Latest / The Founder's Journey with Fexingo: First-Time Entrepreneurs, Failures, and Lessons Learned / From Rejected Prototype to 50M Hardware Startup
Transcript
- Lucas: So there's this moment every hardware founder knows, the one where you've just watched a room full of investors nod politely while your prototype fails to light up. For Adam Keller, that moment came in early 2019, and it nearly ended his company before it started. Luna: Wait, is this the smart-lock company that just hit fifty million in revenue? Lucas: That's the one. Latchly, based in Austin. But back then it was just Adam, a 3D printer, and a pitch deck he'd built in a weekend. The product was a retrofit smart lock that could be installed in under ten minutes without any wiring. The prototype worked in his apartment, but in the demo room, the motor jammed. Luna: Ouch. And the investors just wrote him off? Lucas: Pretty much. He had three meetings that week, and all three passed. One partner even told him that hardware was dead and software was where the money was. Adam walked out of the last meeting, sat in his car, and seriously considered going back to his old job at a security firm. Luna: But he didn't. I read somewhere that he decided to build a hundred units anyway. Lucas: Exactly. He maxed out two credit cards and a small line of credit to order a hundred circuit boards from a manufacturer in Shenzhen. His thinking was simple: if he could get fifty of them into real homes, he'd learn more than any investor pitch could teach him. Luna: That's a gutsy move. What did he learn? Lucas: The first round was a disaster. Out of the hundred units, seventy came back with a dead battery issue. The lock would drain a fresh set of AAs in under two weeks. Turns out the motor he'd chosen was drawing way more current than the datasheet claimed. But here's the twist — the thirty people who kept the locks loved them. They'd leave comments like 'I forgot I had it installed' or 'My landlord never even noticed'. Luna: So the core concept worked, but the execution was off. Lucas: Right. And that split — total failure on the hardware, but genuine delight on the experience — became his compass. He didn't go back to the drawing board. He went to a local electronics engineer, a retired guy who'd spent thirty years at a defense contractor, and together they redesigned the motor driver circuit. The second batch had a two percent failure rate. Luna: Two percent. That's a massive jump. And that second batch is what got him his first real funding? Lucas: It did. He took one of the working units to a local AngelList meetup, and this time he let the investors play with it. He didn't even do a demo — he just handed it to them and said 'install this on my office door in five minutes.' One angel timed him at four minutes and thirty seconds, and wrote a check for two hundred thousand dollars on the spot. Luna: There's something about that — letting the product speak for itself. But I'm curious, what was the hardest part after that first funding? Lucas: Scaling manufacturing. They went from a hundred units to ten thousand, and suddenly they were dealing with injection molding, UL certification, and supply chain delays. Adam told me that the first time he saw a full pallet of finished locks, he felt this mix of pride and sheer terror, because he knew that every single one had to work. Luna: And that's where a lot of hardware startups die, isn't it? They get the prototype right but can't make the leap to mass production. Lucas: Absolutely. But Adam did something smart. He hired a production manager who had spent a decade at a major appliance maker, and he built quality checks into every stage of the line. By the time they hit fifty thousand units, their return rate was under one percent, which is excellent for a consumer electronic. Luna: That's impressive. And now they're at fifty million in annual revenue. How much of that do you think comes from that initial rejection? Lucas: I'd say almost all of it. If those early investors had said yes, he might have rushed a bad product to market and burned through cash. Instead, the rejection forced him to build something that people actually wanted, not something that looked good in a pitch deck. Luna: It's funny, you hear so many stories like this — the rejection that becomes the turning point. But I wonder, is that just survivorship bias? We only hear about the ones that made it. Lucas: That's a fair point. There are plenty of founders who get rejected and never make it. But I think the difference is how they interpret the rejection. Adam didn't see it as a verdict on his idea, he saw it as feedback on his execution. He kept the core insight and changed everything else. Luna: And that's a skill you can develop. Like, most people would just give up, but he had a bias for action. Lucas: Exactly. And that bias is what led him to build those first hundred units. He didn't wait for permission. He just went out and created the evidence he needed. Luna: I love that. So what's next for Latchly? I assume they're not just doing smart locks anymore. Lucas: Right. Last year they launched a smart deadbolt with a built-in camera, and they're moving into multi-family buildings. They just signed a deal with a property management company that runs about fifteen thousand units in the Southeast. But Adam is still hands-on with product design, which is rare at that scale. Luna: That's good to hear. It's easy to lose that founder's touch when you're managing a hundred people. Lucas: He told me he still does a 'customer day' once a month, where he personally installs a lock in someone's home. It keeps him grounded. And it's a reminder that every unit that ships is a promise. Luna: A promise to work. That's a good way to think about hardware. Lucas: It is. And if today's conversation gave you a useful angle on your own project, the way we keep these episodes ad-free is through listener support. If you've gotten value from this show, you can buy me a coffee at buy me a coffee dot com slash fexingo. It genuinely helps us keep doing deep dives like this. Luna: Yeah, it's a small way to say thanks, and it keeps the lights on without any sponsors. Lucas: So back to Adam's story. There's one more lesson that stuck with me — the way he handled the feedback from those first hundred units. When the battery issue came up, he didn't just fix it silently. He sent a personal email to every early customer, explaining what went wrong and how he'd fixed it. That transparency turned a negative into a huge trust boost. Luna: That's such a great customer retention move. How many of those early customers ended up becoming repeat buyers or referring friends? Lucas: Adam says about forty percent of his current customers come from word of mouth, and a lot of that traces back to those early relationships. People remember when a founder treats them like a partner, not a transaction. Luna: That's a lesson that applies beyond hardware. Any founder can do that. Lucas: Totally. And it's a good note to end on. If there's one thing to take away from Latchly's journey, it's that rejection isn't a stop sign, it's a detour. The question is whether you're willing to find the road that actually leads somewhere.