speaker-0 (00:05.646)
Welcome to the Hard Tech Podcast.

speaker-1 (00:09.23)
And everybody, welcome back to the Hard Tech podcast. I'm your host DeAndre Hericus with my usual suspect Grant Chapman. And we had a little bit of technical difficulties before we kicked on because Hard Tech is hard. And that's kind of what we're talking about today, of course. We have Sam Holland from Informal joining us today. He's the co-founder and CTO, is also a notorious donut concealer distributor, something like that. So I'm excited to share a little bit about that. Sam, welcome to the show.

speaker-0 (00:14.862)
How's it going everyone? Thanks for joining.

speaker-1 (00:43.598)
That's right, dispenser, I say it correctly.

Yeah, to kick it off, Sam, I would love to get a background on Informal. I think this is going to be a really poignant conversation around just product development in general. Obviously, Glassboard being a firm similar to yours, you guys have a little bit of a different model. But whenever you and Grant were originally chatting, we talking about doing the podcast, I feel like there's so much value that both you and Grant can share about just that journey for founders as they're going out to build their first products. But yeah, to start off, I'd love a little bit of an intro.

speaker-0 (02:47.406)
No, and it's it's hilarious that you just described like my journey of starting glassboard like the first thing you do is like I'm an engineer I'm good at all these things like design and prototyping and testing and then you realize that 85 % of your day is biz dev and payroll and accounting and legalese and contract negotiations and all the things that I now do full-time and do zero engineering right like any successful

Yep, exactly. one of those things like you become the monster. You started as like a design consultancy to avoid, which is you do business instead of do engineering, right? So it's fun to hear that you've enabled people to just stay in the lane, right?

speaker-1 (03:49.102)
And I guess just to color it in a little bit, because Informal and Glass Board are sort of similar, but sort of not. Maybe, Grant, you can pick the differences in the firms. I do think that in some cases, it makes all the sense in the world to go with Informal. In some cases, it makes all the sense in the world to go with Glass Board. Just making that drawing sure.

speaker-0 (04:04.908)
Yeah, well, I think that the fun part is you enable the unicorns to do what they do best independently and I've built a farm where unicorns want to go live full-time Which involves relocating and you're working in an office nine to five which isn't for some designers or engineers and what you allow people to do is keep that solarpreneur mindset

but offload all the overhead, right? And I think that's the main delta from the engineer's perspective. I think half the people that listen to podcasts are probably the nerds in the engineering seat, not the people that are looking to hire one of us. But I think for people looking to hire one of us, it's really, if you need a particular expertise, Informal might have that particular expertise stronger than like a glass board could, because I only have 20 people and the likelihood that I have one particular expertise you may need that is really niche, it's lower than Informal likely having that person on the bench somewhere. Whereas we...

have a team that lives in a building and room together and that deep collaboration like medical device and safety critical stuff that's where that kind of gets important I think that's the depth the Delta there like where you start stratifying from one model to the other Sam is that about right

speaker-0 (06:03.596)
Yep, it's a third of our business. It's one of those things that like we used to be really afraid of it until we got forced into it by a couple of clients that pushed us really close to the edge as like a wellness device with dreams of becoming medical. And once we realized like, this is just this is just paperwork that sucks, but we can understand this. We've hired the right regulatory consultants. And then like, all right, now we're in. And that was six years ago. And now we're like, cool. None of this scares us. Yes, the paperwork still sucks. But it is a thing that we're comfortable doing. And like it's more eating your veggies than dessert. But

the veggies make you healthy and make it like a good med device at the end of the day.

speaker-0 (06:45.902)
Are you sure this is medical or wellness like you really need to pick?

speaker-0 (07:16.622)
Yeah, no is Well and the lines are so fuzzy and it's all about justification Can you justify that you fit within their lines? Right because it's self-select most of the time until you get your hand slapped and then you've your hand cut in the cookie jar But most of the time it's self-select and keep within the lanes and you're good to go

speaker-1 (07:34.094)
I'm curious on your side. like you mentioned, you're working with sometimes larger companies and also a lot of earlier stage founders, companies, startups, and just helping them manage that gap between idea and execution. There's always that valley of death that exists in the world of hardware. I'm curious on the top mistakes that you tend to see or maybe pitfalls. And also on the flip side of that coin, things that founders do right that actually get them across that finish line to get the product into the world.

speaker-0 (08:25.688)
Hobby, hobby tools.

speaker-0 (08:53.345)
One of them too.

speaker-0 (08:57.944)
That's terrible But to piggyback on that I love the clients that are like what you said they've got it as a hobby stage They're bring it to you or us and we can sink our teeth in because we know what their vision is They've laid enough the groundwork that we can build the the stable version of whatever they're building and then they become the world's best test engineer Because they understand what they want that's actually where like the client superpower comes in that they are the ultimate user Engineer like beta tester because they know all sides and they're just technical enough to be dangerous to poke at it wrong

to find things that your team would have never poked at wrong.

for you.

speaker-0 (09:36.942)
No, that's awesome. And I think that you know I completely resonate with your you know having that client that's technical enough to help drive a team Right to tell you what they want, but doesn't try and I'll call it riding the car alongside the Working alongside a client is always a challenge both from a like Accuracy speed and like vision I think that gets so challenging because they're usually good at one, not all of those things

speaker-1 (10:42.67)
I suppose to of like dial it in a little bit. you guys mentioned like there's two kinds of clients, right? We've got the clients that, you know, take a step back and they're the technical founder, they're the best user tester. And then you also have like the clients that are like wanting to be basically side by side, but also hiring the outsource consultant. How do you, how could you describe how to be most successful with the firm like informal? And then maybe Grant, you could do something similar like, because I think that might be, you know, we always talk about good or bad clients. That's fine. But I don't know how much we talk about

how to be a good client and there's a kind of best practices and to get the most out of the partner that you're working with.

speaker-1 (11:31.116)
You

speaker-0 (11:32.376)
FixedBit It.

speaker-1 (12:03.822)
Yeah, no, I actually think it's pretty fair because I do think that my background, so Sam, I don't know if we talked to when we first jumped on. I ran a software company for four years and use an outsourced software development firm to make my product. And yeah, it's a little bit. You're still contracting out work. I think it from you know, you're doing a demo in your home. It makes sense to kind of like get a scope and like what is my new outdoor patio going to look like? But not the same when it comes to building the actual product. It's a little bit different. Grant, what did you say there?

speaker-0 (12:32.45)
Well, think piggyback, you've never written a line of code. You've literally started, launched, raised, and then sold a software company. never written a line of code. That's right. So you are an ICP. You're an ideal client persona. But I bet you one of the first partners you used wouldn't describe you as an ideal client. You became one later.

speaker-1 (12:49.218)
That's right. I was a very terrible client. was the one that wanted to write. I thought I could write code. No, the answer was no.

speaker-0 (12:55.404)
Yeah, and it was one of those experiences that like it's always better for second-time founders or people that have built a product at a corporation before because they know the pitfalls They don't know how to fix them They just know how to that they should avoid them and some expert can tell them where the stove is hot and not to touch it And think Sam to double-click on your you know analogy. I want one of two People I either want someone who tells me they're so naive. They know nothing. Hey, I know nothing. I have a problem I'd like to solve your experts. I will tell you my budget

and my user needs, what I needed to do at the end of the day, and you got to take care of all the messy middle. Or I want a client that is like, know exactly what I want and I want you guys to lay it out for me and that's more engineering service, which isn't our favorite work, but it pays well. And we'll happily work alongside those clients because they actually understand when things get hard, how bad it is. So my least favorite clients are in the middle of that, that you, right, of being an expert and complete novice is what is it called? The Dunning-Kruger syndrome, right?

where you know just enough that you think you're an expert and really you're at beginning of your journey, those are the worst. Why is this so hard? Couldn't you do this in an afternoon? Like four months of work.

speaker-0 (14:23.362)
Yeah.

speaker-0 (14:58.35)
No, and it's got to feel magical because we've got a couple of startup clients that we've worked with over the years that I've actually done like hiring for them, where I will be the person that does the recruiting and like plants employees at their shop that I now work alongside, like my team works alongside their team. And those are the magic moments that just feel incredible that not only do you help them build a product, but you've subsequently as a partner helped them hire and build a company, which you are effectively doing. You're helping them hire individual contractors that they treat as de facto employees.

speaker-1 (15:30.146)
Honestly another question I've got for you Sam as well and grant to like in the world of Hardware to product development you have like we're talking about the good clients and bad clients and how they can be better Let's turn that around a little bit So what are the things that that these startup founders or product leaders that SMBs or enterprise level companies? Need to be looking for in the product development firm. They're gonna choose right I think I think and I would love to get you guys thoughts on that and like what are the red flags you can see? There are horror stories and the only issue

with hardware is that if it goes wrong it can go

speaker-0 (16:02.08)
It goes really wrong.

speaker-0 (17:09.294)
I agree and double clicking into that my favorite one is I tell people is that firm going to fix bid it for you? Because if they're truly going to fix bid it you probably should run like if they if they tell you hey We think we can reach this earlier milestone for X and we think the project cost why but after X we've got to go revisit and see where at or their TNM or the retainer base like us like then it's a real conversation But if any firm tells you it's fixed bid they either have built exactly that and you're gonna get someone else's product with your name on it Which is fine. That's what you want

Or 80 % of the time they're just lying to you and they're waiting for you to make one change order and now the cats out of the bag Now it's a TNM project plus

speaker-0 (18:03.591)
If you want to take what they gave you somewhere else. Yeah

speaker-0 (18:46.126)
Well, and it's you know, the triangle of fun is good fast cheap we always say in glassboard and If you fix bid it the vendor is now in control of all three of those legs, right? They might have to cut features or make them cheap right like like not do good quality work on those features to make it in budget and timeline They promise you or vice versa rather than when you work with a firm and you're buying effort in hours The founders in the driver's seat of man. This is really important to get perfect or you know what?

That feature is good enough. Let's ship it as is, even if it breaks 10 % of the time, it's a user need that no one's gonna get hurt by.

speaker-0 (19:44.04)
Right, yeah, that both parties are equally happy or unhappy depending on how the project went.

speaker-0 (20:04.166)
can we talk about one more thing? Do you ever get pressure to try and take equity for work or get there? your informal members get pressure to take equity for work?

speaker-0 (21:32.888)
Well, and ironically, the client views it the other way, that because it's equity, you should be along for the long run. And even if you've done the work product that you quoted that you exchanged that equity for, they're like, well, now you're part of the team. Like, you have to help me finish this. And finish means make the company profitable, not just get it to manufacturing, whatever the next step is. And it is misaligned incentives.

you just actually acquire that engineer's co-founder. Then it's their company and they own enough equity and control of the upside that it makes sense. And I keep trying to explain this to clients that want to exchange equity for work. And Sam, we're mirroring your inputs. Like Glassboard does not take equity for work. We are a cash-based, for-profit, engineering rental farm, right? And that's what we do best. However, the leadership at Glassboard, we're all angel investors. We're in a local VC network. If you go pitch our angel network and like...

We want in we'll write you a check and you can just endorse the back of that check straight back to us and we'll go put it toward your retainer But it's on the same terms as other VCs because I think so many startups wreck their cap table by exchanging equity for services and They're never captured in like a VC raise or convertible note or a safe or some standard form and evaluations are off And someone leaves that unhappy and it's usually both parties

speaker-1 (22:41.582)
I will say that I do think I agree with both of you guys so I the software development from that I worked with the CEO and a couple of the partners invested in my company and they did it individually not as the main company exactly and it can be a Strategic move for the the firm to invest in that company. Let's say let's in this example. Let's say I was raising 500,000 and that group

partners within that firm put in 100K at the current valuation. Well, if you help me close my round and I have 250,000, 300,000 slotted for development, you've kind of just helped us. You kind of hedged your bet a bit, assuming I raise the rest of the capital, towards closing that round and ultimately turning back around and spinning that with the firm. And so there's a couple areas where I think it does. It can make sense. It's always a risky bet because obviously the founder needs to close the capital. And maybe it's a little bit of murky business to kind of get into that. But you are just kind of gambler.

a bit at that point. I would see this the only area where I think it might make sense.

speaker-0 (23:43.342)
You just described exactly how it should work, right? The founders actually want to go make a venture bet that the service firm doesn't go have to make, right? I think that's the clear delineation like I'm sure Sam could go angel around and feel really good about angeling in a client like I have no problem angeling in a client like yes My team probably shouldn't listen to me push them harder for that client because I have a vested interest, but it's healthy It's it's a completely young at arm's length Side so I think that's that's super fun. So outside of good clients and bad clients Sam one of the questions I want to ask is

The one superpower you must have is tech stack. Your tech stack must be every CAD package ever you have a consultant for, every simulation package ever you probably have a consultant in the wings for. That's something I'm jealous of because we carry probably five CAD licenses to different softwares alongside the core one that we use as a firm to interface with your client work. That must be such a superpower for you when you're talking to potential partners that need help that you can work in their native file format with someone on your team.

speaker-0 (25:05.346)
Yeah, we're in on shape and it's incredible.

speaker-0 (25:43.5)
or client you need to provide a seat. Because we actually, we've done that a lot. We've had larger enterprise clients that just give us a VPN access to their network license suite and we'll check out their license to work on their CAD.

speaker-0 (26:31.566)
Well, and I'm jealous that you make money on both sides of that. As a founder, I recommend a lot of consultants to my clients that aren't on my team, and I don't take any cuts or any of that. You likely have a person on your team that you're least, your core business model gets a cut of the pie of, of an expert in X field, which is really neat.

speaker-0 (27:30.37)
That's hilarious.

speaker-0 (27:46.488)
nice.

speaker-0 (28:02.574)
Yeah, you need maximum peak point tracking you need an IC that can vary current and voltage because panels want what they want and they won't listen to you and then you pump that into a battery with a little charge pump and you're good to go hilarious no, it's a great example

speaker-0 (28:22.796)
No, that's awesome. And again, I think the other thing that must be super rewarding for what you get to touch is my team only gets to touch our whole projects in a given year. I think we probably touch 50 individual people and then we will then touch maybe 10 core projects. And I think the challenge we'll have is that we only see probably two of those to market any given year. You probably see dozens of products to market every year because you have 500 people that are touching.

X piece or Y piece or Z piece which is so neat.

speaker-0 (29:27.164)
We're the same.

speaker-0 (29:32.878)
And you want a design firm to go beat up that manufacturer during QC and first article inspections not be in their pocket just trying to get it to manufacturing

speaker-0 (30:01.634)
Yeah, this is not the definition of clean.

speaker-0 (30:11.372)
And going back to our prior statement, you want someone paid for their effort because that aligns incentives correctly. Right? Like they are just there to do their job to the best of their ability in that given hour. And that makes sure they're there to do it for the long haul for the right reasons with that client in mind. Because our reputation as consultants, yours, mine, all of your people on your team, our reputation is how we sell. We aren't there to burn bridges and just to, know, what is the old adage? If there's not money to be made in doing it right, there's money to be made prolonging the solution.

as a consultant like that does exist but only with you know not above board consultants and people like you and I will tell our clients upfront what takes a long time where things are slipping and why and how do we as a team collectively want to figure it out because I want you to get to market because I want you to want me to put that on the website so I can advertise that we did that.

speaker-1 (31:17.573)
absolutely.

speaker-0 (31:22.094)
Can you simulate this one little thing where our industrial designer has a question about and then you end up having to re-engineer the thing?

speaker-0 (31:29.934)
It's it's.

speaker-1 (31:46.818)
You guys are problem solvers. I didn't inform That's what you guys really do. You've collected this huge group of people that can solve a problem. And if you have one, then you guys are the ones to go to for it. Sam, we got started a little bit late. But I have to ask you the last question I always ask is, what would be the advice that you would give someone setting out to build a net new product in the world? They're looking at different firms. They're thinking about getting their idea together. What's just the advice you have for hardware founders?

speaker-1 (32:56.6)
That's it's totally right. Honestly, that's the same ethos.

speaker-0 (32:59.15)
It's how we operate. It's like if I can't help you. I know someone who probably can

speaker-1 (33:05.09)
It's all about the network. Everybody, this is the Hard Tech Podcast. I'm your host Deandre Hericus, my co-host Grant Chapman. And Sam, thank you so much for being on here. Love the conversation. Everybody tune in for next week.

speaker-0 (33:10.968)
Thanks for joining everyone. Sam, thanks for hopping on.