MINICASE: The Quest for Growth and Profit at Lovebox.love While you were enjoying a cup of your favorite ristretto, your longtime friend Mlodie was explaining to you a romantic idea that her fianc, Jean, recently had. Sipping her latte macchiato, she started to tell you the story of how Lovebox came to life. Jean was leaving for an extended trip to MIT, and though WhatsApp, Skype, or SMS may have sufficed for most people, Jean wanted more for hersomething so that she would not feel alone, something that could remain with her at home. You knew that Jean had a background in robotics, and you started to get increasingly curious. You discovered that Jean assembled the first prototype of the Lovebox at the local FabLab. The concept, Ml explained, was at the same time both simple and powerful. Jean built a wooden box with a screen inside and a big heart on its face. The heart was designed to spin when receiving a message, a much- improved version of the tone of the old answering machine. By opening the lid, your beloved would stop the heart and could access the message inside the box (Figure 5.1). The lid, made out of beech wood, is here to keep your messages secret! The mirror and the OLED screen make your message appear in a magical way! The electronic board gives life to your Lovebox! The motor makes its heart spin to let you know that a love note is waiting for you! The chassis makes your Lovebox solid and strong from the inside! The body is made of a 9 cm long solid piece of beechwood from France ! The heart, made of a colorful resin will spin as soon as a message shows up! Figure 5.1. The Lovebox hardware "Isn't that a good idea?" The question brought you quickly back to reality. The concept was intriguing, you thought, and your business acumen was telling you that this could become serious business. It was not by chance that you got your job at VeryFamousInvestors. At the same time, you zeroed in on the primary challenge to overcome. You explained to Ml that you understood the crazy appeal of the Lovebox, but you believed that potential customers might struggle to see the difference between the Lovebox and a dedicated $10 dumb phone beyond the beautiful packaging. However, many products 4 of 72 ended up being successful just because they were "cute. You were intrigued and honestly believed that the Lovebox held potential. That's why, shortly after, Ml introduced you to Jean and Marie. Marie joined Jean in the Lovebox venture after seeing the prototype at the FabLab. She fell in love with the concept and recommended that they build a full-fledged business together. It was a cold day in Grenoble, France, when all three of you sat together to discuss the first Lovebox product iteration, which, at that time, only partially worked. You discovered that Jean and Marie still needed a plan and that the alpha product in your hands was mainly for the purpose of debugging. "First, you should try to beta test it to get the overall design and concept straight. A batch of 50 units should also suffice to test the servers and the app," you suggested. Marie jumped in: "Then we should take all the feedback from the trial and ready a first batch of, let's say, 500 units in time for Christmas. But where should we go from here?" "What about a Kickstarter?" you asked. I believe the Lovebox is a perfect fit for crowdfunding! Initial orders, buzz, visibility on both the American and global markets." And so they did! From the trial, they adjusted the size of the display, making it bigger, and updated the app to enable sending stickers beyond the love message (Figure 5.2). Figure 5.2. The three main iterations of the Lovebox concept 4 of 72 ended up being successful just because they were "cute. You were intrigued and honestly believed that the Lovebox held potential. That's why, shortly after, Ml introduced you to Jean and Marie. Marie joined Jean in the Lovebox venture after seeing the prototype at the FabLab. She fell in love with the concept and recommended that they build a full-fledged business together. It was a cold day in Grenoble, France, when all three of you sat together to discuss the first Lovebox product iteration, which, at that time, only partially worked. You discovered that Jean and Marie still needed a plan and that the alpha product in your hands was mainly for the purpose of debugging. "First, you should try to beta test it to get the overall design and concept straight. A batch of 50 units should also suffice to test the servers and the app," you suggested. Marie jumped in: "Then we should take all the feedback from the trial and ready a first batch of, let's say, 500 units in time for Christmas. But where should we go from here?" "What about a Kickstarter?" you asked. I believe the Lovebox is a perfect fit for crowdfunding! Initial orders, buzz, visibility on both the American and global markets." And so they did! From the trial, they adjusted the size of the display, making it bigger, and updated the app to enable sending stickers beyond the love message (Figure 5.2). Figure 5.2. The three main iterations of the Lovebox concept 5 of 72 Figure 5.3. Message received! Finally, they developed a nice new feature that with a "spin of the heart" allowed you to send the love back to the sender as an animated rainfall of hearts (Figure 5.3). After many prototypes, iterations, and hard work, the Lovebox went live on Kickstarter. The $60,000 initially requested to finish the design and deliver the first batch of Lovebox was reached in 10 minutes. By the end of the campaign, and beyond Jean's, Ml's, and Marie's expectations, the project raised more than $330,000 from 3,000 backers. The first batch of products was a success! All the initial 500 units sold out in the prestigious Galerie La Fayette in Paris in less than a month. And when the Lovebox was presented at the CES in Las Vegas, it ended up a finalist for the Best of CES 2017!? Marie was unstoppable. The Lovebox website was online, and orders were multiplying from the simple eCommerce store that they built. Now anyone can buy a Lovebox for $99.99. That's when your phone rang. "Hey, it's Marie! Do you remember 5 of 72 Figure 5.3. Message received! Finally, they developed a nice new feature that with a "spin of the heart" allowed you to send the love back to the sender as an animated rainfall of hearts (Figure 5.3). After many prototypes, iterations, and hard work, the Lovebox went live on Kickstarter. The $60,000 initially requested to finish the design and deliver the first batch of Lovebox was reached in 10 minutes. By the end of the campaign, and beyond Jean's, Ml's, and Marie's expectations, the project raised more than $330,000 from 3,000 backers. The first batch of products was a success! All the initial 500 units sold out in the prestigious Galerie La Fayette in Paris in less than a month. And when the Lovebox was presented at the CES in Las Vegas, it ended up a finalist for the Best of CES 2017!? Marie was unstoppable. The Lovebox website was online, and orders were multiplying from the simple eCommerce store that they built. Now anyone can buy a Lovebox for $99.99. That's when your phone rang. "Hey, it's Marie! Do you remember 6 of 72 our cappuccino for the Lovebox project? We followed your advice concerning Kickstarter, and it worked well beyond our expectations. Now we need some more input. We have some ideas, but I would love your take. This Love platform we've built with our interconnected Loveboxes, said Marie, I need to start monetizing it. Absolutely! you reply without hesitation. Give me until the end of the week to study this, and I'll call you with some ideas. Marie answers, Thanks, I knew I could count on you. Talk to you at the end of the week. Discussion Questions 1. What kind of information do you think you need to seek out as you formulate your recommendations for Marie? 2. How do you suggest that Lovebox should think about driving revenue? What are some of the options? How would you rank them relative to each other? 3. What would you suggest to Lovebox to ensure the long- term viability of their product