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Hard Tech Startups

304 points by dwaxe 10y ago

memossy 10y ago
Out of curiosity do the "hard software" startups at YC (a startup is whether there is doubt that the software can be built at all) share more DNA/commonalities with the "hard tech" startups or their fellow software startups?
Animats 10y ago
By "hard tech", YC apparently means "has technical risk", as opposed to a marketing-based business. There was a time, pre-2000, when VCs did almost entirely "hard tech" startups. VCs were more profitable then. But the weakening of patents by the anti-patent lobby has made this infeasible as a business strategy. You have to buy market share now before someone steals your technology.
- nostrademons 10y ago
  Not sure if I'd agree that weakening of patent protection has made it infeasible. To my eye, technical risk startups are still very defensible, it's just that the early technical advantage needs to grow into a branding or data advantage that is more defensible long-term. And I'd say the reason for this is a combination of more people getting into tech startups and consumers being conditioned to accept less. Flashy couldn't-be-done-before technology makes customers stand up and take notice, but pretty soon they start focusing on the parts that are really useful in their daily lives, and chances are there exist 80/20 solutions that get most of the way there but can be implemented by any one of a number of competitors. I still think that technology risk tends to be underpriced by VCs today. The pendulum's swung too far, where everyone assumes that the tech is just a commodity and what really matters is how many Facebook ads you buy, and that's left several openings where consumers are not consuming because existing solutions suck too much.
- foobarqux 10y ago
  Why are patents weak now? Why were they strong before?
  - Animats 10y ago
    America Invents Act, easy and repeatable post-grant challenges, no more injunctions, very limited punitive damages. Worst case for a patent infringer is having to buy a license.
- prodigal_erik 10y ago
  How have tech patents become weaker? Unlike older subject areas, you can still be given decades of arbitrary pricing power for being the first to claim all the obvious solutions to a straightforward problem.
ryanx435 10y ago
Very often, the first thing we do is help hard tech founders find a small project within their larger idea that fits the model of quick iteration and requires a relatively small amount of capital. Tesla is my favorite example of how powerful this small project + long-term planning mentality can be. Their vision has always been to bring an affordable electric car to the masses, but they first built the Roadster—the opposite of a mass market car—to generate revenue to get to the Model S. so designing and building a top of the line sports car is a small project? what?
- mahyarm 10y ago
  There is this quote from a honda engineer that said creating the original 70mpg honda insight was a lot harder than creating their roadster / supercar project. So yes it is.
- dasmoth 10y ago
  It's a lot smaller than Tesla's subsequent projects. Remember, also, that the roadster was based substantially on the Lotus Elise, and Lotus built the bulk of the vehicle. Look at us as a drivetrain project rather than a car project and it looks at least a bit more manageable (which isn't, by any means, to say trivial).
  - FullyFunctional 10y ago
    I agree with your point, but just for the record: The Lotus Elise + minor delta was the original thinking, but Tesla/Elon has repeatedly pointed out that it was a mistake; the Elise frame was dramatically reworked to the point where it would have been better to have started from scratch.
zwieback 10y ago
Interesting post, could be interpreted multiple ways: - growth in pure/easy SW projects is stalling, need to find new areas - trying to get away from the "bro" prejudice against SW startups - YC has found a good way to bring rapid, iterative development techniques to hard/HW projects Hopefully the third one but probably a combination of all of the above.
- codingdave 10y ago
  Maybe I'm just cynical, but my interpretation was more of "YC's over-arching strategy is to benevolently get a small piece of EVERYTHING, so we'd better convince new markets to come work with us."
AndrewKemendo 10y ago
This is the hardest thing to explain to people about companies like ours. When I say that machine vision systems are comparable to building hardware people can't conceptualize that because they have never really worked with novel CV/ML systems. I think this post has it right too in that finding a small application of the technology is a good approach to sustaining yourself while you get to a bigger goal. This however adds a magnitude of complexity - which means funding requirements aren't that much smaller. For example you have to build a product while also building the technology - vs just building a product on exiting technologies, which is hard enough itself. It's also a risk because if that one product is not a winner, then it poisons the larger play - even though it might be itself very valuable. The challenge comes when you have to explain that, no actually this first thing is just the POC for a larger thing we're trying to do - especially when you are building the market for that larger thing. I think the best path for hard tech companies is to have a lot of money from the start. I know that sounds obvious, but I think it's true specifically for hard tech companies. Unfortunately that usually means you as a founder are a known entity in the venture world. Whether that means you use your own money from a previous exit (like Musk) or convince someone to fund a lot of it (probably because you had a previous exit and have connections) you need a lot of capital up-front. So if you are an unknown to the people with cash, with hard tech plans, prepare for a tough time ahead.
- tedmiston 10y ago
  I'm not super familiar with your company. Does the approaching of building the smallest nucleus of your tech like Sam described work for Pair? A glance at Crunchbase looks like you are seed stage so maybe this is a real pain point right now. > Very often, the first thing we do is help hard tech founders find a small project within their larger idea that fits the model of quick iteration and requires a relatively small amount of capital. This project is often the smallest subset of their technology that still matters to some user or customer. It may at first look like a detour, but it’s a starting point that lets founders build measurable momentum–for themselves, for recruiting employees, and for attracting investors. Edit: The realtime 3D object placement in the demo video [1] is incredibly cool. I've done enough computer vision to realize you have some non-trivial technical work, but I'm not sure if I would label it hard tech personally. I think the gray area is all around the real-time constraint. [1]: https://angel.co/pair-2 https://angel.co/pair-2
paulcole 10y ago
> YC’s largest exit to date is a self-driving car company Isn't that just because several highly valued software startups haven't exited yet? Judging by this list: https://www.cbinsights.com/blog/y-combinator-startup-valuation/ https://www.cbinsights.com/blog/y-combinator-startup-valuati...
- tedmiston 10y ago
  Of course. I never saw the exact Cruise acquisition price, just "north of $1 billion", and you can see 6–7 on that list worth about a billion or more. In fact, in her How to Build the Future talk [1], Jessica Livingston said that most unicorns have come out of YC. [1]: https://www.ycombinator.com/future/jessica/ https://www.ycombinator.com/future/jessica/
hoodoof 10y ago
"Hard tech startups Some people think YC only funds software startups." Kinda strange that software is not seen by YC as "hard tech". I think there's lots of hard tech in software but the way venture capitalists/angel investors tell it, you should only ever build software that can be made in a weekend and then iterated upon. The outcome of this is the X thousandth dog walking social network for uber drivers staying at AirBNB - i.e. stuff that you can build in a weekend and iterate on. And this is why demo days are full of such lightweight software applications - people are actively discouraged from taking the time to build something large scale and, well, "hard". Sometimes it makes sense to make a big bet on building some complex software that might take months or years to build, with lots of moving parts, but once complete solves a big problem. That is software that is "hard tech".
- striking 10y ago
  Edit: I'm awful at this reading thing. Please see the replies to this comment for a correct definition of "hard tech". My original comment follows. . I think "hard tech" in this instance means "technology in the form of hardware" or "technology that is physically manifest" and not "technology that is difficult."
  - nhaliday 10y ago
    I think the latter is the intended meaning actually. AI/machine learning seem to be thrown into the "hard tech" bucket in VC jargon.
  - tedmiston 10y ago
    There's a definition from Sam in the footnote: > [1] I use 'hard tech' to mean a startup is whether there is doubt that the technology can be built at all. Edit: I'm glad he defined it for this post. In general though, there's definitely ambiguity around the term.
  - throwaway729 10y ago
    No. From the footnote: " I use ‘hard tech’ to mean a startup where there is doubt that the technology can be built at all."
imaginenore 10y ago
As much as I like YC and this particular board, their standard deal is $120K for 7% of the company. That amount of money is so ridiculously low for almost any serious hardware project. Just consider what $120K buys you. Barely one mid-level engineer for a year (don't forget the taxes, social security). In that year you would have to create and mass-produce and sell the product, just to keep paying the salary. I'm surprised YC doesn't offer something like $500K for 50% of the company.
- jayjay71 10y ago
  This is a misunderstanding of fundraising. If you give up 50% of your company, no investor will touch you unless you're already profitable or growing like Uber. So unless you believe you can go from zero to unicorn with $500k, giving up such enormous equity is doom for the company. That $120k is intended to last 3 months, not 1 year. And afterwards most companies go on to raise 7 digits for much less than 50% of their companies.
- nostrademons 10y ago
  I think what YC gives you is primarily ideas on how to get a minimal proof point out without hiring that one engineer.
- tlb 10y ago
  The typical trajectory is to take YC's $120k for 7%, gather some evidence that the idea will work, then raise $1-2M for 15%, then get it really working at small scale, then raise $10-20M for 25%, then scale up. The farther along you are, the more money you can raise for a given amount of equity, so it makes sense to raise money in stages.
  - rebillionizer 10y ago
    Why would this be a better path than using SBIR/STTR funding and the associated ecosystem for proof of concept? Unlike YC it is non-dilutive. It's something I've long wondered but it's never been answered to my satisfaction.
roymurdock 10y ago
Now is probably the best time to get into "hard tech" - aka industrial automation, automotive, aerospace & defense, energy & utilities, etc. Look to GE for a prime example - a $250B manufacturing and processing behemoth rebranding itself as an agile tech startup with GE Digital and Predix rolling out across many of its factories. Its 2015 10k was titled "Digital Industrial" and really describes the company's new focus on "hard tech": We are just beginning our transformation as the Digital Industrial Company. The Internet has had a massive impact on consumer productivity and commerce. Its impact on industrial markets is just now being realized. By 2020, 10,000 gas turbines, 68,000 jet engines, more than 100 million lightbulbs and 152 million cars will be connected to the Internet. At GE, we have decided to generate and model this data ourselves—both inside the Company and with our customers. This is what we mean by becoming a Digital Industrial. Our Digital Industrial capabilities will expand our growth rate, improve our margins and bring us closer to our customers. There was a time when every sale had a clear endpoint, followed only by routine service and maintenance. Now, sensors on our products send constant streams of data, analyzed and translated into upgrades that drive productivity in industries where even the smallest incremental efficiency can mean very large gains. Capturing it will be a mission in every one of our businesses. Our aspiration is to offer with every GE product a pathway to greater productivity through sensors, software and big-data analytics. Why GE? I assure you we didn’t wake up one morning with “software envy.” We have been investing in software and accumulating data for decades. Competing will not require big acquisitions. Rather, the technology required to compete is in our sweet spot. So, why not us? Similar story if you look outside of the traditional IT market and across the embedded market. Software is being layered on top of "hard tech" to collect data and provide value in a ton of markets that you won't see covered in Tech Crunch. Or maybe you will, given that YC is now pushing for founders with knowledge of these grittier industries.
- mountaineer22 10y ago
  What is "consumer productivity"?
  - ScottBurson 10y ago
    Obviously, it's our ability to consume more rapidly! You know, one-click ordering :-)
rokhayakebe 10y ago
I prefer Hard Business to Hard Tech. Some businesses may be easy on the tech side, but very hard on the customer acquisition side because they require a complete change in the way people think and/or behave. In that light these businesses were easy tech but hard Businesses that ended up being worth a lot: Ebay, Amazon, Uber, AirBNB, Dropbox, and more. EDIT 10 of the top 15 Unicorns Uber - Not Hard Tech Xiaomi - Kind Of Hard Tech Didi - Not Hard Tech AirBNB - Not Hard Tech Palantir - Hard Tech Snapchat - Not Hard Tech Wework - Not Hard Tech FlipKart - Not Hard Tech SpaceX - Hard Tech Pinterest - Not Hard Tech Dropbox - Not Hard Tech
- throwaway729 10y ago
  Uber's core business isn't hard tech, but they're investing mountains of money in hard tech.
  - tlb 10y ago
    Or to say it another way, providing v1 of the service wasn't hard tech, just a mobile app with routing and payments. Scaling up and driving the cost down is. This is a great way to build a company, because you have real data about which scaling problems are actually important, and a real operation to incrementally test solutions in.
    - throwaway729 10y ago
      Actually I was thinking self driving. But that too.
- deleted 10y ago
  [deleted]
- selimthegrim 10y ago
  God help us if Palantir is hard tech
- har777 10y ago
  How is Palantir hard tech ?
rayiner 10y ago
> Many hard tech founders come from academia or big company backgrounds, where projects can be expensive and slow. We help these founders shift into a much more iterative mindset so they can move faster. I think this is key and I hope it takes off beyond YC. I used to work on a DARPA-funded R&D project in the wireless space. DARPA's culture is really cool: throw a bunch of money at PhD program managers, give them a ton of directorial discretion, and let them fund "blue sky" projects they think are really cool. But it's a very academic mindset and the mission creep is huge. DARPA kept sending us down these "oh can we do this?" rabbit holes. At one point our radio grew an expert system that processed XML-formatted regulatory directives.[1] We spent huge amounts of time doing things other than solving the core problem. A decade later consumer deployment is still a ways away. It would be so much further along if DARPA had the focus of something like YC. It seems like a no-brainer to those in Silicon Valley that you should find a tractable subset of your problem and pound on it until you've figured it out. That's not the way the big research institutions working on "hard tech" usually operate, and it's not really how major research universities teach people to think. [1] https://en.wikipedia.org/wiki/DARPA_Agent_Markup_Language https://en.wikipedia.org/wiki/DARPA_Agent_Markup_Language
- jayjay71 10y ago
  DARPA does a great job when they design competitions especially. Look at what they did for self-driving cars (they held all their competitions before Google or any company was putting any effort into it). A couple years later and suddenly it's a burgeoning field and now companies are being acquired. Their competition for humanoid robots likewise resulted in teams building real hardware on a deadline with impressive results.
  - rayiner 10y ago
    DARPA can be ahead of the curve. A few years ago, I met a VC that worked in the wireless sector. He seemed surprised to learn DARPA had been working on what I guess you'd now call whitespace technology back in the early 2000s. Industry interest came significantly later than that. Though that can be a bad thing. You don't want to be in a position where your DARPA project ends but VCs aren't ready to look at you yet.
ftrflyr 10y ago
My first company Light Up Africa Inc., a hard tech startup, was a part of the Impact Engine in Chicago. We did not have access to 3D printing, hardware facilities, and labs to help us prototype and iterate effectively. And that is just step 1. We then had to manufacture in parallel while continuing to research. Also, I can attest that is extremely difficult to build a startup with a heavy research focus. However, from the brief write-up presented, I don't see how YC is in the position to help build and scale hard tech startups at scale - especially those with a tremendous need for capital invest to further research and manufacture.
DrNuke 10y ago
My two cents here from the industry I am in. Thesis: I can't see any nuclear reactor at the paper stage in 2016 beating the small modular reactors from westinghouse (III gen integral pwr) or ge-hitachi (IV gen PRISM sfr) to the 2030 race for the next coming innovative fleets in the Western World. Corollary: Elsewhere, China and Russia will probably risk more and do better at raising the bar of progress. Action: What can be done at YC level then imho? There may be a niche in standardising the design of the most critical components using data science methods, think of an Ikea for the nuclear island. Hard tech, reduced to the simplest problem with a customer, may be the for nuclear sector some critical process (a new material?) or some critical component (a one-fits-all vessel?), both economically affordable at the lab level and at the computer-powered engineering design.
- acidburnNSA 10y ago
  It can take decades in-reactor to accumulate the irradiation dose needed to prove out really advanced fuels and materials. We really need an international nuclear innovation center complete with a flexible test reactor (high flux, fast spectrum, multiple independent coolant loops), legit post-irradiation examination facilities, core mockup facilities for mechanical design, flow loops for thermal/hydraulics, etc. This is extremely expensive to build and maintain, so a business model that can make money along the way (medical isotope production, Pu238 for space travel, easy access to many customers, etc.) is needed, though multi-mission stuff can add lots of institutional complexity. The national labs are supposed to play this role, and are doing so to a degree, but the current lack of facilities really saddens my advanced nuclear design soul. Russia has operating sodium-cooled reactors (BOR-60, BN-350, BN-600) and low-power critical facilities (BFS-1&2). Using those, they can develop and test new nuclear structural materials and fuels that push the envelope. And shipping materials to Russia for testing and bringing it back for investigation is ridiculously hard. Politically streamlining collaboration is essential for nuclear progress. The US shut down its best test reactors (FFTF near Handford, WA and EBR-2 in Idaho) in the 90s so it's pretty challenging to iterate. At least we're trying to turn TREAT back on now. So what can a nuclear startup do? Sam is right. You have to focus on small things and bootstrap yourself up. I was an advisor to Nuclear Innovation Bootcamp a few months ago and the team wanted to build a new giant reactor in Diablo Canyon's containment for hydrogen production. Big picture stuff. I encouraged them to focus on something more specific, like technology for coupling the nuclear island to an industrial unit (hydrogen, desal, ... anything) while being able to smoothly alternate power between it and the turbine (for load following on the grid). It's a lot less glorious to work on something like that, but that's the only way to get started in this field unless you're sitting at the non-existent international nuclear tech center, or on $1B of very patient seed money.
AceJohnny2 10y ago
> [Tesla] first built the Roadster—the opposite of a mass market car—to generate revenue to get to the Model S. The Model S then generated the revenue to start the Model 3. Except the Roadster didn't generate enough revenue, Tesla was on the verge of bankruptcy, and Elon Musk swooped in to save the day (and have himself labelled a co-founder as part of the deal). The Model X was supposed to be a quick reskin of the Model S chassis as an SUV to provide a stopgap model while the Model 3 was developed, but that turned out to be more complicated than expected and Musk's demands for those striking but complicated gull-wing doors caused development and production problems that delayed it for years. I'm readying the popcorn for the delays and production issues of the Model 3.
lifeisstillgood 10y ago
VC is apparently awash in capital (11 Trillion USD in bonds now trading at negative interest rates quotes Andreessen) The Internet was born out of probably the worlds most successful long term focused VC - DARPA now I can't tell if this is the VC community going back to a long term model and invest for decades before expecting a return. 11 trillion would do a lot of good invested for ten years in the globes best and brightest If we don't know if the tech will work at all (fusion etc) then YC is effectively funding academic research. Which is fine, but I assume the right way to build a business may not be the right way to choose the next research project. Gittens index notwithstanding Are these businesses measured in some way differently to the next Uber? Different P&L expectations, different pool of funds? If not then ... ?
asimuvPR 10y ago
Say I have a technology that's related to autonomous vehicles. It requires hardware and software. How would joining YC increase the odds of the technology being adopted by auto manufacturers? Its not a consumer product and its a technology that aides and improves autonomous operation but does not actually drive the car. It would be nice to hear from anyone from YC or with experience.
- jayjay71 10y ago
  The mentors provide excellent feedback on what you should focus on at any given time, and are great at troubleshooting problems. In addition to that, they have a great network (the YC alumni which includes some self-driving car companies as well as investors) who may be able to connect you directly to the companies you want to work with. One of the hardest things for people that have never started a company before is to understand just how hard it will be. Having people on your side can make all the difference, if only to improve morale and help you maintain you sanity.
  - asimuvPR 10y ago
    Thank you for the reply. Is there something in YC that is not for pure startups? Something to support R&D with a commercial goal but that do mor necessarily follow the common business path.
    - jayjay71 10y ago
      I think YC's criterion for getting admitted into the core program is still fitting - do they believe it can become a (ten) billion dollar company? They recently created the Fellowship program to fund more companies at an earlier stage but I don't know too much about that. It's hard to give you more feedback without knowing more. If you don't want to focus on growth and realistically take VC money, YC might not be for you (these are generalizations, I'd argue Wufoo was a YC success story and they barely took any money at all).
      - asimuvPR 10y ago
dammitcoetzee 10y ago
Alright. I'll apply. I'm barely through the business model stage, but I'll do it. I'll lose some sleep, but if YC is serious about hardware then ok.
- jayjay71 10y ago
  If you're starting a company, be prepared to lose a lot of sleep moving forward :] Shoot me an email [redacted] and I'll help you with your application if you want.
CalChris 10y ago
"We look for brains, motivation, and a sense of design. Experience is helpful but not critical. Your idea is important too, but mainly as evidence that you can have good ideas. Most successful startups change their idea substantially." Could you possibly be more la dee dah?
pitchups 10y ago
> Hard tech companies go through the same 3-month batch format as all of the startups we fund. Is 3 months sufficient time for working on hard tech startup ideas. The original 3 month batch format was designed for software & web startups - YC's initial focus. It seems to me that the cycle time for iterating and testing different approaches to solving problems in hard tech would be much longer - hence require more time?
- toomanybeersies 10y ago
  My personal opinion (not that I have any commercial experience with hardware development) is that it's not. It can take up to a month to receive a specific part for a prototype, and prototyping takes a lot more time in real space than in software. I can change a class or a module in some code and 15 seconds later have the new version running. Changing a single part in a hardware system could take a day of work, changing both the software drivers and the actual physical hardware. You can't just NPM install a new part and see if it works, you have to actually order it and wait for it to arrive in the mail.
  - Balgair 10y ago
    The ONLY way I can see this working is if your parts can ALL be 3-D printed in their entirety or milled in under an hour. That then relies on a very very good printer set-up, likely one that you own and have used for at least a year (temp/humidity issues). You can do some electronics and PCB design with a mill and a copper plated proto-board (mill away copper plate and you can make crude PCB 'wires'), but you still need a fully functioning and stocked components chest or you have to wait a week for Digikey. If the zeitgeist is going towards IoT stuff, and I think it is, then you must wait for electronics parts to link the 3-D printed gizmo to the hackers waiting to make it a spam bot. 3 months is unlikely to be enough time to really get anything working without a well stocked lab.
- starky 10y ago
  I just don't see it, from my perspective in mechanical design, you are at a minimum of 2.5 months from first concept to getting real parts. Hardware is just slow, and there is not much you can do about it without spending tons of money.
mannanj 10y ago
Cool!
deleted 10y ago
[deleted]
neltnerb 10y ago
I am somewhat curious whether Y Combinator is considering partnering with Cyclotron Road up at LBL. It seems to be focused on the same type of companies, hard science, but with an excellent model for supporting this kind of work. As a scientist who founded a hard science startup (and now work for another), I feel like the hands down biggest barrier is lack of access to free/low-cost space to work. These projects aren't the kind of thing you can do out of a coffee shop, it's just too dangerous. Plus it requires expensive capital outlay to do the initial work, even if you only need the equipment for one or two tests. The fact that they partner with a national lab to provide those testing resources saves so much time and energy that's better spent on finding product fit than fundraising enough to get to the point where you can even find out how well your technology can perform. I'd strongly suggest at least reaching out to them to see if they can help advise, they've had amazing results so far.
jonbaer 10y ago
I find this to be a unique 'hard tech' example ... https://www.technologyreview.com/s/422511/the-fantastical-promise-of-reversible-computing/ https://www.technologyreview.com/s/422511/the-fantastical-pr... https://en.wikipedia.org/wiki/Reversible_computing https://en.wikipedia.org/wiki/Reversible_computing
x0x0 10y ago
Hmm. I'm only half serious, but if anyone wants to compete with mylan/epi-pen ping me. They've taken the price from $100 to $500+ over the course of a decade. There's got to be a way to (1) make epi-pens for $25-$50 (which mylan does), (2) sell them for $50-$100, (3) get stupid rich (4m sold per year in the us alone), and (4) do good for the world as well.
poppingtonic 10y ago
I watched Chad Rigetti's talk (https://www.youtube.com/watch?v=GzMvG8UO6Eg https://www.youtube.com/watch?v=GzMvG8UO6Eg) this morning, which was really exciting.

304 points by dwaxe 10y ago

Out of curiosity do the "hard software" startups at YC (a startup is whether there is doubt that the software can be built at all) share more DNA/commonalities with the "hard tech" startups or their fellow software startups?

Animats 10y ago

By "hard tech", YC apparently means "has technical risk", as opposed to a marketing-based business. There was a time, pre-2000, when VCs did almost entirely "hard tech" startups. VCs were more profitable then. But the weakening of patents by the anti-patent lobby has made this infeasible as a business strategy. You have to buy market share now before someone steals your technology.

nostrademons 10y ago
Not sure if I'd agree that weakening of patent protection has made it infeasible. To my eye, technical risk startups are still very defensible, it's just that the early technical advantage needs to grow into a branding or data advantage that is more defensible long-term. And I'd say the reason for this is a combination of more people getting into tech startups and consumers being conditioned to accept less. Flashy couldn't-be-done-before technology makes customers stand up and take notice, but pretty soon they start focusing on the parts that are really useful in their daily lives, and chances are there exist 80/20 solutions that get most of the way there but can be implemented by any one of a number of competitors. I still think that technology risk tends to be underpriced by VCs today. The pendulum's swung too far, where everyone assumes that the tech is just a commodity and what really matters is how many Facebook ads you buy, and that's left several openings where consumers are not consuming because existing solutions suck too much.
foobarqux 10y ago
Why are patents weak now? Why were they strong before?
- Animats 10y ago
  America Invents Act, easy and repeatable post-grant challenges, no more injunctions, very limited punitive damages. Worst case for a patent infringer is having to buy a license.
prodigal_erik 10y ago
How have tech patents become weaker? Unlike older subject areas, you can still be given decades of arbitrary pricing power for being the first to claim all the obvious solutions to a straightforward problem.

ryanx435 10y ago

Very often, the first thing we do is help hard tech founders find a small project within their larger idea that fits the model of quick iteration and requires a relatively small amount of capital. Tesla is my favorite example of how powerful this small project + long-term planning mentality can be. Their vision has always been to bring an affordable electric car to the masses, but they first built the Roadster—the opposite of a mass market car—to generate revenue to get to the Model S. so designing and building a top of the line sports car is a small project? what?

mahyarm 10y ago
There is this quote from a honda engineer that said creating the original 70mpg honda insight was a lot harder than creating their roadster / supercar project. So yes it is.
dasmoth 10y ago
It's a lot smaller than Tesla's subsequent projects. Remember, also, that the roadster was based substantially on the Lotus Elise, and Lotus built the bulk of the vehicle. Look at us as a drivetrain project rather than a car project and it looks at least a bit more manageable (which isn't, by any means, to say trivial).
- FullyFunctional 10y ago
  I agree with your point, but just for the record: The Lotus Elise + minor delta was the original thinking, but Tesla/Elon has repeatedly pointed out that it was a mistake; the Elise frame was dramatically reworked to the point where it would have been better to have started from scratch.

zwieback 10y ago

Interesting post, could be interpreted multiple ways: - growth in pure/easy SW projects is stalling, need to find new areas - trying to get away from the "bro" prejudice against SW startups - YC has found a good way to bring rapid, iterative development techniques to hard/HW projects Hopefully the third one but probably a combination of all of the above.

codingdave 10y ago
Maybe I'm just cynical, but my interpretation was more of "YC's over-arching strategy is to benevolently get a small piece of EVERYTHING, so we'd better convince new markets to come work with us."

AndrewKemendo 10y ago

This is the hardest thing to explain to people about companies like ours. When I say that machine vision systems are comparable to building hardware people can't conceptualize that because they have never really worked with novel CV/ML systems. I think this post has it right too in that finding a small application of the technology is a good approach to sustaining yourself while you get to a bigger goal. This however adds a magnitude of complexity - which means funding requirements aren't that much smaller. For example you have to build a product while also building the technology - vs just building a product on exiting technologies, which is hard enough itself. It's also a risk because if that one product is not a winner, then it poisons the larger play - even though it might be itself very valuable. The challenge comes when you have to explain that, no actually this first thing is just the POC for a larger thing we're trying to do - especially when you are building the market for that larger thing. I think the best path for hard tech companies is to have a lot of money from the start. I know that sounds obvious, but I think it's true specifically for hard tech companies. Unfortunately that usually means you as a founder are a known entity in the venture world. Whether that means you use your own money from a previous exit (like Musk) or convince someone to fund a lot of it (probably because you had a previous exit and have connections) you need a lot of capital up-front. So if you are an unknown to the people with cash, with hard tech plans, prepare for a tough time ahead.

tedmiston 10y ago
I'm not super familiar with your company. Does the approaching of building the smallest nucleus of your tech like Sam described work for Pair? A glance at Crunchbase looks like you are seed stage so maybe this is a real pain point right now. > Very often, the first thing we do is help hard tech founders find a small project within their larger idea that fits the model of quick iteration and requires a relatively small amount of capital. This project is often the smallest subset of their technology that still matters to some user or customer. It may at first look like a detour, but it’s a starting point that lets founders build measurable momentum–for themselves, for recruiting employees, and for attracting investors. Edit: The realtime 3D object placement in the demo video [1] is incredibly cool. I've done enough computer vision to realize you have some non-trivial technical work, but I'm not sure if I would label it hard tech personally. I think the gray area is all around the real-time constraint. [1]: https://angel.co/pair-2 https://angel.co/pair-2

paulcole 10y ago

> YC’s largest exit to date is a self-driving car company Isn't that just because several highly valued software startups haven't exited yet? Judging by this list: https://www.cbinsights.com/blog/y-combinator-startup-valuation/ https://www.cbinsights.com/blog/y-combinator-startup-valuati...

tedmiston 10y ago
Of course. I never saw the exact Cruise acquisition price, just "north of $1 billion", and you can see 6–7 on that list worth about a billion or more. In fact, in her How to Build the Future talk [1], Jessica Livingston said that most unicorns have come out of YC. [1]: https://www.ycombinator.com/future/jessica/ https://www.ycombinator.com/future/jessica/

hoodoof 10y ago

"Hard tech startups Some people think YC only funds software startups." Kinda strange that software is not seen by YC as "hard tech". I think there's lots of hard tech in software but the way venture capitalists/angel investors tell it, you should only ever build software that can be made in a weekend and then iterated upon. The outcome of this is the X thousandth dog walking social network for uber drivers staying at AirBNB - i.e. stuff that you can build in a weekend and iterate on. And this is why demo days are full of such lightweight software applications - people are actively discouraged from taking the time to build something large scale and, well, "hard". Sometimes it makes sense to make a big bet on building some complex software that might take months or years to build, with lots of moving parts, but once complete solves a big problem. That is software that is "hard tech".

striking 10y ago
Edit: I'm awful at this reading thing. Please see the replies to this comment for a correct definition of "hard tech". My original comment follows. . I think "hard tech" in this instance means "technology in the form of hardware" or "technology that is physically manifest" and not "technology that is difficult."
- nhaliday 10y ago
  I think the latter is the intended meaning actually. AI/machine learning seem to be thrown into the "hard tech" bucket in VC jargon.
- tedmiston 10y ago
  There's a definition from Sam in the footnote: > [1] I use 'hard tech' to mean a startup is whether there is doubt that the technology can be built at all. Edit: I'm glad he defined it for this post. In general though, there's definitely ambiguity around the term.
- throwaway729 10y ago
  No. From the footnote: " I use ‘hard tech’ to mean a startup where there is doubt that the technology can be built at all."

imaginenore 10y ago

As much as I like YC and this particular board, their standard deal is $120K for 7% of the company. That amount of money is so ridiculously low for almost any serious hardware project. Just consider what $120K buys you. Barely one mid-level engineer for a year (don't forget the taxes, social security). In that year you would have to create and mass-produce and sell the product, just to keep paying the salary. I'm surprised YC doesn't offer something like $500K for 50% of the company.

jayjay71 10y ago
This is a misunderstanding of fundraising. If you give up 50% of your company, no investor will touch you unless you're already profitable or growing like Uber. So unless you believe you can go from zero to unicorn with $500k, giving up such enormous equity is doom for the company. That $120k is intended to last 3 months, not 1 year. And afterwards most companies go on to raise 7 digits for much less than 50% of their companies.
nostrademons 10y ago
I think what YC gives you is primarily ideas on how to get a minimal proof point out without hiring that one engineer.
tlb 10y ago
The typical trajectory is to take YC's $120k for 7%, gather some evidence that the idea will work, then raise $1-2M for 15%, then get it really working at small scale, then raise $10-20M for 25%, then scale up. The farther along you are, the more money you can raise for a given amount of equity, so it makes sense to raise money in stages.
- rebillionizer 10y ago
  Why would this be a better path than using SBIR/STTR funding and the associated ecosystem for proof of concept? Unlike YC it is non-dilutive. It's something I've long wondered but it's never been answered to my satisfaction.

roymurdock 10y ago

Now is probably the best time to get into "hard tech" - aka industrial automation, automotive, aerospace & defense, energy & utilities, etc. Look to GE for a prime example - a $250B manufacturing and processing behemoth rebranding itself as an agile tech startup with GE Digital and Predix rolling out across many of its factories. Its 2015 10k was titled "Digital Industrial" and really describes the company's new focus on "hard tech": We are just beginning our transformation as the Digital Industrial Company. The Internet has had a massive impact on consumer productivity and commerce. Its impact on industrial markets is just now being realized. By 2020, 10,000 gas turbines, 68,000 jet engines, more than 100 million lightbulbs and 152 million cars will be connected to the Internet. At GE, we have decided to generate and model this data ourselves—both inside the Company and with our customers. This is what we mean by becoming a Digital Industrial. Our Digital Industrial capabilities will expand our growth rate, improve our margins and bring us closer to our customers. There was a time when every sale had a clear endpoint, followed only by routine service and maintenance. Now, sensors on our products send constant streams of data, analyzed and translated into upgrades that drive productivity in industries where even the smallest incremental efficiency can mean very large gains. Capturing it will be a mission in every one of our businesses. Our aspiration is to offer with every GE product a pathway to greater productivity through sensors, software and big-data analytics. Why GE? I assure you we didn’t wake up one morning with “software envy.” We have been investing in software and accumulating data for decades. Competing will not require big acquisitions. Rather, the technology required to compete is in our sweet spot. So, why not us? Similar story if you look outside of the traditional IT market and across the embedded market. Software is being layered on top of "hard tech" to collect data and provide value in a ton of markets that you won't see covered in Tech Crunch. Or maybe you will, given that YC is now pushing for founders with knowledge of these grittier industries.

mountaineer22 10y ago
What is "consumer productivity"?
- ScottBurson 10y ago
  Obviously, it's our ability to consume more rapidly! You know, one-click ordering :-)

rokhayakebe 10y ago

I prefer Hard Business to Hard Tech. Some businesses may be easy on the tech side, but very hard on the customer acquisition side because they require a complete change in the way people think and/or behave. In that light these businesses were easy tech but hard Businesses that ended up being worth a lot: Ebay, Amazon, Uber, AirBNB, Dropbox, and more. EDIT 10 of the top 15 Unicorns Uber - Not Hard Tech Xiaomi - Kind Of Hard Tech Didi - Not Hard Tech AirBNB - Not Hard Tech Palantir - Hard Tech Snapchat - Not Hard Tech Wework - Not Hard Tech FlipKart - Not Hard Tech SpaceX - Hard Tech Pinterest - Not Hard Tech Dropbox - Not Hard Tech

throwaway729 10y ago
Uber's core business isn't hard tech, but they're investing mountains of money in hard tech.
- tlb 10y ago
  Or to say it another way, providing v1 of the service wasn't hard tech, just a mobile app with routing and payments. Scaling up and driving the cost down is. This is a great way to build a company, because you have real data about which scaling problems are actually important, and a real operation to incrementally test solutions in.
  - throwaway729 10y ago
    Actually I was thinking self driving. But that too.
deleted 10y ago
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selimthegrim 10y ago
God help us if Palantir is hard tech
har777 10y ago
How is Palantir hard tech ?

rayiner 10y ago

> Many hard tech founders come from academia or big company backgrounds, where projects can be expensive and slow. We help these founders shift into a much more iterative mindset so they can move faster. I think this is key and I hope it takes off beyond YC. I used to work on a DARPA-funded R&D project in the wireless space. DARPA's culture is really cool: throw a bunch of money at PhD program managers, give them a ton of directorial discretion, and let them fund "blue sky" projects they think are really cool. But it's a very academic mindset and the mission creep is huge. DARPA kept sending us down these "oh can we do this?" rabbit holes. At one point our radio grew an expert system that processed XML-formatted regulatory directives.[1] We spent huge amounts of time doing things other than solving the core problem. A decade later consumer deployment is still a ways away. It would be so much further along if DARPA had the focus of something like YC. It seems like a no-brainer to those in Silicon Valley that you should find a tractable subset of your problem and pound on it until you've figured it out. That's not the way the big research institutions working on "hard tech" usually operate, and it's not really how major research universities teach people to think. [1] https://en.wikipedia.org/wiki/DARPA_Agent_Markup_Language https://en.wikipedia.org/wiki/DARPA_Agent_Markup_Language

jayjay71 10y ago
DARPA does a great job when they design competitions especially. Look at what they did for self-driving cars (they held all their competitions before Google or any company was putting any effort into it). A couple years later and suddenly it's a burgeoning field and now companies are being acquired. Their competition for humanoid robots likewise resulted in teams building real hardware on a deadline with impressive results.
- rayiner 10y ago
  DARPA can be ahead of the curve. A few years ago, I met a VC that worked in the wireless sector. He seemed surprised to learn DARPA had been working on what I guess you'd now call whitespace technology back in the early 2000s. Industry interest came significantly later than that. Though that can be a bad thing. You don't want to be in a position where your DARPA project ends but VCs aren't ready to look at you yet.

ftrflyr 10y ago

My first company Light Up Africa Inc., a hard tech startup, was a part of the Impact Engine in Chicago. We did not have access to 3D printing, hardware facilities, and labs to help us prototype and iterate effectively. And that is just step 1. We then had to manufacture in parallel while continuing to research. Also, I can attest that is extremely difficult to build a startup with a heavy research focus. However, from the brief write-up presented, I don't see how YC is in the position to help build and scale hard tech startups at scale - especially those with a tremendous need for capital invest to further research and manufacture.

DrNuke 10y ago

My two cents here from the industry I am in. Thesis: I can't see any nuclear reactor at the paper stage in 2016 beating the small modular reactors from westinghouse (III gen integral pwr) or ge-hitachi (IV gen PRISM sfr) to the 2030 race for the next coming innovative fleets in the Western World. Corollary: Elsewhere, China and Russia will probably risk more and do better at raising the bar of progress. Action: What can be done at YC level then imho? There may be a niche in standardising the design of the most critical components using data science methods, think of an Ikea for the nuclear island. Hard tech, reduced to the simplest problem with a customer, may be the for nuclear sector some critical process (a new material?) or some critical component (a one-fits-all vessel?), both economically affordable at the lab level and at the computer-powered engineering design.

acidburnNSA 10y ago
It can take decades in-reactor to accumulate the irradiation dose needed to prove out really advanced fuels and materials. We really need an international nuclear innovation center complete with a flexible test reactor (high flux, fast spectrum, multiple independent coolant loops), legit post-irradiation examination facilities, core mockup facilities for mechanical design, flow loops for thermal/hydraulics, etc. This is extremely expensive to build and maintain, so a business model that can make money along the way (medical isotope production, Pu238 for space travel, easy access to many customers, etc.) is needed, though multi-mission stuff can add lots of institutional complexity. The national labs are supposed to play this role, and are doing so to a degree, but the current lack of facilities really saddens my advanced nuclear design soul. Russia has operating sodium-cooled reactors (BOR-60, BN-350, BN-600) and low-power critical facilities (BFS-1&2). Using those, they can develop and test new nuclear structural materials and fuels that push the envelope. And shipping materials to Russia for testing and bringing it back for investigation is ridiculously hard. Politically streamlining collaboration is essential for nuclear progress. The US shut down its best test reactors (FFTF near Handford, WA and EBR-2 in Idaho) in the 90s so it's pretty challenging to iterate. At least we're trying to turn TREAT back on now. So what can a nuclear startup do? Sam is right. You have to focus on small things and bootstrap yourself up. I was an advisor to Nuclear Innovation Bootcamp a few months ago and the team wanted to build a new giant reactor in Diablo Canyon's containment for hydrogen production. Big picture stuff. I encouraged them to focus on something more specific, like technology for coupling the nuclear island to an industrial unit (hydrogen, desal, ... anything) while being able to smoothly alternate power between it and the turbine (for load following on the grid). It's a lot less glorious to work on something like that, but that's the only way to get started in this field unless you're sitting at the non-existent international nuclear tech center, or on $1B of very patient seed money.

AceJohnny2 10y ago

> [Tesla] first built the Roadster—the opposite of a mass market car—to generate revenue to get to the Model S. The Model S then generated the revenue to start the Model 3. Except the Roadster didn't generate enough revenue, Tesla was on the verge of bankruptcy, and Elon Musk swooped in to save the day (and have himself labelled a co-founder as part of the deal). The Model X was supposed to be a quick reskin of the Model S chassis as an SUV to provide a stopgap model while the Model 3 was developed, but that turned out to be more complicated than expected and Musk's demands for those striking but complicated gull-wing doors caused development and production problems that delayed it for years. I'm readying the popcorn for the delays and production issues of the Model 3.

lifeisstillgood 10y ago

VC is apparently awash in capital (11 Trillion USD in bonds now trading at negative interest rates quotes Andreessen) The Internet was born out of probably the worlds most successful long term focused VC - DARPA now I can't tell if this is the VC community going back to a long term model and invest for decades before expecting a return. 11 trillion would do a lot of good invested for ten years in the globes best and brightest If we don't know if the tech will work at all (fusion etc) then YC is effectively funding academic research. Which is fine, but I assume the right way to build a business may not be the right way to choose the next research project. Gittens index notwithstanding Are these businesses measured in some way differently to the next Uber? Different P&L expectations, different pool of funds? If not then ... ?

asimuvPR 10y ago

Say I have a technology that's related to autonomous vehicles. It requires hardware and software. How would joining YC increase the odds of the technology being adopted by auto manufacturers? Its not a consumer product and its a technology that aides and improves autonomous operation but does not actually drive the car. It would be nice to hear from anyone from YC or with experience.

jayjay71 10y ago
The mentors provide excellent feedback on what you should focus on at any given time, and are great at troubleshooting problems. In addition to that, they have a great network (the YC alumni which includes some self-driving car companies as well as investors) who may be able to connect you directly to the companies you want to work with. One of the hardest things for people that have never started a company before is to understand just how hard it will be. Having people on your side can make all the difference, if only to improve morale and help you maintain you sanity.
- asimuvPR 10y ago
  Thank you for the reply. Is there something in YC that is not for pure startups? Something to support R&D with a commercial goal but that do mor necessarily follow the common business path.
  - jayjay71 10y ago
    I think YC's criterion for getting admitted into the core program is still fitting - do they believe it can become a (ten) billion dollar company? They recently created the Fellowship program to fund more companies at an earlier stage but I don't know too much about that. It's hard to give you more feedback without knowing more. If you don't want to focus on growth and realistically take VC money, YC might not be for you (these are generalizations, I'd argue Wufoo was a YC success story and they barely took any money at all).
    - asimuvPR 10y ago

dammitcoetzee 10y ago

Alright. I'll apply. I'm barely through the business model stage, but I'll do it. I'll lose some sleep, but if YC is serious about hardware then ok.

jayjay71 10y ago
If you're starting a company, be prepared to lose a lot of sleep moving forward :] Shoot me an email [redacted] and I'll help you with your application if you want.

CalChris 10y ago

"We look for brains, motivation, and a sense of design. Experience is helpful but not critical. Your idea is important too, but mainly as evidence that you can have good ideas. Most successful startups change their idea substantially." Could you possibly be more la dee dah?

pitchups 10y ago

> Hard tech companies go through the same 3-month batch format as all of the startups we fund. Is 3 months sufficient time for working on hard tech startup ideas. The original 3 month batch format was designed for software & web startups - YC's initial focus. It seems to me that the cycle time for iterating and testing different approaches to solving problems in hard tech would be much longer - hence require more time?

toomanybeersies 10y ago
My personal opinion (not that I have any commercial experience with hardware development) is that it's not. It can take up to a month to receive a specific part for a prototype, and prototyping takes a lot more time in real space than in software. I can change a class or a module in some code and 15 seconds later have the new version running. Changing a single part in a hardware system could take a day of work, changing both the software drivers and the actual physical hardware. You can't just NPM install a new part and see if it works, you have to actually order it and wait for it to arrive in the mail.
- Balgair 10y ago
  The ONLY way I can see this working is if your parts can ALL be 3-D printed in their entirety or milled in under an hour. That then relies on a very very good printer set-up, likely one that you own and have used for at least a year (temp/humidity issues). You can do some electronics and PCB design with a mill and a copper plated proto-board (mill away copper plate and you can make crude PCB 'wires'), but you still need a fully functioning and stocked components chest or you have to wait a week for Digikey. If the zeitgeist is going towards IoT stuff, and I think it is, then you must wait for electronics parts to link the 3-D printed gizmo to the hackers waiting to make it a spam bot. 3 months is unlikely to be enough time to really get anything working without a well stocked lab.
starky 10y ago
I just don't see it, from my perspective in mechanical design, you are at a minimum of 2.5 months from first concept to getting real parts. Hardware is just slow, and there is not much you can do about it without spending tons of money.

mannanj 10y ago

Cool!

deleted 10y ago

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neltnerb 10y ago

I am somewhat curious whether Y Combinator is considering partnering with Cyclotron Road up at LBL. It seems to be focused on the same type of companies, hard science, but with an excellent model for supporting this kind of work. As a scientist who founded a hard science startup (and now work for another), I feel like the hands down biggest barrier is lack of access to free/low-cost space to work. These projects aren't the kind of thing you can do out of a coffee shop, it's just too dangerous. Plus it requires expensive capital outlay to do the initial work, even if you only need the equipment for one or two tests. The fact that they partner with a national lab to provide those testing resources saves so much time and energy that's better spent on finding product fit than fundraising enough to get to the point where you can even find out how well your technology can perform. I'd strongly suggest at least reaching out to them to see if they can help advise, they've had amazing results so far.

jonbaer 10y ago

I find this to be a unique 'hard tech' example ... https://www.technologyreview.com/s/422511/the-fantastical-promise-of-reversible-computing/ https://www.technologyreview.com/s/422511/the-fantastical-pr... https://en.wikipedia.org/wiki/Reversible_computing https://en.wikipedia.org/wiki/Reversible_computing

x0x0 10y ago

Hmm. I'm only half serious, but if anyone wants to compete with mylan/epi-pen ping me. They've taken the price from $100 to $500+ over the course of a decade. There's got to be a way to (1) make epi-pens for $25-$50 (which mylan does), (2) sell them for $50-$100, (3) get stupid rich (4m sold per year in the us alone), and (4) do good for the world as well.

poppingtonic 10y ago

I watched Chad Rigetti's talk (https://www.youtube.com/watch?v=GzMvG8UO6Eg https://www.youtube.com/watch?v=GzMvG8UO6Eg) this morning, which was really exciting.