If you’ve never met Pleo, log onto YouTube, type “Pleo” into the search box, and then click on one of the video clips that are posted. Pleo is a small robotic baby dinosaur—a Camarasaurus to be exact—that was the creation of Ugobe. Pleo has many lifelike characteristics, and can interact with people through its 38 sensors. Pleo can coo, shake, bark, cry, play tug-of-war, and even act sad if you quit playing with it. The baby dinosaur was first revealed to the world at the DEMO Conference in 2006. It got ample press attention and rave reviews. In 2007, Pleo was offered for sale—at a somewhat hefty price of $350—and sold 100,000 units before the end of the year.
Then its sales stalled. In 2008, Ugobe’s board removed its CEO and brought in new leadership. Ugobe went to the capital markets later that year to raise additional funding, to keep the company solvent, but no investor would pony up.
In April 2009, Ugobe filed bankruptcy and Pleo fell silent.
What went wrong?
Several things contributed to Ugobe’s demise. First, although Pleo didn’t look that complicated, getting a robot to do the things Pleo could do was a major undertaking.
John Sosoka, Ugobe’s chief technical officer (CTO), in a presentation about Pleo to a class at Stanford University, said Ugobe spent about $7 million building Pleo before it shipped the first unit. When sales slowed in 2008, Ugobe was in trouble financially, and couldn’t raise additional funds.
But according to Sosoka, even if Ugobe had risen additional funding, it ultimately would have failed anyway. According to Sosoka and others, Ugobe’s real problem wasn’t financial. It was a marketing problem that Ugobe never solved.
The core marketing problem had two parts. First, despite all of Pleo’s positive attributes, Ugobe never really figured out what Pleo was and to whom it should be sold. Was Pleo a pet? Was it a high-end toy? Was it a companion robot for adults? Was it a really cool product?
Was it a platform for research? (Sophisticated users could write software add-ons that would enable Pleo to show more emotion.) Pleo was at the same time all of these things and none of these things. In reality, it was in a category that didn’t really have a name or a market.
Because Ugobe remained as puzzled about what Pleo was and to whom it should be sold as its potential buyers, it never figured out Pleo’s positioning strategy or developed a coherent marketing message.
The second part of Ugobe’s marketing problem is that the firm may have mistakenly interpreted the meaning of Pleo’s early sales. Ugobe clearly believed that the initial interest in Pleo—the 100,000 units that sold in 2007—was validation that Pleo had broad market appeal. It didn’t.
In his insightful book, Crossing the Chasm, Geoffrey A.
Moore explains the nature of this phenomenon. In a nutshell, what Moore said is that there is a chasm between the early adopters of a technologically sophisticated product and mainstream consumers. Early adopters are enthusiasts—they are the visionaries who seek out new products and try them before anyone else.
A company doesn’t have to have a coherent marketing strategy to find early adopters—the early adopters find them. That’s who the 100,000 people who bought Pleo in 2007 likely were, early adopters. According to Moore, a “chasm” needs to be crossed before a product grows beyond early adopters and mainstream consumers join in. If a firm can create a bandwagon effect among its early adopters, and a product becomes a de facto standard, the chasm can be crossed. This never happened in Pleo’s case, a reality Ugobe realized too late. By thinking that Pleo had broad market appeal, the company focused on growth rather than its basic marketing problem.
Eventually, Pleo’s early adopters moved on to the next technological marvel and sales died. Absent accelerating sales, Ugobe was not financially sustainable.
Interestingly, Ugobe’s failure wasn’t the end of Pleo.
At the bankruptcy sale, Innvo Labs, a subsidiary of Jetta Company, Ltd., acquired all the intellectual property related to Pleo and has relaunched the robotic baby dinosaur under the Innvo Labs corporate name.

Questions for Critical Thinking
1. Who do you think should have been identified initially as the target customer for a small robotic baby dinosaur? Should children wanting to play with a unique toy have been the target market? If not, what about adults with a strong interest in technology?
2. What steps could Ugobe have taken to better understand the meaning of its initial sales?
3. Why do you think Ugobe was unsuccessful in its efforts to secure additional funding in 2008? What “red flags” did these investors see when they evaluated the possibility of financially supporting Pleo and the company producing the product?
4. What do you think the odds are that Innvo Labs’
relaunching of Pleo will be successful? To increase the likelihood of success, what steps would you recommend that Innvo Labs take?