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Comment by leoedin | Hacker News Reader

The reason that a larger number of hardware startups have recently appeared is quite simple - these are mostly actually software companies. Modern hardware that a startup might produce - IoT stuff, small computers etc - are essentially bare-minimum hardware wrappers around black-box chips.

The complexity of developing hardware is driven by the number of discrete components used. Every additional resistor is a resistor which can be fitted wrong. Every additional analogue circuit built using discrete components is a huge risk. To build cheap hardware, you avoid all that as much as possible by building PCBs which just wire up highly functional ICs.

In essence your hardware company then becomes a software company.

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> The complexity of developing hardware is driven by the number of discrete components used

Sorry, that's not even close to being true.

Interesting how on HN "hardware" seems to mean "a board with chips". You know, like a Raspberri Pi. That is one type of hardware but not, I dare say, where the $10B (and maybe even $10M) startups would exist.

We are developing two hardware products right now. One is an innovative fire fighting system and the other a CNC machine. The complexity in these designs has very little to do with what chips you place on a board. For example, we expect to have to run three to six months of FEA simulations to validate aspects of the fire fighting system and then have to iterate through several design candidates over several months.

Beyond that there are regulatory issues that could up-end any design if you don't know what you are doing.

Packaging. I almost forgot packaging. Man, that can consume months of testing. You can design a beautiful product only to have it damaged during transportation due to incorrect packaging.

Oh, yeah, you also have to have good software.

Nah, harware isn't just about chips on a board.

Bingo! Reliability, safety, malfunctions in batches of screws, etc. Hardware is more complicated because more is going on. With software: Oops! Gotta restart the phone, shucks! With hardware: Crap, dropped it, gotta buy a new one.

more on the CNC machine?

Hmmm. What can I say?

Very beefy modular tabletop gantry; AC servos; Automatic Tool Changer; probably 3HP CAT 30 or 40 spindle; coolant; Rigid tapping; weight in the 500 to 1000 lbs range.

No, it's not your typical DIY 80-20 t-slot machine on eBay. This is intended as a serious step up from something like a Tormach without having to spend $100K+.

No ETA yet.

Awesome stuff. I hope you post about it.

Also there are little if any "do overs" with hardware. If you manufacture it and you make a mistake and it can't be fixed with software then you have a big problem to deal with.

You will almost certainly find the mentality of people making industrial equipment (or airplanes) different than people who write software where it's just about accepted practice at this point to push products into the channel and fix them later. In a sense your customers become your beta users.

Wasn't always like this (with software). I am getting software updates from Apple it seems every few days. Back in the days of floppy disks and prior to the Internet they had to spend more Q&A time because it would be rather expensive to fix problems with buggy code.

At the least, there are a bunch of strategies that you gotta learn to mitigate the cost of do-overs. It's planning for all the things that can go wrong. Trying to decide whether that logo and your heartfelt "Designed in California" should be embossed or debossed on your case? Learn what "tool-safe" means, and when the moldmaker screws up your font, you'll have a cheap fix instead of scrapping your $10K mold.

> One is an innovative fire fighting system and the other a CNC machine.

What kind of company developes both fire fighting machines and CNC machines?

Are you employed by a prototyping company or something like that?

The only other set-up I can think of where such a combination could occur is something like Mitsubishi, very interesting!

> What kind of company developes both fire fighting machines and CNC machines?

> Are you employed by a prototyping company or something like that?

Yeah. Prototyping company immediately came to my mind as well. It could also be a private R&D institute that does projects on (e.g. EU) grants. I have a friend working in the second, and apart from doing various weird hardware for EU money, they do some batshit crazy stuff when they're bored at work. There's a guy there that routinely does things like driving around the parking lot with a pulsejet-powered warehouse trolley, drawing things on concrete with a DIY flamethrower or spending few months of free time on doing a beautiful, steampunk-style Geiger counter/night lamp.

I own the company. We do both product development for third parties and our own products. Software, electronics, mechanical, anything. From LED's to robotics. We are also developing a neat portable barbecue system that might be launched via Kickstarter.

Very cool! That's just about as good as it gets.

Owning your own business: You get to choose which 20 hours of the day you are going to work! But, yeah, it can be fun.

I wouldn't have it any other way. Congratulations once again. If you're in Europe somewhere please drop me a note and I'll be more than happy to visit if you want me to.

Packaging is best thought of as another hardware product itself. Form and function have to be design-gineered, and materials and parts and assembly have to be corralled into a schedule and budget.

The idea that software is eating hardware, while true on some level for some class of products, is also what leads to lots of startups with solid software backgrounds offering a beautifully designed product that suffers from cost overruns, delays, mechanical and firmware bugs (you think having to test an app across a couple of phones is a pain, try field testing your smart lock). "Move fast and break things" is very different from the mindset needed to build hardware.

Be mindful of the perspective of the authors when reading these tragedies: https://medium.com/@stevekreyos/the-rise-and-fall-of-kreyos-... https://medium.com/@Haje/how-a-half-million-dollar-kickstart...

Right, I didn't mention such things as thermal and environmental testing. How is your widget going to work in an Icelandic winter or at the peak of summer in Death Valley? How about dirt, grime, dust, vibration and humidity, rapid cycling, cycles per day, drop, impact?

The list is huge and highly dependent on the product being designed.

About ten years ago a company owned by a friend of mine shipped a machine worth $800,000 to Japan. The packaging/crate was not designed correctly. The machine suffered irreparable damage during transportation. No, there was no penetration of the crate. It was purely inertial loads on components that were not supported for transportation. They bent. It was probably a combination of forklifts, trucking, port container handling, etc. The machine was a total loss. The insurance company was not happy.

Also: EMC testing, RFI, etc. Certified by a test lab that will cover both North America and Europe.

On shipping: these days it's pretty common to ship everything with mechanical accelerometers in the packaging that trigger on high loads so you can tell when the crate has been dropped. Crazy how often it happens.

That TriggerTrap thing is a lesson in poor project management. They outsourced all their technical work to agencies with basically no oversight and with no strong technical knowledge in house! Kreyos seems to have been in a similar situation.

I think really the lesson here is that you really, really, really shouldn't try to build an electronics or software product without in-house knowledge of electronics and software.

Packaging is hard. I'd like to additionally nominate cables (as in wire harnesses) and strain reliefs to the list of things that make my life miserable.

Oh, yeah - hardware wears down over time in ways that software doesn't. Closest thing might be having to support new OSes, but that's not the same as failure when doing the exact same thing you always do in the same configuration.

Which leads to increased replacement costs. Other fun costs to account for in the physical world: loss rate in transit, defect rate in manufacturing, inventory costs.

Just curious: what software do you use for you FEA simulations?

Mostly Solidworks simulation tools. Flow and mechanical.

Moreover, if you look closely at many so-called "hardware companies" (especially IoT ones), you can see that they actually stick a SoC into a nice packaging and build an app and a cloud platform for that, even when it makes no sense whatsoever. Why?

Because that's how they get the money. On the cloud it's easier to keep monetizing your customers, and more importantly, you can literally just point out that you have "A platform! That grows!" and get investor money. They all are software companies - not only because it's easier than hardware, but also because it's easier to get funding.

Some of the companies you'd thought of as hardware ones actually admit it. I recall hearing Estimote guys repeatedly telling that they are not a hardware company - they are a software one, that just happens to make trendy beacons.

Because the software platform is the valuable part of IoT. The technology behind most of the hardware is commoditized and cheap; VCs are investing in "hardware" companies because you need to sell hardware to get your software in the door. VCs know that hardware gives a lot lower potential returns than software, so they just focus on the value of the software because that's what they know.

The big problem is that IoT isn't really a hockey-stick business: the configuration of even a modest whole-home setup is so complicated that consumers can't do it themselves. You won't see the valuations that accompany software startups because user acquisition is so much harder that they will never give the growth returns that a software company can. Contrast an IoT platform that you have to buy a $50 device to use with a service like Dropbox where there is little to no barrier to becoming a customer.

Ultimately, I think IoT will enable spiffy home automation systems to come down to the price range of mere mortals. But I don't think it's the next $10B market simply because it doesn't solve any problems that most people have.

Nest was acquired for $3.2 billion. The thermostat measures home activity and controls your HVAC. The reason it's highly valued is because of the aggregate of data from all thermostats, which they use to optimize the environment for each customer. Nest is the beginning of home automation for the masses, a market easily greater than $10B.

A/C is one of the few use cases where there is a need that was addressed. A/C accounts for the vast majority of energy usage in most homes, so optimizing it can provide real cost reduction. It's also really easy to install since there was already a single control point for the A/C in the form of a thermostat. Just look at Nest Protect if you want an example of an IoT product without a customer need; they add cost and complexity without any real benefit over normal smoke/CO2 detectors.

A need for A/C optimization doesn't extend to there being a need for IoT/home automation as a whole. What benefit exists for a "smart" house? Drastic energy reduction can be achieved through simple use of CFL/LED light bulbs; they don't need to be Wi-Fi connected. What else would you even want automated in your house?

EDIT: Also, my original point stands: Nest is not a hockey-stick business. They get revenue when a customer buys a product, yet their platform has to support all of the thermostats they've ever sold.

This comes off as the famous (apocryphal) patent quote from around 1900. "Everything that can be invented has been invented"

I think a lot of people (myself included) think there are lots of potential benefits to a smart house. I don't think we're there yet. Most of what exists now isn't very user friendly, and most don't have easy setups so the things that are out now are unlikely to have huge hockey stick growth.

However, that doesn't mean their are no benefits, and it doesn't mean the industry as a whole won't see large growth in the future. Google and Apple are both investing somewhat heavily in the area, along with a huge host of startups. Clearly there are people who think there are possibilities in the space.

As a small list of examples for myself: 1. nest is obvious

2. locks are key feature for me. if i can have my door unlock when i get to it with my phone or watch or whatever that is a win.

2.b. remotely unlocking things could also be nice, if i'm meeting someone and they get there just ahead of me. Alternately giving friends temporary access if they are staying for a weekend.

3. garage doors, see 2 and 2b.

4. remote control blinds (perhaps a bit more than is necessary, but i could see it being nice in my bedroom

5. lights, having them come on in the room i'm coming into with my auto-unlocking door, so i don't have to fumble with them when my hands are full of groceries.

without trying, off the top of my head i came up with 5 things i'd like to have in the next house i build. I suspect Apple and Google and the startups working the area for a few years might come up with 1 or two more that turn out to be really awesome.

It's not that there are no benefits, but there's not a driving need that these products you describe solve that makes up for the additional cost and complexity that implementing them provides. What's the value proposition? If it's "just cool", then there probably isn't one.

1) There are real benefits with Nest since it can reduce energy consumption. Also, Nest isn't really a whole lot more expensive than other thermostats, and there's very little additional complexity.

2) There are lots of problems with locks: you're taking a $15 item, adding some wireless gear and servos to it, and adding significant installation cost and complexity (since you have to somehow power the thing). The alternative is you spend a few bucks getting keys cut to give your friends temporary access. Also there are security concerns here.

3) This one is pretty low effort (since there is already a lot of radio equipment in a garage door opener) but also pretty low benefit: 90% of the time you open the garage door you're in your car, where the opener is within easy reach. I don't think the value of this feature is very high.

4) They have these today. Less useful than you might think, and like anything mechanical, they break. Also, since blinds are typically not powered, this adds cost and complexity since you have to run electricity to your windows. These are a niche product in my mind; if you couldn't justify them 10 years ago, you won't when they're connected to an IoT platform either.

5) While cool, it's still hard to justify the additional cost and complexity. There's not really a driving need other than "oh that's cool". Until the cost comes down significantly, it's still a niche product for people who want to geek out their home. At today's prices, you're looking at $40 for a single light switch compared to $5 for a non-connected switch, plus you have to configure it to do what you want.

I'm all for building cool new products, but consumers want products that reduce cost and complexity, not ones that increase them.

The other thing about #5 is that you can use a $15 motion switch and skip all of the drama of networking, etc.

Re automated lights and the garage door. I have a SmartThings hub and a number of associated motion sensors and z-wave power outlets. I also have young kids so am often up at odd hours. Being able to automate turning on and off certain lights based upon motion is fantastic when you are stumbling around a house half asleep. I've also got my garage door hooked up to it and love being able to let someone in if I am not home or not having to take keys if I go out for a bike ride or walk. Yes there is a cost and configuration can be a hassle, but there is benefit beyond being "cool". My next project is connecting OpenSprinkler to the external z-wave motion sensors to deal with deer raiding a vegetable garden and kids trying to get into a hot tub....

Oh I never said these things aren't useful; but there is still not a market need for them. In your case, you had a specific problem that you wanted to solve, and you solved it. Another solution could have been to install a few night lights around your house. Until IoT solutions are simpler and cheaper than their analog alternatives, I think IoT is going to have a hard time gaining traction.

I also suspect you enjoy configuring this stuff, which isn't a surprise considering this is HN :)

I agree with you in general; right now we're in this phase of "WiFi all the things!" that is suspect. Which ones stick and which ones don't is going to be hard to say. But I suspect a lot of things will soon seem like those 70s-era whole-home audio systems: quaint in a why-did-they-do-that way.

But I think lighting will be different. My personal bet is that for lights, the driving benefit is health. I automated my lights this fall [1] and I've been very happy with it. I have a substantially more regular sleep schedule, and bad sleep has a number of bad health impacts. We're now seeing more research on how screens are disruptive, too. My basic conclusion is that humans aren't really responsible light-switch users. Now instead of my controlling my lights, thelighting is controlling me. Which is how it worked for most of human history.

I don't think many people will retrofit lighting systems right away; it's painful and expensive. But I can certainly see high-end homes selling smart lighting as an add-on. $40/switch seems like a lot, but $275k vs $276k seems pretty small. I expect that plus the 5% of people crazy enough to do it themselves will be enough to keep companies like Philips producing and experimenting.

[1] https://github.com/wpietri/sunrise

Just because you don't think it's useful enough or worth the cost doesn't mean nobody does.

1. Nest is a lot more expensive

2. Not worried about the security. If someone wants in its just not that hard. Locks can be picked, doors can be broken down. Adding hackers to the list isn't meaningfully different.

3. I'm not talking about opening it for me, I'm talking about opening it for other people like they showed in the apple watch keynote.

4. All the things on this list can be done, and obviously they cost more money. For the most part, these are luxury things. Whether they are "worth" it depends on how much money you have to spend. As someone else noted, it might sound expensive, but 275k vs 276k isn't a big deal. 575k vs 580k is even less important.

5.see #4

There are clearly lots of tech products that have nothing to do with reducing cost. They exist only to delight users. With more work in this area the complexity will come down as people make better products.

Everything you described already exist, and is available to mass market.

The fact that you don't have any (and anyone I know of either, to be fair, apart from lights in a few places), speaks a lot about how much the market is ready for this.

Actually it speaks to the fact that I'm currently renting. If my house was finished, I would in fact have most of them.

Nest is so great it simply CANT BE HUSHED!

It's a shame, because the monetization on platform apps will drown out potentially useful systems that are local in scope.

Why do I need lighting controls dependent on a cloud service?

That's exactly my issue with this situation. Cloud computing has a lot of uses, but there are also things that don't need it, and yet it is being forced on them, because this is a hot business model.

To expound on this, look at profit of product negating development. For software, it is nearly full profit. I sell you my app for $4. The app cost me $0.04 to sell. Each additional copy of the app costs almost nothing. Essentially, just Crtl-C, Ctrl-V. Yes, there are hosting costs, Apple's marketplace for apps costs, etc. But hardware has very similar costs too; they cancel out. For a hardware product, to make another copy of the product will eat a lot more of the profits. Essentially, software is cheaper because you can make billions of products for essentially the same cost as thousands with respect to hardware.

Not to mention you can scale up nearly instantaneously, as opposed to hardware manufacturing cycles which months at best.

you miss the more important issue - cash-flow - with software you need almost no cash-flow to scale to infinity, with hardware you have to commit money to warehoused hardware - using income from your sales to pay for manufacturing causes a feedback term to kick in to how fast you can scale your market, even if the demand is out of site you can't meet it (the alternative is paying the bank interest)

BTW this is why kickstarter is such a great model for small hardware startups ..... it effectively short circuits the first zip around this cycle and gives you something to go to the bank with

You need to differentiate marketing costs and COGS. If you are trying to sell a new CRM, it costs a hell of a lot more in marketing than $.04 to sell. There is so much competition to sell digital products and software online. Many physical products don't have as much marketing competition. While physical product companies can take longer to grow, the path to $10B can be with less competition while you establish barriers to entry for copycats.

>The complexity of developing hardware is driven by the number of discrete components used.

No its not. Most components are practically free #1, placing them is also very cheap #2. Hardware is not expensive because of _hardware_ costs. Its expensive because of engineering, prototyping, and latency of development.

/1 single/two digit cents. Except for specialized parts. For example hiend precision resistors, supercaps, weird connectors, non commodity microcontrollers, fpgas, fast ADCs, or precision opamps/voltage references. Nevertheless you will largely use jelly bean components with only few expensive parts on the board.

/2 again except for the very hiend small footprint ones. Super small components targeting lightweight products (cellphones, ultra light laptops) require professional millions of dollars machines and experience. Here is a story of one company almost tanking because CEO is a Jobs wannabe and decided to make his product "sexy" using same components and techniques as Macbooks:

http://www.theamphour.com/237-an-interview-with-joe-and-mark...

Offtopic, but I'm glad I discovered that Saleae scope. I haven't found any other economical way to sample a number of analog inputs in parallel. $219 for 8 analog inputs over USB is great value and I just ordered one. I didn't even bother looking for any of the supposed clones. I only wish I could afford $599 for the 16 analog inputs, but the value prop. isn't as great.

This is so true! Ever since I was a kid I've wanted a security camera to play spy. I'd look at them at Fry's or Amazon or wherever, but there were so many varieties an no clear winner.

Then came Dropcam with sexy packaging, a simple price, and ... well-made software with a subscription model. Next, they're snapped up by Google for $555 million. Would they have been acquired if they only did the hardware and nothing else?

Crowdfunding has been huge for hardware startups too.

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