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Building lean-hardware-startups

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Presented for the first time at IDEAS Show in Taiwan, HAX goes through what it takes for hardware startups to be lean. Learn the easy way: join Hardvard!

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Building lean-hardware-startups

  1. 1. BY @HAXLR8R BUILDING GLOBAL LEAN HARDWARE STARTUPS H A X
  2. 2. TALK TO US! All this is on www.slideshare.com/haxlr8r We LOVE questions & comments! @haxlr8r @benjaminjoffe
  3. 3. HARDWARE STARTUPS
  4. 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. 5. BE A MASTER OF THE PROBLEM What matters is the problem, not the solution!
  6. 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. 7. “LEAN HARDWARE” OR MAPPING THE PATH TO HARDWARE STARTUP SUCCESS
  8. 8. Startup Accelerator for Hardware From Prototype to Business In Shenzhen & San Francisco HAXLR8R
  9. 9. 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
  10. 10. 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!
  11. 11. HAX MISSION: EMPOWERMENT 1. Build the right thing 2. Build things right 3. Ship fast
  12. 12. “HARDWARE UNIVERSITY” H A X
  13. 13. MONSTERS UNIVERSITY OR HARDVARD? H A X
  14. 14. HAX 4 GRADUATES 2 robotics 2 sports tech 2 health tech 1 green tech 1 3d printer 1 connected camera 1 smart city logistics
  15. 15. SPARK RAISES
  16. 16. MEDIA COVERAGE
  17. 17. 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
  18. 18. 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
  19. 19. WHY CHINA FOR STARTUPS?
  20. 20. 3 OLD MYTHS IN 1 SENTENCE “China only makes cheap stuff at scale and copies”
  21. 21. 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
  22. 22. 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)
  23. 23. WHAT ABOUT MY IP? “Protection of IP can be complex manufacturing or product, community, and cloud based services.” Idan Beck Founder gTar (HAX Fund)
  24. 24. 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)
  25. 25. 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?
  26. 26. WHY WOULD A LAOBAN CARE?
  27. 27. 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
  28. 28. STARTUP CHECKLIST
  29. 29. http://whatthefuckismywearablestrategy.com/
  30. 30. 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
  31. 31. BUILDING THE RIGHT THING INITIAL PROBLEM INITIAL SOLUTION INITIAL PROBLEM NEW SOLUTION NEW PROBLEM INITIAL SOLUTION NEW PROBLEM NEW SOLUTION INITIAL PROBLEM INITIAL SOLUTION
  32. 32. 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
  33. 33. 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…)
  34. 34. BEWARE OF THOSE 12 “WARES” wow such excite very hardware so future
  35. 35. FUNWARE 1. FUNware No business
  36. 36. CHINDOGU 1. FUNware No business Kenji Kawakami Chindogu pioneer (with tissue roll headgear + Fail-proof eyedrop glasses)
  37. 37. MORE CHINDOGU Baby mop Open eyes stickers Back scratching grid
  38. 38. FUNWARE 1. FUNware No business (includes NICHEware and ARTware)
  39. 39. EASYWARE 1. FUNware No business 2. EASYware Not defensible
  40. 40. EASYWARE 1. FUNware No business 2. EASYware Not defensible “Two sensors and an app” Nobel-grade research
  41. 41. PRESSY 1. FUNware No business 2. EASYware Not defensible PRESSY ($27) Funded Oct 2013 Raised $695,000
  42. 42. PRESSY 1. FUNware No business 2. EASYware Not defensible Speed Button ($10) (“kuai anniu”) Funded Jan 2014 Raised $34k
  43. 43. 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
  44. 44. SAMEWARE 1. FUNware No business 2. EASYware Not defensible 3. SAMEware Bad positioning
  45. 45. 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)
  46. 46. 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”
  47. 47. 47 companies launched 3D printers and raised $100K+ or more in crowdfunding. Source: Flybridge Capital Partners, 2014.6 COMMODITIZATION? Is it a commodity?
  48. 48. SOLUTIONWARE 1. FUNware No business 2. EASYware Not defensible 3. SAMEware Bad positioning 4. SOLUTIONware Solution looking for a problem
  49. 49. 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
  50. 50. 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
  51. 51. 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
  52. 52. 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
  53. 53. 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
  54. 54. WHEN SOFTWARE WAS STILL HARDWARE… LANDFILL IN NEW MEXICO FULL OF GAME CARTRIDGES…
  55. 55. WHEN SOFTWARE WAS STILL HARDWARE… 5.5 weeksCREATOR NOW A PSYCHOTHERAPIST FOR SILICON VALLEY'S HI-TECH COMMUNITY
  56. 56. 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
  57. 57. AHEAD OF THEIR TIME?
  58. 58. 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
  59. 59. “WHY LOCKITRON HAS TAKEN SO LONG TO SHIP” (CROWDFUNDED WITH $2.3M IN 4Q2012)
  60. 60. 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
  61. 61. “YOU WILL BE RECEIVING SHRU AT COST PRICE.”
  62. 62. 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
  63. 63. BIGGEST TREND IN WEARABLES?
  64. 64. CHINA’S BAROMETER
  65. 65. Mi Band by Xiaomi Fitness Tracker ($13) - Counts your steps Vibrates you awake 30 days standby Water resistant NEWS FLASH!
  66. 66. 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
  67. 67. 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
  68. 68. SOME EXTRAS 13.TEMPware Temporary solution
  69. 69. SOME EXTRAS 13.TEMPware Temporary solution 14.WEAKware Limited value proposition
  70. 70. SOME EXTRAS 13.TEMPware Temporary solution 14.WEAKware Limited value proposition 15.ALIware Repackage a product sourced on Alibaba
  71. 71. SOME EXTRAS 13.TEMPware Temporary solution 14.WEAKware Limited value proposition 15.ALIware Repackage a product sourced on Alibaba 16.INFRAware Requires special infrastructure
  72. 72. 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
  73. 73. 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
  74. 74. “TOKYO-BASED ARTIST ARRESTED FOR 3D PRINTING HER VAGINA”
  75. 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 17.SOLITware Single founder 18.AWKware Awkward form factor or usage 19.GROSSware Image problems
  76. 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 18.AWKware Awkward form factor or usage 19.GROSSware Image problems More ideas welcome!
  77. 77. SCALING HARDWARE
  78. 78. 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
  79. 79. THE RETAIL CHASM PROTOTYPING PRODUCTION SCALING $ Founders Friends Family Fools Crowdfunding Accelerators Angels Grants Sales Factoring Banks VCsPre-orders RETAIL CHASM TIME
  80. 80. SCALING STEP BY STEP $ TIME Specialty stores Big box retailers Online retailers Direct
  81. 81. 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
  82. 82. 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!)
  83. 83. 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
  84. 84. 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!
  85. 85. HAX WANTS YOU
  86. 86. HAX WANTS YOU! Share Comment Apply
  87. 87. @HAXLR8R @BENJAMINJOFFE BENJAMIN@HAXLR8R.COM SLIDESHARE.COM/HAXLR8R HAX WANTS YOU! Share Comment Apply

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