This document discusses strategies for hardware startups. It outlines 12 types of "wares" that hardware startups should avoid, such as "funware" with no business model or "vaporware" that can't be built. It also discusses challenges with scaling hardware, the need to validate problems before solutions, and strategies for funding different stages. The document promotes HAX, an accelerator program to help hardware startups succeed from prototype to business.

1. BY @HAXLR8R
BUILDING
GLOBAL
LEAN
HARDWARE
STARTUPS
H A X

2. TALK TO US!
All this is on
www.slideshare.com/haxlr8r
We LOVE questions & comments!
@haxlr8r
@benjaminjoffe

3. HARDWARE
STARTUPS

4. HARDWARE RENAISSANCE
PROTOTYPING IS EASIER THAN EVER
Arduino / Pi / Spark / 3D printing / Sensors /
BLE / Smartphones / Cloud
SUPPLY CHAIN IS BETTER THAN EVER
– China (Shenzhen) has the whole chain
– Fast, Affordable, Scalable
MORE FUNDING
– KickStarter (250,000+ HW backers!),
IndieGoGo
– More VC & Angel money, acquisitions

5. BE A MASTER OF THE PROBLEM
What matters is the problem,
not the solution!

6. “The question is no
longer: can we make
it?
But: what can we
make
that’s worthwhile?”
Dr. Bjoern Hartmann
Interactive Device Design
Critical Making
HARDWARE TODAY

7. “LEAN
HARDWARE”
OR
MAPPING THE PATH
TO
HARDWARE
STARTUP SUCCESS

10. Startup Accelerator for Hardware
From Prototype to Business
In Shenzhen & San Francisco
HAXLR8R

11. 8 THINGS ABOUT HAX
1. 111 days
2. Shenzhen + San Francisco Demo Day
3. Up to $50k for 6%-8%
4. HAX team (DFM, EE, ID, sourcing) & 50+
mentors
5. 50 startups, 130+ founders
6. 60% Americas // 20% Europe // 20% Asia
7. IOT, wearables, robotics, etc.
8. 20+ crowdfunding campaigns, avg. $200k

12. FOUNDERS LEARN TO…
Position company & product
Buy on Taobao
Shop in Huaqiangbei
Source on Alibaba
Speak enough Mandarin
Prepare a DFM
Select factories
Manage production
Engage advisors
Work with media
Prepare for crowdfunding
Scale
Fundraise
Enjoy the journey!

13. HAX MISSION: EMPOWERMENT
1. Build the right thing
2. Build things right
3. Ship fast

14. “HARDWARE UNIVERSITY”
H A X

15. MONSTERS UNIVERSITY OR
HARDVARD?
H A X

17. HAX 4 GRADUATES
2 robotics
2 sports tech
2 health tech
1 green tech
1 3d printer
1 connected camera
1 smart city logistics

18. SPARK RAISES

19. MEDIA COVERAGE

20. LEAN HARDWARE PHILOSOPHY
1. Validate problem vs. Assume
2. Partner w/ factories vs. Abdicate
3. Fast to market vs. Long cycles
4. Capital effective vs. Capital
intensive
5. User backed vs. Venture
backed

21. 1. Validate problem vs. Assume
2. Partner w/ factories vs. Abdicate
3. Fast to market vs. Long cycles
4. Capital effective vs. Capital
intensive
5. User backed vs. Venture
backed
LEAN HARDWARE PHILOSOPHY
+ HAX Approach
Meaningful
Aligned with founders

22. WHY CHINA
FOR
STARTUPS?

23. 3 OLD MYTHS IN 1 SENTENCE
“China only makes
cheap stuff
at scale and
copies”

24. TODAY’S REALITY
• Your iPad
• Start from 1 unit
• IP is at risk if:
–Your product is trivial
–You pick the wrong
partner
–You’re already successful

25. THE COST OF NOT BEING IN CHINA
“You have to consider
the cost of not being
in China.”
Will Hart
Chief of Staff
Spark.io
(HAX 2)

26. WHAT ABOUT MY IP?
“Protection of IP can be
complex
manufacturing or
product, community,
and cloud based
services.”
Idan Beck
Founder
gTar
(HAX Fund)

27. KNOW-HOW
“Chinese factory
engineers master the
lost art of injection
molding.”
”On the factory floor
you solve problems
much faster, speaking
Bunnie Huang
Hardware Hacker
Bunnie Studios
(HAX Mentor)

28. WHY GO TO CHINA EARLY?
• Prototype better and faster
– PCBs overnight
– All the components you need
– Tools for prototyping
– “Lost art of injection molding”
– Design for manufacturing
– (much) Cheaper
• Build and scale fast
– Integrated supply chain
– Scale up from 1 to any number
– Prepare scaling before it’s painful
Where is the mold?

29. WHY WOULD A LAOBAN CARE?

30. FOUR-AND-A-HALF REASONS
1. Future business
2. Improve capabilities
3. Use excess capacity
4. Internationalize
4.5 Fun
The rest is up to you

31. STARTUP
CHECKLIST

32. http://whatthefuckismywearablestrategy.com/

33. STARTUP CHECKLIST
1. Product Is something working
2. Skills Can the team make it
3. Spirit Resourceful, Optimistic,
Persistent
4. Positioning New segment or new market
 10x better in some way or
different
 Something hard to do

34. BUILDING THE RIGHT THING
INITIAL PROBLEM
INITIAL SOLUTION
INITIAL PROBLEM
NEW SOLUTION
NEW PROBLEM
INITIAL SOLUTION
NEW PROBLEM
NEW SOLUTION
INITIAL PROBLEM
INITIAL SOLUTION

35. STARTUP CHECKLIST
1. Product Is something working
2. Skills Can the team make it
3. Spirit Resourceful, Optimistic,
Persistent
4. Positioning New segment or new market
5. Demand Proof / Customer discovery
6. Distribution How to sell
7. Plan Beyond first product

36. NOT JUST HARDWARE
• Pure hardware can be copied
• Something hard to do
• HW + SW + Community
–Almost all HAX startups use an app /
cloud
–Algorithms, something HARD to replicate
–Community (GoPro, Makerbot, Glass…)

37. BEWARE
OF THOSE
12 “WARES”
wow
such excite
very hardware
so future

38. FUNWARE
1. FUNware No business

39. CHINDOGU
1. FUNware No business
Kenji Kawakami
Chindogu pioneer
(with tissue roll headgear
+ Fail-proof eyedrop glasses)

40. MORE CHINDOGU
Baby mop
Open eyes stickers Back scratching grid

41. FUNWARE
1. FUNware No business
(includes NICHEware and ARTware)

42. EASYWARE
1. FUNware No business
2. EASYware Not defensible

43. EASYWARE
1. FUNware No business
2. EASYware Not defensible
“Two sensors
and an app”
Nobel-grade
research

44. PRESSY
1. FUNware No business
2. EASYware Not defensible
PRESSY ($27)
Funded Oct 2013
Raised $695,000

45. PRESSY
1. FUNware No business
2. EASYware Not defensible
Speed Button ($10)
(“kuai anniu”)
Funded Jan 2014
Raised $34k

46. PRESSY
1. FUNware No business
2. EASYware Not defensible
Xiaomi MiKey
($0.8)
Launched April 2014
“If Xiaomi starts producing
buttons like Pressy,
we will start to produce
smartphones.”
- Founder of Pressy

47. SAMEWARE
1. FUNware No business
2. EASYware Not defensible
3. SAMEware Bad positioning

48. THE BETTER MOUSETRAP MYTH
1. FUNware No business
2. EASYware Not defensible
3. SAMEware Bad positioning
“Build a better mousetrap and the
world
will beat a path to your door”
Ralph Waldo Emerson
(maybe)

49. THE BETTER MOUSETRAP MYTH
1. FUNware No business
2. EASYware Not defensible
3. SAMEware Bad positioning
The problem with
mousetraps
• 4,400 patents
• 400 applicants per year
• “most frequently invented
device in U.S. history”

50. 47 companies launched 3D printers
and raised $100K+ or more in crowdfunding.
Source: Flybridge Capital Partners, 2014.6
COMMODITIZATION?
Is it a commodity?

51. SOLUTIONWARE
1. FUNware No business
2. EASYware Not defensible
3. SAMEware Bad positioning
4. SOLUTIONware Solution looking for a problem

52. 1. FUNware No business
2. EASYware Not defensible
3. SAMEware Bad positioning
4. SOLUTIONware Solution looking for a problem
“When you have a hammer, everything looks
like a nail”
THE HAMMER PROBLEM

53. VAPORWARE
1. FUNware No business
2. EASYware Not defensible
3. SAMEware Bad positioning
4. SOLUTIONware Solution looking for a problem
5. VAPORware Can’t be made

54. BACK TO THE FUTURE
HOVERBOARD
1. FUNware No business
2. EASYware Not defensible
3. SAMEware Bad positioning
4. SOLUTIONware Solution looking for a problem
5. VAPORware Can’t be made

55. DROPKICKER
1. FUNware No business
2. EASYware Not defensible
3. SAMEware Bad positioning
4. SOLUTIONware Solution looking for a problem
5. VAPORware Can’t be made

56. LAMEWARE
1. FUNware No business
2. EASYware Not defensible
3. SAMEware Bad positioning
4. SOLUTIONware Solution looking for a problem
5. VAPORware Can’t be made
6. LAMEware Not on spec

57. WHEN SOFTWARE WAS STILL
HARDWARE…
LANDFILL IN NEW MEXICO FULL OF GAME CARTRIDGES…

58. WHEN SOFTWARE WAS STILL
HARDWARE…
5.5
weeksCREATOR NOW A PSYCHOTHERAPIST FOR SILICON VALLEY'S HI-TECH COMMUNITY

59. FAILWARE
1. FUNware No business
2. EASYware Not defensible
3. SAMEware Bad positioning
4. SOLUTIONware Solution looking for a problem
5. VAPORware Can’t be made
6. LAMEware Not on spec
7. FAILware Successfully built the wrong thing

60. AHEAD OF THEIR TIME?

61. LATEWARE
1. FUNware No business
2. EASYware Not defensible
3. SAMEware Bad positioning
4. SOLUTIONware Solution looking for a problem
5. VAPORware Can’t be made
6. LAMEware Not on spec
7. FAILware Successfully built the wrong thing
8. LATEware Validated market but woke up
competitors

62. “WHY LOCKITRON HAS TAKEN SO LONG TO
SHIP”
(CROWDFUNDED WITH $2.3M IN 4Q2012)

63. LOSSWARE
1. FUNware No business
2. EASYware Not defensible
3. SAMEware Bad positioning
4. SOLUTIONware Solution looking for a problem
5. VAPORware Can’t be made
6. LAMEware Not on spec
7. FAILware Successfully built the wrong thing
8. LATEware Validated market but woke up
competitors
9. LOSSware Minimal or negative margins

64. “YOU WILL BE RECEIVING SHRU AT COST
PRICE.”

65. BOREWARE
1. FUNware No business
2. EASYware Not defensible
3. SAMEware Bad positioning
4. SOLUTIONware Solution looking for a problem
5. VAPORware Can’t be made
6. LAMEware Not on spec
7. FAILware Successfully built the wrong thing
8. LATEware Validated market but woke up
competitors
9. LOSSware Minimal or negative margins
10. BOREware People stop using it

66. BIGGEST TREND IN
WEARABLES?

67. CHINA’S BAROMETER

68. Mi Band by Xiaomi
Fitness Tracker
($13)
-
Counts your steps
Vibrates you awake
30 days standby
Water resistant
NEWS FLASH!

69. FUTUREWARE
1. FUNware No business
2. EASYware Not defensible
3. SAMEware Bad positioning
4. SOLUTIONware Solution looking for a problem
5. VAPORware Can’t be made
6. LAMEware Not on spec
7. FAILware Successfully built the wrong thing
8. LATEware Validated market but woke up
competitors
9. LOSSware Minimal or negative margins
10. BOREware People stop using it
11. FUTUREware No market before years

71. LOCALWARE
1. FUNware No business
2. EASYware Not defensible
3. SAMEware Bad positioning
4. SOLUTIONware Solution looking for a problem
5. VAPORware Can’t be made
6. LAMEware Not on spec
7. FAILware Successfully built the wrong thing
8. LATEware Validated market but woke up
competitors
9. LOSSware Minimal or negative margins
10. BOREware People stop using it
11. FUTUREware No market before years

72. SOME EXTRAS
13.TEMPware Temporary solution

73. SOME EXTRAS
13.TEMPware Temporary solution
14.WEAKware Limited value proposition

74. SOME EXTRAS
13.TEMPware Temporary solution
14.WEAKware Limited value proposition
15.ALIware Repackage a product sourced on Alibaba

75. SOME EXTRAS
13.TEMPware Temporary solution
14.WEAKware Limited value proposition
15.ALIware Repackage a product sourced on Alibaba
16.INFRAware Requires special infrastructure

76. SOME EXTRAS
13.TEMPware Temporary solution
14.WEAKware Limited value proposition
15.ALIware Repackage a product sourced on Alibaba
16.INFRAware Requires special infrastructure
17.SOLITware Single founder

77. SOME EXTRAS
13.TEMPware Temporary solution
14.WEAKware Limited value proposition
15.ALIware Repackage a product sourced on Alibaba
16.INFRAware Requires special infrastructure
17.SOLITware Single founder
18.AWKware Awkward form factor or usage

78. “TOKYO-BASED ARTIST ARRESTED
FOR 3D PRINTING HER VAGINA”

79. SOME EXTRAS
13.TEMPware Temporary solution
14.WEAKware Limited value proposition
15.ALIware Repackage a product sourced on Alibaba
16.INFRAware Requires special infrastructure
17.SOLITware Single founder
18.AWKware Awkward form factor or usage
19.GROSSware Image problems

80. SOME EXTRAS
13.TEMPware Temporary solution
14.WEAKware Limited value proposition
15.ALIware Repackage a product sourced on Alibaba
16.INFRAware Requires special infrastructure
17.SOLITware Single founder
18.AWKware Awkward form factor or usage
19.GROSSware Image problems
More ideas welcome!

81. SCALING
HARDWARE

82. TIMEFRAME
$
PROTOTYPING PRODUCTION SCALING
3 months ~ 2
years
3 months ~ 2
years
1+ year TIME
ARE YOU REALISTIC? SOME THINGS TAKE
TIME
ARE YOU TOO SLOW? MAYBE YOU NEED
HELP

83. THE RETAIL CHASM
PROTOTYPING PRODUCTION SCALING
$
Founders
Friends
Family
Fools
Crowdfunding
Accelerators
Angels
Grants
Sales
Factoring
Banks
VCsPre-orders
RETAIL
CHASM
TIME

84. SCALING STEP BY STEP
$
TIME
Specialty
stores
Big box
retailers
Online
retailers
Direct

85. LEAN RETAIL RULES
Keep demand higher than distribution
Your customers are your best investors
Retail is not a sprint. Learn at each step
Cash flow is king

86. SAVE YOUR CASH FLOW!
Pre-sales (best!)
Credit from supplier (it’s like a bank
loan!)
Factoring (purchase order financing)
Bank credit lines
Revenue-based financing
VC (most expensive money!)

87. KEY STAGES FOR INVESTMENT
1. Concept
2. Work-like prototype
3. Look-like Prototype
4. DFM
5. Crowdfunding
6. First shipment
7. Retail
8. Pre-IPO

88. KEY STAGES FOR INVESTMENT
1. Concept
2. Work-like prototype
3. Look-like Prototype
4. DFM
5. Crowdfunding
6. First shipment
7. Retail
8. Pre-IPO
We recruit here
We take you there
We help anticipate this
Awaiting you there!

89. HAX
WANTS
YOU

90. HAX WANTS YOU!
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91. @HAXLR8R
@BENJAMINJOFFE
BENJAMIN@HAXLR8R.COM
SLIDESHARE.COM/HAXLR8R
HAX WANTS YOU! Share
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