Sam Altman: Why Hardware Could Yield the Next $10B Startups
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Re: Sam Altman: Why Hardware Could Yield the Next $10B Startups
#2I am a broken record. So many brilliant people (RMS comes to mind) have fallen into the trap of thinking that hardware dev for general computing (not including rocketry and other such hardware) is so inexpensive that it's going to be super easy. But that's not the case [1] because hardware is a totally different beast than software. It won't be any more open, or any less expensive; at least, not for a long time.
Re: Sam Altman: Why Hardware Could Yield the Next $10B Startups
#3I am a broken record. So many brilliant people (RMS comes to mind) have fallen into the trap of thinking that hardware dev for general computing (not including rocketry and other such hardware) is so inexpensive that it's going to be super easy. But that's not the case [1] because hardware is a totally different beast than software. It won't be any more open, or any less expensive; at least, not for a long time. [1]:…
All this means is that they are going to need a lot more investment than a software company.
Re: Sam Altman: Why Hardware Could Yield the Next $10B Startups
#4$10B? That's awfully large, and closing the door on a lot of ideas. What if you just want to solve an important problem by selling a product profitably and don't want to grow to enormous size? I guess you look somewhere other than Y Combinator to get started.
Re: Sam Altman: Why Hardware Could Yield the Next $10B Startups
#5I am a broken record. So many brilliant people (RMS comes to mind) have fallen into the trap of thinking that hardware dev for general computing (not including rocketry and other such hardware) is so inexpensive that it's going to be super easy. But that's not the case [1] because hardware is a totally different beast than software. It won't be any more open, or any less expensive; at least, not for a long time. [1]:…
All this means is that they are going to need a lot more investment than a software company.
It's not just cost, it's also cycle time (as mentioned in the article.) To "do" hardware requires a company to be fully formed, with engineers of all kinds, before they can even really begin. They can get a minimal MVP using a Teensy board or something from mbed, but beyond that, for anything of any serious complexity, they have to build out a company.
Re: Sam Altman: Why Hardware Could Yield the Next $10B Startups
#6Is calculated valuation (not market cap!) the only metric relevant to a VC when talking about the size of a company?
What about MRR, YRR, profits, number of employees, revenue/profit per employee?
The only ones profiting from high valuations are VCs' themselves. Therefor one should be really skeptical when reading such articles.
Re: Sam Altman: Why Hardware Could Yield the Next $10B Startups
#7Is calculated valuation (not market cap!) the only metric relevant to a VC when talking about the size of a company? What about MRR, YRR, profits, number of employees, revenue/profit per employee? The only ones profiting from high valuations are VCs' themselves. Therefor one should be really skeptical when reading such articles.
Valuation is a simple metric that can be used to compare companies to each other, and is language that investors understand. It's also easy for founders and employees to follow. Many times companies trump up all other metrics when valuation suffers. But valuation isn't the only one.
When there is a high valuation (and ultimately market cap) the employees who own shares do well too.
Re: Sam Altman: Why Hardware Could Yield the Next $10B Startups
#8The reason that a larger number of hardware startups have recently appeared is quite simple - these are mostly actually software companies. Modern hardware that a startup might produce - IoT stuff, small computers etc - are essentially bare-minimum hardware wrappers around black-box chips.
The complexity of developing hardware is driven by the number of discrete components used. Every additional resistor is a resistor which can be fitted wrong. Every additional analogue circuit built using discrete components is a huge risk. To build cheap hardware, you avoid all that as much as possible by building PCBs which just wire up highly functional ICs.
In essence your hardware company then becomes a software company.
Re: Sam Altman: Why Hardware Could Yield the Next $10B Startups
#9The reason that a larger number of hardware startups have recently appeared is quite simple - these are mostly actually software companies. Modern hardware that a startup might produce - IoT stuff, small computers etc - are essentially bare-minimum hardware wrappers around black-box chips. The complexity of developing hardware is driven by the number of discrete components used. Every additional resistor is a resisto…
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Re: Sam Altman: Why Hardware Could Yield the Next $10B Startups
#10There are a few companies around that have the resources to copy the product of any moderately successful hardware startup. Apple, Samsung, Xitomi, Microsoft, and others can just straight up clone the clever parts of your hardware and wrap it in a package that you could never afford to compete with. That obviously doesn't mean you can't have any success - building a $hundreds-of-millions company is definitely possible, but taking it to the $billions will be a few orders of magnitude harder.
[1] Fitbit did movement tracking well, and now there's Microsoft Band, Nike Fuelband, etc. Pebble popularised smartwatches and now there's Moto 360 and Apple Watch. And so on. And Fitbit and Pebble weren't the first movers in their markets, there'll be smaller companies who failed by being too early.