Hardware Startups Suck [Part 1]

Executive Protection training with the ATLAS-8

So you are probably reading this from one of two main perspectives, either you saw the title of this article and thought to yourself:

“I couldn’t agree more! Let me see what awful things Phil has to say about hardware”

or

“Screw this guy, I bet he doesn’t know the first thing about hardware”

Either way you’re here now and I regret to inform you that I actually love hardware, in fact I’ve started several hardware enabled companies. I’m here to provide some truth for all of the companies out there who have the courage to take their ideas and bring them into the physical world. These red-pills will be hard to swallow, but in my following posts I will discuss how we can overcome these challenges and build successful hardware enabled empires. Even if you are reading this from the perspective of a hardware hater the one thing you must admit is that no matter what the technology or market, creating a physical object pulled from a dream is no small feat. Want an example of hardware that aims to change the world but had an uphill all-out-slug-fest to get funded? Here is a laser firearm training device I designed for my first startup www.TheSaltedEarth.com .

ATLAS-8 Gen 1 Laser Training Target

Truth 1: No one cares about your hardware

This is going to be your first red pill to swallow before you can make progress founding a hardware company. As the technical founder of my first company the hardware was my brainchild, I remember the exact moment the idea popped into my head. I toiled in silence to create the first prototypes working out of a small dining room work-shop. I visited with numerous law enforcement departments in NYC to get their feedback and add their requested features. Want to know what happened the first time I pitched to an angel group? They simply said “So this is like laser tag? There is no need for this type of product.” They didn’t even take more than 2 minutes to try and wrap their heads around how vital LE/MIL/Civilian training is when it comes to first responders, they simply didn’t care. Several dozen pitches later I have completely changed the story, no longer do I stress the hardware since I swallowed this painful pill; Instead I sell the vision of what we will do with the hardware. “Sell the Sizzle not the Steak” is the best way to describe the failures of early stage hardware companies that focus on the tech rather than the benefits. The following image captured investors attention, do you feel it was because of the product or the fact that we are showing what we can DO with the product?

Vehicle Take-down Training

Once you swallow this pill you’ll feel a bit lighter, but this is only the first step as you will now need to redirect your assault and flank any potential investor. I will go in-depth on this topic in Part 2 of this post.

Truth 2: You will suffer in silence

The most difficult part of networking in your startup community will be watching companies with barely any tech plastered across the various media outlets. Your local university will pride themselves on startups that came out of their programs, startups that without the extensive propping-up and coddling would fail immediately. If you’re like me you aren’t a cheerleader, you believe that credit is earned through blood, sweat, and tears. Nothing will turn your stomach faster than seeing groups of educated people gawk at every little thing a software company does, or cheer about sham tech startups winning pitch competitions based purely on feel-good ideas. As a hardware enabled company you will work hard, but this uphill battle will make you something these sensitive software companies could only dream of becoming. Don’t try to be a unicorn, unicorns never built anything, work horses did.

We will explore this topic much more in Part 3 of this post. My immediate advice to you is to surround yourself with startups that are actually producing results, run by people who understand how much work goes into making a truly successful company. These are the people who will be able to introduce you to advisers and investors who can support you.

Truth 3: Pitch competitions are stacked against you

In your quest for funding you are going to apply to more pitch and funding competitions than you will be able to remember. You will spend weeks crafting your unique entries to each of these competitions, and you will lose over and over again. Part of this will be a learning experience crafting your pitch and properly explaining your product/business model/go-to market strategy. The other component of your failure is that you will be directly compared to software and sham-hardware companies, and judged by people who believe that “Hardware is dead.” Don’t let this discourage you, in fact this should galvanize you to fight harder. Knowing that the odds are not in your favor means you have two choices:

  1. Submit an entry that will likely lose
  2. Fight like you’re a bat out of hell and make your pitch compelling

Since we know that we are starting from the back of the pack, we need to fight aggressively to give ourselves the chance at first place. As a hardware enabled SAAS company Salted Earth has been knocked out of bracket style funding competitions because we didn’t have a “Competitive go-to market strategy” compared to our head-to-head competitor that round. By that they meant “You guys need to ship things” while the mobile application company could just inflate numbers and compare themselves to already successful app companies. Want to know where this company is now that beat us? two years later and they still don’t have paying customers. The downside for us is that a customer means someone handed over their hard earned cash for our product, we can’t provide our product for free to “boost” our user figures; However we can use this to our advantage. Part 4 of this post will be dedicated exclusively to strategic mistakes I made in funding competitions and how you as a hardware company can learn from them.

What is a “Sham-Hardware” company you ask? Find out in Part 3!