Gadgetory

I know I know we're here in San Francisco we had to come to Silicon Valley though because small empires has never covered a hardware startup and we found a pretty interesting one called August and we're gonna learn just what it takes to go from an idea in your head to something actually on a shelf I'm Alexis Ohanian start-up founder and Y Combinator partner over the last year I went on a two hundred event book tour and met people building small empires all across North America now I'm back with a new season revisiting some of my favorite stuff shows it's over ever since pebble technologies $10,000,000 kick-started for Annie watch in 2012 a lot of upstart entrepreneurs and established players alike have been trying to enter the hardware space but what many don't realize is just because you made a cool video and you have a working prototype it doesn't mean you can get your product to shelves on budget with the same degree of quality that you or more importantly your customers desire the August smart log just came out and it looks like they may have cracked the code they have a beautiful working product on the shelves but getting it there wasn't easy I'm Jason Johnson the CEO and co-founder of August we make the August smart lock this is a new line of product called a smart lock and so I can control it with my phone I'm going to just lock the door it's authorizing its telling me that a screen so that means the doors open let's close it there we go the door is left it's a device you put on the inside of a door August is designed to go on the inside of your door so it's just on the inside of the door it attaches to your existing deadbolt lock to allow you to stop using metal keys and instead use your smart phone to access a house or and also to give keys to say your your family your housekeeper you can set the time the hours it works and it really solves the problem keys also it knows when I get home by geolocation so if I've got my hands full of baby in grocery I come near it opens up the main advantage of this is that you can invite people to your house without actually having to give them a physical key all right or you don't have to worry about whether your maid you know like made multiple copies of your keys or the ex-boyfriend ex-girlfriend situation so there's a lot of convenience and some security elements to it that are really compelling for a lot of our customers why solve this problem of our locking doors like why do you eat keys yeah so you know it's funny the past two years we're working on this is a phrase I've heard more than anything it's that it's I hate keys her dot hundred of times and we do hate keys in fact that in New York City two million people a year are locked out of their houses keys are a pain we working another job got locked out of your house just said get it I'm solving this problem right now ending keys forever yeah I I I wish it was it was that dramatic for me it was actually somebody else that actually suffered it i I had a friend staying at my house and and they got locked out and I had to crawl through the dog door in the back of the house alright is very small doctor out boy I'm not a proud person yeah that's how they got in and and so they're telling you this story and you're sympathetic I presume and you're like I'm going to solve this problem so you never have to crawl through my dog yeah you know I got built a couple technology companies and so I you know I have a good idea what you can do with technology you know it's got to be way to do this way to kind of change those old metal locks and keys that we have and do it with them electronics because of crowdfunding and pre-orders a lot more people are thinking about starting hardware companies that's great thing is when you start a software company you really just need a laptop internet connection and time with hardware companies you need all of those things as well as contacts and factories distribution supply prototyping so much more the list goes on and all of those things cost a lot of money yeah so you know I'm fortunate that I've built a couple companies previously and and when I started August I started over a founders den which is a private co-working space in San Francisco the great thing about being in a space like that is you're around all kinds of interesting people they're entrepreneurs also investors so I casually started mentioning the idea of August 2 a few people that are active angel investors and I was very fortunate I got I got great reception everyone could relate to the problem of keys and the hassle of keys and so very quickly people started asking if if if I would be interested them investing in the company there are a lot of folks who have tried different approaches to creating like the smart lock how did you settle on this one I'm always interested in technology that becomes you know universal I become that's easily attainable I'm not so interested in technology that is exclusive or expensive and this is what a home automation has been for you know the last 20 years or so you know very complex very expensive systems that usually you know it's the person who installed them in the home who likes them and then everybody else in the household really like hates it right because it's over complicated and it breaks down and it requires you know specific equipment so this was been one of the ideas how do we make automatic kind of smart door lock how do we make it very easy and very attainable the key was to make it to not make it a full replacement product do not force people to remove their hardware remove their doors right n - and to make it an add-on essentially to what you already have so what you say you know you look at all your front door well actually when you look at your front door you see whatever was there before from the outside right we're not changing the the outer part of the deadbolt you know if somebody has a key they can still use it and the fact that this just attaches on the inside is a smart robot that will be able to determine whether you're getting close and will unlock and lock for you you know that's a way to make the product attainable meaning anybody can install it you know people don't have to have a big discussion or a big you know change in what they already have the secret was to to kind of tackle it in a way that is really cognizant cognizant of you know what people already have what they live with and maybe they don't want a big flashing you know techie product on the outside or the inside of their doors you know sort of with a big screen maybe they want something that is subtle and discreet and so this is this was an exercise in restraint in a way great design should be invisible well-designed products are beautiful elegant and simple and that simplicity takes a lot of work that's one thing to build one version of a beautiful product to scale that to thousands or even millions is a whole new challenge does this start on a cocktail napkin how in there are a lot a lot of companies a lot of approaches to this it seems simple right get rid of the key unlock the door magically but there are a bunch of different ways to do that you've settled on a solution that is pretty elegant certainly very sexy I'm also simple and and why why was this the right choice for August so we spent a lot of time on this issue we thought you know you can you can you can replace doors you could replace whole locking mechanisms you could do a lot of different ways to to address the issue and what we wanted to do was to make what we thought would be the most simple solution possible something that anybody could go to a retail store take it home and install it themselves in under 15 minutes that was always our that was a design intent and so we spent two years in fact doing doing a design towards that to test it with many people people that aren't technically sophisticated the people they don't know how to use power tools one make it really simple so it just takes a a simple screwdriver and about roughly 10 minutes with regard to this August lock in particular water what are some of your favorite parts so so from the very beginning my my philosophy is is you know it's it's not about sticking a display on the wall on the fridge which is kind of a lot of what you've seen in the home automation or you know the smart home environment for me it's all about discretion I know the friction of using a key you have to kind of look forward you have to dig in your bag for it you have to remember it you have to physically take it out and and so everything I've tried to do is how do we make you know that experience so much more fluid and so much more discreet at the same time so being able to hide you know a little bit of an indication of okay the lock is turning and it's it's working for example with the LEDs that you know I peer through metal through a technology which is about sort of microscopic laser etching of the metal for example being able to just get that little vibration in your back pocket so that you know that it's working in the background without you having to actually look at your phone and look at the display for me what you know where this is going and it's going to go more and more there is this notion of the invisible interface meaning invisible interactions as well so you get signals and it tells you in the background that oh my doors locking me after after I've come in or my door is locking after I've left the house or it's unlocking as I'm approaching you want this to be happening in ways that are are not disruptive of everything else that you're doing you know they're just it's just lets you kind of live your life fluidly and it works in the background to to make that happen but humans still need signals to tell them that it's happening right and those sub signals can be very subtle and so that's what I'm excited about is in a way the product reveals itself through the experience not what is trying to scream with unto itself in a way you have a problem with that you've engineered a solution for and it's a clever one right cuz you don't need a drill it doesn't take a very long to set up yeah it's a it's a clever way to get the robot to do your bidding what is it like then building a product not just one that you know in theory scales beyond a few articles but like you can actually scales to thousands and tens of thousands of units yes when you know you've set some pretty high expectations once we came up with the initial concept like automatic door lock right smart door lock then you know we work with Eve and his team you know we want to make something that is attractive to end-users we want to make it a very beautiful and magical experience when you're coming in and out of the house then you have to figure out how are we going to actually engineer and build this you know for mass production and that's where a lot of the real challenges came in right so for example this aluminum face for example from a design standpoint we wanted it to look basically completely like a flat piece of metal there no holes or no penetrations in here at all but at the same time there's a set of LEDs behind right which we want to shine through here and that's that's you know what an ID goal and both for the brand as well from a design standpoint industrial design industrial design yes and then in order to make the the light shine through the the aluminum we had to execute a series of micro perforations using a combination of laser and CNC right so how do we find the right manufacturing process for this how do we control that process well how do we match it up with the LEDs and how do we ensure that we get enough light shining through here that it's an accurate indicator the end user it's such a subtle simple feature but we went through at least a dozen different iterations of this combination here and working with different factories to try and execute this design really really well one of Eve's amazing genius is it is how he's able to push the envelope on most everything so so over our two-year development cycle we've had you know many our every week every week hours and hours and hours in a room with the creatives with the engineers looking at how we can just tweak the smallest of things and and Eve has this amazing ability to just ask questions like oh can we make that a little bit smaller we make it a little bit smoother can we make that a little bit you know blank and it you just asks questions he keeps asking questions until it's refined and refined and refined and either either you refine it right or you just you just your exhaust you're like you know I we know it it answers no II actually we cannot I got any different line is drawn but he's asks you know Anna Anna Anna in a in a challenging way but but also in a very respectful way he just has this great creative process you just he pushes everybody on the team Twitter was conceived right here in South Park and at that time let's face it it was pretty janky crashed a lot the nice thing with software is you can deal with bugs like that as long as what you're making is still what users want hardware on the other hand is harder if you're shipping something it needs to be really good especially when the thing that you're shipping is keeping people's homes and loved ones safe you only really pay a cost in time when you're iterating with software right when you're dealing with Adams obviously there's all kinds of other things that come into it how do things like shipping and maybe even 3d printing how do those things affect how you can create maybe a little bit more easily right so this this particular element you know this is the the heart the mechanical heart of the system we went through several different iterations of this this particular design to get the right torque output to have everything match up mechanically and electrically for instance 3d printing allowed us 3d modeling 3d CAD 3d printing allowed us to prototype a lot of different types of case designs mechanical features in terms of how it's going to fit but you know the ultimate you know drivetrain that's in here is made of at least the case the case part is made of injection molded plastic and this is where a lot of people who are in hardware like this is where your tooling costs come in there's a lot of physical you know plant property and equipment that you have to have in place and you pay a lot of money for it and it takes a lot of time to make it in order to produce mass-produce these parts you can only really have maybe one or two iterations on it soft and hard tooling so you try and do as you do as much prototyping as possible this one happens to be machined aluminum prototype it's all in a relative sense cheaper and faster than creating hard tools for making the parts but that that's kind of the cycle that we have to go through we try and use every single prototyping technology that's out there whether it's 3d printing CNC machining before we get to the point where we actually have to buy and cut soft and hard tools because at that point it's that's serious commitment that's that's a serious commitment yeah yeah that's usually you know under a normal schedule maybe a month to build a set of tools so you'd been CEO before of a couple of companies but never a hardware company how much did that help or hinder you yeah so I had a little blot right so I've done a couple of software companies I did a sizable services company but the hardware was new for me which meant that you know I had to rely upon some of Eve's expertise but also outsourcing right and using using firms that have done hardware before and you know if I had known two years ago that I would know so much about hardware than I do today boy I'm not sure I would have would have been as excited that it was it's been a tremendous learning curve because it's a device that has 167 components inside of it right and ostensibly the doesn't look that complicate it doesn't look at that complicate is is the beauty of good hardware yeah you know you kind of hide all that insides but it's a very complex device so what's your advice to someone who wants to they want to start the next August hmm and let's say they don't even have the experience of being CEO before maybe they've tinkered a little bit with hardware but if you could take those two years of lots of lessons and distill that in some way what would you say so I would probably more readily encourage them at work software honestly because you want the competition no I know I'm not so concerned about that it hardware it requires a tremendous amount of capital it's uh and I had some great people you know give me advice on this when I when I saw council at the beginning and they said yeah prepared spent a lot of money because you know prototyping is is an expensive endeavor and and tooling for manufacturing is a very expensive and Sunday and I change the tools and now you spend several hundred thousand dollars on our tool and you gotta redo the entire thing right you know not not to trivialize when you put a lot of hours into software but you don't have that level of cost generally yeah with software no definitely not so it's really hardware founders beware it is it an expensive endeavor and and I don't want to scare people off but just be prepared for that because the worst thing you want to do is spend a lot of time and energy and your own money working on something and then you find out you can't actually make it into a product because it require a lot more capital to turn into the actual project itself there's no beta in hardware you know people's expectations in hardware is that it has to work and it has to be you know of high quality and I think you know in many ways the reason why hardware is becoming more Sexy's also because generally the public has become a lot more you know sensitive to to quality I mean sometimes you know when you when you when you struggle to kind of explain design to people if you just change the word design to the word quality then people started getting it a lot faster right you're welcome Silicon Valley we came here we shot a small empires episode and we taught you something really important Hardware is hard what software is one thing get away with a few bugs here and there but Hardware may seem really cool really sexy you can put together a really compelling video people get really excited money pre-orders all this stuff starts coming in you still kind of build something got to build a lot of something and it has to be good because if you don't build something great your focus smartlock found success by bringing home safety into the internet age but it isn't just about having a great product having a clear process will help your business work efficiently and greatly succeed start by identifying specific areas of your business that are struggling and tackle those right away make sure everyone knows exactly what their responsibilities are and then no two people are working on the same thing are you spending too much time on work that isn't necessary eliminate time wasters and keep your team focused on a simplified workflow and finally don't get tied down to any specific step scheduling reviews will allow you to make sure that everything is running smoothly and let you adapt to anything that might come your way for more business advice is an 80's business circle