Rich Lunak and Innovation Works continue to change the startup world

“We felt like Pittsburgh had tremendous assets in this area,” Lunak says. “We had a strong base of electrical and mechanical talent from our universities and corporate employers. We had a world-renowned supply chain to build, design and manufacture things. We had organizations like America Makes, TechShop and today we even have an advanced robotic manufacturing initiative here locally — so a lot of national recognition.”

In addition, he says area startups, 4moms, Dynamics Inc., BodyMedia, SolePower and others, were emerging and could serve as models.

So, Innovation Works followed the same advice it gives to entrepreneurs.

“We did customer discovery, we tested our ideas out to prospective entrepreneurs who are our customers. We did some pilot tests with some hardware companies that went through AlphaLab, our software accelerator,” Lunak says.

The new program, AlphaLab Gear, ended up very different from AlphaLab. It had a different funding model, up to a $125,000 investment, rather than $50,000; a program of about 40 weeks, not 20; and a different support system, seasoned entrepreneurs who’ve built and scaled hardware companies and partnerships like ANSYS and StartBot.

“We surround them with the investment and resources that they need to take it forward,” Lunak says. “It’s not perfect for every product. You can envision a medical device that might be complicated and needs to go through an FDA process, a regulatory process, that’s not a fit. But for a lot of products, we call them agile hardware products, it’s a great fit — think internet of things, those types of products, those are terrific.”

Improved product development

Innovation and product development cycles are dramatically different — more fluid and faster than they ever were, Lunak says.

“Customer discovery and product market fit a lot of times can be done very cheaply and without significant investments to test out models and theories, so engineers can build mock-ups to test customer reaction,” he says.

Just like Lean manufacturing improved reliability and efficiency, Lean product development does the same thing. Lunak says one leader in this space, Eric Ries wrote “The Lean Startup: How Today’s Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses.”

There’s always been an age-old problem of engineers and developers whose comfort zone is in a lab rather than out working with customers, Lunak says. That can lead to re-engineering a product that’s already designed and developed, which is more expensive.

Another challenge for AlphaLab Gear participants is that engineers and founders know how to design products and want to race to the end solution, but they don’t necessarily design for manufacturability or serviceability.

If engineers need to design a box enclosure, they might want six sides that are fastened or welded together, Lunak says. But a manufacturer’s first thought is to stamp it out of one piece of metal, bend the parts and spot weld the ends for one-third the price.

Serviceability is also sometimes an afterthought, which is a mistake.

“If you’ve got products in the field and they need to be repaired and serviced, sometimes that can be the most profitable portion of your business, and a long-term annuity stream of revenue,” he says. “If you don’t design the products from the onset with that in mind, a lot of times it negatively impacts both your customers and your ultimate revenues and profits.”

To counteract these tendencies, entrepreneurs work from day one with manufacturing engineers and designers and local supply chain partners to do design reviews, and ultimately save time and headaches, Lunak says.

The accelerator has already built out a large network for this because it’s a win-win.

“The entrepreneur gets the input and help of seasoned manufacturing and engineering talent, and the manufacturers stay up on the latest and greatest technology trends, but also get to diversify their revenue streams,” he says.

Be willing to disrupt yourself

In the few years that AlphaLab Gear has been around, the lines between hardware and software have started to blur. The two accelerators already do a lot of cross-programing, and Lunak believes that will only continue.

“Marc Andreessen, a famous entrepreneur and investor, has a saying that software is eating the world, meaning it’s becoming part of everything,” he says.

The latest refrigerators, for example, have software and user interfaces that can give you a weather report and take pictures of what’s inside and send it to your phone while you’re at the store.