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Hardware ain't hard, money is: Crowdfunding, bootstraps and startups
Can you rattle the tin for marketing? Really?
Radbot Our quiz on startup branding revealed that a worrying number of you are not to be trusted with a hot iron - branding, soldering, or even wool setting, it seems.
I made a slight oversight in that while in banking I did not "put aside" (as a friend calls it) the megabucks to become a gentleman of leisure and science, so we need someone else's money to spend, i.e. "investment."
Making good cheap reliable non-bling consumer hardware remains hard, by the way, unless you happen to have the first "insignificant" million or so already in your pocket, it seems!
We don't, so we need someone else's, oh yes...
Money, money, money
To get someone to invest, which might be for shares ("equity") or with a loan ("debt"), the golden rule is that you need to show the person with the gold that you have a capable management team.
Then preferably show that your product/service works, that there is a market for it, and that people are prepared to pay for it. For us this has boiled down to "team, traction, data". One investor took a punt on us without those, another said: "No." (You have to expect most to say “no” whatever your case, for many reasons and non-reasons.)
A useful exception is government help for startups, to help push along tech which is not quite yet commercial, and we've had some of that from the EU and UK, with more on the way.
We do actually have a prototype product that works, though it could always do with more development time, tweaking, cost reduction, etc, etc. Plus we have some clever product ideas for the future, and different "product-markets" to tack.
We are "trialling" it with our limited budget to get the "data" (otherwise known as proof that it works and that people are happy with it) but if we are going to achieve our mission of hundreds of millions of devices saving Joe Everyone billions of pounds per year (and oodles of carbon to save the planet, our secret ulterior motive) then we need to grow and grow fast.
Chicken and crowdfunding egg
But how do we get sales (translation in startup circles: "traction") to show investors before we have a full product to sell? Hmm, I think we call this bootstrapping in IT, or in our case crowdfunding. Raise enough money to get the first shippable product and ship it. (I did once work on a "big" defence project, a ship's command system, that had to ship well after the ship, er, shipped... Ooops.)
Thus to get Radbot (and his clones) to the wider world we will be doing a little hustling with the help of our crowdfunding manager who is back in Lagos (yes, really!) and his newly formed team.
We have to make videos, choose products and rewards, targets, oh my!
Tiers before showtime
First decide why you're crowdfunding: is it for the money, is it to sell product, is it maybe for marketing?
Some of the most convincing stories I heard while knocking back free pizza and beer (sorry, doing rigorous startup "workshops" and "networking") were from those using crowdfunding as a form of marketing, for getting seen, for building a community, with the money almost a side issue.
We definitely need to expand beyond our (wonderful) techie open-source community and get ourselves known to “normal” human beings if we were to move the needle.
Our main target market is not the uber-geek who programs their heating system in 15-minute increments a week in advance from their smartphone.
Yes, I met that person recently; a very smart individual they were, too, and a happy Nest user it seems. But they and their ilk don't control the other 400 million radiators that we care about.
Building a community of normal human beings using our product and becoming "social promotors" sounds suspiciously like that "traction" thing we need to wave at the investors, yes?
So we've decided on a gentle blend of product sales and awareness; we're not directly after piles of cash, but we do want to get the first devices into the hands of consumers at a reasonable scale.
Having surveyed the available platforms, only a couple have the scale in the EU-28 market that we are targeting: Kickstarter and Indiegogo. Indeed, when thinking of branding we tweaked it for the demographics of those sites.
We also have to choose tiers of products and rewards (aka "pledges" and "perks") that will reach non-techie users with a couple of key "personas" that we identified during our branding. Joe Everyone for us is sometimes young and single, sometimes a home-maker.
We also want to reach out to others who would like to help our project along, without necessarily buying a physical product or service.
And then we need to set a target – miss that and the campaign fails and you don't get a penny. Set it too low and you can't cover the fixed costs such as video creation, campaign management, and management time.
We also need to fix the product line prices with the usual tension between the price that marketing dictates would sell versus what the bean counter for our firm says will make money, with the added excitement of Sterling bouncing around all over the place over the next few months until manufacturing and delivery.
There is also a fair amount of showmanship involved. This is sales after all.
Alongside the videos are social media channels and blogs and websites, talks to give, people to glad-hand, questions to answer! Lots of management time...
I feel slightly queasy about the truth universally acknowledged that you need to secure around 30 per cent from friends and family before you even start. See here.
Not just because there's a lot of emotional capital tied up with friends and family money, but also because it seems to be "managed spontaneity" as the audience warm-up man at a TV show once said, while holding up placards saying "laugh" and "applaud". But then maybe I'm just an old fuddy-duddy.
Make it, make it
Oh, and we have to actually tweak our existing prototype, get the CE stamp, and get our new gizmo manufactured. At the moment we make plastics in China and circuit boards here, with assembly often with the help of university students and us nominally C-suite execs! If we're successful we have to improve the manufacturing process and off-load it too.
The Kickstarter campaign kicks off next month.
That brings me on to marketing and PR. Time to discover how cheap my soul is. ®