Our rake in launching a hardware startup is searching for a business model and developing MVP in the field of “Internet of Things”

Disclaimer:
Internet of Things - cool, fun, and on the crest of a wave of world trends. About how to walk the rake, drown on the project of funds for the purchase of a small fleet of foreign cars, what MVP is and what it has to do with hardware, how a programmer becomes a seller - under the cut.

- Hi, my name is Alexander, and I am a startup.
“Hello, Alexander,” the hall replied disjointedly.

Seeing obvious difficulties, the head of the center of anonymous startups offered to tell from the very beginning. Probably my first day would begin like this, if such an institution existed in reality. I will follow the advice and start really from the beginning.

In the beginning was the project

The fact that I am a startup, I did not immediately know. It took a lot of time before the investor lost patience, and he sent us to float freely. It was then that I found in myself that spiritual impulse to get up and say “I’m a startup. Well, gentlemen, investors ... ". No, I will immediately say - I am not a bastard who is looking for investment funds as a way of a banal mortal being. Before this voyage, I was actually the technical director. That is, I had such a simple and familiar product development process. Products are different, tasty and beautiful. But, developing something really new and interesting, in the process it is hard to watch how this “something” is ruined by the disgusting sales process. Suffice it to say that under the influence of the magic power of persuasion, about 15 products were developed for completely different markets that were folded into a table. No, the strength to look at it was not at all, so the departure to free swimming coincided with the separation, bitter and beautiful, with the person who was engaged in sales.
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So, what do we have in the dry residue? Moral obligations to the person who sponsored this business - once. 15 solutions that never found their buyer - two. A bunch of enthusiasm, hands and head. Startaper, che there.

To begin with, we analyze what we have and choose a project. Soon the fairy tale affects, but customers are not soon. In total, two more attempts were made to start selling products before we stopped at the project that we have now. But ultimately, the solution that was developed for the customer won (he even managed to buy a part). It was a solution that allowed to monitor the parameters of the car and track its location. We decided to supplement it with comprehensive diagnostics, expand the list of parameters that the device can receive, and present it as a complex that helps to diagnose the vehicle remotely on the road.

Reference:

MVP (from the English. Minimum viable product - the minimum viable product) - the simplest working prototype of the product, which test demand to full-scale development. Such an approach insures the entrepreneur against the lack of demand for the final product and the loss of resources spent on development. MVP allows you to collect information with minimal effort in order to refine the product to meet the needs of the target audience, or to completely abandon it.

The term MVP was co-founded by SyncDev consulting company Frank Robinson in 2001. And it spread thanks to Steve Blank and Eric Rice, ideologists of customer development methodology. Actually, MVP has become part of this technique.

A tool for assessing something that is not yet on the market (and the development of such a product is actually the goal of a startup) is more than necessary and attractive. And in many books painted, for example, from the same Eric Rees. But! All examples that are given there relate to the software part. Like figachim saytik on WordPress, go around the shops with shoes, and heraks - we got Zappos. Slapped the forum, printed pizza coupons - and founded Groupon. The essence comes down to one thing - invest less, make pens, check the value. Then optimize. We have a solution for remote auto diagnostics and driver monitoring. Strongly glued to one another, right? Following the philosophy in the forehead, it was necessary to take the diagnostic complex and drive with a driver. At the same time solving the problem of a sour mine of a driver who is forced to behave well. I think that in half an hour of such a trip in the world, in principle, there would be no dangerous professions left.

Without knowing anything about the concept of MVP, but having the richest (15 projects, Karl!) Experience of how NOT to do, we intuitively avoided a few mistakes, which I then had the good fortune to observe in other projects:

We did not immediately make iPhone
Of course, you can immediately try to develop a turnkey solution. What we did before. In the strictest secrecy we sawed our pieces of iron, went through all the stages of development and gave this product to sales. It spent a hell of a lot of money. During the development it was possible to open your small taxi fleet for the funds that were spent on developing products that were cut off from the market. In the current decision, we are already tired of the unreasonable expenses, because we blinded the decision from the DevKits, seasoned with a small amount of magic and a heap of wires. Our solution was to kill a medium-sized moose, and when mounted in a car there was a real problem of the absence of a trailer for its placement. But the main thing that we were interested in - is it really necessary for someone?

Zhelezyaka fully justified our expectations - the Chinese component regularly followed the precepts of the Great Kromchego. As you know, all the electronics work on the magic white smoke. If the magic white smoke comes out of the component, then it stops working. And shove smoke back fails. So the hand-made article, after a couple of weeks, joyfully firing a cloud of fragrant kumara in our direction, set off to the gates of Valhalla. Summed up the amazing quality linear stabilizers. We didn’t think of taking money from clients, it saved us. The most important thing we received was feedback: “Guys, cool, we need this, so it would not burn ...”

We did not blow up the state
Although here, rather, the merit of limited funds for the development. If the budgets had allowed us, we probably would have rushed, just as the rest of us, happily yelping, to hire specialists. Different. And more. In fact, the first version after the gushing smoke of Chinese blocks cost us 15,000 to develop documentation for production and 20,000 to build five prototypes.

We did not work with China
When the board is designed, it is imperative to quickly produce a couple of pieces and test. Will it work as you expected? With a probability of 99% - no. It will take several iterations to change the design of the board. And then - about a miracle! We remember that it would be cool to save money (of course, a whole staff of engineers is not a cheap pleasure). Where is the economy mekka zhelezyachnoy, country soldering iron budget? For some reason, it is not customary to think about how much time logistics from China will take for each iteration. We were lucky again. Having a specific experience of working with China, including colleagues with whom we communicated closely, as well as experience with miniature smoke machines, we did not even consider this option for ourselves. In addition, it was important for us to make a decision quickly and put it to the test.

We did not write a system for the MCC
The solution for IoT is not only hardware, but also server and client software. Still in the dark about the practices of MVP, we nonetheless turned around to the fullest. Our solution as a first approximation was written in just 2 months by the efforts of one person. And only having received real reviews, we began to refine the system, closing inefficient blocks and modifying the functionality.

In addition, we immediately laid the opportunity to work through the API. The fact is that we planned to open access to it to all developers and build on it an ecosystem of services and software. This helped us to continue to actively work with the reuse of the code during product upgrades.

It turned out like this:

Success?

Ugums Fantastic and straight from the doorway. We skated the device, woke up - ba! And on the street it is already a turn. Comparks stand on one ruler, Boshi and Siemens are slowly discussing something in their VIP queue ... In fact, everything has become worse. In order. We knew we made the right product. And this confidence was dictated by many people with whom we communicated. But everything was sold mainly by the method of prayer. It’s like programming when drunk code works (at times), but there’s not a clear understanding of why it works / doesn’t work ,. There is not even a clear idea of ​​how he functions there internally. There were several reasons for this:

Brand magic
From the very beginning, we didn’t trade small things out. We went to the exhibitions, but so cheerfully made friends with the manufacturers. We especially liked the dialogue with Kristina Dubinina, curator of the Vesta project (looking ahead - the year of squatting around the plant with very nasty intentions did not bring anything. Nothing at all. It would be better if the intentions were nasty.) , and to improve the quality, and in general. Everything rested in coordination with the department of additional equipment ... Next - trenchant. KamAZ (who successfully implemented the same in his ITIS. It seems to be), GAZ, UAZ. Rolf. Jenser Trash, waste and sodomy. We rejoiced at these names like children. Brainless children. That and fingers in the socket tucked. And even the experience of several successful sales of small parks did not set our brains. Idiots

Techies selling techies
Classics of the genre. Stop five parameters, and we can and so, and that way. If to reduce to the point - to infinity, the proud programmers themselves sold to the techies (who never make buying decisions) their own exclusiveness. This exclusivity was also assured by the fact that one of the competitors during the quarterly telephone calls started selling us to us. Our ChSV soared to the skies. Idiots

Lack of focus
Another problem was that we managed, in fact, a universal solution. Lada Kalina or pyatisottonnik Liebher - we were equally good. As we thought. No, well, the fact that we could work with them was really wonderful. It is still beautiful. Our market is not truncated. But! We were rushing around the line. Try a little bit there. Then a little bit here. Let's try to do this. Didn't work out? Well, let's go to the next segment. Idiots

Accelerator - to test the business model, but not to develop a prototype

In order to stop rushing between the markets, structure the sales and reach the working business model before we open our hooves, we went to the IIDF Accelerator. Attitude to the site is ambiguous, comparable, perhaps, with programming on the pros. There are a lot of people who vehemently defend the vanity of this programming language in spite of the vicious and stinging attacks. Around FRIA on these your internet sites, in the near-startap community, the background develops along a similar pattern. In my purely personal opinion, IIDF simply needs to be properly applied. If you use the accelerator as a plug to any barrel and without parsing, the effect will be absolutely opposite.

To begin with - our story, in the end - about the correct use and dosage. So, we got to FRIA in the 8th set. We fell as a portfolio start-up, which means that we were not only given a pack of valuable recommendations and magic pensions, but also dumped from the Russian bounty for the development of funds to the company’s account.

In the first month it was frankly hard. First, the accelerator makes it work. Now I understand that this is the norm. Or it has become the norm - I do not know. But in the first month, the load level was similar to meeting the barrier in the dark — as deafening as it is effective. Secondly, there was a real misunderstanding of why they turn up their nose from our “potential” clients. “AvtoVAZ. No, well, AvtoVAZ is!

During the first month, after a week with big names and not finding such expected admiration in the eyes of the IIDF trackers, we finally started to do what we were asked to do - to test business models. In this first month, we ran over the B2C, B2B, B2B2C, B2G models, allocating no more than a week to each. And then, with much controversy, they made a turn in our original business concept.

First, we stopped selling the tracker. We started to offer cost reduction based on the subscription model. Secondly, we threw all segments to the monks, except for one - LCV (light commercial trucks). In it, we have prescribed another 14 sub-segments and stopped on the food industry - they have the most pronounced pain, and the cycle of the deal is not so long. As a result, in the second month of acceleration, we received the first income, and at the moment - we have increased sales 4 times. Plan for June - 6 times.

Now about who will be useful accelerator. First of all, for teams that have some sort of product, there are unstructured deals and they don’t know at all what to do next. Accelerator helps such companies isolate and clearly prescribe value, find their niche, and ensure a multiple increase in sales. Accelerator can help not only to turn a swan neck to an entrepreneur, highlighting a completely new approach to product and value appraisal, but also to quickly find contacts to test ideas, pack a project and check economics. In addition - to stop massively hallucinate on the current, often unsubstantiated results. Accelerator helps launch first sales. Bring them to a constant level and develop further. All of this is in terms of lean manufacturing methodology. It seems to me senseless to try to apply the same approaches to a business that has become on the rails (except for the situation when it comes to testing new business models, or when a business is faced with growth problems). There will be other laws and methodologies. Axel's task is to work with the project at the early growth stage.

Also, the accelerator will be less useful for startups with a deep R & D component at the development stage. There are very few projects for which this is true, but they exist. For example, associated with algorithms based on artificial intelligence. If the project is under development, then the focus on sales can only harm, forcing to sell the product, which is required to refine another year. Yes, the value will be confirmed, but it will not work out to the client, as well as close this functionality with the pens.

Use correctly, and then only the warmest memories and thanks to the whole team that worked with your child for three months will remain from the process.

And finally - three more things that, looking back, are required for an IoT startup:

1. In an Internet startup without an “iron part”, failures can be easily fixed - the program will be updated at once for all users. In the “iron” startup, if our gadget is covered by the client, we are going to change / repair it. If the client is in Vladivostok, we board the plane and fly to Vladivostok. Therefore, it is better for IoT startups to run in the first devices in their location, rather than immediately looking for customers all over the world.

2. The main question when testing IoT startups: how can we compare the testing of MVP collected on the knee and the finished device? For MVP, you can not develop a board - to assemble a device from different modules, devkits or ready blocks to close the functionality. The finished device is a completely different product according to the logic of operation and the composition of the components. And even if the MVP worked somehow miraculously for a month instead of a week, it’s not a fact that the final device will be just as stable. To do this, confirming the demand with the help of MVP, we drop everything and realize the finished device. It is important to start the test as soon as possible. And do everything so that it does not interrupt. The sooner the device stops “wearing diapers” and requires a reboot for food every half hour, the more time you will have. If it burns on the table or hangs due to an error in the code and stack overflow, then at least you will clearly know how much time you have left before the angry customer's call)). For example, our piece of iron traveled more than 1.5 million kilometers on tests, and this happened parallel to the sales process before we gave it the green light.

3. It is very easy to merge millions of rubles on production, office and bloated staff, by drawing a beautiful business plan, but not always these costs pay off. In my radical opinion, it is necessary to take all the money from the founders and put it on deposit - leave them a minimum budget for food and experiments, while demanding a product from them after three months. A team that is not capable of gathering MVP during this time will either develop an autopilot system (although in 3 months the “child” should already distinguish between dad and mom and blow bubbles through the nose), or it is wasting time. In the event of a shortage of funds, the team begins to think about how to test demand with a minimum budget, and finds a solution.

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Announcement: Until June 23, the IIDF accepts applications to the industry accelerator for projects from the Internet of Things sphere. This is an opportunity to work with large industry customers and accelerate the development of your business. Among the partners are KhMB Otkrytie, GS Group, the Ministry of Emergency Situations (AIC Safe City), the Ministry of Industry and Trade, the Ministry of Construction.