Hi, this is Wayne again with a topic “Daniela Perdomo: MakerCon New York 2014”.
Hi, so I’m I’m Daniela, I’m a co-founder of NGO tena. I should say upfront that I’ve never worked in hardware before I started this company and I never started company, so I lots lots of learnings to start. You know. I was slotted here under sorry that the proportions are off of my slides, but to start what does go tenets we’ve developed this device that connects to your smartphone allows you to turn it into an off-grid communication tool. So I came up with the idea during sandy when all towers were out and power was out, so you didn’t have Wi-Fi either, and I thought there should be a way to leverage the phones. Everyone already has on them to communicate. No matter what and of course the use cases go beyond emergency, but that’s where we started and I like showing where we are now and if you could see the whole product, it’s actually pretty sleek and nice. We started in a very rudimentary fashion. This was the idea written on paper and the first five months of the company basically involved validating whether the technology would work, whether anyone wanted it and whether anyone had done it and the answer luckily, for us was yes, yes and no.
We, after five months, we had our first working prototypes as Eric was talking about literally duct-taped together, but they really really worked, which was really exciting and the first year the company was self-funded and we worked through various iterations of prototypes and what I quickly learned, as I hemorrhaged my own money into the company is that starting a tech company is incredibly expensive. I’Ve been working in tech startups, always on the software side for six years, but I’d never worked on the hardware side and I would say that starting at hardware companies particularly expensive. So even though I do really recommend bootstrapping for as long as possible. The truth is, you will eventually, unless you’re, either very lucky or independently wealthy.
You have to go out and find funding, and so this is I’m so sorry about this, but yeah. So the things that I learned about the funding process is that getting funding for hardware is much harder than software. I’M not sure why, presumably because most people are used to investing in software also, I think you know they think the entire supply chain is kind of scary, but there are a few things that I think helped us get in the door. Number one was obviously having a working prototype and the other was that we were completely dedicated to it. We’D spent already a year developing and really advancing the technology, testing and whatnot, so that really showed we had both time and money in the game. From our end, an IP position is also really helpful to get funded. It shows that you’ve done your diligence like what about what you’re doing is. Potentially novel doesn’t mean you have to walk home with patents, because that takes a lot of money and time, but we walked in on Provisionals that showed we’d done a prior art search. We had a good understanding of what we were doing was new and, potentially, you know, could lead to full patents later. The other thing too, about VCS, is that you basically end up marrying them. So if you don’t like them, don’t take money from them, even if they’re trying to give it to you and there’s also two different kinds of money, and I think it’s nice to have a mix of them. One is, I call smart money.
Is people who can offer real strategic value? So for someone like me, who’d never worked with. You know a physical product before it was really important to bring on investors. Who’Ve done a lot of manufacturing and understood regulatory issues and patents, but you don’t want everyone to be giving you advice all the time because then you’re gon na you know it’s just too many cooks in the kitchen. It’S really hard to execute.
So it’s nice to get a mix of different kind of investors, so the other thing too, is to raise a little more than you think you need you won’t be, even though I definitely thought for a while we’d be the only heart of hardware startup. To do everything on time and on budget raise a little more, but don’t raise too much more because then you’ll definitely remove optionality for what success for your company might be like. If you take too much money upfront – and so I feel like my job at the company as the CEO and the non engineer most of all – is how do we make make sure the money the money lasts us and gets us to where we need to go And I would say that the general thesis I wouldn’t want to talk about is focus and there’s a few points to that. One is 100 % to stick to the Minimum Viable Product with go tennis.
Specifically, for instance, we could have enabled you to not just share your location and text people when you’re, when, when you’re off grade or don’t have service, we could have also enabled phone calls and sharing videos and images, but what we really wanted to stick to was What people were telling us through tests and everything? Where was the most essential features they wanted? And you know that will save you money in the long run. Number two is to remember: you’re, not an island. I think when you know we got all that money and it was so exciting. I thought.
Okay now now we need to go hire all the best people, but what I realized really quickly is that you can get more for less from say, an industrial design firm. You get seven people who can help you on everything, from packaging to mechanical engineering, as opposed to hiring one person in a house who can’t do all that work, and so we’ve ended up doing that for industrial design, the supply chain. We have an incredible supply chain manager, helping us with that, and also some non-essential engineering, that is not court or a product we’ve also add sourced, which is which has been really helpful. The other thing, too, is to hire thoughtfully and potentially even slowly, of course, that you’re outsourcing certain things that helps, but you know, certainly I’m always excited by anyone who’s into what we’re doing, and so I definitely hired a couple.
People who were you know, I’m just so excited about Goten. I want to work with you and I didn’t really listen to my gut and like looking at the resume. Oh, this person’s never had a full-time job has always been a freelancer, or this person has always been an academic, and you know that’s two specific hires that you know we had to lose along the way one is getting his PhD and the other ones back to Freelancing so hiring and firing is no fun or you know people quitting, but we’re now, like a really small group of six people, all of him. You know we worked so intimately with each other. Everyone has to be really committed, and sometimes there’s red flags early on that you know I learned to now.
Watch for the other thing too, is I’ve been. I was at the beginning, really really cheap with money, even as we you know, because I funded it for so long and it spends so much of my own money getting this off the ground once we had money, I was like this has to last forever. This is the most money I’ve ever seen in a bank account ever, but you know, even though I think it was really helpful to work out of co-working spaces and out of hack spaces and use equipment elsewhere.
The truth is, at some point sooner or later, you’re gon na have to invest in have in having all that stuff in-house. That’S why, after all, people have given you money, so you stopped running it like a family business and you start running it like a company that you know can really operate fully. The other thing I learned is that China isn’t always the answer, and what was really exciting and fascinating to learn is that we did a full supply chain model and, while we’d always assumed, we were going to go to Shenzhen to produce our product.
We learned really quickly. The Mexico was only marginally more expensive than producing in China and there were so many other things there were so much better. I can be there in four hours. I personally speak Spanish. So that’s really helpful. Nafta means that when I bring the products back into the US for distribution, I don’t pay any duties, and so in the end, China was actually cheaper for us and we looked at everything. Was there? Singapore, Vietnam, there’s a variety of things, and that’s why you know another goes back to my previous point. I’M really glad that we brought on a supply chain manager to help us look through these things. Otherwise, we definitely would have defaulted to China, and the other thing is well time is money, and it really is because you do want to get to market soon.
You do want to bring revenues in soon, which is an exciting thing about hardware that you would almost inherently have. A business model has opposed to so many of the software startups I worked at previously. The worst thing you can do is rush, and again is the non engineering person I’m always trying. You know like this is something I’ve had to learn, which is that we are making something out of nothing, and so you can set aggressive deadlines and you should.
But ultimately, things are going to exist and work when they can exist and work, and you can’t rush that development, and this is actually a photo look. They look like bombs because this photo the color is a little off, but those were actually our first test units that we were about to send out to people in October, and I was so focused on getting these things out the door and getting them out because You know this time line, I have this Gantt chart. We need to meet everything, and literally, I think, an hour before I was gon na walk out to FedEx to mail these to people all over the world. We found out that they were completely buggy, and so that was a complete waste of time, energy, emotional and and otherwise – and you know so that was probably one of the most expensive things mistakes I made so much.
We just launched two months ago. So I have a lot of thoughts about that, but I would say that you know and gentlemen, prior to me talked about this – that there are a few things that made it clear that we were ready for launch. One is that we do risk technical development, which is to say everything was basically done. You know maybe some tweaking along the margins for design for manufacture, but we’d already passed that review as well. So that’s one thing. The other thing is, we had a relationship in place with our contract manufacturers, so we had a really good idea.
What the cost of goods would be. So we could set a price and set a price, not just for a pre-order campaign but potentially for relationships with retailers and everything moving forward. You know we decided to do a pre-order on our own website as opposed to using a crowdfunding platform, mostly because in many ways I have to thank sites like Kickstarter IndieGoGo, for validating the fact that people are willing to you know, support a company or a project Before the product is actually available, but we just thought we’d like to vertically integrate everything, so we collect all the data, we didn’t really want to have a timed campaign, and – and so we ended up doing on our own website, which was really cool. We didn’t have to, you know, have a middlemen involved um. I do think that investing in PR is a really good idea at first. To be honest, I thought it was BS and it would be really really wasted money, but we found a really incredible PR firm that was able to get us in front of a few really key reporters.
You know you can’t demo for everyone and when you’re pre-ordering everyone’s sort of taking a chance on you, it’s not entirely taking a chance on you, but with the right PR firm behind you, you can demo to a few key people who can validate that. What you’re doing works is interesting, useful and that was really really helpful for us and it’s really served to you know sort of be the bullhorn which has helped with some of the stuff we’ve been doing since launch, which is engaging with people with social media and Definitely using remarketing as social ads. It’S just made us like more more present and in people’s minds, which has helped us maintain growth even after you know the exuberance of launch. The other thing that I’ve really learned from other hardware startups which I’ve been watching is that so many people tend to over promise and under deliver.
So without naming names, there’s been a couple products that you know have not launched, even though people pre-ordered and paid for them, if not months years ago, and so what we’ve really been focused on doing is making sure that when we launched, we were really clear about When we could deliver and make sure that we weren’t over promising where we were in development, I have seen a few hardware startups launch their product when they haven’t de-risked the whole technology and then it doesn’t exist or they haven’t considered certain regulatory issues. But what we’re trying to do is be really honest and transparent about where, where we are so that you know more people will talk about us and hopefully, when they receive their product, they’ll be really happy, as opposed to sort of just satiated. The there was a graph up earlier here about the fairy fairy tale of startups, and I really like this one. I think this was developed for I found it somewhere on the internet for software startups, but this it’s not really so much a fairy tale.
You start with total pre-launch obscurity and you’re working forever, hoping maybe somebody in the world wants what we’re doing if you’re lucky as we were, you know, you’ll have some really great bump in sales and attention when you launch and then you’ll go through what I love. It’S called trough of the trough of despair. When you know things get real here, you’re no longer you know being written about on a daily basis, many times a day, and I would say that we are here: we’ve made it out of the traffic despair and we were starting to see some some steady, respectable. Pretty exciting growth, which is really exciting, and you know I was told to talk about my experience and – and I wanted to show this to just to show how much more we still need to do. You know: we’ve just started: we’ve just started cutting metal for the manufacturing process.
Just began we’re just looking and starting to look into non diluted sources of funding like like grants from the government, because there’s so many public applications of what we’re doing – and you know all over just to say it’s really exciting, really stressful but potentially super rewarding .