for it and have an installer put it in. You get to see renders of what it looks like at night before you buy. (There are Autodesk tools for that.)

* Custom control panels for the aftermarket auto sound industry. Make cool stuff for LA rappers and wannabees.

* There are lots of industrial products which need heavy customization. Offer on-line ordering tools for such products as a service to industrial sellers.

Trying to hammer a customized product model into the web-based "order on line, ship to customer, integration is someone else's problem, no customer service" model wasn't going to work.

pbreit6• 11 years ago

How many people really want a custom radio front panel?

It looks like they finally decided to focus on this one product which I think is smart because my guess is "way more than you think". Customization may be difficult to make but it is very easy to sell.

rudolf0• 11 years ago

I think sticking with one product to start off with is a good idea, but I'm not sure a radio was the right choice.

DevX101• 11 years ago

* There are lots of industrial products which need heavy customization. Offer on-line ordering tools for such products as a service to industrial sellers.

Yup. This definitely should have started out as a B2B play. Industry will pay an arm and a leg for customization for lots of random parts. Use the cash to build the foundation of the biz then go after the finicky consumer market later.

Animats3• 11 years ago

Yes, and there's a business model. There are industrial companies that are good at making things, but not so good at making web interfaces for ordering complex products. So there's a niche for an online service. There are lots of things a good online service could do that few industrial companies now offer. Consider:

    * proper cross-checking of compatibility of items ordered
    * generate image of finished product
    * on-line generation of installation drawing/CAD file,
      including mounting holes and electrical connections.     
      Let users play with the options. Huge win for
      designers - "If we add option B, will it fit?"
      This, in fact, is the big win - let users try your
      options and see what works for them.
    * generate manufacturing data in format the seller's
      production system can use
    * provide cross-company integration.  If you need
      something that requires parts from several
      companies, and they're often used together, give
      the user help in getting everybody going in the
      same direction.

Most industrial sites have a big parts list and a "call for details" phone number. Getting all the right pieces together is hard. The automation level in this space is low, except for a few big companies.

discreteevent• 11 years ago

In Germany at least there is a big initiative backed government. See industry 4.0 and mass customization. They see it as the next thing that will give then a competitive edge

Retric• 11 years ago

IMO, the custom radio is not really a terrible idea; the problem was all the pictures where of the same radio with a new paint job. At least make the knobs look like chess pieces, rocket ships, airplanes, or cats etc.

Then again who buys radios? Custom clocks seem far more universal and let people use a wider range of shapes.

jeremybell18• 11 years ago

To some extent, the initial product wasn't important. Yes, it needed to resonate with an audience, but it's sole purpose was to test the waters and prove that we could ship.

We liked the radio because it was unique enough that we felt it would stand out. Instead of flipping between AM/FM stations, you'd be flipping between podcasts. I think that would have sold pretty well... or at least well enough for us to prove the concept and raise the large amounts we needed.

fit2rule2• 11 years ago

Geeze, they really missed an opportunity: the electronic musician market.

Right now the electronic-music market is undergoing a massive explosion of new technologies - new products, new synths, just a real explosion of technology for music-makers.

Imagine if a company sprang up that could viably produce custom panels - real hardware - for all the synth software thats on the market? Do this, become the leader, and you will fill in a very big hole ..

waterlesscloud• 11 years ago

Does anyone know how big the hobbyist market is for electronic musicians? I've noticed a lot of my acquaintances talk about "making beats", including a lot of people I'd never suspect. It's made me think that group is larger than I would have thought.

antoniuschan99• 11 years ago

I would like to know how far you got with the product. Even if it's incomplete, I think I would rather judge this on how far completed to beta launch you guys were.

I signed up a few weeks back and was interested in seeing what the product would look like.

jeremybell18• 11 years ago

We have a fully working version of the creation tools, which would output all of the files required for fabrication. We had created all of the custom electronics, and were able to produce a number of functioning prototypes.

The beta was intended to do a few things:

1. Measure interest in the platform and generate traction for investors. 2. User-test and see what was/wasn't working 3. Get a sense of what parts and materials were most popular, to ensure we properly handled inventory.

pbreit6• 11 years ago

One of the few postmortems that actually may be fairly accurate. Yes, the pitch deck is easy on the eyes but terrible at piquing investor interest. I still wasn't quite sure what the product was or why so much energy was being spent trying to create a picture of 10 years from now.

Focusing on 1 (or 2) promising products was definitely the way to go. A customizable wifi radio that plays a podcast, Pandora or Spotify sounds kinda cool.

innocentoldguy• 11 years ago

One of the most important take-aways from that article is the importance of focus. I think if they had limited their priorities to, at the very most, two things, they may have been successful. I find whenever I have more than two priorities, I don't have any priorities at all. Some people argue that the magic threshold is three, but for me it is two.

jeremybell18• 11 years ago

No arguments here.

jguimont• 11 years ago

I built the Timbuk2.com bag customizer (http://timbuk2.com/customizer) and I would say that 50% of their business is on the custom side. People are playing with the product and often they surprise us. Timbuk2 ends up charging a premium for the custom bag, but it a unique bag.

Same applies to Nikeid or adidas or converse or ... A lot of people are trying to build custom products and let the consumer get access to their manufacture, but it is not as simple as it sounds. There are, as in all things, a lot of moving pieces and enough rope to hang yourself.

listic• 11 years ago

Thanks for the tip re: Timbuk2. They are offering a bike share if you leave your driver's license and CC as a guarantee. I really wouldn't want to leave my CC; I wonder if this is legal.

flashman• 11 years ago

That's a really cool customizer. Good job.

jakejake• 11 years ago

Cool looking customizer - nice work! I created a super simple product customizer that allowed users to slap their logo on promotional products (similar to cafe press, but a few years before that). Even with that ridiculously limited set of options it was a challenging project, so kudos to you on the bag customizer.

stevewilhelm• 11 years ago

Two other show companies as well:

- New Balance http://www.newbalance.com/nb-custom/

- Vans http://www.vans.com/custom-shoes.html

chrionsr• 11 years ago

Thanks for sharing your story!

tptacek3• 11 years ago

That seems less like a pitch deck and more a professionally polished brochure for a product, or maybe the introductory section of a prospectus. I don't see how an investor evaluate the company in that deck; I can't see:

* Go-to-market, or even a price point (did I miss it?) or COGS estimates, or a plan for distribution

* Traction, up-front sales commitments, or a sketch of target customers

* Competitors and substitutes --- not having competitors is not usually a good thing.

* An "ask" and a use-of-proceeds summary; what is this deck actually raising?

* Why this particular team (also: the connections between the logos on the bottom and the people listed aren't clear)

If you look at the Mixpanel, Airbnb, and Buffer decks: they're not pretty. They're dry and factual and cut to the chase. Those decks probably work (to the extent decks matter) because they do a good job of surfacing exactly the facts investors care about when evaluating a deal.

I used to sweat decks the same way this designer did, and I'd get compliments on them. Now I feel like I spend more time talking my friends down from sending decks like these to prospects.

jeremybell18• 11 years ago

There are a few of things that I omitted from this version that were usually included or shared in person. Use of proceeds and traction was always shared. We also provided a breakdown of how the pricing worked (as it depended on what you were building).

I usually spoke in more detail about who the team was when I met with someone.

tptacek3• 11 years ago

Thanks for replying! A question: did you ever wonder whether producing such intricately designed collateral actually harmed you from a signaling perspective, by tipping investors that you were focusing a lot on stuff that didn't matter? I ask because I started telling myself that a few years ago (not really so much re: investors, which I thankfully don't have, but other business associates) and I found it very liberating to not have to worry so much about design anymore.

inthewoods• 11 years ago

To me the issue with the deck is that it doesn't simplify the idea - it expands it over and over again until you get overwhelmed by the details of the business. That feeling of complexity, in my opinion, would leave investors feeling that the whole solution was so complex that there were too many ways to fail. Manufacturing? Marketplace? Hardware? It's too much for me - I can't imagine how an investor takes it all in and feels that the team could successfully execute on all the parts.

The best decks I've seen, in addition to everything you've brought up, also simplify the idea down.

lurkinggrue• 11 years ago

Not clear who this was and what they were selling.

advertising2• 11 years ago

Really hard to start something you have to educate people about in the first place, before selling them.

Case in point: it was not quite clear to me what they wanted to do (for a layman like myself in this space) after reading the post-mortem. I felt like I was filling in the blanks in my head and making assumptions.

carrotleads• 11 years ago

This is one of our pain points as well, educating our customers/users

kriro• 11 years ago

"""We were targeting software developers, as we believed we could offer them an entirely new outlet for their creative efforts. But this narrative wasn’t big enough. Investors want to hear a story about changing the world."""

I disagree with this. I think focusing on software developers and making the "hardware side easier" is a viable enough hypothesis. It's better to focus on one segment and understand it well. Have a vague notion of the other potential customers but leave the dreams of hockey sticks to the VCs instead of feeding them imo. Rather focus on whatever segment you identify as a good entry point and validate that is true. I think a smart VS prefers someone that is laser focused on a segment vs someone that dreams too big early but I might be wrong.

lectrick• 11 years ago

I really wanted that customized joystick. Damn...

amit_m• 11 years ago

Wow, that mission statement is so ambitious it made me cringe. Reality check: hardware startups are struggling to ship very simple products after obtaining >$1m funding.

Choosing just one product for color/material customization is a good idea, but I'm not sure that radio is the right choice. I venture a guess that the founders were simply stuck on the concept of making customizable electronics.

Maybe a fashion accessory (e.g. headphones, skateboards) or home decor/furniture of some sort could have been a better choice. People will pay a lot of money to show off.

sciencesama• 11 years ago

its not just about the pitch deck, also about the vision and the usage, how many people working daily and returning from work to home want to play with the radio that has a touch screen with a customization buttons/themes !!

orionblastar• 11 years ago

As part of a business plan you have to research your target market. I highly doubt the average person wants to customize their own electronics, much less a radio in the 21st century were people have smart phones with music streaming apps.

Hardware is hard to sell, look at the OUYA project and how it is struggling and trying to sell itself to save itself. They too had quality issues, they too raised a lot of money but had a hard time selling units. Most people just play video games on their smart phones these days, they don't need to buy a video game console that runs Android.

Good research and a good business plan would have saved them from these mistakes. Instead of making a radio, maybe they could have made wireless Bluetooth speakers for smart phones to play music in the house/apartment for the average person. I'm sure that would have sold better than an AM/FM radio.

downandout3• 11 years ago

I'm not sure how I feel about all of these companies shutting down prematurely to return investor capital (the following example is not based on this company, but it illustrates the point). If a $50M investment actually means $10M in risk capital, and the $40M will be returned at the slightest sign of failure, then entrepreneurs are giving up far too much equity because the investor is actually only risking $10M. Further, the signal that a $50M investment sends to the market about a company is far different than that of a $10M investment.

Combine that with other things like preferred shares, and these large investments wind up being horrible for entrepreneurs, unjustly rewarding for the primary investors who are actually risking small sums in exchange for large portions of equity, and unfair for others that invest based upon what the "smart money" invested with a huge headline number.

nly• 11 years ago

then entrepreneurs are giving up far too much equity because the investor is actually only risking $10M.

Either that or the valuation is inflated artificially 5 fold.

downandout3• 11 years ago

It's probably somewhere in the middle. In any event, entrepreneurs and later investors are clearly getting the short end of the stick here. I can imagine the conversations that lead to these capital returns..."you're failing....if you don't return capital now, you'll never get another investment from a major firm again" (that's if the investors don't negotiate enough board seats/voting rights to just return it without the founder's consent).

jeremybell18• 11 years ago

We burned through all of our investors' money, and worked until we couldn't meet payroll. Once it was clear that we were going to run out of cash, I took a job and negotiated a deal that allowed me to make our investors whole.

downandout3• 11 years ago

As I said, my example didn't necessarily apply to your company. But just in the last few days I have read about 4 different startups returning capital to investors. Investors seem to be aggressively seeking the return of capital, which takes the "risk" out of "risk capital". Decreased risk should also mean decreased rewards.

If you chose to do it of your own volition, then that's a personal decision (though one I don't recommend because your investors made a calculated wager on you...sometimes wagers lose, and that's the nature of the game they have chosen to play). But if you were asked or pressured into it, they shouldn't have done that, and by doing it voluntarily, you are teaching those investors to expect it of others.

bjpirt• 11 years ago

I'm sad that it didn't work out, but kudos to you for doing this. Behaving decently feels like it's becoming an increasingly rare attribute of doing business these days.

I'm curious if you feel it could have worked out differently if you'd flipped the approach on its head and instead of starting with investment and then the product, you bootstrapped custom radios and built the platform out from there when you had some traction?

I ask partially because I'm in a similar place at the moment with a product (http://mirobot.io) and considering different growth strategies.

Chanie• 11 years ago

Sorry to hear you couldn't give birth to your own unicorn but thanks for sharing the story, a good read.

shirazi• 11 years ago

Thanks for sharing.

retreatguru• 11 years ago

Thanks for the post mortem. Did you do much customer development?

Animats3• 11 years ago

There's a minor industry devoted to customized imagery and colors for consumer product. There are startups set up to serve that market, with online design tools.[1][2]. Custom shoes and sports equipment are doing reasonably well. The T-shirt industry has been doing this for at least half a century. Bain, the consulting firm, has an article on what works in product customization.[3] Basically, let the user tweak minor stuff, but not change much.

None of these companies actually let the user affect product function much. It's all decorative, or sizing-related. Autodesk has gone further, with Autodesk Homestyler, which is a free CAD system for home interiors.[4] This is a descendant of Autodesk Kitchen Designer, which was for sizing kitchen cabinets to fit a kitchen space. This lets you lay out a house, existing or planned, add commercial furniture, and view the house in 3D. Available for desktop, browser, and mobile. Despite being an impressive tool, it's never caught on. Probably because most people are terrified of starting with a blank screen and designing their house.

Carl Bass, the CEO of Autodesk, thinks that user design mods and product customization will be important, but aren't here yet. Autodesk has come out with a range of low-end CAD products. They now have their own 3D printer, and there are things like their 123Catch, for turning sets of pictures into 3D models. The technology is doing fine. But designing your own stuff isn't an instant-gratification thing.

[1] http://www.dogma.com [2] http://www.fluid.com [3] http://www.bain.com/publications/articles/making-it-personal... [4] http://www.homestyler.com/floorplan/

brc• 11 years ago

Remember the original business model for Pixar was for it to be a home animation studio, in the same way that people use photoshop to do their own graphics.

I think they had terrible takeup on that and started producing shorts to show how good the technology was.

I think it's the same point - if you can't get instant gratification with something, then the consumer takeup is low.

frozenport• 11 years ago

I could see this working if it were marketed towards kids, as a kind of `Build a Bear` workshop.

Grue3• 11 years ago

I think the product (radio) is totally non-viable but you would've made a killing on Kickstarter (see Coolest Cooler etc.)

OliviaGrey• 11 years ago

Does that mean Medium.com is shutting down?

Well, We Failed – Wattage is shutting down

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