Barriers to Entry for Hardware Startups | Hacker News Reader

Barriers to Entry for Hardware Startups

blog.bolt.io

32 pointsroarden37 comments

OK, so obviously this is not really about barriers to entry for hardware startups at all but is a puff piece written by a VC guy trying to promote something a firm he invests in is trying to sell. No need therefore to discuss actual barriers to entry for hardware startups (which are an interesting topic not covered at all in his article).

Instead let's look at his product, which was his actual article goal, for people to think about and discuss the product. It's a sort of plastic or aluminum wine bottle that has a LCD touch screen on the side and wifi. We can see exactly where this concept came from, it's the IoT model. Put wifi on everything, and if its large enough, put a touch screen on it as well. Plus some sensors, like the temperature sensor and a clock that pretty much costs nothing to add since most embedded chips have a temperature sensor in there already. So for each thing in everything: add wifi and touchscreens. At some point thing is wine since wine is part of everything. Thus this product's provenance is in asking "What can we do by pairing a wine bottle with wifi?" And so they answer this and make a product to answer that pairing. The design process and reason for being has nothing whatsoever to do with what anyone wants or would be or that would sell or be useful. It's about pairing every conceivable preexisting product with wifi and touchscreens and forcing them to do something, anything, and desperately hoping it will somehow catch on, no matter whether it makes sense, no matter whether it addresses any real problem or need.

I know it gets over-referenced here on HN but the old Henry Ford "if I asked people what they wanted they'd say a faster horse, not a car" quote is pretty applicable here. This obviously doesn't make much sense to us, putting a wi-fi chip on a wine bottle, but I'm sure people back in the 1900's didn't realize why it was important to have a four-wheeled vehicle with an internal combustion engine in it. I think we should be celebrating the fact that technology has come so far that we can feed the data collected from a wine bottle automatically to the computer in your pocket.

This is more like asking for a horse with a shiny, touch-screen, IoT saddle.

Except an IoT saddle could actually be useful because it could record horse riding related metrics that could contribute to improving the health, fitness and comfort of both horse and rider.

Except in the real world where said metrics wouldn't integrate meaningfully with the dozens of other devices that collect similar "useful" data into their own proprietary little gardens of infrastructure.

Obsolesence and device defects - I can imagine a saddle has a useful life of a couple of decades.

What are you really going to measure here beyond GPS and accelerometer data? The temperature and humidity of the saddle/horse interface? The strain and weight on the saddle? That'll allow you to report useful stuff like "your horse is tired and about to overheat", "you are to fat ride this horse", and the ever popular "this saddle is the wrong size for current horse/rider combo, please contact a sales representative". All the while taking in the views through the new and improved augmented reality interface on your smartphone, or hmd.

I mean why even have a horse at that point, it seems if you don't want to pick up on the communication from the live animal your riding, why not get a mud-bike.

I never said "very useful". I just wanted to highlight how an otherwise throw away idea might have some merit and wasn't the most stupid idea ever.

A faster horse is also very, very useful. It's not revolutionary. I can get 90% of the relevant information from my phone.

Most of products from these "disruptors" are nothing more than laughable. "Changing the world" with electric wine bottle with proprietary bottles inside? They complain about barriers to entry? They should be happy that they're not locked in psychiatric clinic after these "inventions".

"We've invented the wine bottle version of an inkjet cartridge or Keurig plastic k-cup, give us money".

VCs: HERE HAVE SOME CASH

To be fair, VC's aren't usually exactly after changing the world, they're looking to invest in successful companies. Inkjet printers and Keurig have been extremely successful, so you can't exactly fault VC's for funding the wine version of it.

Very true. I just don't think there's that much of a market for people who want to drink half a bottle of wine and have the rest remain 'fresh'. The average consumer is also becoming increasingly aware of how the razor-blade sales model is bad for them.

I don't really drink wine, but couldn't you use something like https://www.amazon.co.uk/Vacu-Vin-Vacuum-Bottle-Stoppers/dp/... instead of a proprietary bottle.

A wine distribution startup. That's a "hardware startup?"

This fits the criticism that startups are focused on the problems of rich people.

Yeah, I was expecting some aerospace or semiconductor tools, which typically require hundreds of millions in investment before launching anything. That's a real barrier.

"Kuvée’s system hinges on an intelligent wine sleeve that keeps wine fresh for 30 days after opening."

Personally, I don't recall a need for anything over 30 hours, and dumb seems to get the job done. I am sure there are others with less demanding requirements.

Were are you from? Here in Argentina a bottle of wine usually last only a dinner, in some cases until the next day (i.e. 12 or 24 hours). But I think that in USA is more usual to drink just a little of wine before a big meal, so the bottle may last more time.

USA checking in. No open bottle of wine in my house ever makes it to the next calendar day. Sounds like I might enjoy Argentina.

The market for people who take more than a sitting or two to finish a bottle of wine is probably very, very small.

The barrier here is, "bad idea."

Or untapped market.

As a single guy I don't buy wine at all because I won't finish it in time - not because I wouldn't enjoy a glass every few nights.

Though I can't see the expense of such an accessory being worth it to someone who doesn't need to show off. It is possible to seal and cool it for pennies - its just 'ugly'.

There is such a thing as single-serving wine, and it's a growing market.

Interesting. Presumably it is at an heavily increased cost though?

I would imagine this gives reasonable access to ranges of high quality.

In Poland and Germany there are small bottles of wine. They don't have them in USA?

I wouldn't know. I'm British

Seems like a low tech solution to your problem is boxed wine. Trader Joe's sells some good ones for ~$12 (and they hold the equivalent of 4 bottles of wine).

http://www.traderjoes.com/fearless-flyer/article/2762

Oh its not a problem. I just drink teas and whisky instead.

Would boxed wine really be a solution? The problem is of letting wine go to waste - something I don't really care about for cheap wine. If I am going to drink wine recreationally (not just to get drunk) I want to explore the full range - which is not available boxed.

Fair point. I am more into beer, so waste isn't as much of an issue (unless it's a bomber of really high ABV stuff, in which case I just wait for the weekend and/or when I am with someone to share). But I have found the TJ's boxed stuff to be pretty good and it successfully fills the 'glass of wine with dinner' need for me. I'd say stick with Whiskey!

I'm unclear on how Kuvée fits into the three-tier system [0]. Are they trying to supplement/replace the incumbent distributors, or are they in between the vineyards and distributors?

[0] https://en.wikipedia.org/wiki/Three-tier_system_(alcohol_dis...

Amusingly, there's a large California company, Frank-Lin Distillers Products, which has found a way to use the three-tier system in a profitable way. Usually, there are distiller/bottlers, who make and bottle alcohol products, distributors, who operate warehouses and fleets of trucks, and retailers. This results in three levels of markup.

Frank-Lin buys ethanol in bulk, from industrial-scale distillers in the Midwest. The ethanol is delivered in tank cars to the railroad sidings at their plant in Fairfield. There, they take tap water, run it through a deionizing plant to remove dissolved solids, mix it with ethanol, add flavoring, bottle, and ship it out to retailers in their own trucks. Most of the bottom-shelf booze on the West Coast, and some of the expensive stuff (they used to make Skyy Vodka, until Campari bought out that brand) comes from their plant. They make over a thousand different bottled products, but admit that there are only about a hundred different recipes. There are still three tiers, but the markup on ethanol when you buy it by the trainload is very low.

They use a huge number of different bottles, with elaborate designs and labels. Their plant is conveniently located next to a Ball bottle manufacturing plant. They have automated bottling lines which can switch from one product and bottle to another without manual adjustments. This allows them to feed customer illusions about liquor while keeping the manufacturing costs low.

Frank-Lin is moving into wine production.They make "Maestri Chianti", which has decent scores from wine snobs. Same concept, just different bottles and flavoring. Who needs vineyards and wineries when you have an industrial plant and the right formulas? Now that's disruption.

Fascinating! and mind-blowing to think about operations on that kind of scale.

Thanks for taking the time to share that.

OK, so here are my barriers (from painful experience)

a) Need to run a very multidisciplinary culture - electronics, product design,brand, marketing, software, firmware, sourcing, manufacturing, dfm, test, compliance, distribution,returns, cust service etc.

b) Need to synchronise the rhythms of delivery of these different disciplines (no agile process for hard-tooling molds)

c) Need a defensible business model eg some software/ service/ brand component so you don't just get copied

d) You need capital for your supply chain and partners. Volume matters, sometimes you can't even get to the table without volume purchasing. NB you need capital for your first 2 products.

e) The competition is really good (Apple,Sony etc.) The margins are small. The business model is much worse than software or services. Many hardware companies make their money on related services (phones, consoles, printers) so customers don't realise what a 'fair' price is for a hardware item.

How does this company convince vineyards/wine distributors to adopt the proprietary bottle?

One reason is mentioned in the incentivize stakeholders section. The vineyards apparently get more money when they use the proprietary bottle.

I imagine that's better stated as the vineyard getting a higher percentage of the retail price, but that's not a big difference.

edit: the same section mentions not using distributors (I guess they are doing direct to consumer sales for now).

That's when being in good terms with Vinnie Nine-Fingers and Tony Fatso begins to pay off.

Presumably they don't have to (at first)... they just buy retail or wholesale and re-bottle it, either under CO2 and/or using a flexible inner pouch and leaving no gases inside.

They could have done the whole thing without that outer bottle with the WiFi enabled display. Just put a label on the metal bottle and be done with it. Needless complications and expenses...

I get where they're coming from. Locking consumers into a proprietary consumables ecosystem looks good on paper. If you can pull it off (inkjet, Keurig), it can be a big, valuable business. However, it rarely looks good to consumers. That was important to us when we built https://www.pantelligent.com/ -- you shouldn't have to get locked into something like Blue Apron just to make home cooking higher quality, higher variety, and more convenient. You should be able to go to your local supermarket, grab an ordinary $8 salmon fillet, and have an extraordinary culinary experience.

Discussed earlier: https://news.ycombinator.com/item?id=11377255

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