Monday, November 27, 2017

The Trouble with Tech Startups and Tea

Last year I wrote a bit of a rant about crowdfunding and the issues that it presents the tea world. Not much has changed since then but the recent demise of tech startup Teforia got me thinking about this subject again. Dan Bolton's article on World Tea News provided some great insights into why this happened but there was one glaring issue that I haven't seen discussed. The trouble with tech startups is that they all try to solve a problem that doesn't actually exist!

Tea Robots Aren't Necessary


People have been drinking tea for a very, very long time. There hasn't been much in the way of technological innovation (with the possible exception of variable temperature kettles) since the days of Shennong and Lu Yu. It isn't that the world's tea drinkers are stuck in the stone age but rather one simple fact, making tea is not difficult. Whether you are dunking a Lipton teabag or having a serious gongfu session all you really need is leaves and hot water. If you go grandpa style you don't even need to have a strainer on hand.

I do not want or need a robot to make tea for me. Something tells me that most of you reading this feel the same. A huge part of the allure of drinking tea is the process of actually making it. There is something very relaxing and meditative about watching the leaves unfurl. This is why many of us make the switch from tea bags to loose leaf. Even fruity tutti what-cha-ma-call-it from one of the big chain stores provides the user with an interactive experience. That is something that cannot be replicated by an app or any other piece of modern technology.

The Teforia

A Disconnect from Their Customer Base


I have been writing about tea for nearly a decade and in that time I've seen many entrepreneurs come and go. They were all ambitious and absolutely convinced that their product would be the next big thing. The vast majority were genuinely nice people but I always felt like there was a big disconnect from the intended customer base. Most of them have been brand new to the industry with a background in an unrelated field. While this isn't necessarily a bad thing (we all have to start somewhere), it means that they don't actually understand tea drinkers.

I think part of the reason for this is the stereotype of the American tea drinker. We're all sugary iced tea addicts who can't understand anything beyond Lipton teabags (and those are only for when we're sick), right? There are a ton of market research studies that will tell you that's who we are. Robots that dumb down the process might seem like the perfect solution for that kind of consumer but there's a big part of the picture that's missing. Someone who takes tea seriously enough to consider purchasing a high-priced dedicated device already owns several ways to prepare it. For this reason, dedicated tea drinkers just don't see value in something like the Teforia. Is it cool? Sure. Do we need it? Not really. Especially not for more than $1,000.


Venture Capital Supports an Unsound Business Plan


One thing that many of these have in common is that they raise lots of venture capital. What this means is that the owners do not have the funds to make their dream a reality themselves or that they don't want to assume the risk themselves. In many cases, this is because traditional forms of funding, like bank loans, would reject an otherwise unsound business plan.

Teforia raised millions of dollars in several rounds of funding and yet none of the news articles about their closing up have revealed exactly how many units were sold. Judging by the course of events I would bet that it was far under the number that they projected. Media outlets like World Tea News and Fortune compared the company to the also doomed startup Juicero.

Gary Vaynerchuk wrote an article a few years ago on why you shouldn't take VC money and I think it still rings true today. What do you think about all of this? I'd love to hear about it in the comments!