Ken Rother, director and hardware programs lead for Rev: Ithaca Startup Works – based at the Center for Regional Economic Advancement at Cornell – joins host Chris Wofford to share tips for planning, prototyping, manufacturing and funding physical products.
At Rev: Ithaca Startup Works, part of the Center for Regional Economic Advancement at Cornell (CREA), Ken Rother helps entrepreneurs launch physical product startups through his role as director and hardware programs lead. He joins host Chris Wofford in this episode of the Cornell Keynotes podcast from eCornell to offer guidance on bringing a physical product to market – from developing a prototype to securing investors.
Listen and learn how to:
Rev: Ithaca Startup Works supports every kind of startup, including those focused on hardware and physical products. Explore Rev’s programs and services to help you launch and grow your product startup, including this summer’s Prototyping Hardware Accelerator.
Bookmark these resources on entrepreneurship, product development and product management curated by Ken Rother and learn more in his Product Development certificate program from eCornell.
CREA is a division of Research & Innovation at Cornell.
Chris Wofford: On today's episode, we are joined by proven entrepreneur and lead on hardware programs at Cornell's Center for Regional Economic Advancement, Ken Rother. Ken's energy and enthusiasm for product development is definitely infectious, and I think you'll like this one. We discuss how you can take your brilliant product idea to market by prototyping, working with manufacturers, scaling your production, and then onto hiring and capital concerns.
Chris Wofford: It is a journey, but if you're ready to make a thing and sell it, this is the perfect starting point. And if you're already in business, Ken's got some pointers and fresh perspectives that may help you make smart adjustments on the fly. So be sure to check out the episode notes for details on Ken Rother's product development, online certificate programs from Cornell, Ken's reading list, companion keynotes and podcasts, and resources that are available to you at Rev Ithaca and Cornell. This one moves fast, so here's my conversation with Ken.
Chris Wofford: So Ken Rother, you are director of REV in Ithaca and the lead on hardware programs at Cornell's Center for Regional Economic Advancement. We call it CREA. You're an Ithaca fixture and have launched a bunch of businesses yourself. Tell me how you work with people who have product and business ideas, people who are ready to make a thing and sell it.
Kenneth Rother: Often we're working with people who are very good at making something, making a prototype. They've either done it, maybe in their lab or they've done it in a class or they've done it in their garage. And they're quite good at that. What they miss is really understanding, is there a problem?
Kenneth Rother: Is there a bunch of people who actually are trying to accomplish something and are having a problem accomplishing it? So they love what they've got. It's faster, better, cheaper, whatever they want. That's out there, but our people who are trying to accomplish something, whatever that is, whether it's teaching their kid to ride a bicycle or open a can or take a pulse.
Kenneth Rother: Are they having a problem accomplishing that? And that's sort of the first step for us in entrepreneurship is helping people realize, okay, your tech is your tech, but are there a group of people who are stuck because that group of people might be your customer and we need to figure that out.
Chris Wofford: So, it sounds like what you're saying is that, you know, before we even make anything, we need to validate the business idea. There's a process, right? There are questions we need to ask. How do we go about it?
Kenneth Rother: Right. So, you know, often we'll meet someone, and they've already made some prototype in their class, in their PhD work, in their kitchen, in their garage. So that's fine, but we need to take a step back and understand what is the potential business model that you're going to deliver this under.
Kenneth Rother: So we use a tool called the business model canvas connected to a process called customer discovery. This was all developed by a fellow named Osterwalder during his academic research about a dozen years ago. And us and many organizations use this. So really it's these nine boxes that capture all of the assumptions we as entrepreneurs have about our product, who's it for? Not just like, is it for a university or for a hospital, but very specifically like, who is the who, who's going to buy it and use it? What is the value proposition they are looking for? Not what are the features and functions of my product, but what is the benefit they need to get?
Kenneth Rother: In order for this product to be successful. How do people typically buy this product? Do they buy it off the shelf? Do they buy it from a distributor? Do they buy it off of a website? How do they even learn that your product exists? We often say to entrepreneurs, you can have the greatest product since sliced bread.
Kenneth Rother: But if no one knows it exists, how are they going to buy it? So how do you generate awareness? How does that customer typically learn about your kind of product? But then we have to think about, well, what are all the things we need to make this product? And depending on your entrepreneur's expertise, they may have a lot of understanding of how to make the final product, and often they do not.
Kenneth Rother: What are all the resources they're going to need to marshal, money and people and expertise and facilities? Who are they going to partner with? Who might be able to help them get across the finish line? What's the revenue model? Not just how much are people going to pay, but are they going to lease it?
Kenneth Rother: Are they going to buy it outright? Is there a consumables model? And then finally, what does all that cost? So entrepreneurs, we start with a bunch of assumptions. All of us as entrepreneurs, we have all these assumptions. We imagine how our business is going to work. We capture those assumptions in the business model canvas, and we go talk to people.
Kenneth Rother: Not do they like our idea, but do they have the problem we think they have? Are they the person who actually has the buying decision? How do they typically buy stuff? And we validate and change and pivot, until we have a business model that makes sense. Every company on the planet, whether it's a corner store or Apple has a business model.
Kenneth Rother: So you need to figure out your business model because it's going to influence at the end of the day, what are the features and functions of your product? So you can get to the right pricing model and the right marketing channels and so forth.
Chris Wofford: We're here in Ithaca, New York. We have the benefit of being able to work with an organization like Cornell Center for Regional Economic Advancement. We have startup organizations, Ithaca Rev, eLab, etc. Not all of us live in Ithaca, but there's a good chance, no matter where we are located, that we have access to similar resources. Incubators, right? Advisory groups, people that can help us with this. For the person that's aspiring to make a thing and actually turn a business into it, where do we start beyond the business model canvas? What do we need to think about accessing?
Kenneth Rother: In every town in the country, there's going to be, these days, a makerspace. A makerspace is usually a non profit organization where there's shared tools and very creative individuals who know how to do some electronics and 3D printing and maybe crafting and, you know, various tools you would need in order to bring an idea to life and sort of see it physically in front of you.
Kenneth Rother: Many incubators, some of those incubators or economic development incubators run by a town or by a county or by the local university, they're facing an all, you know, all different directions. Some of them are for profit. Some of them are nonprofit. So you wouldn't have to travel far. Even in the most rural of environments to get access to some of those resources to help you bring your idea to life.
Kenneth Rother: And those resources are both the equipment and very creative people around you. One of the things about the business model canvas is we didn't invent it. You can just go to Google, say business model canvas videos, and you're just going to get an endless list of organizations, other universities, other groups like the National Science Foundation who leverage this tool.
Kenneth Rother: And there is all sorts of how to's of how to do this. And it's all based on a book called Business Model Generation. And you could just go to Amazon and buy Business Model Generation. And there's some other books that have come out since. So there's a ton of resources that are available for you to learn from and test.
Kenneth Rother: And then there are these facilities, we have a makerspace here in Ithaca, every town I visit, I go see their makerspace and I don't think I've been in a town yet where there isn't a makerspace and that would be, I think for a lot of people, a place to start. The other place to start is going to be your kitchen if you're making a food thing or, you know, a wood shop.
Kenneth Rother: So that shouldn't be the barrier to entry for an idea.
Chris Wofford: You've graciously assembled Ken's reading list that we're going to be sharing with our audience as well. So check out the episode notes for that. This is a spreadsheet with books, resources, next steps that'll help you on your journey. All right, so we're getting ready to make the thing. We're in the prototype phase.
Chris Wofford: What are things that we need to think about? What kind of mindset do we need to get into when we're putting together prototypes?
Kenneth Rother: When we prototype, there are two basic paths that we take. One is called the looks like prototype and one is called the works like prototype. The looks like prototype is what it sounds like. It's a visual representation of what your product's going to look like. And you start. Buy something simple, paper and cardboard and pipe cleaners, you know, and duct tape. And then you move on to more sophisticated, maybe out of wood or out of wax, or other materials that you can form. And what you're looking for there is to, you know, A, for yourself, get what you'd like this to visually look like.
Kenneth Rother: But this is something you can put in front of people, not to ask them what they think about it, but where maybe they would put this on their desk, or where would they put this in their kitchen, or where would they put this in their car, and so forth. So this looks like prototype helps us understand the visuals, the appearance, the finish, the weight.
Kenneth Rother: The other side of that is what we call the works like prototype. So the works like prototype is going to be a prototype that embodies the one or two key functions that this product has to have, whether it's measuring temperature accurately or being able to quickly sense light or whatever is your capability It doesn't matter what it looks like It's just something that actually proves you can do what you want to do, and hopefully in a format that someone can look at it and say, oh, I get it.
Kenneth Rother: Oh, wow, that's, oh, I need that. That's interesting. Then we move to what we call, as we go through that process, we combine these together into what we call an engineering prototype. And an engineering prototype is this combined entity of the works like and looks like that starts to resemble your final product.
Kenneth Rother: It isn't manufactured the way your final product isn't manufactured yet. It's not certified. It's not tested, but now it's really something you can put in front of people. And what I always tell entrepreneurs is when you're trying to get feedback from someone, the question isn't, do you like what it looks like?
Kenneth Rother: What would you change? The question is, I want you to do something. So I always give the example, I give people a PowerPoint clicker and say, advance the slide. I don't say, what do you think of this PowerPoint clicker? I say. I want you to advance a slide and do they intuitively go to the right arrow button or do they hit the up arrow button?
Kenneth Rother: So what you're trying to do is always keep your user as a user and not as a designer and in that early phase of the works like it looks like prototyping, the kind of feedback you want to get is that feedback that proves the user understands what you're doing and is getting excited by it.
Chris Wofford: In our pregame huddle you mentioned that, prototyping and manufacturing are two different endeavors and the people that are involved in prototyping probably should not be involved in the manufacturing phase. Why the distinction?
Kenneth Rother: Prototyping, there's a ton of tools now out there. So we all think about the tools to build the thing, 3D printers and laser cutters and CNC milling machines and good old band saws and drill presses and lots of folks have the skills to manipulate that and sort of paradoxically, those tools are getting pretty good. So you can get pretty far with a one of prototype and all sorts of electronics, Arduinos and raspberry pi's.
Kenneth Rother: And, you know, there's just a pile of electronics out there that I can make something that resembles you know, the pulse ox meter I'm trying to make better, or this thing that tracks people's eyes or whatever. That skillset sort of assembling those pieces together, A, relatively easy to learn over time. But that's very different than understanding, okay, I'm going to use an injection molding process to make this in volume. And if I'm going to have an injection mold made out of stainless steel, these are the attributes that the shape of the product has to have. If I'm going to make a custom circuit board assembly, so I'm no longer using these off the shelf pieces, because they're too expensive to embed in a product. I need to have my own custom circuit that sort of embodies that capability. Well, a lot of people don't know how to do custom electronics. It's a whole other skill set. And then making it in such a way that it'll pass all of the things like FCC class B that it's not going to interfere with other radios in the house.
Kenneth Rother: It's not going to, you know, catch fire. It's going to pass UL and so forth. It's going to be safe to sell in various jurisdictions. That's a skill set that people learn separately, manufacturing, engineering, separate discipline, people go to school for that. RIT, Rochester Institute of Technology, one of the great schools and part of that process.
Kenneth Rother: So different skill set, very, very different skill set. Same thing if you're doing food, I can make, You know, a gallon of spaghetti sauce in my kitchen, or I can make, five pounds of butter, but that's very different than if I'm making 500 pounds of butter or 500 gallons of spaghetti sauce, not just in the quantity, but in the processes and tools that are used.
Kenneth Rother: And there are people who have expertise, you know, making a gallon or making one of, and there's people of expertise making 500 gallons or 500 pounds of butter. And that, that distinction is often lost on highly technical individuals, because they're not trained that way. So they sort of get caught in their own abilities.
Kenneth Rother: They were able to prototype things quickly, isn't this cool, look what I could do. And they sort of think of the manufacturing process as this, you know, photocopy process. Here's one, make me 500, but it doesn't work that way because ultimately the processes that are used to make stuff in volume, so the yields are predictable, the tested, the price is reasonable very, very different set of processes.
Kenneth Rother: Therefore, a very different set of skills to get you there. Often those skills you hire them in, or you often just work with the manufacturer. One of the mistakes that startups make is they don't pull in the contract manufacturers early enough. Whether it's in your own shop, because you happen to work at a big company that has manufacturing, or you're, you know, using outside third party contract manufacturers.
Kenneth Rother: The reality is they want your business. They want to get that order every, month for 500 units. That's the business they're in. So they're gonna help you create a product that is reproducible. So prototyping is one thing reproducibility is another they're gonna help you do that and the mistake that startups make is they don't pull in the manufacturers early enough who have that skill to Who've tripped on these things time and again and say, well, no, don't do it this way. If we make the slight change, you know, your yields are going to be much higher. I can make it for you a whole lot cheaper, or this part is a little hard to find, but we can find that part for you really easily. So that's one of the big mistakes folks make is they don't. Realize there's a different skill set. They don't know where to get that skill set. And often it comes from a third party that can help you because they want your business.
Chris Wofford: So what's it like working with manufacturing partners? I mean, how many should we engage with? How do we know when we've got the right fit? What are some advice that you could provide there?
Kenneth Rother: Yeah. So how do you know if you got the right fit? Finding a contract manufacturer is like finding other, you know, any other highly skilled capability, you're going to look out into the field, there's a process you go through the sort of formal processes, you might send in what's called an RFI, a request for information out to, I don't know, eight to 10 manufacturers, and this is not work for them, they're going to have it off, you know, off the shelf document, they're going to send it to you and say, we can do this, we can do this, you know, here's our core capabilities, here's our turnaround time, and so forth, so that's not a big ask for them, they're asked for that every day.
Kenneth Rother: You start off with this request for information. Probably several of them you ask are going to be able to do what you want, and a few aren't in the ballpark, they just don't have those kind of processes, they can't make a circuit board that's big, they can't make an enclosure that big, they can't work with a particular material you need. You limit it down, maybe you go to four or five, and you do what's called a request for quotation, at this point, you're first of all going to enter into non disclosure agreement because now it's not about them.
Kenneth Rother: It's about you so you need to tell them what you are doing not necessarily in great detail but it's sufficient detail that you need to protect yourself if you will. So you're gonna sign a non disclosure agreement both parties are going to sign it. They might tell you secrets they don't want out there.
Kenneth Rother: You're going to tell them secrets about how you do it. And their request for quotation not binding, but it's going to give you stuff like what's their typical lead time? What's their minimum order? Do they want to be paid half up front and half on delivery? All of these kind of things. So they need to have a sense of what you're making.
Kenneth Rother: Then you're going to do a reference check, just like anywhere else. You're going to look at what these manufacturers have done, who have they built stuff that's sort of similar, not competitive to what you have, but sort of similar capabilities. If it needs to be sterile, it needs to be medically, you know, needs to have medical certification.
Kenneth Rother: It needs to move fluids around, whatever. It is unique to your product, you want to work with manufacturers who've worked in that same domain. So you're going to do some reference checks, you're going to reach out to other startups, again, not competitors, find out who they used, were they happy, how did it go, all of that stuff.
Kenneth Rother: And then finally, the last step is a request for proposal. Now they need everything. They need what we call the design package. They have, you know, exactly what you're making the shape of it, the schematics, the circuit board designs, the metal, the plastic, everything that's going to go into the product for them to give you a final proposal.
Kenneth Rother: And that's going to lead to a binding contract that says, you know that's going to take them 30 days when you put it in order to get the product who's going to buy the pieces that go into it, how's quality going to be assessed? What are the you know, all of that so that request proposal turns into a contract and ultimately you know you enter into agreement and hopefully you've picked the right person, you know whether that whether it's local or overseas it gets a little contentious, I'll give you my two cents.
Kenneth Rother: I have no objection to people getting stuff made anywhere on the planet. But you've got to account for everything. So if I'm doing something overseas and they can make a mold at a fifth of the cost of the mold here in North America, well, that's okay well, that mold is a one time cost, but how many times do I have to fly overseas to make sure everything's going in the right direction?
Kenneth Rother: So did that mold really save me the money? Now, maybe it did and lots of great overseas. So I'm not slamming overseas suppliers, but you got to figure in shipping. You got to figure in delays when things are, you know, sitting on a port in LA. So picking your manufacturer sort of depends on the business you're in, how quick the turnaround has to be, you know, how complicated it is.
Kenneth Rother: Therefore, am I going to have people on the ground at the manufacturer? And it's one thing to be on the ground at the manufacturer 60 miles away. And it's another thing to be on the ground and manufacture 6, 000 miles away, just hotel costs and food and all that stuff. So that's that long process. You go from RFI to non disclosure to RFQ, RFP, and finally contracting. And there's a lot of templates out there, and that's one of the things we would help you with.
Chris Wofford: So we move from one stage to the next. We're approaching launching the product. We're anticipating going from low volume to high volume production. If things work out then you've got to start considering things like hiring, staffing additional production stages. What do we need to know about on top of that, distribution and marketing of the product as we're reaching that, that stage in our business?
Kenneth Rother: I'll sound like a bit of a broken record, but early on we use this business model canvas and one of the main boxes that I think entrepreneurs ignore at their peril is this box called customer relationship.
Kenneth Rother: How do you get, keep and grow customers? So you need to understand typically how does a customer, your customer learn about your kind of product? For me, if I'm looking for something for the house, and we just redid our kitchen, I go to something called the Wire Cutter, which is now part of the New York Times, and whether I'm looking for a kitchen scale or a new set of pots for our induction stove, if you're not on the wire cutter, I don't really know how good you are.
Kenneth Rother: That's it. Like I'm done. So if you're, you know, if I'm your customer, the person who's, you know, got a nice new kitchen and that's what you're, you know, you're trying to sell stuff into that group of people, you better be where I'm looking. It's because if you're not there, even if you're on Amazon, but you weren't talked about in the Wire Cutter, you're done, right?
Kenneth Rother: So where do people learn? Do they learn about them from trade shows? You know, if it's a very technical product, is there an industry expert they follow? Is there a, you know, head of surgery they follow? Is there a head of research labs that they follow? Where do they get that, you know, where do they get that influence from?
Kenneth Rother: And if it's a consumer good, you know, good old, you know, social media influencers, which influencers are they following? So we often see people in their business model canvas, they, you know, their awareness box, their customer relationship box says, you know, influencers, social media, that doesn't count.
Kenneth Rother: Like literally like who are the three influencers who want to talk about your product? So that's a big step that people miss. And that, that is the marketing step, right? Understanding how people learn, not how you want to talk about it, how people learn about your product. That's the marketing step.
Kenneth Rother: And that goes all the way back to the beginning when you're interviewing those customers and trying to understand their behaviors, now you're going to execute on that and obviously whatever that means, whether it's going to a trade show or getting the Wire Cutter to pick up your product or having a deal with an influencer, that's, you know, that's where that marketing expertise is going to kick in.
Chris Wofford: And now it's getting high stakes. We have to think about financing, funding, all the while, throughout the duration, working on our pitch, refining it. What do we need to think about when we do get into that that scary high stakes financing and funding phase of things?
Kenneth Rother: Funding comes in lots of different flavors, right?
Kenneth Rother: We have funding all the way at the beginning when we are looking at either non dilutive government grants like SBIRs that help you take stuff out of the lab and put them into a commercial environment, if you're not from academia or you're not commercializing something out of a university lab, there might be angel investors. There might be accelerators that make an early stage investment, that first bit of money to help you get across the finish line. At the earliest of stages in our programs at Rev which is part of CREA all of our hardware programs actually have a stipend. So we go out, we're totally grant funded, we're a nonprofit. And when we go and get those grants, built into those grants are small stipends that we can offer to the team. So getting materials and supplies doesn't get in the way of trying their idea.
Kenneth Rother: So there's going to be a lot of different vehicles, the kind of people who are going to start investing, if you will, investing for a return. The folks who were investing really early, their motivations are different than later. So early on, their motivations are maybe the domain you're in. They like child safety, or maybe it's the medical thing you're treating, or maybe it's they like supporting companies coming out of your university.
Kenneth Rother: So early stage investors, you know, high, high risk game, relatively small amounts of money, And there's some really strong motivation that they want to see you succeed. And if it does, you know, there's going to be a return for them later stage investors, that's much more of a financial play. You've got something, they recognize it. You can clearly articulate who the customer is. You can clearly articulate the customer value. You can clearly articulate how much it costs you to get a customer and how many there are. They're just doing the math and saying, okay, if I give you this pile of money, whether it's 500,000 or 5 million, tell me how you're going to use it to execute on that plan to now get those customers, produce the product and ultimately get it out to market.
Kenneth Rother: They're just looking for significant return, but a lot of risk isn't taken off the table for those people. The risk at that point is much more market risk. The risk at the beginning is what we call technical risk. And over that whole time is this thing we call team risk. Like, can these people do it?
Kenneth Rother: So, we got to de-risk the technical side of it. Then we always are de-risking the team. And then finally we're de-risking the market. And it doesn't just happen linearly. It happens iteratively over time. So different investors are looking for different returns.
Kenneth Rother: And they have a very different risk profile, if you will. But we're seeing lots of hardware products get funded. There's a little bit of a Renaissance, not a little bit. There's a big Renaissance going on actually in the last few days. There's just been some interesting stuff yesterday.
Kenneth Rother: A company called Varta, which has a Cornelian at its helm. This is a space manufacturing company. So they made a satellite that goes into space, manufacturers in space, and it just landed yesterday, unmanned satellite landed in Utah. It's first product is a drug that is much easier to make in microgravity.
Kenneth Rother: There's some really cool hardware stuff going on.
Chris Wofford: Super fascinating. I was thinking about this whole process. This is an imposing endeavor, right? This is serious business. I think you have to be cut from a certain cloth to make a thing and expect to sell that out in the marketplace. You've got to be brave. You've got to be resilient, probably have to anticipate heartbreak, crisis management, relationship, you know, problems.
Chris Wofford: What else do we need to kind of have to get it, to get us through this? Resourcefulness is a huge one.
Kenneth Rother: I think what a lot of investors look for is this thing called founder market fit. So product market fit is this idea that I have a product that a whole bunch of people want.
Kenneth Rother: Founder market fit is this concept that this founder is deeply embedded in this area, multi generational, like I think of some of the founders we've had come out of eLab, our on campus credit bearing accelerator, these were people who were you know, third generation, fourth generation, fifth generation in the family business.
Kenneth Rother: They understood it at a level that no one else is ever going to understand it. So I think some of the entrepreneurs that, you know, whether you're on the farm, you're in the kitchen, you're in the hospital, whatever it is, you have expertise that no one else can see. No one else knows about is one of the ways you can mitigate risk.
Kenneth Rother: It's not to say you cannot learn about a market and understand it. And in fact, founder market fit has its own risk because you think, well, I've got this problem. Clearly, everyone who's like me must have this problem, which isn't always the case. So you still need to validate the opportunity. And yes, you can come at it from the outside.
Kenneth Rother: You see something, this doesn't make any sense. I think there's a better way to do it. And I can bring my skills to bear, even though I don't know that industry yet. There's a lot to learn. I teach in a program from the National Science Foundation called I Corps. A lot of deep tech researchers, STEM researchers, medical and whatever, you know, and they're experts in these, you know, incredible inventions.
Kenneth Rother: But they go out and find out, well, actually, how does a neurosurgeon do their job? Oh, wait a second. This is not exactly what I thought. You know, my device is better than the device they're using. But like, what's the whole process of how the neurosurgeon learned about a new device and who decides how it gets bought?
Kenneth Rother: And what about all the training and all the people around it? So when you don't come from this space, you know, you gotta learn all that stuff. It's learnable. And if you do come from this space, the risk is, well, everyone must have this problem because I have this problem. So there, you know, these risks need to be dealt with.
Kenneth Rother: I think a lot of people use words like resilience, you know, you just, there's going to be good days and there's going to be bad days. And it's a long haul, you know, for my two startups, the one I founded and when I joined very early stage, these were, you know, multi years and multi year endeavors before we had the good fortune of being able to exit them.
Kenneth Rother: And I know a company recently at a venture fund that exited like after 17 years, like that's a little long on the long side, but you know, nobody sells after a year or two, these are long endeavors and you better really like what you're doing, I think is the simplest thing I can tell you.
Kenneth Rother: If you don't like what you're doing, this is not the thing to do.
Chris Wofford: Ken Rother, thanks for joining us in the studio. Much appreciated.
Kenneth Rother: Thank you. I really had a good time. Thank you very much.
Chris Wofford: Thanks for listening to Cornell Keynotes. Check out the episode notes for information on Ken Rother's product development online certificate programs from Cornell, Ken's reading list, companion keynotes and podcasts, and resources that are available to you at Rev Ithaca and Cornell University. So thanks again, friends, and subscribe to stay in touch.