All companies face some degree of risk – even if it’s just from natural disasters, like hurricanes. But so-called “hardware” startups – businesses that actually want to make a product to sell to market – face additional risks. Just take a look at what happened to Samsung last year.
Samsung – South Korea’s largest company and one of the most innovative and technically sophisticated in the world – was nearly ruined because of a fault in the battery pack of one of its phones, the Note 7. For a variety of technical reasons, the lithium batteries in Note 7’s kept setting on fire, posing a serious public health and safety risk. Samsung had to ultimately withdraw the product from the market, costing it billions of dollars and damaging its reputation worldwide.
Samsung, thanks to its diversified product base, was able to escape financial ruin. But startups don’t have the same assets to fall back on. Their product needs to be perfect from the get-go. Here is some advice for hardware startups to reduce their risk.
Hire independent engineers
One of the reasons why the Note 7 got to market, despite the battery issues, was because Samsung didn’t hire enough external engineers to test the product thoroughly. Instead, they company trusted its own internal systems to produce a product that was safe, despite the obvious incentives for the team working on the Note 7 to push it out the door as early as possible.
It’s a good idea, therefore, for startups to hire at least two engineers to work on their products. One engineer should be responsible for producing the prototype, and the other should be responsible for reviewing the product before it is sent for production. Doing this is especially important for electronics products since issues can be tough to resolve once plans are finalized, just as Samsung discovered.
Ramp up manufacturing volume slowly
Another source of risk for hardware startups is ramping up production. Not only financially risky, but according to G2 Consultants, it’s also a potential safety hazard too. The problem is that at the moment, the vast majority of manufacturing facilities are overseas in China.
You may be able to get your product made for a fraction of the price that it would cost in, say, the US or Europe, but you’ll also have to accept a higher risk of defects and lower safety standards.
It’s worth remembering that just because your specification says that a product should be made in a particular way, doesn’t mean that the manufacturer will follow your plans to the letter. They may adapt your plans to suit their production methods, increasing the risk that you’ll get sued once your product launches.
Focus on reducing complexity
The complexity of new electronics products can be great. Not only did Samsung discover this with the Note 7, but many other companies have struggled with these issues too, like Fitbit and GoPro.
Using modules is a good way to reduce the complexity of some electronic products. Instead of building things like cameras or accelerometers directly onto the product itself, they can be bought as independent modules which can then be attached together. This makes them easier to integrate and reduces workload.