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

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11–20 of 85 posts

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

#11
post #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.

If that's the plan, you don't need YC in to get started.

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

#12
@sama actually addressed HW on his recent AMA here [0] but as with software startups, you have to broaden your view of a hardware startup -- if you include ventures focused on fundamental semiconductor technology, both analog and digital; tools for design, prototyping and verification; semiconductor intellectual property as well as end products, there are quite a few potential $10B opportunities[1]. I believe @sama is considering the full range of investment options. Not all investments in this segment are capital intensive.

[0] https://news.ycombinator.com/item?id=9238839 [1] http://blog.semiconductors.org/blog/what-end-use-application...

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

#13
post #2

I 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]:…

It is becoming more open and less expensive.

The point is that the tools for prototyping, simulating, assembly, and manufacturing are becoming much cheaper. Along with the fact that people are sharing more.

I agree that there is no substitute for RTFM. That will always be required. Although, it's layers of abstraction in hardware too. Just like software libraries and frameworks: if someone has published a circuit that includes some subsystem I need, I can very likely ctl+v much of it into my own design without having a full understanding of it. Which is the entire reason why an industry around ICs can exist at all. It's just that more people are sharing now than ever before.

Pick and place machines are now becoming accessible at low cost (see Fire Pick Delta/LitePlacer). This addresses many of your assembly errors and mitigates costs.

I can't construct a reasonable argument against your points E, F, and G, which seem to all equate to "something unlucky and magical happened that broke your prototype".

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

#14
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 fire fighting system and the other a CNC machine. The complexity in these designs has very little to do with what chips you place on a board. For example, we expect to have to run three to six months of FEA simulations to validate aspects of the fire fighting system and then have to iterate through several design candidates over several months.

Beyond that there are regulatory issues that could up-end any design if you don't know what you are doing.

Packaging. I almost forgot packaging. Man, that can consume months of testing. You can design a beautiful product only to have it damaged during transportation due to incorrect packaging.

Oh, yeah, you also have to have good software.

Nah, harware isn't just about chips on a board.

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

#15
post #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.

The point of the lower limit on the value of the company is not based on what might turn out to be a 1 billion dollar company. There are many more ideas in hardware than there are in software, purely based upon how accessible it seems. If you are solving anything close to an important problem, you will eventually reach a $10B valuation. A software company can grow to a reasonable size that is nowhere close, but hardware companies don't follow the same path.

Solving a problem with hardware either solves a problem or replaces the thing that fixed the problem before. Solving a problem with software is usually (if not always) making computers better or easier to use. The underlying difference is how clear the change is in the user's life.

The much larger cost to develop and produce hardware like some in the comments have been discussing leads us to value hardware much more significantly than software. It might be due to iTunes, Java, and Windows update making people mad when they waste their time, or have their computer shut down on them in the middle of their work, but there is a significant bias.

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

#16
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 another copy of the product will eat a lot more of the profits. Essentially, software is cheaper because you can make billions of products for essentially the same cost as thousands with respect to hardware.

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

#17
post #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.

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

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

#18
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…

Bingo! Reliability, safety, malfunctions in batches of screws, etc. Hardware is more complicated because more is going on. With software: Oops! Gotta restart the phone, shucks! With hardware: Crap, dropped it, gotta buy a new one.

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

#19
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…

more on the CNC machine?

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

#20
post #16
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…

Not to mention you can scale up nearly instantaneously, as opposed to hardware manufacturing cycles which months at best.
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