How a Single Point of Failure Killed This Start Up
It’s startling to see a startup go from raising over a million dollars on their initial crowdfunding in 2014 to vanishing in just four years. The startup in question? Bluesmart.
They were one of the companies making smart luggage that could be used as a smart lock, charging station, and GPS locator among other nifty features. No matter how extra it may seem, the demand was undeniable for it.
In 2015, they raised a whopping 11.5 million dollars during a funding round with their initial orders expected to ship at the end of the year.
Already in this early phase, they had a lot going for them:
- Validation from the get-go via crowdfunding
- Supply chain established to fulfill initial orders
- Significant funding from investors
Things weren’t perfect though
However, when you start to dive deeper and read reviews on sites like Amazon, the cracks begin to show. Some reviews are glowing. Others are having issues with quality control with bags not opening, the battery dying, no support outside of the warranty, etc.
These issues would be able to be fixed given enough time to mature, but there was a giant on the horizon that was approaching: a total ban on smart luggage. It started arriving in late 2017 and by early 2018 had been adopted by almost every major airline.
Bluesmart, along with other companies, released statements that they were appealing the law, but with no luck. They ended up closing up shop around May 2018.
It might seem like a visible red flag in hindsight to not go into business in one of the most heavily regulated industries, especially in the post 9/11 world. But you have to keep in mind; this was before Samsung phones became a prominent meme with their volatility (and other devices for that matter)
Maybe in a different universe, they never got hit with regulation and kept thriving as a company. A place where everyone had smart luggage, and they made billions.
What they could have done differently
Despite the problems they had before the ban, they seemed to have momentum in the marketplace.
But the fact of the matter is that we all have to account for unpredictability in entrepreneurship. It just comes with the territory in different forms such as:
- Relying on one method of driving traffic (Paid Ads, SEO, Social, etc.)
- Only having one way of monetization
- Not keeping regular backups
- Securing assets (online and otherwise)
The list goes on and on. Any time you are dependent on a single platform for your business, you’re putting yourself at the mercy of the universe. And the universe does not care if your business stays afloat.
The big takeaway here is to diversify. Not to the point where you change your bread and butter, but expanding to new channels will allow your business to take a hit.
For example, say your Google Adwords campaign got suspended for lack of funds or otherwise. If you had campaigns already set up in Bing Ads, it would mean that you’re at least guaranteed SOME level of revenue. And sometimes that’s the difference between a gut punch and a total knockout.
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