MISHA: Modernizing the World of Shisha

William R. Kerr; Gamze  Yucaoglu

Case | HBS Case Collection | August 2018

MISHA: Modernizing the World of Shisha

Abstract

The case opens in 2017 with two of the five co-founders of MISHA telling the company’s CEO Michal Portz that they believe it is time for the global venture to shut down its operations and cease investments. Portz and another co-founder believe MISHA can still work.
The case describes the origins of the ready-to-use capsule solution for shisha smokers and the evolution of MISHA from idea to product design, manufacturing, marketing, and distribution. Consequent mishaps slow down the performance of MISHA, and after five years of the product being in the market and four financing rounds, numbers are far behind what they were in the business plan. The case explores the pivots the company goes through. The central dilemma is this: should the cofounders pull the plug on the company or invest more time and money to try to turn it around? When and according to which criteria should Portz make such a decision?

Keywords: Innovation and Management; marketing strategy; Distribution Channels; emerging markets; entrepreneurship; private sector; for-profit firms; business model; Business Strategy; competitive advantage; growth and development strategy; value creation; decision; Business Startups; Decision Choices and Conditions; Business Startups; Emerging Markets; Business Model; Market Entry and Exit; Growth and Development Strategy; Decision Choices and Conditions; Technology Industry; Qatar; United States;

Language: English

Format: Print

23 pages

Educators

Citation:

Kerr, William R., and Gamze Yucaoglu. "MISHA: Modernizing the World of Shisha." Harvard Business School Case 819-019, August 2018.

We build a tractable growth model where multi-product incumbents invest in internal innovations to improve their existing products, while new entrants and incumbents invest in external innovations to acquire new product lines. External and internal innovations generate heterogeneous innovation qualities, and firm size affects innovation incentives. This framework allows us to analyze how different types of innovation contribute to economic growth and how the firm size distribution can have important consequences for the types of innovations realized. Our model aligns with many observed empirical regularities, and we quantify our framework by matching Census Bureau operating data with patent data for U.S. firms. We observe that internal innovation scales moderately faster with firm size than external innovation.

We study the prevalence and traits of global collaborative patents for U.S. public companies, where the inventor team is located both within and outside of the United States. Collaborative patents are frequently observed when a corporation is entering into a new foreign region for innovative work, especially in settings where intellectual property protection is weak. We also connect collaborative patents to the ethnic composition of the firm’s U.S. inventors and cross-border mobility of inventors within the firm. The inventor team composition has important consequences for how the new knowledge is exploited within and outside of the firm.

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MISHA: Modernizing the World of Shisha

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