Lateral Capital Management, LLC

Acme iPhone Accessories

Acme iPhone Accessories (AIA) developed a phone attachment device which made it easier for Apple iPhones to deliver great pictures. Basically, the AIA device kept the camera straight, eliminated vibration and allowed others to direct the camera remotely (some details disguised). Acme intended this to be the start of a whole series of iPhone products with matching apps for the $38B Smartphone accessory business. We did not invest.

  • Assessment: Beyond our concern about business driven by retail distribution, these products failed the “blink test” when we put them in front of buyers at two large retailers. Moreover, we had no way to judge whether this technology was truly “unique” or whether other similar ideas would hit the market at the same time. Finally, the AIA innovation, and any other “one-off” retail electronics product, have a very short life in that “new” products are frequently leapfrogged before they even hit retail shelves.
  • Outcome:The Company raised about $2MM and shipped its first product, after debuting it at CES in Las Vegas. The product was not successful in terms of retail off-take (our buyers were right) and the company failed.
  • Learning:This experience reinforced our bias against investing in consumer products which have short lives, high distribution costs and no meaningful IP.