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Will Your Hardware Startup Make Money?

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Re: Will Your Hardware Startup Make Money?

#81

Post by jkestner »

officialchicken wrote: post #47
jkestner wrote: post #30

Earlier quoted context omitted.

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.

I know and you know that 2-piece molds are cheap around the world - but does the buyer/typical HN reader know the difference between, say, O-2 and 6063 when tooling? Can Protomold in Minneasota rotoshill my parts?

For most hardware startups their first time, who cares if they're using aluminum tooling? They're going to learn from their first iteration while staying solvent, and they'll never hit enough volume to worry about the tool life.

I don't know what rotoshilling is but manage to produce hardware anyway. A problem I see is that first-timers think they have to act like the big boys, and the big boys design complex assemblies and go to China. (I wouldn't unless you have the money to either make an expensive mistake, or to hire someone with experience.)

Re: Will Your Hardware Startup Make Money?

#83

Post by clesoine »

The first assumption "$30 to produce and you sell it for $99" is bad. That's not a high enough profit margin. Second, obviously don't hire people at full salary. Make something that people are excited to work on and give them equity to do it.

Re: Will Your Hardware Startup Make Money?

#84

Post by donkeyd »

clesoine wrote: post #83

The first assumption "$30 to produce and you sell it for $99" is bad. That's not a high enough profit margin. Second, obviously don't hire people at full salary. Make something that people are excited to work on and give them equity to do it.

Equity doesn't pay for a house or feed children. 90% of the time, they will never bring in any money.[1]

You won't always be able to hire whoever you want/need if you offer them equity. An inexperienced, younger person who's willing to work for equity might cause delays in delivering which will also cost money.

1. http://www.forbes.com/sites/neilpatel/2015/01/16/90-of-start...

Re: Will Your Hardware Startup Make Money?

#85

Post by clesoine »

donkeyd wrote: post #84
clesoine wrote: post #83

The first assumption "$30 to produce and you sell it for $99" is bad. That's not a high enough profit margin. Second, obviously don't hire people at full salary. Make something that people are excited to work on and give them equity to do it.

Equity doesn't pay for a house or feed children. 90% of the time, they will never bring in any money.[1] You won't always be able to hire whoever you want/need if you offer them equity. An inexperienced, younger person who's willing to work for equity might cause delays in delivering which will also cost money. 1. http://www.forbes.com/sites/neilpatel/2015/01/16/90-of-start...

True many people won't be able to work for equity full time. I've been lucky enough to find people willing to work with me for equity in their spare time. I'm not a connected or wealthy person. For many people like me it's the only option. I've been able to get people really excited about the product, but I also have had to accept that I have to be flexible with deadlines for people I'm not yet paying. Things take longer when you don't have money. Sometimes it's better to go slow.

Re: Will Your Hardware Startup Make Money?

#86

Post by smarinov »

Gibbon1 wrote: post #76
officialchicken wrote: post #54

Earlier quoted context omitted.

There's a big difference between 2000 and 5000 unit initial runs... why 5000?

For an initial production run there are a lot of fixed setup costs. Just from my gut feel 5000 units is just barely off the NRE (non recurring engineering cost) 'knee'. (And the manufacturing learning cost knee) Less than 5000 units the NRE costs start to dominate your out the door manufacturing price. So at 2000 units that might be 50% to 80% higher per unit than at 5000 units. Also people often forget about your su…

Thanks for complementing my answer. That's exactly what I had in mind, but I (still) can't type from mobile devices. :)
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