Teforia, the maker of a $1000 (originally $1500) connected tea infuser, announced this week that they would shut down immediately.
In a letter to customers, Teforia CEO Allen Han wrote: “we simply couldn’t raise the funds required in what is a very difficult time for hardware companies in the smart kitchen space.”
I’m not entirely surprised the company couldn’t raise funds. High-priced consumer product startups with a business model that feels even vaguely similar to that of Juicero have experienced pushback from potential investors ever since the high profile juice startup went under. While the two companies are certainly different in many respects, there were enough similarities (high price point, subscription business, easily replaced with alternative methods) to warrant the comparison among a jittery investor class.
But as I read Han’s letter, I started to wonder if what he said is true: are smart kitchen companies having a hard time? Or, as I started to suspect, are some having difficulty while others are flourishing?
On the one hand we have seen companies like Juicero and Teforia struggle and go out of business. But then there are companies like PicoBrew, Perfect Company, and InstantPot, all of which have thrived as they’ve brought new products and approaches to the kitchen.
As I thought about this, I started thinking about the differences between the companies that are succeeding in this space vs. those that go out of business. As it turns out, I think there are some lessons we can learn from observing companies that have had success in this market.
Here are a few characteristics of those companies who are succeeding in the smart kitchen market:
A product should give the consumer new capabilities that would otherwise be too difficult or time consuming without it
A good example is PicoBrew. If you’ve ever wanted to make beer but didn’t want to the mess of traditional home brewing, the PicoBrew is a game changer. By applying precision brewing, pre-proportioned ingredients and the ability to brew famous recipes for well-known microbreweries, the startup from Seattle has created a reliably successful model of creating new products every year as they march down the cost curve with each product.
Teforia, on the other hand, made tea, something billions of people do everyday in their home without much effort. While the concept of adjusting flavor notes and antioxidants is an interesting concept for a tea aficionado, as it turns out tea is something that you can make rather easily.
A product should be either affordable or provide immense value
The Thermomix TM5 is one of those products you’ve probably heard about but very likely don’t have. That’s because the 12-in-1 multicooker commands a pretty penny and has only recently become available in the US.
Normally one would not put the words “$1500 countertop appliance” and “popular” in the same sentence, but Thermomix has seemingly cracked the code by creating an uber all-in-one appliance that slices, dices and cooks you dinner. The company continues to evolve the product as well, adding a connected recipe community and an associated app that continues to gain traction.
While the Teforia critical acclaim showed its value relative to the status quo, the value wasn’t differentiated enough from low-cost knock-offs like this Gourmia tea diffuser which sells for about a tenth of the price.
Smart Kitchen products need a community
Want to sell lots of product? Create an active and passionate community.
Perhaps the best example of this is the Instant Pot. The popular connected pressure cooker has an extremely active social community which includes a Facebook group of nearly three-quarters of a million Facebook users who share recipes and cooking tips online. Independent Facebook Instant Pot communities, each numbering in the tens of thousands, have also sprung up to facilitate recipe sharing.
While some might say a sizable community is the result of a viral product, Instant Pot’s case suggests the opposite where a product’s success was fueled by the community. Early on, the team behind the Instant Pot worked to actively build a community of Facebook influencers who would spread the word. Word got around, and the product started gaining traction. Eventually, the product moved up Amazon’s sales charts, and the combination of a strong community reinforced by sales momentum created a virtuous circle that continues to this day.
There are others ways to build and leverage communities to sell connected kitchen products. ChefSteps created a community around high-quality video content before they launched their first hardware product in the Joule, while Anova started its community with crowdfunding campaigns and the company continues to water and feed the #anovafoodnerd community even after they were acquired by Electrolux.
Smart kitchen companies need to experiment with multiple business models
Smart kitchen product success often relies as much on business model experimentation as it does on cool technology. The Perfect Company is a good example of this since the company has not only created a successful line of low-cost connected scales like the Perfect Bake and Perfect Drink, but they’ve also actively worked with large appliance brands to create a separate line of licensing revenue for their technology. Last year the company announced a deal with Vitamix for their tech, while this year they announced a new deal that provided the technology foundation for the newest generation of the Nutribullet. The company has also created a new business line that creates insights around consumption metrics tied to their scales.
I don’t know if Teforia was actively looked at other models (the company pointed us to their statement on their website), but I would have been surprised if they hadn’t at least looked for licensing partners for their tea brewing tech.
Of course, it should be noted that often times a fate of a company is due to a number of factors beyond their control. The Juicero news no doubt added strong headwinds for Teforia as they searched for more funding and, if Juicero never happened, we might not be talking about Teforia.
Lastly, while every segment, including the smart kitchen, has their share of Juiceros or Teforias, anything more than a casual look around shows there is no shortage of companies innovating and succeeding in the future kitchen space.