Half-Baked Product

The FounderA freshly minted founder decides to get into the oven business. He can’t bake a cake or knead bread, but he knows the kitchen appliance market inside and out. He’s analyzed every business in Spain and reached a conclusion: if he sells a new oven to the country’s pizza makers, pastry chefs, and bakers, he only needs to capture 10% of the market to become a billionaire.10% always looks small when you type it into an Excel spreadsheet.The founder is very good. He builds a plan that, on paper, is flawless and airtight: manufacture a more efficient oven using new technology. Selling it is easy. Want to work more efficiently? Buy our oven. End of pitch. The founder has experience talking to investors and raises enough money to build an MVP.The EngineerThe founder looks for someone who knows how to build ovens and finds an engineer from a prestigious school. The engineer has spent 10 years building ovens and knows how to make one. More than that: he’s the kind of person who spends all day talking and arguing about ovens. He goes to oven conferences. When he gets home at night, he argues for hours on Italian forums about which type of oven is best. The Italian forums are, to him, the ultimate source of oven-truth.He’s tired of building ovens at Corporate Oven. Ten years making the same oven he’s told to make. He wants the freedom to build his own.The founder offers him 20% of the company and total freedom to build the perfect oven. The salary isn’t great, but there’s the promise: if things go well, someday he could be a millionaire. And something more important than money: he’ll finally get to build the oven of his dreams.He signs.The MVPWith little money and lots of enthusiasm, they build an MVP. Two months later it’s done. It’s a functional oven and, more importantly, it has one improvement over traditional ovens: you input the amount of flour, yeast, and water, and the oven automatically knows when to stop for a perfect bake.In theory.In practice it doesn’t work very well, but it’s good enough for an MVP. They go to market and sell 5 prototypes: two bakers the founder knows, the engineer’s mother who bakes cakes, and two oven enthusiasts who buy it out of curiosity.

The feedback is unanimous:“My bread came out burnt.” “The cake was raw.” “Every single pizza burns.”But all things considered, it’s positive: a third of the time, the prototype worked and produced the perfect cake, bread, or pizza.“This is just a prototype. Imagine when we ship the real product. Trust us.”And with that, the founder goes to see an old colleague who now works at a VC: “In 2 months we’ve built a prototype, we already have 5 customers, and it’s very promising. We just need money to scale, build a better version, and sell to every bakery and pastry shop in Spain.”Nobody asks whether the 5 customers would buy again.The founder is very good. He raises 5 million. Ovens Inc. is born.Forum of the BakersThey start improving the prototype. The engineer realizes something: building an algorithm that calculates baking time for cakes, pizzas, and bread is quite a bit more complex than it looked. Every dough is its own universe. They need to hire more engineers.The engineer knows exactly where to look. On the Italian forums there are two users he’s spent years arguing with about convection and refractory stone: Mario and Luigi. He’s never met them in person, but he knows their opinions on ovens better than his own family’s. He offers them the same deal he got: low salary, lots of freedom, the perfect oven.They sign.Meanwhile, the founder needs to sell ovens, but Facebook and Instagram ads get no traction. Turns out nobody buys a fifteen-thousand-euro industrial oven because it popped up in their stories. So he hires a legendary sales team: the best salespeople in all of Spain. People who have never sold ovens, who know nothing about ovens, but who are hungry to sell and very excited about the company.At first it goes badly. Few people want a new oven; they’re happy with the one they have. Why switch? Most small businesses don’t care about a 15% efficiency gain: the risk of switching is too high. If Juan’s Bakery swaps ovens and the new oven fails, Juan loses his customers and shuts down. For Juan, efficiency is optional; tomorrow’s bread is not. Better to stick with the old oven, even if it’s worse on paper.

He’d only switch if Manolo’s Bakery across the street started selling cheaper bread thanks to a more efficient oven and he had no choice. But Manolo thinks exactly the same as Juan, so nobody moves. Perfect equilibrium. Economists have a name for this; Juan and Manolo call it common sense.Big businesses are another story. For them, 15% efficiency means millions saved every year. And one salesperson manages to make contact with Pepepizza.The DecisionMeanwhile, over in engineering, things aren’t going any better. The algorithm is unstable. They’ve gotten the failure rate down from two thirds to one third, but each point of improvement costs twice as much as the last. And then comes the uncomfortable discovery: if the oven only does two of the three things (bread, cakes, or pizza), the algorithm fails just 5% of the time.The engineer brings the proposal to the founder: let’s sacrifice one market and have a product that works.The founder gets angry. He promised the VCs 10% of Spain’s oven market. The entire market. “We can’t sacrifice any of them.”It’s not just greed. The 5 million was raised with the entire market on the slide. The founder isn’t choosing between right and wrong: he’s choosing which promise to break.The engineer goes back to his desk with his three doughs and his 33% failure rate.MallorcaBack to sales: there’s contact with Pepepizza, but enterprise deals don’t close over email. The founder flies to Pepepizza headquarters and meets the owner. They hit it off. They hit it off so well they go to Mallorca together. Nobody knows what was discussed there. What’s known is that when they come back, there’s a deal. Nobody has tried the oven yet. No need. Enterprise sales isn’t about ovens.The handshake comes first. The requirements come later.And they come. Pepepizza’s operations team sends the list to sales: their kitchens are custom-built, so they need ovens with specific dimensions. Oh, and a rotating base like the one they already have.Sales replies: “No problem.”The founder is euphoric. Pepepizza wants to buy an initial batch of 500 ovens. Five hundred. That’s more revenue than everything since they started. For Pepepizza it’s a small pilot, a trial in a few locations before deciding anything.

For Ovens Inc. it’s betting the entire company.“Engineer, we need 500 ovens for Pepepizza. They want specific dimensions and a base that spins. Let’s make it happen.”The engineer doesn’t faint only because he’s already sitting down.The algorithm barely works for pizza. The mold dimensions have spent 5 months being optimized in CAD for the standard size. And nobody, ever, has discussed rotating bases on the Italian forums. If it’s not on the Italian forums, does it even exist?The engineer opens the CAD file in front of the founder. He shows him why the new dimensions break the entire thermal design. The founder looks at the screen, looks at the blueprints, looks at the engineer.“But this is just changing a number, right?”“We can’t. Not until we fix the algorithm and redesign the inverter for the new sizes. That’s 5 more months.”The MiracleIt’s not 5 months.After many lost weekends and entire nights running on Red Bull, in 3 weeks there’s a prototype for Pepepizza. Compromises were made. The algorithm still fails plenty, but at least the dimensions are right. The rotating base? Doesn’t exist yet. Pepepizza is promised an add-on “in a couple of months.” Pepepizza says fine.The Candle ButtonSales has had a revelation: if you sell the oven that exists today, you don’t sell ovens. You have to sell the oven that will exist in 6 months. Promise features. It worked last time: they promised Pepepizza the impossible and the team delivered in 3 weeks. What could go wrong?Sales, of course, has no idea what happens after the contract is signed. The commission is paid at signing. Whatever comes next is another department’s problem.Though there’s something nobody in engineering wants to look at: Ovens Inc. doesn’t live off selling ovens (for now). It lives off raising rounds. And rounds are raised with projections, and projections are manufactured out of whatever sales promises. The “No problem” people are also the only life raft.And then the daily requests begin:“A lot of our potential customers make birthday cakes. When they ask if we have special birthday-cake features, we have to say no, and we lose them. Can we add the feature?”The founder has no doubts.

Last time a feature was requested, they estimated 5 months and did it in 3 weeks. And this is much easier. “It’s just a simple button that adds candles.”The engineer is climbing the walls. They still haven’t finished cleaning up the Pepepizza wreckage. This is absolutely not what people discuss on the Italian forums. Adding a candle button is an insult to the state of the art, or rather, the state of the oven.But he caves.“Just this once.”Sales sells 2 more ovens a month thanks to the new button. Or so they believe. They have no way of checking whether they’d have sold them anyway without the button.The Second-Highest PrioritySoon after, more feature requests arrive.“My oven at home connects to the fireplace. Does yours?”“I make a lot of wedding cakes, what have you got for me?”“Do you have a Ramadan mode?”They build all of them.Engineering stops trying to build a good oven and starts adding buttons and features. Nobody made that decision. It just happened, one ticket at a time.And there’s a detail everyone seems to ignore: each button takes longer than the last. The candle button took three days. The fireplace one, a week. The latest one took three. It’s not that the engineers are getting slower: it’s that every new button has to coexist with all the previous buttons.Meanwhile, customers who buy the oven return it within a week. The reason? The bread and cakes still burn 10% of the time. The MVP problem. The original one. The one from day one. Underneath the twelve new buttons sits the same algorithm from the very first day, and a baker who loses one out of every ten batches is not consoled by the fact that the oven does candles.When a customer calls to cancel, support tries to retain them by offering what’s available: the new button from the latest release. The baker whose bread keeps burning is offered Ramadan mode. The baker leaves anyway. It gets logged as feedback. Engineering has no time to stop and rethink their approach, because stopping isn’t in the backlog.And then the worst day arrives. Pepepizza calls:“Where is the rotating base?”The founder swallows hard. The ticket has been sitting on the kanban board for a month and a half.