Tips for Early-Stage Smart Device Prototyping w/ Keith Nothacker

ABOUT THIS EPISODE

The line between prototyping to perfection and analysis paralysis is fine. On one hand, you want to make sure your IoT-connected device is as customer pleasing as possible.

On the other, you’ve got to get the thing to market.

In this initial episode of Over the Air: IoT Connected Devices & the Journey, we speak with Keith Nothacker, Founder & CEO of BACtrack. Along with tips for early-stage smart device prototyping, Keith shares…

  • BACtrack’s journey from idea to market leader
  • Reasons why some IoT companies don’t fully prototype their products
  • Early (bad) ideas BACtrack tested out

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You want to uncover all of your faultsand all of your weaknessis early on before you are out there in the marketand suddenly trying to scramble with a a piece of hardware that maybe wasn'tfully thought through. You are listening to over the air ioftconnected devices and the journey brought to you by vary in each episode. We have sharpunfiltered conversations with executives about their IOT journeys,the mistakes they made the lessons they learned and what they wishd they'dknown when they started everybody welcome to over the Air Iotconnected devices and the journey episode one today we're going to betalking with my very good friend, Keith Northaker, CEO backtruck Keith. Welcometo the show, thanks for having me Ryan, so Keith for those that are notfamiliar with backtrack. Tell us a little bit about your company and whatyou guys do we make breath alcohol testers for personal and professionaluse along with apps for them, and now we are working on a very specialtransgermal alcohol detector, a warable alcohol detector. So, within the areaof alcohol testing, we do it a lot of different ways: Transdermo all right.So don't let's not assume that everyone out there has a PhD. What doesTransdermo me transgermal, you know when you consume alcohol. People areused to maybe blowing into a breath awiser if they've ever heard of onebefore or maybe seen one or you know. Maybe you know that law enforcementuses it we're measuring the alcohol. That's coming out of your deep lung air,but with a transgernal device, a very small amount of alcohol comes outthrough your skin and your sweat, and so we created a biosensor that actuallypicks up that signal and we are working to estimate your blood alcohol content.Based on that bio sensors readings. Have you observed in some of the earlyresearch like? Are there groups of people that Amit that, through theirskin radically different than other groups like male versus female,different ethnic groups, like what differences have you guys observed?That might surprise somebody? You know it's very early overall we've beenworking on the hardware and the software and we're working onalgorithms. Now so it's early, there are not radical differences person, theperson there'r, certainly some say based on gender and other factors andother things that might be baked into our special sauces. We try to have ourproprietary algorithm but yeah for the most part, relatively consistent andsimilar to to breath alcohol testing. That's how law enforcement can use thatas a standard, because there is this biology that a similar person a person,so you founded this company in two thousand early, two thousand twothousand and four two hasand five myabout right. You know what that'sprobably when we started doing something real. The legal truth iscompany was incorporated in two...

...thousand and one. So I started thiswhen I knew nothing had no skills and was was in college my senior year andjust thought. It was crazy that that police could have a device they couldtest you, but consumers had no way of having their own alcohol detector forfolks out Theyre. Listening to this and they're saying okay, I've been taskedwith developing a connected device or I'm you know, I'm running a connecteddevice. Company Iot Company talk about the path from scrappy startup in O one.You know dorm room now, you're this big bad polished hardware company, you guysare the the eight hundred pound Gorrilla in your space. What like? Whatdid that path? Look like for you guys, yeah first, you know I hate to be atroubling guest, but I disagree with the polished description of us. Youknow you can grow. You can be big, but you never feel like you're doingeverything perfectly. You know even the big companies, the apples of the world,I'm sure there's a lot of interesting stuff that goes on behind the scenes.So for us we took a somewhat atypical path in the bay area. You know ouroffics downtown San Francisco. We never raised outside capital, so our capitalcame from our customers. Our customers had to buy our products. We had to havepositive gross margin and we had to. We were able to reinvest that back intoRND. So we had this great path in the early days and even now, where we sortof had to put out products that people wanted to buy, and that was marketresearch. For us that was sort of saying, hey is this something here: Dopeople want to measure their alcohol level? I remember being at one of thefirst consumer electronic shows that we exhibited at, and people woul, likelaugh they'd, say who would ever want to measure that and then you know guyslike fit bit came along and people want to measure their steps, and now youknow you can measure heartrat with so many things. There's been thisevolution in terms of people's accepting this and willingness tomeasure the round biological signals. So you know early on, we were learningwe were in, we were investing in it and it took a long time to identify variousmarkets, build out the hardware and the software and really grow to where we,where we are today, when you think about things that you wish you like, Iimagine you must when you meet with other tech, executives or especiallyother founders, would you say it's fair that to saythat four hundred, Ninety nine out of five hundred have raised capital likedo? U? Do you find that you are an extreme outlier amongst founders thathave not raised capital? I do. I do. I think, especially with hardwarehardware. Just costs a lot of money. So yes, that is pretty rare. When you lookback at your journey, do you feel I mean now we're going to way off topic,I'm going to bring us back, but I'm genuinely curious. When you look backat your journey, do you ever feel like man I at this inflection point or thisinflection point? Maybe that would have been a time to raise capital that mighthave, or are you looking back and you're like I'm glad we never did that.You know it's interesting. I know this one path, Ryan and it's been scrappyand boots strapping and depending on your customers to grow and make money,and so that that's my whole world, and...

...so I'm probably biased from that, butthat has forced us to focus on the true customer need and to focus on heybefore we build this before we cut steel at a manufacturing facility. Likeare we really certain about this? So so I think it's really forced us to reallyuncover customer needs early in the process and I think for hardware designand IOT design. Th T, that's just critical, I mean there's, certainly themarket. You know you can see products that didn't think through that early.Maybe they raised a bunch of capital and you go build it and you got guyslike Ju, Sero or other. You know. Companies like that, make a huge splashand then whoops. You know the pricing was way off, for the product was a whatwas way off. So I think for us there's not a time where I'm like. Ah Shout wemissed that opportunity. We have some amazing opportunities right now andwe're throwing a lot of resources into them and we're excited by what we'redoing. What do you think for for othercompanies that are you mentioned? Hardware, is hard. Hardware isexpensive. There's a lot of gutcheck moments in hardware development. We seethis at our company all the time where it's like, don't get this wrong. Youknow it's not like software. Where you know you can you can back out of a baddecision easily for companies out there developing ahardware devise developing a connected device it? What are some things thatyou would implore them to be thinking about in some of the early stages, so theyrethey've got a concept. You know maybe they're an existing company looking toembed some intelligence in a existing Harvard product. Maybe it's a newproduct, maybe it's their only product. What are some things or a thing thatyou're like listens whatever you do? This is something you absolutely needto be focused on. Whenever we have prototyped early and prototypedaggressively and made you know, I call horrible samples, but at least it'ssomething that you can wear or blow through or just get a get a sense forwhat you're trying to go for. We have never regretted that you know maybe adecade ago or fifteen years ago, when we started doing soe manufacturing itwas expensive. You know you didn't, have these threed printers, where youcould just crank out designs and see the look and feel, and so you know itwas expensive. We paid two or three thousand dollars for one sample of likeplastic painted plastic, but it was always the right decision to see that,because you just have this path, that you get locked into with hardware, andyou want to uncover all of your faults and all of your weaknessis early onbefore you are out there in the market and suddenly trying to scramble with aa piece of hardware that maybe wasn't fully thought through so for us now andthen advice to other companies. It's try to prototype because there are somany prototyping tools now that are available more more than ever before inthe history of the world, from the electronic side to the plastic sidemechanical, I think that's critical and it's just it's fun now you know for ourwearable. We have a. We have a sleep small device now that we're excitedabout excited to launch in the marketplace, but we had you know bigchunky things and I was wired to a...

...laptop when I was wearing a wearabledevice. You know that, like that was harder, but still that was important todo during that process. So so the question I want to ask is like: Why doyou think that's something that maybe others aren't doing, but but I, what Ireally want to ask is: Do you think there's a credible reason? Why not sour people trying to get to the market so quickly that maybe they don't alwayshave time to be as thorough or do you think that this is a first principle?There's no reason why a company should not be pursuing that path is Tis,something that everyone should be doing. Yeah, I'm very fortunate, my three anda half year old and my wife both like tell me all of my faults. You know in aloving way, so I'm Usedt I'm used to embracing imperfection. So I think it'sjust we're very comfortable. Knowing that hey thi, we might think we'reSMART, we're, not smart and we're smart when we have something out for fiveyears and it's selling and it's working well. So I think that embracing thefact that you might think you're smart but you're not as really importantearly on the process, I'm speculating, but maybe there are companies that youknow, get validation by raising thirty million dollars and they're like hey.We got this and they haven't tested at all they've. No idea of this idea isgoing to hit it, and so I think again in our DNA, we've had to embrace thatand be really careful on the way a because we had limited dollars, but bejust we wanted to do it the right way and try to understand what was going towork before we cut steel before we designed an nat before we got it out tomarket thinking about the how pieace of this for companies embarking on ajourney like yours again, not not necessarily tech startups. You knowyou've got a, maybe a midlevel company doing two hundred million dollarsthey're looking in bed. In fact, let's focus on that example, and I know thatexample is not backtrack, but company that has physical products that theymake and they're. Looking at a company like yours and they're, saying lookit's very obviously the path that you need to take, what our dumb productsand make them, you know quote: Unquote Smart Products. What does that? Howlook like do you think it mea talked about like some of this user testingbut like if you were sitting next to somebody on an airplane, he's anexecutive at one of these companies and he's saying I don't even know what wewhere to begin. What do you think that looks like for somebody like that? Youknow through the Lens of what the experience backtrack has had. I thinkyou just have to put yourself in the future. What are you trying toaccomplish? Where do you want to be in ten years and work backwards from there?I think when it became easier to make APPs in the early the early days callit. You know two thousand and thirteen everybody was connecting everything toan APP and all of a sudden. You have an nap, but what's best for the user, whatuse case a you trying to solve what new capabilities do you have with asmartphone connection that you didn't have before when you were just a dumbproduct, I'm sometimes embarrassed to admit but Ryan you're such a standupguy I'll, admit it to you right here that when we were talking about matingsome of our first apts, I'm like you know what people get athey get a blood alcohol content value...

...from our brethalizer. It shows it onthe screen of the brethalizer of the backtrack. Like do we really need asmartphone APP, and so once we sat down and thought through well, we canleverage all the aditional censors in a smartphone. We can leverage a largescreen in the smartphone. We can display things on that and everybodyhas a smartphone now and we don't have to pay for an expensive screen. We'lljust have people use their own screen once you think about the advantages andhow you can use them. I think that helps to fine the roadmap for whatyou're trying to build, not just hey everybody says Iot is cool en we needto. We need to take our dumb stuff and make it smart, no like what is going toadd value. What can you charge more for and what do people actually want yeah?It seems like, from the vantage point, of course, you know we work with a lotof companies that are trying to embed intelligence in what hap historicallybeen dumb devices, and it seems like no space is struggling more than thekitchen and bath space, and you look at some of the like smart kitchenappliances that are coming out. I don't know, I don't want to insult people outthere that are working on these projects, but you get a sense that it'stechnology for technology's sake and that the value isn't there that theseare not things that customers have said. This is extremely important to me. Doyou do you see that a lot when you're looking out at the landscape ofcompanies doing that and how does backtrack, think about what could bedone versus what should be done, because it's V, it's valuable for thecustomer? This is going to be something: that's really going to drive sales anddrive value yeah. You know there are products that you look at and say hey.This doesn't make sense to me. Maybe there's a kitchen product or a scale.That's digially, connected you're like Hey, I'm, not seeing the value here forthis specific companies. You know your one point out. Product is never yourbest product, but if you're getting stuff out the door and it works andpeople are relatively happy- that's a big step forward. I actually savescreenshots on my phone of like the original Apple Computer, some of theoriginal famous products in the world and theyre. One Point: Oh, it'sembarrassing looking, but you know it gets the ball moving. So on one hand,I'm saying hey prototype and do it perfect and think about the customerneed, and you really really want to try to do that. On the other hand, can'thave analysis, paralysis where you're just trying to make everything perfectand in a world limited budgets and things changing so quickly. You do needyou need to ship, whether it's software hardware, you need to ship. You want tomake it as great as you can. You want to make sure it's safe. You want tomake sure it's right for your users, but I think it is important to get itout the door. So you mentioned you know Embarrassing v Ones I have to askbacktrack. Is Gotten a lot of things right? What can you tell us about someterrible ideas that backtrack is? Had you look back and you say that was justterrible. You know no company bats. A thousand you mentioned apple apple wentlike a decade with no good idea, some...

...only bad ideas. What are some things out there ouldthat you look back and you say we did not get that one right. Yeah we've beenaround for a while, so like all these things pop into my head, like goodthings and bad things and some fun things, you know the first thing popsit, maybe not a horrible idea, but just interesting. We took a censor and abreathpipe design that we had for an early breathlyser, and this is ten.Fifteen years ago, when ipods were prevalent, everybody had an ipot intheir pocket listening to music and we actually took our breath pipe anddesigned it using apples made for ipod program so that you could plug it inand blow into this little connection. And you could see your BAC result onthe ipod screen. We thought it was cool and were like wow we're leveraging thiskind activity, and maybe I would incetivize ouse we prototyped. We did.I think a lot of things were talking about here and then it actually gothigh enough up an apple, and they said you know what we didn't design thisproduct for other hardware pieces to plug in n. We were a little before ourtime there, so apple essentially pulled the rug out from under US there. Onthat project, but at least we were like in our court competency, there I'd say.Also. There was a time when we were first gitting into retail stores. Youknow it was exciting and backtracks, getting into five thousand ten thousandtwenty thousand retail stores now we're in Wallgreens CVS and best by, but inthe early days we did a program and it sole really successfully in an officestore like an office Max and then the next season they said, wow Yo, o peopleactually bought this stuff. Like can you give us more digital health devices?So we went out at the time and we created our own small little subbrandand source. Some like pedometers and thermometers and sort of health devicessteered off course from what we knew threw it onl in this big, likecorrocate display for for a retail store and a thousand stores, and itdidn't do great- it didn't do well the next year. Looking back now, it's likewhat are we thinking like? That's, that's not who we are, but at the timewe thought we were taking advantage of a trend and getting into retail. So youknow just just lots of ups and downs throughout the years, and it's so forthose who are not super familiar with your Brad, you guys are in a lot ofretail locations. You know like so somebody might be able to find yourproduct in linewhat are a few weren't you guys in Cosco, or am Imissremembering that yeah we'VE BEEN IN COSCO? We are in CBS and Walgreens writaid best by yeah. We have placement in a number of retail stores and obviouslycovid hit, and you know that impact's foot traffic there and en obviously UShaving oneline distribution having like multichannel distribution, saves theday you spend all your time designing and Manufactur, and then once you haveit, that's the important part having a smart distribution, f strategy of whatyou've built right then, and I'm sure that you guys spent a lot of timethinking about a pandemic strategy right like everybody else, that's not in your playatrian. Well, you know we're totally remotecompany and when I took over this...

...company, a CEO in two thousand andseventeen, that was one of the first things I did and absolutely was not forpandemic reasons. You know it was. It was just because it seemed like it madepractical sense, but it's certainly aged well. But so my I have a question.Ut T last question. I really appreciate your time today. So very few thingsbring a smile to people's face like alcohol and the concept of alcohol, andyou make a device that interfaces with alcohol, people, drinking and testing,and I remember when you first gave me a device. We were actually sitting at apub in San Francisco and you know I felt compelled to sort of acceleratethe consumption of my pinted beer. So I I could see on the APP how things weretracking over time. What can you tell the users about life at a company thatis at the intersection point of Yo Smart Devices and alcohol? Is that? Doyou find that you get a lot of smiles when you tell people what you do andthey there? They feel compelled to you know, maybe take a shot of fireball andsee what that does yea. You know it's interesting. Yes, we have manyinteresting stories. Yes, Beers that we have to drink at work to test ourproducts are tax, deductible and ax. Deductible Beers always taste the best,but you know with alcohol. I describe it as just this very wide spectrum, sothere are people that can drink socially and have a great time, andthat adds to their night out and then there are people that have alcohol usedisorder and that's that's a very serious thing and you know Dui deathsand alcohol related fatalities. It's just horrible we've spoken with so manypeople that have those types of stories, and so it's I'd say somewhat unique forus to be making products and services that touch people all along thespectrum and, as we've grown our connected devices and we usesmartphones, we can do remote monitoring of people. If you want tocheck somebody else's alcohol level remotely to keep them help, keep themsafe. So that's been this amazing use case and then Rit what you talked aboutoriginally just people being out. We think it's fantastic and fun for peopleto like use devices and get to know like how alcohol affects their own body.You know it's just something that people should have, and so I'd say thatI certainly enjoy what I do and when you get into measuring biology and health with an APP andhardware, it's just. It leads to some really interesting groundbreaking stuff.You mentioned looking backwards fom ten years, so it's two thousand and twentyone. Do you think that and cars seem to be getting smarter, I mean Tesla. IsYou know, I think it's pushing the industry forward? I did not say drivingthe industry for because we're trying to avoid puns on the show. This is aPun free zone. Do you see outcome? I guess on the Spectru of like thisabsolutely should happen, or this is a little bit. You know this is to nannystate where you know, if you're going to operate a motor vehicle, there'ssome kind of backtrack, powered or...

...other company powered biometric censorthat that is able to. You know this transporation thing you were talkingabout you just press your finger. Maybe it's part of the ignition process andit says: Hey your two tenths of a percent over the line. Car Doesn'tstart, you know, or something like that. Do you see a future where this is bakedinto auto automotive technology? I do there are people that have been workingon this for multiple decades. That is definitely the future. If we are partof that fantastic, if we're not part of it and and a huge chunk of our businessdies because that exists, I would love that that'd be fantastic, because thetruth is there're. Still Ten housand people dying every year from alcoholrelated crashes on the roads in the United States. So I think this needs tohappen. We want it to happen. Technology is moving forward. I thinkwith automobiles and manufactures there's just so much there andliability and ensurer. So it's not surprising it's taking so long todevelop, but I absolutely believe that that should happen, and that willhappen all right, Elan Musk if you're listening. This is the next bigtechnology. I know the new modelass is coming out soon. Keith. I want to thankyou for your time. Today. It's been great having you, I really appreciateyou being guest number one on the over the air podcast for one Keith, nothaker,CEO Backtrack. He thanks a lot. Thank you, Ryan appreciate it. You shouldn't have to worry about IOTprojects dragging on or unreliable vendors. You've got enough on yourplate. The right team of Engineers and project managers can change a pivotalmoment for your business into your competitive edge. Various close knitcrew of ambitious problem, solvers, continuous improvers and curiousbuilders know how to turn your ideas into a reality on time and up to yourstandards, with a focus on mitigating risk and maximizing opportunity willhelp you build an Iot solution that you can hang your hat on. Let's bring yourIot idea to life, learn more at very possiblecom. You've been listening to over the AirIot connected devices and the journey, if you enjoyd today's episode make sureto hit subscribe in your favorite podcast player and give us a rating.Have a question or an idea for a future episode. Send it to podcast at verypossiblecom, see you next time.

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