The second installment of Hardware Massive‘s Hardware Summit took place in San Francisco, at Mind the Bridge, on November 6, 2019. In spite of fires raging around the Bay Area complete with power outages, around 200 hardware nerds came out to connect and learn. There were three talks with experts in the physical product space who have seen things. These were interlaced with networking sessions and time to chat with hardware startups and service providers at booths encircling the space.
For highlights from each talk, you can watch the video below:
The Strategy Panel
This talk’s aim was to give guidance on the high-level plans for a HW startup’s development and business model. Its full title was, “The Strategy – Building the Right Team, the Road Map, and Critical Considerations”. Panelists included: Alex Witkowski, founder at Witkowski Law; Alec Rivers, co-founder of ShaperTools; Kelly Coyne, managing partner/co-founder of Grit Ventures; and Anne Cocquyt, founder and CEO of The GUILD. The moderator was HW product entrepreneur, Seth Heltsley.
Coyne shared a story about being an early user of Amazon’s Alexa and needing her husband to turn the lights on and off because Alexa ignored her. Apparently, the male-dominated engineering team behind this product hadn’t done user testing with women. So, it took a while for them to learn that Alexa didn’t respond to the higher pitches of women’s voices. Coyne’s message to startups is that diverse teams aren’t just a feel-good thing that helps with a company’s PR; the range of perspectives within these teams actually help to build a better product.
Rivers shared the story behind the birth of Shaper Tools in the midst of him getting a PhD at MIT. He’d developed the idea for the machine vision-based freehand cutting tool outside of MIT. However, he had the option of working with the university to develop the technology into a business. He got some insider advice letting him know that if he joined up with MIT, it could take away the rights to the company at any time if they thought Rivers wasn’t commercializing the tech fast enough. Rivers decided against the partnership, and his advice to startups is to thoroughly research the organizations your business considers getting entangled with. That goes for accelerators/partnerships, lawyers, or any company that would have significant influence over the progress of your baby.
The advice from Cocquyt echoed the sentiments of Rivers and Coyne. Diverse teams are important, and surrounding yourself with people you can trust is important, too, especially at the beginning of a startup’s journey. However, the people you know and trust going into a startup are more likely to be not diverse. So, when a new business is at the point to bring in new hires, it’s key to build “a team that represents that consumer group that you want to serve.”
Witkowski warned against the desire for startups to get a patent just for the sake of getting a patent. On their own, patents don’t necessarily bring value. “It depends on what’s in the patent application, and what it covers and how enforceable, and how easy it is to design around…”
He also warned, “you can patent something that no one wants to buy.” He’s seen inventors spending years working on a product that doesn’t have a market. Don’t be that guy. Do market testing!
The Operations Panel
I was the moderator of this panel, subtitled, “How to Design for Growth and Avoid the Killer Pitfalls“. During our time, I asked the experts if they’ve seen the same weird things in hardware startup land as I have. If you’re thinking I abused my position in order to get public validation of my viewpoints, you’re 100% correct.
Joining uh, me, Erin McDermott, Director of Optical Engineering at Spire Starter, (woah, this is so meta) were these awesome panelists: Darragh Hudson, founder of Kaizen Dynamic; Chrissy Meyer partner at Root Ventures, and Dana Madlem, VP of Services at Rush Order.
What Shouldn’t HW Startups Try to “Wing”?
Dana Madlem sees a lot of people mistake shipping product as a simple task because it seems commoditized and commonplace. He equated this phenomenon to the idea of having kids.
Billions of people before me have had kids and therefore it should be easy, but it’s NOT at all.– Dana Madlem on how HW startups think about shipping product
Unfortunately, things that seem simple can, for example, result in extra unnecessary dollars in shipping — which can kill your margins entirely. Madlem warned startups not to overlook the parts of your business that seem easy. That would be a sad way to sink!
HW Startup Founders in the Bay Treat HW Development like SW Development
I’ve traveled around the world meeting hardware startups, and more than anywhere else, the ones coming from the San Francisco Bay Area tend to try to build hardware like software. This is in large part because there are a lot of software engineers jumping into hardware development for the first time there. Plus, many of those moving into the wide, grenade-laden world of HW don’t understand how it’s different from building code. But don’t just take it from me! Here’s what the other pros say about this phenomenon and how HW and SW dev differ.
Yeah, 100%.– Chrissy Meyer, Partner at Root Ventures
Well, there you have it.
She told us she hears sentiments of this in an innumerable amount of startup pitches. Meyer added: “There are very good reasons why hardware should not move at the speed of software…Once you cut a tool, I’m sorry, there’s no going back.” After a certain point, making changes is extremely expensive, and there’s a limit to how much you can fix with over-the-air software updates after you ship.
Meyer also mentioned most VC’s are afraid of HW startups. Many VC’s don’t understand how to measure the costs and risks associated with HW startups so they play it safe and stay away. Root Ventures is one of only a few firms that focus on hardware because they understand it.
‘Yeah, hardware typically takes a long time, but we’re gonna do things differently.’ FAMOUS LAST WORDS.– Hudson on seeing startups treat HW like SW development
Hudson pointed out that there are parts of hardware production that can’t be sped up or skipped. And a lot of those steps are very, very costly and time-consuming. Things like opening tooling, kicking off PCBA fabrication or certification each cost thousands of dollars and costs usually cannot be recovered if you need to make changes. So, take the time to plan them well to begin with; it’s worth it!
Where Are Opportunities Missed for Cost or Time Savings in HW Development?
We all had some items that topped our cringe-inducing list of missed opportunities we see with HW startups.
- Virtual Prototyping – there’s a lot of development that can be done before you hold any physical parts in-hand. This can be CAD to test mechanical fit, optical simulation software to see if your lighting is pretty or if your camera gives a nice image, thermal simulation SW to prevent your widget from melting, etc. This one makes me shudder when I see it skipped because it means unnecessary extra time and cost for development.
- Reliability Testing – Chrissy Meyer told us a horror story about not doing this enough for a certain project and then discovering a catastrophic failure rate (80%) at the moment they began to ship. Never again. Now she pushes the HW startups she works with to put in the effort for frequent and thorough reliability testing.
- Using the Tried and True Path – Darragh Hudson explained he sees startups trying to take risks and shortcuts to ship product cheaper and faster, but it never works out well. The experience of those who have done it before is incredibly valuable! And there’s a reason why HW development methodologies exist: they work. Listen to that expert guidance so you don’t get tripped up by details.
- Building a Flexible Supply Chain – relying on over-the-air updates can only get you so far. Dana Madlem guaranteed us he had more experience flashing firmware than any of us. It’s common for a change at this level to be needed once you’ve already got product waiting to ship! Make sure your supply chain can help out if/when you need this level of tweaking.
Fireside Chat – Trade Policies, IP, and the Future of the Hardware Supply Chain
This talk was a very timely discussion on the state of tariffs and trade with China. Greg Fisher, CEO of Berkeley Sourcing Group, moderated this one. The expert panelists were: Mark Cohen, Director and Distinguished Senior Fellow at UC Berkeley; and Philip Rogers, Ph.D. candidate at UC Berkeley.
Expert Opinion on Trade War with China
Cohen told us that things aren’t actually as bad as the media is portraying. In terms of what the United States asked for from the Chinese government, there’s been compliance on most items. These include China’s laws on technology transfer, foreign investment, and trade secrets. He believes much of the fuss we’re seeing around tariffs is happening more for domestic political maneuvering than in regard to international trade policy.
Key Advice to Hardware Startups
Get Yourself a Chinese Patent
Mark Cohen told us they really like to litigate in China. They do it even more than Americans, and if you’re not protected, your hardware company is at risk.
“If you took all the patent offices in the world, except for China, and put them together, the number of patents would be less than those filed in China.– Mark Cohen, Director and Distinguished Senior Fellow at UC Berkeley
China has inexpensive rights, too. A simple utility model might only cost you around $500-$1,000, and within a matter of weeks, you have some protection with high litigation value. Without basic protections, it’s highly likely that your Chinese manufacturer will file for rights on your invention in China, as if they were the original creator!
Tips for Mitigating Supply Chain Stress in the Current Trade Climate
Philip Roger’s advice to hardware startups was to always carefully evaluate your own specific situation. Not all industries are being affected equally by the current political disruptions. With some products, it may make sense to move manufacturing to another country, for others, it might not. Also, even if you decide to switch up your supply chain to avoid China, it may not be 100% possible if some key components can only be sourced from there. What’s more, instability can and does happen everywhere! The place you move production to may prove even more disruptive. Lastly, don’t believe everything you see on the news. A lot of what you’re hearing is likely overdramatized, and you should keep yourself educated with your own real research to keep straight what are valid conclusions versus hysteria.
Miss the 1st Annual Hardware Summit (2018)?
If you missed the previous year’s Hardware Summit and want to glean some gems of wisdom from those talks: not to worry. We covered highlights from that event here.
Link to the Full Version Videos
Want the longer version? Hardware Massive’s Matthew Hall put together a more detailed summary of the 2nd summit along with the full-length videos for each talk here.