Misfit Wearables Founder and CEO Sonny Vu discusses the challenges of launching a hardware company and shares his insights on fundraising and manufacturing.
I’m Sonny Vu, CEO and Founder of Misfit Wearables.
The first product we made is the Shine, I’m wearing that right now on my lapel.
It’s an elegant activity monitor that you can wear anywhere.
I think one the most important things that I’ve learned over that last several startups that we’ve done and the rounds that we’ve done, financing with different people. One is to really plan out your financing strategy over the long term—not just for the upcoming round you’re trying to do.
How will the current structure that you’re putting together affect future plans? Because a lot of times, us entrepreneurs, we just focus on the now and trying to get the deal done. You’re not thinking about the future. You think you can just deal with it later and it can get a lot more complicated than you think. That’s part of why our Series B worked out well—we were able to find just amazing partners. We thought about what it would be when we were doing even our seed round.
Finding the right partners is critical. It’s easy to say, but it is actually true that it’s not just about the money. VC’s will tell you that and I would say you should believe them—that is actually true.
If we really like the partner, that’s a big part of [choosing them]. If we personally like them and we like to hang out with them, that’s one. Two, I ask,”‘Do I feel that that this partner is someone that I can share stuff with?” without having too much of that thought, “If something goes wrong, how will I have to spin it to investors?” If I don’t have to have that thought, then it’s probably the right partner.
In terms of timing, that’s a financial planning matter—but as the saying goes: ‘If money is available take it.’
In order to get stuff manufactured you’re typically going to need a partner, but they’re not going to want to
make stuff for you unless there’s volume, but you don’t get volume unless you have
units to ship. So there’s a quandary that a lot of us hardware folks have. One thing that we did to address that was crowdfunding and pre-orders—that worked out beautifully.
Aside from raising some money and getting some great market data, (which is actually more important than the money), we actually got our first-order—10,000 units. That allowed us to actually go to these makers. Now, they’re thinking, ‘Let me guess, you want us to make stuff for you and you don’t have anything.’ And we say, ‘No, we have 10,000, units.’ They respond, ‘Oh, okay, well that’s interesting.’ It makes the conversation a lot more simple.
I’m no data sage in any way. We make hardware and software and that’s what we focus on. I would say that my hope is that the data belongs the user—the person who generated it—and that the monetization of that data will hopefully go to the generator of that data. But in the short term, I see a number of parties benefitting from [data]. I think it is the hope of generating great amounts of data, and therefore, insights which can lead to behavior change or to reimbursement or different business models. That hope is what drives a lot of the hardware template.
The hardware template, at least around here, is we’re not gonna make a lot of money on the hardware, but ‘check out this premium software service we have.’ And imagine the data. It’s reality, faith and a lot of faith. I’m hoping that those two pillars of faith will become more reality and more every day. People are used to paying for software services these days and hopefully that becomes more true in the health circles. And hopefully data monetization will also be less faith and more reality.