Category Archives: Management

How do you launch a hardware startup?

This is a repost of my  answer on Quora .

Whether its hardware or software or any product, spend lot of time and energy in customer development . Finding out what users want and think they will pay for is more critical than what we think will be cool for them.

Since HW involves lot of capital, you need to get the above part right.Once you have it, you would need to figure out the device/product environment conditions aka environment limitations, regulatory restrictions/guidelines/requirement whatever you call and very likely you will be changing the product spec or operating conditions to match the new reality.

Then come up with product design (look and feel), in layman terms, the product casing or how users should feel like when they see the product. Very likely because of the product casing/packaging, you will very likely revise your spec again..

Next, from the spec you came up with talking to users etc, figure out what it translated to technical components. Like how many HDMI ports , VGA, optical . USB ports etc, what network interfaces you support, what will be the capacity of hard drive and whether it should be SSD etc..

In case of Apple-TV for example, you might need to video encoding/decoding etc, you need good video decoder…check who sells video decoder chips (probably ARM or imagination tech) , also depending what addln functionality you need, you will also need main CPU processor, so figure out if its going to be ARM or MIPS or Intel Atom ..While you are figuring this, also check the embedded OS you want the device to be running and then check if the compatibility of OS with HW at device driver level…

Check all potential vendors for each component and many times they give you sample pricing (typically in volume of 10K pricing …some times they might give you pricing for 1K pieces as well )

Once you have selected vendors, figure out the power consumption and see if the power budget makes sense.Figure out if you want to your device to be running both in Africa and Siberia ..Accordingly revise your power budget and therefore you will change product spec and/or product casing etc..

Next implement the design spec using platforms from upverter etc and simulate the design.  Next select the PCB vendor who can do the design and manufacturing for you…Board design/packaging might impact lot of factors starting from Design spec all the way to casing etc..So this is important..

Add all the pricing and get the BOM (bills of materials) ..Check if the BOM makes sense for the price range you are planning to sell..If your initial BOM at this stage is for example 25$ , triple that number because you are still missing  pcb design and manf, board packaging , yield, lab bring up , compliance testing , QA and other NRE costs…Now check if you are still making money for the price that your customer is willing to pay …If you initially planned to sell for 50$, but your BOM is around 75$, you are loosing money and unless you have lot of money where you can afford losses initially to gain traction, you might have to change your spec again..Most likely you will remove some components and/or reduce some components..for example you might say I will only add 2 HDMI instead of 4, you might reduce processor speed from 1GhZ to 750MHz etc…

Now go back to your customer and convince him that what you are still delivering is lot of value to him and you are still solving their pain points and only removing the nice to have features…If they agree, proceed further..

While you are doing all this, start your embedded and SW development process in parallel using developer or emulator prototyping boards…Have this ready first so that you can do the demo to potential customers/investors on how the product will perform once HW is done …Show them once manufactured, its plug and play ..get their reactions/feedback..very likely you might change your spec totally or part of it…Once you do this 2-3 times and feeling confident, accelerate your PCB board design and manufacturing and get the prototype out…As a start up ,never go for manf without getting SW/Embedded part ready ..Its more like a lean start up development model for hardware..

If you are building a ASIC like Apple does for their Apple-TV , its different on lot of other aspects and I wont recommend it unless you can raise 10-20M$ easily and can hire 10-20 HW engg team …Of course not every product needs an ASIC or even an FPGA and don’t have to rely on leading manf technologies….

As as others have commented , you need to worry if you are infringing IP or if you are creating IP, make IP protection as part of your design thinking and strategy process..You can start with a provisional patent to buy you time and give you a opp to figure if you still want to go ahead after the feedback from SW demo/product demo..

BTW, try to use opensource technologies and customize it where you can…especially the design tools..Some tools are very expensive…Some vendors give their tools free for folks using their IC platform…Another good advice is try to limit vendors as much as you can, it will save you lot of headaches on lot of areas…

I might have left lot of other pieces, but this should give you a good idea of the process involved..If you need details or clarifications, feel free to ping me..

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What are signs that it is time to let go of a customer

(A repost of my answer on Quora )
Which segment is it? B2B or B2C .  Which industry and how far are they in the evaluation process or decision making process. How long they have been   evaluating. Does that customer already use another competitors product? If so what made them consider you in the first place ? Are they currently unhappy with the support, product features or core functionality of the product or did the existing vendor raise prices or is not giving them the expected discount?   …I assume you had done your due diligence in customer discovery process to ensure the customer you approached is really having the pain point and has committed to move into purchasing phase after evaluation…Did the customers requirement change after the evaluation process began? .I have been in account management roles for many yrs in B2B and lot of times what they say when they start evaluating a product  and their actual pain point are completely different. If I know the answers I could give you better answer.. 
But in general, the following are signs I would observe and will rethink before I decide to move on.
 
1. Are they demanding more features before they pay when you feel features vs price you already offer is already very good…
2. What kind of buyer are they..transactional or strategic/relationship ? 
3. Are they demands good enough but you dont have R&D resources to develop them?
4. Are they requesting multiple extensions of license of the product?
5. If they are existing customers, are they really support burden than what they paid for and there is no more room to negotiate either supporting model etc..
6. Customer is creating bad publicity in forums , word of mouth etc?
7. Customer is not commited either in terms of aligning their resources (persons, time,priority) etc..
8. Comparing apples-oranges
9. Is helping your competition by understanding your strengths better
 
The list can go on…I have encountered each of these and many other situations where I had to take a step back, take a hard look , see if this can be resolved by talking to them before moving on. Its very hard and sad that we had to let go a customer whether pre or post sales…So much energy goes into it, I would really urge to talk to them first before letting them go…B2C shares some similarities with each of the above…

Startups :Creating barrier of entries

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Very first qn that crosses the mind of first time startup entrepreneurs. How do I protect my idea ?

Foremost important thing : Ideas are worthless unless executed properly with viable business plan.

Here are some ways:
1. File for provisional patent if you plan to sell in US..its not very expensive, but creates some barrier of entry..If you are not in US, follow same in your country if it has IP laws
2. Register your company and file for trademarks ..again not very expensive, but its not very cheap…
3. Partner with a very reputable law firm.For example my lawfirm is WSGR (www.wsgr.com) and they are very good and rank among top 10 in US. Many lawfirms are startup friendly or find one who is. Many defer fees or don’t charge anything for 1st yr. Negotiate with them. Partnering with good law firm has its benefits and it also signal investors that you are advised by some good firms.
4. Build MVP faster . Ideas don’t matter much. Execution and viable business models matter. So work on that.
5. Once you register your company legally and have finalized idea/business model , start branding campaigns to generate some traction..these are not so easy and takes time.
6. Start thinking of EU/FDA compliance process…They require tons of documentation and are very process oriented..get familiar with it…Familiarity and knowledge is important and can keep your copy cats away for some time…
7. As I mentioned earlier, Start selling …Many think they should sell only when they have beta or final product…Selling should begin very early to really understand what works and what doesn’t with minimum resources…fail fast and fail often should be the key to accelerate your success 🙂

Would love to hear more ideas and thoughts from readers.

Startup Advice and Strategy: What’s important when considering your startup pricing model?

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An interesting and relevant question was asked by a user aq Quora forums . I think this is something every entrepreneur constantly thinks about  ..Have something to contribute, join the discussion here or at Quora at this link :

Startup Advice and Strategy: What’s important when considering your startup pricing model?

I would really look at the following at the minimum assuming you have found your target mkt likes your product based on your MVP.

1. User acq costs
2. Engg costs to develop
3. Life time value (how long you expect to retain them)
4. Anticipated Support costs to retain them
5. Current pricing of existing alternatives

Based on above, If you can come with a price tag where consumer perceives the value of your offering higher than the price tag you set, they will likely to buy. If the value they perceive is more or less same as your price tag , they might still buy depending on the pain level and how good existing alternatives are. If its less than perceived value, it will most likely will not result in any sale.
Also it really depends on who uses your product vs who buys your product. In some cases, if you are selling which is in high or premium range, people might want to check with their spouses or some level of social validation that its on to buy. The same might not apply if you sell to youngsters/teens/singles who earn decent salary or something which can be classified as lifestyle…

Pricing is really a psychological based decision and you have to do multiple experiments to figure what’s the better price tag. One last thing is dont go for short term pricing tricks as consumers will eventually realize the value and your brand recognition will  fall….

 

image courtesy: machiine.com

Startups: Applying lean methodology and business model canvas frameworks

Startup-Image

I’ve been recently asked by many and also I’m seeing similar qns on Quora and coursera entrepreneurship courses.If you are wondering what the question is . Its very simple. It goes along these lines…I have couple of ideas and/or I have shortlisted few of them. Now what do I do?

I was in the same boat multiple times and having been part of multiple startups as early employee and also as someone who failed once before while trying to start a consumer electronics before, I started following this lean methodology framework for my current digital healthcare startup (www.sensoryhealthsystems.com)

1. Download lean canvas ( http://www.leanlaunchlab.com) to understand UVP of your solution. Have only 1-2 strong UVP that is directly addressing the pain points and must-haves
2. Break down your idea into multiple questions and for each qn
a. Talk to atleast 25 people.
b. Get feedback
c. Validate the hypothesis

3. Next download the business model canvas and fill in the whole canvas
a. Next change the customer segment and see how it impacts the cost/revenue stream
b. Keep doing this for all customer segments. You can make some approximations in terms of how much you might want to charge.
c. Repeat the above expt with Distribution channels. For example, if you are making an app that is downloadable via app store or google playstore, then you have give away 35% of what you make..web version you dont give any..so figure out how the distribution channel affects your revenue
d. Figure out who you want to partner with and what the partnership costs are

4. Next depending on whats your customer demographics , figure out the below by running mkting/ad campaigns
a. User acquisition costs (CAC)
b. Figure out the life time value (LTV)
c. Make sure LTV > 3 x CAC at the min
d. Figure out what the funneling looks like and how long does it take to convert a single user to paying customer
e. Figure out how you plan to retain customer and how much does it cost over the life time value of the customer..

5. Build up MVP and iterate it by constantly getting feedback from your prospects…try to sell them and see if they would be interested…if they are not interested, dig deeper why they dont want to ..is it not addressing the pain point directly, they dont see much value for the price you are offering , usability of product sucks or steep learning curve, trust etc….

6. Get some informal medical advisory team who is expert and understands the value proposition of your offering. Get 2-3 mentors as well who can guide on business side …

7. Once all the above are done, then form your core team, get a cofounder or principal, CTO and get the beta out….

Feel free to ping me if you have any qns. Good Luck…

Republished all popular posts back…

Recently my blog has been hacked and the wordpress sql db has been corrupted. For some reason, I had backup of everything else except the critical sql db which has all the posts and many useful comments/responses… I had many articles dating back to 2005…Its a big loss to me..Ofcourse lesson learned 🙂

Luckily, waybackmachine.org has come to my rescue. I was able to retrieve all my posts and republish them with the only caveat being all posts are with today’s date..I did’nt retrieve some of them as I felt its useless as they are not relevant given we are in 2012…

If you have bookmarked any article and I haven’t republished, let me know the article name/blog post and I will do the needful….

Lastly, I haven’t blogged for a while due to personal commitments, but will blog going forward. Also, I will be blogging now on healthcare, Wireless sensors, systems design, energy management .

Personalization of Silicon and need for Design Flow Automation

I was just looking at some of the latest anouncements and the prototypes at the recent CES show and if you look at the trend and the products that consumers are crazy about, and if you want to sum it up..The market is all about how much personalization can the users do in the product. Every consumer wants to see himself/herself in the product..so what does this translate it to for the Semi-Conductor industry folks.. “ Personalization of Silicon “..

Look at the famous Apple IPOD ..Many see it as the symbol of the youth…So the closer the silicon is to the hearts the consumers, the better are the chances for product success…But this personalization all comes with a price…Everyone knows pricing is one key element which determines the reach and sucess of the product .

So, the big question is , how can the IC industry reduce its IC design and packaging (I mean chip packaging and not feature/product packaging ) costs  and yet be profitable? The answer partly comes from the EDA industry. Automation of the design flow. It is the degree of automation and the accuracy of the results which it can deliver over a short span of time . Multi-million transistors ( 10M+ transistors) and SOC’s are becoming common and the TTM is becoming shorter day by day. For example, with-in few days/weeks of the Apple’s IPHONE announcement, LG released a similar competetive product with almost the same functionality as IPHONE. Imagine how fierece the competetion is. Each single day counts.

How can the design teams manage this pressure ? Marketing teams often wants to add new features in the last minute. People involved in the IC Design knows what this translates to. It is not a matter of simple ECO . Sometimes a small feature addition can lead to couple of weeks delay. I know a customer who has to do go through the entire design cycle twice as marketing asked them to add 2 more new features each time and this effected their tape-out schedules by 6 weeks..Not every Semi-conductor company can afford such a delay ( especially folks operating in Consumer Electronics market  segment ).  So , the solution doesnt come by adding few more engineers or simply delaying the product launch.. You need design tools which are smart enough to detect the incremental changes anywhere in the flow and automatically do the appropriate steps in the design flow with no or minimum intervention from designer.

Not many EDA companies are recognizing the importance of the automation and their perception of automation is awefully wrong. I would say in years to come, the company which manages to bring the true “automation” of the design flow to the industry will emerge as the real winner.

If your customer makes money, you make money. It is as simple as that.

BTW, You need engineers to find smarter ways to design and bring “true” personalization of the silicon :)