What If It Came in Blue?

Twenty years ago I was building a Web 1.0 finance company. We were working in a new industry, “online brokerage.” Analysts at investment banks had created this new industry so they could sell reports and attend conferences about a new industry.  Thanks to the metrics the analysts chose our company was one of the leaders in this new industry. 

We were also the only “online brokerage” that had never been anything but online. All of the other online brokerage firms had been brokerage firms before there were websites to be online with.  More interestingly, they all had the same business model.  The real innovations that drove customer demand had nothing to do with our website, which was almost mundane compared to our competitors.   Our real innovation had very little to do with technology.  It had to do with a new business model that existing brokerage firms could not adopt. 

Entirely because of analyst reports on a new industry I was invited to speak at conferences. Lots of conferences. 

I disliked speaking at conferences. I did not like being away from the office. You never knew what would happen on any given day, and tens, perhaps hundreds of thousands of customers were expecting my tech to work. My data center, if you could call it that, was a pile of desktop computers in the basement of a 100+ year old building near the tip of Manhattan. There was very little to be gained leaving the office to talk to a bunch of people who knew less than I did about “online brokerage.”  

Yet, everyone who was anyone was speaking at these conferences. In order to promote my company and improve my public speaking skills I committed to six conference talks per year.  

At one of those conferences  is where I first heard about Farsight. 

Farsight was, according to the charismatic, poised, well-dressed Cheryl, about to become the most important company in online finance. Her presentation was mesmerizing. Farsight had raised more than a hundred million dollars (This was big money in the 1990's) . They had hundreds of employees at work on important projects. They had deep partnerships with many large financial institutions. Farsight had an amazing future ahead. Most importantly, Cheryl, or I should say Dr Cheryl, as she had some serious degrees, made me feel like a small child at the many unfortunate conferences where I had to share the stage with her. A poorly dressed awkward child who did not belong at conferences for grown-ups.  

From the podium Dr Cheryl assured me that my “pure play” online brokerage firm and many others would soon be out of business in the future Farsight was creating. 

I didn't understood what Farsight was.  I assumed I was the only idiot at the conference, that Farsight made sense to everyone else. Later, I learned nobody knew what Farsight's product was but they were too embarrassed to admit that. Some kind of integrated banking/brokerage/other magical finance stuff, all accessible online. Past that aspirational idea things got hazy fast.  Some people claimed to have Farsight accounts but their explanations of the product were strangely vague.

All the Farsight people were very sharp, very charismatic, with great resumes, came from all the most respected financial firms, and their vision of the future of finance had people awestruck.  In comparison, my company looked like bunch of second tier bucket shop operators. Everyone told us Farsight would put us out of business. I was planning for the day when I was put out of business. Honestly, I couldn’t wait.  My life was very stressful. I could use a break.

I bought a nicer suit, got a nicer hair cut, but still looked pretty silly on stage next to Dr. Cheryl. After a year I asked Dr. Cheryl some questions: 

“You have been giving the same pitch to audiences all over the country for a while now Dr. Cheryl.  Can you show us more? What does the product look like? Is anyone using it?  What do they like about it? How do you know there is a market for this integrated financial future? How are you going to be the best at so many different services? Maybe people would rather use a set of non-integrated services that are each great, rather than one average integrated one? Maybe people don’t trust all their assets with one firm and want the future to be a little, you know, messy and complicated?” 

Dr. Cheryl had no answers to any of these question. No one had ever asked these questions before.  

I was not trying to be a jerk. I was trying to get real answers. I thought answers existed, and Dr. Cheryl would be excited to share them if anyone asked. 

Less than six months later Farsight was shutdown without ever launching a product.

You might think I was vindicated. I felt terrible. All those people! All that work! A total waste of time! Farsight employees were not my enemy. Those people were probably doing a great job building exactly what their managers asked them to build, working late, trying hard, solving complex problems, missing out on other opportunities in the go-go 90’s, only to get fired because their bosses had somehow missed the point on why their company existed.

Farsight offered a valuable lesson in customer discovery, although I did not realize it at the time. The lesson was: spend more time testing your ideas with customers and less time talking about them at conferences. Get your ideas into the market, in front of people, early. Don’t assume that because you raised money, or hired employees, or have a distinguished resume, that anyone wants your ideas. Test your ideas, with real customers, see how they work, and then go to conferences to talk about them. 

Or skip the conferences all together! 

Farsight was not an outlier, it is the norm!  Dozens, hundreds of well known companies would raise serious money, hire smart, capable employees, start down a path that was so clear to themselves, and only then realize that people could not care less about the future they were creating. Except perhaps people who organize conferences. 

Had they really not thought about this? Had they not collected any real-world evidence from potential users to validate their ideas? Or had they  discounted contrarian feedback? 

Soon there were reports, books, and conferences lampooning Web 1.0 companies with unsellable ideas for the future.  While many of them seemed like frauds after the fact, I am sure most of those founders and employees were sincerely passionate about what they were doing.  They just did it wrong.

My company was not immune to this problem. We came up with all sorts of terrible ideas that seemed so smart in our conference rooms. Fortunately, our costs of testing them with real customers were comparatively small. Our cost for failure was small too. 

Most of my incredible, visionary, genius ideas were complete failures. I killed them quickly before anyone was hurt, or anyone even noticed.  It is always sad, though, when good people work hard on an interesting problem only to find out that nobody cares. 

A decade later, while presenting at some other conference, for a different company in a different industry, I sat in on Rodney Brooks presenting his two-armed iPad-faced factory-friendly robot, Baxter. 

It was an incredible presentation, consisting of real videos showing iPad-faced robots in factories. Dr. Brooks'  presentation was filled with awe-inspiring ideas on robot-human interaction, ideas that were embedded in Rethink Robotic's factory robots. 

Imagine working side-by-side with an industrial robot that would not crush its human colleagues! Imagine regular non-technical factory workers training robots just by showing the adorable iPad-faced machine how to do things, by manipulating its arms! How much cheaper and flexible is that than hardcoding robot arms the traditional way? Dr Brooks had all of this actually working.

It was obvious to everyone that Dr Brooks was a genius, and his company was going to change the world. He had already raised enormous amounts of money.  And yet, a couple of small things struck me as odd. After the presentation, I went up to the podium to ask him some questions.

“Dr Brooks, why two arms? None of your examples showed using two arms simultaneously. Wouldn’t it be a lot cheaper to build a one armed robot?  And wouldn't that be a lot easier to train? Do customers want two arms, or maybe a  less complicated, cheaper robot?  

Dr. Brooks had a very plausible answer about people being more comfortable working alongside a more anthropomorphic robot.  Who was I to argue? I could have mentioned, “just hang a fake arm off the thing and sell it cheaper” but I felt that would be crass. 

“Ok, thanks.  Dr. Brooks, but one more question, please. Why have people train the robot by manipulating its arms?  Why not just have the robot, or just a simple camera, watch people, maybe you have them wear special tagged gloves to make it easier to figure out what they are doing, and just compile their recorded actions into robotic actions?  Its a gorgeous idea, don’t get me wrong, training a robot the way you might a person, but it seems so technically awkward, don’t you think? And all those extra programing controls on every robot just add so much cost and complexity. "

Again, a plausible, eloquent idea about man-machine interaction, factory flexibility, about making the automation process more comfortable for the factory worker, the idea that manipulating a giant red metal robot arm is more comfortable than being watched through a camera by the factory manager.

Baxter the robot made for some great demos, even if everything it did only used one arm, but I wondered what the CFO’s of those factories thought? Even if the factory workers liked working with a friendly red robot, did companies really make investment decisions based on what the factory workers thought, if they could avoid it?

I am not a big thinker like MIT Professors.  I just ask stupid questions.

Years went by. Rethink Robotics raised more and more money,  something over $150 Million which was real money back then. I would bump into the investors from time to time, ask for news. Sales were slow. Non-existent, actually. Factories didn’t want a $40,000 anthropomorphic robot with an I-Pad face, no matter how many TV-show appearances it had. Rethink Robotics did not seem interested in making less expensive robots, or offering creative financing for expensive ones. The only people who wanted a Baxter were professors in robotic research labs.  

Eventually Rethink Robotics would develop a one-armed robot. It looked beautiful.  It was still too expensive, and it was too late. Real companies that might purchase robots by the thousands, that might have enabled  Rethink Robotics change the world, were no longer willing to engage with a ten year old company that had yet to sell a product. 

Rethink Robotics officially closed its doors on 3 October 2018, but my guess is that it had been functionally  dead  years earlier.

What went wrong?  

Was it the idea? Many people wanted a Baxter, in theory at least. It was the talk of the town, for years. The core ideas of Rethink Robotics are still enticing, and being brought to reality by hosts of next-gen robotic companies.  

Was it the team? They were smart, had terrific ideas, managed to raise the money, and built what they said they would build.  

I don’t think it was the idea. I don’t think it was the team. 

My guess is that  Rethink Robotics was not very interested in talking to real people in the real world.  People who might actually buy a Baxter for their factory. More specifically Rethink Robotics was not interested in talking to potential customers before all the decisions had been made that pretty much fixed Baxter’s position in the marketplace. Its price.  Its feature set. 

Its possible that if Rethink Robotics had surveyed actual factories that could use a Baxter, met with the people making the purchase decision,  maybe Rethink Robotics might have found out that nobody wanted a Baxter?  Maybe they could have figured this out before they built one?   Maybe to penetrate the factory floor it took more than a pretty face and two gorgeous red arms?

What would it take?  A lower price tag?  Easier training?  Financing to reduce the upfront cost? A higher minimum wage?  Color choices other than red? I don’t know, because I am not the customer.  

Dr.  Brooks wasn’t  the customer either. 

Rethink Robotics took it on faith that if they built a Baxter factories would buy.  I would guess that many people questioned this faith and were ignored. 

Classic Field of Dreams attitude. Sometimes it works.  Sometimes.  Ok, I have never seen a "We built it and people came!" success story, but it could be possible...

Mostly it doesn’t work.  Mostly, there is a lot of messiness and complexity in the real world that kills smart peoples' wonderful ideas.  

How do you create something new and still  have something behind your go-to-market strategy other than faith? Countless books have been written about this.  People have made careers speaking on this one small topic. I doubt I can add anything substantive. 

 Its mostly about getting out into the real world, the messy complicated real world, and feeling like an awkward child.  In my experience, the more degrees you have, the less you enjoy being made to feel stupid, ignorant, awkward, which is one reason why highly technical founders have the hardest time with customer discovery. 

The more degrees you have, or the more of an expert you are, the less willing you might be to accept being awkward. This is one reason why highly technical founders have an aversion to testing their ideas with potential customers.  Looking stupid hurts. I know!

But you know what also hurts?

Failure.