Why Lumos, my previous startup, failed

In 2013, I co-founded Lumos. By 2017, Lumos had failed to scale up beyond its initial promise. By then, we had made some wearable tech products that customers truly loved like the ThrillSeeker Backpack (one of the world’s lightest Solar Bag), Aster Backpack (commuter safety cycling bag) and had sold our products in 55 countries. This post is about what I think led to our failure.

So, what was the thesis of founding Lumos? 

We conceptualized Lumos around the idea that our clothes and accessories could generate their own power which could unlock a range of highly impactful applications. Efforts to do this were just about cropping up across the world - Levi’s had music-playing jeans, Google had Project Jacquard. To me, the world of what we wear was going to become exciting, and I wanted to play a big part in it. 

At the start, the possibilities of what we could do were limited only by our imagination - We could charge phones in your backpack, we could have T-shirts that constantly changed patterns/ graphics, we could have James Bond style motorcycle jackets that let you talk into the jacket itself, a backpack that could lift its own weight, Solar Venetian blinds - We made prototypes for all of these. I was inspired by the “cool” quotient of the products that were possible. 

Mistake: I was so inspired by what we could make, that I didn’t focus on what we should make.

Excited by these possibilities, the startup plan was to raise a small round of funds, make 1 or 2 products, and get to some decent revenue (INR 1 Cr. p.a), raise a larger round and then diversify the applications quickly. Looking back, the product imagination and the financial imagination were a long way away from each other. We had a range of products in the POC stage, ‘waiting’ for us to raise adequate funds so we could scale those up. 

Mistake: Depending on diversification early is a sign of lack of PMF (Product Market Fit) of the first product.

How did we start? 

One of the first applications of having “powered wearables” was to charge phones, which was a problem at that time. In 2013, through the help of an IITM super senior (who had multiple patents in flexible electronics), we figured out how to procure flexible Solar Cells on a Fabric substrate. We started using them to build Backpacks that could charge your phone. We launched the unPlug Backpack in Jan 2014 on our own website. We got good reviews in all the leading newspapers in India, and sales took off. 

In 2014, thanks largely to the team (more on that in a future post), we started selling the backpack in Mexico, Germany, Singapore and Australia. In each of these countries, we sold backpacks but didn’t build momentum in any one country. The initial sales by early adopters wasn’t really translating to referrals or sales beyond that. We even got PR in those countries - and excitement of exporting, receiving customers’ praise from multiple countries, and the good reviews masked the weak sales in my mind. 

Mistake: I diversified the geographies too early, and didn’t focus on building momentum in any one market.

During the first year of selling, we realized that our customers were attempting to use the backpack for adventure activities, for which it wasn’t suited. In 2015, we launched the ThrillSeeker, one of the lightest Solar Backpacks in the world. (Solar tech is otherwise clunky and heavy.) We received many accolades for it and this time around, there was a better fit with the customer's needs. However, in achieving better fitment, we went too niche. Coupled with the geographical diversity, sales did not ramp up. 

Mistake: Chasing fit while ignoring the market size was a bad idea.   

Finally, in 2016, we were running out of cash and the current products weren’t scaling up. We concluded that the backpacks were novelty, and they solved a need that was probably better solved by battery banks. At that time, we concluded that we needed to make a product that uniquely solves a strong consumer need.

In line with that, we made Aster - a backpack with simple, yet crucial safety features that cyclists across the world truly require. This time we followed a structured process of setting business goals, and discovering a value proposition, feature discovery, and concept generation (more on the process in a future blog.) 

With Aster, we decided to explore the crowdfunding route, to establish demand, cover working capital costs, and reach an enthusiastic early-adopter market. We set a campaign target of USD 50K in one month. We were hoping to drum up enough momentum to push that figure to about USD 250K-300K. We ended up with USD 130K worth of orders with a GM of > 50%. This figure however, fell short of what was required to cover investments in prototypes and tools. 

In terms of sales, it was the single best year for Lumos, and I think Lumos would have done well if this had been our first product. We had finally got our act together and had delivered products to enthusiastic customers in 55 different countries. However, it wasn’t sufficient for us to continue profitably or raise another round. In April 2017, while we shipped out the last of the crowdfunding orders, we began to look for options to exit Lumos.

So what do I think we got wrong? 

The single largest mistake, across the board, at the start of Lumos was the lack of due diligence. Any entrepreneur must do the following due diligence before starting a company:

Is there a strong customer need that the product is able to meet for the first time (i.e. the need is unmet) or significantly better than the current solution? Is the customer need strong enough for them to go through the hassle of adopting new tech/ unknown brand/ learning new behavior? Will this customer need stay for the next 10-15 years - what would have to happen for this need to stay? 

Had I done this, I would have realized three things. The need I was catering to could have been in two buckets - help the customer stand out and charge their phone. The 2nd need was transactional and could be better met without the hassles of adopting new tech - battery banks solved it with fewer hassles and it was cheaper. Worse - the need itself had a sub 5-year shelf life depending on improving batteries. The need for customers to stand out was true amongst clothing (amongst certain age groups), but amongst backpacks it was a very niche need. 

Is there a scope for building a large business through this (it was my ambition to do so)? If yes, what is the path to building a large business ? 

My approach with Lumos was incremental - let me raise INR 25 lakhs and get to sales of INR 1 Cr, then I will raise more and see where this goes. That is “building a sustainable business” type thinking meeting a “build a high growth business” ambition - it is bound to result in failure. If I had thought back, I would have realized two things: 1) To build a large business, I had to prove PMF in the first 2 years and that would have needed me to experiment a lot more. 2) In order to have the runway to explore PMF in the first 2 years, I would have needed a different approach to team building and a higher fund-raise. 

Is technology mature enough to make the products we wanted to make? A lot of the tech I was excited about and made prototypes of wasn’t at a place where we could productize it. For example, washable solar, or even displays that were flexible (and perhaps washable) did not exist outside of research labs. Neither was the tech mature enough, nor did we have the means to advance it. 

Diversification expectation: Another aspect of the failure was the roadmap itself. As a hardware company, the roadmap of Lumos was based on a single thesis - integrate tech into Wearables to unlock a range of applications. That thesis leads to a wide range of products - a diversification which is difficult for late stage hardware startups, let alone an early stage startup like Lumos. It is super important that the first major product (after you think you have achieved PMF) scales up and you don't depend on product diversification to scale up.