I had a working prototype and some market research that was compelling; now it was time to quit my job to launch a startup!
Well, I gave that company a three-month notice which turned into a six-month notice, since I was their head of product and wanted to make sure the company could live long and prosper without me. During this time I saved as much money as I could and cut costs on all expenses. Fun Fact: cell phone companies, internet providers, etc., are willing to give you lower rates if you just ask. I canceled all the other services that were not absolutely needed by my household. I was digging the trenches.
This was probably one of the most exciting times in my life; getting ready to launch a startup! My early collaborators and I had unlimited potential and creativity as we sat around the dinner table (with face masks on) and talked about victory. We tested and pivoted constantly. We started making PCBs instead of playing with breadboards. We started looking at suppliers and partners. We applied for many accelerators and kept interviewing potential users. This was awesome! People were introducing us to their parents, neighbors, coworkers, etc. We learned so much every day!
After about 300 calls we learned that our primary market was most likely going to be women (“Healthy Helen Persona”), so we partnered with a lot of our interviewees to design the Annaboto with that demographic in mind. They consistently stated they wanted to grow cannabis as long as it was easy and fit in their living room, while not looking like a meth lab, and that people are busy and many live in spaces with no outdoor space or basements. We needed to make Annaboto sleek and gorgeous, not like the blocky thing I had initially designed to solve my own needs.
One thing to note is that the COVID lockdown in Massachusetts began six weeks after I left my job and started working on this new project full time. This made things incredibly challenging since my early collaborators and I were developing a hardware product remotely. This was really difficult because it’s very important to stand around the product during design and testing to play with it while we figure things out. Managing the team with the proper tools was very important, so having access to Jira, Figma, Fusion 360 - all collaborative tools (see my resources list) - allowed our “distributed” team to succeed. We still use those tools today as our team has evolved to be global.
Speaking of teams, we also started to formalize who we were during this time. This product required Mechanical Engineering, Electrical Engineering, Software Development, Market Research, Systems Integration, Botany, App Development, and UI/UX among many other things. So I reached out to my network and engaged several talented people who were able to work part time on the project. I really didn’t have a need for full-time anything then and preferred to spend our few resources on purchasing hardware. I invested $20K of my own money to get us going and the rest of the team was compensated with sweat equity.
Where did the money go? Lawyers, 3D printers, and material to make the prototypes. Where should the money not have gone? Lawyers. I spent a lot of money incorporating the company but should have just used LegalZoom. I learned that we should not spend money on anything unless absolutely necessary. CASH IS KING AND SO IMPORTANT. Also, in this stage we found free software resources available to startups, and used them all! That was a huge money saver (another plug for the resources list).
We applied to VC and other accelerators, and were declined by most. I think they didn’t like the cannabis component because I could see it in their faces during the pitches. This was showing us that a lot of investors and people in the startup environment were wary of cannabis and that was also going to make things much more difficult for us. Oh well. It’s an important mission and we’re committed to breaking the cannabis stigma, so, onwards and upwards. Our mantra became, if it’s hard but worthwhile, do it sooner rather than later; don’t postpone difficult things. (BTW - If you resonate with this, I urge you to read The Hard Thing About Hard Things: Building a Business When There Are No Easy Answers).
Once we had a design we liked, we decided to 3D print and build 10 units. I turned my apartment into a factory (I live in a 1200 sq.ft. apartment in Boston with my wife, two kids, and two dogs). It was cramped! My wife is very supportive, but this was proving to be too much. So, a friend of ours allowed me to move my “factory” to their basement in a row house that was likely built in the 1800’s. We referred to it as “The Dungeon”, and we loved it. It was our first real home and we could fit three people (with masks and social distancing). If you were taller than 6 feet, you had to constantly crouch.
Our internal team started to test these first units and the actual functionality of the product in the wild. We also decided to sell two of the units and toward the end of 2020 we were ready to deliver these paid units. We were on top of the world and cruising! All we needed now was more capital so we could actually go from prototyping to designing an actual product. We started talking to investors and were making a lot of progress. Our calls were going well and our friends and family came out in full force to help support us.This was a great time! The adrenaline of starting something and seeing it come to life is terribly exciting.
My goal for this phase was to refine our target market, redesign the system for the market, and perform internal tests. We built ten internal units and I spent $20,000 in personal investment.
Lessons Learned:
- Preserve Cash, Propel Dreams: Emphasizes the importance of cash conservation in early-stage startups, especially for hardware companies.
- Choose People for Grit and Enthusiasm, Not Just Skill: Highlights the significance of assembling a team aligned with your startup's energy and mission, rather than solely based on technical expertise. You can always learn new skills, but you can’t teach the grit and enthusiasm needed to go the long haul..
- Leverage Free, Achieve More: Encourages the use of available free resources to maximize efficiency and minimize costs during the crucial early phases of a startup.
What to Do Differently:
- Minimize Early Legal Expenses: Reconsider the timing and necessity of legal expenditures, possibly opting for more cost-effective solutions like LegalZoom.