Recently, a startup launched near me with a very interesting business model: 3D printed personalized earbuds. The company is called Normal and based on the different articles available online has been launched by Ben Kaufman’s (Founder, Quirky.com) wife Nikki and received $5 million in funding.
The startup is in a mixed use space combining production and retailing on 22nd Street which is zoned for it. The architects did a very nice job making a sleek, modern, store with a production area in a glass enclosed space at the back, reminiscent of a restaurant.
The business model seems fairly simple. They have developed an app which can be used to take a picture of each ear, select the color you want and send the order to the server. Technician use the picture to print a 3D earbud on these great big Stratasys machines that fits only that ear, insert the electronics, and ship it off to you. The whole process takes around 48 hours. Like I said simple. The company focused a great deal of attention of the production processes.
However, on the consumption side they don’t seem to have done so well. At least as far as we can tell from the traffic in front of and inside the store.
As we so often tell our clients, it is great to focus on the production process but you really need to pay an equal – if not more – amount of attention to the consumption process. Especially in an economy where over 65% of GDP is based on consumer spending, like the US.
We don’t spend a great deal of time hanging out in front of their door but when we walk by this beautiful store we almost always hear passersby asking each other – and some times us – “What do they sell in this great big store?” Notwithstanding all the work that went into the place, as a retail outlet it fails. In fact, the place is almost always empty and, more recently, the staff members are actually coming out onto the sidewalk to show the confused window shoppers what they sell.
Using 3D printers to personalize earbuds is a great idea. Unfortunately, the price point is very high for such a value proposition. The earbuds are sold of $199 which is the on par with a high quality audio devices. And there is the problem! $199 for a high quality audio device makes sense while $199 for pieces of plastic is crazy. This sentiment is supported by the comments readers have left on various technology and news blogs we follow. Thus, the value proposition is wrong.
So what is the lesson to learned here? You really have to work hard on the consumption processes that support your business.
It seems fairly clear the company should have manufactured in the outer boroughs or even outside the city and located its retail space in a high traffic location. Likewise, the launch was premature with respect to the value proposition. Take your time and be critical of the choices you make. If your plans cannot take the heat of a lively and vigorous internal debate the market will even more merciless.
Normal is well bankrolled so they can afford to make mistakes and make corrections. Most startups are not and can’t. Good luck to everyone.