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The reason that a larger number of hardware startups have recently appeared is quite simple - these are mostly actually software companies. Modern hardware that

• 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.
  • joshu 12y ago
    more on the CNC machine?
    • rebootthesystem 12y ago
      Hmmm. What can I say? Very beefy modular tabletop gantry; AC servos; Automatic Tool Changer; probably 3HP CAT 30 or 40 spindle; coolant; Rigid tapping; weight in the 500 to 1000 lbs range. No, it's not your typical DIY 80-20 t-slot machine on eBay. This is intended as a serious step up from something like a Tormach without having to spend $100K+. No ETA yet.
      • joshu 12y ago
        Awesome stuff. I hope you post about it.
  • larrys 12y ago
    Also there are little if any "do overs" with hardware. If you manufacture it and you make a mistake and it can't be fixed with software then you have a big problem to deal with. You will almost certainly find the mentality of people making industrial equipment (or airplanes) different than people who write software where it's just about accepted practice at this point to push products into the channel and fix them later. In a sense your customers become your beta users. Wasn't always like this (with software). I am getting software updates from Apple it seems every few days. Back in the days of floppy disks and prior to the Internet they had to spend more Q&A time because it would be rather expensive to fix problems with buggy code.
    • jkestner 12y ago
      At the least, there are a bunch of strategies that you gotta learn to mitigate the cost of do-overs. It's planning for all the things that can go wrong. Trying to decide whether that logo and your heartfelt "Designed in California" should be embossed or debossed on your case? Learn what "tool-safe" means, and when the moldmaker screws up your font, you'll have a cheap fix instead of scrapping your $10K mold.
  • jacquesm 12y ago
    > One is an innovative fire fighting system and the other a CNC machine. What kind of company developes both fire fighting machines and CNC machines? Are you employed by a prototyping company or something like that? The only other set-up I can think of where such a combination could occur is something like Mitsubishi, very interesting!
    • TeMPOraL 12y ago
      > What kind of company developes both fire fighting machines and CNC machines? > Are you employed by a prototyping company or something like that? Yeah. Prototyping company immediately came to my mind as well. It could also be a private R&D institute that does projects on (e.g. EU) grants. I have a friend working in the second, and apart from doing various weird hardware for EU money, they do some batshit crazy stuff when they're bored at work. There's a guy there that routinely does things like driving around the parking lot with a pulsejet-powered warehouse trolley, drawing things on concrete with a DIY flamethrower or spending few months of free time on doing a beautiful, steampunk-style Geiger counter/night lamp.
    • rebootthesystem 12y ago
      I own the company. We do both product development for third parties and our own products. Software, electronics, mechanical, anything. From LED's to robotics. We are also developing a neat portable barbecue system that might be launched via Kickstarter.
      • jacquesm 12y ago
        Very cool! That's just about as good as it gets.
        • rebootthesystem 12y ago
          Owning your own business: You get to choose which 20 hours of the day you are going to work! But, yeah, it can be fun.
  • jkestner 12y ago
    Packaging is best thought of as another hardware product itself. Form and function have to be design-gineered, and materials and parts and assembly have to be corralled into a schedule and budget. The idea that software is eating hardware, while true on some level for some class of products, is also what leads to lots of startups with solid software backgrounds offering a beautifully designed product that suffers from cost overruns, delays, mechanical and firmware bugs (you think having to test an app across a couple of phones is a pain, try field testing your smart lock). "Move fast and break things" is very different from the mindset needed to build hardware. Be mindful of the perspective of the authors when reading these tragedies: https://medium.com/@stevekreyos/the-rise-and-fall-of-kreyos-new-ac4e2d847964 https://medium.com/@stevekreyos/the-rise-and-fall-of-kreyos-... https://medium.com/@Haje/how-a-half-million-dollar-kickstarter-project-can-crash-and-burn-5482d7d33ee1 https://medium.com/@Haje/how-a-half-million-dollar-kickstart...
    • rebootthesystem 12y ago
      Right, I didn't mention such things as thermal and environmental testing. How is your widget going to work in an Icelandic winter or at the peak of summer in Death Valley? How about dirt, grime, dust, vibration and humidity, rapid cycling, cycles per day, drop, impact? The list is huge and highly dependent on the product being designed. About ten years ago a company owned by a friend of mine shipped a machine worth $800,000 to Japan. The packaging/crate was not designed correctly. The machine suffered irreparable damage during transportation. No, there was no penetration of the crate. It was purely inertial loads on components that were not supported for transportation. They bent. It was probably a combination of forklifts, trucking, port container handling, etc. The machine was a total loss. The insurance company was not happy.
      • tjradcliffe 12y ago
        Also: EMC testing, RFI, etc. Certified by a test lab that will cover both North America and Europe. On shipping: these days it's pretty common to ship everything with mechanical accelerometers in the packaging that trigger on high loads so you can tell when the crate has been dropped. Crazy how often it happens.
  • ubasu 12y ago
    Just curious: what software do you use for you FEA simulations?
    • rebootthesystem 12y ago
      Mostly Solidworks simulation tools. Flow and mechanical.
• Balgair 12y ago
  To expound on this, look at profit of product negating development. For software, it is nearly full profit. I sell you my app for $4. The app cost me $0.04 to sell. Each additional copy of the app costs almost nothing. Essentially, just Crtl-C, Ctrl-V. Yes, there are hosting costs, Apple's marketplace for apps costs, etc. But hardware has very similar costs too; they cancel out. For a hardware product, to make another copy of the product will eat a lot more of the profits. Essentially, software is cheaper because you can make billions of products for essentially the same cost as thousands with respect to hardware.
  • alwaysdoit 12y ago
    Not to mention you can scale up nearly instantaneously, as opposed to hardware manufacturing cycles which months at best.
  • Taniwha 12y ago
    you miss the more important issue - cash-flow - with software you need almost no cash-flow to scale to infinity, with hardware you have to commit money to warehoused hardware - using income from your sales to pay for manufacturing causes a feedback term to kick in to how fast you can scale your market, even if the demand is out of site you can't meet it (the alternative is paying the bank interest)
    • Taniwha 12y ago
      BTW this is why kickstarter is such a great model for small hardware startups ..... it effectively short circuits the first zip around this cycle and gives you something to go to the bank with
  • danvoell 12y ago
    You need to differentiate marketing costs and COGS. If you are trying to sell a new CRM, it costs a hell of a lot more in marketing than $.04 to sell. There is so much competition to sell digital products and software online. Many physical products don't have as much marketing competition. While physical product companies can take longer to grow, the path to $10B can be with less competition while you establish barriers to entry for copycats.
• TeMPOraL 12y ago
  Moreover, if you look closely at many so-called "hardware companies" (especially IoT ones), you can see that they actually stick a SoC into a nice packaging and build an app and a cloud platform for that, even when it makes no sense whatsoever. Why? Because that's how they get the money. On the cloud it's easier to keep monetizing your customers, and more importantly, you can literally just point out that you have "A platform! That grows!" and get investor money. They all are software companies - not only because it's easier than hardware, but also because it's easier to get funding. Some of the companies you'd thought of as hardware ones actually admit it. I recall hearing Estimote guys repeatedly telling that they are not a hardware company - they are a software one, that just happens to make trendy beacons.
  • exelius 12y ago
    Because the software platform is the valuable part of IoT. The technology behind most of the hardware is commoditized and cheap; VCs are investing in "hardware" companies because you need to sell hardware to get your software in the door. VCs know that hardware gives a lot lower potential returns than software, so they just focus on the value of the software because that's what they know. The big problem is that IoT isn't really a hockey-stick business: the configuration of even a modest whole-home setup is so complicated that consumers can't do it themselves. You won't see the valuations that accompany software startups because user acquisition is so much harder that they will never give the growth returns that a software company can. Contrast an IoT platform that you have to buy a $50 device to use with a service like Dropbox where there is little to no barrier to becoming a customer. Ultimately, I think IoT will enable spiffy home automation systems to come down to the price range of mere mortals. But I don't think it's the next $10B market simply because it doesn't solve any problems that most people have.
    • thinkmassive 12y ago
      Nest was acquired for $3.2 billion. The thermostat measures home activity and controls your HVAC. The reason it's highly valued is because of the aggregate of data from all thermostats, which they use to optimize the environment for each customer. Nest is the beginning of home automation for the masses, a market easily greater than $10B.
• rasz_pl 12y ago
  >The complexity of developing hardware is driven by the number of discrete components used. No its not. Most components are practically free #1, placing them is also very cheap #2. Hardware is not expensive because of _hardware_ costs. Its expensive because of engineering, prototyping, and latency of development. /1 single/two digit cents. Except for specialized parts. For example hiend precision resistors, supercaps, weird connectors, non commodity microcontrollers, fpgas, fast ADCs, or precision opamps/voltage references. Nevertheless you will largely use jelly bean components with only few expensive parts on the board. /2 again except for the very hiend small footprint ones. Super small components targeting lightweight products (cellphones, ultra light laptops) require professional millions of dollars machines and experience. Here is a story of one company almost tanking because CEO is a Jobs wannabe and decided to make his product "sexy" using same components and techniques as Macbooks: http://www.theamphour.com/237-an-interview-with-joe-and-mark-garrison-subtly-spelling-sayleeay/ http://www.theamphour.com/237-an-interview-with-joe-and-mark...
  • diydsp 12y ago
    Offtopic, but I'm glad I discovered that Saleae scope. I haven't found any other economical way to sample a number of analog inputs in parallel. $219 for 8 analog inputs over USB is great value and I just ordered one. I didn't even bother looking for any of the supposed clones. I only wish I could afford $599 for the 16 analog inputs, but the value prop. isn't as great.
• josephjrobison 12y ago
  This is so true! Ever since I was a kid I've wanted a security camera to play spy. I'd look at them at Fry's or Amazon or wherever, but there were so many varieties an no clear winner. Then came Dropcam with sexy packaging, a simple price, and ... well-made software with a subscription model. Next, they're snapped up by Google for $555 million. Would they have been acquired if they only did the hardware and nothing else?
• tikhon 12y ago
  Crowdfunding has been huge for hardware startups too.