Hardware Startup Advice

Speaker 0: so hardware versus software startups or any other startup other than hardware. like, you have a hardware device, and i always when i'm talking to startups who have hardware, hardware is difficult. it's expensive. it's inventory. there's, you know, long lead times, what you're working on now and what time it comes out. world has changed. any advice for entrepreneurs that are heading down this road?

Speaker 1: yeah. i mean, look. if you're pondering a hardware, play, i would say, you know, try to find a business model where, there is a way to make money without the hardware. okay? because if you're completely hardware dependent for your revenue to flow, you, you know, you're you're gonna need all the stars to align, like, the constellation of of how that needs to be is it needs to be flawless. unfortunately, in the world of contract manufacturing because you're not gonna start with setting up your own factory, nobody does that. so you're gonna have to go to a centimeters, which is a, you know, contract manufacturer. and, you know, they're probably gonna be in asia somewhere, you know, probably in mainland china. there's gonna be language barriers. there's gonna be, you know, things that are completely, you know, there there is gonna be things that are culturally where you think you understand each other, but you just don't. and, and and and and so you're gonna rely a lot on your centimeters for quality control and final product. right? and there's only so many steps you can take and measurements you can put in place to safeguard that. and so i would say look. in our case, we have built a really good kind of software component. and so it's so good that we can actually charge subscription and have a bunch of features in there, but they're software based. right? and then there is, like, you know, a premium, which comes with a wearable. so what i'm saying is if there is a way to kind of figure out, a software play alongside a hardware play, that could really help you, if the hardware piece doesn't work out the way you intended to, which sadly is the case. right? if you're playing the hardware route, you can, of course, crowdfund. a lot of people do that. you know? and and that's a way to kinda get money to get you know, to give you the money to go into a centimeters. because a contract manufacturer, they'll do nada, nothing unless you pay them. right? one thing you can do is you can get a contract manufacturer to maybe, you can give them maybe shares. right? you know, it's a it's a stretch. usually, they won't. but i've managed to do that once, and i ended up with a friendly centimeters, out of hong kong. but, you know, sadly, the results weren't great. right? and so now you're giving away shares to somebody, and the relationship is not, you know, great because you're upset with them. and they kinda say, hey. but you approved, you know, this and that. and it's like, yeah. but the prototype that i approved wasn't the same as what you kind of ended up giving me. so i think, you know, hardware is really hard. i would say do really good diligence on who you end up doing the hardware piece with. you know, you know, you should do, you should make sure that they've done very similar products, and they got that experience. right? the other thing that is super important if you go down the hardware route is control the firmware. don't let the centimeters do the firmware part. you need to control the the the firmware. all they should do is the hardware. control the algorithms. control that's where the ip sits. the ip seldom sits in the hardware, unless you do what these guys have done, which is they built a big pcba board, with different components, then they've miniaturized it, and then they built their own boards with their own components. right? i think, you know, that's probably the way to go. quite expensive to make the prototype. so a lot of people don't wanna do that because you don't know if you're gonna scale yet. so, yes, i would say try to find a business model that is not completely hardware dependent. do really good due diligence on the contract manufacturer. you're gonna need someone who understands what you're saying. you need to understand what they're saying. you need to be on the same page. preferably, you go sit down, you know, at the table, and you can show things and point at things and really make sure you understand it. right? okay? you're gonna talk to somebody most likely that's good at english, but that's gonna be the sales guy. right? he's gonna sell you that these guys can do it. then you're gonna end up sitting and talking with completely different people, engineers and, know, technical people. and this is where it can get a little hairy. okay? so proper due diligence. right? and then i would say, you know, make sure that your ip sits in the firmware and in the algorithms, and in your ai. right? and make sure that you control all of that. that's yours. so the firmware engineer is your firmware engineer. right? don't let to see him do this stuff. right? because you gotta be careful with copycats, especially when you go and do it in asia, particularly in china. right? and and i think that's probably the top three advices. you know, if you must do hardware, go ahead and do it. but you need to figure out why are you doing hardware. edge? what is your unique selling point to everything else that's already in that sector and segment? i think, you know, if you're doing exactly the same thing as somebody else, are you gonna compete on price? i are you gonna undercut them? right? or, like, what is it that you're gonna do differently? or are you gonna have a a far superior product that has a battery that is ten times as you know? like, really think about the unique selling point. like, you need to have an edge. and if you don't have that, don't get into hardware. it is very expensive, and it comes with just an endless array of problems. right? and so, yeah, that's what i would say.