Bankruptcy of Multikubik, the manufacturer of the Cinemood projector. Survival lessons

Hello.

In Russia, there is a stupid tradition - to kick the fallen, add pain and suffering, although before failure

nothing foretells such a reaction.As if falling gives the right to say and do anything, not to restrain oneself in manifestations of emotions. And I'm not talking about a certain proportion of eternally dissatisfied citizens who every minute show themselves on the Internet and are ready to explain how to run a state, fly into space, cook lasagna. Such people have their own recipe and advice for everything, suffering from the Dunning-Kruger effect, they cannot go beyond their little world. Here we are talking about many who do not see anything positive in the fall of a particular company, as if such an event has an exclusively negative meaning. I can’t agree with this, since the market is arranged in much the same way as life – without death, the birth of something new is impossible.

You must have been told in your school days thatforest fires not only have negative sides, they also cleanse the forest and give it the opportunity to regenerate. I remember being attracted to the concept of birth through death, the idea that nothing disappears without a trace. Let's try to shift this concept to the history of the Russian company Multikubik, which created a portable projector for children and adults. Initially, the name of the company looked like "MULTIKUBIK", which reflected the idea of the device. She appeared at Mikhail Bukhovtsev, who worked at Huawei Technologies (sales, product marketing), he remembered the existence of filmstrips, which were a kind of cartoon for Soviet children. The idea appeared in 2014, Mikhail was at one of the electronics exhibitions in Asia, where he saw small South Korean projectors. The little ones made it possible to show a fairly high-quality picture, broadcast video. They could not be a replacement for a large projector, nor could they compete with a smartphone screen - the niche for such projectors turned out to be quite narrow. At exhibitions, such devices are definitely fascinating, but in real life they often cannot be used. If you knew how many such devices are gathering dust in the boxes at my house, they were brought from exhibitions from all over the world.

Mikhail captured a projector in Russia, inventedanother positioning - as a device for children and parents, and at the same time found a companion in his startup, which existed in the form of an idea. Mikhail's partner was Daria Mingaliyeva, a person from the world of advertising and marketing (she worked for companies such as Grape, BBDO and Leo Burnett). The idea of a safe device for children and parents took shape in a project that took the first step. The emphasis was not only on the technical component, but also on the content that the user was supposed to receive initially by purchasing such a projector.

The first version of the projector was created in Chinesefactory, the price turned out to be very high for the target audience - it was offered to sell an unknown product for $ 220 (11,500 rubles at that time). Retail chains turned up their noses at a new and niche device, they were not ready to invest in its promotion, but at the same time they wanted the shelf price to not exceed 5,000 rubles. Which was basically impossible. Perhaps my first acquaintance with the projector happened exactly then, one of the Svyaznoy purchasing managers showed me a miracle Yudo and said, waving his hand: “They bring all sorts of nonsense that it’s not clear how to sell.”

In "Multikubik" faced with the classicproblem: when a new, unusual device appears, it is difficult to put it on store shelves. Nobody wants to take risks, everyone wants to see a successful product with understandable economics. The solution to this problem is always the same - launch your own sales, create your own website. It was this path that was taken in Multikubik. The first batch was minimal, just under 1,000 devices. The company's turnover in 2014 was half a million dollars, which in retail terms gives us a sales volume of just over 2,000 projectors. Not a bad indicator for a device aimed at children, which has no analogues and background.

The first projector was supposed to bury in theorycompany, put an end to its fate. The projectors turned out to be a factory defect, the first pancake, as often happens, came out lumpy. It was not possible to make money on the projector, the cost of content was high, and sales could not compensate for them. So, the company was able to agree with the licensee of Soyuzmultfilm on the purchase of 50 cartoons for the projector.

Usually startups break down at this point.of its existence. The product turns out to be flawed, the problems are through the roof, there is no guaranteed demand, and you need to invest in correcting errors. And the money itself does not come from the market, that is, again you need to invest your own. The Multikubik project took a break for a year and a half, during this period the company expanded its staff and created a new version of the projector.

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From the point of view of the development of a startup, here you canto say that the first stage was an MVP, when we received the product, we realized that there was a certain demand for it. But there was not enough money, skills and contacts to spread it widely. And the next approach to the projectile was to take into account the need for more investment, an increase in the team and expansion of the geography of sales. Even a market as big as Russia's is not big enough to justify producing a projector like Cinemood. And here simple mathematics begins - how much sales cost in a particular country of the world, how support and logistics are organized. And will you have anything left after that.

The creators of Multikubik decided to go for broke -create a large company focused on the whole world. Various conferences, an attempt to find specialized investors. In parallel, the product was refined, new components were ordered from well-known companies, which immediately affected the cost of the product, it increased significantly. And the projector has ceased to be a product for the Russian market and the mass buyer, it has become too expensive.

The solution was found in the fact that in April 2016launched a crowdfunding campaign on the IndieGoGo website. The goal was realistic and not very ambitious - to collect 75 thousand dollars (the price of the device was planned at 399 dollars). In the end, they managed to raise 172 thousand dollars.

Almost 700 people have invested their money in the project,but this was clearly not enough to launch Cinemood (the name of the projector for foreign markets) in other countries. The growing team was faced with the issue of licensing content for other countries, in particular, for the United States. Content became the main vacuum cleaner and pulled money out of the project. The economy could develop only in the event that the company would come out with about 10-15 thousand sold projectors annually. The search for money for the project did not stop for a single day, as they were vital. In parallel, the company promoted its product through PR, such promotion was quite successful.

The big corporation syndrome is the next stage of Multikubik

What is the difference between a startup and a large corporation?For me, this difference lies in mobility, non-standard solutions, attempts to save as much as possible on everything possible. Excessive work replaces the absence of conditionally unlimited budgets. The second version of the projector receives an optical module developed by Texas Instruments, that is, it is obviously the maximum cost and technology component. And for a startup, this is an expense that it cannot afford. Work on the new projector was carried out by an external team, the design was developed by Yaroslav Rassadin (one of the designers of Marussia Motors). At different times, different teams scattered around the world were involved in the development of the project. Expensive and rich, but the main thing is that the result was not 100% satisfactory. All released versions of the projector had certain technical flaws. Despite Mikhail's statements that the defect is 0.5%, in my life I had to deal with different users who were left without projectors for one or two years, they simply turned off.

One of our readers shared hisimpressions of the projector: “There is one in use. Bought for a little daughter, everything was fine, but at the end of the warranty period, something broke, took it in for repair, spent more than a week, and in the end they refused warranty repairs. I wrote about it in the now banned social network, the company went forward and replaced it with a new one. This is a plus. The downside is that the second cube started acting up again and the pre-installed IVI application no longer works, and service centers and support are still not ready for service. It is now idle and covered with dust. The repair problem has always been acute, it was solved de facto by replacing the projector, which resulted in a separate expense item. That is, the quality of service was not worked out at a sufficient level. And even a few percent of the projectors that broke had a negative effect on the economics of the project. And the problem here was precisely that the development of the project was carried out with the help of different R&D teams, it was impossible to find the ends, everyone shifted the problems to others. And this is a standard story, you need to be mentally prepared for it, otherwise it will become an unpleasant discovery.

The bet was made on the development of content, whichwas right. The device had cartoons, online cinemas in its memory, cooperation with operators in Russia appeared. At the same time, versions of the projector with support for LTE networks were created, the cube developed towards expanding functions, and not at all simplifying the design and the appearance of an inexpensive version.

Pay attention to the cost of one of the lastmodels - just space! And this is a consequence of the wrong direction of development, in order to increase sales, a cheaper product is required, and not at all the appearance of expensive versions. And only this way allows you to achieve success in the market, of course, if you are not targeting the luxury segment with single sales.

Multikubik has learned how to attract money, butthey were always needed in a larger volume, the project burned them. Each year ended in losses, new investments brought increasing losses, there was no return of capital.

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In January 2016, in Round A, the company raises2.5 million dollars from IIDF, in 2017 attracts money from the American SOSV fund. By May, 2018 at the company 16000 devices are sold, for 2017 sales reached 10 thousand pieces. The company actively attracts investments, 2019 was the most productive year, in total, about $10 million was invested in Multikubik.

The company's problem was that the economy did notdidn't add up. Each sale brought a loss, while the content catalog expanded in parallel, the team was quite large. The year 2020 becomes a turning point, as sales de facto rise, people start saving. The prospects are vague, Daria Mingaliyeva leaves the project.

In the same year, the company raises $5 millionas part of factoring for production and sales. This is not an investment in a project, but a regular factoring. Mikhail commented on obtaining factoring in the following way: “In August-September, together with the financial experts of GamesBoost, we developed the first case on the Russian market for factoring all future sales in order to receive financing for all Cinemood production costs. This financing arrangement will allow us to easily scale sales without attracting investment over the next two years.”

At the beginning of 2022, the company fell apart asthe main distributor in Russia, OCS, filed a lawsuit, the volume of claims amounted to 47.3 million rubles. The court ordered OCS to pay this money, their breakdown is curious: 9.4 million is a defective product and the cost of its replacement, 12.5 million rubles is the commodity balance (what was not sold and returned to the company), 17.9 million rubles is debts for unpaid premiums. The advance is another 7.5 million rubles. Interestingly, a second lawsuit from OCS for 38.6 million rubles followed. Other partners also applied to the court, IVI - 13.9 million rubles, Digital Television - 3.5 million rubles. On June 22, 2022, the company filed for bankruptcy.

After that, the projector became limitedfunctional, the ability to purchase new content from the company was disabled, already downloaded content remained available. You can still find these projectors in stores, but their price remains prohibitively high, and the purchase looks dubious. In an interview, Mikhail said that he would try to restart the project, find a strategic investor, he had about 350 million rubles of personal obligations left, which were not written off along with the bankruptcy of the company.

Withdrawal time

I liked the comment of one of ourreaders about this projector: “Great device, the child uses for about three years almost daily, as they say, reduces eye strain, unlike device displays. As an alternative to a tablet or phone for absorbing media content, it is great. I didn’t notice any problems with the software at all, the shell always worked extremely adequately. Few devices after such a long period of use leave only positive emotions and a feeling of well-spent money. Many people have found use for this projector and love it.

In my opinion, the company's problem lies inclassical plane. At the beginning, there was a startup that did not prove the viability of the financial model, and there was no strategic investor. The next stage became possible due to the tenacity of the team, and this is a good sign. But the mistake was that the product was not cheaper, and one mistake turned the whole project upside down. A partial solution could be the introduction of a subscription to the device, but given the amount of marriage (we know from the OCS lawsuit that it was at a high level), this path was closed. Leapfrog with development partners, lack of experience in this area - all this also affected the project.

But when I said at the beginning that the project was notuseless for the market, I was not cunning at all. For a hundred startups, there should be about 99 that will cease to exist within the first five years. And the fact that Multikubik lived so long and quite brightly gave new experience to the people who participated in the project, showed that it is possible to find money, including in Russia. And their failure added experience to the general piggy bank in the market, which is definitely good. From the experience of "Multikubik" you need to draw conclusions, learn, if possible, from the mistakes of others.

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