Idea Market Fit
Customers can buy an idea before the product is real, which is why crowdfunding is hard even if successful.
Why do crowdfunding campaigns fail?
Many hardware startups will share a glossy video, and get a lot of people excited to buy it. This is incredible for product development because you get customer validation, plus the funding to actually build the product.
But it turns out there is a wide gap between someone buying a future product, and that customer buying something now.
This is Idea Market Fit vs Product Market Fit. With your crowdfunding, customers were buying the idea, and not the reality.
I learned this from Brian Chen, who cofounded Bluesmart. They managed to get 10K orders with $2M in sales for a smart luggage product. But hardware is hard, and there is a big gap between the prototype you post to Indiegogo and what you can get to customers 10,000 times. In their case, there were too many features and the price point as a result was too high. Away was a simpler product with more success.
Brian applied these lessons to his latest hardware startup, Room.
Keep your customer development and product development in lock step. Plan out both the first version, and subsequent versions so you can build towards your vision. Packing as much vision into V1 makes achieving that vision harder.
Brian and I discussed this in an interview here. Find key bits of the transcript below.
0:00 Intro
0:34 Background on Bluesmart and Room
5:04 How Bluesmart decided what to build initially
7:50 How to fill the gap between off-the-shelf prototype and shipping
11:00 What you give up by outsourcing design to your manufacturing partners
11:50 Why prototype to crowdfunding to scaling is fundamentally flawed
13:20 Idea Market Fit vs Product Market Fit
14:50 Ivan's hardware idea on embodied personal AI
16:10 Break down your assumptions about features and price point
17:35 The checklist of what to validate early on
19:45 Why thinking across product generations matter
23:00 What are the product generations for Room
26:20 Taking first orders when the product was minimally ramped up
28:00 By not holding inventory, validation and testing was continuous early on.
31:35 What is the long term reconfigurable office vision? Break it down.
35:44 How Katerra is taking a different approach, with boatloads of money.
36:42 How is COVID-19 affecting your startup roadmap?
39:30 How dynamism matters more than efficiency now