This post first appeared as Steve Wunker's piece for LinkedIn
A company with a truly great product – the InstaPot – is going bankrupt.
The InstaPot is a pressure cooker for the digital age. It’s programmable, versatile, durable, and won’t scald its owner with steam. Sushi rice for the kids? Program it and forget it in about 1 minute flat. I love the product so much I have two of them. (Ridiculous, I know, as is the fact that the kids have homemade sushi). From a Jobs to be Done perspective, this product rocks. InstaPot was launched in 2009 and was an immediate mega-hit.
Instant Brands, maker of InstaPot as well as Pyrex and a handful of other kitchen staples, has been suffering declining sales. Combined with too much debt and rising interest rates, it suffered an old-fashioned story of running out of money. But why the declining sales?
Take a look at what happened to Atari, which created the home video game market in the 1980s. It was an ESSENTIAL purchase (I’m channeling my pre-Christmas pleas here – they worked!) The consoles were everywhere, and people invested in buying and learning the games. But that was it. When newer generation games came from other companies, some people bought new consoles, but many just let the Atari ones linger and become slowly obsolete with their increasingly archaic games.
Nolan Bushnell, Atari’s founder, says that his biggest mistake was to not enable upgradability in the game cartridges. The incremental cost of doing that, through making the chips RAM and not ROM? A few cents. He lost is empire over skimping on a few cents.
What might have InstaPot done instead? Perhaps there could have been upgradability of programs, or new add-on accessories – anything to get customers digitally enrolled so that the company could make them into a cadre of early adopters of new kitchen gadgets who would keep on upgrading not just their InstaPot but their kitchen machines and methods.
Instant Brands had identified a critical customer segment – kitchen early adopters – and with that it did…nothing. Without a direct customer relationship, it struggled to cross-sell much. Each new gadget, like its more recent sous vide cookers, had to struggle in the marketplace on its own. The momentum behind its original triumph went nowhere.
Here are the lessons: