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Will Your Hardware Startup Make Money?

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Re: Will Your Hardware Startup Make Money?

#21
post #16
post #3

An ee that can program and do some simple mechanical design can do all that engineering himself.

Maybe for a simple box, but for an injection moulded curved enclosure like the headphone example? If you didn't get that designed by someone who'd done it before you'd be taking a huge risk.

Many tooling shops will design the molds for you if you send them the original part drawings.

Re: Will Your Hardware Startup Make Money?

#23

Finding a talented EE for 75K/year seems like an impossible endeavor (if I read this correctly)

Does it cost $150k/yr to hire someone you're paying $75k/yr?

I've heard the fully-loaded cost of an employee is about 2x their salary, but I'm interested to know what the fully-loaded cost of a startup employee is. At the minimum, an employer would probably need to pay for health insurance, for example. Even if the benefits aren't very good, the cost is higher than someone's salary.

The article says the cost with overhead is 1.25x, but is that realistic?

Re: Will Your Hardware Startup Make Money?

#24
post #16
post #3

An ee that can program and do some simple mechanical design can do all that engineering himself.

Maybe for a simple box, but for an injection moulded curved enclosure like the headphone example? If you didn't get that designed by someone who'd done it before you'd be taking a huge risk.

> you'd be taking a huge risk.

The subject at hand is a hardware kickstarter. That bridge has long been crossed and burned. If you had all the talent and resources at hand already, you'd probably have funding too.

Re: Will Your Hardware Startup Make Money?

#25

This article made me think of Betteridge's law of headlines ( https://en.wikipedia.org/wiki/Betteridge%27s_law_of_headline... ): "Any headline that ends in a question mark can be answered by the word no." On a serious note, it surprised me that the BOM listed the shipping materials as being about as expensive as an assembled and flashed PCB. It's interesting that a cardboard box (which feels pedestrian) costs about a…

I haven't downvoted you but I think people are because they're tired of references to Betteridge's law of headlines in every single submission ending with a question mark.

I personally don't think this is a good case of Betteridge's by the way.

Re: Will Your Hardware Startup Make Money?

#26

Finding a talented EE for 75K/year seems like an impossible endeavor (if I read this correctly)

I know the EE space well in SF Bay Area (source - I was an internal recruiter for a hardware based startup). EE generally sits between 70-90k (but have seen people demand $120k), whereas software developers (especially mobile) is more like 90-120k (and for top talent sits around $150-200k). Depending on the financial health (i.e. funding) of the company, the full cost of an employee can range from 1.25x-1.80x their base salary. Hardware startups generally are stingy on their cost structure (and therefore probably skimp on benefits, bringing them down to 1.25x) because the cost structure is so high relative to software. For example, tooling costs could vary between $100-250k which is terribly difficult to estimate when you don't know the design or demand of your final product. The difference of $100k is...you guessed it...equivalent to a full additional human resource. Resource planning for hardware startups is scary.

I know for a fact finding talented EE people is possible at $75k, and that same level talent would most likely cost $100k for a software dev. Interestingly, there is a decent supply of EE talent out there, however due the varying degree of hardware applications finding the right person is more difficult than it seems on the surface.

Re: Will Your Hardware Startup Make Money?

#27
post #18

You're software start-up probably won't make you money either. At least for hardware, people don't have so many free options. The barriers to entry are also higher. Someone won't be developing hardware after a 12 week online course. To me it looks like a great time to build hardware. Kickstarter has really changed the game. These guys launched today, for example, and they'll probably be funded within 24 hours: https:…

New hardware is always easily more impressive to people that software too, and case in point that pressure pad looks amazing.

Re: Will Your Hardware Startup Make Money?

#28
Really good explanation of all the costs people don't think about. Don't be disheartened. Take those numbers and work them down. Get the overhead cost down by doing it yourself and using consultants. Get the manufacturing cost down through dogged engineering and adjusting your product spec. Write a product strategy that allows you to ramp up toward retail availability, even if it takes several products to get there.

Yes, you will likely fail if you've never done this before and you're trying to make a consumer-quality product. So get experience with an intermediate step or two.

Re: Will Your Hardware Startup Make Money?

#29
post #25

This article made me think of Betteridge's law of headlines ( https://en.wikipedia.org/wiki/Betteridge%27s_law_of_headline... ): "Any headline that ends in a question mark can be answered by the word no." On a serious note, it surprised me that the BOM listed the shipping materials as being about as expensive as an assembled and flashed PCB. It's interesting that a cardboard box (which feels pedestrian) costs about a…

I haven't downvoted you but I think people are because they're tired of references to Betteridge's law of headlines in every single submission ending with a question mark. I personally don't think this is a good case of Betteridge's by the way.

Thanks for the feedback -- I really appreciate it!

Re: Will Your Hardware Startup Make Money?

#30

Finding a talented EE for 75K/year seems like an impossible endeavor (if I read this correctly)

Finding an injection mold with tooling for 5K is also in the realm of impossible (and probably unusable if found), certainly for PCB enclosures.

For one part? You can get tooling for less than that at Protomold in Minneasota (the higher per-part cost is often worth the lessened risk if it's your first go-round), and easily in China.
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