Tech Brew Ride Home - (Portfolio Profile) ArcX

Episode Date: July 16, 2022

Ride Home Fund's latest investment: the smart ring/device controller ArcX! More at https://arcx.fit/ Invest in ArcX via the Ride Home Fund here. Learn more about your ad choices. Visit megaphone.fm/adchoices

On April 4th, 2023, around 2 in the morning, a man was found stabbed multiple times on a sidewalk in downtown San Francisco. Hey, who did this to you? What happened next turned the story into a political firestorm. Reports have identified the victim as Bob Lee, the founder of Cash App. From Bloomberg Podcasts, this is Foundering, the Killing of Bob Lee, beginning April 16. Welcome to another portfolio profile episode of the TechMeme Ride Home. Today we're going to talk to another great company that the Ride Home Fund has invested in. And this one is kind of the most fun that we've invested.

It's the simplest idea. This is just a great product that everybody's going to get instantaneously. And that's why I'm very excited about it. I said to the founder that we're going to talk to, I want to invest in this because it's a product I want right now. Let me stop fomfring. Paul, Paul Blair, you're the founder of ArcX. Thanks for coming on the show. Brian, fantastic to be here. Thank you for having us on. And obviously, thank you for your investments in the company. Absolutely. So let's let's get right to it. Give me, give me the two minute pitch about what this product is and why I want it and why I think a lot of people want it.

Okay, so the idea came from personal experience. I was on a skiing trip with an army buddy. Three days in, his ambition got the better of his talent, and he ripped his ACL, which I thought was a little bit inconsiderate because it meant I had to spend the rest of the trip skiing by myself. So I started listening to music, to podcasts, but I find that when I wanted to skip a track or adjust the volume,

it was really difficult to get a glove finger onto my earbuds. So I invariably had to stop, take a glove off, reach inside my jacket, take my phone out to perform that simple operation. I love my tech, I love my gadgets, but I found that there was just no other wearable or any other way of controlling music during exercise. At a similar experience, running, cycling in the gym. And so three years ago now, left a corporate job match to my family's concern and started building a team to decrees. create this product. So it's a smart ring. It's a wearable.

It's a smart ring for sport and fitness. But it's also essentially, it's a joystick. It's a joystick that allows you essentially control of your smart device using one hand, basically. That's right. We looked at lots of different interfaces, voice and gesture and touch, but find that when you're doing sports, whether you're riding a bike, skiing downhill, doing some sort of exercise where you're using both hands. If you're wearing gloves, even running on a cold day, none of those interfaces are really

guaranteed. So the solution we came up with was a micro joystick inside a little waterproof and shockproof housing. But to get past the whole sizing issue, that tech is then interchangeable through a whole series of different sized, stretch fit rings, designed to be worn with or without gloves on your index finger and controlled with your thumb. Or you can also swap that tech into a little mount and attach it to handlebars, kayak, paddles, ski pools, you name it. So, I mean, you can obviously play and pause music, skip tracks, take incoming calls. You can also do things like, you know, limited SMS functions, but you could do SOS, you know, emergency calls, you know, stuff like that. It's essentially, it's not a one-size-fits-all thing. It's like you can customize this to do what you needed to do depending on your use case. Absolutely. If we take the main use case where obviously the idea came from and talking about

controlling music in a sporting or fitness scenario, we wanted to keep it pretty intuitive. So the default settings are when it's on your finger, up is volume up, down is volume down, left and right is skipping tracks. But if you want to add a little bit more functionality to that, through the app, you can customize those controls. So instead of a double-click to the left and it going back a track, you can go back at the playlist. If you're taking a break during that activity,

rather than getting your phone out, because part of the idea is we obviously want to encourage people to stay active and stay and stay fit. But we all spend way too much time on our screens. So during that activity, we want you to have your phone on you, but not have to get that phone out and look at your device. So you can accept an incoming call, as you said, or you can pull up your voice assistant on your phone. There is an option to make an SOS call, as you said. So if you have an emergency, or you have an accident rather than panicking and trying to find your phone,

if you press and hold the joystick, for a long press, five seconds, it will make a call to emergency services. and it will also send an SMS with your map location. That's the default, or you can customize it in the app. So rather than emergency services, it could be a friend or a partner. You might want to disable the call function and just have that text to go out with some predefined text. Perhaps if you are, say, at the halfway point of a run or a cycle, simply press and hold just to let someone know that you're at your halfway point,

you'll be back in however long. And it works. So it's customizable. out of the box and there's an app for this, but also it works with existing apps out there, like RunKeeper and stuff like that? At this point, we have spoken to RunKeeper, Strava, lots of other big sports and fitness apps. We would love to be able to integrate that, our app with theirs, to essentially enable R-ring to control some of their functionality. So lots of scope for doing that in the future.

But right now, yeah, the tech works right out of the box, connects via Bluetooth to your phone or any other device in a couple of seconds. You don't necessarily need the app, but then the app gives you lots of different features and benefits. I want to come back to this because there's other things that this could be used for down the road. But, you know, give me a little bit of your background because I have dumb ideas for products all the time. And I don't have the wherewithal to know how to figure out how to produce hardware

to make it a reality. So tell me a little bit about your entrepreneurial story and how you're qualified when you have this brainstorm to gin up actual hardware that people can buy. Well, after a business degree, I went into the Army. So I was a paratrooper for 20 years. towards the end of that career, I had an idea for bringing a new product to market. I saw a gap in the market, again, like this, based on personal experience. It was for a dog toy. So I loved that whole process of taking a concept, proving that product market fit, designing a product, getting it manufactured, testing, prototyping, getting some feedback, made every mistake under the sun,

learned a lot from that and got that product to market. Fantastic experience. I couldn't make them fast enough. I grew that business for a couple of years. I even went on to Dragon's Den, which is the British version of Shark Tank. I was unsuccessful, but then did a licensing deal with a great US company. And so had a successful exit there. One or two other startups, lifestyle business, a learning experience,

let's say, and then five years in a corporate job where I rounded out my business experience, had a fantastic mentor as the CEO. And as I said, had this idea, again on personal experience and felt the time was right to leave that corporate job and take this idea forwards. I had the idea in my mind, but clearly didn't have the technical skills or the ability to get right down into the detail of industrial design or the firmware or the software. So my first port of call, if you will, was to find a CTO who had that experience. And Kumar, fantastic CTO, lots of experience in the wearables business.

His background is as a embedded software engineer, brought all that technical skill and experience. Together we then have added to the team since then. But he came on quite early on, six months into the project. Yeah, is it sort of these days, you know, they always say about doing startups, at least in software or whatever, like you can just have two people and, you know, a handful of money and everything is sort of off the shelf now. Like if you're capable of having an idea and at least getting to the point of, I don't know, sketching something out in CAD or something, like, is it sort of off the shelf now for hardware as well? Are there resources for figuring out how to get in touch with manufacturers or things? I hope I'm not sounding like I'm simplifying the process, but is it something that is within reach for people to do these days to actually start a hardware business? Absolutely. I mean, any startup is hard. Software business is phenomenally hard.

But I have learned, yeah, through experience that, yes, hardware is hard. It's true why they say that because you've got the added. complexity of getting a physical product, all the supply chain issues, getting the aesthetics, the feeling the function, all of that right. But there are so many resources out there. There are a lot of different companies that will help you get to that prototype stage, the MVP, very early, with relatively little money. It might be a pretty crude MVP, but at least from there you can prove that product market fit, get a lot of feedback, go around that design. design loop again and improve whatever elements that need improving. So yeah, there are lots of

resources and companies out there. But Kumar and I bootstrapped this as far as we could. We, as I said, went through that whole design iteration four times in the end and improved every single time. And we're fortunate enough to get some really good feedback. Some of it was quite harsh. But we took that on board, made the changes that we could. And in the end, we've now got a fantastic product that we're really excited about. You mentioned briefly there, you know, supply chain issues, you know, not to make this two of the moment. But what has been your experience, you know, the ring is out in the market. It's on store shelves in a limited capacity right now. But in terms of manufacturing, what's been your experience in recent times in terms of being able to actually manufacture arc axes?

Yeah, good question. Anyone producing hardware that has any sort of electronics inside will know that there is that shortage. In the world right now, everyone's chasing and after semiconductors in particular. If anything, the pandemic and the lockdown forced us to slow down a little bit. We had the foresight just over 12 months ago to pre-buy all the components we needed for our first production run of 10,000 units. So we had those sitting in storage. But yes, that is still a concern. We are looking ahead over the next six to 12 months and everyone will be aware that things are.

still in terms of lead times, whereas it was four weeks pre-pandemic, it is not up to 52 weeks, coming down a little bit, but all the forecasts say that it'll probably be mid-2020 before things get back to some sort of normality with reasonably short lead times to get those components and elements needed to put a hardware product together in this sector. Let me, let's talk a little bit about strategy here, because, you know, in my entrepreneurial experience, the actual process of producing something that could go on store shelves is something that's new to me. I don't have experience with it. But what is, what's your philosophy on the idea of, I don't know, DTC versus going wholesale channels and actually, you know,

working with retailers to actually put it on store shelves? Like how do you think of that and, And what is that like building relationships with these partners to actually get the product out to consumers? Yeah, that's a great question. And it is very much a strategy call. What suits us will be very different to other businesses. But not relying too much on previous experience, but that's what I did with my dog toy. I saw D to C, probably 20, 30 percent of inventory and the rest selling to, to, to retailers. There are obviously pros and cons for each. We're trying to do the same with this

business. In terms of retailers, we are now in this fantastic position where we have got potential orders for 50,000 units, which is amazing. We are now facing the challenge of scaling up to meet that demand. That is a nice problem to have, but right now it's still a problem. So it's very much trying to balance that. We want to sell some D to C and have that really close relationship with customers to get that feedback to answer questions, dealing with any complaints, all with the view to trying to improve the product further for future iterations and just to really get that that call-face customer experience.

But we've already got a good relationship with three or four high, high cost. profile retailers in the UK, and we hope to replicate that when we launch in the US early next year. And what is that process like when you go to, you know, here in the Northeast US, like Dix sporting goods is the big one around here? Like, how when, I'm assuming that this is again another process where, and we'll talk about like CES and stuff like that, but when you go out to these retailers, aside from the them being like, oh, that's a good idea. I bet we could sell that. Like, what else are they looking for in terms of taking on something completely new? Like, you know what I mean? Like, this is a brand

new relationship. This is a brand new product category. Like, are there certain things that you have to like prove to them in order to land deals to get on retailer shelves? Yes. Clearly, the retailer's got to believe that the product will sell. They've got to give up some shelf space if it's in a bricks and mortar store or they've got to give up some online space in their catalogue. That takes a degree of confidence from them. It will invariably get down to the contract terms. If it doesn't sell, we might be obliged to take that product back. Our secret weapon is Charlie, who is our first hire. Fantastic athletes used to compete at an elite level, phenomenal salesperson was an early hire in a previous startup and has just

got that ability to knock on any door, create a rapport right away, sell the product in a non-sealsy way and just establish that great relationship. So Charlie's done a phenomenal job with those UK retailers. But yeah, you mentioned big sporting goods. Clearly they will be a target for us, as will be a number of other retailers in the US. So it's just a case of starting that conversation. The more traction we can demonstrate with the more seals we generate, clearly that those conversations get easier. Give me the experience on two different things for other people that might be going into the startup world to do something like this.

What was it like you guys? I think you won in Gadget's Best of CES for Health and Fitness. What's the experience of doing CES and like sort of announcing yourself to the world there? Yeah, we were a finalist in that category. We effectively went, that was our soft launch, so went live at CES last year. It was a digital-only version. And it was, yeah, it was a big moment for us. We thought, well, we'll enter, we'll have a digital booth.

We will send out a bunch of press releases and see what happens. And I remember the moment vividly. It was on the 9th of January last year that our phones blew up when we looked online and just were getting so many inquiries, so much traction, so much publicity. As a result of CES, my wife started crying. tears of joy along the lines of this thing that we have put our heart and souls into for the last couple of years might actually amount to something. Still a long way to go.

We might sell a few down the line. But just that, I suppose, confirmation at that point in time was invaluable. So it was a huge moment for us. Yeah, I think winner of a red dot product design award too. The other one is, I think you guys ran a kickstart. at some point. And I'm curious these days, is Kickstarter another one of those tools that you can use to validate that, oh, there's interest in this? It's sort of like you're getting paid to do sort of product research and development. Is that how you sort of thought of Kickstarter? Yes. And like a lot of things, with hindsight, we would have done it slightly differently.

We would have had a longer run-up, tried to build more of a community. tried to get the word out about the product sooner. But Kickstarter, great platform. We also flipped over to Indiegogo. And with a very limited marketing budget, again, had that confirmation that, okay, some people are interested in this. And the money we generated through pre-order sales enabled us to put that right back into the product, go through the whole design for manufacturer stage, iron out a couple of things. little kinks, which we did find with the electronics and just take the product right up to the

point where we were ready to start production. You and I have talked about some of the other things down the road that we could do with this great product. Obviously, we talked about sort of the emergency message thing. So you can see this as a panic button for the elderly or infirm and things like that. obvious use cases for visually impaired people to navigate things and things like that. But also, as a wearable, there are obvious things that you could build out in later iterations, too. You could add NFC chips and things like that, so you could do context of payment and other

that. What are you thinking in terms of how this particular product can develop over time? We obviously focused on it as a sports tech product and that, I suppose, our DNA of this controlling music and that almost single use case platform. But you're right, in some of those examples you mentioned, we have been amazed at the interest we've had and B2B inquiries for all sorts of niche applications and use cases. and they've been fantastic, great conversations to have, talking most of the time with other founders who can see R-ring as an interface with their tech. So we're very keen to continue those conversations and we have got three collaborations

going at the moment. One as an interface for smart glasses, one as an interface for an AR headset for a medical simulation and another one as you said as a control interface for visually impaired to better flick through and navigate menu options on laptops and other devices there are a host of other use cases out there we probably haven't thought of yet so we are going to open up our software and enable people to program and configure the app and the ring in ways we probably haven't thought of to create use cases that will hopefully be valuable and just make life a lot easier for people in so many different ways. Yeah, it's the, it's the AR and VR interface, I think, that excites me as well,

because if we are on the cusp of AR headsets maybe reaching the mainstream over the next few years, you know, you can, I know that, you know, certain companies think, oh, well, you can just talk to your voice assistant while you're doing that. But you really don't want to be walking down the street and constantly tapping on your classes and things like that. So I can definitely see, I mean, I can already see it now for a lot of the shooting games that I do on the Oculus for VR and stuff like that.

Like having a joystick, having a really simple interface tool like this, you might be well positioned to ride a coming wave here, I think. Yeah, the whole A.R. VR, VR. world and the metaphors is fascinating. It's coming our way for sure. And we have done various tests with a single ring or even have two rings, one on each index finger, controlling various aspects of that. You're right. That voice clearly has its place and it is like all tech getting better and better. But if you've got a bit of an accent like me, even walking down the street and it's a windy day that ambient wind noise can interfere with the recognition.

There's also the latency of using voice as an interface. So we're very excited about what's happening right now. We are trying to tick those milestones off as we go, but also trying to have an eye in the future and what we can include in terms of use cases or even tweaking the hardware slightly just so we can, yeah, add additional use cases as we go. So where we're at right now is there's demand for this. Basically, we're at the position where we're just taking all the money we've got and putting it into manufacturing units to get out there and sell.

So we're right at the cusp of really entering the market and hopefully flooding the market and being successful with. with this product and getting it out there right now? Absolutely. Every startup out there, every founder knows that given macroeconomics and everything going on in the world, that we have to tighten our belts a little bit. We have stripped back absolutely everything. We're as lean as lean can be.

None of us have taken a salary yet. So every single penny is going into getting as many units to market as possible to meet that demand that we know is there. and hopefully growing as a result of that, getting into new markets, we have got three milestones for our app that we want to improve. We see longer-term value coming from the app. So whilst customers will have the hardware on their hand, the app will get better and better and offer them more features and benefits.

So, yeah, one step at a time, but we're excited where we are now, but there's always another crocodile closest to the canoe, another hurdle to overcome. But day by day, we're working hard. Well, speaking of, by the way, I don't think I mentioned this, but if you want to see what we're talking about, check it out at arcx.fit, so that's A-R-C-X.F-I-T. Do you have any, if people listening are interested in getting involved or finding out more, obviously, I'll put them in touch with you.

you if they are. But do you have any asks for the audience in terms of if people do want to get involved, like some key things that you and the team are looking to do right now? Yeah, thank you. I suppose three elements. We are still in the middle of this funding round. We're raising $600,000. We still have a little bit of room left in the round, but we do have to close at the end of this month. So if any investors would like to come on board, we're We would love to have a conversation. Secondly, other partners out there talked about collaboration and niche use cases, other business use cases. We would love to have those conversations.

We get really excited about founders with great ideas and not necessarily startups, but any established businesses who can see a potential partnership. We would love to have those conversations. And we are selling, still an indigo go-go with a 30% discount until the end of this month. that will drop to a 10% discount for the rest of the summer. And then products will be on the shelves and retailers at the retail price of $69. So actually, if you want to get involved and like me, you're like, oh, I want that. Go get it right now while you can for this sort of pre-order batch.

Yeah, and if there's anyone listening that wants to help close this round, feel free to get in touch with me or Paul, and I'll obviously vouch for the team and what they're doing. Paul, like I said, this is the most fun thing that I've invested in. It's the easiest to explain to my mom. What did you invest in this time? She's a runner and she said like I did. She's like, oh, I would use that tomorrow.

So super excited about this. Thanks for coming on and sharing the story. And everybody, pre-order this while you can. Thank you, Brian.