Voices: 15 steps to starting your own electronic-kit business is an interesting article. This engineer started her own successful electronics-kit business. Limor Fried has made Adafruit Industries into a successful electronics-kit business. You can too. Based on her own experience, she offers 15 practical steps for engineers who dream of starting their own kit business.
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Tomi Engdahl says:
Adafruit’s Limor Fried on Building a Hardware Company in the US | Disrupt NY 2013
https://www.youtube.com/watch?v=9b_K2kmCTDI
Julkaistu 1.5.2013
Recently, consumer electronics have tended to be more about closing things down then opening them up, but New York-based Adafruit is working to help reverse that trend, and to make it so that people aren’t afraid of what’s inside their devices, and instead become more comfortable with electronics components and the concepts behind how gadgets actually work.
Tomi Engdahl says:
Ladyada on President Obama’s Fireside G+ Hangout
https://www.youtube.com/watch?v=Kw9fhI8pRMA
Tomi Engdahl says:
The biggest thing I learned is it’s a roller coaster ride. One day, underwriters were pricing an IPO, and the next month, they couldn’t get financing to make payroll, so their people left. The team will leave if you can’t pay them.
Source: http://www.eetimes.com/document.asp?doc_id=1324403&
Tomi Engdahl says:
Developing a Sales Strategy
http://www.eetimes.com/author.asp?section_id=36&doc_id=1324392&
No company can be successful without sales and marketing performing at its peak level.
The most important point I want to make with this blog post is that the sales channel is a living organism. It needs to be adapted and changed as a company evolves, and that’s how entrepreneurs should view it. It’s likely, too, that the sales organization will undergo several changes, and some of those could be painful.
As well, founders must be active participants in the sales activities and cannot avoid being hands-on in the initial sales situations. They have to live and feel the pain of their customers and understand how their solution is helping. Not participating in the sales efforts will undermine the whole strategy. After all, at the heart of the startup is the unwavering belief in what you’re doing and seeing its impact.
Early customer engagements are important and must be nurtured. Each will be unlike another and have different use models than what the founders anticipated. In fact, the sales process will go through many changes until the right recipe for success has been developed.
Phase one, however, is when the founders work closely with initial customers. The sales team comes in at the next phase, when the product is ready to proliferate out of the original sales engagements, and it’s a quite different scenario.
Many in our industry compare the phases to the Hunter and the Farmer. The hunter is the stalker and is able to stalk out initial opportunities. At this stage, the goal is to identify a select number of targets and pursue them relentlessly. The farmer is the harvester; he or she follows in the footsteps of the hunter. The farmer leverages the initial entry into a strategic account provided by the hunter to proliferate the solution across multiple teams. Naturally, the salespeople fitting those two profiles require different skills.
Hunters tend to operate independently and thrive in unknown territory. The farmer is more of a team player and should be paired with an FAE who has a large role to play.
An important skill for the early sales managers is their skill at analyzing the fit between the solution offered and the customer’s problem. Seasoned sales managers are adept at this and will often recommend how to revise the product positioning to adapt to early customer needs and, later on, to expand from a vertical space to another, broader focus.
Tomi Engdahl says:
Meanwhile, ex-Microsoft CEO Steve Ballmer has lost none of his outspoken ways now that he’s left Redmond. In an interview with Charlie Rose, Ballmer said that Amazon wasn’t a real company because it had failed to make any profit in two decades:
They make no money, Charlie. In my world, you’re not a real business until you make some money. I have a hard time with businesses that don’t make money at some point.
I get it if you don’t make money for two or three years, but Amazon’s what – 21 years old – and not making money.
If I was a share owner, it’s an expensive company – market cap of $150bn almost – eventually, if you’re worth $150bn, eventually somebody thinks you’re gonna make $15bn pre-tax and they make about zero, and there’s a big gap between zero and 15.
Ballmer added that the online megastore was fine and all, but not like Microsoft was under his tenure.
I think one capability a business is expected to have is the capability to make money. It requires a certain kind of discipline a certain mindset.
They’re our neighbours, I like the people, they’re fine, but as a businessman if you ask me what I’m proud of, I’m proud of the fact that I made $250bn under my watch as CEO.
Source: http://www.theregister.co.uk/2014/11/02/quotw_ending_november_1/
Tomi Engdahl says:
Project Management Best Practices
http://www.techonline.com/electrical-engineers/education-training/tech-papers/4436282/Project-Management-Best-Practices
solid survival tips in the following categories:
Lay the foundation
Plan the project
Estimate the work
Track your progress
Learn for the future
Tomi Engdahl says:
Home> Community > Blogs > Product Launches and Approvals
Global certifications for makers and hardware startups
http://www.edn.com/electronics-blogs/product-launches-and-approvals/4437238/Global-certifications-for-makers-and-hardware-startups?_mc=NL_EDN_EDT_EDN_today_20141113&cid=NL_EDN_EDT_EDN_today_20141113&elq=44190ff3b9804c41bf4e6804e48ad538&elqCampaignId=20178
Could your product be exempt from EMC testing?
http://www.edn.com/electronics-blogs/product-launches-and-approvals/4432483/Could-your-product-be-exempt-from-EMC-testing-
Tomi Engdahl says:
Global certifications for makers and hardware startups
http://www.edn.com/electronics-blogs/product-launches-and-approvals/4437238/Global-certifications-for-makers-and-hardware-startups?_mc=NL_EDN_EDT_EDN_productsandtools_20141117&cid=NL_EDN_EDT_EDN_productsandtools_20141117&elq=6ab89663a14f4f608f886cb7f3d963c7&elqCampaignId=20219
With the emergence of crowd-funding platforms like Kickstarter and Indiegogo, coupled with the explosive growth of easy to use hardware development platforms like Arduino and Raspberry Pi, a new wave of electronic products is being unleashed around the world by creative enthusiasts.
For these makers and hardware startups alike, the road to launching a viable product is difficult enough without introducing the extra barrier to entry of product certifications. Most require some form of testing to show compliance with the rules that apply to their particular product, but information on the subject is often hard to track down and is seldom concise.
Tomi Engdahl says:
Build or buy: hardware and software considerations
http://www.edn.com/electronics-blogs/brians-brain/4437386/Build-or-buy–hardware-and-software-considerations?_mc=NL_EDN_EDT_EDN_productsandtools_20141117&cid=NL_EDN_EDT_EDN_productsandtools_20141117&elq=6ab89663a14f4f608f886cb7f3d963c7&elqCampaignId=20219
Tomi Engdahl says:
Here’s how startups succeed – 6 Tips for Slush 2014
Lyseggen Meltwater has played a role in a number of start-up truck in the early stages. He summed up their experience of internationalization six ideas:
1. Take the objectives
2. Observe the corporate culture
3. Search for talent
4. Take care of the sales and cash flow
5. Keep your decisions stick
6. Relax and enjoy the ride
Tomi Engdahl says:
U.K. Government Funds Free Online Courses Teaching Startup Skills
http://techcrunch.com/2014/11/18/digital-business-academy/
A tech industry-backed, U.K. government-funded initiative offering free online courses to those wanting to learn commercial digital business skills goes live today, aiming to upskill Brits to work for tech companies or even start their own startup.
The wider narrative here is of course the need to reconfigure the skills of the working population to ensure they’re fit for a more digitally focused national economy. (And create a skills bolster as automation spins up to consume certain types of jobs over the coming decades.)
The newly launched Digital Business Academy is being overseen by Tech City, working in partnership with a range of educational institutions and tech mentorship organizations — including Cambridge University Judge Business School, University College London (UCL), and Founder Centric
Tomi Engdahl says:
Is a Moral Compass a Hinderance Or a Help For Startups?
http://it.slashdot.org/story/14/11/19/1816246/is-a-moral-compass-a-hinderance-or-a-help-for-startups
Does a Startup Need a Moral Compass?
http://news.dice.com/2014/11/19/startup-need-moral-compass/
Ride-sharing service Uber found itself in a lot of trouble this week after BuzzFeed quoted one of its top executives as saying the company should fund opposition research into journalists.
As an emerging company in a hotly contested space, Uber already had a reputation for playing hardball with competitors.
Faced with that sort of competitive landscape, Uber executives probably feel they have little choice but to plunge into a multi-front battle. As the saying goes, when you’re a hammer, everything looks like a nail; and when you’re a startup that feels besieged from all sides by entities that seem determined to shut you down, sometimes your executives get a little heated when they think they’re off-the-record, and threaten to use your major asset—user data—as a weapon.
However, Kalanick stopped short of firing Michael, and it remains to be seen whether Uber will actually attempt a cultural shift.
Tomi Engdahl says:
Social misfits and group interviews: Yup, it’s the startup interview circuit
Why it’s not always you who’ll do the rejecting
http://www.theregister.co.uk/2014/11/25/interviews_tech_startups_bunch_of_nutjobs/
A lot of people have either worked with or know someone who worked at a startup. Lots have good experiences while some have bad experiences – and they have the scars to prove it. Their stories are funny, odd and sometimes downright weird.
The nice thing about startups is that whilst the hours may be appalling, it beats big business hands down. There is little, if any, red tape. The hours tend to be very flexible, as does the work location. No waiting days and days for approval to do the smallest tasks.
No meetings about meetings – generally. If you are the “just do it” kind of person it could suit you down to the ground, and come with big rewards if it plays out well.
One of the key facts to bear in mind is that not all startups make it big. You are taking a risk. The number of failed startups hugely outweighs those that make it.
This is all very nice, but the one critical thing you must ask yourself is: “Are these guys likely to pay me, on time, every pay day?”
The news is frequently awash with horror stories of people not being paid for weeks. It should come as stating the obvious but everyone wants to get paid.
The lesson?
There is no such thing as a standard startup. Each has different setups, different products and customers. But there are common themes. You may get to work from home or to have easy working conditions. And, yes, there’s Kool-Aid.
But one thing is universal: God forbid you don’t deliver what’s expected
Tomi Engdahl says:
12 top crowdfunded IoT devices and what became of them
http://www.edn.com/electronics-blogs/eye-on-iot-/4437714/12-top-crowdfunded-IoT-devices-and-what-became-of-them-?_mc=NL_EDN_EDT_EDN_today_20141126&cid=NL_EDN_EDT_EDN_today_20141126&elq=b8bff4f832de495696b31d84dff806d7&elqCampaignId=20371
The availability of low-cost microcontroller development boards, open-source tools and software, and drop-in wireless modules has opened IoT design to a wide range of potential developers. Combined with crowdfunding, these trends have created an unprecedented opportunity for entrepreneurs to create and market innovative IoT device designs. Here are a dozen of the most highly funded such devices and what became of them.
Tomi Engdahl says:
SF Has An S&M Problem
http://techcrunch.com/2014/11/23/sf-has-an-sm-problem/?ncid=rss&cps=gravity
Our Sales and Marketing costs are killing us.
For years, subscription-based pricing popularized by Software-as-a-Service (SaaS) startups has been pitched to us as a way of reducing S&M costs. Traditionally, software was sold as a license along with a maintenance contract that ensured deep upfront revenues and a continuous stream of income.
Unlike the complexity of that on-premise implemented and managed software, SaaS was supposed to be simpler for customers to use and pay for. That simplicity not only saves on maintenance costs for overburdened IT departments, but also theoretically lowers the sales touch required for a sale, generating revenue efficiency for the provider. By pricing software as a subscription, startups forego upfront revenue from a license fee in exchange for higher and more reliable renewable revenue.
It hasn’t worked out that well.
The evidence is strikingly poor for the subscription model when it comes to actual dollars and cents.
New Relic, the SaaS application monitoring startup, announced its IPO earlier this month as well, and its earnings record is similar. The company had revenues of $63 million in the year before March 31, with $58 million in sales and marketing costs.
These high ratios between revenues and sales and marketing expenses are certainly not new for companies heading to the public markets.
Now, I know the standard excuse here is that these subscription companies are “growing rapidly” and this is all just “an investment in the future.” With subscription pricing, the entire model follows from renewals, with the logic being that once you have acquired a customer, the profit margin will rapidly increase as active sales costs come down.
The challenge is that low-touch sales never seem to be low cost. If a customer is shelling out a serious amount of money from its IT budget to pay for a service, there is going to have to be constant attention paid to that customer to ensure that they are happy with the service while ensuring that they don’t defect to a competitor. This goes far beyond a support subscription, which handles the day-to-day maintenance of ensuring performance of the service for the customer. The CIO needs to know the provider is listening to their concerns, and that means a sales infrastructure.
Furthermore, gross margins for SaaS startups in particular are lower than for companies selling traditional software licenses, since these startups don’t just sell code, but also have to manage data centers and other infrastructure to maintain the software service. With less margin, startups should be more efficient with S&M spending.
Even a company as massive as SalesForce has arguably not found its marketing scale yet. In its most recent quarter, SalesForce’s S&M costs represented more than 51% of total revenue, and more than 67% of gross profit.
Does SaaS still offer a compelling model for some startups? Sure, just take a look at Slack. Given its innate virality as a social tool in the workforce, it is entirely credible to believe that the company can have an off-the-shelf product with a subscription pricing model and avoid the S&M problems that plague others in the enterprise space. But it has an advantage with organic growth that few other B2B startups share.
Tomi Engdahl says:
Hardware by the Numbers: Part 1: Team + Prototyping
https://medium.com/@BoltVC/hardware-by-the-numbers-part-1-team-prototyping-b225a33f55bf
Everyone bemoans hardware. If I had a dollar every time I heard the phrase “hardware is hard” I would probably be sitting on a beach with a mai tai rather than typing this.
Repeating “hardware is hard” ad infinitum doesn’t help anyone.
It doesn’t help first-time founders navigate the prototyping process or find a Chinese contract manufacturer that will build a great product at scale. It doesn’t help dull the slow, stabbing pain of selling products into big-box retail or figure out what reverse logistics means. It certainly doesn’t help hardware startups raise the right kind of capital. I hope this series of posts is more helpful than repeating “hardware is hard.”
I owe this idea to an anonymous attendee of a talk I gave about a year ago in New York. “I’m tired of hearing how ‘expensive’ and ‘slow’ hardware is,” he whined, “what does that actually mean?” He was totally right. So I put together a 110 slide deck of objective numbers aimed at painting a rough, numerical picture of what starting a scalable hardware business looks like. Over the next few weeks, I’ll cover 8 sections in rough chronological order: team, prototyping, financing, manufacturing, logistics, marketing, retail, and exits. This is the first of 4 blog posts to flush out these 110 ‘numbers’.
Tomi Engdahl says:
Indiegogo Is Testing Optional Insurance Fees For Crowdfunded Products
http://techcrunch.com/2014/12/01/indiegogo-is-testing-optional-insurance-fees-for-crowdfunded-products/
This year has been a tricky one for crowdfunding site Indiegogo, thanks to a number of campaigns using its service to raise money for dubious projects (though there have been some cool uses). It looks like the company is responding with a new feature that offers backers some peace of mind about their investments.
The company is testing an ‘Optional Insurance’ fee that provides a refund if backers do not receive the final product within three months of the estimated delivery date. Indiegogo insurance is being tested on one project at this point — stress-management wearable Olive — where it offers potential peace of mind for a $15 fee on top of the product’s $129 backing price.
“Indiegogo regularly develops and tests new features to meet the needs of both funders and campaign owners. This pilot test is currently limited to this individual campaign,” a spokesperson told us.
The introduction of insurance could be significant for Indiegogo, which is widely regarded as the second option for crowdfunding campaigns behind Kickstarter.
One reason for that differentiation is perhaps that Indiegogo is considered to be more relaxed when it comes to regulating and filtering its more fanciful projects/those that appear to be straight-up frauds.
Tomi Engdahl says:
What Do Investors Want? Imperious Group Investing In 30 Startups in 2 Years.
http://www.arcticstartup.com/2014/10/20/what-do-investors-want-imperious-group-investing-in-30-startups-in-2-years
The investment market is becoming increasingly competitive, and the Nordic/Baltic region is starting to attract special attention from VC’s. Many major firms now have full-time principals and partners looking at startups everywhere between Denmark and Estonia and others often send representatives to local events.
With this increased attention, comes the competition for finding and funding top startups.
Many do not realize just how interesting the investment market is. The investors are fighting for the best startups, working together on investing into them while pitching to LP’s to get more funding, just the way you pitch your startups to them.
“We invest into teams, but all the founders of our startups are market innovators. They either create completely new markets, find problems in existing ones or look at a market from a new perspective.” says Pavel Aleshin, head of Analytics at Imperious Group.
Do not start a company if you want to make money, start it if your really want to change something. Preferably solving your own personal need.
Many say that the biggest reason for startup failure is building something nobody really needs.
Tomi Engdahl says:
The Heathkit Mystery
http://hackaday.com/2014/12/22/the-heathkit-mystery/
Heathkit is a company that requires no introduction. From the mid-40s until the 90s, Heathkit was the brand for electronic kits ranging from test equipment, HiFis, amateur radio equipment, computers, to freakin’ robots. Their departure was a tragic loss for generations of engineers, electronic tinkerers and hobbyists who grew up with these excellent and useful kits.
Although Heathkit is dead, 2013 brought an announcement that Heathkit was back in the biz. A Facebook page was launched, a Reddit AMA was held, and the news was that Heathkit would rise from the dead in the first half of 2014. It’s now Christmas, 2014, and there’s no sign of Heathkit anywhere.
A trademark for ‘HEATHKIT’ was filed October 27, 2014
This trademark was granted to Heathkit Company, Inc., incorporated in Delaware.
Tomi Engdahl says:
The Hardware Startup Review
Weekly insights in Hardware Startup Universe. Hackaday-style.
http://hackaday.io/project/883-the-hardware-startup-review
Tomi Engdahl says:
Spark Core and the battle for IoT “platform”
http://hackaday.io/project/883-the-hardware-startup-review/log/1805-spark-core-and-the-battle-for-iot-platform
In a world of tech fairy tales, there would be nothing wrong with telling the Spark Core story as yet-another Kickstarter miracle that surprised everyone, especially its founders, who were subsequently left with only one option – to go ahead and change the world. “People have spoken”, the Oracle would announce.. “now go and fulfill your destiny”. Intentionally or not, Kickstarter has been often instrumental in myth-making and repackaging of impulse reactions to a particular product pitch into ultimate and irrevocable expression of collective free will.
Spark guys were certainly on the “smart” side of this dilemma.
The product itself is exactly what you would expect out of Y Combinator-style accelerator in 2013 – a “Platform for Internet of Things”. People love to fund platforms. They are much more lucrative than the product you sell a piece at the time. Platforms are about a steady stream of recurring revenues, long-term user lock-in and high switching costs, network effects, “app” ecosystem, scalable business models… the works. Selling X “units” of a product only yields revenue that is a function of its net margin. Bringing the same number of users on a “platform”, on the other hand, can be worth anything you can dream of. And investors like to dream.
Great news for Spark guys was that, around the time, Texas Instruments came up with a module that’s just a tool for the job – CC3000 wireless network processor with a price tag in the low $10 range. It was not the first such module on the market, but with features such as Smart Config, it was the easiest to use and apply to most real-world situations straight out of the box. Startups love things that work out of the box – it leaves more time for all the handwaving.
The question is – how does Spark become the Platform for Internet of Things? Sure, it does provide a drop-in worry-free Internet connectivity to any hardware device, but at $39 price tag, how does it get designed in? For Makers, handing out this sum for one Spark Core to hook it up to that one Arduino sitting in the drawer is a no brainer.
Given that It aims at having a pretty general functionality and uses quite expensive chip, the cost of components alone (even at significant volumes) ends up in the high $20 ballpark. With all other things on top, this leaves a fairly narrow profit margin for Spark. Also, we know there are similar sub-$10 drop-in WiFi connectivity modules out there which might not be as easy to use, but not too hard either.
If the design was closed, the board would never stand a chance of getting designed in into anything aimed at mass production and would probably remain in the hobbyist realm forever.
The catch is in the fact that monetization of IoT “platforms” like this simply can’t be about the hardware. In that aspect, it will always be a race to the bottom and it is the manufacturer’s modules that will end up being designed in at the end
Tomi Engdahl says:
Harrison Weber / VentureBeat:
Indiegogo launches InDemand, a feature that allows pre-orders to continue after crowdfunding ends
http://venturebeat.com/2015/01/06/indiegogo-elbows-its-way-into-ecommerce-with-the-launch-of-indemand/
Natasha Lomas / TechCrunch:
Kickstarter’s 2014 Score Card: $529M Pledged By 3.3M Backers, 22K Funded Projects
http://techcrunch.com/2015/01/06/kickstarter-2014-numbers/
Tomi Engdahl says:
Jason Del Rey / Re/code:
Amazon is building an end-to-end platform for hardware startups, part of an effort to become their main sales channel
Amazon Secretly Working on New Platform for Inventors
http://recode.net/2015/01/07/amazon-secretly-working-on-new-platform-for-inventors/
Amazon sells most of the name-brand electronics you can think of. Now, it appears, it wants to be the place where the next generation of gadget and consumer electronics companies can build their brands from the ground up.
Over the last few months, the company has been hiring for a new venture with the goal of creating the “best end-to-end platform for startups.” In another job description, Amazon touts the venture as “a new platform with inventors.”
One listing for a senior marketing manager asks, “Are you inspired by inventors who develop and launch new products? Do you want to market the world’s best end-to-end platform for startups? Do you see the opportunity to connect these entrepreneurs with Amazon’s hundreds of millions of customers through creative and strategic marketing?”
But sources say it could be connected to a recent initiative Amazon has been pursuing. Amazon is attempting to build close relationships with young, promising hardware and electronics companies — think robotic toys, fitness and health gadgets — with the goal of convincing them to build their business using Amazon as the main sales channel.
Tomi Engdahl says:
The True Story of Grouper, a.k.a. Crackle
http://recode.net/2015/01/09/the-true-story-of-grouper-a-k-a-crackle/
Tomi Engdahl says:
Neal Gabler / New York Times:
How VR startup Jaunt selected its name with help from a professional namer
The Weird Science of Naming New Products
http://www.nytimes.com/2015/01/18/magazine/the-weird-science-of-naming-new-products.html?_r=0
put the file into an app for their Android phone and slip the phone into a cardboard headset designed by Google. The not-yet-famous name was of the virtual-reality production process that created this experience. Reviewers said it was “mind-blowingly cool” and an “exciting preview of the future,” but it was also so novel that it had been hard to think of a word to label it. Its inventors had wanted a name that would lodge in the public consciousness the same way Dolby and Imax and Blu-ray had. A name that could become a verb as well as a noun. An iconic name. A name for the ages.
Finding such a name wasn’t easy. Starting in April 2013, the production process itself went through what has become a fairly standard development story for tech start-ups: The three founders — Tom Annau, Jens Christensen and Arthur van Hoff, all computer scientists and “resident entrepreneurs” at a venture-capital firm called Redpoint — began with a flash of insight, then wrote code for the software, then assembled a hardware prototype, then raised more than $34 million from investors, including Google. But initially, they couldn’t come up with a name. The three batted around a few possibilities, Christensen says, but it “very quickly became apparent we weren’t going anywhere. We really needed help.” They had already hired a San Francisco-based branding and design agency called Character to help shepherd their production process to the marketplace, and it was Character that took them to Anthony Shore.
Shore, 47, is what is known in the arcane world of corporate branding as a namer.
Now he met the three entrepreneurs at their office in Menlo Park. They showed him their 32-lens camera — “something that looked like Sputnik,” Shore says — then he put on a headset, and they fired up a standard-issue V.R. demo.
This time Shore was astonished. “It was completely real,” he says. “It was transportive.”
Shore had named everything from companies to products to websites to ingredients to colors. He was responsible for some 160 distinct names in all
For decades, corporations have turned to creative people for their naming needs, with varying results.
Today roughly 500,000 businesses open each month in the United States, and every one needs a name.
Most people assume that companies name themselves and their products. True, Steve Jobs came up with the name for Apple and stuck with it
Richard Branson chose the name Virgin, and namers venerate him for it. “Virgin gets a reaction,”
There is no “way that would get through a boardroom.” Most executives aren’t as imaginative as Jobs or Branson.
For the process that leads to a single name, companies can pay anywhere from $3,000 to $75,000. If that name becomes the foundation of a branding campaign, they can pay tens of millions of dollars more to establish its presence in the commercial firmament. The results can be inspired, but they can also be laughable.
The namer’s craft may attain its highest expression in the pharmaceutical industry, in large part because namers have to work within so many government restrictions.
After Shore had his virtual-reality encounter, he got to work.
Shore learned that the inventors wanted something short, preferably one word. It needed to convey the idea of transport and also seem hip and consumer-friendly, in a manner that suggested advanced technology. The founders wanted it to have a science-fiction feel to it.
In his search for just the right sounds, Shore used an app, called Universal Text Combination Generator, to create a list of 7,500 names combining fricatives and stops.
Like most namers, though, Shore doesn’t believe that computers can replace human creativity. For Shore, sound symbolism was only the beginning. He didn’t just want words that sounded right. Shore liked “natural words,” words that carried semantic and even historic meaning.
For a single project, namers can come up with as many as 6,500 names. Big naming companies will do anywhere from 40 to 50 projects a year
Three weeks after he first experienced the results of the new virtual-reality production process, Shore paid a second visit to Menlo Park — this time with 61 names he had culled from his master list of 1,200. Using PowerPoint, he presented the names one by one with an explanation of the meaning of each.
Typically there are two rounds in each naming project, though larger clients and tougher jobs may require three or four.
Getting clients to accept a name is the hardest part of a namer’s job. Shore calls it the brander’s paradox: Having asked for a whole new identity, the client is terrified to accept it. “We’re taxed with doing something different,” Shore says, “yet those are the very things that might be off-putting or scary.” This is one reason namers make a point of discussing the origins of their names; explaining the chain of reasoning behind an unfamiliar word can make it come to sound not just natural but inevitable. Even so, some of the best names wind up in the bin, which is why Paola Norambuena of Interbrand says she makes it a practice never to argue for a name or to fall in love with one. Naming will break your heart.
Vetting names internationally means considering cultural issues as well. Lexicon has 84 linguists around the world who make sure names don’t ruffle local sensitivities.
Tomi Engdahl says:
Sarah Buhr / TechCrunch:
Startup L. Jackson Speaks Out About Diversity, Cool Products, And All The People He’s Not
http://techcrunch.com/2015/01/20/startup-l-jackson-speaks-out-about-diversity-cool-products-and-all-the-people-hes-not/
Anonymous Twitter persona Startup L. Jackson has captured a large following in the tech community due to his biting commentary on Silicon Valley culture and regular startup advice. We’ve made our guesses about who he is, but we’re still not sure.
Tomi Engdahl says:
When PayPal And Crowdfunding Don’t Mix
http://hackaday.com/2015/01/22/when-paypal-and-crowdfunding-dont-mix/
For the last decade or so, PayPal has drawn the ire of Internet commentators and people who try to do business on the Internet. The claims go from freezing the accounts of non-profits for months, earning interest all the while, ineffectual support, and generally behaving exactly like a bank but without all those nifty consumer protection laws on the books in every sane country.
[Gareth Hayes], the guy behind the HackRF Blue, recently had a run-in with PayPal. The PayPal account associated with the HackRF Blue Indiegogo project was frozen shortly after the campaign ended. To unfreeze his account, [Gareth] was required to submit a few forms of identification and proof of residence.
The message is clear: get your passport, driver’s license, utility bills, dog license, and fourth grade report card uploaded to PayPal somehow before the campaign ends
Tomi Engdahl says:
How Much Are Actual Startup Exit Prices And Returns?
http://exitround.com/how-much-are-ma-exits-actually-worth/
What are the actual returns for investors and founders when startups get acquired? There is plenty of talk lately about bubbles, burn rates and risk, but what are the actual returns that these companies are making?
One obstacle to determining real numbers is that most tech companies that are acquired do not release exit prices. Only 31.6% of the total M&A deals last year released an exit price, per Crunchbase. This happens for various reasons. Private company buyers are not required to release prices. Meanwhile, public company buyers often do not release a price if it is not considered large enough to be “material.”
Despite the lack of disclosure, it’s still possible to analyze the industry’s exit prices and returns.
Using detailed data from Exitround’s Exit Report, we found that companies with exit prices below $100 million returned on average 12.8 times their total invested capital.
Tomi Engdahl says:
What you need to know to make successful YouTube marketing videos for your brand
http://blog.revfluence.com/2014/12/04/what-you-need-to-know-to-make-successful-youtube-marketing-videos-for-your-brand/
Tomi Engdahl says:
Why Building A Great Company May Not Be Enough To Get Acquired
http://exitround.com/building-great-company-may-enough-get-acquired/
The dream of many entrepreneurs is to build a successful business that can go public or be acquired for a large sum. While IPOs are hard to come by, acquisitions are more common.
The mantra is that good companies are bought not sold. In other words, the best companies are sought after and not desperate to sell. But how can startup founders or CEOs ensure that they’re the ones who are bought and not sold?
While the obvious path is to build a great company and great technology, that’s not always enough. There are a number of other things you can do, says Ajay Chopra, general partner at Trinity Ventures and former entrepreneur who has bought and sold companies. He has three main tips to help in this process.
First, establish a presence in the market and in the public. You probably have the most expertise of anyone in your specific business or market, so don’t be afraid to share that with the world.
Secondly, partnerships are critical for building relationships that can develop into bigger acquisitions.
Third, talent is a key factor why companies acquire tech companies. Top talent can bring attention to a company even if it’s a relatively small company.
Tomi Engdahl says:
First Round Capital:
An interview with Slack founder Stewart Butterfield on the company’s strategy for a successful launch
From 0 to $1B – Slack’s Founder Shares Their Epic Launch Strategy
http://firstround.com/article/From-0-to-1B-Slacks-Founder-Shares-Their-Epic-Launch-Strategy
You’ve probably heard about Slack’s exponential growth. And you may have read about how the internal-communication platform — now just two years old — is already used by more than 30,000 teams and valued at over $1 billion. But have you visited its Twitter Wall of Love?
These tweets are real, and they’re the stuff of founders’ dreams. And yet Slack hasn’t run any big integrated marketing campaigns — they don’t have an elaborate email strategy or buy million-dollar billboards. (In fact, they hit those user numbers without a CMO.) So how did the company not only launch with enviable momentum, but so quickly win users’ hearts? If there’s one theme that emerges when founder Stewart Butterfield talks about Slack’s success, it’s that the company made customer feedback the epicenter of its efforts.
Immediately, the Slack team learned that their product functioned very differently as team size increased.
Armed with these observations, the Slack squad made a number of changes to the product — then started the process all over again.
“The pattern was to share Slack with progressively larger groups. We would say, ‘Oh, that great idea isn’t so great after all.’ We amplified the feedback we got at each stage by adding more teams,” Butterfield says.
By summer, they had polished Slack into something they were ready to share more widely, and they announced their preview release in August 2013 (just seven months after they started).
“That was essentially our beta release, but we didn’t want to call it a beta because then people would think that the service would be flaky or unreliable,” Butterfield says. Instead, with help from an impressive press blitz (based largely on the team’s prior experience — i.e. use whatever you’ve got going for you), they welcomed people to request an invitation to try Slack. On the first day, 8,000 people did just that; and two weeks later, that number had grown to 15,000.
The big lesson here: Don’t underestimate the power of traditional media when you launch. It must be your primary concern, starting months beforehand and continuing for weeks afterward. Pull the strings you have. Work closely with your PR firm to find your hook. It can be personalities on your team, impressive customers you already have in the bag, prestigious investors, etc. But don’t leave it to two weeks beforehand and throw something together.
Most importantly, getting the story out doesn’t end when an article is published. In fact, by Butterfield’s estimation, that’s only about 20% of the recipe for media success. “The other 80% is people posting about that article. I almost never go to news sites — it’s overwhelming how much content is out there. But I will pay attention to what my friends are picking up and sharing.”
Social media has leveled the playing field, so whatever coverage you earn, run with it — give it new life by sharing it with your immediate and extended networks again and again. Engage with interested parties in your networks (prioritizing those with lots of followers and known influence) to broaden your reach. Don’t worry about repetition. It will only help you stay top of mind for prospective users.
Teach Users Why They Need Your Product
There’s another key takeaway from Slack’s early experience: Whatever you call your beta, however you announce and operate it, it’s a crucial phase in your product’s development. Wring every bit of feedback that you can from it.
“We started inviting teams in batches and watched what happened. Then we made some changes, watched what happened, made some more changes…”
” If you’re innovating in a nascent market, the push for recognition of your product category needs to be a major chunk of your go-to-market strategy.
Make Active Listening Your Core Competency
“Sometimes you will get feedback that is contrary to your vision,” Butterfield says. “You may be trying to drive in a particular direction that people don’t necessarily understand at first. In our case, we knew the users we had in mind for this product. So in the early days, we looked at our customers, really just testers at that point, and we paid extra attention to the teams we knew should be using Slack successfully.”
“When key users told us something wasn’t working, we fixed it — immediately.”
“Every customer interaction is a marketing opportunity. If you go above and beyond on the customer service side, people are much more likely to recommend you.”
Know Your Magic Number and What Your Metrics Mean
“Most people who fill out the form and hit submit — more than 90% — never invite anyone or start using the software.”
Amplify What Makes Your Company Special
At the root of all your qualitative and quantitative feedback is a product — and making it the best at what it does is all about knowing its core differentiators and unique opportunities. “All of the founders here are past the stage where we have a lot of ego about building something our way,” Butterfield says. “We set ourselves an incredibly high quality bar, and we’re just not going to be happy if we don’t reach it.”
“We don’t cut corners, and we try to focus on the few things that are most important to our product vision.”
Tomi Engdahl says:
Costin Raiu / Securelist:
Researchers say Qwerty keylogger used by Five Eyes governments and Regin malware are developed by the same entity, or by entities working closely together
Comparing the Regin module 50251 and the “Qwerty” keylogger
By Costin Raiu, Igor Soumenkov on January 27, 2015. 11:00 am
http://securelist.com/blog/research/68525/comparing-the-regin-module-50251-and-the-qwerty-keylogger/
Tomi Engdahl says:
The Business Plan: The Document Nobody Read
http://www.eetimes.com/author.asp?section_id=36&doc_id=1325506&
Business plans are still one of the most important documents any company develops.
It used to be that one of the first things the founding team of a start-up did was write the business plan. The thinking was that the company’s business plan was written expressly for venture capitalists and was essential to raise money. However, it has become clear that venture capitalists do not expect — and will not read — a traditional business plan. Does that mean that the business plan is a useless, obsolete document?
I have a different, more pragmatic view of a business plan’s value and believe it still is one of the most important documents any company develops. The reasons are varied and considerable, but the most important motivation to invest the time in writing the plan is the absolute need to clarify the corporate goals, objectives and plans of the fledgling startup.
Driven by this goal, the process of writing the business plan becomes more important than the final document itself. During the creation of the plan, the founding team will need to develop in-depth answers to questions about its mission, product direction, market availability and strengths and weaknesses.
Let me briefly cover two examples of key questions that will need to be resolved. The first is the capitalization table (cap table for short): What ownership of the company is awarded to each employee and how the company will be valued when seeking investments are key parameters here. Another critical element is how the company will allocate its scarce resources. For instance, which markets and customers will be chosen for the initial “beachhead” target? How will the budget be allocated between product development and the sales/marketing efforts?
Coming up with clear answers to those questions will force healthy discussions between the team members and hopefully create an alignment in purpose that will be beneficial.
The plan will become a living document used throughout a company’s existence.
Of course, writing a business plan is a great exercise because it will service as a vehicle to get funding,
Going through the exercise of developing a 30-page or longer business plan will help the founders get a keen understanding of their business.
Through the process, the founding team may find that the company needs to move to a different market segment. It may point out weak areas within the team, which will spawn conversations about resources.
Getting started may seem daunting, but shouldn’t be. After all, the plan begins with open communication within the founding team.
Tomi Engdahl says:
Building a Good Engineering Team In a Competitive Market
http://developers.slashdot.org/story/15/02/02/190214/building-a-good-engineering-team-in-a-competitive-market
It’s a pretty good market out there for tech professionals, at least on a statistical level. That can make it difficult for companies (both large ones and startups) to find good talent for their developer and engineering ranks.
the trick to hiring good tech people isn’t necessarily a matter of offering the best perks, or the most money, or even an office with all sorts of fun stuff (although those can help). Instead, it’s often a matter of selling them on a vision of the company’s future.
Attracting Top Engineers in a Competitive Market
http://news.dice.com/2015/02/02/attracting-top-engineers-in-a-competitive-market/?CMPID=AF_SD_UP_JS_AV_OG_DNA_
What’s a common mistake people make when thinking all they need is an engineer to make their idea into a success?
You can’t wish for something to be awesome. You can’t say if you get an engineer, it will be an awesome product. You have to have a great idea, but you also have to have a team that believes in the idea that shapes it. You can’t have a product such as “Uber for space travel” and just hope that you just need an engineer.
If you look at all startups, generally the most successful ones start out with a killer team: The team has done it before and therefore has experience; they have seen other things and know what mistakes not to make. The bigger the company gets, you can afford to have an idealized version and can hire engineers who haven’t seen enough—they need some guidance.
Anyone who is only starting out with fresh engineers, the odds are against you in succeeding. There are way more startups that haven’t made it.
Can you describe an ideal engineering recruit?
There is no ideal, but there are great traits such as intelligent, communicative, can work in a team, not afraid of hard problems, curious, passionate, and wants to make a difference. An engineer who is not impressive is someone who is just in it for a paycheck. If they ask me about the company and the mission and what the technical challenges are—those kinds of questions are indicative of a quality hire. If the questions center around equity, free lunch, how much vacation do you get—it’s not as interesting to me.
Tomi Engdahl says:
Fundable Acquires Mentorship Service Clarity.fm As Part Of Its New Launch Platform, Startups.co
http://techcrunch.com/2015/02/03/fundable-acquires-clarity-fm/
Equity crowdfunding platform Fundable is announcing that it has acquired Clarity.fm, the Dan Martell-founded startup that connects entrepreneurs with mentors like Mark Cuban, Brad Feld and Eric Ries over the phone.
It was just under a year ago that Fundable announced its acquisition of LaunchRock, a service that helps startups create pre-launch landing pages, as well as acquire and retain customers. At this point, Fundable seems to have built up a network of sites providing different tools and resources to entrepreneurs (it also owns Bizplan, which helps startups develop business plans to attract funding, and the startup blog KillerStartups).
So as part of today’s announcement, Fundable is also launching a new umbrella brand for all its properties, Startups.co. The company now pitches itself as a one-stop shop where entrepreneurs can get “Customers, Press, Funding, and Mentors.”
Tomi Engdahl says:
Sam Altman / Y Combinator Posthaven:
VC firm Bolt to advise Y Combinator’s hardware startups; YC to build small prototyping shop in
YC for Hardware
http://blog.ycombinator.com/yc-for-hardware
As YC has grown, we’ve funded more and more hardware companies. Hardware companies have very different needs from pure software companies, and we’re delighted to announce a number of new resources for YC hardware companies.
Bolt’s partners and engineering staff will advise YC hardware companies on product development and manufacturing, and YC hardware startups will be able to work with Bolt’s staff at Autodesk’s Pier 9 Workshop facility with no cost to our companies as part of the partnership. Their facility is the the best prototyping shop I’ve ever seen. Also, Bolt’s partners are some of the best hardware people I’ve ever met.
Second, we’re also happy to announce a number of new deals for our hardware startups–across-the-board discounts & expedited services, free consultations and prototyping, and volume pricing for YC startups. These range from 3D printing and rapid injection molding, to PCB fab & assembly, metalworking, design expertise, RF and carrier testing, early access to dev kits, product photography & international scaling.
Tomi Engdahl says:
Ask Hackaday: Bringing Your Design to Market
http://hackaday.com/2015/02/09/ask-hackaday-bringing-your-design-to-market/
While many of us have made and documented our open source projects, not many of us have tried to sell our design to the masses. [Scott] developed, marketed, and “bootstrapped” a cool looking MIDI controller. Now, before you get your jumpers in a bunch – the project is completely open source. [Scott] documented the entire process of not only the design, but the trials and tribulations of bringing it to market as well. Calculating costs, FCC testing and the many other challenges of bringing a consumer electronics device to market are all detailed in his blog. Join me while we look at the highs and lows of his interesting and eventually worthwhile journey.
Putting yourself into a game where orders are in the tens of thousands, with hundreds of thousands of dollars changing hands is not easy when you’re just a guy with an idea and a soldering iron. [Scott] was up for the challenge, however. He quickly realized that much of the margin is spent on advertising and to cover risk.
He also talks about the learning process of product design along the way.
Everything I Learned Bootstrapping a Consumer Electronics Product
https://medium.com/@ScottDriscoll/everything-i-learned-bootstrapping-a-consumer-electronics-product-15755c51ca3d
The world of consumer electronics is not a friendly place for bootstrapping. Consumers are used to paying low prices thanks to the economies of scale of mass-manufacturing. But bootstrapping typically involves small-scale manufacturing in which large fixed costs, such as $10,000 plastic injection molds or FCC testing fees, are no longer divided by large numbers.
Tomi Engdahl says:
Arielle Duhaime-Ross / The Verge:
MIT researchers study successful startups to map entrepreneurial quality in the Bay Area
An analysis of San Francisco’s startups shows where the ‘real’ Silicon Valley is
Mapping entrepreneurial quality in California
http://www.theverge.com/2015/2/5/7984489/silicon-valley-startup-entrepreneur-concentration-map
Tomi Engdahl says:
Top 10 crowd-funded PCs: How Steve Jobs’ heirs are building the next great computer
http://www.zdnet.com/article/top-10-crowd-funded-pcs-how-steve-jobs-heirs-are-building-the-next-great-computerreat-computer/
Summary:The crowd-funding revolution has led to a number of fascinating desktop, laptop, and tablet PC projects. Here are some of the most noteworthy — and successful.
Tomi Engdahl says:
Pebble Time Raises $1 Million in 49 Minutes, a New Kickstarter Record
https://www.yahoo.com/tech/pebble-time-raises-1-million-in-49-minutes-111979398809.html
What’s that? Smartwatches aren’t popular? Pishposh, says smartwatch pioneer Pebble, who just broke a fundraising record at the crowdfunding site Kickstarter.
On Tuesday morning, the Pebble Time campaign reached its $500,000 goal in less than 20 minutes and hit the one million dollar mark in just 49 minutes. The latter is a new record on Kickstarter, a spokesman for the site told Yahoo Tech.
The previous record belonged to the Android-based game console Ouya, which raised $1 million in 2 days and 19 hours. So: Not even close.
Pebble garnered over $10 million in funding during its first run on Kickstarter in 2012, but with Pebble Time breaking the $4 million mark in less than three hours, the company’s newest watch seems poised to shatter that mark and possibly set a new high for the website. The current Kickstarter record for pledge total is $13,285,226, held by the aforementioned Coolest Cooler.
Tomi Engdahl says:
Felix Salmon / Fusion:
Disadvantages of staying private for tech companies: difficulty raising additional capital, onerous liquidation preferences
Market forces
Why staying private sucks, if you’re a tech company
http://fusion.net/story/54448/why-staying-private-sucks-if-youre-a-tech-company/
its disastrous IPO notwithstanding, going public has turned out very well for Facebook.
So while there are good reasons that growing tech companies like Uber prefer not to go public, there are also real downsides to staying private.
Firstly, being public gives companies a lot more flexibility in terms of financing. Because all their finances are public, it’s relatively easy to borrow money; it’s rare for private companies to issue bonds, for instance, and when they do borrow, it’s often convertible debt that can prove very expensive if and when the valuation of the company rises.
More importantly, public companies can issue new equity at whatever today’s price is. Stocks go up and stocks go down—all investors are okay with that. And some employees even love when the stock price goes down, because it means they get more stock units at compensation time. The dollar value is the same, but the potential gain is higher.
At private companies, however, there is a very strong convention against “down rounds.” If you last raised money at, say, a $1 billion valuation, then that’s the valuation that’s going to be attached to all current stock grants, even if no one would invest today at anything higher than a $300 million valuation. Should your company need to raise more money to keep on going, it will find it very difficult to do so at any valuation below $1 billion—and it might even go bust as a result.
Certainly, going public doesn’t seem to crimp companies’ ability to innovate.
Tomi Engdahl says:
Spend or Save? It’s a Trick Question
http://www.eetimes.com/author.asp?section_id=36&doc_id=1325857&
How does startup’s CEO balance conserving cash versus building technology from the ground up.
Don’t worry: This post is not about giving you tips to start saving money for your retirement. This post is addressing the difficult subject of how the CEO of a startup might try to balance between saving –– in other words, minimizing the risk of running out of cash –– and spending. That is, investing into building new technology that presumably will propel his or her company to great success.
I always found it difficult and struggled with whether to focus on immediate needs (saving) versus investing in the future (spending). For example, if I choose to preserve cash today, I need to do so while looking ahead to the future to keep pace with the industry and customer needs, not an easy balance.
As a startup, the objective is to survive through the release and initial sales of the first product. These days, many startups have bootstrapped themselves or taken small seed funding to get them through this period. The runway is typically one to two years at the start of the product development. At this stage, the “spend or save” dilemma is focused on how many resources to deploy for the product development. Hire one or two more engineers? Buy more licenses of a critical software tool? Get more compute power?
Once the product has been released, the objective moves to selling it and investing in the channel, and here it starts to get trickier with the addition of this new parameter.
The sales channel needs leads to fill the pipeline and that means marketing and promotion, visibility and awareness through the website and content creation, advertising, events and public relations. All valuable activities that should accelerate the revenue ramp.
Costs skyrocket and the company begins to run out of cash. All of a sudden, the ‘out of cash date’ completely overwhelms your kids’ birthdate in your mind!
Next up is the budget. Judiciously setting goals and objectives that are tied to measurable results is important for all companies, but especially startups. I would recommend a systematic assessment to determine the outcome of every line item expense in the budget. Cost overruns should not be tolerated.
Working smart is important: Some founding technologists fall in love with technology and insist of building it when it can be outsourced or a “ready-to-use” solution exists. A perfect example of this concept is IP. An entire industry has grown up around supplying design pieces that can be used by other chip companies to shorten the development cycle and conserve cash.
Tomi Engdahl says:
How a Kickstarter Project Can Massively Exceed Its Funding Goals and Still Fail
http://hardware.slashdot.org/story/15/03/03/0211236/how-a-kickstarter-project-can-massively-exceed-its-funding-goals-and-still-fail
In November, 2013, a Kickstarter project for a software-defined camera trigger scored £290,386 (~$450,000) in funding after asking for a mere £50,000. After almost a year of delays, they’ve now announced the project is dead. Their CEO has published a lengthy article about how such a successful funding round can still turn into a failed product. In short: budgeting. To get their software into a workable state, they ended up spending 940% of the amount they’d originally allocated to software development. Their protoyping went over budget, too, and they had to spend a fair bit in legal fees to fend off a major camera manufacturer complaining about their product’s name.
How our $500k Kickstarter campaign crashed and burned
Naiveté, poor decisions and six expensive lessons we learned along the way
https://medium.com/@Haje/how-a-half-million-dollar-kickstarter-project-can-crash-and-burn-5482d7d33ee1
Already looking like you’re a year behind schedule isn’t a great place to be, but in our most recent Kickstarter update, we revealed that our software was finally complete. It was a major milestone.
Finally finishing the software was absolutely worth celebrating, but the celebration didn’t last long: Once we finally had the software sorted, we were confident that the hardware didn’t need any further updates. This meant that we were finally able to finalise the Bill of Materials (BOM), and to get the tooling (i.e. the injection moulding parts) ready to put Triggertrap Ada into mass production. This was the point where we received a final quote from our manufacturing partners. This was the point when it all ground to a halt.
How it all went wrong…
We completely blew our development budget
One of the first things you do when you’re planning to bring a new product to market, is to create a project budget. So that’s what we did. We used the information we had at hand — previous experience, estimates from our manufacturing partners, and quotes we received from our development agencies — to put together a comprehensive budget. We were more or less on budget by the time the Kickstarter project launched. In fact, we were feeling pretty good about ourselves at that point: : While the pre-Kickstarter prototype was very late, we were able to launch our product on schedule by putting the Kickstarter page together way faster than we had planned, and the money we spent on the Kickstarter project itself came in around 2% under budget.
Sadly, that was the only part of this project that went to plan.
Pretty much as soon as we launched Triggertrap Ada on Kickstarter, things started to go wrong: On the same day (!) as we launched our campaign, we received a letter from a major camera manufacturer’s law firm.
in addition to trying to register the new trademarks etc, meant that our legal budget was blown way out
Of course, the legal costs were only step one of the battle. The electronics and software design for Triggertrap Ada ended up costing vastly more than we had originally budgeted, in part because it turned out that we couldn’t use the microprocessor we wanted to (the electronics agency claimed that the original microprocessor didn’t have enough memory), and had to do several more design iterations than we had anticipated. Compared to our original project budget, we spent 9.4x more on this phase than we planned to.
In part because of the additional design iterations, we ended up having to spend two and a half times what we had budgeted on our prototyping costs — high-quality 3D printing and subsequent hand-finishing of prototype plastics is hideously expensive — and our industrial and plastics design went significantly over budget.
So that was our first problem.
We screwed ourselves over on the production costs
After spending way, way more than we had planned for to get to the working production prototype stage, we discovered the next major problem: The tooling (i.e. the injection moulds needed to create the plastic casings etc) was significantly pricier than we had anticipated.
It’s OK to spend £50,000 on tooling if you are planning to make 50,000 units — in that case, the tooling contributes to £1 of cost per unit.
However, we also discovered that the Bill of Materials (BOM) cost was about three times more expensive than we had originally planned for. This is a much worse problem
We discovered that we’d need to sell Triggertrap Ada at £200 — or around $350 — per unit. That was a problem: Our original goal was to be able to sell a base unit and a sensor for $99.
We became very focused on delivering the products, and made some grave mistakes along the way — especially in terms of project management and partner selection, as outlined in my blog post from January. No shortage of monumental fuckups, then — but most importantly, we never revisited the price point.
The problem we’re now facing is the deal breaker: At the price point we’re now looking at ($350 instead of $99), the product doesn’t make as much sense anymore.
The next question was what becomes of our 2,000 Kickstarter backers if we do need to cancel the project. The issue is that the $350 price is calculated based on a production run of 5,000 units. If we only make 2,000 units, things get significantly more expensive per unit.
The core of the problem is doing a production run of 2,000: it’s a really dumb number. It falls between technologies: It’s not cost effective to use injection moulding due to the tooling costs, but 3D printing or other low-volume manufacturing processes are similarly expensive.
And then, the pre-orders failed.
As soon as we finally started getting a better picture of what the costs would be, we started discussing pre-orders.
When we opened up for pre-orders in late December, we got a spectacularly nasty surprise. Instead of falling into the 20–50% range, or an expected £220–500k ($350–800k) worth of pre-order sales, less than 1.5% of the people on our mailing list converted into sales, and another few dozen people who weren’t on the mailing list placed an order.
To us, this meant two things.
One: People didn’t want Ada at the higher price point, which means that we couldn’t sell them if we manufactured them.
Two: We were relying on additional revenue to start our tooling and mass production process. Revenue that didn’t materialise.
The sum of all parts
Ultimately, it all conspired to be a perfect storm: Our R&D turned out to take six times longer than we had anticipated and cost five times more than we had budgeted for. The production cost per unit was three times higher, and the tooling costs were significantly higher than we had budgeted for. And the final kick in the groinal area: instead of getting a 20–50% uptake on our post-Kickstarter pre-orders, we got 1.5%.
Hardware is Hard: Getting a Kickstarter project out the door
https://medium.com/@Haje/hardware-is-hard-getting-a-kickstarter-project-shipped-59c9596bdd7f
With Triggertrap Ada looking like it will ship a year after schedule, Triggertrap CEO Haje Jan Kamps reflects on what worked well — and what, er, didn’t.
Tomi Engdahl says:
What have we learned: 6 expensive lessons
https://medium.com/@Haje/how-a-half-million-dollar-kickstarter-project-can-crash-and-burn-5482d7d33ee1
Lesson 1: Fail faster.
I’m a big believer in ‘failing fast’, and if there’s one thing we failed to do above everything else in this project, it is just that.
There were quite a few points throughout the Triggertrap Ada project where we should have taken stock and pulled the plug earlier, or at least taken action when we realised things were moving in the wrong direction.
If we had failed earlier, we would have had enough of a buffer to re-plan and do things differently.
Lesson 2: Don’t let money mask the problem.
When we received the money from Kickstarter (minus their cut, the payment processor’s fees, and taxes), we had more money in our bank account than we ever had before. That sounds like a luxury, of course, but with that much money in the bank, we lost sight of some of the problems.
Lesson 3: Tighter project management.
I mentioned this in my previous post as well, but one of the big shortcomings we had in this project was a really basic project management fail: We failed to manage the resources we had available to us (money, time)
Lesson 4: Avoid scope creep.
Scope creep is anathema to getting a product out the door, and yet, we fell into that trap really early on, when we decided to change the microprocessor.
The assumption was that changing the microprocessor would be straightforward
Realistically, the correct answer would have been “We would love a better UI, but our budget doesn’t stretch to re-doing the electronics and software from scratch, so we’ll have to live with a slightly worse UI than planned”
Lesson 5: Get the right skills.
We thought we had all the skills we needed to deliver this project. We were incredibly wrong. As soon as the Kickstarter money hit our account, we should have hired an experienced hardware product manager.
Lesson 6: Don’t be naïve.
Towards the end of the project, we engaged an extremely experienced hardware project manager
“If you have £300k to develop a consumer electronics product, how would you go about it?” He looked me straight in the eye, blinked twice, and said “I wouldn’t. Not with a budget of under £1m.”
I recently spoke with another well-known photography hardware manufacturer, who estimate that to bring a single product to market, they’ll spend upwards of $30m — and that’s before they’ve mass manufactured a single item.
So… That’s it, then?
Yes, that’s it. I failed. We failed. It feels horrible, and it’s the end of Ada. But not the end of Triggertrap.
Tomi Engdahl says:
£280k Kickstarter camera trigger campaign crashes and burns
Triggertrap cans product, offers furious backers 20% refund
http://www.theregister.co.uk/2015/03/04/kickstarter_triggertrap/
Backers of a Kickstarter campaign which raised a whopping £290k for the development of the Triggertrap Ada modular camera trigger have been left furious and seriously out of pocket after the company behind the product announced it couldn’t deliver and would refund just 20 per cent of punters’ cash.
Triggertrap, which sells a successful mobile phone camera trigger app, raced past its £50,000 Kickstarter goal back in November 2013, on the promise of delivering by May 2014 “one of the fastest, easiest to use, and most affordable high-speed flash- and camera triggers money can’t yet buy”.
When it launched the campaign, Triggertrap claimed it was “ready” to take its modular system to production, but in reality it had disastrously miscalculated timescales – including the amount of work left to be done – and, critically, the costs of manufacturing the system.
Here’s where the Kickstarter funds went
Kamps: The prototype you can see working in our Kickstarter video, was an early working prototype. However, even as the Kickstarter project was running, it became clear that while we did have a rudimentary UI on the prototype, to get the UI we needed, we needed to make a lot of changes. In retrospect, this was a poor choice: If we had stuck with the simpler UI, we might not have had to replace the processor and all the software that was running on the Triggertrap Ada. This choice cost us a tremendous amount of money and a huge deal of delays, as described here.
Hardware is Hard: Getting a Kickstarter project out the door
https://medium.com/@Haje/hardware-is-hard-getting-a-kickstarter-project-shipped-59c9596bdd7f
With Triggertrap Ada looking like it will ship a year after schedule, Triggertrap CEO Haje Jan Kamps reflects on what worked well — and what, er, didn’t.
Tomi Engdahl says:
Pebble defends its return to Kickstarter with Pebble Time
Read more at http://www.trustedreviews.com/news/pebble-defends-its-return-to-kickstarter-with-pebble-time#zHC6juioWFkReQew.99
Pebble Has Not Destroyed Kickstarter
http://www.forbes.com/sites/ewanspence/2015/03/06/pebble-time-crowdfunding/
Nevertheless a successful company using Kickstarter as a store-front has caused people to question if Pebble Time is in the spirit of Kickstarter, or whether the size of the company should exclude it from the use of crowdfunding websites.
Hardware is still a risky business, and while Pebble has one successful product behind it, simply announcing the ‘tricky second album’ does not guarantee sales. Yes, Kickstarter does mean the company will potentially see the money before the product ships (with the associated boon to cash flow), but gauging the public’s opinion – and their wallets – before the product is shipped reduces the risk to Pebble. One bad product launch at this stage would not be welcome.
Kickstarter allows them to test that public opinion, and also allows people to show their support for the project in a tangible way. To me that sounds like the main use case of crowdfunding.
Tomi Engdahl says:
Silicon Valley Investor Warns of Bubble at SXSW
http://bits.blogs.nytimes.com/2015/03/15/silicon-valley-investor-says-the-end-is-near/?_r=2
Rarely has there been a better time for start-ups to raise money from Silicon Valley venture capitalists.
But this golden age may not last long. At least that is what Bill Gurley says. Mr. Gurley is a prominent investor who has spent a career betting on who the winners and losers will be in the future of technology.
His thesis: In today’s environment, venture firms are willing to take big risks on young technology companies with no real track record in business. Many of these companies, he says, have high burn rates, which means they regularly spend enormous amounts of money in hopes of bolstering their overall growth.
But some of these companies will not succeed, and he says the fallout from those failures will have repercussions across the technology industry.
“There is no fear in Silicon Valley right now,” Mr. Gurley said Sunday at the South by Southwest music and technology conference. “A complete absence of fear.”
By some accounts, there are more than 50 of these billion-plus companies in the Valley at the moment, with more added seemingly every other week.
“I do think you’ll see some dead unicorns this year,” Mr. Gurley said.
Tomi Engdahl says:
Etsy’s Success Gives Rise to Problems of Credibility and Scale
http://www.nytimes.com/2015/03/16/business/media/etsys-success-raises-problems-of-credibility-and-scale.html?_r=0
Depending on whom you ask, Alicia Shaffer, owner of the hit Etsy store Three Bird Nest, is a runaway success story — or an emblem of everything that has gone wrong with the fast-growing online marketplace for handmade goods.
The dispute over how goods are produced and sold on a site that prides itself on feel-good, handmade authenticity underscores the growing pains transforming Etsy as it moves toward a potentially lucrative initial public offering of stock.
For many of its fans, Etsy is much more than a marketplace. They view it as an antidote to global mass production and consumption, and a stand against corporate branding. It’s their vote for authenticity and good old craftsmanship, and a seemingly ethical alternative to buying from big corporations. And it has helped spur a wider industry of items that claim to be artisanal, authentic or bespoke, whether bedsheets or beef jerky.
Though the site still loses money because of high development costs, it is booming, with gross merchandise sales reaching $1.93 billion last year. The fees Etsy collected on items listed and sold, as well as on services like the promoted placement of goods, reached $196 million.
But criticism of the production methods of Three Bird Nest and other increasingly high-volume sellers, together with a string of defections by prominent vendors, reflect the company’s struggles to balance growth with maintaining the indie credibility that fueled its popularity.
Etsy grew out of a design project that three Brooklynites took on for an arts-and-crafts bulletin board.
Etsy declared to shoppers it was building an entirely “new economy” that would re-establish a personal connection between buyers and sellers, and it allowed its merchants to sell only things they made themselves.
But as stores took off, sellers started to complain that one person could not possibly keep up with the flood of orders. The logical next step, they said, would be to take on investment and hire employees, or outsource the manufacturing, but doing so would run afoul of Etsy’s rules.
Still, Etsy stuck to its ban — Mr. Kalin was known to be a vocal opponent of easing it — until late 2013, when, under its new chief executive, Chad Dickerson, the site relaxed those standards.
there are already over 5,000 instances of Etsy sellers outsourcing their manufacturing
Critics charge that decision helped open the floodgates to a wave of mass-produced trinkets. For example, a red necklace carried by various sellers on Etsy, with price tags ranging from $7 to $15, can also be purchased through the Chinese wholesale manufacturing site Alibaba.
According to Alibaba, the necklace is made by the Yiwu Shegeng Fashion Accessories Firm, based south of Shanghai, which claims that it can churn out almost 80 million similar necklaces a month.
“It’s like having a gourmet restaurant on a street with upscale galleries, bookshops and coffee shops, and a McDonald’s or a Walmart gets built in a vacant lot on the street,”
Etsy does police such cases, but it can be akin to playing whack-a-mole.
Other sellers, increasingly from outside the United States, also say that the distinction between handmade and mass-manufactured is not as sharp as it may seem.
“After all, Etsy has always served as an antidote to mass manufacturing,” he said. “We still do.”
Most of the goods for sale on Etsy were never strictly handmade, she said — “that is, unless you are digging your own clay, weaving your own cloth, raising your own sheep.”
https://www.etsy.com/
Tomi Engdahl says:
MRRF: MakerOS for Maker Business Management
http://hackaday.com/2015/03/22/mrrf-makeros-for-maker-business-management/
If you’re a maker business, making the things is usually your chief concern, whether you’re 3D printing widgets or milling them. But if you don’t put enough time and energy into things like client interaction and payments, you may find that you don’t have customers. [Mike Moceri] was tired of bloated systems like Salesforce that cost entirely too much for what they are. He created makerOS to help maker businesses be more effective without wasting time, starting with his own—a Detroit-based 3D printing, design, and prototyping firm called Manulith.
When a business registers with makerOS, they get a custom subdomain. makerOS is white-label software that provides a dashboard for the business owner and opens the lines of communication between maker and client. The client sees their own dashboard, and here they can can fill out a short form to describe what they want and upload photos and files from common cloud services.
The operating system for your
maker business
The simple + complete platform for your 3D printing service
http://makeros.com/
Tomi Engdahl says:
A Manifesto for Makers
http://www.eetimes.com/author.asp?section_id=36&doc_id=1326083&
The maker ethos is not unlike that of the athlete and can be found in faraway Russia or the local Maker Faire, says veteran engineer Lee Felsenstein.
It has been said that humanity can be separated into two basic personality types — the Apollonian, whose existential statement is “I think, therefore I am” and the Dionysian, who says “I feel, therefore I am.” This, of course, is simplistic – there are many other types. One that I identify with is the Hephaestian, whose statement is: “I make, therefore I am.”
Hephaestians are the makers, those who ask, “How can you solve a problem if you don’t have one?” We take delight in the process of conceptualization continually tied to realization. We are continuously drawn to the realization of physical structures, or of non-physical structures that have a life in the physical universe more than in the abstract intellect.
Last year I lectured in Russia and heard a presentation by a Russian sociologist who had studied the culture of the Hephestians in the Soviet Union where entire “academic cities” were built to nurture them. These young elite programmers and engineers, as it turned out, were enthusiastic physical sportsmen, confirming the thesis that I was explaining in my lectures – that the phenomenon of hacking was in fact another manifestation of sport.
Why does one go through years of development, consisting mostly of failure, pursuing the elusive goal of performance beyond one’s personal best, when it would mostly be misunderstood by those who had never been there, and when the reward would be only the opportunity to try again to do better? Material reward is tied to such success only loosely — both types of athletes must adapt their economic life to this pursuit of virtuosity.
We do it because we love to, and we do not yet have an answer to the question of the source of this love. Everywhere on Earth people pursue this same quest, one that will never end, and find fulfillment in the process. This is a mystery.
Go to the Maker Faire and you will see not only the high-tech gizmos that young technologists are developing. Look further into the corners of the exhibition halls and you will find table after table of crafters working in fabric, string, plastic, cardboard and wood. They have always been there, a majority being women. Walk among them, handle their products, and talk with them – and see the world being continuously reborn.