Kevin Bailey, of Design 1st: “Be Good with Money”

by Jerome Knyszewski
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Kevin Bailey Design 1st

Kevin Bailey is the founder and CEO of Design 1st. As leader, he is “responsible for setting the strategic direction of the company.”

Design 1st and Kevin Bailey have been the go-to shop for different organizations for more than 25 years. The company offers a “full suite of end-to-end product development expertise.”

With Design 1st, Kevin Bailey and the team offer “research, design, engineering, prototypes, testing, marketing support, transfer to production and finalizing product for first market release.”

Under the leadership of Kevin Bailey, Design 1st has “delivered over 1,000 products to market across a variety of industries, and that influence millions of people globally.”

For example, Kevin Bailey and Design 1st have “helped turn ideas into successful commercialized products” for these companies: Motorola, Acer, Stanley Tools, Ericsson and Christie Digital.

Before Design 1st, Kevin Bailey started out working with the “National Research Council, General Motors, Shell, Bell Northern Research Labs and Nortel Networks.”

While working for these companies, Kevin Bailey “played an integral role in their forward-thinking behavioral research-focused design team on next generation communication devices.”

In the years before Design 1st, Kevin Bailey worked on different devices, which included the “first global smartphone design, development and initial production in 1994.”

Kevin Bailey has earned a degree in Mechanical Engineering from the University of Waterloo. Since 1985, he has been a member of the Professional Engineers of Ontario.

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I was the engineer and was focused on how to actually make the ideas real. How do you build it to actually work for a user in their environments?

Jerome Knyszewski: Thank you so much for joining us in this interview series! Before we dive in, our readers would love to “get to know you” a bit better. Can you tell us a bit about your ‘backstory’ and how you got started?

Kevin Bailey: Before I founded Design 1st in 1996, I spent thirteen years on the ground floor of global hardware product innovation at Nortel Networks, and during a time when the world was shifting from analog to digital communications. I was on the engineering team, considered myself an introvert, but always had — and still have — a love of facing a challenge, solve the problem, and build something. In fact, I grew up building boats from the ground up.

My time at Nortel was a powerful time in the global communications ecosystem that not only impacted how businesses fundamentally operated, but also how they conducted business with their customers. I worked on 2–3 products a year that many times were scrapped as the products were simply too ahead of their time. It was at this time when we saw the Mac and desktop computers hitting office buildings in high volume, workstations and network computer terminals being installed and more. It was a time where companies were leveraging these technology advancements to conduct office- based communications, shifting from a paper process to sharing documents and leveraging spreadsheets to collaborate. It really was the new digital age Wild West. Nortel successfully rode this wave and I was fortunate enough to have spent these formative years at the company and watched the emergence of tools that helped streamline processes for businesses and leverage user-friendly approaches to products and programs. I do think the Xerox PARC labs of the 70’s led to the first Mac’s digital phone systems (and the tech/cost focused PC) and helped set the spotlight on the value of user-friendly product design focus to guide development for large hardware development teams, including Nortel. What I mean is Nortel tapped into that knowledge and trained their teams to really think about product design from a global user experience perspective. How can you develop a communications product that is successful in market and positively impacts millions of people globally?

While at Nortel I was exposed to how to design for users and all the necessary components that are required to develop and deliver a business focused winning product. I spent over a decade working with the deep, behavioral science and technical folks transitioning my thinking of working inward to the forward thinking design teams. We had a design team of 100 people that were trained in a variety of expertise areas, from new user interface modelling to industrial design, to name a couple. I was the engineer and was focused on how to actually make the ideas real. How do you build it to actually work for a user in their environments?

Also in 90’s I was creating DECT, cordless and cell phone designs with Nokia, AEG Germany, Matra and with Nortel, we also created and built the first generation of full screen smart phones in 1995. It was during this time where I learned about the complexities of global manufacturing, supply chain and more. I also learned about the intricacies of the global language interfaces, slide-in keyboards, wrap around telephones with speakers, displays on fridges, etc. It was an amazing time for desktop, fiber, portable wireless innovation and I was in the thick of it and helping to design and deliver these products to market.

Jerome Knyszewski: What was the “Aha Moment” that led to the idea for your current company? Can you share that story with us?

Kevin Bailey: During my Nortel days, I learned about the product development basics and had great exposure to the intersection of data and phone networks, the introduction of the world wide web, and had a window into future thinking on products and technologies that were going to exist and change the world 5–10 years ahead. Nortel was shifting fast to a high-speed IP communications and data company and outsourcing their hardware development (which was my passion and where I excelled). It was at this time — in the mid 90’s — where the seeds of going out on my own were planted. I had been creating a lot of products for large corporations and my “Aha” moment was when I realized I had the ability to help make innovative products for others and I had the learnings of how to successfully bring products to market. My years spent at Nortel gave me the necessary exposure to all facets of the product design lifecycle, design team management, people management, how to identify opportunities and create products in large multi-function groups, to synthesizing different perspectives and disciplines into wow factor products, to turning useful ideas into successful product solutions. It was the right time for me to take a risk and move onto something that I’m good at.

Jerome Knyszewski: Can you tell us a story about the hard times that you faced when you first started your journey? Did you ever consider giving up? Where did you get the drive to continue even though things were so hard?

Kevin Bailey: When I first went out on my own, I reached out to a colleague that had already launched a business to supply companies like Brookstone and Sharper Image with patented products designs. They needed a person to develop fast paced product design ideas and we spent a few years creating products together, designing together, and travelling to China to get them produced. The company already had the business channels in place to get these proprietary retail electronics products to market. The exposure to both design and business processes for fast turn quality design on much smaller budgets from Nortel days would not only help me develop the design process skillset that my company would need to be successful, but also learn the fundamentals of how to help companies connect into existing manufacturing networks to bring their product to market. I worked on early-stage research techniques for more efficient lower cost design process, keeping the importance of identifying the customer first and the role a product plays in connecting emotionally with users, the risks to watch out for early, and how to ensure a predictable outcome, then fine tune the manufacturing after a product is in market. My business background, people skills, acquired knowledge and skills I developed organically, as well as having a knack for ‘moonlighting’ and hunger for wanting to create and learn more helped me realize that I was really good at this approach to product development. I now needed a talented team to help create a custom product design firm to help others find and bring their ideas to life.

It was a bumpy ride during the early days after forming my company, Design 1st. It was actually named something else for two years but during this time I learned all the necessary business operations mechanics that helped me realize that renaming my company to what it is known as today — Design 1st — embodied everything that I’m about. My first question that I needed to decide was between a product company or a service company? Is Design 1st here to help other companies or are my passions served better developing my own products? The answer was easy, I was building a company with no funds and I wanted to design a wide range of products so my company would be set up to help others — from entrepreneurs to enterprise — bring innovative and technically challenging product ideas to market that deliver high value to their customers. I started with a couple of employees, turned my home garage into an office, and completed 3–4 new product design contracts in that first year as Design 1st. They say timing is everything. Nortel’s demise in early 2000 resulted in several former senior colleagues with very specialized skillsets becoming available for hire. I was fortunate to build my staff with a senior team of artists, engineers and manufacturing specialists that know how to tie together the aesthetics and user experience of a product with the reality of physics, materials, cost of goods and punishing use environments to deliver products to market that stand the test of time. We really now had that senior team and the end-to-end capabilities’ skillset to make a difference. Any entrepreneur or organization could partner with us, we’d plug-in and become an extension of their business team and could guide our clients through all phases of the product lifecycle development for the difficult business of physical electronics products you hold, hang and interact with.

They say timing is everything.

Jerome Knyszewski: So, how are things going today? How did your grit and resilience lead to your eventual success?

Kevin Bailey: 25 years later and Design 1st is much larger and really thriving. I’m a firm believer that it takes a village, and the team contributes as much to the success of a business as the CEO. I built my business organically and hired senior staff based on the needed cross-functional skillset. Because our company really does offer end to end capabilities in the product development lifecycle, we’ve built a team that is well versed in so many areas of product development, as well as the business and market sides of the equation. And because of the breadth of offerings, it took a while for entrepreneurs and organizations to learn the ease with which they can buy our service. We’ve ironed out those kinks and have successfully developed over 1,000 projects across a variety of industries including Mining, CleanTech, Biotech, IoT and Consumer Tech and that today influence millions of people all over the world.

Jerome Knyszewski: Can you share a story about the funniest mistake you made when you were first starting? Can you tell us what lessons or ‘takeaways’ you learned from that?

Kevin Bailey: I left Nortel and started out on my own with no funding, no job, and 3 young children at home. Family helped with loans to get us through a few tough years. Finding customers is the hardest part of starting the business. I knew how to develop products but generating consistent income that allowed me to pay a growing staff was daunting. I am an introvert so the idea of knocking on doors and calling people to ask for work was a huge problem for me to succeeding. I had a reputation and a network that provided me half the work including Nortel in the early days re-designing a telephone. I asked friends and associates in my network how the sales process works. The message back was go to events, make calls every day, put ads in yellow pages –the traditional approach. As an introvert, I knew this approach was not the right one for me, however, the internet and Google arrived in the late 90s so I figured I can find customer prospects through a search engine and AdWords investment. This approach was counter to advice I got from my peers and a huge mistake according to all. It was the opposite of funny, make or break, and I launched my sales fully as an inbound only sales company. Today we of course have a much more diverse strategy in finding new clients, however I count my “mistake” as the best thing I ever did to get Design 1st where it is today.

You are the boss and 24–7 has to feel good to you.

Jerome Knyszewski: Ok super. Here is the main question of our interview. What are your “5 Things I Wish Someone Told Me Before I Began Leading My Company”? Please share a story or an example for each.

Kevin Bailey:

  1. You are the boss and 24–7 has to feel good to you. Running a Startup means creating a product or service at the same time you are building an organization. Its two jobs not one. Joining an established company as CEO is quite different than a Startup. Going from nothing to something has many needs and not enough talent to fill all the roles and is harder than going from ‘something to something bigger’, in other words, joining an established company. Decide on the size of the hill you want to climb. I grew my skills in a large organization to figure out the service side then started a company to deal with the business, sales and operations learning while I found service revenue and then grew staff to fill in all the holes. Think five-to-ten-year commitment if you plan on starting something. It’s a long road and you’re the parent in the team. Growing a company product or service inside an established business typically has a faster impact and are two-to-four-year stints. Choose what best fits your interests and talents.
  2. Succeeding from Start to Stable. Know your strengths and the blind spots: marketing, financing, the technical side (product or service), sales. The areas where you are strong you make smart decisions quickly. The other areas are your blind spots. It’s so easy now to find information and expert guidance and mentors in most communities. Filtering through it all and applying opinions of others on what to do first, second, third may still be trial and error. When you start out there are so many areas you have no idea what to do or who to approach to help. While you knock down wall after wall, keep focused on bringing in sales and delivering good service. Keeping costs aligned with always breaking even or better, cash flow and a little contingency set aside if possible, is critical to surviving until the size of team covers all the blind spots. The size of revenue affords admin and tools and smoother operations. Few people figure their way through the maze first time so don’t be hard on yourself if it happens. Regroup, take the learning and re-apply it to the next opportunity that feels worth your talents, time and effort.
  3. Your Role. As the captain of the ship, when there is chaos people look to you to create predictability and process. Your staff are your most cherished assets so it’s important to balance leadership and authority while fostering a culture of excellence, accountability and transparent collaboration. If you’re a respected CEO, your teams will feel less sting if they disagree with a decision you have made. I think of myself as a thoughtful leader who has high expectations of my staff. As soon as something is working and there are people who know what to do no matter the situation, I look to where I’m needed to help solve the next crisis. There will always be fires to put out, times of lost revenue, unnecessary spend, personality clashes, but most importantly, praise to give out.
  4. You better be good with Money or have a Partner in the business who is. Money in, money spent, business growth, if you wake up every Monday and know where your money risk is, you have a much better chance at succeeding. When I had five employees, making sure payroll was in the bank every 2 weeks to pay staff was the most important thing to get right, over and over again every 2 weeks. Staff don’t always stick around when they feel the company is at financial risk. Staff should not be privy to money issues. When I reached the 10 employees mark, the 2 weeks number was twice as big and it scared me but as long as every Monday I knew the sales rates and the invoicing rates and the collection rates were not changing, I knew there would be money to pay. I always worked to having one month’s extra cash in the bank so we could last for at least 2 pay periods if we fell on hard times to give me time to figure out a plan B. To do this for the first 5 years, I only paid myself when the cash float was higher than the contingency cash. It’s essential to have a weekly awareness of your money situation. Most cash made goes into staff salaries as it’s your business expense. If all goes right, there is extra at end of a month that you can call profit. I feel the same risk at 30 staff as I did at 5 staff even though the numbers are much higher. As long as I know every Monday what the sales rates are, what new business came in and how busy the staff are, then I have grown comfortable with the few weekly data points that say everything is okay. When it’s not okay you need even stronger math and money skills to figure out when to stop and start activities, as well as determine what a plan B will be. In many cases it’s to let staff go to stabilize the business at the new revenue level. If you are not a numbers person, find someone who is in tune with the numbers weekly so you can react quickly to change. If you aren’t smart with money, and you don’t pay close attention, your business will continually be at a huge risk to fail. If you are a CEO that is hired to run a business, then you are another cost and the message above is for the owners of the business that hired you!
  5. Most important attribute you develop is Determination. This is a skill that develops and grows over time. There will always be some level of crisis each week, big or small, internal or external. However, building a successful company from scratch is a great adventure. It’s not for the meek and not for those that require nurture. As CEO you are the top of the chain. People may help but they can walk away. When the founder and CEO exits a company the outcome is predictable and not good. When it’s bad I know that next week what was so awful this week, will have passed. As I apply myself to a problem at a time, and as I get a bunch of new skills traveling this road, I know that over time I fail less and I grow more elaborate organizations that are self-sustaining, need me less, and I can pass the baton.

Jerome Knyszewski: This was very inspiring. Thank you so much for the time you spent with this!

 

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