Video / Short
Startup Fails : 3 Lessons From a Canceled Flagship Product
A cancelled flagship product illustrates three startup risks: falling demand, a lack of customers and a product that does not work as intended.
Video summary
Pete Cooper uses the cancellation of a flagship telecom product, the “bubble switch,” to draw three lessons for founders. He sets the case against a period of heavy demand for telecom infrastructure and asks how a large company could still make fundamental mistakes.
The episode identifies falling demand, a lack of customers and a product that did not work as intended as the central risks. Cooper uses the example to encourage founders to test whether a market remains real, whether people will buy and whether the technology actually delivers before committing heavily to a venture.
Video transcript
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And what's that got to do with founders doing new ventures and projects? Well, I'm going to show you how even big companies can make classic mistakes. But, there's three fundamental things that I think you need to learn about what this company did and how to avoid making the same mistakes. So, the technology was called the bubble switch. Now, back then there was a huge surge in demand for telecom products. So, that means the backbone of the internet, you know, connecting things together through this massive network. The biggest companies at that time was Cisco. Agilent Technologies was one of those supplying technology.
Now, this bubble switch had enormous amount of promise because instead of optics going through electro- electrical electrons back to optics, it went directly optical to optical. Very fast, very efficient, and obviously a lot cheaper to run and to install. Now, this technology was patented by Agilent, and they've been working on it for quite many years. In fact, it was so fundamentally important that Agilent was investing an enormous amount of resources into this. It was their flagship product. The bubble switch was going to turn on billions of dollars worth of revenue.
Now, I remember joining the company, and it wasn't long after I joined that my colleague announced at a meeting that it had been canceled. Now, we were all shocked because this was the flagship product. This was the thing that was supposed to save the company. Well, this colleague of mine put it very succinctly. He said, "Well, first of all, the demand has dropped. The telecom market has just plummeted. We don't have the demand. So, all the forecasts for this product have dropped. Number two, we don't have any customers. Nobody's buying this product. And number three, it doesn't work." Pretty damning synopsis of a major project that the company had invested in for so long.