Heard on the Street: Tech investors are moving into consumer products, where the 'move fast and break things' mindset doesn’t always work
By Carol Ryan June 14, 2019 5:30 a.m. ET Photo: Photo Illustration by Emil Lendof/The Wall Street Journal: Photos: iStock, Zuma Press, Reuters Silicon Valley’s creed is progress through disruption, famously endorsed by Mark Zuckerberg’s motto “move fast and break things.” But when it comes to consumer products, some tech investors may just make a mess.
There are valid reasons why VC types are taking to the shopping aisles. The worlds of tech and consumer brands are blurring. Online subscription models and direct-to-consumer retail mean that entrepreneurs do sometimes need the cutting-edge expertise that Silicon Valley players can offer. “ The makers of the popular ice-cream brand Halo Top have raised just $1.5 million from friends and family since the company was set up in 2012. ”
Moreover, so-called network effects, whereby a product or service becomes more valuable the more customers use it, don’t work as well for snack bars as they do for social-media platforms. It also isn’t possible for one kitchen or bathroom brand to dominate a category in the same way that Uber and Lyft have cornered the U.S. ride-sharing business. If anything, the opposite is happening in the splintering consumer sector where large companies are losing market share to a raft of startups.
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