Your first hundred units are research

These are the notes from the session on Wednesday, February 25 at 12:00 p.m..

There is a moment every physical product founder remembers: the first real batch arrives. Not the prototype, not the samples, but boxes, on a pallet, more of your thing than you have ever seen in one place. It feels like the finish line. It is the starting line, and the way you treat those first hundred units decides how the next thousand go.

The mistake

The mistake is to sell them as fast as possible and count the money. That is understandable; the money is real and you need it. But a hundred units sold quickly to people who like you tells you almost nothing, and you have just spent your only cheap chance to learn something before the expensive order.

The first hundred units are a research instrument. Every one of them is a question you are asking the market, and the market answers in three ways: what people do before they buy, what they do with it after, and what they say when it breaks.

Three questions per unit

1. What did it take to sell this one? Not in general: this specific unit. Who bought it, where, after what, at what price, and how long did they hesitate. Write it down. A hundred lines in a spreadsheet is a pattern; a vague memory of “the market went well” is not.
2. What happened after? Did they use it, gift it, return it, review it, reorder? Follow up on every single one. At a hundred units you can. At a thousand you cannot, and the follow-ups you did at a hundred are the only reason you will know what the thousand will do.
3. What went wrong? The packaging that arrived crushed. The instruction nobody read. The colour that sold out and the one that did not move. The customer who asked “does it come in a larger size” three times. Every complaint at this scale is a design note, and the founders who get defensive here pay for it on the reorder.

Prototype, pilot, production

Manufacturers think in three stages, and it helps to borrow their vocabulary. The prototype proves the thing can exist. The pilot run, your first hundred or so, proves it can be made repeatably and finds out whether anyone wants it. Production is the volume order, with the minimum order quantity, the tooling and the real money. The pilot is the stage founders skip, usually because a supplier told them the minimum was a thousand and they believed it.

The minimum is negotiable far more often than founders assume. A supplier who wants your production business will run a small pilot at a higher unit price, because they would rather have a customer who comes back than a one-off order that fails. Ask. Offer to pay more per unit for fewer units. Offer to pay for the tooling up front. Offer a commitment on the production run if the pilot succeeds. Almost every supplier has a version of yes.

What the hundred should change

If your first hundred units do not change anything about the next order, you either got very lucky or you were not listening. Normally they change at least three things:

• The packaging. It is always the packaging. Something arrives damaged, something is too expensive to ship, something does not survive a retail shelf. Packaging is part of the product; the pilot is when you find out which part.
• The mix. You ordered three colours in equal amounts. One sold out in a week, one is still on the shelf. The production order is not one-third each.
• The price. Not necessarily up or down. Often the hundred tells you that the product is worth more to a different customer than the one you thought you had.

And, occasionally, the hundred tells you to stop. That is not a failure of the pilot. That is the pilot working, at a cost of a hundred units instead of a thousand and a mould.

Do not scale what you have not sold. Do not sell what you have not watched being used. The first hundred are for watching.

Somewhere to keep the hundred while you watch them, somewhere to open the boxes that is not your kitchen, and a room to bring the buyer who wants to see the thousand: that is what the floor is for. The research is yours to do. We just make sure you have somewhere to do it.