Finding a talented EE for 75K/year seems like an impossible endeavor (if I read this correctly)
It isn't, but depending on how involved the design is, hiring a consulting engineer can save you money.
Will Your Hardware Startup Make Money?
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Re: Will Your Hardware Startup Make Money?
#32Finding 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 b…
But if your an EE and a software dev can you get 75 + 100 or $175K ? :-)
One of the best advice my Dad ever gave me when I was thinking about majors in college was that you could program computers with an EE or a CS degree but without an EE degree they probably wouldn't let you build/design them. The math and physics were, to my taste, more difficult but I got tremendous satisfaction in being able to understand a computer from the PN junction of its transistors, to the process model of its operating system.
Re: Will Your Hardware Startup Make Money?
#33One thing those tables don't account for is paying for your own (and other full-time) employee salaries post-production. Someone has to keep working after the initial production (and future) run is complete. You don't just sell your hardware, make your profit and leave :)
To sell 50k units or more you will need a few people to handle your store, marketing and support. Also will you continue to sell the same model for years or develop new versions? Lots of other costs to keep a business running should be included in your business financials.
A 3x multiplier is slightly low for CPGs, I'd go with 4-5x depending on the product and market to give yourself some breathing room. Things like sales, resellers and coupons all eat into profit.
Re: Will Your Hardware Startup Make Money?
#34This 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…
A lot of it comes down to automation and mass. Chips are made by the millions and the material costs are minimal. Your box is made by the thousands and is a relative pain to handle.
Re: Will Your Hardware Startup Make Money?
#35It is certainly true that you can spend this amount of money on a product and not make money on the first 5000 product run.
But it is certainly possible to make money on such a first batch: Why do you need inhouse EE, ME, DE en Embedded Engeneer for a headphone. Many of these functions can be done by a small design firm or freelancer that you hire for a much smaller fee. In addition, these people do this all the time for different companies and have a huge experience this way and good contats (you can also go with teh bigger firms, but then you probably need the same amount of money).
Re: Will Your Hardware Startup Make Money?
#36Another hidden cost here (particularly if your main sales channel is direct to consumer) is shrinkage/fraud.
Consumer hardware is easy to purchase with a stolen credit card and fence on eBay.
Re: Will Your Hardware Startup Make Money?
#37You'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:…
I tried to launch a hardware start-up on Kickstarter earlier this year (http://www.pcgamer.com/introducing-gameref-the-anti-cheat-ha...). Unfortunately, it didn't get funded.
I might just suck at PR, but I don't think The Sensel Morph is really representative of your run-of-the-mill funding experience.
Re: Will Your Hardware Startup Make Money?
#38Finding a talented EE for 75K/year seems like an impossible endeavor (if I read this correctly)
Not at all, out of the coastal areas (and maybe even in the coastal areas). It's a harder course than software, but pays worse.
Re: Will Your Hardware Startup Make Money?
#39You'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:…
eventually somebody like these guys will come into play too:
Re: Will Your Hardware Startup Make Money?
#40Finding 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 ove…
My simulated metric was something like %133, which another person on payroll said that was pretty accurate. So there isn't hidden information when calculating this stuff.
Think of:
- Health Insurances ($500/mo)?
- The other half of payroll taxes (~%8)
- Food benefits ($10/day in snacks, $15/meal served)
- Office rental & upkeep costs
- 401k program costs (yes, they charge employers for this)
- HR Costs