#402 – An Interview with Ben Einstein

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Ben Einstein: It is true. It is true, the founder.

Chris Gammell: So what is Bolt in a couple of sentences? What is your, oh boy, here we go. I'm going to try and cut back on my BS stuff here, but what's your elevator pitch for Bolt, Ben?

Ben Einstein: Oh no. Please help me. So Bolt is an early stage hardware-focused venture investor, and we spend an outsourced amount of our energy supporting founders with pretty deep technical experience. So unlike probably the vast majority of venture firms out there, we have a pretty big engineering team and two large prototyping facilities, one in San Francisco and one in Boston, and really roll up our sleeves with the founders of companies. We invest at the earliest possible stage. So I think the current term for that is pre-seed, but in some number of months or years, we'll probably have a new term and we'll be doing that. And so it's really the first time founders pick their heads up to really build a product and a company around that product is sort of where we're ready to start working with companies.

Chris Gammell: Nice. Well, I think that astute and Bauer listeners of a long time will remember that we actually did a meetup at the Bolt Boston headquarters back in 2013, I think.

Ben Einstein: Many years ago. I think when we were first getting off the ground.

Chris Gammell: Yeah, I think so. And it was right around, I believe it was around the, uh, the open hardware summit that we were in that I was in town for that. And I was like, yeah, that was a great, that was a great meetup. And that's a, you know, that's a great space too. It was like right downtown, I believe.

Ben Einstein: Yeah. We had to get super creative with that space. Uh, I think no one had built a machine shop in downtown Boston in like 50 or 60 years. Uh, so we had all kinds of ridiculous problems with getting approval from governments and closing streets down and lifting machines through windows. It was, it was pretty entertaining. And when we got started, we had this tiny little fund, three and a half million bucks. Uh, and so we had to get extremely creative about how we do many of those things, uh, which also is partly what makes the space interesting is when you have these tight constraints around, you know, sort of how much money you can spend or how much time you have available to do something. And so there's some pretty unique, uh, slightly weird features about that office, which I think in most ways I'm proud of, and is also pretty bizarre when people see

Chris Gammell: it now. Right. So, so why was it in Boston in the first place? What, what, what drove that

Ben Einstein: decision? It's, it's, uh, I think it was mostly around, uh, the sort of hardware ecosystem in Boston. Uh, and again, this is going back to like 2011, 2012, when I was starting to think about bolts, um, uh, from my product design experience. And I spent, I just sort of the, the customer development journey that I think many, uh, great hardware founders do actually probably founders of pretty much all types of companies where they kind of canvas a market or an opportunity and talk to some investors and some founders and some, you know, sort of adjacent folks and other businesses that maybe aren't in the venture world and try to sort of understand where needs lie. And, and so this was not a, Oh, you know, I think, you know, hardware companies need a venture firm. Um, it was much more, I saw all these founders that were starting to, uh, sort of, uh, sort of twiddle with atoms instead of bits that didn't have the support they needed. They didn't have the infrastructure around them. And so I saw this opportunity from a sort of a market needs standpoint of folks that were trying to build businesses around physical products and just didn't have the support structure around them. And so, uh, like any naive founder was sort of like, Oh, I can do all those things. Uh, it turns out many of those things are really hard and different from what I expected, which I'm sure we can talk more about it. Yeah. That's definitely on the docket

Chris Gammell: here. Yeah. Cool. Uh, and so what about your background? So you, you were from the Boston area

Ben Einstein: as well or no, I grew up in New Jersey and, uh, I went to school in Massachusetts and kind of got hooked into the Boston scene pretty early on. Uh, and I, I read out of school, uh, sort of this kind of long, funny story. I, uh, sort of accidentally inherited, uh, a product design and development company, uh, which was really my first business. Um, yeah, it was, it was, uh, it was a, uh, wonderful friends of mine. Uh, if they're out there, uh, Jamie and Matt page, um, who were running a sort of medium sized product design consultancy in sort of central Western Massachusetts. And, um, and we're just wonderful humans working on some amazing stuff and, and I would do internships with them and that's sort of very, very close to them when they were kind of getting their business off the ground. And then this sort of 2007, 2008 stuff started to happen. And one of the first things that, uh, big companies do, which was most of their clients is they cut their research and development budgets. And that means all the small, uh, service businesses that are supporting them typically have major project cancellations, which is not good for relatively small companies of, you know, 20, 30 people. Uh, so they very quickly went from, you know, a nice functioning business to less so. Uh, and I was there sort of, uh, uh, standing, holding the pieces somehow, which is a whole, uh, you know, probably a conversation better over drinks. Um, and, uh, but it was great because right out of the gate, I, you know, had a, had a, uh, you know, a handful of people and, and some, some clients that were, uh, kind of knew me and knew and knew the business kind of trusted us. And, and that, that allowed a little tiny consultancy to get started, uh, and kind of grow naturally, but with very few months in the red, um, which is very unusual for most service businesses getting off the ground, especially from guys like me who have no idea how to run a

Chris Gammell: company at the time. Um, and like how, how big were those scraps? I mean, like you said that it was kind of fell apart and then you inherited the pieces, but like, like, was it multiple employees

Ben Einstein: or like what? Yeah, it was multiple employees, uh, and, uh, and an office space and a handful of clients. And, um, yeah, so it's a little sort of a skeleton of a company. Um, and I think they had gone from, I don't know what the number was, 35, 36 people to like four or five, uh, relatively quickly and maybe a couple of months. Um, so yeah, it was a, it was a hard time and

Chris Gammell: Just fill in the rest with hustle, right? That's the, uh, I mean, totally. I, I think there's,

Ben Einstein: there's something to be said for that. And I, uh, I'm a big believer in like diving in and, and learning from experience rather than from classrooms or reading or, you know, passively talking to people. It's much more active process for me. And so I just kind of didn't really know what I was doing and, and kind of asked for advice when I needed it and made some mistakes and did my best to fix them. And it's amazing how much you learn that way if you're diligent and, and I think proactive and thoughtful and try to be fair and respectful to people. Um, you know, it doesn't always work out, but I think you get a bunch of, we had a bunch of clients that were super supportive of that. And, uh, I think wound up to become big pieces of our business, you know, for the first couple of years there when I was getting that company off the ground. Um, but I, I pretty quickly started to get frustrated with the service business model and the sort of selling your time as, uh, some folks will probably realize. And this really started to happen when we started doing a couple of, uh, sort of like licensing type deals. Uh, I don't know if you've ever been involved in any sort of like unusual types of business models where you're like trying to figure out something more interesting. Um, right. Getting past those hours,

Chris Gammell: you mean like, uh, yeah, it's like you just sell a reduced rate for your hourly, but then you say, Oh, but like 10 points on the back end. Exactly. Exactly. And, and I had no, I, I'm not like a

Ben Einstein: business person that was like, Oh, I have a strategy here to like take this much equity.

Chris Gammell: I was copying that from Maury Ballstein saying that at the end of New Lander. So like, that's

Ben Einstein: about how I'm, that's about my level of, uh, it's, I think it's very similar. Uh, I think I'm one notch above Maury Ballstein, but, um, but closer than you might realize. Uh, and yeah. And, and so it was, it was sort of back of the envelope, you know, whatever we could get working. Um, and it was

Chris Gammell: taking a gamble on and maybe making more money later, but totally doesn't always work out.

Ben Einstein: Yeah. But I started to notice this really interesting thing, which was, we had all these, uh, folks that were working on these projects that got super excited about working on these little tiny rinky dink products. And it was because they were, you know, two people and a dog trying to invent some new product versus, you know, a large company, uh, with, uh, you know, 20 people that have to approve things and, you know, SOPs and, and, you know, scope changes when we had to design something differently and all that crap. And, and people got really excited by like this very early loosey goosey kind of free form product development that I think we'd done a little bit of, but it wasn't our business. Like startup within a startup almost. Yeah, totally. And, and it was kind of a, you know, experimental when, when, you know, when you're like at a decent size and you have enough money to throw around to, to sort of maybe lose a little bit of money on some experimental stuff. And, and, uh, and I just saw the difference in sort of morale between people that were working on those projects and people that are working on the, you know, the Fords and the Motorola's and the, you know, the big companies. Um, right. And so a sort of light bulb went off and I tried to like spend more time, uh, thinking about that. We eventually, uh, we did a bunch of weird stuff, licensed a couple of things. Uh, we did a couple of equity, you know, sort of, uh, uh, I don't know if I'd call it investments, but they were sort of kind of what you were talking about equity on the backend, you know, they would pay a little bit upfront and, you know, pretty much all of those went to zero. Um, we had, uh, one, one product that was very successful and we had, I don't remember what it was, a couple of bucks per unit, five bucks a unit or something. Um, and they sold again, I don't remember the numbers, hundreds of thousands of these things. Um, and it was, it was actually the first, uh, iPhone, uh, Bluetooth accessory that was ever approved. Yeah. By, by Apple, uh, which sounds

Chris Gammell: more fun than it was. Um, well, I just mean that like, that's a, that's a heck of a title though.

Ben Einstein: Right. Totally. Yeah. Yeah. I mean, there were, there were a bunch of small companies trying to sort of like aggressively, like as soon as Apple announced the, uh, the, the accessory functionality with Bluetooth or a bunch of small companies all sort of racing to start and Apple had all kinds of problems with their Bluetooth stack. So it was incredibly, uh, difficult product to build actually. Um, but it's this magical thing happens when you're sitting there and every, you know, every month you get a check in the mail and you didn't do a whole lot of work. Uh, and that was sort of the key light bulb moment of like, okay, that we, we had, you know, we had shared alignment with this company and that was the sort of the, the key moment of the sort of beginning of the bulk journey of trying to find a better way to work with companies that wasn't just selling our time in sort of a linear fashion. And then once it's done, you're sort of done and whatever the company makes from it, they sort of, you know, keep for themselves. And that was a really nice feeling. Uh, and so that's a big part of the sort of driving

Chris Gammell: factor of getting bolt off the ground. It sounds like the, the hard part in that scenario. I mean, like either way you have to do the engineering work. Right. And not that that's not the hard part, but the hard parts, it seems like to get that check at the, like the, the check coming every month where it feels like you're not doing anything. It feels like that, that was actually an investment of like not picking the palm accessory. Right. Totally. Yeah, for sure. Yeah. You know, in a, in a world where there's infinite, you know, possible, you know, timelines, right. You know, you pick the one that was the iPhone timeline and that was the right one. So

Ben Einstein: yeah, it's, I think like, exactly. And like many things, in life, it is about luck probably more than anything else. Um, and, uh, we just happened to, you know, do a couple of things. Right. And, uh, again, it wasn't like, you know, millions and millions of dollars and like, everybody's going to retire. It was like, okay, there's something here. Uh, it was like a, uh, it was a sort of a, um, a sign more than anything else, uh, that there was an interesting business model around helping young hardware companies get off the ground. And, uh, you know, it's a much longer story, but that sort of evolved into, I guess what many people call a venture firm, uh, which is, you know, money is a big part of that process, but, uh, we spend a lot of time in sort of where our roots were around the engineering and sort of supporting these companies very closely.

Chris Gammell: Yeah. So, I mean, how did it, how did that transition start then? Were you like, oh, well, I needed to figure out how to make this bigger or what was that piece?

Ben Einstein: So that, that's how it started. It was, okay, this is interesting. Like, how do I do this more?

Chris Gammell: There's something here.

Ben Einstein: Yeah, exactly. It was like a little, like a little cookie crumb that was like, okay, there's something I should keep following. Um, and I think like many founders can, you know, hopefully empathize with this feeling. It's this sort of one conversation leading to another, leading to another for, you know, for hundreds and hundreds of people. Uh, and over that was over a year and a half or so of, um, of spending a lot of time talking to, you know, people may be slightly more entrepreneurial or slightly more business oriented than I was. I'm really a sort of product guy. Uh, you know, I, I sort of, I think I understand business better now, but at the time I sort of like didn't really have

Chris Gammell: any strategy. Uh, you know, I guess we should charge money for this. Exactly. Exactly.

Ben Einstein: Exactly. I mean, it sounds silly, but like, I just loved building products so much. And so I, it was almost, I didn't care. Uh, and it's a very dangerous thing to ever tell a client

Chris Gammell: or anything. Wait, how are we paying for these molds guys?

Ben Einstein: Exactly. Exactly. Exactly. Oh shit. Yeah. Money is a valuable thing to do things, uh, well. Um, and, and so I was, at first I was talking to, you know, all kinds of very, uh, all over the map people, you know, regional development folks. And, you know, I remember speaking to the founder of Yankee Candle, uh, you know, all just kinds of weird stuff, uh, just trying to like, you know, get my head around, you know, how would, you know, companies sort of approach building products if they had a different way of thinking about it. Um, and the, really the gateway moment was I was spending some time in Boston and I, I met, uh, these, these two guys who are very well-known angel investors in Boston, Warren Katz and, and Will Herman, uh, who are still close friends of mine today. Um, and they were the first people to really tell me like, okay, like this is pretty weird, but like, there's something interesting here. And, uh, they introduced me to a very well-known guy named Brad Feld. Um, and who is a venture capitalist, uh, at a pretty well-known venture firm called Foundry Group. And, um, probably one of the most supportive, honest VCs I've ever met.

Chris Gammell: And a great writer too.

Ben Einstein: A great writer, great thinker. He's like super open. Um, and he had the, uh, you know, he's a dorky MIT guy who was sort of early in the computer world and he moved out to Boulder, Colorado and, you know, started this venture firm, which is a, he has all kinds of interesting stories that went into that. Um, and he was one of the very first people to sort of institutionalize hardware, the sort of hardware software investing thing. And, uh, so they had this category that they invested in called human computer interaction. And that led them to, uh, invest in companies like MakerBot and Fitbit and, uh, and Sphero and a whole bunch of other interesting companies, which I had the very unique pleasure of talking to him about in Boulder when he was, you know, he, he spent a significant amount of time with me early on and became convinced that like all these portfolio companies that they had poured millions of dollars into could hugely benefit from sort of what I was

Chris Gammell: talking about was sort of the skeleton for Bolt. Um, and every time that they freak out, they probably, you know, maybe not go to him, but he probably hears about it at least of like, yeah.

Ben Einstein: And he didn't know, right. He's he, I mean, I think he knew computers and software and had been around the block with the venture world, but he, he's not a hard work guy. He didn't, he didn't know how to mold things or how to go to China or how to deal with retail or, you know, you kind of as many venture firms do or partners do, you kind of figure these things out as you go with each company you invest in. But, um, I think he clearly recognized that, okay, this is the thing that you've done a bunch of. I have all these companies in my portfolio that, you know, could probably use something like this or could have used something like this earlier on and institutionalizing this in some way seems like a really good idea. So he agreed to invest personally into that first, uh, Bolt fund and then introduced me to all these people, uh, you know, the James Park and the Fitbit guys and, and Brie Pettis and, and maker bot team when they were whatever, 10 people or something. Um, and all these companies that were kind of just getting off the ground, trying to figure out how to build product at scale. Uh, that was, you know, at least a big part of it was physical and they were really struggling. And that, that was the big transition moment from, okay, this is a, you know, uh, uh, I'm going to add on to my existing business and kind of do slightly more, you know, licensing equity type weirdo deals to, okay, this is actually a different company, which, uh, thinks about and is structured differently than, uh, than I was thinking. Um, and that, that really was the, the key defining moment at like the sort of venture fund part of the way Bolt operates, which is a really important change in how we work and how we think.

Chris Gammell: Interesting. Yeah. I'd like to just call back to that, that thing real quick where you were talking about, you know, the introductions. I mean, I, I never really gave it as much credit as I should have back in the day. You know, I've obviously been learning, you know, small bits and pieces here and there. I'm not deep into this world, but like that, the fact that you like, and then this person introduced us to this and this and this and this and this, like I used to get like really upset actually about like the whole idea of like, it's not who, it's not what you know, it's who you know. But, um, I think that that, that was kind of a very naive view of it because it's more, it's more about, uh, there's so much stuff that you, again, like the infinite possibilities kind of thing, you know, a startup could go and call every vendor on a list to try and do something, but it's usually much more efficient to go and call a trusted source or, you know, go to investor for references. And so like, how, how has that, that people side of things impacted Bolt and your

Ben Einstein: journey? Oh, it's the single biggest leverage, sort of like point of leverage or piece of leverage that I've figured out. It's sort of a cheat to build a great company. It really is. It's, it's, and I think people that, um, you know, I'm, I'm a pretty big introvert. And so I am not like the first person to like go speak to a bunch of people or like, you know, I'm, I'm happy talking about things that I know well, but as soon as it's like, go social network about blockchain, I'm sort of like, I don't, yeah, it's the last thing I want to do. Um, and, and so, um, I figured out that, uh, there's a, and this is actually a big part of Brad and some other folks around him that have sort of helped him do this because he's the same way. Um, in, in sort of thinking about people slightly differently, not as this sort of scary thing that you have to go out and like talk to them, but as, um, people you can learn from and people that can learn from you and forming these like very genuine relationships based on trust and comfort and sort of, you know, it's a type of intimacy. Um, and, and so, um, it, it's actually a, it's a, it's a framework that comes very squarely, uh, out of a, an old somewhat silly book. Uh, I had a win friends and influence people, which if you haven't read, I highly recommend, um, which, which is exactly, uh, which really isn't, um, it's actually incredibly simple. It's like, be good to people and good things will come.

Chris Gammell: And also use their name, Ben. I always remember that one. Uh, that would always seem like really trite in it, but it's like a lot of these things are kind of like common sense, trite things. And it's like, it's only if you use them in a shitty way, right? If you're like, if you're like shaking someone's hand and repeating their name over and over again, like, okay, that's just, that's like, that's just as bad as any cocktail party. Like you were

Ben Einstein: talking, talking about dread. Exactly. Yeah. I mean, the, the, the key for me is, uh, and the key like word about all this stuff is around intent. Yeah. Right. And so like, you can say the same thing over and over again and like shake the hands and do the things. But if your intention isn't genuine and real in terms of the way you think about it, it's going to, people are going to figure it out. Um, and you know, and so my, my intention, uh, with whatever meeting Brad, I mean, you know, isn't, Oh, look at this fancy person who has a bunch of money and can like help me do a bunch of things. It's man, I really liked this guy and he's being really supportive and like, I want to help him however he can. And he's helping me however he can. And that, I think that mechanic is like a fundamental enabler of, I mean, I would say startups, but I would actually argue it's like, you know, all humanity. It's like, yeah, it's, but it's, it's so true. And it's, it's really like this fundamental thing that, um, I think people that are good at that, that have this charisma and like way of being genuine and genuinely supportive, um, to each other and to others are, are so much more likely to succeed, um, in whatever way they define success. And so I've worked really hard to like curate that and be not fearful of the, the sort of like difficult conversations that sometimes come from whatever, from networking or from a hard negotiation or whatever, and just trying to be as real and genuine as possible. And it's amazing what a difference it makes. Um, and I think Brad was a big, big part of telling me that and sort of teaching me that, uh, I think listening to the, I actually listened to the Dale Carnegie book on audio book, uh, on audio tape, whatever it's called. Um, yeah, audible, uh, I don't know what the correct noun for audible is.

Chris Gammell: I believe that's an LP of, uh, yes, yes, yes, yes.

Ben Einstein: The spoken word. Yes. Um, and, uh, it's, it's amazing what, uh, what a difference that framework makes. And so I, if there's like, uh, you know, people out there that are nervous about talking to humans, uh, just know that lots of other people feel the same way and, uh, sort of centering yourself around being genuine and, you know, focusing on the things that you feel most comfortable talking about. I'm really comfortable talking about tearing apart hardware products and injection molding. And so I focus on those things and, um, and, uh, lots of stuff grows out of that versus trying to like force myself to whatever, like talk about business models eloquently, which sometimes I do. And sometimes I don't, because I it depends on what I know.

Chris Gammell: Well, around here, we always, uh, encourage people to always bring something they've worked on to a meetup because people are always interested in it and it's easy to talk about. And, and the meetups that we do, we always try and get everyone to bring something. Cause then it's just like, it's not, Hey, who are you and how can I meet you? And what can you do for me? Because that's always a shitty thing to do. It's more like, Hey, what do you got there? Like, tell me about that. Cause like that looks cool. Right? Like, and that's really, that's kind of how the hardware folks, I think perform best is like hardware

Ben Einstein: in hand. So look at this thing I did. And I also think it's a big confidence booster for people. Uh, at least I feel that way. Like if I'm like talking about something that I've done or I showcase a product I've worked on or something, I feel like it's a, it's like a really good icebreaker because I feel super comfortable like talking about it and sort of proud. Uh, and so long as you're still like engaging with other people and not just like, you know, spewing a bunch of stuff about how good your thing is. Uh, it's a, it's a total, total pro tip to how to, how to sort of networking is kind of this weird term, but you know, how to network. Um, and so I, I think little, little cheats like that are very powerful and getting folks like me and, and, you know, maybe a little bit like you and some other folks that are a little bit more shy, uh, to like break out of your shell a little bit and start talking. And I always find once you get going about some interesting topic that someone gravitates to, it's actually really easy. It's like the, it's like the first couple of sentences that are always challenging. Yeah. Cool. That's great. So, uh, what was the next

Chris Gammell: step then? So you, you actually had to go like, so, okay, so your worst nightmare, you had to then go and talk to a bunch of VCs to raise that first fund that actually allowed

Ben Einstein: you to build that first place. Yeah, it was, it was, it was less VCs that there were a few, there were a few investors I were talking to that cared. Most VCs thought hardware was stupid. Uh, and this is whatever, 2011, 2012. That's direct. Yeah, I think it's true. And I think most people think, uh, you know, SAS and social media were sort of like the big thing at the time. Um, it probably still are in many ways. And they were kind of, um, they gave less sort of, uh, credence to the value of building things physical. And so they were pretty dismissive as VCs often are. Um, and, and I sort of quickly figured out that raising money from VCs actually wasn't right for me for this first fund. And it's also the, the way funds work is actually because of management fees and some other sort of more nuanced topics about how, how venture funds operate. You actually, uh, in many cases don't want to raise money from, uh, funds. You, you do want to raise money from individuals. And sometimes those individuals are partners at funds. So Brad, as an example, wrote a check from his, you know, his personal, you know, net worth, not from foundry group. Um, and so,

Chris Gammell: uh, which was really valuable. I always forgot about, we're not forgot about. I learned very much later on. I always thought that VCs like had a lot of personal money. I did not realize that it's usually them shepherding other people's money. I mean, sometimes they're also invested, but like, that was just a, you know, TIL for me, you know, like totally. Yeah. I mean,

Ben Einstein: yeah, the, the way that's the, that's the way venture got started was, uh, was I'm going to take a bunch of my money and I know how to do things cause I'm rich and, you know, let me invest this money into other people. So if you look at, you know, the very early days of like what people would call venture capital, um, you know, early Silicon Valley in the, in the fifties and sixties, um, that's really what it was. Uh, and it was, there was no management fee. You weren't paid to do that because it was your own money. So you didn't, you didn't care to pay yourself as much as you can. Right. Yeah. Right. Totally. Um, uh, where, whereas now, um, you know, that's the, that's the, the vast minority, um, is, is that set up in the vast majority are, uh, uh, you know, companies like us where, uh, you know, I, I am the, definitely the poor guy of the, of the three partners at Bolt, um, cause I haven't made, you know, tens or hundreds, hundreds of millions of dollars myself. Um, uh, but, but, uh, but the, the fund is still created in the same structure, even if you do have a lot of personal net worth, uh, where you might write, you know, 1% or 2% or maybe 5% of the fund, uh, as a check, as a, as sort of a personal investment, but the structure is in place to equalize all of, uh, what are called the limited partners. So, so Bolt, as an example, we have a bunch of other entities that are investing, you know, tens of millions of dollars into our fund. Uh, and then, uh, most of the upside of that fund is actually returned to those individuals or those foundations. Uh, and that's how 99% of venture firms actually work, uh, is really architected around these other folks. So it's, it's super fascinating. And the venture world is like, has all kinds of problems, but it's a very interesting, um, uh, uh, sort of, uh, type of business model, which I didn't know anything about. Uh, but I've since, since learned, maybe not

Chris Gammell: everything, but I've learned a good amount. So at the end of the day, it's a bucket of money, a bunch of people throw money in and then people like you help decide where to put it towards.

Ben Einstein: Yeah. We, so one of the most beautiful, elegant parts of the venture business is, um, the, the GPs. So guys like me or, or other, you know, maybe slightly more fancy people at other bigger venture firms, uh, general, general partner. Is that right? General partner. Yeah. Um, they, they sort of have a, a, a sort of a partnership relationship with the LP or the limited partner. And the way we always think about it is, is the limited partner puts in all the money and has very little control. Uh, and the general partner puts in very little money and has, uh, you know, very much control. Uh, and so it's really a trust relationship between the LPs and the GPs. Uh, and the trade-off for that is the LPs get most of the financial upside. So in most venture firms, which is, you know, that's what they're interested in. Money makes money. Uh, exactly. Uh, and in most venture firms, it's, it's typically, uh, what's called the carried interest is typically about 20%. So every dollar returned over the fund size, the GPs will get 20 cents on the dollar. Um, and the LPs get 80 cents on the dollar. That's a pretty good deal. Um, and so that's really the fundamental mechanic of what enables the venture business and, you know, to be honest, many startup sort of businesses or sectors to actually function. Uh, and so I find it actually super interesting. Um, it's definitely like I've had to find my own way of doing it, uh, cause I, I could not survive as a partner at a traditional venture firm. Um, that is just not my DNA. And so, uh, we have a, a very unusual way of operating and that is the only reason I'm here cause I couldn't

Chris Gammell: do the normal thing. I'm curious about that too. So like, why, why didn't this exist prior to this? Why, why, or maybe it did. I mean, like it seems like, and we're going to talk about the mechanics of, you know, how you help start out specifically hardware startups, but why wasn't there this kind of

Ben Einstein: model prior to this? That is a good question. I think there are always interesting permutations on this model. Um, on, on the, when I say this model, I mean the sort of the venture model. Um, so there's companies like ideal lab. I'm not sure if you're familiar with them. Yeah. Yeah. And, and, and, and, you know, a handful of other folks that have sort of done unusual things around venture where they sort of incubate companies or start companies or, or sort of invest in people before they even have a company and that kind of thing. Um, so I think there's a handful of folks like that. Uh, there was never really that for hardware companies. And I think, um, you know, I don't know exactly why I'm not a great student of history with the venture world, but, um, I I'm pretty sure the primary reason for that is a hardware is not by itself is, uh, is not an attractive business. Um, and there's all kinds of reasons for that. Uh, but selling a widget for, you know, 20, 30 points of, of, of gross margin dollars, uh, is, is really challenging as a business in today's day and age. There are a few companies that can do it. Uh, it is, it is really, really hard. Um, and so VCs and frankly, entrepreneurs are, are fairly cautious around building, you know, building a company is really hard. Building a hard type of company is exponentially more challenging. And so being, uh, careful about business models, uh, is something that good business folks are really savvy to. Uh, and, and so I think there has been a relative underfunding and relative under sort of performance of those traditional hardware businesses for that reason. And that's changing. Uh, and that's changing not because, uh, you know, people buy things differently or, you know, any fundamental restructuring of venture or anything like that is changing because, uh, the definition of hardware has changed. And the idea that you have, uh, just a widget that sits there in your house, you know, collecting dust, um, is, is more or less, uh, gone, uh, at least in the category of sort of startups. Um, and it's now really focused on the sort of combination of, of, of software and hardware and hardware being a really good mechanism of getting software into a user's life in a way that's not on a screen. And it turns out there are a whole bunch of interesting things you can do when you take software off the screen. And, uh, we're at the very beginning of that journey now. Uh, and so I think more than anything, uh, you know, that was a lot, that was a luck move for me, uh, getting bolt off the ground was I sort of saw this problem. And at the same time, there was this other thing happening, which was software was sort of breaking out of the two dimensional plane of a screen and, and sort of embedding itself in all kinds of other things. Uh, and now that has become, I think one of the, the major dominant technology trends that will last for decades. This is not a, you know, a fad for, you know, a couple of years while VCs get excited about it, then it goes away. Uh, this is a fundamental restructuring in the way, you know, companies big and small and consumers

Chris Gammell: think about technology. Yeah. I agree with that. Um, I think that it's not like the stuff on the screen will, will go away as well. It's just, it's also, of course, it's a yes. Yeah, it's it.

Ben Einstein: Right. Yeah, exactly. Yeah. It's it's, and it's really an augmentation, uh, and it's actually, I struggle with predicting where that will go because it's so many huge possibilities of the way we think about technology creeping into things other than software. Um, and, uh, and so that, that's, uh, it's one of the fun things about being in the venture world is yeah, you don't have to decide you get to find the people at the side. Right. Uh, and that's a very empowering part of this business is I, I am not the person to sit in a room and think of the next great widget or the next great business model or the next great concept. I, I, uh, I'm into the process of building those things. Um, and it's a very, very different thing. So I, um, it has definitely, uh, it has definitely, uh, uh, completely changed the game for hardware companies. Uh, the fact that software is all over the place and it's really, at the end of the day, it's, it's, it's enabled in a couple of different ways by, by mobile phones. Um, and, uh, uh, I think that that is, uh, the key enabler of all of the, all the things that you and I probably both collectively work on, um, is, is around the supply chain and the way consumers think and apps and all these other things are, are, are the sort of

Chris Gammell: infrastructure that make the ecosystem survive. So we started kind of with, uh, the, the origin story of Bolt, but now let's talk about like the origin story of a company that would maybe be going through with Bolt, right? So you kind of mentioned that we, you're going to be talking to people who are making that future and you're going to, you know, so where, where do they start? Like, how do they find you? And maybe specifically, how would someone listening to this find you pitch a thing to you? And then like, what are the services that Bolt ends up, you know, walking through eventually,

Ben Einstein: man, I could talk your ear off about all those things. So, uh, I will do my best.

Chris Gammell: Not just my ear, by the way, many, many ears. So hopefully some with, uh, interesting ideas.

Ben Einstein: Cool. Yeah. We try to be super open. Um, it's gotten a little bit harder as, as, uh, the number of companies that we are working on and, and, and pitch us have, you know, dramatically increased over the last couple of years. But, um, we, we, we really encourage pretty much anybody to reach out to us. If you're thinking about a business, uh, that involves, uh, we call it the sort of intersection of hardware and software. Um, you know, we are happy to talk. Uh, so, uh, probably the easiest way to do that is just going to our website, um, which is bolt.io. Um, I'm also pretty public, uh, in places. And so you can, you know, reach out to me directly. Uh, you know, people can find my email address easily. If you can't, it's been at bolt.io. Uh, I mean, my, my mission here is, is really to support hardware companies. So, um, if someone has a question or an idea or something that they're really, um, focused on, I'm super happy to help in whatever way that I can. Um, uh, we, we spend, um, you know, a good amount of time meeting companies for the first time and trying to understand how are these people thinking about building a business and is this a bench, uh, business that we believe has, uh, what the industry will call venture returns, uh, which are big businesses, uh, doing, you know, typically in some number of years, five to seven years doing, you know, a hundred million dollars of revenue or more. These are large companies. Uh, and, and so that's the sort of lens that we have to look through. It's not because those are the only kinds of products that I think are interesting. It's because that's the business that we have. Uh, and like the timeline of the actual fund itself as well. Totally. Yeah. Yeah. And I think everybody is sort of victim, uh, to their own business model, uh, in whatever way that is. And, and ours is, is in order for our business to work, uh, we have to find really big outlying companies. And so we work really hard to do that. Uh, and that's typically the number one reason why we actually won't work with a company is, is, Hey, we think this is great. We think you're great. You, we like your product. Uh, but this just isn't the, the, we, we don't yet believe this is the type of business that will generate that type of revenue in the type in the timeframe that we expect. Um, and so those are always the hardest decisions because, uh, there's so many interesting people out there and products that at least very selfishly I want to work on. Um, but, uh, it really has to align with our business. Uh, and so we will spend, you know, handful of meetings with a company trying to get to know them and looking at the product. Most companies will have some sort of prototype or some sort of, uh, you know, pretty good explanation of what they want to build. Um, we will then make an investment in those companies if, if our partnership decides that that's something that we want to do and that investment ranges probably the, you know, on the low end, uh, we'll write a, you know, a hundred or $150,000 check. Uh, and, and we will write larger checks, um, you know, 500,000 and $750,000, uh, depending on again, the progress of the company and how much we believe

Chris Gammell: the founders and all kinds of other things. I was actually really surprised. I, I think it was the first time I was out of the peer nine space that you guys had slash have. Um, and I was hanging out with Chris and Kate and they were telling me just how many people apply weekly and you'd meant, you'd mentioned the numbers had gone up and this was a couple of years ago when I had talked to

Ben Einstein: them about it. So. Yeah. It's, it's, I mean, in some ways we always want more, right? Uh, so this is always a good thing. Yeah, exactly. Uh, there are, you know, I think for every company we invest in, there's about 120 that we, that we look at. Oh my goodness. Oh wow. Yeah. So it's pretty,

Chris Gammell: it's pretty nuts. Um, well, so let's, let's step back to that a little bit more too. I mean, like, not that I think that, you know, it's not like, Oh, if we just get this application, right, they're going to definitely cut you a check, but, but, uh, like that's a lot of stuff to look at. I mean, and, and they also had some funny stories for things that they had looked at and I don't remember them, nor would I probably be able to repeat them, but I remember there were some funny things as well. So maybe if you have any funny stories about that, uh, in that 120, you're probably

Ben Einstein: getting some nutty things, but there are some wild things out there. And I think it comes from the fact that I think, you know, traditional software VC is probably see some pretty odd ideas too. Um, I think hardware, the gamut of possibilities are so much wider, right? So we just see some things that are, you know, I remember like, uh, you know, I, I'm sorry if this person's listening. Um, I don't remember who it was or anything, but I remember this person, uh, submitted a actually pretty well designed, uh, slide deck. So it wasn't someone who's totally crazy. Um, it was, you know, there was lots of good images and renderings and clearly a lot of thought went into it of a, it was like a, a spherical iPhone that you mount to the roof of your car to like analyze parking spaces in a city. I mean, they're kind of doing that now though. Like honestly,

Chris Gammell: that's, what's crazy. You guys missed out. Yeah. Yeah. Shit. Yeah. They're doing that for autonomous mapping now. So like, yeah, sorry. Sorry, man. Sorry. Yeah. I mean, we, we, we can't get them all, right. Um, and any big ones that you've missed? I mean, I guess that's always the fun thing with not fun for me, not fun for, you know, venture people. Yeah, there, there are many. I mean,

Ben Einstein: I think one of the things that's, that's hard, uh, uh, to call out is, uh, time is such a huge factor here and we've only been around for five years. Uh, and so there are a bunch of companies, um, that we, for one reason or another decided not to work with that have become successful businesses. Um, but you know, the, in terms of like companies, you know, with huge acquisitions are going public, there have been none of those yet. Um, yeah. So we never saw whatever Oculus or Nest or any of those companies, cause there were many of them were started prior to us,

Chris Gammell: uh, getting off the ground. I guess that's another thing that I think about that I, I guess I didn't really think about in the past, but I had since learned is like, there's only so many people to pitch. I mean, there's, there's a lot of money out there, but there's only so many people to pitch to, especially if you're in a specific area like hardware. And so you probably see, I mean, like the other hardware people do as well, but there's only, you know, like that probably everybody sees everything and only some people pick it out. So you've probably seen the chance to see things that have worked out that you haven't invested in is probably pretty high, you know, that's the hope.

Ben Einstein: And that's a big part of what we tell our LPs is that if you are focused to, I actually think hardware is not that specific, but if you're focused to what many people will call a specific vertical, I actually consider hardware more horizontal than vertical, but you know, that's a,

Chris Gammell: again, hardware for pets, pets, electronics, right? Exactly. Yeah.

Ben Einstein: But there are a bunch of companies that are doing pets hardware and a handful of those businesses. We have a few of them. A handful of those businesses are actually doing really well. And you know, a bunch of them are not doing really well. And that's sort of the nature of, especially consumer electronics, which is most of the sort of the pet stuff. Consumer electronics are actually, I think the, the difference between a consumer business and a, and a sort of B2B or enterprise business are actually much greater than the difference of a software business and a hardware business, which is the thing that people I think really forget. And so the, the difference is, is critical to remember that I think there's much more that unites a hardware company trying to build a physical thing and manufacture it and deal with quality control and logistics and supply chain management and inventory and all these things that software companies don't think about. And that's really what ties many of these companies together is, is the, the, the hardware piece is a tiny part of, of, you know, really the, the product, if you think about it that way, but it's a huge part of the business. Sure. Yeah. And so, and so mastering that, yeah, cash and supplier terms and all this stuff that most software companies don't have to think about, you have to master as a, especially consumer hardware business. Um, and those are, those are hard and there's not a lot of people around that have done that before to give you advice that makes any sense. Uh, and so there are many VCs that, uh, want to be the smartest person in the room because people ask them smart questions at board meetings and, uh, they give an answer because they have some little piece of information about, oh, well, you know, I know Apple uses Foxconn, so you should hire Foxconn. Oh my God. You know, and it's, it's that, yeah, it's that kind of thinking, you know, um, and that's unfortunate. Uh, in most cases, that's a very bad decision for a small company to use a large, you know, tier one CM. Oh, sure. Immediately. Exactly. Exactly. Right. Exactly. Um, and so we try really hard to sort of protect against that. But it's, it's challenging because there's a lot of people out there that are, you know, that are smarter than me, that have done a lot of interesting things in business that people really look up to that just don't have that particular experience and don't have a good framework for why they're giving that answer to that question that someone asked them. Yeah. And those are hard, conversations to have, uh, because, you know, I'm just a guy that likes making stuff and designing things and manufacturing them. Um, and people that have built, you know, billion dollar businesses before giving them different advice is that's, you know, uh, it's a complicated thing. Yeah. We spend a lot of time trying to sort of, I don't know if indoctrinate is the right word, but sort of help the companies kind of think the way we think around being careful and cautious.

Chris Gammell: Don't put words in your mouth, but you know, uh, Freudian slip. Right, right, right, right. What we do is we have a bootcamp of sorts and then we, we have them repeat these phrases that we tell them. Yeah. We don't want them to think on their own or make

Ben Einstein: any decisions of any kind. Uh, no. Disrupt, disrupt, disrupt, disrupt, disrupt, disrupt. Uh, there are lots of tools and tricks that I think are an important part of sort of the bulk package. If you kind of think about it that way, you know, we have a very specific framework that we used to think about product development. Um, and I, you know, not in every case, but in nine times out of 10, it, it, it tends to yield, uh, better results in the companies that we work with. Um, and so that's just a big part of, uh, working together. So I think this is the sort of this whole answer sort of stemmed from you asking about sort of, uh, what that looks like from a, some process standpoint. So after we make an investment sort of talked a little bit about check size there, um, we will spend, uh, you know, probably on average, it's about 18 months, maybe a little bit longer, uh, with companies. Uh, they don't have to move into one of our facilities, but that's totally an option if it helps the company get off the ground. Uh, so we have, uh, two big offices, one in Boston and one in San Francisco and a small office in New York. Um, and we try, uh, really hard, uh, to, to sort of work with the companies on literally a daily basis around product design and development and helping them, um, you know, figure out, uh, some of the really hard decisions that, uh, you have to make in order to build a great product and a business around that product. And, uh, the, the center of that is really around the sort of engineering team that we have. Um, and so covering mechanical engineering, electrical engineering, embedded systems, development, industrial design, uh, manufacturing and test prototype builds. Um, we, we spend, uh, you know, a lot of energy and money and time with those companies to make sure they kind of go through those processes, maybe not perfectly, but, uh, more efficiently than they would go through them otherwise. Um, and, uh, and that's driven by lots of experience from a whole bunch of folks that are, that are here at Bolt. Um, yeah. So let's, well, let's talk about that a little bit.

Chris Gammell: So, I mean, so first off, what is the motivation? So that, that is kind of feels like one of the core aside from like the, obviously the investment, the introduction piece, like we talked about the, the guidance and the education piece and the direct assistance seems like another big one, but like, uh, what are, what are the motivations that, uh, okay. So I'm a bit of a stubborn person. Why would I listen to your engineers versus other people? You know what I mean? Like, sure. Especially if there's conflict around an idea.

Ben Einstein: Yeah. So, uh, you, you know, you've done a lot of interesting things with hardware and are pretty accomplished person. Um, so, you know, you might have, uh, different opinions than, than the average founder that is doing hardware for the first time and pretty much all of our founders, uh, that's the case. They might be very accomplished business operators and have started a company before building software, some other, you know, business that's unrelated to hardware. Uh, and they're treading into, uh, you know, a pretty different world for the first time.

Chris Gammell: Okay. So can you give us an idea of like percentage wise of the people that are first timers? Like, are these mostly software developers or business types or like,

Ben Einstein: yeah, I think it's about 80%. Um, this is a number we have somewhere. Uh, but it's, it's the vast majority of the companies that we invest in have never actually built hardware before as a business. Holy moly. Yeah. And, and so there's a lot of, uh, it's not reeducation, uh, and it's not indoctrination, but it's somewhere in between sort of like, uh, sort of, it's an introduction to the,

Chris Gammell: the vagaries of, of the hardware world. Yeah.

Ben Einstein: Don't scare people away. Um, you're, you're, it's, it's sort of like, um, a recalibration is kind of the way we think about it. You're sort of thinking about things a little bit differently. Um, and, and so just being a little bit more cautious and you have to plan a little bit more and you have to be a little bit more careful with money. Uh, and so just being a little bit more thoughtful, uh, is a, is a difference from the average software company, which can just like build a thing and ship it and see what it, how it goes. And then if it doesn't work, change it and keep doing that at infinitum. Um, that's hard to do with hardware. And so we, we try to sort of re-architect the sort of, um, sort of the, the, the, the framework for how companies think about building at least the hardware part of their business. So, um, but why

Chris Gammell: do you, I mean, obviously this is coming from a hardware person, right? But like, why do you pick the ones who aren't already experienced with hardware in the first place? Because it turns out

Ben Einstein: that the best businesses are built not from great hardware products, uh, but from great business products. So it's not just the physical thing in front of you, but the entire experience of the product. And, and, and that is how you first hear about the company, the website that they have, how they sell you and how they access, you know, you as a customer, so distribution channel, uh, how you receive that product, how you take the product out and set it up, how the software process works, how the app works or the, whatever the backend is sort of structured as, um, how customer support works and what the brand of the, of the company is that they're experiencing, uh, you know, how you retire the product and get them to upgrade to the next one or continue to sell some consumable product or whatever else that sort of comes with that business experience. Uh, that is actually what makes a great product. Uh, not I can build a better circuit board than the next guy. That's a, I believe, I believe just adding one more feature, Ben,

Chris Gammell: will actually make my company successful. So I'd like to reeducate you right now. No, no, I know. Well, I'm sure you get that a lot though too, right? So you probably have to educate the 20% that are hardware people about like, Hey, don't forget about, you know, website experience or whatever else is out there. Totally. Yeah. Yeah. There's definitely a correlation

Ben Einstein: to the founders in our portfolio that have built hardware businesses. Again, this is a small end, but there are a few of them. Um, and they spend probably more time than the average company does on product development. Uh, and they try to get everything just right. And, and so we have this, uh, really polar opposite approach. And this is, this is against the sort of common wisdom that pretty much all venture investors have around hardware. And I don't understand because it's the opposite they have around software. Um, we, we have this very strong belief, uh, sort of a religious belief at this point, um, that companies should build, uh, not the perfect product. They should build something quickly that is good enough. Uh, that is not, uh, perfectly molded and doesn't have every feature. And the circuit board isn't amazing and the battery life is not what they want. Um, and the, and the box sucks and, you know, all the things that kind of go into building the product is, is good enough. Uh, not great. And it's one of the big disservices that companies like Apple and others do is they have so much money and so much control that they've, uh, primed founders to vector towards building these perfect products from day one. Um, and it turns out that that, uh, statistically is not an effective strategy to build a great company. You wind up spending too much money and you do these big launches. Uh, you know, Kickstarter is probably one of the biggest sort of, sort of focal points of this, um, which luckily is going away. Um, and, uh, you do these gigantic launches and it's like this big, huge crescendo moment. And like either you succeed or you fail. Exactly. Yeah, exactly. Oh man. And it turns out that is the worst way to run a company. Uh, the best way is to, yeah.

Chris Gammell: Well, I've always just said the hardest thing is to get someone to give a crap about something on the internet. And, uh, you know, this is now taking that thing and being like, but there's hardware too. Exactly. Exactly. You could buy this thing for your house. Awesome.

Ben Einstein: Yeah. And it's really unfortunate that that is still a pretty common belief in it, at least on the,

Chris Gammell: on the sort of investment side. So is that because the investment side is used to the consumer experience of the opening up the new iPad or whatever it is, is that, is that where that's

Ben Einstein: coming from? You think? I think so. Um, I, I think it's, it's sort of tied into, uh, the experience of the world that many, you know, privileged, uh, you know, oftentimes white men, uh, have of, of products. And it is this, uh, is a deep focus on, uh, on quality and the experience of unboxing and the whole like YouTube unboxing thing and all that stuff. Um, and it turns out, uh, that if you really, uh, look very carefully at customer behavior, that does matter. Uh, but it matters much, much later in the company's life and the, the beginning of the company's life when you're selling that first 10 or a hundred or thousand products, uh, again, depending on sort of your business, uh, it, that what matters way more is that you provide a good experience to the company. And so you know how to communicate with them and you know how to, uh, empathize with them. And, uh, and, and it's, it's, uh, under waiting the first five minutes and over waiting the next year or two years or five years of experiencing that product. Uh, whereas when you are a large consumer electronics company, um, uh, people spend a huge amount of energy, uh, tearing down the like early experience of that product. Um, because that's where many consumers, when you're selling millions of units get caught up is they can't figure out how to, how to, you know, turn on a computer or how to boot up that iPhone or how to download the app or whatever. And they get stuck. Uh, and so it does actually matter. Um, but it matters much less for the very early days of a company's life. Um, and so I'm, I'm just a, a big believer in, in sort of the good enough product in the beginning. And again, this is, this is strictly applies to like the first couple thousand units of a consumer products sort of life. Um, this is not about, uh, you know, uh, every, you know, the entire life of the company sort of operating that way. Um, I've just seen companies that, uh, really keep their heads down and focused towards making the customer happy, uh, over the longterm way outperform the companies that focus on that perfect unboxing or that perfect molded product that no one even really

Chris Gammell: notices in the beginning. What about the split then too? Because this is another kind of underlying question I had was what, what are you targeting consumer versus industrial versus anything else versus I saw a medical company I think on here. So like, how does that color the decisions of bolt? I mean, obviously you do have some consumer level stuff, but I mean, each, each situation is at least slightly different if not, you know, more systemically different. Yeah. I think, I think there's a huge

Ben Einstein: variance in our portfolio. I think it's one of the big misconceptions that people have about bolt and probably most investors in hardware is everybody thinks and talks about the sort of consumer connected hardware companies. And it's actually a minority of our portfolio. Um, it's, I don't know what the number is, it's probably 20 or 30%. Um, the, uh, you know, there's a lot of variance in the types of stuff that we look at. So, uh, we kind of draw concentric rings around that, around the sort of like connected hardware space, which is a big part of our thesis about the world is that again, it's kind of what we were talking about before with software kind of being, being, uh, uh, the center of many new hardware experiences or, or at least a big part of it. Um, that's sort of the, the, the focus. Uh, but we have lots of little sort of rings that sort of come outside of that sort of central area. Um, so we've done a bunch of medical products, um, most of which are on the consumer side of medical, but they're still FDA regulated, uh, and it's still an important part of their business. Um, uh, we've done, uh, a handful of space investments, which we're getting increasingly interested in sort of space and aerospace. Uh, we have a good number of, uh, tools and services that support people making things. Uh, and so folks like, uh, you know, Tempo Automation, which you know is one of our very early portfolio companies from fund one, um, you know, helping, uh, probably many of your listeners build circuit boards, hopefully. Um, and, uh, and, you know, we've done a few CAD investments like join CAD. Uh, and so we're thinking carefully about, uh, companies that are providing tools to folks that make things as well. Uh, and, and there's all these areas that we have sort of domain expertise in because we've either bought those tools and services, or we've started companies in those areas, or we have portfolio companies that have worked with those types of companies. And so we have a sort of a insider advantage if you kind of think about it that way for, uh, for seeing interesting companies in those spaces. Um, and so we're, we're pretty open. We have, uh, the majority of our portfolio are B2B and enterprise products that are, uh, have some physical component. Um, and, uh, a big piece of pretty much all of the businesses is, is what us in the venture world call occurring revenue, uh, which is just getting a company or a user to pay, you know, more than once for a product. And, uh, uh, there's actually a huge difference between, uh, what people call the razors and blades model, which I find sort of frustrating. Um, and many of the sort of good recurring revenue business models that, uh, that I think are what sort of power the, the great consumer businesses and really enterprise businesses too, that, that are out there. Um, and, and, uh, the razors and blades model is, is really, it's a sort of negative experience when you think about like, buying a, a, a, a, a razor blade.

Chris Gammell: Right. You're going to buy this thing that's going to definitely break. So buy more.

Ben Einstein: Exactly. Exactly. Yeah. You, you are setting yourself up to, um, create, uh, uh, an unfortunate purchase decision. The, the transaction is, is, is full of negativity. Uh, it's like when your air conditioner or your humidifier, you need a new filter, right? No one's like excited to go buy a new filter for your air conditioner. Uh, it's a thing you got to do every couple of years or whatever to keep the air clean. And it's sort of this like womp womp, uh, kind of feeling. And, uh, and I try really hard to, to under, to, to instill in many of the companies that we work with and actually companies that we don't work with that there's a huge psychological break between that and a company like Keurig, uh, which, you know, to use an old example, um, or Peloton or someone else who is continuing to charge a, you know, a significant amount of money, but it's for a product that you're excited to buy. Yeah. So when you go out to the store and buy coffee, it's not like, Oh man, I got to buy this thing to maintain my machine. It's man, I'm really excited to like buy this kind of new flavor or this, you know, this different coffee company that I've never tried before, or this, you know, this exercise workout that I have never tried and love going to. Um, right. Well, it's almost like

Chris Gammell: that product experience, but like on a micro level at that point. Right. So it's like each time you, you look at that transaction, you're like, you know, it's probably not conscious, but you are saying like, is this still worth it? And a lot of times, yes, it is because of convenience or whatever it is. Um, yeah. Like every, every time I look at Spotify on my, my credit card bill, right. I'm like, yeah. Oh yeah. But I've listened to music on Spotify every day for the past month. So great. Awesome.

Ben Einstein: Whatever. Exactly. Yeah. You, you, you don't feel like it's, it's maintenance. You feel like it's a product experience that you're paying for it. And that, that psychological break is, is that I call that recurring revenue? Um, I don't consider, even though technically a CFO would call this recurring revenue, I don't consider a filter replacement for a water filter or something

Chris Gammell: recurring revenue in the same way. It's not a, it's not a plastic experience. Right. Exactly.

Ben Einstein: Yeah. It's, it's, it's, I had this experience originally and now it's gotten worse. So I need to pay more money to make it back to normal. Uh, and that feeling versus the like, I have this thing and it works pretty well, but if I pay more, I get something else that, that is totally different from a psychological standpoint. Uh, it sounds like a nuance and it sounds like maybe like splitting hairs, but it's, it's really a fundamental shift in, in consumer behavior. And so pretty much all of our companies have some recurring revenue, sort of more like the, the, the sort of positive experience rather than the negative experience, um, where the companies or the, or the consumers are excited to pay that incremental charge for the coffee or the brick or the, you know, whatever, uh, the software or the data or whatever that kind of goes into that experience. Um, and, and so that, that is, uh, again, one of the major trends sort of enables venture firms to, to find interesting trends in companies that are building physical products.

Chris Gammell: Well, let's talk about the flip side of that. Uh, you know, I was going to bring it up, uh, is the, uh, when that kind of goes awry, right? Like the, so the, uh, the juice arrows of the world and you did a, uh, very good, uh, analysis of it. And I think, you know, so it's called, here's why the juice arrow press is so expensive. Uh, you know, I think this was a fantastic teardown and you go through a lot of like, thank you, what it's, uh, you know, what was going on in there, uh, for a slightly more, uh, language ridden, colorful version of it. You can always watch AVEs tear down a little bit more weepie talk. Um, he likes his weepie. He does like the weepie. Uh, um, but, uh, so that is kind of the flip side and that's what I think some people think about of the, um, you know, that recurring revenue model. So like, how does that square in there?

Ben Einstein: Totally. Uh, it's a, it's a great question. Um, Drusero is, is, is an incredible study of excess. Uh, and it is, um, not necessarily bad, uh, but it is misaligned with the consumer and that's why

Chris Gammell: it didn't work. That's a very, you're going to run for office someday, Ben, I think.

Ben Einstein: Better get used to talking to people. Yeah. Um, no, I mean, I, I know a lot of those guys and I think pretty highly of, of, especially the engineering team, uh, which I've met on a couple of occasions. And, um, I think, uh, one of the things that's important to remember about any company that goes belly up is, is in almost all cases, people, at least some people or most people at the company have good intentions and it just didn't work out. Yeah. Uh, and so even though, um, yeah, like many people, uh, you know, make fun of Drusero as, as sort of the poster child of how ridiculous companies can get in Silicon Valley. Um, I think there was good intention there and there were people that were trying to build something great. Uh, and in some cases it is great.

Chris Gammell: And beautifully built too. I mean, like that is the thing that you pointed out and AVE pointed out and like everyone pointed out, I was like, Oh my God, like look at the machining on this stuff.

Ben Einstein: However, you know, like, but, but yeah, of course. And, and I think what the way I always sort of describe it is, is, uh, I think many folks think of engineering as, uh, as, you know, look at how amazing this is machined or this cool process is a trap I fall into all the time. Uh, you know, I'll be walking around a factory in China and be like, Oh my God, this is incredible. Um, but, but I, uh, I, I sometimes have to remind myself to step back and think about the real definite of engineering is about finding the appropriate solution for a problem, not the coolest one to make.

Chris Gammell: Yeah. And it's a, it's a, it's a product thing too, right? Yeah, exactly. Yeah. Yeah. It's,

Ben Einstein: and it's a, my, you know, a vast majority of my training, uh, was, uh, sort of, you know, I'm a, I'm a mechanical engineer by background, but I spent a huge amount of time, uh, even, even in undergrad thinking very carefully about product. And so you, you, you sort of zoom out. It's kind of like one, one step up from engineering. Uh, and I'm very thankful for, uh, the professors and folks I've sort of talked to along the way that sort of instilled that culture of, you know, it's not about how cool the thing is that you can build. It's about, is it solving the problem in an elegant way, whatever elegant means for, you know, for your audience, it could be cost, it could be supply chain, it could be technical elegance, it could be, uh, you know, whatever, some incredible new alloy that can withstand some new performance metric or whatever. Um, and I think, uh, uh, understanding the sort of customer and sort of the audience of how the thing you're building fits into the full sort of business product, uh, as I call it, I think is a really important component of building something great. Uh, and Juicero sort of missed that, you know, they, they did a really good job building, I mean, really an unbelievable piece of technology, uh, in, in many ways. Um, but it was something that didn't resonate with their consumers and was not the right sort of set of, uh, of sort of features for what, uh, the sort of modern juice consumer, if that's a thing, uh, sort of expects, you know, and, and the calculus is very simple. If, if you, you know, I was one of the very first people to get a Juicero press, I buy a lot of this stuff, but, you know, almost always to take it apart eventually, but I play with it for a little bit. Um, and, and it is not a good, uh, it is not an economic calculation that makes sense. Uh, you know, I, you spend at the time it was $700 for this machine. Uh, and then each juice was something like six bucks or six 50 or something like that. Um, and you still have to do work to do it. So yeah, it's slightly cheaper than, uh, going to whatever a juice bar and spending nine, 10 bucks, which is still crazy to me that people do that every day. Um, uh, but it is not, you have to drink whatever hundreds and hundreds of juices a year for that to economically make sense. And the average person is not going to do that. Uh, so it just doesn't make sense. And I think if they had spent more time, uh, you know, to be totally honest, to raise less money and, uh, spent more time engaging with customers and, and running, you know, genuine sort of objective tests around what features matter and, and what costs make sense, they might still be alive today. They might be thriving. Uh, you mean juice is an incredibly interesting business in a whole bunch of ways. Uh, it's definitely a trend that, uh, you know, correlates at least in some way, shape or form, uh, with health, maybe not the like cold press, you know, $10 juice thing, but, you know, drinking more fruits and vegetables is definitely a good thing. Uh, and I think getting, uh, getting, uh, uh, the barrier to eating, eating and drinking more fruits and vegetables in the home lower is great. Uh, and I think many companies will do well by that at some point. Uh, Jusero unfortunately didn't have the right mix of constraints to build a great sort of business product. And that's eventually what led to their demise. Well, and I think that, uh, you know,

Chris Gammell: this kind of points back to all of the other stuff that you've written about too. I mean, I think that that's ultimately kind of like everything we're talking about here. It's like, you've kind of started putting all, not just you as well. Uh, you know, your whole team has been publishing on the bolt blog. It's something I point people to regularly. I mean, are there, are there one? Oh, I'm the one guy. Yeah. I doubt I'm just the one person. Uh, I think, I think tech crunch might have a little bit more of a sway than Chris Gammell. Uh, for now,

Ben Einstein: for now, you better watch out. Yeah. Right. Exactly. In our world, you are an influential

Chris Gammell: fellow, right? Sure. Um, but what are some things on there that, you know, think that, uh, do you, do you have stuff that where you point, you know, beginners out, you get an email, you're like, Oh, Hey, I wrote about this. Like, like something you find that you're pointing people to on a regular

Ben Einstein: basis. Yeah. So that's where we have a handful of, of posts, um, which are really series of posts. Uh, and unfortunately they're extremely long. And if I was better at things like, you know, that you're great at like podcasts, I would probably figure out a way to do that more eloquently.

Chris Gammell: Um, uh, read your posts online. Yeah. We'll talk after this. Chris Gammell narrates the bolt blog.

Ben Einstein: Oh, I see an interesting business model. Um, uh, and, uh, so, so there's one, uh, I think the first one was on a product, uh, sort of development, sort of the illustrated guide to like developing a product. Uh, and so we took one of our portfolio companies, um, uh, a company called dip jar, uh, and, and sort of walk through the entire process from generating an idea up through manufacturing, you know, sort of stable mass production, uh, and talking about each stage and, and, and how those companies go through that process. Uh, and, and that's a common, Hey, you have questions about product development,

Chris Gammell: read this first and then let's talk. Right. Exactly. Common framework to talk about it, right. Before it's like asking the same questions everyone had. Right. Yeah. I think that the problem

Ben Einstein: with hardware is that there's, you know, it's very variable. And so it's really hard to like read this and it'll answer all your questions. That doesn't really work. So it's much more like read this. We'll use the same terminology and be able to have an intelligent conversation about what you should do. And that, that tends to work pretty well. Um, we have a similar, uh, post, uh, around team building. Um, and so this is, uh, again, probably the single most important thing you do as a, as a founder of any type of company is the people you work with. I know this is, this is one that I

Chris Gammell: always push back against too, but it's like, I, I used to push back against a lot more, but like, you know, you always say like a founder's job is to source good people, but damn, it's right. It's hard.

Ben Einstein: I mean, it's, it's, it's hard. And, and it's why you need, it's right. It's why you ironically need to hire people. Uh, because, uh, you know, at least myself, like I'm pretty good at hiring small numbers of people. Um, I am not the hiring machine that great CEOs are, uh, where they're constantly talking to people and getting them excited about their vision and kind of pulling them into their gravity, but actually a really important point that I always make about team building. Uh, and this is something that has, was made to me, uh, many years ago and has really rung true is it's, it's actually, um, uh, the team that you hire, the sort of like full-time, uh, sort of employees and partners, uh, are actually a relatively small part of a hardware company's team. Uh, and so we try really hard for people to remember that, uh, uh, kind of a space nerd. So I, I use the analogy of it's really like a solar system and the team is definitely like this huge, you know, center point of how things are coming together. It's sort of like the sun of the solar system, the like full-time, you know, dedicated team. Uh, but you have all these little planets around you that are without, uh, which you can't do your job. And so your lawyers are on your team and your CM is on your team and, and, you know, people you hire to do one-off work to help you with a firmware bug. They're on your team.

Chris Gammell: Yeah. Funding sources too, I'm sure. Right.

Ben Einstein: Of course. Yeah. And some of those folks are huge parts of a team and make gigantic differences. Uh, and so I, uh, I think people sometimes overly index on, I gotta be really good at like hiring people and under index on, uh, uh, the, the sort of solar system of people around you that, uh, might not work for you full time, might not be on your payroll. Um, but understanding how to work with those folks and make them happy and select good folks, uh, is a really important skill. I bet you are, you know, really good at finding a good contract manufacturer for boards that you've worked on, uh, better so than probably, you know, 99 out of a hundred, uh, you know, CEOs of even big electronics companies. Um, and that is a really valuable sort of team building element of you as a person, even if whatever hiring people every day is not your sort of default mode of operation. Um, and that's important, you know?

Chris Gammell: Yeah. Right, right, right, right. I mean, yeah, at the end of the day, yeah, you're right. There's, there's not just hiring for individuals or that then I think, I think that's the thing. Like we talked about earlier. It's like, my mind always goes back to the, you know, the, the type a, you know, totally jock CEO type of, Hey, how you doing? You know, like, we're good to meet you. Come on in. Exactly. Yeah. They're like, not that it's even common or people that I've interacted with, right. It's just this, this, uh, stereotype that's in my mind. And, and that's what my mind goes to, but, but that's not necessarily who's the best at recruiting anyways. So.

Ben Einstein: I mean, I think it's one of the big problems, uh, with the sort of archetype we have of, of Silicon Valley founders is this, you know, you think of like whatever Travis of Uber or some of these other people that are just really like, yeah, a lot of people do though. And I think when you talk to many VCs and stuff, they, they're, they're looking for people that have that DNA. Um, and it's, it's really unfortunate. It's a, it's a really shitty way of, uh, of biasing yourselves away from good people. Uh, you know, he is, uh, clearly a, uh, you know, I don't know him. So maybe it's hard to judge, but like a bad person. Uh, and I think many people that have spent a lot of time with him, like, right. There's an article on article of that, but yeah, yeah, exactly. But, uh, you know, and I, I've, I know a couple of people that know him pretty well and are just like, this is not, he's not my favorite person to hang out with. Uh, I wouldn't, I wouldn't trust him with my kids or whatever, you know? Um, yeah, which is maybe not something that we should talk too publicly about, but, uh, you know, something that I think is a really important part of, of, um, of building a great company, uh, is, uh, is understanding that there are multiple dimensions to being good at team building and you need all of them, not really good at one of them. And I think Travis is a specific example of someone I feel like I can talk about without being too offensive. Um, is, you know, I think it's high upper right quadrant, you know, of one element of that and, and really good with, you know, bringing in high power people and, um, and, you know, getting people excited to work with him, but pretty bad at a whole bunch of other things, uh, that it takes to, to run a great company. Uh, and, and the sort of cultural elements are just as important, if not more important than being able to attract great people.

Chris Gammell: Well, so like you mentioned, you know, the team is bigger than just the founding company. So like, what are, what are the sizes of people that usually come into bolt, right? Or the teams that come into bolt and then like, what are the people, what are the people that are inside bolt that can help out

Ben Einstein: with? Sure. Yeah. So the, the team itself is, uh, it's typically pretty small. Uh, and so probably the average company that we invest in is, you know, two to four founders somewhere in that range. Okay. Um, and so probably too, right. I mean, that's a very early measure of that. Yeah. So I, you know, probably half of the companies we invest in don't even have any kind of product yet. Uh, they might have some like duct tape, what we call proof of concept prototype. Um, but that, you know, there's no real engineering that's been done. There's no real product market fit or any kind of sales or anything. Um, so we were very, very, very early in that regard. Um, we've invested in a bunch of companies don't even have an idea. They're just an interesting person and they want to build something and they know it's going to be roughly like this. Um, I have no idea. I have a really

Chris Gammell: hard time with that actually. I mean, I know that that happens, but like, so you're saying that that person though, out of 120 people that have also approached you with maybe more. Yeah. How do you

Ben Einstein: pick that person? It's a bunch of things. Um, and it's a, it's one of the, the probably the, at least for me, uh, one of the most challenging parts of, uh, you know, my sort of day-to-day job. Um, there are people out there which have, um, it's kind of like this gravity thing. I talk about a lot with the sort of team analogy, um, that just have this way of talking and experience that really aligns with a problem area that they're super passionate about. Um, and so there are, uh, you know, take someone like Mike Phillips, um, who was, uh, who was the founder of a company called sense, uh, one of our very early fund one investments, um, who is the exact right guy to be building, uh, sort of roughly the thing he was talking about. Wasn't really sure exactly what it would be at the time. Um, but it was, uh, uh, uh, you know, a thing that he, uh, knew, uh, uh, sort of, uh, big data is probably a ridiculous term at these days, but at the time was a big deal. And, and, you know, processing, you know, uh, gigabytes of data a day on a device is a really hard thing to do really well. And, and he is, he had a deep experience in speech, which is very similar problem

Chris Gammell: to, uh, right. So we've actually had Joe Bamberg on from, of course as well. And, uh, yeah. So he actually talked about Mike as, okay. So that's actually, that's a great example because, so you're saying because Mike had, um, because he had that speech experience, he's like, I want to take this, this new era area. I think it's relevant enough. And then you're like, yeah, that's great.

Ben Einstein: Okay. Yeah. And, and my, my first partner, Axel had, uh, had, had worked with Mike, uh, on his, his first company called speech works, um, which, uh, is interestingly enough, uh, how solid works, uh, got its name, which I think is very funny, um, for those mechanical engineers out there. Um, they sort of copied that, uh, um, and, uh, you know, loved Mike and thought Mike was one of the sharper CEOs in Boston and, uh, you know, decided he, you know, no matter what he wants to work on, basically he wants to work with Mike. Uh, and so as soon as Mike started talking about working on a physical product, uh, he didn't exactly know exactly what it would be and exactly how he would sell it. But he was like, I really think low desegregation should be an easier thing to do. And it's an extremely hard problem. Um, you know, we decided to invest and, uh, you know, it's taken a couple of interesting turns along the way, but I think they're doing great and have hired some wonderful engineers and the product is, you know, it's, it's a really hard problem, uh, but I think it works reasonably well. Um, but so that's just an example of like a great founder working on something that their background has a good, like sort of, uh, sort of what we call founder market fit. Um, so they're, they're clearly the type of person to kind of work roughly in, in this area. And, uh, you know, we, our business is powered by taking a flyer sometimes on really good people.

Chris Gammell: So intuition, that kind of thing around, around, yeah. Okay. That makes sense. All right. So that's, that's not always the case, but that is sometimes the case. So then the people that are two to four person teams, what are they going to experience when they come in and talk to both folks?

Ben Einstein: Yeah. So, uh, as part of this sort of like, um, investment process, we'll spend a lot of time trying to get to know them and their business and, and however much they have and sort of market and customer traction, et cetera. We might do a couple of diligence calls and try to understand, you know, many of the times where we don't know the rocket launch market. So we got to go talk to a couple of those companies and kind of learn about it. Um, and after, you know, typically, uh, you know, a couple of weeks, we kind of get a handle on that and either decide to invest or not. Um, if we decide to invest, um, probably about 70% of those companies will move into one of our offices. Um, so not everybody, it's not requirement. We don't like run like an accelerator program. We're like, show up on this day. Um, but it's a sort of a perk that we offer to companies mainly because we found that collaboration of physical product development works better when it's in person, uh, versus remotely. Um, and so that's sort of the reason for the office space thing. Uh, we have a big shop and a lot of the companies like to use that for 3d printers and laser cutters and welding and CNC machines and all that stuff. Uh, and so we try to push companies to, to sort of, uh, use those common resources so they don't have to spend money to have other people. Yeah. It makes sense.

Chris Gammell: Right. And then you also have people on hand to help with that stuff though as well.

Ben Einstein: That's right. Yeah. Which is by far the most valuable part of sort of that investment process. And so, um, the Tyler who runs our engineering team, uh, very early guy on the Apple iPhone team, uh, as a PM at Apple for many years, uh, building many of those products, I just sort of seen, you know, both the good and the bad and probably the ugly too, um, of, of, of product development and, and, um, uh, sort of manages us interfacing with the company on the engineering side. And so, uh, underneath him, uh, sit a whole bunch of super talented individual contributor engineers that, uh, again, sort of cover the sort of mechanical aspects of a product, all the electrical stuff, both on the board side, uh, and, and the, the, the, the, the firmware side. Uh, uh, we do a bunch of, um, again, not like perfect IDO, uh, you know, whatever frog design ID, but we spend a lot of time thinking about, you know, ID in a good,

Chris Gammell: a good enough way. How is the person holding this thing at least versus, yeah. Yeah. And like,

Ben Einstein: just sort of pushing folks to think through interaction a little bit. Um, you know, I don't think any of our products are going to win awards, you know, red dot awards or whatever for like amazing ID out of the gate. And that's intentional, um, because doing that takes a lot of time and

Chris Gammell: money and adds risks. What if we put in like the most curves into our perfectly milled, uh,

Ben Einstein: injector mold? Yeah. What's so funny. I mean, I could, I could go on forever about like product design firms. I used to run one. Uh, and so I know how that business works really well. Um, but it is, it's really unfortunate though. Like the bright eyed, bushy tailed company that like comes through that process after having spent whatever, half a million dollars on some product development process and gets this thing that looks awesome. And if you try to make it, you're totally fucked. Um, you know, and, uh, or you're going to spend whatever, three times more on tooling and on, you know, crazy shit that you have to do. Right. So we have a one millimeter, uh, wide

Chris Gammell: plastic wall. Exactly. Exactly. It really helps the design, you know? Yeah. It's critical for this first, very first product. Exactly. And it's, it's going to be dropped every day. Exactly. Yeah. And

Ben Einstein: frozen and you know, all kinds of crazy shit. Um, so, so we try really hard to, to kind of get the companies to think about ID early on in, in that kind of way. Uh, and so, you know, we have a full time industrial designer. Um, we have two folks that help with prototyping, uh, and so sort of running the shop and sort of helping people think about, okay, how do I test this or how do I build a fixture to assemble this more effectively? Um, you know, teaching them how to use machines and 3d printers and everything. It's really a sort of teach a person to fish rather than, you know, you know, giving them the fish or whatever the opposite of that is. Um, and, and so it's really trying to get them to sort of think proactively about how to build some of these products. Um, and then, uh, we spend a bunch of time helping them through the manufacturing process, uh, which in most cases is not the tier one gigantic Chinese contract manufacturer. In many cases, it's the local box build house and, uh, you know, totally. Yeah. And, and they're, they're in the shop sometimes like with the people that own the factory, you know, quote unquote factory, um, uh, you know, bringing up boards and, and running tests and looking at, you know, test data and stuff. Um, and that is how, uh, as a company you master production is not by, you know, sending it off to some fancy company and having them do everything, but it's by you sitting there and learning, okay, this is, I'm going to design the fixture that makes this process more efficient. Uh, and I'm going to give it to the CM so they know how to use it. Uh, and then you iterate on that. And, and, uh, that, that process, at least in my experience is how you, you build wonderful supply chains. Um, and it's not by, you know, hiring these big fancy companies that have, oh yeah, no worries. We'll do it for you. Uh, there's no, uh, there's no easy button. I know. Partner Scott Miller likes to say. Yeah. Right. Well, Scott, Scott's been on the shows before as well. Um, yeah. So cool. Yeah. I mean, he has, uh, definitely a, a wonderful experience on the sort of, you know, bigger production runs of mostly consumer electronics, uh, and probably is responsible for building one of the most complicated consumer electronic devices ever Roomba. Um, and it's really, uh, it's a Marvel, uh, I can't talk too much about it, but walking through the, the, the primary Roomba factory is really amazing. Um, that, that stuff, I mean, like, especially

Chris Gammell: cause it was, you know, not really done before at a consumer level. Yeah. Yeah. And, and it's

Ben Einstein: crazy because when they first did it, and it was 2000 or 2001, um, their cost targets were way lower than they are now. Uh, and I think the first Roomba was one 99, if I remember correctly. Um, and so they didn't have, you know, cost of goods to spend money on, you know, a TI processor

Chris Gammell: or some fancy, you know, that's building a toy at that point, right? I mean, there's toys,

Ben Einstein: there are toys that are $199. Yeah, totally. Yeah. They have whatever 45, 50 bucks a bomb cost to build a, you know, a robot with a, you know, a bunch of motors and sensing and software. It was crazy. Um, and that first Roomba, and I'm sure, you know, Scott's talked about this, uh, in some way, shape or form publicly. Um, you know, they built things from, you know, on pick controllers, these crazy, you know, crazy from scratch sensors. So they could save three cents cause there were eight of them or whatever. And, um, just having to like cost optimize everything. And it's so funny cause now they sell these like $800 Roombas and they just like buy a bunch of stuff off the shelf, uh, which is really funny to me, um, because they realized they were artificially low on the price. Uh, and that's again, something they would have figured out if they started to sell this thing differently, they would probably, they'd probably learn that, uh, yeah, slightly easier than they did. Yeah. Well, I think the other thing though,

Chris Gammell: too, is that the, you know, the Dysons of the world push that market up too, right? Totally. So it was like market forces end up impacting entire companies like that.

Ben Einstein: Of course. But again, I think, uh, they spent a huge amount of money and energy, you know, manufacturing this product with these constraints. They didn't actually know they had, or they, they, they thought they had, but they didn't. Um, and I, and my suspicion is they could have spent, you know, they could have spent 60 or 70 or even a hundred bucks on bill of materials and probably been okay. Um, but, but they, they thought they had this, again, I don't remember the exact price, but I think it was $199, you know, really aggressive price target. Um, whereas when you compare it to like, even like a decent vacuum, uh, you know, the vacuums are expensive. Yeah. Uh, even, you know, I remember even, you know, 10 years ago, uh, you know, you, you easily find a $500 vacuum that was, you know, middle of the market. Um, and you know, now I think it's hard to find a vacuum that's, you know, that's less than a couple hundred bucks.

Chris Gammell: Um, mainly due to Dyson. Well, you and I might be shopping different places, Ben, but I've, I've, I have found a little cost of vacuum. You really are. Yeah, yeah, yeah. You know, over here in the Midwest, my friend, uh, we got to, you know, we got some cost constraints going on,

Ben Einstein: you know? I actually, uh, uh, kidding aside, I actually did buy my first vacuum Dyson cleaner not too long. Uh, Jesus, Dyson vacuum cleaner. Yeah. There we go. Uh, words, um, uh, for the first time, it is really impressive. Uh, it is extremely well designed and it's one of those companies that I've kind of like, yeah, you know, I kind of know of Dyson and the whole thing, but, uh, I was actually sort of surprised that I hadn't bought one earlier. Um, I'm pretty cheap guy and I never thought spending $600 on a vacuum made any sense. Um, but, uh, which is also why I don't own a Roomba, uh, but, uh, it is impressive. It is clearly, uh, a far superior design of a product than anything else I've ever owned.

Chris Gammell: Well, I would point you to the vacuum guy on Reddit. He, he did not like this. I'll, I'll point you to that, but I also will point you to the, uh, uh, I was going to actually bring this up earlier. This, uh, there's a great NPR show called how I built this and, oh, I know it. It's great. It's wonderful. Big fan of that show. Um, yeah. And I really liked that. They always ask because the reason it came up before is because you were saying we were super lucky. And it's like the question that Guy Raz always asked is like, are you good or you're lucky? And I think that like, sure. Yeah. I don't think they ever give enough credence to lucky, but, uh, I also don't think they won't, don't want to talk down their, you know, their hard work and it's like, yeah, but damn, some people are lucky, you know, just time wise. It's like, yeah, you know, totally. And

Ben Einstein: hard work makes luck. Yeah. This is the thing that I think it was actually Brad Feld who first told me this. Um, and you know, again, this comes, you have to sort of put it in context. This is a guy who's made, you know, many, many, many millions of dollars working with some of the most famous companies out there. Um, and it's just a sort of luminary sort of figure in the venture world. Uh, uh, and he said something to me at some point, uh, pretty sure it was him. Um, it was, it was the effect of like, if I had the choice between being good at stuff and being lucky at stuff, I take lucky every single time. Um, and there are some people that are just really good at like attracting luck and that is incredibly powerful leverage. Yeah. Yeah. And they're probably doing other things in

Chris Gammell: there too. Of course. Right. It's not like they're just working on laurels. Yeah. But I would sign me up

Ben Einstein: for luck too. I'll take that one for sure. Yeah. I'll have a double serving. Yes, yes, please. Yes, of luck. Um, yeah. So I think to answer your question earlier about sort of the, the, the bulk sort of engineering stuff. So a bunch of these humans, uh, that we have that work full time for us. Um, and then we run companies through, uh, you know, a fairly rigorous process going through, uh, uh, sort of the, the early product development, we call proof of concept prototype development, which most companies have done by the time we've seen them. Um, and then through, uh, uh, the sort of design process of thinking through user interaction and industrial design and, uh, typically software sort of paradigms and how companies are, are sort of interfacing with a product and icons and all that stuff. Um, and also the sort of engineering process of thinking through, you know, writing specs and, um, and, and sort of detailed engineering design, you know, component qualification and, uh, you know, somewhat rigorous testing around making sure the product is going to survive and can be dropped. No return. Yeah. You want to minimize that. That's the thing that people, uh, very often forget in the hardware world is, uh, you're not done when you sell the product. Right. Um, and then merging those two really usually separate prototypes. So that, that sort of first process is creates what's called a looks like prototype. Uh, and the, and the second, uh, part of that process, the engineering, uh, part is it creates a works like prototypes or sometimes a bunch of works like prototypes. Then you have this really hard part of the process where you're trying to cram everything into one. Um, and, and we call that an EP or an engineering prototype. Um, and that is the sort of fusion of this beautiful model, uh, looks like model and this, you know, functional could be one or could be five or 10 functional prototypes that all sort of do different things. Um, and that, that is the, by far the hardest part of the process to go from these two sort of idealistic models into one that, that is a functional product. Um, and that process takes a while, many months. Uh, and then we go through the sort of early production process. Pretty much all companies do their early production runs internally. So we, they do them at our office. Um, so, you know, sometimes it's, you know, five and 10 units at a time. And sometimes we have companies that build a hundred units a week and they've,

Chris Gammell: yeah, they've actually get them out of the field and shipping them out.

Ben Einstein: Totally. Yeah. Yeah. And they have a little line, they learn how to do inventory and, uh, you know, all the little things that kind of go into, um, making a great sort of supply chain. Um, and, uh, and companies definitely figure out a bunch of stuff by having their own facility and their own time and their own people that they're managing kind of work with, uh, you know, through that process themselves. Um, and, uh, typically during that process, we're also doing all of the sort of traditional venture things. So, um, you know, helping them put their pitch deck together and work on business model and talk to investors and raise money and hire and board meetings and all that stuff. Uh, but I tend to focus when I'm talking about the engineering stuff, because I think that's really what differentiates us from other VCs. Sure. Yeah. Well, I was going to ask

Chris Gammell: about that too, though, because you had said earlier that it's like anywhere from a hundred hundred K up to 1 million and, uh, you know, nothing in San Francisco, but that's like what, like three or four months of employees. I mean, it's crazy. Yeah. It depends on, yeah. It depends on how big you are. I mean, so, and, and not to mention the, you know, also to talk about the, the thing that most VCs don't talk about or understand or like, it's like the, Oh yeah, you also have to buy parts and you have to buy molds and you have to like all the other things you have to kind of squeeze in there. And it's not just office chairs and laptops. It's also other stuff. So how far, totally, how far are they expected to go on that first

Ben Einstein: check that you write? It's a big range. Uh, and there are some companies that are able to, again, a lot of this depends on complexity of products and complexity of when I say product, I mean like business product, you know, the entire thing. Um, yeah. And so if you have whatever, you have a piece of software and a website and a backend and data service and AI and a piece of hardware and you know, all this stuff, it's, you know, that tends to take more money and more time and more people than if you're, you know, we have some companies that are two people, they've been two people for nine months, uh, and they're, you know, doing a million dollars in revenue a year. Um, you know, that's a, that's, yeah, it's just, that's a great business in a bunch of ways there, you know, they hope to grow it, but, uh, and they'll need to hire people to do that, but they still have that framework, which is, which is really great. So you're trying to get them though on that first check to the engineering prototype at least. We, we try really hard to get them there and it's not always possible. Um, but that, that there is a huge, uh, mind shift when you have a single product, uh, you know, single model or prototype that an investor can see that both functions and looks good. Uh, that is, there's this step function value change in the company because people can kind of interact with that product. And again, that's not just a prototype. That's not just a physical part. It's also the website or whatever skeleton they, they used to interact with it or the data or the consumable or whatever. Um, and you know, to be honest, this is probably only happens in, I don't know, 60, 70% of the cases. Uh, but that's our big goal is to get companies to that point. And then that is a sort of key enabler for them to go talk to other investors to raise money, uh, typically at a, uh, at a, at a better price. Uh, so they have less dilution because they have, uh, you know, sign that this is a product that people respond to almost always that EP, uh, or, or sometimes the sort of next step, uh, the EBT, uh, comes with some sort of beta testing, um, consumer B2B feedback. Uh, and so it's not just a prototype, right? Exactly. Yeah. You're not making one. You're making at least 10. Yeah, exactly. Yeah. You're never making just one or two units. You're, you're trying to get a handle on, um, okay, I built this thing and I had made all these assumptions, uh, during the development process. Are these assumptions true? Uh, and you do that by, you know, uh, as an example, like Juicero, the product they shipped, I would describe that as an EP or an EVT. Um, it is a, it is a very early stage product, uh, which should not have been sold by the hundreds or thousands, uh, to end users. It should have been, you know, by the 10 or 20s to friends of the company and other people that know it's a beta to see if the pricing makes sense, to see if the product makes sense and people can pay for it, et cetera. Um, and, uh, and so we try really hard to get our companies to kind of get to that place, uh, prior to, you know, building tools and hiring Foxconn and spending millions of dollars and having 50 people on the staff, et cetera. It's not always possible with certain products and certain markets, but that's our big goal.

Chris Gammell: Okay. Yeah, no, that's good. I mean, like it, it sounds like bold at least has a very realistic grasp on the world. It's not just like, if we just throw more resources at it, it'll just work, you know, or it's like, it's all about heart, you know, like that, that usually gets me kind of down when I start hearing that stuff. Totally. And, uh, yeah. And I think there,

Ben Einstein: there are definitely companies and VCs that have that sort of attitude. Um, we're like super against companies raising too much money. I actually think it's, uh, worse to raise too much money than not enough money. Uh, which sounds super counterintuitive.

Chris Gammell: Monica told them that and it was the good advice. Yeah, totally. I mean, Silicon Valley is one of

Ben Einstein: these amazing shows that like manages to both be a farce and also have like a pretty serious line of truth in it. Uh, which I think is why it's so painful to watch for VCs and other folks in the startup community, um, because you kind of resonate like, yeah, it's a farce and it takes it too far, but it, you, you, it comes from truth. They're amplifying at least some nugget, right? Totally. And, and that's why it hurts. Cause you, you read, you know, whatever big head sitting on the roof, you know, getting paid more money than most people in most countries. Exactly. And, and this is true. There are people like that, you know, so it's, I think it's very, you know, Mike judge and the writing team is super skillful, are super skillful at, at sort of, uh, taking the first to just the right level, um, to make it ridiculous, but also still feel true. Um, and, and yeah, and so we, we, you know, really cautioned against the like giant, you know, a hundred million dollar financings prior to shipping anything. Yeah. I think that's incredibly dangerous, um, which is not common. Many of my VC friends would disagree with me, have disagreed with me and have gotten in fights about it. Um, and it's hard to fight against when you are talking to a founder and they're like, listen, I can raise twice as much money for the same dilution. Oh, that is a hard conversation to have with someone.

Chris Gammell: Could you, well, I guess people can look up dilution, I was going to say, but you're just saying that it sounds, it sounds like a better deal to them, right? Exactly. Oh, just run a little bit faster, but it's like, whoa, whoa, whoa, buddy. Uh, yeah. It's like, yeah. It's like if,

Ben Einstein: if like I could buy, uh, you know, a really good, you know, $40,000 BMW, or there's this one dealer I can go to and they're going to give me an $80,000 Tesla for $40,000, like I'm going to take the Tesla every time. Right. But the Tesla has no seatbelts. Yeah. It might kill you. Yeah, totally. Right. So, or whatever the analogy is here, I don't know how far that analogy will run, but, um, you know, the, the idea is the same and you, you wind up getting, uh, just a quote unquote better deal. As he said, the lithium batteries inside there. Uh,

Chris Gammell: we didn't, we didn't test those. Uh, you'll be fine. You'll be fine. You know, I actually had a lithium battery blow up behind me the other day. Holy crap. They're big fires. Yeah. Scary as shit. I ran and I had adrenaline pumping for like two hours. It was scary as hell.

Ben Einstein: I've only seen it once in person. I've seen a bunch of videos, but I've only seen it once in person. And I, it was one of the few times I was really scared. Um, when you see like the jet, cause you know, the pressure is so immense that you see these jets come out. Um, and especially cause at least the one I saw was a puncture, uh, which is, I think how most people, um, get in trouble with lithium batteries is they put a drill bit through it or some piece of metal or something. And they get a little, you know, small hole, um, and chain reactions are really fucking dangerous. Uh, so

Chris Gammell: please be careful. Yeah. Yeah. Well, and I'm sure that, I mean, like, that's another thing that, uh, your engineers probably, you know, like, again, like this, this was a, a one-off thing that I saw, but like, you know, there's companies that are like, oh yeah. So we're going to go and just ship a product with, you know, lots of lithium ion batteries, but you know, at least you have engineers are like, do you all testing, you know, make sure you do trial testing. Like we had a, we had Steve on here a couple of weeks ago talking about like, you know, understanding the actual constraints of batteries and that kind of thing. So yeah, totally. Yeah. I mean, the, the, what,

Ben Einstein: that's the way we talk to our sort of, you know, value proposition, if you think about that way to companies is yes, you can go out and hire a, you know, a full-time engineer and in the Bay area, pay them, you know, $150,000 a year or whatever. Um, and they might've worked on one or two products and that's great. And sometimes they haven't, they're, they're new, uh, and that's okay too. Um, but, uh, when you, when you sort of arm your team with a bunch of folks that have shipped, you know, in many cases, millions of units of products for well-known companies and have been through this process sometimes 20, 30, 40 times, um, even with a junior engineer, it gives them this incredible leverage to not make some of these decisions that sometimes first time engineers will make. Uh, and we're all victims of that. I used to be that guy too. Um, and, and so it's, it's really this, uh, this, this sort of safety net, um, for the companies to kind of help them run through a little bit more rigorous of a process and think a little bit less about the perfect component and the amazing layout on the board and a little bit more about, um, you know, is this battery life makes sense for the end user or does, you know, your cost structure going to, you know, line up with the way this product needs to be sold or, um, have you done appropriate testing? Do you, you know, are you dealing with a, you know, a pre-certified module so you don't have to spend a bunch of money on, on, you know, CDMA certifications and PCBRB and all that stuff. Right. Um, and, and little things like that, it sounds silly, but those,

Chris Gammell: really add up. There's a bunch of them. I think the frustrating thing for me is that like, it's when, when there's a lot of these investment models that are, were created for software and we're very successful for software as well. And then it's like, uh, and then it gets, it's like, okay, now we're gonna do the same thing for hardware. Right. And it's, you know, that's not, not saying it's with you, but like just companies in general, it's like, now let's apply that same thing. And then the same criteria, like you talked about before of like looking for a certain type of founder and like that, that idea of a VC being like, well, we want someone who's brash and new and has done these things. And it feels like in software that works because frameworks change all the time. Right. And it's possible to, to get someone who's a young upstart and trying something new and doing something with the technology that everyone's new at. And that's great. But with hardware, it's like, damn, man, this stuff's been out there. Like it's, you know, like there are, there are new processes, but the old stuff matters just as much in hardware. It's like, you're, we're dragging all this baggage with us in the hardware world. Yeah. And to say that like, it's just a, a young upstart with just can do it attitude is going to get you through. It's like, Oh man, that's going to go poorly. Yeah. I mean, good luck. I'm sure we're working in certain cases and then that'll be used as the example. But like, I think more often than not, it will not be used. I feel like this is my old crotchety man statement here, but totally.

Ben Einstein: I'm a hundred percent with you. Yeah. I mean, I, I, the way I, I, I definitely say it a little bit differently, but I, but I think there's a, there's a lot of overlap in the, in our two philosophies. Um, I, I think the, um, the way I always talk about it is there actually has been a ton of change in the sort of quote unquote hardware ecosystem. And, you know, when I first started doing this, like if you wanted a Bluetooth radio, you were going to like CSR and you were like writing, you know, glue code to like connects, you know, all the radios pieces were different

Chris Gammell: chips as well. You're putting together. You had five,

Ben Einstein: different pieces. Yeah, exactly. And, and there was so much heavy lifting that you had to do in order to like get a product, just like to commute, like just send one bite to a phone. Um, and now you go like buy a pre-certified module. It's like preloaded with firmware. It's got a little, you know, M zero processor on there and you're up and running in a day or two. Um, you know, that, that has really changed. Uh, I think what, what, what hasn't changed is all the stuff behind development. Uh, and so sort of after the, the sort of product is, is designed the, the, the slowest pieces to change are the sort of infrastructure, the supply chain management, the tooling, the inventory management, all that stuff. Uh, those are these big, heavy, slow things, which aren't necessarily bad. You just have to know how to operate within those constraints. Um, and, and unfortunately most bright eyed, bushy tail, you know, you know, first year engineers, they, they took their mechanical engineering class on how a injection mold press works and they understand it theoretically, but they've never like bought a tool before. They'd never like gone to China and like negotiated with a line manager with some, you know, step that's being done incorrectly and trying to convince them that they need to do it in a different way. And these little pieces of wisdom are so much more important on that sort of back half of the sort of product curve, uh, then the, I can build the perfect product right away. And it doesn't take much. It takes, you know, talking to a handful of folks that have been around the block and have watched this process happen a few times and have pattern matched. Okay. These kinds of things tend to work well. And these kinds of things tend to, you know, stay away from these, uh, you wind up with, at least in my experience, like pretty good, uh, pretty good process. Yeah. Better shot. Yeah. You're not going to, you know, it's not a, a surefire success, but, um, you're less likely to have something small and tactical trip you up, uh, which unfortunately is how many, you know, Kickstarter and sort of Indiegogo projects get derailed, uh, is not because there's a bad idea. It's because someone trying to steal money or whatever, it's because they, they, uh, they haven't been through it before. And so they didn't know what they didn't know. And that causes a huge problems, whether it's timelines or quality or, you know, bad suppliers or whatever. Um, but if you just, you know, this is how Scott has a business, right? With dragon. Like if you just talk to someone who's been there a couple of times, I'm going to make it perfect. Like, you know, not every company that works with dragon is wildly successful. Um, but they will guaranteed make fewer mistakes than doing it on your own. And so it's a very similar philosophy that we have, like having an engineer sitting with you doing, uh, you know, firmware review, um, or looking at, you know, board layout or, you know, helping you make sure you have as minimal, whatever slides and bizarre features on a plastic part, you know, it's not going to make you successful, but it's going to, it's less likely to make you fail. Yeah. Right. Uh, and I have this, I always use this analogy. I don't know if you're a bowler. I'm not really a bowler, but I've been bowling a couple of times.

Chris Gammell: Obviously you're not a bowler, dude. Obviously. Um, that was a terrible, a terrible impression by me too. Sorry. Yeah. No, it was great. I thought it was good. You understood the reference of these

Ben Einstein: from Big LeBaski. 9 out of 10. Of course. Okay. Great. Great. Um, uh, we are like the, you know, bolt is like the bumpers that you put in, like, when you go to like a kid's birthday party, the bowling alley and you have like the bumpers in the bowling lane. It's the only way I bowl. Um, yeah, it's way more fun that way. Uh, and you can have a few more drinks too and it's still okay. Um, but like, you know, we're not going to help you bowl a perfect strike, but you're not going to get a gutter ball. Um, you know, and I think, I think that's a, that's a really helpful like way to think about, you know, having folks that are wise around you is not going to make you successful, but it's going to help, uh, lessen the chance that you, you know, have a big fat zero at the end of

Chris Gammell: the day. Yep. Yeah. That's great. Well, how can people find out more about you and bolt and

Ben Einstein: everything else? Cool. Uh, yeah, I think we try to be pretty accessible. So I think it's pretty easy. Um, I, I gave my email address in the beginning there. I'll give it again. It's been at bolt.io. People can totally reach out to me and I'll do my best to respond to folks. Um, we also have, uh, an online form that people can use to pitch a product concept. So if you're working on a new business, uh, the best way is actually not to send it to me is to, is to go to bolt.io slash pitch. Uh, and that's where we sort of receive folks that are, you know, coming, coming in cold, uh, that have an interesting idea for a new business and, uh, typically have a slide deck or some other piece of material that they provide to us. And, uh, we get back to every single person within a couple of weeks, uh, and try to be really diligent about providing some feedback that's, that that's useful to them. Um, so, uh, those are probably the two easiest ways. Uh, I have been forced to be on Twitter. So I try to do that. Uh, uh, so I'm at Ben Einstein. Um, I'm still kind of working on how to use it, but I think I'm getting there. Uh, I believe you shout, shout into the void and then, you know, you, yeah, some people respond to works great. Chris is on there too, as I'm sure people know. Um, and, uh, yeah, this is, this is probably the three easiest ways. Okay. I will also pitch your

Chris Gammell: blog for you. I think the, I think the bolt blog is a great, uh, great resource for people, regardless of if you're building a company or a business or whatever, um, or a product even, I think it's just good for learning about how stuff works, how stuff's torn down. I really like, I really, I keep an eye out for it every time. Thanks. Yeah. I mean, I, I'm, uh, writing is hard.

Ben Einstein: Uh, and I am still, uh, it is not my default mode to like sit down and put a bunch of dots to paper, but it's been really empowering to write things and have people, uh, be really supportive about feedback. And it really acts me on to like write more. Um, I think, uh, my, the most fun posts are me are taking apart products cause I do that anyway. So it's just like, you know, adding some commentary and some pictures to like things I'm already taking apart for fun. Um, so those are really easy. Uh, a lot of the like longer, more content oriented posts are very hard to write. Uh, so, um, if there's things that people are interested in hearing more about, I am totally open to ideas of, of, of things that would be relevant towards the greater hardware community. Awesome. Awesome. Well,

Chris Gammell: Ben, thank you for joining us and, uh, and talking about all this stuff. I'm sure there, there's a lot more to learn from, you know, like hardware, as you said, hopefully is, is continues being a viable, you know, investment opportunity for a lot of people. And, uh, we have some people in our audience, hopefully who are making companies out of it. I hope so. Uh,

Ben Einstein: and we try to help as many folks as we can, even if it's not a sort of a close business relationship, I try to still provide advice and support for folks that are trying to build anything physical. Um, cause there's not enough people that have done it before helping those have not who have not. And I think that's a really important part of, uh, building a better engineering world.

Chris Gammell: Nice. All right. Well, thanks for being on the show. We'll talk to you soon.

Ben Einstein: Thanks, Chris. Always fun to talk with you.

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