Earlier this week Ben, founder of BoltVC Einstein and I talk about hardware products best business model for this topic, some of his summary and opinion are worth learning from.
Since February this year as a hardware item in the y Combinator tutor since Ben already YC provide consultation to the team more than 30 hardware. In addition, Ben Bolt was founded in Boston in 2 years ago, a VC focused on hardware startups and incubators, investment and incubation team currently has 17 and opened San Francisco office in March this year.
Ben, hardware is never done to simply selling a product. Only sold in Best Buy's retail channel, "simple" (his exact words are dumb) electronic product is no longer enough. Hardware team should jump out of the limitations of the product, while standing in the higher point of relying on relying on hardware products to establish a unique business model. According to Ben's summary, there are seven of the best hardware business models:
2. form a closed loop Just Cavalli iPhone 6 Case
5. the embedded
6. the hardware as a service
From the coffee machine best business model
Most models have many successful products, and Keurig-for-X caught my interest. Add backgrounds, Keurig is United States market's best-selling a capsule coffee machine. Can use various drinks capsule made of coffee, tea, hot chocolate, and so on. Most popular stand-alone price over $ 120 or so. A single capsule price of a $ 1.
Ben told me that Keurig capsule coffee machine and coffee machine business model fundamentally different. Whenever speaking of Keurig model almost famous Gillette so people will think "knife + blade" business model. In Ben's view, ordinary coffee machines also belong to the Gillette pattern: ultra-low-cost infrastructure, and the consumption of expensive materials. Gillett has been widespread in the market: the coffee maker and the coffee powder, ink-jet printers and ink cartridges, and so on.
Keurig where the magic? Secret lies in the price.
Ben explains that Keriug is a very delicate type of consumer psychology behind. With capsules of coffee, for example, coffee prices for consumers is a one-time investment of sunk costs, this price from the initial anchor for a subsequent consumer price expectations of consumers. Just Cavalli iPhone 6
Concise, consumers purchased the Keurig classic Psychology: "I paid 120 knives for machines and buy drinks capsule was nothing of value 1 knife; if you do not buy 1 capsule of the sword, then the 120 knife was white. "So happy to keep buying coffee capsules. Keurig 2014 up to 4.7 billion dollars in net income, only 580 million income from sales of coffee machines. It perfectly combines the customer acquisition cost of hardware advantages of recurring revenues, and software features. "Can you believe it? Such a perfect pattern was derived from a coffee machine. "Ben laughs.
"Most of our investment team belongs to such a business model. One of two or three are models of the Keurig, which, once established, will be almost impossible to replace. "Ben is very confident for this model. "So as a VC, what is your exit strategy? "I finally asked. Ben shrugged: "there is no exit. Is permanent for investment firms and I held until the day of death. "
Chinese version of Pebble smart watches
A lot of people told me, after a fresh, their Apple Watch most commonly used is the "view alerts" and "view" these two functions. Pebble that two things can be done, and whether the iPhone or Android phone, are qualified for the job. Even if it is on a business trip, as long as a week, do not need to bring the charger.
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