It takes time

Nabeel Hyatt
Spark Capital Publication
4 min readSep 19, 2016


The first year for Thalmic Labs was a rip-roaring success by any measure. And thankfully, that didn’t kill the company.

That’s what I was thinking about this weekend as Thalmic closed their Series B, a $120m round led by Intel and Amazon with participation by us at Spark Capital, iNovia and others.

Thalmic Labs was founded by a couple of recent grads from the University of Waterloo and got into Y-Combinator for the spring of 2013. They had an early prototype of a new device that promised a better human-computer interface for wearable computing, which for the time was a very odd thing to be in a YC class.

YC was traditionally more of a software incubator, and these were the early days of them spreading out into other areas like Hardware, so Thalmic stuck out like a sore thumb. Were the investors who had been used to software startups that typically had already launched and inevitably “growing 10% week over week” also going to be interested in a capital intensive consumer hardware startup, that had little to no traction, a “mostly working” prototype, and needed to raise $15m right out of the gate?

They got their answer. Their YC peers voted them the best of that class. They had a product video demo that went viral leading to millions of views and over $7m in pre-orders for their new product, the MYO. And they successfully raised a highly competitive A round that we at Spark were excited to lead. That first year was the stuff startups dream of, but so few pull off.

But, I think it’s easy to underestimate the negative effects that this kind of immediate success can create. Success is obviously the goal, but very early, immediate success can sometimes make growing a startup culture very hard. There are lots of detriments to being a startup (lack of team, money, and traction for instance) but the best thing you’ve got is your ability to take risks that large companies won’t or can’t.

As an example, look at Apple. They just released the iPhone 7 and decided not to release sales figures because even a slight dip in sales, even though it will of course sell well, can be deemed a failure. They have to get so conservative that removing a headphone jack is the most courageous thing they can do.

Underdogs take risks, the market leader doesn’t have to, and so if your team is getting every signal from their peers that they have “made it” then it can backfire. Instead of the plucky underdog who is continually risking it all just to have a shot, you are trying to make sure that you don’t embarrass yourself in front of your peers, investors, the press, and employees.

Keeping your risk quotient

And that brings us back to Thalmic. By all outside measures that first year, from YC, to VC funding, and pre-sales, was a success. They followed that up by shipping the MYO, which did well in sales, but not well enough to automatically bet the company on. And that led us to the conversations about what product #2 should be.

There were three options: 1) continue building on the success of the MYO, 2) adapt the MYO to focus on the now exploding VR market, or 3) look into a new product which was very risky, and quite possibly not technically feasible, but would be amazing if they could pull it off.

The safe bet was a MYO version 2.0. After all the first product had been moderately successful, and there were a few enterprise verticals that had emerged as areas to focus on and incrementally grow the business. The second avenue, a MYO adapted specifically for VR, also represented a little less risk. Spark had led the Series A in Oculus, so it was certainly something we were familiar with, and it had turned into a booming category they could surely get additional funding for. Furthermore, building a product for VR would give them all the social positive feedback that being in a hot market provides along the way. Their friends, investors, and neighbors would still think they were hot stuff in a hot category.

They didn’t pick either of those.

They picked Door #3. A new product that the Thalmic team has since been working on that represented the highest risk, but also the only one that had a real chance as being transformative and not just incremental. It was an exciting product, with a lot of potential. But it would be close to a year before we got any feedback on whether the product was even technically possible, let alone ready to launch.

This was not the easy choice, not just for the technical and business risk, but also the social hurdles involved. So many startups get wrapped up in the appearance of success, versus the hard choices necessary to actually be successful. They had no doubt been preached at hundreds of times to “launch early and often”, but they were independent thinking enough to ignore that conventional wisdom in this case.

The really hard startup decisions have the potential energy to put you leaps ahead of others, because so few will make that leap. Thalmic picked the third path, and it took a year before we realized it was going to work. A few months ago the founders embarked on showing a few people a working prototype, and Intel and Amazon immediately stepped up leading to today. The journey is still just beginning for Thalmic, but it’s excellent to see that a determined, gritty, group of amazingly talented people will have the capital to keep taking risks on new technology.



Nabeel Hyatt
Spark Capital Publication

partner at Spark Capital, former CEO, full-time geek, investing time and $ at the fringes.