Enabling a massive generational transfer of knowledge in our companies.

Dreamer: Trace Steffen

Business: HowFactory

Location: Cedar Falls, IA

Industry Contest: Manufacturing/Bioscience/IT

Voting Ends: March 1, 2015 11:59 PM

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Manufacturing/Bioscience/IT Current Rank
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Beyond improving current paper-based practices, HowFactory resolves a fundamental disconnect between engineers who create processes and front-line manufacturing workers. We’re revolutionizing how you create, use and update standard operating procedures, digital work instructions, and training.
Business Description:
Executive Summary

HowFactory is subscription Software as a Service (SaaS) platform and app that allows companies to better capture, use, and collaborate on work instructions and Standard Operating Procedures (SOPs). The company is focused on disrupting the inefficient, cumbersome, and costly processes involved in the industrial manufacturing process engineering field - while ultimately creating a powerful tool for any business in any sector to capture their critical business know-how.

In our initial target market of industrial manufacturing, HowFactory solves the problems of employee errors and costly rework due to poor SOPs/work instructions, lengthy employee training time, and the resulting slowing of production for manufacturers. As American manufacturing is being transformed by technology and reshoring, HowFactory is ready to be a key player in this major economic sector.

Beyond simply improving current paper-based practices, HowFactory constitutes innovation that resolves a fundamental disconnect between engineers who create processes and low to middle skill front-line manufacturing workers. HowFactory software is highly visual, incorporating pictures, videos, and digital assets currently absent from SOPs and engineering change notices (ECNs), which are the de facto curriculum for training manufacturing workers. HowFactory is a key tool that focuses on the human capital in manufacturing, and is part of the developing smart factory and visual factory movements.

HowFactory incorporated in 2014 by co-founders Kenny Stevenson and Trace Steffen. Both have long careers in industrial manufacturing, industrial education, technology commercialization, and business. They company is a Delaware C-Corp located in Cedar Falls, Iowa, and is a graduate of the 2014 Iowa Startup Accelerator.

Business Plan

HowFactory plans with the Business Model Canvas, as taught at Stanford University, uses Agile software development, and practices Scrum for project management in all operations. All allow HowFactory to be adequately planful while acknowledging the need to be nimble and highly responsive to our market, clients, and today’s dynamic technological environment. HowFactory is happy to provide further documentation on any of the nine BMC areas upon request.

1. Customer Segments
HowFactory creates value for our initial market of manufacturing companies and the vendors who supply them. HowFactory is focused is on small to mid-sized companies (as defined by 100 – 500 employees) based in the United States. Conducting 120 customer discovery interviews and rigorous research reveals these companies in acute need of tools for knowledge management, employee training, and process improvement.

With vendors, our focus is on companies who supply more than one outside client – for example a paint company or makers of equipment required for other manufacturing processes. Vendors spend significant time supporting their clients – flying long distances to train and support the companies who use their materials and tools. HowFactory gives them a common, centralized place to store and share key educational assets and a way to open up a two-way communication between product users and product producers.

2. Value Propositions
For manufacturers, HowFactory solves the acute problems of process documentation, storage, and use, as well as employee training and collaboration on SOPs and work instructions. The most common practice is to employ an expensive consultant or use valuable engineering time to document SOPs and work instructions on paper, laminate them, and put them in a binder which is seldom used and sometimes lost. HowFactory delivers value beyond removing cumbersome paper processes. The HowFactory app makes digital capture extremely fast, formats automatically, and allows line workers and engineers to communicate process changes quickly.

3. Channels
HowFactory’s channels include
Online sales
Direct phone sales to established professional networks
Sales by vendors to manufacturers
Sales by consultants already in manufacturing doing various process documentation, training, and work instruction development tasks
Deployment across conglomerates (For example, one of our reference customers is held by the Ali Group which owns 76 brands, 55 manufacturing facilities, and employs 8,500 people)
Campaigns in social media, search engine marketing, and industry education
Trade shows and trade magazine advertising

HowFactory plans to use the “pull” tactics of sales by consultants, vendors, conglomerates, and online as they have the greatest return and scale best.

4. Customer Relationships
HowFactory has very established personal relationships with both the manufacturer and vendor customer segments built over the duration of both our co-founder’s careers. Kenny and Trace are particularly well-connected to the Department of Defense (DoD), manufacturers in industrial coatings (architectural and corrosion protection), robotics, automotive, and the companies in the supply chains for tier one manufacturers. Strong relationships also exist with organizations like the International Union of Painters and Allied Trades, The Society for Protective Coatings, and NACE International.

These relationships are largely maintained through LinkedIn, electronic communication like email and newsletters, and personal interaction at trade shows and on the phone. Due to the “small world” nature of both of these communities, relationships are not particularly costly to maintain but are very important to the overall business plan.

5. Revenue Streams
HowFactory is based on a subscription SaaS model. This proven sales model allows customers limited trials and starting subscriptions just by entering a credit card number. HowFactory can bypass many of the lengthy sales cycles encountered by traditional enterprise software in this way. HowFactory service levels will be determined by three factors: The number of processes, data needs, and number of administrators.

Service levels are:
Manage up to 3 active processes or steps (1 GB data) - Free
Up to 50 active processes or steps (includes 5GB data) - $50/month
Up to 100 active processes or steps (includes 15 GB data) - $100/month
Up to 500 active processes or steps (includes 40 GB data)- $250/month

For larger clients who want to host data on site:
Unlimited processes or steps (includes 100 GB of Data) - $500/month
Unlimited processes or steps - $12,000/year (includes 500 GB of file storage on our servers, or unlimited on yours)
$10,000 on-boarding fee (still being validated)
Each additional administrator $100 / month

HowFactory offers customers existing SOP uploading service at an hourly cost and has partners that can provide media or process consulting, with HowFactory receiving markup.

6. Key Resources
HowFactory’s key resources are:
Intellectual property: Software code, user interface layouts, system behavior, trademark and brand, graphical elements, and contracts
Developed business relationships with reference customers and a large, deep, personal network of potential customers established over decades
Team members and employees: Management team of experienced business professionals; software developer; graphic designer
Formerly established internship program with University of Northern Iowa as a talent pipeline
Office space, computers and software, a/v equipment, and other material
Commercial relevance grant from IEDA; investment capital from Built by Iowa, Iowa Startup Accelerator and friends and family; and applications in process for Iowa Demonstration Fund among several others

7. Key Activities
HowFactory’s activities include:
Software development meeting the needs of clients directly, developed with agile methods
Working closely with reference customers in our closed beta/early adopter pool
SEM and organic marketing to attract customers
Trade events - in the industrial manufacturing space, trade shows and other industry gatherings are highly important
Working with equipment integration packages to take advantage of hardware
Creating and growing integrator-based distribution agreements

8. Key Partners
HowFactory’s key partners include:
Vendors serving manufacturers - these partners, while also customers, leverage sales to and relationships with the companies they serve. Their use of HowFactory reduces risk and uncertainty and optimizes sales.
Reference customers and beta sites - these partners help develop the HowFactory software beyond the MVP stage by providing real-world use, feedback on software performance, and ever-improving product/market fit. They also provide word-of-mouth promotion and valuable connections to peers.
Consulting firms - these partners provide complimentary services in process documentation, and optimize and economize sales. They promote and support clients’ use of HowFactory software and their familiarity with customer segments improves product/market fit.
Industrial software and hardware integrators - these partners help HowFactory acquire knowledge of our customer segments, awareness of competitors, help optimize sales, and support clients.

9. Cost Structure
The HowFactory team has a deep talent pool of industry expertise and technical talent focused on value creation. The focus is building a “low touch” sales model that does not require long lead time or direct onsite contact with customers. Continuing to build channel partnerships is a top priority. Additionally, HowFactory will drive to understand the key features and user stories that create value. That is best done with personnel directly in facilities during the early stages of development.

Our Passion
Both HowFactory founders Trace and Kenny have worked in training in industrial manufacturing for over a decade. During that time we have seen how our clients have struggled to train their employees and manage the corporate knowledge that is essential to the success of their businesses.

As industrial educators the ability to easily create and distribute SOP’s and training knowledge in this way will be a game changer for the companies that we serve. Solving problems through knowledge and technology is what we have dedicated our careers to. HowFactory allows us to impact our industry in the largest possible way.
Reason for Entering:
Funds at this time will be used for software development and business development - specifically marketing and sales. During the next few months, we will devote the majority of our resources to developing the software, testing server and hosting systems at scale, working directly with our reference customers, validating our sales channel, and building our sales funnel.
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