In each of our podcasts, we ask top hardware entrepreneurs the same 10 questions to better understand the challenges and best practices in starting a hardware company. In Season 3 Episode 3, Lemnos’s Eric Klein speaks with Jason Gates, Co-founder & CEO of Compology, a Lemnos portfolio company. Compology provides web-based container monitoring software for waste haulers to streamline operations, enhance customer service and simplify analysis.
- What compelled you to start your hardware company?
My co-founder, Ben, and I went to high school and owned a small company together. We made t-shirts. In our first professional careers, I was working in the waste business in New York City, managing the waste coming off of large construction projects, and Ben was working at Adidas, helping the design of new athletic gear and using sensing technology to help improve those designs.
Working in the business, I saw that there were some inefficiencies in the way that the waste industry operated. A lot of things were done on spreadsheets, index cards, and corkboards. It was an industry that was longing for some technology. With the cost curves of remote connectivity coming way down, battery technology improving, and improvements to capabilities with cameras, Ben and I thought, “If we’re able to put sensors inside dumpsters to monitor things like location, fullness, and content, we could have a big impact on the industry.”
- Had you worked on hardware projects before this startup?
My co-founder and I wouldn’t consider ourselves the most technical founders, so we decided that we needed to win in other places, and that was finding the right fit, making exactly the right thing for what customers needed. And we figured that there’d be some really smart people that would be able to help us design the best way to make that happen on the back end. Ultimately, we took the approach of, “What is the fastest, cheapest, lightest weight way to test our hypothesis?”
- How did you decide what would be your first product?
We started with a thesis that the waste and recycling industry, as a whole, could benefit from the use of better technology.
We spent a lot of time going out, riding on garbage trucks, meeting with regulators, meeting with waste generators, asking about what pain points our end customers have. We were able to distill that down and find that the logistics of collection was a really good place to start.
We looked at small waste containers that you would see next to a bus stop. We looked at liquid waste, like used cooking oil coming from restaurants. Ultimately, we ended up deciding that the municipal solid waste –garbage, recycling, organics—was going to be the launch point.
- How did you decide who would be your mentors?
My view on mentors started as being somewhat transactional—that I needed something, either for myself or for the company, and there was somebody else out there who had a wealth of knowledge on the topic. So I sought those people out to answer a very specific question for me. What I think is really helpful is to reflect and say, “What are the pieces of my own self that I’m missing that having some mentorship would help complete?” Recognizing and being upfront with yourself about what you don’t know, opens the door to getting that answer as quickly as possible.
- What have you gained from working with Lemnos?
We started working with Lemnos when it was just my co-founder, Ben, and I. The stage of the business we were at was finding that right product market fit. You and the other partners were really helpful in asking the questions of us to help determine, “Are we working on the right thing?” Being really open and saying, “You guys are probably going down the wrong path. All of the data show that. You guys really need to take a step back and reconsider.” That process was tremendously helpful to get us to where we’re at today.
- What was the road to your first round of financing?
Starting out, it was definitely a rough road. Our early fundraising was very much a scrap-it-together, taking a nickel-and-dime from anybody who’d be willing to have a conversation with us. We ended up with a rolling close seed round that had multiple convertible notes with multiple different caps that increased in value over time.
We were a hardware business in a market that nobody knew much about. So we needed to demonstrate that this market was more approachable than they initially thought. We did that by saying, “Here are our company goals. Here is what we’re looking to accomplish,” and making those very, very tangible and attainable. Then going back to them with that completed scope of work. Saying, “Look. Here’s what we did. Here is why we’re going to continue doing that,” got investors comfortable with hardware and a market that they didn’t really know much about.
- What has been the most surprising thing about the manufacturing process?
One of the things that we’ve learned is the most impactful is manufacturing management. And there are a lot of things you can do to create a great design, but that design is worthless if it doesn’t get translated properly into the finished good. And what we decided we were going to invest in very heavily early on was oversight of our manufacturers in a way that would allow us to have a lot of control over that end product.
Another pitfall to be aware of is inventory shortage. We had some long lead-time parts, and you always have to factor that in. Lead times can add up quickly.
- What have you learned through customer engagement?
Customers will pull you in different directions, and you’ll hear many different things from many different opinions. We had to work very hard at distilling down all that feedback, looking at who that customer persona was, why they were motivated to provide the feedback that they were providing, and synthesize that with our own views of what the industry should be, and what our vision for the company was.
- What’s the hardest part of being a hardware startup founder?
It was really the operational pieces. There was great support in helping design and manufacture our products, but as an enterprise, industrial hardware product, we had the delivery piece, which actually requires us to bolt cameras into dumpsters, and dumpsters move. If they are sitting stationary, they are not generating revenue for our customers. So, we needed to build an organization in our company that focused on service delivery.
- How do you find a much-needed work-life balance?
We both realized that the efficacy of our work became multiplied when we had other things in our lives that were releases from work. That may be exercise, relationships with other people, or hobbies that have nothing to do with collecting garbage. Burnout is real. If you spend all of your time, seven days a week, thinking about the same thing, you box yourself in. Spending time doing those other things helped our minds work in different ways, so that when we came back to work on Compology, we were fresh, we had new perspectives, and we felt energized about what we were doing.