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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

#51

Post by silverpikezero »

jacquesm wrote: post #25
striking wrote: 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]:…

FPGAs have opened up a lot of options that previously would have been absolutely un-imaginable without access to significant capital. You can now prototype fairly complex designs for relatively little money.

FPGAs may have opened up options for prototyping, yes. However they have done nothing whatsoever for production. It's economically infeasible to productize and FPGA based product since the only ones worth using are all ~$10k per unit, with price breaks only available to 1M unit quantities. It is also almost entirely impossible to commercialize any design with an ASIC, since it takes a minimum of $10-20M to design it (and pay the foundry). Semiconductor startups have been dying a slow death since the 90s, and will continue to disappear completely from the landscape, suffering a "death by NRE."

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

#52

Post by rasz_pl »

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.

No its not. Most components are practically free #1, placing them is also very cheap #2. Hardware is not expensive because of _hardware_ costs. Its expensive because of engineering, prototyping, and latency of development.

/1 single/two digit cents. Except for specialized parts. For example hiend precision resistors, supercaps, weird connectors, non commodity microcontrollers, fpgas, fast ADCs, or precision opamps/voltage references. Nevertheless you will largely use jelly bean components with only few expensive parts on the board.

/2 again except for the very hiend small footprint ones. Super small components targeting lightweight products (cellphones, ultra light laptops) require professional millions of dollars machines and experience. Here is a story of one company almost tanking because CEO is a Jobs wannabe and decided to make his product "sexy" using same components and techniques as Macbooks:

http://www.theamphour.com/237-an-interview-with-joe-and-mark...

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

#53

Post by jacquesm »

silverpikezero wrote: post #51
jacquesm wrote: post #25

Earlier quoted context omitted.

FPGAs have opened up a lot of options that previously would have been absolutely un-imaginable without access to significant capital. You can now prototype fairly complex designs for relatively little money.

FPGAs may have opened up options for prototyping, yes. However they have done nothing whatsoever for production. It's economically infeasible to productize and FPGA based product since the only ones worth using are all ~$10k per unit, with price breaks only available to 1M unit quantities. It is also almost entirely impossible to commercialize any design with an ASIC, since it takes a minimum of $10-20M to design it…

Sure, but in the past you would not have gotten to 'demoable product' which is a key post to pass on the road to serious funding in the hardware arena.

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

#54

Post by clarky07 »

exelius wrote: post #47
thinkmassive wrote: post #46

Earlier quoted context omitted.

Nest was acquired for $3.2 billion. The thermostat measures home activity and controls your HVAC. The reason it's highly valued is because of the aggregate of data from all thermostats, which they use to optimize the environment for each customer. Nest is the beginning of home automation for the masses, a market easily greater than $10B.

A/C is one of the few use cases where there is a need that was addressed. A/C accounts for the vast majority of energy usage in most homes, so optimizing it can provide real cost reduction. It's also really easy to install since there was already a single control point for the A/C in the form of a thermostat. Just look at Nest Protect if you want an example of an IoT product without a customer need; they add cost and…

This comes off as the famous (apocryphal) patent quote from around 1900. "Everything that can be invented has been invented"

I think a lot of people (myself included) think there are lots of potential benefits to a smart house. I don't think we're there yet. Most of what exists now isn't very user friendly, and most don't have easy setups so the things that are out now are unlikely to have huge hockey stick growth.

However, that doesn't mean their are no benefits, and it doesn't mean the industry as a whole won't see large growth in the future. Google and Apple are both investing somewhat heavily in the area, along with a huge host of startups. Clearly there are people who think there are possibilities in the space.

As a small list of examples for myself: 1. nest is obvious

2. locks are key feature for me. if i can have my door unlock when i get to it with my phone or watch or whatever that is a win.

2.b. remotely unlocking things could also be nice, if i'm meeting someone and they get there just ahead of me. Alternately giving friends temporary access if they are staying for a weekend.

3. garage doors, see 2 and 2b.

4. remote control blinds (perhaps a bit more than is necessary, but i could see it being nice in my bedroom

5. lights, having them come on in the room i'm coming into with my auto-unlocking door, so i don't have to fumble with them when my hands are full of groceries.

without trying, off the top of my head i came up with 5 things i'd like to have in the next house i build. I suspect Apple and Google and the startups working the area for a few years might come up with 1 or two more that turn out to be really awesome.

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

#55

Post by claar »

abiekatz wrote: post #48

I like Sam's line: "I always tell my partners that our job is to fund all the companies we can that can be worth $10 billion or more. That’s such a difficult constraint we can’t have any other constraints."

They should put that statement prominently in the YC application materials.

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

#56

Post by exelius »

clarky07 wrote: post #54
exelius wrote: post #47

Earlier quoted context omitted.

A/C is one of the few use cases where there is a need that was addressed. A/C accounts for the vast majority of energy usage in most homes, so optimizing it can provide real cost reduction. It's also really easy to install since there was already a single control point for the A/C in the form of a thermostat. Just look at Nest Protect if you want an example of an IoT product without a customer need; they add cost and…

This comes off as the famous (apocryphal) patent quote from around 1900. "Everything that can be invented has been invented" I think a lot of people (myself included) think there are lots of potential benefits to a smart house. I don't think we're there yet. Most of what exists now isn't very user friendly, and most don't have easy setups so the things that are out now are unlikely to have huge hockey stick growth. H…

It's not that there are no benefits, but there's not a driving need that these products you describe solve that makes up for the additional cost and complexity that implementing them provides. What's the value proposition? If it's "just cool", then there probably isn't one.

1) There are real benefits with Nest since it can reduce energy consumption. Also, Nest isn't really a whole lot more expensive than other thermostats, and there's very little additional complexity.

2) There are lots of problems with locks: you're taking a $15 item, adding some wireless gear and servos to it, and adding significant installation cost and complexity (since you have to somehow power the thing). The alternative is you spend a few bucks getting keys cut to give your friends temporary access. Also there are security concerns here.

3) This one is pretty low effort (since there is already a lot of radio equipment in a garage door opener) but also pretty low benefit: 90% of the time you open the garage door you're in your car, where the opener is within easy reach. I don't think the value of this feature is very high.

4) They have these today. Less useful than you might think, and like anything mechanical, they break. Also, since blinds are typically not powered, this adds cost and complexity since you have to run electricity to your windows. These are a niche product in my mind; if you couldn't justify them 10 years ago, you won't when they're connected to an IoT platform either.

5) While cool, it's still hard to justify the additional cost and complexity. There's not really a driving need other than "oh that's cool". Until the cost comes down significantly, it's still a niche product for people who want to geek out their home. At today's prices, you're looking at $40 for a single light switch compared to $5 for a non-connected switch, plus you have to configure it to do what you want.

I'm all for building cool new products, but consumers want products that reduce cost and complexity, not ones that increase them.

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

#57

Post by ilaksh »

Im looking forward to tabletop micro-foundries that can create ICs. Its a ways off and I'm sure people will say it is impossible, but it will happen eventually and then it will be very obvious how similar software and hardware are.

I think you have to anticipate a gradual movement towards total programabiltiy of reality.

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

#58

Post by danieltillett »

claar wrote: post #55
abiekatz wrote: post #48

I like Sam's line: "I always tell my partners that our job is to fund all the companies we can that can be worth $10 billion or more. That’s such a difficult constraint we can’t have any other constraints."

They should put that statement prominently in the YC application materials.

I think this might be a statement more honoured in the breech after looking at the YC15 alumni.

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

#59

Post by terravion »

onion2k wrote: post #10

There 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 possibl…

This maybe true of consumer product companies, but a lot of "hardware" companies aren't either consumer or product companies, they are service companies. For example, SpaceX builds neat hardware, but sells launch services. They deliver a complete service with their own hardware + software + services.

This is becoming more and more common model in many industries, and is a much harder business to copy.

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

#60

Post by ausjke »

The softwarization of hardware is the key trend, agreed.

The software-defined radio/network/storage etc are happening quickly now.

For the low-end hardware, e.g. the IoT field, the wearable market etc, the software is also key, for instance, they need the cloud platform to be effective and useful these days.

We just need more workshop/factories to turn the (low quantity) hardware-design into real products with high quality, which is still very challenging and a bottleneck.

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