Entrepreneurs often have a great idea and then (hopefully) go and find out if there is a problem that needs solving by their great idea.

That is still backward.

The focus should be on the problem first and then finding a solution for that specific need.

But even more important is decided whether the time is right to solve that specific problem NOW. Yes, I said it. Not all existing problems should be solved right away. And this is because the problem is not as BIG of a problem at all times. Sometimes the gap to solve a problem is very big and sometimes it is really small and it is not always possible to know which one is which.

Let’s use AI as an example. Do you think if chatGPT was launched 10 years ago it would have received the same buy-in from consumers?

I doubt it.

A decade ago we were learning about virtual reality and the possibilities of machine learning and artificial intelligence (even though it has been around for MUCH longer). But I am convinced the abilities of chatGPT would have been feared by many and the trust factor in machine learning and AI was still in its early phases with the public. But I guess we will never know.

So this was a time when Anki hit the market with their robotics and used AI to produce children’s toys as a means to introduce children to AI and the Internet of Things.

Watch this impressive and very creative pitch during the opening of Apple’s Worldwide Developer Conference when they launched their first product Anki Drive.

What went wrong?

Well exactly. The story of Anki is fascinating because they were one of the very first startups that dared to use A.I for commercial purposes at the time but ultimately they paid the price for their first-to-market approach. They produced home robots with games that could be managed via smartphones and were meant as children’s toys.

Although the public seemed ready and the startup had every possible advantage to become a unicorn startup, they closed down in 2019 after 9 years, of which 7 years were in operation.

What were these advantages?

• They raised about $182 million in total over 5 rounds
• One of the investors (for two rounds) was no other than the global financial services giant JP Morgan
• The company’s launch of its first product was at Apple’s Worldwide Developer Conference (WWDC) after being put in contact with someone at Apple
• 3x PhD candidates in robotics and machine learning were the founders and visionaries behind Anki
• They sold more than 1.5 million products
• In 2016, their Cozmo robot was one of the most demanded Christmas gifts on Amazon for the season (see the little robot below) in the USA, UK, and France
• At least 4 of their new products were very popular and they received a lot of press coverage
• The company was named one of the best 25 Inventions of 2013 by the TIME Magazine
• Reported annual revenue of more than $100 million

What could possibly have gone wrong?

According to the research, the company’s finances were poorly managed with high expenses and manufacturing costs. Then an investment fell through at the last minute that led to the company’s announcement of closure, effective immediately, and releasing their 200 employees at the time with a week’s severance pay.

Not a pretty end after such a spectacular start a couple of years ago.

Luckily for some desperate consumers, the assets and IP of Anki were acquired by Dream Labs and continued to be sold afterward.

The Vector robot with built-in emotional intelligent responses was very popular and continued to be sold by Dream Labs afterward.

My takeaway

This sounds like a bit of a sad story but there is a lot to be taken from this in a very positive light. For starters, the impact that Anki had on the robotic industry shouldn’t be underestimated. The vision of the founders were shared by many others and by no means disappeared when the company went down. But very often this is just what failed startups leave behind – a curiosity about the vision they had and if it is achievable in some other way.

With A.I seeing a boom since the launch of chatGPT in November 2022, people are becoming more and more curious (and sometimes fearful) about the possibilities of A.I and machine learning.

So these are my takeaways:

• Their business model was flawed. Despite high interest and selling thousands of units, they were unable to become sustainable on revenue alone due to exorbitant manufacturing costs and less than ideal selling prices ($180 – $320). Sure, they could’ve tried selling the units for double the price but consumers most likely would not have been willing to pay those prices. Bearing in mind that Xbox and Playstations had many more games for similar price points, it was also a tough competition.
• This leads me to the second point – diversification probably also cost them. With only 4 products consistently named in all the online articles, it seems that the company spent (understandably so) a lot of time to develop and test a new product before it could be launched. This inevitably also resulted in the novelty wearing off before they were ready with another product. While 1.5 millions units are a lot, their manufacturing processes (according to the research) were not geared for scaling, which inhibited their revenue flow.
• Finances! Why does it always come back to this? It seems to be a common factor with hypergrowth startups that fail – not managing their finances appropriately. My opinion here is that massive financial investments should be accompanied by a massive development investment in the founders too – to ensure they manage the startups effectively. No one needs to be breathing down their necks, but some management support or mentorship could potentially have saved a lot of the startups I have covered so far. It’s not as simple as that, but I think you get what I mean.
• Product-market fit and timing. I spent some time thinking about this one because it was tricky. While Anki’s products were innovative, the market for consumer robotics may not have been fully mature. A couple of similar startups also failed in that time (Jibo and Kuri) but yet A.I like Alexa boomed. People were ready for home assistants and associated automations like Alexa while the robotics industry was perhaps less matured with a lower demand.

There is a lot more that can probably be unravelled but let’s call it a day. I am quite curious to see what the robotics industry will get up to with the booming A.I advancements and even more so, in the healthcare space.

If there was ever a time for disruption in healthcare, healthtech etc, it is now because the only limitation we have is our own imagination and resilience to push through the barriers that stopped those before us. Only when they tried to conquer the wall, they had to find ways to climb over it. With A.I at the tip of our fingers, we don’t have to climb. We can fly over, crawl through or just blow up the wall if needs be.

What do you think are the biggest needs or gaps to address in healthcare?