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The perks of being a tech failure

By Brian S Hall / April 10, 2014

The perks of being a tech failure

Silicon Valley, the land of dreams, world-changing technologies and the endless pursuit of the next big thing, is also chock full of failures. The entire tech sector is littered with product flops both small and large. Anyone remember the Facebook Home phone? The Palm Pre? Windows Vista?

Between the endless number of startups in Silicon Valley and the range of new tech products introduced each year, failure is bound to happen, and it can be pretty costly. Only about 75% of startups return their investor’s original contribution. But to its credit, Silicon Valley embraces failure, dissects it and pores over each disappointment, all in hopes of getting it right the next time.

The failure fetish

While many think of Silicon Valley as constantly disrupting, the truth is, Silicon Valley is always learning. In his new book, “The Hard Thing About Hard Things,” Ben Horowitz, one of the top venture capitalists in Silicon Valley, writes that failure is not simply worth studying, but should even be celebrated. New York Magazine agrees, even going as far as to say there’s a “failure fetish” in Silicon Valley, where failing—especially on a large scale—is a badge of honor. In an industry known for sunny optimism, Silicon Valley has managed to turn failure into a bragging right.

A lesson in flopping

In truth, the fanfare around failure is more about the subsequent improvements. Successful failures consider their flubs as just another step in the product development process, never the end result. Three recent “failures” perfectly illustrate this point:

Google Nexus Q

In 2012, Google introduced the Nexus Q (Retail price: $299), a ‘made in the USA’ streaming media player shaped like a black orb. It failed. The problem, however, had nothing to do with the unique design or domestic manufacturing. What ultimately sunk the Nexus Q was the abundance of other devices on the market that offered essentially the same functionality, and at a far lower price. Set-up was also not as intuitive as the marketing suggested. Worse still, the Nexus Q marketing campaign focused on the rather inexplicable “social streaming,” a feature of little meaning to prospective buyers.

Google abandoned the Nexus Q, but not its desire to offer a streaming media player—one that would help build a larger audience for its own iTunes-like music and video service. The result: Chromecast, a $35 media player that easily plugs directly into an HDTV’s HDMI port. By maintaining its focus on multimedia streaming, while understanding why the market rejected the Nexus Q, Google was able to bounce back a year later with a product that has already sold over a million units. You can bet the brains behind Nexus Q are already laughing about it.

Samsung Galaxy Gear

Despite clever marketing and significant social media buzz, last year’s Samsung Galaxy Gear smartwatch was pretty underwhelming, selling fewer than a million units. There were several reasons for its failure to break 7 digits. First, not enough people knew what the device could do aside from tell time. This was compounded by a marketing campaign which focused on coolness, when all prospective customers really needed was to know how such a device could enhance their lives.

Second, not enough people were willing to pay the steep price of $299. With Pebbles selling for as little as $150, spending twice as much for a device that only works with other Samsung products seems like a tall order. Which brings me to the Galaxy Gear’s third flaw, limited connectivity. Unless you own a Galaxy Note 2 or later, or a Galaxy S3 or later, you’re S.O.L. when it comes to the Galaxy Gear.

With the wearable devices market expected to reach $30 billion by 2019, Samsung had no intentions of letting the failure of the original Galaxy Gear prevent it from future success. This month, the company launches the Samsung Galaxy Gear 2 and reviews from all over the Web suggest it’s a significant improvement.

The thinner, lighter and longer-lasting Gear 2 is also a little bit cheaper, currently priced at $249. It has a better camera, improved pedometer, a heart rate monitor, and Bluetooth LE to stream music and potentially cooperate with beacons. The Gear 2 also offers improved integration with Samsung’s popular line of Galaxy smartphones.

In addition, Samsung has partnered with developers to offer enhanced services, including PayPal for payments, iHeart Radio for streaming music, Under Armour for fitness tracking, as well as eBay, CNN, BMW and others. Samsung has also centered its Gear 2 marketing efforts around health-related features and notifications, and much less on Dick Tracy-like coolness.

Fitbit Force

Sometimes your product seems flawless in the sterile environment of an assembly line, but new issues come to light the moment it reaches the general public. Case in point: Fitbit Force. Fitbit is a premier fitness tracker manufacturer, and the Fitbit Force was supposed to be their new gold standard. Then customers started seeing red, specifically on their wrists.

A few weeks after launch, some users began complaining about skin rashes from wearing the device. Then more claims cropped up. Then the story hit social media outlets. And finally, the Consumer Product Safety Commission ordered Fitbit to halt sales of the Force wristband. This is potentially devastating for a product that sold over a million units in only a few months.

Unlike Samsung, for example, Fitbit is a leader in wearables, controlling over half the market for fitness bands. The Force recall episode could potentially threaten the entire company’s fortune. Realizing this, Fitbit has taken numerous steps to overcome this product setback. To its credit, Fitbit has acted quickly to the controversy and been reasonably forthcoming about the product’s problems, which they describe as a mild form of contact dermatitis, affecting less than 2% of wearers.

Fitbit has publicly outlined the materials used to make the device, which are all fairly common for a fitness tracker. The company also now offers any Force buyer, whether affected or not by skin rash, a full refund. They’ve even made applying for the refund as simple as possible. As a final measure, Fitbit’s CEO posted a public statement demonstrating the company’s commitment to the market. It reads in part:

“To our Force community, rest assured we’re working on our next-generation tracker and will announce news about it soon. Thank you for your continued loyalty and support.”

As with the previous examples, Fitbit’s reputation will ultimately be determined not by their flop, but how they follow it up. Regardless of what Fitbit comes up with next, they better do it quick. With Samsung and other major hardware manufacturers getting into the fitness game, the competition is about to get pretty fierce.

Entrepreneurs beware

Failure may be a great teacher, but it’s also a difficult class to master. The reasons for tech failures are many and diverse. If you’re looking to unleash a new product on the public, make sure you haven’t committed one of these common mistakes:

  1. Building a great product—that nobody wants.
  2. Creating a product, service or even a feature that a more capable company can quickly integrate into their offering.
  3. Being late to market.
  4. Being early to market.
  5. Mistaking a feature for a full-blown service.
  6. Poor execution, branding, and/or support.
  7. Running out of money.
  8. Choosing the wrong business model. (Giving a service away for free may work for Google, but not for every start-up.)
  9. Too many cooks in the kitchen. There needs to be someone there to provide an affirmative ‘yes’ or ‘no.’
  10. Having founders and team leads that do not share the same vision or commitment.
  11. Not listening to what your customer really wants or needs.
  12. Failing to establish a target audience.
  13. Creating a product or service that is NOT appreciably better than current offerings.
  14. Building a great product or service that requires the participation of a large industry or ecosystem, BEFORE you have enough participants.
  15. Poorly marketing the value, benefit and/or features of your product or service.

Perhaps it’s no wonder why successful tech products and successful entrepreneurs are so lauded, particularly in Silicon Valley. The paths to failure are many, while the trails to success are few and far between. We should probably think of the tech companies in the same way we do Major League Baseball players: if they manage to get a hit 30% of the time, they’re an All-Star.

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