building lean-hardware-startups

BY @HAXLR8R

BUILDINGGLOBAL

LEANHARDWARE STARTUPS

H A X

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HARDWARESTARTUPS

HARDWARE RENAISSANCEPROTOTYPING 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

BE A MASTER OF THE PROBLEM

What matters is the problem,

not the solution!

“The question is no longer: can we

make it?But: what can we

makethat’s worthwhile?”

Dr. Bjoern HartmannInteractive Device Design

Critical MakingUC Berkeley

HARDWARE TODAY

“LEAN HARDWARE”

OR

MAPPING THE PATHTO

HARDWARESTARTUP SUCCESS

WELCOME

TO THE

HARDWARE

JUNGLE

Startup Accelerator for Hardware

From Prototype to Business

In Shenzhen & San Francisco

HAXLR8R

8 THINGS ABOUT HAX

1. 111 days2. Shenzhen + San Francisco Demo Day3. Up to $50k for 6%-8%4. HAX team (DFM, EE, ID, sourcing) & 50+

mentors5. 50 startups, 130+ founders6. 60% Americas // 20% Europe // 20% Asia7. IOT, wearables, robotics, etc.8. 20+ crowdfunding campaigns, avg. $200k

FOUNDERS LEARN TO…Position company & product

Buy on TaobaoShop in HuaqiangbeiSource on AlibabaSpeak enough Mandarin

Prepare a DFMSelect factoriesManage production

Engage advisorsWork with mediaPrepare for crowdfundingScaleFundraise

Enjoy the journey!

干吗呀？

HAX MISSION: EMPOWERMENT

1. Build the right thing2. Build things right

3. Ship fast

“HARDWARE UNIVERSITY”

H A X

MONSTERS UNIVERSITY OR HARDVARD?

D >

H A X

HAX 4 GRADUATES

2 robotics2 sports tech2 health tech1 green tech1 3d printer1 connected camera1 smart city logistics

SPARK RAISES

MEDIA COVERAGE

LEAN HARDWARE PHILOSOPHY1. Validate problem vs. Assume2. Partner w/ factories vs. Abdicate3. Fast to marketvs. Long cycles4. Capital effective vs. Capital

intensive5. User backed vs. Venture backed6. Sustainable vs. Growth at a loss

1. Validate problem vs. Assume2. Partner w/ factories vs. Abdicate3. Fast to marketvs. Long cycles4. Capital effective vs. Capital

intensive5. User backed vs. Venture backed6. Sustainable vs. Growth at a loss

LEAN HARDWARE PHILOSOPHY

+ HAX ApproachMeaningful

Aligned with founders AS SEEN ON

WHY CHINA FOR

STARTUPS?

3 OLD MYTHS IN 1 SENTENCE

“China only makescheap stuffat scale and

copies”

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

THE COST OF NOT BEING IN CHINA

“You have to consider the cost of not being in China.”

Will HartChief of Staff

Spark.io(HAX 2)

WHAT ABOUT MY IP?

“Protection of IP can be complex manufacturing or product, community, and cloud based services.”

Idan BeckFounder

gTar(HAX Fund)

KNOW-HOW

“Chinese factory engineers master the lost art of injection molding.”

”On the factory floor you solve problems much faster, speaking the language of engineering.”

Bunnie HuangHardware Hacker

Bunnie Studios(HAX Mentor)

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?

WHY WOULD A LAOBAN CARE?

FOUR-AND-A-HALF REASONS

1. Future business2. Improve capabilities3. Use excess capacity4. Internationalize4.5 Fun

The rest is up to you

STARTUP CHECKLIST

http://whatthefuckismywearablestrategy.com/

STARTUP CHECKLIST1. Product Is something working2. Skills Can the team

make it3. Spirit Resourceful,

Optimistic, Persistent

4. Positioning New segment or new market

10x better in some way or different

Something hard to do

BUILDING THE RIGHT THING

INITIAL PROBLEM

INITIAL SOLUTION

INITIAL PROBLEM

NEW SOLUTION

NEW PROBLEM

INITIAL SOLUTION

NEW PROBLEM

NEW SOLUTION

INITIAL PROBLEM

INITIAL SOLUTION

STARTUP CHECKLIST1. Product Is something

working2. Skills Can the team

make it3. Spirit Resourceful,

Optimistic, Persistent

4. Positioning New segment or new market

5. Demand Proof / Customer discovery

6. Distribution How to sell7. Plan Beyond first product8. Ready The time is

right

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…)

BEWAREOF THOSE

12 “WARES”

wow

such excitevery hardware

so future

FUNWARE1. FUNware No business

CHINDOGU1. FUNware No business

Kenji KawakamiChindogu pioneer

(with tissue roll headgear+ Fail-proof eyedrop

glasses)

MORE CHINDOGU

Baby mop

Open eyes stickers Back scratching grid

FUNWARE1. FUNware No business

(includes NICHEware and ARTware)

EASYWARE1. FUNware No business2. EASYware Not defensible

EASYWARE1. FUNware No business2. EASYware Not defensible

“Two sensorsand an app”

Nobel-grade research

PRESSY1. FUNware No business2. EASYware Not defensible

PRESSY ($27)Funded Oct 2013Raised $695,000

PRESSY1. FUNware No business2. EASYware Not defensible

Speed Button ($10)(“kuai anniu”)Funded Jan 2014Raised $34k

PRESSY1. FUNware No business2. 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

SAMEWARE1. FUNware No business2. EASYware Not defensible3. SAMEware Bad positioning

THE BETTER MOUSETRAP MYTH1. FUNware No business2. EASYware Not defensible3. SAMEware Bad positioning

“Build a better mousetrap and the world

will beat a path to your door”Ralph Waldo Emerson

(maybe)

THE BETTER MOUSETRAP MYTH1. FUNware No business2. EASYware Not defensible3. SAMEware Bad positioning

The problem with mousetraps• 4,400 patents• 400 applicants per year• “most frequently

invented device in U.S. history”

47 companies launched 3D printersand raised $100K+ or more in crowdfunding.

Source: Flybridge Capital Partners, 2014.6

COMMODITIZATION?

Is it a commodity?

SOLUTIONWARE1. FUNware No business2. EASYware Not defensible3. SAMEware Bad positioning4. SOLUTIONware

Solution looking for a problem

1. FUNware No business2. EASYware Not defensible3. SAMEware Bad positioning4. SOLUTIONware

Solution looking for a problem

“When you have a hammer, everything looks like a nail”

THE HAMMER PROBLEM

VAPORWARE1. FUNware No business2. EASYware Not defensible3. SAMEware Bad positioning4. SOLUTIONware

Solution looking for a problem

5. VAPORware Can’t be made

BACK TO THE FUTURE HOVERBOARD1. FUNware No business2. EASYware Not defensible3. SAMEware Bad positioning4. SOLUTIONware

Solution looking for a problem

5. VAPORware Can’t be made

DROPKICKER1. FUNware No business2. EASYware Not defensible3. SAMEware Bad positioning4. SOLUTIONware

Solution looking for a problem

5. VAPORware Can’t be made

LAMEWARE1. FUNware No business2. EASYware Not defensible3. SAMEware Bad positioning4. SOLUTIONware

Solution looking for a problem

5. VAPORware Can’t be made6. LAMEware Not on spec

WHEN SOFTWARE WAS STILL HARDWARE…

LANDFILL IN NEW MEXICO FULL OF GAME CARTRIDGES…

WHEN SOFTWARE WAS STILL HARDWARE…

5.5 weeksCREATOR NOW A PSYCHOTHERAPIST FOR SILICON VALLEY'S HI-TECH

COMMUNITY

FAILWARE1. FUNware No business2. EASYware Not defensible3. SAMEware Bad positioning4. SOLUTIONware

Solution looking for a problem

5. VAPORware Can’t be made6. LAMEware Not on spec7. FAILware Successfully built the wrong thing

AHEAD OF THEIR TIME?

LATEWARE1. FUNware No business2. EASYware Not defensible3. SAMEware Bad positioning4. SOLUTIONware

Solution looking for a problem

5. VAPORware Can’t be made6. LAMEware Not on spec7. FAILware Successfully built the wrong thing8. LATEware Validated market but woke up

competitors

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

LOSSWARE1. FUNware No business2. EASYware Not defensible3. SAMEware Bad positioning4. SOLUTIONware

Solution looking for a problem

5. VAPORware Can’t be made6. LAMEware Not on spec7. FAILware Successfully built the wrong thing8. LATEware Validated market but woke up

competitors9. LOSSware Minimal or negative margins

“YOU WILL BE RECEIVING SHRU AT COST PRICE.”

BOREWARE1. FUNware No business2. EASYware Not defensible3. SAMEware Bad positioning4. SOLUTIONware

Solution looking for a problem

5. VAPORware Can’t be made6. LAMEware Not on spec7. FAILware Successfully built the wrong thing8. LATEware Validated market but woke up

competitors9. LOSSware Minimal or negative margins10. BOREware People stop using it

BIGGEST TREND IN WEARABLES?

CHINA’S BAROMETER

Mi Band by Xiaomi

Fitness Tracker ($13)

-Counts your steps

Vibrates you awake

30 days standbyWater resistant

NEWS FLASH!

FUTUREWARE1. FUNware No business2. EASYware Not defensible3. SAMEware Bad positioning4. SOLUTIONware

Solution looking for a problem

5. VAPORware Can’t be made6. LAMEware Not on spec7. FAILware Successfully built the wrong thing8. LATEware Validated market but woke up

competitors9. LOSSware Minimal or negative margins10. BOREware People stop using it11. FUTUREware No market before years

LOCALWARE1. FUNware No business2. EASYware Not defensible3. SAMEware Bad positioning4. SOLUTIONware

Solution looking for a problem

5. VAPORware Can’t be made6. LAMEware Not on spec7. FAILware Successfully built the wrong thing8. LATEware Validated market but woke up

competitors9. LOSSware Minimal or negative margins10. BOREware People stop using it11. FUTUREware No market before years12. LOCALware Too tied to a local ecosystem

SOME EXTRAS13.TEMPware Temporary solution

SOME EXTRAS13.TEMPware Temporary solution14.WEAKware Limited value proposition

SOME EXTRAS13.TEMPware Temporary solution14.WEAKware Limited value proposition15.ALIware Repackage a product sourced on

Alibaba

SOME EXTRAS13.TEMPware Temporary solution14.WEAKware Limited value proposition15.ALIware Repackage a product sourced on

Alibaba16.INFRAware Requires special infrastructure

SOME EXTRAS13.TEMPware Temporary solution14.WEAKware Limited value proposition15.ALIware Repackage a product sourced on

Alibaba16.INFRAware Requires special infrastructure17.SOLITware Single founder

SOME EXTRAS13.TEMPware Temporary solution14.WEAKware Limited value proposition15.ALIware Repackage a product sourced on

Alibaba16.INFRAware Requires special infrastructure17.SOLITware Single founder18.AWKware Awkward form factor or usage

“TOKYO-BASED ARTIST ARRESTEDFOR 3D PRINTING HER VAGINA”

SOME EXTRAS13.TEMPware Temporary solution14.WEAKware Limited value proposition15.ALIware Repackage a product sourced on

Alibaba16.INFRAware Requires special infrastructure17.SOLITware Single founder18.AWKware Awkward form factor or usage19.GROSSware Image problems

SOME EXTRAS13.TEMPware Temporary solution14.WEAKware Limited value proposition15.ALIware Repackage a product sourced on

Alibaba16.INFRAware Requires special infrastructure17.SOLITware Single founder18.AWKware Awkward form factor or usage19.GROSSware Image problems

More ideas welcome!

SCALING HARDWARE

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

THE RETAIL CHASM

PROTOTYPING PRODUCTION SCALING

$

FoundersFriendsFamilyFools

Crowdfunding

AcceleratorsAngelsGrants

SalesFactoringBanksVCs

Bridge of Death

Pre-orders

RETAIL CHASM

TIME

SCALING STEP BY STEP$

Bridge of Death TIME

Specialtystores

Big boxretailers

Onlineretailers

Direct

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

SAVE YOUR CASH FLOW!

Pre-sales (best!)Credit from supplier (it’s like a bank loan!)Factoring (purchase order financing)Bank credit linesRevenue-based financingVC (most expensive money!)

KEY STAGES FOR INVESTMENT

1.Concept2.Work-like prototype3.Look-like Prototype4.DFM5.Crowdfunding6.First shipment7.Retail8.Pre-IPO

KEY STAGES FOR INVESTMENT

1.Concept2.Work-like prototype3.Look-like Prototype4.DFM5.Crowdfunding6.First shipment7.Retail8.Pre-IPO

We recruit here

We take you there

We help anticipate this

Awaiting you there!

HAXWANTSYOU

HAX WANTS YOU!

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