Cost Reduction Idea


#1

Could Soylent benefit from going the way of old-school milk cartons and Google, in terms of pricing structure?

Here’s my thought: If Soylent sells advertisement space on their shipping boxes and packaging, to other companies who market health-focused items which dovetail with the mission of Soylent – this being, low cost, high-quality nutritional items available to the masses – could they use this to reduce the price of the product?

They’ve discussed ways to get the pricing down below 3$ a day at length, and I’m thinking that subsidizing ad revenue, assuming the demand can be generated, would potentially allow them to reach a point where they could GIVE SOYLENT AWAY and maintain profitability, similarly to the business model of Google giving away it’s services.

I realize this is a best-case-scenario and would require widespread adoption to approach that level of success via ads alone, but I’m thinking this is one step in the direction to making Soylent more affordable to those concerned with the price of the product.

What are your thoughts?


#2

Minor nit – this is actually an idea for revenue supplementation (which could result in price reduction), rather than a reduction in costs.

They could run into some weird problems if the price were very low (or free). With Google’s services, there’s no way for an individual to overconsume or hoard them.

But my guess is the Soylent folks will ultimately have a lot of incentive to move away from the “standardized Soylent pouring out of faucets” idea and go more in the direction of personalized products. While they could certainly keep a basic formula and press for scale and ubiquity, I could easily see a premium service where they take an analysis of your vitals, bloodwork, genetic data, etc. and produce an individualized version as “your” food.

And whether or not they go this route, when it comes to monetizing through ad revenue, they’ll probably see greater value in their customer data and direct targeting than in old-school, milk carton style advertising.


#3

Hmm concept works but different ads would be recommended. Advertising health foods in Soylent would be like McDonald advertising Burger King in their website. :wink:


#4

Re: revenue supplementation, that’s a good point. I was making the assumption that this team would pass on the savings if they utilized an alternative revenue stream. They’ve discussed a desire to lower the price, I was imagining this as a vehicle for them to do so.

While I can see benefits to offering personalized products in the future, I don’t think that would have an end result of cost reduction (rather the opposite, I’d imagine.) It may allow them to make more on individual sales and thereby enable a reduction in the pricing of “vanilla” Soylent, which would be the kind of end result I was looking for with my idea.

To your final point, though, I’d be interested why you think that milk-carton style advertising isn’t a valuable use of customer data, if it enables a company to reach targeted, stated objectives. And what’s to say they can’t do both? Advertising to their target market really isn’t hurting us as consumers, considering that by using Soylent we’re demonstrating at least a nominal interest in that type of product. And milk-carton advertising is about as far from “in your face” as it gets, in my opinion. Is there any particular reason why they shouldn’t do this, even if the ultimate reduction in price is minimal, or even nothing?


#5

I guess when I imagine how this could play out over more than a few years, if the official Soylent is successful at all, it’s hard to see how they wouldn’t want to press forward into developing higher-margin business lines and “premium” services. Customization would be an obvious one. Even if the actual blends are finite in number as opposed to being truly bespoke, the health service could match you up with the closest one and track progress toward health goals. It’s easy to imagine a lot of potential synergies with other health products, apps, services, etc., if they partnered together.

In short, if this is a business, with real investors, board members, and genuine market potential, it’s hard to see how they don’t get pushed in that direction. Even if Rob and other members of the team are committed to the idea of cheap and ubiquitous Soylent as an answer to the failings of the American diet and/or world hunger, they’re going to have to contend with folks looking for a return on investment and who do not like to see things become overly commoditized. Having some kind of tiered product line could be an answer to that – the higher-margin businesses could effectively underwrite the expansion of the wider social mission.

As for the milk-carton style advertising, I just don’t see it. Maybe this reflects a lack of imagination on my part, but what I do imagine is an idea like that flopping in a board meeting. My impression is that their culture is akin to that of a Silicon Valley startup, and this approach to monetization would be regarded as too grubby or trifling by their ilk. I could see some objecting on the basis of weakening the brand (which no doubt is and will be a real area of concern for these guys). And I feel like they would not want to distract themselves from the kind of “bigger,” longer-term ideas for further monetizing and building the business.

That said, my aim is not to pre-judge or to say it could not be done – just giving my honest reaction.


#6

Rob has said he eventually wants Soylent to compete with normal groceries. So my question is, why don’t normal groceries use ads like this? Milk cartons used to do it, so it’s not that nobody’s thought of it before. In fact, milk cartons no longer do it, as far as I know, so at some point milk companies that were doing it decided it was no longer profitable and stopped. Why is that?


#7

because it creates a perception of cheap quality
people don’t like to be reminded they are eating from the discount bin
by plastering ads over everything you are constantly reminding your customers that they have taken a cheap shortcut to feeding themselves. they tell themselves it is only temporary, this tends to sell less product rather than more, as eventually they upgrade to “the real stufff”. in food perhaps more than anything else, perception is everything.


#8

I’ve actually seen the supermarket brand milks start to have advertising on the gallon jugs. (First one I can remember is an Oreo ad on a gallon of milk).