Hardware is not ‘software wrapped in plastic’
This past weekend I was going through a Board deck for a hardware consumer device company which aims to provide an amazing experience & UI/UX to its customers. Company still remains in stealth, but something popped out at me as I went through all the detailed slides in preparation for the next Board meeting: hardware is not for the faint of heart, not even consumer hardware.
Because there are now digital interfaces to such ‘devices’ (apps, voice UI, etc) some people have started to think of modern consumer hardware devices as simply ‘software wrapped in plastic’! But that is so not true. I wish it were true, and I wish hardware was all plug and play where one could build the equivalent of the next iPhone 7 by just swapping out battery packs, placing a higher definition screen, maybe some more processing power (esp for on-board graphics), and a dual-aperture camera for depth sensing. And I wish it could all be done simply using swap functions in an ODM’s software package.
Reality is that only those who get to see the sausage-making that goes into building and shipping a great hardware device from the inside know the painstaking efforts that are put into hardware engineering. Tremendous attention to details is required, from mechanical engineering to electronics and radios to industrial design and testing — to put a high quality product in customers’ hands, in time, at the right price, and with the right service guarantees. Prototyping has definitely become easier over the last 5–6 years, but shipping manufactured product is still hard.
To a naive eye it might appear that a sleek consumer device may have been envisioned by a bunch of visionary designers who came up with a cool design, rapid prototyped it in their basement using 3D printers, and went online to get it made in China…and that the magic is all in software alone. But that’s not how it works. Not at all. No wonder many hardware projects don’t ship, don’t succeed, and don’t scale. I have seen naive entrepreneurs think it could be done as above, but they eventually learn and, unfortunately, some times too late…With over a decade of doing this in the startup world, I can safely say hardware is hard & littlest details matter.
Consumers today have very high demands from hardware devices, and expect so much. It needs to be beautiful, have tons of features, work under all circumstances, should continue to improve with over the air updates, and should be affordable. These devices could be called Hardware 2.0. And its not your daddy’s hardware anymore :)
Reality is there are few in Silicon Valley who know how to engineer, manufacture, and ship such Hardware 2.0 products (at scale). Those few are incredible resources for startups that are able to get them. When I think of great entrepreneur teams to back, I look if they have already secured, or have an ability to secure, such talent in their teams. Identifying the right components, the right batteries, processors, radios, power electronics, displays, thermal packaging etc, then packaging them all in a tight space, and then managing vendors and their costs + quality control + supply doesn’t happen in amateur hour.
Frankly, finding, recruiting, & helping retain Hardware 2.0 talent is also an area where top hardware investors can differentiate themselves from others. It is much harder for generalist investors to (a) identify this need fast, (b) have a roster of experts they can call upon to help their portfolio companies, and (c) create forums for such talent across their portfolio to communicate, share, learn, and grow. Unfortunately, few investors are paying attention to this.
Hardware details matter for more simpler consumer devices, but they matter even more for the deep-tech that is also being called ‘frontier-tech’. That is why I believe teams with great software AND hardware talent will win big in these areas. From drones to VR to autonomous cars, IoT, wearable devices — hardware is not just software wrapped in plastic. So lets stop calling it that. And lets appreciate a team’s ability to pay attention to design, engineering and manufacturing details as a part of their defensibility moat. Silicon Valley cheers for Elon Musk when an exciting $35,000 electric car is released, or when SpaceX rockets land back on the barge…because they realize how hard it is to accomplish that. And they are cheering not just for Elon Musk, but also for all the engineers that took care of smallest details that could have caused failure.
