3/27/2023 0 Comments Mirror lululemon![]() While Sonos, GoPro and Fitbit struggled (well, are struggling) to start a product line that earns recurring revenue, companies like Mirror were built for it from the start. However, Mirror isn’t a typical hardware company: they designed their business with recurring revenue in mind. Regardless of whether a car is built in 2010 or 2020, most of those things don’t improve so there’s less of a need to upgrade. Cars are a great example of this - most of the value to the customer is having an independent transport that has plenty of storage, includes seating for the family, and is safe. Second, the value proposition doesn’t change much with each cycle upgrade. Contrast this with a company like Spotify - the customer receives value each month and also pays Spotify $10 each month. For Sonos, a customer might buy a speaker for $399 and use it for 10 years without paying Sonos again. ![]() There are two issues.įirst, in a hardware business model, the customer only pays once but extracts value over several years. From a post I wrote on Sonos earlier this year:Ĭonsumer durables is a tough business, and hardware is no exception. Hardware is not typically a great business. Was it a good acquisition for lululemon? Or will it flop like so many other cross-sector M&A deals?
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