The Hardware Startup

Preface

This is a book about how to build a hardware business.

The goal of this book is to provide a roadmap for makers and hardware entrepreneurs who are looking to turn their product ideas into full-fledged businesses. Building a software startup has been largely templatized over the last five years. Free tools enable entrepreneurs to rapidly build, collaborate, deploy, and pivot. There is an extensive network of mentors and thought-leader bloggers sharing advice rooted in their own experience. There are bestselling books devoted to best practices, such as Do More Faster, The Lean Startup, and From Concept to Consumer. There are innumerable incubators and investors rounding out the ecosystem. It is now comparatively easy and inexpensive to launch a software startup.

Hardware is just starting to develop this type of ecosystem. Makers have been around for decades, but hardware startups have only recently begun to enjoy the type of attention and funding common among their software counterparts. Significant changes have taken place in the last two years. The decreasing cost of prototyping is lowering the barriers to entry and making it more feasible to develop a physical product within economic constraints. Kickstarter and Indiegogo have created platforms that enable fundraising for small-batch manufacturing and facilitate a community of early adopters. The number of hardware startups is on the rise. Venture capitalists who were previously uninterested in non-software investment are sitting up and taking notice. But the iconic how-to guide—the Do More Faster or Lean Startup of hardware—hasn’t been written yet. Our goal is to be that guide.

Who This Book Is For

This book is meant for hobbyists and makers who are considering turning their idea or side project into something more.

It’s for maker pros who have built a successful product and are interested in turning it into a company.

It’s for the curious: software engineers considering switching from bits to atoms, or investors who want to learn more about this new ecosystem.

Basically, it’s for anyone interested in understanding the challenges unique to founding and launching a hardware startup…and overcoming them.

How to Use This Book

The book is organized into the following chapters:

Chapter 1: The Hardware Startup Landscape

The first chapter introduces the state of the market for hardware startups, dividing it into four main product categories: connected devices, wearables and personal sensors, robotics, and designed products. It briefly examines the forces that have led to the recent growth of the ecosystem, including the history of the maker movement.

Chapter 2: Idea Validation and Community Engagement

This chapter begins by emphasizing the importance of validating the idea for your company through conversations with distinct groups of people who will be critical to your success as a company. It then introduces the topics of community building and customer development, discussing the different relationships that founders will form to help them along the path to building a company. These include the relationship between cofounders, how to choose advisors, and how to reach potential early adopters.

Chapter 3: Knowing Your Market

This chapter covers techniques for market, consumer, and competitive-landscape research. It aims to help founders better understand where their products fit into a market ecosystem, which is important for idea validation, early brand positioning, and future fundraising. It also works through the basics of customer-development interviews with an eye toward lean product development.

Chapter 4: Branding

This introduction to brand development for hardware startups covers the basics of brand marketing—including brand identity, mission, and personality—and the development of brand assets. It will help founders craft their company’s cohesive brand identity, which is a critical component of success for any physical product.

Chapter 5: Prototyping

This chapter is a guide for getting from design to physical thing. Topics include types of prototypes (including works-like and looks-like prototyping), building your engineering and design team, outsourcing versus insourcing, chip selection, software, and some common terminology specific to the hardware space.

Chapter 6: Manufacturing

This chapter discusses the common processes and pitfalls startups face when moving to manufacturing. It covers when and how to choose a factory and supply chain, where to manufacture, testing and certification, and packaging.

Chapter 7: Acceleration

This chapter presents a survey of the hardware-startup incubator and accelerator ecosystem. It covers the top programs supporting entrepreneurs today, with an eye toward differentiating their offerings and helping interested founders select the program that’s right for them.

Chapter 8: Crowdfunding

Crowdfunding platforms have made a dramatic impact on the ability of hardware-startup founders to take an idea to market. This chapter covers best practices for running a crowdfunding campaign from start to finish: choosing perks, developing a pricing strategy, driving traffic, building community, and more.

Chapter 9: Fundraising

This chapter helps founders navigate the fundraising ecosystem. It examines the players who control capital—including angels, venture capitalists, and strategic investors—and the pros and cons of taking funding from each. It provides guidance on the strategies most likely to result in a successful fundraise, including when and how to reach out, how to create an ideal pitch deck, and how to structure a round.

Chapter 10: Going to Market

This chapter begins with a survey of business models and pricing strategies. It introduces logistics and fulfillment best practices and evaluates distribution channels, with special attention paid to margin and marketing considerations. It also covers the metrics that matter when evaluating the growth of a business. The emphasis throughout is on helping founders make the transition from product to company.

Chapter 11: Legal

Hardware-startup founders face unique legal considerations when building their products. They must navigate potential intellectual property issues, liability concerns, certifications, regulations, tariffs, supplier agreements, and more. This chapter provides an overview of the pitfalls to watch out for and the type of legal support a founder will need at various stages of product development.

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Acknowledgments

We would like to thank Chris Anderson, David Austin, Catherine Baecker, Marc Barros, Ayah Bdeir, David Bill, Chris Bruce, Jon Bruner, Jon Carver, Liam Casey, Claudia Ceniceros, Ben Corrado, Liza Daly, John Dimatos, Gene and Ursula DiResta, Dale Dougherty, Kate Drane, Ron Evans, Josh Fisher, Ash Fontana, Chris and Camille Forrest, Dan Goldwater, Marcus Gosling, Kaethe Henning, Justin Hileman, Xander Hileman, bunnie Huang, Firen Jones, Tom Kitt, Erik Klein, David Lang, Brian Lee, Jason Lemelson, David Lyons, Tim Mason, Christina Mercando, Eric Migicovsky, Sean Murphy, Tim O’Reilly, David Pendergast, Monisha Perkash, Ryan Petersen, Daniel Roberts, Jesse Robbins, Brian Sawyer, Jeff Schox, Jinal Shah, Dan Shapiro, Dave Shapiro, Andy Sherman, Eric Stutzenberger, Zach Supalla, Gnat Torkington, Jesse Vincent, John Vinyard, John W. Vinyard, Kathy Vinyard, Lizzie Vinyard Boyle, Sonny Vu, Saroya Whatley, and Kahlil Gabriel Williams.