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Why everything is a subscription - The Verge
Hardware companies need to sell more than a gadget
Sphero’s founders just wanted to make robots. In 2010, Adam Wilson and Ian Bernstein asked investors for money to build a business around their clever phone-controlled robotic ball. But in some cases, investors wanted to know what more the business could offer: after they sold one robot to a customer, what came next?
The answer was one that many hardware companies have turned to: a recurring revenue model that allows them to rely on customers paying every month or year. To find that model, Sphero experimented with turning the robot into a gaming device, but later, it decided to go all in on its developer tools and make the robots into coding toys that would appeal to schools. At that point, the team pivoted to education as a main focus, and with it, came customers that could pay year after year.
“We created a new product that was very tailored to that group [of educators],” Wilson says. “But then the business model changes a little bit because once you make a 30-pack [of robots], schools have a reoccurring budget, right?”
Hardware companies need to sell more than a gadget
Sphero’s founders just wanted to make robots. In 2010, Adam Wilson and Ian Bernstein asked investors for money to build a business around their clever phone-controlled robotic ball. But in some cases, investors wanted to know what more the business could offer: after they sold one robot to a customer, what came next?
The answer was one that many hardware companies have turned to: a recurring revenue model that allows them to rely on customers paying every month or year. To find that model, Sphero experimented with turning the robot into a gaming device, but later, it decided to go all in on its developer tools and make the robots into coding toys that would appeal to schools. At that point, the team pivoted to education as a main focus, and with it, came customers that could pay year after year.
“We created a new product that was very tailored to that group [of educators],” Wilson says. “But then the business model changes a little bit because once you make a 30-pack [of robots], schools have a reoccurring budget, right?”