The hardware is the thing that matters
Almost four years ago now, I was sitting in the audience for a panel discussion in the final O’Reilly Where conference. I’m struggling to remember exactly which panel it was, but it was a discussion on the state of seed funding in the industry, and during this panel someone said something incredibly stupid. They said, “I don’t do hardware.”
This was coming from a respected VC sitting on a panel in front of an audience that should have known better. Nobody laughed. There was a barrage of lukewarm criticism on the backchannels, but nobody actually laughed. Well, that’s not strictly true, I laughed. People looked at me strangely. But I knew which one of us was right, and which one of us was wrong.
Less than a year later I doubt the same VC would make the same statement, at least not in public. Not long after that conference Paul Graham started talking about a hardware renaissance, and whilst acknowledging that it faced a “deep seated” bias from investors, he argued that this should very much be regarded as a trailing indicator.
He was right. Building hardware was already becoming easier and the poster child of the Open Hardware movement, the Arduino, was on its way to changing the way people prototyped hardware. But along with the little blue board came other new levers on the world. Not least of which was the arrival of Kickstarter, and the realisation that you don’t need to convince one person to back your idea. Instead you just have to convince a few thousand, and that sometimes that’s actually easier.
The way to build a software startup has been codified almost to the point where you could chisel it on stone tablets. There’s a recipe that most software startup founders follow, but founders of hardware startups always found more difficult to follow the recipe, and as a result they eagerly turned towards crowdsourcing for their funding. Even today, hardware startups seem to be far more likely to be bootstrapped, or crowdfunded, than software startups. Because while some have woken up, many VCs still look at hardware as “software wrapped in plastic.” While you can build hardware that way, unexciting hardware at least, that’s a naive way at looking at looking at what’s becoming the next industrial revolution.
The very way we build things is changing. While it’s true that the old manufacturing jobs are never coming back, it’s arguable that those jobs don’t really exist any more, not even in China. Along with those automated factories that are on-shoring, new methods of manufacturing mean that new types of jobs are starting to re-emerge from the software hinterlands.
The poster children for this movement are companies like Local Motors that practice co-creation and micro-manufacturing. While some argue that we should retrain a generation of manufacturing workers for the ‘new economy’ they’re missing the point. Not everything is about software, and services.
The manufacturing skills that made up the old economy are just as valuable in the new economy, more so, because they’ve become rarer. Going forward, knowing how to code will only get you so far.
The new generation of hardware companies also seem to be more widely scattered, the Valley doesn’t seem to confine them in the same way it confined the software industry. The new hardware startups are more likely to be found in New York, or London, or the even the mid-west, than in Bay Area. The companies that are in the Bay area often view the hardware as secondary, incidental, to what they’re trying to build.
By not being able to follow the recipe of the successful software startup, some of the companies out of the new generation of hardware startups may well be managing to shake off the tech industries love affair with venture capital, and the Valley being the only place to start a company. In the long run, I don’t believe this will turn out to be a bad thing.
In fact the very nature of computing that supported the Valley’s rapid growth is changing underneath it. Computing is diffusing out into the environment, but the Valley’s response seems lacklustre. A generation of networked connected appliances and things targeted squarely at early-adopters. Built by, and for, people much like themselves.
Ignoring security, refresh cycles, and architectural issues. The Valley’s response largely ignores the very trends in distributed computing and sensors that they claim to be adopting.
Forty years ago two men named Steve built a business out of hardware that went on to be the most valuable company the world has ever seen. Time passed, technology became more complicated, so much more complicated that it became much harder to do that. But that’s beginning to change again, the dot com revolution happened because, for a few thousand or even just a few hundred dollars, anyone could have an idea and build a software startup. Today for the same money you can build a business selling things, actual goods, and the secret there is that you don’t have to train a whole generation of people into realising that physical objects are worth money the same way people had to be trained to realise that software was worth money. Because that was pretty much why we invented money in the first place.
Software after all is so late-twentieth century, as it matured it became commoditised. But it turns out that hardware, the thing that software apparently commoditised the last time around, is still tactile, tangible, and real. After years of suffering through poor design, and poor experiences, hardware is not just the next big thing, it may well be the only thing that matters.