You’ve landed your product-market-fit and then money just starts reigning down from the heavens right?
For some products that might seem like the case:
- They’ve created an innovation solution to an underperforming need.
- They’re opening up a whole new category
- They appeal to an audience with disposable income, and immense willingness to spend driven by a HUGE pain
- They get an immense amount of free press
But then they hit their addressable TAM ceiling - combined with natural business dynamics factors:
- New entrants with competitive offerings
- Aging product
- The story has gotten old
This is the story of Happiest Baby (the maker of SNOO).
Or at least my take on it!
I started as, what can only be termed, a bit of a super-fan. Practically begging the company to take my money for the value they offered. And through the company’s commercialization journey, the only thing I honestly say to someone today is - look for an alternative.
Happiest Baby has transformed me from a net promoter to an ardent detractor - all because they kept trying to commercialize me more, in the wrong way.
Customer First: Starting with the Job to Be Solved
So you’re becoming a new parent - that was me. You’re excited but also freaked the f*** out. What do you know about kids anyways?
You go down the rabbit-hole of previous parent advice - everyone tells you “get your sleep now, it will be a while”.
You read about this horrible thing called SIDS - sudden infant death syndrome. Are you serious? This can just happen?
Then you discover (thank you viral media!) the most amazing product ever invented - a smart bassinet!
It combines:
- A baby straight jacket (ahem a secured sleep sack) - to keep your baby in place, unable to roll over and suffocate themselves
- A smart bassinet that moves and plays white noise
- It automatically detects your baby crying during their sleep and adjusts its movement and white noise to try to get them to stay or go back to sleep
- It has an app that lets you track and control everything
- It even notifies you when it can’t do its job and you need to actually go be a good parent
- It looks cool with wood accents on it
Yes it does cost over $1000 - but it promises to keep your baby safe and get you more sleep.
TAKE MY MONEY!
The SNOO performs exactly as you dream - it is a great product!
A Market with a Ceiling
When we step back from my immense love for the product, we can put on our business acumen hat and consider some fundamentals.
There was always a ceiling on the market size - in any geographic region, there are only so many babies. In the US: (i) there are approximately 3.6 million babies born every year (ii) approximately 19% of the population is upper income. Rough math says you can only go after about 750k parents a year - not a bad target market.
At 5% adoption, that can be north of $30M in gross revenue per year - NOT TOO SHABBY!
Except it’s never really going to grow much.
There’s a limited number of geographies that are sufficiently affluent to spend $1000+ on a bassinet.
Then considering that we live in a world of Facebook Marketplace, where I can sell my smart bassinet after 6 months of use at eighty cents on the dollar - and after a few years we have a problem.
The market is saturated with SNOOs!
New sales slow down, as people opt for buying second-hand when possible. And second hand SNOOs turn over quickly (the baby is in the bassinet for < 6 months) and can turn over repeatedly.
So SNOO reacts - offering a monthly rental option. GENIUS! Turn excess inventory into an as-a-service product - costing less than buying second hand (for a 6 month period), and rentable multiple times over (so it yields greater gross profit per SNOO unit than selling it new).
But over time business reality evolves. New competitive products entered the market, driving price compression. That rental that used to yield 50 cents on the dollar… is down to 30 cents on the dollar. And the kicker - the TAM still hasn’t grown! Not only is the market saturated, but competition means SNOOs are getting a smaller slice of the pie.
They’ve hit another dreaded plateau in revenue and growth.
So to drive growth, you enhance your product?
Paywall What Works (and Was Free)!
Nope. Instead, SNOO decided to paywall features that had been free since launch.
In July 2024, Happiest Baby introduced “SNOO Premium” - a $19.99/month subscription that put sleep tracking, growth insights, and data exports behind a paywall. Features that parents had been using for free for years suddenly required a monthly fee.
The justification? “Ongoing innovation and development.” The reality? Extracting more revenue from the same customer base rather than growing the market or adding genuinely new value.
Don’t worry about me though, people who bought the SNOO before July 15th, 2024 get the Premium subscription for free - and I bought in 2020, so I don’t get paywalled, right? Right?
Moving the Goal Line: I Should’ve Known They’d Paywall Me Too!
Picture this: It’s 6 AM. I’m already sleep-deprived (I swear I love my kids), when my wife storms into the kitchen.
“What did you do?” she demands, waving her phone.
“What do you mean?” I mumble, still trying to locate my coffee.
“Well, I can’t see any of the data in the SNOO app anymore!”
Oh, you’ve got to be kidding me.
“Oh, they’re trying to paywall us too,” I explain. “I guess our grandfathered access wasn’t so grandfathered after all.”
“Well, are we going to pay?” she asks.
I pause, considering. “The SNOO still rocks the baby to sleep. We just can’t see the pretty graphs anymore.”
We decided not to pay.
And that’s the exact moment when I was transformed from a SNOO evangelist into a detractor - not because the product stopped working, but because of the principle.
This became my case study in how NOT to manage existing customers when you’re desperate for growth.
They Moved the Goal Line Again
You can’t be surprised at this point, can you?
As if paywalling data wasn’t enough, SNOO moved the goalposts once more. Now they’ve started disabling core functionality - not just the data tracking, but actual features that make the SNOO work effectively - for non-paying customers.
Such a shame.
Look, I get it. The company needs revenue growth. A once-innovative product matured. The market saturated. A thriving secondary market emerged. New competitors arrived. These are textbook business challenges that every successful startup eventually faces.
But here’s what separates great companies from those headed for decline - how they respond to these pressures:
- Do they find ways to add genuine value for customers?
- Do they expand their addressable market?
- Do they innovate their way to new revenue streams?
- Or do they cannibalize their existing customer base?
The irony? By alienating their most passionate advocates (like me), they’ve damaged the very word-of-mouth marketing that made SNOO successful in the first place. I went from begging them to take my money to actively warning other parents to look elsewhere.
That’s not commercialization. That’s just bad business.
