Last week I spoke on a panel at a conference in San Francisco hosted by Lemnos Labs a very forward thinking hardware startup accelerator that like Upverter has a lot invested in the resurgence of hardware as a startup genre. The topic of the conference was “Hardware 2.0: The future of hardware” and it got me thinking about what changed. What is different between Hardware 1.0 – the Apples, Intels and the Sun Microsystems of the the world – and today?
This post is a first attempt at defining Hardware 2.0 and explaining the resurgence of hardware startups. I think five things have happened together, and they are colluding to bring hardware back.
Hardware as a Portal
Call it the internet of things if you want, but it’s really more than that. As the big data movement continues to call for more and more data about everything from our hourly activity to our car’s engine hardware will be built to put it all online. It’s the reason for every buzz word from M2M, to the quantified self. It’s resulting in the merging of industrial control networks and the internet. It’s going to make it a hell of a lot harder to fake your dress size, or keep your reactors virus free.
Democratization of Tools
For the better part of the last 30 years CAD, ECAD, MCAD, EDA, CAM, PLM, etc. have all been impossibly inaccessible to most designers anywhere but at large companies. Workstations becoming desktops helped. Windows OS helped. Bittorrent helped. But generally startups couldn’t and still can’t afford thousands or tens of thousands of dollars of software before ever creating something. The combination of the HTML5, crowd sourcing, real-time collaboration, and github inspired reuse are resulting in a new breed of better, cheaper, modern and more accessible tools – which ultimately opens the door for an order of magnitude more hardware startups.
Rapid Prototyping & China
If you know anything about software development, you know that it’s amazingly cheap to compile your product in both money and time cost. For all but the largest software packages it only takes a few seconds and a fraction of a penny worth of power. For most of history “compiling” a hardware prototype cost many weeks and many, many thousands of dollars. Often you could only afford to build a few before you ran out of time or money. 3D printers, rapid prototyping services, and China have all changed this. It’s now possible to get a couple of just about anything built and shipped, just about anywhere in the world, for a total cost of maybe a hundred dollars and a few days. This means more prototypes, faster iterations, and less capital required to start a hardware startup.
Pre-Sales & Crowd-Funding
This one is kind of amazing. It’s now possible to sell a product you haven’t even built yet. This has two huge impacts. First, hardware has high upfront capital requirements, non-zero cost of goods sold, and things like component lead times which all means it’s hard to jump the gap between a prototype and mass manufacturing as a startup. Pre-sales means startups can sell product to fund manufacturing it without requiring venture capital or government grant money. Second, it aligns the incentives of consumers and hardware startups allowing the startup to test market fit before investing in manufacturing a product the market doesn’t want.
1 Billion Cellphones
Today odds are that 1 in 3 people you know (in the developed world) carry a veritable super computer in their pocket at all times. This computer is capable of acting as the brain or the display or the network backhaul for any number of new devices. These mobile computers also now represent the majority of connections to the internet worldwide. These computers mean startups can build simpler and cheaper devices, with better interoperability, fewer battery constraints, and generally shorter times to market. The next great consumer electronics company will very likely start as a hardware startup with a widget for a product, a small device that is little more than a feature.
It’s always been harder to start a hardware startup. It takes a different kind of founder. A different kind of tenacity. But these five forces are levelling the playing field. Lower barriers, and better incentives mean hugely more startups. It means more problems become solvable, and more aspiring entrepreneurs build real companies instead of bullshit social coupon sharing apps. It’s still going to take a couple years to hit full speed, but it has already affected the devices we wear on our wrists, the way we pay for things, and the way we heat our homes.
The rest is inevitable.