A few months ago I was interviewed by India’s Economic Times. Slightly edited for clarity, with some images for enjoyment.
Q: How do investors think about hardware today?
A: “Silicon valley” was originally about silicon, but for the past 25 years, software took prevalence. Today, 3D printing, cloud computing, cheaper sensors and CPUs, small batch manufacturing have helped many startups come to the fore.
We saw software investors gradually get into hardware investments, and specialists like HAX emerge and grow. HAX launched 5 years ago to catch this trend early. We have invested in over 200 hardware startups around the world so far.
Q: How has the hardware startups scene changed in India?
A: The local community is vibrant and we see more and more candidates from India apply to HAX — we invested in two companies Ray Baby and Diabeto — the latter got acquired very rapidly — and more deals not public yet.
What is lacking in India is a strong prototyping environment and supply chain. In fact, Silicon Valley suffers from that too, in addition to very high costs and restrictive immigration laws.
What is lacking in India is a strong prototyping environment and supply chain.
Every ecosystem has strengths and weaknesses, which is why entrepreneurs should try to combine several ecosystems to access world-class resources at every step: R&D, prototyping, manufacturing, fundraising, sales could each take place in a different geography.
For instance: R&D and first prototype in Bangalore, iterations and manufacturing in Shenzhen, fundraising in India first then in U.S. if customers grow there, and assembly and sales in North America.
There is no point trying to replicate what is already working somewhere else: use what exists! HAX was created with this intention of empowering founders with the resources of unparalleled ecosystems.
There is no point trying to replicate what is already working somewhere else. Startups should leverage the strengths of multiple ecosystems.
Looking at India now: it has a unique situation. Not two places follow the same trajectory. India has lots of issues like healthcare, transportation, logistics, food production and infrastructure, which can be solved by hardware startups.
India’s issues like healthcare, transportation, logistics, food production and infrastructure could be solved by hardware startups
At the same time, the lack of supply chain, the slow speed of churning out products and policies have not helped the market. Combining India’s talent, market and capital with Shenzhen’s advantages can boost India’s innovation.
Combining India’s talent, market and capital with Shenzhen’s advantages can boost India’s innovation.
Q: What can the government do?
A: For the government, some policies can encourage experiments and pilot deployment with startups. With such prospects, investors are likely to be more supportive as well.
One sector that is ripe for startups is healthcare: connected devices could help diagnose and heal — offering “digital therapies — and help address the lack of hospitals and doctors. India could thus become more advanced than “developed markets” which are slowed down by their legacy infrastructures, regulations and lobbies.
In healthcare, India could leapfrog other markets which are slowed down by their legacy infrastructures, regulations and lobbies.
Q: Which technology has dominated the hardware startups space in the last two years?
A: The first wave — Fitbit, GoPro, DJI and others — appeared 10 years ago and their products are now very mature. It was mostly consumer gadgets. Today, the most exciting projects we see are in health tech and enterprise. They are less visible to the general public will have a massive impact as they scale.
One such company is Flow Neuroscience, which developed a device to treat depression. It aims at making anti-depressants irrelevant. Another called Simbe Robotics makes a robot that can do a complete inventory in a supermarket using advanced computer vision. It takes 30 minutes instead of 30 hours with a pen or a tablet.
Q: What kills hardware startups?
A: Many fail because they do not talk to customers early and enough. Other early issues can be founders that don’t match well, technical feasibility, bad financing skills, or neglect for marketing. As a founder, you need to have great observation skills, understand what your customer might want to use or not.
Q: What about mergers and acquisitions between Non Tech and Tech companies with startups?
A: Many internet behemoths have plugged in billions of dollars into hardware products. Facebook, Google, Amazon, Apple, Baidu, Softbank have all acquired large and small companies, like Oculus, Kiva and Boston Dynamics. They are looking for technologies, user data and new touch points.
More and more non-tech companies are also investing and buying hardware startups: Mars Pet Foods bought a pet tracker called Whistle, the watch maker Fossil bought Misfit, an activity tracker. Even Suntory invested in Bartesian, a robot making cocktails that came out of HAX.
The world is changing fast, and hardware is the only way for software to access the physical world. We are truly at the dawn of a new industrial revolution — it’s “steam engine time”! (h/t William Gibson)
Hardware is the only way for software to access the physical world.