hardware startups

Bilingual

The Hardware Renaissance
2 months ago
- Y Combinator observed a significant trend: 7 out of 84 recent startups were hardware companies, and they performed better on average.
- Investors often have a bias against hardware, but founders are better at foreseeing the future because they are creating it.
- Multiple factors are driving the hardware trend: crowdfunding, tablets enabling new products, improved electric motors, reliable wireless connectivity, easier manufacturing, better prototyping tools (Arduinos, 3D printing, laser cutters, CNC milling), and online retail reducing reliance on traditional retailers.
- Hardware has always been appealing, but software had an advantage for rapid growth; this advantage may be temporary if hardware shipping becomes as easy as software.
- Founders interested in hardware should not be discouraged by investor bias; Y Combinator is especially interested in funding hardware startups.
- There is room for the next Steve Jobs, but also for new founders to make their mark.
What working on Pebble taught me about building hardware
2 months ago
- Launch a minimum viable product (MVP) quickly to gather real user feedback, even if it's imperfect.
- Use off-the-shelf components and rapid prototyping to test your concept before investing in production.
- Engage with users early and often, directly communicating to validate assumptions and improve the product.
- Visit Shenzhen, China, to connect with manufacturers and leverage existing technologies for cost-effective production.
- Control inventory carefully and grow slowly to avoid cash flow issues common in hardware startups.
Hardware Founders: (When) Should You Try To Raise VC Money?
2 months ago
- Raising venture capital implies an aim to grow the company to a valuation of over $1 billion within 5-10 years, which for hardware typically requires at least $200 million in annual revenue.
- Hardware sales are 'hits driven' like video games, with one successful product needing to fund years of modest success, unlike recurring software revenue.
- Each stage of revenue growth for hardware companies becomes increasingly complex and costly, with operational costs rising in discrete chunks.
- VCs are incentivized to push for growth at all costs because their business model requires $1 billion exits to return profits to limited partners.
- Founders should be aware of the growth requirements that come with VC funding and consider alternatives like bootstrapping or small investments if they are not experiencing exponential growth.
- Successful hardware startups like Simplisafe, Peloton, and Bellabeat have used VC funding after achieving product-market fit, while others like Lumos and Moment started small.

hardware startups

The Hardware Renaissance

What working on Pebble taught me about building hardware

Hardware Founders: (When) Should You Try To Raise VC Money?