4 ms·

Why No Second Hardware Startups?

12 points by apsec112 14y ago

smoyer 14y ago
The article is interesting but I think it misses the obvious (to me) conclusion. After being successful in a high-margin business (software), why would an entrepreneur attempt to enter a low margin (hardware) business? IBM, HP (to some extent) and others have actually been exiting the consumer hardware market. That's not a business I'd choose to start. And using Elon Musk as an example isn't really fair ... he's certainly created high-end hardware but only where there's a market void.
- apsec112 14y ago
  By hardware I don't just mean electronics, but anything that's physical and requires large amounts of capital. Sorry, clarified with edit.
  - rubashov 14y ago
    Regulation. The kind of people who build a successful software startup don't want to deal with OSHA, the EPA, and local zoning boards. If you're freewheeling and you want to build something physical you have to go to China.
  - westbywest 14y ago
    The capital outlay required for pretty much any hardware product is enormous (compared to software-based products). Besides needing to sustain development effort to comply with emissions/safety/etc standards dictated by the regulatory environment, you also need to fund months to years of Q/A testing to ensure your physical widget can be reliably mass-produced. And all this has be done before you have anything to sell for revenue. Respinning a hardware prototype is generally slow and expensive (i.e. can't just recompile), with degree of slowness/cost increasing as you tread further down your development path.
qq66 14y ago
Why don't most success software startup founders start cleantech companies, for that matter? It's probably because they have the skills and interest to succeed in software, their success further confirms their abilities in this market, and unless they have a particular reason to, they'd rather stick to what they know...
- apsec112 14y ago
  I think that's pretty much what the article said: "So, why no second hardware startups? The most likely reason is probably the obvious one: after spending a lot of time in software, it’s hard to go learn a whole new field, especially if you’re already rich and don’t have to work to pay bills."
georgemcbay 14y ago
Quoted in the article: “Can you name any non-serial entrepreneurs? I can’t think of any of the top of my head… all entrepreneurs seem to be serial offenders. Max Levchin, Evan Williams, Justin Khan, Steve Jobs, Jack Dorsey, Mark Pincus… (and a dozen other names).” Isn't this obviously selection bias? Of course you don't hear much about one-failure-and-done entrepreneurs. Why would you, unless their failure was somehow exceptionally spectacular? But that doesn't mean that there aren't plenty of them... there are likely many, many more of them than those that stick with it.
- apsec112 14y ago
  Of course, but I think it's only talking about entrepreneurs who have already had at least one success
  - georgemcbay 14y ago
    Even in that situation, while that cuts the number down I'd still put good money on there being a lot more entrepreneurs who had one great success and then cashed out compared to the number who are "serial entrepreneurs". I think there's still SV-bubble (not economic bubble, but bubble in the social isolation sense) logic going on there in assuming the majority are serial. Of course, I have no data to back this up (but neither does the other viewpoint -- a list of 8 or so guys is hardly a good argument for that side).
- MBlume 14y ago
  I don't think the quote is about one-failure-and-done entrepreneurs, I think it's about the dearth of one-success-and-done entrepreneurs
durkie 14y ago
it's not just capital intensive -- it's hugely time-intensive. i work for a nanotech company that has been trying to scale up its proprietary process in some form or another for 16 years. if i'm quick, i can run maybe a dozen experiments in a day and get results back on 5 of them by the morning. i also do some work with a company that does plasma coatings, also with a proprietary process that the owner (co-)invented. and it's a 4 person shop right now. both people have done very smart work and made processes that have many compelling advantages over the existing state-of-the-art, with cost being a huge one, but it just takes a long-ass time to iterate and get good results from real, physical tests.
primitur 14y ago
As someone who has made a living in software for 20+ years, I'd love to be involved in a hardware startup right now. I mean, the kind of thing where a small group, say about 5 people, pool their resources together, get some boards made, develop some great apps for it, bundle it in a box with knobs and buttons on it, and sell it on. To me, it just seems like the nature progress of software industry: to make computers so important that eventually, hardware is cheaper to ship than software. Eventually. ;)
robot 14y ago
its because %99 of entrepreneurs are not idealists, they are opportunists. there are opportunities that are simpler to pursue in software than in hardware.
2bluesc 14y ago
Where are the hardware start-up happy hours and meetups? I'm from the the DFW area and the typical meet ups are filled with a bunch of people (including good friends) doing cool mobile and web apps. But where do I go to find people doing hardware and wanting to do hardware startups? Only thing I've ever heard of is Solid State Startups, but that's in the Valley (maybe I need to move?). Maybe Makerspaces, but those guys seem more interested in robots and other hobbies then starting their own thing. I think there needs to be a hardware start-up weekend where hardware guys get together, hack some eval boards and try to get something they can launch on Kickstarter or something worth funding.

12 points by apsec112 14y ago

The article is interesting but I think it misses the obvious (to me) conclusion. After being successful in a high-margin business (software), why would an entrepreneur attempt to enter a low margin (hardware) business? IBM, HP (to some extent) and others have actually been exiting the consumer hardware market. That's not a business I'd choose to start. And using Elon Musk as an example isn't really fair ... he's certainly created high-end hardware but only where there's a market void.

apsec112 14y ago
By hardware I don't just mean electronics, but anything that's physical and requires large amounts of capital. Sorry, clarified with edit.
- rubashov 14y ago
  Regulation. The kind of people who build a successful software startup don't want to deal with OSHA, the EPA, and local zoning boards. If you're freewheeling and you want to build something physical you have to go to China.
- westbywest 14y ago
  The capital outlay required for pretty much any hardware product is enormous (compared to software-based products). Besides needing to sustain development effort to comply with emissions/safety/etc standards dictated by the regulatory environment, you also need to fund months to years of Q/A testing to ensure your physical widget can be reliably mass-produced. And all this has be done before you have anything to sell for revenue. Respinning a hardware prototype is generally slow and expensive (i.e. can't just recompile), with degree of slowness/cost increasing as you tread further down your development path.

qq66 14y ago

Why don't most success software startup founders start cleantech companies, for that matter? It's probably because they have the skills and interest to succeed in software, their success further confirms their abilities in this market, and unless they have a particular reason to, they'd rather stick to what they know...

apsec112 14y ago
I think that's pretty much what the article said: "So, why no second hardware startups? The most likely reason is probably the obvious one: after spending a lot of time in software, it’s hard to go learn a whole new field, especially if you’re already rich and don’t have to work to pay bills."

georgemcbay 14y ago

Quoted in the article: “Can you name any non-serial entrepreneurs? I can’t think of any of the top of my head… all entrepreneurs seem to be serial offenders. Max Levchin, Evan Williams, Justin Khan, Steve Jobs, Jack Dorsey, Mark Pincus… (and a dozen other names).” Isn't this obviously selection bias? Of course you don't hear much about one-failure-and-done entrepreneurs. Why would you, unless their failure was somehow exceptionally spectacular? But that doesn't mean that there aren't plenty of them... there are likely many, many more of them than those that stick with it.

apsec112 14y ago
Of course, but I think it's only talking about entrepreneurs who have already had at least one success
- georgemcbay 14y ago
  Even in that situation, while that cuts the number down I'd still put good money on there being a lot more entrepreneurs who had one great success and then cashed out compared to the number who are "serial entrepreneurs". I think there's still SV-bubble (not economic bubble, but bubble in the social isolation sense) logic going on there in assuming the majority are serial. Of course, I have no data to back this up (but neither does the other viewpoint -- a list of 8 or so guys is hardly a good argument for that side).
MBlume 14y ago
I don't think the quote is about one-failure-and-done entrepreneurs, I think it's about the dearth of one-success-and-done entrepreneurs

durkie 14y ago

it's not just capital intensive -- it's hugely time-intensive. i work for a nanotech company that has been trying to scale up its proprietary process in some form or another for 16 years. if i'm quick, i can run maybe a dozen experiments in a day and get results back on 5 of them by the morning. i also do some work with a company that does plasma coatings, also with a proprietary process that the owner (co-)invented. and it's a 4 person shop right now. both people have done very smart work and made processes that have many compelling advantages over the existing state-of-the-art, with cost being a huge one, but it just takes a long-ass time to iterate and get good results from real, physical tests.

primitur 14y ago

As someone who has made a living in software for 20+ years, I'd love to be involved in a hardware startup right now. I mean, the kind of thing where a small group, say about 5 people, pool their resources together, get some boards made, develop some great apps for it, bundle it in a box with knobs and buttons on it, and sell it on. To me, it just seems like the nature progress of software industry: to make computers so important that eventually, hardware is cheaper to ship than software. Eventually. ;)

robot 14y ago

its because %99 of entrepreneurs are not idealists, they are opportunists. there are opportunities that are simpler to pursue in software than in hardware.

2bluesc 14y ago

Where are the hardware start-up happy hours and meetups? I'm from the the DFW area and the typical meet ups are filled with a bunch of people (including good friends) doing cool mobile and web apps. But where do I go to find people doing hardware and wanting to do hardware startups? Only thing I've ever heard of is Solid State Startups, but that's in the Valley (maybe I need to move?). Maybe Makerspaces, but those guys seem more interested in robots and other hobbies then starting their own thing. I think there needs to be a hardware start-up weekend where hardware guys get together, hack some eval boards and try to get something they can launch on Kickstarter or something worth funding.