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Guest: Andra Keay, Managing Director of Silicon Valley Robotics.
Host: Kevin Mako, founder of Product Startup and the leading expert in hardware startup consulting. A hardware entrepreneur since 1999, Kevin has advised more than 1,500 founders and built and scaled MAKO Invent through its acquisition by TriMech in 2024.
Moving Robotics From Research to Market
Silicon Valley Robotics leader Andra Keay explains how robotics founders can balance technical research with market focus, execution, and commercialization. The discussion also covers product strategy, business models, development planning, expert networks, funding readiness, and commercialization.
What You’ll Learn in This Episode
- What is the Robotics industry like today?
- Robotics 2.0?
- A lot of hardware development is included in this topic.
- The commercialization of robotics is a burgeoning topic.
- Robotics founders are slow to commercialize because they spend too much time researching and are then slow to execute.
- There are three stools of robotics hardware companies going to market.
- Funding, product-market fit, and manufacturing are core tenets of developing robotics.
- People underestimate the value of spreading hardware to the world.
- Hardware is long-lasting and takes a while to come together, but it carries profound value when done well.
Episode transcript
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Read the full episode transcript
Kevin Mako: Hello, product innovators. Today we learn from a robotics community leader on what modern robotics innovation startups are doing to succeed in the consumer product segment.
Narrator: You're listening to the Product Startup Podcast, the show that helps bring your product idea to life by chatting with successful inventors,
Narrator: product developers, manufacturers, and hardware industry professionals. Our goal here is to get to the bottom of what makes a product successful, from initial
Narrator: idea to getting your product on store shelves. We're taking you step by step to build a functional product and scale your product business.
Narrator: Hosted by Kevin Mako, one of North America's leading experts on hardware development for small product businesses. Now, on to the show.
Kevin Mako: Welcome back, everyone. Today I'm very excited to introduce Andra Keay to the show.
Kevin Mako: Andrew is the managing director of Silicon Valley Robotics, which supports the innovation and commercialization of robotics technologies.
Kevin Mako: She is headed up Venture Capital Rounds as a fellow lecturer and an XPRIZE. judge. Her office is also just down the hall from our Mako Design California office at circuit
Kevin Mako: launch. Today, Andra is going to share some valuable knowledge in how inventors, startups, small
Kevin Mako: manufacturers can, today Andrew is going to share some valuable knowledge in how inventors,
Kevin Mako: startups, and small manufacturers can understand how robotics is becoming a mainstream part of new electronic mechanical products, also the future of the consumer
Kevin Mako: robotics industry and tips for anyone thinking about robotic products or even incorporating basic robotics into their new hardware product. Now, on to the episode.
Andra Keay: Hi, Andra. Welcome to the show.
Kevin Mako: Thanks, Kevin. It's great to be here. We're excited to have you on. And of course, your office is right across the hall from our office at
Kevin Mako: CircuitLaunch at our San Francisco facilities, an amazing facility. And you've been there for a while now. What can you say about that place?
Andra Keay: Because I'm a huge fan of CircuitLaunch. I love it. And, you know, I'm distracted by the robots that go past my window quite frequently. But it has been
Andra Keay: great to be there as perhaps one of the second tenants there to see that the space is completely full now. And that's in spite of the pandemic.
Andra Keay: It's such a range of interesting startups there. What can I say? I really love being there. And I've seen the benefits for the startups that are there
Andra Keay: as well because they operate as a community where one person's answer can solve another person's
Andra Keay: problem. And we also see people cycling through the community as well in one role at one company,
Andra Keay: then moving to another role at another company, which I think is wonderful because one of the
Andra Keay: hardest things to do as an early stage company is to hire and to have expert answers for some of your important questions.
Andra Keay: It's a community of knowledge.
Kevin Mako: And that is one of the most useful things that startups can have. I love that you mentioned the community element. We had Alex Dantas,
Kevin Mako: as a CEO of CircuitLaunch on the show, actually a few episodes ago. And that was one of the biggest things that we were talking about is how incredible it is.
Kevin Mako: And now us, you know, Mako Design is kind of the design firm of record there. It's great to see all the startups. So obviously, we have clients
Kevin Mako: in the space and see how they emerge and grow. But it's such a powerful community of all the different
Kevin Mako: types of connections that you may need either in one degree or two degrees of separation. Definitely
Kevin Mako: in three degrees, you're getting huge access, especially in the hardware space. Because hardware, obviously, in the whole Bay Area, software always, and really still does
Kevin Mako: prevail, is kind of taking the limelight. And that's what's so amazing about a facility that's focused so exclusively
Kevin Mako: on hardware and hardware companies and helping them grow and scale to be, you know, big things that eventually graduate out of the space and get their own or evolve from
Kevin Mako: there. So it's really amazing to see the growth of that facility and see how popular it's been, even despite COVID, as you mentioned going along.
Kevin Mako: So give us a bit of a background on yourself. You're an incredibly well-connected
Andra Keay: person in the industry. Give us the Coles notes. How did you get here to where you are today? I came over from Australia in 2010.
Andra Keay: I was finishing up my master's in human-robot interaction or human-robot culture. What fascinated me most was the commercialization of robotics.
Andra Keay: And so I wanted to come to Silicon Valley, which is ground zero for robotics.
Andra Keay: Now, most people don't realize that. Because Silicon Valley is the internet giant.
Andra Keay: And indeed, in Silicon Valley robotics is a small fish in a very big pond and is frequently overlooked in the same way that you said hardware is
Andra Keay: overlooked because real estate and talent are expensive in the valley because of the top tier companies that are software
Andra Keay: based. And yet we have twice to three times. the amount of robotics innovation as Boston and Pittsburgh put
Andra Keay: together. We're the leading center in the world for robotics innovation.
Andra Keay: Although China has tried very hard to catch up and they're creating a lot of robotics businesses,
Andra Keay: the innovation factor is still perhaps strongest in the United States. There's certainly also some great robotics coming out of other countries
Andra Keay: and the grant funding in Europe is good,
Andra Keay: but on the heels of the defence industries, there has been a lot of R&D funding that has gone into robotics over the last 20 years.
Andra Keay: And that has come to fruit. This is what I saw when I came over in 2010,
Andra Keay: and I stepped into an association that was forming to meet that needs, Silicon Valley Robotics.
Andra Keay: And this is a coalition of robotics companies in the Bay Area,
Andra Keay: pioneers like SRI International, Willow Garage, while it still existed,
Andra Keay: Bosch and Adept Technologies, which was America's only traditional robotics manufacturer,
Andra Keay: and they were trying to pioneer autonomous mobile robots at the time. They were perhaps just a little bit early as a publicly traded company.
Andra Keay: They were affected by the stock market crash. And what we see is that the autonomous mobile robots,
Andra Keay: companies that they were working on then are now very successful and they've all been acquired by other companies, of course, global companies.
Andra Keay: But we saw the start of the wave of commercialisation of what I call a new form of robotics. I call it Robotics 2.0 because it is just as different
Andra Keay: as the different iterations of the web or internet technologies. The original robotics industry,
Andra Keay: 50% of it is employed in automotive welding.
Andra Keay: Now, that is highly susceptible to the ups and downs of a single
Andra Keay: industry, the automobile industry or automobile manufacturing.
Andra Keay: And the other 50% is split across a range of things from agriculture to primarily dangerous materials, handling, mining,
Andra Keay: paintwork, chemicals, that kind of thing.
Andra Keay: And these are the stupid robots. These are the robots that are expensive and that needs safety cages around them. By and large, that's robotics 1.0.
Andra Keay: In 2004 and 2005, DARPA ran a grand challenge for self-driving cars.
Andra Keay: And the first challenge, nobody crossed the finish line.
Andra Keay: The second challenge, almost all the teams crossed the finish line, and that was only one year later.
Andra Keay: The third challenge, they moved from the desert to a six. simulated suburban environment, although it was at an Air Force base.
Andra Keay: And there were three different tiers of companies competing in that, or teams competing
Andra Keay: in that, and Google was in the background buying them up, as were some of the other vehicle manufacturers after that.
Andra Keay: So we saw the rise in interest in robotics then. And then in 2012, Amazon acquired Kiva systems, and
Andra Keay: that was one of those early mobile robots and more connected,
Andra Keay: that made everybody sit up and go, look, if Google's investing in robots, if Amazon's investing in robots, this technology might be becoming interesting.
Andra Keay: Now, those companies could afford to take a kind of long bet on it, but Amazon hasn't slowed
Andra Keay: down their interests in robotics, even if individual robotics companies have been slow to bear promise.
Andra Keay: And I think if there's one thing that I can say to make sense of this,
Andra Keay: because the internet is flooded with things like Boston Dynamics videos, and people go, well, that's not a very useful robot, is it?
Andra Keay: And it's not supposed to be. Really, Boston Dynamics strength is their research on the leading edge of robotics.
Andra Keay: And when you acquire the Boston Dynamics, team, you really shouldn't be thinking about a product that looks like something they're making.
Andra Keay: You should be thinking about how useful are the developments that they pioneered in making something
Andra Keay: that's smaller, more robust, more affordable, and useful to the consumer. They're a leading edge firm. They're not a product company.
Andra Keay: And yet the most popular videos show robots that are really not useful and not likely to commercialize.
Andra Keay: In a sense, you know when a robot is done right, then you don't even think about it anymore. It just becomes an appliance or a tool
Andra Keay: or something that's getting a job done.
Andra Keay: And, you know, this is a joke amongst robotists. How do you know what a robot is? It's something that doesn't work in a demo.
Andra Keay: And that kind of captures Is it? Robotics is quite a moving field. If you looked at the current definition today of what a robot is and applied it to
Andra Keay: the robotics industry for the last 50 years, they're too stupid to count as robots.
Andra Keay: Nonetheless, that is the robotics industry. And that's why I say there's robotics 1.0, which is a major
Andra Keay: industry. It's, you know, maybe worth $42 billion a year in
Andra Keay: sales. And then there's robotics 2.0. And this is a major industry. And this is a major industry. It's, you know, maybe worth $42 billion a year in sales. And this is, you know,
Andra Keay: is the new wave of robotics that has enabled on this self-driving technology. It's the technology of navigation.
Andra Keay: It is the connection of sensor input and affordable sensors at that that can
Andra Keay: operate rapidly enough over a long enough distance into a computer onboard a robot that can
Andra Keay: make decisions in real time based on that environmental data.
Kevin Mako: Now, Shaky, the mobile robot that SRI produced in 1974,
Kevin Mako: was able to make environmental decisions based on sensor input. But it was tethered through giant cables to mainframe computers in the room behind.
Kevin Mako: What we're talking about now is the ability for even small delivery robots, even small robot vacuum cleaners,
Kevin Mako: to make the use of sensor data, real time, in the real environment.
Kevin Mako: and that's what makes a robot arm collaborative rather than an industrial robot arm.
Kevin Mako: It's able to assess if there's somebody in the planned path and then renavigate a path
Kevin Mako: around the obstacle, whether it's a person or another obstacle.
Kevin Mako: And that's exactly what a mobile robot is doing. It's able to remap a pathway when there's an obstacle in the environment.
Kevin Mako: The amazing thing about this robot 2.0, and I appreciate you bring that up, is that it's really looking at how robot technology is being incorporated
Kevin Mako: into everyday consumer interactions.
Kevin Mako: And a lot of people, when they think of robotics, of course, I think of these complicated things, but I can tell you, as a consumer
Andra Keay: product design firm, we're designing numerous inventions that have these elements of robotics, interactivity.
Andra Keay: I mean, you look at anything in IoT or wearable tech, elements of robotics or entire robotics in themselves are being put into.
Andra Keay: these things, even if it's just small and simple arrangements.
Andra Keay: And that's why I find it so fascinating when you really look at this robot 2.0 that you're talking about and mention the word
Andra Keay: commercialization. And I want you to dig into that a bit, especially looking at the fact of
Andra Keay: robots becoming consumerized and especially to robot inventors or people that are coming up
Andra Keay: with new devices that use sensors that have something in one way or another interacts with the environment around us.
Andra Keay: How is that, you know, looking at that definition is very different. And that's why I think this is a very important episode, because robotics is so integrated with so much
Andra Keay: electronics technology that's coming out at the consumer level.
Andra Keay: So just give us a bit of a highlight around kind of how that definition has changed, why this robot 2 .0 is so important
Andra Keay: to hardware invaders, especially in the electronics sphere these days. By 2030, your household robot
Andra Keay: will be your house.
Andra Keay: Exactly as you said, it's robotics technologies and it's spread, it doesn't have to be all inside the box.
Andra Keay: And I think that's the key thing for robotics is to think outside the box.
Andra Keay: In our minds, we anthropomorphize everything. And so we tend to think of a robot like a pseudo-humanoid operating in
Andra Keay: that fashion. And that is the least interesting way to think about robots. Robots can be split into components and spread around.
Andra Keay: Think outside the box when you think about robotics.
Andra Keay: And, you know, I prefer to use the term robotics technologies a lot of the time because it takes us away from that immediate anthropomorphization of saying a robot,
Andra Keay: that's a box over there, and it will therefore behave in certain fashions.
Andra Keay: And indeed, talking about robotics 2.0 and consumer products,
Andra Keay: iRobot was one of the leading companies in robotics, and they've gone through this transition.
Andra Keay: They were the first company to commercialize a consumer robot.
Andra Keay: And that was the robot vacuum cleaner. And the first robot vacuum cleaners from iRobot were beautifully simple.
Andra Keay: They just bounced off the walls until they'd covered the room.
Andra Keay: And I loved, back in Australia, we had some.
Andra Keay: And people were in love with watching them,
Kevin Mako: but they would insist on a school. describing intelligence to them that wasn't there, they would say, well, it must know where it's
Kevin Mako: been. Or how does it know to do this room after that room? And I'm kind of like, the only thing
Kevin Mako: that we do with this robot is we have a little infrared wall to stop it falling down the stairs.
Kevin Mako: And it just bounces off the walls until it's finished covering the floors pretty much. And then it runs out of charge and it goes back to base.
Kevin Mako: Okay, the most advanced thing that that robot did was go back to base to charge.
Kevin Mako: Now, that's very different of robot vacuum cleaners today because the new Wave Robotics 2.0 that really started in 2010
Kevin Mako: has reached those technologies. And in fact, NETO was one of the first to bring in a LIDA onto their robot vacuum cleaners.
Kevin Mako: And there's been a lot of change in who owns the different robotics companies. But firstly, one of the things, every major vacuum cleaner company,
Kevin Mako: now has a robot vacuum cleaner in their product lineup.
Kevin Mako: And robot vacuum cleaners are 28% of the market share for vacuum cleaners. It's probably more these days.
Andra Keay: So it's taken a while, but you can see from the leading edge of technology to being
Andra Keay: an established part of the market is possible for robot technologies. And it's only growing. It's only growing like crazy, right?
Andra Keay: It's almost like we're at the tip of the iceberg. I've said it before on prior podcast. that I believe if you look around the room in 20 to 30 years from now,
Andra Keay: everything you touch and see is going to have a chip in it one way or another. It's going to have some sort of connected technology or, you know, QR code or scanning device
Andra Keay: or whatever it might be to say that something needs to be replaced or that, you know, this is the part that you're looking at or some other information that it's relaying
Andra Keay: that's important to the user at the time.
Kevin Mako: It doesn't have to be like our desks are actually robotic, but it might be saying that, you know, our sensor does notice that it's not, you know, there's certain back.
Kevin Mako: bacterial contaminants on your surface, and you might want to give it a clean. You know, there's lots of things that are going to happen.
Kevin Mako: But with all this sensor technology and everything that's happening, we are just at the tip of the iceberg of connecting all these devices together. But also,
Kevin Mako: I really like what you said, is simplifying them. So not looking at a robot like an arm that welds
Kevin Mako: parts to a car, but looking at a robot, like maybe a tiny little piece that has a little sensor that does something in your desk to tell you when it's not clean.
Kevin Mako: It can be very simple and stripped down as the technology evolves, as it simplifies, as it becomes easier for developers
Andra Keay: like us to actually design the products to commercialize. And all that's happening right now.
Andra Keay: Absolutely. And I think the distinction between passive and active sensing is shifting.
Andra Keay: As we introduce more things like temperature sensitive materials and new
Andra Keay: chemicals, new, you know, the world of packaging materials is quite fascinating when you look at what's happening,
Andra Keay: what's coming up in the latest advances there. And so I think we will start to see responsive
Andra Keay: products, perhaps as a first step. And as you said, that might not even have computation
Andra Keay: involved so much as being responsive. You know, it's an umbrella that opens up when the sun hits
Andra Keay: Oh, I lost my train of thought just there.
Andra Keay: Something I wanted to ask you, first of all, we can cut that piece out, so don't worry about it. It will just flow through, so I'll just jump into it.
Andra Keay: So if we're looking at all this technology, for people who are creating an invention idea that has incorporated either entire robotics technology,
Andra Keay: even as per the modern definition or components of it, what have you seen? You've dealt with hundreds of hardware startups in the robotic space.
Andra Keay: both on the funding side and the commercialization side and on the production side,
Andra Keay: what do you see are some of the best practices for how to succeed as your newer hardware startup emerging into the space of
Andra Keay: commercializing robotics?
Andra Keay: That's a great question. And, you know, I think I've seen thousands of robotic startups.
Andra Keay: Sometimes one of the most important things that I can offer as advice to founders is that I may have seen a half a dozen similar companies
Andra Keay: that have failed. And they've disappeared without trace.
Andra Keay: But I do remember them.
Andra Keay: And founders will say, well, we've done our research. Nobody else has done what we're doing. And I'm like, well, actually they have and it didn't work.
Andra Keay: And I can remember these companies. And this was what they were trying to do, just like you are. And this was why it didn't work.
Andra Keay: And that can help speed up the pathway. You've got to look on it as a race.
Andra Keay: And some of the most successful entrepreneurs are entrepreneurs who've done this several times before
Andra Keay: because you're expected to have such a lot of knowledge as a startup founder. And it can be very, very difficult acquiring that in the get-go.
Andra Keay: Robotics founders were slow to attempt to commercialize difficult technologies,
Andra Keay: primarily, I think, because they're so used to researching and they wanted to research how to grow a company without falling into these pitfalls.
Andra Keay: So I find often they're some of the best prepared founders out there.
Andra Keay: But nonetheless, there's such a lot that you need to know. And I think we talk briefly about the three schools of the process.
Andra Keay: And in fact, with Silicon Valley Robotics, which is the Roboaks Industry Association in the Bay Area,
Andra Keay: Our first five-year plan was focusing entirely on increasing investment for early-stage robotics startups because there was next to no investment.
Andra Keay: It was down in the hundreds of thousands of dollars.
Andra Keay: And now we have around $30 billion a year invested into robotics technologies.
Andra Keay: It's been an exponential growth in the last 10 years. Wow. But it took the first five years before traditional investors stopped laughing
Andra Keay: when I told them robotics was ready and they should pay attention and some of the leading firms were starting
Andra Keay: to pay attention and you can see that they have some fairly good portfolios and then the
Andra Keay: followers have joined and we've seen a real increase in the number of accelerators and firms
Andra Keay: that are now offering to be a boutique investor for X, Y or Z.
Andra Keay: So I believed in 2015 we when one of the top-tier VCs cold-called me instead of me cold-calling them,
Andra Keay: that we'd succeeded in our strategy of getting investment into robotics. So I looked for the next challenge.
Andra Keay: And the next challenge, this is what I'm getting from the robotics founders themselves,
Andra Keay: was finding customers.
Andra Keay: And in the early stages, it's finding your first pilots. It's finding product market fit.
Andra Keay: and then being able to adjust around that general area
Andra Keay: until you've really mailed down the exact right thing or have ruled it out completely.
Andra Keay: And this is also what the National Science Foundation is now rolling out in the ICOR program.
Andra Keay: And they started with medical and biotech, science-based start-ups. Now they roll it out to every science-based or deep, tech startup founder.
Andra Keay: The ICOR program funds you to go out and do customer development methodology not to build anything, not to test, not to prototype, not
Andra Keay: to build, but to spend six weeks
Kevin Mako: asking customers if they need what you're doing and what their pain points are, what problems they're trying to solve.
Kevin Mako: And that is the most valuable use for your time once you've isolated the technology, that is your technology advantage.
Kevin Mako: If you're really doing an innovative product, then you have both a technology risk and a market risk.
Kevin Mako: And from an investor's perspective,
Kevin Mako: they really want you to have ruled out as much of the risk as possible before they want to invest in you.
Kevin Mako: It is that horse and part where founders say, but I need to have funding before I can get
Kevin Mako: the next pilots because they need to have three robots that I can't afford to build, etc.
Kevin Mako: But sometimes you have to be very fast, very creative and often privately funded
Kevin Mako: or angel funded or look for non-diluted grants. It's very difficult to get investment that's worthwhile.
Kevin Mako: I do see too many startup founders throw away their companies through accelerators.
Kevin Mako: And accelerators can take an incredible amount of your equity for, comparatively speaking, small checks and small amounts of time.
Kevin Mako: Silicon Valley Robotics, for example, we act at the level above that, like a meta-accelerator. We don't bring you into a cohort. We don't give you funding.
Kevin Mako: But we try to provide advice wherever you are, at whatever stage you are, at whatever point you need it.
Kevin Mako: So finding sources of assistance like that are far more useful. than surfing from accelerator to accelerator and
Kevin Mako: exhausting your equity.
Kevin Mako: You know, you've become uninvestable at that point. But non-delusive funding and all revenue and all friends of family and angels
Kevin Mako: and a strategic investor that is coming from the industry. I've seen some great robotic startups or hardware startups getting funded through things like
Kevin Mako: agricultural associations, for example, or pension associations.
Kevin Mako: for particular healthcare -related things.
Kevin Mako: In fact, it was a group of orthodontists that funded a robot for dental surgery.
Kevin Mako: And that is brilliant because from the very start, you can go, okay, we know what our product
Andra Keay: market fit is because our market is funding the development of this product. Well, it's amazing.
Andra Keay: You know, you've got these two things and we could go into the manufacturing, which is the third pillar.
Andra Keay: But looking at the funding and the product market fit, those things somewhat go together. And I love how you mentioned the funding in terms of private, because that's a big
Andra Keay: misconception in any consumer product. The key is that a serious investor who's going to give you a fair price, they want to see some traction, but even just early traction.
Andra Keay: So it's getting some of that customer engagement. And if, you know, maybe even selling some, or trying out
Andra Keay: some light prototype units or something along those lines to prove that the market, it, A, is willing to buy it, and B, that they like it once they actually do buy it,
Andra Keay: or getting some of that feedback from potential customers, whether it's a letter of intent or some other thing that really helps you as a startup say, look, I've validated and you
Andra Keay: mentioned it the technology because an investor really wants to know, well, okay, it's a great idea. And I understand the use that you're going to solve.
Andra Keay: And sure, somebody's going to buy it if you make it, but can you even make it? And of course, that's where understanding the technology, getting the designs, maybe even
Andra Keay: light prototyping, whatever it is to say, okay, no, look, here's the technology. I built it.
Andra Keay: I know how it works. I just don't have the money to now commercialize it. I need to, like you
Andra Keay: say, build three of these things to give to three customers to then get, you know, more formal,
Andra Keay: maybe quotes for manufacturing, to get price points ironed out or whatever the next steps might be.
Andra Keay: But the big key that, you know, when you tie in this customer to funding is the fact that the further you push it privately, either yourself, if you can, you know, if
Andra Keay: you're an engineer yourself or whether you're, you know, friends and family funding or even angel funding to get you
Andra Keay: further along the chain, the further you go in both the technology and in the customer interest, the exponentially more valuable your company becomes.
Andra Keay: You'll get much more money and give up much less equity the further you push it. And absolutely, I see it as well, especially in early, super early stage startups
Andra Keay: because they think, well, you know what, it's worth nothing today. So, yeah, I don't mind giving up half the business because I'd I prefer to have something to nothing.
Andra Keay: That's easy to say looking forward. I can tell you, everybody who's done that when you actually succeed in the product,
Andra Keay: looking backwards, regrets it enormously because it's easy to say looking forward.
Kevin Mako: But when you've got a multi-million dollar product down the road and you've got interest and you're scaling and you've given up 90% of your company for peanuts on what you could
Kevin Mako: have done if you had just self-funded or at least just push it forward through private funding, that is when you're going to start regretting it because like you said, Andra,
Kevin Mako: that can actually stifle your ability to scale. It may plateau you because you have no more equity to give.
Kevin Mako: So it's brilliant how you pull those two together. I appreciate that. Or as we see in many cases, you go bankrupt and a year later,
Kevin Mako: all of your assets and IP are acquired by one of the big competitors and that allows them to integrate your product ideas.
Kevin Mako: So sometimes you've got to realize as well that it isn't,
Kevin Mako: how do you say it can be a competitive world as well and so you
Kevin Mako: can fall into a couple of pitfalls i really one of the pitfalls is getting too
Kevin Mako: many expressions of interest from the research arms of companies as opposed to the operational arms of companies so
Kevin Mako: the KPIs for the research and innovation group is to go out and find as many interesting startups as they can. They will write you letters of intent till the cows come home.
Kevin Mako: The people you're actually going to sell to once you go past that unit of one are your operations people. And that's another thing that investors look at.
Kevin Mako: Like, is this going to translate into larger demand? Have you really understood the problems and the sales cycles of
Kevin Mako: your final market correctly? And as you said, the third leg of the stool, which is so important, is if you've navigated
Kevin Mako: your technology risk, you've got an innovative product and you've got an IP strategy and you're first in the field.
Andra Keay: And then you've navigated your market risk so that you've found the perfect product market fit, for example, you've got orthodontists funding you for a dental
Andra Keay: robot. Then the next thing is going from the unit of one to the unit of many. And that is such a stumbling block.
Andra Keay: So that's the third leg of the stool, prototype to product.
Andra Keay: And avoiding, I know so many startups that build what they can with the materials that are
Andra Keay: to hand and technologies that they can use. So they'll cobble together something on Raspberry Pi
Andra Keay: or Arduino or, you know, one form of prototyping because it's accessible for them and they can do
Andra Keay: it without having the money to pay for that next kind of level up. But it can lead them in a dead
Andra Keay: end when it comes to manufacturability because they've relied on components that are not
Andra Keay: accessible, that maybe no longer are easy to get. Certainly, we find with sensor technologies
Andra Keay: that can be hard to get your hands on the sensors that you need at the moment.
Andra Keay: That's quite common. We do a ton of projects, which people come to us with their adreno boards and say, okay, we've got this prototype roughed out. It works. The market likes it.
Kevin Mako: This is great. But we know we need to now redesign it from the ground up. But generally, it's from a cost perspective, because those boards to produce, you
Kevin Mako: know, in the thousands of units, especially, it's very expensive. You're buying essentially a whole computer when all you need is a small PCB with maybe a few inputs and outputs.
Kevin Mako: So that's quite common. I still think, you know, there's a ton of value in getting to that point, but just understand that that last pillar is
Kevin Mako: important. You do need to figure out now how to manufacture the thing.
Kevin Mako: And don't think that once you've got to the end of prototyping and you've got market fit that your job is done. Because that's
Kevin Mako: where you really need to either raise your next round, a much more significant round, to then do all the hardcore detail engineering to make a manufacturable product, something
Kevin Mako: that both can be made in volume. Like you said, a lot of parts, especially right now with global supply change shortages,
Kevin Mako: you have to be very cognizant of how you're designing something based on what you think you'll be able to order in volume.
Kevin Mako: And then as well, making sure that the cost is reasonable. So you're not overcommitting to a product. You're not having a full computer in a product when you only need a
Kevin Mako: small PCB, a $2 part as opposed to a $35 part. It's going to be very difficult. That's your entire margin baked into that product potentially, right?
Kevin Mako: So definitely designing a Ford, but keep in mind that if you've done a good job on the first phases, you've designed it well, you've also got the funding
Kevin Mako: and you've got some market fit, that should lead you to a very nice position to raise a very
Kevin Mako: fair and proper funding round at that point to get you through that to, you know, through that
Kevin Mako: final engineering design for manufacturing phase and your production, which is very expensive to set up, tool up, get moving smoothly, let
Kevin Mako: alone making sure it's working well, defects,
Kevin Mako: refunds, glitches, all that sort of stuff. All that has to be ironed through. All that costs time and
Kevin Mako: money. But that's a really good position to then, you know, get it to market if you've done the first two legs of the stool well.
Kevin Mako: Exactly. And there are so many traps within that commercialization stage, as you talked about, returns, for example.
Andra Keay: You know, how often is that something that you factor in? And when you're doing something for the first time, how do you know how long it's going
Andra Keay: to last, what its robustness is, what standards it's going to meet? I've seen some early stage companies, you know, again, primarily in robotics,
Andra Keay: but I'm sure this happens everywhere, where they're still at the product market. stage but at the same time they have a unit on a treadmill or in
Andra Keay: some other testing type facility and they're working on finding out where
Andra Keay: the boundaries are for the technologies that are essentially part of what they're doing the other thing i will say is that we
Kevin Mako: for quite a long time the theory has been that china is where you go to manufacture and it's 10
Kevin Mako: times cheaper but in many cases that cases, swings and roundabouts, it actually
Kevin Mako: costs you a lot more in terms of staff time away and the need for constantly being in attendance in those processes.
Kevin Mako: And it's like your actual manufacturing cost might be lower, but the cost that is on your
Kevin Mako: shoulders to deal with that and to deal with something that perhaps hasn't reached
Kevin Mako: the quality standards that you needed has been mis-machined.
Kevin Mako: Well, there's only three costs, I would say there's three costs in production, and people only look at one of them. One, there's your direct cost that's foreseen.
Kevin Mako: Two, there's your direct cost that's unforeseen. And then three, there's your, there's your, or let's
Kevin Mako: say three is really your unforeseen costs or your indirect costs that aren't.
Kevin Mako: aren't exactly obvious in a direct, you know, dollars and cents basis. And between those three,
Kevin Mako: people only look at the first, but you really need to factor in what is your overall cost of
Kevin Mako: these three things combined when you're weighing your decision on manufacturing locally,
Kevin Mako: but not just that, the types of manufacturing, the volumes you're looking at,
Kevin Mako: international versus local versus different types of production methods. And then where you're actually trying to go with your business has a lot to do with it.
Kevin Mako: Are you looking to generate interest to get an equity round, you might not need to sell many units. Or are you really trying to prove that you can build volume quickly?
Kevin Mako: Well, then maybe it's a cash flow play. Depending on what you're trying to do with your business is going to very much make the manufacturing decisions more
Kevin Mako: complicated. Now, what I'll say to kind of wrap it in a bow, the major silver line is all this
Kevin Mako: and something psychologically you have to think about when developing a product is, yes, it's a bit of a marathon. But your comfort should be in the fact that if you go
Kevin Mako: through all these things, and you figure out, you get your funding in order, you build the technology, you get the
Kevin Mako: product market fit, you comb through it, and you fight through it, and you get your manufacturing going. Your company now is exponentially more valuable than it was before.
Kevin Mako: You have really created something legendary, and I'm sure, Andrew, you're seeing it with a lot of companies, the valuations
Kevin Mako: that they're getting bought out for, the big companies that are looking at these new emerging technologies, those valuations are only going up and up and up. And that is,
Kevin Mako: really, you know, the end goal or potentially. I mean, you could build a business out of it or you could sell it outright.
Kevin Mako: But the reality is, if you actually fight the fight to get through all these things, it can be a tremendous, it could be a lifelong value to you as an individual.
Kevin Mako: Absolutely. And we are seeing the investment into these areas is on the increase. The valuation is on the increase.
Kevin Mako: And I would argue that most deep tech companies, most hardware companies, most robotics companies, are still undervalued at the,
Kevin Mako: say, series C and beyond round.
Kevin Mako: People underestimate the power of spreading physical product in the world.
Kevin Mako: We've become used to a kind of software valuation, which is a little bit more easy spread, but then also easily changed, whereas I think
Kevin Mako: you create a more inherently lasting value.
Narrator: Thanks for tuning in to this episode of the Product Startup Podcast,
Narrator: the show that teaches you what it really takes to bring your product to market and turn it into a big success.
Narrator: This podcast series is brought to you by Mako Design + Invent, the original and leading firm in North America to provide global caliber
Narrator: in-to-in physical consumer product development to startups, inventors, and small product business clients. If you're looking for product development help on your invention,
Narrator: head over to MakoDesign.com. That's M-A-K-O Design dot com for a free consultation from one of Mako-designs
Narrator: for design studios from coast to coast. Thanks for listening and see you next time.
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