Tag Archives: hardware

How do you launch a hardware startup?

This is a repost of my  answer on Quora .

Whether its hardware or software or any product, spend lot of time and energy in customer development . Finding out what users want and think they will pay for is more critical than what we think will be cool for them.

Since HW involves lot of capital, you need to get the above part right.Once you have it, you would need to figure out the device/product environment conditions aka environment limitations, regulatory restrictions/guidelines/requirement whatever you call and very likely you will be changing the product spec or operating conditions to match the new reality.

Then come up with product design (look and feel), in layman terms, the product casing or how users should feel like when they see the product. Very likely because of the product casing/packaging, you will very likely revise your spec again..

Next, from the spec you came up with talking to users etc, figure out what it translated to technical components. Like how many HDMI ports , VGA, optical . USB ports etc, what network interfaces you support, what will be the capacity of hard drive and whether it should be SSD etc..

In case of Apple-TV for example, you might need to video encoding/decoding etc, you need good video decoder…check who sells video decoder chips (probably ARM or imagination tech) , also depending what addln functionality you need, you will also need main CPU processor, so figure out if its going to be ARM or MIPS or Intel Atom ..While you are figuring this, also check the embedded OS you want the device to be running and then check if the compatibility of OS with HW at device driver level…

Check all potential vendors for each component and many times they give you sample pricing (typically in volume of 10K pricing …some times they might give you pricing for 1K pieces as well )

Once you have selected vendors, figure out the power consumption and see if the power budget makes sense.Figure out if you want to your device to be running both in Africa and Siberia ..Accordingly revise your power budget and therefore you will change product spec and/or product casing etc..

Next implement the design spec using platforms from upverter etc and simulate the design.  Next select the PCB vendor who can do the design and manufacturing for you…Board design/packaging might impact lot of factors starting from Design spec all the way to casing etc..So this is important..

Add all the pricing and get the BOM (bills of materials) ..Check if the BOM makes sense for the price range you are planning to sell..If your initial BOM at this stage is for example 25$ , triple that number because you are still missing  pcb design and manf, board packaging , yield, lab bring up , compliance testing , QA and other NRE costs…Now check if you are still making money for the price that your customer is willing to pay …If you initially planned to sell for 50$, but your BOM is around 75$, you are loosing money and unless you have lot of money where you can afford losses initially to gain traction, you might have to change your spec again..Most likely you will remove some components and/or reduce some components..for example you might say I will only add 2 HDMI instead of 4, you might reduce processor speed from 1GhZ to 750MHz etc…

Now go back to your customer and convince him that what you are still delivering is lot of value to him and you are still solving their pain points and only removing the nice to have features…If they agree, proceed further..

While you are doing all this, start your embedded and SW development process in parallel using developer or emulator prototyping boards…Have this ready first so that you can do the demo to potential customers/investors on how the product will perform once HW is done …Show them once manufactured, its plug and play ..get their reactions/feedback..very likely you might change your spec totally or part of it…Once you do this 2-3 times and feeling confident, accelerate your PCB board design and manufacturing and get the prototype out…As a start up ,never go for manf without getting SW/Embedded part ready ..Its more like a lean start up development model for hardware..

If you are building a ASIC like Apple does for their Apple-TV , its different on lot of other aspects and I wont recommend it unless you can raise 10-20M$ easily and can hire 10-20 HW engg team …Of course not every product needs an ASIC or even an FPGA and don’t have to rely on leading manf technologies….

As as others have commented , you need to worry if you are infringing IP or if you are creating IP, make IP protection as part of your design thinking and strategy process..You can start with a provisional patent to buy you time and give you a opp to figure if you still want to go ahead after the feedback from SW demo/product demo..

BTW, try to use opensource technologies and customize it where you can…especially the design tools..Some tools are very expensive…Some vendors give their tools free for folks using their IC platform…Another good advice is try to limit vendors as much as you can, it will save you lot of headaches on lot of areas…

I might have left lot of other pieces, but this should give you a good idea of the process involved..If you need details or clarifications, feel free to ping me..

Framework to create a business plan

 I have been lately seeing lot of folks asking how do I create business plan. Since each business is different  because of product, revenue model, distribution, target segment etc , its not possible to suggest something specific unless I know all the facts of that business.
But below is the framework which should be good enough for anyone to learn and comeup with their business plan. This framework also helps founders to really understand all the different pieces of the business and how each of them can affect their business .
1. Download template of lean canvas and fill in all the details, validate with all stake holder and iterate it till it makes sense

2. Next download Business model canvas and the value proposition companion/template/plugin along with it. Again do the due diligence,
validate and iterate it. Lean model canvas and Business model canvas overlap to certain degree, but give very different perspective.
Lean model gives you or helps you identify what is the problem, what is your unique value proposition and have you validated it or verified all the riskiest hypothesis. Typically you do this even before you have your MVP or when you are idea stage.
Once you are clear, fill the business model canvas and then start attaching dollars to it. Those guys have a website called strategyzer.com which lets you do cost estimations and generate P&L statements. Start playing with it by changing one variable at a time. For example, change the size of customer segment or change the distribution channel etc and see how your bottom line is getting effected. Add all the costs to account for every dollar . Dont forget to include customer acq costs etc in the eqn . Include costs for book keeping, legal , office expenses as well. Check the P&L statement see if it makes sense
Once you have it, just translate that canvas into words for business plan word doc, into ppt for your pitch deck and you can use the P&L statement as is or translate into EBITDA structure if you love using that word…
One thing which will be missing from the above and which is required are the following :
( This you should already have it from your customer development phase )
1. Depending on your company whether its B2B or B2C or B2B2C and product, show some metrics how much traction you got already and/or planning to get and what will it cost
2. Tell me whats the avg life time value or length of relationship
3. Tell me how much does it cost to retain them once they become your customer. If you dont have one, what are your anticipated costs
4. What does your sales funnel looks like and how long does it take to make one successful sale
5. Any other metric which shows investors or to your audience that you have what the market wants and is ready to pay
6. If you are web based or app etc, also tell me what your growth hacks are
7. Depending on whether you are 1st time entrepreneur or serial entrepreneur , introduce yourself and your team at the appropriate time. Most 1st time folks do it in beginning .
If something is not clear or if you have followed a different approach/framework, would love to hear more about  it.