To start off, can you talk about your thesis and approach toward investing in hardware? What are your thoughts on hardware startups designing for one use case vs. You’ve cited the example of Google Glass vs. Snap Spectacles. Can you highlight the key difference in the approach for each of these products? What two things has Snap done well w/ Spectacles that hardware startups can learn from? Another example you highlight, re. Apple Siri vs. Amazon Alexa… ’ve noticed in these two approaches? Design iteration is easy in SaaS, not in Hardware. How do you advise hardware startups w/ regard to iterating and design improvements. What’s your opinion of Kickstarter/Indiegogo as a way to validate customer demand? Rather than a $1M in sales on a crowdfunding site, what validation would you like to see from hardware founders? Ben Einstein joins us today from San Fransisco. Bolt, a seed stage VC fund that invests capital, staff, prototyping facilities and expertise in hardware startups.
Ben ran a product design and development consultancy where he brought a range of products to market in sectors including consumer electronics, high performance audio, sports goods and clean tech. Ben, welcome to the program, and thanks for taking the time! Nick! It’s great to be here. Nick: Yeah. Can you start off with your background and your path to venture? Ben: Totally, yeah! Path to, to venture I think like many people is long, random, somewhat frustrating, which I think is pretty common in this world. I started a designing consultancy right out of school doing, you know, what, what the big business world calls NPI, what most people that we know in the venture world call new product development. And this is sort of typically a service business model just like the IEOs you may know as probably the best example of a company that fits into that category. And I think sort of approach companies like ours and say hey you know I’m looking for help designing this physical thing.
And we would be paid either sort of a fixed rate or sort of service sort of contract for the, for the whole product. And, and as we started to do more and more products for bigger and bigger companies, we started to hear about small companies that were struggling to do the same things that big companies do in their sleep. And so we were sort of trying to figure out ways to, to, to work with these tiny little hardware companies. But they don’t have any money. Or at least the money that they have they shouldn’t be giving to us. Bolt was around helping small hardware teams build their first product. And that really covers everything from sort of brainstorming and sort of customer involvement all the way up to prototyping and sort of first production run. Nick: Wow! So you would, you would go all the way back to ideation phase, requirements, definitions, research, development, all the way through launch? This data w as written with GSA Con tent Generator Demov ersion .
Ben: Yeah. So many, many companies that we would, that would work on this scope is pretty broad. And so early on it’s, it’s really all around sort of ideation and sort of concept development. Lot of customer interview and development in the very early stages. But really the sort of the meat of, of what we would do in my past life was really architected around, around sort of prototyping and, and early engineering and, and ID. And Deals so you know some consultancies really focus on, on sort of, sort of user experience or user interaction. Synapse which are really focused on, on sort of mechanical and electrical engineering. And, and we are what’s called a full service shop, which kind of , kind of covers everything. And it, it, it, it makes you probably not an expert in any one field but pretty good at sort of holistically thinking about products, which turns out as really important for venture investing.
Ben: Not, not really. I mean, I think, you know, it’s fairly specific in sort of our, our core thesis or mandate is really architected around connected hardware. And so these are all companies that have a physical product in their sort of stack of what they do. A big part of that is, is, Deals is architected around recurring revenue. And so we’re pretty much uninterested in the traditional sort of 30% gross margin sale at Best Buy. That’s a very, Sales very hard venture business to scale as GoPro and some other have, have taught the, the venture world. It is very challenging to avoid commoditization and a whole bunch of other dynamics that become really tricky at scale over ten plus years. And so we really focus on companies where software and sort of recurring interactions are incredibly important for sort of both the company but also the consumer. Nick: Awesome. You’re speaking my language today.