HAX goes to Stanford to chat about Lean Hardware - new materials inside!

1. HAX
AT
STANFORD
CYRIL EBERSWEILER @HAXLR8R
BENJAMIN JOFFE
@BENJAMINJOFFE
BUILDING
LEAN
HARDWARE
STARTUPS
Wearable 10x
PhD Patents
Stealth
Accelero
-meter
Investors Prototype
3D printed
Algorithms
PCB Shipping
Beta test Off the shelf

2. LEAN HARDWARE PHILOSOPHY
1. Validate problem vs. Assume
2. Partner w/ factories vs. Abdicate
3. Fast to market vs. Long cycles
4. Capital effective vs. Capital intensive
5. User backed vs. Venture backed
6. Sustainable vs. Growth at a loss

3. LEAN HARDWARE PHILOSOPHY
1. Validate problem vs. Assume
2. Partner w/ factories vs. Abdicate
3. Fast to market vs. Long cycles
4. Capital effective vs. Capital intensive
5. User backed vs. Venture backed
6. Sustainable vs. Growth at a loss

4. WHY CHINA
MAKES SENSE
FOR STARTUPS

5. THE COST OF NOT BEING IN CHINA
• “You have to consider the
cost of not being in China.”
• “If you benefit from
economies of scale, China
will make sense, so better to
start early and learn
quickly.”
• HAX Comment: if you start
elsewhere, consider the
switching costs once you
reach thousands of units.
Will Hart
Chief of Staff
Spark.io
(HAX 2)

6. WHAT ABOUT MY IP?
• “Protection of IP takes the
form of complex
manufacturing or product,
community, and cloud
based services that are
hard to reproduce outside of
the hardware itself.”
• HAX Comment: you might
find the hardware you need
for your service in China’s
thousands of factories. Both
Idan Beck
Founder
gTar
(HAX Fund)

7. “THE LOST ART OF INJECTION
MOLDING”
• “Factory engineers can just
look at a product and see the
mold around it and the
material flowing. They can also
tell you if what you have can be
made, and how to do it.”
• "Being on the factory floor will
help you solve problems much
faster, speaking the language
of engineering."
• HAX Comment: China picked
up manufacturing knowledge
where America left it, and ran
Bunnie Huang
Hardware Hacker
Bunnie Studios
(HAX Mentor)

8. WHY GO TO CHINA EARLY?
• Prototype better and faster
– PCBs overnight
– All the components you need
– All sorts of tools for prototyping
– “Lost art of injection molding”
– Design for manufacturing
– (much) Cheaper
• Build and scale fast
– Integrated supply chain
– Scale up from 1 to any number
– Prepare scaling before it’s painful
Where is the mold?

9. WHY WOULD A LAOBAN CARE?
• Four-and-a-half
reasons for factory
owners to work with
startups
1. Grow with you
2. Use excess capacity
3. Improve capabilities
4. Internationalize
4.5 Fun The rest is up to you

10. MAPPING THE
PATH
TO HARDWARE
STARTUP
SUCCESS

14. HAX MISSION: EMPOWERING
FOUNDERS
1. Build the right thing
2. Build things right
3. Ship fast

15. Startup Accelerator for Hardware
From Prototype to Business
In Shenzhen & San Francisco

16. 8 THINGS ABOUT HAX
1. 111 days
2. Shenzhen & San Francisco
3. 40 startups
4. 60% US+Canada // 20% EU // 20% Asia
5. IOT, wearables, robots, etc.
6. $250k average on KickStarter
7. A growth platform
8. Apply now!

17. MEDIA COVERAGE

18. HAX 4 GRADUATES
2 robot-as-a-service
2 sports tech
2 health tech
1 green tech
1 3d printer
1 connected camera
1 smart city logistics

19. KICKSTARTER LAUNCHES
Quitbit / Shot Stats / Niwa / Syrmo
www.kickstarter.com/haxlr8r

21. HARDWARE
STARTUPS

22. STARTUP VS. BUSINESS
• Startup = looking for a scalable business
model
• Business = executing on the model

23. HARDWARE RENAISSANCE
PROTOTYPING IS EASIER THAN EVER
Arduino / Pi / Spark / 3D printing / Sensors /
BLE / Smartphones / Cloud
SUPPLY CHAIN IS BETTER THAN EVER
– China (Shenzhen) has the whole chain
– Fast, Affordable, Scalable
MORE FUNDING
– KickStarter (250,000+ HW backers!),
IndieGoGo
– More VC & Angel money, acquisitions

24. BE A MASTER OF THE PROBLEM
What matters is the problem,
not the solution!

25. Market
Your interests
Your skills
Ocean of problems to solve

26. MINIMUM VIABLE STARTUP
(MVS)
< $1m
Lifestyle
< $10m
Small business
> $100m
Startup

27. BEING A STARTUP
ART BUSINESS
“My dream” “Whatever sells”
YOU

28. “The question is no
longer: can we make
it?
But: what can we
make
that’s worthwhile?”
Dr. Bjoern Hartmann
Interactive Device Design
Critical Making
HARDWARE TODAY

29. HARDWARE TODAY
• Anything can be built
• Not everything should be
• Few can become large businesses

30. STARTUP
CHECKLIST

31. STARTUP CHECKLIST
1. Product Is something working
2. Skills Can the team make it
3. Spirit Resourceful, Optimistic,
Persistent

32. STARTUP CHECKLIST
1. Product Is something working
2. Skills Can the team make it
3. Spirit Resourceful, Optimistic,
Persistent
4. Positioning New segment or new market
10x better in some way

33. BUILDING THE RIGHT THING
INITIAL PROBLEM
INITIAL SOLUTION
INITIAL PROBLEM
NEW SOLUTION
NEW PROBLEM
INITIAL SOLUTION
NEW PROBLEM
NEW SOLUTION
INITIAL PROBLEM
INITIAL SOLUTION

34. STARTUP CHECKLIST
1. Product Is something working
2. Skills Can the team make it
3. Spirit Resourceful, Optimistic,
Persistent
4. Positioning New segment or new market
5. Demand Proof / Customer discovery
6. Distribution How to sell
7. Plan Beyond first product

35. NOT JUST HARDWARE
• Pure hardware can be copied
• Combine Hardware & Software
• Community (GoPro, Makerbot,
Glass…)

36. BEWARE
OF THOSE
“WARES”
wow
such excite
very hardware
so future

37. TWELVE “WARES” TO AVOID
1. FUNware No business

38. TWELVE “WARES” TO AVOID
1. FUNware No business
Kenji Kawakami
Chindogu pioneer
(with tissue roll headgear
+ Fail-proof eyedrop glasses)

39. MORE CHINDOGU
Baby mop
Open eyes stickers

40. TWELVE “WARES” TO AVOID
1. FUNware No business
(includes NICHEware and ARTware)

41. TWELVE “WARES” TO AVOID
1. FUNware No business
2. EASYware Not defensible

42. TWELVE “WARES” TO AVOID
1. FUNware No business
2. EASYware Not defensible
“Two sensors
and an app”
Nobel-grade
research

43. TWELVE “WARES” TO AVOID
1. FUNware No business
2. EASYware Not defensible
PRESSY ($27)
Funded Oct 2013
Raised $695,000

44. TWELVE “WARES” TO AVOID
1. FUNware No business
2. EASYware Not defensible
Speed Button ($10)
(“kuai anniu”)
Funded Jan 2014
Raised $34k

45. TWELVE “WARES” TO AVOID
1. FUNware No business
2. EASYware Not defensible
Xiaomi MiKey
($0.8)
Launched April 2014
“If Xiaomi starts producing
buttons like Pressy,
we will start to produce
smartphones.”
- Founder of Pressy

46. TWELVE “WARES” TO AVOID
1. FUNware No business
2. EASYware Not defensible
3. SAMEware Bad positioning

47. TWELVE “WARES” TO AVOID
1. FUNware No business
2. EASYware Not defensible
3. SAMEware Bad positioning
“Build a better mousetrap and the
world
will beat a path to your door”
Ralph Waldo Emerson
(maybe)

48. TWELVE “WARES” TO AVOID
1. FUNware No business
2. EASYware Not defensible
3. SAMEware Bad positioning
The problem with
mousetraps
• 4,400 patents
• 400 applicants per year
• “most frequently invented
device in U.S. history”

49. TWELVE “WARES” TO AVOID
1. FUNware No business
2. EASYware Not defensible
3. SAMEware Bad positioning
4. SOLUTIONware Solution looking for a problem

50. TWELVE “WARES” TO AVOID
1. FUNware No business
2. EASYware Not defensible
3. SAMEware Bad positioning
4. SOLUTIONware Solution looking for a problem
“When you have a hammer, everything looks

51. TWELVE “WARES” TO AVOID
1. FUNware No business
2. EASYware Not defensible
3. SAMEware Bad positioning
4. SOLUTIONware Solution looking for a problem
5. VAPORware Can’t be made

52. TWELVE “WARES” TO AVOID
1. FUNware No business
2. EASYware Not defensible
3. SAMEware Bad positioning
4. SOLUTIONware Solution looking for a problem
5. VAPORware Can’t be made

53. TWELVE “WARES” TO AVOID
1. FUNware No business
2. EASYware Not defensible
3. SAMEware Bad positioning
4. SOLUTIONware Solution looking for a problem
5. VAPORware Can’t be made

54. TWELVE “WARES” TO AVOID
1. FUNware No business
2. EASYware Not defensible
3. SAMEware Bad positioning
4. SOLUTIONware Solution looking for a problem
5. VAPORware Can’t be made
6. LAMEware Not on spec

55. TWELVE “WARES” TO AVOID
1. FUNware No business
2. EASYware Not defensible
3. SAMEware Bad positioning
4. SOLUTIONware Solution looking for a problem
5. VAPORware Can’t be made
6. LAMEware Not on spec
7. FAILware Successfully built the wrong thing

56. TWELVE “WARES” TO AVOID
1. FUNware No business
2. EASYware Not defensible
3. SAMEware Bad positioning
4. SOLUTIONware Solution looking for a problem
5. VAPORware Can’t be made
6. LAMEware Not on spec
7. FAILware Successfully built the wrong thing
8. LATEware Validated market but woke up
competitors

57. TWELVE “WARES” TO AVOID
1. FUNware No business
2. EASYware Not defensible
3. SAMEware Bad positioning
4. SOLUTIONware Solution looking for a problem
5. VAPORware Can’t be made
6. LAMEware Not on spec
7. FAILware Successfully built the wrong thing
8. LATEware Validated market but woke up
competitors
9. LOSSware Minimal or negative margins

58. TWELVE “WARES” TO AVOID
1. FUNware No business
2. EASYware Not defensible
3. SAMEware Bad positioning
4. SOLUTIONware Solution looking for a problem
5. VAPORware Can’t be made
6. LAMEware Not on spec
7. FAILware Successfully built the wrong thing
8. LATEware Validated market but woke up
competitors
9. LOSSware Minimal or negative margins
10. BOREware People stop using it

59. TWELVE “WARES” TO AVOID
1. FUNware No business
2. EASYware Not defensible
3. SAMEware Bad positioning
4. SOLUTIONware Solution looking for a problem
5. VAPORware Can’t be made
6. LAMEware Not on spec
7. FAILware Successfully built the wrong thing
8. LATEware Validated market but woke up
competitors
9. LOSSware Minimal or negative margins
10. BOREware People stop using it
11. FUTUREware No market before years

60. TWELVE “WARES” TO AVOID
1. FUNware No business
2. EASYware Not defensible
3. SAMEware Bad positioning
4. SOLUTIONware Solution looking for a problem
5. VAPORware Can’t be made
6. LAMEware Not on spec
7. FAILware Successfully built the wrong thing
8. LATEware Validated market but woke up
competitors
9. LOSSware Minimal or negative margins
10. BOREware People stop using it
11. FUTUREware No market before years

61. SCALING
HARDWARE

62. TIMEFRAME
$
PROTOTYPING PRODUCTION SCALING
3 months ~ 2
years
3 months ~ 2
years
1+ year TIME
ARE YOU REALISTIC? SOME THINGS TAKE
TIME
ARE YOU TOO SLOW? MAYBE YOU NEED
HELP

63. THE RETAIL CHASM
PROTOTYPING PRODUCTION SCALING
$
Founders
Friends
Family
Fools
Crowdfunding
Accelerators
Angels
Sales
Factoring
Banks
VCsPre-orders
RETAIL
CHASM
TIME

64. SCALING STEP BY STEP
$
TIME
Specialty
stores
Big box
retailers
Online
retailers
Direct

65. LEAN RETAIL RULES
Keep demand higher than
distribution
Your customers are your best
investors
Retail is not a sprint. Learn at
each step

66. SAVE YOUR CASH FLOW!
Pre-sales (best!)
Credit from supplier (it’s like a bank
loan!)
Factoring (purchase order financing)
Bank credit lines
Revenue-based financing
VC (most expensive money!)

67. KEY STAGES FOR INVESTMENT
1. Concept
2. Work-like prototype
3. Look-like Prototype
4. DFM
5. Crowdfunding
6. First shipment
7. Retail
8. Pre-IPO
We recruit here
We take you there
We help anticipate this
Awaiting you there!

68. SUMMARY

69. LEAN HARDWARE PHILOSOPHY
1. Validate problem
2. Partner with factories
3. Fast to market
4. Capital effective
5. User backed
6. Sustainable
+ HAX Philosophy
Meaningful products
Alignment with

70. COMMENTS | QUESTIONS |
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