Hey Walmart, here’s the startup that inspired the thing Amazon just launched
Amazon’s Echo Show killer feature is video calls. If you buy a couple of devices, you can call each other using the device. And it should be so easy that young kids and grandparents will be able to use it in no time.
If that sounds familiar, it’s because Amazon invested in a startup called Nucleus then built a copycat. And today is a rough day for the young startup.
Nucleus spent a long time figuring out if there was a potential market for this kind of device. It came up with a dead simple product with a display, a camera, a speaker and a microphone. When you tap on someone’s name, it calls them.
If the other person has a Nucleus device, it’s going to ring the other device. If you’re traveling, you can also pick up Nucleus calls using the mobile app. Finally, Nucleus has integrated Amazon’s Alexa so that you can ask queries like on the Amazon Echo.
You might think video calls aren’t that innovative and it’s just pure coincidence that the Echo Show does the same thing. The only issue is that Amazon is the main investor in Nucleus. Last year, the startup raised a $5.6 million Series A funding round from Amazon’s Alexa Fund.
Here’s Nucleus’ demo video:
And here’s Amazon’s intro video:
These things look so similar that you might think that the same team designed both devices. But a Nucleus representative confirmed that the team wasn’t involved in any way with the Echo Show.
Here’s the company’s statement:
Nucleus has been working closely with Amazon since 2014, and just last September, Nucleus announced its Series A round led by The Alexa Fund. However, the larger question here is “should retailers and developers be wary about partnering with larger corporations like Amazon?” The direction that Amazon is taking is a step backward for the Alexa ecosystem and innovation overall, but more importantly, will have wide-ranging repercussions across many different and seemingly unrelated industries; imagine the impact on other retailers of Amazon having their shopping carts in every room of a home. But we have the team, technology, plan and a strategy for keeping Amazon in check, and this is an opportunity to find strong partners who share our values and are willing to put the consumer first.
This isn’t the first time a tech company copycats a smaller one. All major tech companies have done it. But it doesn’t mean that it’s acceptable.
Here are a few key lessons from Nucleus’ story. First, Amazon should have acquired Nucleus. I’m sure it wouldn’t have ruined the company’s bank account to spend tens of millions on a young innovative startup.
Second, network effects can be powerful. Amazon is a well-known brand with a much bigger reach than Nucleus. By Christmas, many people will know about the Echo Show. I don’t think the Nucleus device is going to be as popular.
Eventually, platforms win. The Echo is popular mostly because it integrates so tightly with both Amazon’s ecosystem and third-party companies. By opening up Alexa, Amazon managed to attract dozens of smart home and music streaming partners. It has turned the Echo into a versatile device with many different use cases.
And this leads me to my last point. Don’t build a startup that relies too much on a third-party platform. If the Nucleus device had been a huge mainstream success before the Echo Show launch, Amazon could have cut access to the Alexa API. It would have turned the Nucleus into a basic intercom. Amazon is probably just going to let Nucleus live a quiet life.
On the bright side, Amazon confirms that Nucleus is onto something. When a big tech giant enters your market, it means that there’s room for products like yours. Walmart could use this opportunity to acquire Nucleus and compete with Amazon in no time. Or maybe Google wants to build something similar for its Nest product line.