Teforia Closes Down

Allen Han

Business operations ceased Friday for Teforia Co., makers of a line of smart infusers for fine tea.

“We simply couldn’t raise the funds required in what is a very difficult time for hardware companies in the smart kitchen space,” founder Allen Han wrote in announcing the closure. “We will continue to seek a partner that can leverage Teforia technology and/or provide Sips tea sales to continue our mission of elevating the tea experience. Hopefully you will see Teforia technology in future products,” wrote Han, who holds more than 30 patents.

“We didn’t compromise on the Teforia infuser technology, quality, or the premium tea packaged within our Sips (Selective Infusion Profile System),” wrote Han. The website will remain live through Nov. 3 and the company is distributing firmware to enable its Teforia Leaf equipment to brew owner-sourced teas as well as Sips (packaged tea). Infusers are selling for $199.

Han, a tea lover who is credited with creating the Xbox 360 and the winner of multiple Red Dot, IDEA and Good Design awards, designed Teforia to brew “one perfect cup of tea every time.”

He succeeded.

At World Tea Expo, Teforia was awarded 2016 Best Tea Industry Innovation Award and was named the 2017 Best (Electric) Tea Brewing Device. The innovative brewer, initially priced at more than $1,000, adjusted steep time, agitation, and temperature for premeasured tea in capsules sold online as Sips. These premium teas, from established growers such as Yamamotoyama in Japan, were delivered by subscription as fully recyclable and 90 percent compostable. The classic brewer could be programmed by smartphone to brew any tea.

Teforia machines are wi-fi and Bluetooth enabled and use “Pandora-style learning” to adjust brews to your individual taste. Calculations include the ratio of leaves to water and the number of desired steepings. Leaf shape and varietal and even terroir are part of the recipe. Han calls the process microinfusions that bring out layers of flavor.

“I have never seen a machine before that allows you to dial in these variables and give you just what you want,” said Jesse Jacobs, founder of Samovar Tea and Chai in San Francisco. “Whatever tea you drink from around the world has its own flavor profile depending on where its come from and how it is made, and the Teforia infuser allows those flavors to come through exactly as the tea maker, the tea master, would have intended,” said tea specialist and consultant Jane Pettigrew.

Reviews were favorable, although price raised concerns. A less capable $400 Leaf+ model was introduced in 2017. Unlike the Teforia Classic, the Leaf brewed only Sips capsules available online.

Teforia brewer

What Went Wrong

Contacted last weekend, Han told World Tea News the company was unable to secure funding that would sustain it long enough to educate tea drinkers to its advantages. The firm employed 15 with three contractors at its peak.

“I’m the only one left,” he wrote. In the release, Han mentioned the challenges of securing venture capital for “smart kitchen space” projects. His company launched in 2015 with $5.1 million in seed funding. Enthusiasm for the “connected kitchen” helped Han raise another $12 million in 2016 in a Series A round at a time when several ventures were promoting smart appliances. Juicero, a connected juicer, won $118 million in funding at that time. In September, Juicero closed its doors after a Bloomberg reporter demonstrated its juice packs could be squeezed by hand with little difference in results from juice produced in the $400 juicer.

Juicero was ridiculed as an example of Silicon Valley excess. In retrospect, paying $7 to $8 per glass was unrealistic for families who would have to spend $1,500 to $2,000 per month for fresh juice―even without the $699 cost of the juicer (later reduced to $399).

Han didn’t say how many machines were sold. “Even though we’re only sold in the U.S., Teforia infusers are actively used in 20 different countries, four different continents, and have made almost half-a-million servings of tea in the past nine months,” he said.

“From day one we set out to deliver the best tea experience possible, from sourcing the best all-natural tea in the world, to development of the perfect recipes (with tea masters) to developing the most sophisticated and powerful infusion technology,” said Han. “We went to these extraordinary lengths because we believe premium loose-leaf tea should be delivered in the most delicate and sustainable way possible.”

Lessons to Consider

  • Raising large VC rounds is no guarantee of future business success.
  • Good product design is always a big driver for consumer adoption, but the underlying business fundamentals need to be sound for the venture to succeed.
  • High-priced hardware appeals to early adopters and is critical in recouping development costs, but the number of early adopters, while influential, is always small. Pricing devices that people can afford, while balancing margins on the business side is essential to achieve scale.
  • A closed ecosystem such as Teforia, Keurig and Nespresso can work to generate sustaining cash flow, but that’s assuming the consumables they are offering are unique and right-priced. Investors have pulled back from several similar beverage proposals.

Leaf+ owners were notified how to “open” their brewer via a free firmware update. This enables them to brew any tea. All users are advised to download the latest app. The Apple app (version 674) was updated to be compatible with the new iOS 11, and Android (version 255) will run on Oreo.