Confession: Underneath our dashing good looks, we’re really tech geeks who’re obsessed with cool hardware.
The rabbithole goes pretty deep, I have to admit. Our engineers actually name their internal tools after sci-fi writers: Asimov, Clarke and so on. We use a LIFX bulb in our office to tell us when things get reset. With a little imagination, it does feel like you’re on the Starship Enterprise.
So in the interest of seeing a faster proliferation of cool products in the world, I thought we ought to put together a list of resources that would help hardware startups get more customers.
Here we go:
Content about Customer Acquisition for Hardware Startups:
1: “Empirically the way you get a product visionary as CEO is for him to found the company and not get fired.” – Paul Graham, Y-Combinator
“Pebble assembled the first several hundred watches themselves. If they hadn’t gone through that phase, they probably wouldn’t have sold $10 million worth of watches when they did go on Kickstarter.”
“Like paying excessive attention to early customers, fabricating things yourself turns out to be valuable for hardware startups. You can tweak the design faster when you’re the factory, and you learn things you’d never have known otherwise. Eric Migicovsky of Pebble said one of things he learned was “how valuable it was to source good screws.” Who knew?”
2: “Wow, if guys are willing to pay a couple hundred dollars for a product that’s just a prototype, this thing has really got some legs.” – Chris Peters, Opena Case
“We did some pretty smart things before we jumped onto Kickstarter.”
“As Kickstarter was fairly new, we knew we had to drive a lot of traffic to our Kickstarter project to get people backing the project. So we thought we’d build up a bit of a community before we would actually launch the project. If you’ve read the Seth Godin book on Tribes — it’s all about building a community and getting them to be writing fans about your products.”
“We set up a Facebook page.”
“Very simple. Just threw the idea up there, threw up a couple of renderings, photos and maybe a couple of videos and prototype testing. Then we got all our friends to jump on board and like it and share it around. We even set up a Facebook ad. We ended up having about 1,000 likes on the Facebook page which cost us maybe $100 or $200 worth of ads.”
“We got people’s feedback.”
“We asked them about the product ID. So, we basically did a bit of research before we even jumped on Kickstarter. We asked them what they liked in design, what colors they’re interested in, things like that. We had a bunch of people who were just waiting for this thing to get produced even before it was in Kickstarter.”
Early-bird rewards got ‘massive amount of traffic’ and increased word-of-mouth sales:
“When we launched on Kickstarter, we repaid the favor to these people for helping us spread the word. So, we had an early bird backer rewards. A standard award for an offer for Opena case was $30. We opened it up to early-bird backers for half price, almost $15. We had a very limited number of those rewards, about 150 of them.
“As soon as we launched on Kickstarter, we shared it on Facebook page saying, “Yes, it’s now on Kickstarter. You can basically jump on board and put your money where your mouth is and help make this product a reality.” Those early bird backers sold out within half an hour. They just went like hotcakes. Everyone emailed that link to all their friends saying, “Check this out. If you get in early, you’ll get a really good discount.
“It got us a massive amount of traffic in the first few hours that it was launched. It really helped boost that campaign.”
3: “If you significantly improve quality of life in a basic area of our lives, people will happily sign up.” – Zé Pinto Ferreira, Mellow
How Mellow Made $200,000+ In Preorder Sales In Less Than A Month by Visakan Veerasamy, interviewing co-founder Zé Pinto Ferreira
Before all else, build a better mousetrap:
“If you significantly improve quality of life in a basic area of our lives, people will happily sign up.”
Using Pirate Metrics to think about customer acquisition:
Customer referrals work great for preorders:
“Needless to say we think referrals are a great marketing tactic to use. We’ve found ReferralCandy to be very valuable in driving preorders.”
Good ol’ elbow grease goes a long way:
Mellow also spent a substantial amount of time doing the following:
- Studying other companies’ websites
- Iterating scripts and copy
- Reaching out to 100+ reporters by themselves
- Picking great service providers to partner with (such as TryCelery for preorders)
4: “At the end of the day, brand helps customers answer THE question, “Which one should I buy?” – Marc Barros, Contour
(Part of a 6 part series called How To Define And Create Your Hardware Brand)
Focus on facilitating age-old human functions:
People have been doing the same things for a very long time– only the tools have changed and evolved. Great brands understand that tools exist to serve those fundamental human desires. Examples cited: Rain Shadow Meats (butcher), Chrome Industries (messenger bags).
Use Archetypes in your brand storytelling:
Different products appeal to different drives- Stability, Mastery, Belonging, Independence. Getting the right mix is crucial. (read: The Hero and The Outlaw)
Your product has to be able to tell a story that you define. How is your customer supposed to relate to it? What are they supposed to feel?
“Connected to your history, archetype, and attributes, these stories can change over time as you create a deeper understanding of your brand and what it represents.” – Marc Barros
Other good posts by Marc include The Metrics That Really Matter With Hardware Startups and Shifting From Product to Reaching More Customers. His entire blog is worth a read– he writes with honesty and clarity.
5: “Keep demand higher than distribution, remember that your customers are your best investors, take one step at a time, and keep cash flow healthy.” – Cyril Ebersweiler, HAXLR8R
Two myths in hardware:
- “‘The end game is selling at big box retailers like Wal-Mart or Best Buy.’ Wal-Mart is a problem because servicing retailers is not easy. And the bigger they are, the more cash and time you will need.”
- “‘Once your amazing gizmo is on the shelves it will sell itself. Sadly, retailers are not in the business of creating demand. You are. If your distribution exceeds the demand you created, it will result in unsold inventory.”
Crossing the retail chasm:
Let’s assume your kickstarted project succeeded (over $100k). Once it’s over, your monthly pre-sales are likely to be in the range of 1/20th of your crowdfunding total. That means if you got $200,000 on Kickstarter now your sales are at $10,000/month. Obviously not enough to support a team long term.
You are thus entering the “retail chasm” or “bridge of death” until demand and distribution pick up. Financing this gap is difficult as innovators (the Kickstarter crowd) bought your product but you are still far from the mainstream. Early adopters might be waiting for your product to be ready but will only pay later, if they hear about it.
Positioning and demand creation:
“Demand creation is a result of your positioning (which covers your target user profile, pricing and branding) as well as your media, community and marketing activities. Venture funding will not solve the problem of selling products at a loss, it will just dig a bigger grave faster. Learn how to sell profitably before you scale.”
When and how to scale distribution:
Cyril used the following quote from Charles Huang of Guitar Hero, and it sums it up well:
“Startups should know their return and defect rates before they try to scale. They can learn this through online sales or small boutique store sales. Maybe the second version is when the scaling should happen.” – Charles Huang, co-founder of Guitar Hero
6: “In my mind, “product” is the embodiment of your narrative for how people will benefit from the thing you are giving them, not an assembly of plastic or metal. ” – Cameron Robertson, Lockitron
How Lockitron Made Millions With Their Own Crowdfunding Platform by Eoghan Gannon, interviewing co-founder Cameron Robertson
“We looked very closely at what other crowdfunded projects with technology products had done on Kickstarter, both to understand the success stories like the Pebble watch as well as why certain projects failed or only barely met their goal.
Besides reaching out directly to the folks behind these successful projects,we began to categorize them based on the strength of their Kickstarter page – how long was their video, was it professionally made, how many photos did they include, what points about the products did they talk about.
“We quickly learned that there were several things great Kickstarter pages have in common:”
- Strong Narrative: they have a strong narrative selling the benefits of the product (rather than the technical features);
- Condensed: their videos are upbeat, concise and organized in a logical fashion;
- Emotion: and the overall project presents a strong emotional appeal.
- Okay to be rough around the edges: Conversely, we noted that their videos were not necessarily professionally made.”
On doing PR:
- Media: :”We reached out a number of outlets, however, none of them were interested with the story except for TechCrunch. We launched with TechCrunch and our social channels and that was about it.”
- YouTube -> Reddit, 9GAG: “After our first launch of the original Lockitron in 2011, we knew that hosting your video on YouTube was critical because of their community. Our video was picked up by sites like Reddit and 9GAG which help to propel it to over 2.7 million views in a matter of days.”
Encourage word-of-mouth with a sense of ownership:
“We also managed to foster a tremendous amount of social traffic by giving every one who reserved Lockitron a “backer number” which they could easily Tweet, giving folks a sense of ownership in the broader Lockitron launch.”
On marketing: “We understand that we need to convey just enough information about the benefits of Lockitron without boring folks with technical details to garner the interest of everyday people.”
- Sell benefits, not features: “I could accurately describe Lockitron as a device with Bluetooth, WiFi and 4AA batteries that turns door locks, however, that tells you nothing about why you should have a Lockitron. Rather, if I explain that Lockitron will save you time because you no longer need to leave work to let someone into your home, you instantly understand what why you might buy a Lockitron.”
- Narrative should stand on its own: “The narrative of your product needs to stand on its own two feet. Any great product serves a purpose, delights users and delivers on expectations.”
7: “Play-i raised $30k in the first hour, and finished the first day with $130k- over half their $250k goal.”
Play-I was launched right after Mark Zuckerberg and Code.org asked the public to push programming in schools.
Pre-launch waiting list amplified word-of-mouth:
They gave sneak previews to interested parents at roadshows, then emailed them a day before the launch. They also allowed 500 pre-orders to receive a prize (collectible launch team outfits for the robots).
Attractive, physical products are likelier to get press:
The press is used to getting loads of new mobile apps, and a polished physical product stands out.
Prepping and entertaining he press goes a long way:
They provided a comprehensive media kit (making journalists’ job easier) and gave sneak-previews.
Getting exposure from more established entities (thanks to aligned interests!):
Play-i’s product got lots of exposure on Code.org, because of their mutual interests (public awareness and adoption of programming).
Other good reads and resources:
- How Fitbit Survived As A Hardware Startup, by Robert Hof – while not directly about customer acquisition, there are some very compelling anecdotes about the difficulty of manufacturing, of managing expectations.
- Deconstructing Pebble’s Mainstream Push, by Rakesh Sharma. This post focuses on the later stages of growing a hardware company.
- BoltVC is a seed-stage fund that invests exclusively in hardware, and their blog has some very thoughtful content– a joy to read even if you aren’t in hardware! I particularly enjoyed Why We Exploded Hardware And Put It On Our Walls – a compelling example of how we can use our physical environments to shape our thinking.
- Charleston Tech Wiki – these links were put together for a community in Charleston, South Carolina, but they’re useful for hardware startups worldwide.
- The Blueprint – Lean Hardware Startup has lots of useful links for hardware startups, though most seem to be pre-customer-acquisition focused.
People and Communities:
- AngelList – Hardware Startups. The world of hardware is remarkably small, probably because it takes real dedication to confront such difficult, messy problems. Every hardware startup founder should get a sense of all the other hardware companies in existence. I’d also make it a point to get in touch with the founders of the various companies.
- Creators/Builders is a Twitter list I’ve been putting together of hardware startup founders, accelerators, etc. These are the people who’ve done it and/or are doing it, and you’ll want to pick their brains. Also see: @HWstartups, @HackThings. It’s also worth studying @BestOfKickstart. I’m also starting a Cool-Hardware list, tweet me at @ReferralCandy if you think I should include something!
- /r/hwstartups on Reddit is a great community. Some good reads I’ve encountered:
Phew! That’s all I’ve got for now. Do you have any suggestions?
Let me know in the comments, and I’ll add them right in!