How Keurig Became the 21st Century Razor and Blade

Buy the machine, keep buying the pods...forever. JL

Kim Lyons reports in The Verge:

Instead of being the “Uber for X,” like every app startup used to want, now IoT and gadget makers are aspiring to an even less appealing standard: becoming the Keurig of their niche marketplace.The Keurig model was simple: buy the coffeemaker, and then buy its branded single-serving K-Cup pods of coffee separately. We won’t see an end to such gadgets because too many products rely on what economists refer to as the “two-part tariff,” where you buy the product (razor, floss dispenser, coffee maker) and then pay a per-unit fee for the items (blades, floss, coffee pods) that make the product usable.

If I have one wish for 2020, it’s that we see an end to the stream of gadgets that convince customers to buy a product that requires even more products to make it functional. Instead of being the “Uber for X,” like every app startup used to want, now IoT and gadget makers are aspiring to an even less appealing standard: becoming the Keurig of their niche marketplace.

The Keurig model was simple: buy the coffeemaker, and then buy its branded single-serving K-Cup pods of coffee separately. Even though coffee is readily available in a plethora of forms, Keurig made it seem like having coffee available in single servings was somehow superior to waiting for a drip coffee maker to prepare your java. Then people realized the coffee actually didn’t taste that great, and worse, that the pods were not recyclable and created a ton of waste. It took Keurig more than a decade to introduce reusable pods that could be filled with loose coffee (and there’s still some dispute over whether the pods actually can be recycled).

Obviously, we won’t see an end to such gadgets because too many products rely on what economists refer to as the “two-part tariff,” where you buy the product (razor, floss dispenser, coffee maker) and then pay a per-unit fee for the items (blades, floss, coffee pods) that make the product usable. Every subscription razor blade company has this figured out: it’s why the razor itself is usually relatively inexpensive, but the specialized blades are pricey.

The Juicero may lead the race for most pointless device

Juicero

However, the gadgets that are flooding the marketplace (and Kickstarter) now are a generation removed from razor blades, which actually do take some precision to manufacture. The gadgets I’m ranting about are ones that try to convince you to spend more for a relatively inexpensive, readily available product: floss dispensers with proprietary floss (it’s just string, people); garbage cans with specialty garbage bags; even a manicure machine that paints each fingernail individually using — wait for it — pods of its proprietary nail polish.

The reigning champion of useless devices, of course, was the Juicero juicer which had almost the reverse problem: the $700 machine (the product) that squeezed juice out of pouches (the per-unit items) turned out to not even be necessary for the juicing process. Once people figured out they could extract the juice by just squeezing the pouches (lol), Juicero shut down shortly after.

Yes, these gadgets seem silly when you realize how often they sell you something you already have. But Flosstime raised $1.2 million in two funding rounds for its smart flosser (after first raising $50,000+ on Kickstarter); Townew raised $4.4 million for its $105 smart garbage can that requires its own refill bags; and Coral just raised $4.3 million in venture funding to develop its still-in-beta device.

So as long as venture capitalists think there’s money to be made from two-part tariff devices, this trend is likely to continue. At least, until consumers wise up and realize they’re being played.