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How Supermechanical raised $550,000 for a new wireless device — without VCs or angel investors

Posted by Scott Kirsner  January 31, 2012 08:15 AM

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What do you do if you're two recent MIT grads with a killer idea for a new wireless device, and you want to get it into the hands of consumers within a few months? In Boston, venture capitalists and angel investors are notoriously reluctant to invest in hardware. And moreso when it's hardware that will be pitched to consumers.

For John Kestner and David Carr, who'd started a company called Supermechanical together, the answer turned out to be Kickstarter. The crowd-funding site enables anyone from filmmakers to artists to would-be entrepreneurs to raise money from individual supporters. But few have used it as effectively as Kestner and Carr.

They set out to raise about $35,000 so they could produce a few hundred of their Twine devices (pictured at right). Twine was designed to be what Kestner calls "a minimal Twittering object" — essentially, a wireless node that could send information via e-mail, texts, or Tweets about what was going on in its environs. Was there water seeping into a basement, a heating system failure, or a door being opened? Twine would report on it. And the two-inch square device could be programmed over the Web, using a simple, menu-based interface.

As students at the MIT Media Lab, and later as founders of Supermechanical, Kestner and Carr had been thinking about embedding intelligence and communications capability in everyday objects, like wallets and tables. But they realized that one key component needed to be created: "We found we were spending 80 percent of our time implementing the wireless technology that would make all these things work," Kestner says.

They narrowed down the features to the point where they thought they could sell the Twine devices for about $100. Then they created a video (see below) that encapsulated the concept.

They launched their Kickstarter campaign last November, early in the week of Thanksgiving. "We weren't expecting to raise a lot of money," Kestner says. "We just wanted market validation and enough momentum so that once we started making [the devices], we'd be able to sell them." A $99 pledge on Kickstarter promised you a single Twine device — batteries and shipping included — from the first production batch. For $125, you'd get Twine plus an external moisture sensor or magnetic switch. (Twine users can also plug in their own sensors to the device.) They promised delivery in March.

A post on the blog ReadWriteWeb called the project "amazing," and two days later Engadget noted that "Twine connects your whole world to the internet." "The blog coverage gave the project some initial rocket fuel," Kestner says.

Later that week, as Kestner and Carr were preparing their respective Thanksgiving dinners in Somerville and Cambridge, the project had blown past their $35,000 goal: "We were at $100,000, and it was like, 'Oh, boy.' We're ambitious people, but we weren't expecting this."

supermech-sm.jpgThe biggest bump, Kestner says, came in December, when Kickstarter featured the project at the top of an e-mail newsletter. "We got $70,000 in pledges the day that went out," he says. (In the photo, Carr is on the left and Kestner on the right.)

Running the Kickstarter campaign involved answering "thousands of e-mails" about how the product would work, Kestner says. But after 42 days on the crowd-funding site, the Twine project had raised $550,000. (That sum placed it among the five most-successful fundraising campaigns Kickstarter has seen, he says.) Combined with pre-orders placed through Supermechanical's Web site, Kestner says they'll be making more than 5000 Twine devices in their first run.

"We're not absolutely locked down on our contract manufacturer," Kestner says. "We've found some competitive pricing in the U.S., and on our tight schedule, we need to get it right the first time. I think it'll probably be made in the U.S."

After avoiding the VC and angel route to getting a company off the ground, Supermechanical's founders suddenly find themselves fielding calls from venture capitalists in Boston and beyond. "We're flattered," says Kestner. "We're trying to figure out if, when, and how much we'll need. It's tough when you're doing hardware and you need to have inventory. It takes capital to build a lot of stuff."

The start-up's future projects will involve "objects that take the best of the physical world, and overlay the digital world onto them." One research project from the Media Lab was the Proverbial Wallet, which could grow or shrink inside based on how much money you had in your bank account, or become harder to open when your monthly budget was getting low.

The company is still mostly virtual, but they're using incubator space at the Boston Globe (Boston.com's parent) part-time.

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About Scott Kirsner

Scott Kirsner was part of the team that launched Boston.com in 1995, and has been writing a column for the Globe since 2000. His work has also appeared in Wired, Fast Company, The New York Times, BusinessWeek, Newsweek, and Variety. Scott is also the author of the books "Fans, Friends & Followers" and "Inventing the Movies," was the editor of "The Convergence Guide: Life Sciences in New England," and was a contributor to "The Good City: Writers Explore 21st Century Boston." Scott also helps organize several local events on entrepreneurship, including the Nantucket Conference and Future Forward. Here's some background on how Scott decides what to cover, and how to pitch him a story idea.

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