Hard Tech is Back
blog.samaltman.com
blog.samaltman.com
Steve Blank's Innovation Corp initiative is now working with the NIH, NSF and Defense to help companies development product-market-fit once basic funding has been achieved as well.
Disclaimer: My company GrantIQ.com helps companies find federal funding opportunities & helps large companies identify breakthrough technologies being developed through these programs.
This is generally good advice, but I'm a grant writer (see http://www.seliger.com if you're curious) and have worked on many SBIRs and STTRs. I'll add that there are downsides as well. One is simple timing: if the appropriate SBIR or STTR funding cycle just concluded for that year, you may have to wait another year to apply. Then another 1 – 3 months for a decision. Then longer for final authorization of the budget. The other day I talked to a guy whose best potential SBIR source had had a deadline the month prior.
Second, Phase 1 grants can just be too small for the amount of effort that goes into them.
Third, they don't come with the advice / community / expertise of good VCs.
Fourth, they take a lot of effort to prepare, and for first-time grant writers they can be quite hard. The alternative is to hire someone like my firm. While I'm biased towards doing that for obvious reasons, we also cost money.
While I don't want to talk anyone out of applying, I do want to note that the downsides are considerable too.
As a side note, I used to submit some SBIR and STTR RFPs to Hacker News (search for "seliger" here: https://news.ycombinator.com/from?site=nsf.gov), but I stopped after a while because no one upvotes the submissions.
Definitely not business advice/community, but if a startup is doing significant R&D, it can be useful for the scientific and technical advice and community. Not guaranteed by any means, but I've seen it work out well, mainly in the case where a company submits an STTR jointly with a university research group. If the arrangement ends up working, the most valuable thing to the company in that case is sometimes not even the actual NSF grant money, but the connection to the research group it opens up. Having a joint STTR provides an excuse to get a company sort of attached to the research group as an external partner, with a forcing factor ensuring you end up on their schedule with regular project meetings, access to grad students, etc. Can also end up useless, of course, but when it works out well, it can provide value equivalent to something you'd have to pay a lot for if you were hiring technical consultants (especially in areas like machine learning).
Many companies get stuck in a kind of grant hamster wheel where they end up only producing enough from a grant to be able to get another grant, and not advance in commercializing their technology. I think there are few companies that make the transition from being primarily grant funded for a period into a high growth success.
Sometimes it's your only option for funding, but ideally, it makes up 0 to a fraction of your R&D funding so that it doesn't dilute your focus.
This advice is specific to companies that have a path to be VC-fundable, high growth, commercial success. There are many other (most) companies that can be funded by grants and build their technology incrementally over time.
"SBIR = The PhD Club of America".
Perhaps things have changed. My impression leaving the conference was that it was a complete waste of time if you did not have a PhD in your team who had some connection with the PhD at SBIR in charge of reviewing applications.
In other words: Not a single Silicon Valley college dropout or "college-interruptus" need apply as the process seemed to exhibit favoritism towards members of the aforementioned club.
For the second part, it is standard advice from the granting organizations themselves to contact whomever is overseeing the solicitation (for DoD, they're the "topic author") to establish a good working relationship. Does someone who has a previous history have an advantage? Yes, in the same way that a SV startup founder with prior experience has an advantage seeking funding for a new venture.
For the first part, SBIR/STTR emphasize research, and a PhD (or equivalent degree) is the standard academic research qualification. Teams having technical members without PhDs but with significant domain experience are funded all the time. You're right that having research credentials is necessary, but it's not in itself sufficient. If I put together an application for an area in which I have no prior research experience and no preliminary data, I would expect my application to not be scored.
> In other words: Not a single Silicon Valley college dropout or "college-interruptus" need apply as the process seemed to exhibit favoritism towards members of the aforementioned club.
I don't see it as favoritism, I see it as a mismatch in experience and expectations. My "research currency" (PhD, publication record, patents, grantsmanship experience) isn't worth much if I were wanting to work at a SV startup because I don't have a GitHub account (or so I am led to believe). The kind of currency that an SBIR/STTR values naturally tends to be held by people with PhDs (or equivalent).
It's also important to remember that SBIR/STTRs are highly competitive. A few years ago, I applied to an SBIR from the NCI that ended up funding 1% of applicants that cycle!
I've worked with enough PhD's to be guarded. If you want to get shit actually done sometimes a guy who knows nothing about the field but is full of fire and ambition can run circles around an entire industry.
That's not to say all PhD's are bad, I have met a number who are brilliant. And the secret, in all cases, is in who they were and what they did before their PhD, in most cases even before college.
Programs like SBIR are not about attracting the best. They are about great looking presentations with enough check boxes filled in. The best don't usually fit that mold.
Name the top hundred discoveries or developments of the last century. Let's see how many PhD's originated and drove them to fruition.
I think making a hard tech product for consumers is still very hard, and those who succeed should be commended. People wanting to dip their toes in the water might consider things like building a factory management portal like Splunk that aggregates sensor data, or something that involves sensing and reporting rather than actuation. Actuation can be dangerous and therefore legally risky.
If you don't have people coming out of the industrial automation space with a good understanding, it's hard to walk back in with a useful product.
The upside is a lack of competition and a B2B environment. No need for a marketing department when you just have to attend a few industry trade shows a year.
Even if FactoryTalk is absolutely horrid.
From what I've seen (relatively minimal), industrial automation tends to be incredibly bespoke. E.g. we had consultant X from Y integrator (sometimes now defunct) come in Z years ago (where Z is always > 10) and set up this system: we've been using it as a black box without change since.
In short the "Linux on the desktop" problem - the burden of having to support 1,000+ unique configurations, each with their own edge case behaviors (or outright bugs). And from what I've seen, the ideal startup growth pattern doesn't fit with a services "send one engineer out to an account to custom fix it" way of doing things.
This is accurate and it stems from the proprietary technologies that integrators must sew together. Want to build a better Siemens Step 7 IDE? Get a job at Siemens.
Best case, with clearly documented and defined interfaces, you can rewrite or swap out an entire component. Worst case, you have no source, no standard technologies, and no interface barriers, in which case your choices are leave as-is (no additional features) or replace everything (impractical due to size of codebase / legacy functionality coverage).
Sorry for the runon but this is a major gripe of mine. Most managers just want it to work and unless it doubles your profit, cuts failures and makes you coffee for when other stuff breaks and you're working overtime to fix it they don't want to change anything.
I can sympathize, and I bet you can too. My dishwasher, my car, my garage door... I just want these things to do their job and let me get on with my actual work. I don't want the latest garage door or vacuum.
If the whole point of the organization is to build things, it seems like they should use the best tools for building things. Now, there's a good argument for tried and true solutions, and if the new stuff isn't rock solid, you're going to have wasted materials. It really seems like they should be completely geeking out over better, shinier, fancier tools for building stuff.
Maybe the costs are so high, and the margins so thin there's no room at all for experimentation. But it can't be lack of desire. If it is indeed lack of desire, they're going to go out of business.
I meant identifying the problem and coming up with a solution in the first place.
Go to market is another level of complexity.
As a software engineer, I always thought that the best way to have a great business (not a blow out VC style business, but a good business) is to be a decent-to-good software developer and have deep domain knowledge of some other industry. I thought the best way to get that would be to apprentice in that industry, but the opportunity cost is high (esp as you get older), so the second best way may be to take a job as a dev in that industry and learn as much as you can from the domain experts.
The combo of software development + domain expertise means you see problems to automate away all around you and you can actually execute on what you see.
As a software engineer that works in this space, I disagree. The thing that keeps us using things like MODBUS and CAN are because the problems we are solving are themselves are very simple. So we tend to use simple solutions to address them. The latest dynamic languages and protocols (XML, JSON, YAML, etc) don't solve our existing problems any better.
Quite frankly, the extreme level of complexity in deploying something like Android to control a basic IoT device is beyond appalling. 640k may not be enough for everyone, but it is more than plenty to control IoT devices.
I see two big problems here.
The first is, what's the business case for the buyer? What tangible improvement in their business is possible with all this new technology? Maybe less downtime? Predictive failure models? I feel like the tech is so disruptive, you'd be better off building a completely new factory from scratch rather than convincing an existing one to adopt such a radical process/ops change.
Second, there is a profound skepticism for large-scale software projects in true "industry". My father worked for a long time at Andrew, a maker of coaxial cable in Illinois, which was later acquired by Commscope; their view of software projects was a lot like war in 1984: a constant, ongoing struggle, with no end in sight, of huge promises and lack of good delivery. I'm not sure whether that means the barrier to entry is huge, or once you make great software you'll have a massive differentiated advantage -- probably both -- but just understand, these guys have spent their career dealing with vendors selling overpriced junk from Oracle, SAP, etc. and just expect things will fail from the getgo.
1) I assume you're referring to "Splunk for factories". You could make the same claim about plain-old Splunk. One business case is better real-time response to failure and later, better forensics. I agree, there are many factories where the process is perfected and the operators can read the tea leaves when something goes wrong. Another business case, and probably a better one, might be report generation for managers - people hate making the same reports over and over again.
2) Industrial software largely sucks now. But software in general sucked 20 years ago, and has improved much since then. True industry is behind the software curve by 10-20 years, so they are using old, bad (by today's standards) software. The thing is we've already improved that old, bad software - they just haven't adopted it yet. Once industry begins adopting "newer" software (think Java, .NET, web services) and they see the falling development costs and better features, they get behind it.
There is also a talent shortage in industrial software, because there are higher wages and better working conditions in the desktop, web, and mobile industries. However what has happened is we are now in diminishing returns in those latter three industries because they are saturated with talent, while all the cool things we've built to service those industries can now be repurposed by hard tech. It's the reverse of what happened after the Cold War ended and defense industry veterans fled for greener pastures in Silicon Valley.
You would also have a hard time convincing the buyers to not use the manufacturer software and instead use yours.
Haven't ThingWorx solved this problem very well already ?
I'd like to see better support for actuation in terms of being able to audit things and feed that back to design decisions, which ties very much back to aggregation.
I'm biased to think there may not be much difference between the two domains. And it should be pretty clear that machine learning is going to be increasingly important.
This being said, the customers may not be all that ready for it.
And that isn't an insult to Cruise. The problem space is still difficult, and they created more value tackling that than the vast majority of startups do on much easier problems. I happen to think that the opportunities for making the cutting edge more accessible vastly outweigh the opportunities for cutting new edges, and nobody should be discouraged from doing it because it isn't as glamorous as the research on the ground floor.
This seems to be a standard path for businesses in the tech space. The value many of these companies bring is not the tech itself but the ability to get that tech to the masses (which is no small feat).
It's why the classic techie response to a tech product is "who cares I can already do that with {insert X inaccessible technologies glued together with shell scripts}." The original dropbox thread on HN is a great example of this.
Though I suppose "true" fully autonomous self-driving cars that can handle things like rain, human driver non-verbal communication (like eye contact and the finger), and left turns onto oncoming traffic are still at least a decade away, at least according to MIT's John Leonard, the Cruise founder's likely protégé. [1]
It goes without saying that California with its perfect weather and perfect highways is a rather unfair testing ground for autonomous vehicles, as unfortunate as it is the hotspot for a lot of the autonomous driving research. (Maybe that's why the researchers more grounded in reality are the ones in Pittsburgh and MIT/Boston?)
I remember when a LIDAR unit was a $30,000 SICK laser unit, but now you have the same kind of sensor in your $100 Kinect.
Chouinard is one of the most innovative folks in the history of the climbing industry, having introduced a lot of now-standard technologies like curved ice axe picks, polyester long underwear, and polyester fleece for warmth. I highly recommend the book.
It's just easier to play around with software until you find something novel.
Source: Born and raised black and yellow.
It has to be the tech or tech + talent. Are there enough people worth $1 billion or more to do only a talent acquisition?
Do you have any data showing acqui-hiring of $1 billion or more? I've never heard of such an amount and retention after an acquisition is really, really hard. Seems crazy to spend so much only to have people leave after 1-2 years (or less depending on the company).
Uber, Apple, Tesla, and every car company would be interested.
You're buying both a base platform / proof of concept+ implementation and the key individuals responsible for creating it. Then training your people on the platform with the deeper knowledge from the key individuals in the 1-2 years you've got them employed.
If you can buy a breakthrough and enough knowledge transfer to get your people operational on adapting it, it's worth it even if you don't get any additional breakthroughs?
While the founders and first few employees may leave after an acquisition, preferring to work for themselves, everyone after that is an employee and, as long as they are managed and compensated well, will generally not care so much who the company's owner is.
Although the "technology" more or less worked, it was discarded and re-written or substantially changed.
In the case of Google, I'm thinking of AdMob.
In the case of Yahoo, I'm thinking of the 2-sided ad exchange network they bought and then ripped out the 2-sided features.
I think this is pretty similar to the Monsanto acquisition of Climate Corporation (where I worked) several years ago.
If you're a big traditional company, building an innovative technology team from scratch is really hard, even if you're willing to spend a lot of money on it. It takes a lot of time and effort, and you probably don't have the internal leaders or culture to attract top talent.
Buying a promising startup and continuing to operate it as an independent organization is a straightforward (if expensive) way to solve this bootstrapping problem. From a strategic perspective, it can make complete sense if the opportunity cost of getting a product to market a year or two late can be measured in billions of dollars. There are a lot of advantages to being first to market.
Relative to a company like Google, their weakness may be on the hardware side, but GM likely has access to very strong mechanical engineers, and they certainly now have the funds to go out and hire more folks.
The new safety features on my current car, like collision detection and dynamic cruise control, have certainly changed the way I drive and so altered my life in a small way.
It often feels like black magic getting something to style the way I want it, and its not something that I can sit down and work out with a pen and paper, instead it seems to rely on knowing lots of tricks and obscure features.
Cruise Kyle Vogt's third acquired company. It's still ambiguous as to whether your first startup should be "hard tech" or not. I think in the case of self-driving cars it makes sense because automobiles are a trillion dollar market and the anxiety to stay competitive with the rapidly changing landscape is intense.
Plenty of room in this market yet. What is the biggest competitive advantage and who has it? Data & Tesla. Tesla is the only company with the appropriate data to make self-driving a reality faster than anyone else (tell me when Google starts collecting data in Norway). Data collection equipment is relatively inexpensive. Maybe figure out how to get people to attach sonar or lidar or tap into their car's computer to access that data. What else is a problem, even for Tesla? How about predicting pedestrian behavior and making eye contact -- or identifying if a pedestrian is disabled and sending a signal to those pedestrians that it is OK to walk.
At the end of the day the market being targeted has huge weight to the likelihood of a successful outcome.
Incidentally, if you want to get into YC: https://twitter.com/hunterwalk/status/708304772055441408
In relative contrast, it is trivial and risk-free to make a lean MVP for a generic Uber-for-X and send in a YC application.
10's of Teraflops is cheap.
Source: I just did that.
You can get the 980 Ti w/ 6GB of ram for $600 and some change. And if that's too much, the 970 w/ 4GB can be found for under $400.
And if even that is too high, you can troll gamer forums for used cards and cut that cost in 1/2.
You need to have a Titan X to produce comparable benchmarks, otherwise a lot of people won't take them seriously. Also the 6GB of a 980Ti already rule out quite a few popular networks we needed to run.
I was not really in a position to wait much when buying the card, and I didn't want to risk waiting a few weeks to get a used card I bought on a forum, which then comes out being just as expensive in living cost. You also as a startup don't generally have the luxury to risk waiting.
I don't regret the purchase, I more wanted to show the reality of a "hard tech" startup.
3.5GB usefully. The last 512MB performs significantly slower.
The big cloud vendors are probably more geared towards the infrastructure side, but given problems (a) that "hard tech" requires non-trivial capex, (b) that many startups fail (nature of the space), & (c) that YC sees a lot of startups, then maybe there are opportunities to more efficiently handle "hard tech" needs by time-sharing common resources.
There are always going to be bespoke needs, but things like shared vehicle fleets with standardized interfaces, etc seem plausible when you've got a stable of 5 startups, with each being perfectly fine only testing their autonomous UAV / vehicle platform Tuesdays and Thursdays (or once a month) and letting someone else use it the rest of the time.
Most accelerators have partners that can get this stuff for cheap or free - including physical boxes.
Probably just lots of traffic to blame
Some of the other people here are predicting (with massively higher certainty than doctors) which early-onset brain issue folks will develop alzheimers, making a standard simple way to run experiments in outer space (first launch in a few weeks), doing natural language interfaces for personal finance, and other crunchy stuff.
If anyone wants to talk autonomous vehicles feel free to email me. I enjoy it. :)
Anybody have some spare SDRs or some Lidars while we are at it?
I don't begrudge the fact profitability isn't tied to how much work went into building something, how novel the product is, or whatever. Those bloggers are great because they point out startups like to use the cachet of "solving hard problems" to try and impress me with their less-impressive products.
This blog post makes me laugh because why does it matter to a venture fund if they're "hard tech" or not? It shouldn't, should it? It's about business potential, right? If "hard tech" does that, wouldn't you just invest in it without bragging on it and hope the competition doesn't notice? Maybe Sam is making this post because kids are starting to wise up to the fact "hacker" isn't anything more than something they let you call yourself to feel cool when don't go home after 40 hours. Now the tech is "hard," so nobody asks "why am I wasting my life on this piece of shit?"
On the other hand, the problem might be also that founders which base their startup on technology gave up too easily when looking for funding. So they gave up and get cozy and well paid job at Amazon, Google, Microsoft, Oracle, etc.
And YC application process does not help here: if something is "hard tech", then YC is probably not going to fund it. Why? There are so many application and people who are very very good at hard tech are not type of founders YC would like to invest in since they do not have great communication skills. So their YC application is probably confusing, there is no clear pitch, etc. They cannot explain their start up as "Uber for X" - since it is.... complicated.
In other words, if we get few founders who got rich and get into VC business because they did some hard-tech then we will have more hard tech companies. As of now, majority VCs did some social network / uber-for-X and that is how they got into VC business.
(Yes, I know the issue is apps vs. tech, not SW vs. HW, but there are parallels)
(edit: okay, okay, maybe the article isn't clear.)
SV has its own jargon, and not being from SV, I think it's fair to want to clarify what is meant by a capitalized phrase like "Hard Tech" in case there is a deeper meaning known to those inside SV.
In contrast Facebook is largely just a couple of web forms and some Big O problems at scale.
Yes, and Steph Curry is just a guy shooting a ball in a basket.
A decade-long life extension or growing meat without animals would both probably involve more "Hard Tech" style innovation than building Facebook.
Other observations are IMO less pat. E.g. designing cheaper/better sensors could be either harder or significantly easier than building a Facebook. Depending on the type of sensor and the cost improvement.
Facebook is doing more than that. Mark recently claimed that they are working on "a world-class News Feed, and a world-class messaging product, and a world-class search product, and a world-class ad system, and invent[ing] virtual reality, and build[ing] drones".
Based on the glaring flaws in the base product, I'm unconvinced it has the smarts to do any of those things well.
Stuff that's non-obvious but amazing and makes you think sci-fi... DARPA does a lot of this kind of stuff.
Definitely non-trivial problems, most likely hardware, maybe materials science or something in the other science fields. Maybe new math, or solvers that take days to run on thousands of CPUs. Stuff that might take thousands of man-hours to develop.
Not sure how YC would be involved here, as this is expensive to develop, but DARPA has a funding model.
A technology providing that could help make our politics more democratic. It could also lower the need for communication hierarchies like in big companies.
I'm doing research in this area and built several prototypes. I strongly believe we can achieve the goal, but doing it with only one teammate researcher makes the process very slow. We are two master degree computer scientists and need a bigger team.
Contact me if you are interested.
It is therefore extremely encouraging and important to hear this message clearly and directly from Sam, that this is indeed a lucrative area worth pursuing and that there are investors who have the risk appetite to continue to fund such ventures.
$100K in funding can help you go a long way towards raising those millions of dollars.
Wow. Passive aggressive much?
IMO OSS licences should exclude Silicon Valley parasites until they show a modicum of gratitude.
OSS is supposed to be about donating your time, without asking for anything in return.
Othetwise, you are just as bad as your perception of silicon valley.
We need a "professional-courtesy" license. Something like a GPL on steroids that can only ever be distributed as tarballs.
The minute to pass a binary around, the minute you try to deploy with any sort of devops, etc, you have just opted-in for a commercial license, which requires a (modest) yearly fee.
This way, your generosity will gain jobs for a fellow hackers somewhere. Takers still can pay for the benefit of convenience, though.
It's simply using the targets own values to point out their hypocrisy. You don't insult based on the things you would personally would be offended by.
What hypocrisy? Since when does someone have to build a start-up top be entitled to opinions about what important start-up priorities ought to be, or what the social impact of current start-ups is, or whether current start-ups actually pursue the creation of value for society or not?
I don't see any other way of interpreting a comment like "usually levied by people not building anything at all themselves" -- something completely non-sequitur to the question of whether or not their criticism has merit -- aside from haughty superiority complex that working near the bleeding edge of what start-ups do somehow entitles you to a more valid opinion about whether or not start-ups create actual value or pursue fundamentally important work.
There is no hypocrisy in an OSS developer who has no interest in start-ups pointing out how questionable it is that start-ups actually add value or pursue fundamentally important work. Similarly, there's no hypocrisy in a regular employee of a tech firm pointing that out. Or a single mother who works two retail jobs and couldn't possibly be expected to "build something".
Their opinions about the social value of start-ups still matters absolutely every bit as much as Sam Altman's opinion of the social value of start-ups. Positioning one's self near the bleeding edge of start-ups might entitle you to have a more legitimate opinion about business matters, funding matters, certain technology matters ... but it absolutely does not entitle you to consider your opinions about social value to be more legitimate than someone else's just because they "don't build anything."
It reminds me of John Terry's ridiculous comments earlier in the British soccer season, saying that soccer pundit Robbie Savage is not entitled to make analytical criticism of soccer performance because he (Savage) didn't play on a team that won at a high level during his playing career [0].
It's a bit of nonsense. And I definitely believe that seeing it seep into this post needlessly is at least suggestive of a passive aggressive feeling against people who, while not themselves caring about personally building a start-up, still do care about the lack of social value present in our current start-up culture.
As for hypocritical, it's seems pretty clear to me that demanding someone undertake incredibly risky, intense, life consuming work for the purpose of bettering society, while they themselves do not, would qualify. I'm not sure how it wouldn't.
Your analogy doesn't work because that's just evaluating people based on their own personal goals, not saying they should have loftier ones. If Robbie Savage was saying that professional soccer players should be donating their high salaries to charity, or building houses instead of playing a silly game, that would be hypocrisy.
Further, I don't think anyone is saying Silicon Valley has to produce this value. It's not mandatory. Folks are just going to have their opinion, a low opinion, if you don't.
If you don't care that many people see the side effect of Silicon Valley as on net socially and value destructive, that's fine. No one is speaking to you who doesn't care.
But it's absurd to equate an appraisal of the social side effects of something with entitlement or a "demand for help."
Same as many people who have built much more than Sam Altman ever will.
Unlock water from the oceans, and a lot of people can be helped. I'm ready to start this company, just need a few dozen engineers/chemists and a boatload of funding.
That's why it's hard.
Can't make use of the science portion of it if the engineering portion isn't ready, too.
It seems like companies who build products that have clear and significant business value with excellent market timing are successful. Perhaps you can extrapolate to saying hard tech is now a hot field but this is the first successful exit that comes to mind recently, rather than private investors putting more money on the table.
[0] http://www.reuters.com/article/us-gm-lyft-investment-idUSKBN...
Blunt. True, but blunt.
Hats off to Sam.
The combination of a few trends (Predominately smart phones, social networks & data analytics) enabled a whole new wave of technical possibilities. It was relatively quick to monetize this via App development, so that was the first wave to take advantage. Hard Tech can take longer (though from Cruise's point of view, not always that much longer) so these companies are only coming to fruition now.
When I look at AlphaGo's success, I think we are a new dawn of amazing things from Hard Tech.
I am pretty senior role in my tech career and have not too much time - so even if its just a youtube channel that could start me learning by watching, I would appreciate it.
Follow up with cs224/cs231 if interested.
If the invention is good but the team seems incapable that would be a reason for non-investment.
Also - "hard tech" seems like the wrong thing to be aiming for. There are lots of hard problems to solve with simple tech and disrupting markets. Are these not valuable targets?
Amazing to believe 2 years later they got bought for a billion dollars.
So I guess that's
Cruise $18.8m
Ginkgo Bioworks $54.12M (engineers new organisms) and
Helion Energy $12.11M (fusion) ?
In context, those numbers don't feel that big to me.
Magic Pony (machine learning for reverse-compressing video data, re-adding data that was removed during the compression process) is pretty cool.
http://www.ri.cmu.edu/research_project_detail.html?project_i...
Good luck with your funding. I can certainly commiserate.
Hard tech has always been "back" (when did it go away, Elon Musk?), but it is quite the pivot from the YC of yesteryear that capitalized on things like better UX for AJAX calendars, web hosting, and drag-and-drop file storage.
The really hard tech though really evokes that initial visceral reaction of "too risky" for investors, especially if there's no real indicators in the form of traction or an MVP ("well just wait a sec there, professor, the problem is hard, so we haven't solved it yet").
As an investor, I certainly wouldn't feel comfortable shoveling stacks over to some guys who told me they were going to build true AI with a decade-long outlook. Yikes!
It's also a tougher proposition for founders. You're basically betting 5-10 years of your life on a problem that you don't even know you can solve with no revenue/exit strategy in sight. Meanwhile, that guaranteed salary at Google sure is looking more and more appealing.
I would almost recommend graduate school for these types of people looking to leave their mark on the world in solving a really hard problem where any real contribution only inches the world closer to solving it.
The struggle is real for all actors here.
For founders, the trick is finding that sweet spot where a problem sounds hard on paper (such as self-driving cars or VR headsets, wooo!), but actually is feasible using current technology (e.g. stick some lenses in a piece of cardboard), but due to timing or market forces or whatever, nobody is currently paying attention to it yet.
Then at least, you can execute just like an AJAX calendar app would and obtain the same outcome (to vastly understate the challenges involved!).
This is how true innovation happens. Like evolution, innovation is not a steady inching forward (though that kind of progress certainly operates continuously in the background), but a series of sudden leaps punctuated by relative stability. Those sudden leaps happen when the right brain is in the right place at the right time to make the right analogy or synthesis with existing ideas. You can't fund people to produce it on command, you can only hope to be among the first to recognize that it has happened and to invest in it at that early point, before the innovation is disseminated.
For an approach that does seek to produce innovation on command, see Ken Stanley's work on novelty search: https://www.youtube.com/watch?v=dXQPL9GooyI
People think of AJAX calendars as a joke startup idea now because the techniques for doing this have been well-publicized for a decade now. The trick to creating (what appears to be) a revolutionary startup is to find other techniques that are not well-publicized and then apply them in a new, surprising, and useful domain.
Certainly, the real legwork was done by the browser authors at the time who revolutionized the web by adding these features?
Is it more of a call-to-action? "Make startups!"
There are certainly some things that other people view as hard - like searching the web on every keystroke - that I view as...well, not trivial, but a simple matter of applying capital and writing code, because I know how it all works behind the scenes.
I'm guessing this article is attempting to focus attention away from all of the "The fundraising environment is falling!" and "My mobile app never got traction!" posts to where there are opportunities to exploit an information monopoly, and trying to recruit founders with this specialized technical information to YC.
(As a side note, I actually expect we're in for a large mobile renaissance in a year or two, with many more actually useful mobile apps becoming commonplace. But the "specialized knowledge" that will drive this is market knowledge, not technical knowledge. It's people with intimate knowledge of a problem space being able to acquire just enough technical skills (or partner with a mobile app dev) so that they can build & market a useful app. This is a power shift from technical founders to business founders in the mobile space, while the technical founders go off and build hardware/VR/AI startups.)
YC was founded in 2005; these weren't especially hard problems in 2008.
http://ejohn.org/blog/selectors-in-javascript/
DropBox was also "hard tech" when it came out in 2007; it was file storage, but it was file storage that worked by reverse engineering the operating system so it could hook into Windows Explorer, Finder, and whatever Linux file manager you were using.
I think you're arguing away from what the YC Partners would admit. They didn't fund DropBox because Drew showed up and said, "I don't know if file syncing will work but..." He was a designer who said, "I can make the user experience easier." Whether there were aspects during implementation that were tricky is not surprising but also moot. (And remember Gmail was introduced in 2004; by 2005, AJAX was not as crazy new as you're trying to make it sound.)
YC doesn't fund "hard tech" because they want to make money and the fastest way to make money is to find new uses of existing tech. Now we've found we've driven that car as far as it would go and because we didn't invest in gas (new tech), we're stuck.
Either way, I doubt Dropbox even touches the OS kernel. You can implement all of Dropbox's functionality in userspace using things like Shell32 and file CRUD operations over system calls.
You can't possibly tell me I need to reverse engineer my OS to write a program that downloads and uploads files to the Interwebs? Maybe inotify is the one mystical ingredient...
2007 wasn't exactly the dark ages of computing technology that you make it sound like. BitTorrent was solving the "hard problem" equivalent of Dropbox in 2001, AND it was decentralized :o
https://msdn.microsoft.com/en-us/library/windows/hardware/dn...
http://allthingsd.com/20120815/inside-dropboxs-reverse-engin...
When I messed with Finder, I could get it to do a surprising amount of things just by editing plist files.
I feel like there is probably near parity in the risk between these "hard tech" problems and things like social tech, etc., that many investors have gravitated toward. It's like "Can we build it?" vs "Will they use it if we build it?"
I really do hope Sam's article raises attention more toward the former though. I suspect you'll see more startups coming out of that bucket in the impending winter while the latters' collective refrigerators all run out of Odwalla.
Or create short-term intermediate technologies and make money of them and use that for r&d on the hard part.
I couldn't even find anything about the "services" Theranos offered (and it seems unlikely they would pursue the multi-year bureaucratic hurdle-jumping FDA approval process for two different products concurrently). I only see something about an equally controversial SARS detector but with strong indications that it was developed pre-Theranos by the founder.
Very curious, why do you think you need to run your own clusters, to the point where you think you need to seek unusually risk prone capital?
If your justification is that you are are optimizing for cost (e.g. maximizing your performance per dollar), then you must think the capex dramatically lowers opex at scale if you move from AWS to specialized hardware (say, an FPGA bare metal cluster instead of a GPU or CPU cluster in AWS). In such a case I would argue that you should just get enough paying customers first using AWS, to build up enough cash-flow that would then clearly justify the capex for scaling up and going colo. And at that point, you would not need to shop around for wild risk taking capital, the CBA could easily be explained to any VC and in fact you could probably even just get a bank loan to finance the capex if it is a clear winner in reducing costs.
The only scenario I can see where you really need to run your own hardware from day 1 is if you need to terminate some dedicated circuits for specialized data feeds (e.g. real-time market data)... In that scenario, I would recommend looking into co-locating the data appliance in a third-party data center that is physically nearby to US-EAST and can run a Direct Connection into AWS for you.
Otherwise, you may want to consider the possibility that your desire to own your own cluster may be a case of premature optimization and scaling up too early/too fast. It's a very expensive thing to do and an easy way to accidentally run out of money if you don't have client contracts signed beforehand.
And would most engineers consider Cruise really hard tech? I don't know (I mean that honestly, not passive agressively).
Sama sounds like Donald Trump with the "I told you so". Unlike real estate, science can't be bullied to success. This makes me increasingly bearish on YC's future.
This article is not exactly re-assuring because the noted interests - AI, biotech, and energy - are all extremely crowded fields more than likely competing with large institutions, research organizations, and let's be honest, probably a TON of regulatory hurdles to consider if planning to do business in the US.
For context, one of my primary inventions is a mobility / utility device that would have residential, commerical, and industrial applications. By design it can be applied to a variety of uses. I've done basic patent research and the pathway looks extremely good, quite tempting for me to just go ahead and file ASAP. It's hard tech. It's not glamorous, but it's a huge market opportunity on prima face.
I've got a co-worker pal who finally got his beverage and branding invention patented and now he's in the marketing to local schools, catalogs, and if early indications are correct, he may have an genuinely lucrative future with it. In my view, he's a more likely investor target than anybody out on the West Coast or in a VC room. I simply base this perspective on personal experience and how this post sounds promising yet concludes with a short list of massive goals. Might as well wrap it up with "We just want to invest in a better mousetrap" considering the scope. Cottage industry isn't runaway freight train profit creation, I get that, but I'd also counter that if one wants to get into the next frothy bubble of biotech then good luck with that.
But YC is in the business of hopping aboard every rocket ship it can find. Sam & Co do not want to invest in small business. They want massive payouts. It's the only way the VC game works.
If you're dedicated to getting funding, you have to keep knocking on tons of doors until you find an investor that matches your particular payout goals.
The West Coast / SV venture capital scene makes a ton of noise about massive successes to entice many otherwise-profitable small business ideas to try and become huge. When they don't reach a hyperbolic trajectory, it's a VC failure, but the same business could have easily done well for the founders and early employees as a lifestyle business. A stable orbit if you will, but not going to the Moon.
Find investors who want reasonable returns from your business at your scale. Don't think that the SV VC approach is the only way to get your business idea funded.
I do understand VC might not be the proper target in the purest sense but it's a similar story for most small businesses if I'm not mistaken. Like in hard bench science research - funding goes to those already being successful. Is it really practical to "boot strap" a hard tech company? I draw a lot of inspiration from the Wright Brothers, but I'm still pragmatic.
If there's a 'ground floor' arena where cottage industry would be best served, I'm all ears and would love links, guidance and direction to make progress. Not kidding, it's already been a few years and I've got another half a lifetime to keep plodding away.
The problems you described with these fields are known as "barriers to entry". They are bad for competition and foster lower-order market structures and/or price distortion in virtually any industry, not just those in the tech sector. Thus they're generally frowned upon by all but the most extreme laissez faire capitalists:
Don't pretend that Silicon Valley is not superficial in many regards. Yes, some of those silly, fluff apps have gone on to make money and that's your metric so you defend it.
But for many people, Silicon Valley embodies a different principle, like the one found at Xerox PARC, of people trying to make the future better and not just drive a nicer car.
Sure, I understand that my expectations of how a company looks so early on might be skewed and they have only about 3 minutes, but all the speeches were so templated (stressing ridiculously overhyped market values etc.) that I thought they were really uninspiring. Might be the fault of the VCs who are just looking to randomly jump on the next potentially successful ship endorsed by YC, but I honestly got tired of hearing about the next app that will change the world of X within 10 minutes.
As you mentioned, some of these products have been genuinely amazing and winning lottery tickets that on average bring huge profits to YC, so we should probably look at it more pragmatically rather than expecting them to make the future better.
For example, I'm required to post a video of myself/group talking about the project. I'm not posting a damn video. Fine - I get that you want to be able to see the product/s up close with the passion of the founders, etc. But, hell - the project I'm working on is dirty, "hard", far from glamorous and isn't very presentable - especially on camera where my strong anxieties come out. Though, because of my personality I'm effectively disqualified, despite all else.
If I'm missing something I'd very much like to me corrected.
I understand what it shows as a signal. It's a shitty signal.
Not trying to sound too negative here, but it's a legitimate problem that needs to be addressed. The general heuristic these days is to follow charisma, which in my experience has led to mediocrity, disaster and only everything that comes between. It's the exact impression I got from YC after that process.
Fine. But if you want VC money, give them some credit and assume that they can decide for themselves whether or not your lack of charisma will be a factor in your business. Presumably, some of them are good at their jobs and can correctly make that determination.
Furthermore, to refute your entire claim, there have been many articles suggesting that VCs actually exhibit a selection bias towards social awkwardness, since so many socially awkward people have been terribly successful recently. You're assuming that they're looking for highly charismatic salespeople (and maybe for some companies they are), but what facts support your claim?
What makes you think it's a problem with social awkwardness. There's nothing awkward about it, unfortunately. I'm sure I'm not the only one dissuaded by the requirement to post a video. Phone call, skype, in-person, morse code would be better.
I'm not exactly saying that they're actively looking for charismatic people. I'm saying that requiring a video artificially creates a preventable bias towards those much more comfortable in front of a camera.
I'm using "social awkwardness" (perhaps incorrectly) as an antonym of charisma. If things are biased in favor of charismatic people, then presumably they're biased against uncharismatic people.
> I'm sure I'm not the only one dissuaded by the requirement to post a video. Phone call, skype, in-person, morse code would be better.
You're probably not the only one, but personally, a phone or Skype call causes me more social anxiety since I'm on the spot and have less control over the presentation. So, yes, a video biases towards people who are comfortable on camera, just as a phone call biases towards people who are comfortable on the phone.
You're thinking of the problem only from your own perspective. Can you imagine difference in logistics between watching 1,000 one-minute videos versus organizing 1,000 one-minute Skype calls?
>> The general heuristic these days is to follow charisma ... It's the exact impression I got from YC after that process.
> I'm not exactly saying that they're actively looking for charismatic people.
Ok.
It's a complicated problem that unfortunately has very little visibility. The only reason I post these thoughts is to hopefully help raise visibility on folk similar to me so that those who aren't similar can have a little extra understanding.
Another way to look at my posts is, "Let's be slightly more accommodating, less rigid and less nitpicky to the dissimilar." Because that's where a lot of hidden things lay..
What would you think is a better proposition for investment?
1. Someone who can do all that, partnered (or to later hire) someone who does deep technical dives.
2. Someone who must necessarily hire sales, management, and PR in order to get to step #2 of any business plan: make money.
Even so their bar is low. They're not looking for generalist experts, merely people who are at least willing to participate in all parts of the trade---including making video proposals, and giving press conferences.
You need to persuade people to invest.
You need to persuade people to work for you, good people especially, in the early stages when maybe you can't pay as much as other people or you can't promise a stable career path.
You need to persuade customers to buy your product, or if you don't sell it directly you have to convince store fronts, manufacturers, and the whole gamut that they're taking a justified risk on you.
And yes, when you go onto the Ycombinator forums to complain about their approval process you need to persuade readers that you have a point.
Having social anxiety, or a distinct lack of charisma will interfere with all of these.
Really, all I'd like to see is some sort of other avenue through YC that doesn't necessarily require a video to be posted since that adds to a particular sort of bias.
They're also looking for you be willing to step outside your comfort zone. As a founder you'll constantly have to do things that don't come naturally to you -- talking to investors or customers, interviewing employees, and even firing employees. The fact that you're not willing to make a 1-min video of yourself is a negative signal that you won't be able to step up and do those hard tasks that make you uncomfortable. Being a founder takes more than just being able to build the best technology.
I do think that there could be a middle ground, though. An explanation of the video requirements within arm's reach would be nice. I didn't see anything relevant on the FAQ when I looked.
I'm not critical of Silicon Valley. Silicon Valley includes many companies working on hard problems, or investing money into long-term moonshot programs.
The criticism is levied towards, for example, the social media giants that pull in top engineers to work on social media problems exclusively. The criticism is also directed at Silicon Valley VCs, who lure smart young people to work on semi-trivial problems because it's the quickest path to profit.
It's not necessarily fair criticism. VCs have an incentive, first and foremost, to fund successful businesses. If their surest path to success in today's economy involves building semi-trivial apps, that's what they'll pursue. The same can be said for the finance industry, where the most successful players are employing our nation's top mathematicians and scientists to extract money from public markets using high-frequency trading. We can't expect them to self-regulate. But how can we incentivize smart people to work on something less lucrative?
Craigslist is perhaps an even more pure example of that, a "technology company" where having almost no actual technology, beyond the very basic level of "a webpage", is kind of their ethos.
Sam channels Baghdad Bob for a minute there - "there are no American tanks in Baghdad. Especially not the one that just rolled by on-camera"
Doomsaying is only interesting when you get it right.
I think that Sam is saying, "If you have a good idea, you'll succeed regardless of whether the economy is good or shitty." If you have a bad idea, you'll fail regardless.
The ones who really benefit from the strong economy are the marginal ideas - ideas that normally would not get funded, but people have the spare money to throw at lottery tickets on the off-chance that they're missing something. Cue Pets.com and other 90s Internet startups.
Lost all interest in saltman's point when I read this line.
It's a valid criticism, regardless if the people who are making it are "builders" or not.
It was a turn off, because it makes the author seem bitter about (what I think is) a valid criticism.
Time is valuable. When writing an essay, the introductory paragraph is how the author gets the reader involved in it.
That line reads to me like bitterness, so I concluded that it wasn't worth my time to read any further.
And this being the internet, I felt it was worth my time to post a comment saying how I feel.
It wasn't my intent to post a comment about the other points in the article (which I obviously did not read).
Why can or should criticism only come from [1] people that are building things themselves? What about the press (as only one example) or people who write books? What about people teaching in colleges? What about people leaving comments on HN or any other forum?
Criticism only valid if coming from someone building something themselves? Don't agree with that. [2]
[1] Which to me by the choice of words is what is meant by this statement.
[2] If that is the case companies should never solicit any feedback from their customers about their product or their business model.
> Why can or should criticism only come from [1] people that are building things themselves? What about the press (as only one example) or people who write books? What about people teaching in colleges? What about people leaving comments on HN or any other forum?
Another interpretation is that while criticism can come from any source, those who are not building things themselves necessarily have a different perspective than those who do, and therefore their arguments should be heard in that context.
Also there are people not currently building but that have built something in the past (or assisted others who have done so). Such as sama or pg.
> have a different perspective than those who do, and therefore their arguments should be heard in that context.
That perspective could also be more valuable in some cases. Keep in mind that many of today's "disrupters" are people outside a traditional industry who actually do great things exactly because they have little experience and are not jaded. Fresh outlook not restrained by traditional thinking.
The problem that I had (if you want to call it that) was not that sama made that statement. It's the fact that I feel he implied a negative which was not warranted. Plus the use of "usually" when the truth is nobody is in a position to know the exact experience or background of someone offering criticism particularly what they have done in the past. [1] [2]
[1] There could be people even here on HN who have extremely significant backgrounds in building things that prefer to remain anonymous.
[2] I am now thinking maybe this is why PG has others read his essays. So he could simply change a sentence or insert a word and avoid criticism and excessive footnotes.
Because the people who associate themselves with their products will bite their tongues for business reasons. If Sam pretends like the only people who worth hearing criticize from are exactly the group that won't voice their criticism, he can act like there isn't valuable criticism coming in.
Am I building something? Who knows, I use this account anonymously so I can call bullshit, not be a kissass because I'm worrying about my reputation and the reputation of my products (if they exist).
Hah! Exactly. Look at my footnote [1] to my comment in this thread.
i thought Ycombinator self-posts were not "votable".
this is hardly hard-tech since the same thing is being done in a garage with off the shelf parts http://www.bloomberg.com/features/2015-george-hotz-self-driv...
I have to take issue here. I don't need to be a "builder" to see that what a given startup is building is either worthless or an attempt at solving a non-problem.
I'm not a helicopter pilot, but if I see a helicopter stuck in a tree, I don't need to be one to know that the guy screwed up.
Jeez, can we please move on and do something that actually benefits this world with our talents?
[1] http://zoox.co/
Big ass problem: Found one, where a the first good solution is a must have for nearly everyone in the world with Internet access.
"Hard tech" solution: A bunch of applied math, with advanced prerequisites, some original, for a unique, really good, fun to use, interactive and addictive, by far the best in the world solution -- Did that.
"Hard"? Silicon Valley has more hen's teeth than entrepreneurs who could understand the theorems and proofs of my math even if I explained it to them. Why? They didn't take the prerequisite pure/applied math courses in grad school. Neither did more than a tiny fraction of computer science profs.
Code: 80,000 lines of typing, running, in alpha test -- did that.
"We hope to hear from you."
You did, and you ignored it.
Using my HN UID, look up my submission in your records. If you are interested now, then let me know.
I invited Sam to contact me, and from my HN UID his records will give him my e-mail address so that he can contact me.
Sam requested that anyone with "hard tech" contact him. Here I'm taking "hard" as difficult, challenging, or technically advanced and not necessarily 'hard' as in 'hardware'.
I do intend to announce, say, my beta test on HN, but for the current alpha test that seems a bit early.
Sam asked people to contact him, and here I did and reminded him of my earlier submission that he might be interested in now.
At least for now, the next step is up to Sam.