Particle (formerly Spark)

Zach Isupali's first connected product came from a family problem. His mom kept texting his deaf father, who did not keep his phone in his pocket, so he never heard the ring. Zach wanted the lights in the house to flash when a text arrived, but texting is wireless, so there was nothing to plug into. He had to bring the lights online wirelessly, and that became the first product.

The first product was a connected lighting system under the name Spark, launched on Kickstarter as the Spark Socket. The campaign had a $250,000 goal and raised $125,000, but because Kickstarter is all-or-nothing, the team received nothing. Zach later described the failure as a useful experiment. The team had marketed the launch well, with coverage in Wired and Fast Company, and surveys showed the real problem was price. At around $60 per bulb, connecting a typical house's 50 bulbs quickly cost thousands of dollars. The team spent about $15,000 getting from idea to the first Kickstarter launch and about another $20,000 getting to the second.

The team then reused the technology from the lighting product, refactored it into an easy development path for engineers building IoT products, and relaunched in 2013 with a Wi-Fi development kit called the Spark Core. The campaign had a $10,000 goal and raised almost $600,000 from over 5,500 backers. Backers received their units in December 2013 and January 2014.

The first customers were the Kickstarter backers, who were mostly professional engineers building prototypes. The team's hypothesis was that those prototypes would later become products shipped in volumes of thousands or millions. Early revenue came almost entirely from selling Spark Cores at $40 each. Growth then came from customers who bought them in bulk for production runs of around a thousand units, followed by modules designed into mass-manufacturable products.

From there the company layered on a software platform sold as a subscription, then a cellular platform with SIM cards and data plans. Zach described the shift from being a product company to being a company with a portfolio of products and solutions as the key to growth. The founder said revenue roughly doubled each year, reaching about $600K in 2013, about $4 million in 2016, and a 2017 goal of about $10 million.

What worked was treating each launch as an experiment, spending little before validating demand, and pivoting when the data pointed elsewhere. Building a developer community that later fed hiring and sales also helped. Operationally, the team built trust with its Shenzhen manufacturing partners by living there for four months and hiring its supply chain people directly, which helped it avoid the inventory-hostage problems other hardware startups faced.

Security became a major concern. Zach pointed to the Mirai botnet, which hijacked insecure webcams and took down large parts of the internet, as a reason customers look to Particle for secure, end-to-end device connectivity. Existing insecure devices remain in the field for years, which he said keeps the problem open.

As of the interview, Particle had 35 full-time employees spread across San Francisco, Minneapolis, China, and remote engineers in several countries. The founder said the company had raised about $14 million, and the interview cited a recent round of about $10 million. The business still earned most of its revenue from hardware, with software expected to become the larger share over time.