The Hardware Renaissance

As I understood it, from having worked at a (successful) startup that sold hardware, the big problem with hardware isn't that it's hard to make. Rather, the two big problems are margin and, worse for a startup, inventory costs. Airbnb can add 1,000 new customers with no infrastructure changes, but for a hardware startup to take on 1,000 new customers, someone will have to finance the inventory, and someone will need to predict the amount of widgets to stock in that inventory, and that gets very expensive quickly.<p>I don't know how much the inventory issue is mitigated by the fact that YC companies with working offerings seem to be immediately able to conjure up 500k-1MM in funding.<p>Also, YC's major successes haven't been hardware companies, have they? The last essay I read before this one suggested --- in agreement with the conventional wisdom of VC's --- that a company needs to be Dropbox-successful to move the needle for YC. Not that YC isn't, I'm sure, thrilled to have hardware product companies with traction in their portfolio.<p>Let me just add a banal point: YC's business strategy is, obviously, "throw everything we can at the wall and see what sticks". If you're considering your first company, that's probably not <i>your</i> best strategy. Even putting aside the big-ticket problems like inventory and margin, there are a lot of other things that suck about hardware: lead times, managing supply chain, QA and managing defects, field recalls, shipping. These problems are so big that major hardware companies have people who don't just have one of those tasks as full-time jobs, but are also famous for being able to deal with them.

15 years ago I did a hardware startup, development was extremely hard and I woved never to do a hardware startup again.<p>Now I'm not so sure.<p>Our problem was twofold: First hardware development was not generally something you just did in your sparetime, it was for the big boys. This meant a lot of convoluted processes for dealing with suppliers, expensive and unreliable dev kits and tools, long lead times and all sorts of other hassles.<p>Second the turnaround time for a prototype was at least two weeks. If you made a small mistake you'd find out two weeks later when your prototype arrived. This adds up quickly and slows you down tremendously. Not because we made a lot of mistakes, but we had to be absolutely sure that something worked before sending it off to be prototyped. No testing a new idea in an afternoon or two.<p>These things have totally changed with the commodisation of hardware and the looming 3D revolution.<p>With a makerbot, a raspberry Pi, an arduino and a shelf full of components you're prety much ready to go and can hammer together a working prototype in no time. If you feel cheap you can buy a nice box for your arduino and call it a finished product.

It's quite curious how hardware design lost its cachet.<p>When I was in Computer Engineering at Waterloo (class of '98), many of my classmates were vying for coop jobs in FPGA, ASIC or board-level design. I happened to be one of the lucky ones and it set me on a path to a career in ASIC verification.<p>Today when I look around at my industry, it's downright shocking how little young blood there is around. The youngest ASIC guy I've met in the last 6 or 7 years had a Master's and three years experience - and we all regarded him as the newbie.<p>Only in the last few months have we seen the occasional new-grad's resume cross our threshold. I'd not yet call it a trend, but I hope it becomes one. We have horrible languages, horrible libraries, horrible tools - a huge, shaky mess of infrastructure built on technologies stretched far beyond what they were originally built for - and it's so deeply entrenched that few of my colleagues seem to recognize it. We really need a new generation of fresh perspectives to shake us all up.<p>Let's hope it is indeed a new renaissance that Mr. Graham heralds.

<p><pre><code> "And in particular, don't be deterred from applying to Y Combinator with a hardware idea, because we're especially interested in hardware startups." </code></pre> How are you planning on funding hardware startups? From your site:<p><pre><code> "Usually $11,000 + $3000 per founder. So $17,000 for two founders, $20,000 for three or more. Occasionally we invest more. The goal is usually to give you enough money to build an impressive prototype or version 1, which you can then use to get further funding." </code></pre> A real hardware startup would require at least an order of magnitude more money than this. Unless they walk in with all the required tools, you could burn $20K just in software licenses (Solidworks, Altium Designer, Xilinx Foundation, Keil, etc.) and not have much left for other stuff. Heck, my DSO alone cost me about $20K. The computer I am typing this on probably has $50K in hardware and licenses on it.<p>I could personally consider the idea of presenting a hardware startup to YC, but I would need to know that this is not about (with the utmost respect) finding a few starving 20-year-olds that will kill themselves for a $20K investment. From my vantage point, if you are not throwing $250K+ into a hardware startup it just isn't going to happen. Of course there are exceptions to every rule. Then again, this ain't my first rodeo.<p>Now, if the idea is to throw some money at a project to cobble-together a smoke-and-mirrors prototype and then go raise a few million, well, for the right project this could work.<p>Again, I say the above with respect for what you do. I have done a lot of hardware/software/multidisciplinary development. It's very different from pure software web/mobile startups. Very different.

"We know there's room for the next Steve Jobs"<p>I'm not sure if hardware hackers want to be Steve Jobs... they want to be Woz!<p>"Woz soon followed with the machine that made the company, the Apple II. He single-handedly designed all its hardware and software—an extraordinary feat even for the time. And what's more, he did it all while working at his day job at Hewlett-Packard"<p><a href="http://www.foundersatwork.com/steve-wozniak.html" rel="nofollow">http://www.foundersatwork.com/steve-wozniak.html</a>

If pg is correct and hardware startups are making a renaissance then we can expect to see startups soon that sell shovels for hardware startups. For web startups we see shovel-style products that help with customer support, A/B testing, virtualized servers and so on.<p>In the same way we can expect startups to pop up that make life easier for hardware startups. For instance startups that make prototyping hardware easier. Or that simplify shipping goods all across the globe. Or startups that make it easier to find the right suppliers and get good deals with them.<p>Pretty exciting!

Don't know why hardware is suddenly rising like a phoenix? One word: Apple.<p>Apple used to talk about ease of use and "computer for the rest of us", and they still throw some of that into every presentation, but it's no longer the lead. After Steve Jobs rejoined Apple, it was all about the look and feel of the hardware, not ease of use of the software. "Look, candy colors!" "Look how small! Feel how light! Look at those curves! Oooh, you can never be too thin. Did I mention thin? I meant thinnest!"<p>Then the small, thin, candy-colored devices emerged, and they made Apple the most valuable company in the world, with the media hanging on its every move. And what are they talking about, the software? No, silly, a Windows machine can do anything a Mac can do. Apple wouldn't be so successful without the full package of hardware, software, and services, but it's the HARDWARE more than anything else that everyone talks about.<p>This has given Google, Microsoft, Samsung, and other big companies serious Apple envy, which shows up in their "strategies". How can it not affect small startups as well? It's the environment these little companies are born into.

<i>And in particular, don't be deterred from applying to Y Combinator with a hardware idea, because we're especially interested in hardware startups.</i><p>This is great news. I felt a bit old and stupid at Startup school, because I want to make hardware (albeit for a niche rather than a mass market), but anyone I talked to seemed to find the idea weird and most of the concepts from the stage were along the lines that software - particularly internet software - was, is, and ever shall be the sole basis of a successful startup. It was a relief at the end of the day to hear Joel Spolsky discuss the viability and possible desirability of building a nice little $10m company in just as much detail as building a $1b one.

I'm still struggling to understand the logistics of starting a hardware company.<p>Let's say I have an idea for a portable mini-fridge. What kind of engineers do I need to contract to design it? Where do I find them? Do I need approval, testing? What kind of regulations do I need to follow? And finally how do I get it manufactured? Do I actually need to go to China and meet with factories?<p>I wish someone would put together a step by step guide for these kinds of questions.

The trend towards more hardware-product startups in the sf bay area is real and there is more evidence than just the increase and quality of yc hardware companies that pg wrote about. There are new hardware focused incubators (like Lemnos Labs), more hardware hackathons, and there's been growth in the sensor and hardware meetups for the past couple years.<p>However, it's possible that innovation in hardware technologies is out of reach of startups. I'm differentiating here between hardware-tech and hardware-product startups. Of course there are hardware startups that are attempting to bring new technology to market (go Integrated Plasmonics, and 3Scan!). Interestingly, a good indicator of whether a startup is developing an innovative technology is that Peter Thiel is invested in it--many of his fund-ees are slaving away in labs scattered around SF. The failure modes of these hardware-tech companies will be more interesting than the hardware-product startups. These companies may take a much longer time to develop tech, then the product using that tech, and then fail, because the market they try to disrupt with their technology may be disrupted by other technologies with better economics--energy tech is full of these sorts of baby elephant skeletons. Still, successful investment in real hardware innovation that wins leads to companies like the next GE, Intel, or AT&#38;T so it makes sense for investors with deep enough pockets to aim for these.<p>Hardware products that simply integrate existing commodity components (like Blossom Coffee) have a pretty well understood binary risk profile, they either they hit or they don't. The new hardware renaissance PG is observing is based on the reduced cost of production, and new ways to crowd fund these sorts of companies: things you might prototype in TechShop (shared tools space) and sell via Kickstarter.

I'd suggest that there is a huge opening for a startup that does manufacturing process. This company could earn money by selling its process to others, and dogfooding its own product in a few lucrative niches.<p>For example, the company might start by pulling all the open source EDA, CAD, CNC, and similar, software into a cohesive whole. It would then bring in one of the open source ERP systems and integrate it with the engineering toolchain. Keeping on doing this for every part of the process: ordering, inventory, manufacturing/robotics, testing, sales, distribution, support, financials. The idea is to (as nearly as possible) completely automate the process of scaling hardware based business from a prototype to a product. Achieve this goal and hardware becomes as easy to scale as software.<p>I've been building hardware for the last 30 years, and invariably most of the work goes into making the process run smoothly (ie. designing the process) rather than designing the product.

I think it's fascinating how much money people are willing to pay for hardware compared to software. It's hard to convince people to pay <i>anything</i> for software, but these kickstarter projects are getting lots of people to pay hundreds of dollars for hardware.

Toys, toys, toys!<p>It's all about toys!<p>I want to see iPhone controlled toy tanks with cameras and laser sensors, so me and my brother can kill each other without moving away from our desks.<p>I want to see usb telescopes, microscopes, thermometers, stethoscopes so my kids can play scientists.<p>I want to see more e-toys so kids grow more interested in technology.

Patents. That is what is stopping hardware. Go ahead and try to have something listed in Best Buy without having an army of lawyers breathing down your neck.<p>Every. Single. Hardware. Startup. I know, has either gone bankrupt due to lawsuits, or hasn't ever reached product market fit.

BTW the "applying" link is 404.<p>It's linking to &#60;<a href="http://ycombinator.com/apply&#62" rel="nofollow">http://ycombinator.com/apply&#62</a>; instead of &#60;<a href="http://ycombinator.com/apply.html&#62;" rel="nofollow">http://ycombinator.com/apply.html&#62;</a>.

"So if the ease of shipping hardware even approached the ease of shipping software, we'd see a lot more hardware startups."<p>So what kind of startup can facilitate that change?

Actually, I did bootstrap a hardware product: www.growguard.net. Agree, it's not the best looking product, but engineering, designing and puting it in manufacturing cost less than 5k!<p>A couple of years ago, I was the CTO and cofounder of another hw startup (FTTH space), we did get this thing off teh ground for less than 300k and it is now doing very well and one of the top-3 in it's niche

I think Shenzhen is more the hardware SV than the bay area. Or more "Designed in California, Made in China". Look at this article by bunnie huang illustrating this fact:<p>Akihabara, Eat Your Heart Out <a href="http://www.bunniestudios.com/wordpress/?p=147" rel="nofollow">http://www.bunniestudios.com/wordpress/?p=147</a>

I find these essays really refreshing not only because of their content, but because they're evidence of someone searching for points of uncertainty and investigating them. PG seems to be always looking for what does not make sense and trying to figure it out.

pg didn't mention China but I think the increasing ease of accessing Chinese manufacturing is hardware's AWS equivalent.

This is a good read with some great points... more and more people are coming into the fold and realizing what you can do with platforms like the Arduino in the space of physical/embedded computing. <i>This</i> is where real innovation is happening. Coming from a software dev background, I picked up an Arduino about a year and a half ago - and it is <i>awesome</i>...it's just so much fun...it's like the feeling you get when you make a great web app but times 100 because it's a <i>real physical thing</i> that moves, senses the world around it and lights up (or whatever). Even if you don't believe it's the "next big thing", if you are a sofware dev, you should get into it because it's so much fun and it makes you better developer when you learn about things about digital logic like shift registers.<p>&#60;editorial_hyperbole&#62; I really think the culmination of all this will be what I see as the next logical step after "mobility" in computing (i.e. the idea that you "take your computer everywhere with you"): "ubiquity" - or, in other words, the idea that <i>everything</i> around you - the table you are sitting at in your restaurant, the walls in your office, things that farm your food and control your air conditioner, are computers..and perhaps the most exceiting thing is that this next revolution will (hopefully) be ushered in and controlled by startups. Exciting times. &#60;/editorial_hyperbole&#62;

It seems like the unification of hardware and software (as Apple has done) is where a lot of real value lies. I'd love to see more startups selling innovative hardware/software products.

This is great that PG is talking Hardware Startups - I seem to remember him being less than enthusiastic before, but either way I'm glad that he's seeing a lot of the same things we on the ground are seeing.<p>A few months back I announced on HN that I started a <a href="http://www.reddit.com/r/hwstartups" rel="nofollow">http://www.reddit.com/r/hwstartups</a>, so I wanted to mention that we're growing a pretty good community over there as well.

I am surprised there was no mention of the Rapsberry Pi. Open sourcing hardware and allowing one to build their own "widget" is a game changer. You don't have to know about board layouts anymore, you now have a product/package ready for production that is $25/$35 that has HDMI, 2 usb (easy wifi enabled), ethernet, and audio. Just build software and put on SD card.<p>There are a TON of software products you can build off of this and sell.

Time to resurrect and rethink hardware Lisp Machines as a servers of content like this site?)<p>Hardware machines are much better than Virtual ones..)

One of these hardware startups would grow into an YC of its own. If a hardware incubator can solve the problems of inventory, distribution and shipping, it would pump out products at a much faster rate, with a higher chance of success. You don't doubt Apple's newest product for a reason.

I have the funny impression that, before, hardware was taken for granted, i.e., people bought the Comodoer64 to code in BASIC.<p>Now seems that software is taken for granted, e.g., you download TCP/IP Arduino implementations to connect your circuits to a LAN.

Did anyone else find the bottom line about the (250 word) piece being reviewed by 7+ folks a bit excessive? Honest question. Just feels like a very heavy burden to meet before getting public word out on an idea.

<i>Physical things are great. They just haven't been as great a way to start a rapidly growing business as software.</i><p>The same issue applied to software not all that long ago. As with software, the wide availability of consumer-level, cheap or even free tools to make stuff is driving a renaissance for hardware.<p>And with so <i>much</i> hardware hacking then, as with software, some will see explosive growth.<p>It's good to see in my mind because hardware can be infinitely more important/useful than software.

I am just glad YC is realising the potential of HW companies. Being a Hardware Engineer, I have been feeling out of place in Silicon Valley Startup Scenes.<p>Hope that trend changes soon.

People have mentioned lead times in this thread. Just so I can calibrate my expectations - what do people reading HN consider to be a "long lead time" for hardware?

Amazon Web Services has been an integral part in opening up the web to the glut of software startups we've seen over the past 10 years.<p>Fulfillment by Amazon[1] could be a big part of the rise of hardware startups.<p>Couple 3D printing with a logisitics powerhouse like Amazon, and hardware could be as easy to deploy as a webapp soon.<p>1. <a href="http://www.amazonservices.com/content/fulfillment-by-amazon.htm" rel="nofollow">http://www.amazonservices.com/content/fulfillment-by-amazon....</a>

Difficulties of a hardware startup, compared to a software one, is mainly of storage, selling channels and after-sales services. The inability to iterate quickly is also one of its problem.<p>Unless someone come up with a solution for these problems, I don't see a renaissance of hardware in the form of many startups (but can be in other forms, since now Win 8 is encouraging hardware creativity)

Coincidentally, HN's own robg just posted his new hardware startup here:<p><a href="http://news.ycombinator.com/item?id=4689244" rel="nofollow">http://news.ycombinator.com/item?id=4689244</a><p>Personally I think the biofeedback thing sounds very cool. I ordered a biofeedback device from some outfit a few years ago and never came close to getting the thing to work.

&#62; And one of most conspicuous trends in the last batch was the large number of hardware startups.<p>OT, but please be kind to a learner of the english language: should that sentence be "one of _the_ most conspicuous" or there is some rule by which the article can be used or not in this form?

I'm not sure 8% is really indicative of any trend, also I think the sample size is way too small to draw any kind of conclusions. And no examples of what this 8% are up to, at least in broad terms?<p>If you look at the bigger picture, rather than the little world of YC you'll see lots of hw in medical, aviation, military, communications etc etc.<p>Saying that the number of companies that would be attracted to YC for money has risen from X to 8% doesn't really speak of any trend.<p>There are some examples from kickstarter that spring to mind, like for example, Brydge (bluetooth keyboard/speakers for iPad) and the game controller world has its fair share of hw innovation (like Connect for example) but real hw innovation is out of reach of startups, you need chip fab plants and cross disciplinary skills that are expensive and locked up in the big company r&#38;d departments. The real companies doing hw are not going to YC for money, they go to their boss.

It's impossible to bootstrap a hardware company. You need capital, otherwise you'll never get out of the tar pit that is small-scale production. So hardware companies will always be much harder than software companies, if only for this reason.

Good observation. On top of that, it may be nice to find a solution where you can easily monitor data flowing out of electronic devices in real time. Certainly a lot of software products you can build on top of the coming hardware era.

This article serves as a perfectly timed confirmation of my plan for what I'll do next, once I've achieved everything I can where I am right now.<p>I've been planning to apply to YC and start a hardware-focused startup in the home-automation space.

pg, do you have a quantified list of hardware startup business models that you can share? For example, as a startup, what are the realistic sales &#38; distribution channels that we can model, financially?<p>What we're worried about is designing the wrong product at the wrong price for what seems like a limited set of distribution channels with some rather onerous fixed costs and low margins -- certainly compared to software/SaaS sales. How do you wade through that swamp?

What would be the advantages of applying to YC rather than Lemonos or a hardware specific incubator? I would think initial pool of capital is the biggest hindrance.

PG, thoughts on this?<p>"How I Plan to Bootstrap Aspiring Hardware Engineers"<p><a href="http://news.ycombinator.com/item?id=4691108" rel="nofollow">http://news.ycombinator.com/item?id=4691108</a>

Which would be the companies mentioned in the essay? I have tried to search for a list of yc companies, but the sites I've found were quite outdated.

The interesting question is in which industries will we see the first Twilios, Stripes and Clevers for hardware? Home automation? Cars? Health?

I think it may eventually boiled down to <a href="http://www.aliexpress.com/" rel="nofollow">http://www.aliexpress.com/</a>

Great, now I've got to learn electrical and mechanical engineering. Where's the Rails for hardware?!

How about combining hardware gadgets with the SaaS model? Will HaaS be big in the future?

Now I need to learn design of PCB...

Spot on PG. I think we are qualified to add value to this discussion here. We have bootstrapped our plug device (TonidoPlug) couple of years back. Lot of people ridiculed and cautioned us when we have started. Now it is one of the top rated NAS product in amazon without any recognizable brand name. We have built the entire software stack around it. Now, We OEM our software stack to other Consumer Electronic companies. We have done all without any external investments. Also there are fundamental changes happening in the industry that will aid provide impetus to the growth story. 41% of CE sales are done via online now. So we don't need to pay hefty margins required by Best Buy OR other brick and mortar companies. We can sell directly to end customers and pay the amazon sales tax :)<p>Also many CE companies (Exception of Apple) stopped innovating or don't have access to the exceptional software skills. Typically they buy units from Taiwan ODMs, buy software stack from companies like us, put their brand and sell to their existing channels(Staple, Best Buy). There is no value addition provided by these companies in the entire supply chain except their distribution. Now even the distribution is coming under attack because of the direct sales model. For instance we ship units to more than 75 countries.This situation is so true when you take a look at home networking products (Consumer Routers, NAS, DVRs). You can do a heck a lot of innovation there and people use it daily.<p>Now we are sitting with exceptional know-how, ODM relationships, a software stack that can run on all the embedded device (Routers, DVRs to NAS products) and mobile apps on all the popular mobile OS'es. In couple of years we can challenge the incumbents and build a company that can generate 50-100 million in sales and challenge the incumbents. Even if the margins are tight, we can still make at least 20% net margin. We are ready to accept investment from YC if PG is interested.

at the Dublin websummit an hardware startup (smartthings) won the competition, confirming the tendency.