How underestimating small things made hardware extra hard for this founder

Kyohi Kang, co-founder of Atmoph

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This article is part of Tech in Asia’s partnership with Disrupting Japan where we publish the revised transcripts from the show’s podcast interviews with Japanese entrepreneurs. This is heavily revised from the original transcripts. For the full interview, go here.

I sat down at a cafe with Kyohi Kang, the founder of AtMoph, a hardware startup that creates 27-inch “digital windows.”

Kang talks about how their product works, their successful crowdfunding campaigns, and the challenges they faced before shipping their product.

nTell us about what AtMoph is.n

We call our product digital window but the concept is very simple. It’s a 27-inch monitor that you can hang on your wall and lets you see you the world. Every content is filmed by us in 4K, so you can view sights in Iceland, France, Germany, Hawaii, Japan, etc. The Atmoph Window has one speaker inside so you can also hear the sounds of the waves, birds, etc.

nTell us about your customers.
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We started shipping last year, and we’ve seen that 70 percent are individual consumers, while the rest are restaurants, bars, clinics, and offices.

About 70 to 80 percent of our customers are from Japan.

nIn 2015, you launched a successful Kickstarter campaign. What were the challenges you faced?n

It was really challenging because doing a Kickstarter campaign in Japan was very rare. It was also our first crowdfunding project, so everything was tough.

The reason we needed to do crowdfunding was that we didn’t have enough money to manufacture the product. Also, many people were saying that nobody would want a digital window. So, I needed to prove that at least some customers would buy.

We raised about US$160,000 on Kickstarter, but we needed more money. Things like making injection molding cost a lot. We also had to reduce the price since it’s a crowdfunded and a pre-sale project.

nSo, how did you manage to deliver the products?n

We did another crowdfunding in Japan on Makuake. It was OK, but we still needed to collect more money. So, we asked a government bank for a startup loan and, one year later, raised VC funding of approximately US$1 million.

nWhat turned out to be a difficult part in the process?n

We underestimated too many things. First, it was our first time doing production, so we needed to find good manufacturers, which was very hard. Each time we approached one, they said, “We can’t do this in small batches.”

We did the manufacturing in Japan, but we have about a total of five manufacturers coordinating with each other. The assembly happens in Nara, then Kyoto. The board production is in Osaka, and some of the plastic parts and cables are manufactured near Shanghai.

nWhy did you decide to have your manufacturing in Japan even though you knew the costs would be higher?n

It’s because we didn’t have enough money. To do manufacturing in China, we needed to travel often to negotiate or see the actual production. We needed to save our money.

We are based in Kyoto and there are many manufacturers in the Kansai area. We thought it would be easier and cheaper and the quality would be better if we did it there. However, the cost got a little bit more expensive than we thought.

Like I said, we underestimated small things like checking the costs for the LCD panels, computer boards, plugs, connectors, cables, and manhandling. Each connector sometimes costs US$1, which can easily sum up to US$10. We also needed some storage and wifi adapters, which prices were increasing at the time.

nIf you had the chance to do it again, what would you do differently?n

It’s to make sure to find the best manufacturer and make the design as simple as possible, in terms of the electronic boards, cables, and the assembly process. We should’ve done this before we fixed the budget. But since we didn’t have enough knowledge, we ended up with many processes, parts, and a not-simple-enough design.

nDid you have trouble keeping the momentum going after crowdfunding?n

I couldn’t successfully do that because, first, after doing crowdfunding, we needed to 100 percent focus on manufacturing. So, we did that for about a year, doing almost no marketing or anything because it was very hard to do software development, hardware development, and manufacturing.

After shipping, we gradually started attending design exhibitions in Paris and in the US.

nWhat are your future plans?n

We don’t want to be a tiny maker in the end. I’m a huge sci-fi movie fan and every time I see movies, there is always a virtual window. The goal is to become the interface of the outside and inside worlds, meaning not only showing views but also allowing interaction with the world.

Also, right now, we have a marketplace where customers can download about 500 views, which are filmed by us. But in the coming months, our customers will be able to upload and sell their own content. After that, we can be like an OS for a digital window.

nDo you see your future as a hardware company or a software company?n

It’s possible that we’ll see a mix, like Apple. The software side is very important for us but we need to have some special sensors, cameras, microphones, etc. so that people can experience more real views. Having just the display is not enough to achieve that, so we still need hardware to enhance the experience.

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Many people point out that Japanese startups are too slow to release their initial products and prototypes, and that they should get user feedback sooner rather than spending time polishing a product that might not be what the customer wants. There’s a lot of truth in that, but we need to remember that it is the customer and not the startup founder that determines what is a minimum viable product.

As a startup, your opinion doesn’t really matter a whole lot here. If you don’t have a client who is willing to use your product, then by definition, it’s not viable. Startups in Japan have to spend more time developing their initial product because Japanese businesses and consumers demand more.

But this is changing. There has been real growth in startup events and enterprise startup-matching programs over the past few years. More and more Japanese executives are now slowly coming around to the idea and the role of being a mentor and being engaged with startups.