End Hype 003 - Ideas and AdaptationApr 04, 2020
This is the End Hype Podcast. Callye Keen talks entrepreneurship, manufacturing, marketing, and everything to dominate the physical product business. End the hype. Make the future.
Disruption and strife reveal the shortcomings and challenges that good times mask. Looking at the long term, we will come out stronger and better from this situation. Stay positive. Look for opportunities to solve problems.
Callye gives one of the ideation exercises from the Red Blue Collective Framework. Use Level 10 to discover valuable, executable ideas in a problem space. Use the tool alone to explore or with a team to collaborate.
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This is the End Hype podcast. I'm Callye Keen. I'm here to deliver the information to help you break inertia, launch your product, and fulfill your dreams and destiny. All right, so all seriousness, we're in a critical situation right now. I'm friends with a lot of entrepreneurs online chatting with a lot of people. It's interesting to see industries that are having unpredictable success, right, and other people that are struggling, government stepping in and doing what they can. But the most important piece to get back to, at least for me, is a core tenet that we have. Opportunity is everywhere, right? I believe that it's at times like this where you see amazing inventions, amazing new businesses happen, and it's a dividing line between who was running a red line, fake business and who the hardcore entrepreneurs are, who the scrappy people are, who can really make it happen and see the gaps, solve problems, actually go to the market with something that people really, really need.
So yes, opportunity is everywhere guys. If you're an education company, now's a great time for online education. Schools might change. If you're a business or a restaurant, think about this. The DoorDash and Seamless people, they're in such high demand they just went on strike. Amazon, the people are being worked to the bone because now stores can't be open so everybody's ordering things online. The whole infrastructure of the United States, of the world, all the business models are just changing. People are doing appointments and they're doing digital shopping and we're going to see AR startups, virtual reality startups that help us connect with people. Or even just do simple things like buy some new glasses or buy a shirt, because the world is changing.
Opportunity is everywhere, and we can choose to be mired in dismay and depression, or we can get over ourselves and realize that all these things are out of our control and figure out what we can do, what's in our control, how we can change our lives and change the world. That's just the one upbeat thing. I wanted to get it out there. Now's not the time for fake garbage thinking, now is the time for action and I'm readjusting in all the businesses that I'm associated with and we're figuring out how to operate because we could be in this for two weeks, we could be in it for two months, but I know that on the other end of it, the world will have changed forever. We have to adapt and evolve with it. I think that that's pretty powerful.
All right, so that being said, all that positive stuff, let me give you a tool. Let me give you an action tool, something that we use in my incubators and my coaching programs. I'm going to give you an exercise. You might've seen me post this on Instagram or on LinkedIn before, but we want to become an idea machine. We want to be able to generate ideas on the fly and not just any ideas, but ideas that are executable, ideas that resonate with us, things that are important. So how do we do that? We're going to do an exercise that I call Level 10. I like ranking things. I like thinking about stuff in a subjective numeric way. So it's like that's 10 out of 10. What's a 10 out of 10 idea? Well 10 out of 10 idea hits all those points.
So what we're going to do, and I might brutalize this word, but there's a Japanese term, Ikigai. It combines a few things, combines what you love, it combines what you're good at. It combines what somebody's going to pay for and what the world needs. Those circles of those things overlap and at the center is the meaning of your life. It's where your dreams reside. It's where your point of power is like the fulcrum. The leverage point for you to change your life. What I want you to do is I want you to break down those four buckets. Okay? And a helpful point to note about just brainstorming in general is that we don't want to be precious about our ideas. We want to write down the ideas as they flow.
We want to get into that flow state, write down ideas as they come. We can always edit things down later, but if you start editing and breaking up that flow, the good ideas will stop. So break down those buckets of what you love, what are your hobbies? What do you like? What would you do for free? Is it collecting a thing? Is it playing a game? Is it the gym, is it basketball? What are the things that you love? Is it some personal interaction? What is it? Then what you're good at, what's your skills inventory? There's a number of ways of making that skills inventory and it's not always what you actually do for a job, so you can think outside of that. Like what do you do and other people are like, "Damn, that's really good. I didn't know you could draw like that. I didn't know that you could sing like that." What are those gifts that you have and write down your giftedness.
Then what you get paid for. What have you done in the past or what somebody would pay for that you do. So have you ever done any side hustle, side jobs? You've done some consulting, what actual occupations have you done in the past? Then we look at what the world needs. I think this is the trickiest part and we talk about it all the time. What do customers actually need? The people that you know, that you interact with, what do they actually need? On this simple level without overthinking it too much is, if a business does something and you know successful businesses that do one thing really well, the world needs that thing.
The intersection of all of those, you'll start coming up with intersecting ideas. An example of this is, what you can get paid for and what the world needs could be a product. What people pay for and what the world needs, that is a solution generally to the problem. It just might mean that you don't know how to execute it, you're not versed in that industry. That might mean that you need to build a team. What you're good at and what you get paid for, that's simple that's your job. That's something that you've done. It's pretty clear. If you get paid well to do something and you're good at it, it's probably a job. So we look at these intersection points and we can do this for ourselves and we can do this for our team, but write down 10 in each of those four buckets and start playing with the combinations of these things and see how they overlap.
You can get new ideas on the fly and you can do this as a situational context as well. If you're having a problem with your business, you can look at all of these elements as they apply to the certain issue, situation in hand, and you can come up with solutions very quickly and you can do this with a team in a brainstorming manner. A whole nother conversation about brainstorming. I hate group think. I think you get the weakest, most mediocre ideas from that, but you might have a different culture than me. I think you should do everything individually and then you should collaborate. Everybody have their own flavor instead of everything just being salty. That is one of the techniques that we use to come up with new ideas, new solutions, work past problems. When you experience a problem, that's an opportunity to do something better.
[inaudible 00:09:17] just posted this in Instagram today. There's a little piece of this that's hard to admit for ourselves is if we have a problem, it doesn't matter it's life, fitness, money, anything, relationships. It's our fault. Once we take ownership of that, then we have the freedom. We have the freedom to operate. Any time that we acknowledge that something that needs to be improved, we're also acknowledging that it kind of sucks. If we can make that acknowledgement, then we can actually see what is not fantastic about it and then improve it, but we have to acknowledge that it's all wrong, it's our fault, that's okay, and that we have the agency. We have the ability to take action and make it better. So when we look at situations like now and how they impact our business, we can come up with ideas to make our business better than ever before so when we come out to the other end of this, our business is leaner, it's faster, our marketing is tighter. It's more focused.
We've spent this time to reach out to people who are bored [inaudible 00:10:41] sitting at home. Now's a great time to message all of your customers, talk to all of your customers. They're not doing anything else. Tell them like, "Hey, what's not so great about doing business with our company? What could we do better? What's the thing that you always wish that we'd do or could provide or what trouble is your business having that my business can do or that your life has that I can do for you?" Now's a great time to reach out to people. So on the other side of this, we're far more competitive. We're far better than where we are today.
All right, so continuing our discussion from last week. What I'd like to keep doing is bringing you articles, information that I find around the web to highlight all of the wonderful companies that are putting out content to help people like myself, people like yourself that are trying to design, launch, grow physical product companies. We're kind of in a niche, it's only like a $1 trillion niche, but apparently the information is pretty hard to come by, so when I see something great I got to share it with you. Last week we talked about hardwareclub.co, really cool. But I ran across this article from GeekWire yesterday and this is kind of an axiomatic phrase, something that people take for granted that it's always true is that hardware is hard, right? And it's like, "Oh, that's so clever." So the title of this little click baity, Hardware isn't hard: A startup playbook for succeeding in a sector where many have failed.
And it's true, a lot of people fail because they don't have a whole lot of experience, they don't have a whole lot of resources. And it is time and money, it's costly to get into the physical product game and people, even engineers coming out of school don't have a whole lot of experience with that multidisciplinary concept of pulling a product together and marketing it and selling it and doing the whole thing. It's quite a bit. So great article, I'll link it in the show notes. If you're on YouTube, I'll link it in the comments, but they're picking up on the information that CB Insights analyzed 400 hardware startups and of course, like I always say number one, lack of customer demand. They built something that nobody wants. Of course.
Second one is high burn rate. Compared to software or compared to a services-based startup, hardware startups have incredibly high burn rates. Meaning they just cost a lot. It costs a lot to make something that actually exists. Hardware requires significant capital expenditure to produce a working prototype. Hmm. I don't know, does it? I don't know. I think we'll have to do another podcast on why it potentially doesn't, but traditionally, yes, that is the case. If you want to just straight build your idea, it's very expensive. We approach things a little differently where that process actually makes you money versus costs you money, but I agree. It's expensive to make a prototype. Product iteration cycles for hardware consume significantly more resources and time than software products. That's true. Yes.
Making something real, it's hard to MVP an injection mold. I love these examples they gave, The Coolest Cooler. It's one of my favorites in a talk, they made a ludicrous product. I don't really understand why somebody would want a $300 plus cooler that has as a speaker in it, but it did very well on Kickstarter. The people tried to develop it themselves, spent all of the money, had to go get money, then had to start selling it on Amazon to recoup the money before they fulfilled the Kickstarter. So a lot of Kickstarters that you see that are successful, they actually spend all the money and they haven't built a business, they have no money left over to even buy more units. That's why you see cool products on Kickstarter. You're like, "This is so awesome. I love it." And then it never gets to Amazon.
It never gets to become a business. It's just a product that some dude made, some small team made. Impossible to manufacture. Lily drones. Oh man. Another, I'm pretty sure that they're talking about the little wrist-mount drones, and this would be another great podcast breakdown is when I see little things like that or the really flat watch that they had on Kickstarter that did really well. I mean, I don't know everything in the whole world, but I do know when I see something that's totally impossible to make, especially at that price point.
Here's the tips from GeekWire, and again I'll probably brutalize this guy's name, but Anup, thank you so much for the article. Awesome. Here's some tips. Tweak, don't make. Right. When the original team at Tesla set out to make the Roadster, what they did is they built on top of an existing car, the Lotus Elise. This is fantastic, yes. You take an existing product and you add your intellectual property, you add your secret sauce, your specialization onto something. You don't invent a car from scratch. [inaudible 00:16:42] like, "How do I make a tire?", right? You buy the tire, but so many hardware startups actually do this. They build everything from scratch. Like every board, every everything or they go the other way and they build everything out of project boards like Arduinos and Raspberry Pis, which don't scale up to production.
It's pretty much in my opinion, largely a waste of time. But this is kind of like our strategy of buying existing products, breaking them down and then using that to mock up our quick MVP products. His second tip is go to China. Now you guys know I'm super pro made in America, run a sizeable manufacturing company, but I also get a ton of stuff made in China and the reason is because if I want cheap things, if I want high scale, high turn rate on consumer product goods, it's probably going to be made in China. Of course, we're moving things over to Philippines and India and other places, Vietnam, but when we say move it to China, essentially I think that they just mean send it overseas because there's a lot of talent. There's a lot of knowledge that's been built up. A lot of infrastructure that's been built up. Seeing Mexico come up a little bit, but those are for very high volume, big projects. So if you're making like a Ford Raptor or something like that, Mexico's a good solution, but if you're making your Kickstarter thing probably go into Tianjin.
Design to manufacture the prototype. I think this is really where you need to reach out to somebody who is a manufacturing engineer, has a lot of experience with manufacturing. [inaudible 00:18:28] just very simple things that you can do to parts that make them extremely expensive or hard to assemble. In contract manufacturing, a lot of people don't know this, you pay for yield. If I make 100 parts and only 60 of them can be good because your product is so hard to make, whether it's a line item or it's hidden in the costs, you pay for the whole 100. You just do. That's the only way manufacturers stay in business.
So if your product is very hard to make or very hard to assemble, yes, you're going to pay for it. So design for manufacture of the prototype, come home with a ready to manufacture version of your MVP. A lot of factories are very helpful at iterating, but also know that if you go to three factories and show them the same design, all three of them will have different ideas about what is easy to manufacture. So have somebody on your team that can help you sift through the good ideas for something that's universal so you're not locked into one possible vendor or you haven't destroyed your supply chain. I think that's pretty universal across any business unless you like getting locked into your cloud supplier or there's other universal things that we see in apps that you pretty much can't avoid like a programming language. You can't just switch. It's harder to switch from AWS over to Azure or whatever. It's hard to switch your platforms.
Keep iterating, says once you do the play testing or field testing, go back to China again, rinse and repeat until you know your MVP is ready to go for mass production. Yes, absolutely. I mean you're going to spend a ton of money and hopefully make good money once you go to your final production of your product, but people want to see this process as, "I'm going to 3D print some parts, send it over to China, bing I'm going to get boxes of pristine, beautiful parts back. No problem." That is not realistic.
Not to pitch our service or anything, but there's a lot behind the scenes that happens with every component, every assembly, the way that it's tested, the way that it's sourced, that makes it so you get that polished product. Even after the initial production run, you're going to have tweaks. Like the packaging needs to be tweaked like this. The logistics need to be tweaked, the way it's warehoused or fits on a pallet should be tweaked. There's lots of ways to pull costs out that aren't really just the actual product itself.
Again, this is an awesome article. It came out in January 2020. It's great to see people still writing great articles about hardware startups, physical product startups. I see a huge resurgence of influencers and brands switching over from simple things like T-shirts and courses into physical products. I know it's a way to build a sustainable, brandable business, like a real business that can last and can grow. So I see that interest popping up and so I'm seeing a little bit more content popping up too. But thank you so much. This is End Hype Podcast. I'm out.
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