Photo: Flickr/Steve Jurvetson
Looks like Google is launching some wacky goggles for real-world “search” and information.They could go slow-and-low with it, or they could Go Apple Big with it to satisfy the egos of their top dogs, but they probably should run the Flip Go-To-Market — the well-funded yet startup-style way of launching a gadget.
I call it the The Flip Go-To-Market as in the Flip video camera (Cisco bought Flip’s parent company for $590 million, but shut it down last year). It is popular today with startups like Livescribe’s digital pen, Aliph’s Jawbone, and Roku. TiVo did it this way. So did Slingbox.
For many of these it worked great, and it did for us at Peek as long as we had the war chest to fund it – you need to raise $20-40 million to go from “cool product” to “decent sales flow”.
The Flip Go-To-Market uses:
- Big national retail chains with their marketing spend requirements and placement fees
- Inventory to fill these with suppliers’ factories fired up producing a flow
- Marketing programs through retailers and select media that get the word out
- Price cuts and promos to juice numbers and keep retailer attention
- Continuous product refresh cycle every 6 months of “now with X!”
- Marketing people for twitter accounts and PR stunts and mass mails and Las Vegas suites at CES, etc.
This is way, way, way less than “real” big electronics companies do and it costs less. There is no Superbowl spot or whatever. It’s a marketing budget of like $10-15 million with a product R&D budget similar to whatever the launch budget was — maybe as low as $2 million. A mere $10 million/year.
Compare this to the $100 million in pure measurable ad-buying media spending that an Apple does to launch a big new thing (look it up or watch TV sometime if you think all they do is have a quick lecture at Moscone before madness ensues). When you “Go Apple” you need to have a product that will absolutely fly with proven product-market fit. Apple launches very conservative products in a sense — it is TOTALLY obvious why they are worth $500 on day one.
The FGTM is when you aren’t going to sell a zillion out the gate. People like it, understand it, but it takes some trial and exposure before pulling the trigger. You get into a few places, build awareness a bit, and you let success justify the next wave of $10 to $20 million.
The great thing about this model is that if you have a cool product, it moves units – you can sell a few hundred thousand units this way, or if you spend a bit more, 1 million. Big time! $100 gadget x 1 million units = $100 million in revenues!! (It only cost you $40 million in marketing…but with the scale you get the virtuous cycle of scale going and the $30/unit you pocket starts to pay for the overhead.)
Notice also that your happy nerdy engineering team is churning out an ever-evolving product in this scenario too — Peek the email gadget becomes Peek + web browser, then Peek Android then Samsung Peek and LG Peek etc etc. (Use your imagination.)
The catch for startups, however (in case you are dusting off that old business plan for an exercise gadget), is you need to start by raising $10 million, then you need to raise $30 million more in the next round.
For a big electronics player or for Google, using this approach is the cheap and non-splashy way to get a product going without burning money. The catch for Google here is that some people will say they are failing — “hey, I never see Google Goggles; I see iPhones everywhere. #googlefail”. But the FGTM sneaks up on them.
Remember when Steve Jobs kept lambasting the Kindle as a lame failure? “Why don’t they disclose numbers?” he would say. Think carefully about how Amazon Kindle launched in early 2007. It was not all over TV. It was all over Amazon.com … Jobs was thinking “this is so not Apple”. He was right — it was the FGTM.
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