How NOT To Build a Startup: Ned Hill, CEO of Position Imaging (Part 7)

Sramana Mitra: Let’s go back to the point you were pivoting. How much money did you get at that point to do the pivot?

Ned Hill: Very little on a grip. My burn rate was over $100,000 a month. I was being given a couple hundred thousand dollars to go through the next couple of months. I knew I needed some commercial traction. I approached UPS and told them what I was doing. We did a pilot.

Sramana Mitra: Paid pilot?

Ned Hill: Yes. That came with credibility.

Sramana Mitra: How much was that?

Ned Hill: $50,000. The pilot was successful. It was at a customer counter in New Hampshire. There were four women who worked at the desk. We saved them time on the backroom staging. We saved the customer time. It was a big success, but UPS didn’t move forward because, in their own words, “We are already paying them. If we save them time, they’ll probably go surf the web more.”

That was my credibility check. My real goal was to create this smart package room and launch that. After we finished that pilot, we were already working on a smart package room for multi-family residential buildings. That was in 2015.

Sramana Mitra: How did you sustain five years?

Ned Hill: We had five years of just hardcore technology development.

Sramana Mitra: Where did the financing come from for all this?

Ned Hill: The original investors.

Sramana Mitra: They gave you another $5 million dollars to keep going?

Ned Hill: Yes.

Sramana Mitra: Who are these investors?

Ned Hill: I went to private individuals who I knew and who understood the big picture.

Sramana Mitra: The reason I’m pushing back on some of these things that you’ve done is, this would have been near-death experiences for other entrepreneurs. Private investors don’t operate with these time scales. They don’t give money like that.

Ned Hill: Right. This is a very unorthodox path. I wouldn’t recommend it to anybody. What I would do is nail the application.

Sramana Mitra: Not just the application but customers as well. I would test the application with the customer.

Ned Hill: Up to the working product, that’s what we did. That roadshow for developing the use case took me at least a year or two just to develop the specs. That wasn’t made up in a lab. It was boots on the ground and talking to customers. It wasn’t the residents but the people who owned the buildings. That was done for that product before we started building.

Sramana Mitra: Where do things start to snap in gear?

Ned Hill: Once we launched the smart package room, we saw that it worked as advertised. It was pretty clear early on that we had something and it was a big win. We were lucky because we could see package locker companies and see their pricing. That’s how we started to roll things out. It’s very rare that you go into a fairly mature industry and turn it on its head. There was a fair amount of education. We’ve had three consecutive record quarters. Now we’re starting to venture into other markets.

Sramana Mitra: What is the average deal size?

Ned Hill: $20,000 for the hardware and then $500 a month if you got a building of 300 people. It’s typically $2 an apartment per month.

Sramana Mitra: What kind of revenue level are you at?

Ned Hill: At the end of the year, we’re expecting about $5 million. The multi-family residential market is a good market because it’s sticky but slow going. Those deals last though. We’re engaged with a very large retailer right now with UPS. There are thousands of stores. There’s another retailer in France that wants to put this in.

You’re looking at multiples on our residential sales. We’ll probably be in $10 million to $15 million in 2024 and $9 million in the residential line.

Sramana Mitra: Thank you for your time.

This segment is part 7 in the series : How NOT To Build a Startup: Ned Hill, CEO of Position Imaging
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