Before Twitter became the Twitter we know, it was a side project of Odeo, a network where you could find and subscribe to podcasts.
Starbucks started off by selling espresso machines and coffee beans.
Fab began as Fabulis, a social network geared toward gay men. It’s now a fashion site that generates hundreds of millions of dollars every year.
And before pivoting to social media, Pinterest allowed people to browse and shop their favorite retailers, sending them updates when their favorite items were on sale.
You could chalk these product missteps up to rookie mistakes… young entrepreneurs of young companies who hadn’t yet figured out what their customers wanted.
But that doesn’t explain why so many successful and established companies make the same kinds of mistakes – completely miscalculating the market they have served so well, often for decades.
But most of them are from big and well-known companies.
Actually, I remember most of these ill-fated products. So I thought it would be interesting to share the 10 I have the strongest connections to… either through my own experiences or memories of how the product was received at the time.
- Google Glass: I confess, I fell prey to the hype. I wanted to try them out so badly. But wouldn’t you know it? They flopped before they were made available to consumers. Google Glass’s failure was truly epic. It failed almost every test you could think of. It didn’t matter if it was aesthetic or functional – Google Glass underperformed. It was gawky, geeky and buggy. Testers were thrown out of movie theaters… accused of spying… and ostracized for their Halloweenish bad taste in eyewear. And yet, despite all that, I still can’t wait for Google’s next Glass offering.
- Frito-Lay WOW! fat-free chips: I don’t remember this particular snack item, but I do remember the ingredient that made the magic happen – Olestra. It’s an artificial fat. Not to be indelicate, but it allows the fat you take in at one end to come out harmlessly at the other end… if you know what I mean.
The beauty of modern science, right? Except it caused all kinds of digestive problems. Sales dropped precipitously. I was never personally, ahem, touched by this product. But ever since it disappeared from our grocery shelves, I’ve assiduously avoided all manner of dietary foods and beverages. Thank you, Olestra!
- DeLorean DMC-12: What a car! Those freakin’ doors! As a 20-something, they absolutely bowled me over. So what if I had a small child and another one on the way? I wanted to trade my Toyota station wagon for this beauty and never look back. Alas. The model had safety and performance issues. My ardor soon waned. My second child arrived. And I kept my trusty station wagon for another 11 years.
- Segway: What happened? Weren’t our traffic nightmares supposed to be solved by Segway-propelled pedestrians by now? I recently went on a city tour of Atlanta on a Segway. It was my first time on one, and I had a ball. Only lost my balance once – much to my daughter Rachel’s surprise. (It’s the city where she now lives; I was visiting her.)
I’m looking forward to my next Segway adventure. But I’m not buying one. It doesn’t serve any obvious recreational purpose. For city dwellers, it could replace long walks or short bike rides, but that’s a fine line. Segways are neither fish nor fowl, and they’re too expensive. Wish it weren’t so. They’re so much damn fun.
- McDonald’s Arch Deluxe: I was never a big Mickey D’s fan, but the Arch Deluxe came close to turning me into one. For fast food, it wasn’t bad. The potato roll was a step up. The mayonnaise-Dijon mustard made you almost forget you were eating cheap cheese layered on top of cheap meat. It was, quite rightly, marketed as a premium burger with a premium price. It didn’t click with McDonald’s customers though. When my youngest, the aforementioned Rachel, passed her 15th birthday, she stopped asking her parents to go there. So that was that. I stopped eating there.
- Maxwell House Brewed Coffee (in a box): The difference between then and now is that pre-brewed coffee now comes in bottles, not a box. And it’s sold as iced coffee. Maxwell’s product was sold as hot coffee. As a cold drink, maybe the company could have pulled it off. But customers proved unwilling to pour the coffee into a cup to then heat up.
My partner Adam and I intuited this problem a couple of years ago when we vetted a startup called HeatGenie – it makes coffee in a can that self-heats its contents in less than two minutes. The founder sent us a couple of cans to try. We found out that using it wasn’t as simple as it seemed. The lid had to be twisted to trigger the heating element. Both Adam and I had trouble executing the twist.
We ended up instead recommending a startup that makes a knock-your-socks-off, delicious iced coffee called Black Medicine. Maxwell House shoulda/coulda/woulda chosen the same path. I don’t lose sleep over its misstep. I never liked its coffee anyway.
- Sony Betamax: For a time, I didn’t know which videotape format to buy – Betamax (introduced in 1975) or VHS (introduced a year later). Betamax offered better quality. VHS offered a longer recording time and a lower price. The majority of customers took the “diner” option – the product that gave them more for less money.
- Pepsi A.M.: It targeted the “breakfast cola drinker.” I thought it was a can’t-miss idea. Then again, I was married to a woman who drank three to five glasses of Pepsi every morning with her healthy fruit and yogurt. There simply were not enough people in the world like my wife Cecily. I somehow missed that little detail. This story does have a happy ending, though – well, for me anyway. At some point in the ’90s (I forget when exactly), Cecily gifted me a beautiful 24-speed racing bike, bought entirely with Pepsi promotional coupons. By the way, she is still an avid Pepsi drinker.
- Mobile ESPN: Before the ESPN app, there was… the ESPN flip phone. After buying the phone for $300, you had to pay an extra $65 PER MONTH to get ONLY ESPN’s sports news! Somehow, the product failed to take off. To this day, it remains one of the greatest mysteries of mankind.
- Ford Pinto: The Pinto embodied everything that was wrong with Ford in the 1970s. It offered low-quality, gas-guzzling cars at inflated prices. I got my driver’s license in 1969, a year before the Pinto was introduced. So I kept up with the new models. From the very beginning, the Pinto was a joke. I drove a Volkswagen Beetle instead. It was a low-end car, but it was much cheaper and had no pretensions.
The Pinto actually burst into flames when struck from behind. It left an indelible impression. I’ve distrusted American-made cars ever since. I went from German-made cars to Japanese ones. I’m now thinking of buying a Tesla next – if I could only get over that image of a Pinto’s charred remains…
Iteration Is the Name of the Game for Startups
In startup land, when product development and launch is done right, it’s referred to as achieving product/market fit: offering the right product to the right market at the right time.
As you can see, it’s not easy to do – even for big and experienced companies.
Startups iterate different versions of a product until they find one that strikes a chord with the market. It’s an accepted process, nothing to be embarrassed about. But when large companies launch new products amid so much fanfare and they go bust?
Well, the whole world knows. And it can be pretty embarrassing.
Market/product fit is a big part of the vetting process for Adam and me. Big companies can survive product flops. They become lessons endured for the companies themselves and lessons learned for investors like us.
Just remember, however, that for startups, NOT (eventually) achieving market/product fit can be fatal.
Co-Founder, Early Investing