Panel: Navigating the Stages of Building a Hardware Company

On January 30th, 2019, an impressive concentration of hardware pros could be found at Synapse Product Development‘s downtown Seattle office. Usually, HW people are in the minority at tech events, but not this time. What was the buzz about? Dragon Innovation was there to sponsor a HW startup panel which also included representation from Hackster, Glowforge, and Root Ventures.

Also, there was beer on tap. So, that’s something to be buzzed about. Here’s photographic proof of how excited everyone was:

Watch Video of the Talk

There were lots of valuable tips and trends the panel pros shared during the discussion. You can watch the highlights in the video below:

Who Was Speaking? Scott N. Miller

Scott N. Miller, CEO of Dragon Innovation (an Avnet company) moderated the panel. He has plenty of getting-hands-dirty experience as an early iRobot engineer. His academic background is in mechanical engineering and he also tools around with robots . . . obviously . . . Miller also has a keen grasp on the business and longer-term development perspective. He puts all that to use guiding HW startups at Dragon, and he made for the perfect moderator of this diverse panel.

Heather Brundage

Heather Brundage was the Synapse representation on the panel. Part of her background includes working on submersible robots. She’s now an account manager at Synapse, helping companies bring their hardware babies to life. Like Miller, Brundage brought a valuable viewpoint with her combined perspectives as an engineer plus businessy business person.

Adam Benzion

Adam Benzion is cofounder and CEO of Hackster. Before Hackster, he gained experience successfully founding and then selling a hardware startup. Benzion claims he is more businessy business person than engineer, and simply knew how to ask the right questions and get help from all the necessary specialists when he created his mobile power management gizmo. In any case, that gizmo got his name on 3 patents and led to many more endeavors in the HW space.

Chrissy Meyer

Chrissy Meyer made for another double threat as both experienced electrical engineer and partner at Root Ventures. In her own words, Root Ventures likes to fund very early stage startups solving extremely technically difficult problems. (Why tho? Do they like migraines? Because that’s how we get migraines.) Well, the rougher the mountain terrain, the sharper the Sherpa. Meyer had some great insights with over half Root’s portfolio companies involving hardware in some fashion.

Renuka Ayer

Renuka Ayer, CFO of Glowforge, queen of money management, rounded out the panel’s knowledge. Prior to Glowforge, she helped keep companies making very, very large hardware (e.g. automotive and aerospace) running smoothly financially. Having a background in automotive myself, I know how difficult that can be. Big widgets can involve some of the biggest financial mistakes if you’re not careful (or even if you are). At Glowforge, she sharpened her skills on the tougher task of keeping a budding hardware company running.

Some Tips From the Pros

Adam Benzion (Hackster):

1. Go to HW MeetUp-type events (like this very panel) to meet those with the skill sets you need. Hardware requires many more disciplines to design a system than SW dev does. You’re also not going to find all the HW skill sets you need in just a couple people — you’ll need several experts. So, get to networking! That’s how Benzion, himself, succeeded.
2. For specific questions, reach out to online forums. If you’re on Hackster.io, oftentimes, you can find an example project that involved the thing you’re trying to figure out. Reach out to person who posted and ask how they did it! You might have luck on other platforms, too, like Stack Overflow, Reddit, Github, etc.

Heather Brundage (Synapse):

1. Get feedback from engineers understanding high-volume design requirements early on. And then expect to potentially rethink your entire design based on what they tell you. Don’t ask how to scale your 3D-printed, duct-taped, wire hanger design, ask them how they would build your gadget. Your prototype is best thought of as a way to explain your concept to experts who can build it better.
2. And advice 1a.) be honest about what you don’t know. Get help for your blind-spots.
3. Don’t shop for service partners like you did scrapping for parts for your proof-of-concept. Penny pinching is really great to start with, but when you’re thinking about scale, saving on up-front dollar amounts might cost you in the long run. Look for engineering and vendor partners who a.) know their stuff, and b.) can get you to high volume smoothly.
4. Build relationships with your distributors and retailers. If your sales aren’t 100% direct to customer, keep in close contact with your distribution chain so you know if you’re manufacturing enough or too little.
5. Communicate your priorities to your vendors in terms of “Good/Fast/Cheap Pick Any 2”. Expecting all 3 will get you nowhere, because it’s not possible. If you don’t make your priorities clear, they will be decided for you.

Chrissy Meyer (Root Ventures):

1. Engage your supply chain early on. Even if you’re not ready to jump into large scale production, do a sanity check with your suppliers as soon as you can. Get feedback on how manufacturable your idea is and broad guidelines as soon as possible.
2. “Do not take a dollar of venture money if you don’t have to.” (Wait, what?) Keep in mind, venture capitalists expect 1/2 their porfolio companies will fail. VC’s are motivated to push companies to grow big quickly, but that’s not necessarily based on the best interest of the startup.
3. Build relationship capital with your supply chain. When you’re in a bind and need a favor, you want your supplier to pick up the phone. Relationship capital is often overlooked because it’s an intangible, but it can make or break your startup.
4. Experience is vital for HW startups while not critically important in SW startups. Root Ventures has a saying, “our portfolio companies have more CEO’s that are PhD’s than MBA’s”. They look for deep technical expertise in the founders they give money to. Startups with founders who successfully shipped a physical product before are also favored.

Renuka Ayer, Glowforge

1. Figure out how much money you want and need financially — both personally and professionally.
2. If you crowdfund your HW startup, a fiscally responsible route forward is to find alternative funding for day-to-day expenses. That’s what Glowforge did. They intended their Kickstarter money to go directly to the product from the start.
3. Find credible engineering and manufacturing partners, even if it costs more. The cost of goods sold might start at almost 100% of revenue, but then you work to bring it down to 30-40% as you go.

What Trends Do They See?

Heather Brundage (Synapse):

Voice user interfaces are not just being embedded in more and more hardware, but consumers are beginning to expect it.

Chrissy Meyer (Root Ventures):

Huge increases have happened in sensing technology with all the money dumped into autonomous vehicle development. Root Ventures is seeing this tech trickle down into other industries like manufacturing and logistics.

Adam Benzion (Hackster):

1. Machine learning and AI is exploding into all sorts of tech, especially on Hackster.
2. Interesting companies are emerging using blockchain not in the cryptocurrency arena. These include HW and SW products to do things like: asset management using smart contracts and creating a more secure and big-brotherless internet.

Now Go Network!

Hopefully the panelists impressed upon you the importance of networking with other hardware enginerds. I further hope we’ll see more events posted to Dragon Innovation’s Eventbrite page soon!

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