5 ms·

Keurig CEO Blames Coffee Pod DRM for Falling Sales

52 points by jonas21 12y ago

meritt 12y ago
Twitter and Keurig are finally seeing the impact of their decisions. How many more companies have to learn the hard way that strictly controlling how your users want to use your product is poor business practice?
- deleted 12y ago
  [deleted]
- blfr 12y ago
  What happened with Twitter?
  - cryptoz 12y ago
    This is a good summary: http://www.mathewingram.com/work/2015/04/30/twitters-multi-billion-dollar-mistake-happened-five-years-ago/ http://www.mathewingram.com/work/2015/04/30/twitters-multi-b... and the HN discussion: https://news.ycombinator.com/item?id=9470312 https://news.ycombinator.com/item?id=9470312 TL;DR: Twitter was an open ecosystem with lots of partners and a thriving developer environment. They chose to stop all of that, end their developer relations, and ensure that Twitter Inc was the only way that anyone could Twitter. Now, that closed-off-ecosystem is making growth difficult.
- ChuckMcM 12y ago
  I would guess every company does. Just like every engineer has to learn that you can't really give things away for "free" if you want to survive, if you do not capture any value you end up destitute and unable to continue. In my experience (and that goes back to the time when Lotus 1-2-3 decided to stop requiring you put the Lotus install disk in the "A" drive before it would run) copy restrictions on non-entertainment products becomes a liability in the presence of alternative solutions. Of course the last bit is important, people need an alternative. And generally copy protection helps to empower the creation of an alternative which is kind of a good thing in a way.
dallasgutauckis 12y ago
I think people also probably just realized how much of assholes they're being by using single-use containers for making coffee every day. The one-use concept is nice in theory, but it creates so much trash. It's obnoxious.
- stephengillie 12y ago
  In theory, if their pod was disassembled and emptied, would it be entirely recyclable? I know the coffee grounds would decompose well.
  - mikestew 12y ago
    As I understand it, no. The type of plastic that survives the hot water without leaching yummy chemicals into your drink is apparently not recyclable. Source: from memory, and too apathetic to go look it up.
    - stephengillie 12y ago
      Strange, I could swear the plastic was (1)LDPE.
      - stephengillie 12y ago
        The article says the plastic is (5) not (1). I'll have to do more research. In the meantime, look for Compostable K-Cups. They're a solution to this problem, which hasn't been marketed enough for you to be aware of it.
  - boyaka 12y ago
    The recyclability issue is discussed in the eastbayexpress article linked by anigbrowl in reply to one of the sibling comments. ---Quote: Coffee companies are well aware of the problem. The second brewing system Keurig introduced, the Vue system, tried to address the issue of recyclability in what the company called "an incremental step on our environmental journey." The system doesn't work with the original K-Cup packs, which are made from number seven plastic, a blended plastic that's nearly impossible to recycle. Instead, the Vue capsules use a plastic cup made from polypropylene, number five plastic, and users can peel the foil lid and filter away from the cup. The cups are then recyclable — in theory. The problem is the cups are too small to be captured in most recycling facilities where machinery separates objects by size and density, said Mark Oldfield, assistant director of public affairs for California's Department of Resources Recycling and Recovery. Most facilities filter out items under two-inches in diameter. In any case, number five plastic is rarely recycled in California, Oldfield said. "It's very difficult to deal with something like that," he added. "It's something where convenience is trumping our typical mantra of reducing and recycling."
hyperbovine 12y ago
"We underestimated the passion", hah. Not giving money to greedy assholes: one of my passions indeed.
jarin 12y ago
I understand that their business model is probably based on the whole "give away the razor, sell the blades" thing, but what they probably should do is just make the coffee maker a little more expensive.
- Domenic_S 12y ago
  It would never work anyway. You can't print without a printer and ink, you can't shave without razor blades, but you certainly can make coffee without Keurig.
  - dublinben 12y ago
    >You can't print without a printer and ink You can with a laser printer and toner. Inkjet printers are still hugely profitable though. >you can't shave without razor blades You can buy a lifetime's supply of safety razor blades for the price of a modern kit. Razors are still hugely profitable.
- jessamyn 12y ago
  One of the arguments that they made is that since they didn't have a coffee maker at a low enough price point last xmastime, they lost out on not only the sales but also the people who would have bought coffee because of those sales. They had issues bringing the MINI (the lower price point coffee maker) to market because of some manufacturing issues so they really lost out in the holiday season. So that's a good idea (and the DRM stupid thing is expensive relative to the older model) but apparently wouldn't work. The waste doesn't HAVE to be the issue since with reusable cups it's actually a decent option because it only heats a small amount of water, doesn't have a heating pad, has auto shutoff, etc. However, the insistence that people use the (worse for the environment) cups because it's more profitable is the real waste thing. You could make a coffee maker one-hitter that made better-than-average coffee, but the sorts of people who go in for Keurig convenience are not the people who care (so much) about these things. [nb: I wrote this https://medium.com/message/keurig-didn-t-learn-a-damned-thing-about-drm-972912b13243 https://medium.com/message/keurig-didn-t-learn-a-damned-thin... My take is a little different from TCs]
zak_mc_kracken 12y ago
> We underestimated the passion the consumer had for this The passion of their customers to not put up with bullshit? Yeah, they definitely underestimated that.
karmakaze 12y ago
When they say "we were wrong", I take it to mean they were wrong to think their actions were profitable, nothing more.
- scott_karana 12y ago
  If people vote with their wallets, their ethics directly correlate to the company's profit. A useful feedback loop, to be sure :-)
  - deleted 12y ago
    [deleted]
  - ashark 12y ago
    People don't really vote with their wallets over ethics, though. It'd take an enormous amount of effort to keep up with all the bad things various corporations do, or even just to keep track of which ones have been in the news for nasty behavior. Even people who take time to consider the possibility of attempting to spend ethically are faced with the discouraging reality that 1) they'll still end up accidentally spending a lot of money with unethical companies, since even with a great investment of time their information will only be slightly better than someone who takes no notice of these things, and 2) it will have no effect anyway unless a bunch of other people do it too, meaning tons of lost time and likely a great deal of lost money to accomplish nothing at all. Even with a publicity effort for an organized boycott (more time, more money, spent by someone) you're still just hoping that enough people will make bad individual decisions so that the decisions become good ones (i.e. they do more than just harming the people making them). Most people don't even get that far. With everything else going on, "think seriously about how to spend in such a way as to maybe (but probably not) affect corporate behavior so that it becomes more ethical" drops down the priority list... and down... and right off the bottom. Doesn't mean their spending reflects actual support for corporate douchbaggery, though.
    - walterbell 12y ago
      Counterpoint: Chipotle's successful brand strategy, http://www.forbes.com/sites/scottdavis/2014/06/06/beyond-the-burrito-chipotles-next-big-move/ http://www.forbes.com/sites/scottdavis/2014/06/06/beyond-the...
gnoway 12y ago
I'm a 2-3x a year coffee drinker. Are these machines radically more convenient than the alternatives? My folks manage to get by with one of those machines where you put the grounds in a basket, fill the water reservoir, put your mug under the spout and push the button. The machine is cheap, it looks like it's about the same amount of work to use as the Keurig machine and you get biodegradable paper + grounds afterwards instead of a plastic cup. And you can put in however much of whatever kind of coffee you want.
- edgyswingset 12y ago
  > Are these machines radically more convenient than the alternatives? No. But they are fairly well-designed, and the small convenience of not having to portion out your coffee yourself seems enough to lead to huge sales. Personally, I'm a french press kind of person who likes to take his time with his loose-leaf tea.
- ntkachov 12y ago
  I'm a huge coffee fan and I love my coffee. They are significantly quicker than the alternatives because they make a single cup at a time and take less time to make that cup than a coffee maker would. The quality of K-Cup coffee is trash though. I have yet to find a remotely drinkable brand that I enjoy. I still pack my own reusable K-Cup with my own beans.
- smokey_the_bear 12y ago
  They're both pretty easy, but I can make a cup from a Keurig while holding my baby in under a minute. The traditional machine takes two hands to set up, and 10 minutes to drip.
  - civilian 12y ago
    > while holding my baby Hmmm, that's a great standard to test UX against.
- anigbrowl 12y ago
  I drink a pint of coffee a day, brewed using a French press (spoon freshly-ground coffee into a tall glass pot; add boiling water; press down on a lever that pushes the grounds to the bottom using a wire mesh filter attached to a spindle; pour and enjoy). I love making my own coffee and can more or less do it in my sleep - an essential prerequisite given my preference for a bucket of the stuff first thing in the morning :) But - most people don't want to drink as much coffee at a single sitting as I like to, so small coffee pods sort of make sense for them. Also, it took me many years to find my recipe for a 'perfect' cup of coffee, with the right strength and so on. I'm picky; if I have a 'bad' cup of coffee I'd rather dump it in the trash and make another or even go without than drink it, and buy a pre-made cup of coffee over the counter is often a disappointment (I'm looking at you, Philz coffee). I easily understand why people who find something they like that comes out of a pod want to just stick with it instead of spending years developing their own recipe for the perfect cup.
huhtenberg 12y ago
What's interesting is that they are not planning to scrap the system. Instead they are planning to sell a refillable pod that is compatible with it [1]. In the end, they still want the DRM, it's just that the damage done is too big and they have to say big words to try and undo it. [1] http://money.cnn.com/2015/05/06/investing/keurig-green-mountain-earnings-stock-fall/ http://money.cnn.com/2015/05/06/investing/keurig-green-mount...
deleted 12y ago
[deleted]
DeBraid 12y ago
In 2014, enough K-Cups were sold that if placed end-to-end, they would circle the globe 10.5 times. Almost all of them ended up in landfills. They are not recyclable. www.theatlantic.com/technology/archive/2015/03/the-abominable-k-cup-coffee-pod-environment-problem/386501/
- ralmidani 12y ago
  Wow. Another big offender is non-recyclable yogurt cups. Does anyone have figures on those?

52 points by jonas21 12y ago

Twitter and Keurig are finally seeing the impact of their decisions. How many more companies have to learn the hard way that strictly controlling how your users want to use your product is poor business practice?

deleted 12y ago
[deleted]
blfr 12y ago
What happened with Twitter?
- cryptoz 12y ago
  This is a good summary: http://www.mathewingram.com/work/2015/04/30/twitters-multi-billion-dollar-mistake-happened-five-years-ago/ http://www.mathewingram.com/work/2015/04/30/twitters-multi-b... and the HN discussion: https://news.ycombinator.com/item?id=9470312 https://news.ycombinator.com/item?id=9470312 TL;DR: Twitter was an open ecosystem with lots of partners and a thriving developer environment. They chose to stop all of that, end their developer relations, and ensure that Twitter Inc was the only way that anyone could Twitter. Now, that closed-off-ecosystem is making growth difficult.
ChuckMcM 12y ago
I would guess every company does. Just like every engineer has to learn that you can't really give things away for "free" if you want to survive, if you do not capture any value you end up destitute and unable to continue. In my experience (and that goes back to the time when Lotus 1-2-3 decided to stop requiring you put the Lotus install disk in the "A" drive before it would run) copy restrictions on non-entertainment products becomes a liability in the presence of alternative solutions. Of course the last bit is important, people need an alternative. And generally copy protection helps to empower the creation of an alternative which is kind of a good thing in a way.

dallasgutauckis 12y ago

I think people also probably just realized how much of assholes they're being by using single-use containers for making coffee every day. The one-use concept is nice in theory, but it creates so much trash. It's obnoxious.

stephengillie 12y ago
In theory, if their pod was disassembled and emptied, would it be entirely recyclable? I know the coffee grounds would decompose well.
- mikestew 12y ago
  As I understand it, no. The type of plastic that survives the hot water without leaching yummy chemicals into your drink is apparently not recyclable. Source: from memory, and too apathetic to go look it up.
  - stephengillie 12y ago
    Strange, I could swear the plastic was (1)LDPE.
    - stephengillie 12y ago
      The article says the plastic is (5) not (1). I'll have to do more research. In the meantime, look for Compostable K-Cups. They're a solution to this problem, which hasn't been marketed enough for you to be aware of it.
- boyaka 12y ago
  The recyclability issue is discussed in the eastbayexpress article linked by anigbrowl in reply to one of the sibling comments. ---Quote: Coffee companies are well aware of the problem. The second brewing system Keurig introduced, the Vue system, tried to address the issue of recyclability in what the company called "an incremental step on our environmental journey." The system doesn't work with the original K-Cup packs, which are made from number seven plastic, a blended plastic that's nearly impossible to recycle. Instead, the Vue capsules use a plastic cup made from polypropylene, number five plastic, and users can peel the foil lid and filter away from the cup. The cups are then recyclable — in theory. The problem is the cups are too small to be captured in most recycling facilities where machinery separates objects by size and density, said Mark Oldfield, assistant director of public affairs for California's Department of Resources Recycling and Recovery. Most facilities filter out items under two-inches in diameter. In any case, number five plastic is rarely recycled in California, Oldfield said. "It's very difficult to deal with something like that," he added. "It's something where convenience is trumping our typical mantra of reducing and recycling."

hyperbovine 12y ago

"We underestimated the passion", hah. Not giving money to greedy assholes: one of my passions indeed.

jarin 12y ago

I understand that their business model is probably based on the whole "give away the razor, sell the blades" thing, but what they probably should do is just make the coffee maker a little more expensive.

Domenic_S 12y ago
It would never work anyway. You can't print without a printer and ink, you can't shave without razor blades, but you certainly can make coffee without Keurig.
- dublinben 12y ago
  >You can't print without a printer and ink You can with a laser printer and toner. Inkjet printers are still hugely profitable though. >you can't shave without razor blades You can buy a lifetime's supply of safety razor blades for the price of a modern kit. Razors are still hugely profitable.
jessamyn 12y ago
One of the arguments that they made is that since they didn't have a coffee maker at a low enough price point last xmastime, they lost out on not only the sales but also the people who would have bought coffee because of those sales. They had issues bringing the MINI (the lower price point coffee maker) to market because of some manufacturing issues so they really lost out in the holiday season. So that's a good idea (and the DRM stupid thing is expensive relative to the older model) but apparently wouldn't work. The waste doesn't HAVE to be the issue since with reusable cups it's actually a decent option because it only heats a small amount of water, doesn't have a heating pad, has auto shutoff, etc. However, the insistence that people use the (worse for the environment) cups because it's more profitable is the real waste thing. You could make a coffee maker one-hitter that made better-than-average coffee, but the sorts of people who go in for Keurig convenience are not the people who care (so much) about these things. [nb: I wrote this https://medium.com/message/keurig-didn-t-learn-a-damned-thing-about-drm-972912b13243 https://medium.com/message/keurig-didn-t-learn-a-damned-thin... My take is a little different from TCs]

zak_mc_kracken 12y ago

> We underestimated the passion the consumer had for this The passion of their customers to not put up with bullshit? Yeah, they definitely underestimated that.

karmakaze 12y ago

When they say "we were wrong", I take it to mean they were wrong to think their actions were profitable, nothing more.

scott_karana 12y ago
If people vote with their wallets, their ethics directly correlate to the company's profit. A useful feedback loop, to be sure :-)
- deleted 12y ago
  [deleted]
- ashark 12y ago
  People don't really vote with their wallets over ethics, though. It'd take an enormous amount of effort to keep up with all the bad things various corporations do, or even just to keep track of which ones have been in the news for nasty behavior. Even people who take time to consider the possibility of attempting to spend ethically are faced with the discouraging reality that 1) they'll still end up accidentally spending a lot of money with unethical companies, since even with a great investment of time their information will only be slightly better than someone who takes no notice of these things, and 2) it will have no effect anyway unless a bunch of other people do it too, meaning tons of lost time and likely a great deal of lost money to accomplish nothing at all. Even with a publicity effort for an organized boycott (more time, more money, spent by someone) you're still just hoping that enough people will make bad individual decisions so that the decisions become good ones (i.e. they do more than just harming the people making them). Most people don't even get that far. With everything else going on, "think seriously about how to spend in such a way as to maybe (but probably not) affect corporate behavior so that it becomes more ethical" drops down the priority list... and down... and right off the bottom. Doesn't mean their spending reflects actual support for corporate douchbaggery, though.
  - walterbell 12y ago
    Counterpoint: Chipotle's successful brand strategy, http://www.forbes.com/sites/scottdavis/2014/06/06/beyond-the-burrito-chipotles-next-big-move/ http://www.forbes.com/sites/scottdavis/2014/06/06/beyond-the...

gnoway 12y ago

I'm a 2-3x a year coffee drinker. Are these machines radically more convenient than the alternatives? My folks manage to get by with one of those machines where you put the grounds in a basket, fill the water reservoir, put your mug under the spout and push the button. The machine is cheap, it looks like it's about the same amount of work to use as the Keurig machine and you get biodegradable paper + grounds afterwards instead of a plastic cup. And you can put in however much of whatever kind of coffee you want.

edgyswingset 12y ago
> Are these machines radically more convenient than the alternatives? No. But they are fairly well-designed, and the small convenience of not having to portion out your coffee yourself seems enough to lead to huge sales. Personally, I'm a french press kind of person who likes to take his time with his loose-leaf tea.
ntkachov 12y ago
I'm a huge coffee fan and I love my coffee. They are significantly quicker than the alternatives because they make a single cup at a time and take less time to make that cup than a coffee maker would. The quality of K-Cup coffee is trash though. I have yet to find a remotely drinkable brand that I enjoy. I still pack my own reusable K-Cup with my own beans.
smokey_the_bear 12y ago
They're both pretty easy, but I can make a cup from a Keurig while holding my baby in under a minute. The traditional machine takes two hands to set up, and 10 minutes to drip.
- civilian 12y ago
  > while holding my baby Hmmm, that's a great standard to test UX against.
anigbrowl 12y ago
I drink a pint of coffee a day, brewed using a French press (spoon freshly-ground coffee into a tall glass pot; add boiling water; press down on a lever that pushes the grounds to the bottom using a wire mesh filter attached to a spindle; pour and enjoy). I love making my own coffee and can more or less do it in my sleep - an essential prerequisite given my preference for a bucket of the stuff first thing in the morning :) But - most people don't want to drink as much coffee at a single sitting as I like to, so small coffee pods sort of make sense for them. Also, it took me many years to find my recipe for a 'perfect' cup of coffee, with the right strength and so on. I'm picky; if I have a 'bad' cup of coffee I'd rather dump it in the trash and make another or even go without than drink it, and buy a pre-made cup of coffee over the counter is often a disappointment (I'm looking at you, Philz coffee). I easily understand why people who find something they like that comes out of a pod want to just stick with it instead of spending years developing their own recipe for the perfect cup.

huhtenberg 12y ago

What's interesting is that they are not planning to scrap the system. Instead they are planning to sell a refillable pod that is compatible with it [1]. In the end, they still want the DRM, it's just that the damage done is too big and they have to say big words to try and undo it. [1] http://money.cnn.com/2015/05/06/investing/keurig-green-mountain-earnings-stock-fall/ http://money.cnn.com/2015/05/06/investing/keurig-green-mount...

deleted 12y ago

[deleted]

DeBraid 12y ago

In 2014, enough K-Cups were sold that if placed end-to-end, they would circle the globe 10.5 times. Almost all of them ended up in landfills. They are not recyclable. www.theatlantic.com/technology/archive/2015/03/the-abominable-k-cup-coffee-pod-environment-problem/386501/

ralmidani 12y ago
Wow. Another big offender is non-recyclable yogurt cups. Does anyone have figures on those?