Thoughts on startup marketing, software, and technology

Why Do the Wrong Tech Startups Always Get All of the Glory?

Published June 3, 2014 - 0 Comments
Robot Bartender With No Market In Sight Wins $50K Tech Prize

Innovation and disruption are such sexy words in the technology sphere. Everyone wants to be on board for that new amazing technology or disruptive new enterprise.

The technology press and investors often seem to get hung up and invest too much time and money supporting products that made for exciting demonstrations, but are pretty stupid ideas for revenue generating companies.

This happened again recently in a Georgia tech startup contest. The winner was a company that produces the incredibly “innovative” robot bartender.

The robot bartender by Monsieur can create all kinds of drinks on the fly, has a great touch screen user interface, and you can even order a drink using your iPhone.

Press a button and out comes a Mai Tai!

When I heard about this contest winner I laughed to myself. Once again a product with a sexy demo, but seriously questionable revenue generation capabilities wins over probably dozens of other products with much better income potential.

Who is going to buy a $4000 robot bartender?

Looking at the explainer video, it sure is a slick demo. The people that built Monsieur are supremely talented, no doubt about that.

Where is the Need?

But does the world need a $4,000 box that serves drinks? What problem is this solving and for whom?

As written in the brilliant book Customers Included: How to Transform Products, Companies, and the World – With a Single Step by Mark Hurst and Phil Terry — a company should “discover customers’ unmet needs” and “find out what they need before you build something.”

Is the world running out of bartenders? Is it that hard to make a good drink?

I personally make a mean margarita and it takes me at most about three minutes to crank out a delicious pitcher — and I make them from scratch with no silly drink mixes either.

margaritas

I hearby challenge this robot to a margarita-off any day of the week!

The Market for Robo-Bartenders

The robot mixologist cannot replace a real bartender in a busy establishment, as it is limited to 150 drinks before you have to reload it with mixes and alcohol.

Considering that drinks are a major profit center for bars and restaurants, they are not going to risk losing revenue using a device with such a small capacity.

With that in mind, let’s boil down what the market for this thing could be:

  1. This is not for typical home use, as you need to be pretty serious about your drinking (and be pretty lazy) to believe $4,000 is money well spent for a robot drink maker.
  2. Speaking of the price, the $4,000 price pretty much limits you to the upper 5% of the population within the richest countries.
  3. So this is for wealthy people who entertain frequently and have more people than can be served easily the old-fashioned way.
  4. That means parties with over 10 people, but again due to the drink capacity fewer than 50 people.
  5. A typical for hire party bartender maybe charges $10 per hour (plus tips). For a five hour party you are out $50 in labor.
  6. Let say that people in this market have on average five parties per year. That means that the robo-bartender pays for itself after 80 parties.

So using those figures you need to use this for 16 years for it to be worth it. 16 years!

No offense to Monsier, but expecting to get 16 years of service out any technology device is not something most should ever wager on.

So what we are left with is a market of gadget lovers that just want to look cool by serving drinks with a robot. That is about it.

Surely there are some of you out there — but it seems like an amazingly small market for a company that just won $50,000 in a startup contest.

Can We Focus on Startups That Solve Real Problems?

That $50,000 prize feels like money thrown in the toilet. I wish a company solving a real problem had won that award.

Again no offense to Monsier who did build something very unique and with a great coolness factor. I just do not believe this is a real business opportunity. Hopefully they prove me wrong.

But even the most cool technology needs to have an audience, it needs to have a market to sell to.

Often the businesses that are boring to demonstrate and relatively simple technologies end up being the most meaningful and impactful.

At TribeBoost we have no sexy demo videos…or videos of any kind. I can describe what we do to a client in one sentence. We have no iPhone app or touchscreen interface to wow you with.

This is not a company that will ever win a tech startup contest, but we are profitable, our target market is so large that we have customers from nearly every business type you can imagine, and in just about every major developed country in the world.

Are you building a product that solves a common need or just something that makes for a great demo?