20VC Turning Down Apple & Getting Funded By Chamath @ Social Capital with Dhananja Jayalath, CoFounder & CEO @ Athos

In this episode of "20 Minutes VC," host Harry Stebbings interviews Athos founder Dananja Jayalath (DJ), discussing the journey of creating a revolutionary wearable technology that integrates into gym clothes to provide detailed insights into body mechanics during exercise. DJ shares his entrepreneurial leap from turning down a job at Apple to founding Athos, supported by investors like Chamath at Social Capital and David Cheng at DCM. The conversation delves into the challenges of hardware development, the importance of brand and user experience, iterative product design, and Athos's business model evolution. DJ emphasizes the role of trust in building brand loyalty and outlines Athos's focus on enhancing athletic performance for high school athletes. The episode also touches briefly on Stebbings' support for DesignCrowd, a platform for outsourcing design projects.

• Athos is recognized as an exciting company in the consumer hardware space.
• The technology provides detailed insights into body mechanics during movement.
• Athos' user experience is designed to enhance existing fitness routines.
• The company has received funding from notable investors such as Social Capital, Felix Capital, and DCM Ventures.
• Dananja Jayalath (DJ) is a born entrepreneur who declined a job at Apple to build Athos.

"So joining me stay we have Dananja Jayalath, aka DJ, founder at Athos. To me, one of the most exciting companies in the consumer hardware space."

This quote introduces DJ as the founder of Athos, highlighting the company's significance in the consumer hardware sector.

• DJ and his co-founder Chris wanted to optimize their gym time and improve workouts.
• They sought technology to provide feedback on their exercise routines.
• The founders aimed to create an affordable alternative to personal trainers.
• They explored existing technologies like accelerometers and gyroscopes but found them inadequate.
• Electromyography (EMG) from the medical field was identified as the most accurate for understanding body mechanics.
• The challenge was making EMG technology accessible and affordable.

"The reason we started was because Chris, my co-founder, and I went to the gym a lot, and we wanted to find a way to get more of the time we spent at the gym."

DJ explains the motivation behind Athos, emphasizing the desire for more efficient and effective gym workouts.

• DJ and Chris discovered that EMG technology was expensive and cumbersome.
• They aimed to simplify and reduce the cost of EMG technology for everyday use.
• The founders believed integrating technology into existing routines would increase adoption.
• They decided to incorporate EMG technology into gym clothing, aligning with the routine of changing clothes before a workout.

"So we decided that, you know what? We're going to use this science to give feedback and capture this information."

DJ describes the pivotal decision to use EMG science to develop Athos' core technology.

• DJ exemplifies an entrepreneurial spirit by taking risks and innovating.
• His choice to forgo a position at Apple demonstrates a commitment to his vision for Athos.
• DJ's approach to entrepreneurship involves identifying and solving real-world problems.

"As for DJ, he really is a born entrepreneur, having turned down a role at Apple on leaving university to build Athos into the fantastic company it is today."

The quote highlights DJ's entrepreneurial decision to reject a job at Apple in favor of starting Athos.## Founding Story and Initial Product Development

• Athos' product development aimed to create gym clothes that were stylish, comfortable, and machine-washable, avoiding the need for behavior change.
• The founders, Dananja Jayalath and his partner Chris, focused on capturing biometric signals without using sticky electrodes.
• The project began as a final design project at the University of Waterloo, taking advantage of the requirement to create something in their fourth year.
• They were approached by Chamath, a VC and former Facebook executive, after he saw their presentation at a symposium.
• Chamath offered to fund them, leading to a rapid transition from university to starting their business, despite having job offers from Apple and Analog Devices.

"And what that meant was we need to build something that looked good, felt good, and could go through a washing machine and a dryer so you didn't have to do any behavior change."

This quote highlights the core design principles behind Athos' product: aesthetics, comfort, and convenience in maintenance.

"We were presenting at a symposium and this guy came by, he was better dressed than everybody else was and we didn't know who he was."

This quote introduces Chamath's first interaction with the founders, setting the stage for his subsequent investment offer.

"We got here. I think we had a sea deal about 3 hours afterwards."

This quote captures the whirlwind experience of receiving venture capital funding shortly after meeting with Chamath.

• Hardware product development is often challenging due to the need for physical manufacturing, as opposed to software development.
• Athos faced unique challenges as they were integrating technology into clothing in a way that had not been done before.
• They developed new manufacturing processes and testing standards with their manufacturing partner, Maas, which also works with Nike and Lululemon.
• Speed and iterative development were crucial for Athos to maintain their ability to innovate and adapt their product.

"There was no manufacturing process when we started doing it."

This quote emphasizes the pioneering aspect of Athos' manufacturing process, as they had to create it from scratch.

"We optimize a lot of the details of how we manufacture."

This quote reflects the meticulous approach Athos took to refine their manufacturing process for better and faster product iterations.

• Speed is beneficial for rapid iteration and testing but must be managed carefully in hardware development to prevent issues.
• It is important to capture the right metrics, conduct thorough testing, and keep structured logs during hardware development.
• Athos learned the importance of balancing speed with careful management to ensure successful iterations without compromising the stability of their manufacturing process.

"I think the key point in there is that it's very important to manage it properly."

This quote from Dananja Jayalath acknowledges the delicate balance required in managing speed in hardware development to ensure quality and reliability.

"You need to develop things like, there's a lot of things that help software companies because they are able to iterate fast."

Here, Dananja Jayalath highlights the advantages of rapid iteration, a common practice in software development, and its potential benefits when applied to hardware development with the right management strategies.## Iterative Development and Learning from Failures

• Emphasizing the importance of rapid iteration in product development.
• Acknowledging that frequent failures lead to success.
• Learning quickly from failures is key to creating an exceptional product.

"You have to fail a bunch of times before you can get it right. The faster you can fail, and the faster you can learn from those failures, the faster you can make an amazing product."

This quote highlights the necessity of embracing failure as part of the development process, with the understanding that it leads to faster learning and improvement.

• The importance of distinguishing between what creators want and what users actually need.
• Learning from customer usage is crucial for product development.
• Simplicity and targeted functionality are essential for delivering user value.

"It's very important to disambiguate what you want for the product versus what the users want."

The quote stresses the need to focus on user requirements rather than just the product creator's vision, which can lead to more effective and user-friendly products.

• Discussing the integration of hardware and software.
• The concept that consumers are purchasing experiences, not just products.
• Importance of exceptional design in both hardware and software to enhance user experience.

"People buy experiences and people want to be part of experiences."

This quote encapsulates the idea that successful products are those that provide an exceptional overall experience, which often involves a seamless integration of hardware and software.

• Exploring different business models for hardware products.
• Iteration and testing are crucial in determining the most effective business model.
• The current focus is on providing free software with the purchase of physical products.

"Let's figure out what are all the different things we can try, and let's figure out what are the best things for us to try and take an approach and test and iterate on those things."

The quote emphasizes an experimental and flexible approach to finding the most suitable business model, suggesting that the process is ongoing and subject to change based on user engagement and value creation.

• Branding is crucial for differentiation and success in the market.
• A strong brand builds experience, association, validation, and trust with consumers.
• Capturing mind share and expanding the market are key goals of brand development.

"Brand is an exceptionally important thing in this space, especially to really distinguish yourself and separate from everything that's going on."

This quote underlines the significance of building a strong brand to stand out in a competitive market and create a loyal customer base.

• Addressing the challenge of building brand loyalty in a demographic with perceived low consumer loyalty.
• Differentiation and value delivery are essential for fostering brand loyalty.
• Trust in the product experience is the foundation of brand value.

"If you build a product experience that delivers value and you trust, I think that's where the most value of a brand comes."

The quote suggests that to combat the low consumer loyalty among millennials, brands should focus on creating valuable and trustworthy product experiences that encourage loyalty.## Trust and Brand Loyalty in Health and Fitness

• Trust is crucial for retention in health and fitness products.
• Brands that earn trust become integral to users' routines.
• Lower prices cannot compensate for a lack of trust in a system.

"In, where you can capture somebody's trust, at which point I think especially with things like health and fitness, you want to be able to trust the thing that's giving you advice on your health and fitness to be associated with the brand that trusts you."

This quote emphasizes the importance of building trust with customers, especially in the health and fitness industry, where advice and guidance are critical. A trusted brand retains customers more effectively.

• Experiences with fundraising are unique to each company and founder.
• Having a strong set of investors can drive product development and provide valuable perspectives.
• Success in fundraising is attributed to technological advancement and customer validation.

"I find it very hard to comment on how the fundraising process has been. I feel like this is the only company I've worked at and have started."

Dananja Jayalath reflects on his personal experience with fundraising, noting it's the only one he knows as he has not worked at or started other companies.

"We've been really fortunate in this whole process that we've had an amazing set of investors."

The importance of having supportive investors is highlighted, suggesting they have played a significant role in the company's journey and product development.

• Acknowledgment of progress and improvements over time.
• Importance of demonstrating technological and market progress to investors.
• Future funding rounds should better articulate the company's vision and opportunity.

"Looking back through the history of things, I always feel like, wow, I can't believe somebody funded on that because we've gotten so much better over time."

Dananja Jayalath reflects on the company's growth and the surprising support received from investors early on, despite the progress they've made since then.

"Better and better as we get better and better at understanding and discovering and validating that path to edit."

The goal for future funding is to improve the articulation of the company's vision and the opportunity it represents, demonstrating a clear path of progress.

• Favorite book: "The Seven Laws of Velocity" by Stefan Olander and the CEO of AKQA.
• Best piece of advice: It's okay to make mistakes, but don't repeat them.
• Pros and cons of being a founder involve loving the work but also facing constant challenges.
• Morning routine includes coffee and exercise.
• Future focus for Athos is on high school athletes and improving as a CEO.

"The amount of times that you'll make the right decision is just about the average of the batting average of a major league hitter. So about 0.3% of the time. So it's okay to be wrong. The most important thing is to not make the same mistake."

This advice emphasizes the acceptance of making mistakes but stresses the importance of learning from them and not repeating them.

"We're really focused on capturing and really enabling high school athletes to perform at their best."

The company's future goals involve targeting high school athletes to improve their performance, with a commitment to perfecting their training and workouts.

• Appreciation for the guest's time and insights.
• Reminder to follow the host for behind-the-scenes content and updates on new episodes.
• Thanks to the audience for their support.

"Absolutely fantastic to have DJ on the show and hear the incredible journey of building Athos into the company it is today."

Harry Stebings concludes the podcast by expressing gratitude for having Dananja Jayalath share his experiences and the progress of Athos.