A conversation With Jeevan Kalanithi: EIR at Lux Capital
We are excited to announce that Jeevan Kalanithi (linkedin, blog) is joining Lux as our first Entrepreneur-in-Residence! If you’re not familiar with the role, it’s pretty simple: Jeevan gets time and resources to cook up his next startup, and he helps us think about new companies to back and pitches in to help our existing portfolio companies if they need it.
Jeevan is a founder and startup veteran with eclectic and impressive background across hardware, software, and companies from sizes of one to hundreds of people. We like eclectic and impressive here at Lux.
Jeevan started Sifteo with David Merrill following their successful TED talk, shipping two generations of their connected hardware product into retail before selling Sifteo to 3DR, a UAV hardware and software company. At 3DR, he helped shipped a drone into global retail and an enterprise software product that uses drones to digitize live construction sites.
But instead of just writing a post about why we like Jeevan, why he likes us, and so on, we thought it might be interesting for our readers to get some insights and lessons learned from a founder, particularly one that thoroughly knows hardware and drones. Enjoy!
— Bilal
Qs. How did you end up in the hardware space? Did you always want to be a hardware entrepreneur?
It was more or less by accident.
I did not set out to be an entrepreneur — I don’t have a “I set up a baseball card arbitrage company when I was 12” story. I was more interested in drawing, playing guitar and competing academically in school. As a teenager, I had certain intellectual and creative interests (intellectually: “what makes intelligent systems intelligent?”, creatively: “how do you delight people?”) — and technology products and startups ended up being the natural vehicle to explore these interests. Over time, I became more and more interested in the mechanics of developing successful products, companies and cultures.
In terms of hardware, I did not study it as an undergrad — I did a major called Symbolic Systems at Stanford, a kind of technical cognitive science degree. I completed two concentrations, one in AI and one in 20th century European philosophy. Afterward, I spent time building interactive art projects in New York, at a truly awesome atelier called EYEBEAM. I also worked on movies, painting sets as well as editing. Some acting in TV commercials too — that paid the bills for sure. In addition to that, I was working on some computational modeling research in a neuroscience lab. (Note this wasn’t all exactly at the same time — I was in New York in my early twenties. Goofing off was a huge priority.) I got into hardware at this point because I felt limited by existing hardware with respect to building new and interesting interactions.
I felt like the existing tools and media for expression — screens, traditional pointer-based GUI’s, some touch — were somehow impoverished, and I felt like I wanted to build interactive systems that could do different things — gesture, visual projection onto existing surfaces, things like that. (As is clear, my ideas were rather amorphous at the time, and not product-centric in the least!)
So I figured I needed to learn how to build my own hardware. That sent me off to the Media Lab at MIT, where I started building hardware/software interactive systems. A collaboration there with Dave Merrill — a friend/bandmate/roommate from undergrad who was also at MIT — led first to a successful TED talk and then to our first company, Sifteo. And bang — I was now a hardware entrepreneur.
Qs. Why is hardware hard?
Your margin for error is low. The costs of a bad decision can take a long time to come to light, and those costs can be fatal. Specifically, you can’t make contact with the market all that quickly — making hardware is time consuming — so you have to place bigger bets with less data on your product’s desirability. Second, cash management is not just a matter of tracking your monthly headcount burn. For example, a wrong forecast can kill you instantly — you have to tie up a lot of cash in inventory far in advance of knowledge that it will turn into revenue.
In other words, you can’t learn on the job as easily as you can with more iterative, less cash intensive efforts. The trick is, then, to be extremely cautious on “go big or go home” pressures, and to — and I think this is important — get experienced people in leadership.
Hardware is not bad, though! That’s a gross oversimplification. It’s just different, and you need to understand its dynamics as you plan your company’s strategy and tactics.
Qs. OK, then what’s easier about hardware than what people may think?
You don’t need a huge team to get far. You can get a product to market for $3M to $5M, maybe even $2M if you keep things simple. You can do it with 10 to 15 people. You can do it in 12 to 18 months. It’s all about clever design and an attitude of extreme focus. Brutally scope. Keep the product simple, and deliver a lot of value through software UX. Keep your launch limited to your site and to Amazon (if you are building a consumer product), don’t do brick and mortar retail to start. Enterprise may be kinder than consumer over the medium run as well in terms of cash flow and getting a few shots to improve your hardware.
Another benefit of hardware — assuming you can focus — is that once you set forward on the product plan, revisiting feature decisions or core benefits becomes very costly and painful. Sound bad? It’s not necessarily! This “ballistic path” can let your team focus on making the product a reality instead of constantly tweaking and second guessing. A hardware team in rhythm is a sight to behold — they will epitomize the happy warrior ethos, working hard, getting results, and having fun doing it.
Qs. What tools have come on in last few years that have changed how designs get made, manufactured and supply chain set up?
Things have changed a lot, and the original concepts and strategies in the last hardware renaissance do not all hold. I’m thinking of the era around 2009–2012-ish. At the time, the basic plan was: 1) have a cool concept 2) build a prototype 3) get a Chinese CM to make it 4) put it in Best Buy 5) Profit (or not).
Here’s what’s different.
People don’t want stuff, they want services. The idea of “having stuff” has become undesirable for many people. Rather, you want experiences, you want more time, you want easier. There’s a reason why Marie Kondo is a sensation.
This services-focus is not a new idea, but I believe it can go very, very deep into how you conceptualize your company.
Let’s say you developed a robot lawnmower. Nice work! You might think your next move is to scale up and sell ROBOMOWER 5000 in Lowe’s and Home Depot for 4X COGS, and that’s that. But I wager that people don’t actually want a robot lawnmower. They want their lawn mowed. So maybe you sell it as a monthly service. You basically start a gardening company and scale that, betting that you can do it cheaper than humans can (which, by the way, isn’t always the case! Sometime people are cheaper than robots). Maybe the robot lawnmower still lives in the user’s garage as if they bought it — but they pay for it on a monthly basis, and they can return it to you whenever they feel like it. Maybe your company wraps some sharing scheme among neighborhood users so the mower is in constant use — this may make your business much more profitable. But do the math to make sure.
The “services over stuff” idea may be subtle in its implementation but it gets to the heart of what people want from companies these days. And oh by the way — you might make lots more money over time with these service models — or not. Do your math.
China is better than you. It’s a real mistake to think Asian CMs are just your manufacturing partner. Asian companies can not only manufacture at scale, they can design great products, market them well, and deploy internationally — faster than you.
So I advise companies with the intent to do high-volume consumer electronics to partner with Asian companies very early — they can do a lot of the engineering for you, better than you can — and ensure the value you are delivering isn’t just the widget, but the service it provides. You can deliver a service and software better than they can, and you can probably serve your home market better than they can if your model is more than just putting a widget on a shelf in Best Buy.
Definitely do not put your idea on Kickstarter unless it is truly in PVT (this acronym means, more or less, that you have 1000’s of units built and ready to ship; you are very far from the days of 10 “working” prototypes). Asian CM’s will beat you to market with a high enough quality product if you announce months before you can truly enter the market.
So the model of hiring an engineering team in Silicon Valley, getting your thing working, then going to China, is not necessarily a good move. Partner early. This is way easier said than done, and you’ll need to tap people with relationships with Asian partners to make this happen.
Also note that Asia is the absolute best at high volume, sophisticated consumer products. If yours is not that, you might find a partner closer to home, which would be the dream. I say this not with patriotic fervor, but purely practically as well: being physically near your manufacturer is goodness for fixing problems and perfecting your product.
Qs. What is happening in the drone space? What will this space look like in 3–5 years?
Please see this blog post! In summary, the hardware is getting truly amazing. I don’t think there are opportunities for small companies to innovate in drone hardware. That said, there are endless opportunities to use this amazing hardware to build data products across industries. It will be slow, tough work but the rewards will be huge. Of course, there are a lot of great companies that have been attacking this for awhile, so you won’t be alone.
Additional opportunities lie in second order effects. So if you just assume drones will be everywhere, what problems will need to get solved? Drone defense is one — how do you keep drones off my proverbial lawn (or out of my stadium)? What about air traffic control for drones? Marketplaces for drone operator insurance, perhaps?
Bottom line: Drones are for real. It’s not a fad. But the best thing for drone companies is to become boring and fade into the background of everyday life. Once the hype truly dies down, money will get made.
Qs. What mistakes do you commonly see entrepreneurs make? Team, product, manufacturing, messaging, fundraising?
Lack of focus is the #1 killer. Self-delusion is #2. With #1, always rank everything you are doing. And stop doing all but the top 3. Or maybe even all but the top 1.
With #2, talk to users a lot. Listen for reals. And know that criticizing an idea is not criticizing the person who offers it. This is a cultural point but I think it is important. This is how you avoid throwing good money after bad, how you avoid groupthink, how you avoid irrational exuberance.
These two mistakes will surface as problems across your efforts: with your team, product, manufacturing, messaging, fundraising. But if you solve them you will have eliminated the root cause of large potential screw ups across the different domains of your business.
Here’s another extremely simple and obvious tip — write down a short 1 sentence vision statement — with no conjunctions and ideally no prepositions! And write down 3 to 8 core values. These will aid your ability to focus. Why? Because you will never have enough information to make truly informed decisions as fast as you need them. Your vision and values will function as heuristics that keep you moving fast.
I gotta be honest that when the MIT mentors Dave and I had gave us this advice, back when we first started Sifteo, I was so dismissive. We have to build the product! And make a website! We don’t have time for this touchy feely stuff!
Luckily we removed our heads from our butts early enough and did the exercise. It is so vital.
Qs. How can investors best help their portfolio?
Pretty simple: cheerlead all the way, and support the CEO’s and founders when the chips are down — with money, not just kind words. Second, connect the founders to each other and to experts — but let them know they don’t have to take meetings you offer if they don’t want! Finally, offer market intelligence they can’t get: investors see 100 companies a week and founders see just one — their own.
In other words, provide to entrepreneurs what they want but don’t have: capital, market intelligence, and a shoulder to cry on when needed. In turn, they will provide what you don’t have: the creativity, time and effort to turn concentration bets into massive wins.
Qs. Heard you were a musician and an artist at one point. Was that just a hobby? or has it influenced who you are as a founder/entrepreneur?
Here is a half-baked theory on what motivates creative people. You can divide them into two camps: those that seek the roar of the crowd and those that seek to satisfy an internal creative impulse. The former seek to create a feeling in others, to connect with them somehow. The latter would be just as happy to work in private, unmolested by the outer world.
I suppose we each contain components of both. You could also read this theory as a mapping of extroversion and introversion onto creative production.
As for me, drawing as a kid was purely about an internal creative impulse. I had stacks of artwork that I just kept in a drawer. On the other hand, with music, I loved to write songs and perform them — playing music for a crowd is freaking awesome.
I suppose as an entrepreneur my focus on nailing details comes from that introverted side, and my love of speaking to my team and my customers and getting real products out to real people comes from the extroverted side.
Ultimately, I think artists and entrepreneurs share some kind of strange desire to bring something into the world that wasn’t there before.
Getting more specific: I am very particular about graphic design, industrial design and product aesthetics. I am not happy if live product is one pixel off. At one point, I was at our factory during Sifteo’s first generation, maybe DVT. I was scrutinizing the draft angle of the cubes, and noting some knitting I saw in the plastic, holding our product about an inch from my face. The factory guys laughed and nicknamed me “The Jeweler.”
And then in attempt to get me to approve the sample, informed me my company wasn’t selling jewelry.
Qs. Hey, I was told you are an expert at this — Where are the best burritos in The Mission? :)
The known choice is a good choice: La Taqueria. Specifically, carne asada, grilled, *not* super. Super makes it too wet and ruins the lightly crispy goodness of the grilled treatment. Taqueria San Jose’s al pastor is a strong contender. Finally, the tortas al pastor at Guadalajara are gut busting goodness.
This is probably the most useful piece of advice I am giving to the readers. We should have put it at the top of the post.
