Musings From a Day in the Bay
Thanksgiving is a time for reflection and appreciation. It’s one of the few times of the year that we get together with friends and family and practice presenteeism. For many, it’s also a time of travel (sometimes with accompanying headaches) and a few days of vacation. For me this year, it was a busy time at work.
I spent most of my trip meeting with customers, prospective customers, partners, and new industry friends. In an attempt to get my hardware creds up to snuff, I’ve tried to immerse myself in as much of the industry as possible. One day, in particular, stood out on my recent trip.
Despite having familial obligations and plenty of work to do, especially catching up after a few days at the table with turkey, not a computer and phone, my network was kind enough to fit me into their busy schedules.
November 28th started with a drive from my VRBO in San Carlos to the Dogpatch neighborhood of San Francisco. I headed into a venture capital incubator that specializes in hardware projects and met with one of the most experienced hardware entrepreneurs and investors I’ve had the privilege of meeting so far. The office was buzzing with activity, despite the time of year. The lobby was filled with packages and deliveries, meetings overflowed out of conference rooms to the waiting area, and startup founders skipped to and from the lab and prototyping areas back to their workstations. In a glass-enclosed conference room adjacent to the primary incubation space with robot arms swinging and 3-D printers churning, Mike and I met with one of the principals from the fund.
The purpose of our meeting was to make a quick introduction to me, as the newest member of PRG, and explore how I might accelerate meetings with tomorrow’s breakthrough hardware companies to share ways in which PRG can help. Without sharing confidential tradecraft, I’ll summarize the meeting as a goldmine of information and resources. We learned why specific vendors are selected, which vendors are typically used, who makes the decisions, and the areas of the highest level of competition. One glowing observation: PRG’s Technical Program Manager (TPM) services are a must-have for hardware companies of all sizes.
After the working session, we drove to the East Bay for a meeting with a VC General Partner and current CEO of a PRG customer. Yes, he’s in two roles, each of which is demanding enough for full-time attention, however, after ten minutes one realizes that the roles are out-matched by the drive and intellect of the person in charge. Over a great Thai dish that, I must say, I haven’t enjoyed in my northern Wisconsin neighborhood; we discussed the broad hardware landscape and successful partnerships with leading academic programs. We also covered how-tos (and “how-nots”) of events and meetings. Our energizing meal and conversation validated that it’s possible to appropriately choose one’s customers as much as they choose you and spend time with people you genuinely like in business and life.
Bellies full, we drove back over the bridge into downtown San Francisco (man, there are a lot of cars on the road and, by my informal poll, 10% of the drivers are reading or writing on their phones…we need clean vehicles and autonomous drivers asap…but that’s another post for a later date). We arrived at a trendy coffee shop for next meeting about an hour early and spent our time catching up on email and brainstorming before our final appointment arrived.
Our third and final meeting of the day was with another seed-stage VC who focuses his fund’s investments on industrial, healthcare, and industrial segments, naturally leading to a routine hardware focus. Over coffee and sparkling water (ok, and a cookie or two…), we discussed where they’re seeing strengths and weaknesses in the market. Our final guest brought a refreshing energy and passion for the hardware industry that would make product managers at Apple feel lazy. Using coffee stir sticks to help conceptualize his points, I started to spot similar themes from my first two meetings. They were:
- When the general industry thinks of “hardware” they too-often acquaint the sector with just consumer products. As such, when trends and fads go out of fashion, naysayers feel like the whole industry gets crushed. Don’t let me confuse today's landscape, the consumer segment is hurting, but this area isn’t the only leg on which hardware stands.
- Most VCs and investors still don’t understand hardware, and they look at and fund hardware using the same underwriting techniques as they do their software companies; this is wrong and can lead to a perception of failures that may not be entirely true given, funding amounts and cycles, and company lifespans, and what constitutes traction. The good news is that while these mistakes have changed some of the funding dynamics and led to a bad taste in some VC’s mouths, it has created an opportunity for others.
- The #1 failure still seen today (in all asset classes) is the team. Most commonly, founders and/or early employing disagreeing and leading to an implosion before launch.
- Investments in robotics, agriculture/industrial, and medical (for those who understand its unique nuances) are leading the way and have a lot of runway. We haven’t seen the tip of the iceberg yet, and very few people understand and appreciate this incredibly complex industry.
That was my day in the Bay. I’ve certainly had more than three meetings in a day before, but these were dense, fire-hose filled, working sessions with some brilliant minds and great people. I thank them for their time and for the information they were willing to share.