Perspectives From the Highway1 Vendor Fair
Thoughts on hardware from operators around Silicon Valley

Hardware doesn’t happen in a vacuum. Any startup working on a device of any kind is going to eventually need to talk not just to manufacturers and suppliers, but highly specialized design firms, financial advisors, and a whole host of other agencies and experts. We gathered an array of such services under one roof for our ninth cohort’s Vendor Fair, and thought it might be interesting to get some outlooks and opinions from hardware movers and/or shakers in Silicon Valley and beyond. Spoiler: it was.
What trends have you been seeing in the hardware space lately?
Mark Kennedy, ExisQCI:
These days, more and more companies that have an idea don’t hire their own hardware or software team, they outsource it: they’ll hire a hardware guy for three months to do the hardware design, or use a firm like Lime Lab. They’re small teams trying to outsource as much as they can until they’re ready to hire their own people. In the past, startups used to hire their own engineering, software, ops — all of a sudden they’d have a 40-person overhead they could never fund. Now, people are smarter; these kids are starting companies with one or two people and using other resources.
Erin McFall, Kaizen Dynamic:
For a while, everything was getting connected and smart, and we’re seeing that spread into segments other than consumer electronics. We’re doing a lot of things in adjacent categories like home care, automation, and medical wearables, all with a consumer electronic feeling.
Michelle Peralta, Silicon Valley Bank:
Assumptions are evolving. Look at drone development, for example: years ago, there was a lot of investment in the hardware itself. Now the interest is in your software platform, determining how your fleet works and how to optimize it — there’s more expectation that you have an industry application. It’s cool to design the next neat drone, but what’s it going to do? Who’s going to care? How do you translate that to a product people will pay money for? It’s a shift from simply building something cool to figuring out how you make it into a business; those expectations are the highest I’ve ever seen.
What does the future hold?
Phil Stob, Fathom:
Two things: DDM (direct digital manufacturing) and DFAM (design for additive). What it comes down to is that a part designed for injection molding is going to be designed differently than one that’s intended to be 3D printed. With 3D printing, complexity is free; what you want is a design that’ll give you the requirements you set while using the least amount of material. We’ve been doing topology optimization, which takes a look at all the forces and requirements for a part and designing with those in mind. It requires a different mindset, where you have to understand what the function of the part is instead of fitting it into the mold of a particular process. It opens up a whole new world of possibilities, and we keep introducing new technology and materials that make things tougher, cheaper, and faster. If you’re producing in small volumes, DDM is increasingly where you need to start.
Michelle Peralta, Silicon Valley Bank:
I think of hardware as a data play, and I have for a few years whether it’s wearables, IoT, or drones. The first wave tends to be about collecting information. Then people stop and wonder: “What do we do with it? We’ve got a massive set of data, we don’t know what it means, and now we need to hire a data scientist to figure it out.” That’s the second wave: the software layer that makes sense of it for you. It’s a nice mashup of software and hardware, the secret sauce that turns data into human language. The third wave we’re going to see, whether it’s infrastructure, software, or hardware, will be getting predictive via AI and machine learning. Now that you’ve told me what this data shows historically, tell me what to do next. What can I do? What are my options? The better your predictive capability, the more successful you’re likely to be.
Any advice for an entrepreneur looking to start out in hardware?
Damon Barsuglia, Rigado:
Use a module to get up and running. Everyone thinks they’re going to do a million pieces of whatever they’re building; that’s fantastic, but before you get to those millions of units, use tools like precertified modules to get up and running as quickly as possible. Then, when you start getting into the millions, you can redesign for a more cost-effective solution.
Mark Kennedy, ExisQCI:
Don’t be afraid to use engineering resources from your suppliers: they have them and they want to use them. All the local distributors — the Arrows and Avnets of the world — all have applications engineers; if you task them with a job, they’ll do it. There’s a lot of resources you don’t know exist that are there to help you.
Wen Hsu, ST Micro:
Your suppliers will give you advice about what parts to use and whether a part’s going to go obsolete. You could easily design in a part that’s going to go obsolete in a year, but that also has a very simple alternative to use. Engage with your suppliers early on to really understand suppliers’ portfolios.
Peter Himes, SITRI:
Don’t fall in love with the tech. Understand what your market is and what your customer needs; there’s always an alternative to what you’re trying to do. It’s important to understand that profitability derives from value, and value is what the customer’s willing to pay for above and beyond the cost of materials.
Michelle Peralta, Silicon Valley Bank:
It’s easy to design something that looks cool; it’s hard to design something that manufactures as well as it advertises on Kickstarter. Do your best to align yourself with manufacturers up and down the supply chain; that tends to come down the line later, it always takes longer than you think, and it’s been that way forever. Even the big guys deal with it, but it’s even harder to deal with when you’re short on runway and money is the fuel in your tank; keeping those manufacturing and supply chain partners is critical.
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