“Hardware is hard” is a phrase often heard in the startup world. It’s not surprising though since building something physical inevitably involves an extra layer of complexity when compared to developing an app or software. But as new technologies and funding options continue to emerge, the space is also becoming more and more attractive to entrepreneurs of all stripes.
One particular Berlin startup garnering increasing interest and funding from both users and investors is Senic. Founded in 2013 by Tobias Eichenwald, Felix Christmann and Philip Michaelides, Senic builds products with the aim of making interactions between humans and technology more seamless. With its first product Nuimo, which raised over $500,000 through crowdfunding, the team developed a sleekly designed smart home tool that makes it easy to control devices, like speakers and lights. Instead of having to unlock your phone and find the right app to turn a smart light device on in your apartment, the idea is that having a Nuimo around can simplify this process so you can directly control these smart devices with familiar gestures.
Following Senic’s latest seed funding announcement, we spoke to Eichenwald about the importance of crowdfunding, community and combining knowledge from different disciplines when building a hardware startup.
Why did you and your co-founders decide to start Senic – and build Nuimo?
When we started the company in 2013, we were actually working on a different product that we learned a lot from pretty quickly. A couple of months later, we decided to move into another direction. If you look at the background of the three founders, it becomes pretty clear how it came about. I have a background in psychology and design, and I’m really interested in everything that surrounds how technology affects how we live and process information. Felix is an industrial designer, who did a lot of research on different forms of interaction, like haptic, speech and gesture. And then there’s Philip – a mad scientist. His family owns a pretty large electronics manufacturing company, where we also manufacture our electronics. Despite our different specialties, we were all concerned with one main question: How can we make our interaction in the home more natural and direct?
Why did you and your team decide to run crowdfunding campaigns to finance the Nuimo instead of taking VC funding?
In the hardware investment sector now, there’s a thing that almost always happens when you go into an investor meeting, which is you’ll be asked: Have you done crowdfunding yet? It’s a kind of validation to see whether people like it – which makes sense – but it’s like a double-sided sword. If it works well, you can raise more money with it, but if it doesn’t then you can’t raise additional money with it. For hardware products though, crowdfunding alone is never enough. The campaign is more about showing traction and building up the community than anything else.
In our current technological and business climate, what would you say are some of the toughest challenges facing hardware startups today?
First, it’s really expensive and takes a long time. You might not think about it as a customer when walking into an electronics store, but it probably took at least a year-and-a-half for each product to be developed before it hit the shelf. With software, you can ship something within a month or so and with hardware that’s virtually impossible. Also when it comes to the team size of a software startup, you can build something with as little as one developer and one designer. However, in hardware you need at least seven people – which is already more required resources. Not only that, you also need to build prototypes and buy materials, which isn’t cheap. You can’t really just have an idea and then build it. You really need to rely on crowdfunding or investors. I don’t know a single hardware startup that is bootstrapped.
Second thing is that the stakes are very high. Some of our friends were working on a product and something small went wrong and suddenly their certification fell through and they had to pull back 10,000 devices. This can kill your company right away. With software, you might be able to fix a bug with an update and it’s fine, but with hardware that can just be the end of it. Basically, whatever you ship out can’t be be broken. It has to be on-point and pretty close to perfection.
You’ve said that for Senic, marketing isn’t treated like marketing, but rather as more of a product. Can you explain what you mean by that?
When you buy our product, you’re not buying a piece of hardware. What you’re buying is an experience, which actually loads up the value of the product. That’s why we make documentaries on how the product is made. A customer who has seen how a product is made will value it much more than a customer who has just seen the product in a store. There is more attachment to the product for the first customer – and that’s what we care about communicating on our websites and in our videos, rather than just features.
Now that your crowdfunding campaigns are over, how do you plan on further scaling the product?
The first step was crowdfunding, the second step was the ability to order Nuimo from our website and four weeks ago we launched it on Amazon Germany. Now we’re working on Amazon UK and US. These are our three most important markets. Slowly, we’ll start going into physical retail. It’s really difficult for a hardware startup to get into retail immediately because there are so many potential problems in the middle, like organizing a third-party logistics provider, having warehouses in different countries and making it sure the product goes through customs. So, we’re just taking it step-by-step right now. In the background, we’ve also been working on our second product, which will be even more mass market.
How do you see Senic developing in the next five years?
So in design, there are principles that we’re guided by that tend to be true and have been true for a long time. One of them is that there is a trade-off between flexibility and usability. For example, a flexible tool like a Swiss Army knife will automatically have a trade-off in usability – as in it’s hard to use, slow and users get blisters. And this idea applies to tools and software as well. The interesting thing is that when people are in a situation where they can’t anticipate what they’re going to need – like when camping or in the jungle – they’ll naturally move towards more flexible tools. On the other hand, when people do know what they’re going to need, they’ll likely move towards a less flexible, but more usable, tool. So every morning, I know that I cut bread and for that I have a bread knife. When it comes to technology, the smartphone is like the Swiss Army knife that people need when they can’t anticipate what they need – whether that be listening to music or communicating with friends. Whether we build it or not, what we’re going to see is a shift away from the smartphone in the home and towards less flexible but more usable tools. If you imagine Apple being the Swiss Army knife, then we want to be the German specialty knifemaker WMF next to it focused on interfaces in the home.