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It Starts With An Idea: How to Found a Hardware Company (and crowdfund >$115,000)

11/18/2013

in Make Money, Productivity

Maneesh here. I’ve been hush hush about my secret project over the last few months. Some of the hardcore Hack the System readers figured out bits and pieces and guessed what I’ve been doing since August in Boston, MA.

Well — it’s time to give a few more hints. I’ve started a hardware company. Rather than focusing on ebooks and courses, I’m building something real, something physical.

And I honestly believe that it will change lives.

Over the next few weeks, expect to learn more and more about Pavlok. You should sign up over on that page, for updates — and a chance to be a beta tester.

But one of the best thing about starting a hardware company, is that you get to see what other hardware is on the market.

So I flew to Toronto to attend the launch party for the launch party for PUSH: The first fitness tracking device that measures strength. The description had me hooked:

Force, power, velocity. Decades of research in sport science have established that these three metrics lay at the core of strength training. PUSH is the first fitness device that allows you to track and analyze these metrics, ensuring that your training is optimized.

How does it work? PUSH tracks how your body is performing at a certain weight and provides insights to help you optimize the load. Not moving the bar fast enough? Lower the weight. Not showing signs of fatigue two sets in? Change the weight.  PUSH allows you to push your body to its true potential, using meaningful metrics, and get stronger over time while minimizing the chance of injury that can set you back.


Not to mention, I got to crash with Sol Orwell of Examine.com (and a member of Schwarzenegger’s Fitness Advisory Board). Thanks Sol!

After several months of trying to build an idea into a real hardware product, I know how to get started. The first Pavlok prototypes are just a few weeks away, and I had no previous hardware skills.

So, I know it’s possible to turn an idea into a real product. The difficulty is knowing how to get started.

But first of all — Support PUSH. The device is awesome. The team is awesome. I bought the $259 Push + Bioforce HRV Kit, which is an insane deal —- you get the BioForce HRV device (worth $199) and the Push sensor, together for just $199. But just help them out — it’s a great feeling when we can help a great idea become a real product.

So, that said, I want to introduce a few of the PUSH Team, Suresh Joshi and Mike Lovas, who want to share the knowledge they’ve learned.

 

Idea to Product: How to Build a Hardware Company from Scratch

Despite reading countless books and blogs on start-ups, we’ve learned most of what we currently know in the field. Here’s our breakdown of the “big-ticket items” we used to build our product. Hiring consultants can be a game changer; we’ve included where we’ve used them, but otherwise we’ve bootstrapped it ourselves.

Disclaimer: although this looks like linear process, it’s not… at all.

 

#0 The Idea

Start with an idea you truly believe in.

 

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Having a good idea is crucial to starting any type of business, but they’re also over-hyped. Ideas are a dime a dozen.

Turning an idea into a viable business is hard, and the idea is just a tiny piece of a massive puzzle. There is a ton of content out there to help you generate new ideas, check out some of our favorites:

 

A few things to keep in mind:

Be an authority. You need to have a deep understanding of the problem you’re trying to solve, if you want have a chance at making it big.

Love the problem. You’ll be spending a lot of time, energy, and drive to get your venture off the ground, so you might as well love the space.

Experiment. Nothing helps you understand a problem better than having first-hand experience. In our case, we spent a lot of time at the gym and in the lab testing out our ideas, tracking data, and talking to people.

Watch Out for Feature Creep. People will tell you that you must add “an amazing feature,” but they don’t understand the whole problem nor your product. The moment you become distracted from the main problem your product gets diluted, deadlines get delayed, and your quality suffers.

 

#1 The Team

Build a team of risk-takers who love solving gnarly problems.

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No one can build a company alone, especially a hardware company. Find a solid co-founder (or two) who you can trust to complement your skillset. We started with people who had knowledge in three core areas of our product: software, hardware, and industrial design/manufacturing. Then we started filling holes.

What we look for in a new hire:

  • Crazy problem solving skills and the drive to dig deeper
  • Ability to deliver quality
  • Passion – a brilliant new hire without any domain interest or grit will fizzle out

We want someone who will work with us, not for us. And regardless of how much traction you’re getting, don’t hire anyone who won’t fill a vital role. If they won’t directly help you grow, or produce the product faster, you probably don’t need them (yet).

 

#2 Prototyping + Iteration

Everyone talks about it… you should probably do it.

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Prototype the shit out of it! Quick and dirty is your friend here – you need to see quickly whether an idea will work or fall flat before investing time and money into it. Every iteration of prototyping and testing leads to new insights and understandings of the product; too small, wrong form, LED in the wrong spot, doesn’t fit, etc.

Industrial Design. Get a great designer and 3D print as much as possible. It’s cheap, easy, and accessible. If it passes the prototyping tests, it’s no longer ‘just an idea’, but the real thing. Invest in good ID, as this will be the face of your product and company. HIRE CONSULTANTS here to help with designing for manufacturing – it’s a big step going from a solid CAD model to one that is ready to send to a manufacturing house for tooling.

Electronics. Do you really need a multi-layer, flexible PCB with built-in antenna for your first prototype? Or can you hack your electronics together from a bunch of breakout boards sitting on a breadboard, wrapped in duct tape for demos? Go with the second option.

Software Development. Avoid the temptation to spend lots of time coding a fully functional UI, because this will go through the largest number of iterations, and can easily become the biggest software time/money sink if you’re not careful. Use wire-frames and mock-ups (Balsamiq, Invision), and code the front-end when you think you’ve hashed out something special that is close to what you want.

Prototype Testing. Get people to try out your prototype and ask for honest feedback; fake praises will only hurt you project. Honest and blunt feedback will give you fresh ideas of what you should fix, ditch, or keep.

 

#3 Biz Dev + Funding

Find your niche.

 

Solidify a skeleton business model by using something like a Lean Canvas to put your models on paper. Don’t spend too much time or resources on this task, your plan doesn’t need to be world-changing, you just need a fresh angle.

 

Business 101:

Know your Problem. Do your research to truly understand the problem you’re solving.

Know your Market. Narrowing down your target demographic can be tricky but important to develop a useful product.

Know the Demand. Find out if there is a demand for your product, otherwise, you’ll find yourself pitching to an empty audience.

 

Accelerate

If you don’t have a background in business, seeking help will be essential to your project’s success. An easy way to approach this is by getting into an accelerator or incubator. We went through JOLT when we were starting out, which gave us access to great business mentors. Recently, we’ve been accepted into another program, Creative Destruction Lab, which has a great track record in the wearables space.

 

Seed Funding

Some incubators will provide some seed funding. Look into government funding and grants, free money is your friend, as long as it doesn’t eat up too much of your time. Angel investors have a growing appetite for hardware start-ups as the software scene gets saturated. Finally, institutional money (e.g. Venture Capital) comes last once your business is starting to roll and you need big money to scale.

 

#4 IP

Cover your ass.

People often jump into this part of the project either too early or too late. The moment you come up with an idea isn’t the right time to patent, but on the flip side, you shouldn’t wait until a month after you’ve begun selling your product either. If you apply too soon, you’re wasting time and money on an idea that is likely to change drastically. If you’ve applied too late, you’ve probably missed the boat entirely on having a valid patent.

In our case, we filed just before the start of our crowdfunding campaign, when our site became open to the public with direct traffic. Filing a patent (or even a provisional patent) isn’t cheap, but is worth the money if you have a good idea.

Big reasons to file a patent:

Perceived Legal Protection. You have an idea that you don’t want people to infringe on, but patents can only protect you if you have the money to hire legal help. The patent is only valid in the countries you’ve filed in, so pick your markets carefully.

Investor Candy. When it comes to raising money, especially for a hardware startup, investors love to see some sort of IP protection.

Exit Strategy. If you’re thinking about an exit strategy in an early-stage start-up, this isn’t a good sign. Love your product and make it great; exiting should be an afterthought. That being said, having IP locked down is pretty important for an exit… or so I’ve heard.

HIRE CONSULTANTS HERE: Hiring a patent firm will save you time, money, and stress in the long run.

 

#5 Branding + Marketing

Make a strategy, then blast off.

Design Your Brand

Great branding and solid strategy will make or break your business. Fortunately, we had some amazing designers on our team that helped deliver a cohesive visual identity across all of our platforms. If you don’t have friends who are killer graphic designers and UI/UX designers, find them. HIRE CONSULTANTS to do the graphic design for your logo, visual identity, and branding guidelines; then apply that to everything you do.

 

Crowdfunding

We decided to go down the crowdfunding route to get our product in the market quickly. With crowdfunding becoming more mainstream, it might seem like the only effective way to launch your project, but its not. Crowdfunding is not an easy fix for marketing or to generate pre-sales, you have to do a ton of work to drive traffic to your campaign. Consider social media campaigns, referral contests, stretch goals, live demos, targeted ads, and building a solid PR team.

 

Some points to help you choose the right platform:

Kickstarter – established brand, picky, and expensive.

Indiegogo – global, cheaper than Kickstarter, flexible, and open to any ideas.

Dragon  – new and specifically for hardware; can help with manufacturing and supply chain; relatively untested as a platform.

Private Pre-Orders Site – complete control, very cheap, less “organic reach”.

This is the first half of the process of building an idea to product. The next post will include testing, quotes for manufacturing, certifications, mass production, and distribution. Starting a hardware company is a big undertaking, but very doable if you understand the process and when/where you need to get help. Make sure to do your research and get pros involved for the big steps.

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It’s Maneesh again. Support PUSH. Head over to their IndieGogo campaign page and get your own PUSH — or at least support their cause. God knows I’ll need the same sort of help soon, when I launch my crowdfunding campaign in early 2014.

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