Google Goggles and The Flip Go To Market

Also seen as
this Alleyinsider piece

THE SECRET STARTUP TRICK GOOGLE SHOULD USE TO MARKET ITS NEW GADGETS

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 with the original Peek gadget 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 full-page New York Times buyouts. 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 1.

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 $10-20mm.

The great thing about this model is that if you have a cool product it
really will move lots of units – you can sell a few hundred thousand units in year 1, 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 poeple will say you are failing -- they will say "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.