This is the third of a three-part series on the challenges you’ll face building a hardware startup. In this third blog post, we’ll talk about the parts and processes: what it takes to find the right suppliers, the challenges you face when dealing with manufacturers abroad, as well as how your product evolves in a changing environment and how it affects your results. Check out Part 1 and Part 2 if you haven’t already.
When we think of startups, we often think of people making software or processes. We had the opportunity to host a Q&A panel with the founders of some of our most successful hardware startup. We are joined by panelists whose work touches hardware development in multiple ways, from established large-scale manufacturing operations to startups breaking into the hardware space with innovative designs, to research out on the edge of hardware applications.
Noah Saber-Freedman, our Makerspace technician and team management coordinator, was the moderator for the panel. Our speakers include:
– Ryan Desgroseilliers, Co-founder of Apisen, a startup producing specialized equipment for emergency responders and situations requiring forced entries.
– Daniel Blumer, Co-founder of Revols, a wearable technology startup that is creating the world’s first custom-fit earphones. Revols raised one of the most successful Kickstarter campaigns of over 2.5 million dollars.
– Joanna Berzowska, Chair of Concordia’s Design and Computational Arts and Head of Electronic Textiles at OMSignal–a startup that seamlessly weaves technology into life by designing beautiful and functional smart apparel to help people live active, fit and healthy lives.
– Marios Lteif, Area Sales Manager at Wurth Electronik, one of the leading manufacturers of electronic and electromechanical components, printed circuit boards and PCB-based intelligent power & control systems.
PARTS & PROCESSES
What did it take to find the right suppliers for the parts you need?
Ryan, Apisen: The relationship with manufacturers and suppliers is extremely important and you need to set up a whole infrastructure. There is a unique language and a unique process that nobody teaches you how to deal with. It’s a learning experience. Depending on the stage of product development, when doing early prototyping, it’s better to go to smaller manufacturers, because you may require a small amount of production for a given component. For large manufacturers, they value products that are scalable and have reached a level that requires a large amount of production, otherwise, it’s too costly for them. Moreover, you need to have someone physically there to build a relationship with manufacturers, otherwise they will mentally de-prioritize you.
Daniel, Revols: It was the main reason we went to China. Initially, we were worried about the quality, but we learned that if it’s done properly, it can work very well. There was a major cultural challenge, and we needed to learn how to communicate with manufacturers. Moreover, many people are worried about protecting their patents, but we aren’t as concerned. We still need to take precautions. For example, the more manufacturers you have, the more complex it becomes to manage them, but the positive aspect is that if each manufacturer only creates one component of your product, they will have difficulty replicating your whole product.
Ryan, Apisen: There are also different types of manufacturers, they can be big, medium, or small and there are pros and cons to consider. The smaller ones are more willing to work with you, but they may not have all the resources. For larger ones, they may have the resources, but not enough time to work on your product. In fact, they have different grades they assign to clients and if you have potential, they will assign you a certain team. So the more potential, the more they’ll assign a higher quality team.
What challenges did you face when dealing with manufacturers abroad?
Daniel, Revols: The most important thing to keep in mind is to work with reputable manufacturers. Manufacturers have a reputation and it’s in their best interest to preserve your intellectual property. If you were to contact them online from Canada, they always say of course they can do it. They want your business. But you need to speak with them in person. We reached out to 10 manufacturers in China, and we learned how to assess a factory. You could physically see the place, you can also see how their employees are treated. For example, when they give you a tour of the factory, ask them to go to the bathroom midway, not the one for guests, but the one for employees. You can assess their living conditions, such as if they have air conditioning and other aspects that indicate they are treated well.
Joanna, OMsignal: We started manufacturing in Montreal initially, then we eventually moved on to a manufacturing partner in Sri Lanka. Part of the team including the co-founder went, which is important, and we opened an office there. The challenge was educating the workers on the floor and how to do sourcing and pricing. Every little detail is important.
When dealing with material sciences and textile sciences, it’s a bit different than traditional hardware products. The reason with decided to work with the manufacturer in Sri Lanka was a question of time, we are funded by venture capital and speed is important. For examples, manufacturers may have 30 of the machines we need in Canada, but they could only dedicate two of them for producing our product. The difference in scale is enormous in Sri Lanka. They don’t exploit their workers and have sustainable practices, but the most impressive thing is that there were 3 shifts of workers in a given day. The manufacturer is operational for 24 hours, so it is so much faster. They may be ambitious at the beginning when they say they can deliver what you’re looking for, but once in production, there are many issues that arise. It’s not easy when you’re building a product that is innovative, manufacturers may want to quit along the journey, because it is difficult to produce, so you need to cultivate an ongoing relationship with them.
Marios, Wurth Electronik: There’s 90% of factories that are in Asia, because it’s less expensive to produce parts. That is one of the reasons why most companies decide to seek manufacturers in that region.
Can you talk about the evolution of the product/concept from the outset to today? What’s changed in the environment around the product, and how has that affected the result?
Ryan, Apisen: When you get feedback from customers, you’ll get a whole list of features they would like. Be careful not to become a jack of all trades, it’s expensive. It would cost a fortune for us to make, and it won’t help achieve our goal for the product. So we ended up pivoting back to the original idea because of feature creep. It’s hard to avoid, but we got a couple of wake-up calls, and we realized we needed to push back to core functionality and our key feature. Our secondary features are not the main reasons people are shopping for our product. Start pruning features and focus on the ones that are validated and still address pain point.
On the other hand, hardware is more difficult to A/B test. It’s challenge to change stuff in hardware, cost is an issue, and if you change anything, it will change the timeframe, that’s more important than cost. It might take 6 months to a year for certain components, which is much less flexibility than you have in software. Your first prototype, the quality is subpar and five times the price. You don’t want to order large quantities and still be making changes to your product, because you’ll be less agile. Your customers won’t necessarily inspect you for every little patch initially. Customers, however, expect you to get it right with regards core functionality.
One thing to keep in mind as well is that a lot of the work you do involves speaking with suppliers, there are specialists for every supplier and they want to be accessible to you. If they can help you, they will order this part specifically. They have a lot of experience in the specific components you require, given that they worked on building so many products for their clients. They tested the specific component. This can eliminate huge amounts of waste of time. They want to help you because if you succeed in building your prototype, you will most likely go to them for production.
Daniel, Revols: Initially, we wrote all the features we wanted to have in our product. We had a wish list, but you have to get your MVP out there, which is the fastest way to test whether a market exists. You can always add features later on, but you need to stick to your core feature. We also had one of the most successful crowdfunding campaigns in Canada, raising over 2.5M. It becomes challenging to satisfy all your customers.
Joanna, OMsignal: We started out with a much bigger vision, by creating all kinds of apparel and apps that would address many aspects of health and wellness. It was a difficult process once we raised series A, because it brought on venture capital culture. We had to focus on early adopters, mainly individuals that are into sports. Consequently, we had to change the way we thought about the product, the look and feel, the marketing, and the app.
We hope you enjoyed the third post of this three-part series!
At District 3, we have a Makerspace, a place to test, develop and prototype your ideas into concrete projects that could potentially become a viable business model. Open to the community; it is also a place to learn about new technologies, how to use them and think about design decisions through the development of your project. We’re also hiring a Design Lab Coordinator and Technician, you can apply here.