TinyTel

Matt Horn was working as a management consultant on a turnaround project at a steel door factory in western Sweden when he started thinking about building his own product. His interest in where architecture, engineering and design meet pulled him toward product design and, eventually, mobile phone hardware. The idea came from a simple moment at a friend's house. His friend's son wanted to go outside to play and wasn't allowed to, so the friend suggested he play on an iPad instead. Horn recalled his own childhood in Memphis, Tennessee, where he was outside all the time, and concluded that no simple communication device existed for kids. He described the gap as something like a walkie-talkie, but running on the mobile phone network.

Horn started with a design project alongside friends, and a year later decided to found the company. The product, TinyTel, is a watch-like phone with no screen, just a button and a speaker. Parents set up contacts and view location through a smartphone app, and the device works independently of that phone once configured. TinyTel partnered with the telco Ting, which runs on T-Mobile's 2G network, and includes a SIM card in each package sold in the United States.

The company launched on Kickstarter in mid-2014. Shipping began about a year and a half later, in early 2016, and the team said it took longer than expected to make what Horn called the world's smallest mobile phone. For manufacturing, Horn started on Alibaba but later moved to a network of suppliers he found through personal introductions. He said he found better quality and price that way, and he credited that networking to asking everyone he knew for expert contacts.

The first customers came through Kickstarter. The campaign raised $140,000, and about 1,102 units were sold through it. After that, sales came from the company website and from B2B channels, including retailers in Europe. Horn estimated that the roughly 15,000 units shipped corresponded to about 10,000 individual customers, since some retail stock sat with partners.

Horn raised capital in three equity rounds: $2 million, then $1 million, then $1 million, plus $4 million total from him and outside investors. He said it was easier to find private money from investors in Stockholm than to win over VCs, and that smaller rounds reduced dilution because pre-money valuation rose between 50% and 200% with each round. Horn also said that the darker colors sold better than the bright ones, which surprised the team. He declined to share conversion rates, gross margin and supplier costs, saying those were competitive metrics.

As of the interview, TinyTel had about 30 employees, had sold roughly 15,000 units, and was focused on building four color variants of its product. The company is now positioned as one of the first wearable phones with cellular connectivity for voice and data.