In this episode I speak with Joshua Hsu who is a co-founder of a hardware startup named Introhm that is developing a fitness product.
In our call we discuss a wide variety of topics including prototyping, product validation, patents, fundraising, marketing, and sales.
Podcast MP3: Download
Joshua Hsu of Introhm
John Teel: Welcome to the Predictable Designs podcast, where we discuss all things related to developing, manufacturing, marketing and selling successful new electronic hardware products. I am your host John Teel.
Today I’m speaking with Joshua Hsu who is a co-founder of a hardware startup named Introhm that is developing a fitness product. In our call today, we discuss a wide variety of topics including prototyping, product validations, patents, fundraising, marketing, and sales.
Welcome to the show, Joshua.
Joshua: Hey, thanks, John. I appreciate it.
John: Happy to have you on and I think this will be a good call, we can hit on a wide variety of topics unlike some of the other podcasts I’ve done, where it’s an expert in one area and we just focus on that area.
For you, since you’re a hardware startup founder, we’re going to kind of hit on a bunch of different topics as we discuss your team and your product and the progress that you’ve made so far. Can you go ahead and just tell the listeners just a bit about yourself and also your background?
Joshua: I’m actually a recent alumni of ASU. I studied biomedical engineering and economics. Specifically, interests within those domains were healthcare economics as well as industry organization. Within the biomedical space, I was doing a lot of research in my undergrad, it was ranging from synthetic biology, computational synthetic biology to biomechatronics.
I did research for most of my undergrad career. Then towards the end of my undergrad career, my buddies and I were wanting to start our capstone project. We decided to start a company out of that as well. That’s just a general background on there.
On the extracurricular side, I used to work at a nonprofit consulting firm that specializes in business consulting, metric consulting for small businesses around the valley. I happen to have a lot of the business side of things along with the engineering as well.
John: That’s great. That’s what we were just talking about before we started recording was you were coming on the fact that both of us are interested in both the engineering and the business side which is a rare combination, but I may be a bit biased because I’m like that, but I think it’s a good combination to have. Congrats on that. I also like that your degree is very much in the field of your product. That’s always good instead of you being an English major, and now you’re wanting to do–
Joshua: When I first decided those two majors, I thought I was a little bit crazy because those actually have no overlap whatsoever. My schedule throughout in college was extremely all over the place. In retrospect, it’s actually been extremely helpful understanding the biomedical side, but also the economics of everything as well, extremely useful in retrospect for sure.
John: Absolutely. As I will talk about frequently, most founders, if there’s only one founder, they tend to excel on one side or the other. They tend to be really technical engineers, or they tend to be the business side of things. A lot of startups need to have at least two founders so that they can have that complement of skills. That’s good that you have both of those skills. I know that you’re not a solopreneur. Can you also tell me about your co-founders and the team that you have?
Joshua: That’s interesting. I mentioned we were recent undergrads and we were by no means, the top of our class. We were the most academically smart if you will, traditionally. On paper, I would argue that on paper I was a little bit more qualified than my co-founder at the time. His name is Max Fiscal, by the way.
However, over the past two years, he has gotten to the point that he has far surpassed where both of our graduate and he definitely has surpassed a lot of master’s students in his domain. Just on his own and talking to professors reading textbooks, literally reading textbooks, and just prototyping our lab that we have here.
He’s getting to the point where most graduate students and even some professors can’t really answer his questions anymore. It’s very interesting seeing that happen. Even though that I may have the biomedical as well as some of the business side, it’s helpful because it still allows me to talk to him, but he’s gotten to the point where he’s actually a true CTO, CSO. That’s why he’s like a really good compliment.
I would argue that given the nature of hardware especially if you’re in the health space, like a wearable medical startup, having the ability to understand at least where your CTO is coming from a very fundamental engineering and physics perspective gives you a much better way to develop a business plan.
That’s why that has been extremely helpful and extreme compliment on that. I don’t think I would be able to talk to Max if I didn’t have that particular background given the nature of the startup. It’s been really helpful in our conversation.
John: That’s a great point. I always say, “You don’t need to know how to do everything to get a product to market, but you need to at least have an understanding of it well enough to be able to manage it, and to be able to talk to them and judge the quality of the work that’s being done.”
Otherwise, I feel like a lot of people fall down a trap if they try to outsource say the product development, but they don’t want to oversee it. They don’t really have any interest in learning what the engineers are working on. I think that’s a fatal mistake.
Joshua: What’s interesting is I think people– One of the things we have to develop is basically how to learn, which sounds really weird. Basically, it’s like, most people don’t realize in any kind of–Basically, what you just said like achieving the ability, understand how to manage a problem.
That achievement is far less work than trying to become a true expert because people when they start thinking into it, they think like, “Oh, there’s so much stuff I don’t know. It’s a lot of stuff. What is all this?” Therefore, they decide, “I should probably outsource this. Most of the time you’ll find is that you can definitely learn enough to know what you’re looking for, but not necessarily enough to be an expert in it, but still enough to manage everything else. That’s a fine line that I think is a really good thing to learn how to learn.
John: I couldn’t agree more. Recently, there was a new course in the Hardware Academy on how to design a PCB, that– An example of that, where it’s intended to be an introductory course if you want to learn all the details of designing your own PCB and eventually get to the point of designing a manufacturable PCB, but it’s also really intended to be just an introduction for those that don’t want to design their own printed circuit board, but you need to understand what is a printed circuit board and what are the steps your engineers going through? Otherwise, you can’t manage something if you don’t understand it, and you’re also opening yourself to being scammed and ripped off.
There’s a lot of people, especially in the invention market, that like to prey on people that don’t really know enough to be able to judge what’s happening. I’m always a big proponent of learning as much as possible, but not necessarily going down the route of trying to learn enough to do everything yourself.
There’s a big difference in knowing enough, like you said, to be able to manage it versus being able to actually do the work yourself. We’ve mentioned that it’s a fitness product that’s intended for trainers. Can you tell everyone more about the product? Who’s it for? How it’s used and such?
Joshua: To give it a little background. Things have changed very rapidly. I’ll give you a little overview of it before the current environment now. Max and I’s background actually. We’re former student-athletes at ASU. I was a row crew for ASU and Max was a football player.
Both of us were weightlifters throughout our college career, but we were injured in different capacities due to the incompetence of different personal trainers as well as a physical therapist helping us recover. Max actually had gotten re-injured because of that.
Like most people after an injury, you want to recover as soon as possible and get back to where you were. Like most people, you want to do in the most affordable and effective way possible because we were biomedical engineers, we went through the recovery process with a different perspective, almost a subject matter like perspective.
We discovered that the physical health value chain that leads an individual through recovery to peak performance is very subjective, meaning that there is no objective way to determine the effectiveness of your rehab, of your training.
The industry, at least specifically in the personal training industry, is very much there’s no quality control or any gold standard because there’s examples over 2000 different certifications, trainers, there’s more bad trainers than good trainers overall.
We ultimately decided to found the company to try to help build tools and solutions for these trainers and their clients to basically redefine how they go about their business on that end. That’s essentially the fitness part. The product itself, it’s a wearable system. It’s a multi-noted wearable system.
It’s just a motion sensor inside of it, nothing special, nothing new that is magnetically attached to your clothing. It basically powers a training lifecycle Sass for trainers and their clients. Basically, it takes in workout programs, records full body emotion and generates a work our progress for the trainers themselves to be used for their clients.
Just to give you an idea of what that means is that it, generally speaking, that entire process normally takes about up to five hours. We do that in 15 minutes. It saves the trainers and increases their productivity by a large percent.
John: It’s a device that someone would have on say both their arms and both legs and you’re monitoring the movement that they’re making. Is that correct?
Joshua: Basically. For everyone out there, if you don’t know the sensors in your phone. This is the same sensor that detects whether it’s a flip one way or the other. That same sensor we put into basically a form factor the size of say a quarter or so.
That gets basically attached to different parts of your body, whether through parts of your clothing or for example, a sleeve. Basically, it gets attached to parts of your body. Then because it’s all attached to each other, we can record different data points as your body is in movement. We can show you exactly how you’re moving, why are you moving that way and know how to correct the movement if it’s poor.
John: I assume it’s just an accelerometer.
Joshua: Something like that. It’s nine degrees of freedom. Accelerometer, gyroscope, magnetometer.
John: The full inertial. Got it.
Joshua: There was one of our prototypes where we actually had a barometric sensor in there for altitude, but we decided to go to something else. We’re still doing prototypes. Our current one is just a nine degrees of freedom.
John: That’s good. I always encourage to simplify, get rid of any features initially, like the barometric pressure that I could see that not being absolutely essential considering most people are training probably close to sea level, I assume. I guess it would be more useful if you were training by running up and down mountains or something like that.
Joshua: Exactly. It wasn’t that. The cost of implementing that was a little too high because it would be very sport-specific cases while we were going for more generalized personal training platform software. That wasn’t necessary. It was over complicating it too.
John: Absolutely. You can always add that later once you have more visibility.
John: It’s all about getting something out there then that just gives you visibility because it’s hard to know.
Joshua: The thing is, I didn’t quite mention this, but we actually started in this product. We actually started with smart clothing. That was a big component of our product for 10 months. We were actually developing smart clothing before we actually pivoted into the– We only pivoted into the wearable form factor, the actual physical wearable six to eight months ago. It’s a fairly recent pivot based on– We had redesign the entire product.
The reason behind that was we actually after a third round of primary market research and customer interviews, with the smart clothing we were showcasing our prototypes back then, we just discovered that it was just going to be too much of a sell to try to convince individuals to wear clothing and convincing them to wear different wardrobe products. It was a shock because we wasted a lot of time but we learned a lot too. We did the pivot.
John: I can definitely see that being a good pivot. Doing clothing is, now you’ve got sizes and the style. Obviously everyone has different closes that you like to wear and styles definitely having all the sizes and colors. I mean you just create a stock-keeping nightmare having to obtain so many different–
Joshua: At hardware Academy, I think there was someone actually asked a polling question. I was just thinking about throughout this. It’s not just the prototyping. The prototyping is already difficult enough. There’s no tools out there designed for you to prototype with smart clothing. There’s traditional textile manufacturing stuff, but even then it’s not designed for you to weave and integrate electronics into it. Then prototyping you have to create custom tools just for that. Then once you create then the manufacturing domain, the landscape is definitely not mature at all for the commercialization of smart clothing. You have also have a problem there too. That’s what we found towards the end of that.
John: You’re mixing textiles with electronic manufacturing and those two, typically, don’t go together necessarily. You’re trying to merge two different industries. I think that definitely seems like a really smart pivot there to get away from that. You could always go back to it again later if-
Joshua: We plan to. We still think there are a lot of benefits to the smart clothing, but it’s just that we don’t have capital to both design a prototyping process, multiple with different ones for our purposes as well as the resources to literally up a brand new manufacturing industry, which is essentially what smart clothing needs because we were working with fabric. We were trying to figure out if they had it, but it was just so separated from the two. There was there was barely any overlap.
John: Absolutely. Let’s maybe jump to your business model a little bit. Is this a one time hardware sell? You just sell the device one time, it’s one time payment and that’s all the money you collect from the customer? Is there going to be a software back in service that you’ll charge recurring monthly fee?
Joshua: It depends. With the changing landscape given like the COVID-19 and the virus, we are considering another pivot because we actually originally started in the physical therapy space. I don’t know if I mentioned that, but we pivoted to the performance trainers.
We pivoted to the personal trainers amd the client space. Some of the reasons were the regulatory landscape wasn’t right for our product at the time. It was going to be a harder sell. There there was a lot of liability issues, et cetera, et cetera.
However, given that COVID-19, personally, I’m very concerned about the fact that the physical therapy clinics are closing at a rate, which is just unheard of, as well as patients canceling who desperately need it. For example, 65 plus individuals are at a large amount of fall risks. Every 11 seconds, an elderly individual falls and gets into the ER. Every 19 minutes, they actually die from the fall itself.
It’s crazy. That was before the virus. The fact that these things are closing so fast and they are also at risk. It is definitely something that I personally don’t want to sit and watch it happen.
We’ve been considering a pivot because there’s a lot of overlap between our– It was designed that way because we were originally going to go back into physical therapy space, but there’s a lot of overlap between our product that we designed it for personal trainers and their clients that with a physical therapist and their patients. The business model is in the sense depends on how the evolving landscape goes.
The original business model, we were going to charge trainers a subscription. The hardware comes free. Originally, we did what a lot of people did, “We’re going to sell the hardware.” because I was doing a lot of economic analysis that viewed the economics of it, it just didn’t make any sense just to sell the hardware because if we can redesign the business model in a way, we can actually get the lifetime value of the customers is a lot more.
If I can design the service, that enables me to charge a subscription for it. We switched to subscription for the personal trainers. Essentially what we did was we basically gave the trainers a monthly fee of $200. They pay us $200 a month.
They get a wearable system and they basically get what we call 20 assessment credits they can use to do a full-body assessment of their clients with obviously the analytics and the monitoring of their client comes free, but we found that the actual quantified value proposition which is the actual quantification of the value, the perceived value that trainer has is in those assessments.
We tied the assessments, revenue model, the pricing model, and the business model, three separate models into one, specific for the assessments. It would be, I think it was $100 and $250 and $500 increments.
Now, that business model has changed. If we do do the pivot to the physical therapy, it will probably I believe when I looked into it was based on clinic size, the amount of patients they actually have, very similar to the personal training industry, but it’d be on clinic size. For five patients, I think we were going for $2,500 per month and for 15 patients it was $6,000 a month. For 40 patients it was $15,000 if I remember correctly, for the different services rendered for that aspect. It depends on how we’re going to go about that, but those are the initial specific business models that we’re looking at as well as the pricing and revenue models that we’re looking at.
John: I think that’s a really smart decision. One of the best things you can do to increase the value of a startup is to add a recurring back-in model to the one time sell of the hardware. There are a lot of hardware investors, like Bolt. I don’t know if you know a company named Bolt.
Joshua: Yes. I love Bolt.
John: They have a great blog. I know they only pretty much strictly invest in hardware startups that have a software back-in, or a recurring aspect to it, just because that’s the reason investors have gone crazy for software. In addition, it’s a little easier to develop than hardware, but it’s that recurring model that every investor knows just adds all this predictability to the business and the income coming in.
I think that makes not only your startup something that professional investors will want to invest in, but it’s also going to go long ways in helping your cash flow because the normal startup, hardware startup, the cash flow is always the biggest challenge because you have to pay for inventory typically before you have it, then you don’t get paid until after it’s been delivered for a while.
Having that recurring income coming in can definitely help to smooth out those big spikes that you have in your cash flow. I think that’s a really good strategy. I’m a little confused. You’re pivoting away from trainers and over to physical therapy, but with the coronavirus, it sounds like people aren’t going in for physical therapy. To me, it seems backwards. You would be going from physical therapists to trainers, what am I missing?
Joshua: Part of the element of that we had before that we’re trying to apply to the physical therapist is there’s a telemedical component to our device. Currently, for example, gyms are closing too. It’s such a similar overlap. It’s crazy in how similar it is, but when you have the inability of these health care professionals to meet with their customers, it’d give a disruption in service. For our thing, we basically substitute that service and in certain ways, we actually amplify it.
The idea is that, our delivery of services prevents people, prevents these professionals, these practitioners from losing business and also increase their productivity.
The reason why we’re considering to pivot back into the coronavirus is because now that the status quo has been changed really quickly, they may now be able to– Basically, our market penetration costs and investment will be significantly lower. Now, it has decreased the bear of entry now, so financially it could give us a way in essentially. That was why we pivoted away from it originally.
John: Okay. I got you. Are you not concerned that by the time you have the product ready to ship that things are going to shift in regards to the virus? I’m just curious if your mindset as far as pivoting to something based on something that hopefully is moderately short term and not a long-term impact.
Joshua: I know the question you’re asking. I have answers but I haven’t thought through it to make it concise. Please feel free to jump in if I’m not being clear. I guess I’ll start with my assumptions. I’m assuming that this virus and the current state of things will last anywhere from 12 to 18 months on a relatively good estimate, but potentially longer than 18 months given the state of things that I’ve been following.
John: I think it’s going to be oscillating up until there’s herd immunity or the vaccine comes out.
Joshua: Exactly. People don’t know about vaccine development. 18 months is still very generous when it comes to that. People don’t realize that, which is unfortunate, but people don’t realize how long it actually takes to develop vaccines. It’s not even just safety, it’s just effectiveness of the vaccine too, to actually know it’s effective.
I’m thinking upwards of that realm. I’ve been also talking because I use Twitter a lot, not just for me just catch up. I use Twitter for information feeds from, for example, I segment my information based on say, investors or doctors or whatever it is that I’m looking for, I have lists of people that I know I can trust for information.
One of the ones is the investor lists, which has been saying, “When are investors going to be warmed up to the market again? When do they think the market is going to bounce back?” Basically, they’re just saying like three to six months, they’re just going to pause everything. Then from now until three to six months and an upwards of 18 months or more before anything turns back up again. That’s a very long time period while all of the stuff is happening. For us, I don’t necessarily think that our development of our product would exceed that. Part of the reason is because–
This gets to my second point because there’s so much overlap between the physical therapists, personal trainers, and the patients, and the clients. There’s a lot of overlap.
The core technology hasn’t changed all that much, but it’s just the marketing strategy, the reimbursement strategy, the regulatory strategy, as well as the clinical path market, as well as the marketing claims we can make. If you’re in any medical med-tech based device or wearable, there’s a body of regulation needed to do out there, but really all that regulation at the end of the day, all it does, it just tells you what you can market, what you can claim and why.
There’s a certain amount of resources you have to put in, like money, capital, whatever it is to be basically able to make those claims, but all those regulations is telling you is what claims you can make and what regulations and altercations. That’s pretty much it. That’s basically what I’m trying to operate under right now.
I’m actually putting together a team, actually just got off a meeting with them this morning, but if people don’t realize and if anyone’s here actually is in the med-tech space, there’s a body of regulatory domain and research– Not research, regulatory guidance documents that was released in the past, like three years or so, called software as a medical device.
It basically, in a nutshell, gives you a different path to market to the medical market that doesn’t rely on the physical elements of a particular device. Most people are familiar with FDA class I, class II, class III, all that good stuff.
The thing is about the software is a medical device is essentially as it sounds is that the physical device itself doesn’t have to be a medical device, it’s just the software.
There’s whole other qualifications and domain of regulatory stuff that you follow, but the idea is that because it’s software, it’s far much more simpler to iterate upon then trying to take an actual physical medical device through the FDA. It’s a very new research. The team I’m actually putting together is actually to help me basically research that information and give me a better, more options of what to do, and if I were to go tackle the physical therapy clinical market.
John: Do you have a good feel for which of these two niches are going to be easier to reach? That’s one reason to niche down is because it’s a market that you reach more easily.
Joshua: If you asked me that like two or three weeks ago, I would’ve definitely said the personal training industry, absolutely because there’s no regulatory hurdles. Trainers have the incentive. The trainers still use pen, paper, and Excel. It was very undisrupted, untapped industry.
Given the changing conditions that’s moving so fast. I don’t know. It could be the physical therapists based on how I’m looking at the changing telemedical regulatory landscape that’s happening with the virus, as well as the fact all the different organizations are trying to mitigate it.
There might be enough momentum here to decrease the cost of the acquisition of the market. At this point, I don’t know. I am actually putting two simultaneous programs in place to see which one turns up in the next few weeks, even the next couple months.
The good thing is it doesn’t really affect our core product development because like I was saying earlier, it’s pretty much the same, but it does affect our market penetration strategy when it does come to that. Putting those two programs into place allows me to keep track of both of them and whenever our product development is ready to go at least from the wise, we’ll be able to know which places I go first.
John: In regards to reaching these people since you probably have more connections in the fitness industry than you do at physical therapy. I’m curious, what are your plans? How do you plan on reaching out to physical therapists? Are there organizations for them, which I suspect are, but I’m just curious as far as your marketing message and getting users, how those two compare as far as reaching out to them if you’ve gotten to that point yet of looking into-
Joshua: We actually have more connections in the physical therapy– We have about equal amount of connections because we actually started in the physical therapy industry first with our product.
John: Okay. I did not know.
Joshua: We were actually working with the physical therapist to design– This is when we were still doing smart clothing, but we’ve actually worked with a physical therapist to design the solution, the service, and a product really for the physical therapists because we saw the same problem with therapy clinic too.
Our most of our initial beginning network in the initial stages of the startup was with physical therapists, practitioners, insurance company officials, even some personal trainers who were working with physical therapists inside the clinic. The network was there, but we pivoted away from that a while ago, almost a year ago, 8-10 months ago to the personal training and their client industry.
If we were to go back to the physical therapy industry, we would probably reach out back to the therapists and ask them, “Hey, how’s business?” We know business is bad because of all the cancellations and closures.
John: That may not be the best way to ask the question right now. Great. Let’s maybe switch gears just a little bit. I’m curious, where are you in the development process? Do you have a prototype? If so, what’s the quality? Is it a proof of concept prototype? Do you have something that’s actually a wearable size? Where are you with the development prototyping?
Joshua: The webcam isn’t on, but I’m actually sitting in our one of our hardware development tables or workstations. We actually developed several prototypes, both when we were in smart clothing, but also when we were pivoting over to the wearable form factor side of things. We were actually about to raise capital, use that capital to pay Benchmark Electronics, which is a local manufacturing distributor here, an engineering firm, to actually develop a custom wearable.
A lot of the wearables we saw in the market, even the ones we’re developing weren’t quite what we needed when it came to having that full-body, high-resolution motion capture necessary to be either the personal trainers’ or the physical therapists’ qualifications.
A lot of wearables you see in the market are actually just what I call like a vanity metrics. They actually don’t really help you integrate into changing your behavior. They’re just nice to have. You can see that in a drop off in the wearable use case. There’s no behavioral change that keeps people in it.
The idea is that for us is we needed the higher resolutions to basically build a business solution for these interested parties, which in this case would be personal trainers originally before we went to the physical therapy market. Turns out actually, we actually found a vendor recently that actually had what we needed. It was pretty close. It was 80% of what we needed. It’s not completely there, but it was enough to get to that point, and it has saved us at least 150K.
It’s so expensive to develop a custom hardware, not just a prototype, but a custom hardware that’s firmware integration, software integration, everything, especially the design for manufacturing and the bill materials, everything past engineering, which is tooling and manufacturing beyond. That was extraordinarily expensive. Prototyping is very cheap in comparison. It’s extremely affordable. When you actually want to design the scale-up, it gets astronomically expensive.
John: That’s when engineers start getting involved in it. Obviously, they tend to not be cheap. Things can get expensive really quickly. I really like the way you’re doing this. Basically, your hardware that you’re using is a development kit that a manufacturer offers that you can pretty much use to put out in the field and start offering your service because you’re not just selling the hardware product, you’re really selling the service on the back end of that.
Joshua: Correct. If it was just a hardware product, we would have to get it right. However, if the hardware product can actually enable the real product, then it almost like– Yes, it’s bad in it’s not that perfect, but the main product is still there.
John: That’s great. I think that’s a really nice thing with the strategy that you’re going that you have found a way to get something out in the field, and start collecting the data, and offering your software service without you having to do custom PCB, and custom enclosure, injection molds and all of that stuff, which obviously you’ll do once you get past probably your initial phase, and you’re ready to start mass-producing just to get margins up and things. I’m assuming you’re not planning on using this kit solution for long-term. It’s just more of a short-term–
Joshua: Not at all. We figured based on how we saw things, the kit can definitely help us get early revenues in the very beginning.
John: Absolutely. I think it’s a really good strategy and you’re lucky that you were able to find something out there that pretty much has all the hardware requirements that you need.
Joshua: We were really ecstatic we found it, we were like, “This is it.”
John: I know when I spoke with you, maybe a month or two ago you were just on the verge I think of doing a crowdfunding campaign, then because you found this development kit, that eliminated a lot of your upfront costs that you were going to need to get something out there.
Joshua: It was awesome. It was a good change. It feels awesome.
John: That’s even better than raising money. To raise money, you got to give away something but in this case, you’ve got the benefit without having to give away anything.
John: Do you have a patent yet on the product?
Joshua: No. Our IP strategy is centered around three things. One, it’s a patent around the attachment mechanism, basically the form factor of the actual wearable device, as well as a patent around, we call the mesh IoT network. Basically, the hardware as the system architecture of how all the devices talk to each other because we actually found the wearable, the vendor that gave us it, we actually don’t have to worry about the patents, at least for the short-term.
Our third IP strategy, it’s the algorithms, it’s actually the actual biomechanic algorithms that deliver a really high degree of workout prescriptions as well as the biomechanics, everything like that. That’s actually just a trade secret process that we do to protect internally on that end. Those are the three-front IP strategy on that.
John: You mentioned the patent on the attachment mechanism. Do you just have a provisional patent? Do you have a full utility patent? Would that be-
Joshua: No. We were about to file a provisional for what we were thinking, but after we found the vendor stuff, we didn’t have to spend the money on the provisional stuff. We’re shelving that for now.
John: I think that’s a good idea. We’ve touched on this a little bit, but I want to hit this on its own as far as market validation, if you could. What type of validation have you done? We’ve talked about this somewhat, but this is such a step that so many people just skip past. Their validation is they think it’s a great idea and their mom thinks it’s a great idea, so it’s validated or they talk to one person and they think it’s a great idea. I’m curious, have you guys been out there talking to fitness trainers or physical therapists that aren’t your friends and family?
Joshua: Yes, of course. When it comes to market validation, there’s definitely so many different steps and there’s a definitely a lot of times where you skip over. Specifically for primary market research and not just research, which is just gathering research from actual individuals, interviews, surveys, that kind of stuff. We did about three rounds of that.
There are about 20 to 30 people we interviewed for at least an hour each for three rounds to understand a little bit more about their products, their day-to-day and their pain points. There’s a very specific way of doing that, because you can get caught up in this pitch mode and just start pitching your product features and then you don’t actually get good information. There’s actually a really good short book, it’s called A Mom Test. I don’t know actually if you’ve heard of that book?
John: No, I haven’t.
Joshua: There’s that book and there’s another book, Talking to Humans. I’ve read a lot of business books, a lot, and those two books are probably the most comprehensive of how to actually talk to customers, which, I personally think a lot of engineers do enough of, even some business people don’t do enough of.
John: What do you mean enough of? They don’t do any. Especially for an engineer, they’re just a nuisance to an engineer.
John: Obviously, there’s always more pre-market research, it’s a never-ending thing. That’s another thing people have to realize, is that you don’t just do it for two or three months and you’re done. It’s a constant thing. Talk to customers almost every chance you get.
That’s what The Mom Test really teaches you, is that don’t make it so formal. You can have it in a casual manner that allows you to get the same information, you just have to be aware. That’s why The Mom Test, I highly recommend that for any kind of customer interviews, and then also The Talking Humans one.
John: Those are great. I’ll definitely check those out for myself as well. [crosstalk] learn how to communicate with your customers, what messaging works with them, the vocabulary they use. That’s all really important and something I think is way too often overlooked as not being important.
Joshua: Generally, at least if you look at the engineers, engineers tend to think things very systematically, which I totally get. I do the same thing. They think things in a very formal way, the X, Y, Z. The best customer interviews are the ones that the customer doesn’t know you’re interviewing because those are the times where you can actually get real stuff of the day to day. That’s what we did that first round, trying to understand what they were doing.
The second they actually spent a good amount of time just sitting in a gym and just observing people and just recording their behaviors. Counting certain movements or certain things they did in gym and why they did that. Maybe just randomly talk to people there. I think I was at lifetime fitness when I was doing that.
John: That’s great. I was just going to say that that’s really good. I like that you’re at the gym monitoring people and talking to them. You’ve got the right way of going about it. So many, especially engineers, will hide away in the product development phase and never want to talk to customers.
I think that’s really good. I like just doing it in a non-formal way. I’ve heard other people, and I’ve recommended it, I think it’s a good idea is you’re standing in line for Starbucks. You’re probably not doing that now, but normally you’d be standing in line, occasionally, in Starbucks. If you have a product that is a consumer product for everyone, just start a conversation with the person standing next to you.
Just talk about your product and get their feedback. Even better is go where your customers hang out, like you were at the gym. Just talk to people. You can learn so much and get so much insight by talking to people.
Joshua: You can notice that. For example, when I was doing that, I wasn’t just dressed in my professional work clothes. I was dressed in my gym gear. I had my protein shake, I had a protein bar I was munching. It was very much I fit like the crowd that I was supposed to talk to. That’s why I was almost very easy to talk to.
John: That’s great. It’s always helpful if you’re part of the group that you’re trying to market to you because you understand them, you can relate to them, et cetera. That’s like with me and predictable designs. I can relate because I’m an engineer obviously, but also just because I have done most of this bringing my own product to market. I know a lot of the struggles and the stress, the emotions and the roller coaster and all that good stuff.
Joshua: We did that a lot, the actual physical interviews. We also did a lot of combing. I don’t think they realize we’re just using our tools. If you learn how to use Google search, actually, for example, Google’s advanced operands has been extremely helpful in fighting those digital watering holes on the internet and the forums where people talk about all of this.
When you have forums, when you have these right questions, actually those I would consider primary market research as well because you can see the problems people are facing and asking each other. You can observe that happening. When you use Google to do that, you can start finding out those types of information.
We did a lot of that, where we were looking into the Reddit posts, into forums on fitness sites. Even the same thing, when we were there in the physical therapy centre as well. A lot of that was just customer research. Your question is about validation, let me get to that.
We did a lot of customer research. How we actually validated is actually, we didn’t, this is a little wonky. I’m not sure, I don’t know if anyone does this. Basically, we didn’t design any engineering whatsoever and we did this thing called WOZ. I’m not sure if you’re familiar with the concept. It’s called Wizard of Ozing. It’s basically designing a looks-like product. It looks, feels like what your final product that you envision would be.
You basically hack together a backend server using like no code or PowerPoint or whatever. What the customer sees from their perspective, it seems like a finished product . It’s very scripted, extremely scripted. On your end, you know that the only thing that’s actually real is just a surface level, but it allows you to actually validate your value hypothesis of, “Will someone pay money for what I think the value is?” We call it the Wizard of Oz. It’s like the wizard behind the curtain.
John: You’re basically, you’re selling a software as a service, but you’re doing it manually initially.
Joshua: Yes, basically. Many people think it’s software as a service. Arguably, actually, nowadays there’s a lot of no-code tools out there, which is phenomenal for that stuff. You don’t even need to learn how to code to do a lot of this.
John: I really liked that.
Joshua: Absolutely amazing.
John: I think that’s a great idea. .
Joshua: If you haven’t checked it out, there’s in a site called Make Your Pad. It’s basically this repository of forums. It’s people who are just completely into no code. No code, low code. It’s a huge movement. I found this out through Twitter too, which is why I love Twitter so much.
You find all these tools and services that you can just do a lot of things in a far shorter amount of time and without needing the technical expertise to do it. It basically allows us to validate a lot of different hypothesis that we have and make it so that it is a final product, but we know it’s not. It saves us so much development time. That’s critical in hardware.
Once you invest money into a physical product, it’s assets. You can’t get that back. For us, we can invest in a really good 3D printed thing, paint it a certain way so it looks real. Maybe put a weight inside of it so that it feels real. Then give it to a person, attach to them, have them move about.
We just fake basically fake the analysis. We know the analysis is right because we’re the experts on it. We fake the pipeline to analysis, the value of the delivery vehicle. Just deliver the value. Then basically ask them, “Will you pay for that value?” How you deliver the values is not necessarily important, at least for now. You’re not trying to steal it. Just the delivery of the value is your goal.
There are multiple ways you can deliver that same value. You just have to be really, really creative about it. It’s like the Wizard of Oz. Some call it the Oz Demo.
John: That is really great. Congratulations on doing that. I think that’s a really wise decision. I’m not sure I’ve heard that explained exactly like that before. Thanks.
Joshua: We just find it too expensive to try to spend hundreds of dollars on a prototype when we can spend under a hundred bucks, if that, on just going out and just saying, “Will you pay money for this?” We’ve actually had people like, “Where can I pay money for this?” We basically tell them, “We’re having some server issues. Please sign up for our email and then we’ll let you know when our product is up.” It basically allows us to say, “People will actually pay money for it.” You deliver the value and they’re like, “Holy crap, it’s awesome.” We know that it’s nothing there. They’re very, very low-cost way of actually validating the product.
John: That’s really good. I had written a blog months ago about how to validate a new idea. I think I may have to go back and add one more to it, for anyone that has the software as a service on the back end. I think that’s really good. I love that you’ve done that with the service aspect and then the fact that you found this hardware device that you’re going to be able to use out in the field instead of developing your own hardware. Those two together, I think, are really powerful steps. That’s going to allow you to just shortcut the process and actually succeed with it.
Switching gears a little bit again. Thanks for talking about validation. I think the forums, also, is a really good idea. A way of just communicating with people in various niches. That’s really good. They can be hard to find but, like you said, if you do really specific Google searches, you should be able to find them.
I’m curious as far as an online audience is something I speak quite a bit about. I’m curious. You’ve got some connections with physical therapists but, I don’t know, do you have just a small network of people that you’ve met? I’m assuming, I don’t think you’ve started doing any large-scale audience building, trying to collect email addresses and things like that through people finding your website and such.
Joshua: You’re correct. That is something that I have not, I know it’s important and I have definitely have not put enough time to do that because things were just popping up. We, personally, billed out an audience specific to IntroMe.
However, I am definitely in a lot of different groups that I’ve talked to that represent a lot of our– For example, on Facebook, I think I’m in five or ten different groups that are consisting of primarily our customers. I think when it comes to the personal training space, I need to do the same thing for physical therapists. Basically start from scratch with primary research and all that stuff. Go back to what I had in the past.
For the personal trainers, I am plugged in to a lot of different groups, all the way from study groups, which was for certifications, trade groups, general fitness groups.
Some brand lifestyle groups that help each other, support some subcultures here and there, just to keep an ear on what’s going on. It’s mostly been third party. I’ve been a third party recipient of all that stuff. That has served its purposes. I still can get the information that I’m needing without having to have our group. We have not developed an online audience quite yet.
John: I very much think building your own online audiences is really important. Also just tapping into the audiences of other people, whether that be through a forum unit that you’ve joined and you’re posting in there and getting feedback. Still not quite the same as you having your own audience. It’s a little tricky if you’re still in the pivot phase. If you’d built this audience of personal trainers, but then you decide you want to pivot to physical therapy.
You could always use it later if you come back to it. It’s still something I would recommend that you add to your to-do list, is slowly start branching out your network even more than just your own personal network. Typically, the best way to do that is through sharing content that people find useful and then collecting their email address and building a relationship with them through that way, which is what I’ve done for my business.
Yours is a little, because you’re going after a niche like physical therapists that have organizations and I suspect there’s pretty good ways to reach out to them versus, if you have a consumer electronics product that’s a much broader audience. Then that becomes a lot harder to reach.
You have to do content marketing to make people find you instead of you going out. It’s called inbound marketing. You basically just provide value and then people come to you instead of you throwing out advertisements and pushing your product. You sending the message out to them. Anyway, that’s just something to consider, that you may want to add on your list. Just start building your own online audience.
John: I noticed on your website that it’s pretty much a coming soon. There’s no information on there. I’m curious, do you guys plan on, are you still in– I know from our conversation offline you’re not really super secretive. You understand the value of getting feedback more than keeping it secret. On your website, there’s no mention of your product anywhere.
Joshua: At least for the time being, our initial customization process is just focused on just Phoenix right now. We already have the network necessary to get that early validation and potentially some early revenues. We’re confident in that particular realm. We just haven’t had the time to develop out the website.
Speaker 2: I understand. I know what it’s like when, even with two founders, there’s a million things you have to do.
Joshua: Neither of us have any software development experience, actually. We already are into deepen our own domains to go back and relearn the software side. Actually, that’s one of our bottlenecks right now, is just the software and stuff.
John: I would at least, you don’t have to over-focus on building a huge audience, but even if you just had information about your product and you collected emails as a waitlist, so you’re not just providing content and knowledge, but you’re actually telling them about your product. “If you’re interested add your name to this waiting list.”
That’s something you can throw up pretty quickly with just one page on your website that shows your product off and collects emails if they’re interested. That could be a quick, easy path. That’s a lot easier than starting up a blog and creating content and making it so Google loves you and all that.
Joshua: For sure. I’ll definitely consider that.
John: The last topic I wanted to talk about is your distribution strategy. Are you planning on, once you have the product for sale, are you going to mainly just sell it through your own website, or will other distributors that sell products to physical therapist?
Joshua: I will talk on the personal training side. I haven’t developed out the physical therapists initial penetration strategy, nor the distribution strategy quite yet. I have for the personal trainers, so I can talk about that. Our initial market penetration strategy for the personal trainers. Four weeks ago, we actually started our personal training business, actually. Our most direct competitor from a personal training perspective is actually not wearables. It’s not soft. It’s the personal trainers themselves. They’re our most direct competitors. Max and I, we started a quote-unquote personal training business. Max, as the personal trainer, he is certified as a personal trainer. I would be his first client.
That was phase one of the personal training. I started the initial market penetration strategy, which was, “Start a personal training business with Max and I.” I’m his first client. Max is the first trainer. Phase two of that initial market penetration strategy was, “We’re going to bring on more clients from Max or we’re going to hire a trainer, onboard them with our product and service, and develop out a pseudo-controlled service pipeline using our product.”
Obviously we still have to be there to monitor and collect data. He can’t be used without our supervision. That’s enough to get market validation and get early revenues on that end. Third, we would start targeting, build out the training team even more.
Do lots of them at full capacity. The trainers can then train the other trainers. We’ll start even going to little small boutique gyms, bringing our product to them as well. Then that will be the market penetration. Then we had a three-step distribution strategy that we are going to implement.
Once we get enough trainers on our end and we have enough clients, we’re going to start going direct to gyms. Start doing it enterprisingly. Go to the Lifetime around here. Lifetime, Mountainside Fitness, LA Fitness, EEOs, Equinox, whatever it is and say, “Listen. We know you have a team of trainers of 15,20 people. Here’s a discount of bulk rate price of 15 units.”
“These will increase your progress, your productivity of your trainers, increase client retention and all that good stuff.” That would be direct to gyms. Step one of our three-step distribution strategy. The second part is retail. We would actually go onto different retail channels, specifically digital channels such as bodybuilding.com GMC, other websites that sell fitness related products. Working on a partnership with them, so an affiliate, right there.
Finally, the third step of that distribution strategy would be targeting insurance companies. We would actually enter into a shared cost savings program where, because we actually know much more information about clients’ health, we can basically offer a better risk table for their money.
For every dollar they save we saved from the insurance. That was our market penetration strategy, and then our three-step distribution strategies.
John: That’s interesting. Nice job. I can tell you you’ve given that a lot of thought. That’s more than a lot of times that I’ll see. Obviously you’ve decided to pivot now, so you’re going to have to change that, at least for now. You can always come back to it. I definitely like you mentioning, I think it was bodybuilder.com and going through some of the websites that sell products to people, I guess trainers and such.
That’s something I had recommended to someone in the academy just recently. They were asking about if they should sell their product through Amazon or big retailers or just their website, but they didn’t have any traffic to their website.
Amazon’s a little bit scary to deal with, so I recommended that they go look for smaller niche websites, which is what I did for my product. They’re just much easier to deal with than Amazon. Oh my gosh, especially once you get to where it’s brick and mortar. Trying to sell to Walmart or target, it’s like you have to stand on one leg and you’ve got to do all kinds of things to please them. They’re very critical about all their requirements.
Joshua: I totally get what you’re saying. We weren’t going to do the distribution strategy, which is the retail and the gym stuff, until we knew that we had a product that fit our niche market. That’s why there was an initial market penetration strategy that only focused on just boots on the ground, door to door and early revenue.
Basically, it’s doing something that’s not scalable. The idea is that, in the beginning, you want to do something that’s not scalable to get validation and then switch over to something that’s scalable. Right?
John: Absolutely. Yes.
Joshua: That was the idea of the initial part market penetration strategy. That’s scalable and yes, it’s going to require a lot of us to just go door to door but the more we get, the higher chance that we actually got our product-market fit. The buyer can actually get some early revenues that we can actually go to these large retailers and other, basically e-commerce distribution channels, and say, “We got something. We can actually make you money.” Versus just skipping over that initial part. It’s a shot in the dark sometimes, where you have a horror product you put money into. You’re like, “I got this, where do I sell this? Online.” Not necessarily.
You may have a product no one wants. That’s a huge risk on that. There’s so much you can deploy to de-risk that. I think people skip over it.
John: Absolutely. I think there’s a lot of steps like that that get skipped over. Josh, I’m really impressed with what you’re doing and the way that you’re doing it. I think you’re doing a lot of things right.
I think you’ve got, it sounds like a good team. You’ve got a good mixture of business and engineering skills. You’re finding really good ways to validate and to keep your costs down low. I just commend you on, I think that you’re off to a really good start. I think you’re going to succeed if you keep going at it the way that you guys are going at it now.
Joshua: Thanks, John. I appreciate it.
John: I just want to thank you for coming on the show. I think this has been really good. I think we’ve talked about a wide variety of topics that people will find useful and I really appreciate you coming on.
Before we go, can you tell people where they can learn more, or connect with you online, and learn more about your product and your startup? You mentioned that you used Twitter frequently, so I assume they can find you on there? If you want to give the addresses and things now we can do that, and then I’ll make sure I include them in the show notes as well.
Joshua: Yes, absolutely. Feel free to contact me. I think I’m on the Hardware Academy as well, so you can see footage from my profile out there. I think it’s got my contact information on there.
John: I think your username is , I believe it’s your name. Your full name, so people can find you.
Joshua: I should be on there. If you want to learn about my background specifically, you can just LinkedIn. If you’re searching ‘Joshua C-H.Hsu’, and the Hsu is spelt H-S-U. I should be the first person that pops up. It’s more than welcome to search there, you can reach out to me there. The only place where I consistently post and interact with is Twitter, just because I find more value in just posting on there. I’ve forgotten my handle, actually.
John: [laughs] That’s fine. We’ll include in the show notes.
Joshua: Cool. Awesome. Feel free to reach out. I’m more than happy to talk. My email is also firstname.lastname@example.org. That’s also a good place to reach out. I usually check all these all the time, so you’ll find me one way or the other.
John: Great. Thank you so much for doing this. I’ve really enjoyed talking with you and I think this was a really good conversation, so thanks again.
Joshua: Of course. Thanks, John.
John: See you, Josh.
Joshua: Take it easy.
John: Okay, that’s it for today. Be sure to tune in next week for another episode of the Predictable Designs podcast.Finally, don't forget to download your free PDF: Ultimate Guide to Develop and Sell Your New Electronic Hardware Product. You will also receive my weekly newsletter where I share premium content not available on my blog.
Other content you may like:
- Lesson 2: The Strategic Way to Develop and Sell Your New Electronic Hardware Product
- Episode #18 – Development Costs for Hardware Startups
- Lesson 5: The Strategic Way to Develop and Sell Your New Electronic Hardware Product
- The Minimum Viable Hardware Product
- Lesson 3: The Strategic Way to Develop and Sell Your New Electronic Hardware Product