How can hardware startups compete in the software-centric startup world?
With iteration time measured in days rather than seconds, the burden of marginal costs, and often unexpected hurdles such as the impact of Chinese New Year, hardware companies face unique battles.
But during the Y Combinator program we expect our entrepreneurs creating physical things to move just as quickly as their digital-only friends. In fact, here is the (admittedly bold) hypothesis I shared with the Winter 2016 startups at our kickoff meeting: In the earliest stages, nothing involving hardware product creation should take more than 3 days longer than software.
We have more than 30 hardware startups in the current YC batch, breaking the record we set last batch by 50%. To help give them advice in meeting our expectations, 14 of my smartest friends provided support at YC’s first Hardware Mega Event. We began with an alumni panel of founders who successfully made and shipped things people want (and pay real money for.) Later, we had panels focused on specific topics such as industrial design.
Here I’d like to share some of my favorite pieces of advice they shared:
Consult Users, Not Consultants
Pebble founder Eric Migicovsky holds the current Kickstarter crowdfunding record, having sold $20,338,986 worth of Pebble Times in 30 days. We learned that he launched his first record-setting Kickstarter campaign without the help of any agencies: The original Pebble watch raised nearly $10.3 million, with not a crowdfunding consultant to be found.
Eric said that selling small runs of units to early adopters and listening to their feedback taught him far more about what users actually wanted from their smartwatch than any consultant could. There's no replacement for talking to your customers.
Get The Word Out
Founders nervous about the size of their mailing lists at launch should consider Bluesmart co-founder Diego Saez Gil’s hack. Bluesmart’s founders emailed everyone they had ever corresponded with, explaining that the project they’d poured blood sweat and tears into was launching soon. They asked friends to please check it out. Diego’s from Argentina, so he created Spanish and English versions of the message, to reach as many people as possible.
The $2,244,721 of connected carry-ons sold in their Indiegogo campaign should outweigh any slight breach of etiquette.
Beauty Is Core
Bellabeat co-founder Sandro Mur made mouths drop open with his suggestion to ship beta versions of connected products without electronics. Bellabeat garnered feedback by sending test users smart jewelry without the smarts -- they were basically just beautiful shells. This focus on aesthetics has paid off: Bellabeat’s growing rapidly in the highly-competitive wearables market.
Get Your Hands Dirty
Double Robotics' David Cann provided B2B perspective and an interesting alternative path to finding a contract manufacturer overseas. His company satisfies the tight quality controls and sophisticated manufacturing techniques necessary to create their intricate telepresence robots by manufacturing all of their telepresence machines in Burlingame, CA.
It's worked out well: Profitable and having just launched a majorly-improved version, they’ve never had to bother to raise a series A. Manufacturing locally may cost more upfront, but consider your product and your company's needs: It could end up being worth it.
Design Isn’t An Afterthought
Designer Dominika Blackappl has worked on everything from iPods to Mars rovers, and she stressed that even at the industrial level, design isn’t just something you can bolt on as an afterthought. Impactful design isn’t just about how something looks, she said. It considers all the constraints upon a product, from manufacturing processes to user habits.
Similarly, industrial designer Joe Morin added perspective from working as a consulting designer after years at a big design firm. He cautioned against startups thinking a designer can produce work without guidance: Asking a designer to "just make it look good" is unlikely to produce useful results.
Partners As Accelerants
Greg Kress urged startups to use partners like his firm Radicand to make the most of their time during the crucial, high-impact early days of engineering a hardware product. Getting third-party help can speed up the building of prototypes and supplement core engineering staff, he said.
Tempo Automation co-founder Jeff McAlvay pushed entrepreneurs to ditch their Arduinos and make the move to custom boards sooner rather than later. Tempo creates custom printed circuit boards (PCBs), taking designs from the form of an email attachment to a delivered unit within a week for a few hundred dollars.
Factories Can Be Friends
Dragon Innovation founder Scott Miller is speeding up the process of scaling, getting startups into production at factories that have been vetted by his firm with visits and production runs. Dragon’s standard bill of materials and other tools help ensure you are speaking the same language as your production partners. In manufacturing (and life), communication is key.
Hardware-focused investor Yi Pin Ng showed the incredible value a partner in-country (and often in-factory) can add. With quality assurance staff on the ground in China, Yi Pin's helped several of our startups rapidly scale up to tens of thousands of units per month. By helping with finding factories, navigating incorporation, and hiring in-country staff, Yi and other local partners keep startups from reinventing the wheel every time they start to grow production.
Keep Users Informed
Kickstarter's Julio Terra explained what Kickstarter backers look for from a campaign, stressing that regular updates to create a sense of involvement are of utmost importance. Derek Dukes of Amazon said that you should also encourage your early adopters to share with the wider world. Early customer reviews are key as a product transitions from niche pre-sale to mass-market retail, he said.
Learn From Presales
Tilt co-founder James Beshara talked about the burdens and benefits of a white-label Tilt campaign. James stressed the importance of launching with a pop; that the first 4 hours are typically the most important, and that the more PR budget going into those 4 hours the better on a critical day like launch day. With software, you can launch multiple times, but that’s not the case with a crowdfunding or pre-order launch.
Indiegogo's Evan Cohen introduced pricing strategies for maximizing your crowdfunding campaign’s performance, stressing that your campaign should be a learning opportunity for finding an answer to one key question: What will users actually pay for your product?