Being an Engineer

S2E37 Defied the odds: A Physical Product Development Firm That Focuses on Startups & Small Businesses, Mako Design + Invent –Kevin Mako

August 23, 2021 Kevin Mako Season 2 Episode 37
Being an Engineer
S2E37 Defied the odds: A Physical Product Development Firm That Focuses on Startups & Small Businesses, Mako Design + Invent –Kevin Mako
Show Notes Transcript

Kevin Mako is the Founder of MAKO Design + Invent, a product development firm that provides end-to-end physical consumer product development. What really sets Kevin’s company apart is that it’s tailored to inventors, product startups, and small manufacturers. Mako Design is a 30-person team with offices in Austin, Miami, San Francisco, & Toronto, has developed over 1,000 products for clients and has earned over 25 design and business awards including Red Dot, Inc5000, Entrepreneur360, Indigo Gold, Creative Pool Gold, Best Places to Work, Lux Magazine Best Design Firm in North America, and many others. Kevin lectures at the Masters of Engineering program at Ryerson University, sits on a number of entrepreneurship and education boards, and holds the Duke of Edinburgh Gold Award designation. He is the host of The Product Startup Podcast, the hardware development industry’s leading podcast.

The Being An Engineer podcast is brought to you by Pipeline Design & Engineering. Pipeline partners with medical & other device engineering teams who need turnkey equipment such as cycle test machines, custom test fixtures, automation equipment, assembly jigs, inspection stations and more. You can find us on the web at www.teampipeline.us.

Books/Resources recommended for hardware inventors:  

1)          The 10X Rule by Grant Cardone
2)          The Common Path to Uncommon Success: A Roadmap to Financial Freedom and Fulfillment
3)          Mako blog: https://www.makodesign.com/blog/


Co-Host Rafael Testai

Presenter:

The Being An Engineer Podcast is a repository for industry knowledge and a tool through which engineers learn about and connect with relevant companies, technologies, people, resources and opportunities. Enjoy the show.

Rafael Testai:

Hello, everyone, and welcome to the Being An Engineer show. We have today a very prestigious guest. We have Kevin Mako, and he's the Founder of Mako Design and Invent, and they have four locations in Austin, Miami, San Francisco, and Toronto. And Mako Design and Invent is basically a company that can take any inventors idea from a napkin, to fully prototype, design it and launch in the marketplace with patents, the whole thing, he does the whole thing and the four locations all across the world. That's pretty exciting. I'm your co-host, Rafael Testai. So Kevin, I have to ask you, when I looked at your LinkedIn, it said that you started Mako Design and Invent 22 years ago,, but you look like you're 30 years old. How is that possible?

Kevin Mako:

Yeah. That's a very nice compliment. I'll tell, I'll tell you, hopefully that 'll last, I'm 37. I have a little, little 10 month old little fella and, and a wife here at the house I'm recording out of today. And yeah, this was just it was just an idea back in high school. And then that molded into a company actually incorporated halfway through university at the Ivey Business School, which is Harvard, Harvard Business School, sister school up in Canada, section class president there, pick of the litter of jobs and whatever else. And I turned them all down, essentially, to try this crazy business that I essentially found in high school incorporated in university and then went full time into it. I did a little stint at Hong Kong University for supply chain management and all that stuff. And then after graduating from HKU, and Ivey, then yeah, that was it this full time. And for better or worse, here I am today. It was not easy in the early days tell you that. But yeah, here we are with the coast coast offices and well, over 1000 products worked on and all that stuff. So it's been been quite a ride, all with same vision, though, that we started with all the way back in high school. It's the exact same company, same vision, same business model, just bigger, obviously heavily improved, refined over the years. And now here we sat

Rafael Testai:

You don't hear that very often. All the way from high school, you start one businesses and you stick with it, and we're 37 years old, are you still going at a strong?

Kevin Mako:

Yeah, well, it's not like I didn't try other things like in high school in university, I was definitely playing around with a few things and testing the waters. But this seemed to be the one that just kept sticking and growing. And eventually when I went into this full time, within probably a year after I graduated, basically all the other little things that I was working on trying to be an entrepreneur trying to bring all these ideas to life, it really trickled down to this as my single focus, which I've now focused on ever since right graduating back in 2007.

Rafael Testai:

So how would you define the services of Mako Design and Invent?

Kevin Mako:

Yeah, I simply put, we're a professional grade, physical product design for hardware startups and small hardware manufacturers. So basically, like global caliber design, but tailored to the small folks. And we work with everything from, home adventures with our first idea to small manufacturers that have been around for 50 years that are trying to build the next hot thing. And that's pretty much it, we take them all the way from scratch through to their first production run, we do all the design, prototyping all the engineering in between, and get them to their first production run, get them going. And then they're out of the nest. And we can connect them with a bunch of sources after that, like patent attorneys or crowdfunding agencies, distributors, wholesalers, you name it. So we try and at least connect them with all the resources, they need to then scale that product business to be a national or even international product success.

Rafael Testai:

Definitely, I was watching the YouTube videos of your company, and it mentions how you have the whole network. When inventors come to you, you can connect them to the right resource that's really valuable.

Kevin Mako:

Well, I mean, think about it, right? If you're doing design work for a big corporate firm, you're like one piece of the overall project. And traditionally, that's how industrial design firms worked, right? They did a little part, they toss stuff back and forth over the fence, relatively easy work for the design firm, a lot of great creativity and stuff that happens. But at the end of the day, you have some massive corporate giant who then knows how to spin that into success. Well, we're dealing primarily with early stage companies, startups, home inventors, that thing. Most of the time, they don't have any of those resources tapped or even know what those resources are, what direction to take. So creates a very different model of how you work to help a startup succeed in a product competing against those big companies, their products, right? How do we how do we help our startups win, and then what usually ends up happening for our clients that end up getting into selling and all that stuff, generally, that are acquired by those big folks, right. So it really is a win win for the ecosystem. But the reality is, there's a lot different service offering required everything from how you actually structure, your design, the type of design work you do, the way you actually build out your models, the way you get into production, everything has to be efficient, cost effective, timely, etc. So that startup has has the best chance of success to actually get into the market and create a successful product business from just what starts usually as just an idea. Right?

Rafael Testai:

That was very well said, I have a feeling you said that more than once before. It's like, can but very often you explain what you do, right?

Kevin Mako:

I've been talking about pretty much this for only just a mere 20 years, but still still learning every day.

Rafael Testai:

Right on. So I'm trying to put the pieces together here. So you said this idea of Mako Design and Invent started in Harvard's sister school in Canada. Is that right?

Kevin Mako:

Yeah, that's the Ivey Business School. So we do basically a third of their cases, Harvard is a third of our cases. So it's great because we get this international business education, but I'll tell you, the school of hard knocks is where you really learn to start a business. And that's why I incorporated halfway through university. In 2006, when I actually incorporated the business it was, that's when it really accelerated and then when I went into it full time, there's no education like, like, like the real world education. And that's where that's where the where the belly of the beast became incredible, both from a learning perspective, but also building something that was truly valuable to hardware startups.

Rafael Testai:

So the thing, I'm just my nature, ask a lot of questions. And that's maybe why being a co-host is a good thing for me. But I'm picturing myself being you are picturing someone very smart up and coming halfway through college. Like you said, you don't have all the answers. No one does halfway through college. But you decided to start a company that provides the answers to inventors. And I'm thinking if I'm halfway through college, I probably don't know how to prototype and launch a product to market yet. So how did you do that?

Kevin Mako:

Yeah, this whole thing stemmed because I had an invention idea. That's why I said back in high school, it was a ridiculous little invention idea. And, and I was just trying to figure out how to how to do something with it. That was really the foundation of the question that I asked. And, of course, I'm unmasking people, I know I'm doing as much research as I can. I'm reaching out to the different schools, all this stuff and finding it incredibly difficult just to find somebody even to pay for, that could just help me with getting this from this idea to an actual product business. And that was the Aha! moment. And what really triggered it for me is it when I was getting pretty serious about this in university, I started getting mentors that were in the design space. They're in the marketing space. They're in the branding space of big products. And basically, unanimously, all of them told me, 'What you can't do great, you can't build a great design firm that works with startups. In fact, great design firms avoid startups avoid inventors like the plague. I mean, they'll do if they have massive budgets, yeah, they'll take them on, they'll throw junior team at them wherever else. And they'll they'll accept your money, but they're not built for them. They, they they try and avoid them as much as possible. They don't provide really much help outside of like a very core service offering, whether it's in connections or even education or whatever else.' And they said so so unless you need the money you use inventors is kind of a stepping stone to then get to those big fortune 500 revolving customers. That was when I knew I was like, there's something really magical here, because this entire massive market is completely untapped. And so much of innovation is happening on the ground from real users, real people with those aha moments. There's like this massive missing gap between them and a successful product. Of course, this was all before the crazy Kickstarter, Indiegogo revolution, students incubation, student hardware startups, accelerator centers, incubation centers, etc. They took a took a massive expansion worldwide. So of course, us starting, pioneering this concept of global caliber design to the small folks fell very nicely in line with his massive entrepreneurial revolution that happened over the next 15 years to where we are today. And it's still growing like crazy, right?

Rafael Testai:

So basically, don't tell Kevin, he can't do something.

Kevin Mako:

Yes.

Rafael Testai:

He'll go out there and do it.

Kevin Mako:

Yeah, I know what they were saying. It was a tough ride. In the early days, though. I mean, three or four times, we were we are to that to the hairline. going bankrupt, because every time I had no investors, no debt, no financing. So every time we wanted, we're starting to make some money. And I said, 'Alright, I want to grow, I really want to scale this model,' I had to risk everything. I had to put all that money back in and reinvest over and over and over again, every time we wanted to scale. So I don't do much of that anymore. We grow slow and steady down through profits only. But back in the day, yeah, it was it was an all or nothing game, basically, through my entire 20s.

Rafael Testai:

Yeah, I've been a business owner myself three times already, I launched a mobile application, and I sold it and have a couple other businesses in college. But when when people think about the leader of the company, and why they get paid so much, it actually makes sense to me, because they put all the risk upfront. And so congratulations for that

Kevin Mako:

I've never missed paying a staff payroll. And I have numerous times missed paying myself sometimes from months on end, it's it really it's one of those things where, yeah, when times are good, it's fantastic as a business owner, but when times are tough, or if you're really trying to, elevate to the next level, and put everything you've got on the line. Yeah, it creates, creates a difficult environment. So I understand some of the methodologies behind the folks that were essentially convincing me just to go get the investment banking or management consulting job and had pay my pay my bills and keep it simple like that. But it was something that I at least wanted to try. And I always thought that, if I totally fail and go bust, then then I'll hopefully beg for some jobs, somebody to take in this this, failed entrepreneur back into the system. And, and try again, another day, right. So it really the doom and gloom of failure, it was always there, especially in the early days, but I never let it deter me from trying my best to really build something amazing that I believed in.

Rafael Testai:

Excellent. So as our listeners are listening to this, they're probably wondering what I'm wondering, they've heard people are involved in the world of product design, mechanical design engineer like myself, we wonder how did you make it work, because everything that you said is true, based on my experience, about that segment of the marketplace that you're going after the inventors that I'm just going to recap here, they usually tend to not have a lot of money to develop their ideas. And it's very expensive to develop tangible products hardware. And then secondly, they first time founders don't really understand how difficult it is to bring an idea to market. So you have to basically educate them half of the way. So can you please shed some light on that? How did this market work for you?

Kevin Mako:

For sure, I'll say still to today, talking just strictly about money will go into a few other things that can help with this too. But strictly talking about money, I would say still, most of our clients don't have the funding to go all the way through into their first production round and onto store shelves themselves. But they don't need to, because it's very much a stepping stone approach. For those who do have the funding. That's great. That's amazing, right, you can get to production, then you can test market and then scale and grow from there. But for those who don't have the funding, keep in mind that the brilliant thing about hardware, especially once you get to that physical, tangible prototype, starting obviously, with your rougher prototypes, and then getting into like your more refined presentation, more fully functional prototypes, maybe even pre production. Well, that's where now all these new avenues are opening up, we even look at crowdfunding, which has now been around for years. That's an amazing little bridge, basically between a prototype that's well thought out and paying for production. It bridges the gap, right. So once you've got the prototype, you go to crowdfunding, you, you raise your first funding round from from basically people who are pre purchasing product months and months in advance, you use that funding then to essentially pay for your production run. But there's also investment rounds that are happening and incubation age, even things like the college and university level stuff that never existed when I was around. There's now if you look at most of the colleges and universities around the world, there's generally incubation programs built right into them. Some even with funding these days. So as you hit certain milestones, the university or sponsors of the programs or whatever else will start paying for small investments, and when you hit that, a certain set of criteria, as you get a little bit bigger one, it can start like a couple grand, up to 10 grand and the 50, grand and so on. But then that leads you into a whole range of different investment opportunities now, like angel investment groups, which there's many of or even looking at small seed groups, which then leads into venture capital financing and all that. So if you have a great idea, and you have the persistence to do what you can to get it to the next level, whatever that next level might be, then generally there's somebody out there somewhere who will help you fund it to the next level. And not saying it's easy. It's certainly it's a bit of a battlefield. But the reality of today versus even 10 years ago, is that there's even I think about like incubation maker spaces, incubators themselves, incubation programs. I remember seeing one thing that they predicted there's 100 times more incubation, entrepreneurial incubation centers and co working spaces than there were 20 years ago today. Right now, let's talk about hardware specifically for a second, because what's really interesting in terms of the technology is it is becoming much more efficient to actually get a product to production. So you have things like all of our CAD tools, FEA testing, etc, that make it that allow us to essentially do a lot more design and engineering upfront without spending crazy dollars on multiple rounds of prototyping and testing. So that you can get to a quality finished product faster. That's not a perfect science, there's still always as a hardware element to almost everything, but it's reducing the cost, the time to market, the amount of mistakes, etc. As the technology around CAD software is improving. So is that efficiency to actually get a great product out there. Even things like on the electronics level, where you've got all sorts of essentially Lego block methods where you can just plug and play technology. Now, you can use off the shelf coding, it's very much like websites 20 years ago, he basically had to be an HTML coder, today, you can just drag and drop blocks, right. So this thing is now following the software trend, but also in hardware. So it's making it easier and faster to get to market. Now we talk about what's really happening now, but also for the next 5 or 10 years, which is going to be really incredible is local short run additive manufacturing, being able to manufacture 50, 100, 500 units of your product to test in the market to get real users buying it before then tooling ups, spending big bucks to do your first massive run of five or 10,000 units plus, so it does, it does, but the thing is it's getting exponentially more efficient. Right. So traditionally, this is like a printer, right? Remember how expensive and how long it took to print a color page. And now you've got basically a color printer and anyone in anyone's home who wants one, you can buy one at the store for 49 bucks now, right? So 3D printing is following that trend where it's getting much easier, more efficient, faster to produce units, also much less expensive per unit. So you can actually do the short run manufacturing runs at a reasonable cost. It's still obviously more expensive than tooling and doing a big production run per unit, but much less expensive as a capital expense. So all of these things independently aren't like the the winning ticket. But when you start adding all these things together, it's an incredible time for hardware startups, especially right now, especially in the mass manufacturing consumer space, because of how much easier faster, more efficient it is to get to market to test to refine and then scale your business from there.

Rafael Testai:

Okay, a couple of comments. Number one, everything you said is absolutely true. When I was in college, we actually won a couple competitions for my company and got 1000s of dollars. One of my friends even made $50,000 in a competition

Kevin Mako:

Right on

Rafael Testai:

Crazy amount of money for doing a business plan doing a quick pitch deck. And there you go, and all these mentors and connections. So what you're saying is true. Let me think about that. The next thing I had in mind. Number two was okay, so that's the pitch the competition. So if I understand correctly, people that come to you don't have to have all the money to to go from idea all the way to manufacturer there's a bridging the gap that that step in the middle of the Kickstarter campaign. So you can actually get them to that point. How much usually on average, maybe just ballpark idea does it cost to get an idea on a napkin to that Kickstarter state?

Kevin Mako:

Yeah, it depends on the complexity, but I can give you some ballpark. So keep in mind as well, Kickstarter and Indiegogo. First of all, I do believe it's an incredible option for a hardware mass manufacturer, consumer physical product startup, I think is a really incredible tool, not only to make some, some sales before you have to produce but also to get real market validation and feedback when you sell your first 500 units, and you have real users who purchase it, and then eventually you deliver and they love it. I mean that that you've now made your your business exponentially more valuable and much more right for your next investment round to actually scale. But coming back to costs from that like sketch on an app. And first of all, it that like I mentioned as well, there's other opportunities, other investors, other programs, etc. But what you have to think about is that if it's a relatively simple product, without electronics, you're design engineering, one or two rounds of prototyping, you could be anywhere from 10 to $20,000 in development to $100,000 in development to get to like you're ready for production at a point are you ready for a crowdfunding campaign? Now if you got more complexities, you could double or triple that if it's mechanically like quite complicated or you start getting into like specialized or experimental things. And then again, adding electronics you're adding some costs there. So it really, in hardware, it all depends obviously if you're making me look at like our clients product that truck try plunger, it's a better toilet plunger. It's it's very easy for us to design engineer to set them up to production, and off they go. But you look at one of our clients like the Go Fish, underwater fishing camera, much more comprehensive, you're well into the six figures in terms of everything from design, engineering, prototyping, testing, refinement, etc, before even gone to production. But again, every layer that you get every stage that you get, like, once you get to the end of design phase, you've had a certain milestone, you can get a certain type of investor at that point, once you've got to the rough prototype, you actually have something that quasi works, it's functional, that shows your tech, now you're at a much bigger investor standpoint, by the time you're pre production, and maybe you even got some pre sales or whatever else. Now you're now you're kind of in the in the big leagues as a hardware startup to really access a major funding, right. So it's important that if you're super cash strapped yourself. First things first, you've just got the idea. It's on you, or very close friends and family who trust you. And the idea, right, so that's how you're going to get your first 5, 10, 20 thousand dollars. From there, when you're looking at, you've actually got some physical thing, which is really like the first mark or any kind of more official angel investor or seed investor, then maybe you can start to ask them for 50, 100, 200 thousand dollars to really nail development. And then once you're into,you've actually got some sales, even if it's pre sales, that puts you on the map that proves that people have built their credit card to actually pay for your product, they believe in it that much. Now you're looking at anywhere from 100 to a million dollars in later stage seed financing, or even early stage VC financing or whatnot at that point time to that's not only to manufacture and execute, but also to build quite a substantial and scalable product business around that that innovation. So that's breaking down some of the different phases, and how you can look at investment rounds.

Rafael Testai:

Okay, so you get them from idea to Kickstarter, basically, we're just going to call that the, what would you call that phase in the middle, that Kickstarter, Indiegogo stage? Well, that's it. So really, at that point, ideally, to have a really great crowdfunding campaign, you want to be ready for production, that's very different than just a rough prototype, because when you have just a rough prototype, you're not ready for production, you need to then go through your formalized engineering, formal prototyping testing of that prototype have something that's pretty much almost identical to the to the production unit, to fully vet out every everything that you're doing, then you're ready to actually work with the manufacturer to get real quotes on what it costs. That is the point where you're an ideal candidate for crowdfunding, you can do it earlier. But you're going to have a harder time convincing the public essentially to give you that 5 to $500, for your for your gadget, if you're really not truly ready for production, and the market smart. So you really want to make sure that that you're you're you're carefully deciding when to go to crowdfunding, when you're ready, how you're figuring out your manufacturing, because if you do raise a million dollars on crowdfunding, you darn well better be sure you're going to execute on a high quality production run very soon thereafter, or you're gonna have a lot of angry customer, a lot of angry customers without a product in their hand. So that's why we really advocate being sure that you're at that point, pretty much where you're ready to go to production, before you're actually pulling the trigger on a crowdfunding campaign. And even with the crowdfunding campaign, I would highly advise if this is the if you're not in digital advertising at a fairly sophisticated level, or you're you've never done a crowdfunding campaign before, I highly recommend working with a specialized crowdfunding agency for that work, it is not a set and forget it sort of thing. It really requires talent to build off a great campaign. I can tell you've done this 1000 times from the way you explain it, you know what's coming ahead, you know how to predict it. So when you get them to crowdfunding stage, probably they, they've got enough funds just to get there. And the idea is to let the inventor now gather some money and some investments and the Kickstarter, and then maybe they can come back to you and do phase two or something like that, right? Well, really, at that point, when they've got so if they've gone through the process with us, or a professional design, to production design for production firm. At that point, they're ready to ready to produce, they ideally have already been talking to the manufacturer and getting pricing, which is how they actually price out their campaign to go to to crowdfunding. So at that point, generally, it's just pulling the trigger, you're taking the money that you've earned from the campaign, and now you're applying it to the manufacturing run. So realistically speaking, you don't really need more design after that. However, there's a second major benefit that happens with almost every crowdfunding campaign. And that's user feedback. Because one of the things that happens with a campaign is you start getting comments, emails, inquiries, etc, of people saying, Hey, I really love it if you had this feature, or I'd really love it if you did it in this size, or I'd really love it if you did it for this particular international market. Now, all of a sudden, you start realizing, 'Okay, I've got my A core initial thing that I went to market with. But now I'm starting to learn both from my own feedback, our design teams feedback and real users, real customers feedback, how this thing could expand and grow from beyond just that one product.' And that's where you can take one singular product and turn it into a multi product empire. And that is really what leads to great customers for us, because now they come back for maybe their pro version, or even maybe a simplified version for, let's say Walmart's knocking on their door and they say, Look, you're too expensive for us figure out how to cut your costs in half, we don't need these three features. And and now you'll be a great pitch for Walmart, and we could move massive units. So a lot of times, it could be even a cost down version or a simplified version. So that's where the conversation get very excited. So it's not just about the money that you get from crowdfunding, but it's also about the feedback. And that feedback could be very powerful how you actually build a world class brand. Up until now, I was still wondering how would this made financial sense to you, but now it all clicked for me multiple products, and they're coming back to you for for more design. So that makes sense. Now, one thing that crossed my mind was when all these first time users give you feedback? What if that causes feature overload? Everyone wants a new feature? How do you decide which one to go with? First of all, you ask great questions. These are solid, I'll tell you first and foremost, one of the biggest things that I advocate, I talk about it on our podcast show all the time, I do guest speaking and all this stuff, I teach it to the masters energy engineering program, prior son where I teach. So look, one of the first things most important when you're in the even in the early thinking phase, when you're rough sketching or just ideating, writing down your notes, whatever you're doing. Your first product as a hardware startup, especially if you're cash crunched, is to keep it as absolutely simple, but high quality as possible. And by keeping the features simple, stripped down, highly focused, focusing on one target demographic only not trying to be everything to everyone for your first product, it allows you to use your resources to create quality. Because the more features you add, the more resources you need to make a great quality product. And it's almost it's not even like a direct correlation. Like, if you have a product with two features. And then try and go to a product with five features, it doesn't mean it's going to be two and a half times more expensive, that probably means it's going to be five or eight times more expensive. Because now you've got the compounding interacting elements to these features, which are creating exponentially more complicated in design, research, prototyping, manufacturing, defects, warranties, upset customers, you name it, one of the most difficult things for hardware startup to do is to really say, 'You know what, we've got all these great ideas, but let's just focus on what's really the one or two key features that is truly unique?' Like usually your idea of really comes down to one or two key things, all the other things is just the cherry on top. So focusing on your your high quality, I call it SMVP, smart, minimum viable product, meaning the simplified version, but at a high quality. And you do that with your first launch so that you keep your features. But essentially, you reduce feature creep, that allows you to come up with a great product. And yes, you're there's gonna be a big part of the market that you're missing whatever else, that's fine. But the people that you actually target, that you hit hard with that one key feature for that one person that that that one industry, that one segment, they are going to be very happy customers, you're going to learn from them and from others what your next feature should be, and so on. So that you can be very targeted and very efficient as a hardware startup, on what you're investing in what features really are important and what features are just wasting your money. And so I run a design firm, the more complicated a product is, the more money I make. And yet I heavily heavily advocate to our customers, keep your product as simple as possible, because I know that they keep it simple, keep it highly targeted, they have a much higher chance of success of getting into the market, it's much easier to sell, they'll hit that demographic harder and more of those people are likely to buy. And that will lead them to come back for their second, third, fourth, and so on as they really truly learn how to be efficient, and how to be smart about what features they add from there. So hopefully that makes sense. But it's really something that I've really asked everybody that's that's brewing in an idea or developing it to really think of that MVP, that first version, and thinking about how simple and clean it can be so that you can really nail it with quality. Absolutely. And thank you for the compliment of asking good questions. I'd like to stay in the moment whenever I'm having a conversation with someone and just try to put myself in the shoes of whoever was we're talking about. So the inventor in that case, you said smart, minimum viable product, the S is for smart Is that right?

Kevin Mako:

Yes.

Rafael Testai:

Okay. Yes, as many listeners may have heard that before, minimum viable product, MVP, it's very common term, but we had the smart in front of it, which I really liked. And here's why I want to be specific on this one because you hear MVP around the software tech world, especially, and it's got a bit of a negative connotation, generally used used to somewhat mean, like release crap, just get the market, release some garbage, and then tweak and refine it after that, right, yeah. And that, and that's in hardware, it's, it's actually, if you release crap and just get to market fast, you will fish almost for sure fail. Now, the reason we put the s in front of it is to really highlight, we still want to have that MVP focused, simple, clean, get to market quick. But by doing that, we're able to put more resources into fewer features, and thus make those features high quality, you heard me come around to that quality element a number of times, the only way you're going to have a quality product, especially as a limited resource startup, is by limiting your features. So you can spend more money more dollars per feature, it's as simple as that. And that is what creates quality, simplicity, quality, happy customers, then you can figure out how to scale from there, you can have your pro version, your premium version, your 2.0, whatever you want to call it, products and brands do that anyways, and plus a lot of the things that you want as features you're going to realize the clients didn't want. And a lot of things a client did did want, you didn't even realize were an important feature. So when you come out with your next version, it's going to be much more educated anyways, because of that multifaceted review process from multiple different types of stakeholders to the product, not just you as the owner, or even not just us as a design firm. It's all these other players, like your customers, your vendors, your other partners, etc, that really come together to figure out how you're going to grow the product features after your first launch. This actually remind me of saying that we used to have when I developed my my mobile app that was called the Venky. When when people used to try it, and they want all these features, they give you everything that they wish for, and then it's hard. So you just give them the core features to get them done what they really need done. And then they'll ask you for the additional little feature. And I used to say MVP with a smirk on my face. And people understand, like, I'm just trying to give you the essential right now. And you'll be surprised how little you actually need to give them for them to be happy and get them to accomplish what they need to accomplish. Moving on to the next thing, you mentioned in the early stages, friends, people know you and trust, you may give you the first 10 and $20,000. My question is that people usually I've never heard anyone answer this. So you're going to have the platform to answer this. When a friend gives you money and you're the inventor, what does your friend get in exchange? You have to give them equity. It's always an equity. Now, keep in mind in the beginning, when a lot of people when they have the idea, they try and reach out to institutional angel investors or whatever. And they say, 'Look, I've got this idea, it's going to change the world. That's what whatever else, I want 50,000 or 100,000. And I'll give you half the company or whatever else, it's a very fair deal.' It doesn't work. Because you haven't, you haven't proven execution enough. It all comes down to execution. So when you're the reason we mentioned friends family, is because those and one of the things that I said earlier, which really is important when you are asking friends and family for money is first of all, you need to prove that you've done what you can, how far have you got it on your own, if you don't have a single dollar to put into it, you have time. So you should show that you've put a substantial amount of time into getting as far as you humanly can you're proving execution. When you go to those friends and family, they of course, you're telling them why your idea is so great. And that's part of it. But really, the bigger picture there is that they know you and they trust you. That's why they're really the only source of early stage revenue for you early stage revenue in terms of an investor, because it's people who know you and trust you that no, you know what, it's a good person, they they're reliable, whatever else. So I'm going to give them a bit of money because I trust them that they're going to do what they say they're going to do. I know they're not an expert on products. I kind of like their idea. Or maybe I really like their idea. But I really trust them as a human being and the only person that you can do those people who've known you for many years. That's why people are very frustrated when they go and they reach out to institutional investors and wondered why they get shot down. Even if their ideas incredible. It's because they haven't proven the execution far enough. And that's why it really, it's key as well, when you're thinking about your friends and family. You've got to go to people that you've really got a great tracker with that you've proven over and over that you're reliable person because they're trusting you with a great amount of money and they all they really want in return is of course they want they want their money back and they want something on top. But the reality is they want you to try their best they should understand it's a risky investment as any startup is. But the reality is if you're not putting your best foot forward, you shouldn't be asking if you haven't put everything you've got into it both financially and personally into it. How can you ask somebody that you that you trust or the trust you for money if you're not even willing to put in either your own money or your on time, so that comes back to like your effort, your credibility, all that stuff. And that's why those early phases, it's either on you, which is what most people do, they save until they can at least get some early results, early execution, get into design or prototyping or whatever else. Or if they really can't do anything, but they have people to trust them, they go to that Can ask you something before I forget?

Kevin Mako:

Yes

Rafael Testai:

I really need to ask you so when, let's say my friend is Bob, and I'm the inventor, Bob knows me for a long time I say, Bob, can you give me 10 grand, so I can further develop my idea, he trusts me, he gives me a 10 grand, but you said my friend, in exchange of the equity, what does equity mean? And you give an example that they expect, your friend expects to get their money back, and a little bit on top. And if that's the case, then why give equity, why not just tell Bob, I'm gonna give you back 15 grand, within a year, if this works out. For you, one of the things you've got to think about in terms of equity at the early phases is a lot of people want to give it up early. You've got, we see it all the time, where inventors like, Look, I'll give half half of it away for 25 grand if I can get it right now cuz it's better than better than nothing. But the reality is, that's going to be especially if this product becomes successful, that is going to be exponentially the most, the most expensive money you have ever got. As an investor. I and I've seen it numerous times when it's easy in the idea phase, it doesn't seem like it's worth a lot. But it is because in your life, you're only going to have one, two, maybe three opportunities, I would say, especially as a hardware invention, where you're truly going to come up with with an invention idea. That is, that is revolutionary. And when you come up with that idea, that's your let's call it, let's assume it's the only one you're going to get in your life, and you give half of it away for for some amount of money, whatever it might be, when that product ends up starting to sell hundreds of 1000s or millions of dollars worth worth of inventory. And you're trying to raise your next funding round, because you want to raise a million or $2 million to scale. But you've already given away 50% of your business, it's going to be very difficult to to raise that money and keep almost anything for yourself, especially if you go through two or three rounds of financing. Right, maybe you go through a round a prototyping, then again, around a scale, and then maybe a big round, as you get into, early series rounds. If you've already given away most of it right out of the gate, then you're in trouble. So you really have to reflect personally be like is this something I want to invest in because the further that you can push it yourself, the much more valuable the business becomes. But also the much more equity you have a much more valuable position to offer down the road. So even if you're going to go to your share your cousin Bob, and ask for that $10,000. But you can get it there yourself, you're probably better to go get it designed, get it to a point where it's maybe worth something or whatever else, then maybe come back to Bob and instead of offering them 50% equity for 10 grand you offer him 5% for 10 grand, because the thing's already designed, you're ready to go into prototyping, you've already figured out the technology, you've already done a whole bunch of things in and around the research and the market and all this stuff. Now you come back with something that's half in development, and asking for money for something that you've shown execution on as opposed to just an idea, which people aren't going to give you much for much equity. Unless of course, like you mentioned, you can structure some, some lucky deal with somebody who really trusts you and some other financial arrangement, like a certain return or whatever else. But that that all depends on on what you want to do. But most importantly think about it, the longer you can push off giving away equity, the less equity you have to give away and the more money you will get for that equity as you scale the business. Well said this seems like a good place for a quick pause to share with our listeners that teampipeline.us is where you can learn more about how we develop how we can help medical device and other product engineering or manufacturing teams develop turnkey equipment, custom fixtures and automated machines to characterize inspect at symbol manufacturer and perform verification testing on your devices. Now here we are with Kevin Mako and have two more questions left. So you run a design firm, as we have just mentioned before an invention firm. And my question is, do you ever get tempted to launch your own ideas in house?

Kevin Mako:

Yeah, tempted on it on a daily basis? That's for sure. One of the things that we did early on, is is because we get 1000s of inquiries a year. We from that we work on hundreds of projects. And one of the things we did early on is said that we will never take a piece of equity in any product ever. We are in a bit of a unique situation where we do sometimes we've got people who've come to us like they've been sitting on their their like idea for like 10 years never told a soul right and they're finally ready to do something.

Rafael Testai:

They're shaking when they tell you they're like They're like, can we trust you? So we've tried to go, be old over the top, like almost unnecessarily above the top ethical in terms of how we manage everything in the firm. So nobody in the firm can even invest in a hardware startup or in a hardware company, just to be absolutely crystal sure that there is never a conflict of interest. And we are always 100% working for the clients benefit for their product, period. Right. So, yeah, it's tempting to do our own, it's tempting to partner up, we get offered free equity constantly, we have to turn it down because of this, this principle that we abide by. So it's just it's an it's an almost unfortunate one ways, because yeah, we could have made a lot of money on a lot of projects. But on the other hand, we're, we love what we do, it's, it's a great job. And we're doing well now. And we don't, we have no complaints. So we just want to really more than anything else, we just want to do more of the business model that we have today, we want to do it in more locations, and more places, more accessible to more people. And that's it, right, we don't really want to change the model at this point, we just want to continue to do what we do and, and just grow the reach of it. So if I understand correctly, founders have offered you equity to work on their product, and you've turned it down, is that correct? To work on it for sure. But even like later stage, people be like, 'Oh, man, this is awesome. We did well, like here, we're going to give you guys 2% or 5%, or something like that as as a thank you for the work or whatever else.' And we just say that, obviously, it's it's a it's a massive compliment. But we've never taken it. And we just simply say, just bring us keep in mind if you do the next project. Right. And, it's a success story for everybody. And we feel good about it. And that's it great. And that keeps it keeps it clear. So that when that new person comes in and ask the question, like, are you gonna steal my idea? Well, for sure, we won't to start with but in second, we don't own anything of any product ever in the history of our business. So just seals that. Okay, I understand. Without explaining why, what do you think are just three books, or maybe just one or two that every inventor you think should read, before they approach maybe Mako Design and Invent? You know what I've got, so they're not in the design field, we've got a ton of resources if you want, specifically physical mass manufacture, consumer product development advice, that stuff, hop over our podcasts, The Product Startup, productstartup.com, or just Google Kevin Mako product startup, or Kevin Mako podcast, whatever, you'll find us, we're on every platform, etc. That's a great resource for a bunch of stuff, you can also check out our blog, we've got over 1000 blog articles on almost every topic under the book when it comes to this very specific type of hardware development. But in terms of books, what I would recommend from a business perspective is one just to get you motivated. And I think that's the foundation is Grant Cardone's book 10x Rule. It's a fantastic book just to understand that effort and the drive. And the reasons to really push that, if it is at one or two invention ideas that one or two moments in your life where you have something come to you. The way he explains it's interesting, it's almost like you have a responsibility for for yourself, the world, your family to like to act on this. And then how you actually act on it to become successful, what it really takes what differentiates those who succeed in a new venture, to those who fail. And it becomes very clear in his writing. And if you start to understand the premise of those who succeed, it's a it's a great, great spot to start. So that's more to highlight, let's call it the foundation, in order to actually execute and nail it. I would recommend a new book that just came out. A friend of mine, I've been on his podcast, EO Fire, JLD, the it's a great book called The Uncommon Path to Common Success. And it's a 17-step roadmap to like exactly step by step, what you need to do to actually conquer. And this is for any business, but it's particularly effective in hardware. So those two books combined one will give you the foundation, the motivation, the other will give you the roadmap. And then if you pair that with learning about your specific product and stuff from from, and how to actually develop products from some of the macro design resources, you're in a fantastic space to use to look at next steps on either go or even no go decision for your next invention idea. What a beautiful transition. You mentioned your podcast productstartup.com. You can find it there. And actually forgot to mention that in the introduction. But Kevin is the host of The Product Startup. So if you're listening to this on on your preferred platform of choice, go ahead and check out the product startup link in the description below in the show notes that I have an actually interesting question about this. And Aaron, the host of this show and founder of Pipeline Design & Engineering. He was very curious when I told him this. But if I understand correctly, we interviewed Philip, last week on this podcast. And Philip was the mechanical engineer that started their Product Startup Podcast.

Kevin Mako:

Yeah.

Rafael Testai:

From my understanding, you bought it from him and you're running it now. Is that correct? Yeah, he was at a point where he was transitioning out of the space. And he hadn't hadn't posted in a while, and we were transitioning into the podcast space. And it was a perfect partnership, because he had a great show. And it was the product startup, and it had a good following. And I think they had done 55 episodes at the time. And we were just building our own. And it was a perfect opportunity for us. He was leaving the podcast space, and we were coming in, we just cut a deal to say, hey, let's let's, let's join forces, we'll take it over, we'll host it, your legacy will live on and on, bring a bunch of new content to the show. And that's all we've done. I think we're on just recorded earlier today, Episode 80. And we'll continue to grow from there. But Philip was he's good guy, great host. And I imagine you had a good talk with a probably last last week because he's really well spoken knows his stuff. And I was very excited. We had a lot of fun during the transition, moving him and we even did a transition episode where he was hosting and introduced me as a new host. And yeah, I really enjoyed that process and helped me learn learn the space. And it's been it's been a lot of fun. Well, for anyone listening, if you have a podcast and you want to be a millionaire, Kevin, goodbye from. No, just kidding.

Kevin Mako:

Want one and only my friend. It's The Product Startup and that it will be my only podcast probably for life.

Rafael Testai:

Well, I think that was a really good move. And actually just finished listening to I think was Episode 77. About warehouses if I'm not mistaken.

Kevin Mako:

Ah, yes, yes. Good episode. Right on.

Rafael Testai:

Well, lastly, is there anything that I haven't asked you or you want to say, before we end the show? No, that's it, really appreciate it. If you've got an invention idea in the mass manufactured space stuff that you're intending to sell on Amazon or Kickstarter, or retailers like Walmart or Best Buy, that stuf , hit us up, Mako Design, makodesign.com. We're happy t help. We're even happy to jump on a call and just spitball dir ction, even if you're just at he early stages, and are just lo king for some advice or whatn t from there. Feel free to dr p by anytime drop us a line, check us out resources, what ver else tune in to the podcast. And I really appreciate, mor than anything I just want to say. Really appreciate you h ving me on the show. And it was your questions were amazing s one of the most enjoyable show I've been on as a guest. So hank you. Oh, thank you so much. Thanks, Kevin. Until next time.

Aaron Moncur:

I'm Aaron Moncur, Founder of Pipeline Design & Engineering. If you liked what you heard today, please share the episode. To learn how your team can leverage our team's expertise developing turnkey equipment, custom fixtures and automated machines and with product design, visit us at teampipeline.us. Thanks for listening.