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HARDWARE
TRENDS
2015
v1.2
March 6, 2015
www.haxlr8r.com
www.slideshare.com/haxlr8r
• HAX (aka HAXLR8R) invests in hardware startups and makes sure they build the right
thing, build it right, and get to market fast.
• We see well over a thousand hardware startups per year across categories ranging from
robotics, sensors, health tech, smart home and lesser known ones such as sports tech,
pet tech, bio-sensors and more.
• As a result, it gives us a sense of the “near future” - products that might launch in a
year, later or will never get sold. We try to play our part in bringing the most promising
ones to market.
• This report has been created to give an overview of the “State of Hardware”: innovative
products but also aspects of prototyping and manufacturing that often go unreported on
the arduous journey to success or oblivion.
• Comments are welcome on how to improve this report at makeit@haxlr8r.com or via
twitter at @haxlr8r.
• Applications to the accelerator program are at www.haxlr8r.com.


Benjamin Joffe, Cyril Ebersweiler, Duncan Turner

Shenzhen, March 2015
Foreword
#HAX
3
8. AR / VR
9. Drones
10. Robotics
11. Twelve wares to avoid
12. Prototyping
13. Manufacturing
14. China Rising
Appendix
Foreword
1. Hardware Trends
2. Fundings & Exits
3. Ecosystem Growth
4. Lifestyle
5. Personal Health
6. 3D Printing
7. Smart Home
Table of content
1. HARDWARE TRENDS
Source: Aerial Screw by Leonardo da Vinci
5
Smart watches and trackers, augmented reality,
smart home devices, robots and self-driving cars…
technology is in the news and on shopping lists.
Hardware startups are on the rise across

existing and new categories.
Will every object become ‘sentient’ and connected?

Will every object become ‘intelligent’ and
autonomous thanks to onboard processing?
Hardware trends
• Falling prices and advances in
computing, sensors, batteries and
connectivity have ushered a wave of
“sentient” objects.
• Those connected devices (smart
watches, trackers, sensors…) largely
rely on the computing power of
smart phones, or the cloud.
Sentient and connected
#HAX
Some “first wave” devices

with sensors and connectivity
Bluetooth, WiFi, Zigbee and cellular
New M2M solutions
7
Spark Electron
Cellular dev kit
with data plan
Raised $21M
SigFox
Cellular network for IOT
Helium
M2M network
$214k on Kickstarter

as of Mar 6 ,2015
Raised $4.9MRaised $148.4M
#HAX
• Differentiating and maintaining a
competitive advantage is harder than ever
as components are getting commoditized
and products are global from day one.
• As a result, a flood of smart watches, activity
trackers, filament-based 3D printers and toy
drones are entering the market.
• The way out might be in new sensor
technologies (non-invasive or embedded),
design, software, AI and communities of
users or developers.
• New applications in sports, preventive and
personal health are creating emerging
behaviors toward human augmentation.
Resisting commoditization?
Darma
Sitting & ECG tracker
Mini-quadcopter for $14
on China’s Taobao
Commoditization

Gloves are off! Who was first? Who’s winning?
Commoditization

Gloves are off! Who was first? Who’s winning?
Commoditization

Gloves are off! Who was first? Who’s winning?
• Prototyping is easier and cheaper
thanks to various platforms such as
Arduino, Raspberry Pi, Spark, 3D
printing and more.
• Time To Market (TTM) is shortening
as the loop is closing between
prototyping, crowdfunding,
manufacturing, logistics and retail.
• “Online-to-Offline” (O2O) is rising:
complement an online store with
offline fronts or pop-up stores with
low or no inventory.
Faster to market
#HAX
Arduino, Raspberry Pi

and Spark help with prototyping
Crowdfunding platforms

help launch new products
“Rent a store front”

and

“Inventory-as-a-service”
• With smaller and cheaper MCUs,
objects are turning into computers
able to process sensor data and run
complex algorithms.
• Next step might be “apps on things”
and have truly “enchanted objects”.
Toward enchanted objects?
The power of an iPhone

on your wall
On-board face recognition
Nest Thermostat Welcome

IP camera by Netatmo
OTTO

by NextThingCo
This camera uses STAK

technology to run apps
• Today, low-cost automation, 3D printers and
robots are expanding to new industries and
entering workshops, labs and homes.
• Drones have found applications in
entertainment, imagery, surveying and exploring
deliveries.
• Desktop 3D printers have expanded to include
materials such as metal, carbon fiber, glass and
organic materials such as chocolate, skin and
bones!
Beyond consumer devices
#HAX
Will we train sports
with robots?
Print faster and better
Drones for fun, imagery and delivery
Search & rescue robot
• http://www.gartner.com/newsroom/id/2819918
Hardware hype cycle:

Which technologies will get adopted at scale?
Source: Gartner
#HAX
2. FUNDING & EXITS
17
More hardware startups are getting funded,
supported by the success stories

of recent acquisitions.
Consumer appeal and venture capital are not always
correlated: while consumers might not care about
those, defensibility, long-term strategy and unique
positioning are strong contributors to successful

VC funding.
Funding and exits
18
• In 2014, hardware unicorns were on the rise.
• The year saw billion-dollar acquisitions of Nest,
Oculus, Beats. GoPro went IPO.
• Several other recent M&A such as Dropcam,
Boston Dynamics, SmartThings, Basis reached
hundreds of millions.
• In a mere 4 years, the Chinese smartphone maker
Xiaomi went from zero to the largest market share
in China. Its valuation is now over $40 billion,
diversifying into more connected products.
• Over 200 hardware investment deals ranging from
seed to mega-rounds. Many more unannounced as
investors are tip-toeing into the hardware field.
Zero to One... billion dollars
#HAX
19
Hardware startups on AngelList
Source: AngelList, 2015
• As of March 2015, there were 3,022 hardware startups
on AngelList.
20
Hardware startup investment
Source: Tomasz Tunguz, Redpoint Ventures with Crunchbase data, 2014
• There is a notable increase of investment in hardware
startups since 2013, in particular for seed and series A.
21
Top hardware startups funding
0"
100"
200"
300"
400"
500"
600"
Magic"Leap"
Square"
Jawbone"
Beats"
Xiaomi"
Sonos"
GoPro"
Roku"
Anki"
Oculus"
Lytro"
Nest"
Fitbit"
Razer"
Dropcam"
Leap"MoKon"
Basis"
Leeo"
3D"RoboKcs"
Zepp"Labs"
Withings"
PrimeSense"
Pebble"
iHealth"
Ouya"
Misfit"
FormLabs"
Aldebaran"RoboKcs"
LiRlebits"
Tile"
SmartThings"
Osmo"
SiTeo"
Avegant"
Whill"
Kiva"Systems"
August"
Makerbot"
Note: VC funding amount was found for 38 out of the 41 top hardware companies.
M&A
Private
IPO
$M
Data source: Crunchbase, Jul 2014
22
Top hardware startups valuations
0""
1""
2""
3""
4""
5""
6""
7""
8""
9""
10""
Xiaom
i"
GoPro"
Square"Jawbone"
Nest"
Beats"M
agic"Leap"
Oculus"
Razer"
Kiva"System
s"M
akerbot"Dropcam
"
Boston"Dynam
ics"
Prim
eSense"
Fitbit"
Parrot"
Sm
artThings"
iHealth"
Aldebaran"RoboTcs"
Basis"
$B
Note: Known valuations of 20 largest hardware startups, Jul 2014
$46B
M&A
Private
IPO
23
• Overall VCs fund mostly (1) Serial entrepreneurs (2)
Demos with "Wow!" (3) Growth.
• This creates a funding gap (“Bridge of Death”)
between a demo and growth. As a bridge, startups
use crowdfunding, grants, pre-sales,… and get to
“real business”.
• Most startups plan only their first product, which
reduces their chances of funding.
• Other stumbling blocks: manufacturing, financing,
marketing, distribution.
VCs warming up to hardware... to a point
Cash position over time
24
PROTOTYPING PRODUCTION SCALING
$
TIME
Founders
Friends
Family
Fools
Accelerators
Angels
Grants
Crowdfunding
Pre-orders
Sales
VCs
POs
Banks
Bridge of Death
25
• Since the beginning of the crowdfunding
platform Kickstarter, $389M have been pledged
across 5,500 technology projects.
• Beyond direct sales, crowdfunding is an
“awareness enabler” for distributors, investors,
developers and supporters.
• Several hardware companies were “born” from
crowdfunding: Oculus, SmartThings, Pebble,
Lockitron.
• Technologies aiming for B2B applications can
also start with a consumer product to increase
their visibility.
• Yet, manufacturing remains a barrier. Most
unprepared projects ship late, if at all.
Crowdfunding is an enabler
#HAX
Crowdfunding by top hardware startup
0"
2"
4"
6"
8"
10"
12"
Pebble" Ouya" Formlabs" Tile" Oculus" SmartThings" Misfit"
Selfstarter
$M
27
• Very few campaigns (if any) are an “overnight success”.
• Platform-originated backers are a minority. Creators
have to generate the attention via media contacts and
community building. Media momentum is hard to achieve
yet is key to attract customers. Media have their own
schedule, which is rarely yours.
• Top campaigns often raised venture funding prior to
crowdfunding and spent on advertising, PR, or took a long
time to build a meaningful mailing list. Some had celebrity
endorsements.
• Credibility and genuine enthusiasm seem to matter more
than “video quality”.
Crowdfunding success is rarely an accident
28
• At the time of writing the Coolest Cooler,
a smart cooler for outdoor parties, was
the largest Kickstarter project with over
$13M in backing (go Pebble!). It rose
from the ashes of a failed first
campaign, with better preparation and
timing (it first failed a campaign run
during the Winter).
• The early media coverage of the
smartphone printer Prynt by TechCrunch
got shared over 60,000 times, generating
more than 400,000 views of a casual
demo. This helped build a waiting list of
over 50,000 people. Prynt raised over
$1.5M a few weeks later.
Anatomy of a campaign:
Two successful projects
#HAX
Kickstarter top 10 hardware projects
29
$13.3M $10.3M $8.6M $6.2M $3.4M
$3.4M $2.9M $2.8M $2.4M $2.4M
COOLEST
COOLER
Failed its first
campaign
PEBBLE
Sold 10,000 units
of another watch
and raised $375k
pre-campaign
OUYA
Designed by
Yves Behar
PONO
Co-founded by
Neil Young
MICRO
DASH FORM 1
Raised $500k
pre-campaign
SCIO
Raised $1.9M
pre-campaign
OCULUS SENSE
Raised $10.5M
pre-campaign
TOP
10
CELEB%
CELEB%
REPEAT%
REPEAT%
FUNDED%
FUNDED%
FUNDED%
Indiegogo top 10 hardware projects
30
$2.3M $2.2M $2M $2M $1.7M
$1.5M $1.4M $1.3M $1.3M $1.3M
JIBO
Raised $5.6m
pre-campaign
SOLAR
ROADWAYS
Feasibility in
question
SKULLY
Raised $2.5m
pre-campaign
SCANADU
Raised $2m
pre-campaign
CANARY
Raised $1.2m
pre-campaign
KREYOS
Product issues
RITOT
Feasibility in question
GEEK WAVE AIR TAME TRACKR
FUNDED&
FUNDED&
FUNDED&
FUNDED&
DOABLE?&
NO&CASH&
DOABLE?&
TOP
10
31
• Most crowdfunded projects are not suitable for
venture capital. Only a quarter of projects above $100k
raise VC money.
• There is some correlation between backing amount and
VC funding. Could one cause the other? Which one?
• Eventually, long-term success do not seem to be
correlated with crowdfunding amount so far.
Crowdfunding to VC funding
Source: Flybridge Capital Partners,Aug 2014
32
• Quirky’s community of inventors and
designers pitch ideas online, or help refine
other ideas. The selected projects get built
by Quirky’s product design staff and sold
online and in retail.
• Quirky pays back 10% of product sales, split
between the initial inventor and other
contributors. So far, most projects are fairly
low-tech and best-sellers dominate sales.
• Quirky raised $185.3M in venture funding. In
February 2014, it had close to 300
employees, sales reached $100M in 2014.
Crowdfunding ideas:
The Quirky approach
3. ECOSYSTEM GROWTH
34
The Maker Movement has gathered

considerable steam over the past few years.
How many makers will make the leap

to become a hardware startup?
Ecosystem growth
35
• More makers, more startups, more events, more
funding. Everything is growing.
• Hardware is also getting more attention from both
media and investors, notably thanks to visible
success stories such as GoPro, Nest and Fitbit,
and to the rise of crowdfunding platforms.
• Yet, the ecosystem is not growing evenly in
terms of geographic distribution, availability of
tools, support, talent, capital and manufacturing
capabilities. Some places are better served than
others, and several retain strategic advantages.
A bigger ecosystem
36
• More creators are jumping into hardware thanks to
lower barriers of entry.
• Hackerspaces, TechShops, Fab Labs and various
incubators, public or private like France’s Usine.io
offer places for them to work, use tools, learn and meet
other creators. They often support the early prototyping
stages and act as “pre-accelerators”. Companies like
Wearable World also help projects get attention from
media, investors and brands.
• There are hundreds of Maker Faires, large hardware-
related meetups (the ones in SF, NYC, Waterloo,
London and Paris have thousands of members each),
thousands of Open Source Hardware projects, and a
growing number of events related to hardware and IOT.
• Platforms like Upverter, SupplyBetter and Hackster.io
help source manufacturing partners for later stages.
Early stage support for hardware

is getting more widespread.
#HAX
Over a thousand hackerspaces

are active worldwide
37Source: http://hackerspaces.org/, March 2015
Over a thousand hackerspaces
are active worldwide
38Source: Renee DiResta, OATV, 2014
Hundreds of Maker Faires

are held worldwide every year
39Source: MakerFaire.com, March 2015
Meetup community growth
40Source: meetup.com, March 2015
Hardware Meetup Groups
IOT Meetup Groups
• The number of meetups and
their membership are growing
steadily.
• Close to 20 groups have over
1,000 members. Events
routinely gather hundreds.
• The most active locations are
San Francisco, New York,
London, Bangalore and Paris.
• A strong second group is
composed of Barcelona, Tel
Aviv, Stockholm and Austin (TX),
Reston (VA), Washington (DC).
Popular IOT and Hardware meetups
Source: meetup.com, March 2015
41Source: meetup.com, March 2015
# Meetup Location Members
1 IOT London UK 4,712
2 SF HW Startup USA 4,086
3 IOT Bangalore INDIA 3,219
4 IOT SF/SV USA 3,074
5 Hardwired NYC USA 3,028
6 SF IOT USA 2,841
7 IOT Paris FRANCE 2,397
8 NYC HW Startup USA 2,319
9 IOT Central NYC USA 2,013
10 NOVA Makers (Reston, VA) USA 1,979
11 IOT Israel ISRAEL 1,776
12 Sensored (SF) USA 1,680
13 IOT Barcelona SPAIN 1,594
14 HacDC (Washington, DC) USA 1,342
15 IOT Stockholm SWEDEN 1,276
16 SF Wearables USA 1,064
17 Austin HW Startup USA 1,052
18 HW Startup Lab (London) UK 1,046
42
• At the end of 2014, there were over 2,000
startup accelerators worldwide. Their
structures vary: investment, corporate,
sponsored, non-profit… with different
degrees of alignment with startups.
• Most focus on software. As a result,
hardware startups are often isolated and
can’t get the guidances and tools they need
to prototype and build products at scale.
• Hardware startups increase their chances
by connecting with suitable ecosystems as
well as building manufacturing and supply
chain skills.
Most incubators and accelerators

can’t answer the needs of hardware startups
#HAX
Living next to an electronics market
will speed up prototyping
Makers and startups
43
Makers Build for fun, education, goodwill, etc…
Maker

Pros
Turn their hobby into a business.

Often create tools for other (merry) makers.
Inventors
Invent and sometimes license their ideas.

Rarely full-time.
Hardware

Startups
Born to scale.
44
• BEGINNERS:

Focus on proof-of-concept.
• EXPERIENCED:

Focus on manufacturability

and supply chain.

Reduce bill of materials, care about
component availability and life cycle,
integrate supply chain.
• PROS:

Focus on logistics, distribution

and cash flow.

Find ways to finance inventory,
protect margins and scale up.
Required skills of hardware startup founders
#HAX
Things get real with prototyping
45
Look-like prototype
An object representing the final product. Does not work.

Manufacturability or cost are often not considered.
Proof of Concept A device performing - to some extent - the intended functions.
Work-like Prototype
A prototype that works.

Size, design, cost and performance are secondary concerns.
Look-like-work-like
Prototype
Works, with a design close to what the final product.
Manufacturable
Prototype (DFM)
Works, with design, manufacturability and costs carefully
considered. It is more or less identical to the final product.
Pre-production
prototype
One of few units coming out of the assembly line prior

to full production.
From idea to product:

Leap Motion Controller
46
47
• “Hardware is hard”.

But what is hard exactly in hardware?

Once the R&D part is covered, the riskiest parts are
often in reducing costs to make the product viable,
and handling manufacturing.
• Crowdfunding backers typically invest in early
prototypes (when not mere renders or form factors).
Those might not have completed the critical R&D and
feasibility parts.
• Backers, media and investors are often wowed by
demos and underestimate the difficulties of both
manufacturability and manufacturing.

And that’s when a product can be made at all!
• All would benefit from a better understanding of the
milestones the creators have cleared, so as to grasp
both the level of risk and the level of support needed.
Risk in hardware startups:
Does it work? Can it be made? Can it scale?
Some parts can be 

hard to source
#HAX
4. LIFESTYLE
Source: Pokeball, Pokemon animation series
49
Many daily objects are getting fitted

with sensors and connectivity
Can the market sustain the many

smart watches and trackers?
Eventually, “wearable” is not a category,

what matters is the problem the device is solving.
Lifestyle devices
Booming of smart watches and trackers
50
Are wearables going mainstream?
51
52
• Over 40 companies offer Android Wear
smart watches. Samsung, Motorola,
Sony, LG, Asus and others shipped

an estimated 720,000 units in 2014
(source: Canalys, 2015.2).
• 7-years old startup Pebble cut prices in
2014 and reached over 1M units since
its introduction. It added Android Wear
app compatibility, opening up its
ecosystem but eroding differentiation.
• Initial orders for the Apple Watch due to
launch in April 2015 are estimated
between 5 and 6 million.
Will the market be big enough for all
the smart watch makers?
Differentiation is becoming difficult
#HAX
First generation trackers disappoint
Will the next generation fare better?
53
Many users
gave up on the
first generation
of devices
Will the next
stick and be
“China-worthy”?
#HAX
Evolution of trackers:
Toward fashionable or invisible devices
54
Up
by Jawbone
FuelBand
by Nike
Activité
by Withings
Shine
by Misfit
Swarovski Shine
by Misfit
Charge
by Fitbit
Raised $66M Raised $520M Team reportedly fired
Raised $63M#HAX
Commoditization?
China’s Xiaomi launches a $13 activity tracker
55
Mi Band by Xiaomi
Yours for $13 (mostly in China so far)
• Step count
• Calories burned
• Sleep tracking
• Unlock phone
• Incoming call alerts
• 30 days battery life
• Water resistant
Sports tech:
Multi-purpose and focused trackers
56
Zepp
Golf / Baseball / Tennis
Challenger
by Shot Stats
Helios
Cycling
Syrmo
Skateboard
Trace
Surf / Snow / Skate
Raised $15M $120k on Kickstarter$103k on Kickstarter
Notch
Motion capture
#HAX
Pet tech:
In many places, there are more pets than babies!
57
Petcube
Pet communication
Raised $21M
Whistle
Dog activity monitor
Bistro
Feeder
$251k on KickstarterRaised $240k
#HAX
Payment technologies
58
Raised $590.5M
Square
Mobile payment & services
Coin
Multi-cards device
Raised $15.5M
#HAX
Smart tags
59
iTraq
global location tag
(using cellular triangulation)
$145k on Kickstarter
as of Feb 22, 2015
Tile

Bluetooth tag
$2.6M in crowdfunding
Raised $13.2M#HAX
Music tech:
From learning to daily practice
60
gTar
Midi smart guitar
Roadie
Automatic guitar tuner
$353k on Kickstarter $178k on Kickstarter#HAX
5. PERSONAL HEALTH
Source: Mr Spock with medical Tricorder, Star Trek TV series
62
New low-cost and non-invasive sensors are enabling

a new wave of personal health devices.
Personal health
Personal health devices
63
SCiO
Molecular sensor
Scout by Scanadu
ECG, breathing, Temp
Clarity
Air quality monitor
Darma
Sitting & ECG tracker
Wink by Kindara
Fertility monitor
$2.8M on Kickstarter
Raised $14.5M
$1.7M on Indiegogo
Raised $14.1M
$225k on Kickstarter Raised $1.6M
June by Netatmo
UV tracker
Raised $5.8M#HAX
6. 3D PRINTING
65
3D printing has expanded from basic prototyping
with plastic to numerous materials.
Future printers might produce commercial-grade
products and allow for micro-manufacturing.
Toward more mature technologies
• 3D printing basics:
• FDM (Fused Deposition Modeling) uses
heat to extrude a filament of plastic material.
• SLA (Stereolithography) uses a beam of
light to curate a photo-reactive resin.
• New developments:
• Cheaper printers, portable printing pens.
• New desktop technologies.
• New materials, multi-material prints, multi-
color prints, even printing houses!
• Toward factories with 3D printing farms?
3D printers
Colorful filament

PLA (polylactic acid)
SLA cures polymer

with light
#HAX
Makerbot
Acq. by Stratasys for $403M
FDM: the race to the bottom
$2,899
Micro
$3.4M on Kickstarter
$349 pre-order
Buccaneer
$1.4M on Kickstarter
$1,099 pre-order
$1.6M on Kickstarter
Flux
$599 on KS
iBox Nano
$457k on Kickstarter
$299.99
£255k on Kickstarter
Overlord
$699
#HAX
CreoPop
First with cool ink
$2.3M + $1.5M
on Kickstarter
3Doodler
First 3D printing pen
Lix
Smallest pen
$205k on Indiegogo£732 on Kickstarter
FDM: printing pens
#HAX
$99.99 $139.95 pre-order $119 pre-order 04.2015?
Pegasus
$2.9M on Kickstarter
Form 1+
by FormLabs
Ember
by Autodesk
$820k on KickstarterOpen source
SLA: the new frontier for desktops?
$3,299 $5,995 pre-order $2,999 pre-order
#HAX
Sintratec
SLS (Laser sintering)
Kast
Retina casting
$213k on Indiegogo
New technologies
Prints a variety of materials ranging

from plastics to ceramic or metals
Launching in 2015
10x faster than classic FDM, with higher quality,
allowing production runs
#HAX
New materials
Metal Carbon fiber
Chocolate
Bio ink Skin & Bone
Sandstone
Glass
Medicine
Fabric
#HAX
New applications
OwnPhones
Custom 3D printed ear buds
$767k on Kickstarter#HAX
SOLS
Custom 3D printed in-soles
Raised $19.3M
Printing houses:
A giant 3D printer builds 10 houses in one day
#HAX
7. SMART HOME
Source: The Jetsons, ABC
75
Access, indoor comfort, smarter appliances…

the house is getting connected.
Will anyone win the battle for the home hub?

Will things be interoperable?
Google is making moves toward owning home data;
the market is waiting for Apple’s move.
The smarter home
Thermostats
76
Acquired by Google for $3.2B
Nest Ecobee
Raised $16.1M
#HAX
Hubs
77
SmartThings
Acquired by Samsung for $200MAcquired by Google
Revolv
#HAX
Security
78
Dropcam
WiFi IP camera
Protect
Smoke detector
by Nest
Ring
Smart doorbell
Point
House sitter
Acquired by Google
for $555M
Welcome
by Netatmo
Designed by
Philippe Starck
Raised $5.8M#HAX
Air quality
79
CubeSensorsWeather Station
by Netatmo
Designed by
Philippe Starck
Raised $5.8M Raised $700k#HAX
Door locks
80
Bolt
by Lockitron
August
Raised $10M
Designed byYves Behar
Raised $2.2M via crowdfunding
#HAX
Lighting
81
Hue
by Philips
Bolt
by Misfit
Yeelight
by Yeelink
#HAX
Appliances
82
Smart body analyzer
by Withings
Nomiku
Connected sous-vide
cooking device
Niwa
Hydroponic system
#HAX
Sleep trackers
83
Beddit Sense
$503k on Indiegogo
Raised $8M
$2.4M on Kickstarter
Raised $10.5M
Luna
Smart bed cover
$936k on Indiegogo

(as of March 6, 2015)#HAX
Home sensor networks
84
Xiaomi
Home sensors
Mother
#HAX
8. AR & VR
#HAX Source: Denno Coil, NHK
86
Most augmented and virtual reality products

are not commercialized yet.
Will Christmas 2015 be their coming of age?
Will 2015 be the year of AR/VR?
87
• The most iconic AR project has just
been discontinued: Google decided
to stop the production of Glass less
than two years after launch.
• Glass found a number of niche
applications but faced severe
criticism regarding privacy and failed
to reach mass market adoption,
partly due to its high price tag of
$1,500.
TIMELINE
2013.04: Glass is introduced to “Explorers”

2014.05: Glass open to the general public

2015.01: Google stops producing Glass
Augmented Reality:
Google Glass
#HAX
Augmented Reality:
Top players
88
Magic Leap
Raised $592M
Hololens
by Microsoft
SmartEyeGlass
by Sony
Pre-order: $840
Hired Neil Stephenson
Sci-Fi author of “Snow Crash”
#HAX
Augmented Reality:
Notable crowdfunded projects
89
Meta
$194k on Kickstarter
Raised $23M from VC
CastAR
$1M on Kickstarter
Skully
$2.4M on IndieGoGo
Hired Steve Mann,
pioneer of wearable tech
as Chief Scientist
Founded by former
Valve Software employees
Augmented reality
bike helmet
#HAX
Virtual reality:
Top players
90
Project Morpheus
by Sony
OSVR by Razer
Open Source VR
Oculus
$2.4M on Kickstarter
$2B acq. by Facebook
#HAX
Vive VR
by HTC and Valve
Includes controller and laser for sensors
Samsung Gear VR
Powered by Oculus
Virtual reality:
Other notable projects
91
ANTVR
$261K on Kickstarter
Google Cardboard
Low-cost VR
iPhone VR headset
patented by Apple
#HAX
92
• Giroptic’s camera will be the first 360 degree video
supported by YouTube.
• The availability of such content will make virtual
reality an increasingly attractive proposition.
Virtual Reality:
Solving the creation & distribution of 360 video
#HAX
93
• Most virtual reality experiences are limited to display.
Interfaces like keyboard or mouse are not convenient.
• The Leap Motion controller can be combined with the
Oculus Rift to bring a user’s hands into the virtual
space.
Virtual reality:
Leap Motion solving the “hands” problem in VR
#HAX
Virtual reality:

Capturing the world in 3D
94
Structure Sensor
$1.3M on Kickstarter
Project Tango
by Google
Raised $7M
#HAX
9. DRONES
Source: Viper probe droid of Star Wars Episode V: The Empire Strikes Back, Lucaslifm
96
Drones have found applications

in entertainment, imagery and surveying.
E-commerce giants Amazon and Alibaba and others

are looking into using drones for deliveries.
Piloting, handling obstacles as well as

autonomous flight remain challenging.
Regulations are slowly catching up.
The state of drones
Parrot
Entertainment
Some drone applications
97
SkyCatch
Enterprise / Surveying
3D robotics
Imagery / UAV
Cirque du Soleil
Artistic performance
#HAX Raised $85M
Raised $19.7MMarket cap: $247M (March 2015)
Drone deliveries:
Amazon and Alibaba
98
Alibaba
Successful trial in Feb 2014
Amazon
US regulations don’t allow

deliveries by drone so far
Tea packages were delivered

to areas close to distribution centers in
Beijing, Shanghai and Guangzhou
FAA proposed rules that include a knowledge
test, registering the drone and stay under 500
feet and within line of sight.
Source: Techcrunch, Feb 2015#HAX
New technologies
99
Gimball
Collision-happy inspection robot

developed at EPFL
Distributed Flight Array (DFA)
Self-assembling flying robot

developed at ETH
Juggling quadcopters
Developed at ETH
Construction robots
Developed at ETH
#HAX
Drone incidents
100#HAX
10. ROBOTICS
Source: JARVIS AI system in Iron Man, Marvel Movies
102
A robot can be described as

“A machine performing complex actions

in the physical world”.
Most don’t look like humans but enjoy

increasing levels of autonomy and intelligence.
Today, low-cost and smart robots

are expanding to new industries

and entering workshops, labs and homes.
Robots are coming
Robotics before:
Expensive, simplistic or fictional
103#HAX
Desktop robotics:
Low-cost robots for office, workshop and lab
104
Voltera
PCB Printer
Opentrons
Lab Robot
Othermill
CNC Machine
Taktia
Power Tool
Makerbot
3D Printer
Katia
Robotic arm
#HAX
Service robotics:
Robot cooks, butlers and waiters
105
Robot waiter
Pengheng Space Capsule Hotel
Shenzhen, China
“Butlr” butler robot
Aloft Cupertino Hotel
Hamburger-making robot
by Momentum Machines
#HAX
Service robotics:
Guards and sales assistants
106
OSHbot by Lowes
Sales assistant robot
Knightscope
Security guard robots
Raised $6.7M from VC#HAX
Service robotics:
Cleaning and painting
107
Avidbots
Commercial cleaning
Rational Robotics
Autonomous painting booth
#HAX
Domestic robotics:
Autonomous cleaners & lawn mowers…
108
Husqvarna
Lawn mower
Roomba
by iRobot
Vacuum cleaner
First version sold in 2002
>10M units sold since start
First robot sold in 1995!
#HAX
…are getting commoditized quickly
109
They can now be
sourced from
China for less

than a quarter of
the US retail price.
Competition is
getting tough for
simple robots like
vacuum cleaners
and lawn mowers
as they go
mainstream.
#HAX
Robots might cause new problems
110#HAX
Domestic robotics:
Social robots
111
Nao and Pepper
Social robot
by Aldebaran Robotics
Jibo
Family robot
Raised $30.7MAcq. by Softbank, $100M
Double
Telepresence robot
by Double Robotics
Entertainment robotics:
Toys and drones
112
Mousr
Robotic mouse for cats
by Petronics
Sphero & OllieVarious drones
by Parrot
#HAX
Education robotics:

From research labs to schools and homes
113
Lego Mindstorms Makeblock
Robot kit
CELL
Modular robot
#HAX
• ROBI is a robot kit created by Tomotaka
Takahashi from ROBO-GARAGE. It is
sold via a weekly magazine published by
De Agostini.
• Readers receive a few parts every week
with detailed information. 70 issues are
needed to build the robot ($20/issue,
total: $1,400).
• It sold an estimated $100M by Jan 2015.
ROBI: DIY subscription robot
#HAX
Medical robotics:
From surgery to soft robotics
115
Da Vinci
Surgery robot
BabyBe
for mother/infant communication
for premature babies
#HAX
116
• Google acquired several companies involved in robotics,
vision and control.
• Several of the projects were financed by DARPA.
Google goes robotics
Big Dog
by Boston Dynamics
SchaftAtlas
by Boston Dynamics
#HAX
Human augmentation:
Bionic limbs
117
ReWalk Ekso Bionics
iWalk
Touch Bionics
#HAX
Drones:
Underwater and surface robots
118
OpenROV
Open Source
Underwater Exploration Robot
Protei
Oil spill cleaning robot
$112k on Kickstarter#HAX
Versaball
Jamming gripper

by Empire Robotics
Other robotics novelties
119
“You’re just as good as your grippers”
Robotics proverb
SmartBird
by Festo
UHTTR-1
DIY ping-pong robot
#HAX
Primer v2
Cycling robot by Masahiko Yamaguchi
Industrial robotics:
Robots for factories and warehouses
120
Baxter
Versatile factory robot
by Rethink Robotics
Kiva Systems
Warehousing robots
Acquired by Amazon for $775M
15,000 robots are in operation
across Amazon’s 50 US facilities
Source: CNET, Nov 2014#HAX
Komatsu
Driverless trucks
Over 40 unmanned trucks are
operated by Australia’s mining
giant Rio Tinto.

Each loaded truck weights
over 500 metric tons.
Source: Mining.com, Sep 2013
Transportation robotics:
Self-driving cars
121
RoboCar MEV-C
by ZMP
Self-driving car
by Google
Self-driving car
by BMW
Self-driving car
by Tesla
#HAX
Whill
Segway Solowheel
Hovertrax
Not exactly robots but still interesting:
Personal mobility solutions
122
Zboard
Copenhagen Wheel
#HAX
123
• The market was an estimated $800 million in 2013
and might grow 20x to over $16 billion by 2020
(Source: WinterGreen Research, January 2014).
• According to The Robot Report (July 2014):
+ Robotic harvesting, irrigation, pruning, weeding and thinning
devices are being field-tested all around the world.
+ Robotic spraying and seeding have been going on in Japan
and Australia for years.
+ Driverless tractors are getting started.
+ Robotic cow milking is growing.
+ Nurseries are beginning to use pick-and-place robots.
+ Aerial observation robots might support agricultural precision.”
Agricultural robotics:
Crops, cows and calves
driverless tractor
robotic cow milking
picking strawberries#HAX
11. THE 12 “WARES” TO AVOID
wow
such excite
very hardware
so future
125
There are many ways to fail at a hardware project.
Getting the wrong market, timing or positioning

are enough to wreck a startup.
Avoid the following twelve “wares”.
Recognizing good hardware startups
126
"Happy families are all alike;

every unhappy family

is unhappy in its own way.”
Leo Tolstoy, Anna Karenina
Anna Karenina Principle
127
1. NICHEware

2. EASYware

3. SAMEware

4. SOLUTIONware

5. VAPORware

6. LAMEware

7. FAILware

8. LATEware

9. LOSSware

10. BOREware

11. FUTUREware

12. LOCALware
Beware of those 12 “wares”
Small business

Not defensible

Weak positioning

Solution looking for a problem

Can’t be made

Compromised beyond reason

Building the wrong thing

No margins

No stickiness

No market yet

Too tied to local conditions
128
• Too small market.

No chance of a larger one.
• Includes FUNware and
ARTware.
1. NICHEware
FUNware: Rubik’s cube solving robot

Guinness world record holder
ARTware: One of Japan’s teamLab

outstanding tech/art installations
NICHEware: This robotic trash can

will catch some of your throws#HAX
129
• Too easy to copy.
• Trivial engineering and
market demand will
attract competition and
destroy margins.
• Defensible intellectual
property is not limited to
patents: it can be
software, trade secrets or
a community (such as
Makerbot and GoPro).
2. EASYware
Tile keeps track of your things with bluetooth

It now has droves of competitors
Fever Smart

Smart thermometer on Indiegogo#HAX
130
• Lack of differentiation.
• A weak positioning will
lead to limited sales,
even after an initial
launch via crowdfunding.
• Your “better mousetrap”
needs to be multiple
times better in some way
(price, speed, usability…)
than existing solutions to
capture market share.
3. SAMEware
Over 50 companies launched 3D printers

using crowdfunding and raised over $100k
Source: Flybridge Capital Partners, 2014.06#HAX
131
• A solution looking for a
problem (“a hammer
looking for nails”).
• Academic research often
falls into this category.
4. SOLUTIONware
“Cubes could transform into a chair or a desk”

Source: MIT News, Oct 2013
“They’re trying to get it in the hands

of engineers with big ideas”

Source: Engadget, Oct 2014
“A glimpse of a future

[…] that still feels far away”

Source: TheVerge, Jul 2014
Lytro

Light field photography camera.

Now shifting from cameras to virtual reality.

Raised $140M
M-Blocks

Self-assembling robots from MIT
Hendo’s hoverboard

$510k on Kickstarter
#HAX
• Can’t be made.
• Includes NAIVEware

and SCAMware
5. VAPORware
132
HUVr

Hoverboard
Ritot

Projection watch

$1.6M on Indiegogo
“A clear cut example of a few guys

with a neat idea grossly underestimating

what it takes to develop a product.”

Source: DropKicker, Aug 2014
“Tony Hawk has now issued a video apology

for his role in the HUVr Board prank”

Source: Heavy.com, Mar 2014
“Never attribute to malice that which is
adequately explained by stupidity”

Hanlon’s Razor
Ada by Triggertrap

Camera trigger

for high speed photography

£290,386 on Kickstarter
The creator posted “How our
$500k Kickstarter campaign
crashed and burned”, canceling
the project and refunding the
remainder of the money to
backers.
133
• Under-delivering.
6. LAMEware
“Backers found problems with HW & SW,

including a lack of several advertised features.”

Source: PC World, Sep 2014
“The bulky size [and the need] to have

the app open negates any time-saving”

Source: Snazzy Labs, Nov 2014
Kreyos smart watch

raised $1.5M on Indiegogo
Ring bluetooth controller by Logbar

Raised $880k on Kickstarter.
GoBe calorie counter
Raised $1.1M on Indiegogo
“It does not deliver on its most exciting feature”

Source: Engadget, Feb 2015
134
• Successfully building
the wrong thing.
• This happens to small
and large companies
alike.
• Bigger companies might
ship bigger failures.
7. FAILware
Microsoft Tablet PC (2002)

“The tablets we had done weren’t as thin,

they weren’t as attractive.”

Source: Bill Gates, Jul 2012#HAX
135
• Validated a market but
woke up competitors.
• Delays mean sales start
later, putting pressure on
cash flow.
• Delays also mean
competitors might enter
the market.
• In some cases, delays
lead to obsolescence.
8. LATEware
Their 14,000+ backers waited over 2 years.

Meanwhile, competitors entered the market.
Lockitron

$2.2M in crowdfunding.
#HAX
136
• Minimal or negative
margins.
• Healthy margins allow to
cover the bill of material,
tooling, returns, salaries and
promotion costs. Retail also
takes a considerable share.
• Some products might use a
different business model
allowing them to offer
hardware for cheap or for
free (maybe even pay
users?).
9. LOSSware
“You will be receiving Shru at cost price.”

Creators will have to ship

over 4,500 units at cost.
Shru

Electronic cat toy

Raised $171k on Kickstarter
#HAX
137
• People stop using them.
• Category pioneers often
have flaws. Later versions
might overcome them
and help grow a market.
• For wearables, the next
generation of devices
might fix some key issues
like battery life and live
feedback and trigger
mass market adoption.
10. BOREware
#HAX
138
• Ahead of its time.
• Being too innovative can
be a death sentence.
11. FUTUREware
Google Glass

Got discontinued within 2 years of launch.
Usability, lack of “killer apps”, price

and social barriers prevented it

from reaching the mass market.
Nabaztag (Violet, 2005) 

Connected device
Aibo (Sony, 1999) 

Robotic pet#HAX
139
• Too tied to local
conditions.
• Peculiarities of local
ecosystems can prevent
successful expansion.
12. LOCALware
Japan’s flip phones still represented
over a quarter of all shipments in 2014.

For a decade, those phones have had
very advanced functionalities including
apps, mobile TV and NFC payment.



The isolated technological path
followed by Japan is now often called
“Galapagos Syndrome”.
Phone with electric shaver

Part of the shanzhai “mass production artwork”

production system in China
Safety regulations, IP and logistics will prevent

exporting to most countries.
#HAX
12. PROTOTYPING
Source: Laser cut robot, Trotec
141
Prototyping has become dramatically faster

and cheaper for electronic products.
How far are we from building hardware

at software speed?
Prototyping 2.0
• Barriers for prototyping are falling.
• Mechanical: 3d printing, laser cutting,
CNC machining, vacuum forming…
• Electrical/SW: some prototyping
boards are now production-grade,
circuit printers coming to market.
• Electronics: prices falling,
commoditization.
• Robotics: DIY / open source kits.
• Connectivity: chips, modules,
smartphones, cloud.
Prototyping 2.0
#HAX
• After early prototyping, using 3D printers
quickly becomes a time sink.
• In addition, most additive techniques
can’t be used in manufacturing.
• So once form factor is clarified, use real
CAD data and move away from 3D printing.
Outsource early in order to polish
communication skills.
• Leverage factory expertise and blend
prototyping, DFM and manufacturing,
toward making a real product.
• Leverage the supply chain and take into
account component availability and life-
cycle.
3D printers usage stops at proof of concept
Time spent fixing a printer

or re-doing prints can be
better spent elsewhere
#HAX
• Lots of mechanical parts can be found off-the-shelf or through kits.
• If in China, get any custom part in a few days, including motors.
Worldwide delivery can also be arranged for many parts, including
PCBs.
• Below, the parts included in the Makeblock robotic kit allows the
building of fully functional machines such as a 3D printer or a laser
cutter.
Robotics prototyping:

DIY, Open Source, etc.
3D printer Plotter / CNC / Laser cutter
#HAX
Electronics prototyping
An OS built for
smart devices
Hackable
Wi-Fi and Cellular
modules
Bluetooth
programming
platform
#HAX
• The spread of prototyping and educational platforms contribute
to the growing number of hardware startups.
A slice of Pi for everyone:
5M units sold in 3 years since launch
0
1
2
3
4
5
2012 2013 2014 2015
Jan
Nov
Jun
Feb
Feb
Circuit prototyping:

Print circuits, dispense solder paste, reflow
#HAX
3D printers usage stops at proof of conceptZero to final prototype in 3 months
Prototyping speed is accelerating:
what used to take a year

can be done in a few months.
#HAX
13. MANUFACTURING
Source: Modern Times, Charles Chaplin
150
Manufacturing is often where hardware startups fail.
Integrating the supply chain early in the development
process can dramatically increase odds of success.
Manufacturing
“Get out of the building”
- Lean startup principle
“Get on the factory floor”
- Lean hardware principle
Lean Hardware Startup
#HAX
• To start: de-risk their supply chain to ensure supply of all parts.
• Further: own relationships to be first-class customers and even block
competitors from sourcing the best parts.
• Eventually: own their assembly (or control it like Apple with Foxconn):
control processes and machines.
What every hardware startup wants…
“Apple has exclusive deals with hardware
manufacturers for the best parts for iPad.

[…] HP could only source the second best.”



Source: TheNextWeb, Aug 2011
Can’t touch this
“Apple Bought $578M Worth Of
Sapphire In Advance.”



Source: TechCrunch, Nov 2013
Apple’s sapphire
#HAX
• Startups are not like Apple: volumes, cash, influence,
(very) long runway.
• “Apple quality” takes time and is more pricey
(machined aluminum? laser-made holes? etc.).
• Seeking “perfection” can cause important delays and
shorten runway.
…and can’t have
#HAX
• Creating a product that has never been made
before is a difficult task.
• Design with the factory: avoid mistakes

thanks to “Design from manufacturing”.
• Manufacture in the right location

with access to the relevant supply chain.
• Build with the right partner: toy factories
are great to make toys, less so for robots.
• Launch fast and launch early: improve your
product and supply chain during and
between runs, on the factory floor by
manufacturing in small batches.
Leveling the playing field:

Partnering with factories
#HAX
• Without hardware and manufacturing expertise a
company is at risk of becoming a “hollow company”,
unable to plan or discover improvements.
• Successful design and manufacturing requires
knowledge of the tools.
• Manufacturing issues are hard to solve at a distance or
with middlemen: improvements and discoveries can also
be made on the factory floor.
• Using middlemen makes it harder to adjust your supply
chain.
Startups need in-house experience and

“Get on the factory floor”
#HAX
“The problem is that we don’t understand the problem”
- a hardware startup.
Solving problems is easier on site
#HAX
• Mastering the supply chain
requires finding the original
source for everything: is this
supplier really THE supplier?
• "Parachute manufacturing” -
e.g. a week overseas to source
a contract manufacturer - is
rarely enough due diligence to
select a reliable long-term
partner.
• The depth of the supply chain,
combined with knowledge of
manufacturing and materials are
long-term strategic advantages
against rapid commoditization.
Supply chain due diligence and management
“The biggest roadblock to the success

of hardware startups isn’t money,
machines, or material: it’s finding

the right partners and people

to implement their vision.
Would you hire an agent to shop

for dinner or buy clothes for you? […]
After all, “It’s people! - supply chains are
made out of people!”
- Andrew “bunnie” Huang,

bunnie studios blog, Dec 2014
#HAX
• PCB assembly: the vast majority is now fully automated.
• Injection molding & CNC machining: operated with little
overhead, high throughput and robot arms.
The dream of a fully automated assembly line

is getting closer by the day.
The automation equation
…and 1 million robots…Less employees… … typing on a touchscreen.#HAX
• Prototyping will remain easier when located next
to strong component supply chain.
• Some automated small batch manufacturing
(total <1k units) could gain a local cost and time
advantage thanks to high-quality prototyping tools
used as “printing farms”.
• Product assembly might become more distributed
to facilitate shipping and on-time deliveries. Human
and robotic assembly lines will get closer to their
customers.
One future: distributed manufacturing?
#HAX
14. CHINA RISING
161
China used to be known for only making

cheap copies at scale.
Today’s china also makes the world’s

highest quality products.
The benefits of China’s supply chain for speed, costs
and scaling from a prototype to millions of units

is now open to startups.
A tale of two Chinas
• Copying China’s electronics
supply chain would be as hard
as copying Silicon Valley’s
ecosystem.
• From rare earth production used
in electronics (China produces at
least 70% of the world’s rare earth
elements) to electronics
manufacturing, assembly and
supply chain, it is unlikely to
move anytime soon.
• Instead, combine China’s supply
chain & manufacturing know-how
with global market access. China
is also a huge consumer market
for electronics and building things
there helps understand that.
The hardware world is not flat
#HAX
• Shenzhen, the world capital for electronics and
supply chain is now seen as the “Silicon Valley for
Hardware”.
• Shenzhen’s ecosystem is also used to prototype
better, faster and cheaper: design with local
components and take advantage of the 24-hours
PCB delivery.
Does all hardware lead to Shenzhen?
#HAX
“The city has a complete ecosystem of low-cost labor, massive
factories and leading manufacturing technologies, making it
able to turn out almost any kind of hardware on a large scale
Both Shenzhen and Silicon Valley have a critical mass. We’re
most likely to be successful connecting with Shenzhen than
competing with it head on.”
“A week in Shenzhen is worth a month in the Valley.”

- a hardware startup founder
Connecting with Shenzhen
Joichi Ito

Director

MIT Media Lab
#HAX
The “Silicon Valley for Hardware”
#HAX
Googling ‘Factory’ in Shenzhen
Shenzhen map for makers
Source: Huaqiangbei map for makers
HAX
• The electronics market is
made of over a dozen
multi-story buildings filled
with shops selling
components of all kinds.
• Most shops are tied to
factories and can supply
from 1 to thousands of
parts.
Shenzhen electronics market
Source: Dangerous Prototypes
SEG electronics market Shops in the SEG electronics market
Magnets of various sizes Soldering workshop in mobile repair shop
Top universities building closer ties

with Shenzhen
• Several leading research
institutions are building
ties with Shenzhen’s
unique ecosystem.
• Notably, Berkeley, MIT’s
Media Lab and Center for
Bits and Atoms have
taken steps in that
direction.
• The global Fab Lab
conference Fab 12 will be
held in Shenzhen in 2016.
#HAX
• Barriers to get to market have gone down
(with crowdfunding, e-commerce) and
OEMs are trying to go up the value chain.
• What they lack is design capabilities,
brand recognition, sales & marketing

and customer service.
• Design capabilities: some are hiring
designers and acquiring global talent.
• Brands: some are buying well-known
or distressed brands to get credibility,
distribution and intellectual property.
• Investment: some are investing in
other companies, including startups.
Rise of the OEM
The animatronic pet PLEO was
acquired by its Chinese OEM,
JETTA after filing for bankruptcy
Famed designer Yves Behar
sold a 75% stake in his firm
Fuseproject to the Chinese
communication group
BlueFocus for $46.7M
#HAX
• Several “creators” simply rebrand or repackage
products sourced on Alibaba.
• Some are visible on crowdfunding platforms.
“ALIware” as a new trend?
#HAX
• Smartphone giants like Apple and
Samsung aside, very few foreign
hardware startups have
performed well in China.
• Launching in China requires to
adapt to an entirely different
ecosystem.
• This includes different marketing
practices, distribution channels
and sometimes even a different
revenue model.
Foreign hardware startups in China
Misfit received a $40M
investment from Xiaomi and
other investors. China is now
the largest market for its Shine
activity tracker.
OUYA, the android-based
game console received a $10M
investment from Alibaba.#HAX
173
• The “Pressy” smart button (inserted in the audio plug of a smartphone to
create a shortcut for services) was copied 3 times in China with
successive price drops until it became free with a new business model.
• The Internet company Qihoo gave away 1 million units to college
students to acquire users for its mobile services.
Extreme commoditization:
From Kickstarter to Free in 10 months
$27
2013.10
PRESSY
$3
2014.1
SPEED BUTTON
$1
2014.4
MIKEY
by Xiaomi
FREE
2014.8
SMART BUTTON
by Qihoo
$34,000$695,138
#HAX
• Suffering from competition with large local players
(Xiaomi, Huawei, Lenovo, Midea, ZTE, TCL…).
• Extremely strong execution and iteration.
• Lack of effort in “disruptive” R&D.
Chinese hardware startups
$125M in revenue
DJI eHang
Raised $10M
iHealth
Since 1995#HAX
• Launched by a team of veterans pursuing a platform/software distribution strategy rather
than pure hardware profits. It sold 61 million phones in 2014, claiming China’s #1 spot.
• It sells inventory online directly to consumers as soon as it’s made, with no
advertising and relatively low margins. This approach allows for lower retail prices.
• Xiaomi leverages its community of users to guide product development. The company is
not a mere phone brand but a distribution channel to the aspiring middle class.
• In Sep 2013, Xiaomi hired Hugo Barra from Google to head its international expansion.
The Xiaomi case:
How it became China’s #1 smartphone maker
Founder of Xiaomi
Lei Jun Mi Note
A phablet for 368 USD
Hugo Barra
VP of International, Xiaomi#HAX
• Xiaomi is commoditizing numerous hardware products.
• It intends to launch 100 hardware products with OEMs and investments
(Misfit, iHealth, Yeelight etc.).
• It already offers smartphones, tablets, power banks, activity trackers,
headphones, TV box, 4K TV screen, smart home sensors & connectors,
webcam and more
Xiaomi expands beyond smartphones,
commoditizes more hardware devices
#HAX
“Xiaomization”
24 USD16 USD13 USD
64 USD
18 USD
16,000mAh

power bank
1 USD
Smart button
Miband tracker Bluetooth speaker IP camera
Action camera
41 USD
Headphones
639 USD
4K TV screen
#HAX
Xiaomi’s answer to GoPro? #HAX
• In March 2015 Xiaomi
launched a new action
camera built by its camera
OEM partner.
• With its phones, Xiaomi
captured the middle market,
notably from Samsung and
some high-end from Apple.
• With its action camera,
Xiaomi might capture
market share from GoPro
and create a new market
segment.
Xiaomi offers many different mounts
Source: TechInAsia
APPENDIX
Source: Squid (Super conducting QUantum Interface Device), Strange Days
180
• This report is for informational
purposes only and makes use

of various public and non-public
sources.
• HAX is an investor in several
startups mentioned in this report
(www.haxlr8r.com/companies/).
• SOSventures is an investor in HAX
and in several startups mentioned
in this report
(www.sosventures.com/portfolio/).
Disclaimer
181
• HAX is a startup accelerator focused on hardware

4 months program in Shenzhen

Demo day in San Francisco.
• Most active investor in hardware

65 startups (B2B and B2C)

Robotics, IoT, sensors, smart home…
• Most experienced investor with crowdfunding

26 campaigns

$300,000 average raise
• Pioneer of the “Lean Hardware” methodology

TechCrunch series & presentations
Apply to the next program:

www.haxlr8r.com
About HAX
HEX
3D printed drones
HAX robotics startups (1/2)
182
Avidbots
Cleaning robot
Kast
Ultra-fast 3D printer
KATIA
Low-cost robotic arm
Makeblock
Robotics kit
Cell Robotics
Modular robot
#HAX
#HAX
HAX robotics startups (2/2)
183
Rational Robotics
Painting robot
OpenTrons
Low-cost lab robot
Mousr
Robotic cat toy
Voltera
Circuit board printer
Winner of TechCrunch
Hardware Battlefield#HAX
#HAX
HAX IOT platforms
184
Spark
WiFi + cloud for IoT
STAK
HW+SW stack
for smart devices
#HAX
Darma
Sitting & ECG
HAX health startups
185
BabyBe
communication device
for premature babies
Quitbit
Connected lighter
Melon
EEG sensor
Vigo
Attention monitor
Clarity
Portable
air quality tracker
#HAX
HAX smart home startups
186
Yeelink
Connected lights
Point
House sitter
Niwa
Hydroponic system
Fabule
Emotional lamp
Petcube
Pet communication
#HAX
HAX lifestyle startups (1/2)
187
Shot Stats
Tennis
Helios
Cycling
Syrmo
Skateboard
Roadie
Automatic guitar tuner
OTTO
Hackable camera
Prynt
Smartphone printer
$1.5M on Kickstarter
#HAX
HAX lifestyle startups (2/2)
188
Vibease
Connected vibrator
Nomiku
WiFi sous-vide device
Palette
Modular interface
Everpurse
Phone charging purse
Linkitz
Social modular bracelet
#HAX
HAX startups portfolio
189
#HAX
190
On Slideshare
Software is from the Bay,

Hardware is from Shenzhen
(2013)
Hardware: Harder, Better
Faster Stronger
(2014)
8 things about crowdfunding
(2014)
Hardware unicorns
(2014)
Why makers fail at retail
(2014)
HAX at Stanford
Building lean hardware startups
(2014)
#HAX
191
On Techcrunch
From Prototype
to Production
(Nov 2013)
Financing
(Nov 2013)
Why Makers Fail At Retail
(Feb 2014)
Investing in
Hardware Startups
(Apr 2014)
8 Things About
Hardware Crowdfunding
(Oct 2014)
Breeding Hardware Unicorns
(Nov 2014)
#HAX
HARDWARE
TRENDS
2015
v1.2
March 6, 2015
www.haxlr8r.com
www.slideshare.com/haxlr8r

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Hardware trends 2015

  • 2. • HAX (aka HAXLR8R) invests in hardware startups and makes sure they build the right thing, build it right, and get to market fast. • We see well over a thousand hardware startups per year across categories ranging from robotics, sensors, health tech, smart home and lesser known ones such as sports tech, pet tech, bio-sensors and more. • As a result, it gives us a sense of the “near future” - products that might launch in a year, later or will never get sold. We try to play our part in bringing the most promising ones to market. • This report has been created to give an overview of the “State of Hardware”: innovative products but also aspects of prototyping and manufacturing that often go unreported on the arduous journey to success or oblivion. • Comments are welcome on how to improve this report at makeit@haxlr8r.com or via twitter at @haxlr8r. • Applications to the accelerator program are at www.haxlr8r.com. 
 Benjamin Joffe, Cyril Ebersweiler, Duncan Turner
 Shenzhen, March 2015 Foreword #HAX
  • 3. 3 8. AR / VR 9. Drones 10. Robotics 11. Twelve wares to avoid 12. Prototyping 13. Manufacturing 14. China Rising Appendix Foreword 1. Hardware Trends 2. Fundings & Exits 3. Ecosystem Growth 4. Lifestyle 5. Personal Health 6. 3D Printing 7. Smart Home Table of content
  • 4. 1. HARDWARE TRENDS Source: Aerial Screw by Leonardo da Vinci
  • 5. 5 Smart watches and trackers, augmented reality, smart home devices, robots and self-driving cars… technology is in the news and on shopping lists. Hardware startups are on the rise across
 existing and new categories. Will every object become ‘sentient’ and connected?
 Will every object become ‘intelligent’ and autonomous thanks to onboard processing? Hardware trends
  • 6. • Falling prices and advances in computing, sensors, batteries and connectivity have ushered a wave of “sentient” objects. • Those connected devices (smart watches, trackers, sensors…) largely rely on the computing power of smart phones, or the cloud. Sentient and connected #HAX Some “first wave” devices
 with sensors and connectivity Bluetooth, WiFi, Zigbee and cellular
  • 7. New M2M solutions 7 Spark Electron Cellular dev kit with data plan Raised $21M SigFox Cellular network for IOT Helium M2M network $214k on Kickstarter
 as of Mar 6 ,2015 Raised $4.9MRaised $148.4M
  • 8. #HAX • Differentiating and maintaining a competitive advantage is harder than ever as components are getting commoditized and products are global from day one. • As a result, a flood of smart watches, activity trackers, filament-based 3D printers and toy drones are entering the market. • The way out might be in new sensor technologies (non-invasive or embedded), design, software, AI and communities of users or developers. • New applications in sports, preventive and personal health are creating emerging behaviors toward human augmentation. Resisting commoditization? Darma Sitting & ECG tracker Mini-quadcopter for $14 on China’s Taobao
  • 9. Commoditization
 Gloves are off! Who was first? Who’s winning?
  • 10. Commoditization
 Gloves are off! Who was first? Who’s winning?
  • 11. Commoditization
 Gloves are off! Who was first? Who’s winning?
  • 12. • Prototyping is easier and cheaper thanks to various platforms such as Arduino, Raspberry Pi, Spark, 3D printing and more. • Time To Market (TTM) is shortening as the loop is closing between prototyping, crowdfunding, manufacturing, logistics and retail. • “Online-to-Offline” (O2O) is rising: complement an online store with offline fronts or pop-up stores with low or no inventory. Faster to market #HAX Arduino, Raspberry Pi
 and Spark help with prototyping Crowdfunding platforms
 help launch new products “Rent a store front”
 and
 “Inventory-as-a-service”
  • 13. • With smaller and cheaper MCUs, objects are turning into computers able to process sensor data and run complex algorithms. • Next step might be “apps on things” and have truly “enchanted objects”. Toward enchanted objects? The power of an iPhone
 on your wall On-board face recognition Nest Thermostat Welcome
 IP camera by Netatmo OTTO
 by NextThingCo This camera uses STAK
 technology to run apps
  • 14. • Today, low-cost automation, 3D printers and robots are expanding to new industries and entering workshops, labs and homes. • Drones have found applications in entertainment, imagery, surveying and exploring deliveries. • Desktop 3D printers have expanded to include materials such as metal, carbon fiber, glass and organic materials such as chocolate, skin and bones! Beyond consumer devices #HAX Will we train sports with robots? Print faster and better Drones for fun, imagery and delivery Search & rescue robot
  • 15. • http://www.gartner.com/newsroom/id/2819918 Hardware hype cycle:
 Which technologies will get adopted at scale? Source: Gartner #HAX
  • 16. 2. FUNDING & EXITS
  • 17. 17 More hardware startups are getting funded, supported by the success stories
 of recent acquisitions. Consumer appeal and venture capital are not always correlated: while consumers might not care about those, defensibility, long-term strategy and unique positioning are strong contributors to successful
 VC funding. Funding and exits
  • 18. 18 • In 2014, hardware unicorns were on the rise. • The year saw billion-dollar acquisitions of Nest, Oculus, Beats. GoPro went IPO. • Several other recent M&A such as Dropcam, Boston Dynamics, SmartThings, Basis reached hundreds of millions. • In a mere 4 years, the Chinese smartphone maker Xiaomi went from zero to the largest market share in China. Its valuation is now over $40 billion, diversifying into more connected products. • Over 200 hardware investment deals ranging from seed to mega-rounds. Many more unannounced as investors are tip-toeing into the hardware field. Zero to One... billion dollars #HAX
  • 19. 19 Hardware startups on AngelList Source: AngelList, 2015 • As of March 2015, there were 3,022 hardware startups on AngelList.
  • 20. 20 Hardware startup investment Source: Tomasz Tunguz, Redpoint Ventures with Crunchbase data, 2014 • There is a notable increase of investment in hardware startups since 2013, in particular for seed and series A.
  • 21. 21 Top hardware startups funding 0" 100" 200" 300" 400" 500" 600" Magic"Leap" Square" Jawbone" Beats" Xiaomi" Sonos" GoPro" Roku" Anki" Oculus" Lytro" Nest" Fitbit" Razer" Dropcam" Leap"MoKon" Basis" Leeo" 3D"RoboKcs" Zepp"Labs" Withings" PrimeSense" Pebble" iHealth" Ouya" Misfit" FormLabs" Aldebaran"RoboKcs" LiRlebits" Tile" SmartThings" Osmo" SiTeo" Avegant" Whill" Kiva"Systems" August" Makerbot" Note: VC funding amount was found for 38 out of the 41 top hardware companies. M&A Private IPO $M Data source: Crunchbase, Jul 2014
  • 22. 22 Top hardware startups valuations 0"" 1"" 2"" 3"" 4"" 5"" 6"" 7"" 8"" 9"" 10"" Xiaom i" GoPro" Square"Jawbone" Nest" Beats"M agic"Leap" Oculus" Razer" Kiva"System s"M akerbot"Dropcam " Boston"Dynam ics" Prim eSense" Fitbit" Parrot" Sm artThings" iHealth" Aldebaran"RoboTcs" Basis" $B Note: Known valuations of 20 largest hardware startups, Jul 2014 $46B M&A Private IPO
  • 23. 23 • Overall VCs fund mostly (1) Serial entrepreneurs (2) Demos with "Wow!" (3) Growth. • This creates a funding gap (“Bridge of Death”) between a demo and growth. As a bridge, startups use crowdfunding, grants, pre-sales,… and get to “real business”. • Most startups plan only their first product, which reduces their chances of funding. • Other stumbling blocks: manufacturing, financing, marketing, distribution. VCs warming up to hardware... to a point
  • 24. Cash position over time 24 PROTOTYPING PRODUCTION SCALING $ TIME Founders Friends Family Fools Accelerators Angels Grants Crowdfunding Pre-orders Sales VCs POs Banks Bridge of Death
  • 25. 25 • Since the beginning of the crowdfunding platform Kickstarter, $389M have been pledged across 5,500 technology projects. • Beyond direct sales, crowdfunding is an “awareness enabler” for distributors, investors, developers and supporters. • Several hardware companies were “born” from crowdfunding: Oculus, SmartThings, Pebble, Lockitron. • Technologies aiming for B2B applications can also start with a consumer product to increase their visibility. • Yet, manufacturing remains a barrier. Most unprepared projects ship late, if at all. Crowdfunding is an enabler #HAX
  • 26. Crowdfunding by top hardware startup 0" 2" 4" 6" 8" 10" 12" Pebble" Ouya" Formlabs" Tile" Oculus" SmartThings" Misfit" Selfstarter $M
  • 27. 27 • Very few campaigns (if any) are an “overnight success”. • Platform-originated backers are a minority. Creators have to generate the attention via media contacts and community building. Media momentum is hard to achieve yet is key to attract customers. Media have their own schedule, which is rarely yours. • Top campaigns often raised venture funding prior to crowdfunding and spent on advertising, PR, or took a long time to build a meaningful mailing list. Some had celebrity endorsements. • Credibility and genuine enthusiasm seem to matter more than “video quality”. Crowdfunding success is rarely an accident
  • 28. 28 • At the time of writing the Coolest Cooler, a smart cooler for outdoor parties, was the largest Kickstarter project with over $13M in backing (go Pebble!). It rose from the ashes of a failed first campaign, with better preparation and timing (it first failed a campaign run during the Winter). • The early media coverage of the smartphone printer Prynt by TechCrunch got shared over 60,000 times, generating more than 400,000 views of a casual demo. This helped build a waiting list of over 50,000 people. Prynt raised over $1.5M a few weeks later. Anatomy of a campaign: Two successful projects #HAX
  • 29. Kickstarter top 10 hardware projects 29 $13.3M $10.3M $8.6M $6.2M $3.4M $3.4M $2.9M $2.8M $2.4M $2.4M COOLEST COOLER Failed its first campaign PEBBLE Sold 10,000 units of another watch and raised $375k pre-campaign OUYA Designed by Yves Behar PONO Co-founded by Neil Young MICRO DASH FORM 1 Raised $500k pre-campaign SCIO Raised $1.9M pre-campaign OCULUS SENSE Raised $10.5M pre-campaign TOP 10 CELEB% CELEB% REPEAT% REPEAT% FUNDED% FUNDED% FUNDED%
  • 30. Indiegogo top 10 hardware projects 30 $2.3M $2.2M $2M $2M $1.7M $1.5M $1.4M $1.3M $1.3M $1.3M JIBO Raised $5.6m pre-campaign SOLAR ROADWAYS Feasibility in question SKULLY Raised $2.5m pre-campaign SCANADU Raised $2m pre-campaign CANARY Raised $1.2m pre-campaign KREYOS Product issues RITOT Feasibility in question GEEK WAVE AIR TAME TRACKR FUNDED& FUNDED& FUNDED& FUNDED& DOABLE?& NO&CASH& DOABLE?& TOP 10
  • 31. 31 • Most crowdfunded projects are not suitable for venture capital. Only a quarter of projects above $100k raise VC money. • There is some correlation between backing amount and VC funding. Could one cause the other? Which one? • Eventually, long-term success do not seem to be correlated with crowdfunding amount so far. Crowdfunding to VC funding Source: Flybridge Capital Partners,Aug 2014
  • 32. 32 • Quirky’s community of inventors and designers pitch ideas online, or help refine other ideas. The selected projects get built by Quirky’s product design staff and sold online and in retail. • Quirky pays back 10% of product sales, split between the initial inventor and other contributors. So far, most projects are fairly low-tech and best-sellers dominate sales. • Quirky raised $185.3M in venture funding. In February 2014, it had close to 300 employees, sales reached $100M in 2014. Crowdfunding ideas: The Quirky approach
  • 34. 34 The Maker Movement has gathered
 considerable steam over the past few years. How many makers will make the leap
 to become a hardware startup? Ecosystem growth
  • 35. 35 • More makers, more startups, more events, more funding. Everything is growing. • Hardware is also getting more attention from both media and investors, notably thanks to visible success stories such as GoPro, Nest and Fitbit, and to the rise of crowdfunding platforms. • Yet, the ecosystem is not growing evenly in terms of geographic distribution, availability of tools, support, talent, capital and manufacturing capabilities. Some places are better served than others, and several retain strategic advantages. A bigger ecosystem
  • 36. 36 • More creators are jumping into hardware thanks to lower barriers of entry. • Hackerspaces, TechShops, Fab Labs and various incubators, public or private like France’s Usine.io offer places for them to work, use tools, learn and meet other creators. They often support the early prototyping stages and act as “pre-accelerators”. Companies like Wearable World also help projects get attention from media, investors and brands. • There are hundreds of Maker Faires, large hardware- related meetups (the ones in SF, NYC, Waterloo, London and Paris have thousands of members each), thousands of Open Source Hardware projects, and a growing number of events related to hardware and IOT. • Platforms like Upverter, SupplyBetter and Hackster.io help source manufacturing partners for later stages. Early stage support for hardware
 is getting more widespread. #HAX
  • 37. Over a thousand hackerspaces
 are active worldwide 37Source: http://hackerspaces.org/, March 2015
  • 38. Over a thousand hackerspaces are active worldwide 38Source: Renee DiResta, OATV, 2014
  • 39. Hundreds of Maker Faires
 are held worldwide every year 39Source: MakerFaire.com, March 2015
  • 40. Meetup community growth 40Source: meetup.com, March 2015 Hardware Meetup Groups IOT Meetup Groups • The number of meetups and their membership are growing steadily. • Close to 20 groups have over 1,000 members. Events routinely gather hundreds. • The most active locations are San Francisco, New York, London, Bangalore and Paris. • A strong second group is composed of Barcelona, Tel Aviv, Stockholm and Austin (TX), Reston (VA), Washington (DC).
  • 41. Popular IOT and Hardware meetups Source: meetup.com, March 2015 41Source: meetup.com, March 2015 # Meetup Location Members 1 IOT London UK 4,712 2 SF HW Startup USA 4,086 3 IOT Bangalore INDIA 3,219 4 IOT SF/SV USA 3,074 5 Hardwired NYC USA 3,028 6 SF IOT USA 2,841 7 IOT Paris FRANCE 2,397 8 NYC HW Startup USA 2,319 9 IOT Central NYC USA 2,013 10 NOVA Makers (Reston, VA) USA 1,979 11 IOT Israel ISRAEL 1,776 12 Sensored (SF) USA 1,680 13 IOT Barcelona SPAIN 1,594 14 HacDC (Washington, DC) USA 1,342 15 IOT Stockholm SWEDEN 1,276 16 SF Wearables USA 1,064 17 Austin HW Startup USA 1,052 18 HW Startup Lab (London) UK 1,046
  • 42. 42 • At the end of 2014, there were over 2,000 startup accelerators worldwide. Their structures vary: investment, corporate, sponsored, non-profit… with different degrees of alignment with startups. • Most focus on software. As a result, hardware startups are often isolated and can’t get the guidances and tools they need to prototype and build products at scale. • Hardware startups increase their chances by connecting with suitable ecosystems as well as building manufacturing and supply chain skills. Most incubators and accelerators
 can’t answer the needs of hardware startups #HAX Living next to an electronics market will speed up prototyping
  • 43. Makers and startups 43 Makers Build for fun, education, goodwill, etc… Maker
 Pros Turn their hobby into a business.
 Often create tools for other (merry) makers. Inventors Invent and sometimes license their ideas.
 Rarely full-time. Hardware
 Startups Born to scale.
  • 44. 44 • BEGINNERS:
 Focus on proof-of-concept. • EXPERIENCED:
 Focus on manufacturability
 and supply chain.
 Reduce bill of materials, care about component availability and life cycle, integrate supply chain. • PROS:
 Focus on logistics, distribution
 and cash flow.
 Find ways to finance inventory, protect margins and scale up. Required skills of hardware startup founders #HAX
  • 45. Things get real with prototyping 45 Look-like prototype An object representing the final product. Does not work.
 Manufacturability or cost are often not considered. Proof of Concept A device performing - to some extent - the intended functions. Work-like Prototype A prototype that works.
 Size, design, cost and performance are secondary concerns. Look-like-work-like Prototype Works, with a design close to what the final product. Manufacturable Prototype (DFM) Works, with design, manufacturability and costs carefully considered. It is more or less identical to the final product. Pre-production prototype One of few units coming out of the assembly line prior
 to full production.
  • 46. From idea to product:
 Leap Motion Controller 46
  • 47. 47 • “Hardware is hard”.
 But what is hard exactly in hardware?
 Once the R&D part is covered, the riskiest parts are often in reducing costs to make the product viable, and handling manufacturing. • Crowdfunding backers typically invest in early prototypes (when not mere renders or form factors). Those might not have completed the critical R&D and feasibility parts. • Backers, media and investors are often wowed by demos and underestimate the difficulties of both manufacturability and manufacturing.
 And that’s when a product can be made at all! • All would benefit from a better understanding of the milestones the creators have cleared, so as to grasp both the level of risk and the level of support needed. Risk in hardware startups: Does it work? Can it be made? Can it scale? Some parts can be 
 hard to source #HAX
  • 48. 4. LIFESTYLE Source: Pokeball, Pokemon animation series
  • 49. 49 Many daily objects are getting fitted
 with sensors and connectivity Can the market sustain the many
 smart watches and trackers? Eventually, “wearable” is not a category,
 what matters is the problem the device is solving. Lifestyle devices
  • 50. Booming of smart watches and trackers 50
  • 51. Are wearables going mainstream? 51
  • 52. 52 • Over 40 companies offer Android Wear smart watches. Samsung, Motorola, Sony, LG, Asus and others shipped
 an estimated 720,000 units in 2014 (source: Canalys, 2015.2). • 7-years old startup Pebble cut prices in 2014 and reached over 1M units since its introduction. It added Android Wear app compatibility, opening up its ecosystem but eroding differentiation. • Initial orders for the Apple Watch due to launch in April 2015 are estimated between 5 and 6 million. Will the market be big enough for all the smart watch makers? Differentiation is becoming difficult #HAX
  • 53. First generation trackers disappoint Will the next generation fare better? 53 Many users gave up on the first generation of devices Will the next stick and be “China-worthy”? #HAX
  • 54. Evolution of trackers: Toward fashionable or invisible devices 54 Up by Jawbone FuelBand by Nike Activité by Withings Shine by Misfit Swarovski Shine by Misfit Charge by Fitbit Raised $66M Raised $520M Team reportedly fired Raised $63M#HAX
  • 55. Commoditization? China’s Xiaomi launches a $13 activity tracker 55 Mi Band by Xiaomi Yours for $13 (mostly in China so far) • Step count • Calories burned • Sleep tracking • Unlock phone • Incoming call alerts • 30 days battery life • Water resistant
  • 56. Sports tech: Multi-purpose and focused trackers 56 Zepp Golf / Baseball / Tennis Challenger by Shot Stats Helios Cycling Syrmo Skateboard Trace Surf / Snow / Skate Raised $15M $120k on Kickstarter$103k on Kickstarter Notch Motion capture #HAX
  • 57. Pet tech: In many places, there are more pets than babies! 57 Petcube Pet communication Raised $21M Whistle Dog activity monitor Bistro Feeder $251k on KickstarterRaised $240k #HAX
  • 58. Payment technologies 58 Raised $590.5M Square Mobile payment & services Coin Multi-cards device Raised $15.5M #HAX
  • 59. Smart tags 59 iTraq global location tag (using cellular triangulation) $145k on Kickstarter as of Feb 22, 2015 Tile
 Bluetooth tag $2.6M in crowdfunding Raised $13.2M#HAX
  • 60. Music tech: From learning to daily practice 60 gTar Midi smart guitar Roadie Automatic guitar tuner $353k on Kickstarter $178k on Kickstarter#HAX
  • 61. 5. PERSONAL HEALTH Source: Mr Spock with medical Tricorder, Star Trek TV series
  • 62. 62 New low-cost and non-invasive sensors are enabling
 a new wave of personal health devices. Personal health
  • 63. Personal health devices 63 SCiO Molecular sensor Scout by Scanadu ECG, breathing, Temp Clarity Air quality monitor Darma Sitting & ECG tracker Wink by Kindara Fertility monitor $2.8M on Kickstarter Raised $14.5M $1.7M on Indiegogo Raised $14.1M $225k on Kickstarter Raised $1.6M June by Netatmo UV tracker Raised $5.8M#HAX
  • 65. 65 3D printing has expanded from basic prototyping with plastic to numerous materials. Future printers might produce commercial-grade products and allow for micro-manufacturing. Toward more mature technologies
  • 66. • 3D printing basics: • FDM (Fused Deposition Modeling) uses heat to extrude a filament of plastic material. • SLA (Stereolithography) uses a beam of light to curate a photo-reactive resin. • New developments: • Cheaper printers, portable printing pens. • New desktop technologies. • New materials, multi-material prints, multi- color prints, even printing houses! • Toward factories with 3D printing farms? 3D printers Colorful filament
 PLA (polylactic acid) SLA cures polymer
 with light #HAX
  • 67. Makerbot Acq. by Stratasys for $403M FDM: the race to the bottom $2,899 Micro $3.4M on Kickstarter $349 pre-order Buccaneer $1.4M on Kickstarter $1,099 pre-order $1.6M on Kickstarter Flux $599 on KS iBox Nano $457k on Kickstarter $299.99 £255k on Kickstarter Overlord $699 #HAX
  • 68. CreoPop First with cool ink $2.3M + $1.5M on Kickstarter 3Doodler First 3D printing pen Lix Smallest pen $205k on Indiegogo£732 on Kickstarter FDM: printing pens #HAX $99.99 $139.95 pre-order $119 pre-order 04.2015?
  • 69. Pegasus $2.9M on Kickstarter Form 1+ by FormLabs Ember by Autodesk $820k on KickstarterOpen source SLA: the new frontier for desktops? $3,299 $5,995 pre-order $2,999 pre-order #HAX
  • 70. Sintratec SLS (Laser sintering) Kast Retina casting $213k on Indiegogo New technologies Prints a variety of materials ranging
 from plastics to ceramic or metals Launching in 2015 10x faster than classic FDM, with higher quality, allowing production runs #HAX
  • 71. New materials Metal Carbon fiber Chocolate Bio ink Skin & Bone Sandstone Glass Medicine Fabric #HAX
  • 72. New applications OwnPhones Custom 3D printed ear buds $767k on Kickstarter#HAX SOLS Custom 3D printed in-soles Raised $19.3M
  • 73. Printing houses: A giant 3D printer builds 10 houses in one day #HAX
  • 74. 7. SMART HOME Source: The Jetsons, ABC
  • 75. 75 Access, indoor comfort, smarter appliances…
 the house is getting connected. Will anyone win the battle for the home hub?
 Will things be interoperable? Google is making moves toward owning home data; the market is waiting for Apple’s move. The smarter home
  • 76. Thermostats 76 Acquired by Google for $3.2B Nest Ecobee Raised $16.1M #HAX
  • 77. Hubs 77 SmartThings Acquired by Samsung for $200MAcquired by Google Revolv #HAX
  • 78. Security 78 Dropcam WiFi IP camera Protect Smoke detector by Nest Ring Smart doorbell Point House sitter Acquired by Google for $555M Welcome by Netatmo Designed by Philippe Starck Raised $5.8M#HAX
  • 79. Air quality 79 CubeSensorsWeather Station by Netatmo Designed by Philippe Starck Raised $5.8M Raised $700k#HAX
  • 80. Door locks 80 Bolt by Lockitron August Raised $10M Designed byYves Behar Raised $2.2M via crowdfunding #HAX
  • 82. Appliances 82 Smart body analyzer by Withings Nomiku Connected sous-vide cooking device Niwa Hydroponic system #HAX
  • 83. Sleep trackers 83 Beddit Sense $503k on Indiegogo Raised $8M $2.4M on Kickstarter Raised $10.5M Luna Smart bed cover $936k on Indiegogo
 (as of March 6, 2015)#HAX
  • 84. Home sensor networks 84 Xiaomi Home sensors Mother #HAX
  • 85. 8. AR & VR #HAX Source: Denno Coil, NHK
  • 86. 86 Most augmented and virtual reality products
 are not commercialized yet. Will Christmas 2015 be their coming of age? Will 2015 be the year of AR/VR?
  • 87. 87 • The most iconic AR project has just been discontinued: Google decided to stop the production of Glass less than two years after launch. • Glass found a number of niche applications but faced severe criticism regarding privacy and failed to reach mass market adoption, partly due to its high price tag of $1,500. TIMELINE 2013.04: Glass is introduced to “Explorers”
 2014.05: Glass open to the general public
 2015.01: Google stops producing Glass Augmented Reality: Google Glass #HAX
  • 88. Augmented Reality: Top players 88 Magic Leap Raised $592M Hololens by Microsoft SmartEyeGlass by Sony Pre-order: $840 Hired Neil Stephenson Sci-Fi author of “Snow Crash” #HAX
  • 89. Augmented Reality: Notable crowdfunded projects 89 Meta $194k on Kickstarter Raised $23M from VC CastAR $1M on Kickstarter Skully $2.4M on IndieGoGo Hired Steve Mann, pioneer of wearable tech as Chief Scientist Founded by former Valve Software employees Augmented reality bike helmet #HAX
  • 90. Virtual reality: Top players 90 Project Morpheus by Sony OSVR by Razer Open Source VR Oculus $2.4M on Kickstarter $2B acq. by Facebook #HAX Vive VR by HTC and Valve Includes controller and laser for sensors
  • 91. Samsung Gear VR Powered by Oculus Virtual reality: Other notable projects 91 ANTVR $261K on Kickstarter Google Cardboard Low-cost VR iPhone VR headset patented by Apple #HAX
  • 92. 92 • Giroptic’s camera will be the first 360 degree video supported by YouTube. • The availability of such content will make virtual reality an increasingly attractive proposition. Virtual Reality: Solving the creation & distribution of 360 video #HAX
  • 93. 93 • Most virtual reality experiences are limited to display. Interfaces like keyboard or mouse are not convenient. • The Leap Motion controller can be combined with the Oculus Rift to bring a user’s hands into the virtual space. Virtual reality: Leap Motion solving the “hands” problem in VR #HAX
  • 94. Virtual reality:
 Capturing the world in 3D 94 Structure Sensor $1.3M on Kickstarter Project Tango by Google Raised $7M #HAX
  • 95. 9. DRONES Source: Viper probe droid of Star Wars Episode V: The Empire Strikes Back, Lucaslifm
  • 96. 96 Drones have found applications
 in entertainment, imagery and surveying. E-commerce giants Amazon and Alibaba and others
 are looking into using drones for deliveries. Piloting, handling obstacles as well as
 autonomous flight remain challenging. Regulations are slowly catching up. The state of drones
  • 97. Parrot Entertainment Some drone applications 97 SkyCatch Enterprise / Surveying 3D robotics Imagery / UAV Cirque du Soleil Artistic performance #HAX Raised $85M Raised $19.7MMarket cap: $247M (March 2015)
  • 98. Drone deliveries: Amazon and Alibaba 98 Alibaba Successful trial in Feb 2014 Amazon US regulations don’t allow
 deliveries by drone so far Tea packages were delivered
 to areas close to distribution centers in Beijing, Shanghai and Guangzhou FAA proposed rules that include a knowledge test, registering the drone and stay under 500 feet and within line of sight. Source: Techcrunch, Feb 2015#HAX
  • 99. New technologies 99 Gimball Collision-happy inspection robot
 developed at EPFL Distributed Flight Array (DFA) Self-assembling flying robot
 developed at ETH Juggling quadcopters Developed at ETH Construction robots Developed at ETH #HAX
  • 101. 10. ROBOTICS Source: JARVIS AI system in Iron Man, Marvel Movies
  • 102. 102 A robot can be described as
 “A machine performing complex actions
 in the physical world”. Most don’t look like humans but enjoy
 increasing levels of autonomy and intelligence. Today, low-cost and smart robots
 are expanding to new industries
 and entering workshops, labs and homes. Robots are coming
  • 103. Robotics before: Expensive, simplistic or fictional 103#HAX
  • 104. Desktop robotics: Low-cost robots for office, workshop and lab 104 Voltera PCB Printer Opentrons Lab Robot Othermill CNC Machine Taktia Power Tool Makerbot 3D Printer Katia Robotic arm #HAX
  • 105. Service robotics: Robot cooks, butlers and waiters 105 Robot waiter Pengheng Space Capsule Hotel Shenzhen, China “Butlr” butler robot Aloft Cupertino Hotel Hamburger-making robot by Momentum Machines #HAX
  • 106. Service robotics: Guards and sales assistants 106 OSHbot by Lowes Sales assistant robot Knightscope Security guard robots Raised $6.7M from VC#HAX
  • 107. Service robotics: Cleaning and painting 107 Avidbots Commercial cleaning Rational Robotics Autonomous painting booth #HAX
  • 108. Domestic robotics: Autonomous cleaners & lawn mowers… 108 Husqvarna Lawn mower Roomba by iRobot Vacuum cleaner First version sold in 2002 >10M units sold since start First robot sold in 1995! #HAX
  • 109. …are getting commoditized quickly 109 They can now be sourced from China for less
 than a quarter of the US retail price. Competition is getting tough for simple robots like vacuum cleaners and lawn mowers as they go mainstream. #HAX
  • 110. Robots might cause new problems 110#HAX
  • 111. Domestic robotics: Social robots 111 Nao and Pepper Social robot by Aldebaran Robotics Jibo Family robot Raised $30.7MAcq. by Softbank, $100M Double Telepresence robot by Double Robotics
  • 112. Entertainment robotics: Toys and drones 112 Mousr Robotic mouse for cats by Petronics Sphero & OllieVarious drones by Parrot #HAX
  • 113. Education robotics:
 From research labs to schools and homes 113 Lego Mindstorms Makeblock Robot kit CELL Modular robot #HAX
  • 114. • ROBI is a robot kit created by Tomotaka Takahashi from ROBO-GARAGE. It is sold via a weekly magazine published by De Agostini. • Readers receive a few parts every week with detailed information. 70 issues are needed to build the robot ($20/issue, total: $1,400). • It sold an estimated $100M by Jan 2015. ROBI: DIY subscription robot #HAX
  • 115. Medical robotics: From surgery to soft robotics 115 Da Vinci Surgery robot BabyBe for mother/infant communication for premature babies #HAX
  • 116. 116 • Google acquired several companies involved in robotics, vision and control. • Several of the projects were financed by DARPA. Google goes robotics Big Dog by Boston Dynamics SchaftAtlas by Boston Dynamics #HAX
  • 117. Human augmentation: Bionic limbs 117 ReWalk Ekso Bionics iWalk Touch Bionics #HAX
  • 118. Drones: Underwater and surface robots 118 OpenROV Open Source Underwater Exploration Robot Protei Oil spill cleaning robot $112k on Kickstarter#HAX
  • 119. Versaball Jamming gripper
 by Empire Robotics Other robotics novelties 119 “You’re just as good as your grippers” Robotics proverb SmartBird by Festo UHTTR-1 DIY ping-pong robot #HAX Primer v2 Cycling robot by Masahiko Yamaguchi
  • 120. Industrial robotics: Robots for factories and warehouses 120 Baxter Versatile factory robot by Rethink Robotics Kiva Systems Warehousing robots Acquired by Amazon for $775M 15,000 robots are in operation across Amazon’s 50 US facilities Source: CNET, Nov 2014#HAX Komatsu Driverless trucks Over 40 unmanned trucks are operated by Australia’s mining giant Rio Tinto.
 Each loaded truck weights over 500 metric tons. Source: Mining.com, Sep 2013
  • 121. Transportation robotics: Self-driving cars 121 RoboCar MEV-C by ZMP Self-driving car by Google Self-driving car by BMW Self-driving car by Tesla #HAX
  • 122. Whill Segway Solowheel Hovertrax Not exactly robots but still interesting: Personal mobility solutions 122 Zboard Copenhagen Wheel #HAX
  • 123. 123 • The market was an estimated $800 million in 2013 and might grow 20x to over $16 billion by 2020 (Source: WinterGreen Research, January 2014). • According to The Robot Report (July 2014): + Robotic harvesting, irrigation, pruning, weeding and thinning devices are being field-tested all around the world. + Robotic spraying and seeding have been going on in Japan and Australia for years. + Driverless tractors are getting started. + Robotic cow milking is growing. + Nurseries are beginning to use pick-and-place robots. + Aerial observation robots might support agricultural precision.” Agricultural robotics: Crops, cows and calves driverless tractor robotic cow milking picking strawberries#HAX
  • 124. 11. THE 12 “WARES” TO AVOID wow such excite very hardware so future
  • 125. 125 There are many ways to fail at a hardware project. Getting the wrong market, timing or positioning
 are enough to wreck a startup. Avoid the following twelve “wares”. Recognizing good hardware startups
  • 126. 126 "Happy families are all alike;
 every unhappy family
 is unhappy in its own way.” Leo Tolstoy, Anna Karenina Anna Karenina Principle
  • 127. 127 1. NICHEware
 2. EASYware
 3. SAMEware
 4. SOLUTIONware
 5. VAPORware
 6. LAMEware
 7. FAILware
 8. LATEware
 9. LOSSware
 10. BOREware
 11. FUTUREware
 12. LOCALware Beware of those 12 “wares” Small business
 Not defensible
 Weak positioning
 Solution looking for a problem
 Can’t be made
 Compromised beyond reason
 Building the wrong thing
 No margins
 No stickiness
 No market yet
 Too tied to local conditions
  • 128. 128 • Too small market.
 No chance of a larger one. • Includes FUNware and ARTware. 1. NICHEware FUNware: Rubik’s cube solving robot
 Guinness world record holder ARTware: One of Japan’s teamLab
 outstanding tech/art installations NICHEware: This robotic trash can
 will catch some of your throws#HAX
  • 129. 129 • Too easy to copy. • Trivial engineering and market demand will attract competition and destroy margins. • Defensible intellectual property is not limited to patents: it can be software, trade secrets or a community (such as Makerbot and GoPro). 2. EASYware Tile keeps track of your things with bluetooth
 It now has droves of competitors Fever Smart
 Smart thermometer on Indiegogo#HAX
  • 130. 130 • Lack of differentiation. • A weak positioning will lead to limited sales, even after an initial launch via crowdfunding. • Your “better mousetrap” needs to be multiple times better in some way (price, speed, usability…) than existing solutions to capture market share. 3. SAMEware Over 50 companies launched 3D printers
 using crowdfunding and raised over $100k Source: Flybridge Capital Partners, 2014.06#HAX
  • 131. 131 • A solution looking for a problem (“a hammer looking for nails”). • Academic research often falls into this category. 4. SOLUTIONware “Cubes could transform into a chair or a desk”
 Source: MIT News, Oct 2013 “They’re trying to get it in the hands
 of engineers with big ideas”
 Source: Engadget, Oct 2014 “A glimpse of a future
 […] that still feels far away”
 Source: TheVerge, Jul 2014 Lytro
 Light field photography camera.
 Now shifting from cameras to virtual reality.
 Raised $140M M-Blocks
 Self-assembling robots from MIT Hendo’s hoverboard
 $510k on Kickstarter #HAX
  • 132. • Can’t be made. • Includes NAIVEware
 and SCAMware 5. VAPORware 132 HUVr
 Hoverboard Ritot
 Projection watch
 $1.6M on Indiegogo “A clear cut example of a few guys
 with a neat idea grossly underestimating
 what it takes to develop a product.”
 Source: DropKicker, Aug 2014 “Tony Hawk has now issued a video apology
 for his role in the HUVr Board prank”
 Source: Heavy.com, Mar 2014 “Never attribute to malice that which is adequately explained by stupidity”
 Hanlon’s Razor Ada by Triggertrap
 Camera trigger
 for high speed photography
 £290,386 on Kickstarter The creator posted “How our $500k Kickstarter campaign crashed and burned”, canceling the project and refunding the remainder of the money to backers.
  • 133. 133 • Under-delivering. 6. LAMEware “Backers found problems with HW & SW,
 including a lack of several advertised features.”
 Source: PC World, Sep 2014 “The bulky size [and the need] to have
 the app open negates any time-saving”
 Source: Snazzy Labs, Nov 2014 Kreyos smart watch
 raised $1.5M on Indiegogo Ring bluetooth controller by Logbar
 Raised $880k on Kickstarter. GoBe calorie counter Raised $1.1M on Indiegogo “It does not deliver on its most exciting feature”
 Source: Engadget, Feb 2015
  • 134. 134 • Successfully building the wrong thing. • This happens to small and large companies alike. • Bigger companies might ship bigger failures. 7. FAILware Microsoft Tablet PC (2002)
 “The tablets we had done weren’t as thin,
 they weren’t as attractive.”
 Source: Bill Gates, Jul 2012#HAX
  • 135. 135 • Validated a market but woke up competitors. • Delays mean sales start later, putting pressure on cash flow. • Delays also mean competitors might enter the market. • In some cases, delays lead to obsolescence. 8. LATEware Their 14,000+ backers waited over 2 years.
 Meanwhile, competitors entered the market. Lockitron
 $2.2M in crowdfunding. #HAX
  • 136. 136 • Minimal or negative margins. • Healthy margins allow to cover the bill of material, tooling, returns, salaries and promotion costs. Retail also takes a considerable share. • Some products might use a different business model allowing them to offer hardware for cheap or for free (maybe even pay users?). 9. LOSSware “You will be receiving Shru at cost price.” Creators will have to ship
 over 4,500 units at cost. Shru
 Electronic cat toy
 Raised $171k on Kickstarter #HAX
  • 137. 137 • People stop using them. • Category pioneers often have flaws. Later versions might overcome them and help grow a market. • For wearables, the next generation of devices might fix some key issues like battery life and live feedback and trigger mass market adoption. 10. BOREware #HAX
  • 138. 138 • Ahead of its time. • Being too innovative can be a death sentence. 11. FUTUREware Google Glass
 Got discontinued within 2 years of launch. Usability, lack of “killer apps”, price
 and social barriers prevented it
 from reaching the mass market. Nabaztag (Violet, 2005) 
 Connected device Aibo (Sony, 1999) 
 Robotic pet#HAX
  • 139. 139 • Too tied to local conditions. • Peculiarities of local ecosystems can prevent successful expansion. 12. LOCALware Japan’s flip phones still represented over a quarter of all shipments in 2014.
 For a decade, those phones have had very advanced functionalities including apps, mobile TV and NFC payment.
 
 The isolated technological path followed by Japan is now often called “Galapagos Syndrome”. Phone with electric shaver
 Part of the shanzhai “mass production artwork”
 production system in China Safety regulations, IP and logistics will prevent
 exporting to most countries. #HAX
  • 140. 12. PROTOTYPING Source: Laser cut robot, Trotec
  • 141. 141 Prototyping has become dramatically faster
 and cheaper for electronic products. How far are we from building hardware
 at software speed? Prototyping 2.0
  • 142. • Barriers for prototyping are falling. • Mechanical: 3d printing, laser cutting, CNC machining, vacuum forming… • Electrical/SW: some prototyping boards are now production-grade, circuit printers coming to market. • Electronics: prices falling, commoditization. • Robotics: DIY / open source kits. • Connectivity: chips, modules, smartphones, cloud. Prototyping 2.0 #HAX
  • 143. • After early prototyping, using 3D printers quickly becomes a time sink. • In addition, most additive techniques can’t be used in manufacturing. • So once form factor is clarified, use real CAD data and move away from 3D printing. Outsource early in order to polish communication skills. • Leverage factory expertise and blend prototyping, DFM and manufacturing, toward making a real product. • Leverage the supply chain and take into account component availability and life- cycle. 3D printers usage stops at proof of concept Time spent fixing a printer
 or re-doing prints can be better spent elsewhere #HAX
  • 144. • Lots of mechanical parts can be found off-the-shelf or through kits. • If in China, get any custom part in a few days, including motors. Worldwide delivery can also be arranged for many parts, including PCBs. • Below, the parts included in the Makeblock robotic kit allows the building of fully functional machines such as a 3D printer or a laser cutter. Robotics prototyping:
 DIY, Open Source, etc. 3D printer Plotter / CNC / Laser cutter #HAX
  • 145. Electronics prototyping An OS built for smart devices Hackable Wi-Fi and Cellular modules Bluetooth programming platform #HAX
  • 146. • The spread of prototyping and educational platforms contribute to the growing number of hardware startups. A slice of Pi for everyone: 5M units sold in 3 years since launch 0 1 2 3 4 5 2012 2013 2014 2015 Jan Nov Jun Feb Feb
  • 147. Circuit prototyping:
 Print circuits, dispense solder paste, reflow #HAX
  • 148. 3D printers usage stops at proof of conceptZero to final prototype in 3 months Prototyping speed is accelerating: what used to take a year
 can be done in a few months. #HAX
  • 149. 13. MANUFACTURING Source: Modern Times, Charles Chaplin
  • 150. 150 Manufacturing is often where hardware startups fail. Integrating the supply chain early in the development process can dramatically increase odds of success. Manufacturing
  • 151. “Get out of the building” - Lean startup principle “Get on the factory floor” - Lean hardware principle Lean Hardware Startup #HAX
  • 152. • To start: de-risk their supply chain to ensure supply of all parts. • Further: own relationships to be first-class customers and even block competitors from sourcing the best parts. • Eventually: own their assembly (or control it like Apple with Foxconn): control processes and machines. What every hardware startup wants… “Apple has exclusive deals with hardware manufacturers for the best parts for iPad.
 […] HP could only source the second best.”
 
 Source: TheNextWeb, Aug 2011 Can’t touch this “Apple Bought $578M Worth Of Sapphire In Advance.”
 
 Source: TechCrunch, Nov 2013 Apple’s sapphire #HAX
  • 153. • Startups are not like Apple: volumes, cash, influence, (very) long runway. • “Apple quality” takes time and is more pricey (machined aluminum? laser-made holes? etc.). • Seeking “perfection” can cause important delays and shorten runway. …and can’t have #HAX
  • 154. • Creating a product that has never been made before is a difficult task. • Design with the factory: avoid mistakes
 thanks to “Design from manufacturing”. • Manufacture in the right location
 with access to the relevant supply chain. • Build with the right partner: toy factories are great to make toys, less so for robots. • Launch fast and launch early: improve your product and supply chain during and between runs, on the factory floor by manufacturing in small batches. Leveling the playing field:
 Partnering with factories #HAX
  • 155. • Without hardware and manufacturing expertise a company is at risk of becoming a “hollow company”, unable to plan or discover improvements. • Successful design and manufacturing requires knowledge of the tools. • Manufacturing issues are hard to solve at a distance or with middlemen: improvements and discoveries can also be made on the factory floor. • Using middlemen makes it harder to adjust your supply chain. Startups need in-house experience and
 “Get on the factory floor” #HAX
  • 156. “The problem is that we don’t understand the problem” - a hardware startup. Solving problems is easier on site #HAX
  • 157. • Mastering the supply chain requires finding the original source for everything: is this supplier really THE supplier? • "Parachute manufacturing” - e.g. a week overseas to source a contract manufacturer - is rarely enough due diligence to select a reliable long-term partner. • The depth of the supply chain, combined with knowledge of manufacturing and materials are long-term strategic advantages against rapid commoditization. Supply chain due diligence and management “The biggest roadblock to the success
 of hardware startups isn’t money, machines, or material: it’s finding
 the right partners and people
 to implement their vision. Would you hire an agent to shop
 for dinner or buy clothes for you? […] After all, “It’s people! - supply chains are made out of people!” - Andrew “bunnie” Huang,
 bunnie studios blog, Dec 2014 #HAX
  • 158. • PCB assembly: the vast majority is now fully automated. • Injection molding & CNC machining: operated with little overhead, high throughput and robot arms. The dream of a fully automated assembly line
 is getting closer by the day. The automation equation …and 1 million robots…Less employees… … typing on a touchscreen.#HAX
  • 159. • Prototyping will remain easier when located next to strong component supply chain. • Some automated small batch manufacturing (total <1k units) could gain a local cost and time advantage thanks to high-quality prototyping tools used as “printing farms”. • Product assembly might become more distributed to facilitate shipping and on-time deliveries. Human and robotic assembly lines will get closer to their customers. One future: distributed manufacturing? #HAX
  • 161. 161 China used to be known for only making
 cheap copies at scale. Today’s china also makes the world’s
 highest quality products. The benefits of China’s supply chain for speed, costs and scaling from a prototype to millions of units
 is now open to startups. A tale of two Chinas
  • 162. • Copying China’s electronics supply chain would be as hard as copying Silicon Valley’s ecosystem. • From rare earth production used in electronics (China produces at least 70% of the world’s rare earth elements) to electronics manufacturing, assembly and supply chain, it is unlikely to move anytime soon. • Instead, combine China’s supply chain & manufacturing know-how with global market access. China is also a huge consumer market for electronics and building things there helps understand that. The hardware world is not flat #HAX
  • 163. • Shenzhen, the world capital for electronics and supply chain is now seen as the “Silicon Valley for Hardware”. • Shenzhen’s ecosystem is also used to prototype better, faster and cheaper: design with local components and take advantage of the 24-hours PCB delivery. Does all hardware lead to Shenzhen? #HAX
  • 164. “The city has a complete ecosystem of low-cost labor, massive factories and leading manufacturing technologies, making it able to turn out almost any kind of hardware on a large scale Both Shenzhen and Silicon Valley have a critical mass. We’re most likely to be successful connecting with Shenzhen than competing with it head on.” “A week in Shenzhen is worth a month in the Valley.”
 - a hardware startup founder Connecting with Shenzhen Joichi Ito
 Director
 MIT Media Lab #HAX
  • 165. The “Silicon Valley for Hardware” #HAX
  • 167. Shenzhen map for makers Source: Huaqiangbei map for makers HAX • The electronics market is made of over a dozen multi-story buildings filled with shops selling components of all kinds. • Most shops are tied to factories and can supply from 1 to thousands of parts.
  • 168. Shenzhen electronics market Source: Dangerous Prototypes SEG electronics market Shops in the SEG electronics market Magnets of various sizes Soldering workshop in mobile repair shop
  • 169. Top universities building closer ties
 with Shenzhen • Several leading research institutions are building ties with Shenzhen’s unique ecosystem. • Notably, Berkeley, MIT’s Media Lab and Center for Bits and Atoms have taken steps in that direction. • The global Fab Lab conference Fab 12 will be held in Shenzhen in 2016. #HAX
  • 170. • Barriers to get to market have gone down (with crowdfunding, e-commerce) and OEMs are trying to go up the value chain. • What they lack is design capabilities, brand recognition, sales & marketing
 and customer service. • Design capabilities: some are hiring designers and acquiring global talent. • Brands: some are buying well-known or distressed brands to get credibility, distribution and intellectual property. • Investment: some are investing in other companies, including startups. Rise of the OEM The animatronic pet PLEO was acquired by its Chinese OEM, JETTA after filing for bankruptcy Famed designer Yves Behar sold a 75% stake in his firm Fuseproject to the Chinese communication group BlueFocus for $46.7M #HAX
  • 171. • Several “creators” simply rebrand or repackage products sourced on Alibaba. • Some are visible on crowdfunding platforms. “ALIware” as a new trend? #HAX
  • 172. • Smartphone giants like Apple and Samsung aside, very few foreign hardware startups have performed well in China. • Launching in China requires to adapt to an entirely different ecosystem. • This includes different marketing practices, distribution channels and sometimes even a different revenue model. Foreign hardware startups in China Misfit received a $40M investment from Xiaomi and other investors. China is now the largest market for its Shine activity tracker. OUYA, the android-based game console received a $10M investment from Alibaba.#HAX
  • 173. 173 • The “Pressy” smart button (inserted in the audio plug of a smartphone to create a shortcut for services) was copied 3 times in China with successive price drops until it became free with a new business model. • The Internet company Qihoo gave away 1 million units to college students to acquire users for its mobile services. Extreme commoditization: From Kickstarter to Free in 10 months $27 2013.10 PRESSY $3 2014.1 SPEED BUTTON $1 2014.4 MIKEY by Xiaomi FREE 2014.8 SMART BUTTON by Qihoo $34,000$695,138 #HAX
  • 174. • Suffering from competition with large local players (Xiaomi, Huawei, Lenovo, Midea, ZTE, TCL…). • Extremely strong execution and iteration. • Lack of effort in “disruptive” R&D. Chinese hardware startups $125M in revenue DJI eHang Raised $10M iHealth Since 1995#HAX
  • 175. • Launched by a team of veterans pursuing a platform/software distribution strategy rather than pure hardware profits. It sold 61 million phones in 2014, claiming China’s #1 spot. • It sells inventory online directly to consumers as soon as it’s made, with no advertising and relatively low margins. This approach allows for lower retail prices. • Xiaomi leverages its community of users to guide product development. The company is not a mere phone brand but a distribution channel to the aspiring middle class. • In Sep 2013, Xiaomi hired Hugo Barra from Google to head its international expansion. The Xiaomi case: How it became China’s #1 smartphone maker Founder of Xiaomi Lei Jun Mi Note A phablet for 368 USD Hugo Barra VP of International, Xiaomi#HAX
  • 176. • Xiaomi is commoditizing numerous hardware products. • It intends to launch 100 hardware products with OEMs and investments (Misfit, iHealth, Yeelight etc.). • It already offers smartphones, tablets, power banks, activity trackers, headphones, TV box, 4K TV screen, smart home sensors & connectors, webcam and more Xiaomi expands beyond smartphones, commoditizes more hardware devices #HAX
  • 177. “Xiaomization” 24 USD16 USD13 USD 64 USD 18 USD 16,000mAh
 power bank 1 USD Smart button Miband tracker Bluetooth speaker IP camera Action camera 41 USD Headphones 639 USD 4K TV screen #HAX
  • 178. Xiaomi’s answer to GoPro? #HAX • In March 2015 Xiaomi launched a new action camera built by its camera OEM partner. • With its phones, Xiaomi captured the middle market, notably from Samsung and some high-end from Apple. • With its action camera, Xiaomi might capture market share from GoPro and create a new market segment. Xiaomi offers many different mounts Source: TechInAsia
  • 179. APPENDIX Source: Squid (Super conducting QUantum Interface Device), Strange Days
  • 180. 180 • This report is for informational purposes only and makes use
 of various public and non-public sources. • HAX is an investor in several startups mentioned in this report (www.haxlr8r.com/companies/). • SOSventures is an investor in HAX and in several startups mentioned in this report (www.sosventures.com/portfolio/). Disclaimer
  • 181. 181 • HAX is a startup accelerator focused on hardware
 4 months program in Shenzhen
 Demo day in San Francisco. • Most active investor in hardware
 65 startups (B2B and B2C)
 Robotics, IoT, sensors, smart home… • Most experienced investor with crowdfunding
 26 campaigns
 $300,000 average raise • Pioneer of the “Lean Hardware” methodology
 TechCrunch series & presentations Apply to the next program:
 www.haxlr8r.com About HAX
  • 182. HEX 3D printed drones HAX robotics startups (1/2) 182 Avidbots Cleaning robot Kast Ultra-fast 3D printer KATIA Low-cost robotic arm Makeblock Robotics kit Cell Robotics Modular robot #HAX #HAX
  • 183. HAX robotics startups (2/2) 183 Rational Robotics Painting robot OpenTrons Low-cost lab robot Mousr Robotic cat toy Voltera Circuit board printer Winner of TechCrunch Hardware Battlefield#HAX #HAX
  • 184. HAX IOT platforms 184 Spark WiFi + cloud for IoT STAK HW+SW stack for smart devices #HAX
  • 185. Darma Sitting & ECG HAX health startups 185 BabyBe communication device for premature babies Quitbit Connected lighter Melon EEG sensor Vigo Attention monitor Clarity Portable air quality tracker #HAX
  • 186. HAX smart home startups 186 Yeelink Connected lights Point House sitter Niwa Hydroponic system Fabule Emotional lamp Petcube Pet communication #HAX
  • 187. HAX lifestyle startups (1/2) 187 Shot Stats Tennis Helios Cycling Syrmo Skateboard Roadie Automatic guitar tuner OTTO Hackable camera Prynt Smartphone printer $1.5M on Kickstarter #HAX
  • 188. HAX lifestyle startups (2/2) 188 Vibease Connected vibrator Nomiku WiFi sous-vide device Palette Modular interface Everpurse Phone charging purse Linkitz Social modular bracelet #HAX
  • 190. 190 On Slideshare Software is from the Bay,
 Hardware is from Shenzhen (2013) Hardware: Harder, Better Faster Stronger (2014) 8 things about crowdfunding (2014) Hardware unicorns (2014) Why makers fail at retail (2014) HAX at Stanford Building lean hardware startups (2014) #HAX
  • 191. 191 On Techcrunch From Prototype to Production (Nov 2013) Financing (Nov 2013) Why Makers Fail At Retail (Feb 2014) Investing in Hardware Startups (Apr 2014) 8 Things About Hardware Crowdfunding (Oct 2014) Breeding Hardware Unicorns (Nov 2014) #HAX