Graphos Project

Episode transcript:

Andreas: Welcome to Product: Knowledge, the podcast about marketing products that improve people’s lives. I’m Andreas Schwabe, Director of Media Services at Graphos Product. To start off the new year, we wanted to talk about the entire product cycle. It used to be that if you had a product idea, you had to not only work on the product idea but cobble together the development team for each stage of the process—or you had to hire a development firm. Technology has changed the product development cycle. CAD and 3D rendering make visualizing new products easy. Your product can be perfect, but to be successful, the marketing, packaging, and shipping needs to be at the same level. There are a lot of moving parts. Often the hardest part is knowing where to start, especially when your manufacturer is making your product on a different continent, in a different culture, in a different language. Kyle Handfield from Ventrify knows where to start.

Andreas: Ventrify ushers businesses through the entire product development process. They use a nine step process starting with discovery and finishing with shipping. It’s a consultancy that also does design testing and even going as far as managing regulatory certifications. We invited Kyle Handfield into the Graphos studio because he has a sharp perspective on the broad development process. It’s stuff new businesses and entrepreneurs need to hear. Graphos’ CEO Laurier Mandin started by asking Kyle Handfield how he got into helping people create products out of thin air.

Kyle: In my first year mechanical engineering, I actually trained to be a pilot, so I thought I wanted to fly planes. Ended up going into mechanical engineering, tried a bunch of different industries, and got a chance to go work overseas. So I was looking for an industry where I could get out of my comfort zone. I moved over to Taipei, Taiwan, and I worked for a company over there developing physical products and manufacture them overseas. And the big project I worked on was a smart dog feeder. But I saw the exact same thing that I realized when I started my company is this is a complex space. And it’s a space that until you need it, you don’t really look for it. Everybody says, “Hey Kyle, I’ve never seen somebody who has a company similar to yours.” Yeah, there actually is a couple of companies that are similar to ours across North America doing a very similar service, but you don’t know about them until you go out and seek them. So worked in the industry, actually got to spend some time in Shenzhen, China manufacturing the smart dog feeder and then came back because products are so intimate.

Kyle: Somebody has a problem they’re trying to solve. They’re usually the best person to get information about what they are trying to solve because they’ve thought about it. They’ve spent so much time researching it. Maybe it’s in their industry, so that close one-on-one contact with them. But then they need that secondary half where they can produce the product for a reasonable cost, a reasonable price point, and they can have all the steps to get out there to the market. When you’re bringing a product from an idea through to market, it follows many, many different steps. So we typically follow a nine step process. And throughout that you’re dealing with industrial designers, mechanical engineers, electrical engineers, you’re dealing with people that deal with overseas supply, shipper forwarders. So there’s a lot of different professions that fit into there. It’s what we’re really trying to make is a hands-off solution for somebody who has a great idea, a product that they’re looking to develop but doesn’t have necessarily the team or the time to do it. So a third party company they can go to that can provide really the first truly professional experience of product development.

Laurier: So are most of your clients startups? Are they mostly people who have an idea — inventors, people who’ve never done this before? Or do you kind of run the gamut from these startups to businesses?

Kyle: We do run the gamut. We originally started off targeting entrepreneurs. I love working with entrepreneurs and working with all the ideas, the people that are super passionate about what they’re doing. Unfortunately the product development industry gets expensive. So we do have a few select clients and actually we have a client that’s going to be doing a Kickstarter in January. So that’s a pretty exciting revelation coming out and it’ll allow us to raise the money he needs to work through the rest of the product. But primarily what we focus on is businesses who are looking to diversify. So they have existing products or services and they’re looking to add something new to their lineup or they’re looking to add sensors to devices to get more business intelligence and just looking at what else can we do to make our business more competitive.

Laurier: So in some cases it’s a product that has existed for a while and you’re helping them to make it better?

Kyle: Yeah, exactly. So a lot of what we’ll do is the first step is competitor analysis. So we’ll look at existing products out there on the market and the client usually has identified a couple of reasons why and where they can make their product better. But a lot of the reason is, yeah, we sell this product and we get a ton of negative feedback or we have a lot of maintenance issues. They’re looking now to combat that by developing their own product in a spot where they see a hole in the market.

Laurier: Yeah. Well, and that’s what products really are is solving problems and creating a solution. In the case of a physical product, you’re creating an invention, an inventive way of solving an existing problem, right, that hopefully a lot of people have to make it a successful product.

Kyle: Yeah, and that’s the funny thing is most of our clients come to us and they’ve had an idea for a long time. So they’ve been around for, they’ve had this idea 20 years ago, maybe they made a prototype, but now they finally have the investment required to bring it to market. They’re ready to do something about it, but they don’t know what the first steps are and never mind the rest of the process. They don’t even know where to get started. So that’s really where the conversation starts is they come to us and they’re looking at, Hey, what do we do next? Or where do we go from there?

Laurier: You’ve developed this nine step process you mentioned earlier for taking a product from ideation to shipping. Can you tell us about those nine steps and a little bit about what goes into each of those?

Kyle: Yeah, 100%. so the nine step process is what we’ve been developing over the last couple of years. Online there’s a ton of resources, but they’re pretty scattered for product development. So the first step we do is the discovery and ideation section of the project. So that’s really two stages. But the first stage is figuring out what it is. What’s your idea? What are all the steps? What are the requirements that we need? And at that point we get a marketing company, something like your guys’s involved. And they’ll look at what is the opportunity out there. And then we’ll also get a patent search done. The idea is to spend a certain amount of money upfront to figure out if your product is going to be feasible. Once you get past that ideation stage, we go through and do a concept development. Usually this stage just to get some early customer feedback. So it really falls into two categories, doing the concept design for a proof of concept so the next stage is the prototype. And that’s to get it out there, putting it in people’s hands. You’ve got a physical product, you can play with it, feel it, look at it, and figure out how you actually interact with it. And then you can tweak and modify it.

Kyle: And then after that is where it kind of gets a little bit more complicated and less fun, I would say. But the detailed design and testing phase is we take those prototypes, we put them out there, and we start testing them for how rugged they are, what’s the lifespan, and trying to figure out where in there it’s going to go wrong because spending an extra month on the testing phase is going to save you a lot of time and money once you mass produce something and it’s hard to change. And then the next couple of stages are the parts people usually don’t think about, certifications. Whenever you’re developing a product, certifications are a big part of it. To sell your product on the market, if it’s an electronic product, you generally need an FCC certification, a UL certification. And those certifications change depending on where you’re going to sell it. So that’s a big part about what we help our clients get through is the certification stage. And then the documentation. Documentation is huge. You need user manuals. What do you got to put in there for disclaimers? What do you have to have for a maintenance document, parts documents? What do you have to have as a quality control appendix for the factory? And that brings us right into manufacturing. So we help manufacture overseas and then deal with the shipping logistics and importing the products into the country.

Laurier: And how far do you take the customer in there? When you get to the point where you’ve brought the product into the country and people want to take it to market, they want to sell it on Amazon, is that where you kind of give them a little bit of advice and let them go off on their own? Or do you take them further into the next part of the process?

Kyle: So we’ll definitely be involved. So my ideal client comes to us, says, “Kyle, I got a great idea.” We design, we develop that idea with them and then they come back in a year say, “Hey Kyle, we sold out. We need another a hundred thousand.” That’s the ideal client. So we’d act as a continued supplier. We do not do any of the sales or marketing. So we’ll usually refer our clients to sales and marketing firms to help them go through that process if they’re looking for a hands off solution or some of our clients take that on themselves and try to try to push the product themselves. And then we’ll go as far as saying, “What warehouse do you want us to ship it to?” And we’ll ship it to the fulfillment warehouse. But at this point it’s all about connecting them up with the right people, whether it’s a licensing deal or a, what would you call it? A sales and marketing team to help them really take it to the next step.

Laurier: At what point do people usually come to you? When there’s somebody that has a new idea, do they sit down with you at the drawing table and you start working directly with them, with an industrial designer and an engineer and and developing the product just like that?

Kyle: Yeah, so clients come to us in in two different stages. The first one is exactly what you said. They come to us with a problem or an idea. And that’s usually the best stage to get involved with us because during that ideation phase, we’ll give them a report that outlines all the costs, timelines, and steps of each of the different stages of the project. So it allows them to invest a little bit up front to get all the answers and kind of do a feasibility analysis to see if this is something they truly want to pursue and can be successful in. And that’s including all those small hidden costs. Physical products have such a bad rep for taking four times as long and four times as much money. But a lot of that’s actually due to a lack of planning. So what we try to do at that stage is help our clients plan out all those hidden costs and fees.

Kyle: And then the second phase is people come to us with a prototype. So they’ll come to us with a prototype, say, “Hey Kyle, we made this prototype. It works great. We love it. What do we do now?” So we really help them scale up into manufacturing. And that part is a little bit trickier because you never know what you’re going to get in terms of the design. So typically, yeah, I’d say probably 80% of our clients are that first category right at the start. And then 20% are after that prototype stage.

Andreas: You’re listening to Product: Knowledge, the podcast about marketing products that improve people’s lives.

Laurier: And I know working with a company like Ventrify, one of the biggest reasons to do it is because the hard knocks you’re going to take along the way, learning the hard way can be really extreme. They can be really costly. Can you tell us some stories or a story about things you have learned the hard way or some of your clients may have?

Kyle: Yeah, 100%. So yeah, horror stories are my favorite part of talking about product development because everybody has one. And they really fall in a bunch of different sub segments. So the first thing is design it right right up front. So when you’re going through the development process, a big mistake that a lot of people make is they’ll design the product around a prototype and they won’t think about the mass production. So a really good example is a client came to us and they’re making a wireless electronic device. So they have worked on the design, spent a lot of money on it. But what they figured out is when went to manufacture it, it was going to be a unit cost of a couple hundred dollars.

Kyle: Their market can only support about a hundred dollar price point. So there is ways around that and the ways around that is finding Chinese electronic components that are lower cost, but they don’t come with the same amount of support systems. So all the products you can get off of Digi-Key that readily available all come with user manuals, libraries, because a company has taken those chips from overseas, they’ve developed all the libraries and firmware around it and then they sell it to people to help speed up their time to market. That’s great and well until you go to mass produce the thing. So taking that into consideration, they could have saved a ton of time if they’d considered the right components upfront. So looked at the mass production early on in the story.

Laurier: Yeah. And that’s such a common mistake. Even companies like Tesla have done it where with their Model S car, it was originally designed with just way too many parts so that when analysts were tearing it down and looking at this car and saying, “It’s got a brilliantly designed motor and nothing else on the market can compare with it, but there’s no way you can scale that in a proper manufacturing facility and build it cost effectively and make a profit.” So right from the start, that product was designed to look great, to work great, but not to be assembled efficiently enough, right? And I think that goes for any product. And something I heard you say once when you were talking at an event I was at that was hosted by Ventrify was just the importance of minimizing the number of parts and designing to be manufactured.

Kyle: Yeah. And so in the industry, it’s called DFMA, Design for Manufacturing and Assembly. But yeah, the golden rule is simplicity is key. The less parts you have, the less places you have to go wrong, the less different supply chain you’ve got to deal with, the quicker the assembly. So generally that’s a rule we follow through most of our design. But it’s not something you’d necessarily think about during the prototype stage. And it really goes all the way through to the more complexity you add, the more difficult it gets. The first time we developed a waterproof product is kind of a funny story. We designed it so it had a O ring to seal it and it’s a two part product. So it ended up having an air gap inside. We designed the product and that’s usually not a problem.

Kyle: So we didn’t think about it. It worked great. We tested it, works good. But then what happened is we went to ship it and we got told 45 days to land the shipping container. Our client says, “Getting that over here is going to take too long. We have to look at other options.” So we decided let’s air freight it. So let’s put it on a plane, send it over the ocean. What we didn’t consider at that point was that an aircraft’s cargo bays are not necessarily pressurized. So we send the products over via the plane and all of our products ended up kind of imploding from the inside out because of the pressure differential, the pressure change, and having an air cavity inside. Again, another lesson that we’d never would have thought about that when we’re … Because you’re worried about the problem of shipping.

Laurier: Yeah, and the plan was never to air-ship it in the first place, right? The plan was to ship it by sea, which is way more cost effective. So even to go there, you would know anything that you do that that’s sealed unit, you’re going to consider that. But that’s something you learn by doing and by having that negative experience and now your clients benefit from that lesson.

Kyle: Yeah, 100%. And it’s putting all those little lessons that we spent the money and time learning and passing those on to the clients.

Laurier: What things do you think that the clients most need to know? What advice would you give to someone who is looking at designing and developing and taking a product to market, but they’ve never been there before and they’ve never worked with a company like Ventrify? What do they need to consider when they’re looking at their options?

Kyle: Really the biggest thing to consider is do your due diligence upfront. So before you even go ahead and pay anybody to do any design on the product, before you even go ahead and do the marketing studies, figure out what that nine step process looks like. Figure out what all those different steps along the way look like and start figuring out what are those costs for certifications. We see most likely the reason why projects fail is because they miss costs like those. For example, an FCC certification on an intended emitter, so a device that’s intended to connect to cellular or WiFi, can run you between 50 and a hundred thousand dollars. So that adding on top of the cost of your product can often put people over what their theoretical limit was on their actual costs. So carefully reading and planning out those first stages. And don’t be afraid to get a phone out and phone a bunch of different people and say, “Hey, what’s your average or approximate cost for developing a product and getting it certified? What’s your approximate cost for doing this?” And then kind of try to put those all together in a plan.

Laurier: Yeah. And then add some padding to your budget. Right?

Kyle: Yeah. So I think I mentioned it last time when you were at my presentation, but I always tell clients to use the Pi rule. So Pi in mathematics is 3.14. I always tell everybody it takes 3.14 times as much money and 3.14 times as much time to develop a product and bring it to market is what you would assume.

Laurier: Yeah. Well, as soon as you said that, it was a big smile for me because I know that it’s so often true. And if you budget like that and that’s your expectation, chances are it’s going to take that long. But if it comes up shorter, then great. You’ve got extra reserves both in terms of money and time and you haven’t driven yourself nuts in lost sleep for months as you’re going up and multiplying the budget.

Andreas: Are there any industries that are more prone to needing expensive certifications than others?

Kyle: Yep. So generally the part where you’ll get the most certifications is the FCC certifications so electronic products. And you go even further with electronic products that plug into an outlet. Those you’ll have to do both UL and FCC certifications. And then on top of that, all the other ones. But really the industries you’ve got to worry out for is the medical space. So medical is very interesting. All your products have to be designed and manufactured in ISO 1345 design shops and factories. So that adds a lot of costs. And then so I have a friend named Samir. He used to run a company called Sensassure. They worked on developing sensors for adult diapers for retirement homes. And first company started, went into the physical product space. But what he didn’t realize was even though their products aren’t touching the person, they had to get ethics certifications before every time they wanted to do tests on their product. So medical products can often add a lot of complexity and a lot of challenges. So we actually at Ventrify try to stay away from medical products for insurance reasons and they’re usually better off done in house anyway. But medical and food products are definitely where you got to watch out the most.

Laurier: How do you safeguard against those “gotchas”?

Kyle: In product development, there’s always different places that can go wrong. My company will help you walk through all the steps, but that by no means that we’re experts in every different industry, in every different product. But what we do try to do is we work with the factories who have developed something similar early on in the process. And so even for the certifications, we’ll get certifications, the labs we use involved with review feedbacks early as the concept design. So getting people who have developed similar products or who have manufactured them. So if we’re manufacturing a smartwatch, we’re going to work with somebody who’s done smartwatches before. And finding those trusted partners is a whole another story but finding people who have done and have experience in similar products is so important.

Andreas: So let’s get a quick overview of how you find those partners because that’s a huge part of this. I mean, if you’re going to be doing manufacturing on any kind of scale, it’s likely going to be China. And that means a different language, culture, and just we know nothing. So how do you help with that?

Kyle: Yeah, and so what we’ll do with finding partners is number one, we’re very careful with intellectual property overseas. So we’ll reach out to 20 or 30 different factories that do something similar. And what you’ll find overseas is you’ll end up … Once you do your first product over there, you’ll fine a few factories in each area that you work with. And they are actually very close in the business community. So if we’re working in Guangzhou, China, we’ll actually call a few of our other factories that we’ve worked with and say, “Hey, how was your experience with these guys?”

Kyle: And then the second thing we’ll do is the federal government has a program that’ll help you vet companies overseas in Asia specifically. And they’ll check the business registrations, license, the bank account. And the biggest thing you got to worry about or try to avoid as a first time buyer overseas is people who are acting as a middleman in Hong Kong or who are not necessarily representing the factory. And then the best thing you can do is we always try to get three or four references of clients who’ve developed products with them before that are selling. And then we can look at reviews from the products and look at everything under the table there. But the due diligence process, the vetting process, generally we start it as early as the concept design. So as soon as we’re done that ideation phase, we’ll start thinking about factories we’re going to reach out to. And the earlier you can get them involved in giving you feedback on the design before you’re working with them as a paid client, you can build up a good trust relationship and you’ll quickly weed out the ones that are just there to make it make a dollar and aren’t there for the success of the product versus people that are there for the long term.

Andreas: There are the nine stages, discovery, ideation, conceptual design, prototyping, detailed design, certification, documentation, manufacturing, and shipping. Which one in your mind is that critical pivot point where it falls apart or it doesn’t?

Kyle: Detailed design and testing. So the testing period is the part where people usually get the most or have the lowest expectations. Our testing period is often minimum three months. And during that period, we’ll do everything from testing the battery to environmental testing. So we’ll put in an environmental chamber and tested at negative 22 plus depending on where you’re selling it. But that testing is so important and documentation is also the second part that’s very, very important. Somebody once told me they’re a software firm, they’ve worked with companies over in India and whatnot. And they said, “The problem with them is they will do exactly what you give them.” And you want somebody who is going to take the design and do something a bit different and kind of play with it and be a bit creative about it. We have the opposite problem in Asia where if you don’t give enough information they will kind of tweak it and do whatever they do with it. You want to be very specific on your manufacturing quality control and your documentation because everything in design is intentional and it was there for a reason.

Laurier: Yeah, I love that because if you just show them that they can kind of improvise on it, they might take it and turn it into something else that isn’t really meeting the customer need you have, right, as opposed to giving you exactly what you want. And there is a time to have innovative help and that is usually earlier on before you do the testing, not at manufacturing stage.

Kyle: Yeah. And that’s exactly it. And so the interesting thing we do is we’ll split up the design between multiple factories overseas. So we’ll get a plastics factory, a circuit board factory. We’ll get a factory to do assembly and that’s to keep all the parts out of … Every factory only has a part of the puzzle and it’s really an intellectual property protection strategy. But what it does is it creates a lot of challenges because they don’t know what it’s interfacing with. If they don’t know what it’s interfacing with, a small change can have a huge impact.

Laurier: Yeah. And they can’t be accountable for making it work with the other parts if they don’t know what the other parts are.

Kyle: Yeah, that’s exactly it. But yeah, and it depends on the products. Some products, we’ll just say, “Yep, this is just not patentable.” Hit the market early, hit the market hard, and then see where it goes. And so for those products, we get as much information to each person along the chain as possible. But a lot of our products where you care about quality in intellectual property, we worry about that.

Andreas: Where are the opportunities? What products aren’t being done that you’re thinking, “Man, I wish some guy with a half million dollars would come along and develop this”?

Kyle: What we’re seeing now is there’s a huge demand out there for pet products. So pet products are always huge. They’re always growing.

Andreas: More premium?

Kyle: Premium.

Andreas: It always seems like the really expensive stuff is what’s going for pets right now.

Kyle: Yeah, yeah. So people spend kind of the equivalent money they would spend on their children as they do on their pets. So it’s an interesting market where it’s a lot less regulated, a lot less specific, but you can still charge a lot of money for it. So we’ve got a lot of products kind of in that space that are pretty interesting. And then the second space is the IoT market. So Internet of Things, making dumb devices smart, is where we’re kind of pivoting and focusing our business on because in the next 15 years they’re expected to add $15 trillion to the global GDP. So it’s expected to almost double every year as a market share. So if you’re thinking about developing any product, make sure it’s wirelessly connected and remotely connected. Internet of Things is kind of the big space, so smart home products. You look at Nest, you look at Ring, they got acquired for 1.2 and $3.7 billion.

Kyle: Those type of products are where you’ll see a lot of traction. I was actually in Toronto a couple of weeks ago and I had the CEO of Shopify tell me that you should be picking a rising tide market. So a rising tide market is a market that’s exponentially growing. In a rising tide market, you can afford to make mistakes. You can afford to work through multiple iterations because there’s so much demand and so much consumer products around it, right? So that’s what you kind of want to pick. And right now probably what I would suggest is start looking into wireless products.

Andreas: So if you’re going to build something, just make sure it connects wirelessly.

Kyle: Make sure it connects wirelessly and yeah, smart city, smart home stuff is absolutely blowing up. And yeah, basically anything. Consumer IoT is a pretty saturated market in my opinion right now, but yeah, make sure it connects to the Internet because with 5G rolling out, we’re expecting in the next six to eight months across the U.S. and across Canada. It’s already in South Korea. So that’s going to change the game because you can connect about a thousand times as many devices per cell tower. Of course you need more of them, but the data speeds are just absolutely crazy.

Andreas: That’s it for this episode of Product: Knowledge and our conversation with Product Development Consultant, Kyle Handfield from Ventrify. Visit graphosproduct.com where you can find out more about Graphos, our services, ideas, more podcasts and our blog. All our podcasts are transcribed for the deaf and hard of hearing. Reach out on Twitter @graphosproduct or email us through the form on graphosproduct.com. Thanks for listening. I’m Andreas Schwabe.