August raises $8M as it tries to avoid the hardware revolution's scalability problem
August, the smart lock-maker co-founded by Internet of Things Consortium head Jason Johnson and noted industrial designer Yves Behar, is today announcing that it has raised an $8 million Series A funding round led by Maveron.
The funding will be used to expand the company's workforce as it begins real-world testing of the smart lock it announced during the D11 conference in May. The product is also being examined by independent security contractors and updated to include new features like EverLock, which automatically locks a door after it's been closed. This will delay the product's release: it was originally meant to reach consumers during the holiday season, but is now expected to ship some time next spring.
"When we unveiled the project at D11, we hoped we would get a good response -- maybe we would be shipping a few thousand units by the end of the year," Johnson says. "But what happened is, we got more than a good response. We got a spectacular response. So we slowed things down; it's more important that we deliver something right than that we deliver something quickly."
This makes August the latest hardware company to become a victim of its own success. Most startups encounter problems when their products fail to attract enough attention; hardware startups seem to suffer from a different problem whereby unexpected popularity can lead to delays, issues, and consumer backlash.
Consider Pebble, the most well-funded project in Kickstarter's history. The company raised far more than it expected, which ultimately led to manufacturing delays and frustration caused by the company's seeming inability to satisfy the thousands of people who essentially pre-ordered the device before it even truly existed. The product's spectacular popularity ultimately caused many of its parent company's problems.
“From my conversations with my fellow friends making hardware, there are definitely scalability challenges," Johnson says. "Making a prototype that could perhaps be produced in the thousands to making a product that could perhaps be sold in the tens, if not hundreds, of thousands is a very different business.”
Hence the delay. August is no longer a small company hoping to inspire thousands of early adopters with its smart lock -- it's now trying to ensure that some 40,000 consumers and "many, many" retailers will be receiving or selling a smart lock that meets or exceeds their expectations. That requires a larger team, more time to test the product, and the formation of partnerships with other Internet of Things startups Johnson expects to announce at CES in January.
“The challenge for many of us hardware startups is, we need to move from being really excited and trying to quickly deliver something to making sure that we in fact can scale and can deliver on the promises we’ve been making,” Johnson says. "It's a nod to the big consumer electronics companies and what they do. We have to stay nimble and stay creative, but we also need to mature."
[Image courtesy August]