How to validate and test the market in hardware startups

Sometimes we’re in a trap: without units there’s no validation, and you shouldn’t build more units without validation. Here it’s important to highlight that experiments could be done with interviews, smoke products, non-functional products, simulating by hand what machines will do automatically… so you can learn a lot without actual products. Really, to learn about the problem very little is needed.

When you are learning about the solution a prototype is needed, but probably very different than the final one.

In advanced phases of prototyping, after problem solution is fitted and you’re working on the features of your product to be the right solution, you need to learn with few units and many users using technologies that let you implement changes in a fast and easy way.

Each project is different but everyone should squeeze their imagination to get more and more info with the least effort in hardware creation possible.

Difficulties with prototyping: there are many limitations with prototyping technology. Access to 3d-printers, laser cuttings and similar tools is great, but many times we overuse them. Creating a box is so complicated for us. Something that takes 5 minutes in a metal industry with a folding machine is near to impossible for us, so we complicate it by using 3d printers.

Also molding is not possible for short batches. A combination of 3d-printing, sanding and hand-made silicone molds could solve the problems here. For these projects, many DIY supplies (like cardboard, wood, acrylic, foam, adhesives…) or shortcuts, and small fablabs or garages would be so useful to create something good enough for the validation process.

Usually there’s a big difference in the final quality of the product between prototypes and real products. That also complicates the validation especially when quality is one of the key proposals of the product.

Here you can mix ideal (and non-functional design) with functional (and not so nice design) product, to learn about both topics in an easy way (i.e. a 3d printed case to show the design, and a big, non-wireless Arduino-made device to show functionalities). You’ll have time to design something nice and functional after you learn more about the right design and nice functions.

When you’re validating user experience, or what customers will accept in terms of paying, the nearer you are to the product, the better information you’ll get. Here it’s really important to give testers an experience near to the real one.

There are also different situations or ideas to consider:

• B2B or specific markets: production can be 1-20-100-1000 units.

Usually they are high value (and cost) products so you can produce them locally (i.e. in Germany).

If you go step by step from a few units to more, you can learn in each step, adapt, try again.  Also, producing short series locally improves your team’s knowledge in the process.

If you produce really expensive products that provide a service you can also consider selling only the services or renting the hardware (i.e. high tech drones). In these cases I don’t see the products as a product, I see them as money making machines. You can also let your potential customers use them for a limited time, combining pilot testing with potential sales action.

In these cases the approach to the customer could be slow and difficult. But when you are in and running the tests there are many nice options, all of which could be easier than in mass market projects.

• Add info trackers: an engineering solution, but the decision comes from the business side.

An interesting option for connected hardware devices is to record information about the use of them by the testers. This could be for the final product or only in the test phase.

Maybe that increases the price of production, but the learning that comes from real experience is really valuable. Of course, respecting data privacy and telling that to the users is mandatory. Don’t be surprised if you need to change many things or pivot the project when you have the info. At least you will know that the decisions are coming from actual data from true users in real situations.

• Playing with kids (literally): for some reason there are many projects in hardware related to toys and kids education.

That’s a promising area, and parents are also fans of new ideas. Trying products with them is mandatory. You could organize workshops or similar with kids and parents. In this validation you should also check if parents are really going to pay for it, or they only like it as a concept and they will forget it when a new toy appears in front of them.

• Complicated products: hardware+software+services.

Many projects use gadgets as a way to differentiate themselves. Usually that involves many different projects in one (hardware, software, services, consultancy…) and managing them is difficult.

Sometimes there are platforms to create things, and they represent a good example of the platform-app pivot in Lean Startup. Usually to show the platform, you should be the first to create a nice app that represents the opportunities of the global concept (i.e. as Google did with Nexus devices to show the potential of Android platform, or Arduino that is a platform where near everything could be done)

As you can’t do it alone, other startups may find what you do useful for their own businesses, and they can help by showing the usefulness of your project. If you help others to sell their own stuff they will love you.

In any case, when you have different offers, products and a business model you should validate all of them and be sure at the end you’re earning money. For example: if you have a subscription freemium model based on a hardware device, the product should be right, the service also, and as all the freemium services, the conversion rate between free and premium must be good enough to make money, covering free users and in this case also the hardware production.

Validation usually means so many iterations and some pivots, which is a lot of work. If you multiply it by different products and business areas, the amount of work will be impossible to manage.  You must try to be focused, doing one thing at a time, and doing it well.

A positive outcome is that interaction with physical products can clearly show the behaviour and reactions of people, helping you to get the right feedback.

So don’t be confused between market testing and product testing. Try to do it step by step, because in hardware any change is painful, so it’s better if you minimize the number of big changes. As mentioned, having 100 unvalidated units won’t help you. It’s necessary to find the answer to your problems as soon as possible. To avoid big mistakes you should validate as often as possible, being sure your product and company seems viable before investing big amounts of money.