Failing to anticipate the response of the market: the case of ice shipping
I have a book in my Kindle that I cannot wait to start: "How We Got To Now" by Steven Johnson. As a taste to what is to come, I read a great article on the TED website about inventor's mistakes. I am a truly believer that you learn by failing, even though it hurts.
The case of ice shipping, or how Frederic Tudor in the 19th century failed to to anticipate the response of the market, is quite fascinating.
[His] vision as a young man of shipping blocks of ice from frozen New England lakes to tropical areas, where they could be sold at a staggering markup. Tudor hit upon a technique to keep the ice blocks from melting during the voyage — in initial test shipments from Boston to Martinique, the ice survived the journey in remarkably good shape. But there was a problem that Tudor had never contemplated: the residents of Martinique had no interest in his exotic frozen bounty. They simply had no idea what to do with it. In 1800, the overwhelming majority of people living in equatorial climates would have never experienced anything truly cold.
Tudor assumed that the novelty of ice would be a point in his favour that his blocks would “out-do” all the other luxuries. Instead, the ice received blank stares. He posted handbills around town that included instructions on how to carry and preserve the ice, but found few takers. He did make some ice cream, impressing a few locals who believed the delicacy couldn’t be created so close to the equator, but the trip was ultimately a failure. In his diary, he estimated that he had lost nearly $4,000.
Eventually, Tudor persuaded customers that there was value in ice; before his death, he assembled a vast shipping networking that delivered ice from New England to Rio and Bombay. For a stretch of the 19th-century, ice was the second biggest American export, behind cotton. And before long, inspired by Tudor’s success, other entrepreneurs set out to create artificial cold through mechanical means.