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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

#31

Post by ubasu »

rebootthesystem wrote: post #14
leoedin wrote: post #8

The 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…

> The complexity of developing hardware is driven by the number of discrete components used Sorry, that's not even close to being true. Interesting how on HN "hardware" seems to mean "a board with chips". You know, like a Raspberri Pi. That is one type of hardware but not, I dare say, where the $10B (and maybe even $10M) startups would exist. We are developing two hardware products right now. One is an innovative fir…

Just curious: what software do you use for you FEA simulations?

Re: Sam Altman: Why Hardware Could Yield the Next $10B Startups

#32

Post by acgourley »

jacquesm wrote: post #24
toong wrote: post #17

Earlier quoted context omitted.

If you're outlook is a $10M or even $100M valuation, VCs and even angels would not interested.

Plenty of funds would be happy with exits in the $100M range. The billion dollar exits or IPOs are the exception, not the rule and a $50M exit is a damn sight better than a failure. Of course it all depends on when they joined that particular party, the later in the game the higher the exit would have to be to make those investors happy.

Certainly they would pop a bottle for that 100m exit when it happens, but at the funding stage there is a case to be made for chasing deals in markets large enough that a 10B exit is at least possible. Because 10B might happen and that does a lot to the EV calculations. Even if it doesn't, some might think that startup has a better chance for reaching the 100M mark sooner.

Re: Sam Altman: Why Hardware Could Yield the Next $10B Startups

#33

Post by TeMPOraL »

jacquesm wrote: post #23
rebootthesystem wrote: post #14

Earlier quoted context omitted.

> The complexity of developing hardware is driven by the number of discrete components used Sorry, that's not even close to being true. Interesting how on HN "hardware" seems to mean "a board with chips". You know, like a Raspberri Pi. That is one type of hardware but not, I dare say, where the $10B (and maybe even $10M) startups would exist. We are developing two hardware products right now. One is an innovative fir…

> One is an innovative fire fighting system and the other a CNC machine. What kind of company developes both fire fighting machines and CNC machines? Are you employed by a prototyping company or something like that? The only other set-up I can think of where such a combination could occur is something like Mitsubishi, very interesting!

> What kind of company developes both fire fighting machines and CNC machines?

> Are you employed by a prototyping company or something like that?

Yeah. Prototyping company immediately came to my mind as well. It could also be a private R&D institute that does projects on (e.g. EU) grants. I have a friend working in the second, and apart from doing various weird hardware for EU money, they do some batshit crazy stuff when they're bored at work. There's a guy there that routinely does things like driving around the parking lot with a pulsejet-powered warehouse trolley, drawing things on concrete with a DIY flamethrower or spending few months of free time on doing a beautiful, steampunk-style Geiger counter/night lamp.

Re: Sam Altman: Why Hardware Could Yield the Next $10B Startups

#34

Post by Taniwha »

Balgair wrote: post #16
leoedin wrote: post #8

The 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…

To expound on this, look at profit of product negating development. For software, it is nearly full profit. I sell you my app for $4. The app cost me $0.04 to sell. Each additional copy of the app costs almost nothing. Essentially, just Crtl-C, Ctrl-V. Yes, there are hosting costs, Apple's marketplace for apps costs, etc. But hardware has very similar costs too; they cancel out. For a hardware product, to make anothe…

you miss the more important issue - cash-flow - with software you need almost no cash-flow to scale to infinity, with hardware you have to commit money to warehoused hardware - using income from your sales to pay for manufacturing causes a feedback term to kick in to how fast you can scale your market, even if the demand is out of site you can't meet it (the alternative is paying the bank interest)

Re: Sam Altman: Why Hardware Could Yield the Next $10B Startups

#35

Post by danvoell »

Balgair wrote: post #16
leoedin wrote: post #8

The 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…

To expound on this, look at profit of product negating development. For software, it is nearly full profit. I sell you my app for $4. The app cost me $0.04 to sell. Each additional copy of the app costs almost nothing. Essentially, just Crtl-C, Ctrl-V. Yes, there are hosting costs, Apple's marketplace for apps costs, etc. But hardware has very similar costs too; they cancel out. For a hardware product, to make anothe…

You need to differentiate marketing costs and COGS. If you are trying to sell a new CRM, it costs a hell of a lot more in marketing than $.04 to sell. There is so much competition to sell digital products and software online. Many physical products don't have as much marketing competition. While physical product companies can take longer to grow, the path to $10B can be with less competition while you establish barriers to entry for copycats.

Re: Sam Altman: Why Hardware Could Yield the Next $10B Startups

#36

Post by rebootthesystem »

jkestner wrote: post #26
rebootthesystem wrote: post #14

Earlier quoted context omitted.

> The complexity of developing hardware is driven by the number of discrete components used Sorry, that's not even close to being true. Interesting how on HN "hardware" seems to mean "a board with chips". You know, like a Raspberri Pi. That is one type of hardware but not, I dare say, where the $10B (and maybe even $10M) startups would exist. We are developing two hardware products right now. One is an innovative fir…

Packaging is best thought of as another hardware product itself. Form and function have to be design-gineered, and materials and parts and assembly have to be corralled into a schedule and budget. The idea that software is eating hardware, while true on some level for some class of products, is also what leads to lots of startups with solid software backgrounds offering a beautifully designed product that suffers fro…

Right, I didn't mention such things as thermal and environmental testing. How is your widget going to work in an Icelandic winter or at the peak of summer in Death Valley? How about dirt, grime, dust, vibration and humidity, rapid cycling, cycles per day, drop, impact?

The list is huge and highly dependent on the product being designed.

About ten years ago a company owned by a friend of mine shipped a machine worth $800,000 to Japan. The packaging/crate was not designed correctly. The machine suffered irreparable damage during transportation. No, there was no penetration of the crate. It was purely inertial loads on components that were not supported for transportation. They bent. It was probably a combination of forklifts, trucking, port container handling, etc. The machine was a total loss. The insurance company was not happy.

Re: Sam Altman: Why Hardware Could Yield the Next $10B Startups

#37

Post by rebootthesystem »

jacquesm wrote: post #23
rebootthesystem wrote: post #14

Earlier quoted context omitted.

> The complexity of developing hardware is driven by the number of discrete components used Sorry, that's not even close to being true. Interesting how on HN "hardware" seems to mean "a board with chips". You know, like a Raspberri Pi. That is one type of hardware but not, I dare say, where the $10B (and maybe even $10M) startups would exist. We are developing two hardware products right now. One is an innovative fir…

> One is an innovative fire fighting system and the other a CNC machine. What kind of company developes both fire fighting machines and CNC machines? Are you employed by a prototyping company or something like that? The only other set-up I can think of where such a combination could occur is something like Mitsubishi, very interesting!

I own the company. We do both product development for third parties and our own products. Software, electronics, mechanical, anything. From LED's to robotics. We are also developing a neat portable barbecue system that might be launched via Kickstarter.

Re: Sam Altman: Why Hardware Could Yield the Next $10B Startups

#38

Post by rebootthesystem »

ubasu wrote: post #31
rebootthesystem wrote: post #14

Earlier quoted context omitted.

> The complexity of developing hardware is driven by the number of discrete components used Sorry, that's not even close to being true. Interesting how on HN "hardware" seems to mean "a board with chips". You know, like a Raspberri Pi. That is one type of hardware but not, I dare say, where the $10B (and maybe even $10M) startups would exist. We are developing two hardware products right now. One is an innovative fir…

Just curious: what software do you use for you FEA simulations?

Mostly Solidworks simulation tools. Flow and mechanical.

Re: Sam Altman: Why Hardware Could Yield the Next $10B Startups

#39

Post by jacquesm »

rebootthesystem wrote: post #37
jacquesm wrote: post #23

Earlier quoted context omitted.

> One is an innovative fire fighting system and the other a CNC machine. What kind of company developes both fire fighting machines and CNC machines? Are you employed by a prototyping company or something like that? The only other set-up I can think of where such a combination could occur is something like Mitsubishi, very interesting!

I own the company. We do both product development for third parties and our own products. Software, electronics, mechanical, anything. From LED's to robotics. We are also developing a neat portable barbecue system that might be launched via Kickstarter.

Very cool! That's just about as good as it gets.

Re: Sam Altman: Why Hardware Could Yield the Next $10B Startups

#40

Post by rebootthesystem »

joshu wrote: post #19
rebootthesystem wrote: post #14

Earlier quoted context omitted.

> The complexity of developing hardware is driven by the number of discrete components used Sorry, that's not even close to being true. Interesting how on HN "hardware" seems to mean "a board with chips". You know, like a Raspberri Pi. That is one type of hardware but not, I dare say, where the $10B (and maybe even $10M) startups would exist. We are developing two hardware products right now. One is an innovative fir…

more on the CNC machine?

Hmmm. What can I say?

Very beefy modular tabletop gantry; AC servos; Automatic Tool Changer; probably 3HP CAT 30 or 40 spindle; coolant; Rigid tapping; weight in the 500 to 1000 lbs range.

No, it's not your typical DIY 80-20 t-slot machine on eBay. This is intended as a serious step up from something like a Tormach without having to spend $100K+.

No ETA yet.

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