A Q&A with Seamless Toy Company founder and CEO Michael Rosenblatt. The Boulder, Colorado-based startup, which offers a set of intelligent building blocks for kids called ATOMS, announced the closing of a $2.6 million Seed funding round in mid-November. Investors in the round include Elevation Partners, Promus Ventures and Founder Collective. It was founded in 2012, and previously raised $183,000 through a successful Kickstarter campaign.
SUB: Please describe ATOMS and your primary innovation.
Rosenblatt: ATOMS are a system of smart building blocks that enable kids to bring their creations, or existing toys, to life by adding functionality. There are sensor ATOMS, power ATOMS, logic ATOMS and action ATOMS. Each ATOMS does only one thing, like sense light, but it does it really well. You can connect ATOMS together to build just about anything, and they work with LEGO, Velcro, and can be sewn or bolted onto your creations.
Let’s say you wanted to add headlights to your Nerf gun so you could stalk your sibling in the dark. Connect a knob ATOM to a Rechargeable Battery ATOM and then to an LED ATOM, slap some Velcro stickers onto your Nerf gun, and attach the ATOMS by Velcro. Or, you might want to build an iPhone-controlled Batmobile. Grab some LEGOS to build the car with a few motor ATOMS and the Bluetooth ATOM, hold your iPad next to it to automatically pair, and you can control the motors by way of virtual ATOMS on the iPad’s screen.
SUB: Who are your target markets and users?
Rosenblatt: We have designed ATOMS for boys and girls aged six-through-14. However, one-third of our customers so far have admitted the end user is a grown-up.
SUB: Who do you consider to be your competition, and what differentiates ATOMS from the competition?
Rosenblatt: There are two other startups in the electronic construction toys space: littleBits, which was founded by a fellow Media Lab alum, and Modular Robotics, founded by a fellow CMU alum—my undergrad alma mater. They are both great companies and doing really innovative stuff. Modular Robotics has some really cool mobile robot construction kits, and littleBits is much more about exposing kids to electronics concepts. What we focus on is really enabling kids to build the creations they imagine through powerful components that work with their existing construction systems and toys. I think all these companies are helping shape what the construction toy aisle will look like a few years out.
SUB: You just announced that you’ve raised $2.6 million in Seed funding. Why was this a particularly good time to raise more funding?
Rosenblatt: When we did Kickstarter, that was really about market validation for us. We thought it was a good idea, but we really wanted to see if anyone else did too. We raised $183,000 through our campaign, and had 1,360 customers, which would have been enough to build a strong beta version of our product.
However, with the positive market response, we knew that wasn’t the right thing to do. If you are in it for the long run, there is no such thing as a ‘beta’ construction set, because if you change your standards in a future version, you orphan and upset early adopters who have your early versions that are no longer compatible. So instead, we set out to create a system architecture we could build on for the next ten years of future products. To do that, we raised capital and built a rock star team of people with product dev experience from places like Apple, Tesla, and Samsung.
I’m typically more of a bootstrap-minded entrepreneur, but to do an electronic construction system right, it’s not a bootstrap kind of ordeal.
SUB: How do you plan to use the funds?
Rosenblatt: We have four primary uses of funds: Product development—we are releasing new ATOMS every month; Team—continuing to hire top talent; Outreach—really getting our story out there and building awareness; IP—we’re inventing a great deal of technology, and averaging a patent a month since we started.
SUB: What was the inspiration behind the idea for ATOMS? Was there an ‘aha’ moment, or was the idea more gradual in developing?
Rosenblatt: The inspiration for ATOMS came from the Maker Movement, the proliferation of really neat platforms like Arduino and Raspberry Pi, and the recognition of still how much skill and experience is required to use them.
The Maker Movement has its own one percent problem to be able to use these kinds of things, meaning that the other 99 percent of the population can’t program and solder. We realized that if we made the components themselves smarter—like add a microprocessor to a motor, so it can ‘talk’ transparently to a light sensor—we could remove most of the barriers to building things that do things and make it safe and intuitive for every six-year-old kid, but at the same time still powerful enough for a professional. ATOMS are plug-and-play, in the most literal sense.
SUB: What were the first steps you took in establishing the company?
Rosenblatt: I’m a big believer in infrastructure. The first thing I did was hire an assistant, and together, we hired a recruiter. The thinking was to maximize my time across product development and fundraising, and to make sure we had full-time attention on finding great people as our most valuable resource.
Infrastructure gets a bad rap in the startup world, and is often dismissed as ‘overhead,’ but executive mindshare and recruiting bandwidth are the two most important resources of a young company.
SUB: How did you come up with the name? What is the story or meaning behind it?
Rosenblatt: We call them ‘ATOMS’ because they are elemental. No pun intended—really each ATOM we build is pure in that it does one thing really well. But you can combine them to make more powerful complex things.
At least once-a-month, the engineering team tries to pitch me on a multifunctional ATOM, and once-a-month I shoot it down because I believe that what people are paying us for is simplicity. For instance, we make an Infrared Transmitter that solely communicates to an Infrared Receiver ATOM. We had a lengthy internal discussion about whether we should enable the IR Transmitter to be able to send TV remote comments too. Ultimately, we decided that if we were going to support that feature set, it would be in a separate TV-Controller ATOM because it would be just too messy and confusing to our users to support both features in the same ATOM.
The question that usually follows: “Are circuits of ATOMS called ‘molecules’?” I think that’s too kitschy, so we just call them ‘circuits.’
SUB: Do you have plans to seek additional outside funding in the near future?
Rosenblatt: We’re currently shipping the product, generating revenue and understanding how best to connect with our customers. I think it will be clear over the next few months how best to scale the company, and we’ll fundraise based on what we learn and where we need to go.
SUB: What have the most significant challenges been so far to building the company?
Rosenblatt: I think the most significant challenge to any young company is knowing how to choose your battles—cliché alert, but the most significant challenge to that is maintaining the visibility and perspective necessary to intelligently chose those battles. There are a thousand details competing for our attention, and many of them matter a great deal, so the biggest challenge I have is being able to step away from the details and get a plain view of what’s going on across the company. In Boulder, it has been easier because we can walk to hiking trails from our office, and the combination of being off-screen, getting fresh air, and getting my heart going usually results in an otherwise-unattainable reevaluation of where I’m focusing my attention and energy.
More pragmatically, we’ve had to just keep up morale under what’s been an intense schedule. This team has brought up 15 different embedded system hardware products and 72 hard-tooled parts from scratch to ramped mass production in just under eight months. People are surprised when we say we’re going to ship a new ATOM every month, but it’s really quite a bit slower than the pace we’ve been moving.
SUB: How do you generate revenue or plan to generate revenue?
Rosenblatt: We make great products and sell them for money. It’s really as simple as that. We sell ATOMS in themed starter sets, which contain all the parts you need to build a robot creature, a magic wand, or to prank your big brother, including instructions and activities. We also sell each ATOM individually for people who have specific projects in mind, or want to add on to their starter sets.
SUB: What are your goals for Seamless Toy Company over the next year or so?
Rosenblatt: We are really looking forward to working with the user community. We’ll have shipped several thousand sets by the end of this year, and we are very excited to engage with users on what they are creating with ATOMS, and what they want to create in the future. We also have a lot of new products in the pipeline that we are excited to get out to the world.
Seamless Toy Company – www.myatoms.com