Bringing Instant Pot back from the grave

What’s your % of Rev on Marketing

From bankrupt Instant Pot -> The Chef’s Kiss Promised Land

Let’s Make You Money. On Shipping

LBAB Community: What % of Rev is your Marketing spend?

Over the past 6 mos. I’ve analyzed 5 +100% YoY brand P&Ls, and 1 trend stood out. Marketing as a % of Rev is 50%.

These include bootstrapped and VC backed brands. But 1 out of every 2 dollars the company makes goes into marketing. The Bootstrapped companies were still profitable.

For context, “conventional wisdom” is to spend 15%-20%. So it got me thinking, and I’m going to do some research on marketing spend. I’ll be sharing that later this month.

I’m curious: What % of rev are you spending on Marketing this year?

Drop your answers here. 👇👇👇

And stay tuned for a newsletter in late September, where I’ll share the results here first.

Now, let’s get into one of the hottest bankruptcies of the summer:

Why did Instant Pot rot?

Let’s Examine This Biz

Instant Pot, the at-home cooking device with a cult following, voluntarily filed for bankruptcy back in June (Only for US and CAN operations) and secured $132.5m in new debtor-in-possession financing from existing lenders.

In other words, the company went bankrupt and the debtors are allowing the company to stay in biz to sell its remaining inventory. It avoids the typical fire sale liquidation. Basically, the company enjoys a graceful exit, and debtors get more cents on the dollar.

The company has faced some considerable headwinds:

• Products have 90% penetration across brands.

• Category sales are -50% since 2020.

• In ‘21 they canceled $100m worth of retail orders .

Financial TLDR:

Unfortunately, since Instant Pot is PE-owned, their financials aren’t publicly released. Their estimated Revenue is $475m/yr.

I’m flying a bit blind on this one. But, candidly, this isn’t a unique story. Much of what happened with Instant Pot is a fable in what happens when a brand gets lost in their own hype and doesn’t stay true to their customer.

It’s another shrinking-topline brand that overextended OPEX (currently at 1900 employees) and is now stuck in the position of having to dump inventory to pay back their loans.

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Here’s the 3 moves I’d make to bring Instant Pot back from the grave.

1) Reclaim their focus = Liquidate 50%+ of their catalog.

The product catalog is a mess. In addition to offering Instant pot in multiple variations, they make coffee machines, air fryers, stand mixers, and air purifiers. And, let’s be honest, they can’t be the best in all these categories.

It’s obvious they got wrapped up chasing trends and over-expanded. This forced them to rely on too much debt to afford all of these products, which is why they had to voluntarily file for Chapter 11.

To an extent, I get it. They saturated the market because you only really need 1 Instant Pot so they asked the normal question:

What else can shove into consumers’ homes?

The problem. They went from an incredibly focused hero product to throwing everything but the kitchen sink at customers. I have never seen this strategy work. More often than not, it’s the kiss of death for a brand.

Maybe I love my Instant Pot enough to buy an air fryer from them. But a coffee machine? An air purifier?! C’mon. No consumer is going to trust this company to brew coffee or fix my air.

This is another merchandising team that strayed from the righteous path of custom-driven product expansion

Step 1 on their path to redemption:

• Liquidate the junk inventory (~50%+ of their product catalog) and get back to core focus. (I know a good partner for that!)

• Take the cash and pay down their loans

• Cycle remaining cash into the good inventory.

On my “Hatchet list” (i.e., axing everything in the following categories):

• Air Fryers (indoor grill and toasters included)

• Stand mixers

• Air purifiers

• Coffee

• Rice cookers

I’ll keep Instant Pots and Dutch ovens (“casserole dishes” for anyone outside the US).

Based on their current catalog, it’s so obvious they want to expand into the actual cooking lane, and Dutch ovens are the next progression in a home cook’s low-and-slow journey from an Instant Pot.

Le Creuset absolutely dominates Dutch oven branding, but Instant Pot has a really interesting opportunity to leverage their Instant Pot learnings to make the 21st century (and more approachable) version of a Dutch oven.

They can call themselves Instant Home all they want. No consumer is going to think about this brand as anything other than Instant Pot.

Takeaway: Strip down the catalog and focus on what they’re the best at.

2) Build a marketplace of their products.

The branding across their portfolio is terrible.

They’re running the “Shop our Brands” banner across the top of the site. It’s common, but at this stage of growth and awareness, it’s a huge miss.

Instead of trying to create broad product categories within each brand, they should be cross-selling across their catalog. They should surface the products from across their portfolio in one thoughtful buying experience.

Example:

I’m their core customer. A Home cook who watches too many Youtube cooking shoes.

I have an Instant Pot, Pyrex, and Snapware in my house. Bought all through retail or received as gifts. I had 0 idea the same company owned all 3 brands and I’d be shocked if I were the only one.

This is an old retail branding mentality that stems from not having direct access to customers. But Instant Pot invested all this money in building out a DTC presence, so they might as well leverage it. They’d generate significantly more profits and move more inventory by creating one all-star destination for their portfolio of brands.

The other problem they face: their products aren’t great for driving repurchase behavior.

How many containers (God, I want to call these “Tupperware”), Instant Pots, and Knives do you need? What they should do is blow out AOV by getting creative with bundles and high value offers.

When I buy an Instant Pot, I should get the full meal prep bundle.

• CorningWare: dishes/mugs

• Snapware/Pyrex: Containers

Instant Pot should offer:

• Registry bundles

• New home bundles.

• New parent bundles.

• Fitness/meal-prepper bundles.

That’d allow customers to get their favorite brands in one place and remove the hassle of multiple shipments/orders/etc.

Overstock is stuck with the same problem that lead BB&B to bankruptcy, but at smaller scale.

Takeaway: Increase Profit and Sell Through across the portfolio.

3) Launch more limited edition SKUs with better partners

I bet you didn’t know that Pyrex has a Disney license.

Want to know how I know? Because only 111 people have left reviews on the Disney-branded products, and Instant Pot is selling it for 50%+ off.

How can a family brand sell Disney products so poorly when the majority of households have kids?

Because, out of anything to license from Disney, they went with the Mickey Mouse Club 100 year anniversary.

No offense to anyone who’s a Mouseketeer, but what on God’s green earth are these people doing? To go through the effort and expense of licensing from Disney only to get the D-team of creative assets is a fireable offense.

I’m sorry. I usually try to avoid the ‘blame-a-human’ game, but this is such a poor decision that it calls a lot into question.

Since Instant Pot already has Disney’s contact info, get them back on the line and get the creative assets that will actually move inventory:

• Avengers

• Frozen

• Star Wars

Play the hits. Don’t get cute.

Licensing is such a hard, expensive route to go. Don't be penny-wise but pound foolish. The upside is so great it can redefine a brand. The middling outcome is basically the same thing as the downside where you paid a huge sum upfront and are stuck with unmovable inventory.

First, use Pyrex as the testing ground to validate the model, then extend the strategy across the portfolio and create limited edition releases around when the movies come out.

Next, take this hit show on the road. Extend the licensing to the rest of the catalogs (Snapware, Chicago Cutlery, Instant) and take on more licensing deals. 2 other topical mega-franchises that would be great integrations for this: Barbie and Super Mario Bros.

This strategy accomplishes 3 core goals for the company:

1. Gives customers a reason to come back and buy more

2. Makes products more scarce, increasing demand

3. Siphons attention from major cultural moments, leveraging other companies’ marketing dollars

Their catalog in the future will look like:

1. The Ol’ reliables your grandmother purchased and passed down

2. Constantly fresh, relevant products that people will buy because they love the creative + a dependable product

Takeaway: Expand Catalogs with creative limited editions of your hero product. Not blowing out categories.

Final Thought:

There are some real brands with some real assets here that got lost in the up-and-to-the-right-by-tomorrow narrative that has taken the world by storm in the past 5 years.

That hockey stick playbook doesn’t work for real physical brands.

200% YoY growth for 5 years in a row isn’t and shouldn’t be the goal for physical consumer brands. From the outside, it felt like the PE group took a car operating incredibly well and tried to turn it into a rocket ship, and it blew up before leaving the atmosphere.

Real brands take decades to properly develop. Their power is in owning consumer behavior for decades. Not burning up and flaming out within one.

It’s like making the mistake of trying to get rich vs. wealthy.

Someone will have to step in and take over these assets. I can’t imagine the debtors will let these brands fall by the wayside, and that group will need to come in with real physical product experience. Get this company back to profitable growth will require a shift in mentality: a decades-long exit horizon.

It’ll be hard to turn around the consumer sentiment on Instant Pot since it blew up so publicly, but there are some real assets here that will probably be stripped for parts and sold off. That completely reverses the entire thesis of the PE company.

🧠 The Takeaways

It’s harder to keep focus when things are going well than when they’re not.

1. Expand your category cautiously. Cut excess categories ruthlessly.

2. When you make a big move, bet big. If you’re risking the company, make sure the risk is worth it.

3. Limited edition SKUs are 1 of the fastest ways to grow without taking meaningful inventory risks.

👷 What can you do about this?

1. Analyze your profit per SKU. Cut the bottom 20% that are loss leaders, or upsell maximizers.

2. How can you cycle more cash from slow-moving inventory to fast-moving inventory?

3. How can you launch a limited edition of your best-selling hero product?