Moonshot! by John Sculley

Author:John Sculley [Sculley, John]
Language: eng
Format: epub, mobi
ISBN: 978-0-7953-4336-0
Publisher: RosettaBooks
Published: 2014-06-26T16:00:00+00:00

The concept is powerful because it’s built around a disruptive price, but it has additional appeal to younger consumers, particularly Millennials. The company has attracted major funding from sophisticated investors and is rapidly expanding. And, according to the same article, the global market for eyeglasses is projected at $96 billion by 2015. The potential here is mindboggling.

Closer to home, here’s another disruptive pricing example that recently attracted the attention of my brother David and me. It’s a company in the shaving category called 800razors.com. The founders, Phil Masiello and Steven Krane, approached us because of our experience with consumer marketing, particularly direct-response television.

800razors.com sells high-quality three- and five-blade men’s and women’s razors exclusively over the Internet. Phil and Steven’s research showed that there is a lot of customer dissatisfaction with the price of branded high-quality razors. In fact, the price is so high that many stores put razors on locked shelves to prevent pilfering. Having to track down a busy store manager to unlock the razor shelf adds to the frustration of would-be buyers. Phil and Steven created a low-cost fulfillment system that can deliver 800razors.com shaving products with quality comparable to that of the big razor brands, at about half their cost. 800razors.com also has a powerful customer information system using the cloud and data analytics to help provide a low-cost, high-quality customer experience. We believe these two adaptive innovators have a model with a decent chance of disrupting the traditional razor category. To achieve real price disruption, it’s not about making modifications to an existing supply chain. It’s about reinventing the chain from start to finish.

In 2013, I got involved in the possible acquisition of a once pioneering smartphone business, BlackBerry, after its board started a process to sell the company. In 2012, Shane Maine, Gord McMillan, and I were cofounding partners of the acquisition and credit finance company Inflexionpoint. We had lined up over $4 billion of potential financing to acquire BlackBerry, but BlackBerry’s board members later changed their minds and ended the process to sell the company. Instead, they decided to hire John Chen, one of the most respected high-tech turnaround executives, to become CEO. We had estimated that about 6,500 employees were assigned to the device side of BlackBerry. As Inflexionpoint Asia was already in the components supply chain and IT distribution business, we were very familiar with the cost model throughout the supply chain needed to build a high-quality smartphone and sell it in emerging markets. Our estimates were that we could run a device line of business with fewer than 500 people; we wouldn’t need 6,500 people.

John Chen understood that the device business had to be run on a much lower-cost business model, so one of his first decisions was to outsource the design and contract manufacturing of all BlackBerry devices to Foxconn, the same contract resource that manufactures the iPhone for Apple. At the same time as we were pursuing BlackBerry, Microsoft was in the process of acquiring Nokia’s mobile phone line of business, which employed 32,000 people and was losing hundreds of millions of dollars a quarter.

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