3 lessons on how consumer product startups are disrupting industry giants

Share this articleFacebooktwitterlinkedinmail

Coolest Cooler @Coolest_cooer.png

Hello from China! I’m spending the week in Wuhan, and I’m fighting over the last piece of toast at the hotel breakfast buffet with representatives of Toyota, General Motors, and Citroen. There’s no question that China is the reigning champion of manufacturing in the world, but U.S. is seeing the rise of a new generation of innovators who are dedicated in the making of actual physical stuff — not codes and apps. If you are in the business of making consumer products, the Maker’s Movement and crowdfunding options are bringing in a new wave of competitions and innovations into the marketplace.

Maker’s Movement + New Financing Option = Renaissance of industries that make physical products for consumers

Even Obama and G.E. will agree with that. The White House has declared June 12-18 as the “Week of Makers” to celebrate the folks who are tinkerers in their garages. G.E. just sold their finance arm, GE Capital, so that they can focus on advanced manufacturing.

Still not convinced? Introducing the Coolest Cooler & Just Mayo. Makers Movement and new financing options such as crowdfunding and venture capital are making it easier for entrepreneurs to deal a blow to manufacturing behemoths from the middle of nowhere.

Lesson 1: Kickstarter sent $13M of love to Coolest Cooler

Have no idea who is a “maker”? Meet Ryan Grepper. Ryan has been frustrated with the chest coolers that keep our food and drink cool while we on the road. The coolers we all have in our garages have barely changed since the 1950s.

Most of us will wish in secret that our coolers can be cooler, but Ryan is not like most of us. He spent 14 years designing and prototyping a new cooler in his garage while we are watching TV or surfing the internet.

Why can’t a cooler have separate compartments so that beverages stay cold, and food stays dry? Why is it so clumsy to drag the cooler on the road? Why can’t a cooler have a blender to make iced tea on the fly? Why can’t a cooler blast our favorite tunes from our iPhone? Why?

Last year, Ryan took to final design Coolest Cooler to Kickstarter, and got a whopping $13M of pre-orders to turn his idea into a real business.

Lesson Two: Unilever sued Just Mayo as their best defense to arrest declining sales

In 2013, I went to Bay Area’s Maker’s Faire. For those of you not in the DIY culture, Maker’s Faire is a place where thousands showed up to check out the latest drones, 3D printers, and home-made R2D2.

I wandered into the Food Pavilion — it was was filled with hipster chicken coops, artisanal pickles, two goats, and a small table where you can taste-test Just Mayo, a mayonnaise that was made with no eggs. Cool, I thought, and I moved on to see the fire-breathing metal octopus.

Eighteen months later, Unilever sued Hampton Creek, the maker of Just Mayo because “Just Mayo already is stealing market share from Hellmann’s,” and that, “Unilever will continue to suffer irreparable harm in the marketplace.” Just Mayo is not just gaining consumers’ heart by being all natural and tasty; with the $120M venture money raised in their 3 years of existence, and a lower price point than traditional mayonnaise, they are on the shelve of Whole Foods, Costco and 99 cents store. .

Lesson Three: Startup can grow 10x faster than the time when I was in one

Back in the day when I was in a food startup, we grew very slowly as it was damned hard to raised money. I still remembered the time when I pressed the controller to get overdue invoices paid, and he said, either the supplier or you got paid this Friday. Your choice, no pressure. There was no Kickstarter, and VCs was not interested in the food business. Large companies had plenty of time to compete or acquire smaller brands before they became a real threat.

Once upon a time, you are pretty safe if you are in the manufacturing business. It’s difficult and risky for startups to borrow money to produce your prototype in a real factory, and wondering if anyone will buy one of the 1 million units you just ordered to meet the factory’s minimum rum. But that fairy-tale is starting to fade.

No matter you are an entrepreneurs or executives of a manufacturing company, the Makers Movement and new fundraising options is already unleashing a wave of innovation, disruption and change. It has never been a better time to be a consumer.

Leave a Reply

Your email address will not be published. Required fields are marked *