In the glass boardroom of New Lab, one of New York’s newest—and aptly named—makerspaces, Anna Thornton addressed a captive audience of nearly 100 entrepreneurs. Thornton, director of quality and engineering at hardware consultancy Dragon Innovation, responded to an audience question with advice on the diligence required for product manufacturing.
“The trick is knowing what questions to ask, not having the answers. ‘Am I doing a good job with my bill of materials?’ and ‘Have I thought about how much I really need to spend?’ and ‘Is my timeline realistic?’,” Thornton said. “Once you know those questions, then you can look for the [right] resources.”
Thornton’s presentation was part of the two-day Hardware Workshop hosted by entrepreneurship advisor Mark Barros with support from Boston-based venture capital firm, Bolt. The woman who posed the question, Abigail Edgecliffe-Johnson, said that having the opportunity to speak with experts like Thornton was precisely why she spent two days trudging through the chilly late September rain to the former Brooklyn Navy Yard.
Edgecliffe-Johnson, a PhD anthropologist, quit her job as a public policy researcher three years ago to design STEM education toys for children. Her first product is a colorful, customizable, remote-controlled car that kids can design to do increasingly complex tasks like climb, jump or pull other objects. She came up with the idea because of her frustration with the lack of gender neutral toys for her own son and daughter.
“The basic premise is play,” Edgecliffe-Johnson explains. “Kids just want to play, and the more they play, the more interested they become in what else a toy can do. That’s how you hook in the educational aspect.”
She says that on trips to the playground, the throngs of kids that grapple for a turn with the remote has been validating. As she makes plans for a formal product launch for her brand, RaceYa, Edgecliffe-Johnson now has to figure out her manufacturing strategy. “It helps to be in a room with other entrepreneurs who have gone through this, or are going through this, and to hear their questions,” she says.
Early-stage hardware investors say a reasonable investment timeline expectation is 10 to 12 years.
Many others in the room that day were also first time product designers, and they echoed Edgecliffe-Johnson’s sentiment, revealing that they often feel isolated working in hardware and appreciate the opportunity to feel like part of a community.
That does not surprise Chris Quintero, associate at Bolt. “It takes a long time to get a product off the ground,” he says. “[As a guideline], when we make an investment, we are looking at being involved for about 10 to 12 years.”
Indeed, the recent Hardware Pioneers report from FSG and the Lemelson Foundation cites that new hardware products, particularly those with high regulatory hurdles like medical devices, can take years to develop, compared to other technologies, like new mobile phone apps, which can launch in less than a year. Quintero notes that most venture capital firms would not blink at a 10 or 12-year investment timeline, particularly those like Bolt that are often the first outside investment to come in. At that stage, the market for a new product can be so hard to gauge that the decision to invest usually comes down to a judgment call on the entrepreneur.
“We know we’re going to have to be really hands on,” he explains. “That doesn’t mean we develop the product for them—we aren’t a product development firm. [It means] we look to augment the entrepreneurs’ resources until they can afford to build them themselves.”
In the strong start-up communities like San Francisco, New York and Boston where the Hardware Workshop takes place, the prevalence of experts who can help early entrepreneurs with prototyping, product design, manufacturing, intellectual property, fundraising or branding simplifies the task of pulling resources together. As an entrepreneur, being in one of these well-resourced markets will not guarantee an idea’s success, but it certainly helps the odds.
This is what Adriana Vazquez says motivated her to move back to New York from Philadelphia, where her company Lilu is based. Vazquez credits Philadelphia’s supportive start-up community for helping Lilu’s product—a breast pumping accessory for nursing mothers—advance to user testing. But because the community is small, her team also relies on advice and resources from a larger network.
Digital platforms have been helpful to a certain extent, she says. “We have found a couple of good networks on Slack [the messaging app]. They aren’t specific to hardware, but we can ask each other questions, run ideas past each other.” Many other digital forums, from online courses to virtual networking groups, now exist to support entrepreneurs. But Vazquez says they cannot fully substitute the in-person networks her team has in Philadelphia and which she is building in New York.
It may be surprising that entrepreneurs would feel such a strong need for physical proximity to resources and networks in the digital age—particularly technology innovators. But the spike in urban makerspaces, co-working spaces, design labs and incubation hubs anecdotally points to the validity of this. The research does as well: the 2015 Global Startup Ecosystem Ranking report by Compass found that cities with the largest clusters of high-tech start-ups also have deep pools of high-quality talent, funding resources, mentors, and experienced start-up founders, as well as strong market reach and overall company performance. What’s more, the top 10 cities ranked in the report are all based in highly-advanced economies, including six in the U.S., two in Europe, Tel Aviv and Singapore.
Promisingly, the top 20 also features several cities in emerging economies, including Sao Paolo and Bangalore. But the lack of economic and geographic diversity in the top innovation hub ranks—while perhaps unsurprising—hints that tech start-ups in emerging markets face steeper challenges than their advanced market peers. This is particularly true for entrepreneurs designing products for poor or underserved communities.
“Firms that are pioneering inclusive business models for the poor in the difficult conditions of the developing world shoulder a heavier burden,” the FSG-Lemelson report cites. “These markets typically suffer from poor infrastructure, fragmented value chains, a hard-to-reach consumer base, and, often, weak demand for innovative, socially beneficial products.”
The report continues: “[Hardware pioneers] need access to the right tools, laboratories, workshops, components, and materials to develop, test, and refine prototypes. Typically, these resources are expensive and are required over extended periods, meaning that the cost of pursuing this kind of technological development is high.”
Social entrepreneurs risk investing too many early resources building a product with no market.
To compensate for resource gaps, it is not uncommon to see development- or socially-driven innovators take the “one foot in two markets” approach that Vazquez and her team have, leaning heavily on early networks, like universities, where their work may have started.
This is precisely what Shivang Dave and his colleagues at PlenOptika have done. PlenOptika is developing a low-cost, handheld eye screening device to serve the more than one billion people worldwide who need glasses, but do not have easy access to an eye care professional. Thanks to their fellowship with the Madrid-MIT M+Visión Consortium, the team has been able to build their idea into both a product and a business model from Boston, with regular trips to India for market and field research and user testing.
Successfully working between such distant and different markets has an impact on already-long product development timelines, however, because it requires a modified product development approach than what RaceYa’s or Lilu’s founders might attempt. Hardware entrepreneurs who are close to their target users can build evolving prototypes and solicit frequent user feedback to help them gauge those uncertain markets that Quintero alluded to. This is the approach that San Francisco-based hardware incubator Highway1 encourages its cohorts of entrepreneurs to take.
“We really push ‘express prototype testing’ as a learning method,” says Dakota Boin, firmware engineer for Highway1. “It’s better to spend a day building a rough concept than three weeks perfecting a model that users don’t like, or won’t give you honest feedback on.” Boin says the teams that join the incubator’s semiannual program are all in the prototype stage, and that during their four months at Highway1’s workshop, they are encouraged to do at least one complete round of user testing.
For social entrepreneurs serving far flung markets, however, the risk is investing too many early resources building a product for which there is no demand. In PlenOptika’s case, Dave says: “We knew there was a need for a low-cost eye screening device, but before we could build a product, we needed to understand who our customer was and how they would pay for and use it.”
Dave and his colleagues spent six to eight months on market research and field interviews before building a rough prototype and presenting it to potential customers—healthcare NGOs—in India. “They all said they would use the device we described, but we had to push them on whether they would or could pay [close to] US$1,000 for it,” Dave explains, adding that only from that point could they really begin to hone their product design.
Now, five years since its start, PlenOptika is preparing to manufacture the first batch of its QuickSee eye screening device. Dave says that what got them there was being able to lean on the practical advice and network acquired through their fellowship, along with his team’s dogged commitment and, of course, a lot of time.
This article first appeared in a special issue of Demand, published for USAID and MIT's co-hosted TechCon conference in November 2016.