“It’s hard to make a product; it’s harder to sell one. That’s the thing we help the startups with now, and what we’re focused on is helping them sell their products.”
Liam Casey is sitting in PCH's Innovation Hub talking about the company's strategy. The firm opened this San Francisco office in 2013 after it bought design consultancy Lime Lab in 2012. The intention of the acquisition was to further the company's reach in Silicon Valley and almost four years later, the strategy is paying off.
PCH is 20 years in business this year. The company that started out in Cork, and still has its headquarters there, has spread its wings to China and Silicon Valley. Its business has evolved with it. Once best known for making smartphone accessories, these days PCH has other things to turn its attention to. Among its most recent deals was a collaboration with L’Oreal to produce wearable sensors and backing early-stage hardware projects to help promote innovation.
“The products are far more sophisticated and more complex than anything we’ve done in the past,” says Casey. “We were doing electronics, but they weren’t as complex.”
Having the San Francisco hub has been a boon for PCH. Being located so close to the companies it is doing business with has shortened the lines of communication. Companies can come and see for themselves what PCH is about and collaborate closely as their products are created.
Product delivery
“The sales timeline has gone from 18 months to three months, and three months is conservative,” Casey says. “We aim to do it even faster. Having the history of being able to deliver product, and then having the presence here where people can come in and ask questions and get answers without pause, which is really important. It gives people a lot of confidence.”
That speed is important for companies in the Valley, Casey says, noting that “time is the number one currency here”.
The firm employs 130 people in San Francisco, but is in the process of recruiting for an additional 25 engineers. These jobs are part of a refocusing of the company’s resources on its US business. Earlier this year, PCH said it would cut 250 jobs from its operations in China. That decision was due to a reduction in the need for the factory level engineering services it previously provided in China.
“We can take the products to a much later stage in the development cycle here,” Casey says.
Looking around the offices, it’s not difficult to see why. They house engineers and designers, as well as hosting companies PCH is collaborating with. On one floor are machines ranging from 3D printers to laser cutters that will allow the creation of prototypes and parts for the hardware.
It’s not just about creating products though. PCH is keen to establish itself as a vital part of the community. The ground floor of the building is dominated by an open space that is used for community events and meetings, including hackathons.
It opens on to an outdoor area that can be used for barbecues when the weather – usually agreeable, but on the day I visit it’s a torrential downpour – allows.
In another building only feet away, hardware accelerator Highway One and its current cohort of companies are working away. The programme was set up by PCH in 2013 to help startups get to market with their product more quickly. At a time when much if the focus was on software accelerators and companies, there was a gap for a hardware version, a gap that PCH with its manufacturing experience, was well placed to address.
Companies stay in Highway1 for about four months. So far, five “classes” have completed the programme, and the sixth is in progress. The company has put out a call for the next intake in recent days. One of those with a say in what firms make it into Highway1 is Brady Forrest, vice president of the programme. He is involved in the selection process for the eventual entrants, sifting through the applications and whittling them down to the finalists who will get office space, up to $100,000 funding per team for an equity stake, and access to venture capitalists and potential investors. Highway1 will get the product ready for market.
That’s an integral part of Highway1 – there has be an actual product before a firm is accepted on to the programme.
“They have to have a prototype to come in and they have to have a team that can do it,” explains Forest. “That’s a big part of our vetting process.”
Ask Forrest to name his favourite Highway1 project and he answers diplomatically. “They’re all my favourites,” he says. But he admits there is a special place in his heart for the first team into Highway 1, Ringly. The wearable tech company was introduced to the team by Andreessen Horowitz.
“We were just getting this started, and they came walking through the door,” he said. “They were exactly what we were looking for – software people who want to extend software into the physical world. Because hardware is all about deploying software.”
It’s a huge endorsement for the programme when companies go on to raise millions of dollars after refining their product at Highway1. The 67 companies that have come through its doors have raised more than $90 million between them, and some have gone on to be household names. Among the projects that have come through the programme are Drop, a smart kitchen scale, and Ringly, a company that makes smart jewellery and has conducted trials with MasterCard.
You can expect there will be more household names to add to that portfolio in the coming years.
The pay-off for PCH has not just been in the small equity stake it gets in the successful ventures. Casey says the company knew there was an opportunity there and it focused on start-ups.
“What really surprised us was the halo effect, where the larger tech companies or even the non tech companies wanting to get into technology came to us,” he says.
One of those companies was L’Oreal, which announced in January that it had linked up with PCH to produce a wearable skin sensor that can detect the levels of UV to which skin is exposed. Announced at CES in Las Vegas this year, Casey said at the time it was the first of a number of products the company had planned using this technology.
More recently, PCH announced it would work with Massachusetts based MC10, which it collaborated with on the L’Oreal deal, to commercialise MC10’s Wearable Interactive Stamp platform. The skin-worn, ultra-thin, stretchable, disposable stamp is NFC-enabled and could be used for anything from music events, VIP experiences, hotel room access, even payments.
‘Aha’ moment
Not everything has panned out. Casey cites one potential deal with an unnamed industrial firm who wanted to work with PCH on a particular project after visiting the Highway1 demo day. Although Casey describes it as an “aha” moment, he said the project itself didn’t make sense for PCH to do.
It can afford to be choosy about what it takes on these days. The key thing for Casey is design. “We won’t engage unless there’s a big design aspect to it,” he says. “We’re not taking on the ego projects. They’ve got to be challenging projects that keep the engineering team and the people working on it excited. The more complex they are the more financially rewarding they are as well.
“For us, success is getting your product to market. We want a certainty.”
