Got Hardware Startup? Get Obsessive about your Mistakes
Why is hardware on the rise?
Everybody knows hardware renaissance has arrived and there has been slew of companies racing to reach to top of this new trend. Companies that manufacture what we call sentient objects, machines and devices that are super connected and automated. This was made possible by the rapid fall in prices and advancement of computing, sensors, batteries and, naturally, connectivity. As a consequence, prototyping has become easier and faster than ever before thanks to platforms such as Arduino, Raspberry Pi, 3D printing and more. Consequently, the Time to Market — the time it takes to prototype, fund, manufacture, ship and retail — is significantly shorter than before.
But more importantly, companies rushing to avoid the commoditization of their offering has made innovation all the more important. The need to differentiate has become critical to maintain a competitive advantage. “The way out” may lie in new sensor technologies, design, software, AI and communities of users or developers.
The biggest hurdle to hardware is manufacturing — IS A LIE
Often times we hear industry experts say that biggest hurdle is manufacturing and it is this Black magic that everybody needs to be scared about. Do you know your BOM cost, what is your COGS, Have your figured Logistics, Supply Chain, Inventory control and who can forget Chinese new year! Really?
It is true to some extent that startups want a secure supply chain, control their IP , Logistics and even block their rivals from accessing their manufacturing. But the problem that no one focuses on DEMAND. With all the cutting edge technology, production and assembly lines from big and small FOXCONN’s of the world, you can not create DEMAND with the consumer with all the manufacturing prowess.
Consumer Demand is King
But lets dissect this situation of Consumer Demand a bit. What has changes in the past couple of decades? What is so different this time compared to PC revolution in 80's? The mindshare of people in today’s world is quite different than past. Your startup hardware/software is literally fighting for attention from your consumer. Every product company wants their product to be used “daily” by these consumers( at least that’s what VC’s want- retention rate)
However, people only have limited time during the whole day. If one app takes a place in their phone or usage, other app has to go down in attention (hence falling off usage). Similarly, if hardware startups want their product to be used “daily” then the alternative existing product/solution needs to go into oblivion. This means you are not just craving for attention, you are at War with your competitors (in the minds of consumer).
Some people believe two products if orthogonal can co-exist. I respectfully disagree. Imagine you came up with a product of streaming movies at home. Natural tendency is to list competitors like Netflix, Hulu etc as your competitors. So all you have to do is to build a better product than them right? Wrong!
A consumer has to make choices during every moment in a day. He/she may decide to watch movies OR go to restaurant or play games or Read books etc. Hence you are not just competing with streaming services but with all the orthogonal marketplaces like Food, Gaming, Search etc industries.
What should you do as a Hardware Startup?
Make mistakes, get obsessive about your mistakes. Go to each and every customer of yours to learn more about their habits, their daily life, their usage patterns and their CHOICES. Try again but with more understanding. Even before you think of scaling, investment, accelerators etc, you need to understand these choices. Your consumer will tell you what mistakes are you making. Why are you not compelling enough? They will prepare you for bigger battle and war with Big companies that occupy consumers mindshare today and help you reach to Product/Market fit from right perspective.
Product/market fit is no longer a graph that shows NPS, CAC or growing sales. It is all about usage and a compelling use case to make users Buy your product and keep using them daily. It doesn’t matter if you have software platform behind your hardware product. By the very nature of your hardware product, you have higher barrier to entry and the only way you can compete with Free apps to learn how and when your users are most likely to use your product, optimize for their time during the day/night of the usage and iterate. You can not learn the usage graph and understand consumer demand without making mistakes, and getting obsessive about them.
Consumer demand is created as a result of your mistakes.
Go out of your office, reach out to your early adopters and ask them what mistakes are you making. Understand the phycology and their daily habits. Iterate your product and try again. Product/market fit I believe is a loosely used term which needs to be handled very carefully. It is not about sales or growth. Its about attention. You will make hundreds of mistakes along the way, but only the ones who are obsessive about their mistakes go an extra mile to gain attention (and not just sales) from daily lives of their customers.