9 ms·

Sam Altman: Why Hardware Could Yield the Next $10B Startups

102 points by softdev12 12y ago

striking 12y ago
I am a broken record. So many brilliant people (RMS comes to mind) have fallen into the trap of thinking that hardware dev for general computing (not including rocketry and other such hardware) is so inexpensive that it's going to be super easy. But that's not the case [1] because hardware is a totally different beast than software. It won't be any more open, or any less expensive; at least, not for a long time. [1]: http://www.mauve.plus.com/opensourcehw.txt http://www.mauve.plus.com/opensourcehw.txt
- nsnick 12y ago
  All this means is that they are going to need a lot more investment than a software company.
  - striking 12y ago
    It's not just cost, it's also cycle time (as mentioned in the article.) To "do" hardware requires a company to be fully formed, with engineers of all kinds, before they can even really begin. They can get a minimal MVP using a Teensy board or something from mbed, but beyond that, for anything of any serious complexity, they have to build out a company.
    - nsnick 12y ago
      Given enough investment you can hire the engineers you need. Maybe I should have said that all it requires is more money earlier.
- rboyd 12y ago
  It is becoming more open and less expensive. The point is that the tools for prototyping, simulating, assembly, and manufacturing are becoming much cheaper. Along with the fact that people are sharing more. I agree that there is no substitute for RTFM. That will always be required. Although, it's layers of abstraction in hardware too. Just like software libraries and frameworks: if someone has published a circuit that includes some subsystem I need, I can very likely ctl+v much of it into my own design without having a full understanding of it. Which is the entire reason why an industry around ICs can exist at all. It's just that more people are sharing now than ever before. Pick and place machines are now becoming accessible at low cost (see Fire Pick Delta/LitePlacer). This addresses many of your assembly errors and mitigates costs. I can't construct a reasonable argument against your points E, F, and G, which seem to all equate to "something unlucky and magical happened that broke your prototype".
  - jkestner 12y ago
    Yes, manufacturing is getting cheap enough that the average person can get themselves in a mess of trouble now. It's still got a ways to go before it's cheap enough that they can get themselves out of that mess.
    - ethbro 12y ago
      I feel like "number of people able to get themselves into mess of trouble > number of people able to get themselves out of mess of trouble" is a pretty solid premise throughout time.
- jacquesm 12y ago
  FPGAs have opened up a lot of options that previously would have been absolutely un-imaginable without access to significant capital. You can now prototype fairly complex designs for relatively little money.
  - silverpikezero 12y ago
    FPGAs may have opened up options for prototyping, yes. However they have done nothing whatsoever for production. It's economically infeasible to productize and FPGA based product since the only ones worth using are all ~$10k per unit, with price breaks only available to 1M unit quantities. It is also almost entirely impossible to commercialize any design with an ASIC, since it takes a minimum of $10-20M to design it (and pay the foundry). Semiconductor startups have been dying a slow death since the 90s, and will continue to disappear completely from the landscape, suffering a "death by NRE."
    - jacquesm 12y ago
      Sure, but in the past you would not have gotten to 'demoable product' which is a key post to pass on the road to serious funding in the hardware arena.
      - bsder 12y ago
        Huh? What hardware industry have you been in? If it's a hot hardware area (past hot areas: graphics chips, microprocessors, WiFi chips, OC-768 networking chips, ...), nobody will wait for the FPGA prototype. You get funding, you go to VLSI and maybe you produce an FPGA board for validation along the way. Probably not since what you're doing is probably too complex for a single FPGA anyway. Otherwise, your volume is too small and the FPGA IS your product. And that's only if you can't somehow make it run on a microprocessor. The only place I've ever seen an FPGA validation board was with RF startups in the cellular space. And, even then, it was way back when the protocols were much simpler. tl;dr If your demo doesn't run on a microprocessor (or SoC), it doesn't exist.
        12y ago
- wpietri 12y ago
  I just happened to visit two different hardware companies today. One is 60 years old, one about 2. The people at both these companies are practically peeing their pants with glee over how much better things are. Iteration has gotten radically less expensive. I agree that open-source hardware is not nearly as easy as open-source software. But I think it's definitely going to be both more open and less expensive.
koops 12y ago
$10B? That's awfully large, and closing the door on a lot of ideas. What if you just want to solve an important problem by selling a product profitably and don't want to grow to enormous size? I guess you look somewhere other than Y Combinator to get started.
- atroyn 12y ago
  If that's the plan, you don't need YC in to get started.
- zarriak 12y ago
  The point of the lower limit on the value of the company is not based on what might turn out to be a 1 billion dollar company. There are many more ideas in hardware than there are in software, purely based upon how accessible it seems. If you are solving anything close to an important problem, you will eventually reach a $10B valuation. A software company can grow to a reasonable size that is nowhere close, but hardware companies don't follow the same path. Solving a problem with hardware either solves a problem or replaces the thing that fixed the problem before. Solving a problem with software is usually (if not always) making computers better or easier to use. The underlying difference is how clear the change is in the user's life. The much larger cost to develop and produce hardware like some in the comments have been discussing leads us to value hardware much more significantly than software. It might be due to iTunes, Java, and Windows update making people mad when they waste their time, or have their computer shut down on them in the middle of their work, but there is a significant bias.
- toong 12y ago
  If you're outlook is a $10M or even $100M valuation, VCs and even angels would not interested.
  - jacquesm 12y ago
    Plenty of funds would be happy with exits in the $100M range. The billion dollar exits or IPOs are the exception, not the rule and a $50M exit is a damn sight better than a failure. Of course it all depends on when they joined that particular party, the later in the game the higher the exit would have to be to make those investors happy.
philippnagel 12y ago
Is calculated valuation (not market cap!) the only metric relevant to a VC when talking about the size of a company? What about MRR, YRR, profits, number of employees, revenue/profit per employee? The only ones profiting from high valuations are VCs' themselves. Therefor one should be really skeptical when reading such articles.
- mathattack 12y ago
  Valuation is a simple metric that can be used to compare companies to each other, and is language that investors understand. It's also easy for founders and employees to follow. Many times companies trump up all other metrics when valuation suffers. But valuation isn't the only one. When there is a high valuation (and ultimately market cap) the employees who own shares do well too.
- tlb 12y ago
  Valuation is people's best estimate of discounted future profits. It's true that the discount rate varies with macroeconomic changes, but rarely by as much as a factor of 2 over the last 20 years. When trying to express the long-term potential of a business, a factor of 2 is noise. You're lucky if you can get the number of digits right. MRR/YRR measures the business today, but the long-term prospects are more interesting. Number of employees or revenue/profit per employee don't measure business potential. Some huge businesses (Wal*mart) have low revenue/employee. Some small businesses (specialty consulting) have high revenue/employee.
leoedin 12y ago
The reason that a larger number of hardware startups have recently appeared is quite simple - these are mostly actually software companies. Modern hardware that a startup might produce - IoT stuff, small computers etc - are essentially bare-minimum hardware wrappers around black-box chips. The complexity of developing hardware is driven by the number of discrete components used. Every additional resistor is a resistor which can be fitted wrong. Every additional analogue circuit built using discrete components is a huge risk. To build cheap hardware, you avoid all that as much as possible by building PCBs which just wire up highly functional ICs. In essence your hardware company then becomes a software company.
- deleted 12y ago
  [deleted]
- rebootthesystem 12y ago
  > The complexity of developing hardware is driven by the number of discrete components used Sorry, that's not even close to being true. Interesting how on HN "hardware" seems to mean "a board with chips". You know, like a Raspberri Pi. That is one type of hardware but not, I dare say, where the $10B (and maybe even $10M) startups would exist. We are developing two hardware products right now. One is an innovative fire fighting system and the other a CNC machine. The complexity in these designs has very little to do with what chips you place on a board. For example, we expect to have to run three to six months of FEA simulations to validate aspects of the fire fighting system and then have to iterate through several design candidates over several months. Beyond that there are regulatory issues that could up-end any design if you don't know what you are doing. Packaging. I almost forgot packaging. Man, that can consume months of testing. You can design a beautiful product only to have it damaged during transportation due to incorrect packaging. Oh, yeah, you also have to have good software. Nah, harware isn't just about chips on a board.
  - Balgair 12y ago
    Bingo! Reliability, safety, malfunctions in batches of screws, etc. Hardware is more complicated because more is going on. With software: Oops! Gotta restart the phone, shucks! With hardware: Crap, dropped it, gotta buy a new one.
onion2k 12y ago
There are a few companies around that have the resources to copy the product of any moderately successful hardware startup. Apple, Samsung, Xitomi, Microsoft, and others can just straight up clone the clever parts of your hardware and wrap it in a package that you could never afford to compete with. That obviously doesn't mean you can't have any success - building a $hundreds-of-millions company is definitely possible, but taking it to the $billions will be a few orders of magnitude harder. [1] Fitbit did movement tracking well, and now there's Microsoft Band, Nike Fuelband, etc. Pebble popularised smartwatches and now there's Moto 360 and Apple Watch. And so on. And Fitbit and Pebble weren't the first movers in their markets, there'll be smaller companies who failed by being too early.
- terravion 12y ago
  This maybe true of consumer product companies, but a lot of "hardware" companies aren't either consumer or product companies, they are service companies. For example, SpaceX builds neat hardware, but sells launch services. They deliver a complete service with their own hardware + software + services. This is becoming more and more common model in many industries, and is a much harder business to copy.
yarri 12y ago
@sama actually addressed HW on his recent AMA here [0] but as with software startups, you have to broaden your view of a hardware startup -- if you include ventures focused on fundamental semiconductor technology, both analog and digital; tools for design, prototyping and verification; semiconductor intellectual property as well as end products, there are quite a few potential $10B opportunities[1]. I believe @sama is considering the full range of investment options. Not all investments in this segment are capital intensive. [0] https://news.ycombinator.com/item?id=9238839 https://news.ycombinator.com/item?id=9238839 [1] http://blog.semiconductors.org/blog/what-end-use-applications-drove-semiconductor-sales-in-2014 http://blog.semiconductors.org/blog/what-end-use-application...
abiekatz 12y ago
I like Sam's line: "I always tell my partners that our job is to fund all the companies we can that can be worth $10 billion or more. That’s such a difficult constraint we can’t have any other constraints."
- claar 12y ago
  They should put that statement prominently in the YC application materials.
  - danieltillett 12y ago
    I think this might be a statement more honoured in the breech after looking at the YC15 alumni.
ilaksh 12y ago
Im looking forward to tabletop micro-foundries that can create ICs. Its a ways off and I'm sure people will say it is impossible, but it will happen eventually and then it will be very obvious how similar software and hardware are. I think you have to anticipate a gradual movement towards total programabiltiy of reality.
ausjke 12y ago
The softwarization of hardware is the key trend, agreed. The software-defined radio/network/storage etc are happening quickly now. For the low-end hardware, e.g. the IoT field, the wearable market etc, the software is also key, for instance, they need the cloud platform to be effective and useful these days. We just need more workshop/factories to turn the (low quantity) hardware-design into real products with high quality, which is still very challenging and a bottleneck.
Spearchucker 12y ago
Not trivializing the article, or it's point. Interesting though is that the subject (hardware) reminded me of an app I wrote that lets me quickly model system availability on my phone. My astonishment at the time was that such a simple modeling tool isn't available in any app store (maybe today, couldn't find anything a year or so ago). There are sooo many tools, let alone basic productivity apps that just don't exist yet. And here we are, breathless and panting, moving onto the next big thing - hardware, biotech... Hey its all good stuff. Except for the part where I can't create a simple DB-like table on my phone and have that sync (securely!) with my other devices - without making me create a Dropbox account, or wanting to up-sell me in the app, or get all social on me. Basic, simple and honest apps. Like the Code Vault app I had on my Nokia Communicator in 2001.
bsder 12y ago
Not until software lottery tickets quit returning 10x+. Who, in their right mind, would invest in hardware? NRE kills--especially in mechanical engineering which actually seems to be regressing. Machining companies now charge a fortune for things which my grandfather used to do by hand in his garage in about an hour. Not to mention how long it takes to get an injection mold (14 weeks is not uncommon). For the price of a couple injection molds, I can flog a gaggle of stupid 20-somethings living in squalor for about a year. No contest as to which has a better probability of cashing out. In addition, who is going to buy out a hardware startup? Hardware really doesn't fit the Yahooglezoft strategy, so now your exits are very limited. Even worse, hardware acquirers tend to be rational about things like costs and profit. Finally, everybody who does hardware tries to create the cloud back end and then get anybody else to do the hardware while they extract the rent. So, longer timelines to cash out with higher risk. Yeah, don't think so. Now, the upside is that if you do manage to get a product out, you have an actual barrier to entry. 2 guys and a dog in the Ukraine can't just clone you. While I love the manufacturing incubators, they don't solve the fundamental problem of not knowing how to run machines. The existence of a CNC machine or a TIG welder doesn't magically make you a machinist or a welder. Being able to run a CNC machine doesn't mean you know how to make an injection mold. Most people fail horribly simply at making a PCB board, and those are totally straightforward. Read Andrew "bunnie" Huang's blog for a taste of all the little sh*t that can go wrong in manufacturing: http://www.bunniestudios.com/ http://www.bunniestudios.com/
- dba7dba 12y ago
  I agree. Software is easy to work with because you can reboot. With manufacturing, you can not. I heard a quote from someone discussing war. When a war is about to break out 1) amateurs start talking about strategy. 2) Professional start talking about logistics. Google can be a milti billion firm because they can go from 1 to 10 (in customer #, capacity) easily. With manufacturing, that's just physically impossible. And physics doesn't lie.

102 points by softdev12 12y ago

I am a broken record. So many brilliant people (RMS comes to mind) have fallen into the trap of thinking that hardware dev for general computing (not including rocketry and other such hardware) is so inexpensive that it's going to be super easy. But that's not the case [1] because hardware is a totally different beast than software. It won't be any more open, or any less expensive; at least, not for a long time. [1]: http://www.mauve.plus.com/opensourcehw.txt http://www.mauve.plus.com/opensourcehw.txt

nsnick 12y ago
All this means is that they are going to need a lot more investment than a software company.
- striking 12y ago
  It's not just cost, it's also cycle time (as mentioned in the article.) To "do" hardware requires a company to be fully formed, with engineers of all kinds, before they can even really begin. They can get a minimal MVP using a Teensy board or something from mbed, but beyond that, for anything of any serious complexity, they have to build out a company.
  - nsnick 12y ago
    Given enough investment you can hire the engineers you need. Maybe I should have said that all it requires is more money earlier.
rboyd 12y ago
It is becoming more open and less expensive. The point is that the tools for prototyping, simulating, assembly, and manufacturing are becoming much cheaper. Along with the fact that people are sharing more. I agree that there is no substitute for RTFM. That will always be required. Although, it's layers of abstraction in hardware too. Just like software libraries and frameworks: if someone has published a circuit that includes some subsystem I need, I can very likely ctl+v much of it into my own design without having a full understanding of it. Which is the entire reason why an industry around ICs can exist at all. It's just that more people are sharing now than ever before. Pick and place machines are now becoming accessible at low cost (see Fire Pick Delta/LitePlacer). This addresses many of your assembly errors and mitigates costs. I can't construct a reasonable argument against your points E, F, and G, which seem to all equate to "something unlucky and magical happened that broke your prototype".
- jkestner 12y ago
  Yes, manufacturing is getting cheap enough that the average person can get themselves in a mess of trouble now. It's still got a ways to go before it's cheap enough that they can get themselves out of that mess.
  - ethbro 12y ago
    I feel like "number of people able to get themselves into mess of trouble > number of people able to get themselves out of mess of trouble" is a pretty solid premise throughout time.
jacquesm 12y ago
FPGAs have opened up a lot of options that previously would have been absolutely un-imaginable without access to significant capital. You can now prototype fairly complex designs for relatively little money.
- silverpikezero 12y ago
  FPGAs may have opened up options for prototyping, yes. However they have done nothing whatsoever for production. It's economically infeasible to productize and FPGA based product since the only ones worth using are all ~$10k per unit, with price breaks only available to 1M unit quantities. It is also almost entirely impossible to commercialize any design with an ASIC, since it takes a minimum of $10-20M to design it (and pay the foundry). Semiconductor startups have been dying a slow death since the 90s, and will continue to disappear completely from the landscape, suffering a "death by NRE."
  - jacquesm 12y ago
    Sure, but in the past you would not have gotten to 'demoable product' which is a key post to pass on the road to serious funding in the hardware arena.
    - bsder 12y ago
      Huh? What hardware industry have you been in? If it's a hot hardware area (past hot areas: graphics chips, microprocessors, WiFi chips, OC-768 networking chips, ...), nobody will wait for the FPGA prototype. You get funding, you go to VLSI and maybe you produce an FPGA board for validation along the way. Probably not since what you're doing is probably too complex for a single FPGA anyway. Otherwise, your volume is too small and the FPGA IS your product. And that's only if you can't somehow make it run on a microprocessor. The only place I've ever seen an FPGA validation board was with RF startups in the cellular space. And, even then, it was way back when the protocols were much simpler. tl;dr If your demo doesn't run on a microprocessor (or SoC), it doesn't exist.
      - 12y ago
wpietri 12y ago
I just happened to visit two different hardware companies today. One is 60 years old, one about 2. The people at both these companies are practically peeing their pants with glee over how much better things are. Iteration has gotten radically less expensive. I agree that open-source hardware is not nearly as easy as open-source software. But I think it's definitely going to be both more open and less expensive.

koops 12y ago

$10B? That's awfully large, and closing the door on a lot of ideas. What if you just want to solve an important problem by selling a product profitably and don't want to grow to enormous size? I guess you look somewhere other than Y Combinator to get started.

atroyn 12y ago
If that's the plan, you don't need YC in to get started.
zarriak 12y ago
The point of the lower limit on the value of the company is not based on what might turn out to be a 1 billion dollar company. There are many more ideas in hardware than there are in software, purely based upon how accessible it seems. If you are solving anything close to an important problem, you will eventually reach a $10B valuation. A software company can grow to a reasonable size that is nowhere close, but hardware companies don't follow the same path. Solving a problem with hardware either solves a problem or replaces the thing that fixed the problem before. Solving a problem with software is usually (if not always) making computers better or easier to use. The underlying difference is how clear the change is in the user's life. The much larger cost to develop and produce hardware like some in the comments have been discussing leads us to value hardware much more significantly than software. It might be due to iTunes, Java, and Windows update making people mad when they waste their time, or have their computer shut down on them in the middle of their work, but there is a significant bias.
toong 12y ago
If you're outlook is a $10M or even $100M valuation, VCs and even angels would not interested.
- jacquesm 12y ago
  Plenty of funds would be happy with exits in the $100M range. The billion dollar exits or IPOs are the exception, not the rule and a $50M exit is a damn sight better than a failure. Of course it all depends on when they joined that particular party, the later in the game the higher the exit would have to be to make those investors happy.

philippnagel 12y ago

Is calculated valuation (not market cap!) the only metric relevant to a VC when talking about the size of a company? What about MRR, YRR, profits, number of employees, revenue/profit per employee? The only ones profiting from high valuations are VCs' themselves. Therefor one should be really skeptical when reading such articles.

mathattack 12y ago
Valuation is a simple metric that can be used to compare companies to each other, and is language that investors understand. It's also easy for founders and employees to follow. Many times companies trump up all other metrics when valuation suffers. But valuation isn't the only one. When there is a high valuation (and ultimately market cap) the employees who own shares do well too.
tlb 12y ago
Valuation is people's best estimate of discounted future profits. It's true that the discount rate varies with macroeconomic changes, but rarely by as much as a factor of 2 over the last 20 years. When trying to express the long-term potential of a business, a factor of 2 is noise. You're lucky if you can get the number of digits right. MRR/YRR measures the business today, but the long-term prospects are more interesting. Number of employees or revenue/profit per employee don't measure business potential. Some huge businesses (Wal*mart) have low revenue/employee. Some small businesses (specialty consulting) have high revenue/employee.

leoedin 12y ago

The reason that a larger number of hardware startups have recently appeared is quite simple - these are mostly actually software companies. Modern hardware that a startup might produce - IoT stuff, small computers etc - are essentially bare-minimum hardware wrappers around black-box chips. The complexity of developing hardware is driven by the number of discrete components used. Every additional resistor is a resistor which can be fitted wrong. Every additional analogue circuit built using discrete components is a huge risk. To build cheap hardware, you avoid all that as much as possible by building PCBs which just wire up highly functional ICs. In essence your hardware company then becomes a software company.

deleted 12y ago
[deleted]
rebootthesystem 12y ago
> The complexity of developing hardware is driven by the number of discrete components used Sorry, that's not even close to being true. Interesting how on HN "hardware" seems to mean "a board with chips". You know, like a Raspberri Pi. That is one type of hardware but not, I dare say, where the $10B (and maybe even $10M) startups would exist. We are developing two hardware products right now. One is an innovative fire fighting system and the other a CNC machine. The complexity in these designs has very little to do with what chips you place on a board. For example, we expect to have to run three to six months of FEA simulations to validate aspects of the fire fighting system and then have to iterate through several design candidates over several months. Beyond that there are regulatory issues that could up-end any design if you don't know what you are doing. Packaging. I almost forgot packaging. Man, that can consume months of testing. You can design a beautiful product only to have it damaged during transportation due to incorrect packaging. Oh, yeah, you also have to have good software. Nah, harware isn't just about chips on a board.
- Balgair 12y ago
  Bingo! Reliability, safety, malfunctions in batches of screws, etc. Hardware is more complicated because more is going on. With software: Oops! Gotta restart the phone, shucks! With hardware: Crap, dropped it, gotta buy a new one.

onion2k 12y ago

There are a few companies around that have the resources to copy the product of any moderately successful hardware startup. Apple, Samsung, Xitomi, Microsoft, and others can just straight up clone the clever parts of your hardware and wrap it in a package that you could never afford to compete with. That obviously doesn't mean you can't have any success - building a $hundreds-of-millions company is definitely possible, but taking it to the $billions will be a few orders of magnitude harder. [1] Fitbit did movement tracking well, and now there's Microsoft Band, Nike Fuelband, etc. Pebble popularised smartwatches and now there's Moto 360 and Apple Watch. And so on. And Fitbit and Pebble weren't the first movers in their markets, there'll be smaller companies who failed by being too early.

terravion 12y ago
This maybe true of consumer product companies, but a lot of "hardware" companies aren't either consumer or product companies, they are service companies. For example, SpaceX builds neat hardware, but sells launch services. They deliver a complete service with their own hardware + software + services. This is becoming more and more common model in many industries, and is a much harder business to copy.

yarri 12y ago

@sama actually addressed HW on his recent AMA here [0] but as with software startups, you have to broaden your view of a hardware startup -- if you include ventures focused on fundamental semiconductor technology, both analog and digital; tools for design, prototyping and verification; semiconductor intellectual property as well as end products, there are quite a few potential $10B opportunities[1]. I believe @sama is considering the full range of investment options. Not all investments in this segment are capital intensive. [0] https://news.ycombinator.com/item?id=9238839 https://news.ycombinator.com/item?id=9238839 [1] http://blog.semiconductors.org/blog/what-end-use-applications-drove-semiconductor-sales-in-2014 http://blog.semiconductors.org/blog/what-end-use-application...

abiekatz 12y ago

I like Sam's line: "I always tell my partners that our job is to fund all the companies we can that can be worth $10 billion or more. That’s such a difficult constraint we can’t have any other constraints."

claar 12y ago
They should put that statement prominently in the YC application materials.
- danieltillett 12y ago
  I think this might be a statement more honoured in the breech after looking at the YC15 alumni.

ilaksh 12y ago

Im looking forward to tabletop micro-foundries that can create ICs. Its a ways off and I'm sure people will say it is impossible, but it will happen eventually and then it will be very obvious how similar software and hardware are. I think you have to anticipate a gradual movement towards total programabiltiy of reality.

ausjke 12y ago

The softwarization of hardware is the key trend, agreed. The software-defined radio/network/storage etc are happening quickly now. For the low-end hardware, e.g. the IoT field, the wearable market etc, the software is also key, for instance, they need the cloud platform to be effective and useful these days. We just need more workshop/factories to turn the (low quantity) hardware-design into real products with high quality, which is still very challenging and a bottleneck.

Spearchucker 12y ago

Not trivializing the article, or it's point. Interesting though is that the subject (hardware) reminded me of an app I wrote that lets me quickly model system availability on my phone. My astonishment at the time was that such a simple modeling tool isn't available in any app store (maybe today, couldn't find anything a year or so ago). There are sooo many tools, let alone basic productivity apps that just don't exist yet. And here we are, breathless and panting, moving onto the next big thing - hardware, biotech... Hey its all good stuff. Except for the part where I can't create a simple DB-like table on my phone and have that sync (securely!) with my other devices - without making me create a Dropbox account, or wanting to up-sell me in the app, or get all social on me. Basic, simple and honest apps. Like the Code Vault app I had on my Nokia Communicator in 2001.

bsder 12y ago

Not until software lottery tickets quit returning 10x+. Who, in their right mind, would invest in hardware? NRE kills--especially in mechanical engineering which actually seems to be regressing. Machining companies now charge a fortune for things which my grandfather used to do by hand in his garage in about an hour. Not to mention how long it takes to get an injection mold (14 weeks is not uncommon). For the price of a couple injection molds, I can flog a gaggle of stupid 20-somethings living in squalor for about a year. No contest as to which has a better probability of cashing out. In addition, who is going to buy out a hardware startup? Hardware really doesn't fit the Yahooglezoft strategy, so now your exits are very limited. Even worse, hardware acquirers tend to be rational about things like costs and profit. Finally, everybody who does hardware tries to create the cloud back end and then get anybody else to do the hardware while they extract the rent. So, longer timelines to cash out with higher risk. Yeah, don't think so. Now, the upside is that if you do manage to get a product out, you have an actual barrier to entry. 2 guys and a dog in the Ukraine can't just clone you. While I love the manufacturing incubators, they don't solve the fundamental problem of not knowing how to run machines. The existence of a CNC machine or a TIG welder doesn't magically make you a machinist or a welder. Being able to run a CNC machine doesn't mean you know how to make an injection mold. Most people fail horribly simply at making a PCB board, and those are totally straightforward. Read Andrew "bunnie" Huang's blog for a taste of all the little sh*t that can go wrong in manufacturing: http://www.bunniestudios.com/ http://www.bunniestudios.com/

dba7dba 12y ago
I agree. Software is easy to work with because you can reboot. With manufacturing, you can not. I heard a quote from someone discussing war. When a war is about to break out 1) amateurs start talking about strategy. 2) Professional start talking about logistics. Google can be a milti billion firm because they can go from 1 to 10 (in customer #, capacity) easily. With manufacturing, that's just physically impossible. And physics doesn't lie.