Bug Labs is on a mission, "to disrupt the consumer electronics market."
It’s a multi-billion dollar industry. But there is a way to bring it down. Somebody has to take the modes of production and hand it over to consumers. That’s what Bug Labs hopes to do. To find out a detailed discription of who they are, how they will do it — read on.
Jeremy Toeman paused for a drink of water. His voice was straining and raspy from having talked over the crowd at the Punch Bar in New York, giving the same fifteen-minute presentation for the last two hours. The current group of six onlookers, arranged in a semi-circle around Toeman, remained patient. They had been waiting to get close to Toeman for some time. Everyone on the top floor of the bar was there to gawk at what the young company Bug Labs was getting ready to offer the consumer electronics world and Toeman had it enclosed in his hands. It was Bug Labs first public showing. Nobody outside of the company had seen what the young startup had been working on for the last year and a half, so their eyes remained fixed at Toeman’s outstretched hands.
In it was the standard motherboard to a computer from about two or three years ago, which included USB, Ethernet, WiFi, and Bluetooth. It fit perfectly in Toeman’s open palm. The green plastic and soldered on transistors, the guts of a computer, were only interrupted by four adaptors that stuck out of the green circuit board like tiny pyramids. As Toeman, the marketing director for Bug Labs, continued with his presentation he slowly grabbed two smaller motherboards, one he identified as a functioning like a five mega pixel camera and the other worked as a motion detector. Then he proceeded to connect them to the first motherboard like giant computer Lego blocks.
Bug Labs hopes to do for consumer electronics what Web site mashups have done for the Internet, provide the means for anyone to create their own product. What they will start selling in the fall are the BUGS or the base piece of hardware that can be adapted to include any number of modules that snap into the baseboard like jigsaw pieces. The various add-ons, like a GPS device, a camera, an LCD screen, or keyboard, can be mixed or matched to produce as many gadgets as the consumers can dream up. With 80 potential plug-ins to choose from the BUG could become the foundation for any number of niche gadgets.
But before BugLabs can try to disrupt the multi-billion dollar consumer electronics market, they need to polish the plastic casing that is going to house their gadget. At this event in August, Toeman was only able to showcase the internal organs of the gadget.
"The final product will be cased in plastics and will look like a gadget you would buy, this is what we have to show you right now for demonstration purposes," said Toeman as he pushed the green motherboard towards the center of the circle for the latest group to get a closer look.
The next few months for Bug Labs was a harried race to the finish. They needed to complete their Web site (finished November 1st), any usability issues their product might have, the final aesthetics for the gadgets need to be in place and they have to find a way to generate buzz throughout the consumer electronics industry. If they don’t manage to stay afloat after the full public launch the dream that Peter Semmelhack, CEO and founder of Bug Labs, had back in 2001 will never come to fruition. (click below to read more)
Bug Labs has been working on this launch since April of 2006 after they received venture capital funding from Union Square Ventures,
the same VC company that funded Del.icio.us, Twitter and Tumblr, but
the idea for a customizable gadget that could fit the unique needs of
any customer has been brewing in Semmelhack’s head since October of
2001.
It was one month after 9/11 when Semmelhac, now 41, had his first
son. He had been working as a software developer since 1987 and at the
time was CEO of Antenna Software,
which provided mobile solutions for large companies. Like many people
living in New York after September 11th, Semmelhac was dealing with the
constant fear of terrorism, which was conflated by the natural urge to
protect his infant child.
"Everybody in New York wanted to know where their loved ones were at
all times so if anything happened they could rendezvous and have a
plan, but there was no way to know where your family members were, we
just spent a lot of time on cell phones," said Semmelhack.
What he craved at the time was a GPS device
that would wake up every 10 or so minutes and plot the position of his
loved ones on a map so he would know where his family was instantly
without having to call.
"That gadget just didn’t exist, it still doesn’t exist. The market
for a device like that wouldn’t be big enough," said Semmelhack.
That yearning for a gadget that just wasn’t on
the market stayed with Semmelhack for the next two years. And more kept
mounting in his brain. Next he imagined a security device that
you could stick at your door and would turn on from a motion detector
and automatically take a picture of who was at your door. He didn’t
want an entire home automation system, just a "simple little tool," he
said.
It was in 2003, while playing Legos with his
two-year-old son, that he imagined a way to create all the devices he
wanted at once for a relatively reasonable price.
"I found myself holding one Lego block in one hand
and another Lego block in the other and wondering, why couldn’t this
block be a GPS and this block be a wireless modem and stick them
together to get a wireless GPS," asked Semmelhack.
Eventually Semmelhack decided to scratch his own itch and try to
build the hardware himself. But as he found out, holy smokes, there is
no easy way to build hardware in the same way that you can build
software. He could write software in a day, but building hardware was
out of his reach at the time.
It was in early 2004 when Semmelhack decided to take his idea to the
next level. With his own money he hired three New Jersey engineers, all
ex-Bell Lab employees, to build a prototype.
An important discovery had been made through the process. There was
no technical reason why his multi-gadget dream couldn’t be built. Electronic
companies weren’t trying it because the idea existed way outside the
current business model for gadgets, which requires large consumer
markets before any product can see the light of day. If the
market is too small then the cost of development gets pushed over to
the consumer — and that cost is too much for consumers to bare — and
the gadget dies during R&D.
At first, Semmelhack wasn’t convinced his prototype was anything
more than a "geeky toy that probably didn’t represent a real business."
How many people could he really sell on his two gadget ideas?
But two important events in 2004 changed his mind.
The first was the launch of Make Magazine,
a popular quarterly dedicated to hardware hacking, which opened his
eyes to the fact that he wasn’t the only person interested in
manipulating existing platforms of electronics. The other was a book,
Democratizing Innovation, by Eric Von Hippel an MIT professor who argued the control over products is increasingly moving from producers to consumers. (See Assignment Zero Interview with Eric Von Hippel).
Figuring that the timing was right to turn his idea into something bigger, Semmelhack began looking for venture capitalists. The
idea was to form a company that wouldn’t just sell one gadget to a
niche market, it would sell the ability to create hundreds of different
kinds of gadgets to various small markets. Bug Labs began to take shape.
It was the summer of 2005 when Semmelhack began a nine-month pitch
to Union Ventures, a small venture capital firm in New York. He met
Brad Burnham and Fred Wilson, the founders, at a coffee shop near their
office in Union Square and slowly engaged them in the idea behind Bug
Labs.
Semmelhack had been through the investor dance before with Antenna
Software. But unlike some pitches where the VC at the other end of the
table stays stone-faced until the end of the presentation, Semmelahck
says Burnham and Wilson were engaged, lively and asking questions right
from the beginning. They called it an "out there investment" but saw
lucrative potential in the various applications.
Since then Burnham and Wilson have stayed unusually close with
Semmelhack and the entire Bug Labs team, one could say they have been
closer to this investment than any other since first funding them in
April of 2006. That’s because the Bug Labs office is located just four floors below Union Venture’s Manhattan office in the Flatiron district of New York.
"It was serendipity" that lead Bug Labs into the same building as
their funders according to Semmelhack. Union Ventures had invested in Del.icio.us
in 2003 and had recently sold it to the Internet giant Yahoo. As
Del.icio.us was moving out of the building, Bug Labs was on the search
for a space in New York to begin their work. It was a natural switch.
Out with the old and in with the new, but Bug Labs had big shoes to
fill. Del.icio.us had over 300,000 users and was sold for approximately
$30 million.
Going Open Source with Hardware
Semmelhack
had never worked on an open source project before. While building
software that would make the BUG Base function with modules Bug Labs
was using OSGI (Open Services Gateway initiative), technology released
by IBM in 2001. Unfortunately for Bug Labs, the license for OSGI wasn’t
open source, which meant Bug Labs couldn’t use it and remain an open
source company, a requirement if they wanted to let their customers
modify their gadgets.
Bug Labs would have to re-write OSGI from scratch, a painstaking and
labor intensive project. That is, until they found a lone Ph.D. student
in Switzerland, Jan Rellermeyer,
who had already started doing the same thing, re-writing the software
under an open source license. "It’s a person we never met, we
implicitly trusted, I don’t know why, and we built this piece of code
and released it to the open source community together," said
Semmelhack. If it had not been for this lone developer across the
world, Bug Labs would have been set back by at least four months, which
when you are racing to release a new product with VC money can be an
eternity.
Today the Bug Labs office houses seven full time employees.
Through the hiring process Semmelhack was looking for "the absolute
right people." It isn’t about who has the most Ph.d’s or the greatest
track record, but people who are comfortable taking risks and share his
vision. Bug Labs is on a mission according to Semmelhack, "to disrupt the consumer electronics market."
One of the hires along the way was Jeremy Toeman who lives in San
Francisco and traveled to New York for the first public showing of what
Bug Life is going to offer in the fall.
Toeman has worked under this kind of launch pressure before. His latest project in the technology industry was marketing for Sling Media which produced the Sling Box,
a device that can forward television signals to any mobile device. It
was through that project that Toeman became friends with Peter Rojas
from everybody’s favorite tech blog to hate – Engadget, who Semmelhack approached when he was beginning his search for a marketing director.
Toeman and Semmelhack met in a San Francisco Starbucks and "saw eye
to eye right away," said Toeman. It was an important new role filled,
because a marketing director for Bug Labs wasn’t going to do consumer
research reports. Toeman is going to have to find and manage the
community of users that will use and develop the gadget itself. And
even before the community can grow, Bug Labs still has to prepare.
There is a long road ahead of them before the launch.
The hardware has to be stress tested, the motherboard has to fit in
the plastic housing, the aesthetics have to be good, the software has
to seamlessly interact with the hardware and back again with the Web
site, the Web site itself needs to launch, and all these parts have to
come together so that the customer will get one holistic experience
when they buy a BUG.
At the end of every presentation he gave at Punch Bar in New York,
Toeman would get a feel for his listeners. While the audience was
getting their fill of Bug Lab’s prototype, Toeman was actively looking
for beta testers, and that’s no small order when a pre-requisite for
your beta testers is some kind of software development skills. But itâ??s
the only way to begin stress testing the BUGS.
Beta testing is a stage that all technology startups go through
before their big launch. Del.icio.us had a beta testing stage well
before they were bought by Yahoo. And it’s the only way to ensure that
when Bug Labs is released in the fall they will have a shot at
achieving what Semmelhack views as their ultimate destination.
Before Bug Labs can disrupt an industry it has to develop into a
final product. And for now Semmelhack presses forward inspired by a
quote from Steve Jobs, founder of Apple Inc. "the journey is the
reward," Semmelhack repeated. "If you are unhappy with something in
your life, make a change. That’s how Bug Labs got born," said
Semmelhack.