THIS is why hardware is HARD!
The graveyard of failed startups is a fascinating place to visit.
In the news this week is Ready Robotics collapse, Soft Robotics transition away from grippers, and the general decrying of “hardware is hard!”.
This is not unique to hardware, and it’s lazy thinking to focus on purely hardware and ‘higher capital requirements’ as the reasons for company collapse. Frequently the financial constraints on hardware companies can be avoided if you have experienced people on board (including ON your board - do your investors have the experience you need???).
Payroll is the other significant cost that often brings startups undone, and the inability to hit the right scaling metrics vs funding. Startups with seed rounds and good traction were particularly unlucky in the last two years as the financial downturn killed a lot of Series A funding, or delayed it for a much longer period than expected.
The art of the hardware startup is in carefully balancing incoming finance with product expenses and minimizing the risk of getting overextended in any area, which can include supply chain bottle necks, inventory storage, dependency on one large customer, predatory lending practices and investor/advisors who are looking for a fast exit not a sustainable business.
One of the clear and present dangers to robotics startups is lack of experience in the founding teams. One of the reasons that robotics is succeeding and growing is that many founders now have two, three or four hardware startups under their belts, whether it’s robotics or consumer products or manufacturing machinery.
Startup Failure Statistics
Stats derived from Department of Labor Statistics.
领英推荐
The great startup reckoning event of 2023 and 2024, but why startups should now start going back on offense featuring Tom Loverro of IVP
Nearly 30,000 new products are introduced each year, and 95% of them fail according to Clayton Christensen, a professor at Harvard Business School. And no business is immune to this harrowing statistic, which includes misfires from companies like Google and Amazon. The tech giant’s Google Glass project received millions in investment but quickly disappeared from view. And Amazon has quietly closed all of their checkout-less shops in the last few months.
These large organizations can afford the luxury of a multimillion-dollar misstep in their product development. Ultimately, any innovation roadmap consists of a long trail of trial and error. However, for startups or small businesses that offer just one unique product, this type of error can be lethal. If the product fails, so does the company. In fact, 92% of startups fold in their first three years for that same reason.
Some of the reasons for product failure
Founder at Transmute, Inc.
3 个月Once the design has been capitalized, then comes the scale out, which is a different skill set and a much bigger capital requirement.
Entrepreneurship, Robotics, Exponential Technologies BusDev/Consulting/Pinch Hitting in Negotiations
3 个月Hardware has always been challenging and it is why most robot companies resist selling mechanisms only to be used with the software of other companies. Physical items are harder to support and have increased costs of support through inventory. Repairs and maintenance have known downtime risks so tracking MTTR and MTBF is important. Often companies don't use agile design methods for physical products, but these methods can save time and pain. Design changes are costly for physical products as they create compatibility issues and can obsolete inventory. Unless a firm can sell services or software wrapped around hardware it is hard to be profitable.
It's hard partially because most of the tools we have for building things are clunky and expensive. I find it hard to believe we still use RTL for chip design, and sign-of is at GDSII. Add to that we still use computing architectures from the 1980s, and I'm impressed with what people do manage to achieve.
Strategic Creative Direction | Fluffy Dog Owner | Designer of Healthy Lifestyle
3 个月We need to add poor branding to that list. I don’t mean a logo. Brand isn’t just the packaging, it’s the core WHY — you can pivot if you’re motivated you and your team has the core WHY. Ask the seven Whys when starting and start there. I was in a successful space hardware startup. The core team was amazing and dedicated 100% to their why. Made in Space! I’ve also been in a failed hardware startup and many of the things you listed were correct… but when I look back: I can see the whole team wasn’t fully dedicated to the why which affects decisions and approaches and the ability to be open to pivot when necessary.
Management Consultant | Insurance + Risk- Advisory and Consultant | Strategic & Critical Thinker | Strategic Planning, Analyst & Executor | Financial Management | CRM | Mobility | Robotics | Sustainability Enthusiast
3 个月Very informative