Kiuas Startups – Building a hardware company from scratch
Starting a hardware company is not hard, it’s just different. But what do you have to keep in mind when founding one?
“Hardware is hard,” they say. Every company has their struggles and pain points, but often you hear people talking about the difficulty of founding a successful hardware company. As a hardware startup, you’ll face many challenges for sure, but the product itself is not a limitation.
Pinoa Foods builds hydroponic systems for vertical farming, utilizing the latest technological solutions. Besides, Pinoa produces microgreens, baby leaves and edible flowers in an urban environment, which they cater to restaurants and grocery stores. Microgreens are shoots of salads, with strong flavors and exceptional nutritional values.
unEvn ONE is the world’s first fully-portable gaming desk w/built-in computer chassis and integrated monitor mount. The entirety can be swiftly folded to a compact suitcase without sacrificing the optimal gaming experience and thus making it easier for eSports players to practice with their teammates. unEvn’s vision is to offer simple, updatable and portable solutions for the professional level of eSports.
Two Tails is redesigning dog food: they are reshaping the food experience, the ingredients, packages and the services around the product. Two Tails wants to shatter the perception that dog food is something disgusting, boring, smelly and unhealthy. They offer conscious dog parents a better option: Dog food that makes dogs and their parents happy without harming the environment.
According to Aki Soundunsaari, Kiuas coach and the co-founder of Naava, developing a tangible product takes a lot of time, and often also a lot of money: “Prototyping the products is a bigger investment, both time and money-wise, so planning becomes very relevant. Startup’s products and business might pivot, so how to foresee these type of changes becomes crucial.”
Sometimes early-stage hardware companies have to outsource services, build prototypes in parents’ garages or even use 3D printers in the public libraries.
“Sometimes it’s not even possible to built the hardware at home because you need big and expensive factory machines,” Explains Ilkka Taponen, one of the three co-founders of Two Tails. “Founders have to make their first investment to the product just to get the prototype out of the factory.”
The challenge lies in the slow feedback loop: When the product development is slow, the gathering of feedback is slower as well. Santeri Rinkinen, the co-Founder of unEvn recognizes the situation: “The difficult part is that you need something concrete before you can get proper feedback.”
To save money and time, hardware companies need to do their homework better than well. “We did a lot of market research and testing, but you can just never do enough of it,” says Ralf Holmborg, the co-founder of Pinoa Foods. “We can’t highlight enough how important it is to know your end customer as well as possible.”
The hardness of hardware might be the fact that even though the end product is good, it’s sometimes hard to scale and make money out of it. “You just need to be creative and come up with different kinds of business concepts,” Aleksi Rinkinen, the other co-founder of unEvn describes.
In the consumer market, the most important thing is to stand out – and that’s when we talk about branding. “We believe that developing a brand and raising brand awareness is super important, especially when there is an abundance of products in your category,” says Patrik Ignatius from Pinoa Foods.
When scaling a hardware company, one of the challenges is to keep supporting and serving the old products. “In all of the processes you have to keep in mind all of the product models and iteration versions, in the software you "just" update the previous version,” Aki explains.
Even though hardware companies are different to run compared to software firms, in today’s world for many hardware-driven companies software is an essential element in their offering. For example, Pinoa Foods is currently exploring opportunities on how to add more value in their product using software. Aki also agrees that the software is essential for Naava even though they are a hardware company: “Naava products run on software and it is one of the competitive edges we have – self-driving green walls.”
Hardware is not hard, it’s just different: you often need more capital to develop your product and have many stakeholders to communicate with during the manufacturing process, but in the end, the joy of creating something new is worth it.
All of the three teams and Aki agree that the best feeling is to create something tangible and to be able to touch and see the end product. “And just to see the reactions from our customers – it is the best part,” says Anna-Sofia Juntunen from Two Tails about bringing the product from idea to reality.
Even though working at a hardware company is not just building and fixing prototypes in garages, there is a lot of DIY mentality and patience needed and new skills to be learned. “Sometimes we joke around that we wish that our product would be on our computer, but then again – this is pretty damn cool,” Patrik describes.
Pinoa Foods, Two Tails, and unEvn are part of Kiuas Accelerator batch of 2019.
July 25, 2019