Live from PITCH NYC 2012 Conference & Competition - By Angie Chang (Co-Founder & Editor-in-Chief, Women 2.0)
At the 2012 PITCH NYC Conference, the MAKER panel consists of four women starting companies and shipping hardware products: Limor Fried of Adafruit Industries, Alice Brooks of Roominate, Liz Salcedo of Everpurse and Debbie Sterling of GoldieBlox.
These hardware startup founders and CEOs have experience producing products, building prototypes and raising capital for their initiatives.
Kickstarter Campaigns Funding Hardware Startups
One of the hottest Kickstarter projects of the year for busy women who want to charge their phones on the go, Everpurse boasts an inductive charging mat inside the purse. On Kickstarter, founder Liz Salcedo asked for $100,000 and got that in six days and raised over $238,000 by month's end. "So why is this a tech company?" asked moderator Lora Kolodny.
Everpurse founder and CEO Liz Salcedo explained, "there are a lot of battery and charging technologies out there. We did a lot of research, modifications, prototyping, polarities of magnets and how to condense the efficiencies and make a better charging experience. A lot went into researching how to charge your phone throughout the day." Everpurse is financed entirely through Kickstarter.
For Limor Fried, Kickstarter did not exist at the time she was collecting money through PayPal for her products in 2005. "It took me many years to get up to speed and get the equipment and technologies and that financing - Kickstarter gets you up and running in three months, not two years," remarked Limor Fried, founder and CEO of Adafruit Industries.
Roominate hit such an unanticipated scale so quickly that they had to do rapid redesigns to change the process, making the design more modular. "Why is this a tech company and not a toy company?," asked the moderator again. "While we were creating the toy, we did a lot of rapid iterations and user testing all the time. We used rapid prototyping techniques and bought off the shelf office components to make new versions of the toy," said Roominate's Alice Brooks. "The way that we've put it together and in the design of the pieces, we have intellectual property there," she confirmed regarding IP.
GoldieBlox is a kindred concept "to get little girls interested in building and construction. Girls like storytelling and reading so founder Debbie Sterling tested ideas. For example, she had ribbons and wood you could assemble over a book. Then she saw kids didn't want anything they built to be dismantled. So she iterated and the current GoldieBlox has spools to wind and unwind.
Adafruit Industries has sold over 30,000 MintyBoost kits (pictured below). "Pick your enclosure first so you don't have to mill out and do an injection mold, you can save tons of money," Limor Fried recommended. She suggested experimenting with ready-made items like Altoid tins.
"I chose to go on Kickstarter with my concept to prove the concept to see if someone beside my parents loved the idea," said Debbie Sterling. She asked for $150,000 on Kickstarter and raised $285,000 in the end. "That was more than enough to produce our minimum order of 5,000 and now we're producing 10,000 and shipping in February. Next, it will be more than a Kickstarter project and more of a business."
Regarding the "wow" factor, Everpurse's Liz Salcedo's video on the noise that happens when the phone starts charging in your purse did much better than her actual Kickstarter video.
Alice Brooks reported that Roominate asked for $25,000 on Kickstarter and raised $86,000 to produce the orders, so they raised some angel funding to "start the scale of production to be a sustainable model for us, so if everything went well we would be able to self-sustain." Her mentor Mike Cassidy said "speed is the ultimate weapon of startups" so that's what they did. Also, she warned "be careful that you can deliver on what you promise, otherwise your backers will not be happy."
"I love making physical products - that's my background, product design. It's really hard. You have to invest thousands of dollars in these steel molds and one they are made, you can't change them. It's really capital intensive. In the toy industry, the margins traditionally are not that great so you have to find a way to be price competitive especially if you want to go mass which is what I want to do," said Debbie Sterling.
"There are a couple things to watch out for that I see over and over again. Engineers especially and product designers are so excited about their product they want to make the price really low so everyone can afford it. However I have seen it bite people really badly - you think you can sell it for $50 but by the time you get to that there are massive NRE costs or export costs - you can't raise prices. But if you set it high, you can always give discounts or have sales," said Limor Fried.
She continues, "I don't think hardware is so hard, or that you should be jealous of software engineers. Anything that makes it more difficult for people to compete with you - I don't have to worry about people coming in because I know how hard it is. Anyone with a startup knows, there are eight different Pinterests. With hardware, you don't have to worry that much about competition."
Women 2.0 readers: As Lora Kolodny asked, will hardware startups and democratizing hardware be bigger than blogging? Let us know in the comments.
Angie Chang is Editor-in-Chief and Co-Founder of Women 2.0, a media company offering content, community and conferences for aspiring and current women innovators in technology. Our mission is to increase the number of female founders of technology startups with inspiration, information and education through our platform. Previously, Angie held roles in product management and web UI design. Angie holds a B.A. in English and Social Welfare from UC Berkeley. Follow her on Twitter at @thisgirlangie.