Award-winning Med City start-up's story went from fairy tale to nightmare
The Muve founders wowed the MN Cup competition judges in 2007 with their business pitch for a device to track a person's movement and how many calories they burned in a day. The Rochester company looked to be the "next big thing" as a talented team turned the idea into a product called the Gruve within six months. It started selling on Amazon. And then the Great Recession hit.
Winning a prestigious MN Cup business competition is a huge boost for a start-up, both in finances and networking. However, Rochester’s only overall MN Cup winner -- Muve -- discovered that a victory like that can only take you so far.
“Just because you win the MN Cup doesn’t mean you are going to succeed,” said Andrew Wood , who worked at Muve from early 2008 until the money ran out in June 2010. “We had the potential. There's just no question about it. I will say to this day that was one of the best teams I've ever worked with.”
The MN Cup is considered to be the largest of such competitions in the U.S., which is saying something in the era of the “Shark Tank” TV show. It started in 2005.
Jamie Sundsbak, the executive director of Rochester’s Collider Foundation, said just competing in the contest is very valuable for local companies.
“What it does is it (the MN Cup) puts them into a system … that gives a sort of a framework and builds their network,” he said. “So I think that that helps to at least decrease the chances that your business will fail.”
Three Med City start-ups recently took first place in their divisions to become semi-finalists in the 2021 MN Cup competition..
Canomiks won in the Food/Ag/Bev division, Shrpa took the High-Tech division, and Nanodropper was number one in the Student division. Each division winner is awarded $25,000. And now the nine semi-finalists will each make live pitches on Sept. 17 to compete for the grand prize of $50,000. The winners will be announced on Sept. 20.
Winning a contest is great, though Sundsbak points out that creating a successful company is still very difficult with a lot of potential pitfalls.
“Depending on who you read and the research you do, in the high-tech category, companies see a 60 to 90 percent failure rate today, and that's crazy,” he said.
Having a good product, a visionary creator, an experienced leader and a strong development team still doesn’t mean a company will grow into a Medtronic or an Exact Sciences.
Muve was a shining star in 2007 and people expected big things from the Rochester start-up. The company, co-founded by high profile Mayo Clinic researcher Dr. James Levine , had won the $25,000 grand prize in the then-2-year-old MN Cup business competition. The young company was led by an experienced CEO -- John Montague.
“One of the other reasons we won the MN Cup was actually the presentation. I think Montague did a very good job. And I think the charisma of Jim Levine put it over the top,” remembered Wood.
Immediately after the win was announced in 2007, Montague said, "Afterwards, we were told by several of the judges that we were in a category by ourselves, which is nothing short of amazing... I think the chemistry between Dr. Jim Levine as a passionate scientist and myself as a proven entrepreneur was pretty incredible."
Levine, who championed the first treadmill desks, had created an activity model to combat obesity called nonexercise activity thermogenesis or NEAT. The idea is that small, consistent motion throughout the day can combat obesity. He became famous for his statement that sitting at a desk was as unhealthy as smoking.
Muve took Levine’s concept and the technology created at Mayo Clinic to research it to create a small, wearable device worn clipped to the waist that tracked all motion, recorded it and would buzz to spur people when they were inactive for too long . It also featured a light that changed color based on a person’s motion.
If the idea of wearing something that tracks a person’s movement sounds familiar, you are probably thinking of FitBit. That company was developing its technology about the same time, though Muve had more medical research to back up its device and was considered more accurate.
When Wood joined the company as its "Chief Muvologist," there were seven people on the Muve team. Within six months, they made Levine’s vision into a real device that was manufactured in Appleton, Wis. The early reviews were promising. People were buying it on Amazon and elsewhere.
It provided constant feedback with its buzzes and flashing lights as people tried to meet their calorie burning goals. Some users said the feedback was addictive as it spurred them to lose weight.
“One of the clients I had at the time said, ‘Man, this thing's like crack cocaine,’ which cracks me up,” said Wood.
While Muve’s hopes were on the rise, the economy was plunging in 2008 and 2009 into the Great Recession. That crash meant financing lifelines that companies like Muve counted on were cut off and the money dried up. While a U.S. Department of Health and Human Services' grant of $835,00 helped, it wasn't enough.
The lack of a steady stream of funding kept Muve from being able to reduce the price of its American-made product, which was sold for about $200 plus another $75 for an annual online subscription to the Muve analytics website. Lack of financing also hampered further product improvement.
“We hung in there for about 2 1/2 years. And finally, there just wasn't enough money to make payroll,” said Wood. “It was a sinking ship.”
The Collider’s Sundsbak says Muve’s story is a reminder that success for start-ups depends on a sort of “chaos theory.”
"There has to be so many things happening at the right time for it to catch,” he said. “There's really no way to control everything.” That's why Sundsbak is an advocate for the movement to create as strong entrepreneurial ecosystem in Rochester to give start-ups as much support as possible.
There was a brief attempt at reviving Muve after TV’s Dr. Oz sang the product’s praises, after the doors closed. The second round under a corporate name of Gruve didn’t last long as it tried to gain traction in a wearables market already dominated by big companies that were just starting when Muve was hot.
Wood is now retired, though he does some freelance consulting on ergonomics. He has a dusty Gruve in the bottom of his desk drawer. While Muve’s story didn’t have a happy ending, he smiles when remembering the hopeful, early days. He compares Muve to early carmakers like Hudson or Tucker. It was a contender, but it didn’t just didn’t make it.
“It was a good run. I don't regret it,” said Wood with a wistful chuckle. “I have to admit, every time I see an ad from Fitbit or Apple and so forth, I think it if we have been successful, I would be retired and living in the south of France.”