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Comment by tom_rath | Hacker News Reader

Wow. How could a "Stanford MBA" not even know the basics of marketing? If this fellow had clearly identified his market before specing out and ordering his product he would have completely avoided his first-iteration fiasco.

I also suspect a bit more research would have shown that empty cases (which the customer would fill with their own product) would sell just as well. Instead, he plowed on through to obtain more inventory (wasn't discarding expired inventory the inspiration for the product in the first place?) and meet regulations (instructions, etc.) that he probably didn't even need.

Do your marketing up-front, folks. A well-designed product that doesn't address a market isn't much better than this guy's box of greasy, plastic-covered condoms.

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It sounded like he did identify a market:

"just in time for the San Francisco International Gift Show...I soon began sales calls on buyers ranging from novelty shops and porno stores to gay rights groups and Planned Parenthood clinics...People began buying my key chains. Small gift shops in small towns bought dozens and dozens and regularly reordered"

His failure seems mostly economic: his financial projections didn't include all the overhead involved in importing the keychains, getting them ready for sale, and shipping them out to retailers. And much of that was because he didn't know all those things were required.

He would've been saved by researching the supply chain better, not the market.

Not quite. The product which met with some success was his second iteration: "Retailers told me that what the customer really wanted was a key chain with a usable condom."

Although research of his supply chain was extremely bad, it doesn't seem as though correcting it would have saved his first misdirected attempt at a product.

You are both right. That's why this is such a great story. It's a learning experience at every level!

My own take is that the poor guy's fundamental error was that he jumped the gun on outsourcing. He should have built the first hundred prototypes by hand on his kitchen table, with parts scrounged from one hobby store or another, then sold them himself. It sounds like he basically ended up doing that anyway, but if he'd done so in the first place he'd have invested less up front, gotten feedback faster, and gotten an intuitive sense of his market and the sort of product they'd prefer. Premature optimization!

The other, even more fundamental error was going into the novelty business in the first place.

It would've shown that his business idea was not economically viable, regardless of whether people wanted the keychains, before he had invested $10K in it. If there's no way a business will work, it's better to find that out quickly and cheaply than to invest more money in it.

This is harder than you would think. I took a year off from programming to help a friend market and sell actual physical stuff.

Often times a product that gets well received when you have a few samples made doesn't sell at all. Something you think kinda sucks and is just a 'filler' product in your line up turns out to be the most popular, and you run out of stock. Something sells well, you can get more made, so you order 500 more units, and then all of the sudden the product is not cool and nobody wants it anymore.

Oh, I know. My erstwhile startup seemed like a hot area when we began it a year and a half ago, and people in our target market said "Thank God" when I said what I was building. Now, nobody seems to care, and none of our competitors took off either.

I'm saying that even under his best assumptions about the market, his product was not profitable. He ended up getting customers after all, but even under generous volume and gross margins, it couldn't cover overhead.

Perhaps he should have tried sell the key chains for 5$.

Actually I think the article sums everything up that was wrong at the end:

"I learned that a markup of 150 percent doesn't mean much when you're only making 75 cents per item."

And of course the final nail in the coffin:

"These are hilarious. You gonna give these to us? I bet you could sell thousands of them."

You're right the end made the article. Some articles posted on HN I have trouble getting through the entire thing - glad I did on this one.

And you would have made the same mistake he made! Exactly the same mistake! You seemed to think that he just chose the wrong product or the wrong technique or something. Every business should EXPECT to have to deal with similar stuff he dealt with at the start.

His problem was that his financial calculation was wrong. Marketing is ALWAYS wrong till it works, research is only right after it is proven true. The only thing you can estimate with any degree of accuracy is the financial projection to see if the business is financially viable. And in his case he didn't factor in the uncertainty and the mistakes that one always makes.

The _basics_ of marketing?

No, with proper marketing one would not make the same mistake. Instead, one would conclude that the product was a no-go and adjust their strategy to fit (in this case, putting the idea on the shelf).

Consider marketing the social component of design. In the whole "Make Something People Want" bit, marketing identifies the "something people want" part. "Make" is important, but it doesn't mean jack if you're making the wrong thing.

It sounds as though this guy might have had a good market for condom cases ( http://www.google.com/search?hl=en&q=condom+cases ), particularly in the 80s when the things were just coming out from behind the pharmacist's counter, but he didn't pursue that initially and his second attempt appears to have been an approximation of what people actually wanted to buy.

If he instead identified what people wanted (reliable condom cases) and delivered that instead of a novelty which sold well to Bangkok tourists, he may have had a business.

You're over simplifying things. It's often not easy to determine what people want, because often people cannot say. For example, an iPod.

For example now, you have gotten stuck on this idea of condom cases. I personally don't want anything near to that. BUT, if the design were really interesting, I may want it. So you can't research if I want that, because even if you asked me, the answer I would give would be ambiguous.

Business School people come out with this idea that you can find out what people want before you have a product on that market. You can't! What you can do is identify a PAIN and fix it. You can identify something to be OPTIMIZED and fix that. If your product does not clearly fit any of those two categories, then all you can do is GUESS that people want it, then throw it at the market and move with the market to take the product in the correct direction.

It's easy for you to say condom cases are wanted after reading the article, but a condom keychain or case does not solve any specific pain. It's somewhat convenient thing, but I can easily live without it. It can work in the market, but it may not work.

The correct approach to this type business is to guess the best possible product that could sell in the market. Then put it in the market, and the market will tell you what it really wants. Then you modify to fit the market. But you have to factor this process into your finances, and you have to factor the risk factor in. The more unclear your market is, the greater your risk factor, and your finances have to be large enough to accomodate this risk. This was not true for the guys case above.

You are running with the wrong attitude if you think you can get things right all the time on one shot if you do proper research. It can happen, but most businesses will refocus after being on the market, and there are many many business who did the research, but didn't get it right. They failed and you never hear about them.

It's not over-simplified -- marketing is hard. That's why superb marketing staff are worth their weight in gold.

Those people who can determine what people want don't just snap their fingers and pop out an idea. An iterative process is followed to produce that initial product. With your iPod example, a music player which is small, elegant and easy to use [so drop all the extra features the competitors have which nobody uses -- and which features are those?] took a great deal of research to spec out.

I see what you're saying and agree that product development is an iterative process, but without marketing you're depending upon luck getting you to that final result; and you'll run out of cash long before you reach that point.

I couldn't be bothered to buy a condom case either. I also couldn't be arsed to use Twitter but I'm not the target market for either of those products, so both companies would only waste resources if they attempted to match my needs.

One has to apply the theory into the reality of the situation. You're right on how it should be, but consider the situation of the guy: it was a single guy with a single product and about $15.000 in cash. He is constrained by many factors and it is my belief that the route he went was in general reasonable. He just executed poorly.

To give a famous example: Before the walkman, some market research was being done. The idea was that those guys carrying around stereos on their shoulders might want a lighter alternative that clips onto a belt.

They said 'no'

How could a "Stanford MBA" not even know the basics of marketing?

Keep this story in mind the next time you assume that the computer science graduate in front of you knows how to install Linux. Or that the electrical engineering Ph.D. knows how to solder.

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