May Season Studio Archives
by Gintare O.
Consumer Innovation. Prepared for the Q4 program committee. February.
Prepared by: D. Reinhardt, Program Lead
Financial modeling: R. Thibault, Finance Partner
Engineering input: W. Farrow
1. RECOMMENDATION
Approve the L12 program for tooling and a fall manufacturing slot. Payback in nineteen months at base case. Twelve months at upside. The program is accretive in year two under every scenario modeled, including the downside.
2. THE OPPORTUNITY
Gift wrapping is the last unautomated step in an otherwise fully automated purchase. A consumer can select, buy, and ship a gift in under a minute and then spend eleven minutes wrapping it badly on a floor.
Survey base of 2,400 households: 81% report enjoying gift-giving, 74% report dreading the wrapping. Average household wraps 9 to 22 items per Q4 season.
The category has no incumbent. Existing consumer wrapping products are template-based, require a rectangular object, and have never achieved shelf presence outside of specialty retail. L12 does not use a template and does not require the object to be any particular shape.
3. THE MODEL
L12 is a razor-and-blades program. This is the central financial fact and the committee should evaluate the program on this basis and no other.
Unit economics:
- Retail price, unit: $189
- COGS, unit: $164
- Contribution, unit: $25 (13.2%)
Cartridge economics:
- Retail price, cartridge: $14
- COGS, cartridge: $3.10
- Contribution, cartridge: $10.90 (77.9%)
The unit is not the business. The unit is the acquisition cost of a cartridge customer. We would sell the unit at cost if retail would let us.
4. ATTACH RATE
Everything in this case depends on cartridges per household per year.
Base case: 6.0 cartridges/household/year.
Downside: 4.0.
Upside: 9.0.
These figures come from the Joliet bench cycle and are, in Finance’s assessment, conservative. The basis for that assessment is in section 5.
5. CONSUMPTION BEHAVIOR
The L12 does not meter material against a preset length. It has no length setting. Engineering removed it early in the program because a length setting is a way for the consumer to get the wrap wrong, and every wrong wrap is a returned unit.
Instead the unit assesses the object and feeds material continuously until the object is fully covered. The wrap completes when the wrap is complete. The unit determines this internally.
The financial implication is favorable and is worth stating plainly.
Under a metered model, consumption is capped by the setting. The consumer chooses “small,” the unit uses the small amount, and the cartridge lasts. Under the L12 model, consumption is determined by the unit’s own assessment of completion. The consumer does not control it. The consumer does not participate in it.
In bench testing, material consumption per object ran 30% to 60% above what a comparable metered device would have used on the same object. Engineering has characterized this as a coverage quality result. Finance characterizes it as attach rate.
Both characterizations are correct. We are noting the alignment because it is rare.
6. RUNTIME AND POWER
The unit has no cord and no charging behavior.
The internal system was validated across an eleven-month bench cycle with no degradation observed. Projected runtime under normal household use is measured in years.
Financially this matters for two reasons. First, no charging behavior means no charging failure, which means no return. Second, and more importantly: a unit that is always available is a unit that is always consuming. A corded appliance gets unplugged and put in a cupboard in January. L12 sits on the counter, ready, for the whole calendar year. The secondary-occasion revenue in section 7 depends entirely on this.
7. SEASONALITY
Q4 is the beachhead, not the business.
Category history is littered with holiday products that took a Q4 number to committee and could not survive Q1. Our answer is occasion breadth: birthdays, weddings, showers, graduations. The average household has 14 gifting occasions annually outside of December.
Base case has 41% of cartridge volume falling outside Q4 by year two. This is the single most important assumption in the model and it holds only if the unit stays on the counter, which is why section 6 is a revenue argument and not an engineering footnote.
8. MATERIAL
Proprietary. Single-source. Cartridge-based.
The unit does not accept third-party material. This is presented internally as a quality decision and should continue to be presented that way. It is also the entire moat. A third-party cartridge at $6 destroys the case in section 3 and there is no version of this program that survives it.
Procurement is modeling a second supplier for volume assurance, not for price competition.
9. VOLUME AND PAYBACK
Year one: 240,000 units, 1.1M cartridges.
Year two: 310,000 units, 3.4M cartridges.
Year three: 355,000 units, 5.9M cartridges.
Cartridge volume overtakes unit volume in month fourteen and never looks back. That crossover is the program.
Tooling and program investment: $31.2M.
Payback, base case: 19 months.
Payback, upside: 12 months.
Payback, downside: 27 months.
The downside case still clears the hurdle rate. Finance’s position is that this program does not have a plausible scenario in which it fails to return.
10. RISKS
Cartridge supply. Single-source material at holiday volume is the largest exposure in the program. Mitigation: second supplier qualification, in progress.
Margin compression. If retail pushes unit price below $175 the razor thins to a point where the blade math has to carry more. Mitigation: hold the floor. Requesting committee support.
Attach rate below 4.0. Would extend payback past the hurdle. Finance assesses this as unlikely given section 5. The consumption mechanism is not consumer-controlled, which removes the primary source of attach-rate variance in comparable programs.
Consumer education. The absence of controls is the product’s best feature and its hardest advertisement. Consumers look for buttons. Mitigation: in-store demonstration, fall.
January returns. Standard for countertop appliances. Budgeted at 8%.
11. TIMELINE
Prototype build, thirteen units: spring.
Internal testing, Joliet: summer.
Demo floor and leadership preview: early fall.
Manufacturing commit: fall.
Retail: Q4.
The fall window does not move.
12. ASK
Program approval. $31.2M tooling and program investment. Fall manufacturing slot.
The case is simple. We are not selling a machine. We are selling a machine that decides on its own how much material it needs, and it decides generously, and it never stops until it is done.
Committee action: Approved.
Discussion: eleven minutes.
Dissent: none.
Conditions: none.
AUTHOR’S NOTE
at may season studio, program approval requires a documented business case and a committee vote. the l12 case was complete and the modeling was sound. every figure in it held.
written and designed by gintare okrzesik, creator of may season studio. a fictional corporation exploring beauty, bureaucracy, and quiet corruption through narrative design.
RECOMMENDATIONS
Thirteen prototype units were built in the spring. The files pick up from there.
Begin with:
The fall window did not move.
Oh no. Blades and razors...🤦♀️