No-Show for Vlow
No cash flowing in a crowdfunding campaign for an innovative water faucet? Draw a line under it and move on, says Dr. Anne Völkel from VOSS Incubator
The webpage is still online among the endless expanses of the Internet. However, it is neglected and generates no traffic. Two figures immediately jump out at website users and indicate the failure of an ambitiously launched experiment: only 4,541 euros were collected in total. The funding target was more than 50 times this amount. And only 61 individuals offered their support, whereas there should have been hundreds. The webpage is located on a platform with which companies, especially startups, want to use crowdfunding to acquire the necessary capital to see their idea turned into reality. At the same time, the platform can serve as a gauge: How many people are excited about the new product? The planned service? Naturally, one hopes for positive, maybe even enthusiastic feedback.
This was also the case for Dr. Anne Völkel, Innovation Manager at the VOSS Incubator. According to its own description, this Innovation Lab at the RWTH Aachen Campus is concerned with “developing innovative products, taking economic and environmental limits into consideration. In this way, ideas for future business areas of VOSS Automotive GmbH, a member company of Aachen Chamber of Industry and Commerce (IHK), are to be generated. The Incubator was launched in 2019. During a workshop, the entire Incubator team, including Voss’s development department, created the vision of a smart aerator for faucets with external help from the Invention Center. “With sustainability in mind, these faucets should measure the amount of water and heat energy consumed and help save this precious resource,” says the innovation manager, explaining the idea. They even proposed a “challenge system” via an app, along the lines of: “Your consumption is greater than average. Don't you want to change that?“
A Bold and Independent Move
A great challenge they faced was that automotive supplier VOSS had no experience with home technology. In addition, “VLOW” was intended to be sold directly to end consumers. “B2C [business-to-consumer] is still foreign territory for us,” says Völkel. The aim was to keep the company's own development costs as low as possible, while obtaining valid information about market interest. The two-fold solution seemed to lie in a crowdfunding campaign. “None of us had tried it before,” the engineer says. “But we approached the campaign boldly and independently.” Initially, 400,000 euros were to be generated through donations in this way. Market-ready “VLOWs” were intended as “thank-you gifts” for the donors. However, those in charge quickly realized that they had clearly chosen the wrong instrument. “It was more of a community platform with a marketing strategy,” she says nowadays. The campaign was supposed to run for a month, but after just a few days, it became obvious “that it wasn't going to work”. The numbers were simply too low. Reducing the target amount to 280,000 euros did not make it any more successful. The result: “We made the firm decision not to pursue the idea any more.” So VLOW didn't make it.
Ten months had passed from the definition of the product in early 2020 until it went online. Völkel and her fellow campaigners had invested a lot of time and brainpower for nothing. For nothing? Not quite, says the innovation manager. “We definitely learned a lot from the experience.” Now the team is developing a whole new strategy. “In principle, it might make more sense to go with a manufacturing partner.” They are already taking that approach on a new project, an electric walker.
Dr. Anne Völkel looks back on the unsuccessful “trial run” nonchalantly.
“Of course, it is always a pity when nothing comes of one's idea. But then it’s time to pool our resources and try something new!”
Failed Startups – A Taboo Subject?
In an interview with IHK Aachen, Professor Malte Brettel, head of the Innovation and Entrepreneurship Group at RWTH, explains that failure is part of the game. So is it still a taboo subject?
Professor Malte Brettel: This is really a question of one’s clientele. Startups that involve opening a bakery, for example, know how to go about it and who their clientele is. If I fail with that idea, then I probably did do something wrong along the way. If, however, I have a medical technology startup – and that is more representative of our clients for startups at RWTH – then the prototype and my business model may work on a small scale but no longer on a large scale. That is relatively normal. If such a startup then fails, you simply have to say: Well, that's the way it is, that's just part of the business world. That's why I would differentiate from case to case.
IHK: When do we talk about failure – when the business model doesn't work, or does a company only fail when it stops altogether? Where do you draw the line?
Brettel: That's an interesting question. You read about business models that can't work because they're not profitable enough. I was really intrigued by the startup Outfittery, which centers around sending men entire outfits. Who really knows if this can be profitable? The margins in the apparel industry are there, but are we men really willing to pay to have entire outfits shipped to us, or do we end up going back to the mall? And, if you don't know, then you have to test it! Outfittery has now been very successful and has even been able to extend its idea to women. But the question is, how long do you have to test a business model to know if it works or not? My impression is that many companies hold on to an idea for too long until they finally see: It’s time to let go. There, we fail too late rather than too early.
IHK: Why is that the case?
Brettel: Basically, in and around Aachen, we have a tendency of tinkering to the very end in engineering-oriented fields. Sometimes this attention to detail or great effort is essential with new technologies, because the first approach or experiment doesn't work. But many entrepreneurs take too long and then tend to waste valuable time.
IHK: Why is it necessary for us to break this taboo?
We need to learn to better understand and accept failure, also when it comes to other people.
Brettel: It's the same with me: I've created startups and helped finance companies, and some of those have gone bust. That's just part of being in business, it just didn't work out the way you thought it would. If a piece of technology doesn't work, that's just how it is. Yes, you lose money and also time invested, but you simply have to live with that in a sector like this. Because if we look at the opposite case – you also have to be honest – you naturally have a relatively high level of success, including financial success.
– Authors: Daniel Boss, Anja Nolte