Failed business strategy: Will the cat come back?

Most entrepreneurs are I know are fueled by their ideas and dreams. How many among us have lay awake at night with a great idea that seems to be the best thing since sliced bread? The later into the night it gets, the better the idea becomes! We get up, we map out the idea on our whiteboards, we pace our homeoffice doing thumbnail calculations – usually trying to figure out how we can keep up with the demands of the hordes of people who will be clamoring to buy our product or service.

I’ve done it. Several times. C’mon, admit it! You have, too. Fortunately, in the light of day, 80% of those ideas are revised and/or dropped. We wake up in the morning and wonder “what was I thinking? No one would buy that!” or we might rejig the idea to make it more viable (with the realistic notion that there may not be hordes clamoring for it).

But some ideas from those crazy nights do make it. And CueCat is one of them.

I’d heard of CueCat before but never gave it much thought. But recently, my wife and I (who are avid book collectors) got a membership on LibraryThing and have been documenting our collection of books. LibraryThing recommends CueCat for fast inputting and, although I didn’t get one, I looked into it a bit more.

Underside of the :en:CueCat scanner. Self-made...
Image via Wikipedia

What is CueCat? CueCat is basically a barcode scanner that plugs into the computer. Consumers can scan various barcodes (UPC, ISBN, and some others) and the code will access the product page on the company’s website. That’s the “Cue” part of CueCat. The “Cat” part seems little more random: the CueCat is in the shape of a stylized cat.

Business strategy
CueCat’s to-market business strategy was interesting. They sent out a bazillion of these things for free to targeted users in the hopes that these users would plug them in, use them, and rave about them to their friends. Fair enough. Now here are the problems, as I see them:

First, CueCat’s value is largely unknown. Most consumers I know don’t want to scan their household junk to see the product page on the company’s website. There didn’t seem to be a point to it. This unclear purpose of CueCat is referenced by Jeff Salkowski of the Chicago Tribune who said, “You have to wonder about a business plan based on the notion that people want to interact with a soda can.”

Second, the cat-shape seems random. It could have been Cue-anything and as long as it was in that shape, they could call it that: CueDog, CueTiger, CueCumber. Now, making it a cat at least gives them a little differentiation but there is no tie-in to the product’s purpose.

Third, the targeted distribution was costly (+ $1,000,000 estimated). It seems like they are taking Gillette’s cheap blades/high profit handles model… but leaving out the high profit handles. And, it turned out to hurt them in the end: They tried to legally enforce proprietary code but people in the tech community quickly figured out how to “declaw” the cat (as it was called) for personal use.

Applying the Business Diamond Framework
When applying the Business Diamond Framework to CueCat, the problems become clear: They seem to have a decent Leadership Function Diamond. With 200 employees, their Support Function Diamond seems a little bloated (but what do I know?). Their Value-Add Function Diamond wasn’t clearly creating or providing value. Their To-Market Function Diamond was basically putting CueCat into envelopes and adding a stamp, but there was no clear, viable monetization strategy.

If I were to work on this, here’s what I would have done:

  1. Forget the cat shape. It’s weird and it’s not really something that you’d proudly display. In most cases, I suspect you’d say something like: Hey, I got this cool scanner even though it’s in a cat shape. Just make it look cool.
  2. If you want to stick to barcodes, that’s fine, but make the interactivity far more useful: Don’t send users to a website’s product page. Instead, create a CueCat page where users can buy more products (i.e., through Amazon, eBay or whatever; and it should list available products and make the list sortable by various aspects), rate products, give testimonials, show health information, show hacks, list recipes, and add products to their own page (in a way that’s similar to what I’m doing with LibraryThing).
  3. Open source, open source, open source.
  4. Consider sending bar code stickers for free and sending the CueCat for a mailing fee, and making money on various types of retailer-sponsored marketing or affiliate fees from purchases.
  5. Assure users about security. This wasn’t done very well in the original CueCat and users were conscious of the threat to privacy.
  6. Consider niching the product: Have a tie-in with grocery stores so people can use CueCat at home to create a grocery list that syncs with available coupons and estimates how much groceries will cost before they even go to the store. (And some stores might even have the groceries packaged by the time you get there). Or, tie it in with a weightloss company and set up CueCat for dieters who want to scan barcodes of the stuff they eat to have it automatically journal their diet and keep track of calories, carbs, etc.

Will the cat come bacK?
It could. But we live in a very different world today. It would need to be way smaller, sleeker, more portable, open source, and able to read way more than UPCs. And it would need to be supported by an iPhone App.

Published by Aaron Hoos

Aaron Hoos is a writer, strategist, and investor who builds and optimizes profitable sales funnels. He is the author of The Sales Funnel Bible and other books.

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