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ShopLocket talks to Stephen Lake, co-founder of Thalmic Makers of Myo

The MYO armband, by Thalmic Labs, lets you use the electrical activity in your muscles to wirelessly control your computer, phone, and other favorite digital technologies. Today, Thalmic announced a $14.5 million round of funding. The product was announced this February and in just the first month the company collected over $3.7 million in pre-orders. We sat down with Thalmic Labs Co-Founder and CEO Stephen Lake to find out the secrets behind their successful launch and to learn what’s next for the team.

Tell us a bit about yourself and Thalmic.

Thalmic was founded by myself and two friends from the University of Waterloo, Matthew Bailey and Aaron Grant. We were classmates for the last 5 years. We spent a lot of time working in the area of wearable technology while in school and realized there was no good solution for the inputs to the next generation of computers and wearable devices. The gold standard now is voice but we just feel that it’s not a viable solution in public. You know, walking around talking to yourself on the subway, you become that crazy guy. We were trying to come up with a better way to interact with the digital world and that’s where the MYO came from.

The MYO is a new connection between the real world and the digital world using muscle activity to detect the movements of your hands and fingers, transferring those inputs into a computing device or system.

Have you always been building things? What else have you built?

The three of us all have a background of building things. Myself, I previously worked in doing research in surgical robotics and at the Space Agency building lunar rovers. When I was a kid it went from LEGO in the early days, to building go-carts in my parent’s garage or robots from old electronics. It kept evolving until university when I started getting involved in the more high tech stuff. MYO is just the latest iteration of years and years of building cool stuff.

I read online that you used to run a company selling things on eBay and then started running a DJ service. Where does that experience fit into surgical robotics, lunar rovers and everything that has happened since?

Ha, I don’t know how you dug that up. It fits in about 10 years before any of this. I started a company when I was about 13 years old that was selling LED lighting systems for remote controlled cars and vehicles. I was importing parts from Asia, mostly China and Japan, to Canada, assembling them in my parent’s basement and then shipping them worldwide to customers in every continent through an ecommerce site and through eBay as well. That was my first sort of online business and again I was about 13 or 14 years old at the time.

The DJ business came a bit after that. I was doing some DJ’ing on the side, on my own, during high school for a larger company. And then at some point I decided to go out on my own and buy the equipment myself and opened up a little company in Toronto that did DJ entertainment and lighting for corporate events, high schools and weddings.

We always hear a lot about people starting software companies. What made you decide to start a hardware company instead?

Pure software often has few barriers to entry, so there is a lot of competition. The problem we are trying to solve is not a software problem. Trying to connect the real and digital worlds, you need a hardware interface for people to interact with. MYO combines hardware sensors with complex software algorithms that make sense of the information from the sensors.

The three of us had always known we were going to do something, and that it would probably be hardware. We’re all of a Mechatronics background so we have a unique range of skill sets. It covers software, systems design, electrical engineering, and mechanical engineering. I think that ultimately it’s when you combine hardware and software that the real magic is created.

Software itself is such a low barrier to entry. Anyone in a coffee shop can be writing a web app in a couple days, in a weekend. When you start talking about the really game changing technologies I think that most of them combine the two in really interesting ways. You look at what Apple has done; amazing hardware, amazing software, woven very tightly together. I think that’s been one of their secrets to success.

“You look at what Apple has done; amazing hardware, amazing software, woven very tightly together. I think that’s been one of their secrets to success.”

You launched pre-orders only about 6 weeks ago. How much planning went into the launch?

We spent about two months getting the video right beforehand. The video was a big part of the launch. We had seeded some big publications and some reporters that we liked to cover the initial launch of the video and the pre-sale so that was really successful. But it completely snowballed from there.

We couldn’t have predicted how much amazing PR and word of mouth traction it’s gotten. Even today, I see friends of friends on my Facebook newsfeed sharing it for the first time; “Check out the MYO”, “Check out the video”.

Initially when we launched it, we thought we’d target the early adopters and software developers in the Valley or in the tech world. But that’s not what happened. We’ve actually had less than half of our orders from the US and Canada and the rest have come from all over the world. 132 countries in total have pre-ordered the MYO.

How did you handle international shipping rates for the pre-orders?

We did flat rate for everyone. On the pre-orders the goal wasn’t to maximize margins or profits. It was more just to get them in the hands of people. If we end up eating a bit on cost shipping it to those people, we’re more than happy to do that right now just to make sure that everyone gets their MYO as fast as possible and starts playing with them and iterating on them and building software for them.

At the last minute before the launch, you had the idea to let people tweet the number they were in line to receive the product after they purchased (I believe I was #126). How did it play out?

I think that was huge. We were trying to think about how we could create some sort of social interest or sharability about the fact that you’ve just pre-ordered a MYO and you’re excited about. We’d seen campaigns, Mailbox for example, where you could see where you are in line and we definitely drew inspiration from those. We built out a tweet button after purchase where you could share “I’m number X in line for MYO”. For the first week #getmyo was a trending topic on Twitter and it was awesome to see people share what number they were in line. We had people email us to say: “I’m number 762, I’m so excited. Will you engrave my serial number on my MYO?”

Now that you’ve launched and taken pre-orders what are the main challenges you face before you ship?

We have lots of fun challenges. The demand has been so high that we have to move right into really large-scale mass production on the device. There are lots of engineering challenges and time involved in that. We’re working now with some really good partners for manufacturing the devices off shore and are setting up our supply chain and distribution to handle that volume. Most of the next 6-8 months of our work is focused on that along with getting all the software perfect and making sure the user experience is mind-blowingly awesome out of the box.

Are you working with any key third party partners to handle your fulfillment or other aspects of your process?

We’re a relatively large organization now so we’re able to hire very talented people from the consumer electronics industry and do a lot of that internally. Down the road there will probably be some third-party logistics services helping with some of the low level stuff like moving goods and shipping packages and all that kind of stuff.

We’ve also hired internally for customer support and community management. We’re working really hard to build out our website to handle all of that in a more automated way. Even things you don’t think about initially, like changing people’s orders or the colors on an order or updating your address, that’s all infrastructure that we’ve had to build.

Something you don’t initially think of when you’re launching a pre-sale is all the back-end stuff like how do you handle payments or how do you handle payments that are declined and emailing people the notifications? Just the nuts and bolts of the process. For example, what’s the flow when you get an email from a customer with a question or a change in their order? How do you build a process to ensure that they are all responded to in a timely manner and make sure that we have consistent service across hundreds of emails a day? Those are now things that we’re working on building.

You decided to build your ecommerce solution from scratch rather than doing Kickstarter or using Selfstarter (an open source crowdfunding project by Lockitron). What were your reasons?

Neither of those handle all the stuff I mentioned. They are parts of the solution, they handle payments for example. We had already built our corporate site before the launch and we wanted to make sure that as we moved forward from the initial pre-order to having these customers as long term customers that they would be able to login and access all of their device information, updates, and profiles and make sure that it was a consistent experience. We wanted to build our own website that would allow us to expand as we moved forward. We wanted to have all the data and be able to control it very tightly ourselves.

We used Stripe for payments on the backend. Stripe was incredibly easy to work with. Literally in a weekend we were able to code up that part of the checkout process but now all of the additional layers on that, things that are not covered by Kickstarter, like how do you manage those pre-orders or what comes after we have to set that all up now. We’re using tools like Zendesk.

Is there anything that you would have done differently around the launch?

I would have hired more customer support people. Probably would have had more information available on the website, FAQs and things like that to help minimize inbound. There are a lot of very similar questions that are things that you could very easily answer in a FAQ — one-sentence answers — but it takes resources to respond to every single one of those. We also would have had better contact information on the website. We launched the site pretty quickly to make that release/start date for the campaign and hadn’t really fully fleshed out everything. We didn’t have things like the nice contact us forms, and all that kind of stuff. So the nuts and bolts could have been a bit smoother.

Are you re-building a lot of that now?

Yes. We launched a new site this week, actually. There was a preview of that on Facebook and a launch email that went out. We’ve integrated the corporate site and the product site together so that it’s a lot more cohesive and down the road there will be the developer community and forums. Documentation and all that kind of stuff will be integrated into one central site as well.

“…solve a big problem that you’re really passionate about…”

During the process of launching you and your co-founders spent a lot of time going back and forth between Y Combinator in Mountain View and Waterloo. How was that experience?

It was definitely challenging, being in two places at once. Being split between the Valley and here in Waterloo where the engineering team is based, it’s a lot harder to move quickly. You’re communicating over emails and Skype calls. When you’re in the same place a lot of time you can just huddle up with your team and make a quick decision on the fly and it’s a lot faster.

We’re lucky to have a really deep team and everyone is pretty self-sufficient and on track for what they have to do so it wasn’t too big of a hindrance in that sense. We also have the three co-founders that are involved across the engineering team and we’ve sort of cycled back to the Valley as it made sense. We handled it by not having all of us in the Valley for most of the time. Usually either one or two of us, Matthew, Aaron or myself would be in the Valley and we’d cycle back every couple weeks. So it wasn’t too bad. We would definitely do it again. There is a very important network in the tech world based in the Valley and I think you have to actually be there to connect properly to that network.

You’ve been part of a lot of “mentorship” programs over the years. Things like Next36, the Velocity Garage, and then Y Combinator. What made you take them, and what impact do you think they’ve had on you?

I was part of each one for different reasons. Y Combinator the reason was that we already had pretty strong networks in Canada but ultimately a huge part of our business is in the US and the Valley is a very important connection point. Y Combinator was a good way to build that and also let us draw off the experiences of the partners there which was phenomenal.

Next36, this was prior to Thalmic a couple years ago, was more for personal development. There are some really smart people running the program and it’s almost a miniature MBA. Coming from an engineering background it was a good experience to have. It was a huge amount of learning in an incredibly short amount of time. It was 8 months, 4 months full time in the summer. It was probably the most intense 4-8 months that I could have set up.

All of these and other learning experiences, you can build on all of them. When you’re tackling a challenge you can draw from bits and pieces of each of them. I think it’s important to be able to draw from as broad a set of experiences as possible and it really helps in being resourceful and solving problems. You get these experiences, often conflicting ones, and you see how different organizations are run and how different team dynamics work and you can draw from many different examples of that. Both good and bad.

I’ve often heard that hardware companies have more trouble raising venture capital than software companies. It seems you guys have been getting a lot of attention from VCs, why do you think that is?

We have an awesome technology, that’s number one. Our team is amazing and we have a really deep technical background. There is the founding team itself and we all have really broad experiences, but beyond that every layer down is just really awesome people. There was obviously a lot of traction on the pre-sale, so that helps. And I think the fact that we are solving a problem that has really massive opportunity and can change the entire form factor of computing across so many different disciplines is really exciting and we’ve been lucky in that sense.

There are tonnes of other legitimate and huge business opportunities in less sexy industries on the hardware side but I’ve definitely heard the same thing that it can be a challenge raising money. The capital requirements are higher, the time to market is a lot longer, it’s a lot slower cycles to react and change products, way higher risk on the technical side and on the market side as well because you can’t react as quickly. Those are all valid reasons why it’s harder. But at the same time a lot of those risks are reduced now because it’s so much cheaper to do hardware than even five years ago. You can prototype and set up manufacturing relatively easily, nowhere as easily as writing code for a web app but it’s getting easier.

I think that we’ve seen so much focus on software, mobile and web, in the last ten to fifteen years and the really interesting opportunities there have been explored by so many companies that there are a lot less really innovative, huge game changing things available to investors. There is now starting to be a lot more interest in real technologies, or hard technologies. I don’t think it’s as hard now as it would have been three to five years ago to raise money as a hardware company. And the fact that there are successful examples like Pebble, Nest, Jawbone and a couple others out there building hardware/software products and doing really well right now really helps the investment market as well.

Which living person do you most admire?

Elon Musk

What is your favorite book?

Code Name Ginger – Steve Kemper’s book about Dean Kamen

What's your current state of mind

I’m excited for the future of Thalmic. Lots of challenges and learning opportunities ahead.

When and where were you happiest?

Biking through the Alps in Switzerland in beautiful sunshine in 2011.

What is your idea of misery?

Not being challenged.

What is your greatest fear?

The monsters under the bed.

What’s your favourite quote?

Edison – "I have not failed 700 times. I have not failed once. I have succeeded in proving that those 700 ways will not work. When I have eliminated the ways that will not work, I will find the way that will work."

Which talent would you most like to have?

Being an captivating orator

Which words or phrases do you most overuse?

“pretty” as in “pretty cool”

What’s the best advice you’ve ever been given?

I think that the best advice would be to get lots of advice from different people. I think that there are lots of really smart people, and everyone has a different perspective. We have mentors that we work with, advisors that we look up to and often they’re both equally successful and equally smart and they’ll have totally conflicting advice or points of view. I think that having a broad network of people that are two steps ahead of you in the process that you can rely upon and knowing how to balance the perspectives and make a decision is really important.

Other than that, solve a big problem that you’re really passionate about is something that I would give as advice to other young entrepreneurs like myself. I’ve seen other people on the startup scene solving something because it’s the hot thing right now or because they think they can flip a company and make some money off it. But the most successful companies are all people that are super passionate about what they are doing, they have some competitive advantage or knowledge there and they just execute like mad on that vision.

What question would you pose to our next interviewee?

What do you know that everyone else doesn't?

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