Lean Startups 101--everything you need to know about starting a lean hardware startup and keys to success.

2. Pretty slides?
• I don’t like slides with a lot of text. I prefer slide shows with lots of
pictures I can talk over
… but since you are going to be looking at this later, without the benefit
of me talking, I put a lot of words on it
• Slides will be available on Slideshare
• Credits to Ben from hax and Gregor from alphaboard for creative
borrowing of their concepts

3. Who am I?
• Went to NYU (Computer Engineering) and University System of
Maryland (BS Computer Science and Business)
• Serial Entrepreneur: Internet, Games, Interactive Entertainment,
Finance, Security
• Co-Founder of HARDWARE.co, community for Hardware Startups to
share knowledge
• VP Engineering KIWI.KI GmbH—lead engineering effort and product
design. Prototyped and productized all gen 1 hardware and services.

4. Ideation
• Don’t know what to do? Ask the internet…
• Twitter search “someone should invent”
• Google trends
• Write down shower ideas
• Meet with other entrepreneurial people and tell them about your
ideas!
• Participate in events where you can meet new people and work on
interesting ideas.
• Solve a problem you (or a loved one) has!

5. Vision—Customer
/ Problem Fit
Problem/Solution
Fit
Product/Market
Fit
Scaling
Who are your
customers? What
are their
problems?
Does your
solution actually
solve the
problem? Is
someone actually
willing to pay for
it?
How do your
customers
segment? What is
your unique value
proposition?
Cost structure,
revenue streams,
unfair advantages
Biggest Risk:
Is your problem
worth solving?
The process…

6. The problem is the solution
• “… so preoccupied with wither or not they could that they didn’t stop
to think if they should.”
• The question isn’t can we make it, but is it worth making?
• Why are we uniquely qualified to make this solution?
• Is this solution the best solution to the problem?

7. Customer Problem Fit
• Find (potential) customers to interview
“Hi, my name is ___ from ___. Right now, we’re starting a company to ______. We’re currently
in the development phase and I was hoping you might provide some insight into the market. I
would like to understand your perceptions of _____. In exchange, I would be more than happy
to tell you about some recent innovations in the ___ industry.
• “Is there anything I should have asked you that I didn’t?“
• Take notes
• Have a conversation, not an interrogation
• More complaining = more prepared to pay
• Ask if they have a workaround
• Ask for intros!
• Who is the prototypical early adopter? How badly do they want this problem
solved?
• Document Everything

8. Problem Solution Fit
• Lean Hypothesis: “We believe __ has the problem of ___. We can
help them with our ____. We will know we are right if ____”
• Validate hypothesis quantitatively
• Fail early, often, and cheap
• Try to validate or invalidate before writing a single line of code or 3d printing
• Use paper, clay, wood, lego—anything to get your idea across

9. Product Market Fit
• What is a MVP?
• Minimum: Crap no one wants
• Viable: Built with more backing
than you have
• Minimum Viable Product: Good products to build and learn from
• Consider crowd funding—proves some demand
• Warning: Crowd funding is an obligation!
• Prototype Early – Collect Feedback
Minimum Viable

10. Hardware Startups
• Everything a “software” startup has
• But with Hardware as well
• Hardware is a double-edged sword
• Prototyping is easier than ever!
• Electronics: Arduino / Raspberry Pi / Sensors from Cellphones
• Forms: 3d Printing, CNC
• Interactions: Smart Phones
• Infrastructure: Cloud

11. So uh, What’s lean hardware?
• Build the right things
• Build things right
• Build things fast
• Deliver value on top of things

12. How do I lean hardware?
• Validate the problem
• Be fast to market
• Use money effectively
• Avoid VC
• Don’t build (on top of) crap

13. Someone is going to steal my idea!!!
• If someone can steal your idea, then…
• Your idea was obvious
• Your execution was simple
• It was never a good market to get involved in
• But I have a patent!!!
• Patents are only as good as the defense
• Do you have the time and money to defend your IP?

14. What do I need?
• Problem & Solution
• Skills -- Not just technical skills!
• Team -- Resourceful, optimistic, persistent, persistent, persistent,
persistent
• Market Approach -- Needs to be 10X better or different *not cheaper
• Demand – proof it exists
• Distribution
• Plan for what to do next

15. Never just hardware
• Stand alone products can will
be copied
• Do something difficult
• Take something complicated,
and by making it smart, make it
simple—NOT THE OTHER WAY
AROUND
• Hardware + Services
Community, Algorithms, Buy-in
Beware:
• Fun/Fluff
• Easy Stuff
• Solutions looking for
problems
• Impossible solutions
• Delivering too late
• Unprofitable solution
• No customer Attachment
• Ahead of time
• Local solution
• I put a chip in it

16. How long does this take?
Prototyping Production Scaling
3 months – 2 years 3 months – 1 year 1+ year
• Be realistic, some things take time
• … but don’t let it get away from you, ask for help.

17. Four Rules of Retail
1. Keep demand higher than distribution
2. Your customers are your best investors
3. Take your time and learn—retail is a marathon not a sprint
4. Cash flow is the most important measure
• Pre-sales are great
• Credit from a supplier is pretty good
• Financing purchase orders is okay
• Credit from a bank is okay
• Financing on future sales is okay
• Venture capital sucks!

18. Warning: Hardware is not hard
• It’s just tricky!
• There are tons of gotchas, trivia, regulations, expectations, all of which will
tank your business
• If you can avoid making bespoke hardware to solve the problem, by all
means, do so
• Customize existing hardware
• Partner with existing providers
• Double-edged sword: Risky, but if executed well provides a stable and
continuous access to your customers
• Prototyping is cheaper than ever, but production still has the same fixed
costs (NRE, Certifications, Logistics)

19. Petcube

20. Ideal Lean Hardware Startup
• Solves a real problem, in a way no one has solved before
• Opens up a huge market, or creates a new one
• Makes a complicated thing or system simple
• Isn’t a one-off sale, but an ongoing relationship
• Does not push complexity onto your customers
• Hardware development absolutely required
• Awesome team of dedicated people
• Funded by pre-sales and partners

21. Questions?