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.
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
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!
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
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?
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…)
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
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
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
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
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
70.
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
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
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!
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!)
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!