Comment by mtlynch | Hacker News Reader

Comment by mtlynch | Hacker News Reader

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I've been doing this for the past 18 months with a Raspberry Pi-based network administration tool called TinyPilot. I originally launched it on HN in 2020[0], and there was enough interest that I turned it into a real product[1] and have been iterating on it ever since. Like you, my background is in software, and I had no hardware experience aside from using the Raspberry Pi as a cheap server on a few projects.

I've never found a good guide on how to get started in hardware or eCommerce, but I've been posting yearly[2], monthly[3], and weekly[4] updates about my experience learning as I go.

One thing I wish I knew at the beginning: it's difficult! Scaling a hardware product is probably 10-100x harder than scaling a software product. There's nothing like GCP or AWS that scales from one to thousands. Vendors that offer fulfillment services won't work with you when you're only selling tens to hundreds per month, so you have to do everything yourself. I built my own fulfillment center[5] and hired people to staff it, and that's complicated because that gets into inventory management, employee payroll and benefits, insurance, etc.

The difficulty is a double-edged sword, though. It prevents people from competing with you because nobody else wants the hassle. But the downside is that you're the one who has to deal with the difficulty.

[0] https://news.ycombinator.com/item?id=23927380

[1] https://tinypilotkvm.com/

[2] https://mtlynch.io/solo-developer-year-4/

[3] https://mtlynch.io/retrospectives/

[4] https://whatgotdone.com/michael/project/tinypilot

[5] https://mtlynch.io/retrospectives/2021/05/

I write this with true love for your effort, but do I read your 2021 annual retrospective correctly stating that you made $13K on $477K in revenue? Maybe some of your expenses are paying yourself for software development, and that's just your corporate income?

Consider reading this book:

https://www.amazon.com/Sell-Margins-Higher-Than-Competitors/...

I would really consider raising your prices. I found that when I first started my business, I had a subconscious desire to replicate my income at my previous job, which caused me to irrationally underprice my products. After 2 years, I got over it, and it transformed my life. You've done an amazing amount of work. You should get paid for it (or, if people won't pay for it, get out). My dad used to say, "I don't do work for practice."

>I write this with true love for your effort, but do I read your 2021 annual retrospective correctly stating that you made $13K on $477K in revenue? Maybe some of your expenses are paying yourself for software development, and that's just your corporate income?

Thanks for reading!

No, that doesn't include paying myself. But it's also worth mentioning I also had $59k in raw materials at year-end. If I had to liquidate everything, it would cost about $5k to assemble the raw materials into ~$200k of product and ship them to customers, so I'd theoretically walk away with $195k.

I've always had a hard time assessing the financial health of the business because I'm investing a lot into future growth. Because of the supply shortage, I have to stockpile a lot more raw materials, so as sales grow, I'm also buying more materials to meet the new scale. And a lot of my costs are one-time events that I expect to pay dividends over time (e.g., hiring EE vendors to design a new product, hiring a design firm to overhaul the website, paying developers to add features).

>I would really consider raising your prices. I found that when I first started my business, I had a subconscious desire to replicate my income at my previous job, which caused me to irrationally underprice my products. After 2 years, I got over it, and it transformed my life. You've done an amazing amount of work. You should get paid for it (or, if people won't pay for it, get out). My dad used to say, "I don't do work for practice."

Thanks! This is something I have trouble with because it's hard for me to measure the optimal price. My volumes are too small to really A/B test different prices effectively. Over the course of the business, I keep raising the $50 thinking the new price is crazy, and then people continue buying anyway.

> I keep raising the $50 thinking the new price is crazy, and then people continue buying anyway.

Yes! It is your business, and you know best, but this sounds promising to me and reminds me of my situation. That is why I recommend that book. It argues compellingly that you want to sell less at higher margins, all things being equal. That gave me the courage to raise prices, and I ended up selling just the same/more at higher margins. Raising prices takes courage, and clearly there is some point where you go too far, but it's worth really pushing yourself emotionally to consider it early in the business. If I had not radically altered my pricing 15 years ago (15 years of massively higher income potential and counting! crazy) my life would be so different than it is now.

Rather than thinking of A/B testing, I would try to think of how much value your product adds for your customers, and then capture some reasonable percentage of that. Think of it very broadly (again, see the book). There is more value here than just the hardware/software. Your customers may value dealing with you instead of dell, etc. Try talking to some good customers about how much they would really pay. Some won't feel comfortable, but others may blurt out "we spent $3k on your hardware last year, and the truth is it's a rounding error for us. We just want someone who delivers a solution and answers the phone in person (or whatever)"

Anyway, I wish you the best of luck. After writing my original comment, I realized you had only been operating for 18 months. That, combined with your inventory assessment (I am in software, and have no inventory, so I didn't think of it), seems very promising!

Sounds like you might have a software startup rather than a hardware one.

Most of the value may be in the software for sure, but TinyPilot is a KVM (I had to look it up; knew I recognised it from somewhere but couldn't think what it was. Think I saw Jeff Geerling review it.) so there's hardware involved, inventory, a product to ship.

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