“Don’t ship crappy product.”
An obvious statement to the rest of the world, it’s not that simple.
Shipping a quality device is by far the hardest part of building a hardware company. I’m not even talking about the extra work it takes to deliver an amazing customer experience. I’m just referring to a product that doesn’t break, feels great when you use it, and delivers on the promise. Not just once either, but multiple times over, across thousands of units.
To put hardware life into perspective, a Contour camera has over 200 parts inside. That’s over 200 opportunities to make a product that is misaligned, loose, or dead on arrival. Tested by hand, you never have a 100% guarantee of knowing your device will last for the hundreds of hours you promise, until enough customers tell you it does.
The unfair advantage that hardware startups face is that every consumer has an Apple product in their pocket. Comparing your crooked and under polished device to a product that required an army to build it. Managing a single Apple factory line with more people than your entire company.
To make matters worse, consumers don’t give a shit about how small you are, how hard your product is to build, or that you are running out of money. All they really care is that they paid you and now they expect your product to not only deliver on the promise you offered, but surpass it.
I still remember the first VholdR camera that came off the production line. Envisioning that it would be as beautiful as an Apple device, my heart dropped into my stomach when I realized we weren’t even close. The switches were loose, the rotating lens wouldn’t lock into place, and the back door didn’t “click” when you shut it. Yes, it was an action camera, but it didn’t carry the craftsmanship I had been dreaming about.
Running out of cash, we had two options. Ship and stay in business. Don’t ship and go bankrupt.
We fixed as much as we could and we shipped.
Replacing customer’s cameras as needed we constantly made small improvements, turning a near death experience into something manageable. A never ending quest it took almost six years and seven devices to make the product F’ing great.
Now if that introduction didn’t scare the s@#*! out of you, the financial impact will. Even with a lot of capital in the bank, a defective product can drain your cash, and quickly.
Assuming you retail your product at $100 and it costs you $50 to deliver the finished product to your customer, you have $50 in profit.
Each time you deal with a defective unit it costs about $15 in shipping (to and from the customer), requires you to replace the defective product with a new unit from your warehouse that you can no longer sell, and spend about $5 to ship it back to the factory in buik. Even though your factory says they will reimburse the costs, it will take 60-90 days from the time you send the product back to agreeing on the root cause and in turn the financial reimbursement. In the meantime you are wasting your limited inventory and cash reserves replacing defective units.
On top of that you drop to a 3 star product on amazon, which means you sell less units, lowering your overall profitability.
Here is what the math looks like…
So as a hardware startup, how do you ensure you deliver a quality product?
Nail the Basic Experience
In a rush to build the next amazing product, a lot of startups develop right past the features they have to be great at. Always wanting to do “the new thing” it is incredibly hard to keep a team focused on delivering less features, at really really high quality. Because to do this, you have to work on the same few features over and over and over.
Nail the basic features and you will have a solid product. Miss them and customers will punish you.
At Contour we realized we had to be really great at capturing action video, which meant it had to be rugged, easy to use, produce amazing video, and be mountable on a variety of locations. Often trying to push the envelope, our customers made it clear when they felt we missed these basic features or half delivered on what we promised. Blinded by the technology arms race, it was hard to just focus on the basics when we wanted the product to do so much more.
Although your scaled back features won’t impress the media, your customers will reward you with much higher reviews. A result that Amazon can prove drives higher sales.
I wish I had done this more.
Work With Production Engineers Early
The moment you begin to design your product, you should be working with a production engineer. An under appreciated expert, their years of producing high volume product, can save you thousands of dollars down the road.
If not, you will get to the end, hand the factory your beautiful design and realize it can’t be made. It’s not that it’s impossible, it just means that with a yield rate of 80% they are not willing to make your product. The 20% loss is not something you or the factory can afford to cover.
So what happens if you design a product that can’t be reliably produced?
They start changing your beautiful design, turning your elegant product into a frankenstein pile of plastic. Or even worse, you have to start over because you forgot to ask someone if what you are designing can even be built.
The first VholdR camera was a beautiful design. So beautiful it couldn’t really be produced.
Constantly Be Checking Quality
Quality isn’t a job title or a single department in a startup. No doubt you should absolutely have people who are 100% focused on testing, but as a startup it takes the whole organization to help deliver a quality product. Always understaffed you need all the help you can get to test the product, document the issues, and fix them. Although you hope a ‘quality process’ will help you find a lot of bugs, most of them are found by accident, using the product in random ways.
Shifting the company’s mentality from expecting the product to be flawless to expecting to find mistake, is a small step you can make to keep everyone focused on constantly checking for issues. Assuming someone else on the team will find the bug is a fast way to a massive defective rate.
Even without the expertise in house, you can hire great third party companies who will work with your supplier on their quality process, evaluate their test fixtures, and sample units as they come off the production line. Most frustrating of all, is just because a bug didn’t exist before, doesn’t mean it won’t magically appear down the road. A slight change in production process or parts ordered can turn into a massive problem that isn’t caught until you have thousands of units sitting in your warehouse.
Have Amazing Customer Service
Every company should have fantastic customer service. But if you don’t, it will become very apparent when your product sucks. Read any Amazon review and you can see the customer process goes like this.
- The customer buys the product, uses it, and breaks it.
- The customer calls the retailer who tells them to call the company.
- The customer calls the company and unloads on the first person who answers the phone. Or if no one answers the phone they unload on every voicemail they can reach and every email address provided on your website. Continuing to rant on every forum and in the comments on every article about your company, until you address their issue.
- After a few exchanges the company sends a replacement unit.
- This process repeats until either the product works or the customer gets so fed up they return the fifth replacement to the retailer.
- The customer then gives you a 1 star review online and tells the world how broken your product and customer service are.
You will produce poor quality product along the way. Regardless of the process, you will have customers who unfortunately get their hands on a defective unit. An angering experience, how you handle the issue will speak louder about your company than the broken device in their hand.
Faulty product is understandable, crappy customer service is not.
It’s easy to critique a hardware startup from the sideline. Expecting every device to be Applesque in quality, most people don’t understand how a massive number of defective units could have ever made it into customer’s hands.
Unfortunately the ticking clock and draining bank account force these startups to make decisions they would never want to admit. Ship or go bankrupt, every hardware startup finds itself at a quality crossroads.
A crossroads that can be mitigated with advanced planning, you eventually realize that producing quality product is the heartbeat of your company. And just because you make it to billions in sales and millions in capital raised, doesn’t mean you are immune from this constant battle. The bigger you get, the more expensive the mistakes become.