NEW YORK–”A hardware startup is (equivalent) to five companies,” said Avidan Ross,founder of early stage VC firm Root/ Ventures,nailing down the challenge level of building a company that combines both software and hardware hence IoT or Internet of Things.
The odds of succeeding as an IoT startup is just not easy, but it’s also where VCs are keeping an interesting eye on as most of these IoT or hardware startups because of their capability to raise the stakes. If you’ve seen many of these companies, they’re early in this sector the way the focus is more on functionality–with few putting emphasis on design.
Among the presenters at the Hardwired meetup last May 11, Jonathan Frankel of Nucleus (launching August 1) talked more about how to thrive in this sector. He talked about ways to increase your odds of success as a hardware startup, as he reminded everyone how costs could easily spin out of control. As Ross said, it’s like running five companies in one.
“Who is on your mailing list?” Frankel asked, before saying how crucial it is to meet in-person but to put away the NDAs in any talk.
In building something, he cautioned how, “every need component adds an associated complexity.” And we all know how time is cost, which means tooling and tweaking IoTs require time to pull off.
“Assume cash flow at 20% a month and BOM at $100. Hire a business development and sales teams early,” he advised, adding how one should oversee interoperability, supply chain and lead time along the maddening IoT process.
The fun part came from two demonstrations Lampix and Sam Labs.
Lampix presented what I would call a computer illuminated in a physical world. George Popescu of Lampix called it “a platform Open API and Smart Lamp,” which he announced was going to be at Kickstarter afterwards–for crowdfunding purposes.
Sam Labs showed how its wireless blocks and drag-and-drop app allows younger people to become an instant inventor and even explore programming as it applies in the physical world.
The fireside chat with Ross talked freely about the IoT space:
- Years ago if you wanted to build a hardware product you had to work at GE. Now you can start on your own.
- We’re investing in companies building hardware products; none of them are actually hardware companies
- Humans should be part of the process
- Do not pitch me a Wi-Fi service
- Hardware is f–king hard
- You have to have a specific domain
- (In selecting a founder or team) If he lived all his working in a hamburger chain ( and he proposes a relevant idea), that’s a good start
- Los Angeles is not meant for production (in terms of quality).
- What makes crowdfunding fail: they didn’t prepare from prototype to production
- Apple ingrained in us how design (impacts us) emotionally. Beyond the functionality, design should be front of mind
Dan Burton talked about the many uses of drones nowadays in mining, construction and real estate.
Adam Jonas of Morgan Stanley’s global auto research team looked into how automobiles could be both driven and autonomous, owned and shared. He sees the rise of ride-sharing of cars and the implications of this change.
The meetup was hosted by Matt Turck of First Mark Capital.