Lumo Bodytech: A Bumpy Journey

By George Foster, Amadeus Orleans
2018 | Case No. E645 | Length 18 pgs.

Monisha Perkash cofounded Lumo Bodytech during an incubation program organized by Innovation Endeavors – the venture capital firm started by Eric Schmidt – in 2011. At the time, she had barely met her cofounders and the team was expected to launch a business after six months of design thinking and prototyping efforts. The result was a start-up focused on improving posture and helping solve the common problem of back pain. As of 2018, Lumo Bodytech was still alive and thriving, but the journey had not been free of obstacles and difficult decisions for the CEO.

Even before the conclusion of the incubation phase, one of the cofounders had expressed his dissatisfaction with the direction of the ideation process and threatened to quit if nothing changed. He was an accomplished software engineer who had become a friend in just a few months of work. Additionally, the equity for the new business had already been split among the four cofounders, which could further complicate any exit negotiations.

Around a year later, Lumo Bodytech had successfully launched but the wearables fever was dying down and the financial needs of the young start-up became more pressing by the day. That was when Perkash was approached by a large Asian manufacturer who would be willing to invest if the company implemented a significant change in its strategy, from focusing on a single product to adopting a platform approach to its product line. It was a hard decision to face so early in their trajectory, but Perkash knew she had to make a choice.

The challenges related to financing the company would knock on Perkash’s door once again in mid-2014, when the company had to decide between raising venture debt or settling for a smaller round of equity financing. To make matters worse, there seemed to be a central misalignment between the cofounders and one of the board members about how to approach the issue.

Finally, Perkash had also experienced a fair amount of human resources problems over the years. Some of those were a superstar engineer who had a huge ego, a former classmate who wanted new responsibilities but was underperforming and a new hire who had come from a much larger company and was not prepared for the challenges of a startup environment. Perkash saw it all.

Learning Objective

The teaching objective of the case is to give students an overview of the challenges faced by start-up founders, especially around issues of team formation, product development, financing and human resources.
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